THE COSMOPOLITAN AT MEARS PARK, LLC
                             FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996



<PAGE>



                     THE COSMOPOLITAN AT MEARS PARK, LLC
                             FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


                              Table of Contents



                                                                          Page

Independent Auditors' Report                                              F-21

Balance Sheets as of December 31, 1998 and 1997                           F-22

Statements  of Operations  for the Years Ended  December 31,
1998 and 1997 and for the Period March 15, 1996 (Inception) 
through December 31, 1996                                                 F-23

Statements  of Changes in Members'  Equity  (Deficit)  for the
Years Ended December 31, 1998 and 1997 and for the Period  March 15,
1996  (Inception)through December 31, 1996                                F-24

Statements  of Cash Flows for the Years Ended  December  31, 
1998 and 1997 and the Period March 15, 1996 (Inception) through
December 31, 1996                                                         F-25

Notes to Financial Statements                                             F-27



















                                     F-20
                         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,  1998 and 1997,  and the
related statements of operations,  changes in members' equity (deficit) and cash
flows for the years ended  December  31, 1998 and 1997 and for the period  March
15, 1996 (inception)  through December 31, 1996. 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, 1998 and 1997,  and the results of its  operations
and its cash flows for the years then  ended and for the period  March 15,  1996
(inception)  through  December 31, 1996 in conformity  with  generally  accepted
accounting principles.



Lefkowitz, Garfinkel, Champi & DeRienzo P.C.



Providence, Rhode Island
February 16, 1999











                                     F-21
                     THE COSMOPOLITAN AT MEARS PARK, LLC
                                BALANCE SHEETS
                          DECEMBER 31, 1998 AND 1997


                                    ASSETS
                                                         1998         1997
                                                         ----------   ----------

Investment in real estate:
   Land                                                 $1,009,000    $1,009,000
   Building and improvements                             6,215,517     6,194,821
   Furniture and equipment                                 226,060       207,476
                                                         ----------   ----------
                                                         7,450,577     7,411,297
      Less accumulated depreciation                        644,376       407,054
                                                         ----------   ----------
                                                         6,806,201     7,004,243

Cash                                                        58,439        51,763
Cash equivalent, security deposits                          82,275        21,069
Real estate tax escrow                                      94,279        56,557
Replacement reserve                                         43,023        38,641
Rent receivable                                              1,949         1,775
Prepaid expenses                                            20,080        17,563
Deferred financing fees, less accumulated amortization
   (1998, $91,697; 1997, $58,349)                          141,700       175,048
                                                         ----------   ----------
                                                        $7,247,946    $7,366,659
                                                        ==========    ==========
                                                                 
                               LIABILITIES AND MEMBERS' EQUITY
Liabilities:
   Mortgage note payable                                $6,779,916    $6,868,764
   Accounts payable and accrued expenses                   102,821        61,499
   Accrued interest                                         51,640        52,317
   Security deposits                                       110,630       103,955
                                                        ----------    ----------
   Total liabilities                                     7,045,007     7,086,535

Commitments (Notes 4 and 5)

Members' equity                                            202,939       280,124
                                                        ----------    ----------
                                                                 
                                                        $7,247,946    $7,366,659
                                                        ==========    ==========
                                                                 











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

                                     F-22
<PAGE>

                     THE COSMOPOLITAN AT MEARS PARK, LLC
                           STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


                                       1998         1997         1996
                                   ----------   ----------   ----------

Revenue:

   Rental income                   $2,464,338   $2,302,138   $1,659,166
   Interest and other income           23,559       26,254       15,637
                                   ----------   ----------   ----------
                    
            Total revenue           2,487,897    2,328,392    1,674,803
                                   ----------   ----------   ----------
                                  

Expenses:

   Operating and administrative       272,679      232,858      171,672
   Management fee                      99,507       93,136       66,819
   Repairs and maintenance            224,506      228,972      164,186
   Utilities                          325,242      315,586      237,425
   Real estate taxes                  370,602      332,496      251,926
   Insurance                           32,980       32,590       22,839
   Depreciation and amortization      270,670      267,827      197,576
                                   ----------   ----------   ----------
                                  
            Total expenses          1,596,186    1,503,465    1,112,443
                                   ----------   ----------   ----------
                                   

Income from operations                891,711      824,927      562,360

Interest expense                      623,467      631,259      497,692
                                   ----------   ----------   ----------
                                  
Net income                         $  268,244   $  193,668   $   64,668
                                   ==========   ==========   ==========
                                  

















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

                                     F-23

<PAGE>



                     THE COSMOPOLITAN AT MEARS PARK, LLC
              STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


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



Capital contributions             $   650,000       $        -     $   650,000

Distributions                         (61,750)         (98,200)       (159,950)

Net income                             32,334           32,334          64,668
                                 --------------  ---------------  --------------
                                
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

Distribution                         (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
                                 ==============  ===============   ============















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

                                     F-24


<PAGE>



                     THE COSMOPOLITAN AT MEARS PARK, LLC
                           STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


                                             1998          1997          1996
                                        ------------  ------------  ------------
                                              

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                             $ 268,244    $  193,668    $   64,668
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
      Depreciation and amortization         270,670       267,827       197,576
      Decrease (increase) in rent 
       receivable                              (174)       (1,077)        5,835
      Increase in prepaid expenses           (2,517)       (2,352)      (15,211)
      Increase (decrease) in accounts 
       payable and accrued expenses          41,322        (2,548)     (129,496)
      Decrease (increase) in cash 
       equivalent, security deposits, net   (54,531)       87,589        (6,981)
      Increase (decrease) in accrued 
       interest                                (677)         (618)       52,935
                                        ------------  ------------  ------------
                                       
    Net cash provided by operating
     activities                             522,337       542,489       169,326
                                        ------------  ------------  ------------
                                      

CASH FLOWS FROM INVESTING ACTIVITIES:
    Funds disbursed for acquisition 
    of real estate and property assets
    and liabilities                               -             -      (650,000)
    Purchase of improvements, furniture 
    and equipment                           (39,280)      (16,721)     (101,734)
    Decrease (increase) in real estate 
    tax escrow and replacement reserve      (42,104)        6,661        66,557
                                        ------------  ------------  ------------
    Net cash used in investing 
     activities                             (81,384)      (10,060)     (685,177)
                                        ------------  ------------  ------------
                                     
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from member contribution        35,288             -       650,000
    Principal payments on mortgage note
     payable                                (88,848)      (81,115)      (50,121)
    Distributions to members               (380,717)     (468,262)     (159,950)
                                        ------------  ------------  ------------
    Net cash provided by (used in)
     financing activities                  (434,277)     (549,377)      439,929
                                        ------------  ------------  ------------
                       
NET INCREASE (DECREASE) IN CASH               6,676       (16,948)      (75,922)

CASH, BEGINNING                              51,763        68,711       144,633
                                        ------------  ------------  ------------
CASH, END OF YEAR                        $   58,439    $   51,763    $   68,711
                                        ============  ============  ============
                  

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:

    Cash paid for interest               $  624,144    $  631,877    $  444,757
                                        ============  ============  ============




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

                                     F-25
<PAGE>

                     THE COSMOPOLITAN AT MEARS PARK, LLC
                     STATEMENTS OF CASH FLOWS (CONTINUED)
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


NON-CASH INVESTING ACTIVITY:

   On March 15, 1996, Historic Preservation  Properties 1989 Limited Partnership
contributed the following  assets and  liabilities to The  Cosmopolitan at Mears
Park, LLC:

   Land                                                          $   1,009,000
   Building and improvements                                         6,074,104
   Furniture and equipment                                             200,994
   Cash and cash equivalents                                           144,633
   Cash, security deposits                                              94,093
   Real estate tax escrow                                              168,416
   Rent receivable                                                       6,533
   Deferred financing fees                                             233,397
   Mortgage note payable paid by TCAMP on behalf of HPP'89          (7,650,000)
   Accounts payable and accrued expenses                              (184,799)
   Security deposits                                                   (96,371)


Also,  on March 15, 1996,  The  Cosmopolitan  at Mears Park,  LLC paid the above
noted  $7,650,000  mortgage  note in full  with  the  proceeds  of a  $7,000,000
mortgage  note issued to a lender and  $650,000 of cash  contributions  received
from a Member.






















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

                                     F-26

<PAGE>




                     THE COSMOPOLITAN AT MEARS PARK, LLC
                        NOTES TO FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


(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,
      1998, 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, 1998,  1997 and for
      the period March 15, 1996 (inception)  through December 31, 1996 totaled $
      237,322, $234,485 and $172,569, respectively.




                                     F-27
                     THE COSMOPOLITAN AT MEARS PARK, LLC
                  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


(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, 1998 and 1997 totaled $81,990 and $21,069, respectively.

      At  December   31,  1998  and  1997,   TCAMP  had  $81,990  and   $20,980,
      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, 1998,  1997 and for
      the period March 15, 1996  (inception)  through  December 31, 1996 totaled
      $33,348, $33,342 and $25,007, 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, $30,884 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, 1998,  annual  maturities of the mortgage note for each of
      the next five years are as follows:
                 Year Ending December 31,         Amount

                           1999                $  97,321
                           2000                  106,599
                           2001                  116,761
                           2002                  127,891
                           2003                6,331,344

                                     F-28
                     THE COSMOPOLITAN AT MEARS PARK, LLC
                  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


(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,  1999 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 $99,507,  $93,136 and $66,819,  respectively,
      for the years ended December 31, 1998,  1997 and the period March 15, 1996
      (inception)  through December 31, 1996. Expense  reimbursements to CMC for
      the years ended  December  31,  1998,  1997 and the period  March 15, 1996
      (inception)  through  December  31, 1996  totaled  $282,412,  $264,484 and
      $208,820, respectively.

      During the period March 15, 1996  (inception)  through  December 31, 1996,
      TCAMP  paid  $8,744 in  construction  management  fees to First  Claremont
      Corporation, an affiliate of CMC.

(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-29
                     THE COSMOPOLITAN AT MEARS PARK, LLC
                  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                     AND
     FOR THE PERIOD MARCH 15, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996


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

      Distributions  to Lillian  Carney for the years ended  December  31, 1998,
      1997 and for the period  March 15, 1996 to December 31, 1996 include a 12%
      preferred   return  of  $6,944,   $42,035   and   $61,750,   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,  1998 and  1997,  the  carrying  amounts  of cash,  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, 1998 and 1997  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-30