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, 1996            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, Illinois    60611                        
(Address of principal executive office) (Zip Code)                      


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


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

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

       None                                      None                   


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

                      LIMITED PARTNERSHIP INTERESTS
                            (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





                            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 8.      Financial Statements and 
             Supplementary Data . . . . . . . . . . . . . .  15

Item 9.      Changes in and Disagreements 
             with Accountants on Accounting 
             and Financial Disclosure . . . . . . . . . . .  36


PART III

Item 10.     Directors and Executive Officers 
             of the Partnership . . . . . . . . . . . . . .  36

Item 11.     Executive Compensation . . . . . . . . . . . .  39

Item 12.     Security Ownership of Certain 
             Beneficial Owners and Management . . . . . . .  40

Item 13.     Certain Relationships and 
             Related Transactions . . . . . . . . . . . . .  41


PART IV

Item 14.     Exhibits, Financial Statement Schedules, 
             and Reports on Form 8-K. . . . . . . . . . . .  41


SIGNATURES    . . . . . . . . . . . . . . . . . . . . . . .  43






                                    i




                                 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,
barring any unforeseen economic developments.

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





<TABLE>
<CAPTION>
                                                      SALE OR DISPOSITION 
                                                        DATE OR IF OWNED
                                                      AT DECEMBER 31, 1996,
NAME, TYPE OF PROPERTY                      DATE OF     ORIGINAL INVESTED
    AND LOCATION (d)             SIZE      PURCHASE  CAPITAL 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)




                                                      SALE OR DISPOSITION 
                                                        DATE OR IF OWNED
                                                      AT DECEMBER 31, 1996,
NAME, TYPE OF PROPERTY                      DATE OF     ORIGINAL INVESTED
    AND LOCATION (d)             SIZE      PURCHASE  CAPITAL 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, 1996 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>





     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 renovation and 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, 1996 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, 1996.

     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 1996 and 1995 for the Partnership's remaining investment
property:





<TABLE>
<CAPTION>
                                                              1995                       1996           
                                                    -------------------------  -------------------------
                                                      At     At    At     At     At     At     At    At 
                                Principal Business   3/31   6/30  9/30  12/31   3/31   6/30   9/30 12/31
                                ------------------   ----   ----  ----  -----   ----   ----  ----- -----
<S>                             <C>                 <C>    <C>   <C>   <C>     <C>    <C>   <C>   <C>   
1.  Oakridge Mall
      San Jose, California. .   Retail                91%    91%   90%    88%    88%    88%    88%   92%

----------
<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>




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 1995 and 1996.



                                 PART II

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


     As of December 31, 1996, there were 1,714 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.





<TABLE>
ITEM 6.  SELECTED FINANCIAL DATA

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

                           YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992
                                 (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
                                 1996          1995          1994          1993          1992     
                            ------------  ------------   -----------   ------------  ------------ 
<S>                        <C>           <C>            <C>           <C>           <C>           

Total income. . . . . . .   $  8,761,868     8,438,395     7,996,717      8,179,492     8,623,739 
                            ============  ============   ===========   ============   =========== 

Operating earnings
 (loss) . . . . . . . . .   $  1,376,235     1,924,183     2,041,133      1,714,576     1,549,300 
Venture partners' share 
 of ventures' operations.       (720,023)     (969,830)   (1,037,724)      (988,465)     (997,323)
                            ------------  ------------   -----------   ------------  ------------ 
Net operating earnings
 (loss) . . . . . . . . .        656,212       954,353     1,003,409        726,111       551,977 
Gain on sale of invest-
 ment properties. . . . .          --            --            --         2,667,071       398,984 
Extraordinary item, net
 of venture partner's
 share. . . . . . . . . .          --         (391,010)        --             --            --    
                            ------------  ------------   -----------   ------------  ------------ 
Net earnings (loss) . . .   $    656,212       563,343     1,003,409      3,393,182       950,961 
                            ============  ============   ===========   ============   =========== 
Net earnings (loss)
 per Interest (b):
    Net operating 
     earnings (loss). . .   $      34.99         50.88         53.50          38.72         29.43 
    Gain on sale of invest-
     ment properties. . .          --            --            --            146.65         21.94 
    Extraordinary item, net
     of venture partner's
     share. . . . . . . .          --           (21.50)        --             --            --    
                            ------------  ------------   -----------   ------------  ------------ 
    Net earnings (loss) .   $      34.99         29.38         53.50         185.37         51.37 
                            ============  ============   ===========   ============   =========== 
Total assets. . . . . . .   $ 24,881,744    28,723,368    16,393,988     15,729,136    22,264,626 
Long-term debt. . . . . .   $ 23,002,015    24,532,836    13,741,800     14,245,434    17,967,836 
Cash distributions per 
 Interest (c) . . . . . .   $     125.00         --             5.00          20.00         20.00 
                            ============  ============   ===========   ============   =========== 





<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>




<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1996


<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>

                               1992 . . . . . .       97%                 15.33
                               1993 . . . . . .       96%                 16.01
                               1994 . . . . . .       93%                 17.07
                               1995 . . . . . .       88%                 18.04
                               1996 . . . . . .       92%                 17.53
<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 Lease Lease
                    b)     Significant Tenants       Square Feet Per Annum  Expiration Date Renewal 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       49,620   12/1997         N/A
                           (Drug)
</TABLE>




<TABLE>
<CAPTION>
                    c)     The following table sets forth as of 
                           December 31, 1996 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 1996
                           Year Ending      Expiring         GLA of Expiring  of Expiring       Base Rent
                           December 31,     Leases           Leases           Leases            Expiring
                           ------------     ---------        ---------------  -----------       ----------
<S>                 <C>    <C>              <C>              <C>              <C>               <C>

                              1997               8               24,144           408,066             8%
                              1998              14               39,003           575,012            11%
                              1999              10               38,480           767,920            15%
                              2000               6               11,012           399,097             8%
                              2001               7               23,150           445,276             8%
                              2002               3                7,243           210,534             4%
                              2003              11               69,627           545,136            10%
                              2004              10               22,754           612,993            12%
                              2005               6                7,902           296,374             6%
                              2006              11               23,547           391,865             7%

</TABLE>




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 Limited Partners in the Partnership received
from unaffiliated third parties unsolicited 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 price was
inadequate.  All such offers have expired.  As of the date of this report,
the Partnership is aware that 543.83 Interests have been purchased by such
unaffiliated third parties either pursuant to such tender offers or through
negotiated purchases.  In addition, 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.  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.

     At December 31, 1996, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $3,840,000.  Such funds will be
utilized for working capital requirements and distributions to partners. 
The Partnership and its consolidated venture have currently budgeted
approximately $1,300,000 in 1997 for tenant improvements and other capital
expenditures at the Oakridge investment property.  The Partnership's share
of such items in 1997 is currently budgeted to be approximately $650,000. 
Actual amounts expended in 1997 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 and its
replacement financing secured by the Oakridge investment property is non-
recourse and is secured by the investment property.  The Partnership and
its venture are not personally liable for the payment of the mortgage
indebtedness.

     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 Oakridge Shopping Mall was undergoing a major remodeling and
expansion which was completed in 1996.  Capital expenditures related to the
expansion and remodeling (approximately $661,500 and $5,138,000 were
incurred in 1996 and 1995, respectively) and tenant improvement and other
leasing costs associated with the mall expansion (approximately $249,000
and $351,000 were incurred in 1996 and 1995, respectively) 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 funds (as
discussed above).  Subsequently, in August 1996, the Partnership
distributed $2,250,625 ($125 per Interest) to the Limited Partners and
$397,169 to the General Partners of such refinancing proceeds.  During the
fourth quarter of 1996, Oakridge venture distributed an additional
$1,500,000 (of which the Partnership's share was $750,000).  The remaining
cash and cash equivalents of approximately $1,121,000 held by the venture
at December 31, 1996 is expected to be retained for anticipated short-term
operating reserves at the property.

     In October 1995, Macy's (which owns its own store) began an
approximately $1.7 million remodeling project which included new flooring
and other amenities.  Phase I of the project was completed in 1995 and
Phase II was completed in 1996.

     The property has been considered held for sale or disposition as of
December 31, 1996 as the Partnership intends to begin marketing the
property for sale in 1997.  Therefore, the property will no longer be
subject to continued depreciation.

GENERAL

     As a result of the real estate market conditions discussed above, 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.  Due to these factors, 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 remaining property and its competitive marketplace, 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 1999 (sooner if the property is
sold in the nearer term), barring unforeseen economic developments.

RESULTS OF OPERATIONS

     The increase in cash and cash equivalents at December 31, 1996 as
compared to December 31, 1995 was primarily due to the reclassification in
1996 of restricted funds and restricted construction loan proceeds
(originally intended to be used for the mall expansion and remodeling
project) to cash and cash equivalents as a result of the completion during
1996 of the mall expansion at the Oakridge investment property.  Partially
offsetting the increase in cash and cash equivalents, as well as
contributing to the increase in venture partner's deficit in venture, was
the distributions made to the Oakridge venture partner and the distribution
in August 1996 to the Partners of the Partnership, as discussed above.

     The decrease in rents and other receivables at December 31, 1996 as
compared to December 31, 1995 was primarily due to the timing of receipts
from tenants at the Oakridge investment property.





     The decrease in accounts payable at December 31, 1996 as compared to
December 31, 1995 was primarily due to the completion during 1996 of the
mall expansion 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 was 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.

     The decrease in interest income for the year ended December 31, 1996
as compared to the year ended December 31, 1995 was 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 during 1996,
of which each venture partner's share was $3,450,000, and the distribution
by the Partnership in August 1996 of $2,647,794 to its Partners.  The
increase in interest income and mortgage and other interest expense during
the year ended December 31, 1995 as compared to the year ended December 31,
1994 was primarily due to the retention of proceeds from the refinancing of
the mortgage debt at the Oakridge investment property in February 1995.

     The increase in depreciation expense for the year ended December
31,1996 as compared to the year ended December 31, 1995, as well as the
increase for the year ended December 31, 1995 as compared to the year ended
December 31, 1994, was primarily due to the capital additions incurred
during 1996, 1995 and 1994 at the Oakridge investment property.

     The increase in property operating expenses for the year ended
December 31, 1996 as compared to the year ended December 31, 1995 was
primarily due to increased land rental expense and increased occupancy at
the Oakridge investment property.

     The increase in amortization of deferred expenses for the year ended
December 31, 1996 as compared to the year ended December 31, 1995 was
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, 1996 when compared to the year ended December 31, 1995 was
primarily due to an increase in professional services as a result of the
outsourcing of certain services in October 1995.  The decrease in general
and administrative expense for the year ended December 31, 1995 as compared
to the year ended December 31, 1994 was primarily due to refunds received
by the Partnership in 1995 from the General Partner and its affiliates for
certain 1993 general and administrative reimbursements which were paid by
the Partnership in 1994.

     The decrease in venture partner's share of ventures operations for the
year ended December 31, 1996 as compared to the year ended December 31,
1995 was 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 decrease in venture partner's share of
venture's operations for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 was primarily due to increased mortgage
interest expense related to the February 1995 refinancing.  Partially
offsetting the decrease in 1995 was higher interest income due to receipt
of approximately $4,300,000 in net proceeds from the refinancing.

     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 commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes.  Therefore, there should be little effect on
operating earnings if the property remains substantially occupied.  In
addition, substantially all of the leases contain provisions which entitle
the Partnership to participate in gross receipts of tenants above fixed
minimum amounts.






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, 1996 and 1995

Consolidated Statements of Operations, years ended December 31, 
  1996, 1995 and 1994

Consolidated Statements of Partners' Capital Accounts (Deficits), 
  years ended December 31, 1996, 1995 and 1994

Consolidated Statements of Cash Flows, years ended December 31, 
  1996, 1995 and 1994

Notes to Consolidated Financial Statements

                                                         SCHEDULE

   Consolidated Real Estate and Accumulated Depreciation   III          


SCHEDULES NOT FILED:

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










                      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, 1996 and 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended December
31, 1996, 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 17, 1997





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

                                          CONSOLIDATED BALANCE SHEETS

                                          DECEMBER 31, 1996 AND 1995

                                                    ASSETS
                                                    ------
<CAPTION>
                                                                              1996              1995    
                                                                          ------------      ----------- 
<S>                                                                      <C>               <C>          
Current assets:
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .     $  3,840,380        2,826,515 
  Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . .            --           4,294,143 
  Rents and other receivables . . . . . . . . . . . . . . . . . . . .          141,089          454,591 
  Restricted construction loan proceeds . . . . . . . . . . . . . . .            --           2,783,191 
  Escrow and other assets . . . . . . . . . . . . . . . . . . . . . .          251,541          273,086 
                                                                          ------------      ----------- 

          Total current assets. . . . . . . . . . . . . . . . . . . .        4,233,010       10,631,526 
                                                                          ------------      ----------- 

Investment property, at cost - Schedule III:
  Land  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            --           2,179,147 
  Building and improvements . . . . . . . . . . . . . . . . . . . . .            --          31,071,865 
                                                                          ------------      ----------- 

                                                                                 --          33,251,012 
  Less accumulated depreciation . . . . . . . . . . . . . . . . . . .            --          17,370,504 
                                                                          ------------      ----------- 

          Total property held for investment,
            net of accumulated depreciation . . . . . . . . . . . . .            --          15,880,508 

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

          Total investment property . . . . . . . . . . . . . . . . .       15,741,875       15,880,508 

Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . .        1,247,802        1,363,945 
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . .          891,801          810,110 
Venture partner's deficit in venture. . . . . . . . . . . . . . . . .        2,767,256           37,279 
                                                                          ------------      ----------- 

                                                                          $ 24,881,744       28,723,368 
                                                                          ============      =========== 




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

                                    CONSOLIDATED BALANCE SHEETS - CONTINUED

                             LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
                             -----------------------------------------------------
                                                                              1996              1995    
                                                                          ------------      ----------- 
Current liabilities:
  Current portion of long-term debt . . . . . . . . . . . . . . . . .     $  1,530,822        1,396,898 
  Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . .          870,137        1,302,198 
  Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . .          187,881          198,578 
                                                                          ------------      ----------- 
          Total current liabilities . . . . . . . . . . . . . . . . .        2,588,840        2,897,674 

Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . .           50,862           61,249 
Long-term debt, less current portion. . . . . . . . . . . . . . . . .       23,002,015       24,532,836 
                                                                          ------------      ----------- 

Commitments and contingencies

          Total liabilities . . . . . . . . . . . . . . . . . . . . .       25,641,717       27,491,759 

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. . . . . . . . . . . . . . . . . . . . . .         (697,686)        (723,934)
     Cumulative cash distributions. . . . . . . . . . . . . . . . . .         (676,244)        (279,075)
                                                                          ------------      ----------- 
                                                                            (1,372,930)      (1,002,009)
                                                                          ------------      ----------- 
  Limited partners (18,005 interests):
     Capital contributions, net of offering costs . . . . . . . . . .       16,269,038       16,269,038 
     Cumulative net earnings. . . . . . . . . . . . . . . . . . . . .       13,729,911       13,099,947 
     Cumulative cash distributions. . . . . . . . . . . . . . . . . .      (29,491,521)     (27,240,896)
                                                                          ------------      ----------- 
                                                                               507,428        2,128,089 
                                                                          ------------      ----------- 
          Total partners' capital accounts (deficit). . . . . . . . .         (865,502)       1,126,080 
                                                                          ------------      ----------- 

                                                                          $ 24,881,744       28,723,368 
                                                                          ============      =========== 

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




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

                                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                 YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
                                                            1996             1995             1994     
                                                        ------------     ------------     ------------ 
<S>                                                    <C>              <C>              <C>           
Income:
  Rental income . . . . . . . . . . . . . . . . . . .   $  8,318,615        7,761,913        7,848,706 
  Interest income . . . . . . . . . . . . . . . . . .        443,253          676,482          148,011 
                                                        ------------     ------------     ------------ 
                                                           8,761,868        8,438,395        7,996,717 
                                                        ------------     ------------     ------------ 
Expenses:
  Mortgage and other interest . . . . . . . . . . . .      2,324,469        2,179,802        1,658,208 
  Depreciation. . . . . . . . . . . . . . . . . . . .        932,159          670,045          572,159 
  Property operating expenses . . . . . . . . . . . .      3,685,371        3,372,401        3,402,004 
  Professional services . . . . . . . . . . . . . . .         78,423           77,594           69,075 
  Management fees to corporate 
    general partner . . . . . . . . . . . . . . . . .          --               --               4,078 
  Amortization of deferred expenses . . . . . . . . .        280,651          169,682          179,153 
  General and administrative. . . . . . . . . . . . .         84,560           44,688           70,907 
                                                        ------------     ------------     ------------ 
                                                           7,385,633        6,514,212        5,955,584 
                                                        ------------     ------------     ------------ 
          Operating earnings (loss) . . . . . . . . .      1,376,235        1,924,183        2,041,133 
Venture partner's share of venture's 
  operations. . . . . . . . . . . . . . . . . . . . .       (720,023)        (969,830)      (1,037,724)
                                                        ------------     ------------     ------------ 
        Net operating earnings (loss)
          before extraordinary item . . . . . . . . .        656,212          954,353        1,003,409 

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) . . . . . . . . . . . . .   $    656,212          563,343        1,003,409 
                                                        ============     ============     ============ 





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

                               CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED



                                                            1996             1995             1994     
                                                        ------------     ------------     ------------ 
        Net earnings per limited partnership 
          interest:
            Net operating earnings (loss) . . . . . .   $      34.99            50.88            53.50 
            Extraordinary item, net of venture
              partner's share . . . . . . . . . . . .          --              (21.50)           --    
                                                        ------------     ------------     ------------ 
                Net earnings (loss) per limited 
                 partnership interest . . . . . . . .   $      34.99            29.38            53.50 
                                                        ============     ============     ============ 





























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




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

                          CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

                                    YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<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,
 1993 . . . . . .$1,000    (798,334)    (275,324)   (1,072,658)  16,269,038    11,607,595  (27,150,871)    725,762 

Net earnings
 (loss) . . . . . --         40,136         --          40,136        --          963,273        --        963,273 
Cash distribu-
 tions ($5
 per limited
 partnership
 interest). . . . --          --          (3,751)       (3,751)       --            --         (90,025)    (90,025)
                ------     --------     --------    ----------   ----------    ----------  -----------   --------- 
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). . . . --          --           --            --           --            --           --          --    
                ------     --------     --------    ----------   ----------    ----------  -----------   --------- 




                                    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, 
 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)
                ------     --------     --------    ----------   ----------    ----------  -----------   --------- 
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 
                ======     ========     ========    ==========   ==========    ==========  ===========   ========= 













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




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

                                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
                                                              1996            1995             1994    
                                                          -----------      -----------     ----------- 
<S>                                                      <C>              <C>             <C>          
Cash flows from operating activities:
  Net earnings (loss) . . . . . . . . . . . . . . . .     $   656,212          563,343       1,003,409 
  Items not requiring (providing) cash or 
   cash equivalents:
    Depreciation. . . . . . . . . . . . . . . . . . .         932,159          670,045         572,159 
    Amortization of deferred expenses . . . . . . . .         280,651          169,682         179,153 
    Venture partner's share of venture's 
      operations. . . . . . . . . . . . . . . . . . .         720,023          969,830       1,037,724 
    Extraordinary item, net of venture partner's 
      share of $391,010 . . . . . . . . . . . . . . .           --             391,010           --    
Changes in:
  Rents and other receivables . . . . . . . . . . . .         313,502          (57,016)        (38,140)
  Escrow deposits and other assets. . . . . . . . . .          21,545          695,226        (726,959)
  Accrued rents receivable. . . . . . . . . . . . . .         (81,691)          (1,745)        (76,478)
  Accounts payable. . . . . . . . . . . . . . . . . .         (39,284)          (4,030)        234,852 
  Accrued interest. . . . . . . . . . . . . . . . . .         (10,697)         171,665          (3,515)
  Tenant security deposits. . . . . . . . . . . . . .         (10,387)          (3,857)        (16,489)
                                                          -----------      -----------     ----------- 
          Net cash provided by (used in)
            operating activities. . . . . . . . . . .       2,782,033        3,564,153       2,165,716 
                                                          -----------      -----------     ----------- 
Cash flows from investing activities:
  Net sales and maturities (purchases) 
    of short-term investments . . . . . . . . . . . .           --             122,949       2,561,154 
  Restricted funds. . . . . . . . . . . . . . . . . .       4,294,143       (4,294,143)          --    
  Restricted construction loan proceeds . . . . . . .       2,783,191       (2,783,191)          --    
  Additions to investment property. . . . . . . . . .      (1,186,303)      (6,050,256)     (3,956,063)
  Payment of deferred expenses. . . . . . . . . . . .        (164,508)        (756,555)       (267,430)
                                                          -----------      -----------     ----------- 
          Net cash provided by (used in) 
            investing activities. . . . . . . . . . .       5,726,523      (13,761,196)     (1,662,339)
                                                          -----------      -----------     ----------- 





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

                                                              1996            1995             1994    
                                                          -----------      -----------     ----------- 
Cash flows from financing activities:
  Principal payments on long-term debt. . . . . . . .      (1,396,897)     (15,315,700)       (459,629)
  Venture partner's contributions to venture. . . . .           --               --            837,500 
  Distributions to venture partners . . . . . . . . .      (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)           --            (90,025)
  Distributions to general partners . . . . . . . . .        (397,169)           --             (3,751)
                                                          -----------      -----------     ----------- 
          Net cash provided by (used in) 
            financing activities. . . . . . . . . . .      (7,494,691)      10,976,066         284,095 
                                                          -----------      -----------     ----------- 
          Net increase (decrease) in cash 
            and cash equivalents. . . . . . . . . . .       1,013,865          779,023         787,472 
          Cash and cash equivalents, 
            beginning of year . . . . . . . . . . . .       2,826,515        2,047,492       1,260,020 
                                                          -----------      -----------     ----------- 
          Cash and cash equivalents, end of year. . .     $ 3,840,380        2,826,515       2,047,492 
                                                          ===========      ===========     =========== 
Supplemental disclosure of cash flow information:
  Cash paid for mortgage and other interest, net
    of amounts capitalized of $179,853 in 1995. . . .     $ 2,335,166        2,008,137       1,661,723 
                                                          ===========      ===========     =========== 
  Non-cash investing and financing activities . . . .     $     --               --              --    
                                                          ===========      ===========     =========== 
  Non-cash extraordinary item . . . . . . . . . . . .     $     --              73,786           --    
                                                          ===========      ===========     =========== 











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




              CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                        AND CONSOLIDATED VENTURE

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    DECEMBER 31, 1996, 1995 AND 1994


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.

     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, 1996 and 1995 is summarized as follows:





<TABLE>
<CAPTION>
                                                    1996                               1995            
                                                    -------------------------------------------------------------
                                                          TAX BASIS                          TAX BASIS 
                                         GAAP BASIS      (UNAUDITED)       GAAP BASIS       (UNAUDITED)
                                        ------------     -----------      ------------      ---------- 
<S>                                    <C>               <C>             <C>               <C>         
Total assets. . . . . . . . . . . .      $24,881,744       2,919,787       28,723,368        2,166,065 
Partners' capital accounts 
 (deficit):
    General partners. . . . . . . .       (1,372,930)     (1,388,326)      (1,002,009)      (1,017,100)
    Limited partners. . . . . . . .          507,428         191,085        2,128,089        1,852,649 
Net earnings (loss):
    General partners. . . . . . . .           26,248          25,942           34,264           29,628 
    Limited partners. . . . . . . .          629,964         589,061          529,079          711,083 
Net earnings (loss) per
 limited partnership
 interest . . . . . . . . . . . . .            34.99           32.72            29.38            39.49 
                                         ===========      ==========      ===========      =========== 

</TABLE>





     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 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 ($2,979,126 and $6,137,737 at December
31, 1996 and 1995, respectively, in which the 1995 amount includes
restricted funds) 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 properties along with
lease commissions paid on certain of the Partnership's operating
properties.  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, 1996 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.




     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" are 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, will not be 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 $1,440,046, $1,939,659 and
$2,075,449 for the years ended December 31, 1996, 1995 and 1994,
respectively.

     The Partnership at December 31, 1996 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
their 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 is 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.

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 equally to the Partnership and the
seller.




     Venture operating profits and losses are allocated to the venture
partners generally in proportion to their distributions of net cash flow. 
In 1996, 1995 and 1994, 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.

     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.

     Oakridge had been seeking a refinancing of the mortgage loan to
provide it with funds for a proposed expansion and major remodeling of the
mall.  At the time of application, Oakridge was required to make a
refundable deposit of $540,000 and to pay a non-refundable $135,000 loan
commitment fee.  The Partnership and its venture partner made contributions
to Oakridge to fund their respective 50% shares of these costs.  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 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 included the return of the refundable deposit of
$540,000.  Such refinancing resulted in an extraordinary item of $782,020
(including deferred mortgage costs and accrued interest), of which the
Partnership's share is $391,010.  These proceeds were utilized for capital
expenditures, including the replacement of the roof, and previously
deferred maintenance at the mall and were classified as restricted funds in
the accompanying consolidated balance sheet at December 31, 1995.  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.  The venture had drawn down approximately $5,217,000
from the holdback as of December 31, 1995 (the balance of the lender
holdback was classified as restricted construction loan proceeds in the
consolidated balance sheet at December 31, 1995).  As a result 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 venture concluded that the remaining loan
proceeds of $4,294,143 need no longer be classified as restricted funds
and, subsequently, 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. 
Any additional distributions of sale or refinancing proceeds will be
allocated equally to the partners of the venture.  The refinanced mortgage
loan bears interest at 9.19% per annum and requires monthly payments of
principal and interest of $310,165 until maturity in February 1998.  In
addition, Oakridge has the option to extend the loan for two 3-year
periods.  The interest rate on these extensions would be adjusted at each
period based on the then current three year U.S. Treasury rates and would
require similar payments of principal and interest.





     Nordstrom (which owned its own store) left the center in March 1995. 
Nordstrom has 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.  Due to recent developments, including the opening of Sears
in the former Nordstrom store and commencement of Macy's renovation work
(both in October 1995), the Partnership and its joint venture partner have
decided not to continue 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, 1996 and
1995:
                                             1996             1995   
                                         -----------      -----------
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 February 1998. . . . .     $24,532,837       25,929,734 

     Less current portion of 
       long-term debt . . . . . . .       1,530,822        1,396,898 
                                        -----------      ----------- 

     Total long-term debt . . . . .     $23,002,015       24,532,836 
                                        ===========      =========== 

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

                     1997 . . . . . . . . . .   $  1,530,822
                     1998 . . . . . . . . . .     23,002,015
                     1999 . . . . . . . . . .         --    
                     2000 . . . . . . . . . .         --    
                     2001 . . . . . . . . . .         --    
                                                 ===========


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.




     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, 1996, 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:

                   1997 . . . . . . . . .   $ 5,258,657
                   1998 . . . . . . . . .     5,280,917
                   1999 . . . . . . . . .     4,608,427
                   2000 . . . . . . . . .     3,925,854
                   2001 . . . . . . . . .     3,504,768
                   Thereafter . . . . . .    10,361,007
                                            -----------
                       Total. . . . . . .   $32,939,630
                                            ===========





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

                   1994 . . . . . . . . .      $504,931
                   1995 . . . . . . . . .       115,566
                   1996 . . . . . . . . .       301,074
                                               ========

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 1996, 1995 and 1994 under the above
operating lease was $203,357 in each year.  Additional rental expense under
the above operating lease was $850,773, $696,896 and $764,627 for 1996,
1995 and 1994, respectively.

     Future minimum rental commitments under the lease are as follows:

                   1997 . . . . . . . . .    $  203,357
                   1998 . . . . . . . . .       203,357
                   1999 . . . . . . . . .       203,357
                   2000 . . . . . . . . .       203,357
                   2001 . . . . . . . . .       203,357
                   Thereafter . . . . . .     1,355,717
                                             ----------
                                             $2,372,502
                                             ==========


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,
1996 and for the years ended December 31, 1996, 1995 and 1994 are as
follows:
                                                             UNPAID AT  
                                                            DECEMBER 31,
                             1996       1995        1994       1996     
                           --------   --------    --------  ------------
Management fees to 
 corporate general 
 partner. . . . . . . .     $  --         --         4,078        --    
Reimbursement (at 
 cost) for out-of-
 pocket expenses. . . .       5,716     10,445      11,820        --    
                            -------     ------    --------       -----  
                            $ 5,716     10,445      15,898        --    
                            =======     ======    ========       =====  

     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, 1996.




<TABLE>

                                                                                             SCHEDULE III     

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

                             CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

                                               DECEMBER 31, 1996


<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    INTERESTS  IMPROVEMENTS  TO ACQUISITION    INTERESTS   IMPROVEMENTS   TOTAL (C)
               -----------   ----------- ------------ ---------------    ----------  ------------ -----------
<S>           <C>           <C>         <C>           <C>               <C>         <C>          <C>         
SHOPPING 
 CENTER:
  San Jose, .                                                                (E)   
  California.  $24,532,837           (E)   17,952,393      16,092,145     2,179,147    31,865,391  34,044,538
               ===========       =======   ==========      ==========    ==========    ==========  ==========

</TABLE>




<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       1996   
                                    ACCUMULATED            DATE OF      DATE        OPERATIONS    REAL ESTATE
                                   DEPRECIATION(D)      CONSTRUCTION  ACQUIRED     IS COMPUTED       TAXES   
                                  ----------------      ------------ ----------  ---------------  -----------
<S>                              <C>                   <C>          <C>         <C>              <C>         
SHOPPING 
 CENTER:
  San Jose, 
  California. . . . . . . . . . . .    18,302,663         1978         10-15-77       5-40 years     513,249 
                                       ==========                                                    ======= 
<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, 1996 for Federal income tax purposes 
             was $34,064,002.
</TABLE>




<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>
                                                              1996             1995              1994    
                                                          ------------     ------------     ------------ 
      <S>                                                <C>              <C>              <C>           

                    Balance at beginning of period. .     $ 33,251,012       27,200,756       23,244,693 
                    Additions during period . . . . .          793,526        6,050,256        3,956,063 
                                                          ------------      -----------      ----------- 
                    Balance at end of period. . . . .     $ 34,044,538       33,251,012       27,200,756 
                                                          ============      ===========      =========== 

          (D)  Reconciliation of accumulated depreciation:

                    Balance at beginning of period. .     $ 17,370,504       16,700,459       16,128,300 
                    Provision for current period. . .          932,159          670,045          572,159 
                                                          ------------      -----------       ---------- 
                    Balance at end of period. . . . .     $ 18,302,663       17,370,504       16,700,459 
                                                          ============      ===========       ========== 

          (E)  Property operated under ground lease.

</TABLE>




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 1996 and 1995.


                                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.  AGPP Associates, L.P., an Illinois
limited partnership with JMB as its sole general partner shall be directed
by a majority in interest of its limited partners (who are generally
officers, directors and affiliates of JMB or its affiliates) as to whether
to provide its approval of any sale of real property (or any interest
therein) of the Partnership.  The Partnership is subject to certain
conflicts of interest arising out of its relationships with the General
Partners and their affiliates as well as the fact that the General Partners
and their affiliates are engaged in a range of real estate activities. 
Certain services have been and may in the future be provided to the
Partnership or its investment properties by affiliates of the General
Partners, including property management services and insurance brokerage
services.  In general, such services are to be provided on terms no less
favorable to the Partnership than could be obtained from independent third
parties and are otherwise subject to conditions and restrictions contained
in the Partnership Agreement.  The Partnership Agreement permits the
General Partners and their affiliates to provide services to, and otherwise
deal and do business with, persons who may be engaged in transactions with
the Partnership, and permits the Partnership to borrow from, purchase goods
and services from, and otherwise to do business with, persons doing
business with the General Partners or their affiliates.  The General
Partners and their affiliates may be in competition with the Partnership
under certain circumstances, including, in certain geographical markets,
for tenants for properties and/or for the sale of properties.  Because the
timing and amount of cash distributions and profits and losses of the
Partnership may be affected by various determinations by the General
Partners under the Partnership Agreement, including whether and when to
sell or refinance a property, the establishment and maintenance of
reasonable reserves, the timing of expenditures and the allocation of
certain tax items under the Partnership Agreement, the General Partners may
have a conflict of interest with respect to such determinations.

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





                                                          SERVED IN 
NAME                      OFFICE                          OFFICE SINCE
----                      ------                          ------------
Judd D. Malkin            Chairman                         5/03/71
                          Director                         5/03/71
                          Chief Financial Officer          2/22/96
Neil G. Bluhm             President                        5/03/71
                          Director                         5/03/71
Burton E. Glazov          Director                         7/01/71
Stuart C. Nathan          Executive Vice President         5/08/79
                          Director                         3/14/73
A. Lee Sacks              Director                         5/09/88
John G. Schreiber         Director                         3/14/73
H. Rigel Barber           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 7, 1997.  All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 7,
1997.  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-IX ("Carlyle-IX"), 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, Ltd.-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.-VI ("JMB Income-VI"),
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")), Arvida/JMB Managers, Inc. (the
general partner of Arvida/JMB Partners, L.P.) ("Arvida") and Arvida/JMB
Managers-II, Inc. (the general partner of Arvida/JMB Partners, L.P.-II
("Arvida-II")).  Most of such directors and officers are also partners of
certain partnerships which are associate general partners in the following
real estate limited partnerships:   Carlyle-IX, Carlyle-XI, Carlyle-XII,
Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB
Income-VI, 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.





     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 59) is an individual general partner of JMB
Income-IV and JMB Income-V.  Mr. Malkin has been associated with JMB since
October 1969.  Mr. Malkin is a director of Urban Shopping Centers, Inc.
("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 59) 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 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 58) 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 55) has been associated with JMB since July
1972.  Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods.  He is a member of the Bar of the State of Illinois.

     A. Lee Sacks (age 63) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December 1972.

     John G. Schreiber (age 50) has been associated with JMB since December
1970 and served as an Executive Vice President of JMB until December 1990. 
Mr. Schreiber is President of Schreiber Investments, Inc. a company which
is engaged in the real estate investing business.  He is also a senior
advisor and partner of Blackstone Real Estate Partners, an affiliate of the
Blackstone Group, L.P.  Since 1994, Mr. Schreiber has also served as a
Trustee of Amli Residential Property Trust, a publicly-traded real estate
investment trust that invests in multi-family properties.  He is also a
director of USC, Inc., as well as a director for 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 47) 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 49) 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 44) 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 48) 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 61) has been associated with JMB since March 1973. 
He is a Certified Public Accountant.





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 1996, 1995 and 1994, the General Partners received distributions of
$397,169, $0 and $3,751, respectively, and a management fee of $0, $0 and
$4,078, respectively.  The General Partners received a share of Partnership
earnings for tax purposes aggregating $25,942 in 1996.

     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, 1996.

     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 1996, the
Corporate General Partner of the Partnership was reimbursed for such out-
of-pocket expenses in the amount of $5,716 (all of which were paid as of
December 31, 1996).

     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.





<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>                                <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 officers or their relatives for which each 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>




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).





              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 1996 has been
sent to the Partners of the Partnership.  An annual report will be sent to
the Partners subsequent to this filing.




                               SIGNATURES


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

                 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

                 By:     JMB Realty Corporation
                         Corporate General Partner


                         GAILEN J. HULL
                 By      Gailen J. Hull
                         Senior Vice President
                 Date:   March 21, 1997

     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 21, 1997

                         NEIL G. BLUHM*
                 By:     Neil G. Bluhm, President and Director
                 Date:   March 21, 1997

                         H. RIGEL BARBER*
                 By:     H. Rigel Barber, Chief Executive Officer
                 Date:   March 21, 1997

                         GLENN E. EMIG*
                 By:     Glenn E. Emig, Chief Operating Officer
                 Date:   March 21, 1997


                         GAILEN J. HULL
                 By:     Gailen J. Hull, Senior Vice President
                         Principal Accounting Officer
                 Date:   March 21, 1997

                         A. LEE SACKS*
                 By:     A. Lee Sacks, Director
                 Date:   March 21, 1997

                         STUART C. NATHAN*
                 By:     Stuart C. Nathan, 
                         Executive Vice President and Director
                 Date:   March 21, 1997

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


                         GAILEN J. HULL
                 By:     Gailen J. Hull, Attorney-in-Fact
                 Date:   March 21, 1997




              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