EXHIBIT 13

                               1999 Annual Report
<PAGE>

--------------------------------------------------------------------------------
                          COMMERCIAL PROPERTIES 2, L.P.
--------------------------------------------------------------------------------


   Commercial Properties 2, L.P. is a limited partnership formed in 1983 to
   acquire, operate and hold for investment commercial real estate. The
   Partnership's investment currently consists of one commercial office
   building situated in the Financial Centre Complex in West Little Rock,
   AR. Two Financial Centre is a 113,983 square foot, four-story brick office
   building located near two interstate highways, I-630 and I-430, affording
   easy access to downtown Little Rock and the Little Rock Regional Airport.






                                    Contents

                1  Message to Investors

                2  Consolidated Financial Statements

                5  Notes to the Consolidated Financial Statements

               11  Report of Independent Auditors

               12  Net Asset Valuation
<PAGE>



--------------------------------------------------------------------------------
                              MESSAGE TO INVESTORS
--------------------------------------------------------------------------------

We are pleased to present the 1999 Annual Report for Commercial Properties 2,
L.P. (the "Partnership"). This report includes an update on our efforts to sell
the Partnership's remaining property, Two Financial Centre, and the
Partnership's audited financial statements for the year ended November 30, 1999.

Marketing Update
As discussed in prior reports, we previously engaged a broker to market Two
Financial Centre for sale and solicit bids from prospective buyers. We are
pleased to announce that a purchase offer was recently accepted, and we are
currently negotiating a sales contract. While we anticipate that the property
will be sold during the second quarter of this year, there can be no assurance
that a sale will be completed within this time frame. Once the property is sold,
we will distribute the net proceeds, together with the Partnership's remaining
cash reserves (after payment of, or provision for, the Partnership's liabilities
and expenses), and terminate the Partnership.

Property Update
The Little Rock office market has softened slightly due to the completion of
several new office buildings since 1995, as well as a decrease in demand due to
corporate downsizing and mergers. Two Financial Centre is located within the
suburban Little Rock office sector. This sector has the highest average lease
rate of any submarket in Little Rock with an average occupancy rate of 85.4% as
of January 1999, compared to an overall occupancy rate of 85.7% for Little Rock.

During the year, we executed six new leases at the property totaling 20,198
square feet and one lease renewal totaling 6,545 square feet. As a result, the
property was 100% leased as of November 30, 1999, compared to 84% as of November
30, 1998.

During 2000, nine leases totaling 48,381 rentable square feet, or approximately
40% of the property's leasable area, were originally scheduled to expire.
However, one expiring lease for 31,729 square feet has already been renewed. As
a result, 16,652 square feet, or approximately 14% of the property's leasable
area, is currently scheduled to expire this year.

General Information
We will keep you updated in future reports with respect to our efforts to sell
Two Financial Centre. In the interim, questions regarding the Partnership should
be directed to your Financial Consultant or Partnership Investor Services. All
requests for a change of address or transfer should be submitted in writing to
the Partnership's administrative agent at P.O. Box 7090, Troy, MI 48007-7090.
Partnership Investor Services can be reached at (617) 342-4225, and the
Partnership's administrative agent can be reached at (248) 637-7900.

Very truly yours,

Real Estate Services VII, Inc.          Hogan Stanton Investment, Inc.
General Partner                         General Partner of HS Advisors III, Ltd.




Michael T. Marron                       Mark P. Mikuta
President                               President

February 29, 2000

                                                                              1
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
                                               At November 30,   At November 30,
                                                         1999              1998
-------------------------------------------------------------------------------
<S>                                               <C>               <C>
Assets
Real estate assets held for disposition           $ 7,436,684       $ 7,222,460
Cash and cash equivalents                           2,432,308         1,446,089
Restricted cash                                        23,111            21,386
Rent and other receivables                             68,568           291,360
Prepaid expenses                                           --            10,997
-------------------------------------------------------------------------------
      Total Assets                                $ 9,960,671       $ 8,992,292
===============================================================================
Liabilities and Partners' Capital (Deficit)
Liabilities:
  Accounts payable and accrued expenses           $   173,004       $   258,394
  Due to affiliates                                    65,945            67,910
  Security deposits payable                            19,141            18,528
                                                  -----------------------------
      Total Liabilities                               258,090           344,832
                                                  -----------------------------
Partners' Capital (Deficit):
  General Partners                                   (138,408)         (148,959)
  Limited Partners (100,000 units outstanding)      9,840,989         8,796,419
                                                  -----------------------------
      Total Partners' Capital                       9,702,581         8,647,460
-------------------------------------------------------------------------------
      Total Liabilities and Partners' Capital     $ 9,960,671       $ 8,992,292
===============================================================================
</TABLE>



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
For the years ended November 30, 1999, 1998 and 1997

                                        General         Limited
                                       Partners        Partners           Total
-------------------------------------------------------------------------------
<S>                                  <C>           <C>             <C>
Balance at November 30, 1996         $ (233,230)   $ 19,567,384    $ 19,334,154
Net income                               58,420       5,783,592       5,842,012
Distributions                           (17,172)    (12,051,554)    (12,068,726)
-------------------------------------------------------------------------------
Balance at November 30, 1997           (191,982)     13,299,422      13,107,440
Net income                               43,023       4,259,315       4,302,338
Distributions                                --      (8,762,318)     (8,762,318)
-------------------------------------------------------------------------------
Balance at November 30, 1998           (148,959)      8,796,419       8,647,460
Net income                               10,551       1,044,570       1,055,121
-------------------------------------------------------------------------------
Balance at November 30, 1999         $ (138,408)   $  9,840,989    $  9,702,581
===============================================================================
</TABLE>

See accompanying notes to the consolidated financial statements.              2
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended November 30,
                                                      1999          1998          1997
--------------------------------------------------------------------------------------
<S>                                             <C>           <C>           <C>
Income
Rental                                          $1,937,276    $1,809,825    $3,471,538
Interest                                            77,768       275,122       116,728
Other                                               37,443       157,038        42,206
                                                --------------------------------------
      Total Income                               2,052,487     2,241,985     3,630,472
--------------------------------------------------------------------------------------
Expenses
Property operating                                 674,381       863,874     1,642,425
Depreciation and amortization                           --            --       490,359
General and administrative - other                 262,408       274,713       255,872
General and administrative - affiliates             60,577        33,192       156,766
                                                --------------------------------------
      Total Expenses                               997,366     1,171,779     2,545,422
--------------------------------------------------------------------------------------
Operating income                                 1,055,121     1,070,206     1,085,050
Gain on sale of real estate assets                      --     3,232,132     4,756,962
--------------------------------------------------------------------------------------
      Net Income                                $1,055,121    $4,302,338    $5,842,012
======================================================================================
Net Income Allocated:
To the General Partners                         $   10,551    $   43,023    $   58,420
To the Limited Partners                          1,044,570     4,259,315     5,783,592
--------------------------------------------------------------------------------------
                                                $1,055,121    $4,302,338    $5,842,012
======================================================================================
Per limited partnership unit
(100,000 outstanding)                              $ 10.45       $ 42.59       $ 57.84
--------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.              3
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended November 30,
                                                               1999            1998            1997
---------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>
Cash Flows From Operating Activities:
Net income                                             $  1,055,121    $  4,302,338    $  5,842,012
Adjustments to reconcile net income to net cash
provided by operating activities:
  Depreciation                                                   --              --         442,075
  Amortization                                                   --              --          48,284
  Gain on sale of real estate assets                             --      (3,232,132)     (4,756,962)
  (Decrease) increase in cash arising from
  changes in operating assets and liabilities:
    Restricted cash                                          (1,725)         44,214          91,395
    Rent and other receivables                              222,792        (111,065)        (45,371)
    Prepaid expenses                                         10,997           5,814         (47,075)
    Deferred rent receivable                                     --              --           4,597
    Accounts payable and accrued expenses                   (85,390)        (64,785)        (82,096)
    Due to affiliates                                        (1,965)        (37,702)         62,766
    Security deposits payable                                   613         (40,986)        (97,612)
                                                       --------------------------------------------
Net cash provided by operating activities                 1,200,443         865,696       1,462,013
---------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from sale of real estate                                --       8,762,317      10,351,554
Additions to real estate                                   (214,224)       (442,361)        (32,291)
                                                       --------------------------------------------
Net cash (used for) provided by investing activities       (214,224)      8,319,956      10,319,263
---------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Cash distributions                                               --     (19,543,165)     (1,717,172)
                                                       --------------------------------------------
Net cash used for financing activities                           --     (19,543,165)     (1,717,172)
---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents        986,219     (10,357,513)     10,064,104
Cash and cash equivalents, beginning of year              1,446,089      11,803,602       1,739,498
                                                       --------------------------------------------
Cash and cash equivalents, end of year                 $  2,432,308    $  1,446,089    $ 11,803,602
===================================================================================================
Supplemental Schedule of Non-Cash Investing
Activities:
Write-off of fully depreciated building improvements   $         --    $     10,666    $    327,453
---------------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Operating Activities:
In connection with the General Partners' intent to sell the properties, real estate held for
investment, deferred rent receivable and prepaid leasing commissions in the amounts of $17,469,570,
$130,692 and $294,814, respectively, were reclassified to "Real estate assets held for disposition"
in 1997. In connection with the sale of Maitland Center Office Building C, deferred rent receivable,
and prepaid leasing commissions in the amounts of $50,555 and $65,899 were netted against Gain on
sale of real estate assets. In connection with the sale of Swenson Business Park - Building C,
restricted cash, deferred rent receivable, and prepaid leasing commissions in the amounts of $9,800,
$34,502, and $98,965, respectively, were netted against Gain on sale of real estate assets.
---------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.              4
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
November 30, 1999, 1998 and 1997

1.  Organization
Commercial Properties 2, L.P. (the "Partnership") was organized as a limited
partnership under the laws of the Commonwealth of Virginia pursuant to a
Certificate and Agreement of Limited Partnership dated and filed September 1,
1983 (the "Partnership Agreement"). The Partnership was formed for the purpose
of making acquisitions in and operating certain types of commercial real estate.
The General Partners of the Partnership are Real Estate Services VII, Inc.,
which is an affiliate of Lehman Brothers Inc. (see below), and HS Advisors III,
Ltd. ("HS Advisors"), which is an affiliate of Goodman Segar Hogan, Inc.
("GSH"). The Partnership will continue until December 31, 2010, unless
terminated sooner in accordance with the terms of the Partnership Agreement.

On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic
retail brokerage and asset management businesses to Smith Barney, Harris
Upham & Co. Incorporated ("Smith Barney").  Subsequent to the sale, Shearson
Lehman Brothers Inc. changed its name to Lehman Brothers Inc. ("Lehman
Brothers").  The transaction did not affect the ownership of the General
Partners.  However, the assets acquired by Smith Barney included the name
"Hutton."  Consequently, effective October 12, 1993, the Hutton Real Estate
Services VII Inc. General Partner changed its name to Real Estate Services
VII, Inc. ("Real Estate Services"), and effective August 3, 1995, Hutton/GSH
Commercial Properties 2, L.P. changed its name to Commercial Properties 2,
L.P. to delete any reference to Hutton.

On August 1, 1993, GSH transferred all of its leasing, management and sales
operations to Goodman Segar Hogan Hoffler, L.P., a Virginia limited partnership
("GSHH"). On that date, the leasing, management and sales operations of a
portfolio of properties owned by the principals of Armada/Hoffler ("HK") were
also obtained by GSHH. The general partner of GSHH is Goodman Segar Hogan
Hoffler, Inc., a Virginia corporation ("GSHH Inc."), which has a 1% interest in
GSHH. The stockholders of GSHH Inc. are GSH with a 62% stock interest and H.K.
Associates, L.P., an affiliate of HK, with a 38% percent stock interest. The
remaining 99% interests in GSHH are limited partnership interests owned 50% by
GSH and 49% by HK. On September 28, 1998 GSH sold its general partner and
limited partner interests in GSHH to The St. Joe Company, an unaffiliated
company. The transactions did not affect the ownership of the General Partners.

On November 10, 1997, the Partnership closed on the sale of The Swenson Property
- Building C (the "Swenson Property"). The Swenson Property was sold for net
proceeds of $10,351,554 to WW&LJ Gateways, LTD. (the "Swenson Buyer"), which is
unaffiliated with the Partnership. The selling price was determined by arm's
length negotiations between the Partnership and the Swenson Buyer. The
transaction resulted in a gain on sale of $4,756,962, which is reflected in the
Partnership's statement of operations for the period ended November 30, 1997.

On December 19, 1997, the Partnership closed on the sale of Maitland Center
Office Building C (the "Maitland Property"). The Maitland Property, classified
as "real estate assets held for disposition" at November 30, 1997, in the amount
of $5,350,185, was sold for net proceeds of $8,762,317 to CMD Realty Investment
Fund III, L.P., an Illinois limited partnership (the "Maitland Buyer"), which is
unaffiliated with the Partnership. The selling price was determined by arm's
length negotiations between the Partnership and the Maitland Buyer. The
transaction resulted in a gain on sale of $3,232,132, which is reflected in the
Partnership's statement of operations for the period ended November 30, 1998.

2.  Significant Accounting Policies

Consolidation  The consolidated financial statements include the accounts of the
Partnership and its ventures, Two Financial Centre Joint Venture and Swenson
Building C Joint Venture, and Maitland Building C, which was a wholly-owned
property. Intercompany accounts and transactions between the Partnership and the
ventures have been eliminated in consolidation.

                                                                              5
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


Real Estate Assets Held for Disposition  Real estate assets held for disposition
are carried at the lower of carrying value or fair market value less costs to
sell. During the second quarter of 1997, Swenson Business Park - Building C and
Maitland Center Office Building C, and during the third quarter of 1997, Two
Financial Centre real estate assets were reclassified as held for disposition
and were no longer depreciated.

Leases  Leases are accounted for as operating leases. Leasing commissions are
amortized over the terms of the respective leases. Leasing commissions are
reclassified as real estate assets held for disposition and are no longer
amortized.

Fair Value of Financial Instruments  Statement of Financial Accounting Standards
No. 107, "Disclosures about Fair Value of Financial Instruments" ("FAS 107"),
requires that the Partnership disclose the estimated fair values of its
financial instruments. Fair values generally represent estimates of amounts at
which a financial instrument could be exchanged between willing parties in a
current transaction other than in forced liquidation. However, in many instances
current exchange prices are not available for certain of the Partnership's
financial instruments, since no active market generally exists for such
financial instruments.

Fair value estimates are subjective and are dependent on a number of significant
assumptions based on management's judgment regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments, and other factors. In addition, FAS 107 allows a wide
range of valuation techniques, therefore, comparisons between entities, however
similar, may be difficult.

Cash and Cash Equivalents  Cash and cash equivalents consist of short-term
highly liquid investments which have maturities of three months or less from the
date of purchase. The carrying value approximates fair value because of the
short maturity of these instruments.

Restricted Cash  Restricted cash represents cash held in connection with tenant
security deposits.

Income Taxes  No provision for income taxes has been made in the financial
statements of the Partnership since such taxes are the responsibility of the
individual partners, rather than of the Partnership.

Use of Estimates  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

3. The Partnership Agreement and Cash Distributions
The Partnership Agreement provides that the net cash from operations, as
defined, for each fiscal year will be distributed on a quarterly basis 99% to
the Limited Partners and 1% to the General Partners until each Limited Partner
has received a 9% annual non-cumulative return on his adjusted capital
investment, as defined. The net cash from operations will then be distributed to
the General Partners until the General Partners have received 10% of the
aggregate net cash from operations distributed to all partners. Thereafter, net
cash from operations will be distributed 90% to the Limited Partners and 10% to
the General Partners.

Net proceeds from sales or refinancing shall generally be distributed 99% to the
Limited Partners and 1% to the General Partners until each Limited Partner has
received an amount equal to his adjusted capital investment, as defined, and 10%
cumulative annual return thereon, reduced by any net cash from operations
actually distributed to such Limited Partner. The balance of net proceeds, if
any, will then be distributed 85% to the Limited Partners and 15% to the General
Partners.

                                                                              6
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


Upon the dissolution and termination of the Partnership, the General Partners
will be required to contribute to the Partnership an amount not to exceed 1% of
the total capital contributions from all of the Partners of the Partnership less
prior contributions of the General Partners. In no event shall the General
Partners be obligated to contribute more than the negative balances in their
respective capital accounts. In addition, if upon dissolution and termination of
the Partnership the sum of (i) the Limited Partners' Capital Contributions and
(ii) an amount equal to a 6% cumulative annual return with respect to each
Limited Partner's Adjusted Capital Value reduced by any Net Cash From Operations
distributed to such Limited Partner, exceeds the aggregate distributions to the
Limited Partners of Net Proceeds From Sale or Refinancing, the General Partners
shall contribute to the Partnership for distribution to the Limited Partners an
amount equal to the lesser of such excess or the aggregate distributions of Net
Proceeds From Sale or Refinancing to the General Partners.

For the year ended November 30, 1998, the Partnership paid cash distributions
totaling $8,762,317, or $87.62 per Limited Partnership Unit, representing net
proceeds from the sale of the Maitland Property. For the year ended November 30,
1997, the Partnership paid cash distributions totaling $1,275,000 and $12,879 to
the Limited and General Partners, respectively, representing $12.75 per Limited
Partnership Unit. An additional $10,780,847 was accrued in 1997 for a
distribution, which was paid in February 1998, and comprised of $429,293
representing cash flow from operations for the three months ended November 30,
1997, and $10,351,554 representing net proceeds from the sale of Swenson
Business Park - Building C. Quarterly cash distributions from operations were
suspended beginning with the 1998 first quarter distribution, which would have
been paid on or about April 15, 1998. Once the Partnership's remaining property,
Two Financial Centre, is sold, the General Partners will distribute the net
proceeds together with the Partnership's remaining cash reserves (after payment
of, or provision for, the Partnership's liabilities and expenses), and dissolve
the Partnership.

Losses and all depreciation for any fiscal year shall be allocated 99% to the
Limited Partners and 1% to the General Partners. Income before depreciation for
any fiscal year and all gains from sales will be allocated in substantially the
same manner as net cash from operations.

4.  Transactions with Related Parties
The following is a summary of amounts paid or accrued to the General Partners
for the reimbursement of administrative salaries and expenses that have been
included in general and administrative expenses - affiliate for the years ended
November 30, 1999, 1998 and 1997.

<TABLE>
<CAPTION>
                                Unpaid at,                     Paid
                              November 30,   -----------------------------------
                                     1999       1999           1998         1997
--------------------------------------------------------------------------------
<S>                             <C>          <C>          <C>          <C>
Real Estate Services VII, Inc.
and affiliates:
  Out-of-pocket expenses        $  57,647    $  26,585    $  45,909    $  60,933
HS Advisors III, Ltd.:
  Administrative salaries
  and expenses                      8,298       35,958       22,128       43,783
--------------------------------------------------------------------------------
                                $  65,945    $  62,543    $  68,037    $ 104,716
                                ================================================
</TABLE>

Effective as of January 1, 1997, the Partnership began reimbursing certain
expenses incurred by Real Estate Services VII, Inc. and its affiliates in
servicing the Partnership to the extent permitted by the Partnership agreement.
In prior years, affiliates of Real Estate Services VII, Inc. had voluntarily
absorbed these expenses.

                                                                              7
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


5.  Real Estate Investments
Since inception, the Partnership has acquired four commercial office buildings
and a research and development facility through investments in joint ventures or
limited partnerships with unaffiliated co-venturers, of which one remained as of
November 30, 1999:

                         Square                            Date         Purchase
Property Name              Feet           Location     Acquired            Price
--------------------------------------------------------------------------------
Two Financial Centre    113,983    Little Rock, AR      3/29/84      $10,700,000


The joint venture agreement substantially provides that:

  (a)  Net cash from operations will be distributed 100% to the Partnership
       until it has received an annual, non-cumulative return on its capital
       contribution, as adjusted, of 7%. Thereafter, any remaining cash from
       operations will be shared in a ratio relating to the various ownership
       interests of the Partnership.

  (b)  Net proceeds from a sale or refinancing will be distributed 98% to the
       Partnership and 2% to the joint venture partner.

  (c)  Taxable losses will generally be allocated 100% to the Partnership.

For financial statement purposes, net income and net losses are allocated in the
same manner as taxable income and taxable losses.

For the year ended November 30, 1999, Two Financial Centre had income from
operations totaling approximately $350,825.

6.  Loan to Two Financial Centre Joint Venture
The Two Financial Centre Joint Venture ("TFC") has provided a demand promissory
note to the Partnership with a principal balance of $7,383,033 which bears
interest at 12% per annum, resulting in annual interest of $885,960. Monthly
payments of interest only are due in arrears in the amount of $73,830. On
September 17, 1993, TFC issued to the Partnership a new demand promissory note
in the amount of $610,113 representing the unpaid accrued interest as of
September 17, 1993 on the original principal balance of $7,383,033. The note
bears interest at 8% per annum, resulting in annual interest of $48,809. Monthly
interest of $4,067 is payable in arrears commencing October 17, 1993. As of
November 30, 1999, accrued interest of $1,049,940 remains unpaid. Interest of
$825,000, $706,816 and $612,143 has been paid by TFC to the Partnership during
the fiscal years ended November 30, 1999, 1998 and 1997, respectively. All
interest and principal activity and balances relating to the demand promissory
notes are eliminated in consolidation for financial statement presentation
purposes. Based on borrowing rates currently available to the Partnership for
mortgage loans with similar terms and average maturities, the fair value of
long-term debt approximates carrying value.

7.  Rental Income Under Operating Leases
Future minimum rental income to be received on non cancelable operating leases
as of November 30, 1999 is as follows:

<TABLE>
<CAPTION>
                       ----------------------------------
                       <S>                     <C>
                       2000                    $1,869,000
                       2001                     1,367,000
                       2002                       893,000
                       2003                       449,000
                       2004                        16,000
                       ----------------------------------
                                               $4,594,000
                                               ==========
</TABLE>

                                                                              8
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


Lease terms range from one to ten years. The leases allow for increases in
certain property operating expenses to be passed on to tenants. For the years
ended November 30, 1999, 1998 and 1997 these amounts were $19,647, $22,469 and
$126,677, respectively.

Leases with two tenants at Two Financial Centre generated rental revenue in
excess of 10% of the Partnership's consolidated rental revenues for the year
ended November 30, 1999. One of the leases is with the Federal Bureau of
Investigation ("FBI"), which occupies approximately 28% of the property's
leasable space. This lease, which was scheduled to expire on January 31, 2000,
has been renewed and now expires on March 31, 2001. The second tenant, Blue
Cross/Blue Shield ("BC/BS"), occupied approximately 33% of the property's
leasable space. In October 1998, BC/BS terminated its lease and the General
Partner subsequently re-leased a portion of this space to Commercial Union
Insurance ("CUI"). During 1999, the rental income derived from the FBI and CUI
leases totaled $563,558 and $259,452, respectively. The rental income derived
from the FBI and BC/BS leases previous to 1999 totaled $563,558 and $396,061,
respectively, for 1998 and $492,264 and $464,820, respectively, for 1997. Rental
income from these leases collectively represented approximately 43% of the
Partnership's 1999 consolidated rental income, 52% of 1998 consolidated rental
income and 28% of 1997 consolidated rental income.

On November 26, 1997, Northern Telecom ("Nortel") entered into an agreement with
the Partnership to buyout its lease at Two Financial Centre for the amount of
$147,620. Nortel occupied approximately 5% of the property's leasable space at
November 30, 1997.

8. Reconciliation of Net Income to Taxable Income
The net income reported in the financial statements for the year ended November
30, 1999 exceeded the taxable income reported to the partners by $295,175.
Taxable income reported to the partners for the year ended November 30, 1998
exceeded net income reported in the financial statements by $408,140. The income
reported in the financial statements for the year ended November 30, 1997
exceeded taxable income reported to the partners by $520,674.

These differences are primarily due to the use of different methods of recording
depreciation expense and rental income. The Partnership uses accelerated methods
of depreciating real estate for tax purposes and the straight-line method for
financial statement purposes was used prior to the real estate being classified
as held for sale. Rental income is recorded when received or receivable for tax
purposes and rental income was recorded on a straight-line basis for financial
statement purposes prior to the real estate being classified as held for sale.

                                                                              9
<PAGE>

--------------------------------------------------------------------------------
                         REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------



The Partners
Commercial Properties 2, L.P.
and Consolidated Ventures

We have audited the accompanying consolidated balance sheets of Commercial
Properties 2, L.P. and Consolidated Ventures as of November 30, 1999 and 1998,
and the related consolidated statements of operations, partners' capital
(deficit), and cash flows for each of the three years in the period ended
November 30, 1999. Our audits also included the financial statement schedule
listed in the Index at Item 14(a)(2). These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Commercial Properties 2, L.P. and Consolidated Ventures at November 30, 1999 and
1998, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended November 30, 1999, in conformity
with accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.


                                                            /s/ERNST & YOUNG LLP

New York, New York
January 27, 2000

                                                                              10
<PAGE>

--------------------------------------------------------------------------------
                               NET ASSET VALUATION
--------------------------------------------------------------------------------

Comparison of Acquisition Costs to Estimated Value and
Determination of Net Asset Value Per $126.22 Unit at November 30, 1999
(Unaudited)

<TABLE>
<CAPTION>
                                          Acquisition Cost
                                           (Purchase Price         Partnership's
                                              Plus General              Share of
                                                  Partners'          November 30,
                                 Date of       Acquisition        1999 Estimated
Property                     Acquisition              Fees)              Value(1)
--------------------------------------------------------------------------------
<S>                             <C>             <C>                  <C>
Two Financial Centre(2)(3)      03-29-84        $4,611,600           $ 1,329,354

Cash and cash equivalents                                             2,432,308
Rent and other receivables                                               68,568
Demand promissory note receivable                                     7,993,146
                                                                    -----------
                                                                     11,823,376
Less:
  Accounts payable and accrued expenses                                (173,004)
  Due to affiliates                                                     (65,945)
                                                                    -----------
Partnership Net Asset Value(4)                                      $11,584,427
                                                                    ===========

Net Asset Value Allocated:
  Limited Partners                                                  $   115,844
  General Partners                                                   11,468,583
                                                                    -----------
                                                                    $11,584,427
                                                                    ===========
Net Asset Value Per Unit
  (100,000 units outstanding)                                          $ 114.69
-------------------------------------------------------------------------------

<FN>
(1) This represents the Partnership's share of the November 30, 1999 estimated
    value of Two Financial Centre which was determined by the General Partners,
    with the assistance of the broker engaged to market the property. The
    Partnership's share of the November 30, 1999 estimated value takes into
    account the allocation provision of the joint venture agreement governing
    the distribution of sales proceeds for the property.

(2) Acquisition Cost is net of the outstanding mortgage loan balance at the time
    of acquisition and is comprised of the acquisition fee paid to the General
    Partners and the amount required to fund the completion of tenant
    improvements and other capital items. The Partnership's share of the
    November 30, 1999 estimated value is net of the demand promissory note.

(3) The property is currently carried on the Partnership's balance sheet as
    "Real estate assets held for disposition" and therefore leasing commissions
    and the amortization of leasing commissions are not considered in the
    calculation of Net Asset Value.

(4) The Net Asset Value assumes a hypothetical sale on November 30, 1999 of the
    Partnership's property at its estimated value and the distribution of the
    proceeds of such sale, together with the Partnership's cash and the proceeds
    from temporary investments, to the partners. However, the Net Asset Value
    does not reflect the expenses to be incurred with the wind-down and
    termination of the Partnership. Therefore, the cash available for
    distribution to the limited partners may be less than the Net Asset Value.
</FN>
</TABLE>

Limited partners should note that the Property's value is estimated and the
actual value realizable upon sale may be significantly different. As a result of
these factors and the illiquid nature of an investment in Units of the
Partnership, the variation between the estimated value of the Partnership's
property and the price at which Units of the Partnership could be sold may be
significant. Fiduciaries of limited partners which are subject to ERISA or other
provisions of law requiring valuations of Units should consider all relevant
factors, including, but not limited to, Net Asset Value per Unit in determining
the fair market value of the investment in the Partnership for such purposes.

                                                                              11
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


Schedule III - Real Estate and Accumulated Depreciation
November 30, 1999

<TABLE>
<CAPTION>
                                                                         Two
Consolidated Ventures:                                      Financial Centre
----------------------------------------------------------------------------

<S>                                                          <C>
Location                                                     Little Rock, AR

Construction date                                                       1981
Acquisition date                                                    03-29-84
Life on which depreciation in latest
  income statements is computed                                          (1)
Encumbrances                                                     $ 7,993,146
Initial cost to Partnership (2):
  Land                                                             1,560,092
  Buildings and improvements                                       9,583,430
Costs capitalized subsequent to acquisition:
  Land, buildings and improvements                                 1,549,757
  Deferred Rent                                                       45,635
  Leasing Commissions                                                413,058

Gross amount at which carried at close of period:
  Land                                                             1,560,092
  Buildings and improvements                                      11,133,187
  Deferred Rent                                                       45,635
  Leasing Commissions                                                413,058
----------------------------------------------------------------------------
                                                                 $13,151,972 (4)
                                                                 ==============

Accumulated depreciation (3)                                     $ 5,715,288 (4)
-------------------------------------------------------------------------------

<FN>
(1) Buildings and improvements - 25 years; personal property - 10 years.
(2) Represents aggregate cost for both financial reporting and Federal income
    tax purposes.
(3) The amount of accumulated depreciation for Federal income tax purposes is
    $10,042,454.
(4) The net of these numbers, $7,436,684, represents the amount of "Real estate
    assets held for disposition."
</FN>
</TABLE>

                                                                            F-1
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES


A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended November 30, 1999, 1998 and 1997 follows:

<TABLE>
<CAPTION>
                                             1999           1998           1997
-------------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>
Real estate investments:
Beginning of year                     $12,937,748    $21,826,594    $29,824,136
Additions                                 130,603        242,875         32,291
Deferred Rent                                  --             --         96,190
Leasing Commissions                        83,621        199,487        195,849
Dispositions (1)                               --     (9,331,208)    (8,321,872)
-------------------------------------------------------------------------------
End of year                           $13,151,972    $12,937,748    $21,826,594
                                      =========================================

Accumulated depreciation:
Beginning of year                     $ 5,715,288    $ 9,516,310    $11,944,782
Depreciation expense                           --             --        442,075
Dispositions (1)                               --     (3,801,022)    (2,870,547)
-------------------------------------------------------------------------------
End of year                           $ 5,715,288    $ 5,715,288    $ 9,516,310
                                      =========================================

<FN>
(1) Dispositions include assets associated with the sale of Maitland Center
    Office Building C in 1998 and the sale of Swenson Business Park - Building C
    in 1997.
</FN>
</TABLE>

                                                                            F-2
<PAGE>

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES




                         Consent of Independent Auditors

           We consent to the incorporation by reference in this Annual
           Report (Form 10-K) of Commercial Properties 2, L.P. of our
           report dated January 27, 2000, included in the 1999 Annual
           Report to Shareholders of Commercial Properties 2, L.P. and
           Consolidated Ventures.

           Our audit also included the financial statement schedule of
           Commercial Properties 2, L.P. and Consolidated Ventures
           listed in Item 14(a)(2).  This schedule is the
           responsibility of the Partnership's management. Our
           responsibility is to express an opinion based on our audits.
           In our opinion, the financial statement schedule referred to
           above, when considered in relation to the basic financial
           statements taken as a whole, presents fairly in all material
           respects the information set forth therein.



                                                    /s/ERNST & YOUNG LLP
    New York, New York
    January 27, 2000

                                                                            F-3