EXHIBIT 13

                               1998 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

               10   Report of Independent Auditors

               11   Net Asset Valuation




<PAGE>



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

We are pleased to present the 1998 Annual Report for Commercial Properties 2,
L.P. (the "Partnership"). Included in this report is an update on the status of
the Partnership's remaining property, Two Financial Centre. Also included are
the Partnership's audited consolidated financial statements for the year ended
November 30, 1998.

Marketing Update
Our primary objective during 1999 is to complete a sale of Two Financial Centre.
As discussed in prior correspondence, we have engaged a real estate brokerage
firm and are in the process of actively marketing the property. While we
currently anticipate that the property will be sold and the Partnership
liquidated this year, there can be no assurance that a sale will be completed
within this time frame, or that a sale will result in a particular price. Once
the property 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.

Property Update
The Little Rock office market remained stable during the past year, with an
overall 1998 average occupancy rate of 87%. Two Financial Centre is located
within the West Little Rock submarket, a prestigious submarket with more than
4.4 million square feet. It is also one of the area's strongest submarkets, with
a 1998 average occupancy rate of approximately 90% despite the addition of three
new buildings representing about 75,000 square feet, in 1998.

During the year, the General Partners executed nine new leases totaling 47,834
square feet and five lease renewals totaling 37,444 square feet. However, five
tenants representing 38,092 square feet vacated the property upon the expiration
of their respective leases, or upon the early termination of their leases with
the Partnership's approval. As a result the property was 84% leased as of
November 30, 1998, as compared to 76% as of November 30, 1997. Since two
additional leases totaling 15,651 square feet were signed subsequent to year-end
1998, the property is currently 96% leased.

During 1999, four leases totaling 16,099 square feet, or approximately 13% of
the property's leasable area, are scheduled to expire.

Cash Distributions
The Partnership paid a special cash distribution to Limited Partners on February
18, 1998 totaling $195.39 per Unit. This distribution included your share of the
net proceeds received from the sales of Swenson Business Park - Building C in
November 1997 and Maitland Center Office Building C in December 1997. To date,
Limited Partners have received cash distributions totaling $488.65 per original
$500 Unit. This total includes distributions of cash flow from operations in the
amount of $114.87 per Unit and return of capital payments in the amount of
$373.78 per Unit. Limited Partners will receive one or more additional
distributions when the Two Financial Centre property is ultimately sold.

General Information
We will keep you updated with respect to our marketing efforts at Two Financial
Centre in future reports. 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.



/s/Michael T. Marron                  /s/Mark P. Mikuta
Michael T. Marron                     Mark P. Mikuta
President                             President
March 8, 1999


<PAGE>
2

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES
<TABLE>

-------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                               At November 30,   At November 30,
                                                         1998              1997
-------------------------------------------------------------------------------
<S>                                                <C>              <C>        
Assets
Real estate assets held for disposition            $7,222,460       $12,310,284
Cash and cash equivalents                           1,446,089        11,803,602
Restricted cash                                        21,386            65,600
Rent and other receivables, net of
  allowance for doubtful accounts of
  $-0- in 1998 and $48,670 in 1997                    291,360           180,295
Prepaid expenses, net of accumulated amortization
  of $-0- in 1998 and $1,230,450 in 1997               10,997            16,811
-------------------------------------------------------------------------------
     Total Assets                                  $8,992,292       $24,376,592
===============================================================================
Liabilities and Partners' Capital (Deficit)
Liabilities:
  Accounts payable and accrued expenses            $  258,394       $   323,179
  Due to affiliates                                    67,910           105,612
  Distribution payable                                     --        10,780,847
  Security deposits payable                            18,528            59,514
                                                   ----------------------------
     Total Liabilities                                344,832        11,269,152
                                                   ----------------------------
Partners' Capital (Deficit):
  General Partners                                   (148,959)         (191,982)
  Limited Partners (100,000 units outstanding)      8,796,419        13,299,422
                                                   ----------------------------
     Total Partners' Capital                        8,647,460        13,107,440
-------------------------------------------------------------------------------
     Total Liabilities and Partners' Capital       $8,992,292       $24,376,592
===============================================================================
</TABLE>

<TABLE>
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
For the years ended November 30, 1998, 1997, and 1996
<CAPTION>
                                         General         Limited
                                        Partners        Partners          Total
-------------------------------------------------------------------------------
<S>                                    <C>          <C>            <C>         
Balance at November 30, 1995           $(213,356)   $ 21,534,873   $ 21,321,517
Net income                                 7,399         732,511        739,910
Distributions                            (27,273)     (2,700,000)    (2,727,273)
-------------------------------------------------------------------------------
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
===============================================================================
</TABLE>


See accompanying notes to the consolidated financial statements.       

<PAGE>
3

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

<TABLE>
--------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended November 30,
<CAPTION>
                                                      1998          1997          1996
--------------------------------------------------------------------------------------
<S>                                             <C>           <C>           <C>       
Income
Rental                                          $1,809,825    $3,471,538    $3,660,110
Interest                                           275,122       116,728       116,034
Other                                              157,039        42,206         4,808
                                                --------------------------------------
      Total Income                               2,241,985     3,630,472     3,780,952
--------------------------------------------------------------------------------------
Expenses
Property operating                                 863,874     1,642,425     1,447,759
Depreciation and amortization                           --       490,359     1,369,375
General and administrative - other                 274,713       255,872       185,513
General and administrative - affiliates             33,192       156,766        38,395
                                                --------------------------------------
      Total Expenses                             1,171,779     2,545,422     3,041,042
--------------------------------------------------------------------------------------
Operating income                                 1,070,206     1,085,050       739,910
Gain on sale of real estate assets               3,232,132     4,756,962            --
--------------------------------------------------------------------------------------
      Net Income                                $4,302,338    $5,842,012    $  739,910
======================================================================================
Net Income Allocated:
To the General Partners                         $   43,023    $   58,420    $    7,399
To the Limited Partners                          4,259,315     5,783,592       732,511
--------------------------------------------------------------------------------------
                                                $4,302,338    $5,842,012    $  739,910
======================================================================================
Per limited partnership unit
(100,000 outstanding)                               $42.59        $57.84         $7.33
--------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to the consolidated financial statements.


<PAGE>
4

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

<TABLE>
-------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended November 30,
<CAPTION>
                                                         1998           1997           1996
-------------------------------------------------------------------------------------------
Cash Flows From Operating Activities:
<S>                                              <C>             <C>             <C>       
Net income                                       $  4,302,338    $ 5,842,012     $  739,910
Adjustments to reconcile net income to net
cash provided by operating activities:
  Depreciation                                             --        442,075      1,233,889
  Amortization                                             --         48,284        135,486
  Gain on sale of real estate assets               (3,232,132)    (4,756,962)            --
  Increase (decrease) in cash arising from
  changes in operating assets and liabilities:
    Restricted cash                                    44,214         91,395          8,124
    Rent and other receivables                       (111,065)       (45,371)        12,039
    Prepaid expenses                                    5,814        (47,075)       (51,753)
    Deferred rent receivable                               --          4,597         33,336
    Accounts payable and accrued expenses             (64,785)       (82,096)       148,814
    Due to affiliates                                 (37,702)        62,766          4,571
    Security deposits payable                         (40,986)       (97,612)         1,282
                                                 ------------------------------------------
Net cash provided by operating activities             865,696      1,462,013      2,265,698
-------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from sale of real estate                   8,762,317     10,351,554             --
Additions to real estate                             (442,361)       (32,291)      (260,828)
                                                 ------------------------------------------
Net cash provided by (used for)
  investing activities                              8,319,956     10,319,263       (260,828)
-------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Cash distributions                                (19,543,165)    (1,717,172)    (2,727,273)
                                                 ------------------------------------------
Net cash used for financing activities            (19,543,165)    (1,717,172)    (2,727,273)
-------------------------------------------------------------------------------------------
Net increase (decrease) in
  cash and cash equivalents                       (10,357,513)    10,064,104       (722,403)
Cash and cash equivalents, beginning of year       11,803,602      1,739,498      2,461,901
                                                 ------------------------------------------
Cash and cash equivalents, end of year           $  1,446,089    $11,803,602    $ 1,739,498
===========================================================================================
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.       


<PAGE>
5

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
November 30, 1998, 1997 and 1996

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 approximately $5.5 million, 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 approximately $3.2 million,
which is reflected in the Partnership's statement of operations for the period
ended November 30, 1998.


<PAGE>
6

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

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.

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 were
reclassified as real estate assets held for disposition and were no longer
amortized.

Accounting for Impairment  In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("FAS 121"), which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. FAS 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Partnership adopted
FAS 121 during the fourth fiscal quarter of 1995.

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.


<PAGE>
7

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

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.

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. For the year ended November 30, 1996, the
Partnership paid cash distributions totaling $2,700,000 and $27,273 to the
Limited and General Partners, respectively, representing $27 per Limited
Partnership Unit. 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 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 for the years ended November 30,
1998, 1997 and 1996.


<PAGE>
8

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

<TABLE>
<CAPTION>
                                                Unpaid at,                         Paid
                                              November 30,   -----------------------------------------
                                                     1998           1998           1997           1996
------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>            <C>            <C>        
Real Estate Services VII, Inc.
and affiliates:
  Out-of-pocket expenses                      $    56,846    $    45,909    $    60,933    $     5,615
HS Advisors III, Ltd.:
  Administrative salaries
  and expenses                                     11,064         22,128         43,783         40,148
------------------------------------------------------------------------------------------------------
                                              $    67,910    $    68,037    $   104,716    $    45,763
                                              ========================================================
</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.

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, 1998:

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

The joint venture agreements substantially provide 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, ranging from 7% to 11%. 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 100% to the
      Partnership until it has received an annual, cumulative return ranging 
      from 7% to 11% and an amount equal to 110% to 120% of its adjusted capital
      contribution. Any remaining balance will be shared in a ratio relating to
      the various ownership interests of the Partnership.

  (c) Taxable income of the joint ventures and limited partnerships will be
      allocated in substantially the same manner as net cash from operations.
      For Two Financial Centre, 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, 1998, Two Financial Centre had income from
operations totaling approximately $107,124 and Maitland Center Office Building C
had a loss from operations totaling approximately $85,067.


<PAGE>
9

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

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, 1998, accrued interest of $940,167 remains unpaid. Interest of
$706,816, $612,143, and $1,055,674 has been paid by TFC to the Partnership
during the fiscal years ended November 30, 1998, 1997, and 1996, 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, 1998 is as follows:

<TABLE>
                  -----------------------------------------------
                  <S>                                  <C>       
                  1999                                 $1,696,876
                  2000                                    896,108
                  2001                                    629,492
                  2002                                    578,642
                  2003                                    321,151
                  Thereafter                               10,810
                  -----------------------------------------------
                                                       $4,133,080
                                                       ==========
</TABLE>

Lease terms range from one to ten years. The leases allow for increases in
certain property operating expenses to be passed on to tenants.

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, 1998. 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 July 14, 1998, was
renewed and now expires on January 31, 2000. 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 the space. The rental income derived from the FBI and BC/BS leases
totaled $563,558 and $396,061, respectively, for 1998, $492,264 and $464,820,
respectively, for 1997, and $460,611 and $471,476, respectively, for 1996.
Rental income from both leases collectively represented 52% of the Partnership's
1998 consolidated rental income, 28% of 1997 consolidated rental income and 25%
of 1996 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 Loss
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 net
income reported in the financial statements for the years ended November 30,
1997 and 1996 exceeded the taxable income reported to the partners by $520,674
and $4,182, respectively.

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. Rental income is recorded when received or
receivable for tax purposes and on a straight-line basis for financial statement
purposes.


<PAGE>
10

--------------------------------------------------------------------------------
                         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, 1998 and 1997,
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, 1998. Our audits also included the financial statement schedule
listed in the Index at Item 14(a). These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the 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, 1998 and
1997, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended November 30, 1998, in conformity
with generally accepted accounting principles. 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
February 5, 1999


<PAGE>
11

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

Comparison of Acquisition Costs to Estimated Value and
Determination of Net Asset Value Per $126.22 Unit at November 30, 1998
(Unaudited)

<TABLE>
<CAPTION>
                                                                  Acquisition Cost
                                                                   (Purchase Price     Partnership's
                                                                      Plus General          Share of
                                                                          Partners'      November 30,
                                                                       Acquisition    1998 Estimated
Property                                   Date of Acquisition                Fees)         Value (1)
----------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>               <C>        
Two Financial Centre (2)(3)                           03-29-84         $ 4,611,600       $   206,854

Cash and cash equivalents                                                                  1,446,089
Rent and other receivables                                                                   291,360
Demand promissory note receivable                                                          7,993,146
Prepaid expenses                                                                              10,997
                                                                                         -----------
                                                                                           9,948,446
Less:
  Accounts payable and accrued expenses                                                     (258,394)
  Due to affiliates                                                                          (67,910)
                                                                                         -----------
Partnership Net Asset Value (4)                                                          $ 9,622,142
                                                                                         ===========

Net Asset Value Allocated:
  Limited Partners                                                                       $ 9,525,921
  General Partners                                                                            96,221
                                                                                         -----------
                                                                                         $ 9,622,142
                                                                                         ===========
Net Asset Value Per Unit
  (100,000 units outstanding)                                                            $     95.25
----------------------------------------------------------------------------------------------------

<FN>

(1) This represents the Partnership's share of the November 30, 1998 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, 1998
    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, 1998 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, 1998 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.
    The real estate brokerage commissions payable to the General Partners or others are not
    determinable at this time and have not been included in the determination.  Since the
    Partnership would incur real estate brokerage commissions and other selling expenses in
    connection with the sale of its property and other assets, cash for distribution to the
    partners would 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. The estimated
value does not reflect the actual costs which would be incurred in selling the
property. 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.


<PAGE>
F-1

COMMERCIAL PROPERTIES 2, L.P.
AND CONSOLIDATED VENTURES

Schedule III - Real Estate and Accumulated Depreciation
November 30, 1998

<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                                     1,419,154
  Deferred Rent                                                           45,635
  Leasing Commissions                                                    329,437

Gross amount at which carried at close of period:
  Land                                                                 1,560,092
  Buildings and improvements                                          11,002,584
  Deferred Rent                                                           45,635
  Leasing Commissions                                                    329,437
--------------------------------------------------------------------------------
                                                                     $12,937,748 (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 
    $9,897,200.
(4) The net of these numbers, $7,222,460, represents the amount of "Real
    estate assets held for disposition."
</FN>
</TABLE>


<PAGE>
F-2

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, 1998, 1997, and 1996 follows:
<TABLE>

<CAPTION>
                                                    1998           1997           1996
--------------------------------------------------------------------------------------
<S>                                          <C>            <C>            <C>        
Real estate investments:
Beginning of year                            $21,826,594    $29,824,136    $29,890,761
Additions                                        242,875         32,291        260,828
Deferred Rent                                         --         96,190             --
Leasing Commissions                              199,487        195,849             --
Dispositions (1)                              (9,331,208)    (8,321,872)      (327,453)
--------------------------------------------------------------------------------------
End of year                                  $12,937,748    $21,826,594    $29,824,136
                                             =========================================

Accumulated depreciation:
Beginning of year                            $ 9,516,310    $11,944,782    $11,038,346
Depreciation expense                                  --        442,075      1,233,889
Dispositions (1)                              (3,801,022)    (2,870,547)      (327,453)
--------------------------------------------------------------------------------------
End of year                                  $ 5,715,288    $ 9,516,310    $11,944,782
                                             =========================================

<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>


<PAGE>
F-3







                         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 February 5, 1999, included in the 1998 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). 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
        February 5, 1999