Carlyle Real Estate Ltd Partnership XIV/IL – ‘10-Q’ for 9/30/02

On:  Thursday, 11/14/02, at 4:56pm ET   ·   For:  9/30/02   ·   Accession #:  892626-2-374   ·   File #:  0-15962

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      25    114K 
 2: EX-10.A     Material Contract                                      6     23K 
 3: EX-10.B     Material Contract                                      4     21K 
 4: EX-99       Miscellaneous Exhibit                                  1      6K 

10-Q   —   Quarterly Report
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION          
Washington, D.C.  20549         

FORM 10-Q         

Quarterly Report Under Section 13 or 15(d)          
of the Securities Exchange Act of 1934          

For the quarter ended September 30, 2002Commission file number 0-15962          

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV         
(Exact name of registrant as specified in its charter)          

Illinois                    36-3256340          
(State of organization)      (IRS Employer Identification No.)      

900 N. Michigan Ave., Chicago, IL           60611                           
(Address of principal executive office)     (Zip Code)                          

Registrant's telephone number, including area code 312/915-1987                 

Indicate by check mark whether the registrant (1) has filed all reports         
required to be filed by Section 13 or 15(d) of the Securities Exchange Act      
of 1934 during the preceding 12 months (or for such shorter period that the     
registrant was required to file such reports), and (2) has been subject to      
such filing requirements for the past 90 days.  Yes [ X ]  No [   ]             

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TABLE OF CONTENTS         

PART I     FINANCIAL INFORMATION                                                

Item 1.    Financial Statements . . . . . . . . . . . . . . .     3             

Item 2.    Management's Discussion and                                          
Analysis of Financial Condition and                       
Results of Operations. . . . . . . . . . . . . . .    15  

Item 4.    Controls and Procedures. . . . . . . . . . . . . .    20             

PART II    OTHER INFORMATION                                                    

Item 3.    Defaults Upon Senior Securities. . . . . . . . . .    21             

Item 6.    Exhibits and Reports on Form 8-K . . . . . . . . .    22             

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PART I.  FINANCIAL INFORMATION                                                  

ITEM 1.  FINANCIAL STATEMENTS                                         

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV         
(A LIMITED PARTNERSHIP)         

BALANCE SHEETS          

SEPTEMBER 30, 2002 AND DECEMBER 31, 2001          

(UNAUDITED)         

ASSETS          
------          

                            SEPTEMBER 30,     DECEMBER 31,
                           2002             2001
                           -------------     -----------

Current assets:                                                                 
Cash and cash equivalents . . . . .   $ 12,868,662      12,576,851          
Interest and other receivables. . .         17,109          67,160          
                            ------------    ------------
Total current assets. . . . .     12,885,771      12,644,011    
                            ------------    ------------

Other assets. . . . . . . . . . . . .          --            210,375            
                            ------------    ------------
                            $ 12,885,771      12,854,386
                            ============    ============

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CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV         
(A LIMITED PARTNERSHIP)         

BALANCE SHEETS - CONTINUED          

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)         
-----------------------------------------------------         

                            SEPTEMBER 30,     DECEMBER 31,
                           2002             2001
                           -------------     -----------

Current liabilities:                                                            
Accounts payable. . . . . . . . . .   $     24,317          92,410          
Current portion of long-term debt .          --         41,300,490          
                            ------------    ------------
Total current liabilities . .         24,317      41,392,900    

Distributions received in excess                                                
of recorded investment, net . . . .          --          1,322,572          
                            ------------    ------------
Commitments and contingencies                                                   

Total liabilities . . . . . .         24,317      42,715,472    

Partners' capital accounts                                                      
(deficits):                                                                   
General partners:                                                           
Capital contributions . . . . . .          1,000           1,000        
Cumulative net earnings                                                 
(losses) . . . . . . . . . . . .      2,541,798     (14,698,315)      
Cumulative cash distributions . .     (2,117,798)     (2,117,798)       
                            ------------    ------------
                                  425,000     (16,815,113)
                            ------------    ------------
Limited partners:                                                           
Capital contributions,                                                  
net of offering costs. . . . . .    351,746,836     351,746,836       
Cumulative net earnings                                                 
(losses) . . . . . . . . . . . .   (237,834,104)   (263,316,531)      
Cumulative cash distributions . .   (101,476,278)   (101,476,278)       
                            ------------    ------------
                               12,436,454     (13,045,973)
                            ------------    ------------
Total partners' capital                                         
accounts (deficits) . . . .     12,861,454     (29,861,086) 
                            ------------    ------------
                            $ 12,885,771      12,854,386
                            ============    ============

See accompanying notes to financial statements.         

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                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV                                   
                                           (A LIMITED PARTNERSHIP)                                       

                                          STATEMENTS OF OPERATIONS                                       

                           THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001                       
                                                 (UNAUDITED)                                             

                                                         THREE MONTHS ENDED         NINE MONTHS ENDED    
                                                            SEPTEMBER 30,             SEPTEMBER 30,      
                                                     ------------------------- ------------------------- 
                                                          2002         2001         2002         2001    
                                                      -----------   ----------   ----------   ---------- 
                                                                                                         
Income:                                                                                                  
  Interest income . . . . . . . . . . . . . . . . . . $    52,814      111,606      167,774      349,563 
  Other income. . . . . . . . . . . . . . . . . . . .     124,805        --         139,731        --    
                                                      -----------   ----------   ----------   ---------- 
                                                          177,619      111,606      307,505      349,563 
                                                      -----------   ----------   ----------   ---------- 
Expenses:                                                                                                
  Mortgage interest . . . . . . . . . . . . . . . . .     752,708      934,483    2,621,674    2,803,449 
  Professional services . . . . . . . . . . . . . . .      16,374       11,874      215,334      252,433 
  General and administrative. . . . . . . . . . . . .      62,076      110,046      319,080      471,286 
                                                      -----------   ----------   ----------   ---------- 
                                                          831,158    1,056,403    3,156,088    3,527,168 
                                                      -----------   ----------   ----------   ---------- 
                                                         (653,539)    (944,797)  (2,848,583)  (3,177,605)
Partnership's share of the reduction of the maximum                                                      
  unfunded obligation under and income related to                                                        
  termination of the indemnification agreement. . . .       --           --           --       7,144,354 
Partnership's share of operations of unconsolidated                                                      
  ventures. . . . . . . . . . . . . . . . . . . . . .       --           6,092        --         (37,099)
                                                      -----------   ----------   ----------   ---------- 
      Earnings (loss) before Partnership's share of                                                      
        gains on sale of investment properties and                                                       
        extraordinary items . . . . . . . . . . . . .    (653,539)    (938,705)  (2,848,583)   3,929,650 
Partnership's share of gains on sale of indirect                                                         
  partnership interests . . . . . . . . . . . . . . .       7,852        --       1,648,959      686,076 
                                                      -----------   ----------   ----------   ---------- 
      Earnings (loss) before extraordinary items. . .    (645,687)    (938,705)  (1,199,624)   4,615,726 

Extraordinary items:                                                                                     
  Partnership's share of extraordinary items from                                                        
    unconsolidated ventures . . . . . . . . . . . . .       --           --           --       7,628,296 
  Gain on forgiveness of indebtedness . . . . . . . .  43,922,164        --      43,922,164        --    
                                                      -----------   ----------   ----------   ---------- 
      Net earnings (loss) . . . . . . . . . . . . . . $43,276,477     (938,705)  42,722,540   12,244,022 
                                                      ===========   ==========   ==========   ========== 

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                                CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV                            
                                           (A LIMITED PARTNERSHIP)                                       

                                    STATEMENTS OF OPERATIONS - CONTINUED                                 

                                                         THREE MONTHS ENDED         NINE MONTHS ENDED    
                                                            SEPTEMBER 30,              SEPTEMBER 30,     
                                                     ------------------------- ------------------------- 
                                                          2002         2001         2002         2001    
                                                      -----------   ----------   ----------   ---------- 
Net earnings (loss) per limited                                                                          
 partnership interest:                                                                                   
  Earnings (loss) before Partnership's share of                                                          
    gains on sale of investment properties and                                                           
    extraordinary items . . . . . . . . . . . . . . . $     (1.58)       (2.27)       (6.87)        9.43 
  Partnership's share of gains on sale of indirect                                                       
    partnership interests . . . . . . . . . . . . . .         .02        --            4.10         1.70 
                                                      -----------   ----------   ----------   ---------- 
      Earnings (loss) per limited partnership                                                            
        interest before extraordinary items . . . . .       (1.56)       (2.27)       (2.77)       11.13 

Extraordinary items:                                                                                     
  Partnership's share of extraordinary items                                                             
    from unconsolidated ventures. . . . . . . . . . .       --           --           --           18.88 
  Gain on forgiveness of indebtedness . . . . . . . .       66.78        --           66.78        --    
                                                      -----------   ----------   ----------   ---------- 

      Net earnings (loss) per limited partnership                                                        
        interest. . . . . . . . . . . . . . . . . . . $     65.22        (2.27)       64.01        30.01 
                                                      ===========   ==========   ==========   ========== 

      Cash distributions per limited partnership                                                         
        interest. . . . . . . . . . . . . . . . . . . $     --           --           --           --    
                                                      ===========   ==========   ==========   ========== 

<fn>                                                                                                     
                               See accompanying notes to financial statements.                           

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CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV         
(A LIMITED PARTNERSHIP)         

STATEMENTS OF CASH FLOWS          

NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001         
(UNAUDITED)         

                                   2002         2001
                                  -----------   ----------
Cash flows from operating activities:                                           
Net earnings (loss) . . . . . . . . . . .  $42,722,540   12,244,022         
Items not requiring (providing) cash or                                     
cash equivalents:                                                         
Long-term debt - deferred accrued                                       
interest. . . . . . . . . . . . . . .    2,621,674    2,803,449     
Partnership's share of the reduction                                    
of the maximum unfunded obligation                                  
under and income related to the                                     
termination of the indemnification                                  
agreement . . . . . . . . . . . . . .        --      (7,144,354)    
Partnership's share of operations of                                    
unconsolidated ventures . . . . . . .        --          37,099     
Partnership's share of gains on sale                                    
of indirect partnership interests . .   (1,648,959)    (686,076)    
Extraordinary items . . . . . . . . . .  (43,922,164)  (7,628,296)      
Changes in:                                                                 
Interest and other receivables. . . . .       50,051       20,518       
Other assets. . . . . . . . . . . . . .        2,491        --          
Accounts payable. . . . . . . . . . . .      (68,093)      13,538       
                                  -----------   ----------
Net cash provided by (used in)                              
  operating activities. . . . . .     (242,460)    (340,100)
                                  -----------   ----------
Cash flows from investing activities:                                           
Partnership's distributions from                                            
unconsolidated venture. . . . . . . . .        --       3,785,947       
Partnership's distributions from                                            
unconsolidated venture-sale                                             
proceeds. . . . . . . . . . . . . . . .      326,387      686,076       
Return of Partnership's advance to                                          
affiliated entity . . . . . . . . . . .      207,884        --          
Partnership's contribution to                                               
unconsolidated venture. . . . . . . . .        --          (7,147)      
                                  -----------   ----------
Net cash provided by (used in)                              
 investing activities. . . . . .      534,271    4,464,876
                                  -----------   ----------
Net increase (decrease) in                                  
 cash and cash equivalents . . .      291,811    4,124,776
Cash and cash equivalents,                                  
 beginning of year . . . . . . .   12,576,851    8,599,183
                                  -----------   ----------
Cash and cash equivalents,                                  
 end of period . . . . . . . . .  $12,868,662   12,723,959
                                  ===========   ==========

Supplemental disclosure of cash flow                                            
information:                                                                  
Non-cash activities:                                                        
Recognition of reduction of distri-                                     
butions received in excess of                                       
recorded investment as gain . . . . .  $ 1,322,572        --        
                                  ===========   ==========

See accompanying notes to financial statements.         

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CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV         
(A LIMITED PARTNERSHIP)         

NOTES TO FINANCIAL STATEMENTS         

SEPTEMBER 30, 2002 AND 2001         

(UNAUDITED)         

GENERAL                                                                         

Readers of this quarterly report should refer to the Partnership's    
audited financial statements for the year ended December 31, 2001 which are     
included in the Partnership's 2001 Annual Report on Form 10-K filed on          
April 1, 2002 (File No. 0-15962) as certain footnote disclosures which          
would substantially duplicate those contained in such audited financial         
statements have been omitted from this report.  Capitalized terms used but      
not defined in this quarterly report have the same meanings as in the           
Partnership's 2001 Annual Report on Form 10-K.                                  

The preparation of financial statements in accordance with GAAP       
requires the Partnership to make estimates and assumptions that affect the      
reported or disclosed amount of assets and liabilities at the date of the       
financial statements and the reported amounts of revenues and expenses          
during the reporting period.  Actual results could differ from those            
estimates.                                                                      

The accompanying financial statements include for the nine month      
period ended September 30, 2001 operations of $(37,099) as the                  
Partnership's share of total property operations of $(55,344) of                
unconsolidated properties which were classified as held for sale or             
disposition or sold in the past two years.                                      

Certain amounts in the 2001 financial statements have been            
reclassified to conform with the 2002 presentation.                             

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 and certain of its officers, and for          
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 September 30, 2002 and for the nine         
months ended September 30, 2002 and 2001 were as follows:                       

                                             Unpaid at
                                             September 30,
                    2002        2001      2002
                        -------     ------  ------------
Reimbursement (at cost) for                                                     
out-of-pocket salary and                                                    
salary-related expenses and                                                 
other costs for the Partner-                                                
ship and its investment                                                     
properties. . . . . . . . . .     $50,649     77,749       17,879           
                       =======     ======       ======

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JMB/NYC                                                                         

JMB/NYC was a limited partnership among Carlyle-XIV Associates, L.P., 
and its affiliates, Carlyle-XIII Associates, L.P. and Property Partners,        
L.P., as limited partners and Carlyle Managers, Inc. as the sole general        
partner.  The Partnership was a 50% shareholder of Carlyle Managers, Inc.       
The Partnership held, indirectly as a limited partner of Carlyle-XIV            
Associates, L.P., an approximate 50% limited partnership interest in            
JMB/NYC.  The sole general partner of Carlyle-XIV Associates, L.P. was          
Carlyle Investors, Inc., of which the Partnership was a 50% shareholder.        
The general partner in each of JMB/NYC and Carlyle-XIV Associates, L.P. was     
an affiliate of the Partnership.  JMB/NYC, Carlyle-XIV Associates, L.P.,        
Carlyle Managers, Inc. and Carlyle Investors, Inc. were dissolved and           
terminated in September and October 2002.                                       

As a result of the 1996 restructuring, JMB/NYC had an indirect limited
partnership interest which, before taking into account significant              
preferences to other partners, equaled approximately 4.9% of the                
reorganized and restructured ventures owning 237 Park and 1290 Avenue of        
the Americas (the "Properties").  Neither O&Y nor any of its affiliates         
retained any direct or indirect continuing interest in the Properties.  The     
new ownership structure gave control of the Properties to an unaffiliated       
real estate investment trust ("REIT") owned primarily by holders of the         
first mortgage debt that encumbered the Properties prior to the bankruptcy.     

JMB/NYC had, under certain limited circumstances, through January 1, 2001       
rights of consent regarding sale of the Properties or the consummation of       
certain other transactions that would have significantly reduced                
indebtedness of the Properties.  In general, at any time on or after            
January 2, 2001, an affiliate of the REIT had the right to purchase             
JMB/NYC's interest in the Properties for an amount based on a formula           
relating to the operations of the Properties (the "Formula Price").             

The restructuring and reorganization discussed above eliminated any   
potential additional obligation of the Partnership in the future to provide     
additional funds under its previous joint venture agreements (other than        
that related to a certain indemnification agreement provided in connection      
with such restructuring).                                                       

Pursuant to an indemnification agreement, the Affiliated Partners were
jointly and severally obligated to indemnify the REIT to the extent of $25      
million to ensure their compliance with the terms and conditions relating       
to JMB/NYC's indirect limited partnership interests in the restructured and     
reorganized joint ventures that owned the Properties.  The Affiliated           
Partners contributed approximately $7,800,000 (of which the Partnership's       
share was approximately $3,900,000) to JMB/NYC, which was deposited into an     
escrow account as collateral for such indemnification.  These funds were        
invested in stripped U.S. Government obligations with a maturity date of        
February 15, 2001.  Subsequent to that date, the remaining escrowed funds       
were invested in short-term U.S. Government obligations.  Due to the            
Restructuring discussed below, during 1999 the maximum potential obligation     
was reduced to $14,285,000 and a portion of the collateral (approximately       
$4,460,000 in face amount) was released in 1999 to JMB/NYC.  On March 23,       
2001, JMB/NYC's indirect interest in the 1290 Partnership was sold, and as      
a result, the indemnification obligation was terminated and the remaining       
collateral (approximately $5,700,000 face amount of which the Partnership's     
share was approximately $2,900,000) was released in March 2001 to JMB/NYC.      
The Partnership's share of the reduction of the maximum unfunded obligation     
under the indemnification agreement recognized as income during the years       
1999, 2000 and 2001 was a result of (i) interest earned on amounts              
contributed by the Partnership and held in escrow by JMB/NYC, (ii) the          
Partnership's share of the agreed upon reduction of the maximum obligation      
in November 1999 in connection with the Restructuring discussed below, and      
(iii) the Partnership's share of the remaining indemnification obligation       
that was released in March 2001 in connection with the sale of JMB/NYC's        
indirect interest in the 1290 Partnership.  Interest income earned reduced      
the Partnership's share of the maximum unfunded obligation under the            
indemnification agreement, which had been reflected as a liability.             

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In November 1999, JMB/NYC closed a transaction (the "Restructuring")  
pursuant to which, among other things, JMB/NYC's interests in 237 Park          
Avenue ("237 Park") and 1290 Avenue of the Americas ("1290 Avenue of the        
Americas") were restructured.  Under the Restructuring, the partnership         
that owns 237 Park was converted to a limited liability company ("237 Park      
LLC").  The membership interest in 237 Park LLC owned by 237/1290 Upper         
Tier Associates, L.P. (the "Upper Tier Partnership"), in which JMB/NYC was      
a limited partner with a 99% interest, was contributed to a partnership         
(the "237 Partnership") that acquired the other membership interests in 237     
Park LLC from the REIT and one of its affiliates.  In exchange for the          
interest in 237 Park LLC, the Upper Tier Partnership received a limited         
partnership interest in the 237 Partnership having a fair market value          
(determined in accordance with the partnership agreement of the 237             
Partnership) of approximately $500,000.  (JMB/NYC's total investment in the     
237 Partnership was significantly less than 1% of the 237 Partnership.)         
The 237 Partnership owned a portfolio of investments in addition to 237         
Park.  JMB/NYC had the right, during the month of July of each calendar         
year commencing with 2001, to cause a sale of the interest in the 237           
Partnership for a price equal to the greater of the fair market value of        
such interest (determined in accordance with the partnership agreement of       
the 237 Partnership) and a specified amount, of which JMB/NYC's share would     
be $500,000.  JMB/NYC elected not to exercise its right to cause a sale of      
its interest in the 237 Partnership during July 2001.  In addition, the         
general partner of the 237 Partnership had the right, during the month of       
January of each calendar year commencing with 2002, to purchase the             
interest in the 237 Partnership for a price equal to the greater of the         
fair market value of such interest (determined as described above) and a        
specified amount, of which JMB/NYC's share would be $650,000.  In January       
2002, the general partner of the 237 Partnership exercised its right to         
acquire JMB/NYC's indirect interest in the 237 Partnership, and JMB/NYC         
received $650,000 in sale proceeds.  Such amount was paid to the limited        
partners of JMB/NYC as holders of a tranche of the Purchase Note as             
discussed below.  The Partnership received its share of sale proceeds,          
approximately $320,000, in March 2002.  Due to the January 2002 sale of the     
Partnership's indirect interest in the 237 Partnership, which was the           
Partnership's last investment property, the distributions received in           
excess of recorded investment were reduced to zero and included as part of      
the gain on sale in 2002.  The distributions received in excess of recorded     
investment were created by the 1999 retirement of the Partnership's             
obligations to fund, on demand, $400,000 and $400,000 to Carlyle Investors,     
Inc. and Carlyle Managers, Inc., respectively, of additional paid-in            
capital.  Such obligations, when retired, included accrued but unpaid           
interest.                                                                       

JMB/NYC's indirect interest through the Upper Tier Partnership in the 
partnership (the "1290 Partnership") that owned 1290 Avenue of the Americas     
was also modified, although the REIT continued to own the controlling           
interest in the property. In general, the REIT had the right to sell 1290       
Avenue of the Americas or engage in certain other transactions during the       
period January 1, 2000 through February 28, 2001, provided that JMB/NYC         
received the greater of (i) an amount based on a formula relating to the        
operations of the property (the "1290 Formula Price") and (ii) $4,500,000.      
No such transaction occurred during that period.  An affiliate of the REIT      
also had the right, during the month of March of each calendar year             
commencing with 2001, to purchase JMB/NYC's indirect interest in the 1290       
Partnership for the greater of (x) the 1290 Formula Price and (y)               
$1,400,000.  On March 2, 2001, JMB/NYC was notified that an affiliate of        
the REIT intended to exercise its right to purchase JMB/NYC's indirect          
interest in the 1290 Partnership and on March 23, 2001, the sale was            
completed and JMB/NYC received approximately $1,400,000 at closing (of          
which the Partnership's share was approximately $686,000).  Such amount was     
paid in May of 2001 to the limited partners of JMB/NYC as holders of a          
tranche of the Purchase Note as discussed below.  In addition, JMB/NYC          
received the remaining collateral (approximately $5,700,000, of which the       
Partnership's share was approximately $2,900,000) held pursuant to the          
indemnification agreement, including interest earned thereon, upon closing      
of the sale of its interest in the 1290 Partnership.  The Partnership           
received its share of the sale proceeds and collateral amount in May 2001.      

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A portion of the purchase price for JMB/NYC's indirect interests in   
the 1290 Avenue of the Americas and 237 Park Avenue office buildings was        
represented by a certain promissory note (the "Purchase Note") bearing          
interest at 12-3/4% per annum.  The Purchase Note was secured by JMB/NYC's      
indirect interests in the 237 Partnership (prior to its sale in January         
2002) and the 1290 Partnership (prior to its sale in March 2001) owned          
through the Upper Tier Partnership and was non-recourse to JMB/NYC.  The        
Purchase Note required payment of principal and interest out of                 
distributions made to JMB/NYC from the 1290 Partnership and the 237             
Partnership and proceeds from sales of JMB/NYC's indirect interests in          
those partnerships.  Unpaid interest was accrued and deferred, compounded       
monthly.  Unpaid principal and interest was due at maturity on January 2,       
2001.  As expected, JMB/NYC did not have funds to pay the Purchase Note at      
its maturity.  The limited partners of JMB/NYC, as creditors, and the           
holder of the Purchase Note agreed to certain steps if the Purchase Note        
were not repaid within one year of its maturity as discussed below.  The        
outstanding principal and accrued and deferred interest on the Purchase         
Note at the date of debt forgiveness and final liquidation and termination      
of JMB/NYC, September 30, 2002, was approximately $186,347,000, including       
interest at the default rate (as defined) of 12-3/4% per annum.                 

In December 1999, the Affiliated Partners advanced a total of         
approximately $425,000 (of which the Partnership advanced approximately         
$210,000) to the limited partners of JMB/NYC, which was used to acquire a       
$5,425,000 tranche of the Purchase Note and the related security agreement      
for the collateralization of such tranche.  As a result of this purchase,       
such limited partners, as creditors of JMB/NYC, were entitled to receive up     
to $5,425,000 in proceeds otherwise payable to JMB/NYC in respect of its        
indirect interests in the 1290 Partnership or the 237 Partnership, which        
were owned through the Upper Tier Partnership.  Such amounts received by        
the limited partners generally were distributable to the Affiliated             
Partners in proportion to their respective advances made to purchase the        
tranche (i.e., 50% to the Partnership and 50% in the aggregate to the other     
Affiliated Partners).  In connection with their purchase of the $5,425,000      
tranche of the Purchase Note, the limited partners of JMB/NYC agreed with       
the holder of the Purchase Note that in the event JMB/NYC had not repaid        
all amounts due and owing under the Purchase Note within one year after its     
maturity on January 2, 2001, the holder would take the appropriate steps        
necessary to foreclose upon and obtain JMB/NYC's interest in the Upper Tier     
Partnership in lieu of seeking any other damages.  After the sales of           
JMB/NYC's indirect interests in the 1290 Partnership and the 237                
Partnership, which were the primary assets of the Upper Tier Partnership,       
and the application of JMB/NYC's share of the proceeds from such sales to       
amounts due under the Purchase Note, which did not repay the entire amount      
of the tranche of the Purchase Note acquired by the limited partners of         
JMB/NYC, there were no significant assets, if any, securing repayment of        
the balance due under the Purchase Note, which was considered                   
uncollectible.  Accordingly, the holder did not seek to foreclose on            
JMB/NYC's interest in the Upper Tier Partnership.  The Partnership received     
$207,884 in May of 2002 as a return of its December 1999 advance to the         
limited partners of JMB/NYC. JMB/NYC recognized gain on debt forgiveness        
for financial reporting purposes during September 2002 and Federal income       
tax purposes during 2002 equal to the remaining unpaid principal and            
accrued interest on the Purchase Note of approximately $186,347,000 and         
$62,216,000, respectively.  For Federal income tax purposes the                 
Partnership's share of such gain is expected to be approximately                
$31,037,000.  During 1996, the Partnership discontinued the equity method       
of accounting for JMB/NYC for financial reporting purposes.  Therefore, the     
Partnership did not recognized a portion of JMB/NYC's share of the gain         
related to the Purchase Note for financial reporting purposes.                  

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JMB/PIPER                                                                       

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, were significantly less than rental rates under the      
previous PJI lease.  Additionally, Piper executed new long-term leases          
representing an additional approximately 170,000 square feet.  The property     
manager had 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 did not make the required debt service payments under        
the mortgage loan for and after June 1, 2000, and was 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.     
Prior to default, no such cash flow was generated.  As of April 2, 2001         
(prior to transfer of title to the property), aggregate amounts due to the      
lender were approximately $109,000,000, 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.  During July 2000, the escrow balance of     
approximately $5,146,000 was applied to the outstanding principal balance       
of the loan, 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 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 during 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, within certain limitations, in connection with the transaction,       
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 agreement       
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.  On       
October 2, 2000, the court approved such sale, subject to redemption of the     
property at any time within six months from the date of such sale.  No such     
redemption occurred and title to the property transferred to the lender         
effective April 2, 2001.                                                        

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As a result of the transfer of the property to the lender, the        
Partnership realized an extraordinary gain related to its share of the          
forgiveness of indebtedness and the write off of deferred mortgage fees in      
the net amount of approximately $7,600,000 for financial reporting              
purposes.  The Partnership also recognized approximately $20,897,000 of         
gain for Federal income tax purposes in 2001 as a result of the transfer        
with no corresponding distributable proceeds.  The Defendants have no           
future liability for any representations, warranties and covenants as a         
result of the transfer.                                                         

JMB/900                                                                         

During 1999, JMB/900, through Progress Partners, sold the 900 Third   
Avenue Building to an unaffiliated third party.  As is customary in such        
transactions, Progress Partners 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 for possible payment      
to the buyer in the event of a breach of such representations, warranties,      
covenants and for 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.                                          

The Partnership's share of cash remaining at the venture (approxi-    
mately $900,000) was distributed to the Partnership in May 2001.                

WELLS FARGO CENTER                                                              

The mortgage note secured by the property (with a balance, including  
accrued interest, of approximately $185,000,000 at September 13, 2002,          
prior to transfer of the Partnership's interest in the limited liability        
company), as extended, bore interest at 10% per annum and was to mature         
September, 2003.  All excess cash flow was 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 required     
payment of participation interest (as defined) of any excess proceeds.          

As modified, the amended and restated promissory note (the "Note")    
secured by the Partnership's interest in the limited liability company,         
which had an adjusted principal balance of approximately $21,988,000 and        
accrued interest of approximately $21,934,000 at September 13, 2002 (prior      
to transfer of the Partnership's interest in the limited liability              
company), was due in September 2003.  The Note accrued interest at 17% per      
annum and required payments of cash flow distributed to the Partnership by      
the limited liability company 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 was             
nonrecourse and secured solely by the Partnership's interest in the limited     
liability company.                                                              

During April 2001, the Partnership had received notice of non-monetary
defaults from the lender under the Note.  The Partnership acknowledged          
certain of the defaults described in the notice of default.  In December        
2001, the lender assigned all of its rights and interests under the loan to     
an affiliate of the lender.  On December 17, 2001, the Partnership              
acknowledged and consented to the plans of the affiliate of the lender to       
foreclose on the Partnership's interest in the limited liability company on     
or before December 31, 2002 and waived any notice or additional notice of       
foreclosure to which it may have been entitled under the terms and              
conditions of the loan documents or the California Commercial Code.             
Pursuant to a private foreclosure sale, on September 13, 2002 an affiliate      
of the Partnership's unaffiliated joint venture partner acquired the            
Partnership's interest in the limited liability company and assumed all of      

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the Partnership's rights and obligations under the limited liability            
company's operating agreement dated September 30, 1996, and the                 
Partnership's obligation to repay the indebtedness and its other                
obligations under the Note and the related loan documents were discharged.      
The loan was nonrecourse and secured solely by the Partnership's interest       
in the limited liability company.  The Partnership recognized an                
extraordinary gain on forgiveness of indebtedness of approximately              
$43,922,000 for financial reporting purposes.  The Partnership expects to       
recognize a gain of approximately $31,000,000 from the transaction for          
Federal income tax purposes, with no corresponding distributable proceeds.      

UNCONSOLIDATED VENTURES - SUMMARY INFORMATION                                   

Summary income statement information for JMB/Piper, JMB/Piper II and  
JMB/900 for the nine months ended September 30, 2001 is as follows:             

                                    2001
                                     -----------

Total income from properties                                                
(unconsolidated). . . . . . . . . . . . . .      $ 3,894,705            
                                     ===========

Operating profit (loss) of ventures . . . . .      $   (55,344)             
Extraordinary items . . . . . . . . . . . . .       15,247,014              
                                     -----------
Net earnings (loss) . . . . . . . . . . . . .      $15,191,670              
                                     ===========

Partnership's share of income (loss). . . . .      $ 7,591,197              
                                     ===========

ADJUSTMENTS                                                                     

During 2002, a reallocation of current year's gains was made among the
partners for financial reporting purposes.  Such reallocation did not have      
an effect on total assets, total partners' capital or net earnings.             

In the opinion of the Corporate General Partner, all adjustments      
(consisting solely of normal recurring adjustments) necessary for a fair        
presentation have been made to the accompanying figures as of September 30,     
2002 and for the three and nine months ended September 30, 2002 and 2001.       

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PART I.  FINANCIAL INFORMATION                                                  

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF                      
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reference is made to the notes (the "Notes") to the accompanying      
financial statements for additional information concerning certain of the       
Partnership's investment properties.                                            

At September 30, 2002, the Partnership had cash and cash equivalents  
of approximately $12,869,000.  Such funds are available for working capital     
requirements and distributions to the General Partners and Holders of           
Interests.  As discussed below, JMB/NYC sold its indirect interest in the       
237 Partnership in January 2002.  The Partnership received its share of the     
proceeds from such sale (approximately $320,000) in March 2002.  In May         
2002, the Partnership received approximately $208,000 as a return of its        
1999 advance to the limited partners of JMB/NYC.  In September 2002, the        
Partnership received final dividends of approximately $55,000 and $69,000       
from Carlyle Investors, Inc. and Carlyle Managers, Inc., respectively, and      
a final distribution of approximately $8,000 from Carlyle-XIV Associates,       
L.P.  On September 13, 2002, the Partnership's interest in the Wells Fargo      
Center - South Tower investment property was foreclosed upon.  The              
Partnership's affairs are being wound up and the Partnership expects to         
make a final liquidating distribution and terminate in December 2002,           
barring unforseen developments.                                                 

Although the Partnership expects to make a minimal liquidating cash   
distribution, aggregate distributions received by Holders of Interests over     
the entire term of the Partnership from all cash sources will be less than      
30% of their original investment.  However, in connection with the sale or      
other disposition (including the foreclosure of the interest in Wells Fargo     
Center - South Tower) of properties (or interests therein) owned by the         
Partnership or its ventures, Holders of Interests will be allocated a           
substantial amount of gain for Federal income tax purposes, regardless of       
whether any proceeds are received or distributed from such sales or other       
dispositions.  During 2002, a portion of such gain will be recognized as a      
result of the sale of JMB/NYC's indirect interest in the 237 Partnership        
and the remainder of such gain will be recognized as a result of the            
foreclosure of the Partnership's interest in Wells Fargo Center - South         
Tower.  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 his own tax situation.                              

In November 1999, JMB/NYC closed a transaction (the "Restructuring")  
pursuant to which, among other things, JMB/NYC's interests in 237 Park          
Avenue ("237 Park") and 1290 Avenue of the Americas ("1290 Avenue of the        
Americas") were restructured.  Under the Restructuring, the partnership         
that owned 237 Park was converted to a limited liability company ("237 Park     
LLC").  The membership interest in 237 Park LLC owned by 237/1290 Upper         
Tier Associates, L.P. (the "Upper Tier Partnership"), in which JMB/NYC was      
a limited partner with a 99% interest, was contributed to a partnership         
(the "237 Partnership") that acquired the other membership interests in 237     
Park LLC from the REIT and one of its affiliates.  In exchange for the          
interest in 237 Park LLC, the Upper Tier Partnership received a limited         
partnership interest in the 237 Partnership having a fair market value          
(determined in accordance with the partnership agreement of the 237             
Partnership) of approximately $500,000.  (JMB/NYC's total investment in the     
237 Partnership was significantly less than 1% of the 237 Partnership.)         
The 237 Partnership owned a portfolio of investments in addition to 237         
Park.  JMB/NYC had the right, during the month of July of each calendar         
year commencing with 2001, to cause a sale of the interest in the 237           
Partnership for a price equal to the greater of the fair market value of        
such interest (determined in accordance with the partnership agreement of       
the 237 Partnership) and a specified amount, of which JMB/NYC's share would     

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be $500,000.  JMB/NYC elected not to exercise its right to cause a sale of      
its interest in the 237 Partnership during July 2001.  In addition, the         
general partner of the 237 Partnership had the right, during the month of       
January of each calendar year commencing with 2002, to purchase the             
interest in the 237 Partnership for a price equal to the greater of the         
fair market value of such interest (determined as described above) and a        
specified amount, of which JMB/NYC's share would be $650,000.  In January       
2002, the general partner of the 237 Partnership exercised its right to         
acquire JMB/NYC's indirect interest in the 237 Partnership, and JMB/NYC         
received $650,000 in sale proceeds.  Such amount was paid to the limited        
partners of JMB/NYC as holders of a tranche of the Purchase Note as             
discussed below.  The Partnership received its share of sale proceeds,          
approximately $320,000, in March 2002.  Due to the January 2002 sale of the     
Partnership's indirect interest in the 237 Partnership, which was the           
Partnership's last investment property associated with JMB/NYC, the             
distributions received in excess of recorded investment were reduced to         
zero and included as part of the gain on sale in 2002.  The distributions       
received in excess of recorded investment were created by the 1999              
retirement of the Partnership's obligations to fund, on demand, $400,000        
and $400,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc.,             
respectively, of additional paid-in capital.  Such obligations, when            
retired, included accrued but unpaid interest.                                  

JMB/NYC's indirect interest through the Upper Tier Partnership in the 
partnership (the "1290 Partnership") that owned 1290 Avenue of the Americas     
was also modified, although the REIT continued to own the controlling           
interest in the property. In general, the REIT had the right to sell 1290       
Avenue of the Americas or engage in certain other transactions during the       
period January 1, 2000 through February 28, 2001, provided that JMB/NYC         
received the greater of (i) an amount based on a formula relating to the        
operations of the property (the "1290 Formula Price") and (ii) $4,500,000.      
No such transaction occurred during that period.  An affiliate of the REIT      
also had the right, during the month of March of each calendar year             
commencing with 2001, to purchase JMB/NYC's indirect interest in the 1290       
Partnership for the greater of (x) the 1290 Formula Price and (y)               
$1,400,000.  On March 2, 2001, JMB/NYC was notified that an affiliate of        
the REIT intended to exercise its right to purchase JMB/NYC's indirect          
interest in the 1290 Partnership and on March 23, 2001, the sale was            
completed and JMB/NYC received approximately $1,400,000 at closing (of          
which the Partnership's share was approximately $686,000).  Such amount was     
paid in May 2001 to the limited partners of JMB/NYC as holders of a tranche     
of the Purchase Note as discussed below.  In addition, JMB/NYC received the     
remaining collateral (approximately $5,700,000, of which the Partnership's      
share was approximately $2,900,000) held pursuant to the indemnification        
agreement, including interest earned thereon, upon closing of the sale of       
its interest in the 1290 Partnership.  The Partnership received its share       
of the sale proceeds and collateral amount in May 2001.                         

A portion of the purchase price for JMB/NYC's indirect interests in   
the 1290 Avenue of the Americas and 237 Park Avenue office buildings was        
represented by a certain promissory note (the "Purchase Note") bearing          
interest at 12-3/4% per annum.  The Purchase Note was secured by JMB/NYC's      
indirect interests in the 237 Partnership (prior to its sale in January         
2002) and the 1290 Partnership (prior to its sale in March 2001) owned          
through the Upper Tier Partnership and was non-recourse to JMB/NYC.  The        
Purchase Note required payment of principal and interest out of                 
distributions made to JMB/NYC from the 1290 Partnership and the 237             
Partnership and proceeds from sales of JMB/NYC's indirect interests in          
those partnerships.  Unpaid interest was accrued and deferred, compounded       
monthly.  Unpaid principal and interest were due at maturity on January 2,      
2001.  As expected, JMB/NYC did not have funds to pay the Purchase Note at      
its maturity.  The limited partners of JMB/NYC, as creditors, and the           
holder of the Purchase Note agreed to certain steps if the Purchase Note        
were not repaid within one year of its maturity as discussed below.  The        
outstanding principal and accrued and deferred interest on the Purchase         
Note at the date of debt forgiveness and final liquidation and termination      
of JMB/NYC, September 30, 2002, was approximately $186,347,000, including       
interest at the default rate (as defined) of 12-3/4% per annum.                 

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In December 1999, the Affiliated Partners advanced a total of         
approximately $425,000 (of which the Partnership advanced approximately         
$210,000) to the limited partners of JMB/NYC, which was used to acquire a       
$5,425,000 tranche of the Purchase Note and the related security agreement      
for the collateralization of such tranche.  As a result of this purchase,       
such limited partners, as creditors of JMB/NYC, were entitled to receive up     
to $5,425,000 in proceeds otherwise payable to JMB/NYC in respect of its        
indirect interests in the 1290 Partnership or the 237 Partnership, which        
were owned through the Upper Tier Partnership.  Such amounts received by        
the limited partners generally were distributable to the Affiliated             
Partners in proportion to their respective advances made to purchase the        
tranche (i.e., 50% to the Partnership and 50% in the aggregate to the other     
Affiliated Partners).  In connection with their purchase of the $5,425,000      
tranche of the Purchase Note, the limited partners of JMB/NYC agreed with       
the holder of the Purchase Note that in the event JMB/NYC had not repaid        
all amounts due and owing under the Purchase Note within one year after its     
maturity on January 2, 2001, the holder would take the appropriate steps        
necessary to foreclose upon and obtain JMB/NYC's interest in the Upper Tier     
Partnership in lieu of seeking any other damages.  After the sales of           
JMB/NYC's indirect interests in the 1290 Partnership and the 237                
Partnership, which were the primary assets of the Upper Tier Partnership,       
and the application of JMB/NYC's share of the proceeds from such sales to       
amounts due under the Purchase Note, which did not repay the entire amount      
of the tranche of the Purchase Note acquired by the limited partners of         
JMB/NYC, there were no significant assets, if any, securing repayment of        
the balance due under the Purchase Note, which was considered                   
uncollectible.  Accordingly, the holder did not seek to foreclose on            
JMB/NYC's interest in the Upper Tier Partnership.  The Partnership received     
$207,884 in May of 2002 as a return of its December 1999 advance to the         
limited partners of JMB/NYC.  JMB/NYC recognized gain on debt forgiveness       
for financial reporting purposes during September 2002 and Federal income       
tax purposes during 2002 equal to the remaining unpaid principal and            
accrued interest on the Purchase Note of approximately $186,347,000 and         
$62,216,000, respectively.  For Federal income tax purposes the                 
Partnership's share of such gain is expected to be approximately                
$31,037,000.  During 1996, the Partnership discontinued the equity method       
of accounting for JMB/NYC for financial reporting purposes.  Therefore, the     
Partnership did not recognized a portion of JMB/NYC's share of the gain         
related to the Purchase Note for financial reporting purposes.                  

Pursuant to the indemnification agreement, the Affiliated Partners    
were jointly and severally obligated to indemnify the REIT to the extent of     
$25 million to ensure their compliance with the terms and conditions            
relating to JMB/NYC's indirect limited partnership interests in the             
restructured and reorganized joint ventures that owned the Properties.  The     
Affiliated Partners contributed approximately $7,800,000 (of which the          
Partnership's share was approximately $3,900,000) to JMB/NYC, which was         
deposited into an escrow account as collateral for such indemnification.        
These funds were invested in stripped U.S. Government obligations with a        
maturity date of February 15, 2001.  Subsequent to that date, the remaining     
escrowed funds were invested in short-term U.S. Government obligations.         
Due to the Restructuring discussed above, during 1999 the maximum potential     
obligation was reduced to $14,285,000 and a portion of the collateral           
(approximately $4,460,000 in face amount) was released in 1999 to JMB/NYC.      
As a result of the sale of JMB/NYC's indirect interest in the 1290              
Partnership, the indemnification obligation was terminated and the              
remaining collateral (approximately $5,700,000 face amount of which the         
Partnership's share was approximately $2,900,000) was released in March         
2001 to JMB/NYC.  The Partnership's share of the reduction of the maximum       
unfunded obligation under the indemnification agreement recognized as           
income during the years 1999, 2000 and 2001 was a result of (i) interest        
earned on amounts contributed by the Partnership and held in escrow by          
JMB/NYC, (ii) the Partnership's share of the agreed upon reduction of the       
maximum obligation in November 1999 in connection with the Restructuring        
discussed above, and (iii) the Partnership's share of the remaining             
indemnification obligation that was released in March 2001 in connection        

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with the sale of JMB/NYC's indirect interest in the 1290 Partnership.           
Interest income earned reduced the Partnership's share of the maximum           
unfunded obligation under the indemnification agreement, which had been         
reflected as a liability.                                                       

As discussed in the Notes, JMB/Piper, on behalf of Piper, had been    
negotiating with the lender to transfer title to the Piper Jaffray Tower        
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 under the mortgage loan secured by      
the property, 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'       
fees 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 agreement       
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.  On October 2, 2000, the court approved such     
sale subject to redemption of the property at any time within six months        
from the date of such sale.  No such redemption occurred and title to the       
property transferred to the lender effective April 2, 2001.                     

As a result of the transfer, the Partnership realized extraordinary   
gain related to its share of the forgiveness of indebtedness and the write      
off of deferred mortgage fees in the net amount of approximately $7,600,000     
for financial reporting purposes.  The Partnership also recognized              
approximately $20,897,000 of gain for Federal income tax purposes in the        
second quarter of 2001 as a result of the transfer with no corresponding        
distributable proceeds.  The Defendants have no future liability for any        
representations, warranties and covenants as a result of the transfer.          

The Wells Fargo Center - South Tower continued to suffer from the     
effects of the high level of debt secured by the property, and provided no      
cash flow to the Partnership.  During April 2001, the Partnership received      
notice of non-monetary defaults from the lender under the amended and           
restated promissory note (the "Note") secured by the Partnership's interest     
in the limited liability company that owns the property.  The Partnership       
acknowledged certain of the defaults described in the notice of default.        
In December 2001, the lender assigned all of its rights and interests under     
the loan to an affiliate of the lender.  On December 17, 2001, the              
Partnership acknowledged and consented to the plans of the affiliate of the     
lender to foreclose on the Partnership's interest in the limited liability      
company on or before December 31, 2002 and waived any notice or additional      
notice of foreclosure to which it may have been entitled under the terms        
and conditions of the loan documents or the California Commercial Code.         
Pursuant to a private foreclosure sale, on September 13, 2002 an affiliate      
of the Partnership's unaffiliated joint venture partner acquired the            
Partnership's interest in the limited liability company and assumed all of      
the Partnership's rights and obligations under the limited liability            
company's operating agreement dated September 30, 1996, and the                 
Partnership's obligation to repay the indebtedness and its other                
obligations under the Note and the related loan documents were discharged.      
The Note had an adjusted principal balance of approximately $21,988,000 and     
accrued interest of approximately $21,934,000 at September 13, 2002 (prior      
to transfer of the Partnership's interest in the limited liability              
company).  The loan was nonrecourse and secured solely by the Partnership's     
interest in the limited liability company.  The Partnership recognized an       
extraordinary gain on forgiveness of indebtedness of approximately              
$43,922,000 for financial reporting purposes.  The Partnership expects to       
recognize a gain of approximately $31,000,000 from the transaction for          
Federal income tax purposes, with no corresponding distributable proceeds.      

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RESULTS OF OPERATIONS                                                           

The decrease in interest and other receivables at September 30, 2002  
as compared to December 31, 2001 is primarily due to the collection of sale     
proceeds of approximately $43,000 held in escrow since the close of the         
sale of the Louis Joliet Mall which was recorded as a receivable at             
December 31, 2001.                                                              

The decrease in other assets at September 30, 2002 as compared to     
December 31, 2001 is due to the return of the Partnership's 1999 advance to     
the limited partners of JMB/NYC used to purchase the tranche of the             
Purchase Note, as described more fully above.                                   

The decrease in accounts payable at September 30, 2002 as compared to 
December 31, 2001 is primarily due to the timing of payment for certain of      
the professional fees and administrative expenses of the Partnership.           

The decrease in current portion of long-term debt at September 30,    
2002 as compared to December 31, 2001 is due to the discharge of the            
Partnership's obligation to repay the indebtedness and its other                
obligations under the Note and the related loan documents as a result of        
the transfer of the Partnership's interest in the limited liability company     
which owns the Wells Fargo Center property.  The Note and related loan          
obligations were non-recourse to the Partnership.                               

The decrease in distributions received in excess of recorded          
investment, net at September 30, 2002 as compared to December 31, 2001 is       
due to the reduction of such amount in connection with the sale of the          
indirect interest in the 237 Partnership in January 2002. The distributions     
received in excess of recorded investment was created by the 1999               
retirement of the Partnership's obligations to fund, on demand, $400,000        
and $400,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc.,             
respectively, of additional paid-in capital.  Such obligations, when            
retired, included accrued but unpaid interest.  Such investment was reduced     
to zero and included in the Partnership's share of gain on sale of              
JMB/NYC's indirect partnership interest because that interest was the           
Partnership's last JMB/NYC related investment property, in January 2002.        

The decrease in interest income for the three and nine months ended   
September 30, 2002, as compared to the same periods in 2001 is primarily        
due to a lower average interest rate on invested funds during 2002.             

The other income for the three and nine months ended September 30,    
2002 consists of final dividends of approximately $55,000 and $69,000           
received from Carlyle Investors, Inc. and Carlyle Managers, Inc.,               
respectively, in September 2002, and is also partially due to the               
collection of an insurance settlement of approximately $14,000 relating to      
a formerly owned property in the first quarter of 2002.                         

The decrease in professional services for the nine months ended       
September 30, 2002 as compared to the same period in 2001 is primarily due      
to lower costs for accounting services through the third quarter of 2002.       

The decrease in general and administrative expenses for the nine      
months ended September 30, 2002, as compared to the same period in 2001 is      
primarily due to the payment of approximately $34,000 in the first quarter      
of 2001 by the Partnership for state income taxes owed as a result of the       
sale of the Louis Joliet Mall, payment of a settlement amount                   
(approximately $23,000) for a dispute related to construction costs of a        
formerly owned property made in the second quarter of 2001, and lower costs     
(approximately $93,000) for payroll, financial reporting and investor           
reporting expenses of the Partnership through the third quarter of 2002.        
The decrease in general and administrative expenses for the three months        
ended September 30, 2002, as compared to the same period in 2001 is             
primarily due to lower costs during the third quarter of 2002 for payroll,      
financial reporting and investor reporting expenses of the Partnership.         

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The Partnership's share of the reduction of the maximum unfunded      
obligation under and income related to termination of the indemnification       
agreement recognized as income during 2001 of $7,144,354 is a result of the     
sale of JMB/NYC's indirect interest in the 1290 Partnership in March of         
2001 and release of the Partnership's and other Affiliated Partners'            
indemnification obligation relating to the interest in the 1290                 
Partnership, as well as interest earned during 2001 on amounts contributed      
by the Partnership and held in escrow by JMB/NYC.                               

The decrease in Partnership's share of operations of unconsolidated   
ventures for the nine months ended September 30, 2002, as compared to the       
same period in 2001 is due to the Partnership no longer having an ownership     
interest in the Piper Jaffray Tower after April 2, 2001 and also due to the     
Partnership's final share of operations received in 2001 in regards to the      
winding up of the affairs related to the Partnership's ownership interest       
in the 900 Third Avenue Building, as described more fully in the Notes.         

The Partnership's share of gain on sale of indirect partnership       
interest for the nine months ended September 30, 2002 is primarily the          
aggregate amount of the Partnership's share (approximately $320,000) of         
JMB/NYC's gain from the sale of its indirect partnership interest in the        
237 Partnership in January 2002 and the reduction of the distributions          
received in excess of recorded investment (approximately $1,323,000).  The      
Partnership's share of gain on sale of indirect partnership interest for        
the three months ended September 30, 2002, is primarily due to a final          
liquidating distribution of cash generated from sales proceeds of               
approximately $8,000 received from Carlyle-XIV Associates, L.P. in              
September 2002.  The Partnership's share of gain on sale of indirect            
partnership interest for the nine months ended September 30, 2001 is the        
Partnership's share of JMB/NYC's gain from the sale of its indirect             
partnership interest in the 1290 Partnership on March 23, 2001.                 

The Partnership's share of extraordinary items from unconsolidated    
ventures for the nine months ended September 30, 2001 are the net amount of     
the Partnership's share of gain on forgiveness of indebtedness of               
$8,039,165 and write-off of deferred mortgage fees of $410,869 resulting        
from the transfer of title to the Piper Jaffray Tower to the lender on          
April 2, 2001, as described above.                                              

The extraordinary items - gain on forgiveness of indebtedness for the 
three and nine months ended September 30, 2002 is due to the gain on            
forgiveness of indebtedness resulting from the transfer of the                  
Partnership's interest in the limited liability company which owns the          
Wells fargo Center - South Tower to an affiliate of Partnership's               
unaffiliated venture partner pursuant to a foreclosure sale in September of     
2002 as described above.                                                        

ITEM 4.  CONTROLS AND PROCEDURES                                                

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14 of  
the Securities Exchange Act of 1934 (the "Exchange Act") promulgated            
thereunder, the principal executive officer and the principal financial         
officer of the Partnership have evaluated the effectiveness of the              
Partnership's disclosure controls and procedures as of a date within 90         
days prior to the date of the filing of this report (the "Evaluation Date")     
with the Securities and Exchange Commission ("SEC").  Based on such             
evaluation, the principal executive officer and the principal financial         
officer have concluded that the Partnership's disclosure controls and           
procedures were effective as of the Evaluation Date to ensure that              
information required to be disclosed in this report was recorded,               
processed, summarized and reported within the time period specified in the      
applicable SEC rules and form for this report.  Furthermore, there have         
been no significant changes in the internal controls or in other factors        
that could significantly affect internal controls subsequent to the date of     
their most recent evaluation, including any corrective actions with regard      
to significant deficiencies and material weaknesses.                            

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PART II.  OTHER INFORMATION                                                     

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                              

During April 2001, the Partnership received notice of non-monetary    
defaults from the lender under the amended and restated promissory note         
secured by the Partnership's interest in the limited liability company that     
owns Wells Fargo Center - South Tower.  The Partnership acknowledged            
certain of the defaults described in the notice of default.  In December        
2001, the lender assigned all of its rights and interests under the loan to     
an affiliate of the lender.  On December 17, 2001, the Partnership              
acknowledged and consented to the plans of the affiliate of the lender to       
foreclose on the Partnership's interest in the limited liability company on     
or before December 31, 2002 and waived any notice or additional notice of       
foreclosure to which it may have been entitled under the terms and              
conditions of the loan documents or the California Commercial Code.             
Pursuant to a private foreclosure sale, on September 13, 2002, an affiliate     
of the Partnership's unaffiliated joint venture partner acquired the            
Partnership's interest in the limited liability company.  The note had an       
adjusted principal balance of approximately $21,988,000 and accrued             
interest of approximately $21,934,000 at September 13, 2002 (prior to           
transfer of the Partnership's interest in the limited liability company).       
Reference is made to the subsection entitled "Wells Fargo Center" in the        
Notes to the Financial Statements filed with this report for a further          
discussion of the default under such note.                                      

A portion of the purchase price for JMB/NYC's indirect interests in   
the 1290 Avenue of the Americas and 237 Park Avenue office buildings was        
represented by a certain promissory note (the "Purchase Note") bearing          
interest at 12-3/4% per annum.  Unpaid principal and interest were due at       
maturity on January 2, 2001.  As expected, JMB/NYC did not have funds to        
pay the Purchase Note at its maturity.  The outstanding principal and           
accrued and deferred interest on the Purchase Note at the date of debt          
forgiveness and liquidation and termination of JMB/NYC, September 30, 2002,     
was approximately $186,347,000 including interest at the default rate (as       
defined) of 12-3/4% per annum.  Reference is made to the subsection             
entitled "JMB/NYC" in the Notes to the Financial Statements filed with this     
report for a further discussion of the default under the Purchase Note.         

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ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                             

(a)  Exhibits                                                   

       3-A.    Amended and Restated Agreement of Limited Partnership
is hereby incorporated herein by reference to the Partnership's Report on       
Form 10-Q (File No. 0-15962) dated August 12, 2002.                             

    3-B.    Assignment Agreement by and among the Partnership,
the General Partners and the Initial Limited Partner is hereby incorporated     
herein by reference to the Partnership's Report on Form 10-Q (File No. 0-       
15962) dated August 12, 2002.                                                   

     3-C.    Acknowledgement of rights and duties of the General
Partners of the Partnership between ABPP Associates, L.P. (a successor          
Associate General Partner of the Partnership) and JMB Realty Corporation as     
of December 31, 1995 is incorporated herein by reference to the                 
Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-15962)     
dated November 8, 1996.                                                         

   10-A.   Foreclosure Sale Certificate by and among Carlyle
Real Estate Limited Partnership - XIV, Maguire Partners-WFC Holdings, LLC,      
ATC Realty Seventeen, Inc., Maguire Partners-Bunker Hill, Ltd., Maguire         
Partners-South Tower, LLC, and Wells Fargo Bank, N.A. dated September 13,       
2002 is filed herewith.                                                         

    10-B.   Acknowledgment, Consent and Waiver between Carlyle
Real Estate Limited Partnership - XIV, ATC Realty, Inc. and Wells Fargo         
Bank, N.A. dated September 13, 2002 is filed herewith.                          

      99.     Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed      
herewith.                                                                       

 (b)  No reports on Form 8-K were filed during the last quarter of
the period covered by this report.                                              

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SIGNATURES          

Pursuant to the requirements of the Securities Exchange Act of 1934,  
the Company has duly caused this report to be signed on its behalf by the       
undersigned thereunto duly authorized.                                          

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV   

BY:   JMB Realty Corporation                    
(Corporate General Partner)         

By:   GAILEN J. HULL                
             Gailen J. Hull, Senior Vice President
Date: November 14, 2002             

Pursuant to the requirements of the Securities Exchange Act of 1934,  
this report has been signed below by the following person in the capacity       
and on the date indicated.                                                      

By:   GAILEN J. HULL                
               Gailen J. Hull, Chief Financial Officer
        and Principal Accounting Officer
Date: November 14, 2002             

CERTIFICATIONS          

I, H. Rigel Barber, certify that:                                               

1.   I have reviewed this quarterly report on Form 10-Q of Carlyle Real         
Estate Limited Partnership - XIV;                                     

2.   Based on my knowledge, this quarterly report does not contain any          
untrue statement of a material fact or omit to state a material fact  
necessary to make the statements made, in light of the circumstances  
under which such statements were made, not misleading with respect to 
the period covered by this quarterly report;                          

3.   Based on my knowledge, the financial statements, and other financial       
information included in this quarterly report, fairly present in all  
material respects the financial condition, results of operations and  
cash flows of the registrant as of, and for, the periods presented in 
this quarterly report;                                                

4.   The registrant's other certifying officer and I are responsible for        
establishing and maintaining disclosure controls and procedures (as   
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant   
and we have:                                                          

a)    designed such disclosure controls and procedures to ensure that 
    material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within
  those entities, particularly during the period in which this
quarterly report is being prepared;                       

b)    evaluated the effectiveness of the registrant's disclosure      
  controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation 
Date"); and                                               

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c)    presented in this quarterly report our conclusions about the    
   effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;              

5.   The registrant's other certifying officer and I have disclosed,            
based on our most recent evaluation, to the registrant's auditors and 
the audit committee of registrant's board of directors (or persons    
performing the equivalent function):                                  

a)    all significant deficiencies in the design or operation of      
     internal controls which could adversely affect the registrant's
     ability to record, process, summarize and report financial data
    and have identified for the registrant's auditors any material
weaknesses in internal controls; and                      

b)    any fraud, whether or not material, that involves management or 
     other employees who have a significant role in the registrant's
internal controls; and                                    

6.   The registrant's other certifying officer and I have indicated in          
this quarterly report whether or not there were significant changes   
in internal controls or in other factors that could significantly     
affect internal controls subsequent to the date of our most recent    
evaluation, including any corrective actions with regard to           
significant deficiencies and material weaknesses.                     

Date:November 14, 2002                                                          

/s/ H. Rigel Barber     
    ----------------------------
   Principal Executive Officer

CERTIFICATIONS          

I, Gailen J. Hull, certify that:                                                

1.   I have reviewed this quarterly report on Form 10-Q of Carlyle Real         
Estate Limited Partnership - XIV;                                     

2.   Based on my knowledge, this quarterly report does not contain any          
untrue statement of a material fact or omit to state a material fact  
necessary to make the statements made, in light of the circumstances  
under which such statements were made, not misleading with respect to 
the period covered by this quarterly report;                          

3.   Based on my knowledge, the financial statements, and other financial       
information included in this quarterly report, fairly present in all  
material respects the financial condition, results of operations and  
cash flows of the registrant as of, and for, the periods presented in 
this quarterly report;                                                

4.   The registrant's other certifying officer and I are responsible for        
establishing and maintaining disclosure controls and procedures (as   
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant   
and we have:                                                          

a)    designed such disclosure controls and procedures to ensure that 
    material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within
  those entities, particularly during the period in which this
quarterly report is being prepared;                       

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b)    evaluated the effectiveness of the registrant's disclosure      
  controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation 
Date"); and                                               

c)    presented in this quarterly report our conclusions about the    
   effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;              

5.   The registrant's other certifying officer and I have disclosed,            
based on our most recent evaluation, to the registrant's auditors and 
the audit committee of registrant's board of directors (or persons    
performing the equivalent function):                                  

a)    all significant deficiencies in the design or operation of      
     internal controls which could adversely affect the registrant's
     ability to record, process, summarize and report financial data
    and have identified for the registrant's auditors any material
weaknesses in internal controls; and                      

b)    any fraud, whether or not material, that involves management or 
     other employees who have a significant role in the registrant's
internal controls; and                                    

6.   The registrant's other certifying officer and I have indicated in          
this quarterly report whether or not there were significant changes   
in internal controls or in other factors that could significantly     
affect internal controls subsequent to the date of our most recent    
evaluation, including any corrective actions with regard to           
significant deficiencies and material weaknesses.                     

Date:November 14, 2002                                                          

/s/ Gailen J. Hull      
    ----------------------------
    Principal Accounting Officer

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
		12/31/02		13		21
Filed on:		11/14/02		23		25
For Period End:		9/30/02		1		21
		9/13/02		13		22
		8/12/02		22
		5/31/02		12
		4/1/02		8					10-K405
		12/31/01		3		19			10-K405
		12/17/01		13		21			8-K
		9/30/01		5		20			10-Q
		4/2/01		12		20			10-K405,  8-K
		3/23/01		9		20
		3/2/01		10		16
		2/28/01		10		16
		2/15/01		9		17
		1/2/01		9		21
		1/1/01		9
		10/2/00		12		18
		9/26/00		12		18
		9/15/00		13
		7/20/00		12		18
		6/1/00		12
		5/31/00		12
		1/1/00		10		16
		9/1/99		13
		11/8/96		22
		9/30/96		14		22			10-Q
		12/31/95		22					10-K/A,  10-K405
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