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, 1996
                          -----------------
                                      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 consist exclusively of
investment in and operation of income-producing real property, and all
financial information included in this report relates to this industry segment.

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.  (See Item 7. Liquidity and Capital Resources for additional
information.)

The Registrant distributed a majority of the proceeds from the property sales
in January 1997 to Limited Partners and retained a portion of the cash to
satisfy obligations of the Registrant as well as establish a reserve for
contingencies.  The timing of the termination of the Registrant and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise.  Such contingencies may include legal
and other fees stemming from litigation involving the Registrant including, but
not limited to, the lawsuit discussed in Item 3. Legal Proceedings.  In the
absence of any such contingency, the reserves will be paid within twelve months
of the last property being sold.  In the event a contingency continues to exist
or arises, reserves may be held by the Registrant for a longer period of time.

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

The Registrant no longer owns any joint venture interests in real estate
properties.

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

Proposed class action
---------------------

On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al., Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Registrant, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Registrant and the Affiliated
<PAGE>
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnerships by the proposed class plus interest; general damages for
injuries arising from the defendants' alleged actions; equitable relief,
including rescission, on certain counts; punitive damages; treble damages on
certain counts; recovery from the defendants of all profits received by them as
a result of their alleged actions relating to the Defendant Partnerships;
attorneys' fees and other costs.

The defendants intend to vigorously contest this action. No class has been
certified as of this date. The Registrant believes it has meritorious defenses
to contest the claims. It is not determinable at this time whether or not an
unfavorable decision in this action would have a material adverse impact on the
Registrant.

The Registrant is not subject to any other material pending legal proceedings,
nor were any such other proceedings terminated during the fourth quarter of
1996.

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 1996.
<PAGE>
                                    PART II

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

There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop.  For information
regarding distributions, see Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources,
below.

As of December 31, 1996, the number of record holders of Limited Partnership
Interests of the Registrant was 688.

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

                                      Year ended December 31,                 
                    ----------------------------------------------------------
                       1996        1995        1994        1993        1992   
                    ----------- ----------  ----------  ----------  ----------
Total income        $9,968,437     $(7,816) $(299,072)  $(318,125)  $(390,183)
Income (loss) before
 extraordinary items 8,604,175    (224,813)  (479,754)   (436,167)   (481,508)
Net income (loss)    8,316,056   (224,813)   (479,754)   (436,167)   (481,508)
Net income (loss)
  per Limited Part-
  nership Interest    1,164.74     (31.42)     (67.05)     (60.95)      (67.29)

Total assets         7,727,690   1,171,976   1,009,834   1,453,169    1,919,258


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") are primarily comprised of the Partnership's
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 net
income during 1996 as compared to a net loss in 1995.  Improved property
operations at Post Lake and decreased interest expense at Redwood Shores
resulted in a decrease in the net loss during 1995 as compared to 1994. Further
discussion of the Partnership's operations is summarized below.
<PAGE>
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 is
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.

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.

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 $6,000, respectively.
In addition, the Partnership recognized its share of an extraordinary
prepayment penalty relating to the Post Lake Apartments mortgage loan of
approximately $176,000. 


1995 Compared to 1994
---------------------

Post Lake Apartments generated net income during 1995 as compared to a net loss
during 1994 primarily as a result of higher rental and service income of
approximately $265,000 due to higher rental rates and occupancy.  The higher
rental income at Post Lake Apartments resulted in an increase in property
management fees of approximately $28,000 for 1995 as compared to 1994.
<PAGE>
The net loss from Redwood Shores Apartments decreased during 1995 as compared
to 1994 as a result of higher rental and service income of approximately
$153,000 due to increased rental rates and occupancy and lower interest expense
on the mortgage note payable of approximately $244,000 as a result of the
re-marketing of the bonds secured by the property.  The decrease in the net
loss was partially offset by a decrease in interest income of approximately
$32,000 due to lower interest rates earned on investments and an increase in
administrative expense of approximately $33,000 due to costs incurred in
connection with the re-marketing of the bonds.  

As a result of higher partnership contributions made by the seller of Redwood
Shores Apartments in 1995 as compared to 1994, the seller's participation in
the loss increased during 1995 as compared to 1994. 

As a result of higher outstanding balances and interest rates during 1995,
interest expense on the Partnership's short-term loan with an affiliate
increased during 1995 as compared to 1994.

Primarily as a result of lower data processing costs, administrative expenses
decreased during 1995 as compared to 1994. 

The net improvement in the operations of Post Lake Apartments described above
resulted in affiliate's participation in income from joint venture during 1995
as compared to a participation in loss during 1994.

Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership increased by approximately $7,559,000 as
of December 31, 1996 as compared to December 31, 1995 primarily due to the
proceeds received from the sales of Post Lake Apartments and Redwood Shores
Apartments.  The cash flow deficit from operating activities consisted
primarily of the payment of administrative expenses and the payment of interest
expense on the short-term loan from an affiliate, which was partially offset by
the receipt of interest income. The investing activities consisted of
distributions of approximately $5,657,000 received from the Atlanta Lakes Joint
Venture and distributions of approximately $4,733,000 received from Redwood
Partners. The financing activities consisted of distributions to the affiliated
partner of Atlanta Lakes Investors of approximately $1,461,000, and the
repayment of the General Partner loan of approximately $1,118,000. In January
1997, the Partnership made a distribution of $6,375,600 to Limited Partners.

The Partnership classified the cash flow performance of the properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments.  A deficit is considered to be
significant if it exceeds $250,000 annually or 20% of the property's rental and
service income.  The Partnership defines cash flow generated from the
properties as an amount equal to the property's revenue receipts less property
related expenditures, which includes debt service payments.  Prior to their
sales in 1996, both Post Lake Apartments and Redwood Shores Apartments
generated positive cash flow.  During 1995, Post Lake Apartments generated
positive cash flow while Redwood Shores Apartments generated a marginal cash
flow deficit.  The improvement at Redwood Shores was a result of lower interest
expense on the mortgage note payable as a result of the October 1995
re-marketing of the bonds secured by the property.
<PAGE>
Post Lake Apartments, in which the Partnership held a joint venture interest,
was sold in 1996.  The Partnership's share of the proceeds from the sale of
Post Lake Apartments of approximately $3,906,000 along with the Partnership's
share of the remaining assets of that joint venture were distributed to the
Partnership in 1996.

Redwood Shores Apartments, in which the Partnership held a joint venture
interest, was sold in 1996.  The Partnership's share of the proceeds from the
sale of Redwood Shores Apartments of approximately $4,465,000 along with the
Partnership's share of the remaining assets of that joint venture were
distributed to the Partnership in 1996. 

The loan from the General Partner and accrued interest thereon totaling
$1,253,045 were 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 made a distribution of $6,375,600 ($900.00 per Interest) to
Limited Partners in January 1997 from the proceeds received in connection with
the sales of Post Lake Apartments and Redwood Shores Apartments.  The
Partnership will retain a portion of the cash from the sales to satisfy
obligations of the Partnership as well as establish a reserve for
contingencies.  The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise.  Such contingencies may include legal
and other fees stemming from litigation involving the Partnership including,
but not limited to, the lawsuit discussed in Item 3. Legal Proceedings.  In the
absence of any such contingency, the reserves will be paid within twelve months
of the last property being sold.  In the event a contingency continues to exist
or arises, reserves may be held by the Partnership for a longer period of time.

As previously mentioned, in January 1997, the Partnership made a distribution
of $6,375,600 ($900.00 per Interest) to the holders of Limited Partnership
Interests. Of this amount, $318,780 ($45.00 per Interest) represents a
distribution of Net Cash Receipts reserves and $6,056,820 ($855.00 per
Interest) represents a distribution of Net Cash Proceeds received from the
sales of Redwood Shores Apartments and Post Lake Apartments.  This represents
the first distribution made to Limited Partners.  In addition, Limited Partners
have received certain tax benefits since the beginning 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, 1996         December 31, 1995    
                      -----------------------  -------------------------
                      Financial        Tax       Financial        Tax
                      Statements     Returns    Statements      Returns 
                      ----------    ---------   ----------     ---------

Total assets          $7,727,690    $7,727,690   $1,171,976  $(1,533,354)
Partners' capital
  accounts (deficit):
    General Partner       None          None        (65,055)   (803,831)
    Limited Partners   7,692,913     8,763,268    (419,078)  (1,978,446)
Net income (loss):      
    General Partner       65,055       803,831      (2,248)     (92,150)
    Limited Partners   8,251,001    10,741,714    (222,565)    (375,119)
    Per Limited
      Partnership
      Interest          1,164.74      1,516.33      (31.42)      (52.95)


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                   James E. Mendelson
     Senior Vice President                   John K. Powell, Jr.
     Managing Director, Chief                Jayne A. Kosik
      Financial Officer, Treasurer
      and Assistant Secretary


Thomas E. Meador (age 49) 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 Director 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 42) joined Balcor in September 1988 and is
responsible for due diligence analysis and real estate advisory services for
Balcor and American Express Company. He also has supervisory responsibility for
Balcor's environmental matters. Mr. Darragh received masters' degrees in Urban
Geography from Queen's University and in Urban Planning from Northwestern
University.

James E. Mendelson (age 34) joined Balcor in July 1984 and is responsible for
Balcor's property sales activities. He also has supervisory responsibility for
Balcor's accounting, financial, treasury, investor services and investment
administration functions. From 1989 to 1995, Mr. Mendelson was Vice President -
Transaction Management and Vice President - Senior Transaction Manager and had
responsibility for various asset management matters relating to real estate
investments made by Balcor, including negotiations for the restructuring of
mortgage loan investments. Mr. Mendelson received his M.B.A. degree from the
University of Chicago.
<PAGE>
John K. Powell, Jr. (age 46) 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 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 39) 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 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.

(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 1996.

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

The Registrant paid $399 in 1996 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 owns of record or is known by the Registrant to own beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant.

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

Relatives and affiliates of the officers and partners of the General Partner do
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.
<PAGE>
Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------

(a & b) See Note 4 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.

See Note 8 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, Financial Statement Schedules, and Reports on Form 8-K
-------------------------------------------------------------------------

(a)
(1 & 2) See the Indexes to the Financial Statements and Financial Statement
Schedules 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 1996 is attached hereto.

(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter
ended December 31, 1996.

(c) Exhibits: See Item 14(a)(3) above.

(d) Financial Statement Schedules: See the Indexes to the Financial Statements
and Financial Statement Schedules in this Form 10-K.
<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
                             Managing Director and Chief
                             Financial Officer (Principal
                             Accounting Officer) of
                             Balcor Partners-XX, the
                             General Partner

Date: March 26, 1997             
      --------------

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

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

                         President and Chief Executive
                         Officer (Principal Executive
                         Officer) of Balcor Partners-XX,
/s/ Thomas E. Meador     the General Partner               March 26, 1997     
----------------------                                     --------------
   Thomas E. Meador
                         Managing Director and Chief
                         Financial Officer (Principal
                         Accounting Officer) of
                         of Balcor Partners-XX,
/s/ Jayne A. Kosik       the General Partner               March 26, 1997     
----------------------                                     --------------
   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, 1996 and 1995

Statements of Partners' Capital (Deficit), for the years ended December 31,
1996, 1995 and 1994

Statements of Income and Expenses, for the years ended December 31, 1996, 1995
and 1994

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

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, 1996 and 1995, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.

As described in Note 2 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 has disposed of
all its real estate interests.  Upon resolution of the litigation described in
Note 11 to the financial statements, the Partnership intends to cease operations
and dissolve.




                                   COOPERS & LYBRAND L.L.P.


Chicago, Illinois
March 20, 1997
<PAGE>
                              BALCOR GROWTH FUND
               A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                                BALANCE SHEETS
                          December 31, 1996 and 1995

                                    ASSETS

                                                 1996             1995
                                             ------------     ------------
Cash and cash equivalents                  $   7,699,068    $     139,880
Accounts and accrued interest receivable          28,622           39,213
Investment in joint ventures with affiliates                      992,883
                                             ------------     ------------
                                           $   7,727,690    $   1,171,976
                                             ============     ============


                  LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Loan payable - affiliate                                    $   1,118,145
Accounts payable                           $      14,347            4,480
Due to affiliates                                 20,430          185,138
                                             ------------     ------------
    Total liabilities                             34,777        1,307,763
                                             ------------     ------------
 
Commitments and contingencies

Affiliate's participation in joint venture                        348,346
                                                              ------------
Limited Partners' capital (deficit) (7,084 
  Interests issued and outstanding)            7,692,913         (419,078)
General Partner's (deficit)                                       (65,055)
                                             ------------     ------------
    Total partners' capital (deficit)          7,692,913         (484,133)
                                             ------------     ------------
                                           $   7,727,690    $   1,171,976
                                             ============     ============

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' (DEFICIT)
             for the years ended December 31, 1996, 1995 and 1994



                                    Partners' Capital (Deficit) Accounts
                                  ----------------------------------------
                                                  General       Limited
                                     Total        Partner       Partners
                                  ------------  ------------  ------------
                                 
Balance at December 31, 1993    $     220,434 $     (58,009)$     278,443

Net loss for the year
  ended December 31, 1994            (479,754)       (4,798)     (474,956)
                                  ------------  ------------  ------------
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
                                  ============  ============  ============



(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 Post Lake Apartments, in which the Partnership held a joint venture
interest.


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, 1996, 1995 and 1994


                                      1996          1995          1994
                                  ------------  ------------  ------------

Income:
  Interest on short-term
    investments                 $      96,127 $       2,621 $         710
  Participation in net income
    (loss) of joint ventures with 
    affiliates before 
    extraordinary item              9,872,310       (10,437)     (299,782)
                                  ------------  ------------  ------------
    Total income (loss)             9,968,437        (7,816)     (299,072)
                                  ------------  ------------  ------------
Expenses:
  Interest on short-term loan 
    from an affiliate                  55,702        65,502        40,003
  Administrative                      147,378       141,608       156,554
                                  ------------  ------------  ------------
    Total expenses                    203,080       207,110       196,557
                                  ------------  ------------  ------------
Income (loss) before affiliate's
  participation in income from 
  joint venture and extraordinary
  item                              9,765,357      (214,926)     (495,629)
Affiliate's participation in 
  (income) loss from joint venture (1,161,182)       (9,887)       15,875

Income (loss) before              ------------  ------------  ------------
  extraordinary item                8,604,175      (224,813)     (479,754)
                                  ------------  ------------  ------------
Extraordinary item
  Participation in debt 
    extinguishment expense with
    affiliates                       (288,119)
                                  ------------  ------------  ------------
Net income (loss)               $   8,316,056 $    (224,813)$    (479,754)
                                  ============  ============  ============
Income (loss) before 
  extraordinary item allocated 
  to General Partner            $      67,936 $      (2,248)$      (4,798)
                                  ============  ============  ============
Income (loss) before 
  extraordinary item allocated 
  to Limited Partners           $   8,536,239 $    (222,565)$    (474,956)
                                  ============  ============  ============
<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, 1996, 1995 and 1994
                                  (Continued)

Income (loss) before 
  extraordinary item per Limited 
  Partnership Interest (7,084 
  issued and outstanding)       $    1,205.00 $      (31.42)$      (67.05)
                                  ============  ============  ============
Extraordinary item allocated to 
  General Partner               $      (2,881)
                                  ============
Extraordinary item allocated to 
  Limited Partners              $    (285,238)
                                  ============
Extraordinary item per Limited
  Partnership Interest (7,084 
  issued and outstanding)       $      (40.27)
                                  ============
Net income (loss) allocated to 
  General Partner               $      65,055 $      (2,248)$      (4,798)
                                  ============  ============  ============
Net income (loss) allocated to 
  Limited Partners              $   8,251,001 $    (222,565)$    (474,956)
                                  ============  ============  ============
Net income (loss) per Limited 
  Partnership Interest (7,084 
  issued and outstanding)       $    1,164.74 $      (31.42)$      (67.05)
                                  ============  ============  ============


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, 1996, 1995 and 1994


                                      1996          1995          1994
                                  ------------  ------------  ------------
Operating activities:
  Net income (loss)             $   8,316,056 $    (224,813)$    (479,754)
  Adjustments to reconcile net
    income (loss) to net cash 
    used in operating activities:
      Affiliate's participation
        in income (loss) from 
        joint venture               1,161,182         9,887       (15,875)
      Participation in net
        (income) loss of joint
        ventures with affiliates   (9,872,310)       10,437       299,782
      Participation in debt
        extinguishment expense
        with an affiliate             288,119
      Net change in:               
        Accounts receivable            10,591       (39,213)
        Accounts payable                9,867       (10,076)
        Due to affiliates            (164,708)       45,846        61,496
                                  ------------  ------------  ------------
  Net cash used in operating
    activities                       (251,203)     (207,932)     (134,351)
                                  ------------  ------------  ------------
Investing activities:            
  Capital contributions to
    joint venture with an 
    affiliate                                      (206,000)      (37,000)
  Distributions from joint
    ventures with affiliates       10,577,074       175,000       175,000
                                  ------------  ------------  ------------
  Net cash provided by or used in
    investing activities           10,577,074       (31,000)      138,000
                                  ------------  ------------  ------------


Financing activities:                            
  Deemed distribution to 
    Limited Partners                 (139,010)
  Proceeds from loan payable -
    affiliate                                       386,500        36,000
  Distributions to joint venture
    partner - affiliate            (1,461,117)      (45,202)      (45,202)
<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, 1996, 1995 and 1994
                                 (Continued)


  Deemed distribution to joint
    venture partner - affiliate       (48,411)
  Repayment of loan payable -
    affiliate                      (1,118,145)
                                  ------------  ------------  ------------
  Net cash used in or provided by
    financing activities           (2,766,683)      341,298        (9,202)
                                  ------------  ------------  ------------
Net change in cash and cash
  equivalents                       7,559,188       102,366        (5,553)

Cash and cash equivalents at
  beginning of year                   139,880        37,514        43,067
                                  ------------  ------------  ------------
Cash and cash equivalents at
  end of year                   $   7,699,068 $     139,880 $      37,514
                                  ============  ============  ============


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. Nature of the Partnership's Business: 

Balcor Growth Fund A Real Estate Investment For Capital Appreciation (the
"Partnership") was engaged principally in the investment in joint ventures
owning residential real estate located in Atlanta, Georgia and Redwood City,
California.  During 1996, both properties were sold and the joint ventures were
terminated.  In January 1997, a majority of the Partnership's share of the
proceeds from the sales of the properties was distributed to the Limited
Partners.

2. Partnership Termination:

The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership held joint venture interests in Redwood Shores
Apartments and Post Lake Apartments, both of which were sold in 1996.  The
Partnership distributed a majority of the proceeds in January 1997 to Limited
Partners and retained a portion of the cash to satisfy obligations of the
Partnership as well as establish a reserve for contingencies.  The timing of
the termination of the Partnership and final distribution of cash will depend
upon the nature and extent of liabilities and contingencies which exist or may
arise.  Such contingencies may include legal and other fees stemming from
litigation involving the Partnership including, but not limited to, the lawsuit
discussed in Note 11 of Notes to Financial Statements. In the absence of any
such contingency, the reserves will be paid within twelve months of the last
property being sold.  In the event a contingency continues to exist or arises,
reserves may be held by the Partnership for a longer period of time.

3. Accounting Policies:

(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires 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.
<PAGE>
(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.

(d) Cash and cash equivalents include all unrestricted, highly liquid
investments with an original maturity of three months or less. Cash is held or
invested in one financial institution.

(e) A reclassification has been made to the previously reported 1995 and 1994
statements in order to provide comparability with the 1996 statements.  This
reclassification has not changed the 1995 and 1994 results.   

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

(g) For financial statement purposes, in previous years 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 respective remaining economic interests as
provided for in the Partnership Agreement, the General Partner was allocated
less income in 1996 for financial statement purposes.

4. Partnership Agreement:

The Partnership was organized in August 1985. The Partnership Agreement
provides 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 provides that profits and losses are allocated 99% to
the Limited Partners and 1% to the General Partner. One hundred percent of Net
Cash Receipts available for distribution shall be distributed to the holders of
Interests in proportion to their participating percentages as of the record
date for such distributions. There shall, however, be 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 being
distributed, which will be 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 is 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 will not receive any distributions of Net Cash Receipts or Net
Cash Proceeds.
<PAGE>
5. Investment in Joint Ventures with Affiliates:

(a) The Partnership, through Atlanta Lakes Investors (a partnership which
initially 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, 1995 and 1994, Atlanta Lakes Investors received $5,656,666,
$175,000 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
and 1994, Redwood Associates contributed $206,000 and $37,000, respectively, to
the Joint Venture.

6. 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) are 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, $45,202, and $45,202 were made to the affiliate
during 1996, 1995 and 1994, respectively, as its share of distributions
received from Atlanta Lakes Joint Venture.
<PAGE>
7. Tax Accounting:

The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder, and existing interpretations
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 income for 1996 in the financial statements is $3,229,489 less than the
tax income of the Partnership for the same period.

8. Transactions with Affiliates:

Expenses paid and payable by the Partnership to affiliates are:

                            Year Ended       Year Ended       Year Ended
                             12/31/96         12/31/95         12/31/94   
                          --------------   --------------   --------------
                           Paid  Payable    Paid  Payable    Paid  Payable
                          ------ -------   ------ -------   ------ -------
Reimbursement of expenses
  to the General Partner,
  at cost:
    Accounting            $5,954  $4,809   $29,145  $1,702  $36,741 $14,602
    Data processing        1,949     693     8,899     479   17,018   3,322
    Investor communica-
      tions                 None    None     2,822    None   11,974   2,708
    Legal                  3,324   2,685     4,796     548    2,512     528
    Portfolio management  14,236  11,498    25,912   3,018    4,322   4,261
    Other                    923     745     2,503     343    3,408     325

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, 1995, and 1994, the Partnership incurred interest
expense of $55,702, $65,502, and $40,003, respectively.  The Partnership paid
interest expense of $234,900 during 1996 and paid no interest expense during
either 1995 or 1994.  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.

9.  Extraordinary Items:

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.
<PAGE>
10. Fair Values of Financial Instruments:

The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1996 and 1995 are as follows:

The carrying values of cash and cash equivalents, accounts receivable, and
accounts payable approximate fair value.

11. Contingency:

The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates have been named as defendants alleging certain federal
securities law violations with regard to the adequacy and accuracy of
disclosures of information concerning, as well as the marketing efforts related
to, the offering of the Limited Partnership Interests of the Partnership. The
defendants continue to vigorously contest this action. A plaintiff class has
not yet been certified, and no determination of the merits have been made. It
is not determinable at this time whether or not an unfavorable decision in this
action would have a material adverse impact on the Partnership's financial
position, operations or liquidity. The Partnership believes it has meritorious
defenses to contest the claims.

12. Subsequent Event:

In January 1997, the Partnership made a distribution of $6,375,600 ($900.00 per
Interest) to the holders of limited partnership interests.  Of this amount,
$318,780 ($45.00 per Interest) represents a distribution of Net Cash Receipts
reserves and $6,056,820 ($855.00 per Interest) represents a distribution of Net
Cash Proceeds received from the sales of Redwood Shores Apartments and Post
Lake Apartments.
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE



Report of Independent Accountants

Financial Statements:

Balance Sheet, December 31, 1995

Statements of Income and Expenses and Partners' Capital, for the years ended
December 31, 1996, 1995 and 1994

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

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 balance sheet of Atlanta Lakes Joint Venture
(An Illinois General Partnership) as of December 31, 1995 and the related
statements of income and expenses and partners' capital and statements of cash
flows for each of the three 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 financial position of Atlanta Lakes Joint Venture at
December 31, 1995, and the results of its operations and its cash flows for
each of the three 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)

                                 BALANCE SHEET
                               December 31, 1995


                                    ASSETS

                                                                  1995
                                                              ------------
Cash and cash equivalents                                   $     229,555
Escrow deposits                                                    80,257
Accounts receivable                                               218,300
Deferred expenses, net of accumulated
  amortization of $190,493 in 1995                                 29,306
                                                              ------------
                                                                  557,418
                                                              ------------
Investment in real estate:
  Land                                                          3,794,165
  Buildings and improvements                                   21,297,917
                                                              ------------
                                                               25,092,082
  Less accumulated depreciation                                 7,623,429
                                                              ------------
Investment in real estate, net of
  accumulated depreciation                                     17,468,653
                                                              ------------
                                                            $  18,026,071
                                                              ============

                       LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                            $         902
Security deposits                                                 109,891
Mortgage note payable                                          15,195,030
                                                              ------------
    Total liabilities                                          15,305,823

Partners' capital                                               2,720,248
                                                              ------------
                                                            $  18,026,071
                                                              ============


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

            STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
             for the years ended December 31, 1996, 1995 and 1994


                                      1996          1995          1994
                                  ------------  ------------  ------------
Income:
  Rental and service            $   3,034,082 $   4,077,724 $   3,812,914
  Interest on short-term
    investments                        24,331        11,003         6,393
                                  ------------  ------------  ------------
    Total income                    3,058,413     4,088,727     3,819,307
                                  ------------  ------------  ------------

Expenses:
  Interest on mortgage
    note payable                    1,006,193     1,416,761     1,436,202
  Depreciation                        467,149       653,293       653,293
  Amortization of deferred
    expenses                           16,485        21,980        21,980
  Property operating                1,201,775     1,474,839     1,431,346
  Real estate taxes                   183,377       246,286       227,583
  Property management fees            133,782       188,804       160,401
  Administrative                       11,553        10,204        11,423
                                  ------------  ------------  ------------
    Total expenses                  3,020,314     4,012,167     3,942,228
                                  ------------  ------------  ------------
Income before gain on sale of
  property and extraordinary item      38,099        76,560      (122,921)

Gain on sale of property            9,295,496
                                  ------------  ------------  ------------
Income before extraordinary item    9,333,595        76,560      (122,921)
                                  ------------  ------------  ------------
Extraordinary item:
  Debt extinguishment expense        (365,668)
                                  ------------  ------------  ------------
Net income (loss)                   8,967,927        76,560      (122,921)

Partners' capital at beginning 
  of year                           2,720,248     2,993,688     3,466,609

Distributions to joint venture
  partners                        (11,688,175)     (350,000)     (350,000)
                                  ------------  ------------  ------------
Partners' capital at end of year         None $   2,720,248 $   2,993,688
                                  ============  ============  ============
                                   

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, 1995 and 1994


                                      1996          1995          1994
                                  ------------  ------------  ------------
Operating activities:
  Net income (loss)             $   8,967,927 $      76,560 $    (122,921)
  Adjustments to reconcile net
    income (loss) to net cash
    provided by operating
    activities:
      Extraordinary item:
        Debt extinghishment
          expense                      12,821
      Gain on sale of property     (9,295,496)
      Depreciation of property        467,149       653,293       653,293
      Amortization of deferred
        expenses                       16,485        21,980        21,980
      Net change in:
        Escrow deposits                80,257        12,100        (3,141)
        Accounts receivable           218,300       (11,120)      (12,966)
        Accounts payable                 (902)       (2,210)
        Security deposits            (109,891)        1,882        13,164
                                  ------------  ------------  ------------
  Net cash provided by operating
    activities                        356,650       752,485       549,409
                                  ------------  ------------  ------------
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)     (350,000)
  Deemed distribution to 
    joint venture partners           (374,841)
  Repayment of mortgage note
    payable                       (15,036,078)
  Principal payments on
    mortgage notes payable           (158,952)     (220,848)     (201,408)
                                  ------------  ------------  ------------
  Cash used in financing
    activities                    (26,883,205)     (570,848)     (551,408)
                                  ------------  ------------  ------------
Net change in cash and cash
  equivalents                        (229,555)      181,637        (1,999)
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

                           STATEMENTS OF CASH FLOWS
             for the years ended December 31, 1996, 1995 and 1994
                                  (Continued)


Cash and cash equivalents at
  beginning of year                   229,555        47,918        49,917
                                  ------------  ------------  ------------
Cash and cash equivalents at
  end of year                            None $     229,555 $      47,918
                                  ============  ============  ============


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 the dissolution of the Partnership upon the occurence 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 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 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) Effective January 1, 1995 the Joint Venture adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of". Under SFAS 121, the
Joint Venture recorded its investment in real estate at the lower of cost or
fair value, and periodically assessed, but not less than on an annual basis,
possible impairment to the value of the property. The Joint Venture estimated
the fair value of the property based on the market price less estimated closing
costs.  In the event the Joint Venture determined an impairment in value had
occurred, and the carrying amount of the real estate asset would not be
recovered, a provision would have been recorded to reduce the carrying basis of
the property to its estimated fair value. The Joint Venture considered  the
method referred to above to result in a reasonable measurement of the
property's fair value, unless other factors affecting the property's value
indicated otherwise.
<PAGE>
(d) 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 is recognized as debt extinguishment expense and classified
as an extraordinary item. 

(e) 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.  Since quoted market prices were not available for the Joint
Venture's financial instruments, fair values were based on estimates using
present value techniques. These techniques were significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates could not be
substantiated by comparison to independent markets and, in many cases, would
not have been realized in immediate settlement of the instrument. 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.

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

(g) Cash and cash equivalents included all unrestricted, highly liquid
investments with an original maturity of three months or less.

(h) 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
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 manages 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.
<PAGE>
During 1996, 1995 and 1994, the Joint Venture distributed cash of $11,313,334,
$350,000, 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, 1995, and 1994, the Joint Venture incurred and paid interest
expense on the mortgage note payable of $1,006,193, $1,416,761, and $1,436,202,
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 and 1994. 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 is that
the net income for 1996 in the financial statements is $5,531,252 less than the
tax income of the Joint Venture for the same period.

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.
<PAGE>
8. Extraordinary Items:

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.

9. Fair Value of Financial Instruments:

The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1995 were as follows:

The carrying value of cash and cash equivalents, accounts and accrued interest
receivable and accounts payable approximated fair value.

Mortgage Note Payable: Based on borrowing rates available to the Partnership at
the end of 1995 for mortgage loans with similar terms and maturities, the fair
value of the mortgage note payable approximated the carrying value.
<PAGE>
                               REDWOOD PARTNERS
        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE



Report of Independent Accountants

Financial Statements:

Balance Sheet, December 31, 1995

Statements of Income and Expenses and Partners' Deficit, for the years ended
December 31, 1996, 1995 and 1994

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

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 balance sheet of Redwood Partners (An Illinois
General Partnership) as of December 31, 1995 and the related statements of
income and expenses and partners' deficit and statements of cash flows for each
of the three 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 audits 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 Redwood Partners at
December 31, 1995, and the results of its operations and its cash flows for
each of the three 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)

                                 BALANCE SHEET
                               December 31, 1995

                                    ASSETS

                                                                  1995
                                                              ------------
Cash and cash equivalents                                   $       7,025
Bond reserve                                                    2,478,000
Accounts and accrued interest receivable                          587,529
Deferred expenses, net of accumulated
  amortization of $17,961 in 1995                                 341,252
                                                              ------------
                                                                3,413,806
                                                              ------------
Investment in real estate:
  Land                                                          6,043,941
  Buildings and improvements                                   22,942,335
                                                              ------------
                                                               28,986,276
  Less accumulated depreciation                                 7,329,420
                                                              ------------
Investment in real estate, net of
  accumulated depreciation                                     21,656,856
                                                              ------------
                                                            $  25,070,662
                                                              ============

                       LIABILITIES AND PARTNERS' DEFICIT

Accounts payable                                            $      70,217
Security deposits                                                 113,213
Mortgage note payable                                          25,530,000
                                                              ------------
    Total liabilities                                          25,713,430

Partners' deficit                                                (642,768)
                                                              ------------
                                                            $  25,070,662
                                                              ============


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

            STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' DEFICIT
             for the years ended December 31, 1996, 1995 and 1994


                                      1996          1995          1994
                                  ------------  ------------  ------------
Income:
  Rental and service            $   2,797,528 $   3,604,060 $   3,450,870
  Interest on short-term
    investments                       260,846       271,092       303,404
                                  ------------  ------------  ------------
    Total income                    3,058,374     3,875,152     3,754,274
                                  ------------  ------------  ------------
                                 
Expenses:                          
  Interest on mortgage             
    note payable                    1,012,566     2,047,003     2,290,644
  Depreciation                        524,446       730,651       730,652
  Amortization of deferred         
    expenses                           53,883        17,961
  Property operating                  905,591       857,163       797,404
  Real estate taxes                   218,475       296,936       286,438
  Property management fees            122,614       139,319       138,142
  Administrative                       36,396        64,760        31,422
                                  ------------  ------------  ------------
    Total expenses                  2,873,971     4,153,793     4,274,702
                                  ------------  ------------  ------------
Income (loss) before gain on sale
  of property, seller's 
  participation in joint venture
  and extraordinary item              184,403      (278,641)     (520,428)

Gain on sale of property           15,823,862

Seller's participation in
  (income) loss of joint venture   (5,612,153)      181,206        43,784
                                  ------------  ------------  ------------
Income (loss) before 
  extraordinary item               10,396,112       (97,435)     (476,644)

Extraordinary item:
  Debt extinguishment expense        (287,369)
                                  ------------  ------------  ------------
Net income (loss)                  10,108,743       (97,435)     (476,644)
                                                 
Partners' deficit at beginning
  of year                            (642,768)     (957,333)     (554,689)
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

            STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' DEFICIT
             for the years ended December 31, 1996, 1995 and 1994
                                  (Continued)

Contributions from joint 
  venture partners                                  412,000        74,000
Distributions to joint 
  venture partners                 (9,465,975)
                                  ------------  ------------  ------------
Partners' deficit at end of year         None $    (642,768)$    (957,333)
                                  ============  ============  ============


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, 1995 and 1994


                                      1996          1995          1994
                                  ------------  ------------  ------------
Operating activities:
  Net income (loss)             $  10,108,743 $     (97,435)$    (476,644)
  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)      (43,784)
      Depreciation of property        524,446       730,651       730,652
      Amortization of deferred
        expenses                       53,883        17,961
      Net change in:
        Accounts receivable           587,529      (243,301)       19,022
        Accounts payable              (70,217)       66,327
        Security deposits            (113,213)       (2,352)       (4,245)
                                  ------------  ------------  ------------
  Net cash provided by
    operating activities            1,166,831       290,645       225,001
                                  ------------  ------------  ------------

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        74,000
  Contributions by 
    joint venture partner - 
    seller                                          181,206        43,784
  Distributions to 
    joint venture partners         (9,465,975)
  Distributions to 
    joint venture partner - 
    seller                         (5,612,153)
  Refund of bond reserve            2,478,000
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                           STATEMENTS OF CASH FLOWS
             for the years ended December 31, 1996, 1995 and 1994
                                  (Continued)

  Principal payments on                                      
    mortgage note payable            (310,000)     (387,500)     (352,500)
  Payment of deferred expenses                     (359,213)
  Funding of reserve for 
    replacements                                   (140,000)
                                  ------------  ------------  ------------
  Net cash used in financing
    activities                    (12,910,128)     (293,507)     (234,716)
                                  ------------  ------------  ------------
Net change in cash and cash
  equivalents                          (7,025)       (2,862)       (9,715)

Cash and cash equivalents at
  beginning of year                     7,025         9,887        19,602
                                  ------------  ------------  ------------
Cash and cash equivalents at
  end of year                            None   $     7,025   $     9,887
                                  ============  ============  ============
                                   

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 the 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 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 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) Effective January 1, 1995 the Joint Venture adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of". Under SFAS 121, the
Joint Venture recorded its investment in real estate at the lower of cost or
fair value, and periodically assessed, but not less than on an annual basis,
possible impairment to the value of the property.  The Joint Venture estimated
the fair value of the property based on the market price less estimated closing
costs. In the event the Joint Venture determined an impairment in value had
occurred, and the carrying amount of the real estate asset would not be
<PAGE>
recovered, a provision would have been recorded to reduce the carrying basis of
the property to its estimated fair value. The Joint Venture considered the
method referred to above to result in a reasonable measurement of the
property's fair value, unless other factors affecting the property's value
indicated otherwise.

(e) 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 is recognized
as debt extinguishment expense and classified as an extraordinary item.

(f) 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.  Since quoted market prices were not available for the
Partnership's financial instruments, fair values were based on estimates using
present value techniques. These techniques were significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates could not be
substantiated by comparison to independent markets and, in many cases, would
not have been realized in immediate settlement of the instrument. 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.

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

(h) Cash and cash equivalents included all unrestricted, highly liquid
investments with an original maturity of three months or less.

(i) 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 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 manages 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.
<PAGE>
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, 1995 and 1994 on the Bond Loan
of $1,012,566, $2,047,003 and $2,290,644, respectively.

5. Management and Guarantee Agreement:

An affiliate of the seller, the limited partner of RSAA, was managing the
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 is that
the net income for 1996 in the financial statements is $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.
<PAGE>
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.

9. Fair Value of Financial Instruments:

The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1995 were as follows:

The carrying value of cash and cash equivalents, accounts and accrued interest
receivable and accounts payable approximated fair value.

Mortgage Note Payable: The fair value for the Joint Venture's mortgage note
payable was $22,754,218 at December 31, 1995. The fair value of the mortgage
note payable was estimated using discounted cash flow analysis based on
borrowing rates available to the Partnership at the end of 1995 for mortgage
loans with similar terms and maturities.
<PAGE>