<PAGE>




     THE COSMOPOLITAN AT MEARS PARK, LLC FINANCIAL STATEMENTS FOR THE YEARS
                     ENDED DECEMBER 31, 1999, 1998 AND 1997


                                Table of Contents



                                                                           Page

         Independent Auditors' Report                                      F-23

         Balance Sheets as of December 31, 1999 and 1998                   F-24

         Statements of Operations for the Years Ended December 31,
         1999, 1998 and 1997                                               F-25

         Statements of Changes in Members' Equity (Deficit) for the
         Years Ended December 31, 1999, 1998 and 1997                      F-26

         Statements of Cash Flows for the Years Ended December 31,
         1999, 1998 and 1997                                               F-27

         Notes to Financial Statements                                     F-28



                                                       F-22

<PAGE>

                          INDEPENDENT AUDITORS' REPORT



The Members
The Cosmopolitan at Mears Park, LLC
Boston, Massachusetts


We have audited the  accompanying  balance sheets of The  Cosmopolitan  at Mears
Park,  LLC (the  "Company")  as of December  31, 1999 and 1998,  and the related
statements of operations,  changes in members'  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 Company'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 The Cosmopolitan at Mears Park,
LLC 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-23

<PAGE>

                       THE COSMOPOLITAN AT MEARS PARK, LLC
                                 BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                     ASSETS
                                                                                          1999                    1998
                                                                                   --------------------    --------------------
<S>                                                                                     <C>                     <C>
Investment in real estate:
     Land                                                                                $   1,009,000           $   1,009,000
     Building and improvements                                                               6,272,312               6,215,517
     Furniture and equipment                                                                   260,044                 226,060
                                                                                   --------------------    --------------------

                                                                                             7,541,356               7,450,577
         Less accumulated depreciation                                                         889,745                 644,376
                                                                                   --------------------    --------------------

                                                                                             6,651,611               6,806,201

Cash and cash equivalents                                                                      170,117                  58,439
Cash equivalent, security deposits                                                              20,428                  82,275
Real estate tax escrow                                                                          81,557                  94,279
Replacement reserve                                                                             23,750                  43,023
Rent receivable                                                                                  3,241                   1,949
Prepaid expenses                                                                                20,711                  20,080
Deferred financing fees, less accumulated amortization
   (1999, $125,033; 1998, $91,697)                                                             108,364                 141,700
                                                                                   --------------------    --------------------


                                                                                         $   7,079,779           $   7,247,946
                                                                                   ====================    ====================

                                               LIABILITIES AND MEMBERS' EQUITY
Liabilities:
     Mortgage note payable                                                               $   6,682,598           $   6,779,916
     Accounts payable and accrued expenses                                                      66,493                 102,821
     Accrued interest                                                                           50,899                  51,640
     Security deposits                                                                         110,298                 110,630
                                                                                   --------------------    --------------------

     Total liabilities                                                                       6,910,288               7,045,007

Commitments (Notes 4 and 5)

Members' equity                                                                                169,491                 202,939
                                                                                   --------------------    --------------------

                                                                                         $   7,079,779           $   7,247,946
                                                                                   ====================    ====================



</TABLE>


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

                                      F-24

<PAGE>

                       THE COSMOPOLITAN AT MEARS PARK, LLC
                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


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

     Rental income                                            $    2,650,904            $    2,464,338           $   2,302,138
     Interest and other income                                        37,229                    23,559                  26,254
                                                       ----------------------    ----------------------    ----------------------

                  Total revenue                                    2,688,133                 2,487,897               2,328,392
                                                       ----------------------    ----------------------    ----------------------

Expenses:

     Operating and administrative                                    280,630                   272,679                 232,858
     Management fee                                                  107,525                    99,507                  93,136
     Repairs and maintenance                                         243,328                   224,506                 228,972
     Utilities                                                       317,562                   325,242                 315,586
     Real estate taxes                                               344,886                   370,602                 332,496
     Insurance                                                        34,012                    32,980                  32,590
     Depreciation and amortization                                   278,705                   270,670                 267,827
                                                       ----------------------    ----------------------    ----------------------

                  Total expenses                                   1,606,648                 1,596,186               1,503,465
                                                       ----------------------    ----------------------    ----------------------

Income from operations                                             1,081,485                   891,711                 824,927

Interest expense                                                     614,933                   623,467                 631,259
                                                       ----------------------    ----------------------    ----------------------

Net income                                                     $     466,552             $     268,244            $    193,668
                                                       ======================    ======================    ======================

</TABLE>



      The accompanying notes are an integral part of these financial statements.
                                      F-25

<PAGE>




                       THE COSMOPOLITAN AT MEARS PARK, LLC
               STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>

<CAPTION>
                                                                                  Historic
                                                                                Preservation
                                                                              Properties 1989               Total
                                                          Lillian                 Limited                 Members'
                                                           Carney               Partnership                Equity
                                                     -------------------    ---------------------    --------------------

<S>                                                       <C>                    <C>                       <C>
Balance, December 31, 1996                                 $   620,584            $     (65,866)            $   554,718

Distributions                                                 (468,262)                       -                (468,262)

Net income                                                      96,834                   96,834                 193,668
                                                     -------------------    ---------------------    --------------------

Balance, December 31, 1997                                     249,156                   30,968                 280,124


Distributions                                                 (305,717)                 (75,000)               (380,717)

Contribution                                                         -                   35,288                  35,288

Net income                                                     134,122                  134,122                 268,244
                                                     -------------------    ---------------------    --------------------

Balance, December 31, 1998                                      77,561                  125,378                 202,939

Distributions                                                 (250,000)                (250,000)               (500,000)

Net income                                                     233,276                  233,276                 466,552
                                                     -------------------    ---------------------    --------------------

Balance, December 31, 1999                                 $    60,837             $    108,654            $    169,491
                                                     ===================    =====================    ====================

</TABLE>


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

                                      F-26


<PAGE>





      THE COSMOPOLITAN AT MEARS PARK, LLC 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                                                            $  466,552           $  268,244           $  193,668
      Adjustments to reconcile net income to net cash
        provided by operating activities:
         Depreciation and amortization                                        278,705              270,670              267,827
         Increase in rent receivable                                           (1,292)                (174)              (1,077)
         Increase in prepaid expenses                                            (631)              (2,517)              (2,352)
         Increase (decrease) in accounts payable and accrued
            expenses                                                          (36,328)              41,322               (2,548)
         Decrease (increase) in cash equivalent, security
            deposits, net                                                      61,515              (54,531)              87,589
         Decrease in accrued interest                                            (741)                (677)                (618)
                                                                       ----------------    -----------------    -----------------

      Net cash provided by operating activities                               767,780              522,337              542,489
                                                                       ----------------    -----------------    -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of improvements, furniture and equipment                       (90,779)             (39,280)             (16,721)
      Decrease (increase) in real estate tax escrow and
         replacement reserve                                                   31,995              (42,104)               6,661
                                                                       ----------------    -----------------    -----------------

      Net cash used in investing activities                                   (58,784)             (81,384)             (10,060)
                                                                       ----------------    -----------------    -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from member contribution                                             -               35,288                    -
      Principal payments on mortgage note payable                             (97,318)             (88,848)             (81,115)
      Distributions to members                                               (500,000)            (380,717)            (468,262)
                                                                       ----------------    -----------------    -----------------

      Net cash used in financing activities                                  (597,318)            (434,277)            (549,377)
                                                                       ----------------    -----------------    -----------------

NET INCREASE (DECREASE) IN CASH                                               111,678                6,676              (16,948)

CASH, BEGINNING                                                                58,439               51,763               68,711
                                                                       ----------------    -----------------    -----------------


CASH AND CASH EQUIVALENTS, END OF YEAR                                     $  170,117           $   58,439           $   51,763
                                                                       ================    =================    =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

      Cash paid for interest                                               $  615,674           $  624,144           $  631,877
                                                                       ================    =================    =================



</TABLE>




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

                                      F-27

<PAGE>

                       THE COSMOPOLITAN AT MEARS PARK, LLC
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


(1)      Organization and Description of Business

         The  Cosmopolitan  at Mears  Park,  LLC  (TCAMP),  a Limited  Liability
         Company,  was  formed on March 15,  1996,  under the  Delaware  Limited
         Liability  Company Act. The purpose of TCAMP is to engage in investment
         in, and  operation  and  development  of,  real  estate  and  interests
         therein. The members of TCAMP are Historic Preservation Properties 1989
         Limited Partnership and Lillian Carney (the Members).

         Effective March 15, 1996, Historic Preservation Properties 1989 Limited
         Partnership  (HPP'89)  contributed land,  building and improvements and
         furniture and equipment  (Contributed  Real Estate),  and certain other
         assets  and  liabilities  to  TCAMP  for  a  50%  ownership   interest.
         Concurrently,  Lillian Carney contributed  $650,000 cash to TCAMP for a
         50%  ownership  interest.  Simultaneously,  TCAMP  issued a  $7,000,000
         mortgage  note,  the  proceeds  of  which,   along  with  the  $650,000
         contributed  cash,  were used to settle in full HPP'89's  mortgage note
         payable related to the Contributed  Real Estate.  The fair value of the
         Contributed  Real  Estate  and  other  assets   contributed  by  HPP'89
         approximated  the fair  value of  liabilities  transferred  to TCAMP by
         HPP'89 and the amount paid by TCAMP to settle in full HPP'89's mortgage
         note payable related to the Contributed Real Estate.

         TCAMP owns a residential apartment complex containing 255 units located
         at 250 6th Street, St. Paul, Minnesota.  During the year ended December
         31, 1999, the economic occupancy of TCAMP was 97% (unaudited).

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

         Basis of accounting

         TCAMP'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.  Contributed  Real Estate
         was recorded at fair value and subsequent additions are stated at cost.
         Depreciation  is computed on a  straight-line  basis over the estimated
         economic lives of the assets.

         Depreciation  expense for the years ended December 31, 1999, 1998 and
         1997 totaled $245,369,  $237,322 and $234,485, respectively.


                                      F-28

<PAGE>

                       THE COSMOPOLITAN AT MEARS PARK, LLC
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


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

         Cash, cash equivalents and concentration of credit risk TCAMP 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   $45,595  and   $81,990, respectively.

         At  December  31,  1999 and  1998,  TCAMP  had  $134,139  and  $81,990,
         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 have been  capitalized and are being amortized
         on a  straight-line  basis over the term of the mortgage  note payable.
         Amortization  expense for the years ended  December 31, 1999,  1998 and
         1997 totaled $33,336, $33,348 and $33,342, respectively.

         Revenue recognition

         Revenue,  principally  under annual operating  leases, is recorded when
         due. In most cases,  management  expects  that in the normal  course of
         business, leases will be renewed or replaced by other leases.

         Income taxes

         No   provision   (benefit)   for  income  taxes  is  reflected  in  the
         accompanying  financial  statements  since  the  Members  of TCAMP  are
         required to report their  allocable share of net income (loss) on their
         respective income tax returns.

(3)      Mortgage Note Payable and Escrow Accounts

         TCAMP's mortgage note with the lender bears interest at 9.14% per annum
         and  amortizes  over a 25 year  schedule.  The mortgage  note  requires
         monthly  payments of  principal  and  interest,  real estate tax escrow
         deposits  and  replacement  reserve  deposits of  $59,416,  $27,136 and
         $4,250, respectively. The mortgage note matures in March 2003, at which
         time all unpaid  principal  and accrued  interest is due.  The mortgage
         note is secured by TCAMP's property, rents and assignments of leases.

         At December 31, 1999,  annual  maturities  of the mortgage  note are as
         follows:

                               Year Ending December 31,                Amount

                                         2000                      $  106,599
                                         2001                         116,761
                                         2002                         127,891
                                         2003                       6,331,347





                                      F-29

<PAGE>

                       THE COSMOPOLITAN AT MEARS PARK, LLC
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


(4)      Related Party Transaction and Commitment

         TCAMP entered into a management  agreement  with  Claremont  Management
         Corporation  (CMC) to manage the property.  The sole shareholder of CMC
         is related to Lillian  Carney.  The agreement  expires on June 30, 2000
         and  automatically   renews  thereafter  on  an  annual  basis,  unless
         terminated as provided for in the agreement.  The management  agreement
         requires the payment of a management fee equal to the greater of $5,200
         monthly or 4% of gross receipts, as defined in the agreement,  plus the
         reimbursement   of  all  CMC's  costs  of  providing   these  services.
         Management  fees  under  the  management  agreement  totaled  $107,525,
         $99,507 and  $93,136,  respectively,  for the years ended  December 31,
         1999, 1998 and 1997. Expense  reimbursements to CMC for the years ended
         December  31,  1999,  1998  and 1997  totaled  $248,445,  $282,412  and
         $264,484, respectively.

 (5)     Liability of Members and Distributions of Cash

         The liability of the Members for losses, debts and obligations of TCAMP
         is limited to their capital contributions,  except under applicable law
         Members may,  under  certain  circumstances,  be liable to TCAMP to the
         extent of previous  distributions  received by the Members in the event
         TCAMP does not have sufficient assets to discharge its liabilities.

         Distributions  by TCAMP to the Members at the end of each fiscal  year,
         or at such time as determined by the Board of Managers, are as follows:

         (i)      First,  to Lillian Carney in payment of any current or accrued
                  portion of the 12% preferred return on her unreturned original
                  capital contribution;

         (ii)     Second,  to HPP'89, as the Preferred Return, in an amount when
                  added  to  all  other  cash   available  to  HPP'89  from  its
                  operations or any other source equals $140,000;

        (iii)     Third,  to Lillian  Carney in payment of any unpaid  principal
                  portion of Lillian Carney's original capital contribution;

         (iv)     Fourth,  to the payment of any  principal or interest due with
                  respect to any loans from  Members,  with any such payments to
                  be applied  first to accrued but unpaid  interest  and then to
                  principal; and

         (iv)     Fifth, the balance,  if any, to the Members in accordance with
                  their  respective  percentage  interests  (50%  HPP'89 and 50%
                  Lillian Carney).

         To the extent that HPP'89  accumulated from whatever sources  operating
         reserve  amounts  greater than  $140,000 at the end of any fiscal year,
         HPP'89 was required to contribute such excess within thirty days of the
         end of such fiscal year to TCAMP as additional capital contributions to
         be  distributed  by  TCAMP  to  Lillian  Carney  as  a  return  of  the
         outstanding  portion of her  original  capital  contribution  until her
         original capital contribution was reduced to zero.



                                                       F-30

<PAGE>

                       THE COSMOPOLITAN AT MEARS PARK, LLC
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


(5)      Liability of Members and Distributions of Cash (Continued)

         Distributions  to Lillian  Carney for the years ended December 31, 1998
         and  1997  include  a 12%  preferred  return  of  $6,944  and  $42,035,
         respectively.  Distributions  to  Lillian  Carney  for the years  ended
         December  31,  1998 and 1997  also  include a return  of  $223,773  and
         $426,227 of her original  capital  contribution.  On February 27, 1998,
         HPP'89  contributed  to  TCAMP  an  additional   $35,288   representing
         operating  reserves in excess of $140,000 as of December 31, 1997.  The
         funds were then  distributed  to Lillian Carney by TCAMP as a return of
         her original capital contribution.  On May 18, 1998, TCAMP had returned
         the total  outstanding  portion of Lillian Carney's  original  $650,000
         capital contribution. For the remainder of 1998, TCAMP also distributed
         $75,000 each to HPP'89 and Lillian Carney.

(6)      Fair Value of Financial Instruments

         At December 31, 1999 and 1998,  the  carrying  amounts of cash and cash
         equivalents, cash equivalent security deposits, real estate tax escrow,
         replacement  reserve,  rent  receivable,   prepaid  expenses,  accounts
         payable and accrued  expenses,  accrued interest and security  deposits
         approximate their fair values 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 interest rates available to
         TCAMP for similar financing arrangements. All financial instruments are
         held for non-trading purposes.



                                      F-31