<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

                   For the Fiscal Year Ended DECEMBER 31, 1998

                             Commission File Number
                                    033-22857

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.

                        A CALIFORNIA LIMITED PARTNERSHIP

                  I.R.S. Employer Identification No. 95-4166241

       9090 WILSHIRE BOULEVARD, 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]


<PAGE>   2

PART I.

ITEM 1.   BUSINESS:

Century HillCreste Apartment Investors, L.P. (the "Partnership") is a California
limited partnership formed on June 6, 1988, with National Partnership
Investments Corp. ("NAPICO"), or the ("Managing General Partner") and HillCreste
Properties Inc. (the "Non-Managing General Partner") as the General Partners
(collectively, the "General Partners"). The business of the Partnership is
conducted primarily by the Managing General Partner as the Partnership has no
employees of its own. The Partnership issued 7,258,000 depository units (each
depository unit being entitled to the beneficial interest of a limited
partnership interest) on October 26, 1988 to investors (the "Limited Partners")
for a total amount raised of $72,580,000, through a public offering.

Concurrent with the issuance of the depository units, the Partnership purchased
a 315-unit luxury apartment complex in the Century City area of Los Angeles (the
"Property") from an affiliate of the Managing General Partner for a purchase
price of $68,548,000. In order to complete the purchase of the Property, the
seller, an affiliate of the Managing General Partner (the "Seller" or the
"Special Limited Partner") purchased a 10 percent special limited partnership
interest in the Partnership for $6,855,000. The Partnership Agreement provides
that the 10 percent special limited partnership interest is subordinate to the
other Limited Partners' specified priority return in the case of distributions
of net cash flow from operations, plus the other Limited Partners' return of
capital in the case of net sales or refinancing distribution proceeds.

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, Alan I. Casden and Henry C. Casden.

The Partnership's principal objectives are to (i) provide quarterly cash
distributions, (ii) preserve and protect capital, and (iii) achieve long-term
appreciation in the value of the Property for distribution upon sale. There can
be no assurance that any of these objectives will be achieved.

On December 30, 1998, the Partnership sold the rental property for $58,500,000
to the Operating Partnership. The sale resulted in net cash proceeds to the
Partnership of $57,916,894 and a gain of $24,646,417. Substantially all of the
cash proceeds were held in escrow at December 31, 1998 and were collected
subsequent to year end. The Partnership intends to distribute all assets and
dissolve in 1999.


<PAGE>   3

ITEM 2.   PROPERTIES:

The Partnership held an interest in one real estate property which was sold on
December 30, 1998. See Item 1 above and Schedule for additional information
pertaining to this Property.

ITEM 3.   LEGAL PROCEEDINGS:

The Managing General Partner, NAPICO, is a plaintiff or defendant in several
lawsuits, which are unrelated to the Partnership. In addition, the Partnership
was involved in the actions described below:

Securities and Exchange Commission

The Partnership, NAPICO, and several of NAPICO's officers, directors and
affiliates 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 order concerns, in part, the treatment of Partnership funds
deposited between September 1991 and July 1993 in a master disbursement account
used by the Partnership's previous property management company. The Commission
found that those funds should have been recorded on the Partnership's books and
reported in its financial statements as related party accounts receivable rather
than as cash as done so by the Partnership's auditors. Although the Commission
found that this misclassification of current assets violated federal securities
laws, the Commission did not find that these violations were intentional nor did
the Commission find that limited partners had suffered any loss or damage as a
result of these violations. Moreover, the Commission's order does not impose any
cost, burden or penalty on the Partnership and does not impact NAPICO's ability
to serve as the Partnership's Managing General Partner.

The events that gave rise to the Commission's order occurred in or before 1993.
Subsequent corrective action by the Partnership and its general partners
precludes any recurrence of the cash management issues described in the
Commission's order.

J/B Lawsuit

On February 13, 1997, J/B Investment Partners ("J/B") filed an action in the Los
Angeles Superior Court (the "J/B Lawsuit"), against the Managing General Partner
and its directors, and Casden Properties and certain of its affiliates
(collectively, the "Defendants"). The J/B Lawsuit was styled as a class action
brought against the Defendants on behalf of all limited partners of the
Partnership, and a derivative action brought on behalf of the Partnership
itself. The Partnership was named as a "nominal defendant." The complaint in the
J/B Lawsuit contained four causes of action: (a) breach of fiduciary duty; (b)
breach of contract; (c) unjust enrichment; and (d) equitable relief.

By order dated November 25, 1997, the Los Angeles Superior Court dismissed the
J/B Lawsuit with prejudice. No appeal has been taken.


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

In December 1996, Everest HillCreste Investors, LLC ("Everest"), commenced a
proxy solicitation of the Limited Partners seeking to obtain sufficient votes in
order to (a) authorize Everest to notify the General Partners on behalf of
Limited Partners to call for a special meeting of the Limited Partners, and (b)
adopt a resolution at such meeting approving Everest's proposal to purchase the
Property for $40 million (subsequently increased to $47 million) subject to
certain material conditions. The General Partners are unaware of the results of
that solicitation, as amended.



<PAGE>   4

In July 1998, a consent solicitation statement was sent to the limited partners
setting forth the terms and conditions of the purchase of the property owned by
the Partnership by the Operating 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
property, 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 Partnership's units are not traded on a public exchange. It is not
anticipated that any public market will develop for the purchase and sale of any
units. Depository units may be transferred only if certain requirements are
satisfied. As of December 31, 1998, there were 5,798 registered holders of units
in the Partnership.



<PAGE>   5


ITEM 6.          SELECTED FINANCIAL DATA:


<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                              ---------------------------------------------------------------------------
                                  1998            1997           1996             1995           1994
                              -----------     -----------     -----------     -----------     -----------
<S>                           <C>             <C>             <C>             <C>             <C>        
Rental revenues               $ 6,298,221     $ 5,960,474     $ 5,410,156     $ 5,394,552     $ 5,390,358

Interest and other income         266,438         189,377         218,216         287,523          81,885
                              -----------     -----------     -----------     -----------     -----------

Total revenues                $ 6,564,659     $ 6,149,851     $ 5,628,372     $ 5,682,075     $ 5,472,243
                              ===========     ===========     ===========     ===========     ===========

Income from operations        $ 3,286,838     $ 2,738,970     $ 2,675,170     $ 2,498,336     $ 1,224,739

Gain on sale of rental
   property                    24,646,417              --              --              --              --
                              -----------     -----------     -----------     -----------     -----------
Net income                    $27,933,255     $ 2,738,970     $ 2,675,170     $ 2,498,336     $ 1,224,739
                              ===========     ===========     ===========     ===========     ===========

Net income per
   depository unit            $      3.85     $      0.38     $      0.37     $      0.34     $      0.17
                              ===========     ===========     ===========     ===========     ===========
Rental property owned at
   cost less accumulated
   depreciation               $        --     $34,013,326     $34,337,025     $34,772,331     $35,660,385
                              ===========     ===========     ===========     ===========     ===========

Cash due from escrow          $57,836,152     $        --     $        --     $        --     $        --
                              ===========     ===========     ===========     ===========     ===========

Total assets                  $63,594,749     $38,311,564     $38,040,786     $37,684,178     $38,577,456
                              ===========     ===========     ===========     ===========     ===========
</TABLE>



<PAGE>   6

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS:

CAPITAL RESOURCES AND LIQUIDITY

The Partnership raised proceeds of $72,580,000 from the sale of depository
units, pursuant to a public offering and received additional capital
contributions from the General Partners of $1,050 and from the Special Limited
Partner of $6,855,000. Prior to the sale of the Property, the only sources of
Partnership income consisted of income from rental operations at the Property
and interest earned on Partnership reserves.

In conjunction with the acquisition of the Property, the Partnership entered
into a guarantee agreement (the "Guarantee Agreement") with the Special Limited
Partner, (now an affiliate of the Managing General Partner), which required the
Special Limited Partner to make payments as provided in the Guarantee Agreement,
if and when necessary, in an amount sufficient to enable the Partnership to
provide the Limited Partners with minimum distributions through December 1996.
Through 1994 the Special Limited Partner funded $13,130,998 pursuant to the
Guarantee Agreement, which includes the $350,000 referred to below. Commencing
in 1994, distributions to the partners are being made from cash flow from
operations.

Pursuant to a Memorandum of Understanding entered into on August 11, 1995, the
Special Limited Partner agreed to pay to the Partnership the sum of $350,000 in
two equal installments of $175,000 each; the first such $175,000 payment was
made in August 1995 and the second payment was made in May 1996. These payments
represent the amount of a real estate tax refund received in 1994 for
overpayment of prior year taxes which had previously been offset against amounts
receivable from the Special Limited Partner under the Guarantee Agreement.

Approvals from the City of Los Angeles were obtained to "privatize" the streets
and alleys providing access to the Property and to construct wrought iron
security fencing with controlled entrances into the Property. The final
resolution vacating the streets and alleys was approved on December 31, 1994.
Landscaping, and the construction of the perimeter fencing and related
improvements, including a guardhouse at the Ambassador Street entrance and a
directory/trellis at the Peerless Street location were completed in 1998 at a
cost to the Partnership of $845,570.

RESULTS OF OPERATIONS

Occupancy averaged 97.5 percent for the year ended December 31, 1998, as
compared to an average of 95 percent for the years ended December 31, 1997 and
1996. The Property was 94 and 95 percent occupied as of December 31, 1998 and
1997, respectively. Rental income increased in 1998 and 1997 as a result of the
increase in occupancy and an increase in rental charges per unit. Included in
the interest and other income is interest income earned on cash and cash
equivalents of $242,000, $176,000 and $135,000 in 1998, 1997 and 1996,
respectively. Interest income increased in 1998 and 1997 as a result of the
increase in cash and cash equivalents. The Partnership has its cash and cash
equivalents on deposit primarily with one money market mutual fund.

Included in general and administrative expenses for 1997 is $300,000 in expense
reimbursements to the Non-Managing General Partner. In accordance with the
Partnership Agreement, partnership expense reimbursements, not to exceed $50,000
annually, are payable to the Non-Managing General Partner. The expense
reimbursements for 1991 through 1996 in the amount of $300,000, which were
previously disputed, were expensed and paid in 1997. The amounts related to 1997
and 1998 were expensed and paid in 1998.

The Partnership has assessed the potential impact of the Year 2000 computer
systems issue on its operations. The Partnership believes that no significant
actions are required to be taken by the Partnership to address the issue and
that the impact of the Year 2000 computer systems issue will not materially
affect the Partnership's future operating results or financial condition.

The Operating Partnership purchased the property from the Partnership on
December 30, 1998.


<PAGE>   7

In July 1998, a consent solicitation statement was sent to the limited partners
setting forth the terms and conditions of the purchase of the property owned by
the Partnership by the Operating 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
property, the consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.


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.


<PAGE>   8


                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                              FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULES
                   AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORTS
                                DECEMBER 31, 1998




<PAGE>   9


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
Century HillCreste Apartment Investors, L.P.
(A California limited partnership)

We have audited the accompanying balance sheets of Century HillCreste Apartment
Investors, L.P. (a California limited partnership) as of December 31, 1998 and
1997, and the related statements of income, partners' capital (deficiency) and
cash flows for each of the three years in the period ended December 31, 1998.
Our audits also included the financial statement schedule listed in the index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century HillCreste Apartment
Investors, L.P. as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.

As discussed in Note 1, the Partnership sold its rental property on December 30,
1998. The Partnership intends to dissolve in 1999.




DELOITTE & TOUCHE LLP

Los Angeles, California
April 6, 1999


<PAGE>   10

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
Real-Equity Partners
(A California limited partnership)

We have audited the accompanying balance sheets of Real-Equity Partners (a
California limited partnership) as of December 31, 1997 and 1996, and the
related statements of operations, partners' equity (deficiency) and cash flows
for each of the three years in the period ended December 31, 1997. Our audits
also included the financial statement schedule listed in the index on item 14.
These financial statements and financial statement schedule are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Real-Equity Partners as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


DELOITTE & TOUCHE LLP

Los Angeles, California
April 6, 1998

<PAGE>   11


                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 1998 AND 1997

                                     ASSETS

<TABLE>
<CAPTION>
                                                      1998               1997
                                                   -----------       -----------
<S>                                                <C>               <C>        
RENTAL PROPERTY (Note 1, 2 and 3)                  $        --       $34,013,326

CASH DUE FROM ESCROW (Note 2)                       57,836,152                --

CASH AND CASH EQUIVALENTS (Note 1)                   5,505,534         4,100,537

RESTRICTED CASH (Notes 1 and 5)                        158,700           158,700

OTHER ASSETS                                            94,363            39,001
                                                   -----------       -----------
                                                   $63,594,749       $38,311,564
                                                   ===========       ===========

                       LIABILITIES AND PARTNERS' CAPITAL

ACCOUNTS PAYABLE AND ACCRUED
  LIABILITIES                                      $   436,035       $   367,529

SECURITY DEPOSITS                                           --           297,622

PREPAID RENT                                                --            16,866
                                                   -----------       -----------
                                                       436,035           682,017

COMMITMENTS AND CONTINGENCIES (Note 5)

PARTNERS' CAPITAL (Note 1)                          63,158,714        37,629,547
                                                   -----------       -----------
                                                   $63,594,749       $38,311,564
                                                   ===========       ===========
</TABLE>




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


<PAGE>   12

                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                              STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                  1998            1997            1996
                                              -----------      ----------      ----------
<S>                                           <C>              <C>             <C>       
REVENUES
     Rental income                            $ 6,298,221      $5,960,474      $5,410,156
     Interest and other income                    266,438         189,377         218,216
                                              -----------      ----------      ----------
                                                6,564,659       6,149,851       5,628,372
                                              -----------      ----------      ----------
EXPENSES
     Operating                                  1,372,244       1,255,071       1,165,010
     Property taxes                               522,497         514,306         537,717
     Management fee (Note 4)                      187,167         177,002         177,320
     General and administrative (Note 4)          434,601         758,946         367,599
     Depreciation                                 761,312         705,556         705,556
                                              -----------      ----------      ----------
                                                3,277,821       3,410,881       2,953,202
                                              -----------      ----------      ----------

INCOME FROM OPERATIONS                          3,286,838       2,738,970       2,675,170

GAIN ON SALE OF RENTAL PROPERTY (Note 2)       24,646,417              --              --
                                              -----------      ----------      ----------
NET INCOME                                    $27,933,255      $2,738,970      $2,675,170
                                              ===========      ==========      ==========
NET INCOME PER DEPOSITORY UNIT                $      3.85      $     0.38      $     0.37
                                              ===========      ==========      ==========
</TABLE>





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


<PAGE>   13

                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                  STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY)
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                              Special Limited
                                 General           Limited       Partner
                                 Partners         Partners       (Note 1)         Total
                                ---------       ------------  --------------- ------------
<S>                             <C>             <C>                <C>        <C>         
BALANCE, JANUARY 1, 1996        $(287,786)      $ 37,105,541       $  --      $ 36,817,755

DISTRIBUTIONS (Note 7)            (17,131)        (2,239,292)         --        (2,256,423)

NET INCOME FOR 1996                26,752          2,648,418          --         2,675,170
                                ---------       ------------       -----      ------------
BALANCE, DECEMBER 31, 1996       (278,165)        37,514,667          --        37,236,502

DISTRIBUTIONS (Note 7)            (23,459)        (2,322,466)         --        (2,345,925)

NET INCOME FOR 1997                27,390          2,711,580          --         2,738,970
                                ---------       ------------       -----      ------------
BALANCE, DECEMBER 31, 1997       (274,234)        37,903,781          --        37,629,547

DISTRIBUTIONS (Note 7)            (24,040)        (2,380,048)         --        (2,404,088)

NET INCOME FOR 1998               279,333         27,653,922          --        27,933,255
                                ---------       ------------       -----      ------------
BALANCE, DECEMBER 31, 1998      $ (18,942)      $ 63,177,656       $  --      $ 63,158,714
                                =========       ============       =====      ============
</TABLE>



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


<PAGE>   14

                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                           1998               1997              1996
                                                                       ------------       -----------       -----------
<S>                                                                    <C>                <C>               <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net  income                                                       $ 27,933,255       $ 2,738,970       $ 2,675,170
     Adjustments to reconcile net income to net
        cash provided by operating activities:
           Gain on sale                                                 (24,646,417)
           Depreciation                                                     761,312           705,556           705,556
           Other assets                                                     (55,362)           15,597           (39,496)
           Accounts payable and accrued liabilities                          68,506           (45,928)           54,098
           Due to general partners                                                                  0          (150,000)
           Security deposits                                               (297,622)          (17,622)            5,145
           Prepaid rent                                                     (16,866)          (58,717)           28,618
                                                                       ------------       -----------       -----------
              Net cash (used in) provided by operating activities         3,746,806         3,337,856         3,279,091
                                                                       ------------       -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments received pursuant to the minimum
        distribution guarantee                                                   --                --           175,000
     Rental property                                                        (18,463)         (381,857)         (445,250)
     Cash proceeds from sale of property                                     80,743                --                --
                                                                       ------------       -----------       -----------
             Net cash provided by (used in) investing activities             62,280          (381,857)         (270,250)
                                                                       ------------       -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Distributions to partners                                           (2,404,088)       (2,345,925)       (2,256,423)
                                                                       ------------       -----------       -----------
NET INCREASE IN CASH AND CASH
     EQUIVALENTS                                                          1,404,997           610,074           752,418

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                              4,100,537         3,490,463         2,738,045
                                                                       ------------       -----------       -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                                 $  5,505,534       $ 4,100,537       $ 3,490,463
                                                                       ============       ===========       ===========
</TABLE>




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


<PAGE>   15

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Organization

        Century HillCreste Apartment Investors, L.P. (the "Partnership"), a
        California limited partnership, was formed on June 6, 1988, with
        National Partnership Investments Corp. (the "Managing General Partner"),
        and HillCreste Properties Inc. (the "Non-Managing General Partner") as
        the general partners (collectively, the "General Partners"). On October
        26, 1988, the Partnership issued to investors (the "Limited Partners")
        7,258,000 depositary units (each depositary unit being entitled to the
        beneficial interest of a limited partnership interest), for a total
        amount raised of $72,580,000, through a public offering.

        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.

        Concurrent with the issuance of the depositary units, the Partnership
        purchased a 315-unit apartment complex in the Century City area of Los
        Angeles, California (the "Property") from Casden Properties (the
        "Seller"). To complete the purchase of the Property, the Seller
        purchased a 10% special limited partnership interest in the Partnership
        for $6,855,000 and became the Special Limited Partner of the
        Partnership.

        Among other things, the Partnership Agreement provides that the 10%
        special limited partnership interest be subordinate to the other Limited
        Partners' specified priority return in the case of distributions of net
        cash flow from operations, plus the other Limited Partners' return of
        capital in the case of net sales or refinancing distribution proceeds.

        On December 30, 1998, the Partnership sold the Property for $58,500,000
        to the Operating Partnership. The partners intend to dissolve the
        Partnership in 1999.

        Use of Estimates

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



                                        5
<PAGE>   16

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        Depreciation

        Depreciation is reported using the straight-line method over the
        estimated useful lives of the buildings, improvements and furniture and
        equipment as follows:

<TABLE>
              <S>                                                 <C>
              Buildings                                           35 years
              Improvements                                        15 years
              Furniture and equipment                              5 years
</TABLE>

              Minimum Distribution Guarantee

        The minimum distribution guarantee payments from the Seller have been
        reflected as a reduction in the carrying amount of the Property.

        For its contribution of $6,855,000, the Seller has rights to receive an
        allocation of the Partnership's net cash from operations, after the
        Limited Partners receive a specified priority return, and certain
        distributions upon liquidation.

        Cash and Cash Equivalents

        Cash and cash equivalents consist of cash and bank certificates of
        deposit with an original maturity of three months or less. The
        Partnership has its cash and cash equivalents on deposit primarily with
        one money market mutual fund. Such cash and cash equivalents are
        uninsured.

        Restricted Cash

        Restricted cash consists of bank certificates of deposits assigned to
        the City of Los Angeles in lieu of purchasing a subdivision improvement
        bond to effectuate the privatization of city streets located within the
        Property's perimeter (see Note 5).

        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
        partners.

        Net Income Per Depository Unit

        Net income per depository unit was computed by dividing the Limited
        Partners' share of net income (99%) by the number of depository units
        outstanding during the year. The number of depository units was
        7,258,000 for all years presented.



                                        6
<PAGE>   17

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        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.

2.      RENTAL PROPERTY

        At December 31, 1997, rental property consisted of the following:

<TABLE>
        <S>                                                  <C>
        Land                                                 $16,175,000
        Buildings                                             24,694,402
        Furniture and equipment                                3,870,000
        Improvements                                             827,107
                                                             -----------
                                                              45,566,509

        Less:  Accumulated depreciation                       11,553,183
                                                             -----------
                                                             $34,013,326
                                                             ===========
</TABLE>

        On December 30, 1998, the Partnership sold the Property for $58,500,000
        to the Operating Partnership, an affiliate of NAPICO. The sale resulted
        in net cash proceeds to the Partnership of $57,916,894 and a gain of
        $24,646,417. Substantially all of the cash proceeds were held in escrow
        at December 31, 1998 and were collected subsequent to year end.

3.      MINIMUM DISTRIBUTION GUARANTEE RECEIVABLE FROM PARTNER

        The Minimum Distribution Guarantee Agreement (the "Guarantee Agreement")
        required the Seller, who is also the Special Limited Partner, to make
        payments to the Partnership, if and when necessary, in an amount
        sufficient to enable the Partnership to provide the Limited Partners
        with distributions sufficient to achieve a minimum annual return upon
        the Limited Partners' investment in the Partnership, through December
        31, 1993, as follows:

<TABLE>
<CAPTION>
        Years Ended December 31,               Annual Return on Investment
        ------------------------               ---------------------------
               <S>                                     <C>
               1988                                    8.0%
               1989                                    8.0%
               1990                                    8.5%
               1991                                    9.0%
               1992                                    9.0%
               1993                                    9.0%
</TABLE>

                                        7
<PAGE>   18

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


3.      MINIMUM DISTRIBUTION GUARANTEE RECEIVABLE FROM PARTNER (CONTINUED)

        Pursuant to a Memorandum of Understanding entered into on August 11,
        1995, the Seller agreed to pay to the Partnership the sum of $350,000 in
        two equal installments of $175,000 each; the first such $175,000 payment
        was made in August 1995 and the second payment was made in May 1996.
        These payments represent the amount of a real estate tax refund received
        in 1994 for overpayment of prior year taxes which had previously been
        offset against amounts receivable from the Seller under the Guarantee
        Agreement.

        Through December 31, 1996, the Seller has funded a total of $13,130,998
        directly to the Partnership for distributions to the Limited Partners
        pursuant to the Guarantee Agreement, which includes the $350,000,
        referred to above. The period covered by the Guarantee Agreement expired
        on December 31, 1993. Except with respect to the payments made or to be
        made pursuant to the Memorandum of Understanding, commencing in 1994,
        distributions to the Partners were made from cash flow from operations.

4.      FEES PAID TO GENERAL PARTNERS AND AFFILIATES

        In accordance with the Partnership and other agreements, certain fees
        and reimbursements have been paid to the general partners and their
        affiliates as follows:

        a.    A partnership management fee of $50,000 annually is paid to the
              Managing General Partner. This fee is included in general and
              administrative expenses for 1998, 1997 and 1996.

        b.    Partnership expense reimbursements, not to exceed $50,000
              annually, are paid to the Non- Managing General Partner. The
              Non-Managing General Partner expense reimbursements for 1990
              through 1996 in the amount of $350,000, which were previously
              disputed, were paid in the year ended December 31, 1997. Of this
              amount, $50,000 was expensed in 1990 and the balance of $300,000
              was expensed and included in general and administrative expenses
              for 1997. The amounts related to 1997 and 1998 were expensed and
              paid in 1998.

        c.    The Managing General Partner is entitled to receive 1% of
              distributions (as defined in the Partnership Agreement) which are
              made by the Partnership. The distributions received by the
              Managing General Partner for the years ended December 31, 1998,
              1997 and 1996 were $24,040, $23,459 and $17,131, respectively.

        d.    The Partnership is obligated to pay certain fees to the Managing
              General Partner or its affiliates upon sale of the Property. The
              payment of such fees is subordinated to certain preferred returns
              to the Limited Partners.


                                        8

<PAGE>   19

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


5.      COMMITMENTS AND CONTINGENCIES

        a.    Approvals from the City of Los Angeles were obtained to
              "privatize" the streets and alleys providing access to the
              Property and to construct wrought iron security fencing with
              controlled entrances into the Property. The final resolution
              vacating the streets and alleys was approved on December 31, 1994.
              Landscape and the construction of the perimeter fencing and
              related improvements, including a guardhouse at the Ambassador
              Street entrance and a directory/trellis at the Peerless Street
              location were completed in 1998.

              As a condition to its approval of the proposed "privatization",
              the City of Los Angeles required the construction of a storm drain
              and related improvements, for which an improvement agreement and
              guarantee in the amount $158,700 has been filed with the City of
              Los Angeles. The Partnership has pledged a certificate of deposit
              in such amount to the City to secure the improvement guarantee.
              Contracts in the amount of $767,000 and $60,685 had been awarded
              to construct the wrought iron security fencing and to construct a
              storm drain and related improvements, respectively, for which
              construction work commenced in September 1996. The work was
              completed in 1998 at a cost to the Partnership of $845,570.

        b.    The Managing General Partner of the Partnership is a plaintiff in
              various lawsuits and has also been named as a defendant in other
              lawsuits arising from transactions in the ordinary course of
              business. In the opinion of management and the Managing General
              Partner, the claims will not result in any material liability to
              the Partnership. In addition, the Partnership was involved in the
              actions described below:

        c.    The Partnership, NAPICO, and several of NAPICO's officers,
              directors and affiliates 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 order
              concerns, in part, the treatment of Partnership funds deposited
              between September 1991 and July 1993 in a master disbursement
              account used by the Partnership's previous property management
              company. The Commission found that those funds should have been
              recorded on the Partnership's books and reported in its financial
              statements as related party accounts receivable rather than as
              cash as done so by the Partnership's auditors. Although the
              Commission found that this misclassification of current assets
              violated federal securities laws, the Commission did not find that
              these violations were intentional nor did the Commission find that
              limited partners had suffered any loss or damage as a result of
              these violations. Moreover, the Commission's order does not impose
              any cost, burden or penalty on the Partnership and does not impact
              NAPICO's ability to serve as the Partnership's Managing General
              Partner.

              The events that gave rise to the Commission's order occurred in or
              before 1993. Subsequent corrective action by the Partnership and
              its general partners precludes any recurrence of the cash
              management issues described in the Commission's order.


                                        9

<PAGE>   20

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996



5.      COMMITMENTS AND CONTINGENCIES (CONTINUED)

        d.    On February 13, 1997, J/B Investment Partners ("J/B") filed an
              action in the Los Angeles Superior Court (the "J/B Lawsuit"),
              against the Managing General Partner and its directors, and Casden
              Properties and certain of its affiliates (collectively, the
              "Defendants").

              By order dated November 25, 1997, the Los Angeles Superior Court
              dismissed the J/B Lawsuit with prejudice. No appeal has been
              taken.

              The J/B Lawsuit was styled as a class action brought against the
              Defendants on behalf of all limited partners of the Partnership,
              and a derivative action brought on behalf of the Partnership
              itself. The Partnership was named as a "nominal defendant." The
              complaint in the J/B Lawsuit contained four causes of action: (a)
              breach of fiduciary duty; (b) breach of contract; (c) unjust
              enrichment; and (d) equitable relief.

        e.    The Partnership has assessed the potential impact of the Year 2000
              computer systems issue on its operations. The Partnership believes
              that no significant actions are required to be taken by the
              Partnership to address the issue and that the impact of the Year
              2000 computer systems issue will not materially affect the
              Partnership's future operating results or financial condition.

6.      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. The carrying amount of assets
        and liabilities reported on the balance sheets that require such
        disclosure approximates fair value due to their short-term maturity.

7.      SUBSEQUENT EVENT

        In January 1998, the Partnership distributed $601,022 to the General and
        Limited Partners related to 1997. In addition, in March 1999, the
        Partnership distributed $59,058,362 to the Limited Partners, $1,572,434
        to the Special Limited Partner and $222,534 to the General Partner,
        primarily using cash proceeds from the sale of the property.
        Approximately $2,000,000 was retained by the Partnership pending
        dissolution of the Partnership.



                                       10


<PAGE>   21

                                                                    SCHEDULE III


                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1998


NOTES:   1.   Rental property is stated at cost. Depreciation is provided
              for on the straight-line method over the estimated useful lives of
              the assets. Substantially all of the apartments are leased on a
              month-to-month basis.

         2.   The partnerships interest in the land, buildings, and equipment
              was disposed of on December 30, 1998.

         3.   Investment in rental property:


<TABLE>
<CAPTION>
                                                      Buildings, Improvements
                                                          and Furniture
                                                               and
                                         Land                Equipment                Total
                                     ------------     -----------------------      ------------
<S>                                  <C>                    <C>                    <C>         
Balance, January 1, 1996             $ 16,175,000           $ 28,739,402           $ 44,914,402

Less:  minimum distribution
  guarantee amounts funded
  in 1996                                      --               (175,000)              (175,000)

Additions: Improvements                        --                445,250                445,250
                                     ------------           ------------           ------------
Balance, January 1, 1997               16,175,000             29,009,652             45,184,652

Additions:  Improvements                       --                381,857                381,857
                                     ------------           ------------           ------------
Balance, December 31, 1997             16,175,000             29,391,509             45,566,509

Additions: Improvements                        --                 18,463                 18,463

Sale of property                      (16,175,000)           (29,409,972)           (45,584,972)
                                     ------------           ------------           ------------
Balance, December 31, 1998           $         --           $         --           $         --
                                     ============           ============           ============
</TABLE>


<PAGE>   22
                                                                    SCHEDULE III
                                                                     (Continued)

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                              Buildings, Improvements
                                                                   and Furniture
                                                                        and
                                                                     Equipment
                                                              -----------------------
<S>                                                                <C>         
ACCUMULATED DEPRECIATION:

Balance, January 1, 1996                                           $ 10,142,071

Provision for the year ended
December 31, 1996                                                       705,556
                                                                   ------------
Balance, January 1, 1997                                             10,847,627

Provision for the year ended
December 31, 1997                                                       705,556
                                                                   ------------
Balance, December 31, 1997                                           11,553,183

Provision for the year ended
December 31, 1998                                                       761,312

Sale of Property                                                    (12,314,495)
                                                                   ------------
Balance, December 31, 1998                                         $         -- 
                                                                   ============
</TABLE>




<PAGE>   23

PART III.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (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. 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, 69, 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 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.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of 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, 47, President 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.

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, 53, Chairman of Casden Properties Inc. and The Casden Company,
an affiliate of Casden Properties (formerly CoastFed Properties), a director and
member of the audit committee of NAPICO, and chairman of the Executive Committee
of NAPICO.

Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Corp. He also became the
Chairman of the Board of Casden Properties, Inc. in 1998. Previously, he was the
president and chairman of Mayer Group, Inc., which he joined in 1975. Mr. Casden
has been involved in approximately $3 billion of real estate financings and
sales and has been responsible for the

<PAGE>   24

development and construction of more than 12,000 apartment units and 5,000
single-family homes and condominiums.

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, and the President's Council of the California
Building Industry Association. He also serves on the advisory board to the
School of Accounting of the University of Southern California. He holds a
Bachelor of Science degree from the University of Southern California.

HENRY C. CASDEN, 55, President of Casden Properties Inc., President, Chief
Operating Officer and Secretary of The Casden Company and a director and
secretary of NAPICO.

Mr. Casden has been President and Chief Operating Officer of The Casden Company,
as well as a director of NAPICO since February 1988. He became secretary of both
companies in late 1994. He also became the President of Casden Properties Inc.
in 1998. From 1982 to 1988, Mr. Casden was of counsel and a partner in the Los
Angeles law firm of Troy, Casden & Gould. From 1978 to 1981, he was of counsel
and a partner in the Los Angeles law firm of Loeb & Loeb. From 1972 to 1978, Mr.
Casden was a member of the Beverly Hills law firm of Fink & Casden, Professional
Corporation.

Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.

PAUL PATIERNO, 42, Chief Financial Officer.

Mr. Patierno joined NAPICO in 1998 and is responsible for its financial affairs,
as well as the limited partnerships sponsored by it. From 1995 until joining
NAPICO in September 1998, Mr. Patierno was a senior manager in the affordable
housing group of Altschuler, Melvoin and Glasser LLP, a national public
accounting firm. From 1990 to 1995, he practiced public accounting with a firm
specializing in real estate syndication. Mr. Patierno received his bachelor of
science degree in accounting from California State University at Northridge, and
is a member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants.

PATRICIA W. TOY, 69, 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.

MARK L. WALTHER, 38, Executive Vice President, General Counsel and Assistant
Secretary.

Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.


<PAGE>   25

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.

ITEM 11.  MANAGEMENT REMUNERATION AND TRANSACTIONS:

In accordance with the Partnership Agreement, certain fees and reimbursements
are paid to the general partners and their affiliates as follows:

(a)     A partnership management fee of $50,000 annually is paid to the Managing
        General Partner. This fee is included in general and administrative
        expenses for 1998, 1997 and 1996.

(b)     Partnership expense reimbursements of $50,000 annually are paid to the
        Non-Managing General Partner. The Non-Managing General Partner expense
        reimbursements for 1990 through 1996 in the amount of $350,000, which
        were previously disputed, were paid in the year ended December 31, 1997.
        Of this mount, $50,000 was expensed in 1990 and was included in accounts
        payable and accrued liabilities at December 31, 1996. The balance of
        $300,000 was expensed and included in general and administrative
        expenses for 1997. The amounts related to 1997 and 1998 were expensed
        and paid in 1998.

(c)     1% of distributions (as defined in the Partnership Agreement) is payable
        to the Managing General Partner.

(d)     The Partnership is obligated to pay fees to the Managing General Partner
        or its affiliates upon sale of the Property based upon the form of such
        sale. The payment of such fees is subordinated to certain preferred
        returns to the Limited Partners.

ITEM 12.  SECURITY OF OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT:

(a)     Security of Ownership of Certain Beneficial Owners

        The General Partners own all of the outstanding general partnership
        interests of the Partnership; no person is known to own beneficially in
        excess of 5% of the outstanding limited partnership interests.


<PAGE>   26

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 Managing General Partner. The transactions with the
Managing General Partner are primarily in the form of fees paid by the
Partnership to the General Partners or their affiliates for services rendered to
the Partnership, as discussed below:

(a)     A partnership management fee of $50,000 annually is paid to the Managing
        General Partner. This fee is included in general and administrative
        expenses for 1996, 1995 and 1994.

(b)     Partnership expense reimbursements of $50,000 annually are paid to the
        Non-Managing General Partner. The Non-Managing General Partner expense
        reimbursements for 1990 through 1996 in the amount of $350,000, which
        were previously disputed, were paid in the year ended December 31, 1997.
        Of this amount, $50,000 was expensed in 1990 and the balance of $300,000
        was expensed and included in general and administrative expenses for
        1997. The amounts related to 1997 and 1998 were expensed and paid in
        1998.

(c)     1% of distributions (as defined in the Partnership Agreement) is payable
        to the Managing General Partner.

(d)     The Partnership is obligated to pay fees to the Managing General Partner
        or its affiliates upon sale of the Property based upon the form of such
        sale. The payment of such fees is subordinated to certain preferred
        returns to the Limited Partners.

(e)     The Special Limited Partner receives an allocation of the Partnership's 
        net cash flow from operations, after the Limited Partners receive a
        specified priority return, and certain distributions upon liquidations.

On December 30, 1998, the Operating Partnership purchased the Partnership's real
estate assets for $58,500,000, resulting in a net gain of $24,646,417.

<PAGE>   27

PART IV.

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, 1998 and 1997.

Statements of Income for the years ended December 31, 1998, 1997 and 1996.

Statements of Partners' Capital (Deficiency) for the years ended December 31,
1998, 1997 and 1996.

Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996.

Notes to Financial Statements.

FINANCIAL STATEMENT SCHEDULE:

Schedule III - Real Estate and Accumulated Depreciation, December 31, 1998.

The remaining schedules are omitted because any 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
        Registration #33-22857 incorporated herein by reference.

(10)    Material contracts: The registrant is not party to any material
        contracts, other than the Amended and Restated Certificate and Agreement
        of Limited Partnership dated September 8, 1988 and the contracts
        representing the Partnership's acquisition of its apartment project as
        previously filed at the Securities Exchange Commission, File #33-22857
        which is hereby incorporated by reference.

REPORTS ON FORM 8-K

A report on Form 8-K dated December 10, 1996, was filed with the Securities and
Exchange Commission. This Form 8-K disclosed that the registrant became aware of
an entity conducting a tender offer for up to 320,000 units in the registrant
for $4.25 per Unit.


<PAGE>   28

                                   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.


CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.

By:     NATIONAL PARTNERSHIP INVESTMENTS CORP.
        The Managing 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/ HENRY C. CASDEN
-----------------------------------
Henry C. Casden
Director


/s/ PAUL PATIERNO
-----------------------------------
Paul Patierno
Chief Financial Officer