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|                            | Page   |
|---------------------------------|--------|
|                            |   |
| Independent Auditors' Report    | 1      |
|                            |   |
| Financial Statements            |   |
|                            |   |
| Balance Sheets                  | 2      |
|                            |   |
| Statements of Operations and    |   |
|                            |   |
| Comprehensive Income            | 4      |
|                            |   |
| Statements of Partners' Capital | 5      |
|                            |   |
| Statements of Cash Flows        | 6      |
|                            |   |
| Notes to Financial Statements   | 7      |
|                            |   |
| Supplemental Information        | 12     |

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| Michelle M. Granberry, CPA | P.O. Box 3196         |
|----------------------------|-----------------------|
|                       | Auburn, AL 36831-3196 |
| MEMBER                     | Phone: (334) 741-1050 |
| American Institute of CPAs | Fax: (334) 741-1059   |
| Alabama Society of CPAs    | www.granberrycpa.com  |

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|                                          |   | 2005   |      |   | 2004   |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|
| ASSETS                                        |   |   |      |   |   |   |
|                                          |   |   |      |   |   |   |
| Current Assets                                |   |   |      |   |   |   |
| Cash                                          |   | $      | 2,350     |   |   | $      | 9,399 |   |
| Accounts Receivable - Tenant                  |   |   | 1,073     |   |   |   | 1,221 |   |
| Prepaid Insurance                             |   |   | 963       |   |   |   | 1,322 |   |
| Other Receivable                              |   |   | –   |   |   |   | 56,950 |   |
| Total Current Assets                          |   |   | 4,386     |   |   |   | 68,892 |   |
|                                          |   |   |      |   |   |   |   |   |
| Restricted Deposits and Funded Reserves       |   |   |      |   |   |   |   |   |
| Taxes and Insurance                           |   |   | 3,271     |   |   |   | 760 |   |
| Replacement Reserve                           |   |   | 50,237    |   |   |   | 44,528 |   |
| Security Deposits                             |   |   | 9,654     |   |   |   | 11,583 |   |
| Total Restricted Deposits and Funded Reserves |   |   | 63,162    |   |   |   | 56,870 |   |
|                                          |   |   |      |   |   |   |   |   |
| Property and Equipment                        |   |   |      |   |   |   |   |   |
| Land                                          |   |   | 69,000    |   |   |   | 69,000 |   |
| Buildings and Improvements                    |   |   | 2,185,247 |   |   |   | 2,185,247 |   |
| Furniture, Fixtures and Equipment             |   |   | 99,454    |   |   |   | 99,454 |   |
|                                          |   |   | 2,353,701 |   |   |   | 2,353,701 |   |
| Less Accumulated Depreciation                 |   |   | (559,908  | )      |   |   | (492,347 | ) |
| Total Property and Equipment                  |   |   | 1,793,793 |   |   |   | 1,861,354 |   |
|                                          |   |   |      |   |   |   |   |   |
| Other Assets                                  |   |   |      |   |   |   |   |   |
| Deposits                                      |   |   | 75        |   |   |   | 75 |   |
| TOTAL ASSETS                                  |   | $      | 1,861,416 |   |   | $      | 1,987,191 |   |

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|                                        |   | 2005   |      |   | 2004   |   |
|---------------------------------------------|--------|--------|-----------|--------|--------|--------|
| LIABILITIES AND EQUITY                      |   |   |      |   |   |   |
|                                        |   |   |      |   |   |   |
| Current Liabilities                         |   |   |      |   |   |   |
| Accounts Payable                            |   | $      | 7,336     |   |   | $      | 8,181 |   |
| Deferred Revenue                            |   |   | –   |   |   |   | 65,350 |   |
| Security Deposits Payable                   |   |   | 9,105     |   |   |   | 10,070 |   |
| Tenant Overage Payable                      |   |   | 686       |   |   |   | 159 |   |
| Payroll Taxes Payable                       |   |   | 534       |   |   |   | 548 |   |
| Accrued Interest Payable                    |   |   | 32,185    |   |   |   | 27,303 |   |
| Accrued Partner Fees                        |   |   | 1,000     |   |   |   | 750 |   |
| Accrued Property Taxes Payable              |   |   | 4,232     |   |   |   | 4,245 |   |
| Current Maturities of Mortgage Payable      |   |   | 8,373     |   |   |   | 7,704 |   |
| Total Current Liabilities                   |   |   | 63,451    |   |   |   | 124,310 |   |
|                                        |   |   |      |   |   |   |   |   |
| Long-Term Liabilities                       |   |   |      |   |   |   |   |   |
| Mortgage Payable, net of current maturities |   |   | 1,110,827 |   |   |   | 1,119,199 |   |
| Obligation Under Interest Rate Swap         |   |   | 18,866    |   |   |   | 23,966 |   |
| Total Long-Telco Liabilities                |   |   | 1,129,693 |   |   |   | 1,143,165 |   |
|                                        |   |   |      |   |   |   |   |   |
|                                        |   |   |      |   |   |   |   |   |
| Total Liabilities                           |   |   | 1,193,144 |   |   |   | 1,267,475 |   |
|                                        |   |   |      |   |   |   |   |   |
| Partners' Equity                            |   |   |      |   |   |   |   |   |
| Partners' Capital                           |   |   | 687,138   |   |   |   | 743,682 |   |
| Unrealized Loss on Cash Flow Hedge          |   |   | (18,866   | )      |   |   | (23,966 | ) |
| Total Partners' Equity                      |   |   | 668,272   |   |   |   | 719,716 |   |
|                                        |   |   |      |   |   |   |   |   |
| TOTAL LIABILITIES AND EQUITY                |   | $      | 1,861,416 |   |   | $      | 1,987,191 |   |

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|                                                                |   | 2005   |    |   | 2004   |   |
|---------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                |   |   |    |   |   |   |
| Revenues                                                            |   |   |    |   |   |   |
| Rental                                                              |   | $      | 133,352 |   |   | $      | 127,614 |   |
| Miscellaneous Charges                                               |   |   | 2,417   |   |   |   | 6,430 |   |
| Total Revenues                                                      |   |   | 135,769 |   |   |   | 134,044 |   |
|                                                                |   |   |    |   |   |   |   |   |
| Operating Expenses                                                  |   |   |    |   |   |   |   |   |
| Administrative                                                      |   |   | 18,105  |   |   |   | 21,333 |   |
| Advertising                                                         |   |   | 103     |   |   |   | 188 |   |
| Bad Debt                                                            |   |   | 8,708   |   |   |   | 4,706 |   |
| Management Fees                                                     |   |   | 11,237  |   |   |   | 11,346 |   |
| Repair and Maintenance                                              |   |   | 24,528  |   |   |   | 28,848 |   |
| Taxes and Insurance                                                 |   |   | 35,835  |   |   |   | 35,468 |   |
| Utilities                                                           |   |   | 5,320   |   |   |   | 5,300 |   |
| Total Operating Expenses                                            |   |   | 103,836 |   |   |   | 107,189 |   |
|                                                                |   |   |    |   |   |   |   |   |
| Income (Loss) from Operations                                       |   |   | 31,933  |   |   |   | 26,855 |   |
|                                                                |   |   |    |   |   |   |   |   |
| Partnership and Financial Income (Expense)                          |   |   |    |   |   |   |   |   |
| Partnership Management Fees                                         |   |   | (250    | )      |   |   | (250 | ) |
| Forgiveness of Management Fees                                      |   |   | --      |   |   |   | 3,085 |   |
| Interest Income                                                     |   |   | 266     |   |   |   | 209 |   |
| Interest Expense                                                    |   |   | (20,932 | )      |   |   | (18,051 | ) |
| Total Partnership and Financial Income (Expense)                    |   |   | (20,916 | )      |   |   | (15,007 | ) |
| Income (Loss) from Operations before Depreciation                   |   |   | 11,017  |   |   |   | 11,848 |   |
|                                                                |   |   |    |   |   |   |   |   |
| Depreciation                                                        |   |   | (67,561 | )      |   |   | (75,032 | ) |
|                                                                |   |   |    |   |   |   |   |   |
| Net Loss                                                            |   |   | (56,544 | )      |   |   | (63,184 | ) |
|                                                                |   |   |    |   |   |   |   |   |
| Other Comprehensive Income (Loss)                                   |   |   |    |   |   |   |   |   |
| Unrealized Gain (Loss) on cash flow hedge arising during the period |   |   | 5,100   |   |   |   | (2,907 | ) |
| Total Other Comprehensive Income (Loss)                             |   |   | 5,100   |   |   |   | (2,907 | ) |
|                                                                |   |   |    |   |   |   |   |   |
| Total Comprehensive Loss                                            |   | $      | (51,444 | )      |   | $      | (66,091 | ) |

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|                                 |   | General  |   |   | Limited  |   |    |   |   |
|--------------------------------------|--------|----------|--------|--------|----------|--------|---------|--------|--------|
|                                 |   | Partners |   |   | Partners |   |    | Total  |   |
|                                 |   |     |   |   |     |   |    |   |   |
| Partners' Capital, December 31, 2003 |   | $        | 971    |   |     | $      | 805,895 |   |   | $ | 806,866 |   |
|                                 |   |     |   |   |     |   |    |   |   |   |   |   |
| Net Loss                             |   |     | (632   | )      |     |   | (62,552 | )      |   |   | (63,184 | ) |
|                                 |   |     |   |   |     |   |    |   |   |   |   |   |
| Partners' Capital, December 31, 2004 |   |     | 339    |   |     |   | 743,343 |   |   |   | 743,682 |   |
|                                 |   |     |   |   |     |   |    |   |   |   |   |   |
| Net Loss                             |   |     | (565   | )      |     |   | (55,979 | )      |   |   | (56,544 | ) |
| Partners' Capital, December 31, 2005 |   | $        | (226   | )      |     | $      | 687,364 |   |   | $ | 687,138 |   |

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|                                                                              |   | 2005   |    |   | 2004   |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                              |   |   |    |   |   |   |
| Cash flows from operating activities                                              |   |   |    |   |   |   |
| Net Loss                                                                          |   | $      | (56,544 | )      |   | $      | (63,184 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |    |   |   |   |   |   |
| Depreciation                                                                      |   |   | 67,561  |   |   |   | 75,032 |   |
| (Increase) Decrease in Accounts Rec. Tenants                                      |   |   | 148     |   |   |   | 329 |   |
| (Increase) Decrease in Prepaid Insurances                                         |   |   | 359     |   |   |   | -- |   |
| (Increase) Decrease in Other Receivables                                          |   |   | 56,950  |   |   |   | (56,950 | ) |
| Increase (Decrease) in Accounts Payable                                           |   |   | (845    | )      |   |   | (8,417 | ) |
| Increase (Decrease) in Security Deposits Payable                                  |   |   | (965    | )      |   |   | 955 |   |
| Increase (Decrease) in Tenant Overage Payable                                     |   |   | 527     |   |   |   | 159 |   |
| Increase (Decrease) in Accrued. Partners' Fees                                    |   |   | 250     |   |   |   | 250 |   |
| Increase (Decrease) in Payroll Taxes Payable                                      |   |   | (14     | )      |   |   | (98 | ) |
| Increase (Decrease) in Accrued Interest                                           |   |   | 4,882   |   |   |   | 4,907 |   |
| Increase (Decrease) in Accrued Property Taxes                                     |   |   | (13     | )      |   |   | 889 |   |
| Increase (Decrease) in Deferred Revenue                                           |   |   | (65,350 | )      |   |   | 65,350 |   |
| Total adjustments                                                                 |   |   | 63,490  |   |   |   | 82,406 |   |
| Net cash provided (used) by operating activities                                  |   |   | 6,946   |   |   |   | 19,222 |   |
|                                                                              |   |   |    |   |   |   |   |   |
| Cash flow from investing activities:                                              |   |   |    |   |   |   |   |   |
| Purchase of Fixed Assets                                                          |   |   | --      |   |   |   | (6,806 | ) |
| Net cash provided (used) by investing activities                                  |   |   | --      |   |   |   | (6,806 | ) |
|                                                                              |   |   |    |   |   |   |   |   |
| Cash flow from financing activities:                                              |   |   |    |   |   |   |   |   |
| Payment of Loan Principal                                                         |   |   | (7,703  | )      |   |   | (7,040 | ) |
| Net cash provided (used) by financing activities                                  |   |   | (7,703  | )      |   |   | (7,040 | ) |
|                                                                              |   |   |    |   |   |   |   |   |
| Net increase (decrease) in cash and equivalents                                   |   |   | (757    | )      |   |   | 5,376 |   |
| Cash and equivalents, beginning of year                                           |   |   | 66,269  |   |   |   | 60,893 |   |
| Cash and equivalents, end of year                                                 |   | $      | 65,512  |   |   | $      | 66,269 |   |
|                                                                              |   |   |    |   |   |   |   |   |
|                                                                              |   |   |    |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                |   |   |    |   |   |   |   |   |
|                                                                              |   |   |    |   |   |   |   |   |
| Cash paid during the year for:                                                    |   |   |    |   |   |   |   |   |
| Interest expense                                                                  |   | $      | 15,986  |   |   | $      | 13,027 |   |

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| Buildings                          | 40 years, straight-line      |
|------------------------------------|------------------------------|
| Furniture, fixtures, and equipment | 5-7 years, declining balance |

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| Long-term debt is summarized as follows:                                                                                                                                                                                                                              |   |   |      |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                                                                                                                                                                                                  |   | 2005   |      |   | 2004   |   |
|                                                                                                                                                                                                                                                                  |   |   |      |   |   |   |
| Mortgage note payable in monthly installments (including principal and interest at a variable rate of 1.75% per annum over LIBOR) to Compass Bank, secured by land, building, cash, receivables and income, maturing May 2019. The interest rate at 12/31/05 is 6.06% |   | $      | 198,200   |   |   | $      | 205,903 |   |
|                                                                                                                                                                                                                                                                  |   |   |      |   |   |   |   |   |
| Mortgage note payable to Alabama's HOME Investment Partnership Program. No payment due until maturity in May 2019. Interest accrues annually at 1/2 of 1% until maturity                                                                                              |   |   | 921,000   |   |   |   | 921,000 |   |
|                                                                                                                                                                                                                                                                  |   |   | 1,119,200 |   |   |   | 1,126,903 |   |
|                                                                                                                                                                                                                                                                  |   |   |      |   |   |   |   |   |
| Less principal due within one year                                                                                                                                                                                                                                    |   |   | (8,373    | )      |   |   | (7,704 | ) |
|                                                                                                                                                                                                                                                                  |   |   |      |   |   |   |   |   |
| Total long-term debt                                                                                                                                                                                                                                                  |   | $      | 1,110,827 |   |   | $      | 1,119,199 |   |

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| 2006       |   | $      | 8,373     |   |
|------------|--------|--------|-----------|--------|
| 2007       |   |   | 9,018     |   |
| 2008       |   |   | 9,930     |   |
| 2009       |   |   | 10,748    |   |
| 2010       |   |   | 11,682    |   |
| Thereafter |   |   | 1,069,449 |   |
|       |   |   |      |   |
| Total      |   | $      | 1,119,200 |   |

----

|                                 |   | 2005   |    |   | 2004   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|
|                                 |   |   |    |   |   |   |
| Financial statement net loss         |   | $      | (56,544 | )      |   | $      | (63,184 | ) |
| Reconciling items:                   |   |   |    |   |   |   |   |   |
| Financial statement depreciation     |   |   | 67,561  |   |   |   | 75,032 |   |
| Tax return depreciation              |   |   | (87,660 | )      |   |   | (98,564 | ) |
| Partnership tax return ordinary loss |   | $      | (76,643 | )      |   | $      | (86,716 | ) |

----

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|                                              |   | 2005   |   |   | 2004   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Administrative                                    |   |   |   |   |   |   |
| Bank Charges                                      |   | $      | 233    |   |   | $      | 210 |   |
| Consultant Fees                                   |   |   | 176    |   |   |   | 138 |   |
| Dues and Subscriptions                            |   |   | 96     |   |   |   | 110 |   |
| Miscellaneous                                     |   |   | 125    |   |   |   | 84 |   |
| Office Supplies & Postage                     |   |   | 1,504  |   |   |   | 1,182 |   |
| Professional Fees                                 |   |   | 3,178  |   |   |   | 4,509 |   |
| Salaries - Office                                 |   |   | 10,246 |   |   |   | 12,557 |   |
| Telephone                                         |   |   | 2,057  |   |   |   | 2,248 |   |
| Training Expense                                  |   |   | --     |   |   |   | 295 |   |
| Travel & Entertainment Expense                |   |   | 490    |   |   |   | -- |   |
| Total Administrative                              |   | $      | 18,105 |   |   | $      | 21,333 |   |
|                                              |   |   |   |   |   |   |   |   |
| Repairs & Maintenance                         |   |   |   |   |   |   |   |   |
| Equipment Rental                                  |   | $      | 385    |   |   | $      | 803 |   |
| Maintenance Supplies                              |   |   | 784    |   |   |   | 3,172 |   |
| Interior Paint & Decorating                   |   |   | 981    |   |   |   | 2,557 |   |
| General Maintenance                               |   |   | 4,563  |   |   |   | 4,020 |   |
| Grounds Maintenance                               |   |   | 5,399  |   |   |   | 5,602 |   |
| Exterminating Services                            |   |   | 972    |   |   |   | 1,148 |   |
| Reserve                                           |   |   | 4,498  |   |   |   | 876 |   |
| Salaries - Maintenance                            |   |   | 6,946  |   |   |   | 10,670 |   |
| Total Repairs & Maintenance                   |   | $      | 24,528 |   |   | $      | 28,848 |   |
|                                              |   |   |   |   |   |   |   |   |
| Taxes & Insurance                             |   |   |   |   |   |   |   |   |
| Property, Liability and Workmen's Comp. Insurance |   | $      | 14,699 |   |   | $      | 11,478 |   |
| Medical Insurance                                 |   |   | 2,340  |   |   |   | 3,920 |   |
| Payroll Taxes                                     |   |   | 1,633  |   |   |   | 2,100 |   |
| Real Estate Taxes                                 |   |   | 16,914 |   |   |   | 17,870 |   |
| Other Taxes, Licenses, and Permits                |   |   | 249    |   |   |   | 100 |   |
| Total Taxes & Insurance                       |   | $      | 35,835 |   |   | $      | 35,468 |   |
|                                              |   |   |   |   |   |   |   |   |
| Utilities                                         |   |   |   |   |   |   |   |   |
| Electricity                                       |   | $      | 4,331  |   |   | $      | 4,628 |   |
| Water                                             |   |   | 362    |   |   |   | 199 |   |
| Sewer                                             |   |   | 190    |   |   |   | 128 |   |
| Miscellaneous                                     |   |   | 437    |   |   |   | 345 |   |
| Total Utilities                                   |   | $      | 5,320  |   |   | $      | 5,300 |   |

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