SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549


                           FORM 10-K


         Annual Report Pursuant to Section 13 or 15(d)
            of the Securities Exchange Act of 1934


For the fiscal year 
ended December 31, 1997  Commission file number 0-8915        



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


          Illinois            36-2875192                      
(State of organization)(I.R.S. Employer Identification No.)        


900 N. Michigan Ave., Chicago, Illinois60611                        
(Address of principal executive office)(Zip Code)                      


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


Securities registered pursuant to Section 12(b) of the Act:

                                Name of each exchange on      
Title of each class               which registered            
-------------------       -------------------------------     

       None                            None                   


Securities registered pursuant to Section 12(g) of the Act:

                 LIMITED PARTNERSHIP INTERESTS
                       (Title of class)


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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K   [ X ]

State the aggregate market value of the voting stock held by non-affiliates
of the Registrant.  Not applicable.

Documents incorporated by reference:  None



<PAGE>


                       TABLE OF CONTENTS



                                                  Page
                                                  ----
PART I

Item 1.    Business. . . . . . . . . . . . . . . .   1

Item 2.    Properties. . . . . . . . . . . . . . .   4

Item 3.    Legal Proceedings . . . . . . . . . . .   6

Item 4.    Submission of Matters to a 
           Vote of Security Holders. . . . . . . .   6


PART II

Item 5.    Market for the Partnership's Limited 
           Partnership Interests and 
           Related Security Holder Matters . . . .   6

Item 6.    Selected Financial Data . . . . . . . .   7

Item 7.    Management's Discussion and Analysis 
           of Financial Condition and Results 
           of Operations . . . . . . . . . . . . .  11

Item 7A.   Quantitative and Qualitative 
           Disclosures About Market Risk . . . . .  15

Item 8.    Financial Statements and 
           Supplementary Data. . . . . . . . . . .  16

Item 9.    Changes in and Disagreements 
           with Accountants on Accounting 
           and Financial Disclosure. . . . . . . .  37


PART III

Item 10.   Directors and Executive Officers 
           of the Partnership. . . . . . . . . . .  37

Item 11.   Executive Compensation. . . . . . . . .  40

Item 12.   Security Ownership of Certain 
           Beneficial Owners and Management. . . .  41

Item 13.   Certain Relationships and 
           Related Transactions. . . . . . . . . .  42


PART IV

Item 14.   Exhibits, Financial Statement Schedules, 
           and Reports on Form 8-K . . . . . . . .  42


SIGNATURES . . . . . . . . . . . . . . . . . . . .  44








                               i


<PAGE>


                            PART I


ITEM 1.  BUSINESS

     All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.  Capitalized terms used herein, but
not defined, have the same meanings as used in the Notes.

     The registrant, Carlyle Real Estate Limited Partnership-VII (the
"Partnership"), is a limited partnership formed in 1976 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property.  The Partnership sold $18,000,000 in Limited Partnership
Interests (the "Interests") to the public commencing on October 17, 1977
pursuant to a Registration Statement on Form S-11 under the Securities Act
of 1933 (Registration No. 2-59231).  A total of 18,000 Interests were sold
to the public at $1,000 per Interest.  The offering closed March 31, 1978. 
No 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.  Such
equity investments have been held by fee title, leasehold estates and/or
through joint venture partnership interests.  The Partnership's remaining
real estate investment is located in the State of California and it has no
real estate investments located outside of the United States or in any
other country.  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, 2027.  The Partnership
is self-liquidating in nature.  At sale of a particular property, the net
proceeds, if any, are generally distributed or reinvested in existing
properties rather than invested in acquiring additional properties.  As
discussed further in Item 7, the Partnership currently expects to conduct
an orderly liquidation of its remaining investment property as quickly as
practicable and to wind up its affairs not later than December 31, 1999,
perhaps in 1998, barring any unforeseen economic developments.

     The Partnership has made the real property investments set forth in
the following table:



<PAGE>


<TABLE>
<CAPTION>
                                             SALE OR DISPOSITION 
                                               DATE OR IF OWNED
                                             AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY                DATE OF  ORIGINAL INVESTED
    AND LOCATION (d)        SIZE     PURCHASECAPITAL PERCENTAGE (a)    TYPE OF OWNERSHIP
----------------------   ----------  ------------------------------    ---------------------
<S>                     <C>         <C>    <C>                         <C>
1. Waterford Corners
    Shopping Center
    Waterford Township,
    Michigan . . . .       73,000     3-8-77        3-17-78            fee ownershipof land and
                           sq.ft.                                      improvements
                           g.l.a.
2. Place II Apartments
    Phoenix, Arizona      161 units   6-6-77        4-1-82             fee ownership of land and
                                                                       improvements 
3. Southland Mall
    Columbus, Ohio .      119,000     7-15-77       1-1-84             fee ownership of land and
                           sq.ft.                                      improvements
                           g.l.a.
4. Walnut Bend 
    Apartments
    Dallas, Texas. .      260 units   10-1-77       6-27-83            fee ownership of land and
                                                                       improvements 
5. Bellfort II 
    Apartments
    Houston, Texas .      180 units   7-15-77       3-29-85            fee ownership of land and
                                                                       improvements (through joint
                                                                       venture partnership) 
6. Spice Island 
    Apartments
    Houston, Texas .      256 units   9-16-77       5-31-84            fee ownership of land and
                                                                       improvements
7. Bush River Mall
    Columbia, 
    South Carolina .      108,000     7-15-77      12-15-83            fee ownership of land and
                           sq.ft.                                      improvements 
                           g.l.a.
8. Oakridge Mall
    San Jose, 
    California . . .      335,000    10-15-77         22%              fee ownership of improve-  

                           sq.ft.                                      ments and ground leasehold
                           g.l.a.                                      interest in land (through
                                                                       joint venture partnership)
                                                                       (b)(c)(e)
9.  Windridge Apartments
     Dallas, Texas .      232 units  12-29-77       10-1-89            fee ownership of land and
                                                                       improvements (through joint
                                                                       venture partnership)


<PAGE>


                                             SALE OR DISPOSITION 
                                               DATE OR IF OWNED
                                             AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY                DATE OF  ORIGINAL INVESTED
    AND LOCATION (d)        SIZE     PURCHASECAPITAL PERCENTAGE (a)    TYPE OF OWNERSHIP
----------------------   ----------  ------------------------------    ---------------------

10. Shadowridge of 
     San Antonio 
     Apartments
     San Antonio, Texas   252 units  12-29-77       8-29-83            fee ownership of land and
                                                                       improvements
11. North Chase 
     Apartments
     Houston, Texas.      294 units   4-7-78        2-5-91             fee ownership of land and 
                                                                       improvements (through joint
                                                                       venture partnerships)
12. Wakefield 
     Apartments
     Marietta, Georgia    312 units   7-31-78      12-20-82            fee ownership of land and
                                                                       improvements 

<FN>

---------------

(a) The computation of this percentage for the property held at December 31, 1997 does not include amounts
invested from sources other than the original net proceeds of the public offering as described above and in Item
7.

(b) Reference is made to the Notes filed with this annual report for the current outstanding principal balance
and a description of the long-term mortgage indebtedness secured by the Partnership's real property investment and
for a description of the leasehold interest, under a ground lease, in the land on which the improvements in this
real property investment are situated.

(c) Reference is made to the Notes filed with this annual report for a description of the joint venture
partnership through which the Partnership has made this real property investment.

(d) Reference is made to Item 8 - Schedule III filed with this annual report for further information concerning
real estate taxes and depreciation.

(e) Reference is made to Item 6 - Selected Financial Data for additional operating and lease expiration data
concerning this investment property.

</TABLE>


<PAGE>



     The Partnership's remaining real property investment is subject to
competition from similar types of properties (including properties owned by
affiliates of the General Partners) in the vicinity in which it is located.

Such competition is generally for the retention of existing tenants. 
Reference is made to Item 7 below for a discussion of competitive
conditions and future capital improvement plans of the Partnership and its
remaining investment property.  Approximate occupancy levels for the
property are set forth in the table in Item 2 below to which reference is
hereby made.  The Partnership maintains the suitability and competitiveness
of its property in its market primarily on the basis of effective rents,
tenant mix, tenant allowances and service provided to tenants.  In the
opinion of the Corporate General Partner of the Partnership, the remaining
investment property held at December 31, 1997 is adequately insured. 
Although there is earthquake insurance coverage for a portion of the value
of the Partnership's investment property, the Corporate General Partner
does not believe that such coverage for the entire replacement cost of the
investment property is available on economic terms.

     Reference is made to the Notes for a schedule of minimum lease
payments to be received in each of the next five years, and in the
aggregate thereafter, under leases in effect at the Partnership's property
as of December 31, 1997.

     The Partnership has no employees.

     The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.


ITEM 2.  PROPERTIES

     The Partnership owns or owned directly or through joint venture
partnerships the properties or interests in the properties referred to
under Item 1 above to which reference is hereby made for a description of
said properties.

     The following is a listing of principal businesses or occupations
carried on in and approximate physical occupancy levels by quarter during
fiscal years 1997 and 1996 for the Partnership's remaining investment
property:



<PAGE>


<TABLE>
<CAPTION>
                                                   1996                    1997           
                                         --------------------------------------------------
                                              At    At    At   At    At    At    At    At 
                           Principal Business3/31  6/30  9/3012/31  3/31  6/30  9/30 12/31
                           ----------------------  ----  ---------  ----  ---- ----- -----
<S>                        <C>              <C>   <C>   <C> <C>    <C>   <C>  <C>   <C>   
1.  Oakridge Mall
      San Jose, California Retail             88%   88%   88%  92%   91%   90%   90%   94%

----------
<FN>


     Reference is made to Item 6, Item 7 and to the Notes for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's remaining investment property.

</TABLE>


<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

     The Partnership is not presently subject to any material pending legal
proceedings.



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during
fiscal years 1996 and 1997.



                            PART II

ITEM 5.  MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTEREST
           AND RELATED SECURITY HOLDER MATTERS


     As of December 31, 1997, there were 1,641 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 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 Interests, without regard to the results of
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 distribution
is made.

     Reference is made to Item 6 below for a discussion of cash
distributions made to the Limited Partners.

     Reference is made to Item 7 for a discussion of unsolicited tender 
offers received from unaffiliated third parties.


<PAGE>


<TABLE>
ITEM 6.  SELECTED FINANCIAL DATA

                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURES

                   YEARS ENDED DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993
                         (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
                           1997        1996         1995        1994         1993    
                       -----------  ----------   ----------  ----------   ---------- 
<S>                   <C>          <C>          <C>         <C>          <C>         

Total income . . . . . $10,378,344   8,761,868    8,438,395   7,996,717    8,179,492 
                       ===========  ==========   ==========  ==========   ========== 
Earnings (loss) before
 gain on sale of
 investment property . $ 1,651,012     656,212      954,353   1,003,409      726,111 
Gain on sale of invest-
 ment property . . . .       --          --           --          --       2,667,071 
Extraordinary item, net
 of venture partner's
 share . . . . . . . .       --          --        (391,010)      --           --    
                       -----------  ----------   ----------  ----------   ---------- 
Net earnings (loss). . $ 1,651,012     656,212      563,343   1,003,409    3,393,182 
                       ===========  ==========   ==========  ==========   ========== 
Net earnings (loss)
 per Interest (b):
    Earnings (loss)
     before gain on 
     sale of invest-
     ment property . . $     88.03       34.99        50.88       53.50        38.72 
    Gain on sale of 
     investment 
     property. . . . .       --          --           --          --          146.65 
    Extraordinary item, 
     net of venture 
     partner's share .       --          --          (21.50)      --           --    
                       -----------  ----------   ----------  ----------   ---------- 
    Net earnings (loss)$     88.03       34.99        29.38       53.50       185.37 
                       ===========  ==========   ==========  ==========   ========== 
Total assets . . . . . $25,211,227  24,881,744   28,723,368  16,393,988   15,729,136 
Long-term debt . . . . $     --     23,002,015   24,532,836  13,741,800   14,245,434 
Cash distributions per 
 Interest (c). . . . . $     --         125.00        --           5.00        20.00 
                       ===========  ==========   ==========  ==========   ========== 



<PAGE>


<FN>
-------------

    (a)  The above summary of financial data should be read in
conjunction with the consolidated financial statements and the related
notes appearing elsewhere in this annual report.

    (b)  The net earnings (loss) per Interest is based upon the number
of Interests outstanding at the end of each period (18,005).

    (c)  Cash distributions from the Partnership are generally not equal
to Partnership income (loss) for financial reporting or Federal income tax
purposes.  Each Partner's taxable income (or loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of
the Partnership, without regard to the cash generated or distributed by the
Partnership.  Accordingly, cash distributions to the Limited Partners since
the inception of the Partnership have not resulted in taxable income to
such Limited Partners and have therefore represented a return of capital.

</TABLE>


<PAGE>


<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1997


<CAPTION>

Property
--------

Oakridge Mall   a)   The gross leasable area ("GLA") occupancy 
                     rate and average base rent per square foot 
                     as of December 31 for each of the last 
                     five years were as follows:

                                              GLA           Avg. Base Rent Per
                      December 31,       Occupancy Rate     Square Foot (1)
                      ------------       --------------     ------------------
<S>             <C>   <C>                <C>                <C>

                           1993. . . . .      96%              16.01
                           1994. . . . .      93%              17.07
                           1995. . . . .      88%              18.04
                           1996. . . . .      92%              17.53
                           1997. . . . .      94%              18.77
<FN>
                           (1)  Average base rent per square foot is based on GLA occupied
                                as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
                                                        Base Rent Scheduled LeaseLease
                b)     Significant Tenants   Square FeetPer Annum Expiration DateRenewal Option(s)
                       -------------------   -------------------- --------------------------------
<S>             <C>    <C>                   <C>        <C>       <C>           <C>

                       Oakridge Lanes II      48,500    $145,000  8/2003        N/A
                       (Entertainment)

                       Michaels               23,332     303,316  6/1999        N/A
                       (Variety)

                       Oakridge 6 Theatre     15,346      67,067  12/1998       N/A
                       (Entertainment)

                       Walgreens              15,268     244,288  06/1999       N/A
                       (Drug)
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                c)     The following table sets forth as of 
                       December 31, 1997 certain information 
                       with respect to the expiration of 
                       leases for the next ten years at the 
                       Oakridge Mall:

                                                                   Annualized     Percent of
                                      Number of     Approx. Total  Base Rent      Total 1997
                       Year Ending    Expiring      GLA of Expiringof Expiring    Base Rent
                       December 31,   Leases        Leases         Leases         Expiring
                       ------------   ---------     --------------------------    ----------
<S>             <C>    <C>            <C>           <C>            <C>            <C>

                         1998             9            29,667        359,627            6%
                         1999            11            53,748      1,015,577           18%
                         2000             6            11,012        418,277            7%
                         2001             6            21,410        498,831            9%
                         2002             4             9,693        308,992            5%
                         2003            10            68,475        510,576            9%
                         2004            11            24,494        682,514           12%
                         2005             6             7,902        296,374            5%
                         2006            11            23,547        620,401           11%
                         2007            14            48,632        914,255           16%

</TABLE>


<PAGE>


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 $16,270,000 (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 reserves.  A portion of such proceeds
were utilized to acquire the properties described in Item 1 above.

     During 1996, some of the Holders of Interests in the Partnership
received from unaffiliated third parties unsolicited tender offers to
purchase up to 4.9% of the Interests in the Partnership for amounts ranging
from $335 to $475 per Interest.  The Partnership recommended against
acceptance of these offers on the basis that, among other things, the offer
prices were inadequate.  Such offers have expired.

     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.  The
Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests.

     The Partnership is also aware that, in June 1997, two 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 $350 and $485 per
Interest.  These offers expired in August 1997.  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 3.78% of the outstanding Interests
have been purchased by such unaffiliated third parties either pursuant to
such tender offers or through negotiated purchases.

     It is possible that other offers for Interests may be made by
unaffiliated third parties in the future, although there is no assurance
that any third party will commence an offer for Interests, the terms of any
such offer or whether any such offer, if made, will be consummated, amended
or withdrawn.

     At December 31, 1997, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $4,078,000.  Such funds will be
utilized for working capital requirements and distributions to partners. 
The Partnership and its consolidated venture have currently budgeted
approximately $132,000 in 1998 for tenant improvements and other capital
expenditures at the Oakridge investment property.  The Partnership's share
of such items in 1998 is currently budgeted to be approximately $66,000. 
Actual amounts expended in 1998 may vary depending on a number of factors
including actual leasing activity, results of property operations,
liquidity considerations and other market conditions over the course of the
year.  The sources of capital (in addition to the cash and cash
equivalents) for such items and for both short-term and long-term future
liquidity and distributions are expected to be through net cash generated
by Oakridge and from its sale and/or refinancing.  In such regard,
reference is made to the Partnership's property specific discussion below
and also to the Partnership's disclosure of property lease expirations in
Item 6.  The Partnership's and its venture's mortgage obligation secured by
the Oakridge investment property is non-recourse and is secured solely by
the investment property.  The Partnership and its venture are not
personally liable for the payment of the mortgage indebtedness.


<PAGE>


     There are certain risks associated with the Partnership's investment
made through a joint venture including the possibility that the
Partnership's joint venture partner in an investment might become unable or
unwilling to fulfill their financial or other obligations, or that such
joint venture partner may have economic or business interests or goals that
are inconsistent with those of the Partnership.

     OAKRIDGE MALL

     The Partnership has been in discussions with potential buyers for the
Oakridge Shopping Mall (on behalf of the venture) or the Partnership's
interest in the property.  In March 1998, an agreement in principle was
reached to sell the Partnership's interest in the property to the venture
partner.  If the sale is consummated on the proposed terms, the Partnership
would recognize a gain for financial reporting and Federal income tax
purposes.  There can be no assurances that the sale will be consummated
under the terms of the agreement or under any other terms.  However, upon
the ultimate sale of the property or the Partnership's interest in the
property, the Partnership would then proceed to terminate its affairs.

     The mortgage loan was scheduled to mature in February 1998, however,
the venture exercised its option to extend the loan for six months to
August 1998.  Accordingly, the mortgage loan has been classified as current
in the accompanying consolidated financial statements at December 31, 1997.

Such short-term extension is currently considered adequate given the
venture's current property sale plans.  However, if the venture is
unsuccessful in selling the property before the current loan maturity date,
the venture would seek an additional loan extension from the current lender
or would seek to refinance the mortgage loan.

     Montgomery Ward, an anchor department store, which owns its own
facility at Oakridge Mall, filed for bankruptcy protection pursuant to
Chapter 11 of the Federal Bankruptcy Code on July 7, 1997.  The anchor
store continues to operate and fulfill its obligations under its operating
agreement.

     The property underwent a major remodeling and expansion which was
completed in 1996.  Capital expenditures related to the expansion and
remodeling and tenant improvement and other leasing costs associated with
the mall expansion were funded by a separate $8,000,000 construction
holdback from the February 1995 refinancing.  Pursuant to the Oakridge
venture agreement, 50% of any partner funding obligations for items such as
capital costs were required to be funded by each venture partner.  However,
additional partner fundings related to the expansion and remodeling were
not required.

     In July 1996, Oakridge venture distributed $5,400,000 (of which the
Partnership's share was $2,700,000) of previously restricted refinancing
proceeds.  Subsequently, in August 1996, the Partnership distributed
$2,250,625 ($125 per Interest) of such refinancing proceeds to the Limited
Partners and $397,169 to the General Partners.  During the fourth quarter
of 1996, Oakridge venture distributed an additional $1,500,000 to its
partners (of which the Partnership's share was $750,000).

     The property has been considered held for sale or disposition as of
December 31, 1996.  Therefore, the property is no longer subject to
continued depreciation.

GENERAL

     The Partnership continues to conserve its working capital.  All
expenditures are carefully analyzed and certain capital projects are
deferred when appropriate.  By conserving working capital, the Partnership
will be in a better position to meet its future needs since the
availability of satisfactory outside sources of capital may be limited
given the portfolio's current debt levels.  The Partnership has held its
remaining investment property longer than originally anticipated in an
effort to maximize the return to the Limited Partners.  After reviewing the


<PAGE>


sole remaining property, Oakridge Mall, and its competitive marketplace,
and considering the renovation that was completed in 1996, the General
Partners of the Partnership expect to be able to liquidate the remaining
asset as quickly as practicable.  The affairs of the Partnership are
expected to be wound up no later than December 31, 1999, perhaps in 1998,
barring unforeseen economic developments.

RESULTS OF OPERATIONS

     The increase in cash and cash equivalents at December 31, 1997 as
compared to December 31, 1996 is primarily due to the temporary investment
of cash generated from operations at the Oakridge investment property.

     The increase in rents and other receivables at December 31, 1997 as
compared to December 31, 1996 is primarily due to the timing of and
increase in lump sum recoveries due from tenants at the Oakridge investment
property.

     The increase in escrow deposits and other assets at December 31, 1997
as compared to December 31, 1996 is primarily due to the prepayment of
commissions for certain tenant leases which are considered prepaid expenses
as the leases do not commence until 1998 at the Oakridge investment
property.

     The increase in accrued rents receivable at December 31, 1997 as
compared to December 31, 1996 is due to new tenant leases and lease
renewals at the Oakridge investment property which provide for increases in
minimum lease payments over the terms of the leases.  The Partnership
accrues rental income related to these leases for the full period of
occupancy on a straight-line basis.

     The decrease in venture partner's deficit in venture at December 31,
1997 as compared to December 31, 1996 is primarily due to the increase in
rental income and the decrease in depreciation expense at the Oakridge
investment property, as discussed below.

     The increase in current portion of long-term debt and the
corresponding decrease in long-term debt at December 31, 1997 as compared
to December 31, 1996 is due to the reclassification of the mortgage loan
secured by the Oakridge investment property which is currently scheduled to
mature in August 1998.

     The increase in accounts payable at December 31, 1997 as compared to
December 31, 1996 is primarily due to an increase in accrued ground rent
participation related to the increase in accrued rents receivable at the
Oakridge investment property. As discussed more fully in the notes, the
ground lease provides for the payment of additional ground rent related to
the operations of the Oakridge investment property.

      The increase in rental income for the year ended December 31, 1997 as
compared to the year ended December 31, 1996 is primarily due to increased
average occupancy and increased effective rental rates achieved on new
leases and lease renewals during 1997 including the early lease renewal of
a tenant occupying 15,268 square feet (approximately 5% of the total gross
leasable area) at the Oakridge investment property.  The increase in rental
income for the year ended December 31, 1996 as compared to the year ended
December 31, 1995 is primarily due to an increase in occupancy of temporary
tenants at the Oakridge investment property as a result of the completion
of the mall expansion and remodeling project as well as increased sales at
the property during 1996.

     The decrease in interest income for the year ended December 31, 1997
as compared to the year ended December 31, 1996 and the year ended December
31, 1996 as compared to December 31, 1995 is primarily due to a decrease in
the amount of cash available for short-term investments as a result of
Oakridge venture distributions made to its partners and the subsequent
distribution by the Partnership to its Partners during 1996.


<PAGE>


     The decrease in depreciation expense for the year ended December 31,
1997 as compared to the year ended December 31, 1996 is due to the Oakridge
investment property being classified as held for sale as of December 31,
1996, and therefore, no longer subject to continued depreciation.  The
increase in depreciation expense for the year ended December 31, 1996 as
compared to the year ended December 31, 1995  is primarily due to the
capital additions incurred during 1996 and 1995 at the Oakridge investment
property.

     The increase in property operating expenses for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is
primarily due to the increase in ground rent participation expense
(discussed above) and increased HVAC and parking lot repairs at the
Oakridge investment property in 1997.  The increase in property operating
expenses for the year ended December 31, 1996 as compared to the year ended
December 31, 1995 is primarily due to increased ground rent expense and
increased occupancy at the Oakridge investment property.

     The decrease in amortization of deferred expenses for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is
primarily due to the full amortization of certain tenant lease commissions
at the Oakridge investment property during 1997.  The increase in
amortization of deferred expenses for the year ended December 31, 1996 as
compared to the year ended December 31, 1995 is primarily due to the
amortization of costs associated with the refinancing in 1995 of the
mortgage debt secured by the Oakridge investment property.

     The increase in general and administrative expenses for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is
primarily due to an increase in investor report printing costs,
professional liability insurance costs and outsource service fees in 1997. 
The increase in general and administrative expenses for the year ended
December 31, 1996 as compared to the year ended December 31, 1995 is
primarily due to an increase in professional services as a result of the
outsourcing of certain services in October 1995.

     The increase in venture partner's share of venture's operations for
the year ended December 31, 1997 as compared to the year ended December 31,
1996 is primarily due to the increase in rental income and the decrease in
depreciation expense at the Oakridge investment property in 1997 as
discussed above.  The decrease in venture partner's share of venture's
operations for the year ended December 31, 1996 as compared to the year
ended December 31, 1995 is primarily due to the increases in depreciation
expense, property operating expenses and amortization of deferred expenses
as well as the decrease in interest income, partially offset by the
increase in rental income, as discussed above.

     The extraordinary item, net of venture partner's share, for the year
ended December 31, 1995 was due to the retirement of indebtedness related
to the refinancing in February 1995 of the mortgage debt secured by the
Oakridge investment property.

INFLATION

     Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.

     Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership by 1999.  However, to
the extent that inflation in future periods would have an adverse impact on
property operating expenses, the effect would generally be offset by
amounts recovered from tenants as many of the long-term leases at the
Partnership's sole remaining property have escalation clauses covering
increases in the cost of operating and maintaining the property as well as
real estate taxes.  Therefore, there should be little effect on operating
earnings if the property remains substantially occupied.  In addition,


<PAGE>


substantially all of the leases contain provisions which entitle the
Partnership to participate in gross receipts of tenants above fixed minimum
amounts.



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not applicable.




<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                    (A LIMITED PARTNERSHIP)
                   AND CONSOLIDATED VENTURE

                             INDEX



Independent Auditors' Report

Consolidated Balance Sheets, December 31, 1997 and 1996

Consolidated Statements of Operations, years ended December 31, 
  1997, 1996 and 1995

Consolidated Statements of Partners' Capital Accounts (Deficits), 
  years ended December 31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows, years ended December 31, 
  1997, 1996 and 1995

Notes to Consolidated Financial Statements

                                                SCHEDULE

   Consolidated Real Estate and Accumulated DepreciationIII          


SCHEDULES NOT FILED:

     All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.



<PAGE>














                 INDEPENDENT AUDITORS' REPORT


The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII:

     We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - VII (a limited partnership) and consolidated
venture as listed in the accompanying index.  In connection with our audits
of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index.  These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership.  Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

     In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - VII and consolidated venture at
December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three-year period ended December
31, 1997, in conformity with generally accepted accounting principles. 
Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set
forth therein.







                           KPMG PEAT MARWICK LLP              


Chicago, Illinois
March 23, 1998



<PAGE>


<TABLE>
                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURE

                                  CONSOLIDATED BALANCE SHEETS

                                  DECEMBER 31, 1997 AND 1996

                                            ASSETS
                                            ------
<CAPTION>
                                                                  1997            1996    
                                                              ------------    ----------- 
<S>                                                          <C>             <C>          
Current assets:
  Cash and cash equivalents. . . . . . . . . . . . . . . . .  $  4,078,008      3,840,380 
  Rents and other receivables. . . . . . . . . . . . . . . .       773,584        141,089 
  Escrow deposits and other assets . . . . . . . . . . . . .       304,079        251,541 
                                                              ------------    ----------- 

          Total current assets . . . . . . . . . . . . . . .     5,155,671      4,233,010 
                                                              ------------    ----------- 

  Property held for sale or disposition. . . . . . . . . . .    16,148,745     15,741,875 
                                                              ------------    ----------- 

Deferred expenses. . . . . . . . . . . . . . . . . . . . . .     1,222,059      1,247,802 
Accrued rents receivable . . . . . . . . . . . . . . . . . .     1,211,580        891,801 
Venture partner's deficit in venture . . . . . . . . . . . .     1,473,172      2,767,256 
                                                              ------------    ----------- 

                                                              $ 25,211,227     24,881,744 
                                                              ============    =========== 



<PAGE>


                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURE

                            CONSOLIDATED BALANCE SHEETS - CONTINUED

                     LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
                     -----------------------------------------------------
                                                                  1997            1996    
                                                              ------------    ----------- 
Current liabilities:
  Current portion of long-term debt. . . . . . . . . . . . . $  23,002,015      1,530,822 
  Accounts payable . . . . . . . . . . . . . . . . . . . . .     1,087,454        870,137 
  Accrued interest . . . . . . . . . . . . . . . . . . . . .       176,157        187,881 
                                                              ------------    ----------- 
          Total current liabilities. . . . . . . . . . . . .    24,265,626      2,588,840 

Tenant security deposits . . . . . . . . . . . . . . . . . .        54,562         50,862 
Long-term debt, less current portion . . . . . . . . . . . .         --        23,002,015 
                                                              ------------    ----------- 

Commitments and contingencies

          Total liabilities. . . . . . . . . . . . . . . . .    24,320,188     25,641,717 

Venture partner's subordinated equity in venture . . . . . .       105,529        105,529 

Partners' capital accounts (deficits):
  General partners:
     Capital contributions . . . . . . . . . . . . . . . . .         1,000          1,000 
     Cumulative net losses . . . . . . . . . . . . . . . . .      (631,646)      (697,686)
     Cumulative cash distributions . . . . . . . . . . . . .      (676,244)      (676,244)
                                                              ------------    ----------- 
                                                                (1,306,890)    (1,372,930)
                                                              ------------    ----------- 
  Limited partners (18,005 interests):
     Capital contributions, net of offering costs. . . . . .    16,269,038     16,269,038 
     Cumulative net earnings . . . . . . . . . . . . . . . .    15,314,883     13,729,911 
     Cumulative cash distributions . . . . . . . . . . . . .   (29,491,521)   (29,491,521)
                                                              ------------    ----------- 
                                                                 2,092,400        507,428 
                                                              ------------    ----------- 
          Total partners' capital accounts (deficit) . . . .       785,510       (865,502)
                                                              ------------    ----------- 

                                                              $ 25,211,227     24,881,744 
                                                              ============    =========== 

<FN>
                 See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURE

                             CONSOLIDATED STATEMENTS OF OPERATIONS

                         YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
                                                   1997          1996           1995     
                                               ------------  ------------   ------------ 
<S>                                           <C>           <C>            <C>           
Income:
  Rental income. . . . . . . . . . . . . . .   $ 10,127,703     8,318,615      7,761,913 
  Interest income. . . . . . . . . . . . . .        250,641       443,253        676,482 
                                               ------------  ------------   ------------ 
                                                 10,378,344     8,761,868      8,438,395 
                                               ------------  ------------   ------------ 
Expenses:
  Mortgage and other interest. . . . . . . .      2,181,931     2,324,469      2,179,802 
  Depreciation . . . . . . . . . . . . . . .          --          932,159        670,045 
  Property operating expenses. . . . . . . .      4,424,469     3,685,371      3,372,401 
  Professional services. . . . . . . . . . .         77,668        78,423         77,594 
  Amortization of deferred expenses. . . . .        245,789       280,651        169,682 
  General and administrative . . . . . . . .         98,391        84,560         44,688 
                                               ------------  ------------   ------------ 
                                                  7,028,248     7,385,633      6,514,212 
                                               ------------  ------------   ------------ 
                                                  3,350,096     1,376,235      1,924,183 
Venture partner's share of venture's 
  operations . . . . . . . . . . . . . . . .     (1,699,084)     (720,023)      (969,830)
                                               ------------  ------------   ------------ 
        Earnings (loss) before 
          extraordinary item . . . . . . . .      1,651,012       656,212        954,353 

Extraordinary item:
  Prepayment penalty and deferred mortgage
    expense on refinancing long-term debt,
    net of venture partner's share of $391,010        --            --          (391,010)
                                               ------------  ------------   ------------ 

        Net earnings (loss). . . . . . . . .   $  1,651,012       656,212        563,343 
                                               ============  ============   ============ 



<PAGE>


                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURE

                       CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED



                                                   1997          1996           1995     
                                               ------------  ------------   ------------ 
        Net earnings per limited partnership 
          interest:
            Earnings (loss) before extra-
              ordinary item. . . . . . . . .  $       88.03         34.99          50.88 
            Extraordinary item, net of venture
              partner's share. . . . . . . .          --            --            (21.50)
                                               ------------  ------------   ------------ 
                Net earnings (loss) per limited 
                 partnership interest. . . .   $      88.03         34.99          29.38 
                                               ============  ============   ============ 




























<FN>
                 See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                            CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                       (A LIMITED PARTNERSHIP)
                                      AND CONSOLIDATED VENTURE

                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

                            YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<CAPTION>
                                 GENERAL PARTNERS                             LIMITED PARTNERS (18,005 INTERESTS)
               --------------------------------------------------    ---------------------------------------------------
                                                          CONTRI- 
                                                          BUTIONS 
                      NET                                 NET OF      NET    
            CONTRI- EARNINGS     CASH                    OFFERING  EARNINGS     CASH     
            BUTIONS  (LOSS)  DISTRIBUTIONS    TOTAL       COSTS     (LOSS)  DISTRIBUTIONS  TOTAL   
            ------------------------------ ----------- ---------------------------------------------
<S>        <C>    <C>       <C>           <C>         <C>        <C>        <C>        <C>         
Balance 
 (deficit) at
 December 31, 
 1994. . . . .$1,000 (758,198)   (279,075) (1,036,273) 16,269,038 12,570,868 (27,240,896)1,599,010 

Net earnings
 (loss). . . . --      34,264       --         34,264       --       529,079       --      529,079 
Cash distribu-
 tions ($0
 per limited
 partnership
 interest) . . --       --          --          --          --         --          --        --    
             ------  --------    --------  ----------  ---------- ---------- ----------- --------- 

Balance 
 (deficit) at
 December 31, 
 1995. . . . .1,000  (723,934)   (279,075) (1,002,009) 16,269,038 13,099,947 (27,240,896)2,128,089 

Net earnings
 (loss). . . . --      26,248       --         26,248       --       629,964       --      629,964 
Cash distribu-
 tions ($125
 per limited
 partnership
 interest) . . --       --       (397,169)   (397,169)      --         --     (2,250,625)(2,250,625)
             ------  --------    --------  ----------  ---------- ---------- ----------- --------- 



<PAGE>


                            CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                       (A LIMITED PARTNERSHIP)
                                      AND CONSOLIDATED VENTURE

            CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED



                                 GENERAL PARTNERS                             LIMITED PARTNERS (18,005 INTERESTS)
               --------------------------------------------------    ---------------------------------------------------
                                                          CONTRI- 
                                                          BUTIONS 
                      NET                                 NET OF      NET    
            CONTRI- EARNINGS     CASH                    OFFERING  EARNINGS     CASH     
            BUTIONS  (LOSS)  DISTRIBUTIONS    TOTAL       COSTS     (LOSS)  DISTRIBUTIONS  TOTAL   
            ------------------------------ ----------- ---------------------------------------------

Balance
 (deficit) at
 December 31,
 1996. . . . .1,000  (697,686)   (676,244) (1,372,930) 16,269,038 13,729,911 (29,491,521)  507,428 

Net earnings
 (loss). . . . --      66,040       --         66,040       --     1,584,972       --    1,584,972 
Cash distribu-
 tions ($0
 per limited
 partnership
 interest) . . --       --          --          --          --         --          --        --    
             ------  --------    --------  ----------  ---------- ---------- ----------- --------- 

Balance
 (deficit) at
 December 31,
 1997. . . . .$1,000 (631,646)   (676,244) (1,306,890) 16,269,038 15,314,883 (29,491,521)2,092,400 
             ======  ========    ========  ==========  ========== ========== =========== ========= 












<FN>
                    See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                            CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                       (A LIMITED PARTNERSHIP)
                                      AND CONSOLIDATED VENTURE

                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                        FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
                                                    1997         1996            1995    
                                                -----------   -----------    ----------- 
<S>                                            <C>           <C>            <C>          
Cash flows from operating activities:
  Net earnings (loss). . . . . . . . . . . .    $ 1,651,012       656,212        563,343 
  Items not requiring (providing) cash or 
   cash equivalents:
    Depreciation . . . . . . . . . . . . . .          --          932,159        670,045 
    Amortization of deferred expenses. . . .        245,789       280,651        169,682 
    Venture partner's share of venture's 
      operations . . . . . . . . . . . . . .      1,699,084       720,023        969,830 
    Extraordinary item, net of venture partner's 
      share of $391,010. . . . . . . . . . .          --            --           391,010 
Changes in:
  Rents and other receivables. . . . . . . .       (632,495)      313,502        (57,016)
  Escrow deposits and other assets . . . . .        (52,538)       21,545        695,226 
  Accrued rents receivable . . . . . . . . .       (319,779)      (81,691)        (1,745)
  Accounts payable . . . . . . . . . . . . .        217,317       (39,284)        (4,030)
  Accrued interest . . . . . . . . . . . . .        (11,724)      (10,697)       171,665 
  Tenant security deposits . . . . . . . . .          3,700       (10,387)        (3,857)
                                                -----------   -----------    ----------- 
          Net cash provided by (used in)
            operating activities . . . . . .      2,800,366     2,782,033      3,564,153 
                                                -----------   -----------    ----------- 
Cash flows from investing activities:
  Net sales and maturities (purchases) 
    of short-term investments. . . . . . . .          --            --           122,949 
  Restricted funds . . . . . . . . . . . . .          --        4,294,143     (4,294,143)
  Restricted construction loan proceeds. . .          --        2,783,191     (2,783,191)
  Additions to investment property . . . . .       (406,870)   (1,186,303)    (6,050,256)
  Payment of deferred expenses . . . . . . .       (220,046)     (164,508)      (756,555)
                                                -----------   -----------    ----------- 
          Net cash provided by (used in) 
            investing activities . . . . . .       (626,916)    5,726,523    (13,761,196)
                                                -----------   -----------    ----------- 



<PAGE>


                            CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                       (A LIMITED PARTNERSHIP)
                                      AND CONSOLIDATED VENTURE
                          CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


                                                    1997         1996            1995    
                                                -----------   -----------    ----------- 
Cash flows from financing activities:
  Principal payments on long-term debt . . .     (1,530,822)   (1,396,897)   (15,315,700)
  Distributions to venture partners. . . . .       (405,000)   (3,450,000)         --    
  Initial proceeds received on refinanced 
    long-term debt . . . . . . . . . . . . .          --            --        19,000,000 
  Payments received from refinanced long-term 
    debt holdback. . . . . . . . . . . . . .          --            --         8,000,000 
  Prepayment penalty on long-term debt . . .          --            --          (708,234)
  Distributions to limited partners. . . . .          --       (2,250,625)         --    
  Distributions to general partners. . . . .          --         (397,169)         --    
                                                -----------   -----------    ----------- 
          Net cash provided by (used in) 
            financing activities . . . . . .     (1,935,822)   (7,494,691)    10,976,066 
                                                -----------   -----------    ----------- 
          Net increase (decrease) in cash 
            and cash equivalents . . . . . .        237,628     1,013,865        779,023 
          Cash and cash equivalents, 
            beginning of year. . . . . . . .      3,840,380     2,826,515      2,047,492 
                                                -----------   -----------    ----------- 
          Cash and cash equivalents, end of year$ 4,078,008     3,840,380      2,826,515 
                                                ===========   ===========    =========== 
Supplemental disclosure of cash flow information:
  Cash paid for mortgage and other interest, net
    of amounts capitalized of $179,853 in 1995  $ 2,193,655     2,335,166      2,008,137 
                                                ===========   ===========    =========== 
  Non-cash investing and financing activities:
    Extraordinary item . . . . . . . . . . .    $     --            --            73,786 
                                                ===========   ===========    =========== 











<FN>
                    See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                   AND CONSOLIDATED VENTURE

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               DECEMBER 31, 1997, 1996 AND 1995


OPERATIONS AND BASIS OF ACCOUNTING

     GENERAL

     The Partnership holds (through a joint venture) an equity investment
in a shopping center in San Jose, California.  Business activities consist
of rentals to a variety of retail companies, and the ultimate sale or
disposition of such real estate.  The Partnership currently expects to
conduct an orderly liquidation of its remaining investment and wind up its
affairs not later than December 31, 1999, perhaps in 1998, barring any
unforeseen economic developments.

     The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated venture, Oakridge
Associates ("Oakridge"), in which the Partnership has certain preferential
claims and rights, as discussed below.  The effect of all transactions
between the Partnership and the consolidated venture has been eliminated in
the consolidated financial statements.

     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 where applicable to reflect
the Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to include 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, 1997 and 1996 is summarized as follows:



<PAGE>


<TABLE>
<CAPTION>
                                           1997                          1996            
                                            -------------------------------------------------------------
                                                 TAX BASIS                     TAX BASIS 
                                 GAAP BASIS     (UNAUDITED)    GAAP BASIS     (UNAUDITED)
                                ------------    -----------   ------------    ---------- 
<S>                            <C>              <C>          <C>             <C>         
Total assets . . . . . . . . .   $25,211,227      3,279,035    24,881,744      2,919,787 
Partners' capital accounts 
 (deficit):
    General partners . . . . .    (1,306,890)    (1,345,360)   (1,372,930)    (1,388,326)
    Limited partners . . . . .     2,092,400      1,222,278       507,428        191,085 
Net earnings (loss):
    General partners . . . . .        66,040         42,966        26,248         25,942 
    Limited partners . . . . .     1,584,972      1,031,193       629,964        589,061 
Net earnings (loss) per
 limited partnership
 interest. . . . . . . . . . .         88.03          57.27         34.99          32.72 
                                 ===========     ==========   ===========    =========== 

</TABLE>


<PAGE>



     The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of each
year (18,005).  Deficit capital accounts will result, through the duration
of the Partnership, in net gain for financial 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.  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 ($3,219,670 and $2,979,126 at December
31, 1997 and 1996, respectively) as cash equivalents, which includes
investments in commercial paper and an institutional mutual fund which
holds U.S. Government obligations.  Remaining amounts, if any, (generally
with original maturities of one year or less) are reflected as short-term
investments being held to maturity.

     Deferred expenses consist primarily of commitment fees incurred in
connection with the acquisition and financing of the Partnership's sole
operating property along with lease commissions paid on the Partnership's
sole operating property.  Deferred loan fees and leasing fees are amortized
using the straight-line method over the terms stipulated in the related
agreements.

     Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
rental income for the full period of occupancy on a straight-line basis.

     No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the Partners rather than the
Partnership.  However, in certain instances, the Partnership has been or
may be required under applicable law to remit directly to the tax
authorities amounts representing withholding from distributions paid to
Partners.

     The Partnership has or had acquired, either directly or through joint
ventures, eight apartment complexes and four shopping centers.  All of the
properties have been sold or disposed of, except one shopping center.  The
remaining investment property owned at December 31, 1997 is operating.  The
cost of the remaining investment property represents the total cost to the
Partnership and its venture, plus miscellaneous acquisition costs.

     Depreciation on the Partnership's remaining property has been provided
over the estimated useful lives of its various components as follows:

                                                      YEARS
                                                      -----
      Building and improvements (new)--
        straight-line or 150% declining-balance. . .   5-40
      Building and improvements (used)--
        125% declining-balance or 
        straight-line. . . . . . . . . . . . . . . .   5-40
                                                       ====

     The investment property is pledged as security for the long-term debt,
for which there is no recourse to the Partnership.


<PAGE>


     Maintenance and repair expenses are charged to operations as incurred.

Significant betterments and improvements are 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 requires that the Partnership record an
impairment loss on its property to be held for investment whenever its
carrying value cannot be fully recovered through estimated undiscounted
future cash flows from its operations and sale.  The amount of the
impairment loss to be recognized would be the difference between the
property's carrying value and the property's estimated fair value.  The
Partnership's policy is to consider a property to be held for sale or
disposition when the Partnership has committed to a plan to sell such
property and active marketing activity has commenced or is expected to
commence in the near term.  In accordance with SFAS 121, any property
identified as "held for sale or disposition" is no longer depreciated. 
Adjustments for impairment loss for such property (subsequent to the date
of adoption of SFAS 121) are made in each period as necessary to report
these properties at the lower of carrying value or fair value less costs to
sell.  The adoption of SFAS 121 did not have any effect on the
Partnership's financial position, results of operations or liquidity.

     As the venture had committed to a plan to sell the Partnership's
remaining property, the property was classified as held for sale as of
December 31, 1996, and therefore, is not subject to continued depreciation
beginning January 1, 1997.  The results of operations of the Partnership's
remaining property included in the accompanying consolidated financial
statements were net income of $3,398,168, $1,440,046 and $1,939,659 for the
years ended December 31, 1997, 1996 and 1995, respectively.

     During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued.  These standards became
effective for reporting periods after December 15, 1997.  As the
Partnership's capital structure only has general and limited partnership
interests, the Partnership will not experience any significant impact on
its consolidated financial statements.

     The Partnership at December 31, 1997 is a party to one operating joint
venture agreement.  Pursuant to such agreement, the Partnership made
initial capital contributions of $3,352,642 (before legal and other
acquisition costs and its share of operating deficits as discussed below). 
In general, the joint venture partner, who was the seller of the property
investment being acquired, made no cash contributions to the venture, but
its retention of an interest in the property, through the joint venture,
was taken into account in determining the purchase price of the
Partnership's interest (which was determined by arm's-length negotiations).

Under certain circumstances, either pursuant to the venture agreement or
due to the Partnership's obligation as a general partner, the Partnership
may be required to make additional cash contributions to the venture.

     The Partnership has acquired, through the one remaining venture, one
regional shopping mall.  The joint venture partner (who was primarily
responsible for constructing the property) was to contribute any excess of
cost over the aggregate amount available from Partnership contributions and
financing and, to the extent such funds exceeded the aggregate costs, was
to retain such excesses.  The venture property has been financed under the
long-term debt arrangement as described below.



<PAGE>


INVESTMENT PROPERTY

     OAKRIDGE MALL

     The Partnership is a general partner in the Oakridge Associates Ltd.
venture with the seller of the property.

     Pursuant to the venture agreement, beginning January 1, 1983, any net
cash flow is to be and has been distributed equally to the Partnership and
the seller.  The Partnership has a preferred position (related to the
Partnership's cash investment in the venture) with respect to distributions
of sale or refinancing proceeds from the venture.  Once the preferred
position has been satisfied, any excess sale or refinancing proceeds from
the venture are to be distributed so that the Partnership and the venture
partner equally share the proceeds.

     Venture operating profits and losses are allocated to the venture
partners generally in proportion to their distributions of net cash flow. 
In 1997, 1996 and 1995, profits and losses were allocated 50% to the
Partnership and 50% to the venture partner.  An affiliate of the venture
partner manages the property pursuant to an agreement which provides for a
management fee calculated at a percentage of certain types of income.

     The Partnership has been in discussions with potential buyers for the
Oakridge Shopping Mall (on behalf of the venture) or the Partnership's
interest in the property.

     In March 1998, an agreement in principle was reached to sell the
Partnership's interest in the property to the venture partner.  If the sale
is consummated on the proposed terms, the Partnership would recognize a
gain for financial reporting and Federal income tax purposes.  There can be
no assurances that the sale will be consummated under the terms of the
agreement or under any other terms.

     In October 1990, the Partnership and its Oakridge venture partner
finalized negotiations with the lessors to amend the ground lease at the
Oakridge Mall by adding a "purchase option" provision.  The price for
obtaining the purchase option was $2,000,000.  The Partnership and its
venture partner funded their respective 50% shares of these costs from the
cash flow of the property.  The option (which may be exercised five years
after the death of both lessors) provides for the price of the land to be
determined by a formula related to ground rent paid during the most recent
few years of the lease, and is payable in addition to the cost of the
purchase option discussed above.

     In February 1995, Oakridge refinanced the existing mortgage loan
secured by the property (which had a balance of approximately $14,165,000
at the February 1995 closing) in the amount of $27,000,000.  The mortgage
loan was scheduled to mature in February 1998, however, the venture
exercised its option to extend the loan for six months to August 1998. 
Accordingly, the mortgage loan has been classified as current in the
accompanying consolidated financial statements at December 31, 1997.  Such
short-term extension is currently considered adequate given the venture's
current property sale plans.  However, if the venture is unsuccessful in
selling the property before the current loan maturity date, the venture
would seek an additional loan extension from the current lender or would
seek to refinance the mortgage loan.

     At the February 1995 refinancing, the venture received approximately
$4,300,000 in net proceeds (after payoff of the existing loan including a
prepayment penalty of approximately $708,000 and closing costs).  These
proceeds were utilized for capital expenditures, including the replacement
of the roof, and previously deferred maintenance at the mall.  Such
refinancing resulted in recognition of an extraordinary item of $782,020
(including deferred mortgage costs and accrued interest), of which the
Partnership's share was $391,010.  The lender held back $8,000,000 of the
loan proceeds for the construction of an expansion and remodeling of the
mall which commenced in April 1995 and was completed in 1996.  As a result


<PAGE>


of the venture completing the renovation and remodel of the mall in 1996,
approximately $2,800,000 of excess proceeds from the refinancing was
released from escrow by the lender.  Additionally, after the venture's
review of the requirements for operating reserves, repairs and deferred
maintenance projects, the remaining loan proceeds of $4,294,143 were
distributed to the partners of the venture.  As a result of this
distribution of refinancing proceeds, the Partnership's preferential
position in the venture, as discussed above, was satisfied.  Accordingly,
any additional distributions of sale or refinancing proceeds will be
allocated equally to the partners of the venture.  

     Nordstrom (which owned its own store) left the center in March 1995. 
Nordstrom assigned, transferred and conveyed its interest in its land,
building and Reciprocal Easement Agreement ("REA") to Sears Roebuck and Co.
which opened its new store on October 28, 1995.  The Nordstrom closing and
Sears Roebuck and Co. opening did not have a significant adverse impact on
the operations of the mall.  The property's other anchor tenants,
Montgomery Ward and R.H. Macy, are also subject to the REA.  The REA
requirement for each anchor tenant to operate a department store under it's
specific name expired in August 1993 and in addition, the REA requirement
for each anchor tenant to operate a department store under any name expires
in August 1998.  The Partnership and its joint venture partner have decided
not to pursue extensions of the operating covenants in the REA until such
time, if ever, that negotiations for such extensions are deemed to be in
the best interest of Oakridge.


LONG-TERM DEBT

     Long-term debt consists of the following at December 31, 1997 and
1996:
                                     1997           1996   
                                 -----------    -----------
9.19% mortgage note; secured
 by the Oakridge Mall Shopping
 Center in San Jose, California;
 balance payable in monthly
 installments of $310,165 
 (including interest) until
 maturity in August 1998 . . .   $23,002,015    24,532,837 

     Less current portion of 
       long-term debt  . . . .    23,002,015     1,530,822 
                                 -----------   ----------- 

     Total long-term debt. . .   $     --       23,002,015 
                                 ===========   =========== 

     Five year maturities of long-term debt are summarized as follows:

                  1998 . . . . . . . .   $23,002,015
                  1999 . . . . . . . .        --    
                  2000 . . . . . . . .        --    
                  2001 . . . . . . . .        --    
                  2002 . . . . . . . .        --    
                                         ===========

PARTNERSHIP AGREEMENT

     Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners.  Profits from the sale or
refinancing of investment properties will be allocated to the General
Partners in an amount equal to the greater of any cash distributions of the
proceeds of any such sale or refinancing (as described below) or 1% of the
profits from the sale or refinancing.  Losses from the sale or refinancing
of investment properties will be allocated 1% to the General Partners.  The
remaining sale or refinancing profits and losses will be allocated to the
Limited Partners.


<PAGE>


     An amendment to the Partnership Agreement, effective January 1, 1991,
generally provides that notwithstanding any allocation contained in the
Agreement, if at any time profits are realized by the Partnership, any
current or anticipated event that would cause the deficit balance in
absolute amount in the Capital Account of the General Partners to be
greater than their share of the Partnership's indebtedness (as defined)
after such event, then the allocation of profits to the General Partners
shall be increased to the extent necessary to cause the deficit balance in
the Capital Account of the General Partners to be no less than their
respective shares of the Partnership's indebtedness after such event.  In
general, the effect of this amendment is to allow the deferral of the
recognition of taxable gain to the Limited Partners.  Pursuant to such
provisions, the General Partners were allocated in 1996 additional amounts
of gain for Federal income tax purposes.  Such allocations had no effect on
total Partnership assets or results of operations.

     The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership 6% of the selling price, and that the remaining proceeds (net
after expenses and retained working capital) be distributed 85% to the
Limited Partners and 15% to the General Partners.  However, the Limited
Partners shall receive 100% of such net sale proceeds until the Limited
Partners (i) have received cash distributions of sale or refinancing
proceeds in an amount equal to the Limited Partners' aggregate initial
capital investment in the Partnership and (ii) have received cumulative
cash distributions from the Partnership's operations which, when combined
with sale or refinancing proceeds previously distributed, equal a 6% annual
return on the Limited Partners' average capital investment for each year
(their initial capital investment as reduced by sale or refinancing
proceeds previously distributed) commencing with the third fiscal quarter
of 1978.  The Limited Partners have received cash distributions that
satisfied the requirements in (i) and (ii) above.


LEASES - AS PROPERTY LESSOR

     At December 31, 1997, the Partnership and its consolidated venture's
principal asset is one shopping center.  The Partnership has determined
that all leases relating to this property are properly classified as
operating leases; therefore, rental income is reported when earned and the
cost of the property, excluding cost of land, is depreciated over its
estimated useful life.  Leases with shopping center tenants range from one
to thirty years and provide for fixed minimum rent and partial
reimbursement of operating costs.  In addition, leases with shopping center
tenants provide for additional rent based upon percentages of tenants'
sales volumes.  A substantial portion of the ability of retail tenants to
honor their leases is dependent upon the retail economic sector.

     Minimum lease payments including amounts representing executory costs
(e.g.,taxes, maintenance, insurance) and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating lease agreements relating to the shopping center, are as follows:

                1998 . . . . . . .  $ 6,387,773
                1999 . . . . . . .    5,743,192
                2000 . . . . . . .    4,894,754
                2001 . . . . . . .    4,426,709
                2002 . . . . . . .    3,881,238
                Thereafter . . . .   10,688,519
                                    -----------
                    Total. . . . .  $36,022,185
                                    ===========



<PAGE>


     Additional contingent rent (based on sales by property tenants)
included in rental income was as follows:

                1995 . . . . . . .     $115,566
                1996 . . . . . . .      301,074
                1997 . . . . . . .      456,881
                                       ========

LEASES - AS PROPERTY LESSEE

     The following lease agreement has been determined to be an operating
lease.

     The Oakridge venture owns a net leasehold interest in the land
underlying the San Jose, California shopping center expiring August 31,
2008, subject to renewal for twelve five-year periods.  The lease provides
for an annual base rent of $203,357.  The lease provides that the venture
pays real estate taxes applicable to the leased land and the improvements
situated thereon.  The lease also provides for additional annual percentage
rent based upon the operations of the shopping center.  In October 1990,
the Partnership and the joint venture partner finalized negotiations with
the lessor to amend the ground lease at Oakridge Mall by adding a "purchase
option" provision.

     Minimum rental expense for 1997, 1996 and 1995 under the above
operating lease was $203,357 in each year.  Additional rental expense under
the above operating lease was $1,092,293, $850,773 and $696,896 for 1997,
1996 and 1995, respectively.

     Future minimum rental commitments under the lease are as follows:

                1998 . . . . . . .   $  203,357
                1999 . . . . . . .      203,357
                2000 . . . . . . .      203,357
                2001 . . . . . . .      203,357
                2002 . . . . . . .      203,357
                Thereafter . . . .    1,059,198
                                     ----------
                                     $2,075,983
                                     ==========


TRANSACTIONS WITH AFFILIATES

     Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of December 31,
1997 and for the years ended December 31, 1997, 1996 and 1995 are as
follows:
                                                   UNPAID AT  
                                                  DECEMBER 31,
                        1997      1996      1995     1997     
                      --------  --------  --------------------
Reimbursement (at 
 cost) for out-of-
 pocket expenses . .   $  --       5,716    10,445      --    
                       -------    ------  --------     -----  
                       $  --       5,716    10,445      --    
                       =======    ======  ========     =====  

     The Limited Partners have received an amount from sale or refinancing
proceeds in excess of their initial capital investment plus any deficiency
in a 6% cumulative annual return on their average capital investment.  The
General Partners, therefore, are entitled to participate in sale and
refinancing proceeds to the extent of their previously deferred disposition
fees earned on the properties sold to date.  All such fees, which total
$940,488, were paid as of December 31, 1997.



<PAGE>


<TABLE>

                                                                              SCHEDULE III     

                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURE

                     CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

                                       DECEMBER 31, 1997


<CAPTION>

                                                       GROSS AMOUNT AT WHICH CARRIED          
                         INITIAL COST TO                  AT CLOSE OF PERIOD (B)              
                         PARTNERSHIP (A)--------------------------------------------------------
                    -------------------------    COSTS     
                        LAND AND  BUILDINGS   CAPITALIZED    LAND AND    BUILDINGS            
                        LEASEHOLD   AND        SUBSEQUENT    LEASEHOLD      AND               
           ENCUMBRANCE  INTERESTSIMPROVEMENTSTO ACQUISITION  INTERESTS  IMPROVEMENTS TOTAL (C)
           ----------- ------------------------------------------------ -----------------------
<S>       <C>         <C>       <C>         <C>             <C>        <C>        <C>         
SHOPPING 
 CENTER:
  San Jose,
  California$23,002,015     -- (E) 17,952,393    16,499,0152,179,147(E)   32,272,26134,451,408
           ===========     ======= ==========    ======================   ====================

</TABLE>


<PAGE>


<TABLE>                                                           SCHEDULE III - CONTINUED     

                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURES

               CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED


<CAPTION>
                                                                     LIFE ON WHICH
                                                                     DEPRECIATION 
                                                                      IN LATEST   
                                                                     STATEMENT OF      1997   
                             ACCUMULATED          DATE OF    DATE     OPERATIONS   REAL ESTATE
                            DEPRECIATION(D)    CONSTRUCTIONACQUIRED  IS COMPUTED      TAXES   
                           ----------------    ------------------------------------------------
<S>                       <C>                 <C>        <C>      <C>             <C>         
SHOPPING 
 CENTER:
  San Jose, 
  California . . . . . . . . .   18,302,663      1978       10-15-77    5-40 years    501,891 
                                 ==========                                           ======= 
<FN>
------------------

Notes:
       (A) The initial cost represents the original purchase price of the properties.
       (B) The aggregate cost of real estate owned at December 31, 1997 for Federal income tax purposes 
           was $34,470,870.
</TABLE>


<PAGE>


<TABLE>                                                           SCHEDULE III - CONTINUED     

                         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                    (A LIMITED PARTNERSHIP)
                                   AND CONSOLIDATED VENTURES

               CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

          (C)   Reconciliation of real estate carrying costs:

<CAPTION>
                                                    1997           1996           1995    
                                                ------------   ------------  ------------ 
     <S>                                       <C>            <C>           <C>           

                    Balance at beginning of period$ 34,044,538   33,251,012    27,200,756 
                    Additions during period. .       406,870        793,526     6,050,256 
                                                ------------    -----------   ----------- 
                    Balance at end of period .  $ 34,451,408     34,044,538    33,251,012 
                                                ============    ===========   =========== 

          (D)  Reconciliation of accumulated depreciation:

                    Balance at beginning of period$ 18,302,663   17,370,504    16,700,459 
                    Provision for current period       --           932,159       670,045 
                                                ------------    -----------    ---------- 
                    Balance at end of period .  $ 18,302,663     18,302,663    17,370,504 
                                                ============    ===========    ========== 

          (E)  Property operated under ground lease.

</TABLE>


<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
         AND FINANCIAL DISCLOSURE

     There were no changes of or disagreements with accountants during
fiscal year 1997 and 1996.


                           PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

     The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation, substantially all of the
outstanding stock of which is owned, directly or indirectly, by certain of
its officers, directors, members of their families and their affiliates. 
JMB as the Corporate General Partner has responsibility for all aspects of
the Partnership's operations, subject to the requirement that sales of real
property must be approved by the Associate General Partner of the
Partnership, AGPP Associates, L.P., an Illinois limited partnership with
JMB as its sole general partner.  The limited partners of the Associate
General Partner are generally officers, directors and affiliates of JMB or
its affiliates.  The Partnership is subject to certain conflicts of
interest arising out of its relationships with the General Partners and
their affiliates as well as the fact that the General Partners and their
affiliates are engaged in a range of real estate activities.  Certain
services have been and may in the future be provided to the Partnership or
its investment properties by affiliates of the General Partners, including
property management services and insurance brokerage services.  In general,
such services are to be provided on terms no less favorable to the
Partnership than could be obtained from independent third parties and are
otherwise subject to conditions and restrictions contained in the
Partnership Agreement.  The Partnership Agreement permits the General
Partners and their affiliates to provide services to, and otherwise deal
and do business with, persons who may be engaged in transactions with the
Partnership, and permits the Partnership to borrow from, purchase goods and
services from, and otherwise to do business with, persons doing business
with the General Partners or their affiliates.  The General Partners and
their affiliates may be in competition with the Partnership under certain
circumstances, including, in certain geographical markets, for tenants
and/or for the sale of property.  Because the timing and amount of cash
distributions and profits and losses of the Partnership may be affected by
various determinations by the General Partners under the Partnership
Agreement, including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.

     The names, positions held and length of service therein of each
director, and the executive officers and certain other officers of the
Corporate General Partner are as follows:



<PAGE>


                                                 SERVED IN 
NAME                  OFFICE                     OFFICE SINCE
----                  ------                     ------------
Judd D. Malkin        Chairman                    5/03/71
                      Director                    5/03/71
                      Chief Financial Officer     2/22/96
Neil G. Bluhm         President                   5/03/71
                      Director                    5/03/71
Burton E. Glazov      Director                    7/01/71
Stuart C. Nathan      Executive Vice President    5/08/79
                      Director                    3/14/73
A. Lee Sacks          Director                    5/09/88
John G. Schreiber     Director                    3/14/73
H. Rigel Barber       Executive Vice President    1/02/87
                      Chief Executive Officer     8/01/93
Glenn E. Emig         Executive Vice President    1/01/93
                      Chief Operating Officer     1/01/95
Gary Nickele          Executive Vice President    1/01/92
                      General Counsel             2/27/84
Gailen J. Hull        Senior Vice President       6/01/88
Howard Kogen          Senior Vice President       1/02/86
                      Treasurer                   1/01/91

     There is no family relationship among any of the foregoing directors
or officers.  The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 3, 1998.  All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 3,
1998.  There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

     JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII
("Carlyle-XII"), Carlyle Real Estate Limited Partnership-XIII ("Carlyle-
XIII"),  Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV"),
Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), Carlyle Real
Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real Estate Limited
Partnership-XVII ("Carlyle-XVII"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income Properties-
IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income
Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB
Income Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII).  JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships.  Most of
the foregoing directors and officers are also officers and/or directors of
various affiliated companies of JMB including Income Growth Managers, Inc.
(the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")) and Arvida/JMB Managers, Inc. (the general partner of
Arvida/JMB Partners, L.P.) ("Arvida").  Most of such directors and officers
are also partners, directly or indirectly, of certain partnerships which
are associate general partners in the following real estate limited
partnerships: the Partnership, Carlyle-XI, Carlyle-XII, Carlyle-XIII,
Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB Income-VII, JMB
Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage
Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle Income
Plus-II and IDS/BIG.



<PAGE>


     The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:

     Judd D. Malkin (age 60) is an individual general partner of JMB
Income-IV and JMB Income-V.  Mr. Malkin has been associated with JMB since
October 1969.  Mr. Malkin is also a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers. 
He is a Certified Public Accountant.

     Neil G. Bluhm (age 60) is an individual general partner of JMB Income-
IV and JMB Income-V.  Mr. Bluhm has been associated with JMB since August
1970.  He is also a principal of Walton Street Real Estate Fund I, L.P. and
a director of USC, Inc.  Mr. Bluhm is a member of the Bar of the State of
Illinois and a Certified Public Accountant.

     Burton E. Glazov (age 59) has been associated with JMB since June 1971
and served as an Executive Vice President of JMB until December 1990.  He
is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

     Stuart C. Nathan (age 56) has been associated with JMB since July
1972.  He is a member of the Bar of the State of Illinois.

     A. Lee Sacks (age 64) has been associated with JMB since December
1972.  He is also President and a director of JMB Insurance Agency, Inc.

     John G. Schreiber (age 51) has been associated with JMB since December
1970 and served as an Executive Vice President of JMB until December 1990. 
Mr. Schreiber is President of Schreiber Investments, Inc., a company which
is engaged in the real estate investing business.  He is also a senior
advisor and partner of Blackstone Real Estate Advisors L.P., an affiliate
of the Blackstone Group, L.P.  He is also a director of USC, Inc., a
trustee of Amli Residential Property Trust and a director of a number of
investment companies advised or managed by T. Rowe Price Associates and its
affiliates.  Mr. Schreiber holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

     H. Rigel Barber (age 48) has been associated with JMB since March
1982.  He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

     Glenn E. Emig (age 50) has been associated with JMB since December,
1979.  Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation.  He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.

     Gary Nickele (age 45) has been associated with JMB since February
1984.  He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

     Gailen J. Hull (age 49) has been associated with JMB since March 1982.

He holds a Masters degree in Business Administration from Northern Illinois
University and is a Certified Public Accountant.

     Howard Kogen (age 62) has been associated with JMB since March 1973. 
He is a Certified Public Accountant.



<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

     The Partnership has no officers or directors.  The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses.  Reference is also made to the Notes filed with
this annual report for a description of such distributions and allocations.

In 1997, 1996 and 1995, the General Partners received distributions of $0,
$397,169 and $0, respectively, and a management fee of $0, $0 and $0,
respectively.  The General Partners received a share of Partnership
earnings for tax purposes aggregating $42,966 in 1997.

     JMB Realty Corporation ("JMB"), the Corporate General Partner, has
earned fees aggregating $940,488 in connection with the sales of the Place
II Apartments located in Phoenix, Arizona, the Wakefield Apartments located
in Marietta, Georgia, the Walnut Bend Apartments located in Dallas, Texas,
the Shadowridge of San Antonio Apartments located San Antonio, Texas, the
Bush River Mall Shopping Center located in Columbia, South Carolina, the
Spice Island Apartments located in Houston, Texas, the Bellfort II
Apartments located in Houston, Texas and the Windridge Apartments located
in Dallas, Texas.

    The Limited Partners have received an amount from sale or refinancing
proceeds in excess of their initial capital investment plus any deficiency
in a 6% cumulative annual return on their average capital investment.  The
General Partners, therefore, are entitled to participate in sale and
refinancing proceeds to the extent of their previously deferred disposition
fees earned on the properties sold to date which total $940,488, all of
which were paid as of December 31, 1997.

     The General Partners of the Partnership may be reimbursed for their
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's real property investments.  In 1997, the
Corporate General Partner of the Partnership was not due any reimbursement
for such out-of-pocket expenses.

     The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership. 
The relationship of the Corporate General Partner to its affiliates is set
forth above in Item 10 and Exhibit 21 hereto.



<PAGE>


<TABLE>
<CAPTION>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (a)  The following group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.

                          NAME OF                    AMOUNT AND NATURE
                          BENEFICIAL                 OF BENEFICIAL                 PERCENT
TITLE OF CLASS            OWNER                      OWNERSHIP                     OF CLASS 
--------------            ----------                 -----------------             --------
<S>                       <C>                        <C>                           <C>
Limited Partnership 
  Interests               Liquidity Fund             1,307.75 Interests indirectly 7.26%
                          Investment Corporation     (as investment manager or,
                          1900 Powell Street,        through affiliated entities,
                          Suite 730                  general partner of 5 separate
                          Emeryville, California     investment funds)
                          94608
</TABLE>
<TABLE>
<CAPTION>
     (b)  The Corporate General Partner, its officers and directors and the Associate General Partner own the
following Interests of the Partnership:

                          NAME OF                    AMOUNT AND NATURE
                          BENEFICIAL                 OF BENEFICIAL                 PERCENT
TITLE OF CLASS            OWNER                      OWNERSHIP                     OF CLASS 
--------------            ----------                 -----------------             --------
<S>                       <C>                        <C>
Limited Partnership 
  Interests               JMB Realty Corporation      5 Interests directly         Less than 1%
Limited Partnership 
  Interests               Corporate General Partner, 15 Interests directly (1)     Less than 1%
                          its officers and 
                          directors and the
                          Associate General
                          Partner as a group
<FN>
     (1)  Includes 10 Interests owned by an officer or his relatives for which such officer has investment and
voting power as to such Interests so owned.

     No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.

     Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.

     (c)  There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.

</TABLE>


<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.




                            PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this report:

       (1)  Financial Statements (See Index to Financial Statements
filed with this annual report).

       (2)  Exhibits

            3-A.* The Prospectus of the Partnership dated October 17,
1977, as supplemented on December 5, 1977, January 16, 1978 and March 28,
1978, as filed with the Commission pursuant to Rules 424(b) and 424(c), is
hereby incorporated herein by reference.

            3-B.* Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, and which agreement
is hereby incorporated herein by reference.

            4-A.  Secured promissory note #1 dated February 15, 1995
in the amount of $23,900,000 relating to the refinancing of the mortgage
note by Oakridge Associates, Ltd. which owns Oakridge Mall in San Jose,
California is hereby incorporated herein by reference to the Partnership's
Report for March 31, 1995 on Form 10-Q (File No. 0-8915) dated May 11,
1995).

            4-B.  Secured promissory note #2 dated February 15, 1995
in the amount of $3,100,000 relating to the refinancing of the mortgage
note by Oakridge Associates, Ltd. which owns Oakridge Mall in San Jose,
California is hereby incorporated herein by reference to the Partnership's
Report for March 31, 1995 on Form 10-Q (File No. 0-8915) dated May 11,
1995).

            10-A. Acquisition documents relating to the purchase by
the Partnership of an interest in Oakridge Mall in San Jose, California,
are hereby incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 2-59231) dated October 17,
1977 as amended.

            10-B. Closing statement dated February 15, 1995 relating
to the refinancing by Oakridge Associates, Ltd. which owns Oakridge Mall in
San Jose, California is hereby incorporated herein by reference to the
Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-8915)
dated May 11, 1995).



<PAGE>


            21.   List of Subsidiaries.

            24.   Powers of Attorney

            27.   Financial Data Schedule
----------

     *  Previously filed as Exhibit 3-A and 3-B, respectively, to the
Partnership's Report for December 31, 1993 on Form 10-K of the Securities
Exchange Act of 1934 (File No. 0-8915) filed on March 25, 1994 and hereby
incorporated herein by reference.

     No annual report or proxy material for the fiscal year 1997 has been
sent to the Partners of the Partnership.  An annual report will be sent to
the Partners subsequent to this filing.


<PAGE>


                          SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

              CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

              By:    JMB Realty Corporation
                     Corporate General Partner


                     GAILEN J. HULL
              By     Gailen J. Hull
                     Senior Vice President
              Date:  March 25, 1998

     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 25, 1998

                     NEIL G. BLUHM*
              By:    Neil G. Bluhm, President and Director
              Date:  March 25, 1998

                     H. RIGEL BARBER*
              By:    H. Rigel Barber, Chief Executive Officer
              Date:  March 25, 1998

                     GLENN E. EMIG*
              By:    Glenn E. Emig, Chief Operating Officer
              Date:  March 25, 1998


                     GAILEN J. HULL
              By:    Gailen J. Hull, Senior Vice President
                     Principal Accounting Officer
              Date:  March 25, 1998

                     A. LEE SACKS*
              By:    A. Lee Sacks, Director
              Date:  March 25, 1998

                     STUART C. NATHAN*
              By:    Stuart C. Nathan, 
                     Executive Vice President and Director
              Date:  March 25, 1998

              *By:   GAILEN J. HULL, Pursuant to a Power of Attorney


                     GAILEN J. HULL
              By:    Gailen J. Hull, Attorney-in-Fact
              Date:  March 25, 1998



<PAGE>


         CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

                         EXHIBIT INDEX



                                         DOCUMENT   
                                       INCORPORATED 
                                       BY REFERENCE   PAGE
                                       -------------  ----

3-A.     The Prospectus of the 
         Partnership dated October 17, 
         1977                               Yes           

3-B.     Amended and Restated Agreement 
         of Limited Partnership             Yes           

4-A.     Secured Promissory Note #1
         secured by Oakridge Mall
         in San Jose, California            Yes           

4-B.     Secured Promissory Note #2
         secured by Oakridge Mall 
         in San Jose, California            Yes           

10-A.    Acquisition documents relating 
         to the purchase by the 
         Partnership of an interest 
         in Oakridge Mall in San Jose, 
         California, are hereby 
         incorporated herein by reference 
         to the Partnership's Registration 
         Statement on Form S-11 (File 
         No. 2-59231) dated October 17, 
         1977 as amended                    Yes           

10-B.    Closing statement relating to the 
         refinancing by Oakridge Associates, 
         Ltd. of Oakridge Mall located in
         San Jose, California               Yes           

21.      List of Subsidiaries               No            

24.      Powers of Attorney                 No            

27.      Financial Data Schedule            No