<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

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

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31,  1996
                          Commission File No. 0-11884

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

                     NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP

             (Exact name of registrant as specified in its charter)

    Massachusetts                                               04-2774875
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

 225 Franklin Street, 25th Floor
   Boston, Massachusetts                                           02110
(Address of principal executive offices)                         (Zip Code)

              Registrant's telephone number, including area code:
                                (617) 261-9000

          Securities registered pursuant to Section 12(b) of the Act:
                                     None

          Securities registered pursuant to Section 12(g) of the Act:
                     Units of Limited Partnership Interest

                                (Title of Class)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes  X     No
                                  ---       ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

     No voting stock is held by non-affiliates of the Registrant.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                      None

     Page 1 of ____ pages (including exhibits).  Exhibit Index on Page ____.
<PAGE>

                                    PART I
                                    ------

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

       New England Life Pension Properties; A Real Estate Limited Partnership
(the "Partnership") was organized under the Uniform Limited Partnership Act of
the Commonwealth of Massachusetts on December 17, 1982, to invest primarily in
newly-constructed and existing income-producing real properties.

       The Partnership was initially capitalized with contributions of $2,000
from Copley Properties Company, Inc. (the "General Partner") and $10,000 from
NELRECO Troy, Inc. (the "Initial Limited Partner").  On December 23, 1982 the
Partnership filed a Registration Statement on Form S-11 (the "Registration
Statement") with the Securities and Exchange Commission with respect to the
public offering of 20,000 units of limited partnership interest at a purchase
price of $1,000 per unit (the "Units") with an option to sell up to an
additional 10,000 Units (an aggregate of $30,000,000).  The Registration
Statement was declared effective on March 22, 1983.  On June 29, 1983 the
Partnership sold all 30,000 Units, and the Partnership admitted 3,193 investors
as limited partners (the "Limited Partners"), with $29,652,760 being contributed
to the capital of the Partnership.  At the same time, the Initial Limited
Partner withdrew its contribution from the Partnership.

       The Partnership does not have any employees.  Services are performed
for the Partnership by the General Partner and by affiliates of the General
Partner.

       At December 31, 1996 the Partnership owned the two real estate
investments described in A. and C. below. In 1985 a joint venture in which the
Partnership was a partner sold its interest in a third real estate investment.
In May, 1991, the Partnership sold a fourth real estate investment that resulted
in a capital distribution of $50.00 per Unit. In June 1994, a fifth investment,
an industrial building in Ontario, California, was sold, resulting in a capital
distribution of $193.34 per Unit. In October 1996, the Partnership sold a sixth
investment, an office building in Decatur, Georgia, that resulted in a capital
distribution of $186.66 per Unit.

       The Partnership and its affiliate, New England Life Pension Properties,
II have provided the ground lessee of one of the Partnership's properties, the
Willows Shopping Center in Concord, California, with a $2.5 million leasehold
mortgage loan for the purpose of completing the renovation of the Center.  New
England Life Pension Properties I will fund $625,000, with the balance funded by
New England Life Pension Properties II.  The Partnership has no other current
plan to renovate, improve or further develop any of its real property.

         In the opinion of the General Partner of the Partnership, the
properties are adequately covered by insurance.

       A.  Research and Development Facility in Columbia, Maryland ("Rivers
           ----------------------------------------------------------------
           Corporate Park").
           ----------------

           In 1984 the Partnership consummated a land purchase-leaseback and
leasehold mortgage loan investment totaling $5,100,000 in a 75,500 square foot
research and development facility located in Rivers Corporate Park, Columbia,
Maryland.  The ground lease provides that the Partnership will receive an annual
rental of $126,500 plus 50% of the ground lessee's gross revenues from the
building in excess of a base amount.  The mortgage loan matured on March 31,
1994 and bears interest at the rate of 11.5% per annum.  The lease for the space
in the building gives the tenant occupying the building a right of first offer
during the period which began in September, 1992 and continues through November,
2004.
<PAGE>

           The property was 100% occupied at December 31, 1996. However, on
September 27, 1996, the sole tenant filed for chapter 11 bankruptcy protection
and ceased paying rent. As part of the bankruptcy, the tenant has sold its
assets to another company. Lease negotiations are proceeding with the purchaser;
however, the outcome cannot be predicted. The Partnership has not received
ground rent payments or interest payments currently on the mortgage loan since
the bankruptcy filing, and believes that a portion of the mortgage amount may
not be collected.

           In October 1996, the Partnership reached an agreement in principle
with the borrower on the mortgage loan, whereby the maturity date will be
extended to December 1997. In addition, the fixed interest and ground rental
payments will be reduced, but the Partnership's rate of participation in revenue
from the underlying property will be increased. These changes will be
retroactive to January 1, 1996; however, any adjustment to amounts previously
recognized by the Partnership is expected to be insignificant. Further, the
Partnership will be able to cause a sale of the property. Execution of the
amended loan agreement is dependent upon the borrower's leasing the property to
a suitable tenant and the ability to meet the payment terms of the loan.

       B.  Office Building in Decatur, Georgia ("Decatur TownCenter").
           ----------------------------------------------------------

           In 1985 the Partnership acquired a 3.28 acre parcel of land in
Decatur, Georgia, for $1,675,000 and leased it back to the seller.  Situated on
the land was a four-story, 79,855 square foot office building.  The Partnership
also fully funded its $5,825,000 non-recourse mortgage loan commitment to the
ground lessee.  The loan was secured by a first mortgage of the building and the
leasehold interest in the land.

       The Partnership also made an additional loan of $633,076 to fund tenant
improvements.  This loan was secured by a second mortgage of the building and
the leasehold interest in the land.

       On October 10, 1996, the property was sold at which time the
Partnership received proceeds of $6,573,178 in satisfaction of its mortgage loan
and ground lease.  Of the proceeds, $970,000 was held at the Partnership level
in order to augment reserves, and $5,599,800 was distributed to the Limited
Partners as a capital distribution in the amount of $186.66 per Unit on October
25, 1996.

       C.  Shopping Center in Concord, California ("Willows Shopping Center").
           ------------------------------------------------------------------

           On July 30, 1984, the Partnership and an affiliate of the Partnership
(the "Affiliate") jointly made land purchase-leaseback and leasehold mortgage
loan investments aggregating $15,719,317 in a 24.8 acre shopping center located
in Concord, California, known as the Willows Shopping Center.  The Partnership's
share of the investments aggregated $3,929,829, giving the Partnership a 25%
interest in each component of the investment held in common with the Affiliate.
The investments entitled the Partnership and the Affiliate jointly to receive an
annual interest return of 13% on the $10,719,317 ten-year mortgage, together
with an annual fixed rental under the ground lease equal to a 12.2% return on
the $5,000,000 land purchase price plus an annual percentage rental equal to 50%
of the ground tenant's annual gross revenues in excess of specified base
amounts.

           On August 15, 1985, the Partnership and the Affiliate consented to a
sale by the ground tenant, Willows Concord Venture ("Willows Concord"), of the
ground tenant's ownership interest in the buildings and leasehold interest in
the land to an affiliate of VMS Realty, Inc., an Illinois corporation. In
conjunction with the sale, the ground lease was amended to provide that the
Partnership and the Affiliate would no longer participate in excess rental
revenues from the Shopping Center or in net appreciation from
<PAGE>

the sale of the property. The mortgage loan was also amended to increase the
principal amount by $3,880,683 to $14,600,000, to extend the maturity date one
year to August, 1995, and to lower the interest rate from 13% per annum to a
stepped rate beginning at 9% per annum and increasing to 12% over six years.
Under the terms of the original ground lease, the joint ground lessors were
entitled to 50% of the net proceeds from a sale. The Partnership received cash
of $1,071,875 and an interest in the incremental mortgage loan amount equal to
$970,171, 50% of which was payable to the former ground lessee upon full payment
of the loan principal by the new mortgagor. The joint mortgagees also entered
into a Collection and Disbursement Agreement pursuant to which Willows Concord
was entitled to share in 50% of interest paid under the new note in excess of
the interest that would have been payable under the original note.

         The Partnership and the Affiliate had not received interest payments
currently on the mortgage loan since the payment due in March, 1990, and as a
result, the Partnership and the Affiliate began foreclosure proceedings to take
possession of the property.  On October 4, 1990, Pacific First Bank, the second
leasehold mortgagee, filed an involuntary bankruptcy petition in the United
States Bankruptcy Court for the Northern District of California against the
ground lessee/debtor, to which filing the ground lessee/debtor subsequently
consented.  The ground lessee/debtor later consented to relief from stay of
foreclosure proceedings.  The Partnership and its Affiliate sold their interest
in the leasehold mortgage loan to Willows Concord on June 14, 1991.  In return,
the Partnership and the Affiliate took back a note in the amount of $14,863,206.

         On June 18, 1991, Willows Concord foreclosed on the leasehold
mortgage.  The Partnership, the Affiliate and Willows Concord entered into a
replacement promissory note in the principal amount of $14,863,206, effective
June 18, 1991.  The new loan is secured by the leasehold interest, bears
interest at the rate of 9.323% per annum and provides for a reduction in
principal if the note is paid prior to maturity.  The Partnership, the Affiliate
and Willows Concord also entered into a new ground lease which provides for
annual rent in the amount of $550,000 plus an annual percentage rent equal to
70% of the ground lessee's annual gross revenues in excess of a specified
amount.  The Partnership has a 25% share of such rent.  To the extent that
operating cash flow from the shopping center is not sufficient to pay the ground
rent, such rent was accruable until June 1996, at which time Willows Concord is
obligated to pay all unpaid accrued rent and to pay all future ground rent on a
current basis.  The Partnership and the Affiliate have permitted the accrual of
additional ground rent, and are currently in the process of evaluating various
alternatives.

         On January 1, 1995 the Partnership and the Affiliate provided a $2.5
million construction loan to the ground lessee to fund the renovation of the
Center.  The Partnership committed to fund $625,000 of this amount.  The loan
bears interest at 11% per annum, provides for amortization on a 15-year
schedule, and matures on December 31, 1997.  In addition, the ground lease was
amended to provide the Partnership and the Affiliate with the sole right to
cause a sale on or after January 1, 1996.
<PAGE>

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

         The following table sets forth the annual realty taxes for the
Partnership's properties and information regarding tenants who occupy 10% or
more of gross leasable area (GLA) in the Partnership's properties:

<TABLE>
<CAPTION>

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

                   Estimated    Number of                                    Annual
                     1997        Tenants                        Square      Contract
                    Annual       with 10%                       Feet of       Rent
                    Realty       or More       Name(s) of        Each         per         Lease        Renewal     Line of Business
    Property        Taxes         of GLA        Tenant(s)       Tenant      Sq. Ft.     Expiration     Options        of Principal
                                                                                                                        Tenants
------------------------------------------------------------------------------------------------------------------------------------

<S>                <C>          <C>           <C>              <C>          <C>         <C>           <C>           <C>
Shopping Center     $340,686            2     Comp USA            26,000      $15.50       10/2011     Three 5      Computer Retail
 in Concord, CA                                                                                          year
                                                                                                       options
                                              REI                 29,486      $ 5.50        5/2003      Two 5       Specialty Retail
                                                                                                         year
                                                                                                       options
R&D Building in     $ 86,361            1     Biosys (1)          75,500      $ 8.64       11/2004      Two 5       Biotechnology
 Columbia, MD                                                                                            year
                                                                                                       options
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Biosys declared bankruptcy in 1996, see Item 1 A.
<PAGE>

     The following table sets forth for each of the last five years the gross
leasable area, occupancy rates, rental revenue and net effective rent for the
Partnership's properties:

<TABLE>
<CAPTION>


                                          Gross Leasable     Year-End       Rental       Net Effective
               Property                        Area         Occupancy      Revenue      Rent ($/sf/yr)*
                                                                          Recognized
-------------------------------------------------------------------------------------------------------

    Shopping Center in Concord, CA
--------------------------------------
<S>                                       <C>               <C>           <C>           <C>
                 1992                            274,488           70%    $2,346,938             $12.39
                 1993                            274,488           78%    $2,612,770             $12.52
                 1994                            251,531           91%    $2,595,391             $12.39
                 1995                            251,531           91%    $3,099,701             $13.54
                 1996                            248,193           94%    $3,139,424             $13.75

  Office Building in Decatur, GA (1)
--------------------------------------
                 1992                             79,855           82%    $1,263,302             $18.50
                 1993                             79,855           88%    $1,080,745             $16.11
                 1994                             79,855           90%    $1,200,783             $16.90
                 1995                             79,855           90%    $1,143,642             $15.52
                 1996                                N/A           N/A    $1,288,112             $16.63

     R&D Building in Columbia, MD
--------------------------------------
                 1992                             75,500          100%    $1,050,205             $13.91
                 1993                             75,500          100%      $677,374              $8.97
                 1994                             75,500          100%      $677,374              $8.97
                 1995                             75,500          100%      $677,374              $8.97
                 1996                             75,500          100%      $677,374              $8.97

-------------------------------------------------------------------------------------------------------
</TABLE>

 *   Net effective rent calculation is based on average occupancy during the
     respective years.

(1)  Property was sold October 10, 1996.
<PAGE>

     Following is a schedule of lease expirations for each of the next ten years
for the Partnership's properties based on the annual contract rent in effect at
December 31, 1996:

<TABLE>
<CAPTION>

 ------------------------------------------------------------------------------------------------------
                                          TENANT AGING REPORT
------------------------------------------------------------------------------------------------------

               Property                   # of Lease        Total         Total     Percentage of
                                          Expirations    Square Feet      Annual    Gross Annual
                                                                          Rental      Rental*
------------------------------------------------------------------------------------------------------
Shopping Center in Concord, CA (1)
--------------------------------------
<S>                                        <C>            <C>            <C>           <C>
                 1997                        5         13,146          $84,036          3%
                 1998                        0              0               $0          0%
                 1999                        3         23,650         $262,572         10%
                 2000                        2         10,520         $128,748          5%
                 2001                        2         10,690         $113,136          4%
                 2002                        2         21,031         $231,456          9%
                 2003                        4         44,779         $385,920         14%
                 2004                        0              0               $0          0%
                 2005                        6         49,494         $596,616         22%
                 2006                        0              0               $0          0%

R&D Building in Columbia, MD (2)
--------------------------------------

                 1997                        0              0               $0          0%
                 1998                        0              0               $0          0%
                 1999                        0              0               $0          0%
                 2000                        0              0               $0          0%
                 2001                        0              0               $0          0%
                 2002                        0              0               $0          0%
                 2003                        0              0               $0          0%
                 2004                        1         75,500         $653,075        100%
                 2005                        0              0               $0          0%
                 2006                        0              0               $0          0%
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Remaining leases do not expire within 10 years.
(2) The sole tenant declared bankruptcy in 1996, see Item 1 A.

*  Does not include expenses paid by tenants.
<PAGE>

Following is information regarding the competitive market conditions for each of
the Partnership's properties. This information has been gathered from sources
deemed reliable. However, the Partnership has not independently verified the
information and, as such, cannot guarantee its accuracy or completeness.


      A.  R&D in Columbia, MD.
          --------------------

The property is located within the Howard County R&D market which contains
approximately 8.8 million square feet in a total of 179 buildings.  As of
September 30, 1996, the Howard County market exhibited a vacancy rate of
approximately 5.6%, which represents an improvement from 1995, 1994, and 1993
when overall vacancy was 8.7%, 12%, and 18%, respectively.  The Columbia R&D
submarket contains a total of approximately 6.9 million square feet and, at
September 30, 1996, had a vacancy rate of approximately 5.3%.  The market has
strengthened to the point where speculative R&D construction is now underway in
Howard County and in the Columbia market.

      B.  Shopping Center in Concord, CA.
          -------------------------------

      This neighborhood shopping center lies within the Central Contra Costa
County market which incorporates several cities along the I-680 corridor
including Walnut Creek, Concord, Pleasant Hill and Martinez.  The property's
competitive market includes a total of approximately 2 million square feet in
eight shopping centers.  Within this competitive set, overall occupancy ranged
from a high of 100% to a low of 90% with an average of 97%.  This is up slightly
from a year ago when overall occupancy was approximately 95%.  Due to a scarcity
of space, new retail construction within central Contra Costa County has been
limited.  However, two retail developments are presently under construction in
nearby Pleasant Hill and a new community center just opened four miles southwest
of the property in Walnut Creek.

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

         The Partnership is not a party to, nor are any of its properties
subject to, any material pending legal proceedings, other than the bankruptcy
proceeding for the tenant at Rivers Corporate Park as described in Item 1 A.

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

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.
<PAGE>

                                    PART II
                                    -------

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

         There is no active market for the Units.  Trading in the Units is
sporadic and occurs solely through private transactions.

         As of December 31, 1996, there were 3,354 holders of Units.

         The Partnership's Amended and Restated Agreement of Limited Partnership
dated June 29, 1983, as amended (the "Partnership Agreement"), requires that any
Distributable Cash (as defined therein) be distributed quarterly to the Partners
in specified proportions and priorities.  There are no restrictions on the
Partnership's present or future ability to make distributions of Distributable
Cash.  For the year ended December 31, 1996 cash distributions paid in 1996 or
distributed after year end with respect to 1996 to the Limited Partners as a
group totaled $6,461,100 including $5,599,800 ($186.66 per limited partnership
unit) representing a return of capital from the proceeds of a property sale.
For the year ended December 31, 1995 cash distributions paid in 1995 or
distributed after year end with respect to 1995 to the Limited Partners as a
group totaled $984,000.

         Cash distributions exceeded net income in 1996, and therefore resulted
in a reduction in partners' capital.  Cash distributions were less than net
income in 1995.  Distributions of operating cash flow were less than cash
provided by operating activities in both years.  Reference is made to the
Partnership's Statement of Changes in Partners' Capital and Statement of Cash
Flows in Item 8 hereof.

         The general partner decided not to make a quarterly distribution of
cash flow from operations related to the fourth quarter of 1996.  The
uncertainty as to cash flow from one of the Partnership's two remaining
investments has warranted an increase in working capital reserves.
<PAGE>

Item 6.  Selected Financial Data.
         ------------------------
<TABLE>
<CAPTION>


                               For Year        For Year        For Year        For Year       For Year
                               Ended or        Ended or        Ended or        Ended or       Ended or
                                As of           As of:          As of           As of:          As of:
                              12/31/96\(4)\   12/31/95\(3)\   12/31/94\(2)\   12/31/93\(1)\   12/31/92
                             -----------     -----------     -----------     -----------     -----------
<S>                          <C>             <C>             <C>             <C>             <C>
Revenues                     $ 1,712,474     $ 2,104,802     $ 3,691,109     $ 2,675,255     $ 3,246,472

Net Income (Loss)            $   539,500     $ 1,569,268     $ 3,129,077     $  (899,024)    $ 2,191,885

Net Income (Loss) per
Unit of Limited
Partnership
Interest                     $     17.80     $     51.79     $    103.26     $    (29.67)    $     72.33

Total Assets                 $13,431,421     $19,239,985     $18,681,253     $22,682,389     $24,935,668

Total Cash
Distributions
per Limited
Partnership Unit,
including amounts
distributed after
year end with
respect to the
previous year                    $215.37          $32.80         $236.54          $51.80          $59.20

</TABLE>

(1) The Partnership recorded a provision of $2,800,000 ($92.40 per Unit) for
    impaired mortgage loans during 1993.

(2) The Partnership consummated a sale in 1994 which increased Net Income by
    $1,385,562 ($45.72 per Unit) and capital distributions by $5,800,200
    ($193.34 per Unit).

    The Partnership also recorded a credit of $200,000 ($6.60 per Unit) related
    to impaired mortgage loans during 1994.

(3) The Partnership recorded a credit of $260,000 ($8.58 per Unit) related to
    impaired mortgage loans during 1995.

(4) The Partnership consummated a sale in 1996 which resulted in capital
    distributions of $5,599,800 ($186.66 per Unit).

    The Partnership also recorded a provision of $409,592 ($13.52 per Unit) for
    impaired mortgage loans during 1996.
<PAGE>

Item 7.
-------

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

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

The Partnership completed its offering of units of limited partnership interest
in June 1983.  A total of 30,000 units were sold.  The Partnership received
proceeds of $27,253,251, net of selling commissions and other offering costs,
which were invested in real estate, used to pay related acquisition costs, or
retained as working capital reserves.  The Partnership currently owns the two
real estate investments described in Item 1 hereof.  In addition, four
investments have been sold, one in each of 1985, 1991, 1994 and 1996.  As a
result of these sales and similar transactions, capital of $19,200,000 ($640 per
limited partnership unit) has been returned to the limited partners through
December 31, 1996.

On October 10, 1996, the Decatur TownCenter investment was sold and the
Partnership received net proceeds of $6,573,178.  The resulting capital
distribution to limited partners of $5,599,800 on October 25, 1996 ($186.66 per
limited partnership unit) reduced the adjusted capital contribution to $360.00
per unit.

At December 31, 1996, the Partnership had $2,300,885 in cash and cash
equivalents which is primarily being retained as working capital reserves.  The
Partnership also has a commitment to fund the balance of its share of the
renovation of the Willows Shopping Center, which approximates $316,000.  As a
result of the bankruptcy of the sole tenant at Rivers Corporate Park and the
uncertainty concerning the Partnership's future cash flow from this investment,
the general partner determined that it is prudent to augment working capital
reserves.  Accordingly, no distribution of cash from operations was made
relating to the fourth quarter of 1996.  Distributions of cash from operations
for the first three quarters of 1996 were made at an annualized rate of 7% on
the adjusted capital contribution.  Distributions of cash from operations for
the four quarters of 1995 were made at the annualized rate of 6% on the adjusted
capital contribution.  The increase in the cash distribution rate for the first
three quarters of 1996 was due to the attainment of appropriate cash reserve
levels and the stabilization of property operations.

The carrying value of the real estate investments in the financial statements at
December 31, 1996, other than impaired mortgage loans (Rivers Corporate Park),
is at depreciated cost, or if the investment's carrying value is determined not
to be recoverable through expected undiscounted future cash flows, the carrying
value is reduced to estimated fair market value.  The fair market value of such
investments is further reduced by the estimated cost of sale for properties held
for sale.  Carrying value may be greater or less than current appraised value.
At December 31, 1996, the appraised value of Willows Shopping Center exceeded
its carrying value by approximately $240,000.  The current appraised value of
real estate investments has been estimated by the general partner and is
generally based on a correlation of traditional appraisal approaches performed
by the Partnership's advisor and independent appraisers.  Because of the
subjectivity inherent in the valuation process, the estimated current appraised
value may differ significantly from that which could be realized if the real
estate were actually offered for sale in the marketplace.

Results of Operations
---------------------

Form of Real Estate Investments

The Willows Shopping Center is structured as a ground lease/mortgage loan
investment.  However, for financial reporting purposes it is accounted for as a
jointly-owned property.  Rivers Corporate Park is structured and accounted for
as ground lease/ mortgage loan investment.
<PAGE>

Operating Factors

At December 31, 1996, the Willows Shopping Center was 94% leased, compared to
approximately 91% at the end of 1995 and 1994.  The ground lessee/borrower has
substantially completed the full rehabilitation of the Center.  The
Partnership's share of the remaining cost is approximately $316,000 at December
31, 1996 which largely relates to the renovation of space occupied by a
significant new anchor tenant which began operating in October 1996.

In October 1996, the Decatur TownCenter investment was sold.  The Partnership
received proceeds of $6,573,178 which were used to repay the ground lease
investment and the carrying value of the mortgage loans.  Since the mortgage
loans were impaired, their carrying value had been previously reduced to
estimated fair market value, less anticipated costs of sale and thus no gain or
loss on the sale was recognized.  The total valuation allowance was $2,349,592
at the time of the sale, which included a disposition fee of $196,775 payable to
the advisor.

Rivers Corporate Park was 100% occupied at December 31, 1996 and 1995.  However,
on September 27, 1996, the sole tenant filed for chapter 11 bankruptcy
protection and ceased paying rent.  As part of the bankruptcy, the tenant has
sold its assets to another company.  Lease negotiations are proceeding with the
purchaser; however, the outcome cannot be predicted.  The Partnership has not
received ground rent payments and interest payments on its mortgage loan since
the bankruptcy filing.  The mortgage loan matured in 1994. In October 1996, the
Partnership reached an agreement in principle with the borrower, whereby the
maturity date will be extended to December 1997.  In addition, the fixed
interest and ground rental payments will be reduced, but the Partnership's rate
of participation in revenue from the underlying property will be increased.
These changes will be retroactive to January 1, 1996; however, any adjustment to
amounts previously recognized by the Partnership is expected to be
insignificant. Further, the Partnership will be able to cause a sale of the
property. Execution of the amended loan agreement is dependent upon the
borrower's leasing the property to a suitable tenant and the ability to meet the
payment terms on the loan.

Investment Results

The Partnership determined that the mortgage loan on Rivers Corporate Park was
impaired and recognized a provision for impaired mortgage loans of $400,000
which was charged to operations in the fourth quarter of 1996.

In 1993, the Partnership determined that the mortgage loans to the Decatur
TownCenter were impaired.  During 1994 and 1995, the estimated market value of
the loan collateral increased and the valuation allowance was reduced by
$200,000 and $260,000, respectively, through a credit to operating results.
During 1996, a valuation provision of $9,592 was recognized to adjust the
carrying value to the amount of sale proceeds received, less disposition costs.

The sale of the Ontario Distribution Center in June 1994 resulted in the
recognition of a gain of $1,385,562.

1996 Compared to 1995

Exclusive of the credit from (provision for) impaired mortgage loans, and the
operating results from Decatur TownCenter ($341,585 in 1996 and $602,256 in
1995), real estate operating results for 1996 were $669,507, a decrease from
$788,778 in 1995.  The change was primarily caused by a decline in the amount of
interest income from Rivers Corporate Park.

Interest on cash equivalents and short-term investments decreased between 1996
and 1995 primarily due to lower average investment balances held during the
first nine months of 1996.
<PAGE>

Operating cash flow decreased approximately $353,000 between 1996 and 1995.
This decrease is primarily due to the above mentioned changes in operating
results, increased leasing costs at the Willows and changes in net working
capital.

1995 Compared to 1994

Exclusive of the credit related to the allowance for impaired mortgage loans and
revenue from the Ontario Distribution Center, real estate operating results for
1995 were $1,391,034, a slight increase compared to $1,359,953 in 1994.  The
increase primarily stemmed from results at Willows Shopping Center which
increased by $40,000, partially offset by a decrease in operating income
generated by Decatur TownCenter.

Interest income on short-term investments and cash equivalents increased during
1995 due to an increase in interest rates.

Operating cash flow, exclusive of Ontario Distribution Center, decreased
approximately $57,000 between 1994 and 1995.  This change differs from the
change in operating results primarily due to an increase in working capital
items.

Portfolio Expenses

The Partnership management fee is 9% of distributable cash flow from operations
after any increase or decrease in working capital reserves as determined by the
general partner.  General and administrative expenses primarily consist of real
estate appraisal, printing, legal, accounting and investor servicing fees.

1996 Compared to 1995

The Partnership management fee decreased approximately $12,000 due to the
suspension of cash distributions for the fourth quarter of 1996, partially
offset by an increase in distributable cash flow for the first three quarters of
1996.  General and administrative expenses decreased between 1996 and 1995
primarily due to legal fees incurred in 1995 relating to the matured mortgage
loan investment.

1995 Compared to 1994

The Partnership management fee decreased approximately $31,000 due to the
decrease in distributable cash flow.  General and administrative expenses
increased 2% due to an increase in legal fees, partially offset by a decrease in
printing and accounting fees.


Inflation
---------

By their nature, real estate investments tend not to be adversely affected by
inflation.  Inflation may result in appreciation in the value of the
Partnership's real estate investments over time, if rental rates and replacement
costs increase.  Declines in real property values, during the period of
Partnership operations, due to market and economic conditions, have overshadowed
the positive effect inflation may have on the value of the Partnership's
investments.
<PAGE>

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

         See the Financial Statements of the Partnership included as a part of
this Annual Report on Form 10-K.

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

         The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement
disclosure.


                                  PART III
                                  --------

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

          (a) and (b) Identification of Directors and Executive Officers.
                      ---------------------------------------------------

         The following table sets forth the names of the directors and executive
officers of the General Partner and the age and position held by each of them as
of December 31, 1996, as well as subsequent changes through January 24, 1997.
<TABLE>
<CAPTION>

Name                          Position(s) with the General Partner                      Age
-----                         ----------------------------------------------------      ---
<S>                           <C>                                                     <C>

Joseph W. O'Connor             President, Chief Executive Officer and Director            50
Daniel J. Coughlin             Managing Director and Director                             44
Peter P. Twining (1)           Managing Director, General Counsel and Director            50
Wesley M. Gardiner, Jr.        Vice President                                             38
Daniel C. Mackowiak            Principal Financial and Accounting Officer                 45
James J. Finnegan (2)          Managing Director, General Counsel and Director            36
</TABLE>

(1)  Through January 24, 1997 only.
(2)  As of January 25, 1997.

         Mr. O'Connor and Mr. Coughlin have served in an executive capacity
since the organization of the General Partner on December 16, 1982.  Mr.
Gardiner and Mr. Twining have served in their capacities since June 1994, and
Mr. Mackowiak has served in his capacity since January 1, 1996.  All of these
individuals will continue to serve in such capacities until their successors are
elected and qualify.

    (c)  Identification of Certain Significant Employees.
         ------------------------------------------------
         None.

    (d)  Family Relationships.
         ---------------------

         None.

    (e)  Business Experience.
         --------------------

         The General Partner was incorporated in Massachusetts on December 16,
1982. The background and experience of the executive officers and directors of
the General Partner are as follows:
<PAGE>

       Joseph W. O'Connor has been President, Chief Executive Officer and a
Director of AEW Real Estate Advisors, Inc. ("AEW"), formerly known as  Copley
Real Estate Advisors, Inc. since January, 1982. He was a Principal of AEW from
1985 to 1987 and has been a Managing Director of AEW since January 1, 1988.  He
has been active in real estate for 28 years.  From June, 1967, until December,
1981, he was employed by New England Mutual Life Insurance Company ("The New
England"), which has been merged with and into Metropolitan Life Insurance
Company, most recently as a Vice President in which position he was responsible
for The New England's real estate portfolio.  He received a B.A. from Holy Cross
College and an M.B.A. from Harvard Business School.

       Daniel J. Coughlin was a Principal of AEW from 1985 to 1987 and has
been a Managing Director of AEW since January 1, 1988 and a Director of AEW
since July 1994.  Mr. Coughlin has been active in financial management and
control for 22 years.  From June, 1974 to December, 1981, he was Real Estate
Administration Officer in the Investment Real Estate Department at The New
England.  Since January, 1982, he has been in charge of the asset management
division of AEW.  Mr. Coughlin is a Certified Property Manager and a licensed
real estate broker.  He received a B.A. from Stonehill College and an M.B.A.
from Boston University.

       Peter P. Twining was a Managing Director and General Counsel of AEW
until January 24, 1997 when he resigned from all offices and directorships.  As
such, he was responsible for general legal oversight and policy with respect to
AEW and its investment portfolios.  Before being promoted to this position in
January 1994, he was a Vice President/Principal and senior lawyer responsible
for assisting in the oversight and management of AEW's legal operations.  Before
joining AEW in 1987, he was a senior member of the Law Department at The New
England and was associated with the Boston law firm, Ropes and Gray.  Mr.
Twining is a graduate of Harvard College and received his J.D. in 1979 from
Northeastern University.

       Wesley M. Gardiner, Jr. joined AEW in 1990 and has been a Vice
President at AEW since January, 1994.  From 1982 to 1990, he was employed by
Metric Realty, a nationally-known real estate investment advisor and syndication
firm, as a portfolio manager responsible for several public and private limited
partnerships.  His career at AEW has included asset management responsibility
for the company's Georgia and Texas holdings.  Presently, as a Vice President
and Team Leader, Mr. Gardiner has overall responsibility for all the
partnerships advised by AEW whose securities are registered under the Securities
and Exchange Act of 1934.  He received a B.A. in Economics from the University
of California at San Diego.

       Daniel C. Mackowiak has been a Vice President of AEW since January 1989
and has been a Vice President and the Principal Financial and Accounting Officer
of the Managing General Partner since January 1996. Mr. Mackowiak previously
held the offices of Chief Accounting Officer of AEW from January 1989 through
April 1994 and Vice President and Principal Financial and Accounting Officer of
the Managing General Partner between January 1989 and May 1994. From 1975 until
joining AEW, he was employed by the public accounting firm of Price Waterhouse,
most recently as a Senior Audit Manager. He is a certified public accountant and
has been active in the field of accounting his entire business career. He
received a B.S. from Nichols College and an M.B.A. from Cornell University.

       James J. Finnegan is the Assistant General Counsel of AEW Capital
Management, L.P. ("AEW Capital Management") and has succeeded Peter Twining as
Managing Director, General Counsel and Director of AEW, a subsidiary of AEW
Capital Management.  Mr. Finnegan served as Vice President and Assistant General
Counsel of Aldrich, Eastman & Waltch, L.P., a predecessor to AEW Capital
Management.  Mr. Finnegan has over ten years of experience in real estate law,
including seven years of experience in private practice with major New York City
and Boston law firms.  Mr. Finnegan also serves as AEW's securities and
regulatory compliance officer.  Mr. Finnegan is a graduate of the University of
Vermont (B.A.) and Fordham University School of law (J.D.).
<PAGE>

       Mr. O'Connor is a director of Evans Withycombe Residential, Inc., a
Maryland corporation organized as a real estate investment trust which is listed
for trading in the New York Stock Exchange.  None of the other directors of the
Managing General Partner is a director of a company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934.  All
of the directors and officers of the General Partner also serve as directors and
officers of one or more corporations which serve as general partners of
publicly-traded real estate limited partnerships which are affiliated with the
General Partner.

       (f) Involvement in Certain Legal Proceedings.
           -----------------------------------------

           None.

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

       Under the Partnership Agreement, the General Partner and its affiliates
are entitled to receive various fees, commissions, cash distributions,
allocations of taxable income or loss and  expense reimbursements from the
Partnership.  See Notes 1, 2 and 6 of Notes to Financial Statements.

       The following table sets forth the amounts of the fees and cash
distributions and reimbursements for out-of-pocket expenses which the
Partnership paid to or accrued for the account of the General Partner and its
affiliates for the year ended December 31, 1996.  Cash distributions to the
General Partner include amounts distributed after year end with respect to
1996.

<TABLE>
<CAPTION>

                                                                                 Amount of Compensation
Receiving Entity                           Type of Compensation                   and Reimbursement
----------------                          ---------------------              --------------------------
<S>                                       <C>                                <C>

General Partner                             Share of Distributable Cash            $       8,700

AEW Real Estate Advisors, Inc.              Management Fees                               86,044
(formerly known as Copley Real
Estate Advisors, Inc.)

New England Securities                      Servicing Fees and Out of
Corporation                                 Pocket Reimbursements                          5,231
                                                                                 ----------------

                                            TOTAL                                        $99,975
                                                                                 ================
</TABLE>

       For the year ended December 31, 1996, the Partnership allocated
$(17,441) of taxable loss to the General Partner.

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

      (a)  Security Ownership of Certain Beneficial Owners.
           ------------------------------------------------

         No person or group is known by the Partnership to be the beneficial
owner of more than 5% of the outstanding Units at December 31, 1996.  Under the
Partnership Agreement, the voting rights of the Limited Partners are limited
and, in some circumstances, are subject to the prior receipt of certain opinions
of counsel or judicial decisions.
<PAGE>

            Except as expressly provided in the Partnership Agreement, the right
to manage the business of the Partnership is vested exclusively in the General
Partner.

       (b)  Security Ownership of Management.
            ---------------------------------

            An affiliate of the General Partner of the Partnership owned 1,094
Units at December 31, 1996.

        (c)  Changes in Control.
             -------------------

         There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the
Partnership.

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

          The Partnership has no relationships or transactions to report other
than as reported in Item 11, above.

                                  PART IV
                                  -------

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

          (a)  The following documents are filed as part of this report:

               (1)  Financial Statements--The Financial Statements listed on
the accompanying Index to Financial Statements and Schedules, Financial
Statements Index No. 2, Financial Statements Index No. 3 and Financial
Statements Index No. 4 are filed as part of this Annual Report.

               (2)  Financial Statement Schedules--The Financial Statement
Schedules listed on the accompanying Index to Financial Statements and Schedules
are filed as part of this Annual Report.

               (3)  Exhibits--The Exhibits listed in the accompanying Exhibit
Index are filed as a part of this Annual Report and incorporated in this Annual
Report as set forth in said Index.

          (b)  Reports on Form 8-K.  The Partnership filed one Current Report on
Form 8-K dated October 22, 1996 reporting on Item No. 2 (Acquisition or
Disposition of Assets).
<PAGE>

                    NEW ENGLAND LIFE PENSION PROPERTIES;
                     A REAL ESTATE LIMITED PARTNERSHIP



                            Financial Statements


                               * * * * * * *



                             December 31, 1996
<PAGE>

                      NEW ENGLAND LIFE PENSION PROPERTIES;
                      ------------------------------------
                       A REAL ESTATE LIMITED PARTNERSHIP
                       ---------------------------------

                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
                  -------------------------------------------



                                                                  Page


Report of Independent Accountants....................................

Financial Statements:

      Balance Sheet - December 31, 1996 and 1995.....................

     Statement of Operations - Years ended December 31, 1996, 1995
        and 1994.....................................................

     Statement of Changes in Partners' Capital - Years ended
        December 31, 1996, 1995 and 1994.............................

     Statement of Cash Flows - Years ended December 31, 1996, 1995
        and 1994.....................................................

      Notes to Financial Statements..................................

Financial Statement Schedules:

     Schedule III - Real Estate and Accumulated Depreciation at
        December 31, 1996............................................

      Schedule IV - Mortgage Loans on Real Estate at
        December 31, 1996............................................



All other schedules have been omitted because they are either not applicable or
the required information is shown in the financial statements or notes thereto.
<PAGE>

                       Report of Independent Accountants
                       ---------------------------------

To the Partners


New England Life Pension Properties;
A Real Estate Limited Partnership

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of New England
Life Pension Properties; A Real Estate Limited Partnership (the "Partnership")
at December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of Copley Properties Company, Inc., the
General Partner of the Partnership; our responsibility is to express an opinion
on these financial statements based on our audits.  We conducted our audits of
these statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by the General Partner, and evaluating the
overall financial statement presentation.  We believe our audits provide a
reasonable basis for the opinion expressed above.


/s/ Price Waterhouse, LLP
Boston, Massachusetts
March 24, 1997


<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

BALANCE SHEET

<TABLE>
<CAPTION>
                                                                            December 31,
                                                                -----------------------------------
                                                                     1996                 1995
                                                                ---------------     ---------------
<S>                                                             <C>                 <C>
Assets

Real estate investments:
   Ground leases and mortgage loans, net                        $     4,722,880    $     11,508,875
   Property, net                                                      5,588,459           5,117,318
   Deferred leasing costs and other assets, net                         269,876             176,007
                                                                ---------------     ---------------
                                                                     10,581,215          16,802,200

Cash and cash equivalents                                             2,300,885           1,204,043
Short-term investments                                                  498,869           1,109,814
Interest, rent and other receivables                                     50,452             123,928
                                                                ---------------     ---------------

                                                                $    13,431,421     $    19,239,985
                                                                ===============     ===============

Liabilities and Partners' Capital

Accounts payable                                                $       437,083     $       239,062
Accrued management fee                                                        -              24,575
Deferred disposition fees                                               654,543             457,768
                                                                ---------------     ---------------
Total liabilities                                                     1,091,626             721,405
                                                                ---------------     ---------------

Partners' capital:
Limited partners ($360.00 and $546.66
 per unit, respectively; 30,000 units authorized,
  issued and outstanding)                                            12,294,711          18,467,706
General partner                                                          45,084              50,874
                                                                ---------------     ---------------
Total partners' capital                                              12,339,795          18,518,580
                                                                ---------------     ---------------

                                                                $    13,431,421    $     19,239,985
                                                                ===============     ===============
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS


                                                      Year ended December 31,
                                            ---------------------------------------
                                                1996           1995           1994
                                            ---------     ----------     ----------
<S>                                         <C>           <C>            <C>
Investment Activity

Property rentals                            $ 788,265     $  780,127     $  658,875
Property operating expenses                  (343,067)      (354,550)      (300,700)
Depreciation and amortization                (234,316)      (230,712)      (222,518)
                                            ---------     ----------     ----------
                                              210,882        194,865        135,657

Ground rentals and interest
 on mortgage loans                            800,210      1,196,169      1,534,014
(Provision for) credit from impaired
 mortgage loans                              (409,592)       260,000        200,000
                                            ---------     ----------     ----------

  Total real estate operations                601,500      1,651,034      1,869,671

Gain on sale of investment                          -              -      1,385,562
                                            ---------     ----------     ----------

  Total real estate activity                  601,500      1,651,034      3,255,233

Interest on cash equivalents
 and short-term investments                   123,999        128,506        112,658
                                            ---------     ----------     ----------

  Total investment activity                   725,499      1,779,540      3,367,891
                                            ---------     ----------     ----------

Portfolio Expenses

Management fee                                 86,044         98,302        129,471
General and administrative                     99,955        111,970        109,343
                                            ---------     ----------     ----------
                                              185,999        210,272        238,814
                                            ---------     ----------     ----------

Net Income                                  $ 539,500     $1,569,268     $3,129,077
                                            =========     ==========     ==========

Net income per limited
  partnership unit                          $   17.80     $    51.79     $   103.26
                                            =========     ==========     ==========

Cash distributions per limited
  partnership unit                          $  223.57     $    32.80     $   241.29
                                            =========     ==========     ==========

Number of limited partnership units
  outstanding during the year                  30,000         30,000         30,000
                                            =========     ==========     ==========
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

<TABLE>
<CAPTION>

                                                         Year ended December 31,
                            ---------------------------------------------------------------------------------
                                      1996                         1995                        1994
                            -------------------------    ------------------------    -------------------------
                            General      Limited         General     Limited         General      Limited
                            Partner      Partners        Partner     Partners        Partner      Partners
                            --------     -----------     -------     -----------     --------     -----------
<S>                         <C>          <C>             <C>         <C>             <C>          <C>
Balance at beginning
  of year                   $ 50,874     $18,467,706     $45,121     $17,898,131     $ 28,359     $22,039,045

Cash distributions           (11,185)     (6,707,100)     (9,940)       (984,000)     (14,529)     (7,238,700)

Net income                     5,395         534,105      15,693       1,553,575       31,291       3,097,786
                            --------     -----------     -------     -----------     --------     -----------

Balance at end
  of year                   $ 45,084     $12,294,711     $50,874     $18,467,706     $ 45,121     $17,898,131
                            ========     ===========     =======     ===========     ========     ===========
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                  Year ended December 31,
                                                       -------------------------------------------
                                                            1996            1995            1994
                                                       -----------     -----------     -----------
<S>                                                    <C>             <C>             <C>
Cash flows from operating activities:
 Net income                                            $   539,500     $ 1,569,268     $ 3,129,077
 Adjustments to reconcile net income
 to net cash provided by operating activities:
  Depreciation and amortization                            234,316         230,712         222,518
  Provision for (credit from) impaired
   mortgage loans                                          409,592        (260,000)       (200,000)
  Gain on sale of investment                                     -               -      (1,385,562)
  Increase in deferred leasing costs
   and other assets                                       (116,164)        (22,623)       (122,075)
  Decrease (increase) in operating
   receivables                                              73,476         (88,234)         71,383
  Increase (decrease) in operating liabilities             (81,166)        (16,596)         64,447
                                                       -----------     -----------     -----------
   Net cash provided by operating activities             1,059,554       1,412,527       1,779,788
                                                       -----------     -----------     -----------

Cash flows from investing activities:
 Net proceeds from sale of investment                    2,267,919               -       3,052,295
 Repayment of mortgage loan investment                   4,108,484               -       3,170,000
 Capital expenditures on owned property and
  property collateralizing ground lease/
  mortgage loan investments                               (428,550)       (550,779)       (594,054)
 Decrease (increase) in short-term investments,
  net                                                      610,945      (1,094,854)      1,045,544
 Increase in deferred disposition fees                     196,775               -         192,442
                                                       -----------     -----------     -----------
   Net cash provided by (used in) investing
       activities                                        6,755,573      (1,645,633)      6,866,227
                                                       -----------     -----------     -----------

Cash flows from financing activity:
 Distributions to partners                              (6,718,285)       (993,940)     (7,253,229)
                                                       -----------     -----------     -----------
    Net cash used in financing activity                 (6,718,285)       (993,940)     (7,253,229)
                                                       -----------     -----------     -----------

 Net increase (decrease) in cash and cash
  equivalents                                            1,096,842      (1,227,046)      1,392,786

 Cash and cash equivalents:
  Beginning of year                                      1,204,043       2,431,089       1,038,303
                                                       -----------     -----------     -----------

  End of year                                          $ 2,300,885     $ 1,204,043     $ 2,431,089
                                                       ===========     ===========     ===========
</TABLE>

                (See accompanying notes to financial statements)
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES;
A REAL ESTATE LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

Note 1 - Organization and Business
----------------------------------

     General

     New England Life Pension Properties; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in newly constructed and existing income producing real
properties.  It primarily serves as an investment for qualified pension and
profit sharing plans and other entities intended to be exempt from federal
income tax.  The Partnership commenced operations in June 1983, and acquired six
real estate investments through 1985, four of which have been sold as of
December 31, 1996.  It intends to dispose of its investments within twelve years
of their acquisition, and then liquidate; however, the general partner could
extend the investment period if it is in the best interest of the limited
partners.

     The general partner of the Partnership is Copley Properties Company, Inc.,
a wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"), formerly
known as Copley Real Estate Advisors, Inc. ("Copley").  Subject to the general
partner's overall authority, the business of the Partnership is managed by AEW
pursuant to an advisory contract.

     On December 10, 1996, Copley's parent, New England Investment Companies,
Limited Partnership ("NEIC"), a publicly traded master limited partnership,
acquired certain assets subject to then existing liabilities from Aldrich
Eastman & Waltch, Inc. and its affiliates and principals (collectively, "the AEW
operations").  Simultaneously, a new entity, AEW Capital Management L.P., was
formed into which NEIC contributed its interest in Copley and its affiliates.
As a result, the AEW operations were combined with Copley to form the business
operations of AEW Capital Management, L.P.  This transaction is not expected to
have a material effect on the operations of the Partnership.

     Prior to August 30, 1996, New England Mutual Life Insurance Company ("The
New England") was NEIC's principal unit holder and owner of all of the
outstanding stock of NEIC's general partner.  On August 30, 1996, The New
England merged with and into Metropolitan Life Insurance Company ("Met Life").
Met Life is the surviving entity and, therefore, through a wholly-owned
subsidiary, became the owner of the units of partnership interest previously
owned by The New England and of the stock of NEIC's general partner.  This
transaction is not expected to have a material effect on the operations of the
Partnership.

     At December 31, 1996 and 1995 an affiliate of the general partner owned
1,094 units of limited partnership interest, which were repurchased from certain
qualified plans, within specified annual limitations provided for in the
Partnership Agreement.

     Management

     AEW, as advisor, is entitled to receive stipulated fees from the
Partnership in consideration of services performed in connection with the
management of the Partnership and
<PAGE>

the acquisition and disposition of Partnership investments in real property.
Partnership management fees are 9% of distributable cash flow from operations,
as defined, before deducting such fees. Acquisition fees were paid in an amount
equal to 2% of the gross proceeds from the offering available for investment.
Disposition fees are generally 3% of the selling price of the property, but are
subject to the prior receipt by the limited partners of their capital
contributions plus a stipulated return thereon.

     New England Securities Corporation ("NESC"), an indirect subsidiary of Met
Life, is engaged by the Partnership to act as its unit holder servicing agent.
Fees and out-of-pocket expenses for such services totaled $5,231, $4,719 and
$6,985 in 1996, 1995 and 1994, respectively.


Note 2 - Summary of Significant Accounting Policies
---------------------------------------------------

     Accounting Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the general partner to make estimates
affecting the reported amounts of assets and liabilities, and of revenues and
expenses.  In the Partnership's business, certain estimates require an
assessment of factors not within management's control, such as the ability of
tenants to perform under long-term leases and the ability of the properties to
sustain their occupancies in changing markets.  Actual results, therefore, could
differ from those estimates.

     Ground Leases and Mortgage Loans

     While the related land and loan investments are legally separable, the
terms thereof have been negotiated jointly and the investment performance is
evaluated on a combined basis.  They are, therefore, presented together in the
accompanying balance sheet and statement of operations.

     Investments in land subject to ground leases are stated at cost, plus
accrued revenue.  Investments in mortgage loans to the related ground lessees
are originally stated at cost, plus accrued interest.  If the investment is
subject to ownership accounting (see below), cost is adjusted for the
accumulated cost recovery allowance.  If the mortgage loan is impaired (see
"Impaired Mortgage Loans" below), the carrying amount is adjusted to the
estimated market value of the underlying collateral less anticipated costs of
sale.

     Accrual of contractual ground rent and loan interest is discontinued if the
total of the Partnership's invested cash and such accrual approximates the
appraised value of the investment.  Under this condition, the Partnership
applies ownership accounting whereby revenue is recognized only to the extent of
net operating income generated by the underlying property, before depreciation,
to which the Partnership is entitled.  In addition, the cost of the investment
related to depreciable property is subject to a recovery allowance similar to
depreciation, which is computed using the straight-line method based on
estimated useful lives.  The Partnership, however, retains a priority claim to
all unrecognized contractual revenue.  If a mortgage loan is determined to be
impaired, the Partnership recognizes revenue only to the extent of operating
cash flow generated by the collateral underlying the loan and no longer
recognizes a cost recovery allowance.
<PAGE>

     Impaired Mortgage Loans

     The Partnership considers a loan to be impaired when it is probable that it
will be unable to collect all amounts due under the contractual terms of the
loan agreement.  Factors that the Partnership considers in determining whether a
loan is impaired include its past due status, fair value of the underlying
collateral and economic prospects of the borrower.  When a loan is impaired, its
carrying value is periodically adjusted, through a valuation allowance, to its
estimated market value which is based on the appraised value of the underlying
collateral less anticipated costs of sale.  Changes in the valuation allowance
are reported in the Statement of Operations.

     Property

     The Partnership and an affiliate share common ownership of an investment.
The form of the investment is a combination ground lease and mortgage loan, as
described above; however, in this case (Willows Shopping Center), substantial
economic risks of property ownership rest with the Partnership and its
affiliate.  Accordingly, the investment is accounted for as owned property,
although the Partnership and its affiliate have a priority claim to all
unrecognized contractual revenue.  The Partnership's financial statements
include its proportionate ownership share (25%) of the individual assets,
liabilities, revenue and expenses related to the property.  Land and buildings
and improvements (net of accumulated depreciation) are classified as property in
the balance sheet.

     Capitalized Costs, Depreciation and Amortization

     Maintenance and repair costs are expensed as incurred.  Significant
improvements and renewals are capitalized.  Depreciation is computed using the
straight-line method based on estimated useful lives of the buildings and
improvements.  Leasing costs are also capitalized and amortized over the related
lease terms.

     Acquisition fees have been capitalized as part of the cost of real estate
investments.  Amounts not related to land are being amortized using the
straight-line method over the terms of the mortgage loans or the estimated
useful lives of the property.

     Leases provide for rental increases over the respective lease terms.
Rental revenue is being recognized on a straight-line basis over the lease
terms.

     Realizability of Real Estate Investments

     The Partnership considers a real estate investment, other than a mortgage
loan, to be impaired when it determines the carrying value of the investment is
not recoverable through estimated undiscounted cash flows generated from the
operations and disposition of the property.  The impairment loss is based on the
excess of the investment's carrying value over its estimated fair market value.
For investments being held for sale, impairment loss also includes estimated
costs of sale.  Property held for sale is not depreciated during the holding
period.
<PAGE>

     The carrying value of an investment may be more or less than its current
appraised value.  At December 31, 1996, the appraised value of Willows Shopping
Center exceeded its carrying value by approximately $240,000, while at December
31, 1995 the carrying value exceeded its appraised value by approximately
$390,000.  At December 31, 1995 the Partnership had one other investment which
was not an impaired mortgage loan, the appraised value of which exceeded its
related carrying value by $46,000.

     The current appraised value of real estate investments has been estimated
by the general partner and is generally based on a correlation of traditional
appraisal approaches performed by the Partnership's advisor and independent
appraisers.  Because of the subjectivity inherent in the valuation process, the
estimated current appraised value may differ significantly from that which could
be realized if the real estate were actually offered for sale in the
marketplace.

     Cash Equivalents and Short-Term Investments

     Cash equivalents are stated at cost, plus accrued interest.  The
Partnership considers all highly liquid debt instruments purchased with a
maturity of ninety days or less to be cash equivalents; otherwise, they are
classified as short-term investments.

     The Partnership has the positive intent and ability to hold all short-term
investments to maturity; therefore, short-term investments are carried at cost
plus accrued interest, which approximates market value.  At December 31, 1996
and 1995, all investments were in commercial paper with less than three and six
months, respectively, remaining to maturity.

     Deferred Disposition Fees

     Disposition fees due to AEW related to sales or restructuring of
investments are included in the determination of gains or losses resulting from
such transactions.  According to the terms of the advisory contract, payment of
such fees has been deferred until the limited partners first receive their
capital contributions, plus stipulated returns thereon.

     Income Taxes

     A partnership is not liable for income taxes and, therefore, no provision
for income taxes is made in the financial statements of the Partnership.  A
proportionate share of the Partnership's income is reportable on each partner's
tax return.


     Per Unit Computations

     Per unit computations are based on the number of units of limited
partnership interest outstanding during the year.  The actual per unit amount
will vary by partner depending on the date of admission to, or withdrawal from,
the Partnership.

     Reclassifications

     Certain amounts in prior year financial statements have been reclassified
to conform with the current year presentation.
<PAGE>

Note 3 - Investments in Ground Leases and Mortgage Loans
--------------------------------------------------------

     The following is a summary of the Partnership's investments in ground
leases and mortgage loans:


<TABLE>
<CAPTION>
                                                    Fixed
                                                   Rental/
Investment/                Acquisition             Interest                   December 31,
 Location                       Date                Rate                   1996           1995
-----------                -----------             --------            -----------    ------------
<S>                            <C>                  <C>                <C>            <C>
Rivers Corporate
Park                                1984             11.50% (L)         $1,100,000     $ 1,100,000
 Columbia, MD                                        11.50% (M)          4,000,000       4,000,000

Decatur TownCenter                  1985             12.00% (L)                  -       1,675,000
 Decatur, GA                                          8.50% (M)                  -       5,825,000
                               1986-1989             12.00% (M)                  -         633,076
                                                                       -----------    ------------
                                                                        $5,100,000     $13,233,076
                                                                       ===========    ============

  (L)  Ground lease  (M)  Mortgage loan

<CAPTION>

                                                                                              December 31,
                                                                                  -----------------------------------
                                                                                  1996                           1995
                                                                               ----------                     -----------
   <S>                                                                         <C>                            <C>
   Cash invested                                                               $5,100,000                     $13,233,076

   Unamortized closing costs and
    acquisition fees, net                                                          22,880                          57,447

   Accrued ground lease and
    mortgage loan receivables                                                           -                         717,767

   Capital expenditures                                                                 -                         235,000

   Cost recovery allowance                                                              -                        (394,415)

   Valuation allowance for
    impaired mortgage loans                                                      (400,000)                     (2,340,000)
                                                                               ----------                     -----------
                                                                               $4,722,880                     $11,508,875
                                                                               ==========                     ===========
</TABLE>
<PAGE>

     Ground leases have terms of fifty to sixty years and provide for additional
rent equal to a percentage, ranging from 50% to 60%, of gross revenues in excess
of a base amount from the rental of the buildings situated on the land.
Percentage rent totaled $18,750, $7,413, and $22,643 in 1996, 1995 and 1994,
respectively.  The Partnership is also entitled to that same percentage of the
net proceeds from the sale of the entire property after it has recovered its
cash investment in the land and mortgage loan.  The lease agreements require the
lessee to pay all operating expenses related to the subject land.  The lease for
the space in the Rivers Corporate Park building gives the tenant occupying the
building the right of first refusal to purchase the building and a right to
request the purchase of the land through November 2004 at fair market value.

     Generally, interest on the mortgage loans is payable monthly.  The loans
are secured by first mortgages on the buildings and by the ground leasehold
interests.

     Sale of Ontario Distribution Center

     The Ontario Distribution Center in Ontario, California was sold on June 17,
1994.  The net sale proceeds received by the Partnership fully repaid its ground
lease and mortgage loan investment and resulted in a gain of $1,385,562 ($45.72
per limited partnership unit), net of the disposition fee of $192,442 payable to
the advisor.  On July 28, 1994, the Partnership made a capital distribution to
the limited partners in the aggregate amount of $5,800,200 ($193.34 per limited
partnership unit) with the proceeds from this sale.

     Sale of Decatur TownCenter

     Decatur TownCenter in Decatur, Georgia was sold on October 10, 1996.  The
net sale proceeds received by the Partnership were used to repay the ground
lease investment and the carrying value of the mortgage loans.  Since the
mortgage loans were impaired, their carrying value had been previously reduced
to estimated fair market value, less anticipated costs of sale and thus no gain
or loss on the sale was recognized.  The total valuation allowance at the date
of sale was $2,349,592, including $ 9,592 provided in 1996, which included a
disposition fee of $196,775 payable to the advisor.  On October 25, 1996, the
Partnership made a capital distribution to the limited partners in the aggregate
amount of $5,599,800 ($186.66 per limited partnership unit) with proceeds from
this sale.

     Rivers Corporate Park

     The mortgage loan on Rivers Corporate Park matured on March 31, 1994.

     In October 1996, the Partnership reached an agreement in principle with the
borrower, whereby the maturity date will be extended to December 1997.  In
addition, the fixed interest and ground rental payments will be reduced, but the
Partnership's rate of participation in revenue from the underlying property will
be increased.  These changes will be retroactive to January 1, 1996; however,
any adjustment to amounts previously recognized by the Partnership is expected
to be insignificant.  Further, the Partnership will be able to cause a sale of
the property.


<PAGE>

     The tenancy at this property has become uncertain, with the sole tenant's
filing for bankruptcy in September 1996 and the successor company not yet
affirming or abandoning the lease. Execution of the amended agreement is
dependent upon the borrower's leasing the property to a suitable tenant and its
ability to meet the payment terms on the loan. During the fourth quarter of
1996, the Partnership determined that the Rivers Corporate Park mortgage loan
was impaired and recorded a valuation allowance of $400,000.

     Valuation Allowance

     The activity in the valuation allowance during 1995 and 1996, together with
the related recorded and carrying value of the impaired mortgage loans at the
beginning and end of each year, are summarized in the table below.

<TABLE>
<CAPTION>
                                                 Recorded      Valuation       Carrying
                                                  Value        Allowance        Value
                                                ----------    ------------    ----------
<S>                                             <C>           <C>             <C>
Balance at January 1, 1995                      $6,646,927    $(2,600,000)    $4,046,927
                                                ==========    ===========     ==========

Increase in estimated fair market value
of collateral                                                     260,000
                                                              -----------

Balance at December 31, 1995                     6,781,928     (2,340,000)     4,441,928
                                                ==========    -----------     ==========

Reduction in estimated fair market value
of collateral, net                                                 (9,592)

Additional impaired loan                                         (400,000)

Sale of collateral                                              2,349,592
                                                              -----------

Balance at December 31, 1996                    $4,000,000    $  (400,000)    $3,600,000
                                                ==========    ===========     ==========
</TABLE>
     Except for the effect of sales, the average recorded value of the impaired
mortgage loans did not differ materially from the balances at the end of the
period, except for reductions due to sales.


Note 4 - Investments in Property
--------------------------------

     The Willows Shopping Center investment (the "Willows"), acquired in 1984,
is owned jointly with an affiliate of the Partnership (the "Affiliate"); the
Partnership has a 25% ownership share.  The ground lessee/mortgagor stopped
paying interest on the mortgage loan as of March 1990.  As a result, the
Partnership and its Affiliate began foreclosure proceedings to take possession
of the property.  A protracted series of legal interactions ensued, including
the filing of an involuntary bankruptcy petition by the second leasehold
mortgagee.  In June 1991, the Partnership and its Affiliate sold the mortgage
note to the original owner of the Willows, who in turn undertook and completed
the foreclosure action.  The Partnership and its Affiliate received

                                       31
<PAGE>

a new mortgage note; the principal related to the Partnership's share is
$3,715,802. The note bears interest at 9.323% per annum, payable monthly;
however, it may accrue with interest compounded at 11%. The loan matures on June
18, 2001. The original owner also assumed the ground lease. The ground lease
provides for annual rental payments to the Partnership of $137,500. Rental
payments were accruable through June 1996, with interest compounding at 11%;
however, the Partnership has permitted additional accrual beyond that date as it
evaluates various alternatives. The ground lease also provides for participation
rentals at 70% of gross revenues in excess of a base amount to the Partnership
and its Affiliate. Under this investment arrangement, the Partnership and its
Affiliate are bearing substantial economic risks of ownership; accordingly, the
investment is being accounted for as a jointly owned property.

     In connection with a major renovation of the property, on January 1, 1995,
the Partnership and its Affiliate committed to make a construction loan to the
ground lessee in the amount of $2,500,000. This loan is also being accounted for
as an investment in property. The Partnership's share is $625,000 of which
$309,181 has been funded as of December 31, 1996. Interest accrues at 11%
compounded monthly; debt service payments began on January 1, 1996, including
principal payments based upon a 15-year amortization schedule. The note matures
on December 31, 1997. In addition, the ground lease was amended, whereby after
January 1, 1996, the Partnership and the Affiliate may, at their sole
discretion, offer the entire property for sale.

     At December 31, 1996 and 1995, the Partnership's proportionate share of the
carrying value of the property was comprised of land of $1,250,000 and building
and improvements of $4,338,459 and $3,867,318, respectively (net of accumulated
depreciation of $978,975 and $766,954, respectively).  The buildings are being
depreciated on a straight-line basis with an estimated useful life ranging from
20 to 25 years.

     The Partnership's proportionate share of future minimum rentals under non-
cancelable operating leases are: $679,250 in 1997; $675,000 in 1998; $661,750 in
1999; $629,750 in 2000; $591,250 in 2001; and $3,655,750 thereafter.

                                       32
<PAGE>

Note 5 - Income Taxes
---------------------

     The Partnership's income for federal income tax purposes differs from that
reported in the accompanying statement of operations as follows:
<TABLE>
<CAPTION>

                                                              Year ended December 31,
                                                   -----------------------------------------
                                                       1996           1995           1994
                                                       ----           ----           ----
<S>                                                <C>             <C>            <C>
Net income per financial
 statements                                        $   539,500     $1,569,268     $3,129,077

Timing differences:
 Ground rent and mortgage loan interest (1)            947,478        688,074        602,941
 (Loss) gain on sale                                (3,631,081)             -        223,483
 Valuation allowance                                   400,000       (260,000)      (200,000)
                                                   -----------     ----------     ----------

Taxable (loss) income                              $(1,744,103)    $1,997,342     $3,755,501
                                                   ===========     ==========     ==========
</TABLE>
(1)  Represents additional contractual revenue recognized for tax purposes
     related to the Willows Shopping Center in.


Note 6 - Partners' Capital
--------------------------

     Allocations of net income (losses) from operations and distributions of
distributable cash from operations, as defined, are in the ratio of 99% to the
limited partners and 1% to the general partner.  Cash distributions are made
quarterly.

     Net sales proceeds and financing proceeds are allocated first to limited
partners to the extent of their contributed capital plus a stipulated return
thereon, as defined, second to pay disposition fees, and then 85% to the limited
partners and 15% to the general partner.  As a result of such transactions, the
adjusted capital contribution per limited partnership unit was reduced from
$1,000 to $790 during 1985, from $790 to $740 during 1991, from $740 to $546.66
during 1994. and from $546.66 to $360 during 1996.  Income from a sale is
allocated in proportion to the distribution of related proceeds, provided that
the general partner is allocated at least 1%.  Income or losses from a sale, if
there are no residual proceeds after the repayment of the related debt, will be
allocated 99% to the limited partners and 1% to the general partner.


Note 7 - Subsequent Event
-------------------------

     The general partner decided not to make a quarterly distribution of cash
flow from operations related to the fourth quarter of 1996.  The uncertainty as
to cash flow from Rivers Corporate Park due to the bankruptcy of the sole tenant
has warranted an increase in working capital reserves.

                                       33
<PAGE>

<TABLE>
<CAPTION>



                                                  NEW ENGLAND PENSION PROPERTIES
                                                 A REAL ESTATE LIMITED PARTNERSHIP                              SCHEDULE III

                                             REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                       AT DECEMBER 31, 1996

                                                                              Costs Subsequent       Gross Amount at Which
                                     Initial Costs to Partnership             to Acquisitions      Carried at Close of Period
                            -------------------------------------------   -----------------------------------------------------
                             Encum-                       Buildings &       Improve-                         Buildings &
Description                  brance          Land         Improvements        ments           Land            Improvements
-----------------------     ---------      ----------    --------------     ---------       ----------       --------------
<S>                         <C>            <C>            <C>                <C>            <C>                <C>
Research and
 Development Facility
 Columbia, Maryland          Note A         1,122,880           --               --          1,122,880            --

25% interest in
 Shopping Center
 Concord, California         Note A         1,250,000       3,298,795         2,018,639      1,250,000          5,317,434
                             -------        ----------      ---------        -----------    ----------          ---------
    Total                                  $2,372,880      $3,298,795        $2,018,639     $2,372,880         $5,317,434
                            ===============================================================================================

<CAPTION>

                             Accrued                       Accumulated      Date of            Date          Depreciable
Description                 Ground Rent     Total         Depreciation      Construction     Acquired           Life
-----------------------     ------------   ----------    --------------     ------------    ----------       --------------
<S>                         <C>            <C>            <C>                <C>            <C>               <C>

Research and
Development Facility
Columbia, Maryland                  --      1,122,880          --               --            03/28/84            --

25% interest in
 Shopping Center
 Concord, California                --      6,567,434        (978,975)           - (L)        07/10/84
                                                                                   (B)        06/18/91          25 years
                            ------------   ----------    --------------     ------------    ----------       --------------
     Total                       $0        $7,690,314       ($978,975)
                            ===============================================================================================

</TABLE>

(L) Land
(B) Buildings and Improvements
Notes:
(A) All senior mortgages on the properties are held by New England Life Pension
    Properties

(B) Reconciliation of real estate owned:


<TABLE>
        <S>                                            <C>
        Balance at beginning of year                    $8,951,218
            Acquisitions                                   683,162
            Dispositions                                (1,944,066)
                                                       -----------

        Balance at end of year                          $7,690,314
                                                       ===========
        Accumulated depreciation
          at beginning of year                            $766,954
        Depreciation expense 1996                          212,021
                                                       -----------
        Accumulated depreciation at end of year           $978,975
                                                       ===========

</TABLE>
<PAGE>



                      NEW ENGLAND LIFE PENSION PROPERTIES;
                       A REAL ESTATE LIMITED PARTNERSHIP
                                                                     SCHEDULE IV
                         MORTGAGE LOANS ON REAL ESTATE
                             AT DECEMBER 31, 1996

<TABLE>
<CAPTION>

                                                                                   Valuation
                                    Final      Periodic                Cost        allowance     Accrued     Deferred    Carrying
                          Interest Maturity    Payment  Face Amount   Recovery    for impaired   Interest   Acquisition  Amount of
Description                 Rate    Date       Terms    of Mortgage   Allowance  Mortgage loans  Receivable    Fees      Mortgage
-----------               -------- --------    -------- -----------   ---------  --------------  ----------  ---------   ---------
<S>                       <C>      <C>        <C>       <C>           <C>        <C>             <C>         <C>         <C>
Research and Development
Facility                                      Interest
Columbia, Maryland         11.50%  03/28/94    Monthly    4,000,000       --        (400,000)           --       --      $3,600,000
                     (See Note 3)             Principal
                                             at Maturity

                           --------------------------------------------------------------------------------------------------------
          Total                                          $4,000,000        $0      ($400,000)          $0        $0      $3,600,000
                           ========================================================================================================
</TABLE>

<TABLE>
                           <S>                                             <C>
                           Balance at beginning of year                    $8,441,928
                           Valuation allowance for impaired loans            (409,592)
                           increase in accrued ground lease/mortgage
                              loan receivables                                      0
                           Amortization of deferred acquisition fees                0
                           Disposition                                     (4,432,336)
                                                                         ------------

                                                                            3,600,000
                                                                         ============
</TABLE>
<PAGE>

                             FINANCIAL STATEMENTS
                                  INDEX NO. 2

                   Auditor's Report and Financial Statements

                    of Decatur TownCenter Associates, L.L.C.
                 (Formerly Decatur TownCenter Associates, Ltd.)


                                                                         Page #


Independent Auditor's Report of Duggan & Massey, P.C. ......................

Balance Sheet - October 9, 1996 ............................................

Statement of Income - For the Short Period Ended
  October 9, 1996 ..........................................................

Statement of Changes in Partner's Capital - For the
  Short Period Ended October 9, 1996 .......................................

Statement of Cash Flows - For the Short Period Ended
  October 9, 1996 ..........................................................

Notes to Financial Statements ..............................................
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.

                               (FORMERLY DECATUR

                          TOWNCENTER ASSOCIATES, LTD.)

                              FINANCIAL STATEMENTS

                                OCTOBER 9, 1996
<PAGE>

              [LETTERHEAD OF DUGGAN & MASSEY, P.C. APPEARS HERE]


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------


To The Members
Decatur TownCenter Associates, L.L.C.

We have audited the accompanying balance sheet of Decatur TownCenter Associates,
L.L.C. (formerly Decatur TownCenter Associates, Ltd.) as of October 9, 1996 and
the related statements of  income, members' capital and cash flows for the short
year then ended.  These financial statements are the responsibility of the
Company'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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Decatur TownCenter Associates,
L.L.C. as of October 9, 1996 and the results of its operations and its cash
flows for the short year then ended, in conformity with generally accepted
accounting principles.

                                                      /s/ Duggan & Massey, PC

November 21, 1996
<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                                 BALANCE SHEETS
                                 OCTOBER 9, 1996

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>

<S>                                                   <C>          <C>
Current Assets
  Cash                                                $    71,396
  Accounts receivable - tenants (Net of
     allowance for doubtful accounts of
     $6,506)                                              127,026
  Accounts receivable - others                             14,624
  Escrow account                                          679,379
  Prepaid expenses                                        102,196
                                                      -----------

        Total Current Assets                                       $   994,621

Land                                                                 1,262,000
Building and Improvements (Net of
  accumulated depreciation of
  $3,260,582)                                                       12,360,209

Other Assets
  Loan costs (Net of accumulated
     amortization of $100,000)                            104,811

  Commissions and procurement fees
     (net of accumulated amortization of
     $121,916)                                            432,962

  Accrued Rents Receivable                                 66,667
                                                      -----------

       Total Other Assets                                              604,440
                                                                   -----------

       Total Assets                                                $15,221,270
                                                                   ===========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                       LIABILITIES AND MEMBERS' CAPITAL
                       --------------------------------

<S>                                            <C>             <C>
Current Liabilities
  Accounts payable                             $      58,749
  Deferred income                                    159,541
  Tenant allowance payable                           210,238
  Security deposit                                     1,964
                                               -------------

       Total Current Liabilities                                $     430,492

Long-Term Liabilities
  Mortgage payable                                                 12,650,000
                                                                -------------

       Total Liabilities                                           13,080,492

Partners' Capital                                                   2,140,778
                                                                -------------

       Total Liabilities and Partners' Capital                  $  15,221,270
                                                                =============
</TABLE>



                See accompanying notes and accountant's report.
<PAGE>
                      DECATUR TOWNCENTER ASSOCIATES L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                               STATEMENT OF INCOME
                          PERIOD ENDED OCTOBER 9, 1996

<TABLE>
<S>                                                    <C>                    <C>
Rental Income                                                                     $ 1,002,257
                                                                               ---------------
Expenses
    Amortization                                       $      76,536
    Bad debts                                                  2,049
    Depreciation                                             192,167
    Donations                                                    475
    General building maintenance                              86,839
    Insurance                                                  8,243
    Interest                                                 561,018
    Legal and accounting                                      36,040
    Management fees and commissions                           62,887
    Office                                                     5,131
    Parking deck                                              10,488
    Professional fees                                          8,778
    Salary reimbursement                                      22,589
    Security                                                  21,972
    Taxes and licenses                                       109,801
    Utilities                                                 98,578
                                                       -------------
            Total Expenses                                                          1,303,591
                                                                               ---------------

            Operating Loss                                                           (301,334)

Other Income and Expenses
    Interest income                                                                       865
                                                                               ---------------

            Loss Before Extraordinary Item                                           (300,469)

Extraordinary Item
    Debt Forgiveness Income                                                         3,257,821
                                                                               ---------------

            Net Income                                                            $ 2,957,352
                                                                               ===============
</TABLE>

                See accompanying notes and accountant's report.
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES L.L.C.
                (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         STATEMENT OF MEMBERS' CAPITAL
                         PERIOD ENDED OCTOBER 9, 1996


<TABLE>
<S>                                                       <C>
Balance, beginning of period                               $ (6,080,274)

Contributions to capital                                      5,263,700

Net income for the period                                     2,957,352
                                                           ------------

Balance, end of period                                      $ 2,140,778
                                                           ============
</TABLE>




                See accompanying notes and accountant's report.
<PAGE>


                     DECATUR TOWNCENTER ASSOCIATES L.L.C.
                (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                            STATEMENT OF CASH FLOWS
                         PERIOD ENDED OCTOBER 9, 1996
<TABLE>
<CAPTION>

<S>                                                           <C>                <C>
Cash Flows From Operating Activities:
   Net Income                                                                    $  2,957,352
   Adjustments to reconcile net income
     to net cash provided by operating
     activities:
       Gain on extraordinary item                             $ (3,257,821)
       Depreciation and amortization                               268,703
       (Increase) Decrease in assets:
          Accounts receivable - tenants                            (39,524)
          Accounts receivable - others                              (8,796)
          Prepaid expenses                                         (75,816)
          Escrow from loan closing                                (679,379)
       Increase (Decrease) in Liabilities:
          Accounts payable and accrued
            liabilities                                           (564,701)        (4,357,334)
                                                              ------------       ------------
             Net cash provided by
                operating activities                                               (1,399,982)

Cash Flows From Investing Activities:
   Capital expenditures                                           (127,181)
   Purchase of interest in Decatur TownCenter II                (9,540,860)
   Purchase of land - Phase I                                   (1,262,000)
   Distribution on termination of Decatur TownCenter II             49,279
                                                              ------------
             Net Cash Used By
                Investing Activities                                              (10,880,762)

Cash Flows From Financing Activities:
   Loan costs                                                     (104,811)
   Proceeds from mortgage note                                  12,650,000
   Payment on mortgage note                                     (4,694,140)
   Contributions to capital                                      4,400,000
                                                              ------------
             Net Cash Provided By
                Financing Activities                                               12,251,049
                                                                                 ------------
Net decrease in cash and
   cash equivalents                                                                   (29,695)

Cash and cash equivalents at beginning of year                                        101,091
                                                                                 ------------

Cash and cash equivalents at end of period                                       $     71,396
                                                                                 ============

Supplemental disclosure of cash flow information:

   Cash paid during the period for interest                                      $    398,355
                                                                                 ============

</TABLE>

                See accompanying notes and accountant's report.
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         NOTES TO FINANCIAL STATEMENTS
                                OCTOBER 9, 1996


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Description of Operations
     -------------------------
     Decatur TownCenter Associates, Ltd. was formed on March 8, 1984 as a
     partnership between A.J. Land, Jr., Daniel B. Pattillo and Lawrence P.
     Kelly.  A.J. Land, Jr. was the general partner of the project.  The
     partnership was established to construct, manage, and lease an office
     building in Decatur, Georgia.  On October 9, 1996, Decatur TownCenter
     Associates, Ltd. changed its name to Decatur TownCenter Associates, L.L.C.
     In addition to the name change, the Partnership accepted three new members
     on October 9, 1996.  These new members are Hempel & Lenz, Inc., SHB
     Partners, III and Pinehill Decatur, G.P.  The original Partners contributed
     their interest to DTC Holdings, L.L.C.

     Allocation of Income and Loss
     -----------------------------
     All income or loss from January 1, 1996 through October 9, 1996 is
     allocated 100% to the members of DTC Holdings, L.L.C. individually.
     Thereafter, all income generated after October 9, 1996 is allocated as
     follows:

       A) A preferred cumulative return on members invested capital of 12% per
          annum as shown below:

               DTC Holdings, L.L.C.      13.63%
               Pinehill Decatur, G. P.   31.82%
               SHB Partners III          15.91%
               Hempel & Lenz             38.64%

       B) Any excess income after the preference return is allocated as
          follows:

               DTC Holdings, L.L.C.      22.27%
               Pinehill Decatur, G. P.   28.64%
               SHB Partners III          14.32%
               Hempel & Lenz             34.77%

     Any loss generated after October 9, 1996 is allocated based upon the same
     allocation percentage as income allocated after preferred returns as noted
     in (B) above.

     Building and Improvements
     -------------------------
     Building and improvements are carried at cost.  Depreciation on the
     building is computed using the straight-line method over a thirty year
     period.  Tenant improvements are being depreciated using the straight-line
     method over the lives of the related tenant leases.  Expenditures for
     maintenance, repairs, renewals and improvements which do not materially
     extend the useful lives of the assets are charged to current earnings.

     Intangible Assets
     -----------------
     Loan costs are being amortized using the straight-line method over the life
     of the loan.
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         NOTES TO FINANCIAL STATEMENTS
                                OCTOBER 9, 1996

     Commissions and procurement fees are being amortized using the straight-
     line method over the lives of the related leases.

     Income Taxes
     ------------
     These financial statements do not reflect a provision or expense for income
     taxes.  Each member's pro rata share of income or loss is reported on their
     individual income tax return.

     Cash and Cash Equivalents
     -------------------------
     For purposes of the statements of cash flows, the Limited Liability Company
     considers all highly liquid debt instruments purchased with a maturity of
     twelve months or less together with accrued interest to be cash
     equivalents.

2.        BUILDING AND IMPROVEMENTS


     The investment in building and improvements consists of the following:

<TABLE>
<CAPTION>
                                          October 9,
                                            1996
                                       -------------
<S>                                    <C>

PHASE I
-------
Construction period interest
    and taxes                          $    338,060
Building                                  3,973,681
Landscape and lobby                         116,102
Furniture and equipment                       9,067
Tenant and capital improvements           1,838,888
Less:  accumulated depreciation         ( 3,260,582)
                                       ------------

Total Building and Improvements        $  3,015,216
                                       ============
<CAPTION>
                                         October 9,
                                            1996
                                       ------------
<S>                                    <C>

PHASE II
--------
Building                               $  8,208,510
Landscaping                                 100,655
Furniture and equipment                       7,272
Tenant and capital improvements           1,028,556
                                       ------------

                                       $  9,344,993
                                       ============
</TABLE>
3.   FIRST MORTGAGE PAYABLE

     New England Life Pension Properties held a first mortgage secured by all of
     the real property and improvements of the partnership.  The total proceeds
     were $5,825,000.  Monthly payments of interest only began April 1, 1985 and
     continued until October 9, 1996.  Interest expense amounted to $498,497 for
     the short year ended October 9, 1996.  The first mortgage was retired in
     conjunction with the refinancing through NationsBank.  (See Note 8).
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         NOTES TO FINANCIAL STATEMENTS
                                OCTOBER 9, 1996




4.   SECOND MORTGAGE PAYABLE

     New England Life Pension Properties ($633,076) and Decatur TownCenter
     Associates, Ltd. partners ($422,040) held a second leasehold mortgage
     secured by all of the real property and improvements of the Partnership.
     The total proceeds were $1,055,116.  Interest expense amounted to $58,876
     for the short year ended October 9, 1996.  The second mortgage was retired
     in conjunction with the refinancing through NationsBank.  (See Note 8).

5.   RELATED PARTY TRANSACTIONS

     The Partnership has contracted with related parties for the performance of
     various management, leasing and construction services.  The Decatur
     TownCenter Associates, L.L.C. members have common ownership and management
     control with Land Realty Services, Land & Property In-Town, Pope and Land
     Enterprises, and Decatur TownCenter II Associates.

     Amounts involving related parties are summarized as follows:
<TABLE>
<CAPTION>

                                    October 9,
                                       1996
                                    ----------
<S>                                 <C>

Capital improvements                 $32,713
Construction-tenant finishes          88,817
Office expense                           978
General maintenance                   21,640
Commissions                           54,967
Management fees                       29,579
Salaries                              22,589
</TABLE>


6.   LEASE COMMITMENTS

     Land - Building Site
     --------------------
     The Partnership sold to and leased back from New England Life Pension
     Properties the land on which the Phase I building is located.  The
     Partnership was committed to a sixty-year lease beginning February 20,
     1985.  The lease covers property of approximately one acre under the
     building.  In addition, the partnership owned approximately one and one-
     half acres on which the parking lot is located.  On October 9, 1996, the
     Partnership exercised its option to buy back the land and parking lot at
     the time the first mortgage was satisfied.  The purchase price of the land
     and parking lot was $1,262,000.  (See Note 8).

<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         NOTES TO FINANCIAL STATEMENTS
                                OCTOBER 9, 1996

7.   PURCHASE OF LAND AND RETIREMENT OF DEBT

     On October 9,1996 Decatur TownCenter Associates, L.L.C. entered into an
     agreement with New England Pension Properties to purchase the land on which
     the limited liability company's building is located and retire all debt
     owed to New England Pension Properties.  The terms of the agreement were as
     follows:
<TABLE>
<CAPTION>

<S>                                                   <C>           <C>
          Accrued ground lease                        $  603,000    (See Note 11)
          Land                                         1,262,000
          Payment of indebtedness                      4,694,140    (See Note 11)
          Miscellaneous costs of acquisition              44,600
          Less:  Transfer tax credits                 (    1,262)
          Less:  Disbursement to other parties        (   41,000)
                                                      ----------

          Amount paid to New England
            Pension Properties                        $6,561,478
                                                      ==========
</TABLE>
8.   NOTE PAYABLE - NATIONSBANK

     On October 9, 1996, Decatur TownCenter Associates, L.L.C. took out a note
     from NationsBank to finance the purchase of the Decatur TownCenter (Phase
     I) land, purchase the interest in Decatur TownCenter II Associates and to
     replace the NELP financing on Phase I building.  The principal amount of
     the note is $12,650,000 and is secured by all of the real property and
     improvements of the Limited Liability Company, interest payments commence
     November 1, 1996 and continue through October 1, 1998.  Principal and
     interest payments commence November 1, 1998 and continue to maturity.  The
     maturing date of this note is September 10, 1999 with the extended maturity
     to September 10, 2000 or September 10, 2001 at the option of Decatur
     TownCenter Associates, L.L.C.  The interest rate on this note is variable
     and calculated based on various indices at the election of Decatur
     TownCenter Associates, L.L.C.

9.   CAPITAL CONTRIBUTIONS

     On October 9, 1996, notes previously due to A. J. Land, Jr., Larry Kelly
     and Daniel Patillo as well as previously accrued interest were deemed to be
     contributions to the capital of Decatur TownCenter Associates, L.L.C.
<TABLE>
<CAPTION>

                    Principal Value    Interest Accrued    Total Value of
      Member        Value of Note         on Note          Contribution
 --------------    ----------------   ------------------   ----------------
<S>                    <C>                <C>                 <C>
A. J. Land, Jr.        $224,718            $235,166          $459,884
Larry Kelly              52,604              55,049           107,653
Daniel Patillo          144,718             151,445           296,163
                   ----------------   ------------------   ----------------
Totals                 $422,040            $441,660          $863,700
                   ================   ==================   ================
</TABLE>
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         NOTES TO FINANCIAL STATEMENTS
                                OCTOBER 9, 1996




     Additionally, capital contributions were made by the new members of the
     Limited Liability Company as follows:
<TABLE>
<CAPTION>

                               CONTRIBUTED
MEMBER                           CAPITAL
------                       ---------------
<S>                            <C>
DTC Holdings, L.L.C.            $  600,000
Hampel & Lenz, Inc.              1,700,000
SHB III Partners                   700,000
Pine Hill Decatur, G.P.          1,400,000
                             ---------------
                                $4,400,000
                             ===============
</TABLE>
     Total contributions to capital for the short year ended October 9, 1996
     were $5,263,700.

10.  TECHNICAL TERMINATION DISTRIBUTION

     On October 9, 1996, Decatur TownCenter Associates, L.L.C. purchased the
     remaining interest in Decatur TownCenter II Associates from New England
     Pension Life Pension Properties IV.  This caused a technical termination of
     the Joint Venture by operation of law.  Decatur TownCenter Associates,
     L.L.C. succeeded to all the assets and liabilities of the terminated Joint
     Venture as the sole remaining Joint Venturer.
<TABLE>
<CAPTION>

<S>                                     <C>
Cash                                        $   49,279
Prepaid expenses                                60,442
Accounts receivable                             79,419
Building and property                        9,344,993
Intangible assets                              339,259
Other operating assets                          66,666
Less other operating liabilities           (   359,526)
                                          ---------------
Total Investment in Assets of
    Decatur TownCenter, II
    Associates due to
    Technical Termination                   $9,580,532
</TABLE>                                  ===============

11.  EXTRAORDINARY INCOME - FORGIVENESS OF DEBT

     In conjunction with the purchase of land and retirement of debt held by New
     England Pension Properties, Decatur TownCenter Associates, L.L.C.
     recognized income from the forgiveness of debt.
<PAGE>

                     DECATUR TOWNCENTER ASSOCIATES, L.L.C.
                 (FORMERLY DECATUR TOWNCENTER ASSOCIATES, LTD.)
                         NOTES TO FINANCIAL STATEMENTS
                                OCTOBER 9, 1996


<TABLE>
<S>                                         <C>
First Mortgage Payable                       $  5,825,000
Second Mortgage Payable                           633,076
Accrued Interest First Mortgage                    28,865
Accrued Interest Second Mortgage                  722,995
Accrued Ground Lease                            1,345,025
Less Ground Lease Paid                       (    603,000)
Less payment on First/Second Mortgage        (  4,694,140)
                                            ---------------

Extraordinary Income-Forgiveness of Debt     $  3,257,821
                                            ===============
</TABLE>

12.  RENTALS UNDER OPERATING LEASES

     Minimum future rental income on noncancellable operating leases as of
     October 9, 1996 is:

<TABLE>
<CAPTION>
                   Year Ending           Minimum Future
                   December 31              Rentals
                   -----------           --------------

                   <S>                   <C>
                       1997                  $2,684,759
                       1998                   2,458,274
                       1999                   2,036,803
                       2000                   1,719,678
                       2001                   1,442,635
                       Thereafter             4,454,935
                                          -------------

                       Total              $  14,797,084
                                          -------------
</TABLE>

13.  CONTINGENCY

          At December 31, 1995, the partnership was negotiating with New England
     Life Pension Properties to purchase the land and retire the debt to NELP.
     Had these negotiations been unsuccessful, NELP had the option to offer the
     property for sale at its sole discretion.  The purchase of the land and the
     refinancing has alleviated this contingency.
<PAGE>

                             FINANCIAL STATEMENTS
                                  INDEX NO. 3

                   Auditor's Report and Financial Statements

                     of Decatur TownCenter Associates, Ltd.

                                                                       Page #

Independent Auditor's Report of Duggan & Massey, P.C .....................

Balance Sheet - December 31, 1995 and 1994 ...............................

Statement of Income - For the Years Ended
  December 31, 1995, 1994 and 1993 .......................................

Statement of Changes in Partner's Capital - For the Years Ended
  December 31, 1995, 1994 and 1993 .......................................

Statement of Cash Flows - For the Years Ended
  December 31, 1995, 1994 and 1993 .......................................

Notes to Financial Statements ............................................

<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, LTD.

                              FINANCIAL STATEMENTS

                       DECEMBER 31, 1995, 1994, AND 1993
<PAGE>

              [LETTERHEAD OF DUGGAN & MASSEY, P.C. APPEARS HERE]


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------


To The Partners
Decatur TownCenter Associates, Ltd.

We have audited the accompanying balance sheets of Decatur TownCenter
Associates, Ltd. as of December 31, 1995 and 1994 and the related statements of
income, partners' capital and cash flows for each of the three years in the
period ended December 31, 1995.  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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all  material respects, the financial position of Decatur TownCenter Associates,
Ltd. as of December 31, 1995 and 1994 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern.  The Partnership's significant
cash deficits and operating losses raise substantial doubt about its ability to
continue as a going concern.  The Partnership's ability to continue as a going
concern is dependent on attaining future positive cash flow and/or additional
financing.  The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


                                                      /s/ Duggan & Massey, PC

January 15, 1996
<PAGE>
                      DECATUR TOWNCENTER ASSOCIATES, LTD.

                                BALANCE SHEETS

                                    ASSETS
                                    ------
<TABLE>
<CAPTION>

                                                               December 31
                                                     ---------------------------------
                                                          1995               1994
                                                     --------------    ---------------
<S>                                                  <C>               <C>
Current Assets
    Cash                                              $    101,091      $      15,024
    Accounts receivable - tenants (Net of
        allowance for doubtful accounts of
        $340 and $1,072)                                     8,422             20,376
    Accounts receivable - others                             9,810              3,955
    Prepaid expenses                                         2,826              1,860
                                                     --------------    ---------------
            Total Current Assets                           122,149             41,215
                                                     --------------    ---------------
Building and Improvements (Net of
    accumulated depreciation of
    $3,059,894 and $2,818,534)                           2,978,833          3,161,332
                                                     --------------    ---------------
Other Assets
    Loan costs (Net of accumulated
        amortization of $100,000 and
        $98,349)                                               -0-              1,650
    Commissions and procurement fees
        (Net of accumulated amortization of
        $141,934 and $89,770)                              123,638            156,906

Investment in Decatur TownCenter II
    Associates                                                   1                  1
                                                     --------------    ---------------
            Total Other Assets                             123,639            158,557
                                                     --------------    ---------------
            Total Assets                               $ 3,224,621        $ 3,361,104
                                                     ==============    ===============
</TABLE>

<PAGE>
                   LIABILITIES AND PARTNERS' CAPITAL
                   ---------------------------------
<TABLE>
<CAPTION>

                                                                December 31
                                                      --------------------------------
                                                           1995              1994
                                                      --------------    --------------
<S>                                                   <C>               <C>
Current Liabilities
  First mortgage payable                                $ 5,825,000       $ 5,825,000
  Second mortgage payable                                 1,055,116         1,055,116
  Accrued interest expense                                1,190,277           994,535
  Accrued ground rent expense                             1,189,250           988,250
  Accounts payable                                           42,200            40,356
  Rents received in advance                                   1,088             1,536
  Security deposit                                            1,964             1,964
                                                      --------------    --------------

      Total Current Liabilities                           9,304,895         8,906,757
                                                      --------------    --------------







Partners' Capital                                        (6,080,274)       (5,545,653)
                                                      --------------    --------------




      Total Liabilities and Partners' Capital           $ 3,224,621       $ 3,361,104
                                                      ==============    ==============
</TABLE>


                See accompanying notes and accountant's report.
<PAGE>
                      DECATUR TOWNCENTER ASSOCIATES LTD.
                             STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                                   Years Ended
                                                                                   December 31

                                                           -----------------------------------------------------------
                                                               1995                1994                  1993
                                                           ----------------    -----------------    ------------------

Rental Income                                                  $ 1,143,642          $ 1,200,783           $ 1,080,745
                                                           ----------------    -----------------    ------------------
<S>                                                        <C>                 <C>                  <C>
Expenses
    Advertising and promotion                                        3,433                4,480                   857
    Amortization                                                    65,084               69,133                58,240
    Bad debts                                                        9,524                 (530)                  620
    Depreciation                                                   230,092              224,828               213,102
    Donations                                                          100                  248                   120
    General building maintenance                                   112,535              104,466               100,522
    Ground rent                                                    201,000              201,000               201,000
    Insurance                                                       10,336                6,611                10,635
    Interest                                                       621,739              621,734               655,714
    Legal and accounting                                            11,717                9,762                 8,735
    Management fees and commissions                                 75,201               65,888                62,854
    Miscellaneous rental expense                                        -0-               1,337                   971
    Office                                                           5,355                5,324                 3,864
    Parking deck                                                    11,465               12,783                10,417
    Salary reimbursement                                            36,263               37,716                27,622
    Security                                                        21,208               18,599                17,501
    Taxes and licenses                                             142,618              123,490               131,827
    Utilities                                                      119,980              122,336               122,318
                                                           ----------------    -----------------    ------------------
            Total Expenses                                       1,677,650            1,629,205             1,626,919
                                                           ----------------    -----------------    ------------------
            Operating Loss                                        (534,008)            (428,422)             (546,174)
                                                           ----------------    -----------------    ------------------
Other Income and Expenses
    Interest income                                                    307                  845                 3,956
    Penalty                                                           (920)                  -0-                   -0-
                                                           ----------------    -----------------    ------------------
      Total Other Income and Expenses                                 (613)                 845                 3,956
                                                           ----------------    -----------------    ------------------

            Net Loss                                           $  (534,621)         $  (427,577)          $  (542,218)
                                                           ================    =================    ==================

</TABLE>
                See accompanying notes and accountant's report.

<PAGE>
                      DECATUR TOWNCENTER ASSOCIATES LTD.
                         STATEMENTS OF PARTNERS' CAPITAL


<TABLE>
<CAPTION>
                                                                        Years Ended
                                                                        December 31
                                                  -----------------------------------------------------
                                                       1995                1994               1993
                                                  --------------      --------------     --------------


<S>                                               <C>                 <C>                <C>
Balance, beginning of period                       $ (5,545,653)       $ (5,118,076)      $ (4,575,858)


Net loss for the period                                (534,621)           (427,577)          (542,218)
                                                  --------------      --------------     --------------


Balance, end of period                             $ (6,080,274)       $ (5,545,653)      $ (5,118,076)
                                                  ==============      ==============     ==============
</TABLE>

<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES LTD.
                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          Years Ended
                                                                          December 31
                                                          ------------------------------------------
                                                              1995           1994           1993
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
Cash Flows From Operating Activities:
  Net loss                                                $  (534,621)   $  (427,577)   $  (542,218)
  Adjustments to reconcile net loss
    to net cash provided by operating
    activities:
      Depreciation and amortization                           295,176        293,961        271,342
      (Increase) Decrease in assets:
         Accounts receivable - tenants                         11,954         10,072        (11,785)
         Accounts receivable - others                          (5,855)        (3,955)         6,965
         Prepaid expenses                                        (966)           722         11,578
      Increase (Decrease) in Liabilities:
         Accounts payable and accrued
           liabilities                                        398,586        238,464        265,679
         Rents received in advance                               (448)        (4,964)         6,500
                                                          ------------   ------------   ------------

             Net cash provided by
               operating activities                           163,826        106,723          8,061

Cash Flows From Investing Activities:
  Capital expenditures                                        (77,759)      (155,176)      (294,623)
                                                          ------------   ------------   ------------

Net increase (decrease) in cash and
  cash equivalents                                             86,067        (48,453)      (286,562)

Cash and cash equivalents at beginning
  of year                                                      15,024         63,477        350,039
                                                          ------------   ------------   ------------

Cash and cash equivalents at end of year                  $   101,091    $    15,024    $    63,477
                                                          ============   ============   ============



Supplemental disclosure of cash flow information:
  Cash paid during the year for interest                  $   425,996    $   577,822    $   599,154
                                                          ============   ============   ============
</TABLE>




                See accompanying notes and accountant's report.
<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, LTD.
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1995


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Description of Operations
     -------------------------

     Decatur TownCenter Associates, Ltd. was formed on March 8, 1984 as a
     partnership between A.J. Land, Jr., Daniel B. Pattillo and Lawrence P.
     Kelly.  A.J. Land, Jr. is the general partner of the project.  The
     partnership was established to construct, manage, and lease an office
     building in Decatur, Georgia.

     Building and Improvements
     -------------------------

     Building and improvements are carried at cost.  Depreciation on the
     building is computed using the straight-line method over a thirty year
     period.  Tenant improvements are being depreciated using the straight-line
     method over the lives of the related tenant leases.  Expenditures for
     maintenance, repairs, renewals and improvements which do not materially
     extend the useful lives of the assets are charged to current earnings.

     Intangible Assets
     -----------------

     Loan costs are being amortized using the straight-line method over a ten
     year period.

     Commissions and procurement fees are being amortized using the straight-
     line method over the lives of the related leases.

     Income Taxes
     ------------

     These financial statements do not reflect a provision or expense for income
     taxes.  Each partner's pro rata share of income or loss is reported on
     their individual income tax return.

     Reclassifications
     -----------------

     Certain amounts in the prior year financial statements have been
     reclassified for comparative purposes to conform with the presentation in
     the current year financial statements.

     Cash and Cash Equivalents
     -------------------------

     For purposes of the statements of cash flows, the Partnership considers all
     highly liquid debt instruments purchased with a maturity of twelve months
     or less together with accrued interest to be cash equivalents.
<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, LTD.
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1995


2.    BUILDING AND IMPROVEMENTS

     The investment in building and improvements consists of the following:

<TABLE>
<CAPTION>

                                           December 31
                                   ---------------------------
                                       1995            1994
                                   ------------     ----------
<S>                                <C>           <C>

Construction period interest
    and taxes                      $   338,060   $    338,060
Building                             3,863,063      3,863,063
Landscape and lobby                    116,102        116,102
Furniture and equipment                  9,067          9,067
Tenant and capital improvements      1,712,435      1,653,574
Less:  accumulated depreciation     (3,059,894)   ( 2,818,534)
                                   -----------   ------------

Total Building and Improvements    $ 2,978,833   $  3,161,332
                                   ===========   ============
</TABLE>
3.   FIRST MORTGAGE PAYABLE

     New England Life Pension Properties holds a first mortgage secured by all
     of the real property and improvements of the partnership.  The total
     proceeds were $5,825,000.  Monthly payments of interest only began April 1,
     1985 and continue until maturity.  On February 19, 1995, the maturity date
     of the note was changed from February 19, 1995 to December 31, 1996.  On
     the maturity date, the loan shall be due and payable in full, including any
     unpaid interest.  Annual interest expense amounted to $495,125 for the year
     ended December 31, 1995, $495,125 for the year ended December 31, 1994, and
     $529,100 for the year ended December 31, 1993.  Interest in the amount of
     $84,498, $15,369 and $98,072 was accrued but unpaid at December 31, 1995,
     1994 and 1993, respectively.  There are no binding agreements to refinance
     on or after the maturity date.  The promissory note was amended March 1,
     1993 to reduce the interest rate from 12% to 8.5% per annum.

4.   SECOND MORTGAGE PAYABLE

     New  England Life Pension Properties ($633,076) and Decatur TownCenter
     Associates, Ltd. partners ($422,040) hold a second leasehold mortgage
     secured by all of the real property and improvements of the Partnership.
     The total proceeds were $1,055,116.  The loan bears interest at twelve
     percent per year, beginning March 10, 1986 until maturity.  On February 19,
     1995, the maturity date of the note was changed from February 19, 1995 to
     December 31, 1996.  On the maturity date, the loan shall be due and payable
     including accrued interest.  There are no binding agreements to refinance
     on or after the maturity date.  Annual interest expense amounted to
     $126,614 for each of the years ended December 31, 1995, 1994, and 1993.
     Interest in the amount of $1,105,779, $979,165 and $852,551 was accrued but
     unpaid at December 31, 1995, 1994 and 1993, respectively.
<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, LTD.
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1995



5.   RELATED PARTY TRANSACTIONS

     The Partnership has contracted with related parties for the performance of
     various management, leasing and construction services.  The Decatur
     TownCenter Associates, Ltd. partners have common ownership and management
     control with Land Realty Services, Land & Property In-Town, Pope and Land
     Enterprises, and Decatur TownCenter II Associates.

     Amounts involving related parties are summarized as follows:
<TABLE>
<CAPTION>

                                  1995      1994      1993
                                --------  --------  --------
<S>                             <C>       <C>      <C>

Accounts receivable              $10,149  $ 3,955  $    -0-
Accounts payable                  25,355    1,416    34,149
Capital improvements                 -0-    4,996    21,789
Construction-tenant finishes      46,076   89,273   119,978
Entertainment                        -0-      -0-        14
General maintenance               34,923   10,556     4,919
Interest expense                  50,646   50,646    50,646
Lease buy-outs                       -0-   26,637   122,024
Commissions                       34,912   26,022    22,609
Management fees                   33,361   35,743    38,453
Salaries                          36,392   37,716    27,622

</TABLE>

     Other related party items include a portion of the second mortgage funded
     by partners in the amount of $422,040 (See Note 4) and the accrued interest
     due to the partners on the second mortgage for the years ended December 31,
     1995, 1994 and 1993 of $442,311,  $391,665 and $341,020, respectively.

6.   LEASE COMMITMENTS

     Land - Building Site
     --------------------

     The Partnership sold to and leased back from New England Life Pension
     Properties the land on which the building is located.  The Partnership is
     committed to a sixty-year lease beginning February 20, 1985.  The lease
     covers property of approximately one acre under the building.  Annual
     ground lease expense amounted to $201,000 for each of the years ended
     December 31, 1995, 1994 and 1993.  At December 31, 1995, 1994 and 1993, a
     total of $1,189,250, $988,250 and  $787,250 was accrued but unpaid.

<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, LTD.
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1995



     The lease amount is comprised of a fixed annual rental and a participation
     rental.  The fixed annual rental is $16,750 per month.  The participation
     rental is a sum equal to sixty percent (60%) of gross receipts (as defined
     in the lease agreement) in excess of the base amount attributable to the
     current lease year.  Gross receipts did not exceed the stated base amounts
     for the years ended December 31, 1995, 1994 and 1993; therefore, no
     participation rental was owed.

     Minimum future rental payments are as follows:
<TABLE>

                      <S>                     <C>
                      1996                    $  201,000
                      1997                       201,000
                      1998                       201,000
                      1999                       201,000
                      2000                       201,000
                      Thereafter               8,877,500
                                              ----------

                      Total Minimum Future
                        Rental Payments       $9,882,500
                                              ----------
</TABLE>
     The Partnership has an option to repurchase the land on the date the first
     mortgage is repaid.

     Land - Parking Lot
     ------------------

     The Partnership owns approximately one and one-half acres on which the
     parking lot is located; however, in conjunction with the sale-leaseback
     described above, this land was leased to and subleased back from New
     England Life Pension Properties.  The primary lease is for a term of
     ninety-nine years, beginning February 20, 1985.  The annual rent income
     amount is $1.  The terms of the sublease are identical to those of the
     primary lease, with the annual rent expense amount being $1.

7.   INVESTMENT IN DECATUR TOWNCENTER II ASSOCIATES

     Decatur Town Center Associates, Ltd. entered into a joint venture on
     December 31, 1987 with New England Life Pension Properties IV to build an
     office building on the Leasehold Tract - Clairmont Road Property.  The
     joint venture will lease and manage the property until December 31, 2047
     unless sooner dissolved or terminated.  No losses from the joint venture
     have been allocated to Decatur TownCenter Associates, Ltd. since operating
     deficiencies are funded by New England Life Pension Properties IV.
<PAGE>

                      DECATUR TOWNCENTER ASSOCIATES, LTD.
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1995



8.  RENTALS UNDER OPERATING LEASES

     Minimum future rental income on noncancellable operating leases as of
     December 31, 1995 is:
<TABLE>
<CAPTION>

                          Year Ending  Minimum Future
                          December 31     Rentals
                          -----------  --------------
                         <S>                <C>

                         1996               $  844,474
                         1997                  720,270
                         1998                  514,765
                         1999                  357,896
                         2000                  170,415
                         Thereafter             12,254
                                            ----------

                         Total              $2,620,074
                                            ----------
</TABLE>
9.  CONTINGENCY

    The Partnership is negotiating with New England Life Pension Properties to
    purchase the land and retire the debt in Decatur TownCenter Associates, Ltd.
    If these negotiations are unsuccessful, New England Life Pension Properties
    has the option to offer the property for sale at its sole discretion as
    granted in the amended ground lease dated February 19, 1995.
<PAGE>

                             FINANCIAL STATEMENTS
                                  INDEX NO. 4

                   Auditor's Report and Financial Statements

                of M.O.R. XVIII Associates Limited Partnership
            (referred to elsewhere herein as Rivers Corporate Park)

                                                                        Page #

Independent Auditor's Report of Wolpoff & Company..........................

Balance Sheet - December 31, 1996 and 1995 ................................

Statement of Income - For the Years Ended
  December 31, 1996, 1995 and 1994 ........................................

Statement of Partners' Capital - For the Years Ended
  December 31, 1996, 1995 and 1994 ........................................

Statement of Cash Flows - For the Years Ended
  December 31, 1996, 1995 and 1994 ........................................

Notes to Financial Statements .............................................

<PAGE>

                   M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP

                                FINANCIAL REPORT

                                DECEMBER 31, 1996


<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                 -------------------------------------------

                                   CONTENTS
                                   --------

                               DECEMBER 31, 1996
                               -----------------


ACCOUNTANT'S REVIEW REPORT                                                 1

FINANCIAL STATEMENTS

    Balance Sheet                                                        2 - 3

    Statement of Income                                                    4

    Statement of Partners' Capital                                         5

    Statement of Cash Flows                                              6 - 7

    Notes to Financial Statements                                        8 - 11


ACCOUNTANT'S REPORT ON SUPPLEMENTARY INFORMATION                          12

SUPPLEMENTARY INFORMATION

    Schedule of Changes in Partners' Capital - Income Tax Basis           13

    Supplemental Ground Rent                                              14
<PAGE>

To the Partners
M.O.R. XVIII Associates Limited Partnership
Columbia, Maryland

We have reviewed the balance sheet of M.O.R. XVIII Associates Limited
Partnership as of December 31, 1996 and 1995, and the related statements of
income, partners' capital, and cash flows for the three years ended December 31,
1996, 1995 and 1994, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of M.O.R. XVIII Associates Limited Partnership.

A review consists principally of inquiries of Partnership personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.



                                                   WOLPOFF & COMPANY, LLP


Baltimore, Maryland
January 20, 1997
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                                 BALANCE SHEET
                                 -------------

                                    ASSETS
                                    ------



<TABLE>
<CAPTION>
                                                                      December 31,
                                                               ------------------------------
                                                                   1996             1995
                                                               ------------------------------
<S>                                                           <C>             <C>
PROPERTY AT COSTS - Notes 1 and 2
    Land, 5.3 Acres (11 Acres are Leased - See Note 5)        $   762,452         $   762,452
    Building No. 1                                              2,449,170           2,449,170
    Tenant Improvements                                         1,138,724           1,138,724
    Construction in Progress - Building No. 2                   2,597,015             227,713
    Deffered Costs                                                620,740             403,059
                                                              -----------         -----------
                                                                7,568,101           4,981,118
    Less Accumulated Depreciation and Amortization             (1,316,878)         (1,250,349)
                                                              -----------         -----------
       PROPERTY, NET                                            6,251,223           3,730,769
                                                              -----------         -----------
OTHER ASSETS
    Cash and Cash Equivalents - Note 1                                  0               1,494
    Restricted Funds                                               47,199             152,556
    Receivables from Tenant
      Rent and Expense Reimbursements                             134,952                   0
      Deferred Rent Receivable - Notes 1 and 4                          0             644,037
    Receivable, Affiliates - Note 3                                40,512              40,512
    Receivable, Partner                                                 0             150,000
    Prepaid Taxes                                                   6,573                   0
                                                              -----------         -----------
       TOTAL OTHER ASSETS                                         229,236             988,599
                                                              -----------         -----------
                                                              $ 6,480,459         $ 4,719,368
                                                              ===========         ===========

</TABLE>
____________________
See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.



                                      -2-

<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                               BALANCE SHEET
                               -------------

                       LIABILITIES AND PARTNERS' CAPITAL
                      ---------------------------------




<TABLE>
<CAPTION>
                                                                        December 31,
                                                               ------------------------------
                                                                   1996             1995
                                                               ------------------------------
<S>                                                           <C>             <C>
LIABILITIES
    Mortgage Payable - Note 2                                 $ 4,000,000         $ 4,000,000
    Construction Mortgage Payable - Note 2                      1,793,887                   0
    Accrued Interest Payable                                       65,531              38,333
    Tenant Security Deposits                                       43,161              43,161
    Payable, Affiliates - Note 3                                  585,924             360,261
    Accounts Payable and Accrued Expenses                         951,093               1,271
                                                              -----------         -----------
        TOTAL LIABILITIES                                       7,439,596           4,443,026

COMMITMENTS AND CONTINGENCY - Note 5

PARTNERS' CAPITAL - Note 1                                       (959,137)            276,342
                                                              -----------         -----------
                                                              $ 6,480,459         $ 4,719,368
                                                              ===========         ===========

</TABLE>

____________________

See Accountants' Review Report.
The notes to financial statements are an integral part of this statement.



                                     -3-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                              STATEMENT OF INCOME
                              -------------------



<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                             --------------------------------------------
                                                                                 1996            1995             1994
                                                                             ------------    --------------    -----------
<S>                                                                        <C>              <C>             <C>
REVENUE - Notes 1 and 4
    Rental Income                                                            $  677,374        $  677,374      $  677,374
    Interest and Other Income                                                    15,563             4,072          22,808
                                                                             ----------        ----------      ----------
         TOTAL REVENUE                                                          692,937           681,446         700,182
                                                                             ----------        ----------      ----------
EXPENSES - Note 4
    General and Administrative                                                      409             7,342           4,449
    Property Taxes                                                                6,602             9,751          10,194
    Legal and Accounting                                                         15,560             3,700           3,818
    Management Fees - Note 3                                                     19,045            19,232           5,266
    Bad Debt - Note 4                                                           668,335                 0               0
                                                                             ----------        ----------      ----------
         TOTAL EXPENSES                                                         709,951            40,025          23,727
                                                                             ----------        ----------      ----------
OPERATING INCOME                                                                (17,014)          641,421         676,455
                                                                             ----------        ----------      ----------
MORTGAGE INTEREST AND GROUND RENT
    Interest on Permanent Mortgage - Note 2                                     380,000           460,000         460,000
    Land Mortgage Interest                                                            0                 0          68,944
    Ground Rent - Note 5                                                        105,822           154,538         126,500
                                                                             ----------        ----------      ----------
                                                                                485,822           614,538         655,444
                                                                             ----------        ----------      ----------

INCOME (LOSS) BEFORE DEPRECIATION                                              (502,836)           26,883          21,011

DEPRECIATION AND AMORTIZATION                                                   (66,529)          (74,666)        (81,324)
                                                                             ----------        ----------      ----------
NET LOSS - Notes 1 and 6                                                     $ (569,365)       $  (47,783)     $  (60,313)
                                                                             ==========        ==========      ==========

</TABLE>
____________________

See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.


                                      -4-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                      STATEMENT OF PARTNERS' CAPITAL
                      ------------------------------



<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                             --------------------------------------------
                                                                                 1996            1995             1994
                                                                             ------------    --------------    -----------
<S>                                                                        <C>              <C>             <C>
CAPITAL CONTRIBUTIONS
    Prior Years                                                              $ 1,489,546       $ 1,489,546     $   414,406
    Current Year                                                                 220,626                 0       1,075,140
                                                                             -----------       -----------     -----------
                                                                               1,710,172         1,489,546       1,489,546
                                                                             -----------       -----------     -----------
DISTRIBUTIONS
    Prior Years                                                                 (788,241)         (788,241)       (788,241)
    Current Year                                                                (886,740)                0               0
                                                                             -----------       -----------     -----------
                                                                              (1,674,981)         (788,241)       (788,241)
                                                                             -----------       -----------     -----------
ACCUMULATED LOSSES
    Prior Years                                                                 (424,963)         (377,180)       (316,867)
    Current Year                                                                (569,365)          (47,783)        (60,313)
                                                                             -----------       -----------     -----------
                                                                                (994,328)         (424,963)       (377,180)
                                                                             -----------       -----------     -----------
TOTAL PARTNERS' CAPITAL (DEFICIT)                                            $  (959,137)       $  276,342     $   324,125
                                                                             ===========       ===========     ===========


</TABLE>

____________________

See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.


                                      -5-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                            STATEMENT OF CASH FLOWS
                            -----------------------



<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                             --------------------------------------------
                                                                                 1996            1995             1994
                                                                             ------------    --------------    -----------
<S>                                                                        <C>              <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Loss                                                                 $  (569,365)      $  (47,783)     $   (60,313)
                                                                             -----------       ----------      -----------
    Adjustments to Reconcile Net Loss
     to Net Cash Provided (Used) by Operating Activities
        Depreciation and Amortization                                             66,529           74,666           81,324
        Change in Accounts Payable and Accrued Expenses                           27,169            1,271         (192,363)
        Change in Prepaid Expenses                                                (6,573)          20,625                0
        Change in Receivables from Tenant                                        509,085          (22,519)        (149,901)
        Increase in Receivables, Affiliates                                            0                0          (25,286)
        Change in Restricted Funds                                               105,357           (6,983)            (842)
                                                                             -----------       ----------      -----------
           Total Adjustments                                                     701,567           67,060         (287,068)
                                                                             -----------       ----------      -----------
             Net Cash Provided (Used) by Operating Activities                    132,202           19,277         (347,381)
                                                                             -----------       ----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Construction Costs, Net of Accounts Payable                               (1,419,451)               0                0
    Change in Receivable, Affiliates                                                   0                0          (15,226)
    Leasing Commissions                                                         (217,681)               0                0
    Change in Receivable, Partner                                                150,000                0                0
                                                                             -----------       ----------      -----------
           Net Cash Used by Investing Activites                               (1,487,132)               0          (15,226)
                                                                             -----------       ----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Change in Payable, Affiliates                                                225,663          (19,347)         379,608
    Capital Contributions                                                        220,626                0                0
    Principal Payments on Land Mortgage                                                0                0          (18,080)
    Distributions to Partners                                                   (886,740)               0                0
    Proceeds from Construction Loan                                            1,793,887                0                0
                                                                             -----------       ----------      -----------

           Net Cash Provided (Used) by Financing Activities                    1,353,436          (19,347)         361,528
                                                                             -----------       ----------      -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                         (1,494)             (70)          (1,079)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                       1,494            1,564            2,643
                                                                             -----------       ----------      -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                                       $         0       $    1,494      $     1,564
                                                                             ===========       ==========      ===========


</TABLE>

*Reclassified to conform to current year's presentation.

                                  (Continued)
____________________

See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.



                                      -6-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                            STATEMENT OF CASH FLOWS
                            -----------------------


<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                    -------------------------------------------
                                                       1996           1995            1994
                                                    -------------------------------------------

<S>                                               <C>             <C>          <C>
SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
     Cash Paid During the Year for Interest
        Expensed                                    $   458,625     $   539,244    $     539,244
        Capitalized                                 $    10,759     $         0    $           0
                                                    ===========     ===========    =============
SUPPLEMENTAL SCHEDULE OF
  NONCASH FINANCING ACTIVITIES:
     Assumption of Land Mortgage by Partners        $         0     $         0    $   1,075,140
                                                    ===========     ===========    =============



</TABLE>


____________________

See Accountant's Review Report.
The notes to financial statements are an integral part of this statement.


                                      -7-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                 -------------------------------------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                               DECEMBER 31, 1996
                               -----------------

Note 1  -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

             Organization
             ------------
             M.O.R. XVIII Associates Limited Partnership (the Partnership) was
             formed in 1982 pursuant to an agreement under the
             Maryland Uniform Limited Partnership Act.

             Property
             --------
             The Partnership owns a leasehold interest in a 75,000-square-foot
             office/warehouse building (Building #1) in Columbia (Howard
             County), Maryland. See Note 5 regarding the related land lease. The
             development of the property, which is 100% leased to Crop Genetics
             International Corporation (see Note 4), was completed and
             operations commenced in February 1984.

             During 1996, the Partnership constructed a building containing
             35,000 square feet of leasable space on 5.3 acres of land adjacent
             to Building #1. The building is 100% leased GTS/Duratek and became
             operational in January 1997.

             Carrying costs and expenses incurred during the construction of
             Building #2 were capitalized and included in construction in
             progress.

             Depreciation
             ------------
             Building and improvement costs are being depreciated using the
             straight-line method over the estimated useful life of 50 years.

             Amortization
             ------------
             Various deferred costs are being amortized as follows:



                                                               Amortization
                                         Amount                    Period
                                         ------                -------------
                 Leasing Costs         $ 345,216                3 - 10 Years
                 Mortgage Costs          258,785                4 - 10 Years
                 Organization Costs       16,739*                  5 Years
                                       ---------
                                       $ 620,740
                                       =========





                 *Fully amortized.


             Rental Income
             -------------
             Rental income is recognized on a straight-line basis over the term
             of the lease. The excess of resulting rental income over the rent
             stipulated in the lease is reflected as deferred rent receivable.

             Cash and Cash Equivalents
             --------------------------
             The Partnership considers all highly liquid debt instruments
             purchased with a maturity of 3 months or less to be cash
             equivalents.



                                      -8-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                  NOTES TO FINANCIAL STATEMENTS - CONTINUED
                  -----------------------------------------

                              DECEMBER 31, 1996
                              -----------------


Note 1  -    Income Taxes
             ------------
(Cont.)      Partnerships, as such, are not subject to income taxes. The
             partners are required to report their respective shares of
             partnership income or loss on their respective income tax returns
             (see Note 6).

             Use of Estimates
             ----------------
             The preparation of financial statements in conformity with
             generally accepted accounting principles requires management to
             make estimates and assumptions that affect certain reported amounts
             and disclosures.

Note 2  -    DEBT SERVICE

             Mortgage Financing - Building No. 1
             -----------------------------------
             On March 28, 1984, the Partnership obtained permanent financing on
             the leasehold interest from New England Life Pension Properties in
             the amount of $4,000,000. Pertinent terms of the mortgage are as
             follows:

                   Mortgage Amount                          $4,000,000
                   Date Settled                               3/28/84
                   Interest Rate                                9.5%
                   Total Annual Payments (Interest Only)      $380,000
                   Term                                    December 31, 1997


             An agreement in principle was reached with the mortgagor that
             effective January 1, 1996, the loan was amended to reduce the
             interest rate to 9.5% from 11.5%, reduce interest only payments to
             $380,000 from $460,000, and extend the maturity date from March
             1994 to December 1997. These financial statements have incorporated
             the amended terms. The amended terms remain in effect through
             December 31, 1997.

             Construction Mortgage - Building No. 2
             --------------------------------------
             In September 1996, the Partnership obtained a construction loan
             commitment in the amount of $3,075,000 from First Union National
             Bank of Maryland for Building #2. The building has been leased to
             GTS/Duratek which occupied the building in January 1997. During the
             construction period, interest only is payable monthly at the LIBOR
             rate plus 225 basis points. Principal payments begin upon
             completion of tenant improvements and are based on a 20-year
             amortization. The Partnership is required to make additional
             principal payments annually equal to the net cash flow of the
             property.

             The loan is personally guaranteed by certain partners of MRU
             Limited Partnership.

Note 3  -    RELATED PARTY TRANSACTIONS

             Management Fees
             ---------------
             The Partnership has entered into an agreement with Manekin
             Corporation, an affiliated entity, to act as management agent for
             the property. The management agreement provides for management fees
             equal to 3% of rent and tenant expense billings collected.
             Management fees totaled $19,045, $19,232 and $5,266 in 1996, 1995
             and 1994, respectively.



                                      -9-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                  NOTES TO FINANCIAL STATEMENTS - CONTINUED
                  -----------------------------------------

                              DECEMBER 31, 1996
                              -----------------


Note 3  -    Payable, Affiliates
             -------------------
(Cont.)      The Partnership participates in a central disbursing cash account
             with various entities affiliated with the Partnership. As of
             December 31, 1996 and 1995, funds used by the Partnership in excess
             of the Partnership's cash balance amounted to $585,924 and
             $360,261, respectively, and is reflected as payable, affiliates.
             The funds bear interest at the applicable federal rate.

             Receivable, Affiliates
             ----------------------
             As of December 31, 1996 and 1995, the Partnership had amounts due
             from various affiliated entities totaling $40,512.

             Construction Contracts

             During 1996, the Partnership entered into contracts with Manekin
             Corporation, an affiliated entity, a company controlled by the
             partners of MRU Limited Partnership, for the construction of a
             35,000 square foot building and related tenant improvements. The
             contracts amounted to approximately $2,286,000. As of December 31,
             1996, $949,851 was payable to Manekin Corporation and is included
             in accounts payable.

Note 4  -    LEASE

             Crop Genetics International Corporation entered into a lease
             agreement with the Partnership in September 1992 and moved into the
             space on December 1, 1992. Real property taxes, insurance and most
             operating expenses are paid directly by the tenant. The lease is
             for a twelve-year, three-month term and provided for six months of
             free rent. The average annual rent is $653,076.

             During 1996, Crop Genetics filed for Bankruptcy under Chapter 11.
             In December 1996, the company sold its assets to Thermotrilogy
             Corporation. The Partnership is currently negotiating the lease
             terms with Thermotrilogy Corporation. The Partnership does not
             anticipate collecting receivables from Crop Genetics in the amount
             of $668,335.

             GTS/Duratek entered into a lease for building No. 2 effective
             January 1, 1997. The lease is for a ten year period for an average
             annual rent of $438,866. Future minimum rents to be received under
             the noncancellable term of the lease are as follows:


                                      1997       $   424,548
                                      1998           424,548
                                      1999           424,548
                                      2000           424,548
                                      2001           424,548
                                Thereafter         2,704,788




                                     -10-



<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

                  NOTES TO FINANCIAL STATEMENTS - CONTINUED
                  -----------------------------------------

                              DECEMBER 31, 1996
                              -----------------



Note 5  -    LAND SALE AND LEASEBACK

             On March 28, 1984, the Partnership entered into a sale-leaseback
             agreement through December 31, 1995, with New England Life Pension
             Properties (a real estate limited partnership). Pursuant to this
             agreement, the Partnership sold 11 acres of land for $1,100,000 in
             exchange for a 60-year net leasehold interest in the land. The
             annual rent is $126,500 plus 50% of all gross revenues as defined
             in excess of $597,000. An agreement in principle was reached with
             the land lessor whereby, effective January 1, 1996, the annual rent
             was reduced to $104,500 plus 80% of all gross revenues in excess of
             $597,000. These financial statements incorporate the amended terms.
             Effective January 1997, the additional rent is adjusted to 80% of
             revenues greater than $508,095. Additional ground rent in the
             amount of $1,322 and $28,038 was incurred for 1996 and 1995,
             respectively. No additional ground rent was incurred in 1994.

Note 6  -    TAX ACCOUNTING

             The taxable loss of the Partnership differs from financial
             reporting as follows:


<TABLE>
<CAPTION>



                                                Current          Prior
                                                  Year           Years            Total
                                              -----------     -----------       ------------
 <S>                                         <C>           <C>              <C>
              Net Loss as Reported            $ (569,365)     $  (424,963)      $   (994,328)
              Depreciation Adjustments          (155,473)      (1,779,595)        (1,935,068)
              Amortization of
                 Interest and Taxes                    0         (269,005)          (269,005)
              Capitalized Interest and
                 Taxes on Undeveloped Land             0           98,316             98,316
              Deferred Rent                      644,037         (644,037)                 0
              Prepaid Taxes                       (6,753)               0             (6,753)
                                              -----------     -----------       ------------
              Taxable Loss                    $  (87,554)     $(3,019,284)       $(3,106,838)

</TABLE>



                                     -11-
<PAGE>

To the Partners
M.O.R. XVIII Associates Limited Partnership
Columbia, Maryland


                ACCOUNTANT'S REPORT ON SUPPLEMENTARY INFORMATION
                ------------------------------------------------

The accompanying supplementary information contained on pages 13 and 14 is
presented for purposes of additional analysis. Such information has not been
subjected to the same inquiries and analytical procedures applied in the review
of the basic financial statements, but has been compiled from information that
is the representation of the management of M.O.R. XVIII Associates Limited
Partnership, without audit or review. Accordingly, we do not express an opinion
or any other form of assurance on such supplementary information.

                                                          WOLPOFF & COMPANY, LLP

Baltimore, Maryland
January 20, 1997


                                     -12-
<PAGE>

                  M.O.R. XVIII ASSOCIATES LIMITED PARTNERSHIP
                  -------------------------------------------

          SCHEDULE OF CHANGES IN PARTNERS' CAPITAL - INCOME TAX BASIS
          -----------------------------------------------------------

                         YEAR ENDED DECEMBER 31, 1996
                         ----------------------------



<TABLE>
<CAPTION>

                                         Partners'                                                   Partners'
                            Partners'    Capital                                                      Capital
                            Ownership    (Deficit)         Capital                       Current      (Deficit)
                            Percentage   12/31/95        Contribution   Distributions   Year Loss      12/31/96
                            -----------  --------        ------------   -------------   ---------     ------------
<S>                       <C>           <C>            <C>             <C>             <C>          <C>
GENERAL PARTNER
 RA & DM, Inc.                   1.00%     $    (38,154)    $   2,206     $   (8,867)    $    (875)    $    (45,690)

LIMITED PARTNER
 MRU Limited Partnership        99.00%       (2,269,577)      218,420       (877,873)      (86,679)      (3,015,709)
                               ------      ------------     ---------     ----------     ---------     ------------
                               100.00%     $ (2,307,731)    $ 220,626     $ (886,740)    $ (87,554)    $ (3,061,399)
                               ======      ============     ==========    ==========     =========     ============


</TABLE>
__________

See Accountant's Review Report on Supplementary Information.


                                     -13-
<PAGE>

                                   MOR XVIII
                                   ---------

                           SUPPLEMENTAL GROUND RENT
                           ------------------------

                               DECEMBER 31, 1996
                               -----------------


<TABLE>
<CAPTION>
                                                         1996         1995         1994
                                                    -----------  -----------  -----------
<S>                                               <C>           <C>          <C>
Rental Income                                       $   677,374  $   677,374  $   677,374
                                                    -----------  -----------  -----------
Deferred Rent Receivable
   Current Year                                        (668,336)    (644,037)    (619,738)
   Prior Year                                           644,037      619,738      471,557
                                                    -----------  -----------  -----------
                                                        (24,299)     (24,299)    (148,181)
                                                    -----------  -----------  -----------
Rent Receivable
   Current Year                                         (54,423)           0            0
   Prior Year                                                 0            0            0
                                                    -----------  -----------  -----------
                                                        (54,423)           0            0
                                                    -----------  -----------  -----------
Net Rent                                                598,652      653,075      529,193

Base Rent                                               597,000      597,000      597,000
                                                    -----------  -----------  -----------

Excess Net Rent Over Base Rent                            1,652       56,075      (67,807)

Supplemental Ground Rent Rate                              80.0%        50.0%        50.0%
                                                    -----------  -----------  -----------

Supplemental Ground Rent                            $     1,322  $    28,038  $         0
                                                    ===========  ===========  ===========



</TABLE>
__________

See Accountant's Review Report on Supplementary Information.


                                     -14-
<PAGE>

<TABLE>
<CAPTION>
                               EXHIBIT INDEX
                               -------------

EXHIBIT NO.                      EXHIBIT                            PAGE NO.
----------                       -------                            --------
<S>             <C>                                                 <C>
4.              Amended and Restated Agreement of Limited               *
                Partnership of the Registrant, dated June 29,
                1983 (filed as Exhibit 4 to the Registrant's
                Annual Report on Form 10-K for the fiscal
                year ended December 31, 1983 [the "1983
                Annual Report"]).

10A.            Form of Escrow Deposit Agreement among the              *
                Registrant, NEL Equity Services Corporation
                and The First National Bank of Boston (filed
                as Exhibit 10A to the Registrant's Registration
                Statement on Form S-11, dated December 22, 1982,
                file no. 2-81059 [the "Registration Statement"]).

10B.            Advisory Contract dated March 22, 1983, between         *
                the Registrant and Copley Real Estate Advisors,
                Inc. (filed as Exhibit 10 to the 1983 Annual
                Report).

10C.            Form of Agreement between the Registrant and            *
                Copley Properties Company, Inc. relating to
                organizational expenses (filed as Exhibit 10C
                to the Registration Statement).

10D.            Purchase Agreement and Deposit Receipt dated            *
                April 14, 1983 between Doyle Development Company
                and NBS Investment Corporation, which assigned
                its rights and obligations thereunder to the
                Registrant (filed as Exhibit 10 to Current Report
                on Form 8-K dated June 29, 1983, as filed on
                July 14, 1983).

10E.            Purchase and Sale Agreement dated December 1984,        *
                as amended by First Addendum to Purchase and Sale
                Agreement dated as of January 10, 1985 (filed as
                Exhibit 28 to Current Report on Form 8-K dated
                January 23, 1985).

10F.            Amended and Restated Secured Promissory Note            *
                dated August 20, 1985, by VMS 1984-133, Ltd.,
                for the benefit of the Registrant and New
                England Life Pension Properties II; A Real
                Estate Limited Partnership.
</TABLE>

  ------------------------------------------------------
* Previously filed and incorporated herein by reference.
<PAGE>

<TABLE>
<CAPTION>
                               EXHIBIT INDEX
                               -------------

Exhibit Number                                                     Page Number
--------------                                                     -----------
<S>             <C>                                                 <C>
10G.            Amended and Restated Ground Lease dated                 *
                August 20, 1985 between the Registrant, New
                England Life Pension Properties II; A Real
                Estate Limited Partnership and VMS 1984-133,
                Ltd.

10H.            Amended and Restated Memorandum of Ground               *
                Lease dated August 20, 1985 by and among the
                Registrant, New England Life Pension Properties
                II; A Real Estate Limited Partnership and
                VMS 1984-133, Ltd.

10I.            Contract of Sale dated as of March 30, 1984 by          *
                and between Decatur TownCenter Associates, Ltd.,
                and the Registrant.

10J.            Three Party Agreement dated as of March 30, 1984        *
                by and among Decatur Town Center Associates,
                the Registrant and the Citizens and Southern
                National Bank.

10K.            Promissory Note dated February 20, 1985, in the         *
                principal amount of $5,825,000 from the Registrant
                to Decatur Town Center Associates, Ltd.

10L.            Ground Lease dated February 20, 1985 between            *
                the Registrant and Decatur Town Center Associates,
                Ltd.

10M.            First Consolidated Amendatory Agreement dated           *
                December 29, 1988 by and between Decatur
                TownCenter Associates, Ltd. and the Registrant.
</TABLE>
  ------------------------------------------------------
* Previously filed and incorporated herein by reference.
<PAGE>

<TABLE>
<CAPTION>
                               EXHIBIT INDEX
                               -------------

Exhibit Number                                                     Page Number
--------------                                                     -----------
<S>             <C>                                                 <C>
10N.            Purchase and Sale Agreement dated September 27,         *
                1990 by and between New England Mutual Life
                Insurance Company, a Massachusetts corporation,
                and Tom Hennig Co., Inc., a California corporation,
                as amended by Letter dated December 12, 1990.

10O.            Letter Agreement between New England Life               *
                Pension Properties II; A Real Estate Limited
                Partnership, the Registrant and Willows
                Concord Venture dated June 14, 1991.

10P.            Promissory Note dated June 14, 1991, in the             *
                principal amount of $14,863,206.38 from Willows
                Concord Venture to New England Life Pension
                Properties II; A Real Estate Limited Partnership
                and the Registrant.

10Q.            Assignment of Note and Liens Including Deed of          *
                Trust dated as of June 13, 1991 by New England
                Life Pension Properties II; A Real Estate Limited
                Partnership and the Registrant to Willows Concord
                Venture.

10R.            Assignment of VMS Loan Documents dated June 14,         *
                1991 by Willows Concord Venture to New England
                Life Pension Properties II; A Real Estate Limited
                Partnership and the Registrant.

10S.            Deed of Trust and Security Agreement dated June 13,     *
                1991 between Willows Concord Venture, as Trustor,
                Chicago Title Company, as Trustee, and New England
                Life Pension Properties II; A Real Estate Limited
                Partnership and the Registrant, as Beneficiary.

10T.            Assignment of Leases and Rents dated June 13, 1991      *
                by Willows Concord Venture to New England Life
                Pension Properties II; A Real Estate Limited
                Partnership and the Registrant.

10U.            Amended and Completely Restated Ground Lease            *
                dated effective as of June 18, 1991 between
                Registrant, New England Life Pension Properties
                II; A Real Estate Limited Partnership and
                Willows Concord Venture.
</TABLE>
  ------------------------------------------------------
* Previously filed and incorporated herein by reference.
<PAGE>

<TABLE>
<CAPTION>
                               EXHIBIT INDEX
                               -------------

Exhibit Number                                                     Page Number
--------------                                                     -----------
<S>             <C>                                                <C>
10V.            Amended and Restated Secured Promissory Note            *
                effective as of June 14, 1991, in the principal
                amount of $14,863,206.38 from Willows
                Concord Venture to the Registrant and
                New England Life Pension Properties II;
                A Real Estate Limited Partnership.

10W.            Modification Agreement and First Amendment to           *
                Loan Documents dated August 13, 1991, by and
                between Willows Concord Venture, the
                Registrant and New England Life Pension
                Properties II; A Real Estate Limited Partnership.

10X.            Modification Agreement and Second Amendment to          *
                Loan Documents dated September 12, 1991, by
                and between Willows Concord Venture, the
                Registrant and New England Life Pension Properties
                II; A Real Estate Limited Partnership.

10Y.            Modification Agreement and Third Amendment to           *
                Loan Documents dated October 15, 1991, by and
                between Willows Concord Venture, the Registrant
                and New England Life Pension Properties II;
                A Real Estate Limited Partnership.

10Z.            Fourth Amendment to Loan Documents dated                *
                December 17, 1992 by and between Willows
                Concord Venture, Registrant and New England
                Life Pension Properties II; A Real Estate
                Limited Partnership.

10AA.           Amendment to Promissory Note executed as of             *
                March 1, 1993 made by Decatur TownCenter
                Associates, Ltd. in favor of Registrant.

10BB.           First Amendment to First Consolidated                   *
                Amendatory Agreement executed as of March 1,
                1993 made by and between the Registrant and
                Decatur TownCenter Associates, Ltd.
</TABLE>

  ------------------------------------------------------
* Previously filed and incorporated herein by reference.
<PAGE>

<TABLE>
<CAPTION>
                               EXHIBIT INDEX
                               -------------

Exhibit Number                                                     Page Number
--------------                                                     -----------
<S>             <C>                                                <C>
10CC.           Fee Transfer and Lien Release Agreement dated           *
                June 1, 1994 by and between New England Life
                Pension  Properties, A Real Estate Limited
                Partnership.  a Massachusetts limited partnership
                and 5141 E. Santa Ana Property  Company, a
                California Limited Partnership.

10DD.           Construction Loan Agreement dated January 1, 1995       *
                by and between Willows Concord Venture, A
                California Limited Partnership as Borrower, and
                New England Life Pension Properties; A Real
                Estate Limited Partnership as Lender.

10EE.           Second Amendment to Promissory Note dated as of         *
                February 19, 1995 between the Registrant and
                Decatur TownCenter Associates, Ltd. ("Decatur").

10FF.           Second Amendment to Ground Lease dated as of            *
                February 19, 1995 between the Registrant and
                Decatur.

10GG.           Second Amendment to First Consolidated Amendatory       *
                Agreement dated as of February 19, 1995 between the
                Registrant and Decatur.

10HH.           Third Amendment to Participation Agreement dated as     *
                of February 19, 1995 among the Registrant, A.J.
                Land, Jr., David B. Pattillo and Lawrence P. Kelly.
</TABLE>

  ------------------------------------------------------
* Previously filed and incorporated herein by reference.
<PAGE>

                                  SIGNATURES
                                  ----------


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

                                NEW ENGLAND LIFE PENSION PROPERTIES;
                                A REAL ESTATE LIMITED PARTNERSHIP



Date:  March 31, 1997           By:    /s/ Joseph W. O'Connor
                                       ----------------------
                                       Joseph W. O'Connor
                                       President of the
                                       General Partner



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
     Signature                          Title                   Date
     ---------                          -----                  ----
<S>                             <C>                      <C>

                                President, Principal
                                Executive Officer and
                                Director of the
 /s/  Joseph W. O'Connor        General Partner                 March 31, 1997
------------------------
      Joseph W. O'Connor

                                Principal Financial and
                                Accounting Officer of the
 /s/  Daniel C. Mackowiak       General Partner                 March 31, 1997
-------------------------
      Daniel C. Mackowiak

                                Director of the
 /s/  Daniel J. Coughlin        General Partner                 March 31, 1997
------------------------
      Daniel J. Coughlin

                                Director of the
 /s/  James J. Finnegan         General Partner                 March 31, 1997
-----------------------
      James J. Finnegan
</TABLE>