FINANCIAL STATEMENTS AND
                            INDEPENDENT AUDITORS' REPORT

                             CITYSIDE APARTMENTS, L.P.

                          DECEMBER 31, 1997, 1996 AND 1995








<PAGE>



                             Cityside Apartments, L.P.

                                 TABLE OF CONTENTS






INDEPENDENT AUDITORS' REPORT


FINANCIAL STATEMENTS


    BALANCE SHEETS


    STATEMENTS OF OPERATIONS


    STATEMENTS OF PARTNERS' EQUITY


    STATEMENTS OF CASH FLOWS


    NOTES TO FINANCIAL STATEMENTS








<PAGE>











                            INDEPENDENT AUDITORS' REPORT



To the Partners
Cityside Apartments, L.P.

      We have audited the  accompanying  balance sheets of Cityside  Apartments,
L.P. as of December 31, 1997 and 1996, and the related statements of operations,
partners'  equity and cash flows for the years ended December 31, 1997, 1996 and
1995. These financial  statements are the  responsibility  of the  partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our 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 referred to above present fairly,
in all material respects, the financial position of Cityside Apartments, L.P. as
of December 31, 1997 and 1996, and the results of its operations, the changes in
partners'  equity and cash flows for the years ended December 31, 1997, 1996 and
1995, in conformity with generally accepted accounting principles.


/s/Reznick Fedder & Silverman

Bethesda, Maryland
May 11, 1998




















<PAGE>


  <TABLE>
  <CAPTION>
                             Cityside Apartments, L.P.

                                   BALANCE SHEETS

                                    December 31,


                ASSETS
                                            1997      1996
<S>                                     <C>       <C>
CURRENT ASSETS
   Petty cash                          $     400  $     400
   Cash in bank - operations              44,040     86,291
   Cash in bank - development              1,533      1,437
   Tenant accounts receivable              9,900     17,821
   Accounts receivable - subsidy          11,392     21,318
   Accounts receivable - other             1,008          -
   Prepaid taxes and insurance            42,121     39,371
   Due from affiliate
                                          32,090     10,499

     Total current assets
                                         142,484    177,137

DEPOSITS HELD IN TRUST - FUNDED
   Tenant security deposits held
                                          18,876     17,551

RESTRICTED DEPOSITS AND FUNDED RESERVES
   Mortgage escrow deposits               70,029     59,469
   Reserve for replacements              210,237    180,166
   Reserve for painting                   47,574     29,117
   Rehabilitation escrow                 120,869    117,686
   Roofing and siding reserve
                                           4,597     64,684


                                         453,306    451,122

RENTAL PROPERTY
   Land                                   99,797     99,797
   Buildings and improvements         13,802,871 13,802,871
   Building equipment - portable
                                          14,723     14,723

                                      13,917,391 13,917,391
   Less accumulated depreciation
                                       4,178,545  3,675,441


                                       9,738,846 10,241,950

OTHER ASSETS
   Deposits                                3,060      3,060
   Mortgage costs, less accumulated
     amortization of $102,106 and
     $91,267                             233,384    244,223
                                         -------    -------


                                         236,444    247,283

                                       $         $
                                      10,589,956 11,135,043
  </TABLE>











                                    (continued)


<PAGE>


  <TABLE>
  <CAPTION>
                             Cityside Apartments, L.P.

                                   BALANCE SHEETS

                                    December 31,

                          LIABILITIES AND PARTNERS' EQUITY


                                                      1997      1996
             <S>                                     <C>       <C>
             CURRENT LIABILITIES
                Accounts payable                   $     583  $   8,490
                Accrued interest payable              47,830     48,380
                Accrued management fee                 4,703      5,652
                Accrued P.I.L.O.T.                    15,954     22,814
                Due to general partners               79,177     79,177
                and affiliates
                Rent deferred credits                  1,319      1,317
                Current maturities of
                  mortgages payable
                                                      69,787      62,859

                     Total current
                     liabilities                     219,353     228,689
                                                     ---------  ---------

             DEPOSITS LIABILITY
                Tenant security
                deposits (contra)                     18,876      17,551
                                                     --------   -----------

             LONG-TERM DEBT
                Mortgages payable, less             7,732,845  7,802,632
                  current maturities
                Accrued interest payable              504,975    431,965
                                                      

                                                    8,237,820  8,234,597

             CONTINGENCY                                   -          -

             PARTNERS' EQUITY                       2,113,907  2,654,206

                                                  $10,589,956 11,135,043
</TABLE>



























                         See notes to financial statements



<PAGE>


  <TABLE>
  <CAPTION>
                             Cityside Apartments, L.P.

                              STATEMENTS OF OPERATIONS

                              Year ended December 31,


                                              1997         1996         1995
                                          ----------------------   ---------

<S>                                       <C>          <C>         <C>
Revenue
   Rental                                $1,316,457   $1,281,775  $1,285,427
   Interest and other
                                             19,992      20,117       29,947
                                             ------      ------       ------


                                          1,336,449    1,301,892   1,315,374
                                          ---------    ---------   ---------
Expenses
   Administrative                           154,413     167,757      163,402
   Utilities                                 76,924      78,170       71,139
   Operating and maintenance                260,973     207,532      153,174
   Taxes and insurance                      217,939     191,263      182,006
   Interest                                 650,056     681,306      662,020
   Depreciation and amortization
                                            513,943     514,376      515,275
                                            -------     -------      -------


                                          1,874,248    1,840,404   1,747,016
                                          ---------    ---------   ---------

                                            $            $           $
                                          ==           ==
         NET LOSS                          (537,799)    (538,512)   (431,642)
                                          ========     ========    ========
</TABLE>

































                         See notes to financial statements



<PAGE>


<TABLE>
<CAPTION>
                             Cityside Apartments, L.P.

                           STATEMENTS OF PARTNERS' EQUITY

                    Years ended December 31, 1997, 1996 and 1995



                                                        General        Limited
                                             Total     partner        partner
<S>                                      <C>          <C>          <C>
Partners' equity, December 31, 1994      $ 3,629,360  $ 139,637    $ 3,489,723

Net profit (loss) - 1995                   (431,642)      7,298      (438,940)
                                         -----------   ---------   -----------

Partners' equity, December 31, 1995      3,197,718      146,935    3,050,783

Partner distribution                        (5,000)     --           (5,000)

Net loss - 1996                            (538,512)     (5,385)     (533,127)
                                         -----------   ---------   -----------

Partners' equity, December 31, 1996      2,654,206      141,550    2,512,656

Partner distribution                        (2,500)     --           (2,500)

Net loss - 1997                            (537,799)     (5,378)     (532,421)
                                         -----------   ---------   -----------

Partners' equity, December 31, 1997      $ 2,113,907  $ 136,172    $ 1,977,735
                                          ===========  =========    ==========
</TABLE>






























                         See notes to financial statements



<PAGE>


<TABLE>
<CAPTION>
                             Cityside Apartments, L.P.

                              STATEMENTS OF CASH FLOWS

                              Year Ended December 31,


                                                   1997        1996         1995
                                             --------------------------------------
<S>                                          <C>          <C>           <C>
Cash flows from operating activities
   Net loss                                  $            $             $
                                             (537,799)     (538,512)    (431,642)
   Adjustments to reconcile net loss to
   net cash provided by operating
   activities
     Depreciation                             503,104       503,537      504,436
     Amortization                              10,839        10,839       10,839
     Mortgagor income                               -           429            -
     Mortgagor entity expenses                 73,010             -            -
     Decrease in tenant accounts receivable     7,921         5,801          182
     Decrease (increase) in accounts            9,926        (8,675)       3,279
        receivable - subsidy
     Increase in accounts receivable -         (1,008)            -            -
     other
     Decrease in accounts receivable -              -             -       15,118
     insurance claims
     Decrease (increase) in prepaid            (2,750)        3,247       (3,369)
     expenses
     Decrease (increase) in tenant             (1,405)        1,230            -
     security deposits - net
     Decrease (increase) in  mortgage         (10,560)        6,494       (8,184)
        escrow deposits
     Increase (decrease) in accounts           (7,083)        3,802         (968)
     payable
     Decrease in accrued management fee          (949)       (1,038)      (1,046)
     Increase (decrease) in accrued              (550)       72,513       72,563
     interest payable
     Increase (decrease) in accrued            (6,860)       (6,343)       3,219
     P.I.L.O.T.
     Decrease in accounts payable - fire            -             -      (48,257)
        loss
     Increase in rent deferred credits            583           675          300
                                             -----------------------------------

        Net cash provided by operating         36,419        53,999      116,470
                                             -----------------------------------
        activities

Cash flows from investing activities
   Deposits to reserve for replacements       (30,071)      (26,954)     (26,880)
   Deposits to rehabilitation escrow           (3,183)       (4,104)      (4,233)
   Deposits to painting escrow                (18,457)       (8,057)        (633)
   Advances on behalf of affiliate            (21,591)      (10,499)           -
   Withdrawal from (deposit to) roofing        60,087       (64,684)           -
                                             -----------------------------------
   and siding reserve

        Net cash used in investing                 (13,215  (114,298)   (31,746)
                                             -------------------------- --------
          activities

Cash flows from financing activities
   Principal payments on mortgages            (62,859)      (56,620)    (50,999)
   Distribution to limited partner             (2,500)       (5,000)           -
   Repayment of due to general partners                                (376,330)
                                             -----------------------------------
   and affiliates

        Net cash used in financing                 (65,359   (61,620)  (427,329)
                                             -------------------------- -------
        activities

        NET DECREASE IN CASH                  (42,155)     (121,919)    (342,605)

Cash, beginning                                   88,128     210,047     552,652
                                             -------------------------  --------

Cash, end                                    $    45,973$      88,128$    210,047
                                              ============ ============= ======

Supplemental disclosure of cash flow
information
   Cash paid for interest during the year    $     577,597$   583,837 $  589,457
                                              ============ ============= =======
</TABLE>


                         See notes to financial statements


<PAGE>



                             Cityside Apartments, L.P.

                           NOTES TO FINANCIAL STATEMENTS

                          December 31, 1997, 1996 and 1995


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Cityside  Apartments,  L.P. was organized  under the laws of the State of New
   Jersey on April 1,  1988 for the  purpose  of  acquiring,  constructing,  and
   operating a low-income residential housing project under Section 221(d)(4) of
   the  National  Housing  Act.  The project  consists  of 126 units  located in
   Trenton,  New Jersey and is  currently  operating  under the name of Cityside
   Apartments.   Cash   distributions  are  limited  by  agreement  between  the
   partnership and the City of Trenton to $81,884 annually, however, in no event
   can the  distributions  exceed  surplus  cash as defined by HUD.  The project
   qualifies  for the  low-income  credit  established  by the Tax Reform Act of
   1986.

   Each  building of the project has  qualified  and been  allocated  low-income
   housing credits  pursuant to Internal  Revenue Code Section 42 ("Section 42")
   which  regulates the use of the project as to occupant  eligibility  and unit
   gross rent, among other requirements.  Each building of the project must meet
   the provisions of these regulations during each of fifteen  consecutive years
   in order to remain qualified to receive the credits.

   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  amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the financial statements and
   the reported  amounts of revenue and expenses  during the  reporting  period.
   Actual results could differ from those estimates.

   Rental Property

   Land,  buildings  and  improvements  are  recorded at cost.  Depreciation  is
   provided for in amounts  sufficient to relate the cost of depreciable  assets
   to operations  over their  estimated  service  lives using the  straight-line
   method  over a 27.5 year life.  Personal  property is recorded at cost and is
   depreciated  over its estimated  service life of 5-7 years using  accelerated
   methods. Improvements are capitalized, while expenditures for maintenance and
   repairs  are charged to expense as  incurred.  Upon  disposal of  depreciable
   property,  the appropriate property accounts are reduced by the related costs
   and accumulated depreciation. The resulting gains and losses are reflected in
   the statements of operations.























<PAGE>



                             Cityside Apartments, L.P.

                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1997, 1996 and 1995


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Amortization

   Mortgage costs are amortized  over the term of the respective  loan using the
   straight-line method.

   Provision for Doubtful Accounts

   The  partnership  considers  accounts  receivable  to be  fully  collectible;
   accordingly,  no  allowance  for doubtful  accounts is  required.  If amounts
   become   uncollectible,   they  will  be  charged  to  operations  upon  such
   determination.

   Rental Income

   Rental income is recognized as rentals become due. Rental  payments  received
   in advance are deferred until earned.  All leases between the partnership and
   tenants of the property are operating leases.

   Income Taxes

   No provision or benefit for income taxes has been included in these financial
   statements  since taxable income or loss passes through to, and is reportable
   by, the partners individually.

NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS

   The  partnership  has four  general  partners  which  collectively  have a 1%
   interest - Trenton Investors,  Inc., Landex  Corporation,  The Richman Group,
   Inc.  and Altman  Properties,  Ltd. - and one limited  partner,  American Tax
   Credit  Properties,  L.P.,  which has a 99% interest.  Total general  partner
   capital contributions  received in prior years were $400. The limited partner
   was obligated to make capital contributions of $6,098,988,  all of which have
   been received.

NOTE C - LONG-TERM DEBT

   Mortgage Payable - Greystone Servicing Corporation, Inc.

   The  partnership  is  obligated  under the  terms of a  mortgage  payable  to
   Greystone  Servicing  Corporation,   Inc.  (subservicer  for  the  Government
   National  Mortgage  Association).  The note is insured by the Federal Housing
   Administration  (FHA)  and  is  collateralized  by a  first  mortgage  on the
   property. The note bears interest at the rate of 10.5%.











<PAGE>



                             Cityside Apartments, L.P.

                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1997, 1996 and 1995



NOTE C - LONG-TERM DEBT (Continued)

   Mortgage Payable - Greystone Servicing Corporation, Inc. (Continued)

   Principal and interest are payable by the partnership in monthly installments
   of $53,371  through  August 1, 2019.  Principal  and accrued  interest due at
   December 31, 1997 and 1996 are  $5,466,332  and $47,830,  and  $5,529,191 and
   $48,380, respectively.

   Under  agreements  with the  mortgage  lender  and FHA,  the  partnership  is
   required to make monthly escrow deposits for taxes, insurance and replacement
   of project assets,  and is subject to restrictions as to operating  policies,
   rental charges, operating expenditures and distributions to partners.

   The  liability  of the  partnership  under the  mortgage  is  limited  to the
   underlying value of the real estate  collateral plus other amounts  deposited
   with the lender.

   Aggregate  annual  maturities  of the mortgage  payable over each of the next
   five years are as follows:
<TABLE>
<CAPTION>
<S>                         <C>
 December 31,             
         1998             $   69,787
         1999                 77,478
         2000                 86,016
         2001                 95,495
         2002                106,018
</TABLE>
   Mortgage Payable - City of Trenton

   The  partnership is obligated  under the terms of a mortgage from the City of
   Trenton,  State of New Jersey. The note bears interest at the rate of 3.125%.
   Annual payments of principal and interest, limited to surplus cash as defined
   and in accordance with the terms of the agreement, were scheduled to commence
   on February 4, 1993. No payments were due in 1997 and 1996 under the terms of
   the  agreement.  All unpaid  principal  and  interest  is due and  payable on
   February 4, 2006, subject to extension to August 1, 2019 at the discretion of
   the first mortgagee.  Principal and accrued interest due at December 31, 1997
   and  1996  are  $2,336,300   and  $504,975,   and  $2,336,300  and  $431,965,
   respectively.

   The loan is secured by a second mortgage on the real estate. The liability of
   the partnership  under the mortgage is limited to the underlying value of the
   real estate collateral.











<PAGE>



                             Cityside Apartments, L.P.

                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1997, 1996 and 1995



NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

   Due to General Partners and Affiliates

   As of December 31, 1997 and 1996, the partnership  owes the general  partners
   and certain  affiliates  $43,326 and $43,326,  respectively,  for development
   fees, construction management fees, and other construction items. The amounts
   are noninterest bearing and due on demand.

   Partnership Administration Fee

   The  partnership  has  entered  into a  Partnership  Administrative  Services
   agreement  with the general  partners  for their  services  in  managing  the
   business of the partnership.  The annual fee is equal to 50% of net cash flow
   available for  distribution  as defined in the  partnership  agreement with a
   maximum of $250,000 per year. No such fee was incurred  during 1997, 1996 and
   1995.  The  cumulative  amount  payable as of  December  31, 1997 and 1996 is
   $35,851.

   Management Fee

   The property is managed by an  affiliate of certain of the general  partners.
   The  management  fee is 6% of project  receipts.  The  management  agent also
   receives fees for accounting services provided to the partnership. Management
   fees charged to operations  during 1997, 1996 and 1995 were $79,577,  $76,712
   and $77,346, respectively.  Accounting fees charged to operations were $6,804
   during each of the three years ended  December  31. At December  31, 1997 and
   1996, $4,703 and $5,652, respectively,  in management and accounting fees are
   payable.

   Insurance

   The sole shareholder of an affiliate of one of the general partners  provided
   debt service  financing for the  capitalization  of LaMere  Associates,  Inc.
   (LaMere).  In connection with such debt financing,  the shareholder  received
   20% of the stock of LaMere.  LaMere was paid premiums in connection  with the
   following  insurance  coverage  provided  to  the  project:  property,  auto,
   workmen's  compensation,  liability  and umbrella.  In  connection  with such
   insurance coverage, the partnership incurred $60,442,  $56,725 and $57,574 in
   premiums for the years 1997, 1996 and 1995, respectively.















<PAGE>



                             Cityside Apartments, L.P.

                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1997, 1996 and 1995



NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (Continued)

   Shared Project Payroll Costs and Expenses

   As  approved  by the State of New Jersey  Department  of  Community  Affairs,
   Division of Housing and  Community  Resources,  payroll and all other  direct
   costs of employment for certain  employees are shared between the partnership
   and Cityside  Apartments,  Phase II, L.P., a contiguous project. The projects
   share a common management office and therefore share office expenses. Certain
   non project  specific  maintenance  expenses are shared between the projects.
   These payroll  costs and expenses are allocated  based on the number of units
   in each project.  Also  approved,  the social service  director/site  manager
   provided  services  to another  project the  management  agent  manages.  The
   partnership was reimbursed by the management agent for the services  provided
   based on the time spent on the other project.

   Computer Services

   In accordance with HUD Handbook 4381.5 Rev-2, Paragraph 6.38, the partnership
   uses the services of a computer  consultant  company to provide the following
   services:  purchase and install personal  computers and the related equipment
   and software for the project's rental office,  provide training and technical
   support, and consult on software upgrades. Dynamic Information Services, Inc.
   (DIS), which is owned by a relative of an officer of the management  company,
   is a licensed  representative  of Project  Data  Systems,  Inc., a nationally
   known  provider  of  computer  system  software  for the  subsidized  housing
   industry. DIS derives 40% of its consulting service revenues from third party
   clients not affiliated with the management  company. In 1997, the partnership
   paid $1,640 for equipment representing actual cost, and $420 for training and
   technical  support services based on billable hours. In 1996, DIS provided no
   services  to the  partnership.  In 1995,  the  partnership  paid DIS $183 for
   technical support and training services based on billable hours.

NOTE E - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS

   All profits and losses are  allocated  1% to the general  partners and 99% to
   the limited partner.

   Distributable  cash  flow,  as  defined  by  the  partnership  agreement,  is
   distributable  1% to the general  partners  and 99% to the  limited  partner.
   However, cash distributions are limited as described in note A.
















<PAGE>



                             Cityside Apartments, L.P.

                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1997, 1996 and 1995



NOTE E - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS (Continued)

   Gain,  if any,  from a sale,  exchange or other  disposition  is allocable as
follows:

   1.To all partners having negative balances in their capital accounts prior to
     the  distribution  of any sale or refinancing  proceeds,  an amount of such
     gain to increase their negative balance to zero.

   2.1% to the general partners and 99% to the limited partner until the limited
     partner has received an amount equal to its gross capital contribution.

   3.The remainder of such gain,  if any, 50% to the limited  partner and 50% to
     the general partners.

   Loss from a sale is allocable as follows:

   1.To the partners such that after such allocation  their  respective  capital
     accounts will be proportionate to their interests.

   2.To the partners until each partner's  capital  account equals their capital
     contribution.

   3.To the partners to the extent of and in  proportion to each  partner's  
     capital account.

   4.Any  remaining  loss is allocated to the  partners in  accordance  with the
     manner in which they bear the economic risk of loss.

NOTE F - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENT

   The Federal Housing  Administration (FHA) has contracted with the partnership
   under Section 8 of Title II of the Housing and Community  Development  Act of
   1974 to make  housing  assistance  payments to the  partnership  on behalf of
   qualified tenants. The agreements are on a unit-by-unit basis, have a 15-year
   term and expire on various dates through May 2005.


















<PAGE>



                             Cityside Apartments, L.P.

                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1997, 1996 and 1995


NOTE G - CONTRACT WITH THE CITY OF TRENTON (IN LIEU OF TAXES)

   The  partnership  has  entered  into an  agreement  with the City of  Trenton
   whereby the partnership  pays a service charge in an amount equal to 6.28% of
   gross rents as defined in the agreement. During 1997, 1996 and 1995, $83,841,
   $82,610 and $82,167,  respectively, was charged to operations and $15,954 and
   $22,814, respectively, is owed at December 31, 1997 and 1996.

NOTE H - CONTINGENCY

   The partnership's low-income housing credits are contingent on its ability to
   maintain  compliance  with  applicable  sections  of Section  42.  Failure to
   maintain compliance with occupant eligibility,  and/or unit gross rent, or to
   correct  noncompliance  within  a  specified  time  period  could  result  in
   recapture of previously  taken tax credits plus interest.  In addition,  such
   potential  noncompliance may require an adjustment to the contributed capital
   by the limited partner.