402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                              FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997




                                Table of Contents


                                                                           Page

Independent Auditors' Report                                               F-45

Balance Sheets as of December 31, 1999 and 1998                            F-46

Statements of Operations for the Years Ended December 31, 1999,
 1998 and 1997                                                             F-47

Statements of Changes in Partners' Equity (Deficit) for the Years
 Ended December 31, 1999, 1998 and 1997                                    F-48

Statements of Cash Flows for the Years Ended December 31, 1999,
 1998 and 1997                                                             F-49

Notes to Financial Statements                                              F-50



                                      F-44

<PAGE>




                          INDEPENDENT AUDITORS' REPORT




The Partners
402 Julia Street Associates Limited Partnership
Boston, Massachusetts


We have audited the accompanying  balance sheets of 402 Julia Street  Associates
Limited  Partnership (the Partnership) as of December 31, 1999 and 1998, and the
related statements of operations, changes in partners' equity (deficit) and cash
flows for each of the years in the  three-year  period ended  December 31, 1999.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of 402 Julia Street  Associates
Limited  Partnership  as of December  31, 1999 and 1998,  and the results of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December  31,  1999 in  conformity  with  generally  accepted  accounting
principles.


Lefkowitz, Garfinkel, Champi & DeRienzo P.C.


Providence, Rhode Island
February 4, 2000



                                      F-45

<PAGE>



                 402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                                 BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>


                                     ASSETS

                                                              1999                         1998
                                                       --------------------        ----------------------

<S>                                                          <C>                         <C>
Investment in real estate:
     Land                                                    $     132,800               $       132,800
     Building and improvements                                   1,581,571                     1,581,571
                                                       --------------------        ----------------------
                                                                 1,714,371                     1,714,371
     Less accumulated depreciation                                 395,129                       355,590
                                                       --------------------        ----------------------

                                                                 1,319,242                     1,358,781

Cash                                                               109,638                        91,640
Cash equivalent, security deposits                                  19,743                        19,318
Accounts receivable                                                  1,500                         1,314
Real estate tax and insurance escrow                                24,592                        24,119
Replacement reserve                                                 26,699                        26,039
Deferred financing fees, less accumulated
     amortization (1999, $6,082; 1998 $1,789)                       36,845                        41,138
                                                       --------------------        ----------------------

                                                            $    1,538,259               $     1,562,349
                                                       ====================        ======================


                        LIABILITIES AND PARTNERS' EQUITY


Liabilities:
     Mortgage note payable                                  $    1,084,010               $     1,096,135
     Accounts payable and accrued expenses                           8,824                        12,325
     Accrued interest                                                6,043                         6,111
     Security deposits                                              21,309                        21,359
                                                       --------------------        ----------------------

         Total liabilities                                       1,120,186                     1,135,930

Commitments (Note 4)

Partners' equity                                                   418,073                       426,419
                                                       --------------------        ----------------------

                                                            $    1,538,259               $     1,562,349
                                                       ====================        ======================

</TABLE>


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

                                      F-46

<PAGE>

                 402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>

                                                     1999                   1998                   1997
                                               ------------------     ------------------     ------------------
<S>                                               <C>                    <C>
Revenue:

         Rental income                             $    237,008           $    228,249           $    232,631
         Interest and other income                        3,711                  5,498                  9,502
                                               ------------------     ------------------     ------------------

         Total revenue                                  240,719                233,747                242,133
                                               ------------------     ------------------     ------------------

Expenses:

         Operating and administrative                    27,347                 29,695                 37,681
         Management fees                                 19,377                 23,842                 23,075
         Repairs and maintenance                         46,005                 39,366                 33,249
         Utilities                                        6,220                  7,757                  5,401
         Real estate taxes                                6,066                  5,967                  5,836
         Insurance                                        8,821                  9,335                  7,813
         Depreciation and amortization                   43,832                 56,405                 44,062
                                               ------------------     ------------------     ------------------

         Total expenses                                 157,668                172,367                157,117
                                               ------------------     ------------------     ------------------

Income from operations                                   83,051                 61,380                 85,016

Interest expense                                         72,897                 87,929                101,235
                                               ------------------     ------------------     ------------------


Net income (loss)                                   $    10,154           $    (26,549)          $    (16,219)
                                               ==================     ==================     ==================
</TABLE>



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

                                      F-47

<PAGE>







                 402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
               STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                  Historic
                                Preservation
                                 Properties
                                1989 Limited                                   Limited
                                Partnership             Developers             Partner                 Total
                             -------------------    -------------------    -----------------     ------------------
<S>                             <C>                    <C>                     <C>                  <C>
Balance,
December 31, 1996                $     368,747          $      137,471          $       (31)         $     506,187

Distributions                                -                 (18,500)                   -                (18,500)

Net loss                               (10,596)                (5,623)                    -                (16,219)
                             -------------------    -------------------    -----------------     ------------------

Balance, December 31, 1997             358,151                113,348                   (31)               471,468

Distributions                                -                (18,500)                    -                (18,500)

Net loss                               (17,344)                (9,205)                                     (26,549)
                             -------------------    -------------------    -----------------     ------------------

Balance,December 31, 1998              340,807                 85,643                   (31)               426,419


Distributions                                -                (18,500)                    -                (18,500)

Net income                               6,634                  3,520                     -                 10,154
                             -------------------    -------------------    -----------------     ------------------

Balance,
December 31, 1999                $     347,441           $     70,663           $       (31)         $     418,073
                             ===================    ===================    =================     ==================
</TABLE>



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

                                      F-48

<PAGE>

                 402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>
                                                                     1999                1998               1997
                                                                ----------------    ---------------     --------------

<S>                                                                 <C>               <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                $  10,154         $  (26,549)         $ (16,219)
    Adjustments to reconcile net income (loss) to net cash
       provided by operating activities:
         Depreciation and amortization                                  43,832             56,405             44,062
         Increase in accounts receivable                                  (186)                 -             (1,314)
         Increase (decrease) in accounts payable and
           accrued expenses                                             (3,501)            (3,000)            10,700
         Increase (decrease) in security deposits, net                    (475)             1,376                (78)
         Decrease in accrued interest                                      (68)            (2,302)               (50)
                                                                ----------------    ---------------     --------------

    Net cash provided by operating activities                           49,756              25,930             37,101
                                                                ----------------    ---------------     --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Increase in real estate tax and insurance escrow
             and replacement reserve                                    (1,133)            (5,514)           (11,457)
                                                                ----------------    ---------------     --------------

    Cash used in investing activities                                   (1,133)            (5,514)           (11,457)
                                                                ----------------    ---------------     --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from refinancing                                                -          1,100,000                  -
    Payment on mortgage note payable                                         -         (1,005,764)                 -
    Payment of deferred financing fees                                       -            (42,927)                 -
    Principal payments on mortgage notes payable                       (12,125)            (7,652)            (6,002)
    Distributions                                                      (18,500)           (18,500)           (18,500)
                                                                ----------------    ---------------     --------------
    Net cash provided by (used in) financing activities                (30,625)            25,157            (24,502)
                                                                ----------------    ---------------     --------------

NET INCREASE IN CASH                                                    17,998             45,573              1,142

CASH, BEGINNING OF YEAR                                                 91,640             46,067             44,925
                                                                ----------------    ---------------     --------------

CASH, END OF YEAR                                                    $ 109,638         $   91,640          $  46,067
                                                                ================    ===============     ==============

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest                                           $  72,965         $   90,231          $ 101,285
                                                                ================    ===============     ==============


</TABLE>


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

                                      F-49

<PAGE>

                 402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


(1)      Organization and Description of Business

         402 Julia Street Associates Limited  Partnership (the  Partnership),  a
         Delaware limited partnership,  was formed on July 25, 1989 to acquire a
         19,000  square  foot  site and the  building  situated  thereon  in New
         Orleans,  Louisiana,  and rehabilitate the building into 24 residential
         apartment  units and  approximately  3,500 net rentable  square feet of
         commercial  space known as the Loft (the Property).  The Partnership is
         owned by Historic Preservation Properties 1989 Limited Partnership (HPP
         1989) as a general partner  (65.33%),  by Henry M. Lambert and R. Carey
         Bond (the  Developers)  as general  partners  (34.66%),  and by John D.
         Lambert III (the Limited Partner) as a limited partner (.01%).

         At December 31, 1999, the  Partnership  had leased 100%  (unaudited) of
         the residential apartment units and commercial space.

(2)      Basis of Presentation and Significant Accounting Policies

         Basis of accounting

         The  Partnership's  financial  statements  are  prepared on the accrual
         basis of accounting in accordance  with generally  accepted  accounting
         principles.

         Use of estimates

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

         Investment in real estate and depreciation

         Investment  in real  estate  is held  for  lease  and  stated  at cost.
         Depreciation  is provided over the estimated  economic  useful lives of
         the assets using the straight-line method.

         Depreciation  expense for each of the years ended  December  31,  1999,
         1998 and 1997 totaled $39,539.

         Cash, cash equivalents and concentration of credit risk

         The Partnership considers all highly liquid investments with a maturity
         of three  months or less when  purchased to be cash  equivalents.  Cash
         equivalents at December 31, 1999 and 1998 totaled  $19,743 and $19,318,
         respectively.

         At December 31, 1999 and 1998, the Partnership had $36,132 and $13,041,
         respectively of cash and cash equivalents on deposit in banks in excess
         of amounts insured by the Federal Deposit Insurance Corporation.

         Deferred financing fees

         Deferred  financing fees are being amortized on a  straight-line  basis
         over the term of the mortgage note.  Amortization expense for the years
         ended  December 31, 1999,  1998, and 1997 totaled  $4,293,  $16,866 and
         $4,523, respectively.  Amortization expense for the year ended December
         31, 1998 includes  $15,077 of previously  deferred fees relating to the
         mortgage note refinanced during July 1998 (see Note 3).




                                      F-50

<PAGE>




(2)      Basis of Presentation and Significant Accounting Policies (Continued)

         Revenue recognition

         Revenue from commercial units,  principally under short-term  operating
         leases,  is recorded when due.  Approximately  half of all  residential
         apartment units are rented under  short-term  operating  leases and the
         remaining  residential  apartment  units  and all  commercial  space is
         rented under  month-to-month  arrangements.  Rental revenue is recorded
         when due.

         Income taxes

         No   provision   (benefit)   for  income  taxes  is  reflected  in  the
         accompanying   financial   statements  since  income  or  loss  of  the
         Partnership  is  required  to be  reported  in the tax  returns  of the
         respective partners.

(3)      Mortgage Note Payable

         On July 17, 1998,  402 Julia  refinanced  its mortgage  note payable by
         issuing a promissory  note to a new lender in the amount of $1,100,000,
         bearing  interest at 6.69%,  amortizing over 30 years,  and maturing in
         August 2008 at which time all unpaid interest and principal is due. The
         mortgage note requires  monthly  payments of principal and interest and
         real estate tax and insurance escrow deposits in the aggregate  amounts
         of $7,091,  and $1,312,  respectively.  The mortgage note also requires
         monthly  replacement  reserve  deposits  of $300  which the  lender has
         waived  until the  lender  determines  that the  Property  is not being
         maintained in accordance with, or an event of default occurs under, the
         agreements related to the mortgage note payable.

         At December 31, 1999,  annual  maturities of the mortgage note for each
         of the next five years are as follows:



                     Year Ending December 31,                   Amount

                               2000                       $    12,962
                               2001                            13,856
                               2002                            14,812
                               2003                            15,834
                               2004                            16,926

         The mortgage note is secured by the Partnership's  property,  rents and
         assignment of leases.

(4)      Transactions with Related Party and Commitments

         The  Partnership  has a  month-to-month  property  management and lease
         broker agreement with a company owned by the Developers (the Affiliate)
         to manage the Property  for a fee equal to 6% of gross rental  receipts
         and to serve as the  lease  broker  for a fee  equal to one half of one
         month's rent for each lease signed or  continuation  of existing rental
         relationship.  For the years ended  December 31,  1999,  1998 and 1997,
         fees paid under this agreement  totaled  $19,377,  $23,842 and $23,075,
         respectively.

         The Partnership reimbursed to the Affiliate certain payroll and related
         payroll costs totaling $12,723, $11,686 and $11,437 for the years ended
         December 31, 1999, 1998 and 1997, respectively.


                                     F-51

<PAGE>

(5)      Leases

         Real  estate tax and  operating  expense  reimbursements  for the years
         ended  December 31,  1999,  1998 and 1997  totaled  $1,284,  $1,401 and
         $2,655, respectively, and have been reported as a reduction of expenses
         in the accompanying financial statements.

         In  most  cases,  management  expects  that  in the  normal  course  of
         business, commercial leases will be renewed or replaced by other leases
         and month-to-month arrangements with residential and commercial tenants
         will be continued or replaced by short-term operating leases.

(6)      Fair Value of Financial Instruments

         The  carrying  amounts  of cash,  cash  equivalent  security  deposits,
         accounts receivable,  real estate tax and insurance escrow, replacement
         reserve,  accounts payable and accrued  expenses,  accrued interest and
         security  deposits  approximate  their fair values at December 31, 1999
         and 1998 due to their short maturities.  The fair value of the mortgage
         note  payable at December 31, 1999 and 1998  approximates  its carrying
         amount  based  on  the  interest  rates  currently   available  to  the
         Partnership   for  similar   financing   arrangements.   All  financial
         instruments are held for non-trading purposes.



                                     F-52