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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2001

Commission File Number0-13810

REAL ESTATE ASSOCIATES LIMITED VII

A California Limited Partnership

I.R.S. Employer Identification No. 95-3290316

9090 Wilshire Blvd., Suite 201, Beverly Hills, California 90211

Registrants Telephone Number, Including Area Code (310) 278-2191

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

NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or 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 S-K 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 of this Form 10-K
or any amendment to this
Form 10-K. [X]

TABLE OF CONTENTS



|           |                                                                                                |  |  |  |  |  |  | 
|---------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I.   
|           | ITEM 1. BUSINESS                                                                              
|           | ITEM 2. PROPERTIES                                                                            
|           | ITEM 3. LEGAL PROCEEDINGS                                                                     
|           | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   
|PART II.  
|           | ITEM 5. MARKET FOR THE REGISTRANTS PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS.
|           | ITEM 6. SELECTED FINANCIAL DATA                                                               
|           | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
|           | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|           | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           
|           | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  
|PART III. 
|           | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                   
|           | ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS                                             
|           | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                       
|           | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                       
|           | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:                     
|SIGNATURES



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PART I.




ITEM 1. BUSINESS

Real Estate Associates Limited VII (REAL VII or the Partnership) is a
limited partnership which was formed under the laws of the State of California
on May 24, 1983. On February 1, 1984, the Partnership offered 2,600 units
consisting of 10,400 limited partnership interests and warrants to purchase a
maximum of 5,200 additional limited partnership interests through a public
offering managed by E.F. Hutton Inc.

The general partners of the Partnership are National Partnership Investments
Corp. (NAPICO), a California Corporation (the Corporate General Partner),
and National Partnership Investments Associates II (NAPIA II). NAPIA II is a
limited partnership formed under the California Limited Partnership Act and
consists of Mr. Charles H. Boxenbaum and two unrelated individuals as limited
partners. The business of the Partnership is conducted primarily by NAPICO.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation (CIC), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the
Operating Partnership), a majority owned subsidiary of Casden Properties
Inc., a real estate investment trust organized by Alan I. Casden, purchased a
95.25% economic interest in NAPICO. The current members of NAPICOs Board of
Directors are Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden.

On December 3, 2001, Casden Properties Inc., entered into a merger agreement
and certain other transaction documents with Apartment Investment and
Management Company, a Maryland corporation (AIMCO) and certain of its
subsidiaries, pursuant to which, on March 11, 2002, AIMCO acquired Casden
Properties Inc. and its subsidiaries, including NAPICO.

The Partnership holds limited partnership interests in 17 and 21 local limited
partnerships as of December 31, 2001 and 2000, respectively. The Partnership
also holds a general partner interest in Real Estate Associates IV (REA IV)
which, in turn, holds limited partnership interests in 13 and 15 additional
local limited partnerships as of December 31, 2001 and 2000, respectively,
therefore, the Partnership holds interests, either directly or indirectly
through REA IV, in 30 and 36 local limited partnerships as of December 31, 2001
and 2000, respectively. The other general partner of REA IV is NAPICO. The
Partnership surrendered its interest in one limited partnership in July 2001,
sold its interest in two limited partnerships in April and December 2001 and
the lender foreclosed on three limited partnerships in September 2001. In
December 1998, the Partnership sold its interests in 11 local limited
partnerships to the Operating Partnership. Each of the local partnerships owns
a low income housing project which is subsidized and/or has a mortgage note
payable to or is insured by agencies of the federal or local government.

In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including among others, interest subsidies, rent
supplements, and mortgage insurance, with the intent of reducing certain market
risks and providing investors with certain tax benefits, plus limited cash
distributions and the possibility of long-term capital gains. There remain,
however, significant risks. The long-term nature of investments in government
assisted housing limits the ability of the Partnership to vary its portfolio in
response to changing economic, financial, and investment conditions. Such
investments are also subject to changes in local economic circumstances and
housing patterns, as well as rising operating costs, vacancies, rent collection
difficulties, energy shortages, and other factors which have an impact on real
estate values. These projects also require greater management expertise and
may have higher operating expenses than conventional housing projects.

Under recently adopted law and policy, the United States Department of Housing
and Urban Development (HUD) has determined not to renew the Housing
Assistance Payment (HAP) Contracts on a long term basis





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on the existing terms. In connection with renewals of the HAP Contracts under
such new law and policy, the amount of rental assistance payments under renewed
HAP Contracts will be based on market rentals instead of above market rentals,
which may be the case under existing HAP Contracts. The payments under the
renewed HAP Contracts may not be in an amount that would provide sufficient
cash flow to permit owners of properties subject to HAP Contracts to meet the
debt service requirements of existing loans insured by the Federal Housing
Administration of HUD (FHA) unless such mortgage loans are restructured. In
order to address the reduction in payments under HAP Contracts as a result of
this new policy, the Multi-family Assisted Housing Reform and Affordability Act
of 1997 (MAHRAA) provides for the restructuring of mortgage loans insured by
the FHA with respect to properties subject to the Section 8 program. Under
MAHRAA, an FHA-insured mortgage loan can be restructured into a first mortgage
loan which will be amortized on a current basis and a low interest second
mortgage loan payable to FHA which will only be payable on maturity of the
first mortgage loan. This restructuring results in a reduction in annual debt
service payable by the owner of the FHA-insured mortgage loan and is expected
to result in an insurance payment from FHA to the holder of the FHA-insured
loan due to the reduction in the principal amount. MAHRAA also phases out
project-based subsidies on selected properties serving families not located in
rental markets with limited supply, converting such subsidies to a tenant-based
subsidy.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In
addition, the economic impact on the Partnership of the combination of the
reduced payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

The partnerships in which the Partnership has invested are principally existing
local limited partnerships. The Partnership became the limited partner in
these local limited partnerships pursuant to arms-length negotiations with the
local partnerships general partners who are often the original project
developers. In certain other cases, the Partnership invested in newly formed
local partnerships which, in turn, acquired the projects. As a limited
partner, the Partnerships liability for obligations of the local limited
partnership is limited to its investment. The local general partner of the
local limited partnership retains the responsibility of maintaining, operating
and managing the project. Under certain circumstances of default, the
Partnership has the right to replace the general partner of the local limited
partnerships, but otherwise does not have control of sale, refinancing, etc.

Although each of the partnerships in which the Partnership has invested will
generally own a project which must compete in the market place for tenants,
interest subsidies and rent supplements from governmental agencies make it
possible to offer these dwelling units to eligible low income tenants at a
cost significantly below the market rate for comparable conventionally financed
dwelling units in the area.





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During 2001, all of the projects in which the Partnership had invested were
substantially rented. The following is a schedule of the status, as of
December 31, 2001, of the projects owned by local partnerships in which the
Partnership, either directly or indirectly through REA IV, has invested.

SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 2001

|                                         |  |        |     |            |  |                  |         |             |     |  |     |               |    |   |     |  
|---------------------------------------- |  | ------ | --- | ---------- |  | ---------------- | ------- | ----------- | --- |  | --- | ------------- | -- | - | --- | -
|                                         |  |        |     |            |  | Units Authorized |         |             |     |  |     |               |    |  
|                                         |  |        |     |            |  | For Rental       |         |             |     |  |     |               |    |  
|                                         |  |        |     |            |  | Assistance Under |         |             |     |  |     |               |    |  
|                                         |  |        |     |            |  | Section 8 or     |         |             |     |  |     |               |    |  
|                                         |  |        |     |            |  | Other Rent       |         |             |     |  |     | Percentage of
|                                         |  | No. of |     | Supplement |  | Units            |         | Total Units
|Name and Location                        |  | Units  |     | Program    |  | Occupied         |         | Occupied   
|                                         |  |        |     |            |  |                  |         |            
|Aristocrat Manor
Hot Springs, AR         |  |        | 101 |            |  |                  | 114/  0 |             |     |  | 83  |               |    |   | 82  | %
|Arkansas City Apts.
Arkansas City, AR    |  |        | 16  |            |  |                  | 0/  12  |             |     |  | 14  |               |    |   | 88  | %
|Bellair Manor Apts.
Niles, OH            |  |        | 68  |            |  |                  | 68/  7  |             |     |  | 68  |               |    |   | 100 | %
|Birch Manor Apts. I
Medina, OH           |  |        | 60  |            |  |                  | 60/  0  |             |     |  | 56  |               |    |   | 93  | %
|Birch Manor Apts. II
Medina, OH          |  |        | 60  |            |  |                  | 60/  0  |             |     |  | 57  |               |    |   | 95  | %
|Bluewater Apts.
Port Huron, MI           |  |        | 116 |            |  | None             |         |             | 108 |  |     |               | 93 | %
|Clarkwood Apts. I
Elyria, OH             |  |        | 72  |            |  |                  | 34/  0  |             |     |  | 69  |               |    |   | 96  | %
|Clarkwood Apts. II
Elyria, OH            |  |        | 120 |            |  |                  | 51/  0  |             |     |  | 113 |               |    |   | 94  | %
|Danbury Park Manor
Superior Township, MI |  |        | 151 |            |  |                  | 86/  0  |             |     |  | 145 |               |    |   | 96  | %
|Desoto Apts.
Desoto, MO                  |  |        | 42  |            |  |                  | 42/  0  |             |     |  | 42  |               |    |   | 100 | %
|Dexter Apts.
Dexter, MO                  |  |        | 50  |            |  |                  | 50/  0  |             |     |  | 47  |               |    |   | 94  | %





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SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 2001
(Continued)

|                                   |  |        |     |            |  |                  |         |             |    |  |     |               |    |   |    |  
|---------------------------------- |  | ------ | --- | ---------- |  | ---------------- | ------- | ----------- | -- |  | --- | ------------- | -- | - | -- | -
|                                   |  |        |     |            |  | Units Authorized |         |             |    |  |     |               |    |  
|                                   |  |        |     |            |  | For Rental       |         |             |    |  |     |               |    |  
|                                   |  |        |     |            |  | Assistance Under |         |             |    |  |     |               |    |  
|                                   |  |        |     |            |  | Section 8 or     |         |             |    |  |     |               |    |  
|                                   |  |        |     |            |  | Other Rent       |         |             |    |  |     | Percentage of
|                                   |  | No. of |     | Supplement |  | Units            |         | Total Units
|Name and Location                  |  | Units  |     | Program    |  | Occupied         |         | Occupied   
|                                   |  |        |     |            |  |                  |         |            
|Goodlette Arms Apts.
Naples, FL    |  |        | 250 |            |  |                  | 250/  0 |             |    |  | 248 |               |    |   | 99 | %
|Hampshire House
Warren, OH         |  |        | 150 |            |  |                  | 150/  0 |             |    |  | 145 |               |    |   | 97 | %
|Henrico Arms
Richmond, VA          |  |        | 232 |            |  |                  | 232/  0 |             |    |  | 228 |               |    |   | 98 | %
|Ivywood Apts.
Columbus, OH         |  |        | 124 |            |  |                  | 124/  0 |             |    |  | 122 |               |    |   | 98 | %
|Jasper County Prop.
Heidelberg, MS |  |        | 24  |            |  |                  | 24/  0  |             |    |  | 17  |               |    |   | 71 | %
|Nantucket Apts.
Alliance, OH       |  |        | 60  |            |  |                  | 59/  0  |             |    |  | 59  |               |    |   | 98 | %
|Newton Apts.
Newton, MS            |  |        | 36  |            |  | None             |         |             | 28 |  |     |               | 78 | %
|Oak Hill Apts.
Franklin, PA        |  |        | 120 |            |  |                  | 82/  0  |             |    |  | 115 |               |    |   | 96 | %
|Oakview Apts.
Monticello, AR       |  |        | 32  |            |  |                  | 0/  7   |             |    |  | 28  |               |    |   | 88 | %
|Oakwood Park I Apts.
Lorain, OH    |  |        | 50  |            |  |                  | 50/  0  |             |    |  | 49  |               |    |   | 98 | %
|Oakwood Park II Apts.
Lorain, OH   |  |        | 78  |            |  | None             |         |             | 73 |  |     |               | 94 | %
|Pachuta Apartments
Pachuta, MS     |  |        | 16  |            |  |                  | 0/  16  |             |    |  | 15  |               |    |   | 94 | %





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SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 2001
(Continued)

|                                   |       |       |        |         |            |          |                  |           |             |  |     |       |               |  |     |    |  
|---------------------------------- | ----- | ----- | ------ | ------- | ---------- | -------- | ---------------- | --------- | ----------- |  | --- | ----- | ------------- |  | --- | -- | -
|                                   |       |       |        |         |            |          | Units Authorized |           |             |  |     |       |               |  |    
|                                   |       |       |        |         |            |          | For Rental       |           |             |  |     |       |               |  |    
|                                   |       |       |        |         |            |          | Assistance Under |           |             |  |     |       |               |  |    
|                                   |       |       |        |         |            |          | Section 8 or     |           |             |  |     |       |               |  |    
|                                   |       |       |        |         |            |          | Other Rent       |           |             |  |     |       | Percentage of
|                                   |       |       | No. of |         | Supplement |          | Units            |           | Total Units
|Name and Location                  |       | Units |        | Program |            | Occupied |                  | Occupied 
|                                   |       |       |        |         |            |          |                  |          
|Rand Grove Village
Palatine, IL    |       |       | 212    |         |            |          | 212/  0          |           |             |  | 195 |       |               |  | 92  | % 
|Richards Park Apts.
Elyria, OH     |       |       | 60     |         |            |          | 24/  0           |           |             |  | 57  |       |               |  | 95  | % 
|Shubuta Properties
Shubuta, MS     |       |       | 16     |         |            |          | 0/  16           |           |             |  | 16  |       |               |  | 100 | % 
|South Glen Apts.
Trenton, MI       |       |       | 159    |         |            |          | 14/  0           |           |             |  | 153 |       |               |  | 96  | % 
|Tradewinds East
Essexville, MI     |       |       | 150    |         |            |          | 30/  0           |           |             |  | 142 |       |               |  | 95  | % 
|Warren Heights Apts. II
Warren, OH |       |       | 88     |         |            |          | 88/  0           |           |             |  | 87  |       |               |  | 99  | % 
|Yorkview Estates
Massillon, OH     |       |       | 50     |         |            |          | 50/  0           |           |             |  | 49  |       |               |  | 98  | % 
|                                   |       |       |        |         |            |          |                  |           |             |  |     |       |               |  |     |   
|                                   | TOTAL |       |        | 2,763   |            |          |                  | 1,954/ 58 |             |  |     | 2,628 |               |  |     | 95 | %
|                                   |       |       |        |         |            |          |                  |           |             |  |     |       |               |  |     |   





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ITEM 2. PROPERTIES

The local limited and general partnerships in which REAL VII holds interests
own various multi-family rental properties. See Item 1 for information
pertaining to these properties.




ITEM 3. LEGAL PROCEEDINGS

Class Action

On August 27, 1998, two investors holding an aggregate of eight units of
limited partnership interests in Real Estate Associates Limited III (a
partnership in which NAPICO is a general partner) and two investors holding an
aggregate of five units of limited partnership interest in Real Estate
Associates Limited VI (another partnership in which Company is a general
partner) commenced an action in the United States District Court for the
Central District of California on behalf of themselves and all other similarly
situated, against the Partnership, NAPICO and certain other affiliated
entities. The complaint alleges that the defendants breached their fiduciary
duty to the limited partners of such Funds and made materially false and
misleading statements in the consent solicitation statements that were
disseminated to the limited partners of such Funds relating to approval of the
transfer of partnership interests in limited partnerships to the Operating
Partnership. The plaintiffs seek preliminary and permanent injunction relief
and other equitable relief, as well as compensatory and punitive damages.
However, plaintiffs made no effort to enjoin the transaction from taking place.
On August 4, 1999, a holder of one unit of limited partnership interest in
Housing Programs Limited (a partnership in which the Company is a general
partner) filed a lawsuit similar to the one discussed above against added
Housing Programs Limited. The second action has been subsumed in the first
action, which has been certified as a class action.

After defendants moved for summary disposition of the action, plaintiffs filed
a motion for leave to file an amended complaint. Although defendants opposed
the filing of the complaint proposed by plaintiffs, the court issued an order
on July 20, 2001 granting plaintiffs leave to amend but denying them leave to
file the complaint they proposed. Plaintiffs filed a Second, Restated, Amended
and Supplemental Complaint dated August 7, 2001 and on August 21, 2001 filed a
Corrected Second, Restated, Amended and Supplemental Complaint (CSRASC). The
CSRASC adds eight new defendants and six new counts which were not included in
prior complaints. The new counts include; (i) violations of the anti-bundling
rules of the Securities and Exchange Act of 1934, (ii) violation of the
doctrine of inherent fairness, (iii) a declaratory judgment that the certain
defendants are not entitled to indemnification under the partnership
agreements, (iv) rescission of the business combination discussed in Note 1,
(v) a constructive trust on any recovery from a separate lawsuit pending in the
United States District Court of the Middle District of Pennsylvania which was
brought on behalf of several limited partnerships which are not parties to this
action; and (vi) an accounting. Defendants made a motion to dismiss the
CSRASC, which was denied. The court found that the issues presented would be
more appropriate resolved in a motion for summary judgment or summary
adjudication. Defendants intend to make such a motion. The deadline to do so
is April 1, 2002.

Defendants denied allegations in the CSRASC in their answer. The parties are
in the process of conducting discovery. The discovery deadline is February 28,
2002 and the trial is scheduled for July 16, 2002. A motion is before the
court to extend these deadlines and the hearing on that issue is scheduled for
February 4, 2002. Once discovery is complete, defendants will move for summary
judgement dismissing the complaint.

The managing general partner of such NAPICO managed partnerships and the other
defendants believe that the plaintiffs claims are without merit and intend to
contest the actions vigorously.

Other

The holder of a Partnership note payable in the amount of $1,675,000 plus
accrued interest payable of $2,482,855 as of December 31, 2001, seeks to compel
the Partnership to execute a UCC-1 financing statement





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to perfect plaintiffs security interest in the Partnerships interest in the
Henrico limited partnership. The Partnership has no investment balance related
to this limited partnership.

As of December 31, 2001, the Partnerships Corporate General Partner was a
plaintiff or defendant in several lawsuits. None of these suits were related
to REAL VII.




ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners interests, held for investment by the Partnership, by a real estate
investment trust organized by an affiliate of NAPICO, together with certain
amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to
the sale of the partnership interests in 1998, the consents of the limited
partners to the sale and amendments to the Partnership Agreement were obtained.




PART II.






|ITEM 5. | MARKET FOR THE
REGISTRANTS PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS.
|------- | --------------------------------------------------------------------------------------

The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by E.F. Hutton Inc. It is not
anticipated that any public market will develop for the purchase and sale of
any partnership interest. Limited Partnership Interests may be transferred
only if certain requirements are satisfied. At December 31, 2001, there were
3,172 registered holders of units in the Partnership. The Partnership has
invested in certain government assisted projects under programs which in many
instances restrict the cash return available to project owners. The
Partnership was not designed to provide cash distributions to investors in
circumstances other than refinancing or disposition of its investments in
limited partnerships. In March 1999, the Partnership made a distribution of
$272,250 to the limited partners and $2,750 to the general partners, using
proceeds from the sale of the partnership interests. No other distributions
have been made from the inception of the Partnership.





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ITEM 6. SELECTED FINANCIAL
DATA:

|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                                      |  | Year Ended December 31,
|                                                                                      |  |                        
|                                                                                      |  | 2001                    |            | 2000 |  | 1999 |            | 1998 |  | 1997
|                                                                                      |  |                         |            |      |  |      |            |      |  |     
|Loss From Operations                                                                  |  | $                       | (2,302,317 | )    |  | $    | (2,324,547 | )    |  | $    | (2,402,772 | ) |  | $ | (3,639,747 | ) |  | $ | (3,472,967 | )
|Gain on Sale and Foreclosure of Limited
Partnership Interests                         |  |                         | 13,141,585 |      |  |      |           |      |  |      |           |   |  |   | 7,132,262  |   |  |   |           |  
|Distributions From
Limited Partnerships
Recognized as Income                          |  |                         | 118,032    |      |  |      | 260,566    |      |  |      | 357,404    |   |  |   | 199,985    |   |  |   | 234,084    |  
|Equity in (Loss) Income of Limited
Partnerships and
Amortization of
Acquisition Costs |  |                         | (312,898   | )    |  |      | 10,162     |      |  |      | (145,660   | ) |  |   | (9,496,388 | ) |  |   | (61,791    | )
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Net Income (Loss)                                                                     |  | $                       | 10,644,402 |      |  | $    | (2,053,819 | )    |  | $    | (2,191,028 | ) |  | $ | (5,803,888 | ) |  | $ | (3,300,674 | )
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Net Income (Loss) per Limited
Partnership Interest                                    |  | $                       | 507        |      |  | $    | (98        | )    |  | $    | (104       | ) |  | $ | (276       | ) |  | $ | (157       | )
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Total assets                                                                          |  | $                       | 1,920,892  |      |  | $    | 355,164    |      |  | $    | 335,843    |   |  | $ | 794,295    |   |  | $ | 17,422,816 |  
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Investments in Limited
Partnerships                                                   |  | $                       |           |      |  | $    | 149,626    |      |  | $    | 239,464    |   |  | $ | 359,566    |   |  | $ | 16,870,487 |  
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Notes Payable                                                                         |  | $                       | 13,614,501 |      |  | $    | 17,424,501 |      |  | $    | 17,424,501 |   |  | $ | 17,424,501 |   |  | $ | 24,869,501 |  
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Fees and Expenses Due to
General Partner                                              |  | $                       | 4,209,789  |      |  | $    | 5,506,492  |      |  | $    | 5,006,313  |   |  | $ | 4,506,134  |   |  | $ | 3,762,494  |  
|                                                                                      |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  





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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Liquidity

The Partnerships primary sources of funds include interest income on money
market funds and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that
any of the local partnerships in which the Partnership has invested will
generate cash flow sufficient to provide for distributions to the Partnerships
limited partners in any material amount. The Partnership made a cash
distribution to investors in March 1999, using proceeds from the disposition of
its investments in certain limited partnerships.

Capital Resources

The Partnership received $39,000,000 in subscriptions for units of limited
partnership interests (at $5,000 per unit) during the period March 7, 1984 to
June 11, 1985, pursuant to a registration statement on Form S-11.

Results of Operations

The Partnership was formed to provide various benefits to its partners as
discussed in Item 1.

At December 31, 2001, the Partnership has investments in 30 limited
partnerships, all of which own housing projects that were substantially all
rented. The lender foreclosed on three limited partnerships in September 2001
and the Partnership surrendered its interest in one local partnership in July
2001. The Partnership also sold its interests in two local partnerships in
2001 and 11 local partnerships in December 1998. The Partnership, as a limited
partner, is entitled to 98% to 99% of the profits and losses of the local
limited partnerships. The Partnership accounts for its investments in the
local limited partnerships on the equity method, thereby adjusting its
investment balance by its proportionate share of the income or loss of the
local limited partnerships. Equity in losses of limited partnerships are
recognized in the financial statements until the limited partnership investment
account is reduced to a zero balance. Losses incurred after the limited
partnership investment account is reduced to zero are not recognized. Limited
partners are not liable for losses beyond their contributed capital.

Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent
distributions received are recognized as income. At December 31, 2001, the
Partnership does not have a positive investment balance in any limited
partnership.

The total (loss) income from the local partnerships that was allocated to the
Partnership was $(1,385,000), $(622,000) and $289,000 for the years ended
December 31, 2001, 2000 and 1999, respectively. However, because losses
incurred after the investment account is reduced to a zero balance are not
recognized, the Partnership recognized equity in (loss) income of limited
partnerships of $(312,898), $10,162 and $(145,660) for the years ended December
31, 2001, 2000 and 1999, respectively. The cumulative amount of the
unrecognized equity in losses of certain limited partnerships was approximately
$11,812,000 and $10,427,000 as of December 31, 2001 and 2000, respectively.

Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were $118,032, $260,566 and $357,404 for
the years ended December 31, 2001, 2000 and 1999, respectively. These amounts
were recognized as income on the accompanying statements of operations, in
accordance with the equity method of accounting.

As of December 31, 2001 and 2000, the Partnership has cash and cash equivalents
of $227,776 and $205,538, respectively. Substantially all of these amounts are
on deposit primarily with high credit quality financial





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institutions, earning interest. This resulted in the Partnership earning
$14,644, $4,718 and $2,723 in interest income for the years ended December 31,
2001, 2000 and 1999, respectively. The amount of interest income varies with
market rates available on investments and with the amount of funds available
for investment. Cash equivalents can be converted to cash to meet obligations
of the Partnership as they arise. The Partnership intends to continue
investing available funds in this manner.

The Partnership is obligated on non-recourse notes payable of $13,614,501 and
$17,424,501 at December 31, 2001 and 2000, respectively, which bear interest at
9.5 percent to 10 percent per annum and have principal maturities ranging from
August 1999 to January 2002. The notes and related interest are payable from
cash flow generated from operations of the related rental properties as defined
in the notes. These obligations are collateralized by the Partnerships
investments in the limited partnerships. Unpaid interest is due at maturity of
the notes. Interest expense was $1,529,793 for 2001 and $1,652,605 for both
2000 and 1999.

All notes and related accrued interest payable, aggregating $34,800,468 as of
December 31, 2001, became payable prior to January 31, 2002. The Partnership has
not made any payments and is in default under the terms of the notes. Due to
the Partnerships lack of cash and partners deficiency, there is substantial
doubt about its ability to make these payments, which would result in the
possible foreclosure of the investments in the local limited partnerships. As
a result, there is substantial doubt about the Partnerships ability to
continue as a going concern. Management is in process of attempting to
negotiate extensions of the maturity dates on the past due notes payable.

In February 2000, the Partnership entered into an agreement with a note holder
related to a note in the amount $2,200,000 plus accrued interest of $3,265,489
as of July 31, 2001 that became payable in 1999. All conditions of the
agreement were satisfied in July 2001, and the lender cancelled the note and
accrued interest in exchange for the Partnership surrendering its interest in
the Edgewood Terrace limited partnership. The Partnership recognized a gain of
approximately $5,308,000 on this transaction.

A recurring partnership expense is the annual management fee. The fee is
payable to the Corporate General Partner of the Partnership and is calculated
at .5 percent of the Partnerships original remaining invested assets. The
management fee is paid to the Corporate General Partner for its continuing
management of partnership affairs. The fee is payable beginning with the month
following the Partnerships initial investment in a local limited partnership.
Management fees were $500,903 for 2001 and $500,179 for both 2000 and 1999. As
of December 31, 2001, the fees and expenses due the Corporate General Partner
exceeded the Partnerships cash. The Corporate General Partner, during the
forthcoming year, will not demand payment of amounts due in excess of such cash
or such that the Partnership would not have sufficient operating cash; however,
the Partnership will remain liable for all such amounts.

Under recently adopted law and policy, the United States Department of Housing
and Urban Development (HUD) has determined not to renew the Housing
Assistance Payment (HAP) Contracts on a long term basis on the existing
terms. In connection with renewals of the HAP Contracts under such new law and
policy, the amount of rental assistance payments under renewed HAP Contracts
will be based on market rentals instead of above market rentals, which may be
the case under existing HAP Contracts. The payments under the renewed HAP
Contracts may not be in an amount that would provide sufficient cash flow to
permit owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing Administration of
HUD (FHA) unless such mortgage loans are restructured. In order to address
the reduction in payments under HAP Contracts as a result of this new policy,
the Multi-family Assisted Housing Reform and Affordability Act of 1997
(MAHRAA), provides for the restructuring of mortgage loans insured by the FHA
with respect to properties subject to the Section 8 program. Under MAHRAA, an
FHA-insured mortgage loan can be restructured into a first mortgage loan which
will be amortized on a current basis and a low interest second mortgage loan
payable to FHA which will only be payable on maturity of the first mortgage
loan. This restructuring results in a reduction in annual debt service payable
to the owner of the FHA-insured mortgage loan and is expected to result in an
insurance payment from FHA to the holder of the FHA-insured loan due to the





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reduction in the principal amount. MAHRAA also
phases out project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies to a
tenant-based subsidy.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure their mortgage indebtedness under MAHRAA. In
addition, the economic impact on the Partnerships of the combination of the
reduced payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

As a result of the foregoing, the Partnership, in 1997, undertook an extensive
review of disposition, refinancing or re-engineering alternatives for the
properties in which the limited partnerships have invested and are subject to
HUD mortgage and rental subsidy programs. The Partnership has incurred
expenses in connection with this review by various third party professionals,
including accounting, legal, valuation, structural and engineering costs, which
amounted to $50,730 for the year ended December 31, 1999, and are included in
general and administrative expenses.

On December 21, 2001, the Partnership sold its interest in Parkway Towers
limited partnership and realized a gain of $1,703,198. Net proceeds of
$1,693,116 were collected on January 10, 2002.

On September 13, 2001, the lender foreclosed on the three Cleveland limited
partnerships and the Partnership realized a gain of $3,798,607.

In July 2001, the Partnership surrendered its interest in the Edgewood Terrace
limited partnership and realized a gain of $5,455,407.

In May 2001, a foreclosure action was filed by the holders of certain purchase
money notes against the Danbury local partnership, in which the Partnership has
invested. The notes are in the aggregate face amount of $1,150,000, and were
issued in connection with the acquisition of Danbury Park (a 151-unit complex
located in Ypsilanti, Michigan) by the local partnership. The parties have
reached a settlement whereby the plaintiffs have agreed to (i) accept payment
of a discounted amount ($765,000), provided payment is made by June 30, 2002,
and (ii) stay the foreclosure proceedings unless payment is not received on or
before the due date. The Partnership has no investment related to this limited
partnership.

In April 2001, the Partnership sold its interest in the Pebbleshire limited
partnership and realized a gain of $2,184,373. The gain is equal to the net
proceeds received because the Partnership had no investment balance related to
this limited partnership.

On December 30, 1998, the Partnership sold its limited partnership interests in
11 local limited partnerships with a total carrying value of $6,588,686 to the
Operating Partnership. The sale resulted in proceeds to the Partnership of
$400,000 and a net gain of $7,132,262, after being relieved of notes and
interest payable of $13,515,691 and incurring selling costs of $194,743. The
cash proceeds were held in escrow at December 31, 1998, and were collected in
1999. In March 1999, the Partnership made cash distributions of $272,250 to
the limited partners and $2,750 to the general partners, using proceeds from
the sale of the partnership interests.

The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity
securities. The purchase was subject to, among other things, (i) the purchase
of the general partner interests in the local limited partnerships by the
Operating Partnership; (iii) the approval of HUD and certain state housing
finance agencies; and (iii) the consent of the limited partners to the sale of
the local limited partnership interests held for investment by the Partnership.





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In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of
various conflicts of interest in connection with the proposed transaction.
Prior to the sale of the partnership interests, the consents of the limited
partners to the sale and amendments to the Partnership Agreement were obtained.

Operating expenses, other than interest expense and management fees, consist of
legal and accounting fees for services rendered to the Partnership and general
and administrative expenses. Legal and accounting fees were generally
consistent and were $176,226, $104,738 and $118,460 for the years ended
December 31, 2001, 2000 and 1999, respectively. General and administrative
expenses were $110,039, $71,743 and $134,251 for the years ended December 31,
2001, 2000 and 1999, respectively. Included in administrative expenses are
reimbursements to NAPICO for certain expenses, which totaled $44,076, $7,370
and $16,920 for the years ended December 31, 2001, 2000 and 1999, respectively.
Also included in general and administrative expenses in 1999 is $50,730,
related to the aforementioned third party reviewed of the properties owned by
the local partnerships

Total revenue for the local partnerships were $15,822,000, $20,077,000 and
$19,626,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Total expenses for the local partnerships were $17,213,000, $20,693,000 and
$19,980,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

The total net loss for the local partnerships for 2001, 2000 and 1999
aggregated $1,391,000, $616,000 and $354,000, respectively. The income
(losses) allocated to the Partnership were $(1,385,000), $(622,000) and
$289,000 for 2001, 2000 and 1999, respectively.

The Partnership, as a limited partner in the local partnerships in which it has
invested, is subject to the risks incident to the construction, management and
ownership of improved real estate. The Partnership investments are also
subject to adverse general economic conditions and, accordingly, the status of
the national economy, including substantial unemployment, concurrent inflation
and changing legislation, could increase vacancy levels, rental payment
defaults and operating expenses, which in turn, could substantially increase
the risk of operating losses for the projects.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership is exposed to market risk primarily due to fluctuations in
interest rates. Specifically, the Partnership is subject to market risk
resulting from fluctuations in the general level of U.S. interest rates as the
Partnerships debt of $13,614,501 is based on a weighted average fixed rate of
9.6% per annum. As a result, the Partnership will be obligated to pay
contractually agreed upon rates of interest on its fixed rate debt, unless
management refinances its existing fixed rate debt and potentially incur
substantial prepayment penalties.

The following table provides information about the Partnerships interest rate
sensitive financial instruments, including, amounts due at maturity, principal
amortization, weighted average interest rates and fair market values as of
December 31, 2001 and 2000:

|                                     |                 |                                |   |            |     |      |  |      |  |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            |     |   |   |             |  | 
|------------------------------------ | --------------- | ------------------------------ | - | ---------- | --- | ---- |  | ---- |  | ---- |  | ---------- |  | ----- |  | ----- |  |  |  |  |  |  |  |  |  |  | - | ---------- | --- | - | - | ----------- |  | 
|                                     |                 |                                |   |            |     |      |  |      |  |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            |     |   |   | Fair Market
|As of
December 31, 2001              |                 | 2002                           |   | 2003       |     | 2004 |  | 2005 |  | 2006 |  | Thereafter |  | Total |  | Value
|                                     |                 |                                |   |            |     |      |  |      |  |      |  |            |  |       |  |      
|Interest Rate Sensitive Liabilities: |                 |                                |   |            |     |      |  |      |  |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            |     |   |   |            
|                                     | Fixed Rate Debt |                                | $ | 13,614,501 |     |      |  |      |  |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  | $ | 13,614,501 |     |   | $ | 13,614,501  | 
|                                     |                 | Weighted Average
Interest Rate |   |            | 9.6 | %    |  |      |  |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            | 9.6 | % |   |             |  | 

|                                     |                 |                                |   |            |     |      |   |           |    |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            |     |   |   |             |  | 
|------------------------------------ | --------------- | ------------------------------ | - | ---------- | --- | ---- | - | --------- | -- | ---- |  | ---------- |  | ----- |  | ----- |  |  |  |  |  |  |  |  |  |  | - | ---------- | --- | - | - | ----------- |  | 
|                                     |                 |                                |   |            |     |      |   |           |    |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            |     |   |   | Fair Market
|As of
December 31, 2000              |                 | 2002                           |   | 2003       |     | 2004 |   | 2005      |    | 2006 |  | Thereafter |  | Total |  | Value
|                                     |                 |                                |   |            |     |      |   |           |    |      |  |            |  |       |  |      
|Interest Rate Sensitive Liabilities: |                 |                                |   |            |     |      |   |           |    |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            |     |   |   |            
|                                     | Fixed Rate Debt |                                | $ | 15,834,000 |     |      | $ | 1,590,501 |    |      |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  | $ | 17,424,501 |     |   | $ | 17,424,501  | 
|                                     |                 | Weighted Average
Interest Rate |   |            | 9.6 | %    |   |           | 10 | %    |  |            |  |       |  |       |  |  |  |  |  |  |  |  |  |  |   |            | 9.6 | % |   |             |  | 





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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and Supplementary Data are listed under Item 14.






|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

Not applicable.





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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
Real Estate Associates Limited VII
(A California limited partnership)

We have audited the accompanying balance sheets of Real Estate Associates
Limited VII (a California limited partnership) as of December 31, 2001 and
2000, and the related statements of operations, partners deficiency and cash
flows for each of the three years in the period ended December 31, 2001. Our
audits also included the financial statement schedules listed in the index in
Item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. These
limited partnerships represent the investee information in Note 2 and the
financial statement schedules. The financial statements of these limited
partnerships were audited by other auditors. Their reports have been furnished
to us and our opinion, insofar as it relates to the amounts included for these
limited partnerships, is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 our audits
and the reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Real Estate Associates Limited VII as of
December 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, based on our audits and the reports of other
auditors, such financial statement schedules, when considered in relation to
the basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 3 to the
financial statements, the Partnerships recurring losses from operations,
partners deficiency and past due notes and related accrued interest payable of
$34,800,468 raise substantial doubt about the Partnerships ability to continue
as a going concern. Managements plans concerning these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

DELOITTE & TOUCHE LLP

Los Angeles, California
April 5, 2002





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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

BALANCE SHEETS

DECEMBER 31, 2001 AND 2000

ASSETS

|                                                       |                                                        |              |                                            |             |           |           |             |             |         |         | 
|------------------------------------------------------ | ------------------------------------------------------ | ------------ | ------------------------------------------ | ----------- | --------- | --------- | ----------- | ----------- | ------- | ------- | 
|                                                       |                                                        |              |                                            |             | 2001      |           | 2000       
|                                                       |                                                        |              |                                            |             |           |           |            
|INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2)           |                                                        | $            |                                           |             |           | $         | 149,626     |            
|CASH AND CASH EQUIVALENTS                              |                                                        |              | 227,776                                    |             |           |           | 205,538     |            
|RECEIVABLES FROM SALE OF PARTNERSHIP
INTEREST (NOTE 2) |                                                        |              | 1,693,116                                  |             |           |           |            |            
|                                                       |                                                        |              |                                            |             |           |           |             |            
|                                                       |                                                        | TOTAL ASSETS |                                            | $           | 1,920,892 |           |             | $           | 355,164 |        
|                                                       |                                                        |              |                                            |             |           |           |             |            
|                                                      
|LIABILITIES AND PARTNERS DEFICIENCY                  
|                                                      
|LIABILITIES:                                           |                                                        |              |                                            |             |           |           |             |            
|                                                       | Notes payable (Note 3)                                 |              | $                                          | 13,614,501  |           |           | $           | 17,424,501  |        
|                                                       | Accrued interest payable (Note 3)                      |              |                                            | 21,185,967  |           |           |             | 25,147,770  |        
|                                                       | Accrued fees and expenses
due general partner (Note 4) |              |                                            | 4,209,789   |           |           |             | 5,506,492   |        
|                                                       | Accounts payable and other liabilities (Note 2)        |              |                                            | 64,474      |           |           |             | 78,272      |        
|                                                       | Due to affiliate (Note 4)                              |              |                                            | 3,630       |           |           |             |            |        
|                                                       |                                                        |              |                                            |             |           |           |             |            
|                                                       |                                                        |              | 39,078,361                                 |             |           |           | 48,157,035  |            
|                                                       |                                                        |              |                                            |             |           |           |             |            
|COMMITMENTS AND CONTINGENCIES
(Notes 4 and 5)          |                                                        |              |                                            |             |           |           |             |            
|PARTNERS DEFICIENCY:                                  |                                                        |              |                                            |             |           |           |             |            
|                                                       | General partners                                       |              |                                            | (694,705    | )         |           |             | (801,149    | )      
|                                                       | Limited partners                                       |              |                                            | (36,462,764 | )         |           |             | (47,000,722 | )      
|                                                       |                                                        |              |                                            |             |           |           |             |            
|                                                       |                                                        |              | (37,157,469                                | )           |           |           | (47,801,871 | )          
|                                                       |                                                        |              |                                            |             |           |           |             |            
|                                                       |                                                        |              | TOTAL LIABILITIES AND PARTNERS
DEFICIENCY |             | $         | 1,920,892 |             |             | $       | 355,164 | 
|                                                       |                                                        |              |                                            |             |           |           |             |            

The accompanying notes are an integral part of these financial statements.

2



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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |           | 
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ---------- | --------- | ---- | - | ---------- | --------- |  | - | ---------- | --------- | 
|                                                                                                                    |                                            |   | 2001       |           | 2000 |   | 1999      
|                                                                                                                    |                                            |   |            |           |      |   |           
|REVENUE:                                                                                                            |                                            |   |            |           |      |   |            |           |  |   |            |          
|                                                                                                                    | Interest and other income                  |   | $          | 14,644    |      |   | $          | 4,718     |  |   | $          | 2,723     | 
|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |          
|OPERATING EXPENSES:                                                                                                 |                                            |   |            |           |      |   |            |           |  |   |            |          
|                                                                                                                    | Interest (Note 3)                          |   |            | 1,529,793 |      |   |            | 1,652,605 |  |   |            | 1,652,605 | 
|                                                                                                                    | Management fees  general partner (Note 4) |   |            | 500,903   |      |   |            | 500,179   |  |   |            | 500,179   | 
|                                                                                                                    | General and administrative (Note 4)        |   |            | 110,039   |      |   |            | 71,743    |  |   |            | 134,251   | 
|                                                                                                                    | Legal and accounting                       |   |            | 176,226   |      |   |            | 104,738   |  |   |            | 118,460   | 
|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |          
|                                                                                                                    |                                            |   | 2,316,961  |           |      |   | 2,329,265  |           |  |   | 2,405,495  |          
|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |          
|LOSS FROM OPERATIONS                                                                                                |                                            |   | (2,302,317 | )         |      |   | (2,324,547 | )         |  |   | (2,402,772 | )        
|GAIN ON SALE AND FORECLOSURE OF
LIMITED PARTNERSHIP INTERESTS (Note 2)                                              |                                            |   | 13,141,585 |           |      |   |           |           |  |   |           |          
|DISTRIBUTIONS FROM LIMITED
PARTNERSHIP RECOGNIZED
AS INCOME (Note 2)                                                |                                            |   | 118,032    |           |      |   | 260,566    |           |  |   | 357,404    |          
|EQUITY IN INCOME (LOSS) OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ADDITIONAL BASIS AND
ACQUISITION COSTS (Note 2) |                                            |   | (312,898   | )         |      |   | 10,162     |           |  |   | (145,660   | )        
|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |          
|NET INCOME (LOSS)                                                                                                   |                                            | $ | 10,644,402 |           |      | $ | (2,053,819 | )         |  | $ | (2,191,028 | )        
|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |          
|NET INCOME (LOSS) PER LIMITED PARTNERSHIP
INTEREST                                                                  |                                            | $ | 507        |           |      | $ | (98        | )         |  | $ | (104       | )        
|                                                                                                                    |                                            |   |            |           |      |   |            |           |  |   |            |          

The accompanying notes are an integral part of these financial statements.

3



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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

STATEMENTS OF PARTNERS DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

|                              |                           |   |          |         |          |   |             |            |   |   |             |            |  
|----------------------------- | ------------------------- | - | -------- | ------- | -------- | - | ----------- | ---------- | - | - | ----------- | ---------- | -
|                              |                           |   | General  |         | Limited  |   |             |            |  
|                              |                           |   | Partners |         | Partners |   | Total      
|                              |                           |   |          |         |          |   |            
|DEFICIENCY, January 1, 1999   |                           | $ | (755,951 | )       |          | $ | (42,526,073 | )          |   | $ | (43,282,024 | )         
|                              | Distributions to partners |   |          | (2,750  | )        |   |             | (272,250   | ) |   |             | (275,000   | )
|                              | Net loss for 1999         |   |          | (21,910 | )        |   |             | (2,169,118 | ) |   |             | (2,191,028 | )
|                              |                           |   |          |         |          |   |             |            |   |   |             |           
|DEFICIENCY, December 31, 1999 |                           |   | (780,611 | )       |          |   | (44,967,441 | )          |   |   | (45,748,052 | )         
|                              | Net loss for 2000         |   |          | (20,538 | )        |   |             | (2,033,281 | ) |   |             | (2,053,819 | )
|                              |                           |   |          |         |          |   |             |            |   |   |             |           
|DEFICIENCY, December 31, 2000 |                           |   | (801,149 | )       |          |   | (47,000,722 | )          |   |   | (47,801,871 | )         
|                              | Net Income for 2001       |   |          | 106,444 |          |   |             | 10,537,958 |   |   |             | 10,644,402 |  
|                              |                           |   |          |         |          |   |             |            |   |   |             |           
|DEFICIENCY, December 31, 2001 |                           | $ | (694,705 | )       |          | $ | (36,462,764 | )          |   | $ | (37,157,469 | )         
|                              |                           |   |          |         |          |   |             |            |   |   |             |           

The accompanying notes are an integral part of these financial statements.

4



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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |            |           |   |         |  
|------------------------------------------------------ | --------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------- | --------------------------------------------------- | ----------- | ---- | ---------- | ---------- | --------- | ---- | ------- | ---------- | --------- | - | ------- | -
|                                                       |                                                                             |                                                                                                            |         |                                                     |             | 2001 |            | 2000       |           | 1999
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                  |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       | Net Income (loss)                                                           |                                                                                                            | $       | 10,644,402                                          |             |      | $          | (2,053,819 | )         |      | $       | (2,191,028 | )        
|                                                       | Adjustments to reconcile net loss to net cash
used in operating activities: |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |            |          
|                                                       |                                                                             | Gain on sale and foreclosure of limited partnership interests                                              |         |                                                     | (13,141,585 | )    |            |            |          |      |         |            |          |  
|                                                       |                                                                             | Equity in loss (income) of limited partnerships and
amortization of additional basis and acquisition costs |         |                                                     | 312,898     |      |            |            | (10,162   | )    |         |            | 145,660   |  
|                                                       |                                                                             | Decrease in other assets                                                                                   |         |                                                     |            |      |            |            |          |      |         |            | 34,729    |  
|                                                       |                                                                             | Increase in accrued interest payable                                                                       |         |                                                     | 1,492,293   |      |            |            | 1,559,145 |      |         |            | 1,565,097 |  
|                                                       |                                                                             | Decrease (increase) in accrued fees and expenses
due general partner                                       |         |                                                     | (1,296,703  | )    |            |            | 500,179   |      |         |            | 500,179   |  
|                                                       |                                                                             | Increase (decrease) in accounts payable                                                                    |         |                                                     | (13,798     | )    |            |            | 13,816    |      |         |            | (57,700   | )
|                                                       |                                                                             | Increase in due to affiliate                                                                               |         |                                                     | 3,630       |      |            |            |          |      |         |            |          |  
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       |                                                                             |                                                                                                            |         | Net cash (used in) provided by operating activities |             |      | (1,998,863 | )          |           |      | 9,159   |            |           |   | (3,063  | )
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                  |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       | Distributions from limited partnerships recognized
as a return of capital   |                                                                                                            |         |                                                    |             |      |            | 100,000    |           |      |         | 26,734     |          
|                                                       | Capital contributions to limited partnerships                               |                                                                                                            |         | (163,272                                            | )           |      |            |           |           |      |         | (52,292    | )        
|                                                       | Proceeds from sale of limited partnership interests                         |                                                                                                            |         | 2,184,373                                           |             |      |            |           |           |      |         | 400,000    |          
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       |                                                                             |                                                                                                            |         | Net cash provided by investing activities           |             |      | 2,021,101  |            |           |      | 100,000 |            |           |   | 374,442 |  
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                  |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       | Distributions to partners                                                   |                                                                                                            |         |                                                    |             |      |            |           |           |      |         | (275,000   | )        
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|NET INCREASE IN CASH AND CASH EQUIVALENTS              |                                                                             |                                                                                                            | 22,238  |                                                     |             |      | 109,159    |            |           |      | 96,379  |           
|CASH AND CASH EQUIVALENTS, beginning of year           |                                                                             |                                                                                                            | 205,538 |                                                     |             |      | 96,379     |            |           |      |        |           
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|CASH, end of year                                      |                                                                             | $                                                                                                          | 227,776 |                                                     |             | $    | 205,538    |            |           | $    | 96,379  |           
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       | Cash paid during the year for interest                                      |                                                                                                            | $       | 37,500                                              |             |      | $          | 93,460     |           |      | $       | 87,508     |          
|                                                       |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|SUPPLEMENTAL SCHEDULE OF
NON-CASH FINANCING ACTIVITIES |                                                                             |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |           
|                                                       | See Note 3 to financial statements regarding notes
and interest payable     |                                                                                                            |         |                                                     |             |      |            |            |           |      |         |            |          

The accompanying notes are an integral part of these financial statements.

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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001



|1. |  | Summary of Significant Accounting Policies
|-- |  | ------------------------------------------

Organization

Real Estate Associates Limited VII (the Partnership) was formed under the
California Limited Partnership Act on May 24, 1983. The Partnership was formed
to invest primarily in other limited partnerships or joint ventures which own
and operate primarily federal, state or local government-assisted housing
projects. The general partners are Coast Housing Investments Associates, a
limited partnership, National Partnership Investments Corp. (NAPICO), the
Corporate General Partner, and National Partnership Investments Associates II
(NAPIA II), a limited partnership. The business of the Partnership is
conducted primarily by NAPICO.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation (CIC), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the
Operating Partnership), a majority owned subsidiary of Casden Properties
Inc., a real estate investment trust organized by Alan I. Casden, purchased a
95.25% economic interest in NAPICO.

On December 3, 2001, Casden Properties Inc., entered into a merger agreement
and certain other transaction documents with Apartment Investment and
Management Company, a Maryland corporation (AIMCO) and certain of its
subsidiaries, pursuant to which, on March 11, 2002, AIMCO acquired Casden
Properties Inc. and its subsidiaries, including NAPICO.

These financial statements include the accounts of Real Estate Associates
Limited VII and Real Estate Associates IV (REA IV), a California general
partnership in which the Partnership holds a 99 percent general partner
interest. Losses in excess of the minority investment that would otherwise be
attributed to the minority interest are being allocated to the Partnership.

The Partnership issued 5,200 units of limited partnership interests through a
public offering. Each unit was comprised of two limited partnership interests
and two warrants granting the investor the right to purchase two additional
limited partnership interests. An additional 10,400 interests associated with
warrants were exercised. The general partners have a 1 percent interest in
profits and losses of the Partnership. The limited partners have the remaining
99 percent interest in proportion to their respective investments.

The Partnership shall be dissolved only upon the expiration of 50 complete
calendar years (December 31, 2033) from the date of the formation of the
Partnership or the occurrence of various other events as specified in the
Partnership agreement.

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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|1. |  | Summary of Significant Accounting Policies (Continued)
|-- |  | ------------------------------------------------------

Upon total or partial liquidation of the Partnership or the disposition or
partial disposition of a project or project interest and distribution of the
proceeds, the general partners will be entitled to a liquidation fee as
stipulated in the Partnership agreement. The limited partners will have a
priority return equal to their invested capital attributable to the project(s)
or project interest(s) sold and shall receive from the sale of the project(s)
or project interest(s) an amount sufficient to pay state and federal income
taxes, if any, calculated at the maximum rate then in effect. The general
partners fee may accrue but shall not be paid until the limited partners have
received distributions equal to 100 percent of their capital contributions.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number (SFAS No.) 141, Business Combinations
and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 was
effective immediately and SFAS 142 will be effective January 2002. The new
standards are not expected to have a significant impact on the Partnerships
financial statements.

Uses of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Method of Accounting for Investments in Limited Partnerships

The investments in limited partnerships are accounted for on the equity method.
Acquisition, selection and other costs related to the acquisition of the
projects have been capitalized as part of the investment account and are being
amortized on a straight line basis over the estimated lives of the underlying
assets, which is generally 30 years.

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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|1. |  | Summary of Significant Accounting Policies (Continued)
|-- |  | ------------------------------------------------------

Net Income (Loss) Per Limited Partnership Interest

Net income (loss) per limited partnership interest was computed by dividing the
limited partners share of net income (loss) by the number of limited
partnership interests outstanding during the years. The number of limited
partnership interests was 20,802 for all years presented.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and bank certificates of deposit with
an original maturity date of three months or less. The Partnership has its
cash and cash equivalents on deposit with high credit quality financial
institutions. Such cash and cash equivalents are in excess of the FDIC
insurance limit.

Impairment of Long-Lived Assets

The Partnership reviews long-lived assets to determine if there has been any
permanent impairment whenever events or changes in circumstances indicate that
the carrying amount of the asset may not be recoverable. If the sum of the
expected future cash flows is less than the carrying amount of the assets, the
Partnership recognizes an impairment loss. No impairment losses were
recognized during the years ended December 31, 2001, 2000 and 1999.



|2. |  | Investments in Limited Partnerships
|-- |  | -----------------------------------

The Partnership holds limited partnership interests in 17 and 21 limited
partnerships as of December 31, 2001 and 2000, respectively, after selling and
surrendering its interests in three limited partnerships and the lender
foreclosing on three limited partnership in 2001. In addition, the Partnership
holds a general partner interest in REA IV. NAPICO is also the general partner
in REA IV. REA IV, in turn, holds limited partner interests in 13 and 15
additional limited partnerships as of December 31, 2001 and 2000, respectively.
In total, therefore, the Partnership holds interests, either directly or
indirectly through REA IV, in 30 and 36 partnerships as of December 31, 2001
and 2000, respectively. The limited partnerships own residential low income
rental projects consisting of 2,763 apartment units. The mortgage loans of
these projects are payable to or insured by various governmental agencies.

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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|2. |  | Investments in Limited Partnerships (Continued)
|-- |  | -----------------------------------------------

The Partnership, as a limited partner, is entitled to between 98 percent and 99
percent of the profits and losses in the limited partnerships it has invested
in directly. The Partnership is also entitled to 99 percent of the profits and
losses of REA IV. REA IV holds a 99 percent interest in each of the limited
partnerships in which it has invested.

Equity in losses of limited partnerships is recognized in the financial
statements until the limited partnership investment account is reduced to a
zero balance. Losses incurred after the limited partnership investment account
is reduced to zero are not recognized. The cumulative amount of the
unrecognized equity in losses of certain unconsolidated limited partnerships
was approximately $11,812,000 and $10,427,000 as of December 31, 2001 and 2000,
respectively.

Distributions from the limited partnerships are accounted for as a return of
capital until the investment balance is reduced to zero. Subsequent
distributions received are recognized as income.

In February 2002, the Partnership sold its interests in the Goodlette Arms
limited partnership and realized a gain of approximately $2,000,000. The gain
is equal to the net proceeds received because the Partnership had no investment
related to this limited partnership.

On December 21, 2001, the Partnership sold its interest in Parkway Towers
limited partnership and realized a gain of $1,703,198. Net proceeds of
$1,693,116 were collected on January 10, 2002.

On September 13, 2001, the lender foreclosed on the three Cleveland limited
partnerships and the Partnership realized a gain of $3,798,607.

In July 2001, the Partnership surrendered its interest in the Edgewood Terrace
limited partnership and realized a gain of $5,455,407.

In May 2001, a foreclosure action was filed by the holders of certain purchase
money notes against the Danbury local partnership, in which the Partnership has
invested. The notes are in the aggregate face amount of $1,150,000, and were
issued in connection with the acquisition of Danbury Park (a 151- unit complex
located in Ypsilanti, Michigan) by the local partnership. The parties have
reached a settlement whereby the plaintiffs have agreed to (i) accept payment
of a discounted amount of $765,000 ($158,313 of which was paid in 2001),
provided payment is made by June 30, 2002, and (ii) stay the foreclosure
proceedings unless payment is not received on or before the due date. The
Partnership has no investment related to this limited partnership.

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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|2. |  | Investment in Limited Partnerships (Continued)
|-- |  | ----------------------------------------------

In April 2001, the Partnership sold its interest in the Pebbleshire limited
partnership and realized a gain of $2,184,373. The gain is equal to the net
proceeds received because the Partnership had no investment balance related to
this limited partnership.

The following is a summary of the investments in limited partnerships and
reconciliation to the limited partnership accounts:

|                                                                            |  |      |          |      |  |   |          |  
|--------------------------------------------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|                                                                            |  | 2001 |          | 2000
|                                                                            |  |      |          |     
|Investment balance, beginning of year                                       |  | $    | 149,626  |      |  | $ | 239,464  |  
|Write-off of Edgewood Terrace                                               |  |      | (145,027 | )    |  |   |         |  
|Cash distributions recognized as
a return of capital                        |  |      |          |      |  |   | (100,000 | )
|Equity in (loss) income of limited partnerships                             |  |      | (163,272 | )    |  |   | 16,294   |  
|Amortization of additional basis and
capitalized acquisition costs and fees |  |      | (4,599   | )    |  |   | (6,132   | )
|Capital contributions                                                       |  |      | 163,272  |      |  |   |         |  
|                                                                            |  |      |          |      |  |   |          |  
|Investment balance, end of year                                             |  | $    |         |      |  | $ | 149,626  |  
|                                                                            |  |      |          |      |  |   |          |  

The difference between the investment per the accompanying balance sheets at
December 31, 2001 and 2000, and the equity per the limited partnerships
combined financial statements is due primarily to cumulative unrecognized
equity in losses of certain limited partnerships, additional basis and costs
capitalized to the investment account, cumulative distributions recognized as
income and recognition of impairment losses.

Selected financial information from the combined financial statements at
December 31, 2001 and 2000 and for each of the three years in the period ended
December 31, 2001, of the limited partnerships in which the Partnership has
invested directly or indirectly, is as follows:

Balance Sheets

|                                                 |  |                |        |      |  |   |        |  
|------------------------------------------------ |  | -------------- | ------ | ---- |  | - | ------ | -
|                                                 |  | 2001           |        | 2000
|                                                 |  |                |        |     
|                                                 |  | (in thousands)
|Land and buildings, net                          |  | $              | 31,575 |      |  | $ | 41,137 |  
|                                                 |  |                |        |      |  |   |        |  
|Total assets                                     |  | $              | 41,744 |      |  | $ | 56,771 |  
|                                                 |  |                |        |      |  |   |        |  
|Mortgages loan payable                           |  | $              | 35,732 |      |  | $ | 44,987 |  
|                                                 |  |                |        |      |  |   |        |  
|Total liabilities                                |  | $              | 46,865 |      |  | $ | 60,420 |  
|                                                 |  |                |        |      |  |   |        |  
|Deficiency of Real Estate Associates Limited VII |  | $              | (5,713 | )    |  | $ | (3,179 | )
|                                                 |  |                |        |      |  |   |        |  
|Equity
(Deficiency) of other partners            |  | $              | 592    |      |  | $ | (470   | )
|                                                 |  |                |        |      |  |   |        |  

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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|2. |  | Investment in Limited Partnerships (Continued)
|-- |  | ----------------------------------------------

Statements of Operations

|                                               |  |                |        |      |  |      |        |   |  |   |        |  
|---------------------------------------------- |  | -------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                               |  | 2001           |        | 2000 |  | 1999
|                                               |  |                |        |      |  |     
|                                               |  | (in thousands)
|Total revenue                                  |  | $              | 15,822 |      |  | $    | 20,077 |   |  | $ | 19,626 |  
|                                               |  |                |        |      |  |      |        |   |  |   |        |  
|Interest expense                               |  | $              | 1,088  |      |  | $    | 1,483  |   |  | $ | 1,526  |  
|                                               |  |                |        |      |  |      |        |   |  |   |        |  
|Depreciation                                   |  | $              | 3,214  |      |  | $    | 3,201  |   |  | $ | 3,390  |  
|                                               |  |                |        |      |  |      |        |   |  |   |        |  
|Total expenses                                 |  | $              | 17,213 |      |  | $    | 20,693 |   |  | $ | 19,980 |  
|                                               |  |                |        |      |  |      |        |   |  |   |        |  
|Net loss                                       |  | $              | (1,391 | )    |  | $    | (616   | ) |  | $ | (354   | )
|                                               |  |                |        |      |  |      |        |   |  |   |        |  
|Net (loss) income allocable to the
Partnership |  | $              | (1,385 | )    |  | $    | (622   | ) |  | $ | 289    |  
|                                               |  |                |        |      |  |      |        |   |  |   |        |  

Land and buildings above have been adjusted for the amount by which the
investments in the limited partnerships exceed the Partnerships share of the
net book value of the underlying net assets of the investee which are recorded
at historical costs. Depreciation on the adjustment is provided for over the
estimated remaining useful lives of the properties.

An affiliate of NAPICO is the general partner in 20 of the limited partnerships
included above. Another affiliate received property management fees of
approximately 5 percent of the revenue from the Pebbleshire limited
partnership, in which an affiliate of NAPICO was the general partner, prior to
its sale in 2001. The affiliate received property management fees of $17,668,
$53,589 and $50,700 in 2001, 2000 and 1999, respectively. The following sets
forth the significant data for the partnerships in which an affiliate of
NAPICO is the general partner, reflected in the accompanying financial
statements using the equity method of accounting:

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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|2. |  | Investment in Limited Partnerships (Continued)
|-- |  | ----------------------------------------------

|                                                 |  |                |        |      |  |      |        |   |  |   |       |  
|------------------------------------------------ |  | -------------- | ------ | ---- |  | ---- | ------ | - |  | - | ----- | -
|                                                 |  | 2001           |        | 2000 |  | 1999
|                                                 |  |                |        |      |  |     
|                                                 |  | (in thousands)
|Total assets                                     |  | $              | 22,682 |      |  | $    | 30,890 |   |  |   |       |  
|                                                 |  |                |        |      |  |      |        |   |  |   |       |  
|Total liabilities                                |  | $              | 28,462 |      |  | $    | 38,840 |   |  |   |       |  
|                                                 |  |                |        |      |  |      |        |   |  |   |       |  
|Deficiency of Real Estate Associates Limited VII |  | $              | (6,542 | )    |  | $    | (7,675 | ) |  |   |       |  
|                                                 |  |                |        |      |  |      |        |   |  |   |       |  
|Deficiency of other partners                     |  | $              | 762    |      |  | $    | (275   | ) |  |   |       |  
|                                                 |  |                |        |      |  |      |        |   |  |   |       |  
|Total revenue                                    |  | $              | 8,709  |      |  | $    | 11,360 |   |  | $ | 8,967 |  
|                                                 |  |                |        |      |  |      |        |   |  |   |       |  
|Net loss                                         |  | $              | (810   | )    |  | $    | (712   | ) |  | $ | (757  | )
|                                                 |  |                |        |      |  |      |        |   |  |   |       |  

Under recently adopted law and policy, the United States Department of Housing
and Urban Development (HUD) has determined not to renew the Housing
Assistance Payment (HAP) Contracts on a long term basis on the existing
terms. In connection with renewals of the HAP Contracts under such new law and
policy, the amount of rental assistance payments under renewed HAP Contracts
will be based on market rentals instead of above market rentals, which may be
the case under existing HAP Contracts. The payments under the renewed HAP
Contracts may not be in an amount that would provide sufficient cash flow to
permit owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing Administration of
HUD (FHA) unless such mortgage loans are restructured. In order to address
the reduction in payments under HAP Contracts as a result of this new policy,
the Multi-family Assisted Housing Reform and Affordability Act of 1997
(MAHRAA) provides for the restructuring of mortgage loans insured by the FHA
with respect to properties subject to the Section 8 program. Under MAHRAA, an
FHA-insured mortgage loan can be restructured into a first mortgage loan which
will be amortized on a current basis and a low interest second mortgage loan
payable to FHA which will only be payable on maturity of the first mortgage
loan. This restructuring results in a reduction in annual debt service payable
by the owner of the FHA-insured mortgage loan and is expected to result in an
insurance payment from FHA to the holder of the FHA-insured loan due to the
reduction in the principal amount. MAHRAA also phases out project-based
subsidies on selected properties serving families not located in rental markets
with limited supply, converting such subsidies to a tenant-based subsidy.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In
addition, the economic impact on

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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|2. |  | Investment in Limited Partnerships (Continued)
|-- |  | ----------------------------------------------

the Partnership of the combination of the reduced payments under the HAP
Contracts and the restructuring of the existing FHA-insured mortgage loans
under MAHRAA is uncertain.

As a result of the foregoing, the Partnership, in 1997, commenced extensive
review of disposition, refinancing or re-engineering alternatives for the
properties in which the limited partnerships have invested and are subject to
HUD mortgage and rental subsidy programs. The Partnership has incurred expenses
in connection with this review by various third party professionals, including
accounting, legal, valuation, structural and engineering costs, which amounted
to $50,730 for the year ended December 31, 1999, and are included in general
and administrative expenses.

On December 30, 1998, the Partnership sold its limited partnership interests in
11 local limited partnerships with a total carrying value of $6,588,686 to the
Operating Partnership. The sale resulted in proceeds to the Partnership of
$400,000 and a net gain of $7,132,262, after being relieved of notes and
interest payable of $13,515,691and incurring selling costs of $194,743. The
cash proceeds were held in escrow at December 31, 1998 and were collected in
1999. In March 1999, the Partnership made cash distributions of $272,250 to
the limited partners and $2,750 to the general partners, using proceeds from
the sale of the partnership interests.

The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity
securities. The purchase was subject to, among other things, (i) the purchase
of the general partner interests in the local limited partnerships by the
Operating Partnership; (iii) the approval of HUD and certain state housing
finance agencies; and (iii) the consent of the limited partners to the sale of
the local limited partnership interests held for investment by the Partnership.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of
various conflicts of interest in connection with the proposed transaction.
Prior to the sale of the partnership interests, the consents of the limited
partners to the sale and amendments to the Partnership Agreement were obtained.



|3. |  | Notes Payable
|-- |  | -------------

Certain of the Partnerships investments involved purchases of partnership
interests from partners who subsequently withdrew from the operating
partnership. As of December 31, 2001, the Partnership is obligated on
non-recourse notes payable of $13,614,501 bearing

13



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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|3. |  | Notes Payable (Continued)
|-- |  | -------------------------

interest at 9.5 to 10 percent, to the sellers of the partnership interests.
Accrued interest is $21,185,967 as of December 2001. The notes have principal
maturity dates ranging from August 1999 to January 2002 or upon sale or
refinancing of the underlying partnership properties. These obligations and
related interest are collateralized by the Partnerships investments in the
investee limited partnerships and are payable only out of cash distributions
from the investee partnerships, as defined in the notes. Unpaid interest is
due at maturity of the notes.

All notes and related accrued interest payable, aggregating $34,800,468 as of
December 31,2001, became payable prior to January 31, 2002. The Partnership has
not made any payments and is in default under the terms of the notes. Due to
the Partnerships lack of cash and partners deficiency, there is substantial
doubt about its ability to make these payments, which would result in the
possible foreclosure of the investments in the local limited partnerships. As
a result, there is substantial doubt about the Partnerships ability to
continue as a going concern.

Management is in process of attempting to negotiate extensions of the maturity
dates on the past due notes payable.

In February 2000, the Partnership entered into an agreement with a note holder
related to a note in the amount $2,200,000 plus accrued interest of $3,265,488
as of July 31, 2001 that became payable in 1999. All conditions of the
agreement were satisfied in July 2001, and the lender cancelled the note and
accrued interest in exchange for the Partnership surrendering its interest in
the Edgewood Terrace limited partnership. The Partnership recognized a gain of
approximately $5,308,000 on this transaction.

In connection with the foreclosures and surrender of partnership interests
during 2001, the Partnership was relieved of notes and related accrued interest
payable aggregating approximately $7,026,000. In addition, in connection with
the sale of the partnership interest on Parkway Towers, the limited
partnership, on behalf of the Partnership, notes and related accrued interest
payable aggregating approximately $2,238,000

In connection with the sale of the partnership interest in Goodlette Arms in
2002 (See Note 2), the Partnership paid off notes and related accrued interest
payable aggregating approximately $6,000,000.

14



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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED
VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
DECEMBER 31, 2001



|4. |  | Fees and Expenses Due General Partner
|-- |  | -------------------------------------

Under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to NAPICO for an annual management
fee equal to .5 percent of the original remaining invested assets of the
remaining partnerships. Invested assets are defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage loans
related to the Partnerships interest in the capital accounts of the respective
partnerships.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $44,076, $7,370 and $16,920 in 2001, 2000 and 1999, respectively,
and is included in administrative expenses.

As of December 31, 2001, the fees and expenses due the Corporate General
Partner exceeded the Partnerships cash. The Corporate General Partner, during
the forthcoming year, will not demand payment of amounts due in excess of such
cash or such that the Partnership would not have sufficient operating cash;
however, the Partnership will remain liable for all such amounts.

At December 31, 2001, $3,630 is due to another partnership in which NAPICO is
also the general partner.



|5. |  | Contingencies
|-- |  | -------------

Class Action

On August 27, 1998, two investors holding an aggregate of eight units of
limited partnership interests in Real Estate Associates Limited III (a
partnership in which NAPICO is a general partner) and two investors holding an
aggregate of five units of limited partnership interest in Real Estate
Associates Limited VI (another partnership in which Company is a general
partner) commenced an action in the United States District Court for the
Central District of California on behalf of themselves and all other similarly
situated, against the Partnership, NAPICO and certain other affiliated
entities. The complaint alleges that the defendants breached their fiduciary
duty to the limited partners of such Funds and made materially false and
misleading statements in the consent solicitation statements that were
disseminated to the limited partners of such Funds relating to approval of the
transfer of partnership interests in limited partnerships to the Operating
Partnership. The plaintiffs seek preliminary and permanent injunction relief
and other equitable relief, as well as compensatory and punitive damages.
However, plaintiffs made no effort to enjoin the transaction from taking place.
On August 4, 1999, a holder of one unit of limited partnership interest in
Housing Programs Limited (a partnership in which the Company is a general
partner) filed a lawsuit similar to the one discussed above against added
Housing Programs Limited. The second action has been subsumed in the first
action, which has been certified as a class action.

15



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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|5. |  | Contingencies (Continued)
|-- |  | -------------------------

After defendants moved for summary disposition of the action, plaintiffs filed
a motion for leave to file an amended complaint. Although defendants opposed
the filing of the complaint proposed by plaintiffs, the court issued an order
on July 20, 2001 granting plaintiffs leave to amend but denying them leave to
file the complaint they proposed. Plaintiffs filed a Second, Restated, Amended
and Supplemental Complaint dated August 7, 2001 and on August 21, 2001 filed a
Corrected Second, Restated, Amended and Supplemental Complaint (CSRASC). The
CSRASC adds eight new defendants and six new counts which were not included in
prior complaints. The new counts include; (i) violations of the anti-bundling
rules of the Securities and Exchange Act of 1934, (ii) violation of the
doctrine of inherent fairness, (iii) a declaratory judgment that the certain
defendants are not entitled to indemnification under the partnership
agreements, (iv) rescission of the business combination discussed in Note 1,
(v) a constructive trust on any recovery from a separate lawsuit pending in the
United States District Court of the Middle District of Pennsylvania which was
brought on behalf of several limited partnerships which are not parties to this
action; and (vi) an accounting. Defendants made a motion to dismiss the
CSRASC, which was denied. The court found that the issues presented would be
more appropriate resolved in a motion for summary judgment or summary
adjudication. Defendants intend to make such a motion. The deadline to do so
is April 1, 2002.

Defendants denied allegations in the CSRASC in their answer. The parties are
in the process of conducting discovery. The discovery deadline is February 28,
2002 and the trial is scheduled for July 16, 2002. A motion is before the
court to extend these deadlines and the hearing on that issue is scheduled for
February 4, 2002. Once discovery is complete, defendants will move for summary
judgement dismissing the complaint.

The managing general partner of such NAPICO managed partnerships and the other
defendants believe that the plaintiffs claims are without merit and intend to
contest the actions vigorously.

Other

The holder of a Partnership note payable in the amount of $1,675,000 plus
accrued interest payable of $2,482,855 as of December 31, 2001, seeks to compel
the Partnership to execute a UCC-1 financing statement to perfect plaintiffs
security interest in the Partnerships interest in the Henrico limited
partnership. The Partnership has no investment balance related to this Local
Partnership.

16



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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001



|5. |  | Contingencies (Continued)
|-- |  | -------------------------

The corporate general partner of the Partnership is a plaintiff in various
lawsuits and has also been named a defendant in other lawsuits arising from
transactions in the ordinary course of business. In the opinion of management
and the corporate general partner, the claims will not result in any material
liability to the Partnership.



|6. |  | Income Taxes
|-- |  | ------------

No provision has been made for income taxes in the accompanying financial
statements since such taxes, if any, are the liability of the individual
partners. The major differences in tax and financial reporting result from the
use of different bases and depreciation methods for the properties held by the
limited partnerships. Differences in tax and financial reporting also arise as
losses are not recognized for financial reporting purposes when the investment
balance has been reduced to zero.



|7. |  | Fair Value of Financial Instruments
|-- |  | -----------------------------------

Statement of Financial Accounting Standards No. 107, Disclosure about Fair
Value of Financial Instruments, requires disclosure of fair value information
about financial instruments, when it is practicable to estimate that value.
The notes payable are collateralized by the Partnerships investments in
investee limited partnerships and are payable only out of cash distributions
from investee partnerships. The operations generated by the investee limited
partnerships, which account for the Partnerships primary source of revenues,
are subject to various government rules, regulations and restrictions which
make it impracticable to estimate the fair value of the notes and related
accrued interest payable. It is impracticable to estimate the fair value of
the amounts due to the general partner due to their related party nature The
carrying amount of other assets and liabilities reported on the balance sheets
that require such disclosure approximates fair value due to their short-term
maturity.



|8. |  | Fourth-Quarter Adjustment
|-- |  | -------------------------

The Partnerships policy is to record its equity in the loss of limited
partnerships on a quarterly basis, using estimated financial information
furnished by the various local operating general partners. The equity in loss
of limited partnerships reflected in the accompanying annual financial
statements is based primarily upon audited financial statements of the investee
limited partnerships. The change of approximately $317,812 between the
estimated nine-month equity in income and the actual 2001 year end equity in
loss has been recorded in the fourth quarter.

17



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##### Table of Contents



REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEAR ENDED DECEMBER 31, 2001, 2000 AND 1999

SCHEDULE

|                        |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |          |   |  |   |   | 
|----------------------- |  | ---------------------------- | ------- | --------- |  | ------- | ------- | ------------ |  | -------- | - | ------ |  | -------- | ------ | -- |  | ------- | - | ------ |  | - | -------- | - |  | - | - | 
|                        |  | Year Ended December 31, 2001
|                        |  |                             
|                        |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  | Cash    |   | Equity |  |   |          |  
|                        |  | Balance                      |         |           |  |         |         | Capital      |  |          |   |        |  | Distri-  |        | in |  | Balance
|                        |  | January                      |         | Advances/ |  | Contri- |         | Amortization |  | butions  |   | Income |  | December
|Limited Partnerships    |  | 1, 2001                      |         | Acq costs |  | butions |         | Acq costs    |  | Received |   | (Loss) |  | 31, 2001
|                        |  |                              |         |           |  |         |         |              |  |          |   |        |  |         
|Aristocrat Manor        |  | $                            |         |           |  | $       |         |              |  | $        |   |        |  | $        |        |    |  | $       |   |        |  | $ |         |   |  | $ |   | 
|Arkansas City Apts.     |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Bellair Manor Apts.     |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Birch Manor I           |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Birch Manor II          |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Bluewater Apts.         |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Clarkwood Apts. I       |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Clarkwood Apts. II      |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Danbury Park Manor      |  |                              |         |           |  |         | 160,563 |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   | (160,563 | ) |  |   |  | 
|Desoto Apts.            |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Dexter Apts.            |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Edgewood Terrace II *   |  |                              | 149,626 |           |  |         |         |              |  |          |   |        |  |          | (4,599 | )  |  |         |   |        |  |   | (145,027 | ) |  |   |  | 
|Goodlette Arms Apts.    |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Hampshire House Apts.   |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Henrico Arms            |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Ivywood Apts.           |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Jasper County           |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Nantucket Apts.         |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Newton Apts.            |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Oak Hill I              |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Oakview Apts.           |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Oakwood Park I          |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Oakwood Park II         |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Pebbleshire *           |  |                              |         |           |  |         | 2,709   |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   | (2,709   | ) |  |   |  | 
|Pachuta Apts.           |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Rand Grove Village      |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Richards Park Apts.     |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Shubuta Properties      |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|South Glen Apts.        |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Tradewinds East Apts.   |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Warren Heights Apts. II |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|Yorkview Estates        |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |         |   |  |   |   | 
|                        |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |          |   |  |   |   | 
|                        |  | $                            | 149,626 |           |  | $       | 163,272 |              |  | $        |  |        |  | $        | (4,599 | )  |  | $       |  |        |  | $ | (308,299 | ) |  | $ |  | 
|                        |  |                              |         |           |  |         |         |              |  |          |   |        |  |          |        |    |  |         |   |        |  |   |          |   |  |   |   | 



---

|* |  | Surrendered or sold its interests in the limited partnership during 2001
|- |  | ------------------------------------------------------------------------





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##### Table of Contents



SCHEDULE
(Continued)

REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEAR ENDED DECEMBER 31, 2001, 2000 AND 1999

|                        |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|----------------------- |  | ---------------------------- | ------- | ----------- |  | ------------- |  | ------------ |  | -------- |  | ------ |  | -------- | ------ | ------- |  | ---- | -------- | ------- |  | - | ------ |  |  | - | ------- | 
|                        |  | Year Ended December 31, 2000
|                        |  |                             
|                        |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  | Cash |          | Equity  |  |   |        | 
|                        |  | Balance                      |         |             |  |               |  |              |  |          |  |        |  |          |        | Distri- |  | in   |          | Balance
|                        |  | January                      |         | Acquisition |  | Capital       |  | Amortization |  | butions  |  | Income |  | December
|Limited Partnerships    |  | 1, 2000                      |         | costs       |  | Contributions |  | Acq costs    |  | Received |  | (Loss) |  | 31, 2000
|                        |  |                              |         |             |  |               |  |              |  |          |  |        |  |         
|Aristocrat Manor        |  | $                            |         |             |  | $             |  |              |  | $        |  |        |  | $        |        |         |  | $    |          |         |  | $ |        |  |  | $ |         | 
|Arkansas City Apts.     |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Bellair Manor Apts.     |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Birch Manor I           |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Birch Manor II          |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Bluewater Apts.         |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Clarkwood Apts. I       |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Clarkwood Apts. II      |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Cleveland I             |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Cleveland II            |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Cleveland III           |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Danbury Park Manor      |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Desoto Apts.            |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Dexter Apts.            |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Edgewood Terrace II     |  |                              | 239,464 |             |  |               |  |              |  |          |  |        |  |          | (6,132 | )       |  |      | (100,000 | )       |  |   | 16,294 |  |  |   | 149,626 | 
|Goodlette Arms Apts.    |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Hampshire House Apts.   |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Henrico Arms            |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Ivywood Apts.           |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Jasper County           |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Nantucket Apts.         |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Newton Apts.            |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Oak Hill I              |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Oakview Apts.           |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Oakwood Park I          |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Oakwood Park II         |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Pachuta Apts.           |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Parkway Towers          |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Pebbleshire Apts.       |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Rand Grove Village      |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Richards Park Apts.     |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Shubuta Properties      |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|South Glen Apts.        |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Tradewinds East Apts.   |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Warren Heights Apts. II |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|Yorkview Estates        |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|                        |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 
|                        |  | $                            | 239,464 |             |  | $             |  |              |  | $        |  |        |  | $        |        |         |  | $    | (100,000 | )       |  | $ | 16,294 |  |  | $ | 149,626 | 
|                        |  |                              |         |             |  |               |  |              |  |          |  |        |  |          |        |         |  |      |          |         |  |   |        |  |  |   |         | 





---



##### Table of Contents



SCHEDULE
(Continued)

REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEAR ENDED DECEMBER 31, 2001, 2000 AND 1999

|                        |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|----------------------- |  | ---------------------------- | ------- | ----------- |  | ------------- | - | ------------ |  | -------- | ------ | ------ |  | -------- | - | ------- |  | ---- | ------- | ------- |  | - | -------- | - |  | - | ------- | 
|                        |  | Year Ended December 31, 1999
|                        |  |                             
|                        |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  | Cash |         | Equity  |  |   |          |  
|                        |  | Balance                      |         |             |  |               |   |              |  |          |        |        |  |          |   | Distri- |  | in   |         | Balance
|                        |  | January                      |         | Acquisition |  | Capital       |   | Amortization |  | butions  |        | Income |  | December
|Limited Partnerships    |  | 1, 1999                      |         | costs       |  | Contributions |   | Acq costs    |  | Received |        | (Loss) |  | 31, 1999
|                        |  |                              |         |             |  |               |   |              |  |          |        |        |  |         
|Aristocrat Manor        |  | $                            |         |             |  | $             |   |              |  | $        |        |        |  | $        |   |         |  | $    |         |         |  | $ |          |   |  | $ |         | 
|Arkansas City Apts.     |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Bellair Manor Apts.     |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Birch Manor I           |  |                              |         |             |  |               |   |              |  |          | 2,307  |        |  |          |   |         |  |      | (2,307  | )       |  |   |          |   |  |   |        | 
|Birch Manor II          |  |                              |         |             |  |               |   |              |  |          | 1,680  |        |  |          |   |         |  |      | (1,680  | )       |  |   |          |   |  |   |        | 
|Bluewater Apts.         |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Clarkwood Apts. I       |  |                              |         |             |  |               |   |              |  |          | 3,206  |        |  |          |   |         |  |      | (3,206  | )       |  |   |          |   |  |   |        | 
|Clarkwood Apts. II      |  |                              |         |             |  |               |   |              |  |          | 3,268  |        |  |          |   |         |  |      | (3,268  | )       |  |   |          |   |  |   |        | 
|Cleveland I             |  |                              | 9,171   |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      | (9,171  | )       |  |   |          |   |  |   |        | 
|Cleveland II            |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Cleveland III           |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Danbury Park Manor      |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Desoto Apts.            |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Dexter Apts.            |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Edgewood Terrace II     |  |                              | 350,395 |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   | (110,931 | ) |  |   | 239,464 | 
|Goodlette Arms Apts.    |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Hampshire House Apts.   |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Henrico Arms            |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Ivywood Apts.           |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Jasper County           |  |                              |         |             |  |               |   |              |  |          | 9,271  |        |  |          |   |         |  |      |         |         |  |   | (9,271   | ) |  |   |        | 
|Nantucket Apts.         |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Newton Apts.            |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Oak Hill I              |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Oakview Apts.           |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Oakwood Park I          |  |                              |         |             |  |               |   |              |  |          | 3,405  |        |  |          |   |         |  |      | (1,805  | )       |  |   | (1,600   | ) |  |   |        | 
|Oakwood Park II         |  |                              |         |             |  |               |   |              |  |          | 2,554  |        |  |          |   |         |  |      | (2,554  | )       |  |   |          |   |  |   |        | 
|Pachuta Apts.           |  |                              |         |             |  |               |   |              |  |          | 23,858 |        |  |          |   |         |  |      |         |         |  |   | (23,858  | ) |  |   |        | 
|Parkway Towers          |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Pebbleshire Apts.       |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Rand Grove Village      |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Richards Park Apts.     |  |                              |         |             |  |               |   |              |  |          | 2,743  |        |  |          |   |         |  |      | (2,743  | )       |  |   |          |   |  |   |        | 
|Shubuta Properties      |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|South Glen Apts.        |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Tradewinds East Apts.   |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Warren Heights Apts. II |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|Yorkview Estates        |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|                        |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 
|                        |  | $                            | 359,566 |             |  | $             |  |              |  | $        | 52,292 |        |  | $        |  |         |  | $    | (26,734 | )       |  | $ | (145,660 | ) |  | $ | 239,464 | 
|                        |  |                              |         |             |  |               |   |              |  |          |        |        |  |          |   |         |  |      |         |         |  |   |          |   |  |   |         | 





---



##### Table of Contents



SCHEDULE
(Continued)

REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN, EQUITY IN EARNINGS OF AND DIVIDENDS RECEIVED FROM
AFFILIATES AND OTHER PERSONS
FOR THE YEARS ENDED
DECEMBER 31, 2001, 2000 AND 1999



|NOTES: | 1. |  | Equity in income (losses) of the limited partnerships represents the
Partnerships allocable share of the net results of operations from the
limited partnerships for the year. Equity in losses of the limited
partnerships will be recognized until the investment balance is reduced to
zero or below zero to an amount equal to future capital contributions to
be made by the Partnership.
|------ | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|       | 2. |  | Cash distributions from the limited partnerships will be
treated as a return of the investment and will reduce the
investment balance until such time as the investment is reduced to
an amount equal to additional contributions. Distributions
subsequently received will be recognized as income.                                                                                           





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##### Table of Contents



SCHEDULE III
(CONTINUED)

REAL ESTATE ASSOCIATES LIMITED VII
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 2001

|                                                                                            |       |       |        |       |             |      |           |                    |  |       |                |              |  |   |             |            |             |   |           |            |  |   |           |            | 
|------------------------------------------------------------------------------------------- | ----- | ----- | ------ | ----- | ----------- | ---- | --------- | ------------------ |  | ----- | -------------- | ------------ |  | - | ----------- | ---------- | ----------- | - | --------- | ---------- |  | - | --------- | ---------- | 
|                                                                                            |       |       |        |       |             |      |           |                    |  |       |                |              |  |   | Buildings,  |            |             |   |           |            |  |   |          
|                                                                                            |       |       |        |       |             |      |           |                    |  |       |                |              |  |   | Furnishings |            |             |   |           |            |  |   |          
|                                                                                            |       |       | Number |       | Outstanding |      |           |                    |  |       | and Equipment  |              |  |   |             |            |             |   |          
|                                                                                            |       |       | of     |       | Mortgage    |      |           |                    |  |       | Amount Carried |              |  |   |             |            | Accumulated
|Partnership/Location                                                                        |       | Units |        | Loan  |             | Land |           | at close of period |  | Total |                | Depreciation
|                                                                                            |       |       |        |       |             |      |           |                    |  |       |                |             
|Aristocrat ManorHot Springs, AR                                                             |       |       | 114    |       |             | $    | 3,117,465 |                    |  | $     | 265,158        |              |  | $ | 3,493,023   |            |             | $ | 3,758,181 |            |  | $ | 1,618,580 |           
|Arkansas City ApartmentsArkansas City, AR                                                   |       |       | 16     |       |             |      | 493,238   |                    |  |       | 22,416         |              |  |   | 504,920     |            |             |   | 527,336   |            |  |   | 194,050   |           
|Bluewater ApartmentsPort Huron, MI                                                          |       |       | 116    |       |             |      | 1,514,976 |                    |  |       | 130,163        |              |  |   | 4,054,868   |            |             |   | 4,185,031 |            |  |   | 2,266,660 |           
|Danbury Park ManorSuperior Township, MI                                                     |       |       | 151    |       |             |      | 1,531,135 |                    |  |       | 183,752        |              |  |   | 5,365,889   |            |             |   | 5,549,641 |            |  |   | 2,771,497 |           
|Desoto ApartmentsDesoto, MO                                                                 |       |       | 42     |       |             |      | 595,705   |                    |  |       | 50,000         |              |  |   | 1,223,647   |            |             |   | 1,273,647 |            |  |   | 849,607   |           
|Dexter ApartmentsDexter, MO                                                                 |       |       | 50     |       |             |      | 749,858   |                    |  |       | 50,000         |              |  |   | 1,522,910   |            |             |   | 1,572,910 |            |  |   | 1,071,206 |           
|Goodlette Arms ApartmentsNaples, FL                                                         |       |       | 250    |       |             |      | 2,586,495 |                    |  |       | 1,239,262      |              |  |   | 6,471,338   |            |             |   | 7,710,600 |            |  |   | 4,164,878 |           
|Henrico ArmsRichmond, VA                                                                    |       |       | 232    |       |             |      | 2,440,067 |                    |  |       | 206,980        |              |  |   | 4,094,623   |            |             |   | 4,301,603 |            |  |   | 3,678,812 |           
|Jasper County Prop.Heidelberg, MS                                                           |       |       | 24     |       |             |      | 657,711   |                    |  |       | 33,000         |              |  |   | 785,153     |            |             |   | 818,153   |            |  |   | 738,158   |           
|Newton ApartmentsNewton, MS                                                                 |       |       | 36     |       |             |      | 984,921   |                    |  |       | 55,017         |              |  |   | 1,069,170   |            |             |   | 1,124,187 |            |  |   | 1,058,633 |           
|Oakview ApartmentsMonticello, AR                                                            |       |       | 32     |       |             |      | 1,098,490 |                    |  |       | 75,000         |              |  |   | 1,179,931   |            |             |   | 1,254,931 |            |  |   | 427,882   |           
|Pachuta ApartmentsPachuta, MS                                                               |       |       | 16     |       |             |      | 443,058   |                    |  |       | 20,680         |              |  |   | 490,732     |            |             |   | 511,412   |            |  |   | 489,304   |           
|Rand Grove VillagePalatine, IL                                                              |       |       | 212    |       |             |      | 2,378,768 |                    |  |       | 491,000        |              |  |   | 6,879,142   |            |             |   | 7,370,142 |            |  |   | 6,355,754 |           
|Shubuta PropertiesShubuta, MS                                                               |       |       | 16     |       |             |      | 442,712   |                    |  |       | 23,179         |              |  |   | 555,601     |            |             |   | 578,780   |            |  |   | 516,451   |           
|South Glen ApartmentsTrenton, MI                                                            |       |       | 159    |       |             |      | 2,480,378 |                    |  |       | 298,089        |              |  |   | 5,426,752   |            |             |   | 5,724,841 |            |  |   | 4,826,970 |           
|Tradewinds East ApartmentsEssexville, MI                                                    |       |       | 150    |       |             |      | 2,008,555 |                    |  |       | 117,692        |              |  |   | 5,571,294   |            |             |   | 5,688,986 |            |  |   | 3,171,009 |           
|Bellair Manor ApartmentsNiles, OH                                                           |       |       | 68     |       |             |      | 779,207   |                    |  |       | 152,995        |              |  |   | 1,546,944   |            |             |   | 1,699,939 |            |  |   | 902,387   |           
|Birch Manor Apartments IMedina, OH                                                          |       |       | 60     |       |             |      | 421,756   |                    |  |       | 60,889         |              |  |   | 1,322,956   |            |             |   | 1,383,845 |            |  |   | 771,732   |           
|Birch Manor Apartments IIMedina, OH                                                         |       |       | 60     |       |             |      | 637,455   |                    |  |       | 50,284         |              |  |   | 1,386,407   |            |             |   | 1,436,691 |            |  |   | 808,745   |           
|Clarkwood Apartments IElyria, OH                                                            |       |       | 72     |       |             |      | 468,224   |                    |  |       | 68,841         |              |  |   | 1,532,128   |            |             |   | 1,600,969 |            |  |   | 893,741   |           
|Clarkwood Apartments IIElyria, OH                                                           |       |       | 120    |       |             |      | 900,156   |                    |  |       | 92,510         |              |  |   | 2,628,368   |            |             |   | 2,720,878 |            |  |   | 1,533,210 |           
|Hampshire House ApartmentsWarren, OH                                                        |       |       | 150    |       |             |      | 2,661,719 |                    |  |       | 101,163        |              |  |   | 3,945,365   |            |             |   | 4,046,528 |            |  |   | 2,301,463 |           
|Ivywood ApartmentsColumbus, OH                                                              |       |       | 124    |       |             |      | 1,439,446 |                    |  |       | 200,184        |              |  |   | 2,938,855   |            |             |   | 3,139,039 |            |  |   | 1,714,526 |           
|Nantucket ApartmentsAlliance, OH                                                            |       |       | 60     |       |             |      | 524,841   |                    |  |       | 34,676         |              |  |   | 1,303,765   |            |             |   | 1,338,441 |            |  |   | 760,602   |           
|Oak Hill ApartmentsFranklin, PA                                                             |       |       | 120    |       |             |      | 1,682,957 |                    |  |       | 75,834         |              |  |   | 3,089,355   |            |             |   | 3,165,189 |            |  |   | 1,802,213 |           
|Oakwood Park I ApartmentsLorain, OH                                                         |       |       | 50     |       |             |      | 145,137   |                    |  |       | 63,123         |              |  |   | 854,198     |            |             |   | 917,321   |            |  |   | 498,165   |           
|Oakwood Park II ApartmentsLorain, OH                                                        |       |       | 78     |       |             |      | 312,319   |                    |  |       | 102,202        |              |  |   | 1,378,989   |            |             |   | 1,481,191 |            |  |   | 804,405   |           
|Richards Park ApartmentsElyria, OH                                                          |       |       | 60     |       |             |      | 628,313   |                    |  |       | 52,416         |              |  |   | 1,418,923   |            |             |   | 1,471,339 |            |  |   | 820,161   |           
|Warren Heights Apartments IIWarren, OH                                                      |       |       | 88     |       |             |      | 1,031,352 |                    |  |       | 21,803         |              |  |   | 2,202,950   |            |             |   | 2,224,753 |            |  |   | 1,285,060 |           
|Yorkview EstatesMassillon, OH                                                               |       |       | 50     |       |             |      | 575,086   |                    |  |       | 22,049         |              |  |   | 1,202,879   |            |             |   | 1,224,928 |            |  |   | 701,679   |           
|Additional basis of real estate due to
capital contribution to investee
limited partnership |       |       |        |       |             |      |           |                    |  |       | 238,728        |              |  |   | 4,110,491   |            |             |   | 4,349,219 |            |  |   | 2,778,069 |           
|                                                                                            |       |       |        |       |             |      |           |                    |  |       |                |              |  |   |             |            |             |   |           |            |  |   |           |           
|                                                                                            | TOTAL |       |        | 2,763 |             |      | $         | 35,731,500         |  |       | $              | 4,599,085    |  |   | $           | 79,551,566 |             |   | $         | 84,150,651 |  |   | $         | 52,575,609 | 
|                                                                                            |       |       |        |       |             |      |           |                    |  |       |                |              |  |   |             |            |             |   |           |            |  |   |           |           





---



##### Table of Contents



SCHEDULE III
(Continued)

REAL ESTATE ASSOCIATES LIMITED VII
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 2001



|NOTES: | 1. |  | Each local limited partnership has developed, owns and operates the housing
project. Substantially all project costs, including construction period interest
expense, were capitalized by the limited partnerships.
|------ | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|       | 2. |  | Depreciation is provided for by various methods over the estimated useful lives
of the projects. The estimated composite useful lives of the buildings are from
25 to 40 years.                                    
|      
|       | 3. |  | Investments in property and equipment:                                                                                                                                                                             

|                                    |  |      |            |           |  |              |             |   |  |   |             |  
|----------------------------------- |  | ---- | ---------- | --------- |  | ------------ | ----------- | - |  | - | ----------- | -
|                                    |  |      |            |           |  | Buildings,   |             |   |  |  
|                                    |  |      |            |           |  | Furnishings, |             |   |  |  
|                                    |  |      |            |           |  | And          |             |   |  |  
|                                    |  | Land |            | Equipment |  | Total       
|                                    |  |      |            |           |  |             
|Balance, January 1, 1999            |  | $    | 5,856,545  |           |  | $            | 98,604,406  |   |  | $ | 104,460,951 |  
|Net additions - 1999                |  |      | 38,287     |           |  |              | 1,097,917   |   |  |   | 1,136,204   |  
|                                    |  |      |            |           |  |              |             |   |  |   |             |  
|Balance, December 31, 1999          |  |      | 5,894,832  |           |  |              | 99,702,323  |   |  |   | 105,597,155 |  
|Net additions - 2000                |  |      | 12,115     |           |  |              | 1,377,443   |   |  |   | 1,389,558   |  
|                                    |  |      |            |           |  |              |             |   |  |   |             |  
|Balance, December 31, 2000          |  |      | 5,906,947  |           |  |              | 101,079,766 |   |  |   | 106,986,713 |  
|Net additions - 2001                |  |      |           |           |  |              | 444,609     |   |  |   | 444,609     |  
|Sale and foreclosures of properties |  |      | (1,307,862 | )         |  |              | (21,972,809 | ) |  |   | (23,280,671 | )
|                                    |  |      |            |           |  |              |             |   |  |   |             |  
|Balance, December 31, 2001          |  | $    | 4,599,085  |           |  | $            | 79,551,566  |   |  | $ | 84,150,651  |  
|                                    |  |      |            |           |  |              |             |   |  |   |             |  





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##### Table of Contents



SCHEDULE III
(Continued)

REAL ESTATE ASSOCIATES LIMITED VII
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 2001

|                                     |  |             |             |  
|------------------------------------ |  | ----------- | ----------- | -
|                                     |  | Buildings, 
|                                     |  | Furnishings
|                                     |  | And        
|                                     |  | Equipment  
|                                     |  |            
|Accumulated Depreciation:            |  |             |             |  
|Balance, January 1, 1999             |  | $           | 61,388,610  |  
|Net additions, 1999                  |  |             | 1,263,157   |  
|                                     |  |             |             |  
|Balance, December 31, 1999           |  |             | 62,651,767  |  
|Net additions, 2000                  |  |             | 3,198,384   |  
|                                     |  |             |             |  
|Balance, December 31, 2000           |  |             | 65,850,151  |  
|Net additions, 2001                  |  |             | 2,679,021   |  
|Sales and foreclosures of properties |  |             | (15,953,563 | )
|                                     |  |             |             |  
|Balance, December 31, 2001           |  | $           | 52,575,609  |  
|                                     |  |             |             |  





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PART III.




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Real Estate Associates Limited VII(the Partnership) has no directors or
executive officers of its own.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation (CIC), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P., (the
Operating Partnership) a majority owned subsidiary of Casden Properties Inc.,
a real estate investment trust organized by Alan I. Casden, purchased a 95.25%
economic interest in NAPICO. On March 11, 2002, NAPICO became a wholly owned
subsidiary of Apartment Investment and Management Company. The following
biographical information is presented for the directors and executive officers
of NAPICO with principal responsibility for the Partnerships affairs.

Charles H. Boxenbaum,72, Chairman of the Board of Directors and Chief
Executive Officer of NAPICO.

Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was
a real estate broker with the Beverly Hills firm of Carl Rhodes Company. Mr.
Boxenbaum has been a member of the Board of Directors of Casden Properties Inc.
since 1998.

Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchangers seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate
Association, National Institute of Real Estate Brokers, Appraisal Institute,
various mortgage banking seminars, and the North American Property Forum held
in London, England. He is one of the founders and a past director of the First
Los Angeles Bank, organized in November 1974. Since March 1995, Mr. Boxenbaum
has served on the Board of Directors of the National Housing Council. Mr.
Boxenbaum received his Bachelor of Arts degree from the University of Chicago.

Bruce E. Nelson,50, President, Chief Operating Officer and a director of
NAPICO.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved
in the identification, analysis, and negotiation of real estate investments.
Mr. Nelson is a member of the Board of Directors of Casden Properties Inc. and
is a Director of the Affordable Housing Tax Credit Coalition.

From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his
Bachelor of Arts degree from the University of Wisconsin and is a graduate of
the University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.

Alan I. Casden,56, Chairman of the Board of Directors and Chief Executive
Officer of Casden Properties Inc., a director and member of the audit committee
of NAPICO, and chairman of the Executive Committee of NAPICO.

Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.





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Mr. Casden is a member of the American Institute of Certified Public
Accountants and of the California Society of Certified Public Accountants. Mr.
Casden is a member of the advisory board of the National Multi-Family Housing
Conference, the Multi-Family Housing Council, the Presidents Council of the
California Building Industry Association and the Urban Land Institute. He also
serves on the Board of Trustees of the University of Southern California. He
holds a Bachelor of Science degree and a Masters in Business Administration
degree from the University of Southern California.

Brian H. Shuman, 39, Senior Vice President and Chief Financial Officer.

Mr. Shuman joined NAPICO in 2000, and is responsible for the financial affairs
of NAPICO, as well as the limited partnerships sponsored by it. From 1996
until joining NAPICO in August 2000, Mr. Shuman was Vice President  Finance
for Preferred Health Management Inc., the largest provider of worker
compensation diagnostic imaging services in California formed in 1996, and was
responsible for establishing and managing the accounting, billing, collection ,
treasury and financial reporting departments. From 1994 to 1996, he was the
Controller for DVI Business Credit Corporation, which provides asset based
lending to a wide range of health concerns. From 1985 to 1994, Mr. Shuman
served in senior management positions, as a director or manager of finance, a
portfolio tax analyst, and a senior accountant/tax consultant. He holds a
Bachelor of Arts degree in economics and accounting from the University of
Maryland. Mr. Shuman is a Certified Public Accountant and is a member of
American Institute of Certified Public Accountants and the California Society
of Public Accountants.

Patricia W. Toy,72, Senior Vice President  Communications and Assistant
Secretary.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.

Jeffrey H. Sussman,35, Senior Vice President, General Counsel and Secretary.

Mr. Sussman joined NAPICO in 1998, and is responsible for the legal affairs of
NAPICO and its affiliates. He is also the President of NPEI and a member of the
preliminary investment committee. Prior to joining NAPICO in April 1998, Mr.
Sussman was an associate with the law firm of Rus, Miliband, Williams & Smith
in Irvine, California. His practice emphasized real estate finance and
insolvency law and included the representation of borrowers, lenders, and
court-appointed trustees in matters involving apartment complexes, retail
centers and hotels. Mr. Sussman received a Bachelor of Arts degree from the
University of California, Berkeley and Juris Doctor and Master in Business
Administration degrees from the University of Southern California. He is a
member of the State Bar of California, and holds Series 22, 39 and 63 licenses
issued by the National Association of Securities Dealers, Inc.

NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the Commission), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commissions order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and
does not impact NAPICOs ability to serve as the Partnerships Managing General
Partner.





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ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS

Real Estate Associates Limited VII has no officers, directors or employees.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to
     .5 percent of the invested assets, including the Partnerships allocable share
of the mortgages related to the real estate properties held by local limited
partnerships. The fee is earned beginning in the month the Partnership makes
its initial contribution to the local partnership. In addition, the
Partnership reimburses the Corporate General Partner for certain expenses.

An affiliate of the General Partner is responsible for the on-site property
management for a property owned by limited partnership in which the Partnership
has invested.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



|(a) |  | Security Ownership of Certain Beneficial Owners                                                                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The General Partners own all of the outstanding general partnership
interests of REAL VII; no person is known to own beneficially in excess
of 5 percent of the outstanding limited partnership interests.                                                         
|   
|(b) |  | With the exception of the initial limited partner, Bruce Nelson, who is
an officer of the Corporate General Partner, none of the officers or
directors of the Corporate General Partner own directly or beneficially
any limited partnership interests in REAL VII.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The Partnership is obligated to NAPICO for an annual
management fee equal to .5 percent of the original remaining invested assets of
the limited partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage loans
related to the Partnerships interest in the capital accounts of the respective
partnerships. The management fee was approximately $500,000 for the years
ended December 31, 2001, 2000 and 1999.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $44,076, $7,370 and $16,920 in 2001, 2000 and 1999, respectively,
and is included in operating expenses.

NAPICO is the general partner in 20 of the limited partnerships, in which the
Partnership has investments. An affiliate of NAPICO received property
management fees of 5 percent of the revenues from the Pebbleshire limited
partnerships, in which NAPICO was the general partner, prior to its sale in
2001. The affiliate received property management fees of $17,668, $53,589 and
$50,700 in 2001, 2000 and 1999, respectively.

On December 30, 1998, the Partnership sold its limited partnership interests in
11 local limited partnerships, with a total carrying value of $6,588,686, to
the Operating Partnership. The sale resulted in proceeds to the Partnership of
$400,000 and a net gain of $7,132,262 after being relieved of notes and
interest payable of $13,515,691 and incurring selling costs of $194,743. In
March 1999, the Partnership made cash distributions of $272,250 to the limited
partners and $2,750 to the general partners, using proceeds from the sale of
the partnership interests.





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The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity
securities. The purchase was subject to, among other things, (i) the purchase
of the general partner interests in the local limited partnerships by the
Operating Partnership; (ii) the approval of HUD and certain state housing
finance agencies; and (iii) the consent of the limited partners to the sale of
the local limited partnership interests held for investment by the Partnership.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of
various conflicts of interest in connection with the proposed transaction.
Prior to the sale of the partnership interests, the consents of the limited
partners to the sale and amendments to the Partnership Agreement were obtained.




ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

Financial Statements

Report of Independent Public Accountants.

Balance Sheets as of December 31, 2001 and 2000.

Statements of Operations for the years ended December 31, 2001, 2000 and 1999.

Statements of Partners Deficiency for the years ended December 31, 2001, 2000
and 1999.

Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999.

Notes to Financial Statements.

Financial Statement Schedules
Applicable to Real Estate Associates Limited VII, Real Estate Associates IV and
the Limited Partnerships in which Real Estate Associates Limited VII and Real
Estate Associates IV have investments.

Schedule  Investments in Limited Partnerships, December 31, 2001, 2000 and
1999.

Schedule III  Real Estate and Accumulated Depreciation, December 31, 2001,
2000 and 1999.

The remaining schedules are omitted because the required information is
included in the financial statements and notes thereto or they are not
applicable or not required.

Exhibits



|(3)  |  | Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form S-11 #2-84816
which is incorporated herein by reference.                                                                                                                                                                                                               
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(10) |  | Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of Limited
Partnership dated May 24, 1983 and the forty-eight contracts representing
the partnership investment in local limited partnerships as previously
filed at the Securities Exchange Commission, File #2-84816 which is hereby
incorporated by reference.

Reports on Form 8-K

No reports on Form 8-K were filed during the year ended December 31, 2001.





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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 in the City of Los
Angeles, State of California.

REAL ESTATE ASSOCIATES LIMITED VII



| | By: | NATIONAL PARTNERSHIP INVESTMENTS CORP.
General Partner
| | --- | ------------------------------------------------------



|/s/   Charles H. Boxenbaum
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer | 
|-------------------------------------------------------------------------------------------------------------- | 



|/s/   Bruce E. Nelson
Bruce E. Nelson
Director and President | 
|------------------------------------------------------------ | 



|/s/   Alan I. Casden
Alan I. Casden
Director | 
|-------------------------------------------- | 



|/s/   Brian H. Shuman
Brian H. Shuman
Chief Financial Officer | 
|------------------------------------------------------------- |