EXHIBIT 13











                                               U.S. REALTY INCOME PARTNERS, L.P.
                                                (A DELAWARE LIMITED PARTNERSHIP)

                                               CONSOLIDATED FINANCIAL STATEMENTS



                                                AS OF DECEMBER 31, 2004 AND 2003
                                                         AND FOR THE YEARS ENDED
                                                DECEMBER 31, 2004, 2003 AND 2002






                                       F-1


                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.

                        (A DELAWARE LIMITED PARTNERSHIP)

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2004 AND 2003







                                Table of Contents

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                     Number
                                                                                     ------
<S>                                                                                <C>
Report of Independent Registered Public Accounting Firm.........................       F-3

Consolidated Balance Sheets as of December 31, 2004 and 2003....................       F-4

Consolidated Statements of Earnings for the Years
  ended December 31, 2004, 2003 and 2002........................................       F-5

Consolidated Statements of Changes in Partners' Equity for the Years
  ended December 31, 2004, 2003 and 2002........................................       F-6

Consolidated Statements of Cash Flows for the Years
  ended December 31, 2004, 2003 and 2002........................................       F-7

Notes to Consolidated Financial Statements .....................................   F-8 to F-16

Schedule I - Real Estate and Accumulated Depreciation...........................      F-17
</TABLE>






                                       F-2







                        RAYBURN, BATES & FITZGERALD, P.C.
                 -------- CERTIFIED PUBLIC ACCOUNTANTS --------
                                    SUITE 300
                                5200 MARYLAND WAY
                           BRENTWOOD, TENNESSEE 37027
                                www.rbfcpa.com


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Partners
of U.S. Realty Income Partners, L.P.

We have audited the accompanying consolidated balance sheets of U.S. Realty
Income Partners, L.P. (a Delaware Limited Partnership, hereafter referred to as
the Partnership) as of December 31, 2004 and 2003, and the related consolidated
statements of earnings, changes in partners' equity and cash flows for each of
the years in the two-year period ended December 31,2004. The audit for the year
ended December 31, 2004 also included the financial Schedule I. These
consolidated financial statements and financial schedule are the responsibility
of the Partnerships management.  Our responsibility is to express an opinion on
these consolidated financial statements and financial schedule based on our
audits. The consolidated financial statements of the Partnership for the year
ended December 31, 2002, were audited by other auditors whose report dated
February 4,2003, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Partnership is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Partnership as
of December 31, 2004 and 2003, and the results of its operations and its cash
flows for each of the years in the two-year period ended December 31, 2004 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the financial schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                                       /s/

                                           RAYBURN, BATES & FITZGERALD, P.C.


Brentwood, Tennessee
March 24, 2005


                                      F-3



                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>
                     Assets                                    2004               2003
                     ------                                    ----               ----
<S>                                                         <C>                  <C>
Cash                                                        $   582,545          757,636
Escrow deposits                                                  12,142           18,477
Tenant receivables, no allowance for bad debts
   deemed necessary                                             158,258            6,111
Property and improvements, net of
   accumulated depreciation of $2,558,260
   in 2004 and $2,386,374 in 2003 (note 2)                    3,203,222        3,219,610
Other assets (note 4)                                           517,790          595,004
                                                            -----------       ----------

            Total assets                                    $ 4,473,957        4,596,838
                                                            ===========       ==========

         Liabilities and Partners' Equity
         --------------------------------

Liabilities:
   Note payable (note 5)                                    $ 3,143,358        3,357,658
   Accounts payable                                              18,136           15,373
   Accrued expenses and security deposits                        28,476           32,405
                                                            -----------       ----------

           Total liabilities                                  3,189,970        3,405,436
                                                            -----------       ----------

Minority partners' interest in joint venture                    251,997          121,240
                                                            -----------       ----------
Partners' equity:
   General partner, no units authorized                         (69,778)         (77,869)
   Limited partners, 4,858 units authorized and issued        1,101,768        1,148,031
                                                            -----------       ----------

            Total partners' equity                            1,031,990        1,070,162
                                                            -----------       ----------

           Total liabilities and partners' equity           $ 4,473,957        4,596,838
                                                            ===========       ==========
</TABLE>




See accompanying notes to consolidated financial statements.

                                      F-4




                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

                       CONSOLIDATED STATEMENTS OF EARNINGS

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


<TABLE>
<CAPTION>
                                                          2004             2003           2002
                                                          ----             ----           ----
<S>                                                    <C>                <C>            <C>
Revenues:
   Rental income                                       $   947,026        843,696        822,612
   Common area maintenance (note 8)                        137,705        124,515        124,580
   Interest and other                                        3,827          5,844         11,174
                                                       -----------       --------       --------
        Total revenues                                   1,088,558        974,055        958,366
                                                       -----------       --------       --------

Expenses:
   Interest                                                240,305        254,783        268,903
   Legal and professional                                   38,337         24,807         20,520
   Depreciation                                            171,886        168,487        166,426
   Amortization                                             95,198         95,252         95,234
   Property taxes                                           76,020         76,020         76,020
   State taxes                                              26,895         21,574         12,053
   Leasing and administrative (note 7)                      61,800         67,243         67,030
   Management fees                                          39,891         36,277         35,562
   Repairs and maintenance                                  29,159         32,592         29,992
   Utilities                                                 8,605          8,145          7,882
   Insurance                                                 7,877          9,623          9,098
                                                       -----------       --------       --------
        Total expenses                                     795,973        794,803        788,720
                                                       -----------       --------       --------


Net earnings before minority interest and
   earnings from joint venture                             292,585        179,252        169,646

Minority partner's interest in operating earnings         (130,757)       (84,090)       (79,328)
                                                       -----------       --------       --------

Earnings from operations                                   161,828         95,162         90,318

Earnings from joint venture (note 3)                          --             --           21,746
                                                       -----------       --------       --------

Net earnings                                           $   161,828         95,162        112,064
                                                       ===========       ========       ========

Net earnings per unit                                  $     31.65          18.61          21.91
                                                       ===========       ========       ========

Weighted average number of units                             4,858          4,858          4,858
                                                       ===========       ========       ========
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-5





                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


<TABLE>
<CAPTION>
                                          Limited          General          Total
                                         Partners'         Partner         Partners'
                                          Equity           Equity           Equity
                                          ------           ------           ------
<S>                                     <C>                <C>            <C>
Distributive share of net earnings               95%             5%              100%
                                        -----------        -------        ----------

Balance at December 31, 2001            $ 1,351,166        (88,230)        1,262,936

Net earnings of 2002                        106,461          5,603           112,064

Distributions                              (200,000)          --            (200,000)
                                        -----------        -------        ----------

Balance at December 31, 2002              1,257,627        (82,627)        1,175,000

Net earnings of 2003                         90,404          4,758            95,162

Distributions                              (200,000)          --            (200,000)
                                        -----------        -------        ----------

Balance at December 31, 2003              1,148,031        (77,869)        1,070,162

Net earnings of 2004                        153,737          8,091           161,828

Distributions                              (200,000)          --            (200,000)
                                        -----------        -------        ----------

Balance at December 31, 2004            $ 1,101,768        (69,778)        1,031,990
                                        ===========        =======        ==========
</TABLE>



See accompanying notes to consolidated financial statements.

                                      F-6


                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


<TABLE>
<CAPTION>
                                                                 2004           2003            2002
                                                                 ----           ----            ----
<S>                                                           <C>               <C>            <C>
Cash flows from operating activities:
   Net earnings                                               $ 161,828         95,162         90,318
   Adjustments to reconcile net earnings to cash
     provided by operating activities:
       Minority partner's interest in net profit of
         consolidated partnership                               130,757         84,090         79,328
       Depreciation                                             171,886        168,487        166,426
       Amortization of intangible assets                         95,198         95,252         95,234
       (Increase) decrease in:
         Tenant receivables                                    (152,147)         2,218         (7,343)
         Escrow deposits                                          6,335         (5,555)        (3,029)
         Other assets                                           (17,984)        (9,903)       (11,596)
       Increase (decrease) in:
         Accounts payable                                       (10,397)        12,844          2,513
         Accrued expenses and security deposits                  (3,929)        11,381         (1,750)
                                                              ---------       --------       --------

       Net cash provided by operating activities                381,547        453,976        410,101
                                                              ---------       --------       --------

Cash flows from investing activities:
   Purchase of property and improvements                       (142,338)      (110,560)       (79,190)
   Distribution from joint venture                                 --             --           21,746
                                                              ---------       --------       --------

       Net cash used in investing activities                   (142,338)      (110,560)       (57,444)
                                                              ---------       --------       --------

Cash flows from financing activities:
   Repayments on note payable                                  (214,300)      (199,823)      (185,702)
   Distributions paid                                          (200,000)      (200,000)      (200,000)
                                                              ---------       --------       --------

       Net cash used in financing activities                   (414,300)      (399,823)      (385,702)
                                                              ---------       --------       --------

Decrease in cash and cash equivalents                          (175,091)       (56,407)       (33,045)

Cash and cash equivalents, beginning of period                  757,636        814,043        847,088
                                                              ---------       --------       --------

Cash and cash equivalents, end of period                      $ 582,545        757,636        814,043
                                                              =========       ========       ========

Supplemental disclosure of cash flow information:
  Payments during the period for:
     Interest                                                 $ 240,305        254,783        268,903
                                                              =========       ========       ========
     Taxes                                                    $  17,333          6,492          7,352
                                                              =========       ========       ========

Supplemental disclosure of noncash financing activities:
   Improvements acquired using accounts payable               $  13,160           --             --
                                                              =========       ========       ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-7




                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002




(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 28, 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 (the Joint
          Venture). The 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 the Joint Venture by an unaffiliated party.

       The Partnership and the Joint Venture file their separate tax returns and
          prepare their 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.

       Allowance for Bad Debts
       -----------------------
       Tenants receivable are reviewed monthly and any tenants with balances
          greater than 30 days past due are contacted regarding past due
          amounts. If attempts are unsuccessful in collecting the amounts due,
          the tenant may be evicted if necessary and if balances remain after
          continued collection efforts, the account at that point is
          charged-off.

       The allowance for bad debts represents an amount which, in management's
          judgment, will be adequate to absorb potential uncollectible tenants
          receivable. In determining the adequacy of the allowance, management
          considers the general economic condition, the tenant's financial
          ability and the age of the receivable.

       Property and Improvements
       -------------------------
       Property and improvements are recorded at the acquisition cost.
          Renovations and improvements are capitalized; maintenance and repairs
          are expensed. Depreciation is provided for in amounts sufficient to
          relate the cost of depreciable assets to operations over their
          estimated service lives ranging from 15 to 39 years, using
          straight-line and accelerated methods. The Partnership reviews for
          impairment losses on its real estate assets when events and
          circumstances indicate that the assets might be impaired.

       The Partnership would accrue for losses associated with environmental
          remediation obligations if such losses were probable and reasonably
          estimable. Accruals for estimated losses from environmental
          remediation obligations would generally be recognized no later than
          completion of a remedial feasibility study. Such accruals would be
          adjusted as further information developed or circumstances changed.



                                       F-8



                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(1)    Summary of Significant Accounting Policies: (Continued)
       ------------------------------------------
       Property and Improvements (Continued)
       -------------------------
          Costs of future expenditures for environmental remediation obligations
          would not be discounted for their present value. Recoveries of
          environmental remediation costs from other parties are recorded as
          assets when their receipt is deemed probable. The Partnership's
          management is not aware of any environmental remediation obligations
          which would materially affect the operations, financial position or
          cash flows and therefore has made no loss accruals.

       Other Assets
       ------------
       Lease costs and commissions are amortized over the terms of the
          respective leases. Leases at the shopping center expire from 2005 to
          2009. Loan costs are amortized over the term of the loan which matures
          in 2014. Amortization of lease commissions, included in amortization
          expense, was $23,003, $23,057, and $23,039 in 2004, 2003, and 2002,
          respectively.

       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. During 1999 a lease containing the rent free period was
          amended, whereby rent payments by the tenant began immediately. At
          this time, rent receivable was reclassified as lease acquisition cost
          and is being amortized as described in Note 4.

       The Partnership currently has three tenants in which the rental
          agreements provide for minimum rental payments plus contingent rents
          based on the lessee's gross sales. Contingent rents are recorded as
          income when a change in the factors on which the contingent lease
          payments are based have actually occurred.

       Earnings Per Unit
       -----------------
       Earnings per unit are based on the limited partners' allocation of
          earnings divided by the weighted average of limited partner units
          outstanding.

       Income Taxes
       ------------
       No provisions have been made for federal income taxes as such taxes are
          the personal responsibility of the partners. State franchise and
          excise taxes are provided for the state in which nexus exists for the
          property.

       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.


                                       F-9


                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


(1)    Summary of Significant Accounting Policies: (Continued)
       ------------------------------------------
       Use of Estimates
       ----------------
       The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect certain
          reported amounts and disclosures. Accordingly, actual results could
          differ from those estimates.

       Effect of Implementing New Accounting Standards
       -----------------------------------------------
       The following discusses new accounting standards and the related impact
	  on the Partnership:

           Exchanges of Nonmonetary Assets
           -------------------------------
           In December 2004, the Financial Accounting Standards Board (FASB)
           issued Statement of Financial Accounting Standards No. (SFAS) 153,
           Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,
           Accounting for Nonmonetary Transactions. This statement amends the
           principle that exchanges of nonmonetary assets should be measured
           based on the fair value of the assets exchanged and more broadly
           provides for exceptions regarding exchanges of nonmonetary assets
           that do not have commercial substance. This Statement is effective
           for nonmonetary asset exchanges occurring in fiscal periods beginning
           after June 15, 2005. The adoption of this standard is not expected to
           have a material impact on financial condition, results of operations,
           or liquidity of the Partnership.

           Meaning of Other Than Temporary Impairment
           ------------------------------------------
           In March 2004, the Emerging Issues Task Force (EITF) released Issue
           03-1, Meaning of Other Than Temporary Impairment, which addressed
           other-than-temporary impairment for certain debt and equity
           investments. The recognition and measurement requirements of Issue
           03-1, and other disclosure requirements not already implemented, were
           effective for periods beginning after June 15, 2004. In September
           2004, the FASB staff issued FASB Staff Position (FSP) EITF 03-1-1,
           which delayed the effective date for certain measurement and
           recognition guidance contained in Issue 03-1. The FSP requires the
           application of pre-existing other-than-temporary guidance during the
           period of delay until a final consensus is reached. Management does
           not anticipate that the issuance of the final consensus will have a
           material impact on financial condition, the results of operations, or
           liquidity of the Partnership.

           Accounting for Certain Loans or Debt Securities Acquired in a
           Transfer
           ---------------------------------------------------------------------
           In December 2003, the American Institute of Certified Public
           Accountants issued statement of Position (SOP) 03-3, Accounting for
           Certain Loans or Debt Securities Acquired in a Transfer. SOP 03-3
           requires acquired loans, including debt securities, to be recorded at
           the amount of the purchaser's initial investment and prohibits
           carrying over valuation allowances from the seller for those
           individually-evaluated loans that have evidence of deterioration in
           credit quality since origination, and it is probable all contractual
           cash flows on the loan will be unable to be collected. SOP 03-3 also
           requires the excess of all undiscounted cash flows expected to be
           collected at acquisition over the purchaser's initial investment to
           be recognized as interest income on a level-yield basis over the life
           of the loan. Subsequent increases in cash flows expected to be
           collected are recognized prospectively through an adjustment of the
           loan's yield over its remaining life, while subsequent decreases are
           recognized as impairment. Loans


                                      F-10


                                                         EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


(1)    Summary of Significant Accounting Policies: (Continued)
       ------------------------------------------
           Accounting for Certain Loans or Debt Securities Acquired in a
           -------------------------------------------------------------
           Transfer (Continued)
           --------
           carried at fair value, mortgage loans held for sale, and loans to
           borrowers in good standing under revolving credit agreements are
           excluded from the scope of SOP 03-3. The guidance is effective for
           loans acquired in fiscal years beginning after December 15, 2004 and
           is not expected to have a material impact on financial condition,
           results of operations, or liquidity of the Partnership.

           Accounting for Certain Financial Instruments with Characteristics of
           --------------------------------------------------------------------
           Both Liabilities and Equity
           ---------------------------
           In May 2003, the FASB issued SFAS 150, Accounting for Certain
           Financial Instruments with Characteristics of Both Liabilities and
           Equity. This statement establishes standards for classifying and
           measuring certain financial instruments that embody obligations of
           the issuer and have characteristics of both liabilities and equity.
           The provisions of SFAS 150 became effective June 1, 2003, for all
           financial instruments created or modified after May 31, 2003, and
           otherwise became effective as of July 1, 2003. In December 2003, the
           FASB deferred for an indefinite period the application of the
           guidance in SFAS 150 to noncontrolling interests that are classified
           as equity in the financial statements of a subsidiary but would be
           classified as a liability in the parent's financial statements under
           SFAS 150. The deferral is limited to mandatorily redeemable
           noncontrolling interests associated with finite-lived subsidiaries.
           Management does not believe any such applicable entities exist as of
           December 31, 2004, but will continue to evaluate the applicability of
           this deferral to entities which may be consolidated as a result of
           FASB Interpretation No. 46 (FIN 46), Consolidation of Variable
           Interest Entities.

       Consolidation
       -------------
       The Partnership fully consolidates into its financial statements
          majority-owned entities. All significant intercompany balances and
          transactions, if any, would be eliminated in consolidation.

(2)    Property and Improvements:
       -------------------------
       Property and improvements located at Bellevue Plaza consist of the
           following at December 31, 2004 and 2003, respectively:

<TABLE>
<CAPTION>
                                                      2004             2003
                                                      ----             ----
<S>                                               <C>               <C>
               Buildings and improvements         $ 5,347,181        5,191,683
               Less accumulated depreciation       (2,558,260)      (2,386,374)
                                                  -----------       ----------
                                                    2,788,921        2,805,309
               Land                                   414,301          414,301
                                                  -----------       ----------
                                                  $ 3,203,222        3,219,610
                                                  ===========       ==========
</TABLE>

       During the years ended December 31, 2004, 2003 and 2002, the Partnership
          recognized depreciation of $171,886, $168,487, and $166,426,
          respectively.


                                      F-11


                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


(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
          3.745% 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. The disposal of the LLC interest began during
          the year ended December 31, 2001.

       The partnership's income from its joint venture investments is determined
          as follows for the years ended December 31, 2004, 2003 and 2002,
          respectively:

<TABLE>
<CAPTION>
                                                    2004        2003       2002
                                                    ----        ----       ----
<S>                                               <C>           <C>       <C>
        Distributions from Prudential/Daniel
            Office Venture, LLC                   $   --         --       21,746
                                                  ========      ====      ======
</TABLE>

(4)    Other Assets:
       ------------
       Other assets consist of the following at December 31, 2004 and 2003,
          respectively:

<TABLE>
<CAPTION>
                                                    2004             2003
                                                    ----             ----

<S>                                             <C>                  <C>
        Acquisition fees                        $   328,447          328,447
        Lease acquisition costs                     499,605          499,605
        Loan costs                                  126,880          126,880
        Deferred commissions                        168,191          164,927
                                                -----------       ----------
                                                  1,123,123        1,119,859
        Less accumulated amortization              (606,983)        (526,505)
                                                -----------       ----------
                                                    516,140          593,354
        Accounts receivable from affiliate            1,650            1,650
                                                -----------       ----------
                                                $   517,790          595,004
                                                ===========       ==========
</TABLE>

       Acquisition fees are amortized over the estimated life of the acquired
          property, which is thirty-one and one-half years. Deferred commissions
          and lease acquisition costs are amortized over the terms of the
          related leases. Loan costs are amortized over the terms of the related
          mortgage.



                                      F-12



                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


(4)    Other Assets: (Continued)
       ------------
       Amortization expense was $95,198, $95,252 and $95,234 for 2004, 2003 and
          2002, respectively. The estimated future amortization expense at
          December 31, 2004 is as follows:

<TABLE>
<CAPTION>
                 Year Ended
                 December 31,
                 ------------
<S>                                                               <C>
                    2005                                          $ 91,886
                    2006                                            90,429
                    2007                                            89,829
                    2008                                            76,676
                    2009                                            20,151
                    Thereafter                                     147,169
                                                                  --------
                                                                  $516,140
                                                                  ========
</TABLE>

       Deferred commissions in the amount of $17,984 and $9,903 to be amortized
       over a weighted average of four and one-half and five years were acquired
       during 2004 and 2003, respectively.

(5)    Note Payable:
       ------------
       During 1999, the Partnership refinanced the mortgage on the Bellevue
          Plaza property. Under the terms of the new mortgage, additional funds
          were provided for establishment of property tax escrow and repayment
          to a tenant for various improvements made by the tenant. These
          improvements have been classified in the financial statements as lease
          acquisition costs, since at the time of refinancing, the terms of the
          original lease with the certain tenant were amended to provide for
          this repayment.

       The mortgage is payable at 7.25% in monthly installments of principal and
          interest of $37,884. The mortgage matures in July, 2014, and is
          secured by a deed of trust on the Bellevue Plaza property. Principal
          maturities of the mortgage are as follows:

<TABLE>
<CAPTION>
                 Year Ended
                 December 31,
                 ------------
<S>                                                                  <C>
                    2005                                             $  231,311
                    2006                                                248,898
                    2007                                                267,822
                    2008                                                287,678
                    2009                                                310,060
                 Thereafter                                           1,797,589
                                                                     ----------
                                                                     $3,143,358
                                                                     ==========
</TABLE>



                                      F-13




                                                         EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002



(6)    Reconciliation of Financial Statements and Tax Returns:
       ------------------------------------------------------
       The following is a reconciliation of financial statement net income and
	  federal taxable income:

<TABLE>
<CAPTION>
                                                                   2004            2003           2002
                                                                   ----            ----           ----

<S>                                                              <C>             <C>            <C>
               Net earnings on consolidated statement            $ 161,828         95,162        112,064
                  of earnings

               Items treated differently on the tax return:
                  Minority interest                                130,757         84,090         79,328
                  Earnings from joint venture                         --             --          (21,746)
                  Amortization                                     (14,148)       (14,140)       (14,140)
                  Other temporary differences                          496         (4,881)       (75,746)
                                                                 ---------       --------       --------
               Taxable income per tax returns                    $ 278,933        160,231         79,760
                                                                 =========       ========       ========
        </TABLE>

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

(7)    Related Party Transactions:
       --------------------------
       Administration expenses (fees and other costs and expenses) paid to the
          general partner or its affiliates amounted to $65,000 in 2004, $66,300
          in 2003, and $66,000 in 2002.

(8)    Leases of Lessor:
       ----------------
       Bellevue Plaza leases property to others under noncancelable operating
          leases requiring fixed monthly payments over various terms, plus their
          proportionate share of certain building operating costs, insurance and
          real property taxes. Revenue from expense recoveries was $137,705,
          $124,515, and $124,580 in 2004, 2003, and 2002, respectively. The
          following table sets forth the minimum cash rental payments to be
          received from leases in place as of December 31, 2004:

<TABLE>
<CAPTION>
                 Year Ending
                 December 31,
                 ------------
<S>                                                               <C>
                    2005                                          $  565,213
                    2006                                             454,359
                    2007                                             433,502
                    2008                                             316,687
                    2009                                              63,724
                                                                  ----------
                                                                  $1,833,485
                                                                  ==========
</TABLE>

       During 2004, 2003 and 2002, two tenants leasing space contributed 15% or
          more to rental income. One lessee accounted for 22%, 25% and 26% of
          rental income during 2004, 2003 and 2002, respectively. The other
          lessee accounted for 27%, 17% and 15% of rental income during 2004,
          2003 and 2002, respectively.



                                      F-14


                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


(8)    Leases of Lessor: (Continued)
       ----------------
       During 2004, 2003 and 2002, one tenant leasing space paid percentage of
          sales rent of $215,877, $104,199 and $86,565, respectively. For the
          year ended December 31, 2004, information was available to estimate
          the percentage of sales rents for that year prior to the release of
          the financial statements.

       The estimated fair values of the partnership's financial instruments, as
          of December 31, 2004 and 2003, were as follows:

<TABLE>
<CAPTION>
                                             2004                          2003
                                    ----------------------        ---------------------
                                    Carrying         Fair         Carrying        Fair
                                     Amount          Value         Amount         Value
                                    --------         -----        --------        -----
<S>                                <C>             <C>            <C>            <C>
       Financial assets:
          Cash and cash
              equivalents          $  582,545        582,545        757,636        757,636
          Escrow deposits              12,142         12,142         18,477         18,477
          Tenant receivables          158,258        158,258          6,111          6,111
                                   ----------      ---------      ---------      ---------
                                      752,945        752,945        782,224        782,224
                                   ----------      ---------      ---------      ---------
       Financial liabilities:
          Note payable              3,143,358      3,349,546      3,357,658      3,690,317
          Other payables               46,612         46,612         47,778         47,778
                                   ----------      ---------      ---------      ---------
                                   $3,189,970      3,396,158      3,405,436      3,738,095
                                   ----------      ---------      ---------      ---------
</TABLE>

(9)    Financial Instruments:
       ---------------------
       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.

          Tenant receivables, escrow deposits, and other payables - Carrying
              values of these accounts approximate fair value due to their short
              maturities.

          Note payable - The fair value of the note payable is based on
              estimated interest rates for similar loans as of the balance sheet
              dates.

(10)   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. At December 31,
          2004, the Partnership had deposits at three banks which exceeded
          insured limits by approximately $335,000. 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 within these limits at
          December 31, 2004.


                                      F-15



                                                         EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(11)   Selected Quarterly Financial Data (Unaudited):
       ---------------------------------
       Set forth below is selected quarterly financial data for the years ended
          December 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                      First        Second        Third         Fourth
                                     Quarter       Quarter       Quarter       Quarter
                                     -------       -------       -------       -------
<S>                                  <C>           <C>          <C>            <C>
       2004:
          Total revenues             $318,992      259,821       214,908        294,837
                                     --------      -------      --------       --------
          Net earnings before
              minority interest
              and earnings from
              joint venture           107,401       81,482        15,767         87,935
                                     --------      -------      --------       --------
          Net earnings                 62,780       52,841         2,343         43,864
                                     --------      -------      --------       --------
          Earnings per unit          $  12.28        10.33           .46           8.58
                                     --------      -------      --------       --------
          Weighted average
              number of units           4,858        4,858         4,858          4,858
                                     --------      -------      --------       --------
       2003:
          Total revenues             $312,656      250,041       204,464        206,894
                                     --------      -------      --------       --------
          Net earnings before
              minority interest
              and earnings from
              joint venture            95,703       77,865         7,422         (1,738)
                                     --------      -------      --------       --------
          Net earnings (loss)          51,923       51,559        (4,007)        (4,313)
                                     --------      -------      --------       --------
          Earnings (loss) per unit   $  10.15        10.08         (0.78)         (0.84)
                                     --------      -------      --------       --------
          Weighted average
              number of units           4,858        4,858         4,858          4,858
                                     --------      -------      --------       --------
</TABLE>


                                      F-16




                                                          EXHIBIT 13 (CONTINUED)

                        U.S. REALTY INCOME PARTNERS, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

              SCHEDULE I - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                DECEMBER 31, 2004



<TABLE>
<CAPTION>
                                                                                          Costs Capitalized
                                                                                             Subsequent to
                                                                 Initial Cost                Acquisition
                                                          --------------------------      ------------------
                                                                          Buildings            Buildings
                                                                             and                  and
Description                        Encumbrances           Land          Improvements          Improvements
-----------                        ------------           ----          ------------          ------------
<S>                                <C>                   <C>            <C>                 <C>
Bellevue Plaza Shopping
    Center                         $  3,143,358          414,301         4,895,626               451,555
</TABLE>


<TABLE>
<CAPTION>
                                                 Gross Amount at which
                                               Carried at Close of Period
                                               --------------------------
                                                       Buildings
                                                          and
Description                            Land           Improvements        Total
-----------                            ----           ------------        -----
<S>                                <C>                <C>                <C>
Bellevue Plaza Shopping
    Center                         $    414,301        5,347,181         5,761,482
</TABLE>


<TABLE>
<CAPTION>
                                    Accumulated              Date
Description                        Depreciation            Acquired
-----------                        ------------            --------
<S>                                <C>                     <C>
Bellevue Plaza Shopping
    Center                         $  2,558,260              1997
</TABLE>


<TABLE>
<CAPTION>
                                                  Gross        Accumulated
Reconciliation of carrying costs                  Amount       Depreciation
--------------------------------                  ------       ------------
<S>                                             <C>
Balance, January 1, 2002                        $5,416,234      2,051,461
Additions                                           79,190        166,426
Retirements                                           --             --
                                                ----------      ---------
Balance, December 31, 2002                       5,495,424      2,217,887
Additions                                          110,560        168,487
Retirements                                           --             --
                                                ----------      ---------
Balance, December 31, 2003                       5,605,984      2,386,374
Additions                                          155,498        171,886
Retirements                                           --             --
                                                ----------      ---------
Balance, December 31, 2004                      $5,761,482      2,558,260
                                                ==========      =========
</TABLE>


Computation of Depreciation
---------------------------
Depreciation is provided as disclosed in footnote 1 to the consolidated
   financial statements.


                                      F-17