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

	FINANCIAL STATEMENTS AND SCHEDULES

	December 31, 1997, 1996 and 1995

	(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                            6-13

Independent Auditors' Report on Accompanying Schedules       14

Schedules:

   Schedule V - Property and Improvements                    15

   Schedule VI - Accumulated Depreciation of
      Property and Improvements                              16























	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, 1997 and
1996 and the related statements of operations, partnership equity, and
cash flows for the years ended December 31, 1997, 1996 and 1995.  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, 1997 and 1996 and the results
of its operations and its cash flows for the years ended December 31,
1997, 1996 and 1995, in conformity with generally accepted accounting
principles.

                                 S/N Dempsey Wilson & Co., P.C.
                                     Certified Public Accountants


January 27, 1998
Murfreesboro, Tennessee










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

	       BALANCE SHEETS

                       	December 31, 1997 and 1996

	Assets

                                         1997         1996

Cash                                  $   477,135  $  291,829

Tenant receivables                          1,996       6,035

Property, plant and equipment, net of
   accumulated depreciation of
   $1,424,675 in 1997 and $1,269,294
   in 1996                              3,885,252   4,040,633

Investment in joint venture                 1,000       1,000

Other assets                              256,079     266,984

      Total assets                    $ 4,621,462  $4,606,481

Liabilities and Partnership Equity

Notes payable                         $ 3,557,105  $3,600,032

Accounts payable                            1,187       2,548

Accrued expenses                          120,548      83,492

      Total liabilities                 3,678,840   3,686,072

Commitments and contingent liabilities

Minority partners' interest in joint
   venture                               (102,925)   (121,073)

Partnership equity:
   General Partners, no units authorized (184,100)   (184,303)
   Limited Partners, 4,858 units
      authorized, issued, and
      outstanding                       1,229,647   1,225,785
      Net partnership equity            1,045,547   1,041,482

                                      $ 4,621,462  $4,606,481

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, 1997, 1996 and 1995

                                 1997        1996        1995
Revenues:
   Rental income               $ 626,672  $629,035    $ 609,362
   Common area maintenance       105,595   114,654       83,116
   Interest                        6,236     3,212        6,088
      Total revenues             738,503   746,901      698,566

Expenses:
   Interest                      357,889   362,845      366,378
   Legal and professional         18,268    24,510       28,269
   Depreciation                  155,381   155,430      155,430
   Amortization                   21,103    30,925       31,758
   Property taxes                 75,460    68,047       68,047
   Leasing and administrative     44,323    75,068       47,025
   Management fees                27,650    27,121       26,305
   Repairs and maintenance        24,889    23,583       23,134
   Refinancing costs               2,500    28,543         -
   Utilities                      11,998     8,814       10,419
   Insurance                       7,538     3,183        7,052
      Total expenses             746,999   808,069      763,817
Net loss before minority
   interest and loss from joint
   venture                        (8,496)  (61,168)     (65,251)

Minority partner's interest in
   operating profit              (18,148)  (12,317)      (3,009)

Loss from operations             (26,644)  (73,485)     (68,260)

Income (loss) from joint venture  30,709    20,845         (118)

Net earnings (loss)            $   4,065  $(52,640)   $ (68,378)

Net earnings (loss) per unit   $     .79  $ (10.29)   $  (13.37)

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, 1997, 1996 and 1995



                                      Limited    General
                                     Partners    Partners       Total

Distributive share of net earnings        95%          5%          100%

Balance at December 31, 1994       1,340,752    (178,252)    1,162,500

Net loss of 1995                     (64,959)     (3,419)      (68,378)

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














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, 1997, 1996 and 1995

                                    1997        1996        1995
Cash Flows from Operating Activities

Net loss from operations          $(26,644)  $(73,485)   $ (68,260)
Adjustments to reconcile net
   income to cash provided by
   operating activities:
      Minority partner's
         interest in net profit
         (loss) of consolidated
         partnership                18,148     12,317        3,009
      Depreciation                 155,381    155,430      155,430
      Amortization                  21,103     30,925       31,758
   (Increase) decrease in:
      Tenant receivable              4,039     (3,283)       3,127
      Other assets                 (10,198)    35,000      (65,080)
   Increase (decrease) in:
      Accounts payable              (1,361)      (157)       1,145
      Accrued expenses              37,056      1,625      (32,572)
Net cash provided by operating
   activities                      197,524    158,372       28,557
Cash Flows from Investing Activities

Distribution from (investment in)
   joint venture                    30,709     20,845         (118)
Net cash used in investing
   activities                       30,709     20,845         (118)

Cash Flows from Financing Activities

Repayments on mortgage note        (42,927)   (42,571)     (38,538)
Net cash used in financing
  activities                       (42,927)   (42,571)     (38,538)
Net (decrease) increase in
   cash and cash equivalents       185,306    136,646      (10,099)
Cash and cash equivalents
   at beginning of year            291,829    155,183      165,282
Cash and cash equivalents
   at end of year                 $477,135   $291,829     $155,183

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, 1997, 1996 and 1995


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, 1997, 1996 and 1995



1.	Summary of Significant Accounting Policies, (Continued)

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, 1997, 1996 and 1995


2.	Property and Improvements

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

       		                             1997          1996

Buildings and improvements    $ 4,895,626   $4,895,626
Less accumulated depreciation  (1,424,675)  (1,269,294)
                                3,470,951    3,626,332

Land                              414,301      414,301

                              $ 3,885,252   $4,040,633

During the years ended December 31, 1997, 1996 and 1995, the
Partnership recognized depreciation of $155,381, $155,430,
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, 1997, 1996 and 1995

3.	Investment in Joint Venture, (Continued)

Revenues of the Joint Venture for the seven months ended July 28,
1995 are summarized as follows:

	Revenues			                $1,133,452

	Expenses
	   Interest				        408,573
	   Depreciation and
amortization			        285,598
   Other operating expenses		        493,962
					      1,188,133

Net Loss				     $  (54,681)

	Cash flow information is summarized as follows:

		Operating activities			$  148,286
		Investing activities			   (39,659)
		Financing activities			  (156,610)

		Net decrease in cash			   (47,983)

		Cash, beginning of year 			    47,642

		Cash, end of year				$     (341)

The partnership's income (loss) from its joint venture investments
is determined as follows:
                                        1997     1996       1995


Distributions from Prudential/Daniel
   Office Venture, LLC                $30,709  $ 20,845  $ 10,000
Provisions for loss on investment in
   DR/US West End General Partnership    -         -      (10,118)

                                      $30,709  $ 20,845  $   (118)



9






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

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1997, 1996 and 1995

4. 	Related Party Transactions

Administration expenses (fees and other costs and expenses) paid
to the general partner or its affiliates amounted to $36,000 in
1997, $65,000 in 1996 and $36,000 in 1995.

5.   Note Payable

The Partnership has a note payable to a financial institution
amounting to $3,557,105 and $3,600,032 as of December 31, 1997 and
1996.  The note bears an interest rate of 10% per annum with
monthly installments of principal and interest of $33,743 payable
until March 31, 1998, 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

                                      1997         1996        1995
   Net income (loss), per
      financial statements    $    4,065  $  (52,640)  $ (68,378)

   Items treated differently
      on the tax return:
   Net operating loss              1,038      (4,003)    (16,080)
   Write-down in value of
      investment                    -           -            118
   Amortization                  (14,140)    (14,149)    (14,151)

   Net loss, per tax returns   $  (9,037)  $ (70,792)  $ (98,491)

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






                              10






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

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1997, 1996 and 1995


7. 	Other Assets

Other assets consist of:
						          1997          1996
   Acquisition fees                     $ 328,447     $ 328,447

   Mortgage financing costs                  -          101,089

   Deferred commissions                    41,021        41,968

                                          369,468       471,504

   Less accumulated amortization         (115,039)     (206,170)

                                          254,429       265,334

   Accounts receivable from affiliate       1,650         1,650


                                        $ 256,079     $ 266,984

Acquisition fees are amortized over the life of the acquired
property, which is 31.5 years.  Deferred commissions 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, 1997, future minimum lease receipts were as
follows:

Year Ending December 31:

        1998                            $  418,600
        1999                               285,395
        2000                               196,516
        2001                               146,525
        2002                                39,594
        2003                                 7,124

                                        $1,093,754

9.   Supplemental Cash Flow Information

Interest paid totaled $328,247 in 1997, $362,845 in 1996 and
$366,378 in 1995.

11



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

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1997, 1996 and 1995

10.  Financial Instruments

The estimated fair values of the partnership's financial
instruments, as of December 31, 1997 and 1996, were as follows (in
thousands):

                                   1997                1996

                            Carrying      Fair  Carrying      Fair
                            Amount       Value  Amount       Value
Financial assets:
  Cash and cash equivalents $477       $  477   $292       $  292
  Receivables                  2            2      6            6
  Investment in joint
    venture                    1        1,361      1        1,361

                            $480       $1,840   $299       $1,659

Financial liabilities:
   Notes payable            $3,557     $3,557   $3,600     $3,600
   Accounts payable              1          1        3          3
   Accrued expenses            121        121       83         83

 	                            $3,679     $3,679   $3,686     $3,686

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, 1997, 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



12



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

	NOTES TO FINANCIAL STATEMENTS (Continued)

	For the Years Ended December 31, 1997, 1996 and 1995

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.  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 27, 1998
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


    1992          5,301,022     5,570          -         5,306,592

    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



















	15




	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


    1992            492,359    155,308          -           647,667

    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



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.









	16