402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                                    FINANCIAL STATEMENTS
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996





                      402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                                    FINANCIAL STATEMENTS
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996




                                     Table of Contents


                                                                            Page

Independent Auditors' Report                                                F-43

Balance Sheets as of December 31, 1998 and 1997                             F-44

Statements of Operations for the Years Ended December 31, 1998, 1997 and
  1996                                                                      F-45

Statements  of Changes in Partners'  Equity  (Deficit)  for the Years
  Ended December 31, 1998, 1997 and 1996                                    F-46

Statements of Cash Flows for the Years Ended December 31, 1998, 1997 
  and 1996                                                                  F-47

Notes to Financial Statements                                               F-48



































                                            F-42



                                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, 1998 and
1997,  and the related  statements of  operations,  changes in partners  equity
(deficit) and cash flows for the years then ended.  These  financial  statements
are the responsibility of the Partnerships 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.

     Because we were not engaged to audit the statements of operations,  changes
in partners  equity  (deficit)  and cash flows for the year ended  December 31,
1996,  we did not  extend  our  auditing  procedures  to enable us to express an
opinion on the results of operations,  changes in partners equity (deficit) and
cash flows of 402 Julia Street Associates Limited Partnership for the year ended
December 31, 1996. Accordingly, we express no opinion on them.

     In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material  respects,  the financial  position of 402 Julia
Street Associates Limited  Partnership as of December 31, 1998 and 1997, and the
results of its  operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.


Lefkowitz, Garfinkel, Champi & DeRienzo P.C.


Providence, Rhode Island
February 16, 1999




















                                            F-43
<PAGE>

                      402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                                       BALANCE SHEETS
                                 DECEMBER 31, 1998 AND 1997





                                          ASSETS

                                                          1998           1997
                                                       ----------     ----------


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                             355,590        316,051
                                                       ----------     ----------
                                                        1,358,781      1,398,320

Cash                                                       91,640         46,067
Cash equivalent, security deposits                         19,318         19,094
Accounts receivable                                         1,314          1,314
Real estate tax and insurance escrow                       24,119         20,944
Replacement reserve                                        26,039         23,700
Deferred financing fees, less accumulated
   amortization (1998, $1,789; 1997 $30,154)               41,138         15,077
                                                       ----------     ----------
                                                       $1,562,349     $1,524,516
                                                       ==========     ==========
                                                      

                         LIABILITIES AND PARTNERS EQUITY


Liabilities:
   Mortgage note payable                               $1,096,135     $1,009,551
   Accounts payable and accrued expenses                   12,325         15,325
   Accrued interest                                         6,111          8,413
   Security deposits                                       21,359         19,759
                                                        ---------      ---------
 
      Total liabilities                                 1,135,930      1,053,048

Commitments (Note 4)

Partners' equity                                          426,419        471,468
                                                        ---------      ---------
                                                       $1,562,349     $1,524,516
                                                        =========      =========










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

                                            F-44
<PAGE>

                      402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                                  STATEMENTS OF OPERATIONS
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


                                         1998           1997           1996
                                    --------------  -------------   ------------
                                                                     (Unaudited)

Revenue:

      Rental income                 $    228,249     $   232,631       $241,273
      Interest and other income            5,498           9,502          5,234
                                       --------------  -------------   ---------
      Total revenue                      233,747         242,133        246,507
                                       --------------  -------------   ---------
Expenses:

      Operating and administrative         29,695         37,681         24,362
      Management fees                      23,842         23,075         22,400
      Repairs and maintenance              39,366         33,249         26,830
      Utilities                             7,757          5,401          8,371
      Real estate taxes                     5,967          5,836          6,046
      Insurance                             9,335          7,813         11,546
      Depreciation and amortization        56,405         44,062         50,236
                                       --------------  -------------   ---------
                                       
      Total expenses                      172,367        157,117        149,791
                                       --------------  -------------   ---------
                                     
Income from operations                     61,380         85,016         96,716

Interest expense                           87,929        101,235        101,809
                                       --------------  -------------   ---------
Net loss                               $  (26,549)     $ (16,219)      $ (5,093)
                                       ==============  =============   =========
                                      



















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

                                            F-45



<PAGE>


                      402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


                           Historic
                         Preservation
                          Properties
                         1989 Limited                     Limited
                         Partnership      Developers      Partner      Total
                         -------------   -------------  ----------  ------------

Balance,
December 31, 1995          
(Unaudited)             $    372,074         157,737        (31)      $ 529,780

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

Net loss                      (3,327)         (1,766)         -          (5,093)
                         -------------   -------------  -------------  ---------
                       
Balance,
December 31, 1996            368,747         137,471        (31)        506,187
(Unaudited)

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
                             
                         =============   =============  =============  =========
                         




















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

                                            F-46
<PAGE>

                      402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                                  STATEMENTS OF CASH FLOWS
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


                                             1998         1997         1996
                                          -----------  -----------   ----------
                                                                     (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                              $   (26,549)  $ (16,219)    $   (5,093)
   Adjustments to reconcile net loss
     to net cash provided by operating
     activities:
      Depreciation and amortization           56,405      44,062         50,236
      Decrease (increase)in accounts        
        receivable                                 -      (1,314)           377
      Increase (decrease)in accounts
        payable and accrued expenses          (3,000)     10,700         (4,625)
      Increase(decrease)in security            
        deposits, net                          1,376         (78)           743
      Decrease in accrued interest            (2,302)        (50)           (45)
                                          -----------  -----------     ---------
    Net cash provided by operating    
      activities                              25,930        37,101       41,593
                                            -----------  -----------   ---------
                                          

CASH FLOWS FROM INVESTING ACTIVITIES:
   Increase in   real   estate   tax 
     and insurance escrow and replacement
     reserve                                   (5,514)     (11,457)      (3,620)
                                            -----------  -----------   ---------
   Cash used in investing activities           (5,514)     (11,457)      (3,620)
                                            -----------  -----------   ---------
                                           

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                              (7,652)      (6,002)      (5,433)
   Distributions                              (18,500)     (18,500)     (18,500)
                                            -----------  -----------   ---------
   Net   cash   provided   by   (used
    in)financing activities                    25,157      (24,502)     (23,933)
                                            -----------  -----------   ---------
                                            
NET INCREASE IN CASH                           45,573        1,142       14,040

CASH, BEGINNING OF YEAR                        46,067       44,925       30,885
                                            -----------  -----------   ---------

CASH, END OF YEAR                           $  91,640    $  46,067     $ 44,925
                                           ===========  ===========   ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for interest                    $ 90,231    $ 101,285     $101,854
                                            ===========  ===========   =========













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

                                            F-47
<PAGE>

                      402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                               NOTES TO FINANCIAL STATEMENTS
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


(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 a  general  partner
(34.66%),  and by John D. Lambert III (the Limited Partner) as a limited partner
(.01%).

     At December 31, 1998, 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 the  years  ended
December  31,  1998,  1997  and  1996  totaled  $39,539,   $39,539  and  $45,713
(unaudited), respectively.

      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, 1998 and 1997 totaled $19,318 and $19,094, respectively.

     At  December  31,  1998,  the  Partnership  had  $13,041  of cash  and cash
equivalents  on  deposit in banks in excess of  amounts  insured by the  Federal
Deposit Insurance Corporation. At December 31, 1997, the Partnership had no 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 each of the years ended
December  31,  1998,  1997,  and  1996  totaled   $16,866,   $4,523  and  $4,523
(unaudited), 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-48



                     402 JULIA STREET ASSOCIATES LIMITED PARTNERSHIP
                         NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996





(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, 1998,  annual  maturities  of the mortgage note for each of
the next five years are as follows:


                Year Ending December 31,                  Amount

                          1999                        $   12,145
                          2000                            12,962
                          2001                            13,856
                          2002                            14,812
                          2003                            15,834

     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,  1998,  1997 and 1996,  fees paid  under  this  agreement  totaled
$23,842, $23,075 and $22,400 (unaudited), respectively.

     The  Partnership  reimbursed to the Affiliate  certain  payroll and related
payroll costs totaling  $11,686,  $11,437 and $7,657  (unaudited)  for the years
ended December 31, 1998, 1997 and 1996, respectively.







                                            F-49

(5)   Leases

     Real estate tax and operating  expense  reimbursements  for the years ended
December 31, 1998, 1997 and 1996 totaled $1,401,  $2,655 and $2,581 (unaudited),
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, 1998 and 1997 due to their short  maturities.
The fair value of the  mortgage  note  payable  at  December  31,  1998 and 1997
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-50