FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER

                               SECTION 13 OR 15(d)

                                   FORM 10-KSB

(Mark One)
[X]   Annual Report Under Section 13 or 15(d) of the  Securities  Exchange Act
      of 1934 [No Fee Required]

                 For the fiscal year ended December 31, 1999

[ ]   Transition  Report Under Section 13 or 15(d) of the Securities  Exchange
      Act of 1934 [No Fee Required]

                For the transition period from_______to_______

                         Commission file number 2-95502

              DREXEL BURNHAM  LAMBERT REAL ESTATE  ASSOCIATES III (Name of small
                business issuer in its charter)

           New York                                               13-3251176
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                       55 Beattie Place, P.O. Box 1089
                       Greenville, South Carolina 29602
                   (Address of principal executive offices)

                                 (864) 239-1000

                            Issuer's telephone number

        Securities registered under Section 12(b) of the Exchange Act:

                                      None

        Securities registered under Section 12(g) of the Exchange Act:

                      Units of Limited Partnership Interest

                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 during the past 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 ___

Check if there is no disclosure  of delinquent  filers in response to Item 405
of  Regulation  S-B  contained  in  this  form,  and  no  disclosure  will  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-KSB or any amendment to this Form 10-KSB.  [X]

State issuer's revenues for its most recent fiscal year $1,700,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests, as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>

                                     PART I

Item 1.     Description of Business

Drexel  Burnham  Lambert  Real  Estate  Associates  III  (the  "Partnership"  or
"Registrant") was organized in 1984 as a New York limited  partnership  pursuant
to the Limited  Partnership Law of the State of New York. The general partner of
the Partnership is DBL Properties  Corporation ("DBL" or "General Partner"),  an
affiliate  of  Apartment   Investment  and  Management  Company  ("AIMCO")  (see
"Transfer  of Control"  below).  The  Partnership  Agreement  provides  that the
Partnership  is to terminate on December 31, 2004,  unless  terminated  prior to
such date.

The  Partnership's  primary business is to operate and hold existing real estate
properties for investment. The Partnership acquired interests in six real estate
properties  during  1985 and 1986 and it  continues  to own and  operate  one of
those,  its 90% general  partnership  interest in Shallowford  Corners  Shopping
Center (see "Item 2. Description of Property").

Commencing  in June 1985  pursuant to a  registration  statement  filed with the
Securities  and Exchange  Commission,  the  Partnership  offered  80,000 limited
partnership Units (the "Units"). A total of 60,095 Units were sold to the public
at $500 per Unit. The offering  closed on December 31, 1995. No limited  partner
has made any  additional  capital  contribution  after  that date.  The  limited
partners  of  the  Partnership  share  in  the  benefits  of  ownership  of  the
Partnership's real estate investments according to the number of Units held.

As of  December  31,  1999 the  Partnership  adopted  the  liquidation  basis of
accounting due to the imminent loss of its remaining  investment  property.  The
first  mortgage on Shallowford  Corners  Shopping  Center of $7,750,000  matured
April  15,  1997.  On  October  15,  1997,  the  General  Partner  negotiated  a
forbearance  agreement  with the holder of the mortgage  and had operated  under
this agreement until the Partnership defaulted on this agreement on December 15,
1999. Subsequent to December 31, 1999, the lender foreclosed on the property and
the property was sold on March 7, 2000 through foreclosure.

A further  description of the  Partnership's  business is included in "Item 6.
Management's Discussion and Analysis or Plan of Operation".

The Registrant  has no employees.  Management  and  administrative  services are
provided by the General Partner and by agents  retained by the General  Partner.
Effective  October  1, 1998,  management  of the  property  was  provided  by an
unrelated third party.

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive. There are other commercial properties within the market area of the
Partnership's  property.  The number  and  quality  of  competitive  properties,
including  those which may be managed by an affiliate of the General  Partner in
such  market  area,  could have a material  effect on the market for  commercial
space at the  Partnership's  property  and the rents that may be charged for the
property. The General Partner and its affiliates are not a significant factor in
the United States in the commercial industry.

Both the income and expenses of operating the property owned by the  Partnership
are subject to factors outside of the Partnership's  control, such as changes in
the supply and demand for  similar  properties  resulting  from  various  market
conditions, increases/decreases in unemployment or population shifts, changes in
the  availability of permanent  mortgage  financing,  changes in zoning laws, or
changes in patterns or needs of users. In addition,  there are risks inherent in
owning  and  operating   commercial   properties  because  such  properties  are
susceptible  to the  impact of  economic  and other  conditions  outside  of the
control of the Partnership.


<PAGE>


There have been,  and it is possible  there may be other,  Federal,  state,  and
local  legislation  and  regulations  enacted  relating to the protection of the
environment.  The Partnership is unable to predict the extent,  if any, to which
such new  legislation  or  regulations  might occur and the degree to which such
existing or new legislation or regulations  might adversely  affect the property
owned by the Partnership.

The  Partnership  monitors its property for evidence of  pollutants,  toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed,  which resulted in no material adverse
conditions or liabilities.  In no case has the Partnership  received notice that
it is a potentially  responsible party with respect to an environmental clean up
site.

 Transfer of Control

On  October  1,  1998,  Insignia,  the  sole  shareholder  of IFGP  Corporation,
completed  its  merger  with and into  AIMCO,  a  publicly  traded  real  estate
investment  trust,  with AIMCO being the surviving  corporation  (the  "Insignia
Merger").  As a result of the Insignia  Merger,  AIMCO acquired  control of IFGP
Corporation and, as a result thereof,  the General Partner.  The General Partner
does not believe that this transaction has had or will have a material effect on
the affairs and operations of the Partnership.

Item 2.     Description of Properties

The following table sets forth the Partnership's investment in its property:

                           Date of
Property                   Purchase    Type of Ownership                  Use

Shallowford Corners       12/30/86    Partnership has a 90%       Retail Center
  Shopping Center                     interest in the joint       116,000 sq.ft.
  Roswell, GA                         venture which has fee
                                      ownership subject to a
                                      first mortgage

Schedule of Properties:

Set forth  below for the  Registrant's  property  is the gross  carrying  value,
accumulated  depreciated,  depreciable  life, method of depreciation and Federal
tax basis.
<TABLE>
<CAPTION>

                         Gross
                        Carrying   Accumulated                                Federal
Property                 Value     Depreciation    Rate        Method        Tax Basis
                            (in thousands)                                 (in thousands)

<S>                     <C>            <C>       <C>        <C>  <C>          <C>
Shallowford Corners     $ 7,650        (1)       3-30 yrs   150%/200% DBL     $ 5,193
</TABLE>

(1)   As a result of adopting the  liquidation  basis of  accounting,  the gross
      carrying  value of the property was adjusted to its net  realizable  value
      and will not be depreciated any further.

See  "Note B" to the  consolidated  financial  statements  included  in "Item 7.
Financial Statements" for a description of the Partnership's former depreciation
policy.


<PAGE>


Schedule of Property Indebtedness:

The  following  table  sets  forth  certain  information  relating  to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>

                           Principal                                       Principal
                           Balance At    Stated                             Balance
                          December 31,  Interest   Period     Maturity       Due At
Property                      1999        Rate   Amortized      Date        Maturity
                         (in thousands)                                  (in thousands)

<S>                 <C>     <C>          <C>        <C>     <C>   <C>       <C>
Shallowford Corners (2)     $ 7,750      10.00%     (1)     04/15/97 (1)    $ 7,750

Adjustment to
  liquidation basis            (100)

Totals                      $ 7,650
</TABLE>

(1)   The mortgage on Shallowford  Corners  Shopping center went into default on
      December 15, 1999.  Subsequent to December 31, 1999, the lender foreclosed
      on the  property.  See  "Item 7.  Financial  Statements,  Note A" for more
      information on the foreclosure.

(2)   As  a  result  of  the  Partnership  adopting  the  liquidation  basis  of
      accounting,  the mortgage  note payable was adjusted to the  estimated net
      realizable value of the property securing the debt. The net effect of such
      adoption was to decrease the carrying value of the note by $100,000.

Schedule of Rental Rates and Occupancy:

Average annual rental rate and occupancy for 1999 and 1998 for the property.

                                 Average Annual              Average Annual
                                  Rental Rates                 Occupancy
                                  (per sq. ft.)
                               1999           1998          1999         1998

 Shallowford Corners          $10.26         $10.05          91%         92%

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly  competitive.  The property of the  Partnership is subject to competition
from other commercial  properties in the area. The General Partner believes that
the property is adequately insured.  The property is in good physical condition,
subject to normal  depreciation  and  deterioration  as is typical for assets of
this type and age.


<PAGE>


The following is a schedule of the commercial  lease  expirations  for the years
2000-2009:
<TABLE>
<CAPTION>

                          Number of                                      % of Gross
                         Expirations   Square Feet    Annual Rent       Annual Rent
                                                    (in thousands)
Shallowford Corners
<S>  <C>                      <C>         <C>            <C>                <C>
     2000                     3           3,337          $ 51               4.58%
     2001                    10          21,459           352              31.78%
     2002                     5          11,690           150              13.60%
     2003                     2           2,623            28               2.53%
     2004-2005               --            --              --                --
     2006                     1          45,528           341              30.86%
     2007-2009               --              --            --                --
</TABLE>


The following schedule reflects  information on tenants occupying 10% or more of
the leasable square feet for the commercial property:

                           Square Footage     Annual Rent
      Nature of Business       Leased       Per Square Foot     Lease Expiration
      Shallowford

        Grocery store          45,528            $7.50             July 2006

Real Estate Taxes and Rates:

Real estate taxes and rates in 1999 for the property were as follows:

                                       1999 Billings        1999 Rate
                                       (in thousands)

         Shallowford Corners                $ 87               1.2%

Capital Improvements:

Shallowford Corners Shopping Center

During the year ended December 31, 1999, the Partnership completed approximately
$3,000 of capital improvements at Shallowford Corners Shopping Center consisting
of tenant improvements. These improvements were funded from operating cash flow.
No capital improvements were planned for 2000 since the Partnership  anticipated
the foreclosure of this property in 2000.

Perimeter Square Shopping Center

During the year ended  December 31, 1999, the  Partnership  completed no capital
improvements at Perimeter Square Shopping Center.  The property was sold on July
21, 1999.

Green Valley Hotel

During the year ended December 31, 1999, the Partnership completed approximately
$3,000 of capital  improvements  at Best  Western  Green  Valley  consisting  of
furniture and fixtures. The property was sold on August 10, 1999.

Tucson Airport Hotel

During the year ended December 31, 1999, the Partnership completed approximately
$75,000 of capital  improvements at the Clarion Hotel Tucson Airport  consisting
of televisions,  refrigerators,  and signage.  The property was sold on December
17, 1999.

Item 3.     Legal Proceedings

The Partnership is unaware of any pending or outstanding  litigation that is not
of a routine nature arising in the ordinary course of business.

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

During the quarter ended December 31, 1999, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.


<PAGE>


                                     PART II

Item 5.     Market for the  Partnership's  Common Equity and Related  Security
            Partner Matters

As of December 31, 1999, the Partnership  included  approximately  1,835 limited
partners,  holding a total of 59,905 units.  Affiliates  of the General  Partner
owned 7,501 Units or 12.52% at December 31, 1999. No public  trading  market has
developed  for the  Units  and it is not  anticipated  that  such a market  will
develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999 and the subsequent period from January 1,
2000 through March 20, 2000 (see "Item 6.  Management's  Discussion and Analysis
or Plan of Operation" for more details):

                                                Distributions
                                                             Per Limited
                                        Aggregate        Partnership Unit
                                      (in thousands)
       01/01/98 - 12/31/98              $  599 (1)            $10.00
       01/01/99 - 12/31/99                  --                    --
        01/01/00 - 3/20/00               2,800 (2)             46.74

(1)   Distribution was made from cash from operations.

(2)   Consists of $1,928,000 from sale proceeds and $872,000 from operations.

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 7,501 limited
partnership  units in the  Partnership  representing  12.52% of the  outstanding
units. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

Item 6.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-KSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-KSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operations.  Accordingly,  actual  results  could differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

This  item  should  be read  in  conjunction  with  the  consolidated  financial
statements and other items contained elsewhere in this report.


<PAGE>


Results of Operations

As of  December  31,  1999 the  Partnership  adopted  the  liquidation  basis of
accounting due to the default of the mortgage at Shallowford Corners on December
15, 1999.

Prior to adopting the liquidation basis of accounting,  the Partnership realized
net income of  approximately  $874,000  compared to a net loss of  approximately
$1,090,000  for the year ended  December  31, 1999 and 1998,  respectively.  The
increase in net income for the year ended  December 31, 1999 is primarily due to
the gain on the sales of the Partnership's  properties as discussed below and to
a lesser extent,  the  recognition  of the  cumulative  effect of adopting a new
accounting principle during the year ended December 31, 1999.

Excluding  the  operations of Tucson  Airport Hotel and Green Valley Hotel,  the
losses from continuing  operations for the year ended December 31, 1999 and 1998
were approximately $312,000 and $359,000,  respectively.  The decrease in losses
from  continuing  operations is due to a decrease in total  expenses,  which was
partially offset by a decrease in total revenues.  Total revenues  decreased due
to decreases in rental revenue and other income which were  partially  offset by
the gain on the sale of  Perimeter  Square in 1999 as  discussed  below.  Rental
revenues  decreased due to the sale of Perimeter  Square in July of 1999.  Other
income decreased due to lower cash balances in interest bearing accounts.

Total  expenses  decreased  due to  decreases  in  rental  operations  expenses,
mortgage  interest  expense,  property  tax  expense and  depreciation  expense,
partially  offset by an  increase  in general and  administrative  expense.  The
decrease in rental operation  expense and mortgage  interest expense were due to
the sale of  Perimeter  Square in July of 1999.  The  decrease  in  depreciation
expense was due to assets  becoming fully  depreciated  at  Shallowford  Corners
during 1999 as well as the sale of Perimeter Square.  General and administrative
expense remained relatively  constant and included  professional fees associated
with operating the Partnership.  Included in general and administrative expenses
at both December 31, 1999 and 1998 are management  reimbursements to the General
Partner allowed under the Partnership  Agreement.  In addition costs  associated
with the  quarterly and annual  communications  with  investors  and  regulatory
agencies  and  the  annual  audit  required  by the  Partnership  Agreement  are
included.

On July 21, 1999, the Partnership sold Perimeter Square to an unaffiliated third
party,  P & H  Properties,  L.L.C.,  for net  sales  proceeds  of  approximately
$662,000  after  payoff of the  mortgage  and  payment  of  closing  costs.  The
Partnership  realized  a  gain  of  approximately   $64,000  on  the  sale.  The
Partnership  realized a loss on the early extinguishment of the debt encumbering
Perimeter  Square  of  approximately  $3,000  consisting  of  the  write-off  of
unamortized loan costs.

On  August  10,  1999,  the  Partnership  sold  the  Green  Valley  Hotel  to an
unaffiliated third party for net sales proceeds of approximately  $544,000 after
payoff of the mortgage and payment of closing costs. The Partnership  realized a
gain of approximately  $917,000 on the sale. The Partnership  realized a loss on
the early  extinguishment  of the debt encumbering the property of approximately
$42,000 consisting of a prepayment penalty and the write-off of unamortized loan
costs.

On December 17, 1999, the  Partnership  sold Tucson  Airport  Hotel,  located in
Tucson, Arizona to an unaffiliated party for net sales proceeds of approximately
$2,060,000. The Partnership realized a net gain of approximately $623,000 on the
sale during fourth quarter 1999. The  Partnership  also recognized a gain on the
early  extinguishment  of the debt  encumbering  the  property of  approximately
$69,000  consisting of the write off of the excess liability accrued in 1998 for
the estimated  fair value of the equity  participation  feature of the loan (see
"Item 7. Financial  Statements - Note B"),  partially offset by the write-off of
the associated mortgage discount and a prepayment penalty.


<PAGE>


Best Western  Green Valley Hotel and Tucson  Airport  Hotel were the only hotels
owned by the  Partnership  and  represented  one  segment  of the  Partnership's
operations.  Due to the sale of  these  properties,  the  results  of the  hotel
segment have been shown as income from discontinued  operations and gain on sale
of discontinued operations.  The revenues of these properties were approximately
$5,933,000 and $6,914,000 for 1999 and 1998, respectively.  Loss from operations
was  approximately  $378,000 and $461,000 for 1999 and 1998,  respectively.  The
decrease in loss from  discontinued  operations was primarily due to the sale of
the Green Valley Hotel in August of 1999 which  resulted in only eight months of
losses compared to a full year in 1998.

Liquidity and Capital Resources

The  financial  statements  have been  prepared  assuming the  Partnership  will
liquidate  during  2000 (see  "Item 7.  Financial  Statements  - Note  A").  The
indebtedness  encumbering the remaining  property was in default at December 31,
1999, and the property was subsequently foreclosed on by the lender.

At  December  31,  1999,  the  Partnership  had  cash and  cash  equivalents  of
approximately  $5,836,000  compared to approximately  $2,904,000 at December 31,
1998.  The increase in cash and cash  equivalents  of  approximately  $2,932,000
since the year ended  December 31, 1998 is due to  approximately  $10,317,000 of
cash  provided  by  investing  activities  and  approximately  $318,000  of cash
provided by operating  activities  which was partially  offset by  approximately
$7,703,000  of cash used in  financing  activities.  Cash  provided by investing
activities  consisted of property sales proceeds,  partially  offset by property
improvements and replacements and lease commissions paid. Cash used in financing
activities consisted primarily of repayments of notes payable on sold properties
and, to a lesser extent, payments on the mortgages encumbering the Partnership's
properties,  prepayment  penalties  paid  and  an  appreciation  fee  paid.  The
Registrant invests its working capital reserves in money market accounts.

Distributions from operations of approximately $599,000 were paid to the limited
partners  during the year ended December 31, 1998.  There were no  distributions
during the year ended  December 31, 1999.  Subsequent to December 31, 1999,  the
Partnership distributed approximately $2,800,000 ($46.74 per limited partnership
unit) to the limited partners consisting of approximately $1,928,000 ($32.18 per
limited  partnership unit) from the sale proceeds of Perimeter Square, The Green
Valley Hotel, and the Tucson Airport Hotel, and  approximately  $872,000 ($14.56
per limited partnership unit) of cash from operations. Due to the foreclosure of
the  Partnership's  last remaining  property,  the General  Partner  anticipates
distributing   the  remaining  cash,  less  reserves  needed  to  terminate  the
Partnership during the near future.

The first mortgage on Shallowford  Corners Shopping Center of $7,750,000 matured
April  15,  1997.  On  October  15,  1997,  the  General  Partner  negotiated  a
forbearance  agreement  with the holder of the mortgage  and had operated  under
this agreement until the Partnership defaulted on December 15, 1999. As a result
of the mortgage  entering into a default  status,  the lender  foreclosed on the
mortgage and  subsequently  sold the property on March 7, 2000 for $7,650,000 to
an unaffiliated party.

As a result of the  decision  to  liquidate  the  Partnership,  the  Partnership
changed its basis of  accounting  for its  financial  statements at December 31,
1999 to the  liquidation  basis of  accounting.  Consequently,  assets have been
valued  at  estimated  net  realizable   value  (including   subsequent   actual
transactions  described  above) and liabilities are presented at their estimated
settlement amounts,  including  estimated income, net of costs,  associated with
carrying  out  the   liquidation.   The  valuation  of  assets  and  liabilities
necessarily  requires many estimates and  assumptions  and there are substantial
uncertainties in carrying out the liquidation.  The actual realization of assets
and  settlement of liabilities  could be higher or lower than amounts  indicated
and is  based  upon  the  General  Partner's  estimates  as of the  date  of the
financial statements.

At December 31, 1999, in accordance  with the  liquidation  basis of accounting,
assets were adjusted to their  estimated net  realizable  value and  liabilities
were  adjusted  to their  settlement  amount and  include  all  estimated  costs
associated  with carrying out the  liquidation.  The net adjustment  required to
convert to the  liquidation  basis of accounting was a decrease in net assets of
approximately  $269,000  which  is  included  in the  Statement  of  Changes  in
Partners'  Capital/Net Assets In Liquidation.  The adjustments are summarized as
follows:

                                                    Increase (Decrease)
                                                       in Net Assets
                                                       (in thousands)
Adjustment from book value of property and
   improvements to estimated net realizable value          $ 307
Adjustment of debt to net settlement amount                  100
Adjustment of other assets                                  (138)
Net increase in net assets                                 $ 269

Tender Offers

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 7,501 limited
partnership  units in the  Partnership  representing  12.52% of the  outstanding
units. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

Year 2000 Compliance

General Description

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent  upon the  General  Partner  and its  affiliates  for  management  and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had  date-sensitive  software or embedded  chips might
have  recognized  a date using "00" as the year 1900  rather than the year 2000.
This  could  have  resulted  in a  system  failure  or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

Computer Hardware, Software and Operating Equipment

In 1999,  the Managing  Agent  completed  all phases of its Year 2000 program by
completing  the  replacement  and repair of any  hardware or software  system or
operating  equipment that was not yet Year 2000 compliant.  The Managing Agent's
hardware  and software  systems and its  operating  equipment  are now Year 2000
compliant.  No  material  failure or  erroneous  results  have  occurred  in the
Managing Agent's computer  applications  related to the failure to reference the
Year 2000 to date.

Third Parties

To  date,  the  Managing  Agent  is not  aware of any  significant  supplier  or
subcontractor  (external agent) or financial institution of the Partnership that
has a Year 2000 issue that  would  have a material  impact on the  Partnership's
results of operations,  liquidity or capital  resources.  However,  the Managing
Agent  has no means of  ensuring  or  determining  the Year 2000  compliance  of
external  agents.  At this time, the Managing Agent does not believe that a Year
2000 issue of any  non-compliant  external agent will have a material  impact on
the Partnership's financial position or results of operations.

Costs

The total cost of the Managing Agent's Year 2000 project was approximately  $3.2
million and was funded from operating cash flows.

Risks Associated with the Year 2000

The Managing  Agent  completed all necessary  phases of its Year 2000 program in
1999,  and did not  experience  system or  equipment  malfunctions  related to a
failure to reference the Year 2000. The Managing  Agent or Partnership  have not
been  materially  adversely  effected by  disruptions  in the economy  generally
resulting from the Year 2000 issue.

At this  time,  the  Managing  Agent  does not  believe  that the  Partnership's
businesses,  results of  operations  or financial  condition  will be materially
adversely effected by the Year 2000 issue.

Contingency Plans Associated with the Year 2000

The  Managing  Agent has not had to implement  contingency  plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.

Item 7.     Financial Statements

DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

LIST OF FINANCIAL STATEMENTS

Report of KPMG LLP, Independent Auditors

Consolidated Statement of Net Assets in Liquidation - December 31, 1999

Consolidated Statements of Operations - Years ended December 31, 1999 and 1998

Consolidated  Statements of Changes in Partners' (Deficit) Capital/Net Assets in
Liquidation - Years ended December 31, 1999 and 1998

Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998

Notes to Consolidated Financial Statements


<PAGE>


                          Independent Auditor's Report

The Partners
Drexel Burnham Lambert Real Estate Associates III



We have  audited  the  accompanying  consolidated  statement  of net  assets  in
liquidation  of  Drexel  Burnham   Lambert  Real  Estate   Associates  III  (the
"Partnership") as of December 31, 1999, and the related consolidated  statements
of operations,  changes in partners' (deficit) capital/net assets in liquidation
and cash flows for each of the years in the  two-year  period then ended.  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 audit.

We conducted our audit 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.

As more  fully  described  in Note A,  due to the  imminent  foreclosure  of its
investment  property,  the General Partner has decided,  effective  December 31,
1999, to liquidate the Partnership. As a result, the Partnership has changed its
basis of  accounting  as of December  31, 1999 from a going  concern  basis to a
liquidation basis.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of the Partnership as of December
31, 1999,  and the results of its  operations and its cash flows for each of the
years in the two-year  period then ended in conformity  with generally  accepted
accounting principles.

As discussed in Note B to the consolidated financial statements, the Partnership
changed  its  method of  accounting  for a  mortgage  loan with a  participation
feature by adopting the provisions of the American Institute of Certified Public
Accountants'  Statement of Position 97-1 "Accounting by  Participating  Mortgage
Loan Borrowers" on January 1, 1998.

                                                                     /s/KPMG LLP

Greenville, South Carolina
March 24, 2000


<PAGE>



              DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

             CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
                       (in thousands, except unit data)

                                December 31, 1999

Assets

  Cash and cash equivalents                                       $ 5,836
  Receivables and deposits                                             23
  Investment property                                               7,650

                                                                   13,509

Liabilities

  Accounts payable                                                     79
  Tenant security deposit                                              27
  Other liabilities                                                   340
  Mortgage note payable (in default)                                7,650
  Due to affiliate                                                    173

                                                                    8,269

Net assets in liquidation                                         $ 5,240


         See Accompanying Notes to Consolidated Financial Statements


<PAGE>


              DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

                      Consolidated Statements of Operations

                       (in thousands, except unit data)

<TABLE>
<CAPTION>

                                                         Years Ended December 31,
                                                            1999           1998
Revenues:                                                               (restated)
<S>                                                        <C>           <C>
    Rental operations (Note J)                             $ 1,526       $ 1,722
    Other income                                               110           132
    Gain on sale of investment property                         64            --
       Total revenues                                        1,700         1,854

Expenses:
    Rental operations                                          413           488
    General and administrative                                 222           221
    Mortgage interest                                          866           949
    Property taxes                                              98           121
    Depreciation                                               413           434
       Total expenses                                        2,012         2,213

Loss from continuing operations                               (312)         (359)
Loss from discontinued operations                             (378)         (461)
Gain on sale of discontinued operations (Note G)             1,540            --

Net income (loss) before cumulative effect of a
    change in accounting principle and extraordinary
     item                                                      850          (820)
Cumulative effect on prior years of adopting
    Statement of Position 97-1 for mortgage

    participation                                               --          (270)

Extraordinary gain on early extinguishment of debt              24            --

Net income (loss) (Note L)                                  $  874        $(1,090)

Net income (loss) allocated to general partner              $  126         $ (11)
Net income (loss) allocated to limited partners                748        (1,079)

                                                            $  874        $(1,090)

Net income (loss) per partnership unit:
Net income (loss) before cumulative effect of a change
  in accounting principle and extraordinary item           $ 12.12       $  (13.55)
Cumulative effect on prior years of adopting Statement
  of Position 97-1 for mortgage participation               $   --         $ (4.46)
Extraordinary gain on early extinguishment of debt             .37             --
Net income (loss)                                          $ 12.49       $ (18.01)

Distribution per limited partnership unit                   $  --         $ 10.00
</TABLE>

         See Accompanying Notes to Consolidated Financial Statements


<PAGE>


              DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

          Consolidated Statements of Changes in Partners' (Deficit)
                      Capital/NET ASSETS IN LIQUIDATION
                       (in thousands, except unit data)


<TABLE>
<CAPTION>

                                        Limited
                                      Partnership     General      Limited
                                         Units       Partner's    Partners'     Total

<S>                                      <C>            <C>        <C>         <C>
Original capital contributions           60,095         $ 1        $30,048     $30,049

Partners' (deficit) capital at
  December 31, 1997                      59,905       $ (122)      $ 5,908     $ 5,786

Distributions paid to limited
  partners                                   --            --         (599)       (599)

Net loss for the year ended
  December 31, 1998                          --           (11)      (1,079)     (1,090)

Partners' (deficit) capital at
  December 31, 1998                      59,905          (133)       4,230       4,097

Net income for the year ended
  December 31, 1999                          --           126          748         874

Partners (deficit) capital at
  December 31, 1999                      59,905        $ (7)       $ 4,978       4,971

Adjustment to liquidation basis
 (Note C)                                                                          269

Net assets in liquidation at
  December 31, 1999                                                            $ 5,240
</TABLE>


         See Accompanying Notes to Consolidated Financial Statements


<PAGE>



              DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                (in thousands)
<TABLE>
<CAPTION>

                                                           Years Ended December 31,
                                                                1999        1998
Cash flows from operating activities:
<S>                                                            <C>         <C>
   Net income (loss)                                           $ 874       $(1,090)
   Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
     Cumulative effect of adopting SOP 97-1                        --          270
     Gain on sale of investment property                          (64)
     Extraordinary gain on early extinguishment of debt           (24)          --
     Gain on sale of discontinued operations                   (1,540)          --
     Depreciation                                               1,048        1,194
     Amortization of loan costs, lease commissions, and
      debt discount                                                57           79
     Accretion of debt discount                                    30           30
     Change in accounts:
      Receivable and deposits                                     465         (137)
      Other assets                                                 99          (12)
      Accounts payable                                           (235)         (38)
      Tenant security deposit liabilities                         (20)           4
      Accrued property taxes                                     (209)          87
      Due to affiliate                                            (93)        (494)
      Other liabilities                                           (70)         158
            Net cash provided by operating activities             318           51

Cash flows from investing activities:

   Property improvements and replacements                         (81)        (338)
   Proceeds from sale of investment property and
     discontinued operations                                   10,404           --
   Lease commissions paid                                          (6)          --
            Net cash provided by (used in) investing
              activities                                       10,317         (338)

Cash flows from financing activities:

   Payments on mortgage notes payable                            (278)        (294)
   Distributions paid to partners                                  --         (599)
   Loan costs paid                                                 --          (25)
   Appreciation premium paid                                     (165)          --
   Prepayment penalty                                            (122)          --
   Repayment of notes payable                                  (7,138)          --
            Net cash used in financing activities              (7,703)        (918)

Net increase (decrease) in cash and cash equivalents            2,932       (1,205)

Cash and cash equivalents at beginning of year                  2,904        4,109

Cash and cash equivalents at end of year                      $ 5,836      $ 2,904

Supplemental disclosure of cash flow information:

   Cash paid for interest                                     $ 1,315      $ 1,552
</TABLE>

         See Accompanying Notes to Consolidated Financial Statements


<PAGE>




              DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1999

Note A - Basis of Presentation

As of December 31, 1999,  Drexel Burnham Lambert Real Estate Associates III (the
"Partnership" or "Registrant")  adopted the liquidation  basis of accounting due
to the default of the first  mortgage  on  Shallowford  Corners on December  15,
1999. Subsequent to December 31, 1999, the lender foreclosed on the property and
sold it to an unaffiliated party on March 7, 2000 for $7,650,000.

As a result of the  decision  to  liquidate  the  Partnership,  the  Partnership
changed its basis of  accounting  for its  financial  statements at December 31,
1999, to the  liquidation  basis of accounting.  Consequently,  assets have been
valued  at  estimated  net  realizable   value  (including   subsequent   actual
transactions  described  below) and liabilities are presented at their estimated
settlement amounts. The valuation of assets and liabilities necessarily requires
many  estimates  and  assumptions  and there are  substantial  uncertainties  in
carrying out the liquidation. The actual realization of assets and settlement of
liabilities  could be higher or lower than amounts  indicated  and is based upon
the General Partner's estimates as of the date of the financial statements.

Note B - Organization and Significant Accounting Policies

Organization:

The  Partnership  was organized as a limited  partnership  under the laws of the
State of New  York  pursuant  to a  Certificate  of  Limited  Partnership  dated
December 21, 1984.  The general  partner of the  Partnership  is DBL  Properties
Corporation  ("DBL"  or  the  "General  Partner").  The  General  Partner  is an
affiliate of Apartment  Investment and Management Company ("AIMCO") (see "Note D
- Transfer of Control"). The Partnership Agreement provides that the Partnership
is to terminate on December 31, 2004, unless terminated prior to such date.

Principles of Consolidation:

The consolidated  financial  statements  include the accounts of the Partnership
and  its  90%  general  partnership  interest  in  DBL  Airport  Valley  Limited
Partnership  ("DBLAV")  which owned and  operated two hotels in Tucson and Green
Valley,  Arizona,  which were sold during 1999, and its 90% general  partnership
interest  in  Shallowford  Associates,  Ltd.  ("Shallowford"),  which  owns  and
operates  a shopping  center in  Roswell,  Georgia.  All  material  inter-entity
transactions  and balances have been eliminated in  consolidation.  In addition,
the consolidated financial statements include the accounts and operations of its
wholly-owned  property,  Perimeter Square Shopping Center ("Perimeter  Square"),
which is a shopping center in Tulsa, Oklahoma, which was sold during 1999.

Use of Estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.


<PAGE>



Fair Value of Financial Instruments:

Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial  Instruments",  as amended by SFAS No. 119, "Disclosures
about Derivative Financial Instruments and Fair Value of Financial Instruments",
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate  fair  value.  Fair value is defined in the SFAS as the amount at which
the  instruments  could be exchanged in a current  transaction  between  willing
parties,  other than in a forced or liquidation  sale. The Partnership  believes
that the  carrying  amount of its  financial  instruments  (except for long term
debt)  approximates  their fair value due to the short  term  maturity  of these
instruments.  As a result of the Partnership  adopting the liquidation  basis of
accounting,  the Partnership's  mortgage note payable,  which is in default, was
adjusted to the estimated net realizable  value of the  collateral  securing the
debt.  The net effect of the adoption was to decrease the carrying  value of the
note totaling $7,750,000 by approximately $100,000.

Cash and Cash Equivalents:

Cash and cash  equivalents  include  cash on hand,  in banks  and  money  market
accounts.  At certain  times,  the amount of cash deposited at a bank may exceed
the limit on insured deposits.

Tenant Security Deposits:

The  Partnership's  commercial  property requires security deposits from lessees
for the duration of the lease and such deposits are included in receivables  and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged the space, and is current on rental payments.

Investment Property:

The  investment  property  consists of one retail  center and is stated at cost.
Acquisition  fees are  capitalized as a cost of real estate.  In accordance with
SFAS No.  121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
Long-Lived Assets to Be Disposed Of", the Partnership  records impairment losses
on long-lived assets used in operations when events and  circumstances  indicate
that the assets might be impaired and the  undiscounted  cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
Costs of investment  properties  that have been  permanently  impaired have been
written down to appraised  value.  No  adjustments  for impairment of value were
recorded in the year ended  December  31, 1998.  As a result of the  Partnership
adopting  the  liquidation  basis of  accounting,  the  investment  property was
adjusted to its estimated net realizable  value at December 31, 1999. The effect
of adoption  was to increase the carrying  value of the  investment  property by
approximately $307,000.

Depreciation:

Depreciation was provided by the  straight-line  method over the estimated lives
of the  investment  properties  and related  personal  property.  Subsequent  to
December 31, 1999, no depreciation  will be recorded under the liquidation basis
of accounting.  For Federal income tax purposes,  the accelerated  cost recovery
method is used (1) for real property over 15 years for additions  prior to March
16, 1984,  18 years for  additions  after March 15, 1984 and before May 9, 1985,
and 19 years for additions  after May 8, 1985,  and before  January 1, 1987, and
(2) for personal  property over 5 years for additions  prior to January 1, 1987.
As a result of the Tax Reform Act of 1986,  for  additions  after  December  31,
1986, the modified  accelerated cost recovery method is used for depreciation of
(1) real property over 27 1/2 years and (2) personal  property  additions over 7
years.

Tenant  improvements were depreciated  using the  straight-line  method over the
tenant's lease term.

Loan Costs:

Loan costs of approximately $450,000, have been completely amortized at December
31, 1999.

Participation Mortgage Note Payable:

The Partnership adopted the provision of the AICPA Statement of Position ("SOP")
97-1 "Accounting by  Participating  Mortgage Loan Borrowers" on January 1, 1998.
The new  pronouncement  requires a borrower to estimate the fair value of equity
participation features by the lender and accrue such amounts at the inception of
the loan.  The  offsetting  discount is accredited to interest  expense over the
life of the loan. The total  estimated  fair value of this equity  participation
feature is $390,000 and was recorded in other liabilities. The cumulative effect
of adopting this SOP at the beginning of 1998 was an increase in the net loss of
$270,000  and the  accretion  of the  discount  recognized  in 1999 and 1998 was
$30,000 each year.  The property with the mortgage with an equity  participation
feature was sold in December of 1999 (see "Note G" for further details).

Leases:

The Partnership  leases  commercial  space to tenants under various lease terms.
For leases  containing  fixed  rental  increases  during  their term,  rents are
recognized on a straight-line  basis over the terms of the leases. For all other
commercial leases, rents are recognized over the terms of the leases as earned.

Lease Commissions:

At December 31, 1999,  unamortized  lease  commissions of approximately  $46,000
were written off in the adjustment to liquidation  basis because the Partnership
determined that these intangible assets no longer have value.  Lease commissions
were  being  amortized  using  the  straight-line  method  over the terms of the
respective leases.

Segment Reporting:

SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information
established  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note N"
for required disclosure.

Reclassifications:

Certain  reclassifications have been made to the 1998 balances to conform to the
1999 presentation.

Note C - Adjustment to Liquidation Basis of Accounting

At December 31, 1999, in accordance  with the  liquidation  basis of accounting,
assets were adjusted to their  estimated net  realizable  value and  liabilities
were adjusted to their settlement amount. The net adjustment required to convert
to the  liquidation  basis  of  accounting  was an  increase  in net  assets  of
approximately  $269,000  which  is  included  in the  Statement  of  Changes  in
Partners'  Capital  (Deficit)/Net  Assets In  Liquidation.  The  adjustments are
summarized as follows:

                                                          Increase (Decrease)
                                                             in Net Assets
                                                            (in thousands)
Adjustment from book value of property and
   improvements to estimated net realizable value                $ 307
Adjustment of debt to net settlement amount                        100
Adjustment of other assets                                        (138)

Net increase in net assets                                       $ 269

Note D - Transfer of Control

On October 1, 1998, Insignia Financial Group, Inc., the sole shareholder of IFGP
Corporation,  completed its merger with and into AIMCO,  a publicly  traded real
estate  investment  trust,  with  AIMCO  being the  surviving  corporation  (the
"Insignia Merger").  As a result of the Insignia Merger,  AIMCO acquired control
of IFGP Corporation and, as a result thereof,  the General Partner.  The General
Partner does not believe that this  transaction  has had or will have a material
effect on the affairs and operations of the Partnership.

Note E - Transactions with Affiliated Parties

The Registrant has no employees and is dependent on the General  Partner and its
affiliates for the management and administration of all Partnership  activities.
The  Partnership  Agreement  provides  for certain  payments to  affiliates  for
services and as  reimbursement  of certain  expenses  incurred by  affiliates on
behalf of the Partnership.

The following  payments were made to the General  Partner and affiliates  during
the years ended December 31, 1999 and 1998:

                                                            1999       1998
                                                             (in thousands)
Property management fees (included in operating
  expenses)                                                 $ --       $399
Reimbursement for services of affiliates (included in
  general and administrative expenses)                        65         95

For the nine months ended September 30, 1998,  affiliates of the General Partner
were entitled to receive  varying  percentages of gross receipts from all of the
Partnership's  commercial and hotel properties for providing property management
services. The Partnership paid to such affiliates approximately $399,000 for the
nine months ended September 30, 1998.  Effective  October 1, 1998 these services
for the commercial and hotel properties were provided by an unrelated party.

An affiliate  of the General  Partner  received  reimbursements  of  accountable
administrative  expenses amounting to approximately  $65,000 and $95,000 for the
years ended December 31, 1999 and 1998, respectively.

At December 31, 1999, the  Partnership  owed an affiliate of the General Partner
approximately  $174,000 for payroll expenses paid by such affiliate on behalf of
the hotel properties.

Included in other liabilities at December 31, 1999, is a $25,000 note payable to
the co-venturer in Shallowford.  The note does not have any stipulated terms for
repayment  and it accrues  interest at 3% above prime.  Interest  expense on the
note  amounted  to  approximately  $3,000 in both 1999 and 1998.  Total  accrued
interest  payable of approximately  $21,000 is included in other  liabilities at
December 31, 1999.

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 7,501 limited
partnership  units in the  Partnership  representing  12.52% of the  outstanding
units. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

Note F - Sale of Investment Property

On July 21, 1999, the Partnership sold Perimeter Square to an unaffiliated third
party,  P & H  Properties,  L.L.C.,  for net  sales  proceeds  of  approximately
$662,000  after  payoff of the  mortgages  and  payment  of closing  costs.  The
Partnership  realized  a  gain  of  approximately   $64,000  on  the  sale.  The
Partnership  realized  a loss on the early  extinguishment  of debt  encumbering
Perimeter  Square  of  approximately  $3,000  consisting  of  the  write  off of
unamortized loan costs.

The sales transaction is summarized as follows (amounts in thousands):

           Net sale price, net of selling costs          $ 2,032
           Net real estate (1)                            (1,953)
           Net other assets                                  (15)
             Gain on sale of real estate                 $    64

(1)   Net of accumulated depreciation of approximately $2,546,000.

Note G - Sale of Discontinued Operations

On  August  10,  1999,  the  Partnership  sold  the  Green  Valley  Hotel  to an
unaffiliated third party for net sales proceeds of approximately  $544,000 after
payoff of the mortgage and payment of closing costs. The Partnership  realized a
gain of approximately  $917,000 on the sale. The Partnership  realized a loss on
the early  extinguishment  of the debt encumbering the property of approximately
$42,000 consisting of a prepayment penalty and the write-off of unamortized loan
costs.

The sales transaction is summarized as follows (amounts in thousands):

           Net sale price, net of selling costs          $ 3,102
           Net real estate (1)                            (2,175)
           Net other assets                                  (10)
             Gain on sale of real estate                 $   917

(1)   Net of accumulated depreciation of approximately $3,384,000.

On December  17,  1999,  the  Partnership  sold the Tucson  Airport  Hotel to an
unaffiliated  third  party for net sales  proceeds of  approximately  $2,060,000
after  payoff of the  mortgage  and payment of closing  costs.  The  Partnership
realized a gain of  approximately  $623,000 on the sale.  The  Partnership  also
recognized  a gain on the  early  extinguishment  of the  debt  encumbering  the
property of  approximately  $69,000  consisting  of the  write-off of the excess
liability   accrued  in  1998  for  the  estimated  fair  value  of  the  equity
participation  feature  of the loan  (see  "Note  B"),  partially  offset by the
write-off of the associated mortgage discount and a prepayment penalty.

The sales transaction is summarized as follows (amounts in thousands):

           Net sale price, net of selling costs             $ 5,270
           Net real estate (2)                               (4,730)
           Net other liabilities                                 83

             Gain on sale of real estate                     $  623

(2)   Net of accumulated depreciation of approximately $6,719,000.

Best Western  Green Valley Hotel and Tucson  Airport  Hotel were the only hotels
owned by the  Partnership  and  represented  one  segment  of the  Partnership's
operations.  Due to the sale of  these  properties,  the  results  of the  hotel
segment have been shown as income from discontinued  operations and gain on sale
of discontinued operations.  The revenues of these properties were approximately
$5,933,000 and $6,914,000 for 1999 and 1998, respectively.  Loss from operations
was approximately $378,000 and $461,000 for 1999 and 1998, respectively.

Note H - Mortgage Note Payable

The principle terms of the mortgage note payable are as follows:
<TABLE>
<CAPTION>

                                 Principal    Monthly                          Principal
                                Balance At    Payment                           Balance
                               December 31,  Including  Interest  Maturity       Due At
Property                           1999       Interest    Rate      Date        Maturity
                                    (in thousands)                           (in thousands)

<S>                              <C>           <C>      <C>      <C>   <C>    <C>
Shallowford Corners              $ 7,750       $ 65     10.00%   04/15/97     $ 7,750
 1st mortgage in default (1)
Adjustment to liquidation
 basis                              (100)

Totals                           $ 7,650
</TABLE>

(1)   As  a  result  of  the  Partnership  adopting  the  liquidation  basis  of
      accounting,  the mortgage  note payable was adjusted to the  estimated net
      realizable value of the property  securing the debt. The net effect of the
      adoption was to decrease the carrying value of the note by $100,000.

Note I - Partners' Capital

Pursuant to a public offering,  60,095 Limited  Partnership Units ("Units") were
sold at $500 per Unit.  During 1994 partners  holding 190 Units  abandoned their
interests. The calculation of net loss per limited partner unit in 1999 and 1998
is based on 59,905 Units outstanding.

For income tax purposes,  the limited partners share 99% and the General Partner
shares 1% (subordinated as defined in the Partnership  Agreement) in all profits
or losses  from  operations  until the  limited  partners  have  received  an 8%
cumulative preferred return on their invested capital.  Thereafter,  the limited
partners  share 90% and the General  Partner shares 10% in the profits or losses
from operations.

Cash  distributions  from sales or  refinancings,  if any,  shall be made to the
partners to the extent available and, as more fully described in the Partnership
Agreement,  as  follows:  first,  to the  limited  partners,  until the  limited
partners have received an amount equal to their  unrecovered  invested  capital;
second,  99% to the  limited  partners  equal  to any  unpaid  preferred  return
arrearage;  and third, any remaining excess, 85% to the limited partners and 15%
to the General Partner.

Distributions  in  liquidation  to the  partners  shall  be  made  pro  rata  in
accordance with the partners' capital accounts.

In accordance with the Partnership  Agreement,  limited partners are entitled to
receive an 8% cumulative preferred return on their unrecovered invested capital.
No distributions were made or accrued to the General Partner,  since the limited
partners must receive their original  invested capital plus any preferred return
arrearage  before payment to the General  Partner.  As of December 31, 1999, the
unpaid preferred return arrearage totaled approximately $26,380,000.


<PAGE>


Note J - Operating Leases and Preferred Returns

Operating Leases

The  Partnership  leases  office and retail space to tenants at the  Shallowford
property under lease  agreements which expire on various dates through 2006. The
following  is a  schedule  by  year of the  minimum  future  rentals,  excluding
escalations, required under these leases as of December 31, 1999 (in thousands):

           2000                  $  928
           2001                     830
           2002                     497
           2003                     358
           2004                     342
        Thereafter                  539

           Total                 $3,494

A major tenant in Shallowford leases  approximately 39% of available space under
a lease expiring in 2006.  Rental income recognized under this lease amounted to
approximately $341,000 for each of the years ended December 31, 1999 and 1998.

Preferred returns

The DBLAV joint venture agreement  provides,  among other things,  that the cash
flow  from  operations  of  both  properties  will  be  used  first  to pay  the
Partnership a preferred return on its cash investments.

Note K - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>

                                                  Initial Cost
                                                 To Partnership
                                                 (in thousands)
                                                         Buildings
                                                        and Related    Adjustment to
                                                         Personal       Liquidation
Description                 Encumbrance        Land      Property          Basis
                           (in thousands)                             (in thousands)

<S>                           <C>            <C>          <C>             <C>
Shallowford Corners           $ 7,650        $ 5,882      $ 6,442         $(4,674)
</TABLE>


<TABLE>
<CAPTION>

                      Gross Amount At Which
                             Carried
                       At December 31, 1999
                          (in thousands)
                             Buildings
                                And
                              Related
                              Personal          Accumulated    Year of       Date    Depreciable
Description           Land    Property  Total  Depreciation  Construction  Acquired  Life-Years

<S>                 <C>       <C>       <C>        <C>          <C>        <C>   <C>  <C>
Shallowford Corners $ 5,604   $ 2,046   $7,650     (1)          1985       12/30/86   3-30 yrs
</TABLE>

(1)   As a result of adopting the  liquidation  basis of  accounting,  the gross
      carrying  values of the  properties  were  adjusted to the net  realizable
      value and will not be depreciated further.

Reconciliation of Real Estate and Accumulated Depreciation:


                                                 Years Ended December 31,
                                                    1999          1998
                                                      (in thousands)
Real Estate

Balance at beginning of year                      $ 33,718      $ 33,380
  Property improvements                                 81           338
  Disposals of property                            (21,581)           --
  Adjustment to liquidating basis                   (4,568)           --
Balance at end of year                             $ 7,650      $ 33,718

Accumulated Depreciation

Balance at beginning of year                      $ 16,476      $ 15,282
  Additions charged to expense                       1,048         1,194
  Dispositions of properties                       (12,649)           --
  Adjustment to liquidating basis                   (4,875)           --
Balance at end of year                              $   --      $ 16,476

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31, 1999 and 1998,  respectively,  is  approximately  $10,468,000  and
$32,613,000.  The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998,  respectively,  is  approximately  $5,275,000 and
$16,987,000.

Note L - Income Taxes

The Partnership has received a ruling from the Internal  Revenue Service that it
will  be  classified  as  a  partnership   for  Federal   income  tax  purposes.
Accordingly,  no provision for income taxes is made in the financial  statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.

The following is a  reconciliation  of the  Partnership's  net income (loss) for
financial and Federal tax reporting purposes (in thousands):

                                                   Years Ended December 31,
                                                      1999           1998
Net income (loss) as reported                        $  874         $ (790)
Excess of book over tax depreciation and
  amortization                                       (1,326)            23
Provision for doubtful accounts                          13             (9)
Nondeductible employee meals                              7             14
Other                                                   179             16
      Federal taxable net loss                      $  (253)        $ (746)
Federal taxable loss per limited
  partnership                                       $ (4.22)       $(12.43)


<PAGE>


The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):

                                                 1999

Net assets as reported in liquidation          $ 5,342
  Reserve for bad debt                              36
  Net book over tax fixed asset basis           (1,921)
  Other                                            814

Net assets - Federal tax basis                 $ 4,271

Note M - Distributions

In February 1998, the  Partnership  declared and paid a cash  distribution  from
operations  to the  limited  partners in the amount of  approximately  $599,000.
There were no distributions declared in 1999.

Subsequent  to December  31, 1999,  the  Partnership  distributed  approximately
$2,800,000  ($46.74  per  limited  partnership  unit)  to the  limited  partners
consisting of approximately  $1,928,000  ($32.18 per limited  partnership  unit)
from the sale  proceeds of Perimeter  Square,  the Green Valley  Hotel,  and the
Tucson Airport Hotel and approximately  $872,000 ($14.56 per limited partnership
unit) of cash from operations.

Note N - Segment Reporting

Description  of the types of products  and  services  from which the  reportable
segment derives its revenues:

The Partnership had two reportable  segments:  commercial and hotel  properties.
The Partnership's  commercial  property segment consisted of two retail shopping
centers,  one in Arizona and one in Georgia.  The Partnership  leases commercial
space to tenants  under  various  lease terms.  The shopping  center  located in
Arizona  was sold to an  unrelated  party  during  1999  (See  "Note F - Sale of
Investment  Property"  for further  information  regarding  the shopping  center
sale).  The  Partnership's  hotel  property  segment  consisted of two hotels in
Arizona. The two hotel properties held by the Partnership were sold to unrelated
parties during 1999.  Therefore,  the hotel segment is reflected as discontinued
operations  (see  "Note  G  -  Sale  of  Discontinued  Operations"  for  further
discussion regarding the hotel sales).

Measurement of segment profit or loss:

The  Partnership  evaluates  performance  based on segment  profit (loss) before
depreciation. The accounting policies of the reportable segments are the same as
those described in the summary of significant accounting policies.

Factors management used to identify the enterprise's reportable segment:

The Partnership's  reportable  segments consisted of investment  properties that
offered  different  products and  services.  The  reportable  segments were each
managed  separately because they provided distinct services with different types
of products and customers.


<PAGE>


Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" column includes Partnership administration related items
and income and expense not allocated to the reportable segment.
<TABLE>
<CAPTION>

              1999                 Commercial       Hotel         Other       Totals
                                               (discontinued)
<S>                                 <C>             <C>           <C>         <C>
Rental operations                   $ 1,526         $   --          $ --      $ 1,526
Other income                             22             --            88          110
Interest expense (income)               896             --           (30)         866
Depreciation                            413             --            --          413
General and administrative
  expense                                --             --           222          222
Gain on sale of discontinued
  operations                             --          1,540            --        1,540
Gain on sale of investment
  property                               64             --            --           64
Loss from discontinued
  operations                             --           (378)           --         (378)
Extraordinary (loss) gain on
  early extinguishment of debt           (3)            27            --           24
Segment (loss) profit                  (151)         1,189          (164)         874
Net assets in liquidation                --             --         5,342        5,342
Capital expenditures for
  investment properties                  78              3            --           81
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

              1998                 Commercial       Hotel         Other       Totals
                                               (discontinued)
<S>                                 <C>             <C>           <C>         <C>
Rental operations                   $ 1,722           $ --          $ --      $ 1,722
Other income                             27             --           105          132
Interest expense                        949             --            --          949
Depreciation                            434             --            --          434
General and administrative
  expense                                --             --           221          221
Loss from discontinued
  operations                             --           (461)           --         (461)
Cumulative effect of adopting
  standard                               --           (270)           --         (270)
Segment loss                           (233)          (731)         (126)      (1,090)
Total assets                          9,356          9,830         1,782       20,968
Capital expenditures for
  investment properties                   1            337            --          338
</TABLE>


Note O - Legal Proceedings

The Partnership is unaware of any pending or outstanding  litigation that is not
of a routine nature in the ordinary course of business.

Item 8.     Changes in and  Disagreements  with  Accountants on Accounting and
            Financial Disclosure

Effective  September 23, 1998,  the Registrant  dismissed its prior  Independent
Auditors,  Pannell Kerr  Forster PC ("PKF") and retained as its new  Independent
Auditors,  KPMG LLP.  PKF's  Independent  Auditor's  Report on the  Registrant's
consolidated financial statements for the calendar year ended December 31, 1997,
did not contain an adverse  opinion or a  disclaimer  of  opinion,  and were not
qualified or modified as to uncertainty,  audit scope or accounting  principles.
The  decision  to  change  Independent  Auditors  was  approved  by the  General
Partner's  directors.  During the calendar year ended 1997 and through September
23, 1998,  there were no  disagreements  between the  Registrant  and PKF on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope  or  procedure  which  disagreements  if  not  resolved  to  the
satisfaction  of PKF,  would have  caused it to make  references  to the subject
matter of the disagreements in connection with its reports.

Effective September 23, 1998, the Registrant engaged KPMG LLP as its Independent
Auditors.  During the year ended  December  31, 1997 and through  September  23,
1998,  the  Registrant  did not consult KPMG LLP regarding any of the matters or
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.

Since September 23, 1998, there were no disagreements between the Registrant and
KPMP  LLP on  any  matter  of  accounting  principles  or  practices,  financial
statement disclosure or auditing scope of procedures.


<PAGE>



                                    PART III

Item 9.     Directors and Executive  Officers,  Promoters and Control Persons,
            Compliance with Section 16(a) of the Exchange Act

Drexel  Burnham  Lambert  Real  Estate   Associates  III  (the  "Registrant"  or
"Partnership")  does  not  have  any  officers  or  directors.   Management  and
administrative  services are performed by DBL Properties  Corporation  ("DBL" or
the  "General  Partner")  and its  affiliates.  The General  Partner has general
responsibility  and  authority  in all  matters  affecting  the  business of the
Partnership.

The names of the  directors  and  executive  officers of DBL as of December  31,
1999,  their ages and  nature of all  positions  presently  held by them are set
forth below. There are no family relationships between or among any officers and
directors:

Name                   Age     Position

Patrick J. Foye        42      Executive Vice President and Director

Martha L. Long         40      Senior Vice President and Controller

Patrick J. Foye has been  Executive Vice President and Director of the General
Partner  since  October  1,  1998.  Mr.  Foye has  served  as  Executive  Vice
President and director of AIMCO since May 1998.  Prior to joining  AIMCO,  Mr.
Foye was a partner in the law firm of  Skadden,  Arps,  Slate,  Meagher & Flom
LLP  from  1989 to 1998  and was  Managing  Partner  of the  firm's  Brussels,
Budapest and Moscow  offices from 1992 through  1994.  Mr. Foye is also Deputy
Chairman of the Long Island Power  Authority and serves as a member of the New
York State  Privatization  Council.  He received a B.A.  from Fordham  College
and a J.D. from Fordham University Law School.

Martha L. Long has been  Senior Vice  President  and  Controller  of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group,  Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997,  retaining  that title until  October  1998.  From 1988 to June
1994,  Ms. Long was Senior Vice  President and  Controller for The First Savings
Bank, FSB in Greenville, South Carolina.

Based solely upon a review of Forms 3 and 4 and amendments  thereto furnished to
the Registrant  under Rule 16a-3(e) during the  Registrant's  most recent fiscal
year and Form 5 and amendments  thereto furnished to the Registrant with respect
to its most recent  fiscal year,  the  Registrant  is not aware of any director,
officer,  beneficial  owner of more than ten  percent  of the  units of  limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms,  reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.

Item 10.    Executive Compensation

No directors and officers of the General Partner received any remuneration  from
the Registrant.


<PAGE>


Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 1999.

                                            Number of Units     Percentage

           AIMCO Properties LP                   4,391            7.33%
             (an affiliate of AIMCO)
           Cooper River Properties, LLC          3,110            5.19%
             (an affiliate of AIMCO)

AIMCO Properties LP is indirectly  ultimately  controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.

Cooper  River  Properties,  LLC is  indirectly  ultimately  owned by AIMCO.  Its
business address is 55 Beattie Place, Greenville, South Carolina 29602.

No director or officer of the General Partner owns any units.

Item 12.    Certain Relationships and Related Transactions

The Registrant has no employees and is dependent on the General  Partner and its
affiliates for the management and administration of all Partnership  activities.
The  Partnership  Agreement  provides  for certain  payments to  affiliates  for
services and as  reimbursement  of certain  expenses  incurred by  affiliates on
behalf of the Partnership.

The following  payments were made to the General  Partner and affiliates  during
the years ended December 31, 1999 and 1998:

                                                   1999          1998
                                                     (in thousands)
Property management fees                           $  --        $ 399
Reimbursement for services of affiliates              65           95

For the nine months ended September 30, 1998,  affiliates of the General Partner
were entitled to receive  varying  percentages of gross receipts from all of the
Partnership's  commercial and hotel properties for providing property management
services. The Partnership paid to such affiliates approximately $399,000 for the
nine months ended September 30, 1998.  Effective  October 1, 1998 these services
for the commercial and hotel properties were provided by an unrelated party.

An affiliate  of the General  Partner  received  reimbursements  of  accountable
administrative  expenses amounting to approximately  $65,000 and $95,000 for the
years ended December 31, 1999 and 1998, respectively.

At December 31, 1999, the  Partnership  owed an affiliate of the General Partner
approximately  $174,000 for payroll expenses paid by such affiliate on behalf of
the hotel properties.

Included in other liabilities at December 31, 1999, is a $25,000 note payable to
the co-venturer in Shallowford.  The note does not have any stipulated terms for
repayment  and it accrues  interest at 3% above prime.  Interest  expense on the
note  amounted  to  approximately  $3,000 in both 1999 and 1998.  Total  accrued
interest  payable of approximately  $21,000 is included in other  liabilities at
December 31, 1999.


<PAGE>


Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 7,501 limited
partnership  units in the  Partnership  representing  12.52% of the  outstanding
units. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

Item 13.    Exhibits and Reports on Form 8-K

      (a)   Exhibits:

            Exhibit 27, Financial Data Schedule,  is filed as an exhibit to this
            report.

      (b)   Reports on Form 8-K filed during the fourth quarter of calendar year
            1999:

            None.


<PAGE>



                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                              DREXEL  BURNHAM  LAMBERT REAL ESTATE  ASSOCIATES
                              III

                              By:   DBL Properties Corporation
                                    Its General Partner

                              By:   /s/Patrick J. Foye
                                    Patrick J. Foye
                                    Executive Vice President

                              By: /s/Martha L. Long
                                    Martha L. Long
                                    Senior Vice President
                                    and Controller

                              Date:


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
date indicated.

/s/Patrick J. Foye      Executive Vice President      Date:
Patrick J. Foye         and Director


/s/Martha L. Long       Senior Vice President         Date:
Martha L. Long          and Controller




<PAGE>


              DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III

                                INDEX TO EXHIBITS

Exhibit Number                      Description

    2.1       Agreement and Plan of Merger,  dated as of October 1, 1998, by and
              between AIMCO and IPT; incorporated by reference to Current Report
              on Form 8-K dated October 1, 1998.

    3.1       Prospectus of the Partnership filed pursuant to rule 424(b), dated
              December 30, 1983 is hereby incorporated herein by reference.

    3.2       Supplement dated October 10, 1984 to Prospectus dated December 30,
              1983 is hereby incorporated herein by reference.

    3.3       Form of  Agreement  of Limited  Partnership  of the  Partnership
              reference is made to Exhibit A to the Prospectus.

    3.4       Certificate  of  Limited  Partnership  of the  Partnership,  which
              appears as Exhibit  3.2 to the  Registration  Statement  is hereby
              incorporated herein by the reference.

    10.1      Agreement  related to  purchase  by the  Partnership  of  Wendover
              Business  Park  Phase  II in  Greensboro,  North  Carolina,  which
              appears  as  Exhibit  2.1 to  the  Registration  Statement  of the
              Partnership is hereby incorporated herein by reference.

    10.2      Agreement related to purchase by the Partnership of an interest in
              the Sheraton Poste Inn in Cherry Hill,  New Jersey,  which appears
              as Exhibit 2.2 to the Registration Statement of the Partnership is
              hereby incorporated herein by reference.

    10.3      Agreement  relating to purchase by the Partnership of Presidential
              House at Sky Lake in  North  Miami  Beach,  Florida,  for  which a
              Report on Form 8-K was filed with the  Commission  on  November 5,
              1984, is hereby incorporated herein by reference.

    10.4      Agreement  relating to purchase by the  Partnership of an interest
              in Table Mesa Shopping  Center in Boulder,  Colorado,  for which a
              Report on Form 8-K was filed with the  Commission on May 21, 1985,
              is hereby incorporated herein by reference.

    10.5      Amendment No. 1, dated October 1, 1992,  among the  Partnership,
              Coreal  N.V.,  Inc. and  Almanzil,  Inc.,  to the Joint  Venture
              Agreements,  dated April 4, 1984,  between the  Partnership  and
              Coreal  relating to the Sheraton  Poste Inn is  incorporated  by
              reference to the  Registrant's  Annual Report on Form 10-KSB for
              the fiscal year ended December 31, 1992.

    10.6      Contracts  related to refinancing of the debt of Wendover Business
              Park  Phase II were  filed as  Exhibit  10.6 to the report on Form
              10-KSB for the fiscal year ended December 31, 1993, and are hereby
              incorporated herein by reference:

              (a)  Mortgage note dated January 13, 1994 between  Drexel  Burnham
                   Lambert  Real  Estate  Associates  II,  a  New  York  limited
                   partnership,  and United  Family Life  Insurance  Company,  a
                   Georgia corporation.


<PAGE>


              (b)  Deed of Trust and Security  Agreement  dated January 13, 1994
                   between Drexel Burnham  Lambert Real Estate  Associates II, a
                   New York  limited  partnership,  and Stewart  Title  Guaranty
                   Company  for the  benefit  of United  Family  Life  Insurance
                   Company, a Georgia corporation.

              (c)  Assignment of Leases, Rents, Contracts,  and Agreements dated
                   January  13,  1994 from Drexel  Burnham  Lambert  Real Estate
                   Associates  II, a New York  limited  partnership,  to  United
                   Family Life Insurance Company, a Georgia corporation.

              (d)  Hazardous  Material  Indemnification  Agreement dated January
                   13,  1994  between   Drexel   Burnham   Lambert  Real  Estate
                   Associates  II, a New York  limited  partnership,  and United
                   Family Life Insurance Company, a Georgia corporation.

              (e)  Escrow Agreement dated January 13, 1994 by and between United
                   Family Life Insurance Company, a Georgia corporation,  Drexel
                   Burnham Lambert Real Estate Associates II, a New York limited
                   partnership, and Dickinson, Logan, Todd and Barber, Inc. (the
                   "Escrow Agent").

    10.7      Purchase  and  Sale  Contract   between   Registrant  and  P  &  H
              Properties, L.L.C., an Oklahoma limited partnership, dated May 18,
              1999,  incorporated  by  reference  to Current  Report on Form 8-K
              dated July 21, 1999.

    10.8      First Amendment to Purchase and Sale Contract  between  Registrant
              and P&H Properties, L.L.C., an Oklahoma limited partnership, dated
              June 4, 1999,  incorporated by reference to Current Report on Form
              8-K dated July 21, 1999.

    10.9      Second Amendment to Purchase and Sale Contract between  Registrant
              and P&H Properties, L.L.C., an Oklahoma limited partnership, dated
              June 4, 1999,  incorporated by reference to Current Report on Form
              8-K dated July 21, 1999.

    10.10     Purchase  and  Sale  Contract  between   Registrant  and  Pacifica
              Companies,   a  California   Corporation,   dated  May  12,  1999,
              incorporated  by  reference  to  Current  Report on Form 8-K dated
              December 1, 1999.

    10.11     First Amendment to Purchase and Sale Contract  between  Registrant
              and Pacifica Companies,  a California  Corporation,  dated May 27,
              1999,  incorporated  by  reference  to Current  Report on Form 8-K
              dated December 1, 1999.

    10.12     Purchase and Sale Contract  between DBL Airport  Valley  Limited
              Partnership,  an Arizona  limited  partnership  and  Jaykumar H.
              Shah,  M.D.  dated June 24, 1999  relating to the sale of Tucson
              Airport Hotel.

    10.13     First  Amendment  to  Purchase  and Sale  Contract  between  DBL
              Airport  Valley   Limited   Partnership,   an  Arizona   limited
              partnership  and  Jaykumar  H. Shah,  M.D.  dated June 24,  1999
              relating to the sale of Tucson Airport Hotel.

    10.14     Second  Amendment  to  Purchase  and Sale  Contract  between DBL
              Airport  Valley   Limited   Partnership,   an  Arizona   limited
              partnership  and Jaykumar H. Shah, M.D. dated September 29, 1999
              relating to the sale of Tucson Airport Hotel.

    10.15     Third  Amendment  to  Purchase  and Sale  Contract  between  DBL
              Airport  Valley   Limited   Partnership,   an  Arizona   limited
              partnership  and Jaykumar H. Shah,  M.D.  dated December 2, 1999
              relating to the sale of Tucson Airport Hotel.

    10.16     Fourth  Amendment  to  Purchase  and Sale  Contract  between DBL
              Airport  Valley   Limited   Partnership,   an  Arizona   limited
              partnership  and Jaykumar H. Shah,  M.D. dated December 10, 1999
              relating to the sale of Tucson Airport Hotel.

    16        Letter  dated  September  23,  1998 from the  Registrant's  former
              independent   accountant   regarding  its  concurrence   with  the
              statements  made by the  Registrant in Current  Report on Form 8-K
              dated September 30, 1998.

    16.1      Letter  dated  October  21,  1998  from  the  Registrant's  former
              independent   accountant   regarding  its  concurrence   with  the
              statements  made by the  Registrant in Amended  Current  Report on
              Form 8-K/A dated October 26, 1998.

    27        Financial Data Schedule.

    99.1      Special  Report/Acquisition  Bulletin  dated May 9, 1985 regarding
              the  Purchase  by the  Partnership  of  interests  in  Table  Mesa
              Shopping Center in Boulder,  Colorado, and the 123 Office Building
              in  Tyson's  Corner,  Virginia  is hereby  incorporated  herein by
              reference.

    99.2      Report on Form 8-K filed  November 4, 1984  regarding the purchase
              of Presidential House at Sky Lake in North Miami Beach, Florida is
              hereby incorporated herein by reference.

    99.3      Report on Form 8-K filed May 21, 1985 regarding the acquisition of
              a 50% interest in Table Mesa Shopping Center in Boulder,  Colorado
              is hereby incorporated herein by reference.

    99.4      On May 17,  1988,  a report  on Form 8-K was filed  regarding  the
              refinancing  of the four loans  underlying the  Presidential  wrap
              mortgage is hereby incorporated herein by reference.

    99.5      On June 12,  1989,  a report on Form 8-K was filed  regarding  the
              modification of Table Mesa Promissory Note is hereby  incorporated
              herein by reference.

    99.7      On October 11, 1989, a report on Form 8-K was filed  regarding the
              change in control of the parent company of the General  Partner is
              hereby incorporated herein by reference.

    99.8      Second Note and Deed of Trust Revision  Agreement dated December
              3,  1990  regarding  Table  Mesa  Shopping  Center  in  Boulder,
              Colorado.

    99.9      Report on Form 8-K filed  February 3, 1993  regarding  the sale of
              the   outstanding   stock  of  the   General   Partner  is  hereby
              incorporated herein by reference.

    99.10     Report on Form 8-K filed July 9, 1997,  regarding  the change in
              control of the Partnership.


<PAGE>


                                                                   Exhibit 10.12

                           PURCHASE AND SALE CONTRACT

                                     BETWEEN

    DBL AIRPORT VALLEY LIMITED PARTNERSHIP, an Arizona limited partnership

                                    AS SELLER

                                       AND

                             JAYKUMAR H. SHAH, M.D.

                                  AS PURCHASER

                                   relating to

                              Clarion Hotel-Airport

                      6801 S. Tucson Blvd., Tucson, Arizona


<PAGE>


                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1 DEFINED TERMS......................................................1
ARTICLE 2 PURCHASE AND SALE OF PROPERTY......................................4
ARTICLE 3 PURCHASE PRICE & DEPOSIT...........................................4
ARTICLE 4 FINANCING..........................................................5
ARTICLE 5 FEASBILITY PERIOD..................................................5
ARTICLE 6 TITLE..............................................................7
ARTICLE 7 CLOSING............................................................9
ARTICLE 8 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND PURCHASER.13
ARTICLE 9 CONDITIONS PRECEDENT TO CLOSING...................................17
ARTICLE 10 BROKERAGE........................................................18
ARTICLE 11 POSSESSION.......................................................18
ARTICLE 12 DEFAULTS AND REMEDIES............................................18
ARTICLE 13 RISK OF LOSS OR CASUALTY.........................................19
ARTICLE 14 RATIFICATION.....................................................19
ARTICLE 15 EMINENT DOMAIN...................................................19
ARTICLE 16 MISCELLANEOUS....................................................19


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                     PURCHASE AND SALE CONTRACT

      THIS PURCHASE AND SALE CONTRACT  ("Purchase  Contract") is entered into as
of June 24, 1999 (the "Effective  Date") by and among DBL AIRPORT VALLEY LIMITED
PARTNERSHIP,  an Arizona  limited  partnership  ("Seller") and JAYKUMAR H. SHAH,
M.D.,  having  a  principal  address  at 536  Alta  Vista,  Monrovia,  CA  91016
("Purchaser").

      NOW,  THEREFORE  WITNESSETH:  That for and in  consideration  of  mutual
covenants and agreements  herein after set forth,  Seller and Purchaser hereby
agree as follows:

RECITALS

R-1...Seller  holds  legal  title to a parcel  of real  estate  located  in Pima
County, Arizona, on which certain improvements have been constructed.

R-2...Purchaser  desires  to  purchase  and Seller has agreed to sell such land,
improvements and certain associated property, defined below as the "Property" on
the terms and  conditions  set forth below  (which  terms and  conditions  shall
control  in the event of any  conflict  with these  Recitals),  such that on the
Closing  Date (as  defined  in this  Purchase  Contract)  the  Property  will be
conveyed to Purchaser;

R-3...Purchaser  has  agreed to pay to Seller  the  Purchase  Price (as  defined
herein)  for the  Property,  and  Seller  has  agreed  to sell the  Property  to
Purchaser on the terms and conditions set forth below.

R-4...Purchaser  has  made  such  investigations  regarding  the  Property,  and
Purchaser's  intended  uses of each of the  Property  as  Purchaser  has  deemed
necessary and desirable, has approved the same in all respects,  subject only to
the  representations,  warranties  and  covenants  set  forth  in this  Purchase
Contract and does hereby agree to consummate the  transactions  contemplated  by
this Purchase Contract as set forth below.

                                    ARTICLE 1

                                  DEFINED TERMS

1.1  Defined  Terms.  Terms with  initial  capital  letters in this  Purchase
Contract shall have the meanings set forth in this Article 1 below.

1.1.1 "Assignment" shall have the meaning ascribed thereto in Section 7.2.1.3.
1.1.2 "Bill of Sale"  shall  have the  meaning  ascribed  thereto  in  Section
7.2.1.2.
1.1.3 "Broker" shall have the meaning  ascribed  thereto in Section 10.1.  1.1.4
"Business Day" means any day other than a Saturday or Sunday or Federal  holiday
or legal holiday in Pima County, Arizona.

1.1.5  "Closing"  means the  consummation  of the  purchase and sale and related
transactions contemplated by this Purchase Contract in accordance with the terms
and conditions of this Purchase Contract.

1.1.6 "Closing  Date" means a date which is on or after  September 15, 1999, but
no later than  September  17, 1999.  1.1.7  "Closing  Statement"  shall have the
meaning ascribed thereto in Section 7.2.1.4.

1.1.8  "Commercial  Lease(s)" means the interest of Seller in and to all leases,
subleases  and other  occupancy  agreements,  whether  or not of  record,  which
provide for the use or  occupancy of space or  facilities  on or relating to the
Property  and  which  are  in  force  as of the  Effective  Date.  There  are no
Commercial Leases.

1.1.9 "Consultants" shall have the meaning ascribed thereto in Section 5.1.
1.1.10   "Deed" shall have the meaning ascribed thereto in Section 7.2.1.1.
1.1.11   "Deposit" shall have the meaning ascribed thereto in Section 3.1.1.
1.1.12   "Escrow  Agent"  shall have the meaning  ascribed  thereto in Section
          3.1.1.
1.1.13 "Purchase  Contract" means this Purchase and Sale Contract by and between
Seller and Purchaser. 1.1.14 "Excluded Permits" means those Permits which, under
applicable law, are nontransferable.

1.1.15  "Feasibility  Period" shall have the meaning ascribed thereto in Section
5.1.  1.1.16  "Fixtures  and Tangible  Personal  Property"  means all  fixtures,
furniture,  furnishings,  fittings, equipment, machinery, apparatus, appliances,
inventory,  automobiles  and other articles of personal  property now located on
the Land or in the  Improvements  as of the date of this  Purchase  Contract and
used or usable in connection with any present or future  occupation or operation
of all or any part of the Property.  The term  "Fixtures  and Tangible  Personal
Property"  does not include (i)  equipment  leased by Seller and the interest of
Seller in any  equipment  provided  to the  Property  for use,  but not owned by
Seller,  or (ii)  property  owned or leased by Tenants and guests,  employees or
other persons  furnishing  goods or services to the Property,  or (iii) property
and equipment  owned by Seller,  which in the ordinary course of business of the
Property is not used  exclusively  for the business,  operation or management of
the  Property.   1.1.17  "Franchise  Agreement"  means  that  certain  Franchise
Agreement, dated July 10, 1991, by and between Choice Hotels International, Inc.
("Choice Hotels") and Seller.

1.1.18  "Land" means all of that  certain  tract of land located in Pima County,
Arizona,  commonly  known  as 6801  South  Tucson  Boulevard,  Tucson,  Arizona,
containing  approximately 7.97 acres and more particularly  described in Exhibit
1.1.18  attached  hereto and made a part hereof and all rights,  privileges  and
appurtenances pertaining thereto.

1.1.19 "Like Kind  Exchange"  and "Like Kind Exchange  Property"  shall have the
meaning  ascribed  thereto in Section 16.18.  1.1.20 "Liquor License" means that
certain liquor license issued by the Arizona  Department of Liquor  Licenses and
Control,  relating  to the  Property.  1.1.21  "Notice"  shall have the  meaning
ascribed  thereto  in  Section  16.6.  1.1.22  "Property"  means  the  Land  and
Improvements  described in the Recitals and all rights of Seller relating to the
Land and the Improvements,  including without limitation,  any rights, title and
interest of Seller,  if any, in and to (i) any strips and gores  adjacent to the
Land and any land  lying in the bed of any  street,  road,  or avenue  opened or
proposed,  in front of or adjoining the Land,  to the center line thereof;  (ii)
any unpaid award for any taking by condemnation or any damage to the Property by
reason  of a  change  of  grade  of any  street  or  highway;  (iii)  all of the
easements,  rights,  privileges,  and  appurtenances  belonging  or in  any  way
appertaining to the Property;  together with all Fixtures and Tangible  Personal
Property,  the  right,  if any and only to the  extent  transferable,  of Seller
issued to Property Contracts and Commercial Leases,  Permits other than Excluded
Permits and the Miscellaneous Property Assets.

1.1.23 "Property Contracts" means all purchase orders, maintenance,  service, or
utility  contracts  and  similar  contracts,  which  relate  to  the  ownership,
maintenance,  construction or repair and/or  operation of the Property and which
are not  cancelable on ninety (90) days' or shorter  Notice,  except  Commercial
Leases,  including,  without  limitation,  those contracts  described on Exhibit
1.1.23.

1.1.24  "Proration  Period" shall have the meaning  ascribed  thereto in Section
7.1.4. 1.1.25 "Improvements" means all buildings and improvements located on the
Land taken "as is" containing approximately 95,164 gross square feet of building
area.

1.1.26  "Miscellaneous  Property  Assets"  means all  contract  rights,  leases,
concessions,  warranties, plans, drawings and other items of intangible personal
property  relating to the ownership or operation of the Property owned by Seller
and  assignable  without  consent  of any third  party  required  for  transfer,
excluding,  however, (i) receivables,  (ii) Property Contracts, (iii) Commercial
Leases,  (iv) Permits,  (v) cash or other funds,  whether in petty cash or house
"banks," or on deposit in bank accounts or in transit for deposit, (vi) refunds,
rebates  or other  claims,  or any  interest  thereon,  for  periods  or  events
occurring prior to the Closing Date, (vii) utility and similar deposits,  (viii)
insurance or other prepaid Items or (ix) books and records, except to the extent
that Seller receives a credit on the Closing Statement for any such item.

1.1.27  "Permits"  means  all  licenses  and  permits  granted  by  governmental
authorities  having  jurisdiction  over the Property in respect of the matter to
which the applicable license or permit applies and owned by Seller or used in or
relating to the  ownership,  occupancy  or operation of the Property or any part
thereof not subject to a Commercial  Lease,  including without  limitation,  the
Liquor License.

1.1.28 "Permitted  Exceptions" means those exceptions or conditions permitted to
encumber the title to the Property in accordance  with the provisions of Section
6.2.

1.1.29 "Purchase Price" means the total consideration to be paid by Purchaser to
Seller for the purchase of the Property as described in Section 3.1.

1.1.30 "Tenant" means any person or entity entitled to occupy any portion of the
Property  under  a  Commercial  Lease.   1.1.31  "Title  Commitment"  or  "Title
Commitments" shall have the meaning ascribed thereto in Section 6.1.

1.1.32   "Title  Company" shall have the meaning  ascribed  thereto in Section
          3.1.1.
1.1.33   "Title Insurer" shall have the meaning set forth in Section 6.1.

                                    ARTICLE 2

                          PURCHASE AND SALE OF PROPERTY

2.1  Purchase  and  Sale.  Seller  agrees to sell and  convey  the  Property  to
Purchaser  and  Purchaser  agrees to  purchase  the  Property  from  Seller,  in
accordance with the terms and conditions set forth in this Purchase Contract.

                                    ARTICLE 3

                            PURCHASE PRICE & DEPOSIT

3.1 Purchase Price. The total purchase price ("Purchase Price") for the Property
shall be FIVE MILLION  EIGHT HUNDRED  THOUSAND  DOLLARS  ($5,800,000.00),  which
shall be paid by  Purchaser,  as follows:  3.1.1  Deposit.  On the date  hereof,
Purchaser  shall deliver to Fidelity  National Title  Insurance  Agency ("Escrow
Agent" or the  "Title  Company")  a deposit in the sum of One  Hundred  Thousand
Dollars ($100,000.00) in cash (the "Deposit"). Purchaser and Seller each approve
the form of escrow instructions attached as Exhibit 3.1.1.

3.1.2  Investment  of Deposit.  The Escrow Agent shall hold the Deposit and make
delivery of the Deposit to the party  entitled  thereto  under the terms hereof.
Escrow Agent shall invest the Deposit in such short-term, high-grade securities,
interest-bearing   bank   accounts,   money  market  funds  or  accounts,   bank
certificates  of deposit or bank  repurchase  agreements as Escrow Agent, in its
discretion, deems suitable, (provided that Escrow Agent shall invest the Deposit
as jointly  directed by Seller and Purchaser should Seller and Purchaser each in
their  respective  sole  discretion  determine  to issue such  joint  investment
instructions  to the Escrow  Agent) and all  interest and income  thereon  shall
become part of the  Deposit  and shall be remitted to the party  entitled to the
Deposit, as set forth below.

3.1.3  Application  of  Deposit.  If the sale of the  Property  is closed by the
Closing Date,  monies held as the Deposit shall be applied to the Purchase Price
(and  paid  over to the  Seller)  on the  Closing  Date.  One-half  (1/2) of the
Deposit,  which is FIFTY  THOUSAND  DOLLARS  ($50,000.00)  (the  "Non-Refundable
Deposit"), shall be non-refundable to Purchaser for any reason as of the date of
this Agreement.  One-half (1/2) of the Deposit,  which is FIFTY THOUSAND DOLLARS
($50,000.00) (the "Refundable Deposit"),  shall be refundable to Purchaser until
expiration of the Feasibility  Period,  as provided  herein.  If the sale of the
Property is not closed by the Closing Date owing to failure of satisfaction of a
condition precedent to Purchaser's obligations,  the Refundable Deposit shall be
returned and  refunded to  Purchaser,  and neither  party shall have any further
liability  hereunder,  subject  to and except for  Purchaser's  liability  under
Section 5.3.

                                    ARTICLE 4

                                    FINANCING

4.1  Financing.  Purchaser  assumes full  responsibility  to  expeditiously  and
diligently  initiate and pursue all steps necessary to obtain the funds required
for  settlement,  and  acquisition  of such funds  shall not be a  condition  to
Purchaser's obligations under this Purchase Contract.

                                    ARTICLE 5

                               FEASIBILITY PERIOD

5.1 Feasibility  Period.  Subject to the terms of section 5.3 below,  for thirty
(30) calendar days  following the  Effective  Date (the  "Feasibility  Period"),
Purchaser, and its agents,  contractors,  engineers,  surveyors,  attorneys, and
employees  ("Consultants")  shall have the right from time to time to enter onto
the Property and to investigate the Property:  5.1.1 To conduct and make any and
all customary studies, tests, examinations and inspections, or investigations of
or  concerning  the Property  (including  without  limitation,  engineering  and
feasibility  studies,  evaluation  of drainage and flood  plain,  soil tests for
bearing capacity and percolation and surveys, including topographical surveys).

5.1.2 To confirm any and all matters which  Purchaser may  reasonably  desire to
confirm  with  respect to the  Property.  5.1.3 To  ascertain  and  confirm  the
suitability of the property for Purchaser's intended use of the Property.

5.1.4 To investigate the  feasibility,  prerequisites  and costs associated with
transfer  of the Liquor  License to  Purchaser  at  Closing,  including  without
limitation, investigation of acquisition of a temporary liquor license operating
permit for the Property.

5.2 Termination. Should the results of any of the matters referred to in Section
5.1 above appear  unsatisfactory  to Purchaser  for any reason,  then  Purchaser
shall have the right to terminate  this  Purchase  Contract by giving Notice (as
defined herein) to that effect to Seller and Escrow Agent on or before 5:00 p.m.
EST on the date of expiration of the Feasibility  Period. If Purchaser exercises
such right to terminate,  this Purchase  Contract  shall  terminate and be of no
further force and effect,  subject to and except for Purchaser's liability under
Section 5.3, and Escrow Agent shall return the  Refundable  Deposit to Purchaser
and deliver the Non-Refundable  Deposit to Seller. If Purchaser fails to provide
Seller with Notice of cancellation  prior to the end of the Feasibility  Period,
this  Purchase  Contract  shall remain in full force and effect and  Purchaser's
obligation to purchase the Property shall be  non-contingent  and  unconditional
except only for satisfaction of the conditions  expressly stated in this ARTICLE
5 and in ARTICLE 9.

5.3 Indemnity; Insurance. Purchaser shall indemnify and hold Seller harmless for
any actions taken by Purchaser and the  Consultants  on the Property.  Purchaser
shall  indemnify,  defend  (with  attorneys  selected by Seller) and hold Seller
harmless from any and all claims,  damages,  costs and liability which may arise
due to such entries,  surveys, tests,  investigations and the like. Seller shall
have the right, without limitation,  to disapprove any and all entries, surveys,
tests,  investigations  and the like  that in their  reasonable  judgment  could
result in any  injury to the  Property  or  breach of any  agreement,  or expose
Seller to any  liability,  costs,  liens or  violations  of  applicable  law, or
otherwise adversely affect the Property or Seller's interest therein. No consent
by the Seller to any such  activity  shall be deemed to  constitute  a waiver by
Seller or assumption of liability or risk by Seller.  Purchaser hereby agrees to
restore  the  Property  to the  same  condition  existing  immediately  prior to
Purchaser's  exercise of its rights  pursuant to this  ARTICLE 5 at  Purchaser's
sole  cost  and  expense.   Purchaser  shall  maintain  casualty  insurance  and
comprehensive  public  liability  insurance  with  broad  form  contractual  and
personal  injury  liability  endorsements  with  respect  to  the  Property  and
Purchaser's  activities  carried on therein,  in amounts  (including  deductible
amounts)  and with such  insurance  carriers  as shall be approved by Seller and
naming Seller and its  affiliates as loss payees or additional  insureds (at the
option of Seller), with endorsements acceptable to Seller, including a waiver of
defenses of the insurer  based on the  actions or  inaction of  Purchaser.  Such
liability  insurance shall provide coverages of not less than  $1,000,000.00 for
injury or death to any one person and  $3,000,000.00 for injury or death to more
than one person and  $500,000.00  with respect to property  damage,  by water or
otherwise).  The  provisions  of this  section  shall  survive  the  Closing  or
termination of this Purchase Contract.

5.4 No  Liens;  Information.  Purchaser  shall  not  permit  any  mechanic's  or
materialman's  liens or any other  liens to attach to the  Property by reason of
the performance of any work or the purchase of any materials by Purchaser or any
other  party  in  connection  with any  studies  or  tests  conducted  by or for
Purchaser. Purchaser shall give written notice to Seller a reasonable time prior
to entry onto the  Property  and shall  permit  Seller to have a  representative
present during all investigations and inspections  conducted with respect to the
Property.  Purchaser  shall  take  all  reasonable  actions  and  implement  all
protections  necessary to ensure that all actions taken in  connection  with the
investigations and inspections of the Property, and all equipment, materials and
substances generated,  used or brought onto the Property pose no material threat
to the safety of persons or the  environment and cause no damage to the Property
or other property of Seller or other persons.  All information made available by
Seller to Purchaser in  accordance  with this  Purchase  Contract or obtained by
Purchaser in the course of its  investigations  shall be treated as confidential
information  by  Purchaser,  and,  prior  to the  purchase  of the  Property  by
Purchaser,  Purchaser  shall use its best  efforts  to  prevent  its  agents and
employees from divulging such  information to any unrelated third parties except
as reasonably  necessary to third  parties  engaged by Purchaser for the limited
purpose of  analyzing  and  investigating  such  information  for the purpose of
consummating the transaction  contemplated by this Purchase Contract,  including
Purchaser's attorneys and representatives, prospective lenders and engineers.

                                    ARTICLE 6

                                      TITLE

6.1 Title Commitment. Purchaser and Seller acknowledge that, as of the Effective
Date,  Purchaser has received a commitment for title  insurance for the Property
in an  amount  equal to the  Purchase  Price  ("Title  Commitment,")  issued  by
Fidelity  National  Title  Insurance  Company  ("Title  Insurer") for a standard
coverage  owner's title  insurance  policy,  together with legible copies of all
instruments  identified  as exceptions  therein.  Seller agrees that it shall be
solely responsible for payment of all costs relating to procurement of the Title
Commitment and a standard  coverage owner's policy of title insurance  purchased
by Seller on behalf of  Purchaser  at the  Closing.  6.2  Permitted  Exceptions.
Purchaser  agrees to accept title to the Property and agrees that  conveyance by
the Deed (as defined  herein)  shall be subject to the  following,  all of which
shall be deemed "Permitted  Exceptions," and Purchaser agrees to accept the Deed
and title to the Property  subject  thereto:  6.2.1 All exceptions  shown in the
Title  Commitment  (other  than  mechanics'  liens and taxes due and  payable in
respect of the period preceding Closing);  and 6.2.2 Such exceptions and matters
as the Title Company  shall be willing to omit as  exceptions  to coverage;  and
6.2.3 All Commercial Leases and any other occupancy,  residency,  lease, tenancy
and similar  agreements  entered  into in the ordinary  course of business;  and
6.2.4 All Property  Contracts and any other  existing  contracts  created in the
ordinary course of business by Seller,  which are not identified for termination
by Purchaser during the Feasibility  Period;  and 6.2.5 Real estate and property
taxes to the extent not due and payable;  and 6.2.6 Defects and exceptions which
do not  materially  and adversely  affect the condition of title to the Property
and its use as of the  Effective  Date.  6.3  Liens to be Paid at  Closing.  The
existence of other mortgages,  liens, or encumbrances shall not be objections to
title,  provided that properly executed instruments in recordable form necessary
to  satisfy  and remove the same of record are  delivered  to the  Purchaser  at
Closing or, in the  alternative,  with  respect to any mortgage or deed of trust
liens,  that  payoff  letters  from the holder of the  mortgage or deed of trust
liens shall have been delivered to and accepted by the Title Insurer (sufficient
to remove the same from the policy issued at Closing),  together in either case,
with recording and/or filing fees.

6.4  Property  Taxes to be Paid at Closing.  Unpaid liens for any and all taxes,
charges and regular and special  assessments  shall not be  objections to title,
but shall be prorated  between  Seller and  Purchaser  as of the  Closing  Date,
subject to the provisions  for  apportionment  of taxes  contained  herein.  6.5
Franchise Taxes to be Paid at Closing.  Unpaid franchise or business corporation
taxes of any  corporations  in the chain of title shall not be an  objection  to
title,  provided that the Title Insurer agrees to insure against  collection out
of the Property or otherwise against Purchaser or its affiliates.

6.6 Financing Statements to be Released at Closing. If on the Closing Date there
are conditional  bills of sale or Uniform  Commercial Code financing  statements
that were filed on a day more than six (6) years prior to such Closing, and such
financing  statements have not been extended by the filing of UCC-2 continuation
statements  within the past six (6) years prior to such Closing,  such financing
statements shall not be deemed to be an objection to title.

6.7 Title at Closing.  If on the Closing Date,  the state of title is other than
in accordance with the  requirements  set forth in this Purchase  Contract or if
any condition to be fulfilled by Seller shall not be satisfied,  Purchaser shall
provide  Seller with Notice  thereof at such time,  or such title  objection  or
unfulfilled  condition  shall be  deemed  waived  by  Purchaser  in  which  case
Purchaser  and Seller  shall  proceed to  consummate  the Closing on the Closing
Date.

6.7.1.  If Purchaser  timely gives Seller such Notice,  Seller shall have thirty
(30) days to cure, at its option, such objection or unfulfilled condition.

6.7.2 If during the period of cure  Seller is unable or  unwilling,  in its sole
discretion  or  opinion,  to  eliminate  such title  objection  or cause a title
insurance  company  to insure  over  such  matter or  satisfy  such  unfulfilled
condition, Seller shall give Purchaser Notice thereof, and if Purchaser does not
waive such objection by Notice delivered to Seller and the title company issuing
the Title  Commitment  on or before seven (7) calendar  days  following the date
Seller  gives such  Notice,  then this  Purchase  Contract  shall  automatically
terminate,  in which event the parties hereto shall have no further  obligations
to each other.

6.8 No Additional Liens. Seller covenants that it will not voluntarily create or
cause  any lien or  encumbrance  (other  than  Commercial  Leases  and  Property
Contracts in the ordinary course of business) to attach to the Property  between
the date of this Purchase  Contract and the Closing Date; any such monetary lien
or  encumbrance  so attaching by voluntary  act of Seller shall be discharged by
the Seller at or prior to Closing on the Closing Date or any  postponed  Closing
Date.  Except as  expressly  provided  above,  Seller  shall not be  required to
undertake  efforts to remove any other  lien,  encumbrance,  security  interest,
exception,  objection  or  other  matter,  to make any  expenditure  of money or
institute  litigation or any other judicial or  administrative  proceeding,  and
Seller may elect not to  discharge  the same.  6.9 No  Objections  to  Permitted
Encumbrances. Anything to the contrary notwithstanding, Purchaser shall not have
any  right  to  terminate  this  Purchase   Contract  or  object  to  any  lien,
encumbrance, exception or other matter that is a Permitted Exception or that has
been waived or deemed to have been waived by Purchaser.

6.10  Survey.  Neither  party  shall be  required  to  obtain  a survey  for the
Property.  If  Purchaser's  lender  shall  require  a  survey  of the  Property,
Purchaser shall obtain such survey at Purchaser's sole cost and expense.

                                    ARTICLE 7

                                     CLOSING

7.1 Dates,  Places Of Closing,  Prorations,  and Delinquent  Rent.  7.1.1 Place;
Closing  Date.  The Closing  shall take place in the offices of Escrow  Agent at
Escrow  Agent's  office in Tucson,  Arizona,  or such other place as the parties
shall  mutually  agree upon on or before the Closing Date.  Seller and Purchaser
agree that either party may deliver  documents by overnight air courier or other
means so that such party need not be physically present at the Closing.

7.1.2  Extension.  The Closing Date may be extended  without penalty at the sole
option of Seller to a date not later than ninety (90) days following the Closing
Date  specified  above,  in order to allow Seller  additional  time to satisfy a
condition  to be  satisfied  by  Seller,  or  such  later  date  as is  mutually
acceptable to Seller and Purchaser.

7.1.3.  Prorations.   At  Closing,  the  Escrow  Agent  shall  make  appropriate
prorations,  credits, debits and adjustments in accordance with Exhibit 7.1.3 as
of the Closing Date, with Seller  generally being entitled to or charged for, as
the case may be, revenues and expenses relating to the Property  attributable to
the period up to the Closing Date (and further  credited for any amounts paid by
Seller  attributable to the period on or after the Closing Date),  and Purchaser
being  entitled  to or  responsible  for,  as the  case  may  be,  all  of  same
attributable to the period on and after the Closing Date. The proration shall be
final and unadjustable  except as provided in the following  paragraph,  and the
provisions of this Section  7.1.3.  shall apply during the Proration  Period (as
defined below).

7.1.4.  Proration  Period.  If any of the items  subject to proration  hereunder
cannot be prorated at the Closing because the  information  necessary to compute
such  proration  is  unavailable,  or if any errors or  omissions  in  computing
prorations at the Closing are  discovered  subsequent to the Closing,  then such
item shall be reapportioned  and such errors and omissions  corrected as soon as
practicable  after the  Closing  Date and the  proper  party  reimbursed,  which
obligation shall survive the Closing for a period (the "Proration  Period") from
the Closing Date until three (3) months after the Closing  Date.  Neither  party
hereto shall have the right to require a recomputation of a Closing proration or
a correction  of an error or omission in a Closing  proration  unless within the
Proration  Period one of the  parties  hereto (i) has  obtained  the  previously
unavailable  information or has  discovered the error or omission,  and (ii) has
given Notice  thereof to the other party  together with a copy of its good faith
recomputation of the proration and copies of all substantiating information used
in  such  recomputation.  The  failure  of a  party  to  obtain  any  previously
unavailable information or discover an error or omission with respect to an item
subject to  proration  hereunder  and to give Notice  thereof as provided  above
within  the  Proration  Period  shall be deemed a waiver of its right to cause a
recomputation  or a correction of an error or omission with respect to such item
after the Closing Date. Any Rents that have accrued,  but have not yet been paid
shall be prorated  in  accordance  with  estimates  based upon the prior  years'
information  (or  reasonable  estimates  of  Seller  if  no  such  prior  years'
information   is   available),   and  shall  be   subsequently   readjusted  and
reapportioned  upon  receipt.  Purchaser  shall pay  Seller  for rents and other
receivables and revenues that have accrued,  but are not yet due and payable, at
Closing.

7.2  Items To Be Delivered Prior To Or At Closing.
7.2.1 Seller.  At Closing,  Seller  shall  deliver to  Purchaser,  each of the
following items, as applicable:
 7.2.1.1 Deed. A special  warranty deed ("Deed") in the form attached as Exhibit
7.2.1.1 to Purchaser.  The acceptance of the Deed at Closing, shall be deemed to
be full  performance  of, and  discharge of, every  agreement and  obligation on
Seller's  part to be performed  under this Purchase  Contract,  except for those
that this Purchase Contract specifically provides shall survive Closing.

 7.2.1.2 Bill of Sale. A "Bill of Sale" without recourse or warranty in the form
attached as Exhibit 7.2.1.2 covering all Property Contracts,  Commercial Leases,
Permits  (other than  Excluded  Permits)  and  Fixtures  and  Tangible  Personal
Property. Purchaser shall execute the Bill of Sale so as to effect an assumption
by Purchaser, including, without limitation, of Seller's obligations thereunder.

 7.2.1.3 Assignment An assignment and assumption agreement ("Assignment") in the
form attached as Exhibit 7.2.1.3,  transferring without recourse or warranty all
of  Seller's  right,  title and  interest in and to the  Miscellaneous  Property
Assets to  Purchaser,  subject to any  consents of third  parties  required  for
transfer. Purchaser shall assume Seller's obligations thereunder.

 7.2.1.4 Closing  Statement.  A  closing  settlement  statement  executed  by
 Seller ("Closing Statement").

 7.2.1.5  Seller's Title  Affidavit.  An affidavit in customary form  reasonably
acceptable to Seller to enable Title  Insurer to delete the standard  exceptions
relating to mechanics  liens and parties in possession  from the title insurance
policy to be issued at Closing,  provided that such  affidavit  does not subject
Seller to any greater liability or impose any additional  obligations on Seller,
other than as set forth in this Purchase Contract.

 7.2.1.6 Non-Foreign Certificate. A certification of Seller's non-foreign status
pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.

 7.2.1.7  Certificate of Title.  Certificate of titles transferring to Purchaser
good title to all  automobiles  and trucks  comprising the Fixtures and Tangible
Personal Property.

 7.2.1.8 Baggage.  A list of all  baggage  checked  or  left  in the  care of
Seller at 7:00 a.m. of the Closing Date.
 7.2.1.9 Employee  List.  A list of all  on-site  employees  of Seller as set
forth in Section 7.5.

 7.2.1.10Delivery of Other Items. Except for the items expressly listed above to
be delivered at Closing,  delivery of any other  required  items shall be deemed
made by Seller to Purchaser,  if Seller leaves such documents at the Property in
their   customary   place  of   storage  or  in  the   custody  of   Purchaser's
representatives.

7.2.2  Purchaser.  At Closing,  Purchaser  shall deliver to Seller the following
items with respect to each Property  being  conveyed or transferred by merger at
such Closing:

 7.2.2.1 Purchase Price. The full Purchase Price as required by ARTICLE 3 hereof
plus or minus the adjustments or prorations  required by this Purchase Contract.
If at Closing there are any liens or encumbrances on the Property that Seller is
obligated  or elects to pay and  discharge,  Seller  may use any  portion of the
Purchase Price to satisfy the same, provided that Seller shall have delivered to
Purchaser, or to Purchaser's designee, on such Closing instruments in recordable
form sufficient to satisfy such liens and  encumbrances of record (or, as to any
mortgages or deeds of trust, appropriate payoff letters, acceptable to the Title
Insurer),  together  with the cost of  recording  or  filing  such  instruments.
Purchaser,  if request is made within a reasonable time prior to Closing, agrees
to provide at Closing  separate  certified  or  cashier's  checks as  requested,
aggregating  not more than the amount of the  balance of the portion of Purchase
Price,  to facilitate the  satisfaction of any such liens or  encumbrances.  The
existence of any such liens or  encumbrances  shall not be deemed  objections to
title if Seller shall comply with the foregoing requirements.

 7.2.2.2 Closing Statement.  The Closing Statement executed by Purchaser.
 7.2.2.3 Bill of Sale.  An executed counterpart of the Bill of Sale.
 7.2.2.4 Assignment. An executed counterpart of the Assignment.
 7.2.2.5 Hart-Scott-Rodino  Compliance.   Written  evidence  of  Purchaser's
compliance with  Hart-Scott-Rodino  Act requirements or of the non-applicability
thereof to the transactions contemplated by this Purchase Contract.

 7.2.2.6 Other Items.  Such other  instruments,  documents or certificates as
 are required to be delivered by Purchaser to Seller in accordance with any of
the other provisions of this Purchase Contract.
7.3  Franchise Agreement.  Purchaser agrees to cancel the Franchise Agreement
as of September 15, 1999.
7.4  Liquor License.  Purchaser shall be solely responsible for obtaining any
consents and payment of any fees  relating to transfer of the Liquor  License
to Purchaser at Closing, and Seller shall reasonably cooperate with Purchaser
regarding such transfer.
7.5  Termination  of Employees.  Seller shall  terminate all employees of Seller
(salaried,  hourly  or  otherwise)  who are  employed  in  connection  with  the
operation or management of the Property effective as of 7:00 a.m. on the Closing
Date,  and Seller shall be solely  responsible  for any amount  payable to or in
respect of any such employees and all other claims  relating to such  employees,
including in each case any employees  who are hired by Purchaser,  and including
without limitation all wages, salaries, gratuities and accrued benefits, accrued
vacation and fringe benefits, health benefits and claims, severance obligations,
taxes and all other  liabilities  associated with the employment of any employee
to (but not  including) the Closing Date.  Purchaser  shall have the right after
the Effective Date to contact and interview  current  employees of Seller and to
review  all  files in the  possession  of  Seller  relating  to such  employees.
Purchaser  intends  to  employ  most,  if not  all,  of those  on-site  salaried
employees of Seller as well as the on-site hourly  employees of Seller listed on
a schedule  thereof to be prepared by Seller and  delivered  to Purchaser on the
Closing  Date,  all of whom will be  released  from the  employ of Seller at (or
prior to) Closing.  Purchaser agrees to notify Seller prior to expiration of the
Feasibility  Period of any such  listed  employees  to whom  Purchaser  does not
intend to offer  employment  so that  Seller  may  comply  with any  obligations
pursuant to the Worker  Adjustment  and Retraining  Notification  Act, 29 U.S.C.
Section  2101  et  seq.  ("WARN")  or  under  the  Consolidated  Omnibus  Budget
Reconciliation  Act of 1985,  Pub. L. No. 99-272,  100 Stat. 82 ("COBRA").  Each
party shall assume responsibilities  required of such party under WARN or COBRA,
and each party shall  indemnify and hold the other party  harmless for liability
resulting  from  WARN  or  COBRA  directly  or  indirectly  resulting  from  the
transactions  contemplated by this Agreement or by a such party's actions.  This
Section 7.5 shall  survive  Closing  and the  delivery of the Deed and the other
conveyance documents.

7.6 Safe Deposit Boxes.  Seller shall, on or before the seventh (7th) day before
the Closing Date,  deliver  written notices to any persons who have safe deposit
boxes  at the  Property  as of the  Closing  Date  advising  of the  sale of the
Property  to  Purchaser  and  requesting  the removal  and  verification  of the
contents on or prior to the Closing Date. Purchaser may have a representative on
the Property  during such removal of the contents of the safe deposit  boxes and
participating  in the  verification  thereof.  7.7  Assumption  of  Liabilities.
Purchaser  assumes any and all liability for the following  items located on the
Property as of the Closing  Date:  personal  property of guests of the Property,
the contents of safe deposit boxes and baggage.

                                    ARTICLE 8

      REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND PURCHASER

8.1  Representations And Warranties Of Seller.

8.1.1  Representations and Warranties.  For the purpose of inducing Purchaser to
enter into this Purchase Contract and to consummate the sale and purchase of the
Property in accordance herewith, Seller represents and warrants to Purchaser the
following as of the Effective Date and as of the Closing Date:

 8.1.1.1 Seller is a lawfully and duly organized  limited  partnership,  in good
standing  under the laws of the state of  Arizona;  and has or at Closing  shall
have the power and  authority to sell and convey the Property and to execute the
documents  to be  executed  by Seller  and prior to  Closing  will have taken as
applicable, all corporate,  partnership, limited liability company or equivalent
entity actions required for the execution and delivery of this Purchase Contract
and the consummation of the transactions contemplated by this Purchase Contract.
The compliance  with or fulfillment of the terms and conditions  hereof will not
conflict with, or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, any purchase  contract to which Seller is a party
or by which Seller is otherwise  bound.  Seller has not made any other  purchase
contract for the sale of, or given any other  person the right to purchase,  all
or any part of any of the Property;

 8.1.1.2 Seller owns fee title to the Property, subject only to the Permitted
 Exceptions;

 8.1.1.3  There are no adverse or other  parties in  possession of the Property,
except for occupants, guests and Tenants.

 8.1.1.4 The joinder of no person or entity  other than Seller is  necessary  to
convey the Property fully and completely to Purchaser at Closing,  or to fulfill
Seller's obligations hereunder, and Seller has all necessary right and authority
to convey and assign to Purchaser all contract rights and warranties required to
be conveyed and assigned to Purchaser hereunder;

 8.1.1.5 Purchaser has no duty to collect  withholding taxes for Seller pursuant
to the Foreign Investors Real Property Tax Act of 1980, as amended;

 8.1.1.6 To Seller's knowledge, there are no actions, proceedings, litigation or
governmental investigations or condemnation actions either pending or threatened
against the Property;

 8.1.1.7  Seller has no knowledge of any claims for labor  performed,  materials
furnished or services  rendered in connection  with  constructing,  improving or
repairing any of the  Property,  caused by Seller and which remain unpaid beyond
the date for which payment was due and in respect of which liens may or could be
filed against any of the Property; and

 8.1.1.8  Seller  discloses  that  the  Seller  has  not  yet  provided  certain
information  relating to Seller's  acquisition  of the  Property  and the Liquor
License to the Arizona  Department of Liquor Licenses and Control.  Seller makes
no representation or warranty as to the validity,  status or  transferability of
the Liquor License.

8.1.2 As Is Purchase.  Except for the representations  and warranties  expressly
set forth above in Section 8.1.1,  the Property is expressly  purchased and sold
"AS IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase Price and the terms and
conditions set forth herein are the result of  arm's-length  bargaining  between
entities  familiar with  transactions  of this kind,  and said price,  terms and
conditions  reflect  the fact that  Purchaser  shall have the benefit of, and is
relying upon, no information provided by Seller, and Purchaser is not relying on
any statements,  representations or warranties,  express or implied,  made by or
enforceable directly against Seller, including, without limitation, any relating
to the value of the  Property,  the physical or  environmental  condition of the
Property, the state, federal,  county or local law, ordinance,  order, permit or
suitability,  compliance  or  lack  of  compliance  of  the  Property  with  any
regulation,  or any other  attribute  or matter of or relating  to the  Property
(other than any covenants of title contained in the deeds conveying the Property
and the representations set forth above). Purchaser represents and warrants that
as of the date hereof and as of the Closing Date, it has and shall have reviewed
and conducted such independent analyses,  studies,  reports,  investigations and
inspections as it deems  appropriate in connection with the Property.  If Seller
provides or has provided any documents, opinions or work product of consultants,
surveyors, architects,  engineers, title companies,  governmental authorities or
any other person or entity with respect to the  Property,  Purchaser  and Seller
agree that  Seller has done so or shall do so only for the  convenience  of both
parties, Purchaser shall not rely thereon and the reliance by Purchaser upon any
such  documents,  opinions or work product  shall not create or give rise to any
liability of or against Seller,  Seller's partners or affiliates or any of their
respective partners, officers, directors, participants,  employees, contractors,
attorneys,   consultants,   representatives,   agents,  successors,  assigns  or
predecessors-in-interest.  Purchaser  shall  rely only upon any title  insurance
obtained  by  Purchaser  with  respect  to  title  to  the  Property.  Purchaser
acknowledges   and  agrees  that  no   representation   has  been  made  and  no
responsibility  is  assumed  by  Seller  with  respect  to  current  and  future
applicable  zoning  or  building  code  requirements  or the  compliance  of the
Property with any other laws,  rules,  ordinances or regulations,  the financial
earning  capacity  or  expense  history of the  Property,  the  continuation  of
contracts,  continued occupancy levels of the Property,  or any part thereof, or
the continued  occupancy by Tenants or,  without  limiting any of the foregoing,
occupancy at Closing. Prior to Closing, Seller shall have the right, but not the
obligation, to enforce its rights against any and all Property occupants, guests
or Tenants. Purchaser agrees that the departure or removal, prior to Closing, of
any of such guests,  occupants or Tenants  shall not be the basis for, nor shall
it give rise to,  any claim on the part of  Purchaser,  nor shall it affect  the
obligations of Purchaser under this Purchase Contract in any manner  whatsoever;
and Purchaser shall close the transaction  described  herein and accept delivery
of the Deed with or without such tenants in possession and without any allowance
or reduction in the Purchase  Price.  Purchaser  hereby releases Seller from any
and all claims and  liabilities  relating to the  foregoing  matters,  except as
provided in Section 8.1.3 below. 8.1.3 Survival. Seller and Purchaser agree that
those  representations  contained in Section 8.1.1 shall  survive  Closing for a
period  of one (1) year  (that  is,  any  proceeding  based on the  breach  of a
representation  contained  in  Section  8.1.1  that  survives  Closing  must  be
commenced within one (1) year subsequent to the date of such representation). In
the event that Seller breaches any representation contained in Section 8.1.1 and
Purchaser had knowledge of such breach, Purchaser shall be deemed to have waived
any right of recovery  and Seller  shall not have any  liability  in  connection
therewith. 8.1.4 Definition of "Knowledge". Representations and warranties above
made to the  knowledge  of  Seller  shall  not be  deemed  to imply  any duty of
inquiry.  For purposes of this Purchase Contract,  the term Seller's "knowledge"
shall mean and refer to only actual  knowledge of the Designated  Representative
(as  hereinafter  defined) of the Seller and shall not be  construed to refer to
the  knowledge  of any other  partner,  officer,  director,  agent,  employee or
representative  of the Seller, or any affiliate of the Seller, or to impose upon
such Designated  Representative any duty to investigate the matter to which such
actual  knowledge  or the  absence  thereof  pertains,  or to  impose  upon such
Designated Representative any individual personal liability. As used herein, the
term "Designated Representative" shall refer to James R. Green.

8.1.5  Representations And Warranties Of Purchaser.  For the purpose of inducing
Seller to enter  into this  Purchase  Contract  and to  consummate  the sale and
purchase of the  Property  in  accordance  herewith,  Purchaser  represents  and
warrants to Seller the following as of the Effective  Date and as of the Closing
Date, and such representations and warranties shall survive Closing:

 8.1.5.1 No pending or, to the  knowledge of  Purchaser,  threatened  litigation
exists which if determined  adversely  would  restrain the  consummation  of the
transactions  contemplated by this Purchase  Contract or would declare  illegal,
invalid or non-binding any of Purchaser's obligations or covenants to Seller.

 8.1.5.2  Purchaser  has the power and  authority  to execute  and  deliver  and
perform  this  Purchase   Contract  and  all  documents  and   instruments   and
transactions  contemplated  hereby or  incidental  hereto,  and such  execution,
delivery and  performance by Purchaser does not (i) violate any provision of any
law,  governmental  rule or  regulation  currently  in effect,  (ii) violate any
judgment,  decree, writ, injunction,  award, determination or order currently in
effect that names or is specifically directed at Purchaser or its property,  and
(iii) require the consent,  approval,  order or authorization  of, or any filing
with or notice to, any court or other governmental authority.

 8.1.5.3 The joinder of no person or entity other than Purchaser is necessary to
consummate the  transactions  to be performed by Purchaser and Purchaser has all
necessary  right  and  authority  to  perform  such  acts  as are  required  and
contemplated by this Purchase Contract.

                                    ARTICLE 9

                         CONDITIONS PRECEDENT TO CLOSING

9.1 Purchaser's Conditions.  Purchaser's obligation to close under this Purchase
Contract,  shall be subject to and conditioned  upon the fulfillment of each and
all of the following conditions precedent: 9.1.1 Documents Delivered. All of the
documents  required  to be  delivered  by Seller  to  Purchaser  at the  Closing
pursuant to the terms and conditions  hereof shall have been delivered and shall
be  in  form  and  substance   reasonably   satisfactory  to  Purchaser;   9.1.2
Representations  and Warranties.  Each of the  representations and warranties of
Seller contained herein shall be true in all material respects as of the Closing
Date; 9.1.3 Covenants.  Seller shall have complied with, fulfilled and performed
in all material  respects  each of the  covenants,  terms and  conditions  to be
complied  with,  fulfilled  or  performed  by Seller  hereunder;  9.1.4 No Other
Conditions.  Notwithstanding  anything  to the  contrary,  there  are  no  other
conditions on Purchaser's  obligation to close the transaction  described herein
except as expressly set forth above. 9.2 Seller's  Conditions.  Without limiting
any of the rights of Seller  elsewhere  provided for in this Purchase  Contract,
Seller's  obligation to close the transaction  described herein shall be subject
to and  conditioned  upon  the  fulfillment  of each  and  all of the  following
conditions  precedent:   9.2.1   Representations  and  Warranties.   Purchaser's
representations  and warranties  set forth in this Purchase  Contract shall have
been true and correct in all material  respects when made, and shall be true and
correct in all  material  respects on the Closing  Date and as of the  Effective
Date as though such  representations  and warranties were made at and as of such
date and time.  9.2.2  Covenants.  Purchaser  shall  have  fully  performed  and
complied with all covenants,  conditions, and other obligations in this Purchase
Contract  to be  performed  or  complied  with  by it at  or  prior  to  Closing
including,  without  limitation,  payment in full of the Purchase  Price.  9.2.3
Litigation.  There shall not be pending or, to the knowledge of either Purchaser
or  Seller,  any  litigation  or  threatened  litigation  which,  if  determined
adversely,  would restrain the consummation of the transactions  contemplated by
this Purchase  Contract or declare  illegal,  invalid or  nonbinding  any of the
covenants or obligations of the Purchaser.  9.2.4  Hart-Scott-Rodino.  Purchaser
shall have produced  evidence  reasonably  satisfactory to Seller of Purchaser's
compliance with  Hart-Scott-Rodino  Act requirements or of the non-applicability
thereof to the transactions contemplated by this Purchase Contract.

                                   ARTICLE 10

                                    BROKERAGE

10.1 Broker.  Seller represents and warrants to Purchaser that it has dealt only
with  Insignia/ESQ  Hotel  Partners  (Jack Carr),  1401 Dove Street,  Suite 500,
Newport Beach,  California  92660,  Phone:  (949) 553-0808,  Fax: (949) 553-0606
("Broker") in connection with this Purchase Contract.  Seller and Purchaser each
represents  and warrants to the other that other than  Broker,  it has not dealt
with or utilized the services of any other real estate  broker,  sales person or
finder in  connection  with this  Purchase  Contract,  and each party  agrees to
indemnify the other party from and against all claims for brokerage  commissions
and finder's fees arising from or attributable to the  misrepresentations,  acts
or omissions of the indemnifying  party.  10.2 Commission.  Seller agrees to pay
Broker a commission according to the terms of a separate agreement. Broker shall
not be deemed a party or third party beneficiary of this Purchase Contract.

                                   ARTICLE 11

                                   POSSESSION

11.1 Possession.  Possession of the Property subject to the Permitted Exceptions
shall be delivered to Purchaser at the Closing,  subject to Purchaser's right of
entry for inspection as set forth in ARTICLE 5.

                                   ARTICLE 12

                              DEFAULTS AND REMEDIES

12.1 Seller's Remedies. In the event Purchaser terminates this Purchase Contract
following the Feasibility Period for any reason other than Seller's inability to
convey  title as required  by this  Purchase  Contract,  or  Purchaser  defaults
hereunder  prior to the Closing  Date and  consummation  of the Closing does not
occur by  reason  of such  termination  or  default  by  Purchaser,  Seller  and
Purchaser agree that it would be impractical and extremely difficult to estimate
the damages  which Seller may suffer.  Therefore,  Seller and  Purchaser  hereby
agree that, except for the Purchaser's  obligations to Seller under Section 5.3,
the  reasonable  estimate of the total net detriment that Seller would suffer in
the event that Purchaser terminates this Purchase Contract or defaults hereunder
prior to the Closing Date is and shall be, as Seller's  sole remedy  (whether at
law or in  equity),  the right to receive  from the Escrow  Agent and retain the
full  amount  of the  Deposit.  The  payment  and  performance  of the  above as
liquidated damages is not intended as a forfeiture or penalty within the meaning
of applicable  law and is intended to settle all issues and questions  about the
amount of damages  suffered by Seller in the applicable  event,  except only for
damages under Section 5.3 above, irrespective of the time when the inquiry about
such damages may take place. Upon any such failure by Purchaser hereunder,  this
Purchase Contract shall be terminated,  and neither party shall have any further
rights or obligations  hereunder,  each to the other, except for the Purchaser's
obligations  to  Seller  under  Section  5.3  above,  and the right of Seller to
collect such liquidated damages to the extent not theretofore paid by Purchaser.

12.2  Purchaser's  Remedies.  Provided that  Purchaser has not  terminated  this
Purchase Contract and is not otherwise in default hereunder, if the Closing does
not occur as a result of Seller's  default  hereunder,  Purchaser's  sole remedy
shall be to elect to terminate this Purchase Contract and receive  reimbursement
of the Deposit (or so much thereof as has been received by Escrow Agent).

                                   ARTICLE 13

                            RISK OF LOSS OR CASUALTY

13.1 Risk of Loss.  The risk of loss or damage to the  Property by fire or other
casualty until the Deed is recorded is assumed by the Seller,  provided that the
Seller's  responsibility  shall  be  only to the  extent  of any  recovery  from
insurance  now carried on the  Property.  Upon  assignment  to  Purchaser of any
insurance  proceeds in respect of fire or other casualty  occurring  between the
Effective Date and the Closing,  Purchaser shall have no right to terminate this
Purchase  Contract on account thereof,  but Seller shall assign to Purchaser its
interest in and to any  insurance  policies  and proceeds  thereof  payable as a
result of such  damage or  destruction.  Seller  shall  not,  in any  event,  be
obligated to effect any repair, replacement,  and/or restoration,  but may do so
at its  option,  in which case  Seller may apply the  insurance  proceeds to the
costs of restoration.

                                   ARTICLE 14

                                  RATIFICATION

14.1  Ratification.  This Purchase  Contract shall be null and void unless fully
executed by Purchaser and Seller on or before 5PM, June 24, 1999.

                                   ARTICLE 15

                                 EMINENT DOMAIN

15.1 Eminent Domain. In the event that at the time of Closing all or any part of
the Property is (or has previously  been) acquired,  or is about to be acquired,
by authority of any  governmental  agency in purchase in lieu thereof (or in the
event that at such time there is any notice of any such  acquisition by any such
governmental agency),  Purchaser shall have the right, at Purchaser's option, to
terminate  this Purchase  Contract by giving Notice within  fifteen (15) days of
the occurrence of such event and recover the Deposit hereunder,  or to settle in
accordance with the terms of this Purchase  Contract for the full Purchase Price
and receive the full benefit or any  condemnation  award. It is expressly agreed
between  the  parties  hereto  that  this  paragraph  shall  in no way  apply to
customary  dedications  for  public  purposes  which  may be  necessary  for the
development of the Property.

                                   ARTICLE 16

                                  MISCELLANEOUS

16.1 Exhibits And  Schedules.  All exhibits and schedules  annexed  hereto are a
part of this  Purchase  Contract  for all  purposes.  16.2  Assignability.  This
Purchase  Contract is not assignable  without first  obtaining the prior written
approval of the non-assigning party;  provided however that Purchaser may assign
its  interest in this  Purchase  Contract to any entity  controlled  by or under
common control with Purchaser pursuant to a written assumption agreement, signed
by the assignor and the assignee and pursuant to which the named Purchaser shall
remain  liable  jointly and  severally  with such  assignee as Purchaser for all
obligations of Purchaser under this Purchase Contract.

16.3 Binding Effect.  This Purchase  Contract shall be binding upon and inure
to the benefit of Seller and  Purchaser,  and their  respective  successors,
heirs and permitted assigns.

16.4 Captions.  The captions,  headings,  and arrangements used in this Purchase
Contract are for convenience only and do not in any way affect,  limit, amplify,
or modify  the terms and  provisions  hereof.  16.5  Number And Gender Of Words.
Whenever  herein the singular  number is used, the same shall include the plural
where appropriate, and words of any gender shall include each other gender where
appropriate.   16.6   Notices.   All  notices,   demands,   requests  and  other
communications  required  pursuant to the  provisions of this Purchase  Contract
("Notice")  shall be in writing and shall be deemed to have been properly  given
or served  for all  purposes  (i) if sent by Federal  Express or the  nationally
recognized  overnight  carrier  for next  business  day  delivery,  on the first
business  day  following  deposit of such Notice with such  carrier,  or (ii) if
personally  delivered,  on the  actual  date of  delivery  or  (iii)  if sent by
certified mail,  return receipt  requested  postage prepaid,  on the fifth (5th)
business day following the date of mailing addressed as follows:

    If to Seller:                       If to Purchaser:

    DBL Airport Valley Limited          Jaykumar H. Shah, M.D.
    Partnership                         536 Alta Vista
    c/o Clarion Hotel                   Monrovia, CA  91016
    6801 S. Tucson Blvd.                Phone:  (626) 357-9888
    Tucson, AZ  85706                   Fax:  (626) 256-6897
    Attn:  Mr. James R. Green
    Phone: (520) 746-3932
    Fax:  (520) 889-9934

    and

    Argent Real Estate
    Attention:  David Marquette
    1401 Brickell Avenue, Suite 520
    Miami, FL 33131
    Phone:  (305) 374-3052
    Fax: (305) 371-6898

    with a copy to:

    Richard A. Cohn, Esquire
    Bryan Cave LLP
    700 Thirteenth Street, N.W.
    Washington, D.C.  20005-3960
    Phone:  (202) 508-6000
    Fax:  (202) 508-6200
                                        In each case with a copy to:

    with a copy to:
                                        Fidelity National Title Insurance
                                        Company

    Margaret E. Koppen, Esquire         National Title Services
    Bryan Cave LLP                      700 Louisiana, Suite 2600
    2 N. Central Ave., Suite 2200       Houston, TX  77002
    Phoenix, AZ  85004                  Attn:  Ms. Lolly Avant, Vice President,
    Phone:  (602) 364-7492              National Closing Specialist
    Fax:  (602) 364-7070                Phone:  (800) 879-1677
                                        Fax:  (713) 225-2726


         Any of the parties  may  designate a change of address by Notice to the
      other parties.  Whenever in this Purchase Contract the giving of Notice is
      required, the giving of such Notice may be waived in writing by the person
      or persons entitled to receive such Notice.

16.7 Governing Law And Venue.  The laws of the State of Arizona shall govern the
validity,  construction,   enforcement,  and  interpretation  of  this  Purchase
Contract,  unless  otherwise  specified  herein  except for the conflict of laws
provisions thereof.  All claims,  disputes and other matters in question arising
out of or relating to this Purchase  Contract,  or the breach thereof,  shall be
decided by proceedings  instituted  and litigated in the United States  District
Court for the district in which the Property is situated, and the parties hereto
expressly consent to the venue and jurisdiction of such court. 16.8 Entirety And
Amendments.  This Purchase  Contract  embodies the entire agreement  between the
parties and supersedes all prior Purchase Contracts and understandings,  if any,
relating  to the  Property,  and  may be  amended  or  supplemented  only  by an
instrument in writing executed by the party against whom enforcement is sought.

16.9 Severability. If any of the provisions of this Purchase Contract is held to
be  illegal,  invalid,  or  unenforceable  under  present or future  laws,  such
provision shall be fully severable. The Purchase Contract shall be construed and
enforced as if such  illegal,  invalid,  or  unenforceable  provision  had never
comprised a part of this Purchase Contract; and the remaining provisions of this
Purchase  Contract  shall  remain  in full  force  and  effect  and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
from this Purchase Contract. In lieu of such illegal,  invalid, or unenforceable
provision,  there  shall  be  added  automatically  as a part of  this  Purchase
Contract  a  provision  as  similar  in  terms  to  such  illegal,  invalid,  or
unenforceable  provision as may be possible to make such provision legal, valid,
and enforceable.

16.10 Multiple Counterparts.  This Purchase Contract may be executed in a number
of identical  counterparts.  If so executed,  each of such counterparts is to be
deemed  an  original  for  all  purposes  and  all  such   counterparts   shall,
collectively, constitute one Purchase Contract. In making proof of this Purchase
Contract, it shall not be necessary to produce or account for more than one such
counterparts.

16.11  Further  Acts.  In  addition  to the acts and deeds  recited  herein  and
contemplated  and performed,  executed and/or delivered by Seller and Purchaser,
Seller and Purchaser  agree to perform,  execute  and/or  deliver or cause to be
performed,  executed and/or delivered any and all such further acts,  deeds, and
assurances  as may be  necessary to  consummate  the  transactions  contemplated
hereby.

16.12 Construction. No provision of this Purchase Contract shall be construed in
favor of, or against,  any particular  party by reason of any  presumption  with
respect  to  the  drafting  of  this  Purchase  Contract;  both  parties,  being
represented  by counsel,  have fully  participated  in the  negotiation  of this
instrument.

16.13  Confidentiality.  Purchaser  shall not disclose the terms and  conditions
contained in this Purchase Contract, shall keep the same confidential,  provided
that Purchaser may disclose the terms and  conditions of this Purchase  Contract
(i) as required by law, (ii) to consummate the terms of this Purchase  Contract,
or any financing relating thereto,  or (iii) to Purchaser's or Seller's lenders,
attorneys and accountants. Any information provided by Seller to Purchaser under
the terms of this  Purchase  Contract is for  informational  purposes  only.  In
providing  such  information  to Purchaser,  Seller makes no  representation  or
warranty,   express,   written,  oral,  statutory,  or  implied,  and  all  such
representations  and warranties are hereby expressly  excluded.  Purchaser shall
not in any way be entitled to rely upon the accuracy of such  information.  Such
information is also  confidential  and Purchaser shall be prohibited from making
such information  public to any other person or entity other than its agents and
legal representatives,  without Seller's prior written authorization,  which may
be granted or denied in Seller's sole discretion.

16.14 Time Of The  Essence.  It is expressly  agreed by the parties  hereto that
time is of the essence with respect to this Purchase Contract.  16.15 Cumulative
Remedies  And Waiver.  Except as otherwise  provided  herein,  no remedy  herein
conferred or reserved is intended to be exclusive of any other available  remedy
or remedies,  but each and every such remedy shall be cumulative and shall be in
addition to every other  remedy  given  under this  Purchase  Contract or now or
hereafter  existing at law or in equity.  No delay or  omission to exercise  any
right or power  accruing upon any default,  omission,  or failure of performance
hereunder  shall  impair any right or power or shall be construed to be a waiver
thereof,  but any such right and power may be exercised from time to time and as
often as may be deemed expedient. No waiver, amendment, release, or modification
of this Purchase Contract shall be established by conduct,  custom, or course of
dealing.  16.16 Litigation Expenses.  In the event either party hereto commences
litigation  against the other to enforce its rights  hereunder,  the  prevailing
party in such  litigation  shall be entitled to recover from the other party its
reasonable  attorneys' fees and expenses  incidental to such  litigation.  16.17
Time  Periods.  Should the last day of a time  period fall on a weekend or legal
holiday,  the next Business Day  thereafter  shall be considered  the end of the
time period.

16.18 Exchange. At Seller's sole cost and expense, Seller may structure the sale
of the Property to Purchaser as a "like kind exchange"  under  Internal  Revenue
Code Section 1031 whereby Seller will acquire  certain  property (the "Like Kind
Exchange Property") in conjunction with the sale of the Property (the "Like Kind
Exchange").  Purchaser shall cooperate fully and promptly with Seller's  conduct
of the Like Kind  Exchange,  provided  that all costs and expenses  generated in
connection  with the Like Kind  Exchange  shall be borne  solely by Seller,  and
Purchaser shall not be required to take title to or contract for the purchase of
any other  property.  If Seller uses a qualified  intermediary to effectuate the
exchange,  any assignment of the rights or obligations of Seller hereunder shall
not relieve,  release or absolve Seller of its  obligations to Purchaser.  In no
event shall the Closing Date be delayed by the Like Kind Exchange.  Seller shall
indemnify  and hold  harmless  Purchaser  from and against any and all liability
arising from and out of the Like Kind Exchange.

16.19 Bulk Sales.  Purchaser  and Seller  hereby agree that Seller shall have no
responsibility  for and shall take no action  relating  to  compliance  with the
"bulk sales law" of any applicable jurisdiction with respect to the transactions
contemplated  by this  Purchase  Contract.  Purchaser  shall  indemnify and hold
Seller  harmless from and against any and all claims  relating to any failure to
comply with the "bulk sales law" of any applicable  jurisdiction with respect to
the sale and transfer of the Property.  16.20 Exclusivity.  Purchaser and Seller
hereby agree that Seller may continue to market the Property  during the term of
this  Agreement,  and any  agreement  executed by Seller during the term of this
Agreement  shall  disclose the existence of this  Agreement and a contingency to
the closing of such  additional  agreement  shall be the  cancellation  or other
termination of this Agreement.

16.21 First Amendment.  Purchaser and Seller hereby acknowledge that the parties
are executing that certain First Amendment to Purchase and Sale Contract of even
date with this Agreement.

NOW WHEREFORE, the parties hereto have executed this Purchase Contract as of the
date first set forth above.

                        Seller:     DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION,  a
                                                New  York   corporation,   Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:


                        Purchaser:



                                    JAYKUMAR H. SHAH, M.D.


EXHIBITS:
Exhibit 1.1.9           Legal Description of Land
Exhibit 1.1.23          Property Contracts
Exhibit 3.1.1           Escrow Instructions
Exhibit 7.1.3           Prorations
Exhibit 7.2.1.1         Special Warranty Deed
Exhibit 7.2.1.2         Bill of Sale
Exhibit 7.2.1.3         Assignment and Assumption Agreement
First Amendment to Purchase and Sale Contract


<PAGE>


                                 EXHIBIT 1.1.23

                               Property Contracts

1.    Permit to Operate,  issued by PIMA COUNTY HEALTH DEPARTMENT,  expiration
      date November 30, 1999.

2.    Business  License,  issued  by  CITY OF  TUCSON  OCCUPATIONAL  OR  LIQUOR,
      expiration date December 31, 1999.

3.    Warranty and Service  Agreement,  dated January 20, 1997, by and between
      MIS ASSOCIATES, INC., a Georgia corporation and Seller.

4.    Lease, dated April 20, 1987, by and between THE LAUNDRY MAN and Seller.

5.    Equipment  Lease/Use  Agreement  (re: copy  machine),  dated December 8,
      1995, by and between COPYING DUPLICATING PRODUCTS, INC. and Seller.

6.    Agreement for Spectravision Pay Per View Movies and Other Services,  dated
      June 16, 1998, by and between ON COMMAND VIDEO, a Delaware corporation and
      Seller.

7.    Agreement (re:  postage meter),  by and between NEOPOST  LEASING/NEOPOST
      and Seller.

8.    Hotel/Motel Bulk Rate Agreement,  dated as of June 8, 1998, by and between
      ROBIN CABLE SYSTEMS OF TUCSON, an Arizona limited  partnership,  d/b/a TCI
      of Tucson and Seller.


<PAGE>


                                  EXHIBIT 3.1.1

                               ESCROW INSTRUCTIONS

SELLER AND BUYER:

      1. Will deposit with Escrow Agent all documents  necessary to complete the
sale as  established  by the terms of these  instructions  and authorize  Escrow
Agent to deliver or record said documents as required herein.

      2.    Direct  that all  money  payable  be paid to Escrow  Agent  unless
otherwise specified.

      3.  Authorize  Escrow Agent to act upon any statement  furnished by a lien
holder or his agent,  without  liability or  responsibility  for the accuracy of
such statement.

      4. Authorize  Escrow Agent to pay from available funds held by it for said
purpose  amounts   necessary  to  procure  documents  and  to  pay  charges  and
obligations necessary to consummate this transaction.

      5.    Direct that the  disbursement  of any funds shall be made by check
of Escrow Agent.

      6. Direct that when these  instructions  and all title  requirements  have
been complied with, Escrow Agent shall deliver,  by recording in the appropriate
public office, all necessary  documents,  disburse all funds and issue the title
insurance policy.

      7. Shall  indemnify  and save  harmless  Escrow  Agent  against all costs,
damages, attorney's fees, expenses and liabilities which it may incur or sustain
in connection with these instructions, any interpleader action, or any servicing
account arising herefrom (except for any wrongful acts or negligence on the part
of Escrow Agent) and will pay the same on demand.

SELLER AND BUYER AGREE:

      8. Escrow Agent has the right to resign upon written  ten-day  notice,  if
such right is exercised,  all funds and documents shall be returned to the party
who deposited them.

      9. Escrow Agent shall not accept  payments  under a  cancellation  notice,
unless in cash, certified or cashier's check or money order.

      10.  Should  Escrow  Agent be closed on any day of  compliance  with these
instructions, the requirement may be met on the next succeeding day Escrow Agent
is open for business.

      11. Time is of the essence of any  agreement  to pay or perform  hereunder
which  agreement  shall remain unpaid or unperformed  as of close of escrow.  No
payment of Buyer of such amounts  shall be received or  receipted  for by Escrow
Agent  unless all amounts due as of the date of  compliance  are paid unless and
until written authority therefor has been delivered to Escrow Agent by the payee
of said amount.

      12.  Escrow  Agent may at any time,  at its  discretion,  commence a civil
action  to  interplead  any   conflicting   demands  to  a  court  of  competent
jurisdiction.

      13. It is fully  understood  that  Fidelity  National  Title  serves as an
escrow agent only in connection  with these  instructions  and cannot give legal
advice to any party hereto.

      14. The title insurance provided for, unless otherwise specified, shall be
evidenced  by the  standard  form of title  insurance  policies on file with the
Insurance  Director of the State of Arizona  subject to exceptions  shown in the
commitment for title insurance and title insurance policy issued.

                                     ***


<PAGE>


                                 EXHIBIT 7.2.1.1

                              SPECIAL WARRANTY DEED

WHEN RECORDED RETURN TO:
Margaret E. Koppen, Esq.
Bryan Cave LLP
2 North Central Avenue, 22nd Floor
Phoenix, AZ  85004


                              SPECIAL WARRANTY DEED

            DBL  AIRPORT  VALLEY  LIMITED   PARTNERSHIP,   an  Arizona   limited
partnership  ("Grantor"),  for valuable  consideration paid to Grantor,  and for
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged,  does hereby convey to JAYKUMAR H. SHAH, M.D.  ("Grantee"),
its  successors  and assigns  forever,  all Grantor's  interest in the property,
together with all Grantor's  interest,  if any, in any improvements and fixtures
located  thereon,   and  all  rights  and   appurtenances   pertaining   thereto
(collectively,  the "Property")  legally  described on Exhibit A attached hereto
and made a part hereof.

            Subject  to  existing  taxes,  assessments,   liens,   encumbrances,
covenants,  conditions,  restrictions,  rights of way,  reservations in patents,
easements,  all other matters of record,  and such matters as an accurate survey
or visual inspection of the Property would disclose.

            Grantor  warrants to Grantee  that  Grantor will defend title to the
Property  against  the acts of  Grantor  and none other  subject to the  matters
stated herein.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


<PAGE>



            IN WITNESS WHEREOF,  Grantor has executed this Special Warranty Deed
this ____ day of __________, 1999.

                                    GRANTOR:

                                    DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION,  a
                                                New  York   corporation,   Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:


STATE OF ______________       )
                              ) ss.
County of _____________       )

      The  foregoing  instrument  was  acknowledged  before  me this ____ day of
__________,  1999, by  _______________,  the  _______________  of DBL PROPERTIES
CORPORATION,  a New York  corporation,  the  general  partner of DREXEL  BURNHAM
LAMBERT REAL ESTATE ASSOCIATES III, a New York limited partnership,  the general
partner  of  DBL  AIRPORT  VALLEY  LIMITED   PARTNERSHIP,   an  Arizona  limited
partnership, on behalf of the partnership.

                              -----------------------------------
                                  Notary Public

My Commission Expires:
----------------------



<PAGE>


                                 EXHIBIT 7.2.1.2

                                  BILL OF SALE

                                  BILL OF SALE

      FOR  GOOD AND  VALUABLE  CONSIDERATION,  the  receipt  of which is  hereby
acknowledged,  DBL  AIRPORT  VALLEY  LIMITED  PARTNERSHIP,  an  Arizona  limited
partnership ("Seller"),  hereby assigns,  transfers,  grants,  bargains,  sells,
conveys and  delivers  unto  JAYKUMAR H. SHAH,  M.D.  ("Purchaser"),  all of its
right,  title and interest in and to any personal  property  owned by Seller and
located  on the real  property  described  on  Exhibit  A  attached  hereto  and
incorporated  herein  by  this  reference  (the  "Personal  Property"),  without
representation, warranty or recourse of any kind;

      TO HAVE AND TO HOLD  forever  the  Personal  Property,  together  with all
rights and appurtenances related thereto;

      DATED this ______ day of ____________, 1999.


                                    SELLER:

                                    GRANTOR:

                                    DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION,  a
                                                New  York   corporation,   Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:

                                    BUYER:

                                    -----------------------------------------
                                    JAYKUMAR H. SHAH, M.D.




<PAGE>



                                 EXHIBIT 7.2.1.3

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

      This ASSIGNMENT AND ASSUMPTION  AGREEMENT("Agreement") is made as of the
________  day of  _______________,  1999,  by and  among  DBL  AIRPORT  VALLEY
LIMITED PARTNERSHIP,  an Arizona limited partnership ("Assignor") and JAYKUMAR
H. SHAH, M.D. ("Assignee").


                                    RECITALS:

      A.  Assignor is selling to Assignee  certain  real and  personal  property
known as the Clarion  Hotel,  Tucson  Airport,  legally  described  on Exhibit A
attached hereto (the "Property").

      B.  Assignor  is the owner of certain  contract  rights and other items of
intangible  personal  property  relating to the  ownership  or  operation of the
Property  owned by Seller  defined in that certain  Purchase and Sale  Contract,
dated ___________,  1999 ("Purchase and Sale Contract"), by and between Assignor
and Assignee as the ("Miscellaneous  Property Assets").  The term "Miscellaneous
Property  Assets" shall have the same meaning herein as in the Purchase And Sale
Contract.

      B.    Assignor  desires  to assign to  Assignee  its  rights,  title and
interest in the Miscellaneous Property Assets.

      C.    Assignee  wishes to assume the  Miscellaneous  Property Assets and
accept the  assignment  from Assignor  subject to the terms and conditions set
forth herein.


                                   AGREEMENTS:

      NOW THEREFORE,  in consideration of the mutual covenants contained herein,
and payment of other  valuable  consideration,  Assignor and  Assignee  agree as
follows:

      1.    Assignment.  Assignor  hereby  assigns to Assignee all its rights,
title and interest in the Miscellaneous  Property Assets,  and Assignee hereby
assumes any and all obligations relating to the Miscellaneous  Property Assets
and accepts such assignment.

      2. Performance by Assignee. By accepting this Assignment,  Assignee hereby
assumes  and  agrees  to  perform  all  obligations  of the  Assignor  under the
Miscellaneous  Property  Assets  as may  accrue  from and after the date of this
Agreement.  Assignee  hereby  agrees  to  indemnify,  defend,  protect  and hold
harmless  Assignor from and against all losses,  damages,  claims,  liabilities,
judgments  and costs  (including  attorneys'  fees) which  Assignor may incur or
sustain by reason of any failure of Assignee to perform the obligations  assumed
herein.

      3.    Purchase  Agreement.  This  Agreement is executed and delivered by
the parties hereto in accordance with the Purchase and Sale Contract.

      4.    Successors and Assigns.  This Agreement  shall be binding upon and
inure to the  benefit  of the  parties  and their  respective  successors  and
assigns.

      5.    Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of which may be executed  by one or more of the  signatory
parties.  Signature pages may be detached from the  counterparts  and attached
to a single copy of this Agreement to form one legally effective document.

      IN WITNESS  WHEREOF,  this Agreement is executed  effective as of the date
first above written.

                                    ASSIGNOR:

                                    DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION, a
                                                New York corporation, Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:


                                    ASSIGNEE:

                                    ----------------------------------------
                                    JAYKUMAR H. SHAH, M.D.



<PAGE>


                                  EXHIBIT 7.1.3

                                   PRORATIONS

      The following  items shall be prorated  between Seller and Purchaser as of
the Closing Date. Where appropriate, such adjustments shall be made on the basis
of actual days  elapsed  over the  relevant  billing  period,  unless  otherwise
provided:

      (a) Fuel,  electricity,  water, sewer, gas, electric,  telephone and other
      utility  charges and rents  (except such  metered  utility  charges  which
      Seller  shall cause to be read on the Closing  Date and billed to Seller).
      All utility deposits shall be transferred to Purchaser,  and an adjustment
      shall be made to the Purchase Price for such deposits.

      (b)  Prepaid  guest  room  deposits  and all other  deposits  for  advance
      bookings,  reservations,  banquets, meals, parties, meetings, functions or
      services.

      (c) Rents; deposits;  amounts prepaid, accrued but unpaid, past due and/or
      delinquent under the Contracts;  equipment leases and/or  conditional sale
      contracts assumed by Purchaser (if any).

      (d) Security  deposits (the full amount  thereof,  if any), and rent under
      the Commercial Leases.

      (e) Guest  room  revenues  representing  the sale of  products  and/or the
      delivery of services  to  customers  for the period of time at or prior to
      7:00 a.m. on the Closing Date (but only as to products  sold and delivered
      or services fully delivered and completed prior to such time) shall belong
      to  Seller;  and guest room  revenues  representing  the sale of  products
      and/or the delivery of services to  customers  for the period of time from
      and after 7:00 a.m. on the Closing Date shall belong to Purchaser. At 7:00
      a.m. on the Closing  Date,  Seller  shall cease to record on its books and
      records all guest room transactions for guests then on the premises.

      (f) Restaurant,  gift shop, tennis shop, floral shop, public room and like
      revenues  for  products  and/or  services  fully  delivered or provided to
      customers  at or prior to 7:00 a.m.  on the Closing  Date shall  belong to
      Seller;  and such  revenues  for  products  and/or  services  delivered or
      provided to customers from and after 7:00 a.m. on the Closing Date or with
      respect to products and/or services delivered or completed after 7:00 a.m.
      on the Closing Date shall belong to Purchaser. At 7:00 a.m. on the Closing
      Date,  Seller shall cease to record all such transactions on its books and
      records.

      (g)  General  property  taxes,  special  taxes,  special  assessments  and
      personal  property taxes payable,  arising or accruing through the Closing
      Date.

      (h) Any real estate ad valorem or similar taxes for the  Property,  or any
      installment of assessments  payable in installments  which  installment is
      payable in the year of Closing,  shall be  prorated  to the  Closing  Date
      based upon actual days  involved.  The proration of real property taxes or
      installments of assessments shall be based upon the assessed valuation and
      tax rate  figures for the year in which the  Closing  occurs to the extent
      the same are  available;  provided,  that in the event that actual figures
      (whether for the  assessed  value of the Property or for the tax rate) for
      the year of Closing are not available at the Closing  Date,  the proration
      shall be made using figures from the preceding year.

                                     ***


<PAGE>


                                                                 Exhibit 10.13

                FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT


      THIS FIRST  AMENDMENT  TO  PURCHASE  AND SALE  CONTRACT  ("Amendment")  is
entered into as of June 24, 1999 (the "Effective Date") by and among DBL AIRPORT
VALLEY  LIMITED  PARTNERSHIP,  an Arizona  limited  partnership  ("Seller")  and
JAYKUMAR H. SHAH, M.D. ("Purchaser").

      NOW,  THEREFORE,  for  good  and  valuable  consideration,   the  receipt,
sufficiency  and validity of which are hereby  acknowledged,  the parties hereby
agree that that certain  Purchase and Sale Contract,  dated as of June 24, 1999,
by and among Seller and Purchaser, is hereby amended as follows:

      1. Property Contracts. At any time prior to Closing, Purchaser may request
in writing that, as of the Closing Date, Seller terminate any Property Contracts
which are cancelable  without penalty or payment,  and Seller shall use its best
efforts to cancel such Property Contracts as of the Closing Date.

      2. Franchise Agreement. Purchaser agrees to: (i) assume the obligations of
Seller as licensee  under the  Franchise  Agreement  and cause Choice  Hotels to
release  Seller  from  its  obligations  and  liabilities  under  the  Franchise
Agreement,  subject to the approval of Choice  Hotels  pursuant to the Franchise
Agreement; or (ii) allow Seller to cancel the Franchise Agreement as of Closing,
whereupon Purchaser shall pay any and all costs, damages or expenses relating to
such  cancellation.  Purchaser  shall be solely  responsible  for  obtaining any
consents  and  payment  of any fees  relating  to  assignment  of the  Franchise
Agreement to  Purchaser  at Closing and release of Seller by Choice  Hotels from
its obligations and liabilities under the Franchise Agreement,  and Seller shall
reasonably cooperate with Purchaser regarding such assignment. Release of Seller
from any and all obligations and  liabilities  under the Franchise  Agreement by
Choice Hotels shall be a condition of Closing. If Purchaser has not obtained the
consent of Choice Hotels to  assignment of the Franchise  Agreement to Purchaser
and release of Seller from its obligations  and liabilities  under the Franchise
Agreement by five (5) days prior to Closing, Purchaser shall give Seller written
notice on such date of same.

      3.    Extension  of  Closing.  Section  7.1.2 of the  Purchase  Contract
regarding  extension  of the Closing  Date by Seller is hereby  deleted in its
entirety.

      4.    Purchase  Price.  Section 3.1 of the Purchase  Contract is amended
so that  the  Purchase  Price of the  Property  shall  be FIVE  MILLION  SEVEN
HUNDRED  THOUSAND  DOLLARS  ($5,700,000.00),  in  cash  or  other  immediately
available funds.

      5. Deed. Section 7.2.1.1 of the Purchase Contract is amended by adding the
following: "Upon the written request of Purchaser prior to Closing, Seller shall
convey the  Property to  Purchaser  by two (2)  separate  Deeds,  with each Deed
containing a portion of the Property  designated by  Purchaser,  so long as such
conveyances  can be  accomplished  without any  additional  liability or cost to
Seller."

      6. Amendment.  Purchaser and Seller hereby amend the Purchase  Contract as
stated herein.  Terms not otherwise defined within this Amendment shall have the
meanings  ascribed  to them in the  Purchase  Contract.  All  terms,  covenants,
conditions  and  provisions  of the  Purchase  Contract  are hereby  reinstated,
ratified,  affirmed  and remain in full force and  effect,  as  modified by this
Amendment. All references to the Purchase Contract shall, hereafter, include the
provisions of this Amendment.

      7.    Counterparts.   This   Amendment   may  be   executed  in  several
counterparts,   each  of  which  counterparts  shall  be  deemed  an  original
instrument and all of which together shall constitute a single Amendment.

      NOW  WHEREFORE,  the parties hereto have executed this Amendment as of the
date first set forth above.

                        Seller:     DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION, a
                                                New York corporation, Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:


                        Purchaser:



                                    JAYKUMAR H. SHAH, M.D.



<PAGE>


                                                                 Exhibit 10.14

                      SECOND AMENDMENT TO AND REINSTATEMENT

                          OF PURCHASE AND SALE CONTRACT

            THIS SECOND  AMENDMENT  TO AND  REINSTATEMENT  OF PURCHASE  AND SALE
CONTRACT ("Second Amendment") is made effective as of the 29th day of September,
1999 (the "Effective Date") by and among DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an  Arizona  limited  partnership   ("Seller"),   and  JAYKUMAR  H.  SHAH,  M.D.
("Purchaser").

                                    RECITALS

      A.  Seller and  Purchaser  entered  into that  certain  Purchase  and Sale
Contract  and  First  Amendment  thereto  made  effective  as of June  24,  1999
(collectively,  the "Purchase Contract") for purchase and sale of hotel property
located in Tucson,  Pima County,  Arizona as more particularly  described in the
Purchase Contract.

      B.  Purchaser  notified  Seller  that  Purchaser  was unable to close this
transaction  by  September  17,  1999 (the  "Closing  Date," as  defined  in the
Purchase Contract).

      C.    The parties desire to reinstate and amend the Purchase Contract
upon the terms and conditions provided in this Second Amendment.

      NOW,  THEREFORE,   and  in  consideration  of  the  premises,  the  mutual
agreements  herein and other good and  valuable  consideration,  the receipt and
adequacy  of which  are  hereby  acknowledged,  Seller  and  Purchaser  agree as
follows:

      1.    Defined Terms.   Except as otherwise provided herein, all
capitalized terms used in this Second Amendment have the meanings ascribed in
the Purchase Contract.

      2.    Ratification and Reinstatement.   The Purchase Contract is hereby
reinstated, subject to the modifications and agreements expressly set forth
above.  Except as so amended by this Second Amendment, the Purchase Contract
remains in full force and effect.

      3. Closing  Date.  Section  1.1.6 of the  Purchase  Contract is amended to
provide  that the Closing  Date shall be extended to October 8, 1999.  Purchaser
may elect to extend the Closing  Date for up to a maximum of two (2)  additional
consecutive   twenty-one  (21)-day  periods  (each  an  "Extension  Period")  by
delivering  written  notice  thereof to Seller not later than seven (7) calendar
days prior to the  expiration of the then effective  Closing Date,  which notice
shall  be  accompanied  by  payment  of an  additional  Fifty  Thousand  Dollars
($50,000.00)  for each Extension Period requested (and which extensions shall be
conditioned upon such payment in each case). All sums paid to extend the Closing
Date shall be  nonrefundable  (except in the event of a Seller  default) but, in
the event the sale of the Property shall close under the Purchase Contract,  all
such sums shall be applicable to the Purchase Price at Closing.

      4.  Closing  Extension  Fees.  As  inducement  for  Seller's  agreement to
reinstate the Purchase  Contract and extend the Closing Date, on the date hereof
Purchaser  shall  pay  directly  to  Seller  the sum of Fifty  Thousand  Dollars
($50,000.00),  in immediately available funds, which sum shall be non-refundable
(except  in the  event of a Seller  default)  but,  in the event the sale of the
Property shall close under the Purchase Contract,  which sum shall be applicable
to the Purchase Price at Closing.

      5. Deposit. As further  consideration for Seller's agreement to enter into
this Second  Amendment,  Purchaser  agrees that the Deposit in the amount of One
Hundred Thousand Dollars  ($100,000.00)  currently held by Escrow Agent shall be
immediately  released and paid over to Seller. This Second Amendment shall serve
as a binding instruction to the Escrow Agent to pay the entire amount of Deposit
to Seller  pursuant  to wire  instructions  received  from Seller and the Escrow
Agent may rely  conclusively  on this  Second  Amendment  to pay the  Deposit to
Seller.

      6. Waiver of Conditions  Precedent.  Purchaser hereby irrevocably confirms
the  satisfaction  or waiver of all  contingencies  and conditions  precedent to
Purchaser's obligations under the Purchase Contract, however the foregoing shall
not release  Seller from the obligation to deliver the closing  documents,  make
other closing deliveries and comply with the closing requirements  applicable to
Seller as set forth in the Purchase  Contract.  Purchaser  further  acknowledges
that  Purchaser's  obligation  to purchase  the Property is  non-contingent  and
unconditional except only for satisfaction of the conditions expressly stated in
Sections 9.1.1, 9.1.2 and 9.1.3 of the Purchase Contract.

      7.    Counterparts.   This Second Amendment may be executed in several
counterparts and by facsimile, each of which shall be deemed an original, and
of which together shall constitute one and the same document.



                        [SIGNATURES ON FOLLOWING PAGE]


<PAGE>



      IN WITNESS WHEREOF,  the parties have executed this Second Amendment as of
the date first set forth above.

            SELLER:           DBL AIRPORT VALLEY LIMITED
                              PARTNERSHIP, an Arizona limited
                              partnership

                              By:  DREXEL BURNHAM LAMBERT
                                      REAL ESTATE ASSOCIATES III,
                                      a New York limited partnership,
                                      Its General Partner

                                      By:  DBL PROPERTIES CORPORATION,
                                        a New York corporation,
                                        Its General Partner

                                        By:____________________________
                                        Printed Name:___________________
                                        Title:__________________________




            PURCHASER:        ________________________________
                              JAYKUMAR H. SHAH, M.D.




<PAGE>


                                                                 Exhibit 10.15

                THIRD AMENDMENT TO PURCHASE AND SALE CONTRACT


      THIS THIRD  AMENDMENT  TO  PURCHASE  AND SALE  CONTRACT  ("Amendment")  is
entered into on December 2, 1999 (the "Effective Date") by and among DBL AIRPORT
VALLEY LIMITED  PARTNERSHIP,  an Arizona limited partnership  ("Seller") and JBR
HOSPITALITY GROUP, LLC, an Arizona limited liability company ("Purchaser").

      NOW,  THEREFORE,  for  good  and  valuable  consideration,   the  receipt,
sufficiency  and validity of which are hereby  acknowledged,  the parties hereby
agree that that certain  Purchase and Sale Contract,  dated as of June 24, 1999,
by and  between  Seller and  JAYKUMAR  H. SHAH,  M.D.  successor-in-interest  to
Purchaser;  amended  by that  certain  First  Amendment  to  Purchase  and  Sale
Contract,  dated as of June 24, 1999; and further amended by that certain Second
Amendment  to  Purchase  and Sale  Contract,  dated  as of  September  29,  1999
(collectively, the "Purchase Contract"), is hereby amended as follows:

      1.    Purchase  Price.  Section 3.1 of the Purchase  Contract is amended
so that the Purchase  Price of the Property shall be FIVE MILLION FOUR HUNDRED
FIFTY  THOUSAND  DOLLARS   ($5,450,000.00),   in  cash  or  other  immediately
available funds.

      2.    Closing  Date.  Section  1.1.6 of the Purchase  Contract is hereby
amended such that the Closing Date shall be on or before December 10, 1999.

      3.  Evidence  of Loan.  On or before  December  2, 1999,  Purchaser  shall
provide to Seller  evidence  adequate to Seller in Seller's sole  discretion of:
(a)  commitment by a third party to make a loan ("Loan") to Purchaser to acquire
the Property;  and (b)  confirmation of Purchaser's  payment to such lender of a
commitment fee in the sum of one percent (1%) of the Loan.

      4.  Deposit  of Funds.  On or before  December  3, 1999,  Purchaser  shall
deposit with Escrow  Agent in cash the sum of ONE MILLION  THREE  HUNDRED  FIFTY
THOUSAND DOLLARS  ($1,350,000.00).  Of this amount, ONE HUNDRED THOUSAND DOLLARS
($100,000.00)  shall be an addition to the Deposit,  shall be  non-refundable to
Purchaser  (except  in the  event of a  Seller  default),  shall be  immediately
released  and paid over to Seller,  and,  in the event the sale of the  Property
shall close under the Purchase  Contract,  shall be  applicable  to the Purchase
Price at Closing.

      5.    Legal   Description.   The  legal  description   attached  to  the
Purchase  Contract as Exhibit A is hereby replaced with the legal  description
attached to this Amendment as Exhibit A.

      6. Amendment.  Purchaser and Seller hereby amend the Purchase  Contract as
stated herein.  Terms not otherwise defined within this Amendment shall have the
meanings  ascribed  to them in the  Purchase  Contract.  All  terms,  covenants,
conditions  and  provisions  of the  Purchase  Contract  are hereby  reinstated,
ratified,  affirmed  and remain in full force and  effect,  as  modified by this
Amendment. All references to the Purchase Contract shall, hereafter, include the
provisions of this Amendment.

      7.    Counterparts.   This   Amendment   may  be   executed  in  several
counterparts,   each  of  which  counterparts  shall  be  deemed  an  original
instrument and all of which together shall constitute a single Amendment.

      NOW WHEREFORE, the parties hereto have executed this Amendment on the date
first set forth above.

                        Seller:     DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION, a
                                                New York corporation, Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:


                        Purchaser:  JBR HOSPITALITY GROUP, LLC, an Arizona
                                    limited liability company


                                    By:

                                    Printed:

                                    Title:


<PAGE>


                                                                 Exhibit 10.16

                FOURTH AMENDMENT TO PURCHASE AND SALE CONTRACT


      THIS FOURTH  AMENDMENT  TO PURCHASE  AND SALE  CONTRACT  ("Amendment")  is
entered  into on  December  10,  1999  (the  "Effective  Date") by and among DBL
AIRPORT VALLEY LIMITED  PARTNERSHIP,  an Arizona limited partnership  ("Seller")
and  JBR  HOSPITALITY   GROUP,   LLC,  an  Arizona  limited   liability  company
("Purchaser").

      NOW,  THEREFORE,  for  good  and  valuable  consideration,   the  receipt,
sufficiency  and validity of which are hereby  acknowledged,  the parties hereby
agree that that certain  Purchase and Sale Contract,  dated as of June 24, 1999,
by and  between  Seller and  JAYKUMAR  H. SHAH,  M.D.  successor-in-interest  to
Purchaser;  amended  by that  certain  First  Amendment  to  Purchase  and  Sale
Contract,  dated as of June 24, 1999;  further  amended by that  certain  Second
Amendment to Purchase and Sale  Contract,  dated as of September  29, 1999;  and
further  amended by that certain Third  Amendment to Purchase and Sale Contract,
dated  December  2, 1999  (collectively,  the  "Purchase  Contract"),  is hereby
amended as follows:

      1.    Closing  Date.  Section  1.1.6 of the Purchase  Contract is hereby
amended such that the Closing Date shall be on or before December 15, 1999.

      2.  Release of Funds.  On December  10,  1999,  the sum of FIFTY  THOUSAND
DOLLARS  ($50,000.00)  of the amounts  deposited  with Escrow Agent by Purchaser
shall be immediately  released and paid over to Seller,  shall be non-refundable
to Purchaser  (except in the event of a Seller  default),  and, in the event the
sale  of the  Property  shall  close  under  the  Purchase  Contract,  shall  be
applicable to the Purchase Price at Closing.

      3. Amendment.  Purchaser and Seller hereby amend the Purchase  Contract as
stated herein.  Terms not otherwise defined within this Amendment shall have the
meanings  ascribed  to them in the  Purchase  Contract.  All  terms,  covenants,
conditions  and  provisions  of the  Purchase  Contract  are hereby  reinstated,
ratified,  affirmed  and remain in full force and  effect,  as  modified by this
Amendment. All references to the Purchase Contract shall, hereafter, include the
provisions of this Amendment.

      4.    Counterparts.   This   Amendment   may  be   executed  in  several
counterparts,   each  of  which  counterparts  shall  be  deemed  an  original
instrument and all of which together shall constitute a single Amendment.




                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

      NOW WHEREFORE, the parties hereto have executed this Amendment on the date
first set forth above.

                        Seller:     DBL AIRPORT  VALLEY  LIMITED  PARTNERSHIP,
                                    an Arizona limited partnership

                                    By:   DREXEL  BURNHAM  LAMBERT REAL ESTATE
                                          ASSOCIATES  III, a New York  limited
                                          partnership, Its General Partner

                                          By:   DBL PROPERTIES CORPORATION, a
                                                New York corporation, Its
                                                General Partner

                                                By:
                                                Printed:
                                                Title:


                        Purchaser:  JBR HOSPITALITY GROUP, LLC, an Arizona
                                    limited liability company


                                    By:

                                    Printed:

                                    Title: