EXHIBIT 99

                  Royal Palm Beach Colony, Limited Partnership


Extract from Annual  Report of the  Registrant  on Form 10-K for the Fiscal Year
ended September 30, 1995 -- Items 1 and 2
<PAGE>
                                     PART I


Item 1. Business

(a) GENERAL DEVELOPMENT OF BUSINESS

Royal  Palm  Beach  Colony,   Limited  Partnership  (the  "Partnership"  or  the
"Registrant")   was  organized  under  the  Delaware   Revised  Uniform  Limited
Partnership  Act. The  Partnership  is a successor  to Royal Palm Beach  Colony,
Inc.,  (the  "Predecessor  Company") a Florida  corporation  organized  in 1963.
Pursuant to a Plan of Complete Liquidation (the "Plan"), the Predecessor Company
transferred  all of its  assets,  subject  to  all  of its  liabilities,  to the
Partnership  in exchange for a number of  partnership  units  ("Units")  exactly
equal to the  number  of  shares  of  common  stock of the  Predecessor  Company
outstanding on July 11, 1985 (the "Effective  Date"). On the Effective Date, the
Units were  distributed to the former holders of common stock of the Predecessor
Company  on the  basis of one (1) Unit for  each  share of  common  stock of the
Predecessor Company. The Partnership, as a successor to the Predecessor Company,
has registered its Units under Section 12 (b) of the Securities  Exchange Act of
1934. Under the Amended Agreement of Limited Partnership of the Registrant,  the
term of the Partnership  expires December 31, 2005, unless extended by vote of a
majority of the partnership units.

AMERICAN STOCK EXCHANGE  LISTING On January 16, 1996 the American Stock Exchange
halted  trading in the  Partnership's  Units pending filing of this Form 10K and
review thereof by the Exchange.  The Exchange also advised the Partnership  that
it did not currently meet the Exchange's listing standards and that no assurance
could be given that trading in the units would resume.  Management believes that
a market for the Partnership's  Units may develop  over-the-counter if the Units
are not permitted to trade on the Exchange,  but there can be no assurance  that
such market will develop.

Results of Liquidation Activities

The Partnership's  principal business has been to operate, manage and dispose of
the assets which were transferred to it on the Effective Date by the Predecessor
Company.

Since  the  Effective  Date  of  the  Predecessor  Company's  liquidation,   the
Partnership has engaged in a program of asset disposition  resulting in the sale
of assets for an aggregate gross consideration of $65,116,575. As of January 31,
1996, the Partnership had distributed an aggregate of $29,156,000,  or $6.50 per
Unit,  to the  general  and  limited  partners.  See  Item 5 --  Market  for the
Registrant's   Common   Equity  and  Related   Stockholder   Matters  --  "Prior
Distributions."


<PAGE>
As  of  September  30,  1995,  the  Partnership's   remaining  assets  consisted
principally of; (1) mortgages  having aggregate  principal  balances of $285,801
and  which  are  included  in the  balance  sheet  in the item  "Mortgage  Notes
Receivable"  (net of deferred  profit of $49,648 -- see Note 2 to the  financial
statements);  (2) a 165 acre  tract of land in the  Village  of Royal Palm Beach
(the  "Village"),  (a portion of which is now under  development:  see Item 2 --
Properties  --  "Village of Royal Palm  Beach"),  which land was  reacquired  in
January,  1992 by foreclosure of a mortgage and which is included in the balance
sheet at $3,767,818  (this tract is hereinafter  referred to as the  "Crestwood"
tract),  (3) unsold land in Palm Beach County,  Florida which is included in the
balance sheet at its book value of $487,582,  (4) a tract of land in the Village
reacquired by foreclosure in 1993 and included in the balance sheet at $287,197,
(5)  contingent  receivables  relating to a prior sale of utility  assets with a
maximum  future  undiscounted  value of  $5,945,000  (which  amount,  other than
$432,800 earned as of September 30, 1995 but not paid to the  Partnership  until
January,  1996, has not been included in the balance sheet due to its contingent
nature -- see Note 11 to the Financial  Statements),  and (6) cash in the amount
of $83,902.  Through January 31, 1996, there had been no material changes in the
Partnership's real estate assets.


Factors Affecting Future Operations and Distributions

The  availability  of cash for  distribution  in the future  will  depend upon a
variety of factors not currently determinable.

(1)  Recent Efforts to Resume Active Business Activities

In early 1992, a large portion of the Partnership's  remaining land consisted of
the undeveloped 165 acre "Crestwood" Tract described above,  which had been sold
during the  process  of the  Partnership's  liquidation  but  reacquired  by the
Partnership  in 1992 when the  purchaser  was unable to service the interest and
amortization  payments  to  the  Partnership  on  a  $5,039,952  purchase  money
mortgage.  Management's attempts to remarket the Crestwood Tract on a bulk basis
were  unsuccessful.  Management  perceived that due to changes in the market for
real estate in  southern  Florida,  the  Crestwood  Tract  would  continue to be
difficult to market at acceptable  prices.  Among other factors  depressing  the
local market was the  "overhang" of large  undeveloped  tracts which were on the
market as the result of bank insolvencies.

Management  also  concluded  that the market for  developed  land -- defined for
purposes of this discussion as buildable lots which have been properly zoned and
developed  with  grading,  roads  and  utility  lines  brought  to the  property
boundaries -- was tightening,  with local and national builders  competing for a
shrinking supply of such developed land. With the liquidation of the Partnership
having  progressed to the point at which the major portion of the  Partnership's
assets had been  liquidated,  management  began to consider  the most  effective
means  to  maximize  unitholder  value  with  respect  to  the  balance  of  the
Partnership's assets.

After study, management concluded that the Partnership's  continuing liquidation
should proceed along two tracks.
<PAGE>
First,  it was  determined  that  unitholder  values could most  effectively  be
increased if some or all of the Crestwood Tract were  temporarily  withheld from
sale and selectively developed.  In the judgment of management,  the prospective
incremental  increase in selling  prices of developed  land over  amounts  which
might reasonably be anticipated from the sale of the land in its raw state would
substantially  exceed the cost of developing such land, and warranted investment
of a  portion  of the  Partnership's  cash  assets  in  development  activities.
Management  therefore  commenced the development of one portion of the Crestwood
Tract,  consisting  of 178 lots zoned for  single  family  housing,  in order to
enhance  its sale value.  Management's  decision  to  commence  development  was
influenced,  in part, by an appraisal  obtained in 1992 of the  Crestwood  Tract
which  indicated  that such tract had a then  current  fair market  value in the
approximate amount of $4,500,000 and could have a significantly  higher value if
rezoning and re-permitting work were accomplished. Management was further of the
opinion that the  Crestwood  Tract would have an  indefinite  but  substantially
higher value if developed with roads and a utility infrastructure. See Item 2 --
Properties -"Village of Royal Palm Beach."

Second,  management  concluded  that generally  strengthening  conditions in the
south Florida real estate market might present an opportunity to the Partnership
to  capitalize  on its status as a  publicly  traded  entity.  In early 1994 the
Partnership retained a private consultant to determine whether unitholder values
could further be enhanced by utilizing the Partnership's cash and remaining land
as a vehicle for the  resumption of active  business  operations,  either in the
land development  business or by expanding its activities into home building and
other  real  estate-related   fields.   Management  also  wished  to  obtain  an
independent  review of its assumption that the market value of the Partnership's
units  might be  enhanced  over  time were the  Partnership  to  convert  from a
liquidating to an active business mode.

Management also concluded that its decision to develop portions of its remaining
Palm Beach  County real  estate  would be  consistent  either with a decision to
proceed  with  the  Partnership's  complete  liquidation,   to  resume  business
operations,  or to complete its  liquidation  by acquiring and  distributing  to
unitholders  the  securities  of another  entity in  connection  with a business
combination.  It therefore proceeded with the development plans described above,
and at  the  same  time  explored  the  business  and  tax  implications  of the
resumption  of business  activities  and/or  business  combination  with another
entity.  The progress of such land development,  and financing recently obtained
therefor,  is  discussed  under Item 2 --  Properties  -- "Village of Royal Palm
Beach."

Management ultimately concluded that the most logical course for the Partnership
to follow would involve the addition of home building operations. In furtherance
of this  objective,  the  Partnership,  during  the  summer of 1994,  retained a
locally  recognized  consultant  to the home  building  industry to assist it in
identifying  possible  affiliations  in south Florida.  After several  potential
affiliations  were identified,  a memorandum of understanding  was executed with
Regency Homes,  Inc., a prominent,  privately-owned  South Florida home builder.
The  memorandum   envisioned  a  business   combination  in  which  the  Regency
shareholders,   and  the  Partnership  would  have  acquired  62.5%  and  37.5%,
respectively  (later  modified  to 60% and 40%,  respectively)  of a new entity,
followed by  distribution  of the  Partnership's  shares to its  unitholders and
liquidation of the Partnership.  However, after protracted negotiations over the
terms of the agreement and several downward  modifications of Regency's original
earnings projections, negotiations with Regency were suspended in early December
1995 and terminated in late December, 1995.
<PAGE>
While management  continues to explore the possibility of a business combination
with an operating  business,  the Partnership is proceeding with the liquidation
of the its remaining assets, and, in connection therewith, continuing to develop
the residential lots in the Crestwood tract. The status of such dispositions and
development is discussed in Item 2 below.

(2)  Cash Available for Distribution

Whether or not the Partnership  resumes active business  activities,  management
intends  to  continue  to  invest  in  the   development   of  portions  of  the
Partnership's  remaining  land in Palm Beach  County as a means of  achieving  a
higher  return  upon  sale.  Because  of the cash  requirements  for  such  land
development  activities in 1995,  together with cash  expenditures in connection
with the proposed  transaction  with Regency  Homes,  Inc. and normal  operating
expenses,  no cash was available for  distribution  in 1995 and it is considered
doubtful that cash will be available  for  distribution  in 1996.  See Item 7 --
Management  Discussion  and  Analysis of Financial  Condition  -- Liquidity  and
Capital  Resources.  If the  Partnership  ultimately  determines  to  carry  its
liquidation  to  conclusion,   the  timing  of  the  resumption  of  liquidating
distributions  will depend  largely upon its ability to dispose of its remaining
land, developed or undeveloped, and future collections of contingent receivables
relating  to a prior  sale of a  utility  plant.  See  Item 2 --  Properties  --
"Utility  Contingent  Receivable"  for a discussion of other  factors  affecting
future  distributions.  If management  determines  that the  Partnership  should
continue in business,  the form in which the Partnership does business,  and the
form in which present  unitholders hold an equity  position,  could also change.
Management is unable to predict the distribution policy of the Partnership if it
resumes active business  activities or the  distribution  policy of any business
entity which might result from the combination of the  Partnership  with another
entity.  However,  management  considers  it  more  likely  than  not  that  the
Partnership  will  complete  its  liquidation  without  engaging  in a  business
combination with another entity.


(b) Financial Information About Industry Segments

Not applicable.

(c) Narrative Description Of The Business

Regulation

Development and sales  operations of the Partnership or by potential  purchasers
of real estate from the Partnership  have been subject to regulation by a number
of local,  state and  federal  agencies  concerning  the  nature  and  extent of
improvements,  and compliance with zoning  regulations,  building codes,  health
requirements and environmental protection.  The Partnership believes that it has
been in substantial  compliance with all such laws and regulations  which affect
its properties  and that it has developed the properties to the extent  required
by contract or law. If such laws or regulations are amended, in particular those
concerning environmental protection,  the cost of compliance could be increased.
Reference is made to the discussion concerning the impact of land use regulatory
issues affecting salability of certain properties remaining in Palm Beach County
in Item 2 -- Properties -- "Acreage in the Vicinity of the Village."
<PAGE>
Competition

The real estate business conducted by the Partnership is highly competitive. The
Partnership's  sales  of  its  remaining  land  will  compete  with  surrounding
developments,  and  with  owners  of  tracts  of  land  in the  area  of all its
properties.  There  are  substantial  tracts  of  vacant  land  and  land  under
development  in the general  area of most of the  Partnership's  remaining  real
estate. These competitive considerations could affect the decisions of potential
purchasers of the Partnership's remaining properties.

The Partnership  has  historically  marketed its properties  through direct mail
advertising to major brokers and  developers,  advertisements  in major regional
newspapers and direct contacts  between officers of the Managing General Partner
and real estate developers and brokers.  The Partnership is currently  marketing
its remaining  properties  through local real estate  brokers,  including  Randy
Rieger, who also served as interim Vice President and Chief Operating Officer of
the  Partnership's  managing general partner between September 1995 and February
1996. See Item 13 -- "Certain Relationships and Related Transactions."


Impact of General Economic Conditions

The  development  and sale of real estate occurs within a historically  cyclical
market, and is significantly influenced by general economic conditions. Sales of
housing units and sales of tracts to builders are  particularly  affected by the
costs and  availability of mortgage  financing and the rise and fall of interest
rates in general.  Interest  rates have moved in a narrow  range during the past
year, and declined slightly in December 1995. If significant  increases occur in
the future, the real estate market could suffer as a result.


Personnel

As of January 31, 1996, Stein Management Company,  Inc. ("Steinco") the Managing
General Partner, employed 3 persons.

Office Facilities

The  Partnership's  executive  headquarters  are located at 2501 S. Ocean Drive,
Hollywood, Florida 33019. The premises are owned by an affiliate of Hasam Realty
Limited  Partnership  ("Hasam L.P."), a general partner of the Partnership,  and
are being made available to the Partnership as an accommodation without charge.



<PAGE>
Item 2.  Properties

Palm Beach County, Florida

The Company originally owned approximately 28,000 acres in Palm Beach County, in
southeastern  Florida,  approximately  4,200 of which  were  located  within the
Village.

The Village of Royal Palm Beach

The village, an incorporated municipality, is approximately eight miles from the
Palm Beach International  Airport and eleven miles west of Palm Beach. Two major
area highways,  Southern  Boulevard and Okeechobee Road, lead directly from Palm
Beach  through West Palm Beach to the Village.  The Village has a population  of
approximately  16,000  and  is  primarily  residential.  The  Village  has  been
developed  in  accordance  with a master  plan and  includes  schools,  shopping
facilities, community recreation areas, and its own police and fire departments.

Although the Partnership had previously sold all of its land in the Village,  it
reacquired in 1992, through  foreclosure of a defaulted purchase money mortgage,
the  165  acre  Crestwood  Tract  of  undeveloped  land  in  the  Village.  When
reacquired,  the  Crestwood  Tract was zoned and  preliminary  approval had been
obtained for the development of 172 single-family  homesites (the "Single Family
Tract")  and 625  multi-family  units.  The  Crestwood  Tract is  bisected  by a
principal  Village  road and has  access  to all  utilities,  but was  otherwise
undeveloped  with the  exception  of the  existence  of  portions  of a drainage
system.

Commercial Tract within the Crestwood Tract

In order to  enhance  the value  and  salability  of the  Crestwood  Tract,  the
Partnership  has obtained the rezoning of a 28 acre portion of the  multi-family
zoned  property in the Crestwood  Tract to permit the  Partnership to offer such
portion for sale as a shopping center site. The  Partnership  expects to receive
site-plan  approval in mid-1996.  The  Partnership  has executed an agreement to
sell this portion to an unaffiliated shopping center developer  ("Purchaser") in
four phases.  The first phase relates to an 11.8 acre tract to be sold for $3.00
per square  foot  (approximately  $1,542,024  subject to final  survey),  with a
closing subject to soil testing, availability of sufficient utility connections,
environmental  matters,  final site-plan  approval by June, 1996 and approval of
the premises by a major  supermarket  chain as a site for a new supermarket.  In
addition,  the  Purchaser  has an  inspection  period ending in May, 1996 during
which  Purchaser can terminate the agreement if it determines  that the property
is not suitable for  Purchaser's  purposes.  All  conditions  to closing must be
satisfied and the closing must occur ("First Closing") on or before December 31,
1996. The Purchaser's only liability for failure to close will be its loss of an
initial  deposit  of  $15,000,  plus  additional  deposits  aggregating  $55,500
required if the inspection  period expires,  the supermarket  chain approves the
site, and the Purchaser does not terminate the agreement.
<PAGE>
The second and third  phases  consist of two  parcels  which are  covered by the
rezoning  process  referred to above and adjoin the shopping center site, but as
to which  building  permits are not expected to be available  for  approximately
four years. As to such parcels,  the Partnership has agreed,  during a five-year
period following the First Closing,  to accord an option to Purchaser to acquire
the  parcels,  with the price to be paid  dependent  on the terms upon which the
Purchaser  leases or sells such parcels to an unaffiliated  third party. In such
event the Purchaser will pay to the partnership,  (i) in the event of a lease, a
sum equal to the five times the average annual rental under the lease,  and (ii)
in the event of a sale,  50% of the net proceeds of the sale;  provided that the
partnership  is not required to accept less than $3.50 per square  foot.  If the
Partnership  obtains  an  unsolicited  offer to lease or  purchase  the  parcels
("Third Party Offer") which the Partnership desires to accept, the Purchaser may
exercise a right of first refusal in which case the Partnership  must accept (i)
in the event of a lease,  a sum equal to five times the average annual rental to
be paid during the first five years of the proposed lease, and (ii) in the event
of a sale, 50% of the net proceeds the Partnership would have received under the
Third Party Offer.

The fourth  phase  relates  to a 14-acre  parcel as to which  rezoning  from the
current  multi-family  to commercial use is not considered  feasible for several
years.  The  Purchaser  has been  granted an option  ending four years after the
First  Closing to acquire  this parcel at $3.50 per square  foot  (approximately
$2,129,000  subject to survey).  The  Partnership is entitled to make an earlier
sale of  this  parcel,  commencing  two  years  after  the  First  Closing,  for
multi-family  residential  purposes only, and for a price which is less than the
option  price,  subject to the  Purchaser's  right of first  refusal at the same
price.

Randy Rieger,  who became  vice-president of the Partnership's  managing general
partner in  September,  1995 for an interim  period  following  the death of its
President,  is  entitled  to a  commission  of 10% of the  net  proceeds  to the
Partnership on all of the above-described transactions. See Item 13.

In addition,  as a result of  management's  decision to develop  portions of the
Crestwood Tract,  the Partnership has replanned the  configuration of the entire
tract.  This project  included a redesign of the Single  Family  Tract,  and the
Partnership  has now received  final plat approval to increase to 198 the number
of lots which may be developed in the Single  Family  Tract.  "Development,"  as
such term is  applied to  single-family  lots,  entails  the  completion  of all
necessary  zoning,  land  use,   environmental  and  other  required  regulatory
procedures,  the  installation of roads and utility  connections to each lot and
the provision of drainage facilities.

The Partnership has recently  completed the off-site utility  infrastructure for
the entire Crestwood Tract. The cost of such construction approximated $975,000.
This construction was financed with the proceeds of a $975,000 construction loan
from  Union  Bank of  Florida,  ("Union  Bank  Loan " -- See  Item 13  -"Certain
Relationships and Related Transactions").  See Item 7 -Management Discussion and
Analysis -- "Liquidity." Under the terms of the Union Bank Loan, the Partnership
is paying  interest at a rate equal to 2% above the bank's prime  lending  rate.
The Union Bank's  aggregate  commitment in respect of the  Residential  Tract is
$2,175,000.  The Union Bank Loan,  which is secured by a first  mortgage  on the
1978 undeveloped homesites,  is due in full on July 1, 1997. Individual lots may
be released from the mortgage upon sale upon a prepayment of $20,000 per lot.
<PAGE>
The Partnership is developing the residential lots in three phases, of which the
first phase,  comprising  32 lots,  is currently  being  developed  with on-site
improvements. financed by $350,000 in additional borrowings under the Union Bank
Loan.  Four of the  residential  lots  in the  first  phase  have  already  been
purchased by Regency Homes, Inc. for the sum of $35,000 per lot, and the balance
of 28 lots are  subject to an option in favor of Regency at $36,000  per lot for
the 14 remaining waterfront lots and $30,000 for the 14 remaining "dry" lots (an
additional  $924,000  if all options are  exercised).  In order to preserve  the
option,  Regency must  purchase a minimum of three lots per month  commencing in
May,  1996.  The  agreement  with Regency  Homes,  Inc. was unrelated to and not
contingent  upon the  merger  described  in Item 1 -- Recent  Efforts  to resume
Active Business Operations.

The Partnership  proposes to finance  on-site  development of the balance of the
Single Family Tract,  anticipated to cost in the range of $1.9 million, with the
balance of the  borrowing  available  under the Union Bank Loan and public  bond
financing  through the Indian Trail Water  Control  District  (the  "District"),
which  the  Partnership   anticipates   will  produce  net  available  funds  of
approximately  $1,000,000.  Union Bank is not obliged to fund the balance of its
commitment  unless bond issue  proceeds of a minimum of $1,000,000 are realized.
The  District  has  adopted  the  Partnership's  proposed  development  plan,  a
court-appointed  commission  has  reported  favorably  upon  such  plan  and the
District has authorized the initiation of procedures  with a view to issuance of
the  bonds.  The  Partnership  intends  to seek  issuance  of the  bonds  during
mid-spring of 1996. The District's ability to sell such bonds will be subject to
financial  market and other  variable  factors which cannot be predicted at this
time.  The  Partnership's  ability to proceed with on-site  development of these
sites would be adversely  affected if such bank and/or bond financing  proves to
be unavailable.  The additional  financing  anticipated from Union Bank could be
deferred or said bank's obligation to make further advances could expire without
further funding if the Partnership does not sell at least 20 single-family  lots
in first 32-lot phase on or before May, 1996. In turn, the Partnership's ability
to meet this schedule depends upon the rate at which Regency Homes,  Inc., which
holds  options  on these  lots,  is able to sell and  construct  homes  thereon.
Regency  has the right to defer  additional  purchases  until  May 1996  without
losing its options.  Management  believes that the market for homes on such lots
is currently strong.

In March, 1993 the Partnership  reacquired a separate tract of five acres in the
Village  by  accepting  a deed in  lieu  of  foreclosure  on a  mortgage  with a
principal  balance of $300,000 (See Item 7 --"Foreclosure  Transactions").  This
parcel is bordered by a golf course and a principal  Village  road, is zoned for
approximately  100 multi-family  residential units and is being offered for sale
in its present state without further development.

Included in Property  Held For Sale at  September  30, 1995 is the net  carrying
value of a mortgage note  receivable  having a net carrying value of $137,614 on
which foreclosure  action has been commenced.  Management is of the opinion that
the realizable value of the underlying property is in excess of the current book
value of the mortgage.
<PAGE>
Utility Contingent Receivable

In 1983 the Partnership's  Predecessor Company sold to the Village of Royal Palm
Beach a water and sewage treatment system servicing the Village. Pursuant to the
agreement  of  sale  ("Utility  Contract"),  the  Predecessor  company  received
$2,510,000  on  closing,  and was  entitled  to future  payments to a maximum of
$10,900,000 as future connections,  measured by consumption increases, were made
to the system over a period  ending  August,  2001.  As of  September  30, 1995,
$5,708,000 had not been received or earned.  The Utility  Contract also provided
for contingent  extension  periods  aggregating  not more than three  additional
years to compensate for possible  future  governmental  building  moratoriums or
water use restrictions.  The Partnership's  consultants have advised it that the
term has been  extended  through  2003 as a result of water  usage  restrictions
imposed by the South  Florida  Water  Management  District  in 1990 and 1991 and
moratorium  actions  taken by the  Village of Royal Palm Beach in 1985 and 1986.
The Utility Contract also calls for payments to the Partnership  equal to 25% of
any  "Guaranteed   Revenues"   (payment  by  developers  to  secure   guaranteed
allocations of plant capacity)  collected by the Village to a maximum payment of
$500,000,  of which  $262,657 has already been  received.  It is not possible to
predict the amount or timing of future  revenues to the  Partnership  under this
program.

To date, the Partnership has received the following Utility Contract payments:
<TABLE>
<CAPTION>
                                           Amount Received Based On
                                       ---------------------------------
Fiscal Year Ended                      Consumption            Guaranteed
September 30,                           Increases              Revenues
-----------------                      -----------            ----------
<S>                                      <C>                   <C>  
1984                                     $919,000
1985                                      830,000
1986                                      637,000
1987                                      859,000
1988                                      240,000             $ 30,000
1989                                      761,000               45,000
1990                                          -0-               35,000
1991                                      293,000               21,000
1992                                      357,000               37,000
1993                                      168,000               47,000
1994                                       58,000               27,000
1995*                                     413,000               20,000
                                       ----------             --------
Total                                  $5,535,000             $262,000
                                       +=========             ========
</TABLE>
----------------------------------
*Paid in January, 1996.


<PAGE>
The  Utility   Contract  with  extensions   management   believes  have  already
accumulated  will expire in 2003,  subject to extensions of up to one additional
year.  The ability of the  Partnership to realize the maximum price is dependent
upon the rate at which the population in the Village grows,  and levels of water
consumption  which in turn depends upon  economic,  social and climatic  factors
which cannot be predicted.  Historically,  water  consumption  tends to increase
based upon increases in population.  During most of fiscal 1990, however, due to
drought  conditions  existing in most Southern Florida,  the South Florida Water
Management District imposed mandatory water usage  restrictions.  The imposition
of these  restrictions  resulted in a decrease in aggregate water consumption in
the area from which the  Partnership's  receipts are projected while  population
was increasing.

Management  believes  that  there  remain  sufficient  potential  new home water
hookups in the area served by the utility to enable the  Partnership  to realize
the  maximum  remaining  $5,708,000  in  contingent  payments  under the Utility
Contract.  There can be no assurance that the rate of new  construction or water
consumption in such area will be sufficient to enable the Partnership to receive
the full  amount or even a  substantial  portion of such  payments  prior to the
expiration of the contingent payment term.


Acreage in the Vicinity of the Village

Substantially all of the property previously owned by the Predecessor Company in
Palm  Beach  County  outside  of  the  Village  limits,  originally  aggregating
approximately  23,800 acres,  was sold under the  Predecessor  Company's  retail
installment  sales  program,  which  terminated  prior to the  inception  of the
Partnership.  The Partnership  currently  retains a tract of  approximately  483
acres,  and  additionally   holds   approximately  206  one-acre  lots,  located
approximately eight miles northwest of the Village.

The 206 lots have been  improved with graded  unpaved  access roads and drainage
facilities. The Partnership has not sold any of these lots. The timing of future
sales of these lots,  the manner in which they may be developed and the ultimate
realizable  prices for these lots are dependent upon a complex and  interrelated
number of factors arising out of governmental regulations concerning permissible
land use.

Palm Beach  County has  adopted  land  development  regulations  under which new
development  will not be permitted  unless adequate public  facilities  (such as
roads) will be in place  concurrently with the impacts of such development.  The
Indian  Trail Water  Control  District  ("District")  is  currently  preparing a
revised  drainage plan which would result in an exemption for such 206 lots from
further  compliance  with such  concurrency  requirements  and  would  allow the
issuance of building  permits for  single-family  residences on such lots.  Such
plan has  been  opposed  by  other  governmental  agencies,  however,  and it is
uncertain  whether the plan will be adopted.  If the plan is not approved  these
lots may not be usable  for  residential  purposes.  Further,  even  assuming  a
favorable  result,  the  administrative  process leading to the  availability of
building permits cannot be expected to be completed  before  mid-1998.  However,
management  is of the opinion that the  realizable  value of these lots,  in the
aggregate, is in excess of its current book value of $132,754.
<PAGE>
The 483-acre  tract had been  reserved for use by the  District,  in part,  as a
water  retention  area  for such  revised  drainage  plan.  The  Partnership  is
presently  evaluating possible  alternative uses of this tract, which contains a
significant amount of wetlands.  Since the use of this land is also dependent on
the  extension of roads,  and  development  activity on this tract may meet with
opposition  from  governmental  agencies  concerned  with  wildlife and wetlands
preservation,  it is not possible to estimate the realizable value of this land.
However,  management is of the opinion that its realizable value is in excess of
its current book value of $213,421.

Elsewhere  in the  vicinity  of the Village the  Partnership  previously  held a
disputed claim to approximately 24 acres of undeveloped land. This claim had not
originally  been  accorded  value on the  Partnership's  balance  sheet  and was
considered  to have little or no value.  During  1994,  in  connection  with the
resolution of this claim with adjoining land owners,  and in order to give value
to such claim, the Partnership  relinquished a portion of its claim,  acquired 5
adjoining acres for $141,879,  and executed a joint  development  agreement with
one of such adjoining landowners relating to the Partnership's  acreage and such
landowner's acreage (comprising approximately 22 acres in the aggregate of which
the Partnership now owns  approximately 12 acres). The Partnership and the joint
developer  have recently  entered into an agreement to sell the entire  combined
parcel for a price of $1.90 per square  foot,  subject  to survey,  which  would
result  in a gross  selling  price of  approximately  $1,820,808  of  which  the
Partnership's share would be approximately  $927,500. The sale is subject to the
purchaser's  ability to have the premises  rezoned for use as a shopping center,
approval of the  premises  as a site for a  supermarket  by a major  supermarket
chain,  and the issuance of all  necessary  building and other  permits,  with a
closing date (subject to all of the  foregoing) no later than June 30, 1997. The
agreement is also subject the ability of the  Partnership  to cause the owner of
an  adjoining  residence,  which is not  owned by the  Partnership  or its joint
developer,  to sell such residence to the purchaser.  There is no assurance that
such permits  will be  obtained,  nor can the  Partnership  predict  whether the
rezoning process, which involves proceedings before several governmental bodies,
or the sale of the aforesaid  residence,  could be completed or obtained  within
the required time frame.


Hernando County, Florida

The Predecessor Company originally owned approximately  17,600 acres in Hernando
County,  Florida,  located 56 miles from Tampa,  with 13 miles of road  frontage
along U.S.  Highway 19, a major area highway.  In 1994 the Partnership sold a 14
acre  tract  in this  area  for  $125,000.  The  Partnership  presently  retains
approximately 20 acres in this area with negligible value.


<PAGE>
Lake County,  Florida

The Predecessor  Company  originally  owned  approximately  12,300 acres in Lake
County,  Florida,  located in  Central  Florida  on the  outskirts  of the Ocala
National Forest  approximately 39 miles from Ocala and 6 miles from Deland. Lake
County is  predominantly  rural with a population of  approximately  14,000.  At
September 30, 1992, the Partnership  owned no property in Lake County;  however,
in March of 1993 the  Partnership  accepted a deed in lieu of  foreclosure  on a
mortgage on a 1400 acre  portion of this  property  with a principal  balance of
$706,000. See Item 7 -- "Foreclosure Transactions." Approximately 1,000 acres of
this  property  which  are  remote,  undeveloped  and  may be  unsuited  for any
development,  were sold by the Partnership for a cash price of $350,000 in June,
1993. The balance of the tract was sold in 1994 in two  transactions  for prices
aggregating  $360,000,  of which  $248,000 was  represented  by a purchase money
mortgage  payable over a five year term. In November 1995 this mortgage having a
principal  balance of $222,471  and  deferred  profit of  $48,958,  was sold for
$170,000.