U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	FINANCIAL STATEMENTS AND SCHEDULES 

	December 31, 1998, 1997 and 1996

	(With Independent Auditors' Report Thereon)






























	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)


	Table of Contents


                                                            Page
                                                           Number


Independent Auditors' Report                                 1

Financial Statements:

   Balance Sheets                                            2

   Statements of Operations                                  3

   Statements of Partnership Equity                          4

   Statements of Cash Flows                                  5

   Notes to Financial Statements                            6-12 
 

Independent Auditors' Report on Accompanying Schedules       13

Schedules:

   Schedule V - Property and Improvements                    14

   Schedule VI - Accumulated Depreciation of
      Property and Improvements                              15







Independent Auditors' Report





Members of the Partnership
U.S. Realty Income Partners, L.P.
Nashville, Tennessee


We have audited the balance sheets of U.S. Realty Income 
Partners, L.P. (a limited partnership) (the Partnership) as of 
December 31, 1998 and 1997 and the related statements of 
operations, partnership equity, and cash flows for the years 
ended December 31, 1998, 1997 and 1996.  The 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 audits 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 U.S. Realty Income Partners, L.P. as of December 31, 1998 and 
1997 and the results of its operations and its cash flows for the 
years ended December 31, 1998, 1997 and 1996, in conformity with 
generally accepted accounting principles.





January 26, 1999
Murfreesboro, Tennessee  S/N Dempsey Vantrease & Follis PLLC


	U. S. Realty Income Partners, L.P.
	(A Limited Partnership)

	BALANCE SHEETS

	December 31, 1998 and 1997


	Assets

                                            1998         1997    

Cash                                     $   295,485  $  477,135 

Tenant receivables                            32,901       1,996

Property, plant and equipment, net of 
   accumulated depreciation of 
   $1,580,106 in 1998 and $1,424,675 
   in 1997                                 3,729,821   3,885,252

Investment in joint venture                    1,000       1,000

Other assets                                 413,928     256,079 

      Total assets                       $ 4,473,135  $4,621,462 

	Liabilities and Partnership Equity

Notes payable                            $ 3,505,577  $3,557,105 

Accounts payable                                 874       1,187

Accrued expenses                             123,474     120,548 

      Total liabilities                    3,629,925   3,678,840 

Commitments and contingent liabilities

Minority partners' interest in joint 
   venture                                  (130,529)   (102,925)

Partnership equity:
   General Partners, no units authorized    (187,690)   (184,100)
   Limited Partners, 4,858 units 
      authorized, issued, and 
      outstanding                          1,161,429   1,229,647   
      Net partnership equity                 973,739   1,045,547 
 
                                         $ 4,473,135  $4,621,462 

See accompanying notes to financial statements.
	2

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	STATEMENTS OF OPERATIONS

	For the Years Ended December 31, 1998, 1997 and 1996

                                    1998        1997        1996   
  
Revenues:
   Rental income                  $ 533,070  $626,672    $ 629,035
   Common area maintenance           59,999   105,595      114,654
   Interest                          16,883     6,236        3,212 
      Total revenues                609,952   738,503      746,901     

Expenses:
   Interest                         352,958   357,889      362,845
   Legal and professional            20,818    18,268       24,510 
   Depreciation                     155,431   155,381      155,430 
   Amortization                      21,904    21,103       30,925
   Property taxes                    78,229    75,460       68,047
   Leasing and administrative        48,436    44,323       75,068 
   Management fees                   21,783    27,650       27,121
   Repairs and maintenance           31,889    24,889       23,583
   Refinancing costs                   -        2,500       28,543
   Utilities                         16,545    11,998        8,814
   Insurance                          8,715     7,538        3,183 
      Total expenses                756,708   746,999      808,069  

Net loss before minority           
   interest and loss from joint 
   venture                         (146,756)   (8,496)     (61,168)

Minority partner's interest in
   operating (profit) loss           27,604   (18,148)     (12,317)   

Loss from operations               (119,152)  (26,644)     (73,485)

Income from joint venture            47,344    30,709       20,845 

Net earnings (loss)               $ (71,808) $  4,065    $ (52,640)

Net earnings (loss) per unit      $  (14.04) $    .79    $  (10.29)

Weighted average number of units      4,858     4,858        4,858    


See accompanying notes to financial statements.

	3

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	STATEMENTS OF PARTNERSHIP EQUITY

	Years Ended December 31, 1998, 1997 and 1996



                                        Limited    General
                                       Partners    Partners       Total  

Distributive share of net earnings           95%          5%          100%

Balance at December 31, 1995          1,275,793    (181,671)    1,094,122

Net loss of 1996                        (50,008)     (2,632)      (52,640)

Balance at December 31, 1996          1,225,785    (184,303)    1,041,482 

Net earnings of 1997			       3,862         203         4,065  

Balance at December 31, 1997          1,229,647   $(184,100)   $1,045,547  

Net loss of 1998                        (68,218)     (3,590)      (71,808)

Balance at December 31, 1998         $1,161,429   $(187,690)   $  973,739  




















See accompanying notes to financial statements.

	4

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	STATEMENTS OF CASH FLOWS

	Years Ended December 31, 1998, 1997 and 1996

                                     1998       1997        1996   

Cash Flows from Operating Activities

Net loss from operations          $(119,152)  $(26,644)   $ (73,485)
Adjustments to reconcile net
   income to cash provided by 
   operating activities:
      Minority partner's 
         interest in net profit
         (loss) of consolidated
         partnership                (27,604)    18,148       12,317   
      Depreciation                  155,431    155,381      155,430
      Amortization                   21,904     21,103       30,925 
   (Increase) decrease in: 
      Tenant receivable             (30,905)     4,039       (3,283)
      Other assets                 (179,753)   (10,198)      35,000 
   Increase (decrease) in:
      Accounts payable                 (313)    (1,361)        (157)
      Accrued expenses                2,926     37,056        1,625  
Net cash provided by operating
   activities                      (177,466)   197,524      158,372  

Cash Flows from Investing Activities

Distribution from 
   joint venture                     47,344     30,709       20,845  
Net cash used in investing
   activities                        47,344     30,709       20,845  

Cash Flows from Financing Activities

Repayments on mortgage note         (51,528)   (42,927)     (42,571)
Net cash used in financing
  activities                        (51,528)   (42,927)     (42,571)
Net (decrease) increase in 
   cash and cash equivalents       (181,650)   185,306      136,646 
Cash and cash equivalents
   at beginning of year             477,135    291,829      155,183  

Cash and cash equivalents
   at end of year                  $295,485   $477,135     $291,829    

See accompanying notes to financial statements.

	5

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS

	For the Years Ended December 31, 1998, 1997 and 1996


1.	Summary of Significant Accounting Policies

Organization

U.S. Realty Income Partners, L.P. (the Partnership) was formed as a 
limited partnership under the laws of the state of Delaware on 
September 23, 1987.  The Partnership was formed to acquire, operate, 
hold for investment and dispose of residential and commercial 
property.  The general partner is Vanderbilt Realty Joint Venture, a 
Tennessee partnership.  Limited partners were admitted beginning on 
May 15, 1988.  The partnership controls certain shopping center 
property, located in Nashville, Tennessee, through its 66-2/3% 
interest in Bellevue Plaza Partners, a Tennessee joint venture.  This 
joint venture's assets, liabilities and operations are included in 
these financial statements and represent the partnership's primary 
business.  Minority interests represent the 33-1/3% interest held in 
such joint venture by an unaffiliated party.  

The Partnership files its tax return and prepares its financial 
statements under the accrual method of accounting.  

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Partnership 
considers cash on hand, demand deposits with financial institutions, 
and highly liquid financial instruments with a maturity of three 
months or less to be cash and cash equivalents.

Property and Improvements

Property and improvements are recorded at the acquisition cost.  
Depreciation is provided for in amounts sufficient to relate the cost 
of depreciable assets to operations over their estimated service 
lives, using straight-line and accelerated methods.

Investment in Joint Venture

Investment in joint venture currently represents the partnership's 
indirect 4.17% interest in Prudential/Daniel Office Venture, LLC, 
which is stated at cost (note 3).

	6

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1998, 1997 and 1996


1.	Summary of Significant Accounting Policies, (Continued)

	Revenue Recognition
	
	Rent is recorded as income over the lease terms as rents become 
receivable according to provisions of the leases.  Rent from leases 
containing rent-free periods is recognized on a straight-line basis, 
with the related straight-line rent included in tenant receivables  
until payments of rent begin.  The receivables are reduced in each 
subsequent month by the excess of the monthly payments over the 
income.

Earnings per Unit

Earnings per unit are based on the weighted average of limited partner 
units outstanding.

Income Taxes

The financial statements include only the assets and liabilities and 
results of operations which relate to the business of the Partnership. 
No provisions have been made for federal and state income taxes as 
such taxes are the personal responsibility of the partners.

Partnership Allocations

Partnership allocations are made in accordance with the limited 
partnership agreement.  Cash distributions, net earnings or loss and 
taxable income or loss are generally allocated 95% to the limited 
partners and 5% to the general partner.  Liquidation proceeds are 
generally allocated 85% to the limited partners and 15% to general 
partners, after replenishment of negative capital accounts and return 
of limited partners' capital and preferred returns.

Use of Estimates

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates 
and assumptions that affect certain reported amounts and disclosures. 
Accordingly, actual results could differ from those estimates.

7

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1998, 1997 and 1996


2.	Property and Improvements

Property and improvements located at Bellevue Plaza consist of the 
following:

       		                             1998          1997   

Buildings and improvements    $ 4,895,626   $4,895,626
Less accumulated depreciation  (1,580,106)  (1,424,675)
                                3,315,520    3,470,951

Land                              414,301      414,301 

                              $ 3,729,821   $3,885,252 

During the years ended December 31, 1998, 1997 and 1996, the 
Partnership recognized depreciation of $155,431, $155,381,
and $155,430, respectively.

3.	Investment in Joint Venture

The Partnership held a 50% interest in DR/US West End General 
Partnership, a general partnership joint venture formed to own and 
operate a commercial office building in Nashville, Tennessee.

Effective July 28, 1995, the partnership exchanged its interest in the 
assets of DR/US West End General Partnership (DR/US) for an indirect 
4.17% equity interest (held through a limited partnership interest in 
Daniel S.E. Office Limited Partnership) in Prudential/Daniel Office 
Venture, LLC (the LLC).  The LLC, which is controlled by Prudential 
Life Insurance Company of America, owns six office buildings 
(including the DR/US property) located in Nashville, Tennessee and 
Raleigh, North Carolina.  Management believes the fair value of the 
partnership's interest in the LLC approximates capital contributions 
recognized by the LLC (for the 4.17% interest) amounting to 
$1,361,445.  Such capital contributions were valued based on 
management's (unaudited) estimated values of the contributed 
properties.  The LLC interest has been valued in these financial 
statements at $1,000, the partnership's carrying value in the DR/US 
investment.

8

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1998, 1997 and 1996

3.	Investment in Joint Venture, (Continued)

The partnership's income from its joint venture investments is 
determined as follows:
                                         1998     1997       1996   

Distributions from Prudential/Daniel
   Office Venture, LLC                 $47,344  $ 30,709  $ 20,845

4. 	Related Party Transactions

Administration expenses (fees and other costs and expenses) paid to 
the general partner or its affiliates amounted to $40,500 in 1998, 
$36,000 in 1997 and $65,000 in 1996.

5.   Note Payable

The Partnership has a note payable to a financial institution 
amounting to $3,505,577 and $3,557,105 as of December 31, 1998 and 
1997.  The note bears an interest rate of 10% per annum with monthly 
installments of principal and interest of $33,743 payable until July 
1, 1999, when the remaining balance will be due.  The note is 
collateralized by a deed of trust on the Bellevue Plaza property.

6.   Reconciliation of Financial Statements and Tax Returns

                                         1998         1997        1996   
   Net income (loss), per 
      financial statements       $  (71,808) $    4,065   $ (52,640)

   Items treated differently
      on the tax return:
   Net operating loss                 33,855      1,038      (4,003)
   Amortization                      (14,148)   (14,140)    (14,149)

   Net loss, per tax returns      $  (52,101) $  (9,037)  $ (70,792)

The Partnership's federal income tax return is subject to audit and 
possible adjustment by the Internal Revenue Service.




9
	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1998, 1997 and 1996


7. 	Other Assets

Other assets consist of:
								   1998          1997   
   Acquisition fees                     $ 328,447     $ 328,447      
   Lease acquisition costs                 58,583          -        
   Deferred commissions                   148,656        41,021     
                                          535,686       369,468       
       
   Less accumulated amortization         (123,408)     (115,039)     
                                          412,278       254,429       
      
   Accounts receivable from affiliate       1,650         1,650       

                                        $ 413,928     $ 256,079       
       
Acquisition fees are amortized over the life of the acquired property, 
which is 31.5 years.  Deferred commissions and lease acquisition costs 
are amortized over the terms of the related leases.

8.   Leases of Lessor

Bellevue Plaza leases property to others under noncancellable 
operating leases requiring fixed monthly payments over various terms. 
At December 31, 1998, future minimum lease receipts were as follows:

Year Ending December 31:

        1999                            $  430,748        
        2000                               434,766
        2001                               565,530
        2002                               469,273
        2003                               378,833
        2004 and after                   1,090,408 

                                        $3,369,558 

9.   Supplemental Cash Flow Information

Interest paid totaled $353,387 in 1998, $328,247 in 1997 and $362,845 
in 1996.  

10
	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1998, 1997 and 1996

10.  Financial Instruments

The estimated fair values of the partnership's financial instruments, 
as of December 31, 1998 and 1997, were as follows (in thousands):

                                     1998                1997        
                              Carrying      Fair  Carrying      Fair
                              Amount       Value  Amount       Value
Financial assets:
   Cash and cash equivalents  $295       $  295   $477       $  477
   Receivables                  33           33      2            2
   Investment in joint 
      venture                    1        1,361      1        1,361

                              $329       $1,689   $480       $1,840

Financial liabilities:
   Notes payable              $3,506     $3,506   $3,557     $3,557
   Accounts payable                1          1        1          1
   Accrued expenses              123        123      121        121

 	                              $3,630     $3,630   $3,679     $3,679
     
Methods and assumptions used in estimating fair values are summarized 
as follows:

Cash and cash equivalents - Carrying amounts represent a reasonable 
estimate of fair values.

Trade accounts receivable and payable, and accrued expenses - Carrying 
values of these accounts approximate fair value due to their short 
maturities.

Investment in joint venture - Management's estimate of fair value, as 
of December 31, 1998, is based on unaudited estimated values of the 
underlying real estate. Management believes the fair value of the 
partnership's interest in the LLC approximates capital contributions 
recognized by the LLC (for the 4.17% interest) amounting to 
$1,361,445.  Such capital contributions were valued based on 
management's (unaudited) estimated values of the contributed 



11
	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1998, 1997 and 1996

10.  Financial Instruments (Continued)

properties.  The LLC interest has been valued in these financial 
statements at $1,000, the partnership's carrying value in the DR/US 
investment. (note 3)

Note Payable - Carrying value of the note payable approximates market 
value since the terms of the note are similar to those available in 
the current market.

11.	Credit Concentration

	The Partnership maintains cash balances at various financial 
institutions.  Deposits at banks are insured by the Federal Deposit 
Insurance Corporation up to $100,000 at each bank and are within 
insured limits at December 31, 1998.  Deposits with brokerages are 
insured by the Securities Investor Protection Corporation (SIPC) up to 
$100,000 for claims for cash and $400,000 for coverage on securities. 
The Partnership's deposits at brokerages are also within these limits 
at December 31, 1998.

12.  Environmental Contingency

The shopping center property the partnership controls (described in 
note 1) has environmental problems due to a current tenant.  The 
tenant operates in an industry that has a superfund established by the 
State of Tennessee.  This superfund is available to the businesses in 
this industry, however, the state has yet to promulgate rules and 
regulations for use of these funds.  Management anticipates no related 
liability to the partnership since management believes that the 
current tenant is responsible for the cost of the cleanup.












1





	INDEPENDENT AUDITORS' REPORT
	ON ACCOMPANYING SCHEDULES





Members of the Partnership
U.S. Realty Income Partners, L.P.


Our audit was conducted for the purpose of forming an opinion on 
the basic financial statements of taken as a whole.  Schedule V - 
Property and Improvements and Schedule VI - Accumulated 
Depreciation of Property and Improvements are presented for 
purposes of additional analysis and are not a required part of 
the basic financial statements.  Such information has been 
subjected to the auditing procedures applied in the audit of the 
basic financial statements and, in our opinion, is fairly stated 
in all material respects in relation to the basic financial 
statements taken as a whole.






January 26, 1999
Murfreesboro, Tennessee
	













	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	SCHEDULE V - PROPERTY AND IMPROVEMENTS




                                                           
                                                        
                 Balance at                              Balance,
                 Beginning    Additions                  at end
Classification   of Period     At Cost    Retirements   of Period


    1993          5,306,592     2,400          -         5,308,992

    1994          5,308,992       935          -         5,309,927

    1995          5,309,927      -             -         5,309,927
    
    1996          5,309,927      -             -         5,309,927

    1997          5,309,927      -             -         5,309,927

    1998          5,309,927      -             -         5,309,927


















	14

	U.S. Realty Income Partners, L.P.
	(A Limited Partnership)

	SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY AND IMPROVEMENTS




                                                         
                              Additions                  
                 Balance at   Charged to                  Balance,
                 Beginning    Costs and                   at end
Classification   of Period     Expenses    Retirements   of Period


    1993            647,667    155,340          -           803,007

    1994            803,007    155,427          -           958,434

    1995            958,434    155,430          -         1,113,864
    
    1996          1,113,864    155,430          -         1,269,294

    1997          1,269,294    155,381          -         1,424,675

    1998          1,424,675    155,431          -         1,580,106



Depreciation is provided for by the required tax method of depreciating 
commercial real estate; i.e. MACRS.  The Partnership believes this provides 
for a depreciation provision similar to standard book depreciation methods.















	15