SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
(Mark One)
 X  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
---
      OF 1934
For the fiscal year ended December 31, 1996
                                       OR
                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                           OF THE SECURITIES EXCHANGE
                          ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ...................  to  .......................

                                                          Commission File Number
                                                                        33-36336

                       INTERVEST MORTGAGE ASSOCIATES L.P.
             (Exact name of Registrant as specified in its charter)


             Delaware                                             13-3575243
-------------------------------                              ----------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)


          10 Rockefeller Plaza, New York, New York               10020-1903
--------------------------------------------------------------------------------
          (Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code             (212) 757-7300
                                                   ----------------------------


           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
                                (Title of Class)


           Securities Registered Pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES X     NO

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






                                        1

<PAGE>

<TABLE>
<CAPTION>


                                TABLE OF CONTENTS




                                     PART I


                                                                                                                      Pages
                                                                                                                      -----
<S>   <C>  <C>                                                                                                          <C>
Item  1    Description of Business                                                                                       3
Item  2    Properties                                                                                                    6
Item  3    Legal Proceedings                                                                                             6
Item  4    Submission of Matters to a Vote of Security Holders                                                           6


                                     PART II


Item  5     Market for the Registrant's Units of Limited Partnership Interest ("Units")                                  6
Item  6     Selected Financial Data                                                                                      6
Item  7     Management's Discussion and Analysis of Financial Condition and Results of
             Operations                                                                                                  7
Item  8     Financial Statements and Supplementary Data                                                                  9
Item  9     Changes in and Disagreements with Accountants on Accounting and Financial
             Disclosure                                                                                                 28



                                    PART III


Item 10           Directors and Executive Officers of the Registrant                                                     28
Item 11           Executive Compensation                                                                                 28
Item 12           Security Ownership of Certain Beneficial Owners and Management                                         28
Item 13           Certain Relationships and Related Transactions                                                         29



                                     PART IV


Item 14           Exhibits, Financial Statement Schedules and Reports on Form 8-K                                        29

SIGNATURES                                                                                                               30




                  Supplemental Information to be Furnished with Reports Filed Pursuant to Section                        30
                     15(d) of the Act.


</TABLE>



                                        2

<PAGE>



                                     PART I
Item  1.   Description of Business

Organization

The registrant,  Intervest  Mortgage  Associates L.P. (the  "Partnership")  is a
Delaware limited partnership organized in June 1990. The Partnership's principal
executive offices are located at 10 Rockefeller Plaza, Suite 1015, New York, New
York 10020-1903, and its telephone number is 212-757-7300.

The General  Partner is Intervest  Funds  Management  Corporation  (the "General
Partner"),  a Delaware  corporation  which was incorporated in June 1990. All of
the stock of the General  Partner is owned by Lowell S.  Dansker and Lawrence G.
Bergman,  who are also Special Limited Partners of the Partnership.  The General
Partner  manages and controls the affairs of the  Partnership  and has agreed to
pay all Partnership expenses.

During 1991, a public  offering of $10,000,000  of units of limited  partnership
interest was completed. The Partnership's objectives are to invest in mortgages,
which will  preserve  and  protect  the  Partnership's  capital  and provide for
monthly  distribution to unitholders at a floating annual interest rate on their
adjusted  contributions  equal to two  percentage  points over the prime rate of
Chase  Manhattan  Bank of New York,  with a minimum rate of 9 1/2% and a maximum
rate of 15%.

The Partnership  invests in mortgages  secured by  income-producing  properties,
primarily  residential  apartment  buildings.   Mortgages  generally  will  have
maturities  ranging from one to seven years.  Mortgage  investments  may include
first mortgages, junior mortgages and wraparound mortgages.

Present Business

Proceeds  from the sale of the  $10,000,000  of units were  principally  used to
acquire  mortgages,  which  at  December  31,  1996,  had a  carrying  value  of
$6,575,000. The balance is mostly invested in cash equivalents.

For  financial  statement   reporting  purposes,   all  mortgages  sold  to  the
Partnership  by  affiliates  have been  recorded at the  historical  cost of the
affiliate,  adjusted for a discount to reflect an  appropriate  market  interest
rate at the date of acquisition.

Each  of  the  Partnership's  seven  mortgages  is  a  first  mortgage  lien  on
multifamily  residential apartment buildings.  Five of the residential apartment
buildings  are  located in New York City,  one is located in New  Rochelle,  New
York, a suburb of New York City, and one is located in East Orange, New Jersey.

Future Business Operations

The  Partnership  plans to engage in the real  estate  business,  including  the
acquisition  and  origination  of  additional  mortgages  in  the  future.  Such
additional mortgages may be purchased from affiliates of the Partnership or from
unaffiliated  parties. It is anticipated that such mortgages will be acquired or
originated by reinvesting a substantial part of the proceeds  resulting from the
sale, repayment or prepayment of the present mortgage portfolio.

The Partnership's  mortgage loans will include:  (i) wraparound  mortgage loans;
(ii)  junior  mortgage  loans;  (iii)  interim  mortgage  loans;  and (iv) first
mortgage loans.

The Partnership's  mortgage loans will generally be secured by  income-producing
properties.  In determining whether to make mortgage loans, the Partnership will
analyze relevant real property and financial  factors which may in certain cases
include  such  factors as the  condition  and use of the subject  property,  its
income-producing  capacity and the quality,  experience and  creditworthiness of
the owner of the property.  The Partnership's  mortgage loans will generally not
be personal obligations of the borrower and will not be insured or guaranteed by
governmental agencies or otherwise.

                                        3

<PAGE>




The  Partnership  may  make  both  long-  and  short-term  mortgage  loans.  The
Partnership   anticipates  its  mortgage  loans  will  typically  mature  within
approximately five years.  However,  the Partnership may also invest in mortgage
loans with shorter  maturities and then reinvest the proceeds from such mortgage
loans in additional  mortgage loans. The Partnership  anticipates that generally
its mortgage  loans will  provide for balloon  payments due at the time of their
maturity.

Mortgage Investment Policy

To  the  extent  that  proceeds  from  existing  mortgages  are  available,  the
Partnership  anticipates  that it will  acquire or  originate  senior and junior
mortgages,  primarily on multifamily  residential  properties located in the New
York  metropolitan  area.  Such  mortgages  generally will not be insured by the
Federal Housing  Administration or guaranteed by the Veterans  Administration or
otherwise  guaranteed or insured in any way. The  Partnership  requires that all
mortgaged properties be covered by property insurance in amounts deemed adequate
in the opinion of management.

In addition,  prior to funding any mortgage,  the Partnership will obtain a real
property appraisal prepared by an independent MAI appraiser and a mortgagee's or
owner's title insurance  policy or commitment as to the priority of the mortgage
or the condition of title.  The General  Partner will  generally rely on its own
independent analysis and not exclusively on appraisals in determining whether or
not to make a particular  mortgage loan.  The principal  amount of each mortgage
made by the Partnership  will not exceed,  when added to the amount of any other
mortgages  on  the  underlying  property,  85%  of the  appraised  value  of the
underlying property.

An  independent  advisor has been retained to issue letters of opinion that each
proposed mortgage to an affiliated borrower is fair and at least as favorable to
the Partnership as a loan to an unaffiliated borrower in similar circumstances.

Temporary Investment by Affiliates on Behalf of the Partnership

An affiliate of the  Partnership may make a mortgage loan or purchase a mortgage
in its own  name  and  temporarily  hold  such  investment  for the  purpose  of
facilitating the making of an investment of the  Partnership,  provided that any
such  investment  is acquired by the  Partnership  at a cost no greater than the
cost of such  investment to the affiliate plus carrying costs and provided there
is no other benefit to the affiliate arising out of such transaction.

Certain Characteristics of the Partnership's Mortgage Investments

Mortgages  typically  provide for  periodic  payments  of interest  and, in some
cases,  principal during the term of the mortgage,  with the remaining principal
balance and any accrued  interest due at the maturity date. The mortgages  owned
by the Partnership provide for monthly payments of interest and balloon payments
at  maturity,  which  means  that a  substantial  part  or  all of the  original
principal  of the  mortgage  is due in one lump sum  payment  at  maturity.  The
property on which the mortgage is a lien provides the security for the mortgage.
If the net revenue from the property is not  sufficient to make all debt service
payments due on mortgages on the property,  or if at maturity or the due date of
any balloon  payment the owner of the property  fails to raise the funds to make
the payment (by refinancing, sale or otherwise), the Partnership could sustain a
loss on its  investment  in the  mortgage.  To the extent that the aggregate net
revenues from the Partnership's mortgage investments are insufficient to pay the
monthly distributions to the unitholders,  the General Partner has agreed to pay
the Partnership any shortfall.

With  respect  to  any  wraparound  mortgages  which  may be  originated  by the
Partnership in the future,  such wraparound  mortgages are generally  negotiated
and  structured on an individual,  case by case basis,  and may be structured to
include any or all of the following provisions:




                                        4

<PAGE>



      (i) The  Partnership  may lend money to a real property owner who would be
obligated  to  repay  the  senior  underlying  mortgage  debt as well as the new
wraparound indebtedness owed to the Partnership.

      (ii)  The  Partnership  may  legally  assume  the  obligation  to make the
payments due on the senior underlying mortgage debt.

      (iii) The real  property  owner-debtor  may agree to make  payments to the
Partnership in satisfaction of both the senior underlying  mortgage debt and the
new wraparound indebtedness owed to the Partnership.

      (iv) The Partnership may receive a mortgage on the real property to secure
repayment of the total amount of indebtedness  (wraparound  indebtedness and the
senior underlying mortgage indebtedness).

The mortgages owned by the Partnership are first mortgages. In all cases, in the
opinion  of   management,   the  current  value  of  the   underlying   property
collateralizing  the  mortgage  loan is in  excess of the  stated  amount of the
mortgage loan. Therefore, in the opinion of management of the Partnership,  each
property  on which a mortgage  owned by the  Partnership  is a lien  constitutes
adequate collateral for the related mortgage loan. Accordingly, in the event the
owner of a property  fails to make  required debt service  payments,  management
believes that, based upon current value,  upon a foreclosure of the mortgage and
sale of the  property,  the  Partnership  would  recover its entire  investment.
However,  there can be no  assurance  that the current  value of the  underlying
property will be maintained.

Loan Loss Experience

For financial reporting purposes, the Partnership considers a loan as delinquent
or  non-performing  when  it is  contractually  past  due 90  days or more as to
principal or interest payments. To date, the Partnership has not experienced any
defaults or delinquencies in its mortgage portfolio.  The Partnership  evaluates
its portfolio of mortgage loans on an individual basis,  comparing the amount at
which the investment is carried to its estimated net realizable value. Since the
Partnership has not experienced any defaults or delinquencies,  no allowance for
loan losses is presently maintained.

Tax Accounting Treatment of Payments Received on Mortgages

The  Partnership  derives  substantially  all of its cash flow from debt service
payments  which  it  receives  on  mortgages  owned  by it.  The tax  accounting
treatment of such debt service payments, as income or return of capital, depends
on the particular  mortgage.  In the case of mortgages  which pay interest only,
the entire debt service payment prior to maturity received by the Partnership is
treated as income and the  repayment  of  principal  is  generally  considered a
return of  capital.  In the case of  mortgages  which  include  amortization  of
principal in the debt service payment  received by the  Partnership,  the amount
representing  amortization  of  principal  is  generally  treated as a return of
capital for tax accounting purposes.

Financial Accounting Treatment of Payments Received on Mortgages

For financial reporting  purposes,  the Partnership's basis in certain mortgages
is less than the face amount  outstanding.  This  difference is  attributable to
discounts  recorded by the  Partnership  to reflect a market rate of interest at
the date the loans were  acquired.  These  discounts  will be amortized over the
lives of the mortgages.

Effect of Government Regulation

Investment  in  mortgages  on  real  properties  presently  may be  impacted  by
government regulation in several ways.  Residential properties may be subject to
rent control and rent  stabilization  laws. As a  consequence,  the owner of the
property may be restricted in its ability to raise the rents on  apartments.  If
real estate  taxes,  fuel costs and  maintenance  of and repairs to the property
were to increase  substantially,  and such increases are not offset by increases
in rental income,  the ability of the owner of the property to make the payments
due on the mortgage as and when they are due might be adversely affected.

                                        5

<PAGE>




Laws  and   regulations   relating  to  asbestos   have  been  adopted  in  many
jurisdictions,  including New York City, which require that whenever any work is
undertaken in a property in an area in which  asbestos is present,  the asbestos
must be removed or encapsulated  in accordance  with such  applicable  local and
federal laws and regulations.  The cost of asbestos removal or encapsulation may
be  substantial,  and if there were not sufficient  cash flow from the property,
after debt service on mortgages, to fund the required work, and the owner of the
property fails to fund such work from other  sources,  the value of the property
could be adversely affected,  with consequent impairment of the security for the
mortgage.

Laws  regulating  the  storage,  disposal  and  clean up of  hazardous  or toxic
substances at real  property  have been adopted at the federal,  state and local
levels.  Such  laws  may  impose  a lien on the real  property  superior  to any
mortgages on the property. In the event such a lien were imposed on any property
which serves as security for a mortgage owned by the  Partnership,  the security
for such mortgage could be impaired.

Item  2.  Properties

None.

Item  3.  Legal Proceedings

The Partnership is not engaged in any litigation,  nor does it presently know of
any  threatened  or  pending  litigation  in which it is  contemplated  that the
Partnership will be made a party.


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

None.

                                     PART II

Item      5. Market for the Registrant's Units of Limited  Partnership  Interest
          ("Units")

There is no established trading market for the Units.

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

Income Statement Data
                                                                                Year Ended December 31,
                                                          1996           1995           1994            1993          1992
                                                      ------------  ------------   --------------  -------------  --------
<S>                                                     <C>            <C>             <C>            <C>           <C>
Revenue:

   Interest income......................................$1,218,000     $1,209,000      $1,190,000     $1,130,000    $1,035,000
   Gain on early repayment of
          discounted mortgages.......................       47,000          9,000

   Other income......................................        2,000         17,000
                                                        ----------    -----------
   .....................................................$1,267,000     $1,235,000      $1,190,000     $1,130,000    $1,035,000

Expenses:

   General and administrative........................        3,000          6,000           5,000          5,000         3,000
                                                      ------------   ------------    ------------   ------------  ------------

   Net income...........................................$1,264,000     $1,229,000      $1,185,000     $1,125,000    $1,032,000
                                                        ==========     ==========      ==========     ==========    ==========

</TABLE>


                                        6

<PAGE>



Balance Sheet Data

<TABLE>
<CAPTION>

                                                                                            December 31,
                                                          1996           1995           1994            1993          1992
                                                      ------------   ------------   ------------   -------------     --------

<S>                                                      <C>           <C>             <C>            <C>           <C>
Cash and cash equivalents...............................$ 5,730,000   $ 6,566,000     $ 3,726,000    $ 1,002,000   $ 1,368,000
Mortgages receivable..................................... 6,575,000     5,542,000       7,578,000     10,195,000     9,489,000
Total assets.............................................12,386,000    12,177,000      11,418,000     11,289,000    10,903,000
Partner's Capital........................................10,104,000    10,045,000      10,039,000     10,190,000    10,084,000

</TABLE>

Item 7.   Management's  Discussion  and Analysis of Financial  Condition and
          Results of Operations

Liquidity and Capital Resources:

The  Partnership  is  engaged  in  the  real  estate  business,   including  the
originating  and purchase of real estate  mortgage  loans,  consisting  of first
mortgages,  junior mortgages,  wraparound  mortgages and interim mortgage loans.
The  Partnership's  current  investment  policy  emphasizes  the  investment  in
mortgage loans on income producing properties. The majority of the Partnership's
loans are expected to mature within approximately five years.

The  Partnership's  liquidity  is managed to ensure  that  sufficient  funds are
available to preserve and protect the  Partnership's  capital and to provide for
monthly  distributions  to unitholders at a floating  annual rate based on their
adjusted  capital  contributions  equal to two percentage  points over the prime
rate of Chase  Manhattan  Bank,  New York  with a  minimum  rate of 9 1/2% and a
maximum of 15%.

Results of Operations:

Year ended December 31, 1996 and 1995

For the year ended December 31, 1996 interest  income was $1,218,000 as compared
to  $1,209,000  for the same period a year ago. The increase of $9,000  resulted
mainly from an increase in mortgages  receivable in the fourth  quarter 1996, an
offset in part by a decrease in interest rate subsequent to July 1995.

Year ended December 31, 1995 and 1994

For the year ended December 31, 1995 interest  income was $1,209,000 as compared
to $1,190,000  for the same period a year ago. The increase of $19,000  resulted
mainly from an increase in interest rates in 1995.

Since the  Partnership  is engaged in the real estate  business,  its results of
operations are affected by general  economic trends in real estate  markets,  as
well as by trends in the  general  economy and the  movement of interest  rates.
Since the properties underlying the Partnership's  mortgages are concentrated in
the New York City area,  the  economic  condition  in that area can also have an
impact on the Partnership's operations.

The rental housing  market in New York City remains  stable and the  Partnership
expects that such properties will continue to appreciate in value with little or
no  reduction  in  occupancy  rates.  The  Partnership's  mortgage  portfolio is
composed predominantly of mortgages on multi-family residential properties, most
of which are subject to applicable rent control and rent stabilization  statutes
and  regulations.  In both cases,  any increases in rent are subject to specific
limitations.  As such,  properties of the nature of those  constituting the most
significant portion of the Partnership's  mortgage portfolio are not affected by
the  general  movement  of real  estate  values  in the  same  manner  as  other
income-producing properties.




                                        7

<PAGE>



Impact of Inflation:

Inflation  has not had an  effect  on the  Partnership's  objectives  of  making
monthly  distributions to unitholders  from interest  received from its mortgage
portfolio.  Since  certain  mortgages  bear  interest  at a fixed  rate,  rising
interest  rates as a result of inflation may require the  Partnership to rely on
the  guarantee  of the General  Partner to pay to the  Partnership  a sufficient
amount to make the monthly distributions to the unitholders.

Business:

The  Partnership  is engaged in the real estate  business  and has  historically
invested  primarily in real estate  mortgage  loans secured by income  producing
real property.  It is anticipated that a substantial  portion of the loans to be
made by the Partnership  will be loans with terms of  approximately  five years.
Such  transactions  typically  require an  understanding  of the underlying real
estate  transaction  and rapid  processing and funding as a principal  basis for
competing in the making of these  loans.  The  Partnership  does not finance new
construction.

At  December  31,  1996,  five of the seven  Partnership  loans were  secured by
properties located in the greater New York metropolitan area.

Competition:

The Company  competes for  acceptable  investments  with real estate  investment
trusts,  commercial banks,  insurance companies,  savings and loan associations,
pension funds and mortgage banking firms,  many of which have greater  resources
with which to compete for desirable mortgage loans.


                                        8

<PAGE>




Item  8.  Financial Statements and Supplementary Data
<TABLE>
<CAPTION>


INTERVEST MORTGAGE ASSOCIATES L.P.:                                                                                        Page

<S>                                                                                                                          <C>
   Report of Independent Auditors -- 1996, 1995 and 1994...........................................................          11

   Balance Sheets as of December 31, 1996 and 1995.................................................................          12

   Statements of Operations for the years ended December 31, 1996, 1995 and 1994...................................          13

   Statements of Partners' Capital for the years ended December 31, 1996, 1995 and 1994............................          14

   Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994...................................          15

   Notes to Financial Statements...................................................................................          16

   Schedule IV -- Mortgage Loans on Real Estate -- December 31, 1996...............................................          20

</TABLE>


Other financial  statement  schedules and  inapplicable  periods with respect to
schedules listed above are omitted because the conditions requiring their filing
do not exist or the  information  required  thereby is included in the financial
statements filed, including the notes thereto.


                                        9

<PAGE>

<TABLE>
<CAPTION>


INTERVEST FUNDS MANAGEMENT CORPORATION:                                                                                   Pages
<S>                                                                                                                          <C>

   Report of Independent Auditors -- 1996, 1995 and 1994...........................................................          22

   Balance Sheets as of December 31, 1996 and 1995.................................................................          23

   Statements of Operations for the years ended December 31, 1996, 1995 and 1994...................................          24

   Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994...................................          25

   Notes to Financial Statements...................................................................................          26

</TABLE>


                                       10
<PAGE>


                        ` REPORT OF INDEPENDENT AUDITORS



To the Partners
Intervest Mortgage Associates L.P.
New York, New York


         We have audited the accompanying  balance sheets of Intervest  Mortgage
Associates  L.P. (a Delaware  limited  partnership)  as at December 31, 1996 and
December 31, 1995, and the related  statements of operations,  partners' capital
and cash flows for each of the years in the three-year period ended December 31,
1996 and Schedule IV. These  financial  statements and related  schedule are the
responsibility of the Company'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 and related schedule
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  financial  statements  enumerated  above  present
fairly, in all material  respects,  the financial position of Intervest Mortgage
Associates  L.P. at December 31, 1996 and December 31, 1995,  and the results of
its operations and its cash flows for each of the years in the three-year period
ended  December  31,  1996 in  conformity  with  generally  accepted  accounting
principles.  Further,  it is our  opinion  that the  schedule  referred to above
presents fairly, in all material respects,  the information set forth therein in
compliance  with the  applicable  accounting  regulation of the  Securities  and
Exchange Commission.





New York, New York
January 22, 1997

                                     - 11 -

<PAGE>



                       INTERVEST MORTGAGE ASSOCIATES L.P.

                                 BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                                December 31,
                                                                                                ------------
                                   A S S E T S                                               1996          1995
                                   -----------                                              ------         -----

<S>                                                                                   <C>            <C>
Cash and cash equivalents  . . . . . . . . .                                          $ 5,730,000    $ 6,566,000


Mortgages receivable, including due from
   affiliates of $1,300,000 in 1996 and
   1995 (Note C) . . . . . . . . . . . . . .                                            6,575,000      5,542,000


Interest receivable  . . . . . . . . . . . .                                               81,000         69,000
                                                                                      -----------    -----------



          T O T A L  . . . . . . . . . . . .                                          $12,386,000    $12,177,000
                                                                                      ===========    ===========



                        LIABILITIES AND PARTNERS' CAPITAL

Distributions payable (Note F) . . . . . . .                                          $ 2,101,000    $ 1,738,000


Escrow deposits payable  . . . . . . . . . .                                              173,000        367,000


Deferred fee income  . . . . . . . . . . . .                                                8,000         27,000
                                                                                      -----------    -----------


          Total liabilities  . . . . . . . .                                            2,282,000      2,132,000


Partners' capital  . . . . . . . . . . . . .                                           10,104,000     10,045,000
                                                                                      -----------    -----------



          T O T A L  . . . . . . . . . . . .                                          $12,386,000    $12,177,000
                                                                                      ===========    ===========
</TABLE>













                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 12 -

<PAGE>



                       INTERVEST MORTGAGE ASSOCIATES L.P.

                            STATEMENTS OF OPERATIONS



                                            Year Ended December 31,
                                           ------------------------
                                      1996          1995           1994
                                      ----          ----           ----

Revenue:

   Interest income, includes
     $241,000, $294,000 and
     $371,000, from affiliates
     (Note G)  . . . . . . . . .    $1,218,000    $1,209,000    $1,190,000
                                    ----------    ----------    ----------


   Gain on early repayment of
     discounted mortgages
     (Note C)  . . . . . . . . .        47,000         9,000


   Other income  . . . . . . . .         2,000        17,000
                                    ----------    ----------    ----------


                                     1,267,000     1,235,000     1,190,000


Expenses:

   General and administrative  .         3,000         6,000         5,000
                                    ----------    ----------    ----------




NET INCOME . . . . . . . . . . .    $1,264,000    $1,229,000    $1,185,000
                                    ==========    ==========    ==========




                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 13 -

<PAGE>


<TABLE>
<CAPTION>

                       INTERVEST MORTGAGE ASSOCIATES L.P.

                         STATEMENTS OF PARTNERS' CAPITAL



                                                                                    Special       Limited
                                                                  General           Limited      Partners
                                                  Total           Partner           Partners    (Unitholders)
                                                  -----           -------           --------    -------------
Balances, January 1,
<S>                                          <C>              <C>              <C>              <C>
   1994 . . . . . . .                        $ 10,190,000     $    186,600     $      3,400     $ 10,000,000

Partnership expenses
   paid by the
   general partner
   (Note D) . . . . .                               5,000            5,000

Net income  . . . . .                           1,185,000          112,400            1,100        1,071,500

Distributions
   (Note E) . . . . .                          (1,341,000)        (266,800)          (2,700)      (1,071,500)
                                              -----------        ---------          -------      -----------

Balances,
   December 31, 1994                           10,039,000           37,200            1,800       10,000,000

Partnership expenses
   paid by the
   general partner
   (Note D) . . . . .                               6,000            6,000

Net income  . . . . .                           1,229,000                                          1,229,000

Distributions
   (Note E) . . . . .                          (1,229,000)                                        (1,229,000)
                                              -----------        ---------          -------      -----------

Balances,
   December 31, 1995                           10,045,000           43,200            1,800       10,000,000

Partnership expenses
   paid by the
   general partner
   (Note D) . . . . .                               3,000            3,000

Net income. . . . . .                           1,264,000           55,400              600        1,208,000

Distributions
   (Note E) . . . . .                          (1,208,000)                                        (1,208,000)
                                              -----------        ---------          -------      -----------

BALANCES,
   DECEMBER 31, 1996.                         $10,104,000        $ 101,600          $ 2,400      $10,000,000
                                              ===========        =========          =======      ===========



</TABLE>



                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 14 -

<PAGE>



                       INTERVEST MORTGAGE ASSOCIATES L.P.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                          Year Ended December 31,
                                                         ------------------------
                                                  1996             1995              1994
                                                 ------           ------            -----

<S>                                           <C>              <C>              <C>
Cash flows from operating activities:
   Net income  . . . . . . . . . . . . . .    $  1,264,000     $  1,229,000     $  1,185,000
   Adjustments to reconcile net income to
     net cash provided by operating
     activities:
       Amortization of discount on
         mortgages receivable  . . . . . .         (17,000)         (18,000)         (18,000)
       Gain on early repayment of
         discounted mortgages  . . . . . .         (47,000)          (9,000)
       Expenses paid by general partner  .           3,000            6,000            5,000
       (Increase) decrease in interest
         receivable  . . . . . . . . . . .         (12,000)          45,000          (22,000)
       (Decrease) increase in deferred fee
         income  . . . . . . . . . . . . .         (19,000)          26,000          (14,000)
                                              ------------     ------------     ------------

          Net cash provided by operating
            activities . . . . . . . . . .       1,172,000        1,279,000        1,136,000
                                              ------------     ------------     ------------


Cash flows from investing activities:
   Collection of mortgages receivable  . .       9,118,000        3,884,000        3,292,000
   Mortgages receivable acquired . . . . .     (10,087,000)      (1,821,000)        (657,000)
   (Decrease) increase in escrow deposits
     payable . . . . . . . . . . . . . . .        (194,000)         303,000          (20,000)
                                              ------------     ------------     ------------

          Net cash (used in) provided by
            investing activities . . . . .      (1,163,000)       2,366,000        2,615,000
                                              ------------     ------------     ------------


Cash flows from financing activities:
   Partners' distributions . . . . . . . .        (845,000)        (805,000)        (987,000)
   Decrease in due to general partner  . .                                           (40,000)
                                              ------------     ------------     ------------

          Net cash (used in) financing
            activities . . . . . . . . . .        (845,000)        (805,000)      (1,027,000)
                                              ------------     ------------     ------------


NET (DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS . . . . . . . . . . . . . .        (836,000)       2,840,000        2,724,000

Cash and cash equivalents at beginning of
   the period  . . . . . . . . . . . . . .       6,566,000        3,726,000        1,002,000
                                              ------------     ------------     ------------


CASH AND CASH EQUIVALENTS AT END OF THE
   PERIOD  . . . . . . . . . . . . . . . .    $  5,730,000     $  6,566,000     $  3,726,000
                                              ============     ============     ============


</TABLE>












                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 15 -

<PAGE>


                       INTERVEST MORTGAGE ASSOCIATES L.P.

                          NOTES TO FINANCIAL STATEMENTS


(NOTE A) - Organization and Business:

         Intervest Mortgage Associates L.P., a Delaware limited partnership (the
"Partnership"),  was formed for the primary purpose of investing in mortgages on
improved  income-producing real properties.  The Partnership will continue until
December 31, 1999, unless terminated sooner in accordance with the provisions of
the partnership agreement.

         The special limited partners, Lowell S. Dansker and Lawrence G. Bergman
each own 50% of the common stock of Intervest Funds Management Corporation,  the
general partner.


(NOTE B) - Significant Accounting Policies:

         Cash equivalents:

         The Partnership  considers all highly liquid instruments purchased with
an original maturity of three months or less to be cash equivalents.


(NOTE C) - Mortgages Receivable:

         Mortgages   receivable   consist  of  first  mortgages  on  residential
properties.

         Interest rates on mortgages range from 9 1/2% to 15%. Certain mortgages
have been discounted utilizing rates ranging from 11% to 16 1/2%.

         During  1996  and  1995,  mortgages  were  paid in full  prior to their
maturity date. This resulted in the recognition of a gain,  which represents the
balance of the unamortized discount applicable to these mortgages.

(continued)


                                     - 16 -

<PAGE>


                       INTERVEST MORTGAGE ASSOCIATES L.P.

                          NOTES TO FINANCIAL STATEMENTS


(NOTE C) - Mortgages Receivable:  (continued)

         Annual  maturities of mortgages  receivable  during the next five years
are summarized as follows:

          Year Ending
          December 31,

              1997 . . . . . . . . . . . . .  $1,526,000
              1998 . . . . . . . . . . . . .     652,000
              1999 . . . . . . . . . . . . .   2,985,000
              2000 . . . . . . . . . . . . .      84,000
              2001 . . . . . . . . . . . . .      84,000
              Thereafter . . . . . . . . . .   1,337,000
                                              ----------
                                               6,668,000
              Less unearned discount . . . .      93,000
                                                  ------

                        T o t a l. . . . . .  $6,575,000
                                              ==========

         The  Partnership  evaluates  its  portfolio  of  mortgage  loans  on an
individual basis, comparing the amount at which the investment is carried to its
estimated net realizable  value.  At December 31, 1996 and at December 31, 1995,
no allowance was required.


(NOTE D) - Duties and Obligations of the General Partner:

         As more fully  described  in the  partnership  agreement,  the  General
Partner has agreed, among other things, to:

         (1)  Manage and control the business of the Partnership;

         (2)  Pay  all  organization   costs  and  operating   expenses  of  the
Partnership and the expenses in connection with the public  offering.  Operating
expenses for 1996, 1995 and 1994 have been reflected in the financial statements
of the Partnership;

         (3)  Pay to the Partnership any shortfall with respect to cash
distributions due to unitholders;

         (4) Repurchase each year, on a noncumulative basis, a maximum of 10% of
units  outstanding as of January 1 of each year if requested by the unitholders;
and

(continued)


                                     - 17 -

<PAGE>


                       INTERVEST MORTGAGE ASSOCIATES L.P.

                          NOTES TO FINANCIAL STATEMENTS


(NOTE D) - Duties and Obligations of the General Partner: (continued)

         (5) Maintain a net worth of at least 10% of the  adjusted  contribution
of the unitholders, but in no event less than $500,000. At December 31, 1996 and
December 31,  1995,  the audited  financial  statements  of the general  partner
showed a net worth of $1,134,000 and $1,085,000,  respectively,  including notes
receivable from stockholders of $1,000,000.


(NOTE E) - Allocation of Income, Losses and Distributions:

         As more fully described in the partnership  agreement,  income,  losses
and distributions are to be allocated as follows:

         (1) Net income and operating cash  distributions,  first to unitholders
in an amount equal to their  investment  return (equal to 2% above prime rate of
Chase Manhattan Bank,  subject to a minimum rate of 9 1/2% and a maximum rate of
15% per  annum)  and then to the  general  partner  (99%)  and  special  limited
partners (1%).

         (2) Net loss,  other than from a  disposition,  as defined,  99% to the
general partner and 1% to the special limited partners.

         (3) Net loss from a disposition,  to unitholders to the extent of their
positive  capital  account  balances and then to the general partner and special
limited partners.

         (4)  Disposition  proceeds will generally be distributed to unitholders
until each has  received an amount equal to his  original  invested  capital and
then to the general partner and special limited partners.


(NOTE F) - Distribution Accrual Plan:

         Under  the  partnership  agreement,  unitholders  can elect to have the
Partnership  retain  distributions  they are entitled to receive.  Such retained
amounts will earn  interest at Chase  Manhattan  Bank's  prime rate,  compounded
monthly, with a floor of 9 1/2% and a ceiling of 15%.


(NOTE G) - Related Parties:

         [1]  During  1995  and  1994,  the  Partnership  received  payments  of
mortgages in the amounts of  $2,000,000  and  $850,000,  respectively,  due from
affiliates.

(continued)


                                     - 18 -

<PAGE>


                       INTERVEST MORTGAGE ASSOCIATES L.P.

                          NOTES TO FINANCIAL STATEMENTS


(NOTE G) - Related Parties:  (continued)

         [2] Under the terms of the partnership agreement,  the Partnership will
invest in mortgages on improved income-producing real properties owned by either
unaffiliated  or affiliated  borrowers.  If the property  owner is an affiliated
entity,  certain conditions must be met before the investment can be made by the
Partnership.


(NOTE H) - Income Taxes:

         The  Partnership  will not be  required  to provide  for,  or pay,  any
federal income taxes. Income tax liabilities and/or benefits that arise from its
operations will be passed directly to the individual  partners.  The Partnership
may be subject to state and local taxes in jurisdictions in which it operates.


(NOTE I) - Unit Repurchase Rights:

         Beginning  January 1, 1999,  or at an  earlier  date,  in the event the
Partnership  is to be  terminated,  the General  Partner  will have the right to
purchase all Units from the unitholders.



                                     - 19 -

<PAGE>

<TABLE>
<CAPTION>

INTERVEST MORTGAGE ASSOCIATES L. P.
SCHEDULE IV--MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
                                                                                                      ORIGINAL
                                 EFFECTIVE ACTUAL    FINAL                                               FACE    CARRYING   PRE-
                                INTEREST INTEREST   MATURITY                              PRIOR       AMOUNT OF  AMOUNT OF PAYMENT
     DESCRIPTION                  RATE    RATE       DATE       PERIODIC PAYMENT TERMS    LIEN         MORTGAGE  MORTGAGES PENALTY
     -----------                  ----    ----       ----       ----------------------    ----         --------  -----------------
     RESIDENTIAL FIRST MORTGAGES,
     RENTAL APARTMENT BUILDINGS:
<S>                               <C>     <C>       <C>   <C>                                           <C>      <C>
      BRONX, NEW YORK             13.00   13.00     07/01/12   INTEREST ONLY MONTHLY                    $800,000 $   800,000    (D)
      NEW YORK, NEW YORK          11.60   10.00     03/01/05                 (B)                         950,000     840,000    (E)
      NEW ROCHELLE, NEW YORK      10.25   10.25 (A) 10/01/99                 (C)                       1,300,000   1,300,000    (F)
      BRONX, NEW YORK             16.50   15.00     03/31/98   PRIN. AND INTEREST MONTHLY                670,000     542,000    (G)
      EAST ORANGE, NEW JERSEY     16.40   14.25     11/08/99   PRIN. AND INTEREST MONTHLY                650,000     643,000    (H)
      NEW YORK, NEW YORK          13.25   13.25     04/15/99                 (C)                       1,050,000   1,050,000    (I)
      NEW YORK, NEW YORK          13.00   13.00     05/01/97                 (C)                       1,400,000   1,400,000    (F)
                                                                                           --         ----------  ----------
                                                                                           $0         $6,820,000  $6,575,000
                                                                                           ==         ==========  ==========

(A)      INTEREST AT FLUCTUATING  CHASE MANHATTAN BANK PRIME RATE PLUS 2% WITH A
         FLOOR AND A CEILING.

(B)      INTEREST MONTHLY, ADDITIONAL PRINCIPAL PAYMENT DUE ON EVERY MARCH 1.

(C)      INTEREST MONTHLY, PRINCIPAL AT MATURITY.

(D)      NOT PREPAYALE.

(E)      1% FEE REQUIRED, IF PREPAID PRIOR TO 3/2/2004.

(F)      NO PREPAYMENT PENALTY.

(G)      1% PAYOFF PREMIUM IS REQIORED.

(H)      NOT PREPAYABLE PRIOR TO 7/8/1998, AND ONE MONTH'S (31 DAYS) INTEREST IS
         REQUIRED.

(I)      NOT PREPAYABLE  UNTIL 4/15/97,  1% PREPAYMENT  PREMIUM NOT REQUIRED (IF
         AFTER MARCH 15, 1999).

(J)      NO MORTGAGE LOAN IS DELINQUENT AS TO PRINCIPAL AND/OR INTEREST.

</TABLE>

                                       20
<PAGE>
SCHEDULE IV--MORTGAGES LOANS ON REAL ESTATE--continued





The following summary reconciles mortgages receivable at their carrying values:
<TABLE>
<CAPTION>


                                                             Year Ended December 31
                                                             ----------------------
                                                            1996         1995          1994
                                                            ----         ----          ----
<S>                                                     <C>          <C>           <C>
Balance at beginning of period ...........              $5,542,000   $ 7,578,000   $10,195,000

Additions during period:
  Mortgages acquired ...............................    10,087,000     1,821,000       657,000

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

                                                        15,629,000     9,399,000    10,852,000

Deductions during period:
  Collections of principal, net
    of amortization of discounts ...................     9,054,000     3,857,000     3,274,000
                                                       -----------   -----------   -----------

         BALANCE AT CLOSE OF PERIOD ................   $ 6,575,000   $ 5,542,000   $ 7,578,000
                                                       ===========   ===========   ===========
</TABLE>


                                       21
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
Intervest Funds Management Corporation
New York, New York


         We have audited the  accompanying  balance  sheets of  Intervest  Funds
Management  Corporation  as at December 31, 1996 and December 31, 1995,  and the
related  statements  of  operations  and cash flows for each of the years in the
three-year  period ended December 31, 1996.  These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our 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  financial  statements  enumerated  above  present
fairly,  in all material  respects,  the financial  position of Intervest  Funds
Management  Corporation  at December 31, 1996 and  December  31,  1995,  and the
results of its  operations  and its cash  flows for the years in the  three-year
period ended December 31, 1996 in conformity with generally accepted  accounting
principles.





New York, New York
January 22, 1997

                                     - 22 -

<PAGE>

<TABLE>
<CAPTION>


                     INTERVEST FUNDS MANAGEMENT CORPORATION

                                 BALANCE SHEETS



                                                                                                     December 31,
                                                                                                     ------------
                                     A S S E T S                                                 1996         1995
                                     -----------                                                ------        -----

<S>                                                                                       <C>             <C>
Cash and cash equivalents  . . . . . . . . . .                                            $    32,000     $     7,000

Investment in partnership (Notes A and C)  . .                                                102,000          73,000

Prepaid taxes  . . . . . . . . . . . . . . . .                                                                  5,000
                                                                                          -----------     -----------



          T O T A L  . . . . . . . . . . . . .                                            $   134,000     $    85,000
                                                                                          ===========     ===========


Commitments and contingent liabilities (Note C)


                                 STOCKHOLDERS' EQUITY

Common stock, no par value; authorized
   3,000 shares; issued and outstanding
   20 shares . . . . . . . . . . . . . . . . .                                            $        20     $        20

Additional paid-in capital . . . . . . . . . .                                              1,907,980       1,907,980

Deficit  . . . . . . . . . . . . . . . . . . .                                               (774,000)       (823,000)
                                                                                          -----------     -----------

                                                                                            1,134,000       1,085,000

Less notes receivable - stockholders
   (Note C)  . . . . . . . . . . . . . . . . .                                              1,000,000       1,000,000
                                                                                          -----------     -----------



          T O T A L  . . . . . . . . . . . . .                                            $   134,000     $    85,000
                                                                                          ===========     ===========
</TABLE>















                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 23 -

<PAGE>



                     INTERVEST FUNDS MANAGEMENT CORPORATION

                            STATEMENTS OF OPERATIONS



                                                  Year Ended December 31,
                                                 ------------------------
                                             1996           1995        1994
                                            ------         ------      -----

Revenue:

   Interest income  . . . . . . . . .    $   1,000     $   1,000     $   1,000
                                         ---------     ---------     ---------



Expenses:

   General and administrative . . . .        3,000         3,000         2,000


   Payment to partnership (Note C)  .                     14,000
                                         ---------     ---------     ---------


          T o t a l . . . . . . . . .        3,000        17,000         2,000
                                         ---------     ---------     ---------


Operating (loss)  . . . . . . . . . .       (2,000)      (16,000)       (1,000)


Equity in income of partnership . . .       56,000                     112,000


State and City (taxes) benefit
   (Note B[2])  . . . . . . . . . . .       (5,000)        1,000        (8,000)
                                         ---------     ---------     ---------


NET INCOME (LOSS) . . . . . . . . . .       49,000       (15,000)      103,000


Deficit at beginning of period  . . .     (823,000)     (808,000)     (911,000)
                                         ---------     ---------     ---------



DEFICIT AT END OF PERIOD  . . . . . .    $(774,000)    $(823,000)    $(808,000)
                                         =========     =========     =========













                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 24 -

<PAGE>

<TABLE>
<CAPTION>


                     INTERVEST FUNDS MANAGEMENT CORPORATION

                            STATEMENTS OF CASH FLOWS



                                                               Year Ended December 31,
                                                               -----------------------
                                                          1996          1995          1994
                                                          ----          ----          ----
Cash flows from operating activities:
<S>                                                   <C>           <C>           <C>
   Net income (loss) . . . . . . . . . . . . . . .    $  49,000     $ (15,000)    $ 103,000
   Adjustments to reconcile net income (loss) to
     net cash (used in) operating activities:
       Equity in income of partnership . . . . . .      (56,000)                   (112,000)
       Decrease (increase) in prepaid taxes  . . .        5,000        (4,000)
       (Decrease) in taxes payable . . . . . . . .                                  (12,000)
                                                      ---------     ---------     ---------

          Net cash (used in) operating
            activities . . . . . . . . . . . . . .       (2,000)      (19,000)      (21,000)
                                                      ---------     ---------     ---------


Cash flows from investing activities:
   Distributions from partnership  . . . . . . . .                                  267,000
   Decrease in due from partnership  . . . . . . .                                   40,000
   Purchase of units of limited partnership  . . .                    (30,000)
   Sale of units of limited partnership  . . . . .       30,000
   Expenses paid on behalf of partnership  . . . .       (3,000)       (6,000)       (5,000)
                                                      ---------     ---------     ---------

          Net cash provided by (used in)
            investing activities . . . . . . . . .       27,000       (36,000)      302,000
                                                      ---------     ---------     ---------


Cash flows from financing activities:
   Distributions to stockholders . . . . . . . . .                                 (252,000)
   Capital contributions . . . . . . . . . . . . .                     15,000
                                                                    ---------     ---------

          Net cash provided by (used in)
            financing activities . . . . . . . . .                     15,000      (252,000)
                                                                    ---------     ---------


NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS . . . . . . . . . . . . . . . . . .       25,000       (40,000)       29,000


Cash and cash equivalents at beginning of the
   period  . . . . . . . . . . . . . . . . . . . .        7,000        47,000        18,000
                                                      ---------     ---------     ---------



CASH AND CASH EQUIVALENTS AT END OF THE PERIOD . .    $  32,000     $   7,000     $  47,000
                                                      =========    ==========     =========
</TABLE>





                            The accompanying notes to
                           financial statements are an
                              integral part hereof.

                                     - 25 -

<PAGE>


                     INTERVEST FUNDS MANAGEMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE A) - Organization:

         Intervest Funds  Management  Corporation  (the  "Company"),  a Delaware
corporation,  was formed by Lowell S. Dansker and Lawrence G. Bergman,  who each
own 50% of the Company's  issued and outstanding  common shares.  The Company is
the general  partner and its  stockholders  are  special  limited  partners in a
limited partnership, Intervest Mortgage Associates L.P. (the "Partnership").


(NOTE B) - Significant Accounting Policies:

         [1]  Cash equivalents:

                  The Company considers all highly liquid instruments  purchased
with an original maturity of three months or less to be cash equivalents.

         [2]  Income taxes:

                  The Company has elected to be treated as an S corporation  for
federal income tax purposes and for state and local  jurisdictions  which permit
such  election.  As  a  result,  income  is  generally  taxed  directly  to  the
stockholders for such purposes.


(NOTE C) - The Partnership:

         The Partnership invests in mortgages on improved  income-producing real
properties owned by either unaffiliated or affiliated borrowers. The Partnership
has sold 1,000 units of limited  partnership  interest at $10,000 per unit. Each
unitholder is generally entitled to a return on his investment equal to 2% above
the prime rate of Chase Manhattan Bank subject to a minimum rate of 9 1/2% and a
maximum rate of 15% per annum.

         The Company, as general partner, has agreed, among other things to:

         [1]  Manage and control the business of the Partnership;

         [2]  Pay all operating costs of the Partnership;

         [3]  Pay to the Partnership any shortfall with respect to cash
distributions due to the unitholders described above;

         [4] Repurchase each year on a noncumulative  basis, a maximum of 10% of
units  outstanding as of January 1 of each year if requested by the unitholders,
and

(continued)


                                     - 26 -

<PAGE>


                     INTERVEST FUNDS MANAGEMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

(NOTE C) - The Partnership:  (continued)

         [5] Maintain a net worth of at least 10% of the  adjusted  contribution
of the  unitholders,  but in no event less than $500,000.  Notes receivable were
contributed to capital by the  stockholders  to maintain a net worth of at least
10% of the  adjusted  contribution  of the  unitholders.  The notes will  become
interest-bearing  at a defined rate only for the period from the date payment is
demanded by the Company until such payment is made.

         In addition,  the Company has paid all organization  costs and expenses
of the  Partnership  in  connection  with  the  sale  of the  units  of  limited
partnership interest.

         As more fully described in the partnership  agreement,  income,  losses
and distributions are to be allocated as follows:

         (1) Net income and operating cash  distributions,  first to unitholders
in an amount equal to their  investment  return and then to the general  partner
(99%) and special limited partners (1%).

         (2) Net loss,  other than from a  disposition,  as defined,  99% to the
general partner and 1% to the special limited partners.

         (3) Net loss from a disposition,  to unitholders to the extent of their
positive  capital  account  balances and then to the general partner and special
limited partners.

         (4)  Disposition  proceeds will generally be distributed to unitholders
until each has  received an amount equal to his  original  invested  capital and
then to the general partner and special limited partners.


(NOTE D) - Unit Repurchase Rights:

         Beginning  January  1,  1999 or at an  earlier  date,  in the event the
Partnership is to be terminated, the Company will have the right to purchase all
units from the unitholders.

                                     - 27 -

<PAGE>



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

None



                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

The General Partner of the Partnership,  Intervest Funds Management Corporation,
is wholly owned by Lowell S. Dansker and Lawrence G.  Bergman.  The  Partnership
will be managed by the General  Partner,  which was  incorporated in Delaware on
June 13, 1990. It has an office located at 10 Rockefeller  Plaza,  New York, New
York 10020-1903 (telephone: 212-757-7300).

The current  directors  and  executive  officers  of the General  Partner are as
follows:

Lowell S. Dansker, age 46, serves as a Director,  and as Co-Chairman,  President
and Treasurer of the General Partner. Mr. Dansker received a Bachelor of Science
in Business Administration from Babson College, a law degree from the University
of Akron  School of Law, and is admitted to practice as an attorney in New York,
Ohio, Florida and the District of Columbia.

Lawrence G. Bergman,  age 52,  serves as a Director,  and as  Co-Chairman,  Vice
President and Secretary of the General Partner.  Mr. Bergman received a Bachelor
of Science degree and a Master of Engineering  (Electrical)  degree from Cornell
University,  and a Master of Science in  Engineering  and a Ph.D degree from The
Johns Hopkins University.

For more than the past  fifteen  years,  Mr.  Dansker and Mr.  Bergman have been
actively  involved in the  ownership  and operation of real estate and mortgages
primarily  through  100%  family  owned  partnerships,  corporations  and family
trusts.

Mr. Bergman, his wife, Mr. Dansker and Mr. Dansker's father are the sole owners,
partners and trustees,  respectively, of such family corporations,  partnerships
and trusts. Mr. Dansker and Mrs. Bergman are brother and sister.

Item 11.  Executive Compensation

Pursuant to the terms of the partnership agreement, $112,400 was credited to the
capital account of the General Partner during 1994. No other compensation of any
kind was paid to or  accrued by the  Partnership  for any  executive  officer or
director of the General Partner.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The following  table sets forth  information  concerning the ownership of common
stock of the General Partner.


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                                                  Amount of           Percent
Name and Address of Beneficial Owner         Beneficial Ownership     of Class
------------------------------------         ---------------------------------

   Lowell S. Dansker........................      10 shares             50.0%
   360 West 55th Street,
   New York, New York 10019

   Lawrence G. Bergman...................         10 shares             50.0%
   201 East 62nd Street
   New York, New York 10021


Item 13.  Certain Relationships and Related Transactions

During 1994 and 1995,  the  partnership  received  payments of  mortgages in the
amounts of $850,000 and $2,000,000, respectively, due from affiliates.


                                     PART IV


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

(a)   (1) Financial Statements:

          See Item 8 "Financial Statements and Supplementary Data"

(a)   (2) Financial Statement Schedules:

          See Item 8 "Financial Statements and Supplementary Data"

(a)   (3) Exhibits:

   4      Certificate  of Limited  Partnership  and  Certificate of Amendment to
          Certificate of Limited Partnership. (1)

  10.1    Form of Escrow Agreement. (1)

  10.2    Form of Independent Advisor Agreement. (1)

  25  Power of Attorney. (1)

(b)       Reports on Form 8-K

          None

(1)       Incorporated  by reference to Registrant's  Registration  Statement as
          amended on Form S-11  (File No.  33-  36336),  declared  effective  on
          November 20, 1990.








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                                   SIGNATURES


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

                       INTERVEST MORTGAGE ASSOCIATES L.P.

                                   By: INTERVEST FUNDS MANAGEMENT CORPORATION
                                                              General Partner



Dated:  March 25, 1997             By:      /S/ Lawrence G. Bergman
                                            -----------------------
                                                Lawrence G. Bergman
                                                Executive Vice President



PURSUANT to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

Signatures
                                             President, Co-Chairman,
                                             Treasurer and Director
                                             of Intervest Funds
/S/ Lowell S. Dansker                        Management Corporation
Lowell S. Dansker                            (Principal Executive Officer)
Dated:  March 25, 1997


                                             Executive Vice President,
                                             Co-Chairman, Secretary
/S/ Lawrence G. Bergman                      and Director of Intervest
Lawrence G. Bergman                          Funds Management Corporation
Dated:  March 25, 1997                       (Principal Operating Officer)




Supplemental Information to be Furnished with Reports Filled Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:


The annual report to Unitholders has not as yet been distributed.

When the annual report has been distributed to the Unitholders, four copies will
be sent to the Commission.




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