UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549

                                      FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1997
                          -----------------
                                      OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from               to 
                               -------------    -------------            

Commission file number 0-15646
                       -------

                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
              --------------------------------------------------          
            (Exact name of registrant as specified in its charter)

           Illinois                                      36-3378299
-------------------------------                      ------------------- 
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

2355 Waukegan Road
Bannockburn, Illinois                                       60015
----------------------------------------             -------------------     
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   --------------
Securities registered pursuant to Section 12(b) of the Act:  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 ]
<PAGE>
                                    PART I

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

Balcor Growth Fund A Real Estate Investment for Capital Appreciation (the
"Registrant") is a limited partnership formed in August 1985 under the laws of
the State of Illinois. The Registrant raised $7,084,000 from sales of Limited
Partnership Interests. The Registrant's operations currently consist of
interest income earned on short-term investments and the payment of
administrative expenses.

The Registrant utilized the net offering proceeds to acquire joint venture
interests in Redwood Shores Apartments and Post Lake Apartments, both of which
were sold in 1996. In January 1997, the available proceeds from the sales were
distributed to Limited Partners.

Pursuant to the Partnership Agreement, when all interests in real estate are
sold or otherwise disposed of and the General Partner is not then aware of any
remaining contingencies, the Registrant will be dissolved.  The Registrant has
been dismissed as a defendant in the proposed class action lawsuit described in
"Item 3. Legal Proceedings".  There are currently no contingencies outstanding.
Therefore, the General Partner commenced liquidation of the Registrant, and on
March 10, 1998, the Registrant's registration under the Securities Exchange Act
of 1934 was terminated and the Registrant was dissolved.  

The officers and employees of Balcor Partners-XX, the General Partner of the
Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.

Item 2. Properties
------------------

As of December 31, 1997, the Registrant no longer owns any joint venture
interests in real estate properties.

Item 3. Legal Proceedings
-------------------------

Klein, et al. vs. Lehman Brothers, Inc., et al.
----------------------------------------------

On August 30, 1996, a proposed class action complaint was filed, Lenore Klein,
et al. vs. Lehman Brothers, Inc., et al. (Superior Court of New Jersey, Law
Division, Union County, Docket No. Unn-L-5162-96). The complaint was amended on
each of October 18, 1996, December 5, 1997, and January 15, 1998. The
Registrant, additional limited partnerships which were sponsored by The Balcor
Company, American Express Company, Lehman Brothers, Inc., Smith Barney, Inc.
and various other entities were originally the named defendants in the action.
The December 5, 1997 and January 15, 1998 Amended Complaints, among other
changes, no longer name the Registrant as a defendant and all claims relating
to the Registrant have been eliminated from the Amended Complaint.  

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

No matters were submitted to a vote of the Limited Partners of the Registrant
during 1997.
<PAGE>
                                   PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
---------------------------------------------------------------------
Matters
-------

The Registrant was terminated in the State of Illinois on March 10, 1998.
On March 10, 1998, the Registrant's registration under the Securities Exchange
Act of 1934 was terminated. 
   
For information regarding distributions, see Financial Statements, Statements
of Partners' Capital and Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources, below.

As of December 31, 1997, the number of record holders of Limited Partnership
Interests of the Registrant was 688.

Item 6. Selected Financial Data
-------------------------------

                                      Year ended December 31,                 
                    ----------------------------------------------------------
                       1997        1996        1995        1994        1993   
                    -----------  ---------- ----------  ----------  ----------

Total income           $109,561  $9,968,437    $(7,816)  $(299,072)  $(318,125)
(Loss) income before
 extraordinary items    (39,643)  8,604,175   (224,813)   (479,754)   (436,167)
Net (loss) income       (39,643)  8,316,056   (224,813)   (479,754)   (436,167)
Net (loss) income 
  per Limited Part-
  nership Interest-
  Basic and Diluted      (5.60)   1,164.74     (31.42)     (67.05)     (60.95)
Total assets          1,338,615   7,727,690  1,171,976   1,009,834   1,453,169
Distribution per
  Limited Partner-
  ship Interest         900.00(A)     None       None         None        None

(A) This amount includes a distribution of Original Capital of $855 per Limited
Partnership Interest.

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

Operations
----------

Summary of Operations
---------------------

The operations of Balcor Growth Fund A Real Estate Investment for Capital
Appreciation (the "Partnership") during 1997 were primarily comprised of the
payment of administrative expenses, which were partially offset by interest
<PAGE>
income on short-term investments. During 1996 and 1995, the operations of the
Partnership were primarily comprised of participation in the operations of the
Post Lake and Redwood Shores apartment complexes.  As a result of gains
recognized from the sales of the Post Lake and Redwood Shores apartment
complexes in 1996, the Partnership generated significant net income during 1996
as compared to net losses in 1997 and 1995.  Further discussion of the
Partnership's operations is summarized below.

1997 Compared to 1996
---------------------

As a result of higher average cash balances during 1997, interest income on
short-term investments increased during 1997 as compared to 1996.

The Partnership participated in the operations of the Post Lake and Redwood
Shores apartment complexes prior to the sale of both properties in 1996.  The
Partnership also recognized its share of the gains on the sales of the
properties in 1996.  In addition, an affiliate participated in the operations
of Post Lake Apartments prior to its sale and recognized its share of the gain
on the sale of the property. As a result of the two property sales, the
Partnership's participation in net income of joint ventures with affiliates and
affiliate's participation in income from joint venture ceased during 1996.

The Partnership incurred interest expense on the short-term loan from an
affiliate prior to its repayment in 1996. 

During 1996, the Partnership recognized its share of extraordinary debt
extinguishment expenses related to the sales of the Redwood Shores Apartments
and Post Lake Apartments of approximately $105,000 and $183,000, respectively. 

1996 Compared to 1995
---------------------

The net income from Post Lake Apartments increased during 1996 as compared to
1995 primarily as a result of the gain on the sale of the property of
approximately $9,295,000.

Redwood Shores Apartments generated net income during 1996 as compared to a net
loss during 1995 primarily as a result of the gain on the sale of the property
of approximately $15,824,000.  In addition, the property had lower interest
expense by approximately $1,034,000 on the mortgage note payable as a result of
the October 1995 re-marketing of the bonds secured by the property and the sale
of the property.  The increase in net income was partially offset by higher
operating expenses during 1996 as compared to 1995 due to exterior painting and
repairs made to the wood siding of the buildings of approximately $180,000.

The seller's participation in the operations of Redwood Shores Apartments was
equal to the distributions received or contributions made during any year.
During 1996, the seller received its final distribution of partnership proceeds
in accordance with the Partnership Agreement, while during 1995, the seller
made contributions.  As a result, the seller was allocated significant income
in 1996 as compared to a loss in 1995.

As a result of higher cash balances due to the receipt of proceeds from the
sales of Post Lake Apartments and Redwood Shores Apartments, as described
above, the Partnership generated higher interest income on short-term
investments in 1996 as compared to 1995.
<PAGE>
As a result of the repayment of the short-term loan from an affiliate in 1996,
interest expense on the Partnership's short-term loan from an affiliate
decreased during 1996 as compared to 1995.

As a result of the gain on the sale of Post Lake Apartments, affiliate's
participation in income from joint venture increased during 1996 as compared to
1995.

Liquidity and Capital Resources
-------------------------------

The cash position of the Partnership decreased by approximately $6,379,000 as
of December 31, 1997 as compared to December 31, 1996 primarily due to the
distribution to Limited Partners in January 1997 of the available proceeds
received from the sales of Post Lake Apartments and Redwood Shores Apartments.
The cash flow used in operating activities of approximately $3,000 consisted of
the payment of administrative expenses which was partially offset by interest
income earned on short-term investments. The financing activity consisted of a
$6,375,600 distribution  to Limited Partners in January 1997. In March 1998, a
final distribution of $1,277,670 was made to Limited Partners, as discussed
below.

Pursuant to the Partnership Agreement, when all interests in real estate are
sold or otherwise disposed of and the General Partner is not then aware of any
remaining contingencies, the Partnership will be dissolved.  As discussed
above, the Partnership's interests in real estate were sold in 1996.  The
Partnership has been dismissed as a defendant in the proposed class action
lawsuit described in "Item 3. Legal Proceedings".  There are currently no  
contingencies outstanding.  Therefore, the General Partner commenced
liquidation of the Partnership.  After retaining approximately $61,000 to pay
the final administrative expenses of the Partnership, a final distribution of
$1,277,670 ($180.36 per Interest) was made to the Limited Partners in March
1998, which represents all remaining cash reserves. The distribution consisted
entirely of Net Cash Proceeds. 

The Partnership was terminated in the State of Illinois on March 10, 1998. On
March 10, 1998, the Partnership's registration under the Securities Exchange
Act of 1934 was terminated. 

Since inception, including the final distribution issued in March 1998, Limited
Partners have received distributions totaling $1,080.36 per $1,000 Interest. Of
this amount, $45.00 per Interest represents a distribution of Net Cash Receipts
and $1,035.36 per Interest represents a distribution of Net Cash Proceeds. In
addition, Limited Partners have received certain tax benefits since the
inception of the Partnership. The General Partner did not receive any
distribution of Net Cash Receipts or Net Cash Proceeds from the Partnership.

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

See Index to Financial Statements in this Form 10-K.

The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.

The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
<PAGE>
                         December 31, 1997          December 31, 1996    
                      -----------------------   -------------------------
                       Financial       Tax       Financial         Tax
                      Statements     Returns     Statements      Returns 
                      ----------    ---------    ----------     ---------

Total assets           $1,338,615  $2,388,699    $7,727,690     $8,790,290
Partners' capital
  (deficit) accounts:
    General Partner          None     (9,904)          None           None
    Limited Partners    1,277,670   2,383,401     7,692,913      8,763,268
Net (loss) income:      
    General Partner          None     (9,904)        65,055        803,831
    Limited Partners     (39,643)     (4,267)     8,251,001     10,741,714
    Per Limited
      Partnership
      Interest            (5.60)(A)    (0.60)      1,164.74(A)    1,516.33

(A) Amount represents basic and diluted net income per Limited Partnership
Interest.

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

There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
<PAGE>
                                   PART III

Item 10. Directors and Executive Officers of the Registrant
-----------------------------------------------------------

(a) Neither the Registrant nor Balcor Partners-XX, its General Partner, has a
Board of Directors.

(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:

     TITLE                                OFFICERS

Chairman, President and Chief           Thomas E. Meador
   Executive Officer
Senior Vice President                   Alexander J. Darragh
Senior Vice President                   John K. Powell, Jr.
Senior Managing Director, Chief         Jayne A. Kosik
   Financial Officer, Treasurer
   and Assistant Secretary                           

Thomas E. Meador (age 50) joined Balcor in July 1979.  He is Chairman,
President and Chief Executive Officer and has responsibility for all ongoing
day-to-day activities at Balcor. He is a member of the board of directors of
The Balcor Company. He is also Senior Vice President of American Express
Company and is responsible for its real estate operations worldwide. Prior to
joining Balcor, Mr. Meador was employed at the Harris Trust and Savings Bank in
the commercial real estate division where he was involved in various lending
activities. Mr. Meador received his M.B.A. degree from the Indiana University
Graduate School of Business.

Alexander J. Darragh (age 43) joined Balcor in September 1988 and is
responsible for real estate advisory services for Balcor and American Express
Company. Mr. Darragh received masters' degrees in Urban Geography from Queen's
University and in Urban Planning from Northwestern University.

John K. Powell Jr. (age 47) joined Balcor in September 1985 and is responsible
for portfolio and asset management matters relating to Balcor's partnerships.
Mr. Powell also has supervisory responsibility for Balcor's risk management  
function. He is a member of the board of directors of The Balcor Company. He
received a Master of Planning degree from the University of Virginia. Mr.
Powell has been designated a Certified Real Estate Financier by the National
Society for Real Estate Finance and is a full member of the Urban Land
Institute.

Jayne A. Kosik (age 40) joined Balcor in August 1982 and, as Chief Financial
Officer, is responsible for Balcor's financial, human resources and treasury
functions. From June 1989 until October 1996, Ms. Kosik had supervisory
responsibility for accounting functions relating to Balcor's public and private
partnerships. She is also Treasurer and a Senior Managing Director of The
Balcor Company. Ms. Kosik is a Certified Public Accountant. 

(d) There is no family relationship between any of the foregoing officers.
<PAGE>
(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1997.

Item 11. Executive Compensation
-------------------------------

The Registrant paid $1,185 in 1997 with respect to one of the executive
officers and directors of Balcor Partners-XX, the General Partner. The
Registrant has not paid and does not propose to pay any remuneration to the
remaining executive officers and directors of the General Partner. Certain of
the remaining officers receive compensation from The Balcor Company (but not
from the Registrant) for services performed for various affiliated entities,
which may include services performed for the Registrant. However, the General
Partner believes that any such compensation attributable to services performed
for the Registrant is immaterial to the Registrant. See Note 7 of Notes to
Financial Statements for the information relating to transactions with
affiliates.

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

(a) No person owned of record or is known by the Registrant to have owned
beneficially more than 5% of the outstanding Limited Partnership Interests of
the Registrant.

(b) Neither Balcor Partners-XX nor its officers and partners owned as a group
or individually any Limited Partnership Interests of the Registrant.

Relatives of the officers and affiliates of the partners of the General Partner
did not own any Interests.

(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.

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

(a & b) See Note 3 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.

See Note 7 of Notes to Financial Statements for information relating to
transactions with affiliates.

(c) No management person is indebted to the Registrant.

(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
                                    PART IV

Item 14. Exhibits and Reports on Form 8-K
-------------------------------------------

(a)
(1 & 2) See the Index to the Financial Statements in this Form 10-K.

(3) Exhibits:

(3) The Amended and Restated Agreement and Certificate of Limited Partnership
of Balcor Growth Fund A Real Estate Investment for Capital Appreciation,
previously filed as Exhibit 3 to Amendment No. 3 dated October 1, 1986 to the
Registrant's Registration Statement on Form S-11 (Registration No. 33-4963), is
incorporated herein by reference.

(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 3
dated October 1, 1986 to the Registrant's Registration Statement on Form S-11
(Registration No. 33-4963) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-15646) are incorporated
herein by reference.

(10) Material Contracts:

(a)(i) Agreement of Sale relating to the sale of Redwood Shores Apartments in
Redwood City, California previously filed as Exhibit (2) to the Registrant's
Current Report on Form 8-K dated June 12, 1996 is incorporated herein by
reference.

(ii) Letter Agreements dated July 12, 1996 and August 9, 1996 related to the
sale of Redwood Shores Apartments in Redwood City, California previously filed
as Exhibit (99) to the Registrant's Current Report on Form 8-K dated September
6, 1996 are incorporated herein by reference.

(b) Agreement of Sale relating to the sale of Post Lake Apartments in Cobb
County, Georgia previously filed as Exhibit (2) to the Registrant's Current
Report on Form 8-K dated September 6, 1996 is incorporated herein by reference.

(27) Financial Data Schedule of the Registrant for 1997 is attached hereto.

(b) Reports on Form 8-K:  A Current Report on Form 8-K dated January 15, 1998
was filed reporting the status of proposed class action litigation to which the
Registrant was a party.

(c) Exhibits: See Item 14(a)(3) above.
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                         BALCOR GROWTH FUND
                         A REAL ESTATE INVESTMENT FOR CAPITAL
                         APPRECIATION

                         By:/s/Jayne A. Kosik
                             ---------------------------------
                             Jayne A. Kosik
                             Senior Managing Director and Chief
                             Financial Officer (Principal
                             Accounting Officer) of
                             Balcor Partners-XX, the
                             General Partner

Date: March 17, 1998             
      --------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

       Signature                     Title                       Date    
---------------------   -------------------------------      ------------

                         President and Chief Executive
                         Officer (Principal Executive
                         Officer) of Balcor Partners-XX,
/s/Thomas E. Meador      the General Partner               March 17, 1998
----------------------                                     --------------
   Thomas E. Meador
                         Senior Managing Director and Chief
                         Financial Officer (Principal
                         Accounting Officer) of
                         of Balcor Partners-XX,
/s/Jayne A. Kosik        the General Partner               March 17, 1998
----------------------                                     --------------
   Jayne A. Kosik
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                        INDEX TO FINANCIAL STATEMENTS 

Report of Independent Accountants

Financial Statements:

Balance Sheets, December 31, 1997 and 1996

Statements of Partners' Capital (Deficit), for the years ended December 31,
1997, 1996 and 1995

Statements of Income and Expenses, for the years ended December 31, 1997, 1996
and 1995

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

Notes to Financial Statements

Financial Statement Schedules are omitted for the reason that they are
inapplicable or equivalent information has been included elsewhere herein.
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Balcor Growth Fund
A Real Estate Investment for Capital Appreciation:

We have audited the financial statements of Balcor Growth Fund A Real Estate
Investment for Capital Appreciation (An Illinois Limited Partnership) as listed
in the Index of this Form 10-K. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Balcor Growth Fund A Real
Estate Investment for Capital Appreciation at December 31, 1997 and 1996, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.

As described in Note 1 to the financial statements, the partnership agreement
provides for the dissolution of the Partnership upon the disposition of all its
interests in real estate.  At December 31, 1996, the Partnership had disposed
of all its real estate interests, and accordingly has ceased operations and was
dissolved on March 10, 1998.



                                   COOPERS & LYBRAND L.L.P.


Chicago, Illinois
March 11, 1998
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                                BALANCE SHEETS
                          December 31, 1997 and 1996

                                    ASSETS

                                                  1997            1996
                                              ------------    ------------
Cash and cash equivalents                   $   1,319,999   $   7,699,068
Accounts and accrued interest receivable           18,616          28,622
                                              ------------    ------------
                                            $   1,338,615   $   7,727,690
                                              ============    ============

                       LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                            $      41,644   $      14,347
Due to affiliates                                  19,301          20,430
                                              ------------    ------------
    Total liabilities                              60,945          34,777
                                              ------------    ------------

Commitments and contingencies
 
Limited Partners' capital (7,084 Interests
  issued and outstanding)                       1,277,670       7,692,913
General Partner's capital                            None            None
                                              ------------    ------------
Total partners' capital                         1,277,670       7,692,913
                                              ------------    ------------
                                            $   1,338,615   $   7,727,690
                                              ============    ============
                                               
The accompanying notes are an integral part of the financial statements.
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                   STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
             for the years ended December 31, 1997, 1996 and 1995

                                    Partners' Capital (Deficit) Accounts
                                  ----------------------------------------
                                                  General       Limited
                                     Total        Partner       Partners
                                  ------------  ------------  ------------
                                 
Balance at December 31, 1994    $    (259,320)$     (62,807)$    (196,513)

Net loss for the year
  ended December 31, 1995            (224,813)       (2,248)     (222,565)
                                  ------------  ------------  ------------
Balance at December 31, 1995         (484,133)      (65,055)     (419,078)

Deemed distribution to
  Limited Partners (A)               (139,010)                   (139,010)
Net income for the year
  ended December 31, 1996           8,316,056        65,055     8,251,001
                                  ------------  ------------  ------------
Balance at December 31, 1996        7,692,913          None     7,692,913

Cash distributions (B)             (6,375,600)                 (6,375,600)
Net loss for the year
  ended December 31, 1997             (39,643)                    (39,643)
                                  ------------  ------------  ------------
Balance at December 31, 1997    $   1,277,670          None $   1,277,670
                                  ============  ============  ============

(A) This amount represents the Partnership's share of a state withholding tax
paid on behalf of the Limited Partners relating to the gain on the sale of Post
Lake Apartments, in which the Partnership held a joint venture interest.

(B) This amount represents a distribution of $900 per Limited Partnership
Interest made in January 1997.

The accompanying notes are an integral part of the financial statements.
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                       STATEMENTS OF INCOME AND EXPENSES
             for the years ended December 31, 1997, 1996 and 1995

                                      1997          1996          1995
                                  ------------  ------------  ------------
Income:
  Interest on short-term 
    investments                 $     109,561 $      96,127 $       2,621
  Participation in net income
    (loss) of joint ventures with 
    affiliates before
    extraordinary item                            9,872,310       (10,437)
                                  ------------  ------------  ------------
  Total income (loss)                 109,561     9,968,437        (7,816)
                                  ------------  ------------  ------------
Expenses:
  Interest on short-term loan                                
    from an affiliate                                55,702        65,502
  Administrative                      149,204       147,378       141,608
                                  ------------  ------------  ------------
    Total expenses                    149,204       203,080       207,110
                                  ------------  ------------  ------------
(Loss) income before affiliate's
  participation in income from
  joint venture and extraordinary
  item                                (39,643)    9,765,357      (214,926)

Affiliate's participation in 
  income from joint venture                      (1,161,182)       (9,887)
                                  ------------  ------------  ------------
(Loss) income before 
  extraordinary item                  (39,643)    8,604,175      (224,813)

Extraordinary item:
  Participation in debt 
    extinguishment expense with
    affiliates                                     (288,119)
                                  ------------  ------------  ------------
Net (loss) income               $     (39,643)$   8,316,056 $    (224,813)
                                  ============  ============  ============
Income (loss) before 
  extraordinary item allocated
  to General Partner                     None $      67,936 $      (2,248)
                                  ============  ============  ============
(Loss) income before 
  extraordinary item allocated
  to Limited Partners           $     (39,643)$   8,536,239 $    (222,565)
                                  ============  ============  ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                       STATEMENTS OF INCOME AND EXPENSES
             for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)

                                      1997          1996          1995
                                   ------------  ------------  ------------

(Loss) income before 
  extraordinary item per Limited
  Partnership Interest (7,084
  issued and outstanding) - 
  Basic and Diluted             $       (5.60)$    1,205.00 $      (31.42)
                                  ============  ============  ============     
                            

Extraordinary item allocated to
  General Partner                        None $      (2,881)         None
                                  ============  ============  ============
Extraordinary item allocated to
  Limited Partners                       None $    (285,238)         None
                                  ============  ============  ============
Extraordinary item per Limited 
  Partnership Interest (7,084
  issued and outstanding) -
  Basic and Diluted                      None $      (40.27)         None
                                  ============  ============  ============
Net income (loss) allocated to 
  General Partner                        None $      65,055 $      (2,248)
                                  ============  ============  ============
Net (loss) income allocated to 
  Limited Partners              $     (39,643)$   8,251,001 $    (222,565)

                                  ============  ============  ============
Net (loss) income per Limited                    
  Partnership Interest (7,084
  issued and outstanding) -
  Basic and Diluted             $       (5.60)$    1,164.74 $      (31.42)
                                  ============  ============  ============

The accompanying notes are an integral part of the financial statements.
<PAGE>



                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                           STATEMENTS OF CASH FLOWS
             for the years ended December 31, 1997, 1996 and 1995

                                      1997          1996          1995
                                  ------------  ------------  ------------
Operating activities:
  Net (loss) income             $     (39,643)$   8,316,056 $    (224,813)
  Adjustments to reconcile net
    (loss) income to net cash
    used in operating activities:
      Affiliate's participation
        in income from joint
        venture                                   1,161,182         9,887
      Participation in net
        (income) loss of joint
        ventures with affiliates                 (9,872,310)       10,437
      Participation in debt
        extinguishment expense
        with an affiliate                           288,119
      Net change in:
        Accounts receivable            10,006        10,591       (39,213)
        Accounts payable               27,297         9,867       (10,076)
        Due to affiliates              (1,129)     (164,708)       45,846
                                  ------------  ------------  ------------
  Net cash used in operating
    activities                         (3,469)     (251,203)     (207,932)
                                  ------------  ------------  ------------
Investing activities:
  Capital contributions to
    joint venture with an                        
    affiliate                                                    (206,000)
  Distributions from joint                       
    ventures with affiliates                     10,577,074       175,000
                                                ------------  ------------
  Net cash provided by or used in
    investing activities                         10,577,074       (31,000)
                                                ------------  ------------
Financing activities:
  Deemed distribution to 
    Limited Partners                               (139,010)
  Proceeds from loan payable - 
    affiliate                                                     386,500
  Distributions to joint venture
    partner - affiliate                          (1,461,117)      (45,202)
  Deemed distribution to joint 
    venture partner - affiliate                     (48,411)
  Repayment of loan payable - 
    affiliate                                    (1,118,145)
  Distribution to Limited Partners (6,375,600)
                                  ------------  ------------  ------------

The accompanying notes are an integral part of the financial statements.
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                           STATEMENTS OF CASH FLOWS
             for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)

                                      1997          1996          1995
                                  ------------  ------------  ------------

  Net cash used in or provided
    by financing activities        (6,375,600)   (2,766,683)      341,298
                                  ------------  ------------  ------------
Net change in cash and cash
  equivalents                      (6,379,069)    7,559,188       102,366

Cash and cash equivalents at
  beginning of year                 7,699,068       139,880        37,514
                                  ------------  ------------  ------------
Cash and cash equivalents at
  end of year                   $   1,319,999 $   7,699,068 $     139,880
                                  ============  ============  ============
                                   
The accompanying notes are an integral part of the financial statements.
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (An Illinois Limited Partnership)
                         NOTES TO FINANCIAL STATEMENTS

1. Termination of Partnership Affairs:

Pursuant to the Partnership Agreement, when all interests in real estate are
sold or otherwise disposed of and the General Partner is not then aware of any
remaining contingencies, Balcor Growth Fund A Real Estate Investment for
Capital Appreciation (the "Partnership") will be dissolved.  The Partnership's
interests in real estate were sold in 1996.  The Partnership has been dismissed
as a defendant in a proposed class action lawsuit.  There are currently no
contingencies outstanding.  Therefore, the General Partner commenced
liquidation of the Partnership.  After retaining approximately $61,000 to pay
the final administrative expenses of the Partnership, a final distribution of
$1,277,670 ($180.36 per Interest) was made to the Limited Partners in March
1998, which represents all remaining cash reserves. The distribution consisted
entirely of Net Cash Proceeds.  Including this final distribution, Limited
Partners have received cumulative distributions of $1,080.36 per $1,000
Interest, of which $45 represents Net Cash Receipts and $1,035.36 represents
Net Cash Proceeds. 

The Partnership was terminated in the State of Illinois on March 10, 1998.
On March 10, 1998, the Partnership's registration under the Securities Exchange
Act of 1934 was terminated. 
 
2. Accounting Policies:

(a) The preparation of the financial statements in conformity with generally
accepted accounting principles required the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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 vary from those estimates.

(b) Investment in joint ventures with affiliates represented the recording of
the Partnership's interests, under the equity method of accounting, in two
joint ventures with affiliated entities. Under the equity method of accounting,
the Partnership recorded its initial interests at cost and adjusted its
investment accounts for additional capital contributions, distributions and its
share of joint venture income or loss. Supplemental financial information for
the respective joint ventures is provided in the attached joint venture
financial statements.

(c) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Statement No. 107 does not apply to all balance sheet items and
excludes certain financial instruments and all non-financial instruments such
as real estate and investment in joint ventures from its disclosure
requirements.
<PAGE>
(d) Cash and cash equivalents included all unrestricted, highly liquid
investments with an original maturity of three months or less.  Cash was held
or invested in one financial institution.

(e) The Partnership was not liable for Federal income taxes and each partner
recognized his proportionate share of the Partnership income and loss in his
tax return; therefore, no provision for income taxes was made in the financial
statements of the Partnership.

(f) For financial statement purposes, prior to 1996 partners were allocated
income and loss in accordance with the provisions in the Partnership Agreement.
In order for the capital accounts of the General Partner and Limited Partners
to appropriately reflect their remaining economic interests as provided for in
the Partnership Agreement, the income (loss) allocations between the partners
have been adjusted for financial statement purposes in 1997 and 1996.

(j) Statement of Financial Accounting Standards, No. 128, "Earnings per Share"
was adopted by the Partnership for the year-ended December 31, 1997 and had
been applied to all prior earnings periods presented in the financial
statements.   Since the Partnership has no dilutive securities, there is no
difference between basic and diluted net income per Limited Partnership
Interest.

3. Partnership Agreement:

The Partnership was organized in August 1985. The Partnership Agreement
provided for Balcor Partners-XX to be the General Partner and for the admission
of Limited Partners through the sale of up to 100,000 Limited Partnership
Interests at $1,000 per Interest, 7,084 of which were sold through October 2,
1987, the termination date of the offering.

The Partnership Agreement provided that profits and losses were allocated 99%
to the Limited Partners and 1% to the General Partner. For financial statement
purposes, prior to 1996 partners were allocated income and loss in accordance
with the provisions in the Partnership Agreement.  In order for the capital
accounts of the General Partner and Limited Partners to appropriately reflect
their remaining economic interests as provided for in the Partnership
Agreement, the income (loss) allocations between the partners have been
adjusted for financial statement purposes in 1997 and 1996.

One hundred percent of Net Cash Receipts available for distribution was
distributed to the holders of Interests in proportion to their participating
percentages as of the record date for such distributions. There was, however,
accrued for the benefit of the General Partner as its distributive share from
operations, an amount equivalent to approximately 1% of the total Net Cash
Receipts available for distribution, which would have been paid only as a part
of the General Partner's share of distributed Net Cash Proceeds. This accrued
distributive share along with the General Partner's share of Net Cash Proceeds
was subordinated to the receipt by Limited Partners of certain levels of
returns as defined in the Partnership Agreement.  Based on the amount of Net
Cash Proceeds received by the Partnership from the sales of the properties in
which it held joint venture interests and the amount of Net Cash Receipts
received by the Partnership, the General Partner did not receive any
distributions of Net Cash Receipts or Net Cash Proceeds.
<PAGE>
4. Investment in Joint Ventures with Affiliates:

(a) The Partnership, through Atlanta Lakes Investors (a partnership
whichinitially was wholly-owned by the Partnership), acquired a 50% joint
venture interest in Atlanta Lakes Joint Venture which owned Post Lake
Apartments. The remaining 50% joint venture interest was owned by Atlanta
Lakes, Inc., an entity managed by an affiliate of the General Partner. The
Partnership did not raise sufficient capital to enable it to retain its
original ownership percentage of Atlanta Lakes Investors without incurring
additional mortgage financing. The Partnership transferred 25.83% of its
interest in Atlanta Lakes Investors to another affiliate of the General Partner
for 25.83% of the amount of the Partnership's cash payments made in connection
with the acquisition of the property.  Post Lake Apartments was sold in 1996.
Atlanta Lakes Investors received its share of the net sales proceeds plus its
share of the remaining assets held by the joint venture, and the joint venture
was terminated in 1996.  During 1996 and 1995, Atlanta Lakes Investors received
$5,656,666 and $175,000, respectively, representing its portion of
distributions from the joint venture. In addition, Atlanta Lakes Investors
received $187,421 during 1996 as its share of a deemed distribution for the
State of Georgia withholding taxes paid by the Atlanta Lakes Joint Venture on
behalf of the joint venture partners.

(b) The Partnership, through its ownership of Redwood Associates, owned a 50%
joint venture interest in Redwood Partners (the "Joint Venture"), a joint
venture between Redwood Associates and Sequoia Shores, Inc. (an entity managed
by an affiliate of the General Partner). The Joint Venture acquired a 70%
general partnership interest in an existing limited partnership which owned
Redwood Shores Apartments.  Redwood Shores Apartments was sold in 1996.
Redwood Associates received its share of the net sales proceeds plus its share
of the remaining assets held by the joint venture, and the joint venture was
terminated in 1996.  During 1996, Redwood Associates received $4,732,987,
representing its portion of distributions from the joint venture.  During 1995,
Redwood Associates contributed $206,000 to the Joint Venture.

5. Affiliate's Participation in Joint Venture:

Atlanta Lakes Investors was a joint venture between the Partnership and an
affiliated partnership. Profits and losses were allocated 74.17% to the
Partnership and 25.83% to the affiliate. All assets, liabilities, income and
expenses of the joint venture (which owed a 50% equity investment in Atlanta
Lakes Joint Venture, the former owner of Post Lake Apartments) were included in
the financial statements of the Partnership with the appropriate adjustment of
profit or loss for the affiliate's participation in the joint venture. Post
Lake Apartments was sold in 1996.  Atlanta Lakes Investors received its share
of the net sales proceeds plus its share of the remaining assets held by
Atlanta Lakes Joint Venture, and both joint ventures were terminated in 1996.
Distributions of $1,461,117 and $45,202 were made to the affiliate during 1996
and 1995, respectively, as its share of distributions received from Atlanta
Lakes Joint Venture.

6. Tax Accounting:

The Partnership kept its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder, and existing interpretations
<PAGE>
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences is that
the net loss for 1997 in the financial statements is $25,472 more than the tax
loss of the Partnership for the same period.

7. Transactions with Affiliates:

Expenses paid and payable by the Partnership to affiliates are:

                            Year Ended       Year Ended       Year Ended
                             12/31/97         12/31/96         12/31/95   
                          --------------   --------------   --------------
                           Paid  Payable    Paid  Payable    Paid  Payable
                          ------ -------   ------ -------   ------ -------
Reimbursement of expenses
  to the General Partner,
  at cost:
    Accounting             $9,539  $4,453   $5,954  $4,809  $29,145  $1,702
    Data processing         3,840   3,116    1,949     693    8,899     479
    Investor communica-
      tions                  None    None     None    None    2,822    None
    Legal                   6,900   3,155    3,324   2,685    4,796     548
    Portfolio management   17,726   8,577   14,236  11,498   25,912   3,018
    Other                     745    None      923     745    2,503     343

During 1996, the General Partner loan of $1,118,145 and accrued interest
thereon of $134,900 were fully repaid from a portion of the Partnership's share
of the proceeds from the sales of Post Lake Apartments and Redwood Shores
Apartments. The Partnership had repaid $100,000 of accrued interest expense
earlier in 1996. During 1996 and 1995, the Partnership incurred interest
expense of $55,702 and $65,502, respectively.  The Partnership paid interest
expense of $234,900 during 1996 and paid no interest expense during 1995.
Interest expense was computed at the American Express Company cost of funds
rate plus a spread to cover administrative costs. This rate varied between
5.76% and 6.34% during 1996, prior to the repayment.

8. Extraordinary Item:

In connection with the sales of Post Lake Apartments and Redwood Shores
Apartments during 1996, the joint ventures which owned the properties wrote off
the remaining unamortized deferred financing fees related to the loans which
collateralized the properties sold in the amounts of $12,821 and $287,369,
respectively, of which $6,410 and $105,285, respectively, represent the
Partnership's shares. In addition, in connection with the sale of Post Lake
Apartments, the joint venture which owned the property paid a prepayment
penalty in the amount of $352,847, of which $176,424 represents the
Partnership's share. These amounts were recognized as extraordinary items and
were classified as participation in debt extinguishment expense with
affiliates.

9. Fair Values of Financial Instruments:
<PAGE>
The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1997 and 1996 are as follows:

The carrying values of cash and cash equivalents, accounts receivable, and
accounts payable approximate fair value.
<PAGE>
                            ATLANTA LAKES JOINT VENTURE
                           INDEX TO FINANCIAL STATEMENTS

Report of Independent Accountants

Financial Statements:

Statements of Income and Expenses and Partners' Capital, for the years ended
December 31, 1996 and 1995

Statements of Cash Flows, for the years ended December 31, 1996 and 1995

Notes to Financial Statements

Financial Statement Schedules are omitted for the reason that they are
inapplicable or equivalent information has been included elsewhere herein.
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Atlanta Lakes Joint Venture

We have audited the accompanying statements of income and expenses and
partners' capital and statements of cash flows of Atlanta Lakes Joint Venture
(An Illinois General Partnership) for each of the two years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows for Atlanta
Lakes Joint Venture for each of the two years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.

As described in Note 1 to the financial statements, the Partnership Agreement
provides for the dissolution of the Partnership upon the disposition of all its
interests in real estate.  At December 31, 1996, the Partnership had disposed
of all its interests in real estate and, accordingly, has ceased operations and
was dissolved on December 31, 1996.  


                                   COOPERS & LYBRAND L.L.P.


Chicago, Illinois
March 20, 1997
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

            STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
                 for the years ended December 31, 1996 and 1995
                  
                                                 1996             1995
                                             ------------     ------------
Income:
  Rental and service                       $   3,034,082    $   4,077,724
  Interest on short-term investments              24,331           11,003
                                             ------------     ------------
    Total income                               3,058,413        4,088,727
                                             ------------     ------------

Expenses:
  Interest on mortgage note payable            1,006,193        1,416,761
  Depreciation                                   467,149          653,293
  Amortization of deferred expenses               16,485           21,980
  Property operating                           1,201,775        1,474,839
  Real estate taxes                              183,377          246,286
  Property management fees                       133,782          188,804
  Administrative                                  11,553           10,204
                                             ------------     ------------
    Total expenses                             3,020,314        4,012,167
                                             ------------     ------------
Income before gain on sale of property and                   
  extraordinary item                              38,099           76,560
Gain on sale of property                       9,295,496
                                             ------------     ------------
Income before extraordinary item               9,333,595           76,560

Extraordinary item:                                          
  Debt extinguishment expense                   (365,668)
                                             ------------     ------------
Net income                                     8,967,927           76,560
                                               
Partners' capital at beginning of year         2,720,248        2,993,688

Distributions to joint venture partners      (11,688,175)        (350,000)
                                             ------------     ------------
Partners' capital at end of year                    None    $   2,720,248
                                             ============     ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

                            STATEMENTS OF CASH FLOWS
                 for the years ended December 31, 1996 and 1995
           
                                                 1996             1995
                                             ------------     ------------
Operating activities:
  Net income                               $   8,967,927    $      76,560
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Extraordinary item:
        Debt extinguishment expense               12,821
      Gain on sale of property                (9,295,496)
      Depreciation of property                   467,149          653,293
      Amortization of deferred expenses           16,485           21,980
      Net change in:
        Escrow deposits                           80,257           12,100
        Accounts receivable                      218,300          (11,120)
        Accounts payable                            (902)          (2,210)
        Security deposits                       (109,891)           1,882
                                             ------------     ------------
  Net cash provided by operating activities      356,650          752,485
                                             ------------     ------------
Investing activities:
  Proceeds from sale of property              26,600,000
  Payment of selling costs                      (303,000)
                                             ------------
  Net cash provided by investing activities   26,297,000
                                             ------------
Financing activities:
  Distributions to joint venture partners    (11,313,334)        (350,000)
  Deemed distribution to joint venture 
    partners                                    (374,841)
  Repayment of mortgage note payable         (15,036,078)
  Principal payments on mortgage note 
    payable                                     (158,952)        (220,848)
                                             ------------     ------------
  Cash used in financing activities          (26,883,205)        (570,848)
                                             ------------     ------------

Net change in cash and cash equivalents         (229,555)         181,637

Cash and cash equivalents at beginning of 
  year                                           229,555           47,918
                                             ------------     ------------
Cash and cash equivalents at end of year            None    $     229,555
                                             ============     ============
                                                
The accompanying notes are an integral part of the financial statements.
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Nature of the Partnership's Business: 

Atlanta Lakes Joint Venture (the "Joint Venture") was engaged solely in the
operation of residential real estate located in Atlanta, Georgia (Post Lake
Apartments). Post Lake Apartments was sold in 1996. The Partnership Agreement
provides for dissolution of the Partnership upon the occurrence of certain
events, including the disposition of all interests in real estate. The Joint
Venture distributed the proceeds from the sale of the property as well as the
remaining assets of the Joint Venture, and the Joint Venture was terminated on
December 31, 1996.

2. Accounting Policies:

(a) The preparation of the financial statements in conformity with generally
accepted accounting principles required the Joint Venture to make estimates and
assumptions that affected the reported amounts of revenues and expenses during
the reporting period.  Actual results could have varied from those estimates.

(b) Depreciation expense was computed using the straight-line method. Rates
used in the determination of depreciation were based upon the following
estimated useful lives:
                                                     Years
                                                     -----

               Buildings and improvements             30
               Furniture and fixtures                  5

Maintenance and repairs were charged to expense when incurred. Expenditures for
improvements were charged to the related asset account.  

(c) Deferred expenses consisted of financing fees which were amortized over the
term of the agreement through the date of the property's sale. Upon sale, any
remaining balance was recognized as debt extinguishment expense and classified
as an extraordinary item.

(d) Revenue was recognized on an accrual basis in accordance with generally
accepted accounting principles.

(e) The Joint Venture was not liable for Federal income taxes and each partner
recognized its proportionate share of the Joint Venture loss or income in its
tax return; therefore, no provision for income taxes was made in the financial
statements of the Joint Venture.

3. Joint Venture Agreement:

The Joint Venture was organized in December 1986 and provided for Atlanta Lakes
Investors, an Illinois limited partnership, and Atlanta Lakes, Inc., an
Illinois corporation, to be joint venturers (together, the "Partners"). Atlanta
<PAGE>
Lakes Investors was owned by Balcor Growth Fund A Real Estate Investment for
Capital Appreciation ("BGF") and Balcor Employee Investment Partners-87. An
affiliate of the General Partner of BGF managed the business activities of
Atlanta Lakes, Inc.

The Joint Venture Agreement provided that each Partner had a participation
percentage of 50% in the Joint Venture. Each item of income, gain, loss,
deduction or credit for each year was allocated to the Partners in accordance
with their respective participation percentages. The Partners  set aside as a
reserve for contingencies and/or working capital, any portion of Net Cash
Receipts and/or Net Capital Proceeds which they reasonably deemed necessary or
appropriate for the business of the Joint Venture. Net Cash Receipts of the
Joint Venture were distributed from time to time as the Partners determined, in
accordance with the Partners' respective participation percentages. Net Capital
Proceeds were distributed to the Partners in accordance with their respective
participation percentages.

During 1996 and 1995, the Joint Venture distributed cash of $11,313,334 and
$350,000, respectively, to its Partners. During 1996, the Joint Venture made a
deemed distribution of $374,841 for the State of Georgia withholding taxes paid
on behalf of the joint venture partners.

4. Mortgage Note Payable:

The Joint Venture obtained first mortgage financing in the amount of
$16,575,000 collateralized by Post Lake Apartments. The mortgage note payable
was repaid when the property was sold in 1996. The mortgage note bore interest
at the rate of 9.25% and was payable in monthly installments of principal and
interest of $136,468.

During 1996 and 1995, the Joint Venture incurred and paid interest expense on
the mortgage note payable of $1,006,193 and $1,416,761, respectively.

5. Management Agreement:

Post Lake Apartments was managed by an affiliate of the seller for a management
fee of 4.25% of gross receipts. In addition, the manager was entitled to
receive 20% of operating income in excess of the budgeted operating income for
each year up to an amount which, when added to the base monthly fee, equaled
5.5% of the gross receipts for Post Lake for such calendar year. The manager
earned $15,240 of additional management fees for 1995. The operating income did
not exceed the budgeted operating income in 1996. The management agreement was
terminated when the property was sold in 1996.

6. Tax Accounting:

The Joint Venture kept its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements, which were prepared in
accordance with generally accepted accounting principles, differ from the tax
returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences was that
the net income for 1996 in the financial statements was $5,531,252 less than
the tax income of the Joint Venture for the same period.<PAGE>

7. Property Sale:

In September 1996, the Joint Venture sold the Post Lake Apartments in an all
cash sale for $26,600,000. From the proceeds of the sale, the Joint Venture
paid $15,036,078 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $303,000 in selling costs and a prepayment
penalty of $352,847. In addition, the Joint Venture paid State of Georgia
withholding taxes of $374,841 on behalf of the joint venture partners relating
to the gain on the sale of the property which has been recorded as a deemed
distribution for financial statement purposes. The basis of the property was
$17,001,504 which is net of accumulated depreciation of $8,090,578. For
financial statement purposes, the Joint Venture recognized a gain of $9,295,496
from the sale of this property. 

8. Extraordinary Item:

In connection with the sale of Post Lake Apartments, the Joint Venture wrote
off the remaining unamortized deferred financing fees related to the loan which
collateralized the property in the amount of $12,821. In addition, the Joint
Venture paid a prepayment penalty of $352,847. These amounts were recognized as
an extraordinary item and were classified as debt extinguishment expense.
<PAGE>
                               REDWOOD PARTNERS
                        INDEX TO FINANCIAL STATEMENTS 

Report of Independent Accountants

Financial Statements:

Statements of Income and Expenses and Partners' Deficit, for the years ended
December 31, 1996 and 1995

Statements of Cash Flows, for the years ended December 31, 1996 and 1995

Notes to Financial Statements

Financial Statement Schedules are omitted for the reason that they are
inapplicable or equivalent information has been included elsewhere herein.
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Redwood Partners

We have audited the accompanying statements of income and expenses and
partners' capital and statements of cash flows of Redwood Partners (An Illinois
General Partnership) for each of the two years in the period ended December 31,
1996. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows for Redwood
Partners for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. 

As described in Note 1 to the financial statements, the Partnership Agreement
provides for the dissolution of the Partnership upon the disposition of all its
interests in real estate.  At December 31, 1996, the Partnership had disposed 
of all its interests in real estate and, accordingly, has ceased operations and
was dissolved on December 31, 1996.



                                   COOPERS & LYBRAND L.L.P.


Chicago, Illinois
March 20, 1997
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

            STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' DEFICIT
                for the years ended December 31, 1996 and 1995
                

                                                 1996             1995
                                             ------------     ------------
Income:
  Rental and service                       $   2,797,528    $   3,604,060
  Interest on short-term investments             260,846          271,092
                                             ------------     ------------
    Total income                               3,058,374        3,875,152
                                             ------------     ------------

Expenses:
  Interest on mortgage note payable            1,012,566        2,047,003
  Depreciation                                   524,446          730,651
  Amortization of deferred expenses               53,883           17,961
  Property operating                             905,591          857,163
  Real estate taxes                              218,475          296,936
  Property management fees                       122,614          139,319
  Administrative                                  36,396           64,760
                                             ------------     ------------
    Total expenses                             2,873,971        4,153,793
                                             ------------     ------------
Income (loss) before gain on sale of 
  property, seller's participation in joint
  venture and extraordinary item                 184,403         (278,641)

Gain on sale of property                      15,823,862

Seller's participation in (income) loss
  of joint venture                            (5,612,153)         181,206
                                             ------------     ------------
Income (loss) before extraordinary item       10,396,112          (97,435)

Extraordinary item:
  Debt extinguishment expense                   (287,369)
                                             ------------     ------------
Net income (loss)                             10,108,743          (97,435)
                                              
Partners' deficit at beginning of year          (642,768)        (957,333)

Contributions from joint venture partners                         412,000

Distributions to joint venture partners       (9,465,975)
                                             ------------     ------------
Partners' deficit at end of year                    None    $    (642,768)
                                             ============     ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                           STATEMENTS OF CASH FLOWS
                for the years ended December 31, 1996 and 1995
                
                                                 1996             1995
                                             ------------     ------------
Operating activities:
  Net income (loss)                        $  10,108,743    $     (97,435)
  Adjustments to reconcile net income (loss)
    to net cash provided by operating
    activities:
      Extraordinary item:
        Debt extinguishment expense              287,369
      Gain on sale of property               (15,823,862)
      Seller's participation in income 
        (loss) from joint venture              5,612,153         (181,206)
      Depreciation of property                   524,446          730,651
      Amortization of deferred expenses           53,883           17,961
      Net change in:
        Accounts receivable                      587,529         (243,301)
        Accounts payable                         (70,217)          66,327
        Security deposits                       (113,213)          (2,352)
                                             ------------     ------------
  Net cash provided by operating activities    1,166,831          290,645
                                             ------------     ------------
Investing activities:
  Proceeds from sale of property              11,780,000
  Payment of selling costs                       (43,728)
                                             ------------
  Net cash provided by investing activities   11,736,272
                                             ------------
Financing activities:
  Contributions by joint venture partners                         412,000
  Contributions by joint venture partner -
    seller                                                        181,206
  Distributions to joint venture partners     (9,465,975)
  Distributions to joint venture partner -
    seller                                    (5,612,153)
  Refund of bond reserve                       2,478,000
  Principal payments on mortgage note 
    payable                                     (310,000)        (387,500)
  Payment of deferred expenses                                   (359,213)
  Funding of reserve for replacements                            (140,000)
                                             ------------     ------------
  Net cash used in financing activities      (12,910,128)        (293,507)
                                             ------------     ------------

The accompanying notes are an integral part of the financial statements.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                           STATEMENTS OF CASH FLOWS
                for the years ended December 31, 1996 and 1995
                                  (Continued)
                
                                                 1996             1995
                                             ------------     ------------


Net change in cash and cash equivalents           (7,025)          (2,862)

Cash and cash equivalents at beginning of
  year                                             7,025            9,887
                                             ------------     ------------
Cash and cash equivalents at end of year            None    $       7,025
                                             ============     ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Nature of the Partnership's Business:

Redwood Partners (the "Joint Venture") was engaged solely in the operation of
residential real estate located in the Redwood City, California market (Redwood
Shores Apartments).  Redwood Shores Apartments was sold in 1996. The
Partnership Agreement provides for dissolution of the Partnership upon the
occurrence of certain events, including the disposition of all interests in
real estate.  The Joint Venture distributed the proceeds from the sale of the
property as well as the remaining assets of the Joint Venture, and the Joint
Venture was terminated on December 31, 1996.

2. Accounting Policies:

(a) The preparation of the financial statements in conformity with generally
accepted accounting principles required the Joint Venture to make estimates and
assumptions that affected the reported amounts of revenues and expenses during
the reporting period. Actual results could have varied from those estimates.

(b) The financial statements include the accounts of Redwood Partners and its
70% general partnership interest in Redwood Shores Apartments Associates
("RSAA") on a consolidated basis. The seller owned a 30% limited partnership
interest in RSAA. For financial statement purposes, the seller's participation
in the operations of the property was equal to the seller's capital
contributions or the distributions made to the seller.

(c) Depreciation expense was computed using the straight-line method. Rates
used in the determination of depreciation were based upon the following
estimated useful lives:

                                                    Years
                                                    -----

               Buildings and improvements             30
               Furniture and fixtures                  5

Maintenance and repairs were charged to expense when incurred. Expenditures for
improvements were charged to the related asset account. 

(d) Deferred expenses consisted of financing fees which were amortized over the
term of the re-marketing period of the bonds secured by the property, through
the date of the property's sale. Upon sale, any remaining balance was
recognized as debt extinguishment expense and classified as an extraordinary
item.

(e) Revenue was recognized on an accrual basis in accordance with generally
accepted accounting principles.

(f) The Joint Venture was not liable for Federal income taxes and each partner
<PAGE>
recognized its proportionate share of the Joint Venture loss or income in its
tax return; therefore, no provision for income taxes was made in the financial
statements of the Joint Venture.

3. Joint Venture Agreement:

The Joint Venture was organized in April 1987 and provided for Redwood
Associates, an Illinois limited partnership, and Sequoia Shores, Inc., an
Illinois corporation, to be joint venturers (together, the "Partners"). In
June 1987, the Joint Venture acquired a 70% general partnership interest in
RSAA, an existing California limited partnership which owned the Redwood Shores
Apartments in Redwood City, California.  Redwood Associates was owned by Balcor
Growth Fund A Real Estate Investment for Capital Appreciation ("BGF"). An
affiliate of the General Partner of BGF managed the business activities of
Sequoia Shores, Inc.

The Joint Venture Agreement provided that each Partner had a participation
percentage of 50% in the Joint Venture. Each item of income, gain, loss,
deduction or credit for each year was allocated to the Partners in accordance
with their respective participation percentages. Joint Venture distributions
from all sources were made to the Partners in accordance with their respective
participation percentages.

During 1996, the Joint Venture distributed $9,465,975 to its Partners.

4. Mortgage Note Payable:

RSAA assumed a $28,000,000 loan (the "Bond Loan") funded from the proceeds of
the sale of Multi-Family Housing Revenue Bonds, Series 1985B, issued by the
City of Redwood City, California, consisting of $2,370,000 in serial bonds and
$25,630,000 in term bonds. The Bond Loan is collateralized by a mortgage on the
Redwood Shores apartment complex. The serial bonds were fully repaid in 1995.
In October 1995, RSAA completed the re-marketing of the $25,630,000 term bonds.
The principal and bond reserve were unchanged and the interest rate was reduced
from 8.75% to 5.20%. The principal was initially amortized by $200,000
semi-annually. The semi-annual amortization subsequently increased by $10,000
or $15,000 for each six-month period thereafter through the sale date. RSAA
paid refinancing fees of $320,000 and Redwood Partners paid legal fees of
$39,213 in connection with the re-marketing.

Redwood Shores was sold in 1996, and the purchaser assumed the mortgage note
payable. The bond reserve of $2,478,000, which was established with proceeds
from the Bond Loan, was credited to RSAA at the sale of the property. Pursuant
to the loan agreement, these amounts were invested in short-term investments
and interest earned thereon accumulated to the benefit of RSAA and was applied
against the debt service payments on the Bond Loan.

RSAA incurred and paid interest expense in 1996 and 1995 on the Bond Loan of
$1,012,566 and $2,047,003, respectively.

5. Management and Guarantee Agreement:

An affiliate of the seller, the limited partner of RSAA, was managing the
<PAGE>
property for a fee of 4% of gross rental receipts prior to its sale. The
management agreement extended through the sale date of the property. In
addition, Redwood Partners received a management fee of 1% of gross rental
income plus $10,000 from RSAA.

6. Tax Accounting:

The Joint Venture kept its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder, and existing interpretations
thereof.  The accompanying financial statements, which were prepared in
accordance with generally accepted accounting principles, differ from the tax
returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences was that
the net income for 1996 in the financial statements was $2,775,790 less than
the tax income of the Joint Venture for the same period. 

7. Property Sale:

In September 1996, RSAA sold the Redwood Shore Apartments in an all cash sale
for $37,000,000. The purchaser took title subject to the existing first
mortgage loan in the amount of $25,220,000. From the proceeds of the sale, RSAA
paid $43,728 in selling costs. The basis of the property was $21,132,410 which
is net of accumulated depreciation of $7,853,866. For financial statement
purposes, the Joint Venture recognized a gain of $15,823,862 from the sale of
this property.

8. Extraordinary Item:

In connection with the sale of Redwood Shores Apartments, the Joint Venture
wrote off the remaining unamortized deferred financing fees related to the loan
which collateralized the property in the amount of $287,369. This amount was
recognized as an extraordinary item and was classified as debt extinguishment
expense.<PAGE>