ITEM 1. BUSINESS
Unless otherwise indicated, all references herein to "Notes" are to Notes to Consolidated Financial Statements of Carlyle Income Plus, L.P. - II contained in this annual report. Capitalized terms used herein, but not defined, have the same meanings as used in the Notes.
The registrant, Carlyle Income Plus, L.P.- II (the "Partnership") is a limited partnership formed in December 1987 and currently governed by the Revised Uniform Limited Partnership Act of the State of Delaware to invest in income-producing commercial and residential real property. On May 24, 1988, the Partnership commenced an offering to the public of $100,000,000 in Limited Partnership Interests ("Interests") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (No. 33-19463). A total of 64,264.53 Interests at $1,000 per Interest (fractional interests are due to a Distribution Reinvestment Program) were sold to the public between May 24, 1988 and June 18, 1990. The offering closed on April 30, 1990. No holder of Interests (hereinafter sometimes referred to as a "Limited Partner") has made any additional capital contribution after such date. The Limited Partners of the Partnership share in their portion of the benefits of ownership of the Partnership's real property investments according to the number of Interests held.
The Partnership is engaged solely in the business of the acquisition, operation and sale and disposition of equity real estate investments. As of December 31, 1999, all of the Partnership's investments in real estate have been sold. Such equity investments were held by fee title and/or through joint venture partnership interests. None of the Partnership's real property investments were located outside of the United States. A presentation of information about industry segments, geographic regions, raw materials or seasonality is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. Pursuant to the Partnership Agreement, the Partnership is required to terminate no later than December 31, 2038. The Partnership is self-liquidating in nature. Upon the sale of a particular property, the net proceeds, if any, were held for working capital, distributed or reinvested in existing properties rather than invested in acquiring additional properties. The Partnership currently expects 1225 Investment Corporation to wind up its affairs by mid-2000, with the winding up of the Partnership's affairs expected sometime thereafter in 2000. The termination of the Partnership's affairs generally is contingent upon, among other things, 1225 Investment Corporation (a real estate investment trust in which the Partnership owns an approximate 44% interest) winding up its affairs.
The Partnership made real property investments set forth in the following table:
Approximate occupancy levels for the Partnership's investment property which was owed during 1999 are set forth in the table in Item 2
ITEM 2. PROPERTIES
The Partnership owned through joint venture partnerships and a corporation, interests in the properties referred to under Item 1 above to which reference is hereby made for a description of such properties.
The following is a listing of principal businesses or occupations carried on in and approximate occupancy levels by quarter during fiscal years 1999 and 1998 for the Partnership's remaining investment property owned during 1999:
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any pending material legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during 1998 and 1999.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1999, there were 6,484 record holders of Interests of the Partnership. There is no public market for Interests, and it is not anticipated that a public market for Interests will develop. Upon request, the Corporate General Partner may provide information relating to a prospective transfer of Interests to an investor desiring to transfer his Interests. The price to be paid for the Interests, as well as any other economic aspects of the transaction, will be subject to negotiation by the investor. There are certain conditions and restrictions on the transfer of Interests, including, among other things, the requirement that the substitution of a transferee of Interests as a Limited Partner of the Partnership be subject to the written consent of the Corporate General Partner, which may be granted or withheld in its sole and absolute discretion. The rights of a transferee of Interests who does not become a substituted Limited Partner will be limited to the rights to receive his share of profits or losses and cash distributions from the Partnership, and such transferee will not be entitled to vote such Interests or have other rights of a Limited Partner. No transfer will be effective until the first day of the next succeeding calendar quarter after the requisite transfer form satisfactory to the Corporate General Partner has been received by the Corporate General Partner. The transferee consequently will not be entitled to receive any cash distributions or any allocable share of profits or losses for tax purposes until such next succeeding calendar quarter. Profits or losses from operations of the Partnership for a calendar year in which a transfer occurs will be allocated between the transferor and the transferee based upon the number of quarterly periods in which each was recognized as the holder of the Interests, without regard to the results of the Partnership's operations during particular quarterly periods and without regard to whether cash distributions were made to the transferor or transferee. Profits or losses arising from the sale or other disposition of Partnership properties will be allocated to the recognized holder of the Interests as of the last day of the quarter in which the Partnership recognized such profits or losses. Cash distributions to a holder of Interests arising from the sale or other disposition of Partnership properties will be distributed to the recognized holder of the Interests as of the last day of the quarterly period with respect to which such distribution is made.
Reference is made to Item 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering of Interests as described in Item 1, the Partnership had approximately $55,256,000(after deducting selling expenses and other offering costs) with which to make investments in income- producing commercial and residential real property, to pay legal fees and other costs (including acquisition fees) related to such investments and for working capital requirements. A portion of such proceeds was utilized to acquire the properties described in Item 1 above.
The board of directors of JMB Realty Corporation ("JMB"), the corporate general partner of the Partnership, has established a special committee (the "Special Committee") consisting of certain directors of JMB to deal with all matters relating to tender offers for Interests in the Partnership, including any and all responses to such tender offers. During 1996, some of the holders of Interests in the Partnership received from third parties unaffiliated with the Partnership or the General Partners unsolicited tender offers to purchase up to 4.9% of the Interests in the Partnership at amounts between $350 and $400 per Interest. During 1997 and early 1998, other unaffiliated third parties made unsolicited tender offers to some of the holders of Interests. These offers each sought to purchase up to 4.9% of the Interests in the Partnership at amounts between $250 and $325 per Interest. Certain of these unaffiliated third parties made additional unsolicited tender offers in May and October, 1998. These offers each sought to purchase up to 4.9% of the Interests in the Partnership at amounts between $150 and $215 per Interest. In early 1999, another unaffiliated third party made an unsolicited tender offer to purchase up to 4.9% of the Interests at $170 per Interest. All of the above offers have expired. The Special Committee recommended against acceptance of these offers on the basis that, among other things, the offer prices were inadequate. As of the date of this report, the Partnership is aware that 5.96% of the outstanding Interests have been purchased by all such unaffiliated third parties either pursuant to such tender offers or through negotiated purchases.
The Partnership distributed approximately $18,960,000 in late May 1999 to the Holders of Interests ($295 per Interest) from the proceeds of the March 1999 sale of the 1225 Connecticut Avenue, N.W. office building and approximately $321,000 to the holders of Interests ($5 per Interest) from Partnership operational cash flow and reserves, including those from offering proceeds. The Partnership also distributed $16,913 to the General Partners, which represented their share of Partnership operational cash flow and reserves, including those from offering proceeds.
At December 31, 1999, the Partnership had cash and cash equivalents of approximately $2,501,000. The Partnership distributed $1,606,738 ($25 per Interest) in February 2000 to the holders of Interests, which included $10.00 per Interest from the aforementioned sale proceeds and $15 per Interest from Partnership operational cash flow and reserves, including those from offering proceeds. The Partnership also distributed $50,739 to the General Partners, which represented their share of Partnership operational cash flow and reserves, including those from offering proceeds. No further distributions of cash flow will be made until the liquidation of the Partnership. The General Partners have not received and will not receive their share of any distributions of proceeds from sales, as the subordination requirements of the Partnership Agreement necessary for the retention of sales proceeds by the General Partners will not be met.
1225 CONNECTICUT AVENUE, N.W.
In March 1999, 1225 Investment Corporation executed an agreement with BRE/Connecticut L.L.C. for the sale of the 1225 Connecticut Avenue,N.W. office building. On March 29, 1999, 1225 Investment Corporation completed the sale of the property for a sale price of $52,960,000 payable in cash at closing (subject to adjustment for selling costs of approximately $1,103,000 and operating prorations of approximately $515,000). The
Partnership's share of the sale proceeds, after payment by 1225 Investment Corporation to retire the existing mortgage indebtedness (scheduled to mature in February 2001) with a principal balance of $7,000,000 and payment of the associated prepayment penalty of approximately $247,000, was approximately $19,420,000. The sale resulted in no significant gain or loss on sale for financial reporting purposes to 1225 Investment Corporation, primarily as a result of value impairment provisions totaling $7,765,956 recorded by 1225 Investment Corporation in 1996 and 1998 (of which Partnership's share was $3,381,297). Additionally, 1225 Investment Corporation recognized a loss on sale in 1999 for Federal income tax purposes of approximately $1,900,000. However, the tax consequences to the Partnership are expected to consist of a loss on its investment in unconsolidated affiliated corporation, 1225 Investment Corporation, of approximately $1,450,000 in 2000.
In connection with the sale of this property, as is customary in such transactions, 1225 Investment Corporation agreed to certain representations and warranties, with a stipulated survival period which expired, with no liability to 1225 Investment Corporation, as scheduled on December 10, 1999.
In April 1999, the Partnership received a dividend of $19,596,000 from 1225 Investment Corporation, of which $18,987,600 represented the Partnership's share of current distributable proceeds from the sale of the 1225 Connecticut Avenue, N.W. office building and $608,400 represented the Partnership's share of operations. In December 1999, after the expiration of the aforementioned survival period for representations and warranties, the Partnership received a dividend of $573,120 from 1225 Investment Corporation, of which $435,360 represented the Partnership's residual share of proceeds from the sale of the 1225 Connecticut Avenue, N.W. office building and $137,760 represented the Partnership's share of cash flow from operations. The Partnership also received an operating dividend of $435,360 from 1225 Investment Corporation in February 1999.
LANDINGS SHOPPING CENTER
On December 30, 1997, the JMB/Landings joint venture sold the land and related improvements of the Landings Shopping Center. The sale price was $9,700,000 (before selling costs and prorations). Reference is made to the Notes for a further description of the sale.
ASHBY APARTMENTS
In August 1996, the CIP/Ashby joint venture sold the land and related improvements of The Ashby at McLean Apartments. The sale price was $21,400,000 (before selling costs and prorations). Reference is made to the Notes for a further description of the sale.
GENERAL
There are certain risks associated with the Partnership's investments made through joint ventures or corporations, including the possibility that the Partnership's joint venture partners or other stockholders in an investment might become unable or unwilling to fulfill their financial or other obligations, or that such joint venture partners or other stockholders may have economic or business interests or goals that are inconsistent with those of the Partnership.
With the sale of the 1225 Connecticut Avenue, N.W. office building, the Partnership has sold its interest in its last investment property. The termination of the Partnership's affairs generally is contingent upon, among other things, 1225 Investment Corporation winding up its affairs. The Partnership currently expects 1225 Investment Corporation to wind up its affairs by mid-2000, with the winding up of the Partnership's affairs expected sometime thereafter in 2000.
RESULTS OF OPERATIONS
Reference is made to the Notes for additional information concerning the Partnership's real estate investments.
At December 31, 1998, the Partnership owned, through an investment in an unconsolidated corporation, an interest in one operating investment property. This remaining investment property was sold in 1999.
The increase in cash and cash equivalents and decrease in investment in unconsolidated affiliated corporation at December 31, 1999 as compared to December 31, 1998 is due primarily to the sale of 1225 Connecticut Avenue, N.W. office building and the Partnership's receipt of $20,604,480 of dividends from distributable sale proceeds and operational cash flow from 1225 Investment Corporation in 1999. The Partnership distributed approximately $19,281,000 ($300 per Interest) of such dividends to the holders of Interests and $16,913 to the General Partners in 1999.
The increase in interest income for the year ended December 31, 1999 as compared to the year ended December 31, 1998 is attributable primarily to interest earned on the Partnership's share of distributable proceeds received from the March 1999 sale of the 1225 Connecticut Avenue, N.W. office building. Such increase in interest income was partly offset by interest earned in 1998 on distributions totaling $5,100,000 received by the Partnership from the JMB/Landings venture during the three months ended March 31, 1998, a substantial portion of which represented the Partnership's share of the proceeds from the December 1997 sale of the Landings Shopping Center. The decrease in interest income for the year ended December 31, 1998 as compared to the year ended December 31, 1997 is due primarily to smaller average outstanding balances in the Partnership's interest-bearing cash and cash equivalents in 1998.
The provision for value impairment of $241,000 in 1998 is due to the Partnership's reduction of the net carrying value of its investment in its unconsolidated affiliated corporation, 1225 Investment Corporation, as of December 31, 1998.
The decrease in Partnership's share of operations of unconsolidated affiliated corporation for the year ended December 31, 1999 as compared to the year ended December 31, 1998 is attributable primarily to the March 1999 sale of the 1225 Connecticut Avenue, N.W. office building by 1225 Investment Corporation. The decrease in Partnership's share of operations of unconsolidated affiliated corporation for the year ended December 31, 1998 as compared to the year ended December 31, 1997 is attributable primarily to the Partnership's share ($529,882) of the total provision for value impairment of $1,217,000 recorded by 1225 Investment Corporation at December 31, 1998.
The decrease in Partnership's share of operations of unconsolidated venture for the year ended December 31, 1998 as compared to the year ended December 31, 1997 is due primarily to the December 1997 sale of the Landings Shopping Center by the JMB/Landings venture.
Partnership's share of loss on sale of property by unconsolidated affiliated corporation in 1999 is attributable to the March 1999 sale of the 1225 Connecticut Avenue, N.W. office building by 1225 Investment Corporation.
Partnership's share of gain on sale of investment property by unconsolidated venture in 1997 is attributable to the December 1997 sale of the Landings Shopping Center by the JMB/Landings venture.
Partnership's share of extraordinary items of unconsolidated affiliated corporation in 1999 is due to the payment of a prepayment penalty associated with the retirement of the existing mortgage indebtedness by 1225 Investment Corporation with a portion of the sale proceeds from the March 1999 sale of the 1225 Connecticut Avenue, N.W. office building and the write-off of unamortized deferred financing costs.
INFLATION
Due to the decrease in the level of inflation in recent years, inflation generally has not had a material effect on the operations of the Partnership. Due to the Partnership's sale of its last remaining investment property in 1999 and the expected winding up of the Partnership in 2000, inflation is not expected to significantly impact future operations.
YEAR 2000
The Partnership has not experienced any material disruption in its operations in connection with the century change and does not expect any such disruption in the future. The Partnership has not needed to implement contingency plans, has not had any material remediation costs and does not anticipate that its future costs of remediation will be material. However, there can be no assurance that disruption may not occur in the future or that the costs of any required remediation may not be material. With the sale of its last investment property, the 1225 Connecticut Avenue N.W. office building and barring any unforeseen circumstances, the Partnership expects to terminate its affairs in 2000.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE INCOME PLUS, L.P. - II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE
INDEX
Independent Auditors' Report Consolidated Balance Sheets, December 31, 1999 and 1998 Consolidated Statements of Operations, years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Partners' Capital Accounts (Deficits), years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows, years ended December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
1225 INVESTMENT CORPORATION (A CORPORATION)
INDEX
Independent Auditors' Report Balance Sheets, December 31, 1999 and 1998 Statements of Operations, years ended December 31, 1999, 1998 and 1997 Statements of Changes in Shareholders' Equity, years ended December 31, 1999, 1998 and 1997 Statements of Cash Flows, years ended December 31, 1999, 1998 and 1997
Notes to Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners CARLYLE INCOME PLUS, L.P. - II:
We have audited the consolidated financial statements of Carlyle Income Plus, L.P.- II (a limited partnership) and consolidated venture as listed in the accompanying index. These consolidated financial statements are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the General Partners of the Partnership, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Carlyle Income Plus, L.P.- II and consolidated venture as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois March 20, 2000
CARLYLE INCOME PLUS, L.P. - II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
OPERATIONS AND BASIS OF ACCOUNTING
General
The Partnership held, (either by purchase of stock or through joint ventures) an equity investment portfolio of real estate in the United States. Business activities consisted of rentals to a variety of commercial and retail entities, rentals to individuals, and the ultimate sale of such real estate. All properties have been sold as of December 31, 1999. The Partnership currently expects 1225 Investment Corporation to wind up its affairs by mid-2000, with the winding up of the Partnership's affairs expected sometime thereafter in 2000. The termination of the Partnership's affairs generally is contingent upon, among other things, 1225 Investment Corporation winding up its affairs.
The accompanying consolidated financial statements include the accounts of the Partnership and its majority-owned venture, CIP/Ashby Partners ("CIP/Ashby"), whose property was sold in August 1996. The effect of all transactions between the Partnership and the consolidated venture has been eliminated. The equity method of accounting has been applied in the accompanying consolidated financial statements with respect to the Partnership's interest in JMB/Landings Associates ("JMB/Landings"), whose property was sold in December 1997, and 1225 Investment Corporation ("1225 Connecticut Avenue, N.W."), whose property was sold in March 1999. Accordingly, the accompanying consolidated financial statements do not include the accounts of JMB/Landings or 1225 Connecticut Avenue, N.W.
The Partnership's records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying consolidated financial statements have been prepared from such records after making appropriate adjustments to present the Partnership's accounts in accordance with generally accepted accounting principles ("GAAP") and to consolidate the accounts of the venture as described above. Such GAAP and consolidation adjustments are not recorded on the records of the Partnership. The net effect of these items for the years ended December 31, 1999 and 1998 is summarized as follows:
The net earnings (loss) per limited partnership interest ("Interest") is based upon the number of Interests outstanding at the end of each period (64,269.53). Deficit capital accounts will result, through the duration of the Partnership, in net gain for financial reporting and Federal income tax purposes.
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.
Statement of Financial Accounting Standards No. 95 requires the Partnership to present a statement which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The required information has been segregated and accumulated according to the classifications specified in the pronouncement. Partnership distributions or dividends from unconsolidated investments are considered cash flow from operating activities only to the extent of the Partnership's cumulative share of net earnings. In addition, the Partnership records amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the Partnership's policy is to consider all such amounts held with original maturities of three months or less ($2,300,000 and $1,119,778 at December 31, 1999 and 1998, respectively) as cash equivalents, which includes investments in an institutional mutual fund which holds United States Government obligations, with any remaining amounts (generally with original maturities of one year or less) reflected as short-term investments being held to maturity.
No provision for state or Federal income taxes has been made as the liability for such taxes is that of the partners rather than the Partnership.
INVESTMENT PROPERTIES
The Partnership had acquired, either by purchase of stock or through joint ventures, interests in an apartment building, a shopping center and an office building. At December 31, 1999, all of these properties were sold. Under certain circumstances, the Partnership may have been required to make cash contributions to the ventures either pursuant to the venture agreements or due to the Partnership's obligations as a general partner. The cost of the investment properties represented the total cost to the Partnership plus certain acquisition costs.
Depreciation on the properties had been provided over the estimated useful lives of the various components as follows: YEARS ----- Buildings and improvements -- straight-line. . . . . . . . . . . . . 30 Personal property -- straight-line. . . . . . . . . . . . . 5 == Maintenance and repair expenses were charged to operations as incurred. Significant betterments and improvements were capitalized and depreciated over their estimated useful lives.
The Partnership adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed of" ("SFAS 121") as required in the first quarter of 1996. SFAS 121 required that the Partnership record an impairment loss on its properties to be held for investment whenever their carrying value could not be fully recovered through estimated undiscounted future cash flows from their operations and sale. The amount of the impairment loss to be recognized would have been the difference between the property's carrying value and the property's estimated fair value. The Partnership's policy was to consider a property to be held for sale when the Partnership had committed to a plan to sell such property and active marketing activity had commenced or was expected to commence in the near term. The Partnership and its unconsolidated affiliated corporation had committed to such a plan as of December 31, 1996 for 1225 Connecticut Avenue, N.W. office building, which was sold in March 1999.
In accordance with SFAS 121, any properties identified as "held for sale or disposition" were no longer depreciated. Adjustments for impairment loss for such properties (subsequent to the date of adoption of SFAS 121) were made in each period as necessary to report these properties at the lower ofcarrying value or fair value less costs to sell. The adoption of SFAS 121 did not have any significant effect on the Partnership's financial position, results of operations or liquidity.
The accompanying consolidated financial statements include $559,399, $1,656,400 and $2,398,460, respectively, of the Partnership's share of total operations of $1,284,938, $3,803,422, and $5,413,567 for the years ended December 31, 1999, 1998 and 1997 of unconsolidated properties sold or held for sale or disposition.
JMB/Landings
In August 1988, the Partnership, through JMB/Landings Associates, a joint venture partnership with Carlyle Income Plus, Ltd. ("CIP-I"), another partnership sponsored by the General Partners of the Partnership, acquired a 50% interest in The Landings Shopping Center, located in Sarasota, Florida.
JMB/Landings purchased the shopping center for a purchase price of $13,100,000, which was paid in cash at closing. The terms of the JMB/Landings partnership agreement provided generally that annual cash flow, sale proceeds and tax items were to be distributed or allocated based on the capital contributions made by each partner. Distributions and allocations were made 50% to the Partnership.
As of December 31, 1996, JMB/Landings had committed to a plan to sell the property and therefore the property was classified by the JMB/Landings venture as held for sale and was not subject to continued depreciation as of that date.
JMB/Landings sold the land and related improvements of The Landings Shopping Center in December 1997 for a sale price of $9,700,000. JMB/Landings received the sale price in cash at closing, net of selling costs and prorations. The sale resulted in a gain of approximately $1,939,000 to JMB/Landings for financial reporting purposes (of which the Partnership's share was approximately $970,000), primarily as a result of a value impairment provision of $3,500,000 (of which the Partnership's share was $1,750,000) recorded by JMB/Landings in 1995. In addition, JMB/Landings recognized a loss on sale of approximately $1,448,000 for Federal income tax reporting purposes in 1997 (of which the Partnership's share was approximately $724,000). In connection with the sale of this property, as is customary in such transactions, JMB/Landings agreed to certain representations and warranties, with a stipulated survival period which expired, with no liability to JMB/Landings, as scheduled in late June, 1998. The remaining funds of the JMB/Landings venture were distributed to the venture partners in late June, 1998.
An affiliate of the General Partners of the Partnership managed the property for a fee equal to 4% of the property's gross receipts. Such property management fees for the year ended December 31, 1997 were $41,809.
CIP/Ashby
In February 1990, the Partnership, through CIP/Ashby, a joint venture partnership with CIP-I, acquired a 69% interest in The Ashby at McLean Apartments ("The Ashby"), an apartment building located in McLean, Virginia. The Ashby had 250 units, commercial space and related parking facilities. CIP/Ashby's total cash investment in The Ashby was approximately $28,705,000, of which the Partnership's share was approximately $19,806,000.
In August 1996, CIP/Ashby sold The Ashby for a sale price of $21,400,000, which was paid in cash at closing.
In connection with the sale of this property, as is customary in such transactions, CIP/Ashby agreed to certain representations and warranties, with a stipulated survival period which expired, with no liability to CIP/Ashby, as scheduled in late August, 1997. The CIP/Ashby venture was liquidated in 1997.
1225 Connecticut Avenue, N.W.
In May 1990, the Partnership acquired approximately 44% of the common stock of a newly formed Delaware corporation (1225 Investment Corporation), owned jointly with entities originally advised by affiliates of the General Partners. 1225 Investment Corporation acquired an office building located in Washington, D.C., known as 1225 Connecticut Avenue, N.W., an eight-story building with approximately 203,000 rentable square feet and three levels of subsurface parking.
1225 Investment Corporation purchased 1225 Connecticut Avenue, N.W. office building for a purchase price of approximately $54,125,000, including the assumption of existing indebtedness of $2,700,000. The Partnership contributed $24,000,000 for its approximate 44% interest in the stock of 1225 Investment Corporation. 1225 Investment Corporation has qualified as a real estate investment trust ("REIT") pursuant to sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Partnership has received approximately 44% of 1225 Investment Corporation's dividends. Such dividends distributed from operations generally constitute taxable income to the Partnership. As the 1225 Investment Corporation had committed to a plan to sell the property, the property was classified as held for sale as of December 31, 1996 and, therefore, was not subject to continued depreciation as of that date. 1225 Investment Corporation began marketing the 1225 Connecticut Avenue office building for sale during the second quarter of 1998.
In response to the uncertainty relating to 1225 Investment Corporation's ability to recover the net carrying value of 1225 Connecticut Avenue, N.W. office building through future operations and sale, 1225 Investment Corporation, as a matter of prudent accounting practice for financial reporting purposes, recorded a provision for value impairment in 1996 in the amount of $6,548,956 (of which the Partnership's share was $2,851,415). An additional provision for value impairment of $1,217,000 (of which the Partnership's share was $529,882) was recorded at December 31, 1998 to reflect the then current estimated fair value, less costs to sell, of the property.
In response to the uncertainty relating to the Partnership's ability to recover the net carrying value of its investment in its unconsolidated affiliated corporation, 1225 Investment Corporation, through future operations and sale during the estimated holding period, the Partnership recorded, as a matter of prudent accounting practice, a provision for value impairment of such investment of $241,000 as of December 31, 1998. Such provision was recorded to reduce the net carrying value of the investment to its the then estimated fair value.
The property was managed by a third party management company for a fee equal to 2.5% of the property's gross operating receipts.
In March 1999, 1225 Investment Corporation executed an agreement with BRE/Connecticut L.L.C. for the sale of the 1225 Connecticut Avenue,N.W. office building. On March 29, 1999, 1225 Investment Corporation completed the sale for a sale price of $52,960,000, payable in cash at closing (subject to adjustment for selling costs of approximately $1,103,000 and operating prorations of approximately $515,000). The Partnership's share of the sale proceeds, after payment by 1225 Investment Corporation to retire the existing mortgage indebtedness with a principal balance of $7,000,000 and payment of the associated prepayment penalty of approximately $247,000, was approximately $19,420,000. The sale resulted in no significant gain or loss on sale for financial reporting purposes to 1225 Investment Corporation, primarily as a result of the aforementioned value impairment provisions totaling $7,765,956 recorded by 1225 Investment Corporation in 1996 and 1998 (of which the Partnership's share was $3,381,297). Additionally, 1225 Investment Corporation expects to recognize a loss on sale in 1999 for Federal income tax purposes of approximately $1,900,000. However, the tax consequences to the Partnership are expected to consist of a loss on its investment in its unconsolidated affiliated corporation, 1225 Investment Corporation, of approximately $1,450,000 in 2000.
In connection with the sale of this property, as is customary in such transactions, 1225 Investment Corporation agreed to certain representations and warranties with a stipulated survival period which expired, with no liability to 1225 Investment Corporation, as scheduled, on December 10, 1999.
In April 1999, the Partnership received a dividend of $19,596,000 from 1225 Investment Corporation, of which $18,987,600 represented the Partnership's share of current distributable proceeds from the sale of the 1225 Connecticut Avenue, N.W. office building and $608,400 represented the
Partnership's share of operations. In December 1999, after the expiration of the aforementioned survival period for representations and warranties, the Partnership received a dividend of $573,120 from 1225 Investment Corporation, of which $435,360 represented the Partnership's residual share of proceeds from the sale of the 1225 Connecticut Avenue, N.W. office building and $137,760 represented the Partnership's share of cash flow from operations. The Partnership also received an operating dividend of $435,360 from 1225 Investment Corporation in February 1999.
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, profits and losses of the Partnership from operations are generally allocated first to the General Partners in an amount equal to the greater of the General Partners' share of "Disbursable Cash" (as described below) or 1%. Profits from the sale or other disposition of investment properties are generally allocated first to the General Partners in an amount equal to the greater of the General Partners' share of cash distributions of the proceeds of any such sale or other disposition (as described below) or 1% of the total profits from any such sale or other disposition, plus an amount which would reduce deficits (if any) in the General Partners' capital accounts to a level consistent with the gain anticipated to be realized from the sale of properties. Losses from the sale or other disposition of investment properties are to be allocated 1% to the General Partners.
The General Partners have made capital contributions of $25,000. Except as required upon dissolution and liquidation of the Partnership or the General Partners' interests in the Partnership, the General Partners are not required to make any additional capital contributions. (Upon liquidation of the Partnership, each General Partner will be required to make a capital contribution to the Partnership in the amount of such General Partner's deficit balance in its capital accounts as determined for Federal income tax purposes) "Disbursable Cash" of the Partnership is to be distributed 93% to the holders of Interests and 7% to the General Partners; provided, however, that receipt by the General Partners of two of such seven percentage points of disbursable cash otherwise distributable to them in any fiscal year will be subject to receipt by the holders of Interests of a 6% return for such year on their "Average Adjusted Capital Contribution" on a noncumulative basis. Distributions of "Sale Proceeds" are to be initially allocated 99% to the holders of Interests and 1% to the General Partners. However, upon the completion of the liquidation of the Partnership and final distribution of all Partnership funds, all previous distributions of sale proceeds to the General Partners are to be repaid to the Partnership to the extent that the holders of Interests have not received sale proceeds equal to their initial capital investment plus a 6% return thereon (as defined). After receipt by the holders of Interests of such preferred return, further distributions of sale proceeds are to be allocated to the General Partners until the General Partners have received distributions in an amount equal to 3% of the aggregate selling prices of all properties sold, with the remaining balance to be distributed 85% to the holders of Interests and 15% to the General Partners; provided, however, that such 3% and 15% of sale proceeds distributable to the General Partners are subordinate to the holders of Interests' receipt of a 9% return on their investment. Since the holders of Interests will not receive an amount equal to their initial contributed capital from the aggregate sale proceeds of all of the Partnership's investment properties, the General Partners will not receive their share of any distributions of proceeds from sales.
TRANSACTIONS WITH AFFILIATES
All of the Partnership's properties were at one time managed by an affiliate of the General Partners for fees computed as a percentage of certain rents received by the properties. In December 1994, one of the affiliated property managers sold substantially all of its assets and assigned its interest in its management contracts to an unaffiliated third party. In addition, certain of the management personnel of the property manager became management personnel of the purchaser and its affiliates. The successor to the affiliated property manager's assets was acting as the property manager of The Ashby at McLean Apartments and 1225
Connecticut Ave. N.W. office building after the assignment on the same terms that existed prior to the assignment. The Landings Shopping Center continued to be managed by an affiliate of the General Partners through the date of its sale in December 1997.
The Partnership, pursuant to the Partnership Agreement, is permitted to engage in various transactions involving the Corporate General Partner and its affiliates including the reimbursement for salaries and salary-related expenses of its employees, certain of its officers, and other direct expenses relating to the administration of the Partnership and the operation of the Partnership's investments. Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their affiliates as of December 31, 1999 and for the years ended December 31, 1999, 1998 and 1997 are as follows:
INDEPENDENT AUDITORS' REPORT
The Partners Carlyle Income Plus, L.P.- II:
We have audited the financial statements of 1225 Investment Corporation as listed in the accompanying index. These financial statements are the responsibility of the Management of the Corporation. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management of the Corporation, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 1225 Investment Corporation as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois March 20, 2000
1225 INVESTMENT CORPORATION (A CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
OPERATIONS AND BASIS OF ACCOUNTING
The accompanying financial statements have been prepared for the purpose of complying with Rule 3.09 of Regulation S-X of the Securities and Exchange Commission. They include the accounts of the unconsolidated corporation, 1225 Investment Corporation,in which Carlyle Income Plus,L.P.- II and certain other parties that were originally advised or managed by affiliates of the General Partners of Carlyle Income Plus, L.P.- II are shareholders.
1225 Investment Corporation (the "Corporation") had the exclusive purpose of owning a 100% interest in the 1225 Connecticut Avenue N.W., office building, a 202,915 square-foot office building located in Washington, D.C., which was sold on March 29, 1999. Endowment and Foundation Realty, Ltd. -- JMB-IV, IDS Life Account RE, JMB/Northern Real Estate Fund, Carlyle Income Plus, L.P.- II ("CIP-II"), and certain other institutional investors collectively hold substantially all of the common stock of the Corporation. IDS Life Account RE is advised by JMB Annuity Advisers, and the remaining stockholders, other than CIP-II, are advised by Heitman Capital Management L.L.C. or its affiliates.
The Corporation's records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying financial statements have been prepared from such records after making appropriate adjustments to present the Corporation's accounts in accordance with generally accepted accounting principles ("GAAP"). Such adjustments are not recorded on the records of the Corporation. The effect of these items for the years ended December 31, 1999 and 1998 is summarized as follows:
The preparation of financial statements in accordance with GAAP requires the Corporation 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.
Statement of Financial Accounting Standards No. 95 requires the Corporation to present a statement which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The required information has been segregated and accumulated according to the classifications specified in the pronouncement. In addition, the Corporation records amounts held in U.S. Government obligations at cost which approximates market. For the purposes of these statements, the Corporation's policy is to consider all such amounts held with original maturities of three months or less (none at December 31, 1999 and 1998) as cash equivalents, with any remaining amounts (generally with original maturities of one year or less) reflected as short-term investments being held to maturity.
Depreciation on buildings and improvements was (through December 31, 1996) provided over the estimated useful lives of the assets (30 years) using the straight-line method.
Maintenance and repair expenses were charged to operations as incurred. Significant betterments and improvements were capitalized and were depreciated over their estimated useful lives.
The Corporation adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of ("SFAS 121") as required in the first quarter of 1996. SFAS 121 required that the Corporation record an impairment loss on its property to be held for investment whenever its carrying value could not be fully recovered through estimated undiscounted future cash flows from operations and sale. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the property's estimated fair value. The Corporation's policy was to consider the property to be held for sale or disposition when the Corporation had committed to a plan to sell or dispose of such property and active marketing activity had commenced or was expected to commence in the near term. The Corporation had committed to such a plan as of December 31, 1996 for its real estate investment, the 1225 Connecticut Avenue, N.W. office building, which was sold in March 1999. In accordance with SFAS 121, any property identified as "held for sale or disposition" was no longer depreciated. Adjustments for impairment loss for such a property (subsequent to a date of adoption of SFAS 121) were made in each period as necessary to report the property at the lower of carrying value or fair value less costs to sell. There was no assurance that any estimated fair value of the property would ultimately be realized by the Corporation in any future sale or disposition transaction. Deferred costs consisted of commitment fees incurred in connection with the refinancing of the property and lease commissions incurred. Deferred loan fees and lease commissions were amortized over the terms of the related debt agreement and leases using the straight-line method.
The Corporation has qualified as a real estate investment trust ("REIT") pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986 (as amended, the "Code"), and has distributed at least 95% of its taxable income annually to its shareholders. Since the Corporation has qualified as a REIT, the Corporation, in general, is not subject to Federal corporate income tax or the District of Columbia corporate franchise tax (except for the District of Columbia corporate franchise minimum tax of $100) on its regular taxable income and is not taxed on long-term capital gain income to the extent its income is distributed as dividends. Accordingly, no provision for income taxes has been made in the accompanying financial statements. Tax-exempt shareholders generally will not be required to pay any Federal income tax on the dividends they receive from the Corporation, provided such shareholders have not financed the acquisition of shares with "acquisition indebtedness" as defined under the Code.
INVESTMENT PROPERTY
A description of the acquisition and other events relating to the property, including the provisions for value impairment and the determination to classify the property as held for sale or disposition at December 31, 1996, and the sale of the property in March 1999, is contained in the Notes to Consolidated Financial Statements of Carlyle Income Plus, L.P.- II. Such notes are incorporated herein by reference.
MANAGEMENT AGREEMENT
A description of the terms of the management agreement is contained in the Notes to Consolidated Financial Statements of Carlyle Income Plus, L.P.- II. Such notes are incorporated herein by reference.
LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1999 and 1998:
1999 1998 ------------ ------------ 6.98% mortgage note, due February 1, 2001; secured by 1225 Connecticut Avenue, N.W.; payable in monthly installments of $40,717 (interest only)-retired in March 1999 . . . . . . . . . . $ -- 7,000,000 ---------- ---------- Total debt . . . . . . . . . . . . . . -- 7,000,000 Less current portion of long-term debt. . . . . . . . . . $ -- --
---------- ---------- Total long-term debt . . . . . . . . . $ -- 7,000,000 ========== ==========
CORPORATION BY-LAWS
The Corporation's by-laws provide for the shareholders to be allocated or distributed shares of profits and losses, cash flow from operations and sale or refinancing proceeds according to their respective ownership percentages.
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the Corporation to affiliates of JMB Realty Corporation as of December 31, 1999 and for the years ended December 31, 1999, 1998 and 1997 are as follows:
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with the Corporate General Partner, its affiliates or their management other than those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements filed with this annual report).
(2) Exhibits.
3.1. Agreement of Limited Partnership is set forth as Exhibit A of the Partnership's Prospectus, which is incorporated herein by reference to the Partnership's Registration Statement on Form S-11 (File No. 33-19463) dated May 24, 1988.
4.1. Assignment Agreement, which is Exhibit B of the Partnership's Prospectus, is hereby incorporated herein by reference to Exhibit 4.1 of the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-17705) dated March 25, 1994.
10.1. Agreement of Partnership of JMB/Landings Associates dated July 14, 1988, by and between Carlyle Income Plus, Ltd. and the Partnership, hereby incorporated herein by reference to Post-Effective Amendment No. 2 to the Form S-11 (File No. 33-19463) Registration Statement of the Partnership dated September 28, 1988.
10.2 Acquisition documents relating to the purchase by the Partnership of a portion of the common stock in 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C. is hereby incorporated by reference to the Partnership's prospectus on Form S-11 (File No. (33-19463)) dated June 5, 1990 as amended.
10.3 Closing statement dated January 28, 1994 relating to the refinancing by 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C., is hereby incorporated herein by reference to the Partnership's report for March 31, 1994 on Form 10-Q (File No. 0-17705) dated May 11, 1994.
10.4 Secured promissory note dated January 28, 1994 in the amount of $6,500,000 relating to the refinancing by 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C., is hereby incorporated herein by reference to the Partnership's report for March 31, 1994 on Form 10-Q (File No. 0- 17705) dated May 11, 1994.
10.5 Secured promissory note dated January 28, 1994 in the amount of $500,000 relating to the refinancing by 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C., is hereby incorporated herein by reference to the Partnership's report for March 31, 1994 on Form 10-Q (File No. 0-17705) dated May 11, 1994.
10.6 Real Property Purchase Agreement between CIP/Ashby Partners and WRIT Limited Partnership dated July 19, 1996 relating to the sale by the Partnership (through the CIP/Ashby joint venture) of the Ashby at Mclean Apartments is hereby incorporated herein by reference to the Partnership's report for August 26, 1996 on Form 8-K (File No. 0-17705) dated September 6, 1996.
10.7 Real Property Purchase Agreement between JMB/Landings Associates and Inland Real Estate Acquisitions, Inc., dated November 25, 1997 relating to the sale of the Landings Shopping Center is hereby incorporated herein by reference to the Partnership's report for December 30, 1997 on Form 8-K (File No. 0-17705) dated January 12, 1998.
10.8 Real Property Purchase Agreement between 1225 Investment Corporation and BRE/Connecticut L.L.C., dated February 10, 1999 relating to the sale of the 1225 Connecticut Avenue office building is hereby incorporated herein by reference to the Partnership's report for March 29, 1999 on Form 8-K (File No. 0-17705) dated April 8, 1999.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
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No annual report or proxy material for the fiscal year 1999 has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CARLYLE INCOME PLUS, L.P. - II
By: JMB Realty Corporation Corporate General Partner
____________________________________ By: Gailen J. Hull Senior Vice President Date: March 24, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation Corporate General Partner
JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 24, 2000
NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 24, 2000
H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 24, 2000
_____________________________________ By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 24, 2000
A. LEE SACKS* By: A. Lee Sacks, Director Date: March 24, 2000
STUART C. NATHAN* By: Stuart C. Nathan, Executive Vice President and Director Date: March 24, 2000
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
______________________________________ By: Gailen J. Hull, Attorney-in-Fact Date: March 24, 2000
CARLYLE INCOME PLUS, L.P. - II
EXHIBIT INDEX
DOCUMENT INCORPORATED BY REFERENCE ------------
3.1. Amended and Restated Agreement Yes of Limited Partnership, incorporated by reference to Exhibit A of the Partnership's Prospectus
4.1. Assignment Agreement, incorporated Yes by reference to Exhibit B to the Partnership's Prospectus
10.1.- Material Contracts Yes 10.8.
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with the Corporate General Partner, its affiliates or their management other than those described in Items 10 and 11 above.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements filed with this annual report).
(2) Exhibits.
3.1. Agreement of Limited Partnership is set forth as Exhibit A of the Partnership's Prospectus, which is incorporated herein by reference to the Partnership's Registration Statement on Form S-11 (File No. 33-19463) dated May 24, 1988.
4.1. Assignment Agreement, which is Exhibit B of the Partnership's Prospectus, is hereby incorporated herein by reference to Exhibit 4.1 of the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-17705) dated March 25, 1994.
10.1. Agreement of Partnership of JMB/Landings Associates dated July 14, 1988, by and between Carlyle Income Plus, Ltd. and the Partnership, hereby incorporated herein by reference to Post-Effective Amendment No. 2 to the Form S-11 (File No. 33-19463) Registration Statement of the Partnership dated September 28, 1988.
10.2 Acquisition documents relating to the purchase by the Partnership of a portion of the common stock in 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C. is hereby incorporated by reference to the Partnership's prospectus on Form S-11 (File No. (33-19463)) dated June 5, 1990 as amended.
10.3 Closing statement dated January 28, 1994 relating to the refinancing by 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C., is hereby incorporated herein by reference to the Partnership's report for March 31, 1994 on Form 10-Q (File No. 0-17705) dated May 11, 1994.
10.4 Secured promissory note dated January 28, 1994 in the amount of $6,500,000 relating to the refinancing by 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C., is hereby incorporated herein by reference to the Partnership's report for March 31, 1994 on Form 10-Q (File No. 0- 17705) dated May 11, 1994.
10.5 Secured promissory note dated January 28, 1994 in the amount of $500,000 relating to the refinancing by 1225 Investment Corporation which owns 1225 Connecticut Avenue in Washington, D.C., is hereby incorporated herein by reference to the Partnership's report for March 31, 1994 on Form 10-Q (File No. 0-17705) dated May 11, 1994.
10.6 Real Property Purchase Agreement between CIP/Ashby Partners and WRIT Limited Partnership dated July 19, 1996 relating to the sale by the Partnership (through the CIP/Ashby joint venture) of the Ashby at Mclean Apartments is hereby incorporated herein by reference to the Partnership's report for August 26, 1996 on Form 8-K (File No. 0-17705) dated September 6, 1996.
10.7 Real Property Purchase Agreement between JMB/Landings Associates and Inland Real Estate Acquisitions, Inc., dated November 25, 1997 relating to the sale of the Landings Shopping Center is hereby incorporated herein by reference to the Partnership's report for December 30, 1997 on Form 8-K (File No. 0-17705) dated January 12, 1998.
10.8 Real Property Purchase Agreement between 1225 Investment Corporation and BRE/Connecticut L.L.C., dated February 10, 1999 relating to the sale of the 1225 Connecticut Avenue office building is hereby incorporated herein by reference to the Partnership's report for March 29, 1999 on Form 8-K (File No. 0-17705) dated April 8, 1999.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
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No annual report or proxy material for the fiscal year 1999 has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CARLYLE INCOME PLUS, L.P. - II
By: JMB Realty Corporation Corporate General Partner
____________________________________ By: Gailen J. Hull Senior Vice President Date: March 24, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation Corporate General Partner
JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 24, 2000
NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 24, 2000
H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 24, 2000
_____________________________________ By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 24, 2000
A. LEE SACKS* By: A. Lee Sacks, Director Date: March 24, 2000
STUART C. NATHAN* By: Stuart C. Nathan, Executive Vice President and Director Date: March 24, 2000
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
______________________________________ By: Gailen J. Hull, Attorney-in-Fact Date: March 24, 2000
CARLYLE INCOME PLUS, L.P. - II
EXHIBIT INDEX
DOCUMENT INCORPORATED BY REFERENCE ------------
3.1. Amended and Restated Agreement Yes of Limited Partnership, incorporated by reference to Exhibit A of the Partnership's Prospectus
4.1. Assignment Agreement, incorporated Yes by reference to Exhibit B to the Partnership's Prospectus
10.1.- Material Contracts Yes 10.8.
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No