FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the fiscal year ended December 31, 2000 OR
                          -----------------

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934  [NO FEE REQUIRED]

For the transition period from _____________ to _____________

Commission File No. 1-8356
                    ------

                                    DVL, INC.
-------------------------------------------------------------------------------
           Exact name of Registrant as specified in its charter)

            Delaware                                    13-2892858
-------------------------------                    -------------------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                     Identification No.)


70 East 55th Street, 7th Floor, New York                10022
-------------------------------------------------------------------------------
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code (212) 350-9900
                                                   --------------

         Securities registered pursuant to Section 12(b) of the Act:

                                              Name of Each Exchange
      Title of Each Class                      on Which Registered
 ----------------------------                 ---------------------
 Common Stock, $.01 par value                         None

Securities registered pursuant to Section 12(g) of the Act:  None
                                                             ----

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  Yes  X    No
                                        ---     ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of  registrant's  knowledge,  in definitive  proxy  information  statements
incorporated  by reference in Part IV of this Form 10-K or any amendment to this
Form 10-K. [X ]

The aggregate  market value of the Common Stock of the  Registrant  held by non-
affiliates as of March 15, 2001 was $750,590.

The number of shares  outstanding  of Common Stock of the Registrant as of March
15, 2001 was 16,560,450.


<PAGE>


                                    DVL, INC.

                 INDEX TO ANNUAL REPORT ON FORM 10-K FILED WITH
                     THE SECURITIES AND EXCHANGE COMMISSION
                          YEAR ENDED DECEMBER 31, 2000
                               ITEMS IN FORM 10-K
                               ------------------

                                                                    Page
                                                                    ----
                                     PART I

Item  1.  Business                                                    1
Item  2.  Properties                                                  9
Item  3.  Legal Proceedings                                           9
Item  4.  Submission of Matters to a Vote of Security Holders         9


                                     PART II

Item  5.  Market for Registrant's Common Equity and Related
           Stockholder Matters                                       10
Item  6.  Selected Consolidated Financial Data                       11
Item  7.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                       13

Item  7A. Quantitative and Qualitative Disclosures About
           Market Risk                                               23
Item  8.  Financial Statements and Supplementary Data                24
Item  9.  Changes In and Disagreements with Accountants on
           Accounting and Financial Disclosure                       24


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant         25
Item 11.  Executive Compensation                                     27
Item 12.  Security Ownership of Certain Beneficial Owners
            and Management                                           34
Item 13.  Certain Relationships and Related Transactions             42


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports
            on Form 8-K                                              45

<PAGE>


                                     PART I

     This 2000 Annual Report on Form 10-K contains  statements  which constitute
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  Those statements include statements regarding the intent, belief or
current expectations of the Registrant and its management team. The Registrant's
stockholders   and   prospective   investors   are   cautioned   that  any  such
forward-looking  statements are not guarantees of future performance and involve
risks and  uncertainties,  and that actual  results may differ  materially  from
those projected in the forward-looking  statements. Such risks and uncertainties
include,  among other things,  general economic  conditions,  the ability of the
Registrant to obtain  additional  financings,  the ability of the  Registrant to
successfully  implement its business  strategy and other risks and uncertainties
that are discussed herein.

ITEM 1.  BUSINESS.

OVERVIEW

     DVL,  Inc.,  a  Delaware  corporation  incorporated  in 1977  ("DVL" or the
"Company"),  is a commercial  finance company which is primarily  engaged in the
ownership and servicing of a portfolio of secured commercial  mortgage loans, as
well as acting as the general partner of the limited  partnerships which own the
properties   which  secure  such   mortgages   (each  an   "Affiliated   Limited
Partnership").  Also,  the Company  performs  real estate asset  management  and
administrative services for third parties.

     DVL  is  the  general  partner  of  approximately  80  Affiliated   Limited
Partnerships  which  own  income-producing  commercial,  office  and  industrial
properties  comprising  approximately 3.0 million square feet. A majority of the
properties are subject to long-term triple net leases with various tenants.  The
principal tenant is Wal-Mart Stores, Inc. The remaining  properties are shopping
centers, industrial properties and other commercial properties. The Company also
performs real estate and partnership management services for these partnerships,
as well as, for third parties.

     The mortgage loans held by the Company are primarily "wrap-around" mortgage
loans which are subject to non-recourse,  underlying mortgages held by unrelated
institutional  lenders which  self-liquidate  from the base rents payable by the
underlying  tenants  over the primary  term of the related  leases.  The Company
receives mortgage payments from the Affiliated Limited Partnerships and pays the
underlying  mortgage  holders  their  required  monthly  principal  and interest
payments. In addition,  the Company receives a portion of the Affiliated Limited
Partnerships'  percentage rent income as additional debt service.  The Company's
other principal  assets include (a) loans made to limited partners of Affiliated
Limited  Partnerships,  which  loans  are  secured  by the  limited  partnership
interests held by such limited partners, (b) a long term leasehold interest in a
certain  commercial  property,  (c)  investments as a limited partner in certain
Affiliated Limited Partnerships and (d) certain real estate interests.

     The  Company  derives  the  majority  of  its  income  as a  result  of the
difference in the effective interest rates on its wrap-around  mortgages and the
interest  rates  on the  underlying  mortgages,  as  well  as  from a  share  of
percentage rents received from various tenants of the Affiliated Limited


                                        1
<PAGE>


Partnerships,  from  rentals  received  as a result of its  long-term  leasehold
interests,  from fees  received  as General  Partner of the  Affiliated  Limited
Partnerships  (including  disposition and management fees),  from  distributions
received as a limited partner in the Affiliated Limited  Partnerships,  from the
sale of partnership properties, and fees from third-party management contracts.

     Through  an  arrangement   developed  with  a  related  entity  called  the
"Opportunity  Fund",  described  below,  the Company  continues  to seek out and
participate  in  investment  opportunities  related to its existing  asset base.
These  opportunities  do not  require  the direct  investment  of the  Company's
capital.  To date, the  Opportunity  Fund has purchased 15 mortgages  secured by
properties  owned  by  certain  Affiliated  Limited  Partnerships  as  well as a
commercial  property  and  various  limited  partnership  interests  in  certain
Affiliated  Limited   Partnerships.   The  Company,  as  a  participant  in  the
Opportunity  Fund,  has a right  to  participate  in  profits  after  the  other
investors in the Opportunity Fund receive a required return on their investment.

     At December 31, 2000,  the Company had net operating  loss carry-  forwards
("NOLS")  aggregating  approximately $61 million,  which expire in various years
through 2019,  including  $54 million which expire  through 2007. If the Company
generates  profits in the future,  the Company may be subject to  limitations on
the use of its NOLS  pursuant  to the  Internal  Revenue  Code.  There can be no
assurance  that a  significant  amount of the  Company's  existing  NOLS will be
available to the Company at such time as the Company desires to use them.

     DVL's  anticipated  cash flow  provided by operations is sufficient to meet
its current cash requirements through January 2002. In the event that Management
determines that such cash flow is not sufficient, NPO Management LLC ("NPO") has
agreed to allow the Company to defer payment of its management  fees. See Item 7
and 13 below for a description  of the Company's  obligation to NPO. The Company
has in the past and  expects in the future to  continue to augment its cash flow
with additional cash generated from either the sale or refinancing of its assets
and/or  borrowings.   See  Management   Discussion  and  Analysis  of  Financial
Conditions and Results of Operations.

     The Company's  current  strategy is to (i) maximize the value of its assets
and  meet  its  short-term  working  capital  needs  by  continuing  to  manage,
administer  and service its  existing  real estate  properties,  the  Affiliated
Limited  Partnerships  and the  mortgages  on loans to such  Affiliated  Limited
Partnerships,  (ii) increase its  participation  in the Opportunity  Fund, (iii)
obtain  investments  through the use of bank  borrowings and (iv) expand through
the  acquisition of one or more  companies to generate  income and positive cash
flow.  There can be no  assurance  that the Company  will be able to identify or
acquire  businesses.  See Business  Developments - New Acquisition for a pending
new acquisition.


                                           2
<PAGE>


     The  Company   anticipates  that  it  would  finance  any  possible  future
acquisition  through new  borrowing  or the  issuance of its common or preferred
stock.  During  2000,  the  Company  purchased  eight  new  mortgage  loans  and
refinanced  three existing  mortgage loans.  The purchases were primarily funded
through new bank financings. Also, during 2000, the Company purchased all of the
real  estate  assets of a limited  partnership  from which the  Company had been
leasing such real estate assets under a master lease agreement. This acquisition
was also financed with a new bank loan. In early 2001,  the Company  purchased a
parcel of land that was  partially  funded with bank  financings.  See  Business
Activities  below for  details of these  transactions.  The Company has no other
current commitments or arrangements for additional financings.

     The principal  executive offices of the Company are located at 70 East 55th
Street,  7th Floor, New York, New York 10022. The Company's  telephone number is
(212)  350-9900.  The  Company  and its  subsidiaries  have not  engaged  in any
business activity outside of the United States.

BUSINESS ACTIVITIES

     Mortgage Loans
     --------------

     The  Company's  mortgage  loan  portfolio  consists  primarily of long-term
wrap-around  and other  mortgage loans to its  Affiliated  Limited  Partnerships
secured  by the types of  properties  discussed  above.  Most of such  loans are
subordinated  obligations  with the  majority  of the  payments  received  being
utilized to amortize the related underlying  mortgage loan over the primary term
of the related lease. The Company builds equity in the mortgage loans over time.
At  December  31,  2000,  the Company had  investments  in 38 mortgage  loans to
Affiliated  Limited  Partnerships  with an  aggregate  mortgage  balance  due of
$74,379,000 and a carrying value for financial reporting purposes of $41,639,000
prior to a loan loss reserve of  approximately  $5,250,000.  These mortgage loan
receivables are subject to underlying mortgage obligations of $26,019,000.

     Generally,  the tenants of the  Affiliated  Limited  Partnerships  executed
"triple-net" leases and, therefore,  the tenants are responsible for the payment
of all taxes,  insurance and other property  costs.  In certain  instances,  the
partnership is required to maintain the roof and structure of the premises.

     DVL's mortgage  portfolio included 26 and 24 loans with net carrying values
of $33,639,000 and  $31,621,000 as of December 31, 2000 and 1999,  respectively,
which are due from Affiliated Limited Partnerships that own properties leased to
Wal-Mart  Stores,  Inc.  Wal-Mart is a public  company  subject to the reporting
requirements  of the SEC.  Wal-Mart has closed  certain of its stores located on
the properties subject to the Company's mortgages.  However,  Wal-Mart continues
to pay the required  rent with respect to such  properties.  Net carrying  value
refers to the unpaid principal balance less any allowance for reserves,  and any
amount which represents future interest based upon the purchase of the loan at a
discount.

     In  addition  to base rent,  most  leases  also  require  the tenant to pay
additional  rent  equal to a  percentage  of gross  receipts  from the  tenant's
operation  of a  property  above a  specified  amount  ("Percentage  Rent").  In
virtually  all cases where the  partnership  is  entitled to receive  Percentage
Rent, a portion of such rent is required to be paid to the Company as additional
interest and/or additional debt service on the long-term mortgage.


                                        3
<PAGE>


     The Company  has the right to  refinance  the  outstanding  mortgage  loans
underlying its wrap-around  mortgage loans to Affiliated  Limited  Partnerships,
provided that the debt service and principal  amount of a refinanced loan are no
greater than that of the  existing  wrap-around  loan.  The Company also has the
right to arrange senior financing  secured by properties on which it holds first
or second mortgage loans by  subordinating  such mortgage loans,  subject to the
limitations set forth above.

     During 2000, DVL purchased  five wrap mortgage  loans from an  unaffiliated
third  party which are secured by real  estate  properties  owned by  Affiliated
Limited  Partnerships  in which  DVL is the  general  partner.  The  loans  were
purchased  for an aggregate  price of  $1,210,000  plus closing  costs,  paid as
follows:  cash of $135,000,  a $75,000 unsecured  promissory note payable to the
seller  of the loans  maturing  on March 1,  2001,  without  interest,  and bank
financings of $1,000,000.  The $75,000 note was paid in full in March 2001. This
bank  financing is a  self-amortizing  loan that was originally was scheduled to
mature on April 1,2005 with  interest  accruing at the annual rate of prime plus
1.5% and  requires  payments  to be made  from the net  cash  proceeds  DVL will
receive on the mortgage loans.  The wrap mortgage loans were previously owned by
DVL and were transferred to the seller in 1992 in settlement of indebtedness. In
May 2000, DVL, as the general partner of an Affiliated Limited  Partnership that
owned one of the real estate properties that secured this bank loan,  negotiated
the sale of the partnership's property. DVL received $700,000 in connection with
the sale as the mortgage holder which DVL paid to the bank to reduce the loan.

     During 2000,  DVL purchased two  additional  mortgage  loans from an entity
that is part of the Opportunity  Fund (see  "Opportunity  Fund",  defined below)
which are secured by real estate owned by  Affiliated  Limited  Partnerships  in
which DVL is the general  partner.  The loans were  purchased  for an  aggregate
price of  $900,000,  paid as  follows:  the  issuance to the seller of a secured
promissory  note in the amount of  $200,000  maturing  on August  31,  2002 with
interest  accrued at the rate of 12% per  annum,  compounded  monthly,  and bank
financing of $700,000 which was added to the loan described  above. The maturity
date of the loan was extended until May 1, 2006.

     In 2000, the Company  obtained  additional  bank financing in the amount of
$1,450,000  that  is  secured  by the  assignment  of  three  existing  mortgage
receivables  and a $405,000 face value mortgage  receivable  which was purchased
from an  entity  that is part of the  Opportunity  Fund  for  $315,000.  The net
proceeds  of this loan were used to repay one  existing  underlying  mortgage of
approximately  $92,000  and the  balance  of the  funds  were  used for  general
corporate  purposes  including  the  payment of accrued  fees to NPO.  This bank
financing is a self-amortizing  loan that matures on April 1, 2005 with interest
accruing  at the annual  rate of prime plus 1.5% and  requires  payments be made
from the net cash proceeds DVL will receive on these  mortgage  loans.  In 1998,
the Company  refinanced one mortgage which  generated  approximately  $40,000 in
excess of the existing underlying  mortgage.  The net excess funds from the 1998
refinancing were used to pay the expenses of the  refinancings,  and to pay down
the  loan  to NPM  Capital  LLC  ("NPM")  as  required  by the  applicable  loan
agreements.  During 1999, DVL did not refinance any of its wrap  mortgages.  The
amounts obtained from all of the refinancings  were primarily based on the value
of the base  rents due from  tenants  during  the  period of the base lease term
subsequent  to the payoff of the existing  first  mortgages.  As a result of the
refinancings,  the Company's  asset base available for future  refinancings  has
diminished.

                                        4
<PAGE>


     All of the Company's  mortgage loans are pledged to secure the indebtedness
of the Company to NPO  (together  with NPM,  the "NPM  Parties")  and  Blackacre
Capital Group,  LLC ("BCG"),  which are entities  engaged in real estate lending
and management  transactions  and are affiliated with certain  stockholders  and
insiders of the Company. All outstanding indebtedness owed to NPM was fully paid
off in May 1999. See Items 7 and 13 below for a description  of certain  related
transactions involving the NPM Parties.

     LOANS SECURED BY LIMITED PARTNERSHIP INTERESTS

     The Company  maintains a relatively  small portfolio of loans to individual
limited partners of the Affiliated Limited Partnerships, which loans are secured
by limited partnership interests in such Affiliated Limited Partnerships.  As of
December 31, 2000, such loans had an aggregate  carrying value of $105,000 after
a loan loss reserve of approximately  $284,000.  Substantially all of such loans
were non-performing.  The Company, through NPO, has been aggressively attempting
to collect these loans  including the  institution of litigation and foreclosure
on the limited partnership interests, where appropriate.

     LOAN PORTFOLIO

     The  following  table sets  forth the  number of various  loans owed to the
Company which are outstanding,  the aggregate loan balances,  including  accrued
interest, and the allowances for loan losses, at December 31, 2000. See Tables 1
and 2 of Appendix "A" to this Form 10-K for detailed information as to each such
loan.

                                                  Number   Aggregate   Allowance
                                                   of        Loan      for Loan
                 Type of Loan                     Loans     Amount      Losses
                 ------------                     ------  ----------   ---------

                                                       (dollars in thousands)

Long-term mortgages due from Affiliated
 Limited Partnerships                                     $ 53,979
     Less:  unearned interest (1)                          (12,340)
                                                          --------

      Total loans collateralized by mortgages       38      41,639      $ 5,250
                                                   ---    --------       ------

Loans collateralized by limited partnership
 interests                                          24         389          284
                                                   ---    --------       ------

Advances due from Affiliated Limited Partnerships   16         170           -
                                                   ---    --------       ------

      Total loans                                   78    $ 42,198      $ 5,534
                                                   ===    ========      =======

------------
(1)  Unearned  interest  represents  the  unamortized  balance of  discounts  on
     previously funded loans.


     INVESTMENTS IN AFFILIATED LIMITED PARTNERSHIPS

     The  Company  over the  years  has  acquired  various  limited  partnership
interests  in its  Affiliated  Limited  Partnerships  pursuant  to the  terms of
certain settlement agreements and through various purchases and foreclosures.

                                        5
<PAGE>


     PARTNERSHIP AND PROPERTY MANAGEMENT

     The Company is the general partner of approximately  80 Affiliated  Limited
Partnerships from which it receives management,  transaction and other fees. The
Company,  through  Professional  Service Corporation  ("PSC"),  its wholly-owned
subsidiary,  is engaged in the management of one industrial  property located in
New Jersey pursuant to a master lease interest. This master lease permits PSC to
sub-lease the property to tenants and retain  profits  subject to the payment by
PSC of operating  expenses and rent to the  partnership  that owns the property.
Prior to December 2000, PSC managed a second  industrial  property in New Jersey
pursuant to a master lease.  In December 2000, the Company  purchased all of the
real estate assets that encompassed the second master lease, as discussed below.

     In June 1998, the Company entered into a Management Services Agreement with
a limited  partnership  (in which certain of its partners are affiliates of NPO)
to render  services for a fee. This  agreement  may be  terminated  with 30 days
notice by either party. As compensation,  the Company receives the following (a)
a monthly fee of $5,000 through November 2000, and (b) after all the partners of
the partnership have earned a 20% internal rate of return, compounded quarterly,
on their capital  contributions,  an amount of cash equal to 25% of the profits,
as defined in the agreement. For 2000 and 1999 the Company received compensation
under such agreement equal to $362,500 and $480,000, respectively.

     In  addition,  the Company  entered into a service  agreement  with another
limited  partnership  whose  general  partner is an  affiliate of NPO, to render
certain accounting and  administrative  services.  As compensation,  the Company
receives  a monthly  fee of $3,000,  and  expense  reimbursements  of $1,000 per
month. For 2000 and 1999, the Company received aggregate compensation under such
agreement of $48,000 each year.

     The Company  entered into a property  management  agreement  with an entity
that is part of the  Opportunity  Fund  pursuant to which DVL provides  property
management  services in exchange for fees equal to 3% of rent  collections.  For
2000 and 1999, the Company received  compensation  equal to $27,000 and $12,000,
respectively.

     In November 1999, the Company entered into a management  service  agreement
with an entity whose partners are affiliates of NPO to render certain accounting
and administrative services. As compensation, the Company receives a monthly fee
of  $2,000,  a monthly  deferred  fee of $6,500 and an annual  incentive  fee if
certain levels of profitability are obtained. For 2000 and 1999, the Company was
paid $24,000 and $4,000 and accrued  fees of $78,000 and $13,000,  respectively.
In early  2001,  the  Company was paid an  aggregate  amount of  $91,000,  which
represented all of the deferred fees through December 31, 2000.

     REAL ESTATE HOLDINGS

     The Company currently owns three properties located in New Jersey. Prior to
May 1999 the Company  owned an  additional  parcel,  consisting  of 6.9 acres of
land,  which was leased for an annual rent of $30,000 to an  Affiliated  Limited
Partnership  which owned the buildings and improvements on the parcel.  In April
1999,  the Company sold this property to an  affiliated  entity which is part of
the  Opportunity  Fund. In connection with the sale, the Company also was repaid
on a mortgage which it held on the leasehold interest.

     One of the remaining properties consists of approximately two acres of land
underlying  approximately  80,000 square feet of manufacturing,  warehousing and
commercial  buildings  which was leased  through  November 1998 to an Affiliated
Limited Partnership ("Toch"),  which owned the buildings and improvements on the
property  subject to a mortgage  held by the Company.  In November of 1998,  the
Company  foreclosed  on the  mortgage  and now  owns  the  land,  buildings  and
improvements.

                                        6
<PAGE>


     During 2000, DVL purchased the land,  buildings,  and  improvements  from a
limited partnership which owned seven buildings located in an industrial park in
Kearny,  NJ for an aggregate  purchase price of $3,000,000,  plus closing costs.
Prior to the  purchase,  the  Company had been  leasing all of these  buildings,
under a  master  lease  agreement,  and  subletting  this  property  to  various
unrelated  tenants.  The  acquisition  was  funded  with bank  financing  in the
original principal amount of $3,000,000 and cash of approximately  $255,000. The
bank  financing  accrues  interest  at the rate of 10% per  annum  and  requires
monthly  interest-only  payments  until December 1, 2001, at which time the loan
matures. The Company may extend the loan under the same terms until June 1, 2002
by paying an extension fee of $15,000.

     In early 2001,  DVL  purchased the fee title in a parcel of land in Kearny,
NJ from an unrelated third party for a purchase price of $365,000,  plus closing
costs. The acquisition was funded with bank financing in the original  principal
amount of  $200,000  and cash of  approximately  $175,000.  This bank  financing
accrues  interest at the rate of 9.5% per annum and  requires  monthly  interest
only  payments  until  December 31, 2001,  at which time the loan  matures.  The
Company may extend the loan under the same terms  until June 1, 2002,  by paying
an extension fee of $750.

     OPPORTUNITY FUND

     The Company,  BCG, an affiliate of  Blackacre  (as defined  below),  P.N.M.
Capital  LLC,  an  affiliate  of NPO  ("PNM"),  and Pemmil  Management  LLC,  an
affiliate of NPO ("Pemmil"),  and PNM  (collectively  the "NPO  Affiliates") are
parties to a certain  Agreement which is called the  Opportunity  Agreement (the
"Opportunity  Agreement").  The Opportunity  Agreement has a term of three years
expiring April 2001,  subject to earlier  termination if certain maximum capital
contributions  have been  reached.  The  Opportunity  Agreement  provides for an
arrangement  (the  "Opportunity  Fund")  whereby the fund has the right of first
refusal to finance the acquisition of limited partnership  interests or mortgage
loans to  Affiliated  Limited  Partnerships  in which  the  Company  is  general
partner,  or which the Company  already owns, if the Company is unable to pursue
such business opportunity with its own funds from its reserves or available from
operations, or by obtaining financing from a third party or issuing equity.

     The Opportunity Fund is expected to pursue each opportunity with respect to
which it  exercises  its  right of first  refusal  through  the use of a special
purpose limited liability company. All of the required capital contributions are
to be provided by the other  members.  The Company will receive up to 20% of the
profits from an opportunity  after the other investors receive a return of their
investment plus preferred annual returns ranging from 12% to 20%.

     The  transactions  in which the Opportunity  Fund may engage  include,  for
example,  acquisition of partnership interests from existing limited partners of
Affiliated Limited  Partnerships,  and investment in certain properties owned by
the Company or such partnerships, where capital may be required to enhance value
but is not currently  available to the Company.  There can be no assurance  that
the Opportunity  Fund's  activities will generate profit or distributions to the
Company.

                                        7
<PAGE>


     As of March 1, 2001, the  Opportunity  Fund has purchased 15 wrap mortgages
of Affiliated  Limited  Partnerships from unaffiliated third parties (seven were
purchased in 1998, one was purchased in 1999 and seven  mortgages were purchased
in 2000),  acquired limited  partnership units from unaffiliated  individuals in
three Affiliated  Limited  Partnerships,  and acquired a leasehold interest of a
tenant of an  Affiliated  Limited  Partnership.  In addition,  during 1999,  the
Opportunity  Fund acquired a property of an Affiliated  Limited  Partnership and
the land  underlying this property from DVL. During 2000, DVL purchased three of
the mortgages owned by the Opportunity  Fund and the Opportunity  Fund was fully
satisfied on an additional  four mortgage  loans, as each of the properties that
secured these four mortgage loans was sold. As of March 1, 2001, the Opportunity
Fund owns eight mortgages.  During 2000, DVL was paid approximately  $8,000 from
the investments by the Opportunity  Fund,  which was used to pay amounts owed by
DVL under a note in favor of an entity that is part of the Opportunity Fund.

NEW ACQUISITION

     On March 30, 2001, the Company's  newly-formed wholly owned subsidiary,  S2
Holdings,  Inc.,  ("S2")  entered into an agreement  for the purchase of a 99.9%
Class B member  interest in Receivables  II-A LLC, a limited  liability  company
("Receivables  II-A"),  from Receivables II-A Holding Company LLC ("Seller"),  a
newly  formed  indirect  wholly  owned  subsidiary  of a company  engaged in the
acquisition and management of periodic payment  receivables.  The Class B member
interest will entitle S2 to be allocated 99.9% of all items of income,  loss and
distribution.  Receivables  II-A  owns  all of the  equity  interests  in  three
subsidiary  limited  liability  companies  that  have  previously  acquired  and
securitized  four portfolios of periodic payment  receivables.  Receivables II-A
solely  has the right to receive  the  residual  cash flow from the  securitized
receivables after payment of the securitized noteholders.

    S2  will  purchase  its  interest  for  an  aggregate   purchase   price  of
$25,399,000. The purchase price will be paid by the issuance of promissory notes
by S2 in the aggregate  amount of  $25,325,000,  which are limited  recourse and
payable from the future monthly cash flow received by S2 as  distributions  from
the periodic payment receivables owned by Receivables II-A's  subsidiaries.  The
notes  will  mature  on  December  31,  2021,  bear  interest  at the rate of 8%
annually,  and will be secured by a pledge of S2's interest in Receivables  II-A
and all proceeds  and  distributions  related to such  interest.  The  principal
amount of the notes and the purchase  price may be increased or decreased,  from
time to time,  based upon the  performance  of the underlying  receivables.  The
balance of the purchase  price will be paid by the issuance by DVL of a warrant,
valued at $74,000,  for the purchase of 2 million  shares of the common stock of
DVL,  exercisable until February 15, 2011 at a price of $.20 per share. DVL also
will issue its  guaranty of up to  $2,532,500  of the purchase  price,  which is
callable after December 31, 2021.

     Pursuant to the terms and conditions of the  transaction,  S2 deposited the
promissory notes and the pledge, and DVL deposited the warrant and its guarantee
in escrow  pending  the  closing.  The  closing  of the  purchase  is subject to
satisfaction of certain conditions precedent,  including the receipt of consents
and  approvals to the  transaction  by certain  rating  agencies  that rated the
securitizations  and by a  senior  lender  to the  Seller.  The  transaction  is
expected  to close by May 1,  2001,  but  there  can be no  assurance  that such
consents and approvals will be obtained or that the transaction will close.

     EMPLOYEES

     As of March 2001, the Company had 11 employees all of whom were employed on
a full-time basis other than the President of the Company, who serves on a part-
time basis.  The Company is not a party to any collective  bargaining  agreement
and the Company's  employees are not represented by any labor union. The Company
considers its relationship with its employees to be good.

                                        8
<PAGE>


ITEM 2.  PROPERTIES.

     The Company maintains  corporate  headquarters in New York City in a leased
facility  located  at 70 E. 55th  Street,  New York,  New York,  which  occupies
approximately 6,000 square feet of office space. The lease for such office space
is due to expire on February 7, 2003. The base rent is $227,160 per annum,  plus
real estate tax and operating expense escalation clauses. The Company sub-leases
to tenants  on a  month-to-month  basis,  certain  office  space at 70 East 55th
Street.  During 2000 and 1999, the Company received  approximately  $48,000 each
year, from these sub-tenants. A description of the other properties owned by the
Company  appears in the subsection  captioned  "Real Estate  Holdings" in Item 1
above.  The Company  believes that its existing  facilities are adequate to meet
its  current  operating  needs  and that  suitable  additional  space  should be
available  to the  Company  on  reasonable  terms  should  the  Company  require
additional space to accommodate future operations or expansion.

ITEM 3.  LEGAL PROCEEDINGS.

     The Company from time to time is a party in various lawsuits  incidental to
its business operations.  In the opinion of the Company, none of such litigation
in which it is currently a party, if adversely determined,  will have a material
adverse effect on the Company's financial condition or its operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

                                        9
<PAGE>


                                     PART II


ITEM 5. MARKET FOR DVL'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

     The  Common  Stock of DVL is traded on the  over-the-counter  market and is
quoted on the OTC Bulletin Board maintained by the NASD under the symbol "DVLN".
As of March 7, 2001,  DVL stock was  trading at $.05 per share based on the last
sale price. The following table sets forth, for the calendar periods  indicated,
the high and low bid prices of the Common Stock as reported by the NASD for 2000
and 1999. Such prices are inter-dealer prices without retail mark-up,  mark-down
or commission, and do not represent actual transactions.


2000                                     High         Low
----                                    ------       -----

Fourth Quarter  . . . . . . . . . . .   $ .11       $ .05
Third Quarter . . . . . . . . . . . .     .13         .06
Second Quarter  . . . . . . . . . . .     .20         .06
First Quarter . . . . . . . . . . . .     .34         .13


1999                                     High         Low
----                                    ------       -----

Fourth Quarter  . . . . . . . . . . .   $ .20       $ .13
Third Quarter . . . . . . . . . . . .     .23         .17
Second Quarter  . . . . . . . . . . .     .22         .19
First Quarter . . . . . . . . . . . .     .23         .14


     At March 15,  2001,  there were 3,568  holders of record of Common Stock of
DVL. No dividends  have been paid since October 1990. At this time, DVL does not
anticipate paying any dividends in the foreseeable future.

                                       10
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

     The data set forth below should be read in conjunction with other financial
information  of  DVL,  including  its  consolidated   financial  statements  and
accountants'   report  thereon  included   elsewhere  herein  and  "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

                   Consolidated Statements of Operations Data
                    (In thousands except for per share data)
                             Year Ended December 31,

<TABLE>
<CAPTION>
                                                           1996             1997             1998             1999            2000
                                                         --------         --------         --------         --------        --------
<S>                                                      <C>              <C>              <C>              <C>             <C>
Revenues
  Affiliates                                             $  5,835         $  6,183         $  5,794         $  6,375        $  4,818
  Other                                                       399               70              528            1,360           1,245
                                                         --------         --------         --------         --------        --------
          Total                                          $  6,234         $  6,253         $  6,322         $  7,735        $  6,063
                                                         ========         ========         ========         ========        ========

Income (loss) before extraordinary gain                    (4,471)          (2,415)            (758)           1,026        $    199
Extraordinary gain on the settlement of                     8,349            4,011              202            1,267             306
 indebtedness
                                                         --------         --------         --------         --------        --------
         Net Income (loss)                               $  3,878         $  1,596         $   (556)        $  2,293        $    505
                                                         ========         ========         ========         ========        ========
Basic earnings (loss) per share
  Income (loss) before extraordinary gain                $   (.31)        $   (.15)        $   (.04)        $    .06        $    .01
  Extraordinary gain                                          .58              .25              .01              .08             .02
                                                         --------         --------         --------         --------        --------
         Net Income (loss)                               $    .27         $    .10         $   (.03)        $    .14        $    .03
                                                         ========         ========         ========         ========        ========

Diluted earnings (loss) per share
  Income (loss) before extraordinary gain                    (.31)            (.15)            (.04)             .02             .01
  Extraordinary gain                                          .58              .25              .01              .02             .00
                                                         --------         --------         --------         --------        --------
         Net Income (loss)                               $    .27         $    .10         $   (.03)        $    .04        $    .01
                                                         ========         ========         ========         ========        ========

</TABLE>

                                                                              11
<PAGE>


                         Consolidated Balance Sheet Data
                                 (In thousands)
                                As at December 31

                                       1996     1997     1998     1999     2000
                                     -------  -------  -------  -------  -------

Total assets                         $76,383  $64,942  $55,635  $41,858  $45,437
                                     =======  =======  =======  =======  =======

Underlying mortgages payable         $49,749  $45,306  $38,644  $27,692  $26,019
                                     =======  =======  =======  =======  =======

Long-term debt and notes payable     $20,340  $12,143  $ 9,937  $ 5,156  $10,887
                                     =======  =======  =======  =======  =======
Shareholders' equity                 $ 3,582  $ 5,279  $ 4,775  $ 7,068  $ 7,573
                                     =======  =======  =======  =======  =======

                                             12
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

INTRODUCTION

     The  Company  is a  commercial  finance  company  which has been  primarily
engaged in the  ownership  and  servicing of a portfolio  of secured  commercial
mortgage  loans,  as well  as  managing  numerous  properties  and  the  limited
partnerships which typically own such properties.

     DVL's  anticipated  cash flow  provided by operations is sufficient to meet
its current cash  requirements  through January 2002. In the event that the cash
flow is less than  anticipated,  NPO has agreed to accept as partial  payment of
its fees, the cash sums available.  See below for a description of the Company's
obligations  to NPO.  The  Company  has in the past and expects in the future to
continue to augment its cash flow with additional cash generated from either the
sale or refinancing of its assets and/or borrowings.

     The Company's  current  strategy is to (i) maximize the value of its assets
and  meet  its  short-term  working  capital  needs  by  continuing  to  manage,
administer  and service its  existing  real estate  properties,  the  Affiliated
Limited  Partnerships  and the  mortgages  on loans to such  Affiliated  Limited
Partnerships,  (ii) increase its  participation  in the Opportunity  Fund, (iii)
obtain assets using borrowed funds, where possible,  and (iv) expand through the
acquisition of one or more companies to generate  positive income.  There can be
no assurance  that the Company  will be able to identify or acquire  businesses.
While the Company regularly evaluates and discusses potential acquisitions,  the
Company currently has no understandings,  commitments or agreements with respect
to any acquisitions.  The Company anticipates that it would finance any possible
future  acquisition  through  new  borrowings  or the  issuance of its common or
preferred stock. During 2000, the Company purchased eight new mortgage loans and
refinanced three existing mortgage loans, which was primarily funded through new
bank financings.  Also, during 2000, the Company purchased the land and building
on a property that the Company had a master lease  agreement.  This  acquisition
was financed with a new bank loan. In early 2001, the Company purchased a parcel
of land that was partially funded with bank financing.

     At December  31, 2000,  the Company had net  operating  loss carry  forward
("NOLS")  aggregating  approximately $61 million,  which expire in various years
through 2019,  including  $54 million which expire  through 2007. If the Company
generates  profits in the future,  the Company may be subject to  limitations on
the use of its NOLS  pursuant  to the  Internal  Revenue  Code.  There can be no
assurance  that a  significant  amount of the  Company's  existing  NOLS will be
available to the Company at such time as the Company desires to use them.

                                       13
<PAGE>


SIGNIFICANT EVENTS

     NPM AND NPO TRANSACTIONS

     In an  effort to  alleviate  its  liquidity  problems  and to meet  certain
mandatory  debt  repayment  requirements,  on September  27,  1996,  the Company
entered into a loan  transaction  with NPM under a certain  Amended and Restated
Loan  Agreement  dated as of March 27,  1996 (the  "Original  Loan  Agreement"),
pursuant to which NPM purchased certain loans from creditors of the Company, and
agreed  to make  principal  installment  payments  of up to  $600,000  on  DVL's
obligations  to two of its  creditors.  NPM fulfilled  this  additional  funding
obligation.  The original  principal  loan amount from NPM was  $8,382,000  (the
"Original Loan"),  which was $3,150,000 in excess of the aggregate  balances due
on the loans sold to NPM.  Accordingly,  the  transaction  resulted in a loss of
$880,000 in 1996 and an effective  interest rate of 15% on the NPM loan in 1999,
1998 and 1997. In 1997, NPM advanced the Company an aggregate of $200,000, which
amount  was  being  paid  back to NPM pari  passu  with the  Original  Loan.  In
addition,  from January 1998 through May 1999, NPM advanced amounts  aggregating
an additional  $370,000 to the Company to fund quarterly  payments to a creditor
of the Company. All advances not contemplated by the Original Loan bore interest
at 15% per annum and were being  re-paid pari passu with the Original Loan (such
amounts, collectively, are referred to herein as the "NPM Loan").

     Under the terms of the NPM Loan, the principal balance was payable over six
years with interest  accruing at the rate of 10.25% per annum.  In May 1999, DVL
repaid all amounts due under the NPM loan.

     In  connection  with the  transactions  contemplated  by the Original  Loan
Agreement,  in  March  1996,  the  Company  and NPO,  an  affiliate  of  certain
principals  of NPM,  entered  into an  Asset  Servicing  Agreement  (the  "Asset
Servicing  Agreement"),  pursuant to which NPO is  providing  the  Company  with
administrative  and advisory  services relating to the assets of the Company and
its Affiliated  Limited  Partnerships.  In consideration for such services,  the
Company is required to pay NPO $600,000 per year (with cost of living increases)
over the seven-year term of the agreement,  subject to early  termination  under
certain conditions. DVL had the right to defer up to $600,000 of such fees, with
interest  at 15% per  annum,  during  the first  two years and to defer  reduced
amounts  during the third  year.  DVL had  accrued  and unpaid  service  fees of
$373,000 as of December 31, 2000.  NPO has waived any event of default which may
exist under the Asset Servicing Agreement during the period through December 31,
2001, based on the fact that the amount of accrued service fees has exceeded the
operative limitations since mid-1997.  The waiver does not affect NPO's right to
receive payment of all deferred  service fees, and interest  thereon,  which are
currently outstanding or which may become outstanding through December 31, 2001.

     In connection with the Original Loan Agreement,  certain  affiliates of NPM
acquired an aggregate of 1,000,000  shares (the "Base  Shares") of the Company's
Common Stock for $200,000. The Base Shares currently represent  approximately 6%
of the  outstanding  Common  Stock  of the  Company.  An  affiliate  of NPM also
acquired  100 shares of preferred  stock of the Company for $1,000.  The Company
issued to affiliates of the NPM Parties warrants (the  "Warrants"),  exercisable
as of January 1999 in accordance  with the terms of such  Warrants,  to purchase
such  number  of  shares of Common  Stock  as,  when  added to the Base  Shares,
represent an aggregate of 49% of the outstanding  Common Stock of the Company on
a fully-diluted  basis. The original exercise price of the Warrants was $.16 per
share, subject to applicable  anti-dilution  provisions and subject to a maximum
aggregate  exercise price of  approximately  $1,900,000.  The Warrants expire on
December 31, 2007. The Warrants were valued for financial  statement purposes at
$516,000 at the date of issuance and such value  resulted in a debt  discount to
be amortized  using the effective  interest rate method.  Through March 2001, no
Warrants have been exercised.

                                       14
<PAGE>


     The possibility  that some or all of the Warrants may be exercised  creates
the potential for significant dilution of the current  stockholders.  The actual
dilutive  effect cannot be currently  ascertained,  since it depends on whether,
and if so to what extent, the Warrants are exercised.

     RECENT DEBT TENDER OFFERS AND REDEMPTIONS

     Since October  1997,  the Company  conducted  three cash tender offers (the
"Offers")  with an offer  price of  $0.12  per  $1.00  principal  amount  of the
Company's 10% redeemable  promissory  notes due December 31, 2005 (the "Notes").
The first two Offers were financed with a loan from Blackacre, discussed below.


The results were as follows:

                    Principal Amount       Principal Amount
                         of Notes              of Notes         Extraordinary
                     Purchased by           Purchased by           Gains to
                         DVL                  Blackacre               DVL
                    ----------------       ----------------      -------------


Offer # 1          $ 6,224,390               $ 392,750            $   202,000
                                                                     (1998)
                                                                  $ 2,906,000
                                                                     (1997)

Offer # 2          $ 2,413,652               $ 423,213            $ 1,267,000
                                                                     (1999)

Offer # 3          $   378,270               $  - 0 -             $   306,000
                                                                     (2000)

     The  Company  has had the  option to redeem  the  outstanding  Notes  since
January 1, 1999 by issuing additional shares of Common Stock with a then current
market value  (determined  based on a formula set forth in the Notes),  equal to
110% of the face  value  of the  Notes  plus any  accrued  and  unpaid  interest
thereon.  Because  the  applicable  market  value of the  Common  Stock  will be
determined at the time of redemption,  it is not possible currently to ascertain
the  precise  number of shares  of  Common  Stock  that may have to be issued to
redeem the outstanding  Notes. The redemption of the notes may cause significant
dilution  for  current  shareholders.  The  actual  dilutive  effect  cannot  be
currently  ascertained  since it depends on the number of shares to be  actually
issued to satisfy the Notes. The Company  currently  intends to exercise at some
point in the future its redemption option to the extent it does not buy back the
outstanding Notes by means of cash tender offers or cash redemptions.

     Notes with an aggregate principal amount of approximately $3,725,000 remain
outstanding  as of December  31,  2000.  The Offers have  reduced the  potential
dilutive effective on the Company's current  stockholders that would result from
redemption of the notes for shares of Common Stock. However, given the aggregate
principal  amount of Notes which remains  outstanding,  the  potential  dilutive
effect of such a redemption is still significant.

     In order to fund the  acquisition  of the  Notes in the  first  and  second
Offers and pay the  related  costs and  expenses,  the Company  entered  into an
amended financing arrangement (the "BC Arrangement") with Blackacre, NPM and NPO
as of October 20, 1997,  in the form of a Fourth  Amendment to a Loan  Agreement
between such parties (as amended,  the "Amended Loan Agreement),  permitting the
Company to borrow up to $1,760,000 (the amount actually  borrowed by the Company
pursuant to the BC  Arrangement  is  referred to as the "BC Loan").  The BC Loan
matures on  September  30, 2002 and bears  interest at the rate of 12% per annum
compounded  monthly  and  payable at  maturity.  Total  borrowings  under the BC
Arrangement were $1,560,000 as of December 31, 2000. In addition, Blackacre is

                                       15
<PAGE>


entitled  to  acquire  15% of all Notes  acquired  by the  Company  in excess of
$3,998,000  under  the same  terms  and  conditions  as the  Company.  Blackacre
acquired Notes  aggregating  $392,750 under these terms from the first Offer and
$423,213 from the second Offer. DVL funded the third Offer with available cash.

     As further  consideration for Blackacre's providing the Company with the BC
Loan, the Company issued to Blackacre 653,000 shares of Common Stock.

     The  Company's  obligations  under  the BC Loan are  secured  by all of the
assets of the Company  currently pledged to NPO under the Amended Loan Agreement
and the other documents executed in connection therewith.  The BC Loan is senior
to all  indebtedness  of the Company  other than  indebtedness  to NPO and, with
respect to individual assets, the related secured lender. The effective interest
rate to the Company for financial  reporting  purposes,  including the Company's
costs associated with the BC Loan, and the value of the 653,000 shares of common
stock issued to Blackacre in  connection  therewith,  is  approximately  14% per
annum.  Interest  payable in connection  with the BC Loan will be deferred until
the Company satisfies all of its obligations owing to NPO. However,  since April
27, 2000,  the Company must pay  principal  payments of 15% of all proceeds that
would  otherwise  be  remitted to NPO to  Blackacre.  Thereafter,  interest  and
principal  will be paid from 100% of the proceeds then  available to the Company
from the mortgage collateral held as security for the BC Loan.

     During December 2000, the Company sent  redemption  letters to note holders
who hold Notes that aggregate  approximately  $106,000 offering to pay the Notes
in cash at the face value. As of December 31, 2000, no monies were disbursed.

OPPORTUNITY FUND

     In April 1998, DVL, an affiliate of Blackacre and affiliates of NPO entered
into an Opportunity  Agreement  providing for the Opportunity Fund,  pursuant to
which  entities  would be  formed,  from  time to time,  to enter  into  certain
transactions  involving the acquisition of limited partnership  interests in the
assets of, or mortgage loans to, Affiliated Limited Partnerships or other assets
in which the Company has an interest.  These  investment  opportunities  will be
presented to the Opportunity Fund on a first-refusal  basis, if the Company, due
to financial  constraints,  is unable to pursue such business opportunities with
its own funds.

     The Opportunity Fund is expected to pursue each opportunity with respect to
which it  exercises  its  right of first  refusal  through  the use of a special
purpose limited liability company. All of the required capital contributions are
to be provided by Blackacre and the NPO affiliates.  The Company will receive up
to 20% of the profits from an opportunity after Blackacre and the NPO affiliates
receive a return of their investment plus preferred  returns ranging from 12% to
20% per annum.

     As of March 1, 2001, the  Opportunity  Fund has purchased 15 wrap mortgages
of Affiliated  Limited  Partnerships  from  unaffiliated  third  parties  (seven
mortgages  were  purchased in 1998, one mortgage was purchased in 1999 and seven
mortgages were purchased in January 2000),  acquired limited  partnership  units
from  unaffiliated  individuals in three Affiliated  Limited  Partnerships,  and
acquired a lease hold interest of a tenant of an Affiliated Limited Partnership.
In  addition,  during  1999,  the  Opportunity  Fund  acquired a property  of an
Affiliated  Limited  Partnership and the land underlying this property from DVL.
During 2000, DVL purchased three of the mortgages owned by the Opportunity  Fund
and the  Opportunity  Fund was fully  satisfied on an  additional  four mortgage
loans, as the properties that secured these four mortgage loans was sold. As of

                                       16
<PAGE>


March 1, 2001, the Opportunity Fund owns eight  mortgages.  During 2000, DVL was
paid  approximately  $8,000 from the investments by the Opportunity  Fund, which
amount  was used to pay  amounts  owed by DVL under a note in favor of an entity
that is part of the Opportunity Fund.

RESULTS OF OPERATIONS

     DVL  had net  income  (loss)  from  operations,  net  income  (loss)  after
extraordinary items, and extraordinary gains, as follows:

                                        2000             1999            1998
                                      --------       ----------       ---------

Net income (loss)
  from operations                     $199,000       $1,026,000       $(758,000)

Net income (loss) after
  extraordinary gains                 $505,000       $2,293,000       $(556,000)

Extraordinary gains                   $306,000       $1,267,000       $ 202,000

     Interest income on mortgage loans from  affiliates and interest  expense on
underlying  mortgages  decreased  from  1998  through  2000,  as a  result  of a
reduction in the size of DVL's  mortgage  portfolio.  The decrease  from 1999 to
2000 was partially  offset by additional  interest  income and interest  expense
from the purchase of eight new  mortgage  loans,  some of which have  underlying
mortgages.

     Gains on satisfaction of mortgage loans were as follows:

                                        2000             1999            1998
                                      --------       ----------       ---------

                                      $256,000       $1,639,000       $ 173,000

These  gains   resulted  from  the  Company   collecting  net  proceeds  on  the
satisfaction of mortgage loans that were greater than the carrying value.

Transaction and other fees from Affiliated Limited Partnerships were as follows:

                                        2000             1999            1998
                                      --------       ----------       ---------

                                      $413,000       $  502,000       $ 497,000

Transaction  and  other  fees  were  earned  in  connection  with  the  sales of
partnership properties and refinancings of underlying mortgages.

     Distributions from investments in affiliates  decreased in 2000 compared to
1999 but were greater in 1999 than 1998.  Distributions  were higher in 1999 due
to the refinancing of certain underlying  mortgages in the limited  partnerships
in which  DVL  owned  limited  partnership  units,  but did not hold  mortgages.
Distributions   from   investments  in  2000  included   approximately   $77,000
distributed  to the Company  from an  Affiliated  Limited  Partnership  that had
excess cash.

     Net rental income from others was as follows:

                                        2000             1999            1998
                                      --------       ----------       ---------

                                      $523,000       $  532,000       $ 333,000

The primary  reason for the  decrease  in 2000 from 1999 was greater  repair and
maintenance  costs,  as well as a $10,000 per month rent reduction  granted to a
major tenant  beginning in September 2000.  However,  the decrease was partially
offset by both higher  occupancy,  as well as, higher rents paid by new tenants.
The primary reason for the increase from 1998 to 1999 was the addition of rental
income received on a property on which DVL had foreclosed in November 1998.

                                       17
<PAGE>


     Management fees from others were as follows:

                                        2000             1999            1998
                                      --------       ----------       ---------

                                      $500,000       $  533,000       $  59,000

The Company was paid incentive  management  fees of $312,500 and $420,000 during
2000 and 1999,  respectively,  from an entity that is owned by affiliates of NPO
and BCG. The decreased incentive  management fees earned was partially offset by
a new management  service agreement entered into in November 1999 with an entity
whose  partners  are  affiliates  of  NPO  to  render  certain   accounting  and
administrative services.

     Distribution  from  investments  from  others  increased  in 2000 from 1999
primarily  as a result of the  purchase  by the  Company of certain  real estate
assets  which the  Company  previously  had been  leasing  under a master  lease
agreement. The Company owned limited partnership units in the seller of the real
estate and as a result, the Company received  approximately  $121,000 from these
limited partnership units.

     Each year,  the  Company  finalized  settlement  agreements  that allow the
Company to realize cash  proceeds  that exceed the carrying  value in previously
reserved limited partner notes receivable. As a result, DVL reflected a recovery
in the provision for losses as follows:

                                        2000             1999            1998
                                      --------       ----------       ---------

                                      $ 37,000       $   48,000       $ 153,000

     General  and  administrative  expenses  decreased  in 2000  from  1999  but
increased in 1999 as compared to 1998.  The primary  reasons for the decrease in
2000 from 1999 were a decrease in salaries and payroll  related  costs,  as well
as, a  reduction  in  stockholder  communication  costs.  These  decreases  were
partially offset by greater  franchise and tax costs. The primary reason for the
increase  from 1998 to 1999 was a result of DVL's move in  November  1998 to its
new corporate headquarters.

     The asset  servicing fee due from the Company to NPO increased in 2000 from
1999 and 1998 due to an increase in the consumer price index, as provided for in
the governing agreement.

     Legal and professional  fees decreased in 2000 as compared to 1999 but were
greater in 1999 than in 1998.  The increased  costs in 2000 and 1999 as compared
to 1998 were a result of the reduction of in-house  legal  personnel and the use
of outside  legal  counsel  for all  corporate  matters,  including  those costs
incurred relating to transaction fees earned.

     Interest expense on the loan to NPM decreased in 1999 compared to 1998 as a
result of the accelerated  pay-down of this loan. The financing costs of the NPM
Loan, as well as the value of the warrants  issued in connection  with obtaining
such loan, were amortized  proportionately  as such loan was repaid. As the loan
was totally repaid in May of 1999, all remaining costs were amortized in 1999.

     Interest  expense on the loan from  Blackacre  increased  from 1998 through
2000 as a result of compounding interest. In addition, the increase in 1999 from
1998 was also a result of an additional borrowing of $500,000 in January 1999 in
connection with the Second Offer.

                                    18
<PAGE>


     Interest  expense on the Notes increased in 2000 from 1999 but decreased in
1999 from 1998. Additional Notes are issued every year for the interest that has
accrued  during such year.  The  interest  cost was reduced for each of the past
three years, as a result of DVL having repurchased Notes in the Tender Offers.

     Interest  expense  associated with the NPO asset servicing fee decreased in
2000 as compared  to 1999 but  increased  in 1999 as compared to 1998.  Interest
accrues on all amounts due to NPO and during  2000 such  outstanding  amount due
was reduced significantly.

     Interest  expense  relating to other debts increased in 2000 as compared to
1999 but  decreased  in 1999 as  compared  to 1998.  During  2000,  the  Company
borrowed  an  aggregate  of  $6,425,000  to fund the  acquisition  of eight  new
mortgage loans, the purchase of all the land, buildings, and improvements from a
limited  partnership  which owned seven  buildings in an industrial  park in New
Jersey,  and refinanced three existing  mortgage  receivables.  The Company paid
$700,000  towards  the  principal  balance of one of such loans  during 2000 and
re-borrowed  the  $700,000  to  partially  fund the  acquisition  of  additional
mortgage loans.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  cash flow from  operations  is generated  principally  from
rental income from its leasehold interests in real estate,  management fees from
the operation of Affiliated Limited  Partnerships and transaction and other fees
received as a result of the sale and/or  refinancing of  partnership  properties
and  mortgages.   The  Company's   portfolio  of  loans  to  Affiliated  Limited
Partnerships  currently does not produce  substantial  cash flow from operations
because  most of the cash  received  from the  mortgages is used to pay the debt
service on mortgages on the properties senior to those held by the Company, with
any excess being used to pay certain other creditors, including NPO.

     DVL's  anticipated  cash flow  provided by operations is sufficient to meet
its current cash requirements through January 2002. In the event that Management
determines  that such cash flow is not  sufficient,  NPO has agreed to allow the
Company to defer  payment of its  management  fees.  NPO has agreed to waive any
events of  default  that may exist  under its  servicing  agreements  due to the
deferral of fees through December 31, 2001. As of December 31, 2000, the Company
owed  approximately  $373,000 to NPO. From January 1, 2000 through  December 31,
2000,  the Company paid an aggregate of  $1,813,885 to NPO. Of this amount paid,
$750,000 was paid out of proceeds  from the  refinancing  discussed  below.  DVL
believes that its current liquid assets and credit  resources will be sufficient
to fund operations on a short-term basis as well as on a long-term basis.

     In 1997, the Company  entered into the BC Loan with  Blackacre,  permitting
the Company to borrow up to $1,760,000 to fund the purchase of Notes, and to pay
related  costs and expenses.  A total of $1,060,000  had been borrowed as of the
expiration of the first offer and an additional  $500,000 was borrowed as of May
14, 1999 to fund the second  offer.  During the period from May 18, 2000 through
August 1, 2000, DVL expended  approximately  $45,000 from available cash to fund
the  purchase of Notes,  and to pay related  costs and  expenses,  for the third
offer. As further  consideration for Blackacre's  providing the Company with the
BC Loan, the Company issued to Blackacre  653,000 shares of Common Stock. The BC
Loan  matures on  September  30, 2002 and bears  interest at the rate of 12% per
annum.  The  effective  rate to the Company for  financial  reporting  purposes,
including the Company's costs  associated with the BC Loan, and the value of the
653,000 shares issued to Blackacre is  approximately  14%.  Interest  payable in
connection  with the BC Loan  will be  payable  in the form of the  issuance  of
additional  Notes until the Company  satisfies all of its  obligations  owing to
NPO.

                                       19
<PAGE>


     However,  since April 27, 2000, the Company must pay principal  payments of
15% of all  proceeds  that  would  have  otherwise  been  remitted  to  NPO,  to
Blackacre.  Once NPO is paid in full,  interest and principal  will be paid from
100% of the proceeds then available to the Company from the mortgage  collateral
held as security for the BC Loan.

     From  January  1998  through  May 1999,  NPM  advanced  additional  amounts
aggregating  $370,000  to DVL to fund  quarterly  payments  to a creditor of the
Company.  These  advances  were not  required  under the  Original  Loan.  These
advances  bore  interest  at 15% per annum and were  paid  pari  passu  with the
Original  Loan. In May 1999, DVL paid all remaining  outstanding  amounts due on
the NPM Loan.

     During 2000, DVL purchased  five wrap mortgage  loans from an  unaffiliated
third  party which are secured by real  estate  properties  owned by  Affiliated
Limited  Partnerships  in which  DVL is the  general  partner.  The  loans  were
purchased  for an aggregate  price of  $1,210,000  plus closing  costs,  paid as
follows:  cash of $135,000,  a $75,000 unsecured  promissory note payable to the
seller  of the loans  maturing  on March 1,  2001,  without  interest,  and bank
financings of $1,000,000. This $75,000 note was paid in full in March 2001. This
bank  financing  is a  self-amortizing  loan that  matures on April  1,2005 with
interest accruing at the annual rate of prime plus 1.5% and requires payments to
be made from the net cash  proceeds  DVL will  receive  on the  loans.  The wrap
mortgage loans were previously  owned by DVL and were  transferred to the seller
in 1992 in settlement of indebtedness.  In May 2000, DVL, as the general partner
of an  Affiliated  Limited  Partnership  that  owned  one  of  the  real  estate
properties that secured this bank loan, negotiated the sale of the partnership's
property.  DVL received  $700,000 as the  mortgage  holder which DVL paid to the
bank to reduce the loan.

     During 2000,  DVL purchased two  additional  mortgage  loans from an entity
that is part of the  Opportunity  Fund which are secured by real estate owned by
Affiliated Limited  Partnerships in which DVL is the general partner.  The loans
were purchased for an aggregate price of $900,000, paid as follows: the issuance
to the seller of a secured promissory note in the amount of $200,000 maturing on
August 31,  2002 with  interest  accrued  at the  annual  rate of 12% per annum,
compounded monthly, and bank financing of $700,000.  All closing costs were paid
in  cash.  The  bank  loan is from the  same  lender  and the same  terms as the
$1,000,000 loan described  above,  except that the maturity date of the loan was
extended until May 1, 2006.

     In 2000, the Company  obtained  additional  bank financing in the amount of
$1,450,000  that  is  secured  by the  assignment  of  three  existing  mortgage
receivables  and a $405,000 face value mortgage  receivable  which was purchased
from an  entity  that is part of the  Opportunity  Fund  for  $315,000.  The net
proceeds  of this loan were used to repay one  existing  underlying  mortgage of
approximately  $92,000  and the  balance  of the  funds  were  used for  general
corporate  purposes  including  the  payment of accrued  fees to NPO.  This bank
financing is a self-amortizing  loan that matures on April 1, 2005 with interest
accruing  at the annual  rate of prime plus 1.5% and  requires  payments be made
from the net cash proceeds DVL will receive on these loans. In 1998, the Company
refinanced one mortgage which generated  approximately  $40,000 in excess of the
existing  underlying  mortgage.  The net excess funds from the 1998  refinancing
were used to pay the expenses of the  refinancings,  and to pay down the loan to
NPM as required by the  applicable  loan  agreements.  During 1999,  DVL did not
refinance any of its wrap mortgages.

                                       20
<PAGE>


     The amounts obtained from all of the  refinancings  were primarily based on
the value of the base rents due from tenants during the period of the base lease
term  subsequent to the payoff of the existing first  mortgages.  As a result of
the refinancings, the Company's asset base available for future refinancings has
diminished.

     During 2000, DVL purchased the land,  buildings,  and  improvements  from a
limited partnership which owned seven buildings located in an industrial park in
Kearny,  NJ for an aggregate  purchase price of $3,000,000,  plus closing costs.
Prior to the  purchase,  the  Company had been  leasing all of these  buildings,
under a  master  lease  agreement,  and  subletting  this  property  to  various
unrelated  tenants.  The  acquisition  was  funded  with bank  financing  in the
original principal amount of $3,000,000 and cash of approximately  $255,000. The
bank  financing  accrues  interest  at the rate of 10% per  annum  and  requires
monthly  interest-only  payments  until December 1, 2001, at which time the loan
matures. The Company may extend the loan under the same terms until June 1, 2002
by paying an extension fee of $15,000.

     In early 2001,  DVL  purchased the fee title to a parcel of land in Kearny,
NJ from an unrelated third party for a purchase price of $365,000,  plus closing
costs. The acquisition was funded with bank financing in the original  principal
amount of  $200,000  and cash of  approximately  $175,000.  This bank  financing
accrues   interest  at  the  rate  of  9.5%  per  annum  and  requires   monthly
interest-only  payments until December 31, 2001, at which time the loan matures.
The  Company  may extend  the loan  under the same  terms  until June 1, 2002 by
paying an extension fee of $750.

     On March 30, 2001, the Company's  newly-formed wholly owned subsidiary,  S2
Holdings,  Inc.,  ("S2")  entered into an agreement  for the purchase of a 99.9%
Class B member  interest in Receivables  II-A LLC, a limited  liability  company
("Receivables  II-A"),  from Receivables II-A Holding Company LLC ("Seller"),  a
newly  formed  indirect  wholly  owned  subsidiary  of a company  engaged in the
acquisition and management of periodic payment  receivables.  The Class B member
interest will entitle S2 to be allocated 99.9% of all items of income,  loss and
distribution.  Receivables  II-A  owns  all of the  equity  interests  in  three
subsidiary  limited  liability  companies  that  have  previously  acquired  and
securitized four portfolios of periodic payment receivables.  Receivables II - A
solely  has the right to receive  the  residual  cash flow from the  securitized
receivables after payment to the securitized noteholders.

     S2  will  purchase  its  interest  for  an  aggregate   purchase  price  of
$25,399,000. The purchase price will be paid by the issuance of promissory notes
by S2 in the aggregate  amount of  $25,325,000,  which are limited  recourse and
payable from the future monthly cash flow received by S2 as  distributions  from
the periodic payment receivables owned by Receivables II-A's  subsidiaries.  The
notes  will  mature  on  December  31,  2021,  bear  interest  at the rate of 8%
annually,  and will be secured by a pledge of S2's interest in Receivables  II-A
and all proceeds  and  distributions  related to such  interest.  The  principal
amount of the notes and the purchase  price may be increased or decreased,  from
time to time,  based upon the  performance  of the underlying  receivables.  The
balance of the purchase  price will be paid by the issuance by DVL of a warrant,
valued at $74,000,  for the purchase of 2 million  shares of the common stock of
DVL,  exercisable until February 15, 2011 at a price of $.20 per share. DVL also
will issue its  guaranty of up to  $2,532,500  of the purchase  price,  which is
callable after December 31, 2021.

                                          21
<PAGE>


     Pursuant to the terms and conditions of the  transaction,  S2 deposited the
promissory notes and the pledge, and DVL deposited the warrant and its guarantee
in escrow  pending  the  closing.  The  closing  of the  purchase  is subject to
satisfaction of certain conditions precedent,  including the receipt of consents
and  approvals to the  transaction  by certain  rating  agencies  that rated the
securitizations  and by a  senior  lender  to the  Seller.  The  transaction  is
expected  to close by May 1,  2001,  but  there  can be no  assurance  that such
consents and approvals will be obtained or that the transaction will close.

     The purchase  agreement  contains annual minimum and maximum levels of cash
flow that will be retained by S2, after the payment of interest and principal on
the notes, which are as follows:

                 Years                 Minimum          Maximum

                 2001 to 2009         $462,500         $500,000
                 2010 to 2015          700,000          750,000
                 2016 to 2021          700,000             None

IMPACT OF INFLATION AND CHANGES IN INTEREST RATES
-------------------------------------------------

     The  Company's  portfolio  of  mortgage  loans made to  Affiliated  Limited
Partnerships  consists  primarily  of  loans  made at fixed  rates of  interest.
Therefore,  increases or decreases in market  interest  rates are  generally not
expected to have an effect on the Company's earnings.  Other than as a factor in
determining market interest rates, inflation has not had a significant effect on
the Company's net income.

                                       22
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     DVL has no substantial cash flow exposure due to interest-rate  changes for
long-term debt obligations, because a majority of the long-term debt is at fixed
rates. DVL primarily enters into long-term debt for specific  business  purposes
such as the  repurchase  of debt at a discount  or the  acquisition  of mortgage
loans.

     DVL's ability to realize on its mortgage  holdings is sensitive to interest
rate  fluctuations  in that the sales prices of real property and mortgages vary
with interest rates.

     The table set forth below presents  principal  amounts and related weighted
average  interest rates by year of maturity for DVL's  investment  portfolio and
debt obligations.

                                                                 There-
In Thousands            2001    2002    2003     2004    2005    After     Total
--------------------------------------------------------------------------------

ASSETS
Cash equivalents       $1,184                                            $ 1,184
 Variable rate
 Average interest rate   4.5%                                               4.5%

LONG TERM DEBT
Fixed rate             $5,343  $4,562  $2,511  $2,465   $2,688  $14,005  $31,574
Average interest rate   9.10%   9.10%   9.10%   9.10%    9.10%    9.10%    9.10%

Variable rate          $  382  $  466  $  519  $  707   $  230  $  -0-   $ 2,304
Average interest rate     11%     11%     11%     11%      11%     -0-

                                    23
<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         SUPPLEMENTARY DATA

                           Quarterly Data (Unaudited)
                      For the Year Ended December 31, 2000
                 (In Thousands Except Share and Per Share Data)

<TABLE>
<CAPTION>
                                              1st                  2nd                3rd                 4th               Full
                                            Quarter              Quarter            Quarter             Quarter             Year
                                          ------------         -----------        ------------        -----------        -----------
<S>                                       <C>                  <C>                <C>                 <C>                <C>
Total Revenue                             $      1,257         $     1,523        $      1,448        $     1,835        $     6,063
Total Expenses                                   1,383               1,504               1,405              1,572              5,864
Net income (loss) before
  extraordinary gain                              (126)                 19                  43                263                199
Extraordinary gain                                  23                 126                 107                 50                306
Net (income) loss                                 (103)                145                 150                313                505
Basic earnings (loss)
  per share:
  Income (loss) before
  extraordinary gain                      $      (0.01)        $      0.00        $       0.00        $      0.02        $      0.01
  Extraordinary gain                      $       0.00         $      0.01        $       0.01        $      0.00        $      0.02
  Net income (loss)                       $      (0.01)        $      0.01        $       0.01        $      0.02        $      0.03
Diluted earnings (loss)
  per share:
  Income (loss) before
  extraordinary gain                      $      (0.01)        $      0.00        $       0.00        $      0.00        $      0.01
  Extraordinary gain                      $       0.00         $      0.00        $       0.00        $      0.00        $      0.00
  Net income (loss)                       $      (0.01)        $      0.00        $       0.00        $      0.00        $      0.01
Weighted average
  shares outstanding:
  Basic                                     16,560,450          16,560,450          16,560,450         16,560,450         16,560,450
  Diluted                                   16,560,450          87,278,791         107,114,914         96,337,586         96,337,586
</TABLE>

                           Quarterly Data (Unaudited)
                      For the Year Ended December 31, 1999
                 (In Thousands Except Share and Per Share Data)

<TABLE>
<CAPTION>
                                              1st                  2nd                3rd                 4th               Full
                                            Quarter              Quarter            Quarter             Quarter             Year
                                          ------------         -----------        ------------        -----------        -----------
<S>                                       <C>                  <C>                <C>                 <C>                <C>

Total Revenue                             $      2,170         $     2,458        $      1,398        $     1,709        $     7,735
Total Expenses                                   1,936               1,820               1,356              1,597              6,709
Net income (loss) before
  extraordinary gain                               234                 638                  42                112              1,026
Extraordinary gain                                 736                 497                  25                  9              1,267
Net (income) loss                                  970               1,135                  67                121              2,293
Basic earnings (loss)
  per share:
  Income (loss) before
  extraordinary gain                      $       0.01         $      0.04        $       0.00        $      0.01        $      0.06
  Extraordinary gain                      $       0.04         $      0.03        $       0.00        $      0.00        $      0.08
  Net income (loss)                       $       0.05         $      0.07        $       0.00        $      0.01        $      0.14
Diluted earnings (loss)
  per share:
  Income (loss) before
  extraordinary gain                      $       0.00         $      0.01        $       0.00        $      0.00        $      0.02
  Extraordinary gain                      $       0.01         $      0.01        $       0.00        $      0.00        $      0.02
  Net income (loss)                       $       0.01         $      0.02        $       0.00        $      0.00        $      0.04
Weighted average
  shares outstanding:
  Basic                                     16,560,450          16,560,450          16,560,450         16,560,450         16,560,450
  Diluted                                   75,016,577          64,314,433          64,170,369         66,983,238         66,983,238
</TABLE>

The financial  statements  and notes  thereto,  together  with the  accountants'
report  thereon of Richard A. Eisner & Company,  LLP, are set forth on pages F-1
through F-30, which follow. The financial statements are listed in Item 14(a)(1)
hereof.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                       24
<PAGE>


                                 PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF DVL

     A. The  following  table sets forth the name of each director and executive
office of the  Company,  and the nature of all  positions  and offices  with the
Company  held by him at  present.  The  term of all  directors  (other  than the
special  purpose  director)  expires at the  Company's  next  annual  meeting of
stockholders,  which  will be held on a date to be  scheduled.  The  term of all
executive  officers expires at the next annual meeting of directors,  to be held
immediately thereafter.

           NAME                             POSITION

  Frederick E. Smithline     Chairman of the Board
  Myron Rosenberg            Director
  Allen Yudell               Director
  Alan E. Casnoff            President and Chief Executive Officer
  Gary Flicker               Executive Vice President and Chief Financial
                               Officer
  Keith B. Stein             Special Purpose Director

     In addition to three regular directors,  who were elected by the holders of
Common  Stock  and who have all of the  powers  normally  granted  to  corporate
directors, the Company has one special purpose director, who was elected in 1996
by the holder of the Class A Preferred  Stock.  The special purpose director has
no right to vote at meetings of the Board,  except as to Bankruptcy  Matters (as
such term is defined in the Certificate of Incorporation).

     B.   The following is a brief account of the recent business  experience of
each director and executive officer and directorships  held with other companies
which file reports with the Securities and Exchange Commission:

     FREDERICK E.  SMITHLINE (age 68) has served as Chairman of the Board of the
Company  since 1990 and as a director  since 1982.  From  September  1989 to May
1996, Mr.  Smithline was of counsel to the law firm of Epstein,  Becker & Green,
P.C., New York, New York. He is currently in private practice as an attorney.

     MYRON  ROSENBERG  (age 72) has served as a director  of the  Company  since
1973. Mr. Rosenberg is currently a financial consultant.  Through December 1996,
Mr. Rosenberg served as Executive Vice President of Rosenthal & Rosenthal, Inc.,
New York,  New York, a commercial  finance  concern,  where he had been employed
since 1961. Mr. Rosenberg also serves as a director of Deotexis, Inc.

     ALLEN  YUDELL  (age 61) has  served  as a  director  of the  Company  since
September 1996. From 1967 to 1991, Mr. Yudell was President of Delco Development
Corporation.  From 1992 to 1996,  Mr.  Yudell  was a Vice  President  of Unidell
Realty Corp., and he is currently a consultant to Unidell. Delco and Unidell are
shopping center development  companies based in Boca Raton,  Florida. Mr. Yudell
is also a member of the International Council of Shopping Centers.

                                       25
<PAGE>


     ALAN E.  CASNOFF  (age 57) has served as  President  of the  Company  since
November  1994,  and was a director  from October 1991 to  September  1996.  Mr.
Casnoff  served as Executive  Vice President of the Company from October 1991 to
November 1994. Mr.  Casnoff has maintained his other business  interests  during
this period and thus has devoted less than full time to the business  affairs of
DVL. From November 1990 to October 1991,  Mr.  Casnoff served as a consultant to
the Company and from 1971 to October  1991,  as Secretary of the Company.  Since
May 1991, Mr. Casnoff has also served as a director of Kenbee  Management,  Inc.
("Kenbee"),  an  affiliate  of the  Company,  and as  President  of Kenbee since
November  1994.  Since  1977,  Mr.  Casnoff  has  also  been  a  partner  of P&A
Associates,   a  private  real  estate   development   firm   headquartered   in
Philadelphia,  Pennsylvania. Since 1969, Mr. Casnoff was associated with various
Philadelphia,  Pennsylvania  law firms  which  have been  legal  counsel  to the
Company  and  Kenbee.  Since  July 1999,  he is of counsel to Klehr,  Harrision,
Harvey, Brazenburg & Ellers ("Klehr"). Klehr is providing some legal services to
the Company.

     GARY FLICKER (age 41) became Vice President and Chief Financial  Officer of
the Company in April 1997 and Executive  Vice  President in September  1998. Mr.
Flicker is a Certified  Public  Accountant.  From January 1996 to April 1997, he
was a  financial  consultant,  performing  acquisition  analysis  and  financial
reporting consulting services.  From November 1985 to November 1994, he was Vice
President - Director of Real  Estate  Accounting  and  Financial  Analysis  with
Integrated  Resources,   Inc.   ("Integrated"),   a  publicly-held  real  estate
investment  company.  Thereafter,  until  December  1995,  Mr. Flicker served as
Senior Real Estate Controller for Concurrency Management, Inc. which was engaged
by  Integrated's   successor  to  perform  management  services.  Mr.  Flicker's
principal   responsibilities   for  Integrated   involved  the   performance  of
accounting,  tax and financial reporting services, as well as financial analysis
for limited  partnerships  in which a subsidiary of  Integrated  was the general
partner.  From November  1983 to November  1985,  Mr.  Flicker was a Supervising
Senior  Accountant at Kenneth Leventhal & Company,  C.P.A.s,  and from September
1980 to November 1983 he was a Senior Accountant at Garnick,  Mansfield, et al.,
C.P.A.s (formerly Lester Witte & Company).

     KEITH B. STEIN (age 44) has been a special purpose  director of the Company
since September 1996. Mr. Stein is the Chairman,  Chief Executive Officer, and a
director of National Auto Receivables  Liquidation,  Inc.  (NASDAQ/BB:  NATA), a
specialty  automobile  finance  company.  From March 1993 to September  1994, he
served as Senior Vice  President,  Secretary  and General  Counsel of  WestPoint
Stevens,  Inc., a textile  company,  after  having  served the same company from
October  1992 to February  1993 in the  capacity of Acting  General  Counsel and
Secretary. From May 1989 to February 1993, Mr. Stein was associated with the law
firm of Weil, Gotshal & Manges LLP. Mr. Stein is an affiliate of NPM.

(c)  COMPLIANCE WITH SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors,  and persons who are beneficial owners of more
than 10% of a  registered  class of the  Company's  equity  securities,  to file
reports of ownership  and changes in ownership  with the  Commission.  Officers,
directors,  and greater than 10%  beneficial  owners are required by  Commission
regulations  to furnish the Company with copies of all Section  16(a) forms they
file.  To the  Company's  knowledge,  based  solely on  review  of such  reports
furnished to the Company, and written representations that no other reports were
required  during or with respect to the fiscal year ended December 31, 2000, all
Section 16(a) filing requirements applicable to such persons were satisfied.

                                       26
<PAGE>


ITEM 11.    EXECUTIVE COMPENSATION


     A. SUMMARY COMPENSATION TABLE

     The following  table sets forth all  compensation  awarded to, earned by or
paid to the following  persons for services  rendered to the Company in 2000 and
(if  applicable) in 1999 and 1998: (1) the person serving as the Company's chief
executive  officer  during  2000;  (2) those other  persons who were  serving as
executive  officers as of the end of 2000 whose  compensation  exceeded $100,000
during 2000:

                           SUMMARY COMPENSATION TABLE

                                                                 Long-Term
                                  Annual Compensation       Compensation Awards
                             -----------------------------  --------------------
                                                            Securities
                                              Other Annual  Underlying     LTIP
    Name             Year    Salary   Bonus   Compensation  Options/SAR  Payouts
    ----             ----    ------   -----   ------------  -----------  -------
Alan E.  Casnoff     2000  $120,000  $   -         -            -           -
President and        1999   120,000    10,000      -            -
Chief Executive      1998   120,000      -         -        25,000(2)       -
Officer


Gary Flicker         2000  $136,000  $ 17,500      -        25,000(2)       -
Executive Vice       1999   132,500    17,500      -        25,000(3)       -
President and Chief  1998   125,000    15,000      -        25,000(3)       -
Financial Officer(1)

----------

(1)  Mr.  Flicker  became  Vice  President  and Chief  Financial  Officer of the
     Company on April 16, 1997 and Executive Vice President in September 1998.

(2)  Consists of options to purchase shares of Common Stock under the 1996 Stock
     Options Plan.

                                                         27
<PAGE>


     B.   OPTION GRANTS IN LAST FISCAL YEAR

     The following  table sets forth  information as to options  granted in 2000
under the DVL,  Inc.  1996  Stock  Option  Plan (the  "Plan")  to the  executive
officers named in the Summary  Compensation  Table. The Plan originally provided
for the grant of options to purchase up to  1,500,000  shares of Common Stock to
Employees and  Non-Employee  Directors (in each case as defined in the Plan). In
February  2000,  DVL amended the Plan to increase the number of shares of common
stock available under the Plan by an additional 1,000,000 shares.

     The Plan provides that any one employee  wishing to exercise an option must
give  prior  notice to the Board.  If the Board  determines,  in its  reasonable
discretion,  that such exercise will cause an "ownership  change" (as defined in
Section 382 of the  Internal  Revenue  Code of 1986,  as amended) in the Company
which would have an adverse  effect on the Company's use of its NOLS (as defined
in Section 382) (an "Adverse Ownership  Change"),  the Board shall deny approval
of the exercise.  If the Board  determines that such exercise would not cause an
Adverse  Ownership  change,  it  shall  approve  the  exercise.  The  conditions
described  in  this  paragraph  are  referred  to  below  as  the  "Section  382
Restrictions".

     As of  December  31,  2000,  options  to  purchase  1,278,131  shares  were
outstanding under the Plan and 1,221,869 shares were available for issuance upon
exercise of options which may be granted in the future.

                                       28
<PAGE>


<TABLE>
<CAPTION>
                                           Individual Grants                          Grant Date Value
                      -------------------------------------------------------------  -------------------
                                             Percentage of
                                             Total Options
                      Number of Securities     Granted to    Exercise
                       Underlying Options     Employees in     Price     Expiration      Grant Date
     Name(1)               Granted(1)        Fiscal Year(2)  ($/Sh)(3)      Date      Present Value (4)
-------------------   --------------------   --------------  ---------   ----------  -------------------
<S>                          <C>                   <C>           <C>      <C>              <C>
Gary Flicker                 25,000                50.0%         .11      05/08/10         $2,500
</TABLE>

(1)  Individual   grants  to  employees  become   exercisable  in  whole  or  in
     installments,  and at such  times,  and subject to the  fulfillment  of any
     conditions on exercisability  (in addition to the Section 382 Restrictions)
     as may be  determined  by  the  Compensation  Committee  of  the  Board  of
     Directors (the "Committee") at the time of grant. All options listed in the
     above table became exercisable upon grant,  subject only to the Section 382
     Restrictions. The Committee also has the discretion to establish provisions
     relating to the  forfeiture of an option in connection  with the employee's
     termination of employment with the Company,  or to grant any option without
     a  forfeiture  provision.  Each of the  options  listed in the above  table
     provides that the option will be forfeited  upon  termination of employment
     for "cause" (as therein defined).  In addition,  the options granted to Mr.
     Flicker  limit  the  period  of  exercise  after  termination  under  other
     circumstances (except death or disability).

(2)  Total options granted to employees in fiscal year 2000 was 50,000.

(3)  Represents  the fair market value of the  underlying  shares on the date of
     grant  (determined in accordance  with the Plan as the closing price of the
     Common Stock on the OTC Bulletin Board).

(4)  The  Black-Scholes  option  pricing  model was chosen to estimate the grant
     date present value of the options set forth in this table. The Company does
     not  believe  that  the  Black-Scholes  model,  or  any  other  model,  can
     accurately  determine  the  value of an  option.  Accordingly,  there is no
     assurance that the value,  if any,  realized by an option holder will be at
     or near the value estimated by the Black-Scholes model. Future compensation
     resulting  from option  grants is based  solely on the  performance  of the
     Company's stock price. The Black-Scholes  ratio of .10 was determined using
     the  following  assumptions:  a  volatility  of 85%,  an  historic  average
     dividend  yield of 0%, a risk  free  interest  rate of 6.56%  and a 10 year
     projected exercise period.

                                       29
<PAGE>


     C.   FISCAL YEAR-END OPTION VALUES

     The following table sets forth information as to options held as of the end
of 2000 by the executive  officers named in the Summary  Compensation  Table. No
options  were  exercised  by said  officers in 2000.  All  options  held by said
officers at fiscal year-end were immediately exercisable.

                 Number of Securities Underlying    Value of Unexercised
                  Unexercised Options At Fiscal     In-The-Money Options
     Name                    Year End                At Fiscal Year End
     ----        -------------------------------    --------------------

Alan E.  Casnoff             375,000                       none
Gary Flicker                 125,000                       none

     D.   COMPENSATION OF DIRECTORS

     Regular  directors  who  are  not  officers  or  employees  of the  Company
("Non-Employee  Directors")  presently  receive a  director's  fee of $1,500 per
month,  plus $500 for each Audit  Committee  meeting  of the Board of  Directors
attended.  Directors  who are officers or  employees  of the Company  receive no
compensation  for their  services as  directors  or  attendance  at any Board of
Directors or committee meetings.  None of the current directors is an officer or
employee.  The special purpose director receives no compensation for his service
as a director or attendance at any Board of Directors or committee meetings.

     On September 17, 1998, 1999 and 2000,  options to purchase 15,000 shares of
Common Stock were  granted to each of the three  directors  (Messrs.  Rosenberg,
Smithline and Yudell).  The options were granted under the Plan,  which provides
for  automatic  grants of options for 15,000  shares to each  incumbent  regular
director on each  anniversary  of the adoption of the Plan.  The options  vested
immediately  and are  exercisable  for a term of ten (10) years from the date of
grant.  The  exercise  price is equal  to the fair  market  value on the date of
grant.

     E.   EMPLOYMENT CONTRACTS AND ARRANGEMENTS

     Gary  Flicker  entered  into an  Employment  Agreement  with  the  Company,
effective as of April 16, 1997,  providing for his  employment as Vice President
and Chief Financial Officer for a one-year term at an annual salary of $120,000,
and for the grant of 50,000 stock  options under the Plan upon  commencement  of
employment.  Effective  January 1, 2001,  2000, and 1999, Mr.  Flicker's  annual
salary was  increased to $140,600,  $136,500,  and $132,500,  respectively.  The
Employment  Agreement  with Mr.  Flicker  expired on April 16,  1998 and was not
renewed.  However, Mr. Flicker continues to be employed by the Company,  without
an  employment  agreement,   as  Chief  Financial  Officer  and  Executive  Vice
President.

     The  Company  also  entered  into an  Indemnification  Agreement  with  Mr.
Flicker, effective upon commencement of his employment, contractually obligating
the Company to indemnify him to the fullest extent  permitted by applicable law,
in connection  with claims arising from his service to, and activities on behalf
of, the Company.

                                    30
<PAGE>


     As of August 11, 1998, the Company entered into Indemnification  Agreements
which  agreements  are  substantially  the same as that  entered  into  with Mr.
Flicker.

     F.   BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION

     During 2000, no executive officer of the Company served as a director of or
a member of a compensation  committee of any entity for which any of the persons
serving on the Board of Directors of the Company is an executive officer.

     G.   BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION

     The Board of Directors of the Company,  which acts in the stead of a formal
compensation committee, is comprised of Messrs. Rosenberg, Smithline and Yudell,
all of whom are independent directors.  In such capacity, the Board of Directors
reviews  compensation  of the executive  officers of the Company to determine if
such  compensation  is in line with  similar  organizations  and  determine  the
compensation of the executive officers of the Company.

     The  Company's  executive  compensation  program is designed to attract and
retain  qualified  executives with competitive  levels of compensation  that are
related to  performance  goals and which  recognize  individual  initiative  and
accomplishments.   The  principal   components   of  the   Company's   executive
compensation program are fixed compensation in the form of base salary, variable
compensation in the form of annual cash bonuses and stock options.

     The Company is subject to Section  162(m) of the  Internal  Revenue Code of
1986,  as  amended  (the  "Code"),  which  limits the  deductibility  of certain
compensation  payments to its  executive  officers.  The Company does not have a
policy requiring the Board to qualify all compensation for  deductibility  under
this  provision.  The Board,  however,  considers the net cost to the Company in
making all  compensation  decisions  and will continue to evaluate the impact of
this provision on its executive compensation.

     Base  Salary:  Any  discretionary  increases in base salary are based on an
annual  evaluation  by the  Board of the  performance  of the  Company  and each
executive  officer,  and  take  into  account  any new  responsibilities  of the
executive,  his or her  experience  and years of service  with the Company and a
comparison  of base  salaries  for  comparable  positions  at other real  estate
finance companies.

     Annual  Bonus:  The  Board  may  decide to  award a bonus to any  executive
officer.  Any awards of discretionary  bonuses are based on an annual evaluation
by the Board of the performance of the Company and each executive  officer,  and
take into  account any  special  contributions  of the  executive  officer.  Mr.
Flicker was awarded a discretionary bonus of $17,500 for 2000.

                                   31
<PAGE>


     Stock Options: The Stock Option Plan was adopted by the Board in April 1996
and ratified by the  stockholders in September 1996. The Board believes that the
significant  equity  interests  in the Company held by the  Company's  executive
officers have served to link the interest of the  executive  officers with those
of the stockholders.  Under the Company's Stock Option Plan, options to purchase
shares of Common Stock may be granted to the executive  officers of the Company.
The Board  believes that the grant of stock options is, and will continue to be,
an important component of the Company's executive  compensation program.  During
2000,  Mr. Flicker was granted an amount of stock options under the Stock Option
Plan as provided in the table set forth herein  entitled  "Option Grants in Last
Fiscal Year." In determining the size of such grants to executive officers,  the
Board reviewed various  factors,  including the executives'  total  compensation
package  and the  performance  of the Company and each  executive  officer.  The
stockholdings of an executive  officer were not a factor in determining the size
of such grants.

     Chief Executive Officer Compensation:  Mr. Casnoff, the Company's President
and Chief Executive  Officer,  is not party to an employment  agreement with the
Company,  and Mr.  Casnoff's  compensation is established in accordance with the
principles  described  above in connection  with the  compensation  of executive
officers.  The Board reviews Mr.  Casnoff's  performance and determines any base
salary  adjustments,  additional bonuses and stock option grants considering the
various factors described above with respect to executive officers.

     Mr.  Casnoff's  base salary was $120,000 for fiscal 2000 which was the same
as 1999 and 1998. Mr. Casnoff did not receive a  discretionary  bonus or a Stock
Option grant for 2000.

     H.   PERFORMANCE COMPARISON

     The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock for each of the last five
years with the cumulative return (assuming reinvestment of dividends) of the Dow
Jones Equity Market Index and the Dow Jones Real Estate Investment Index.

     Since August 1995, the Common Stock has been traded on the over-the-counter
market  and has been  quoted on the NASD OTC  Bulletin  Board  under the  symbol
"DVLN".  Until August 3, 1995, the Common Stock was traded on the New York Stock
Exchange.

                                   32
<PAGE>


                       COMPARISON OF FIVE YEAR CUMULATIVE
                                  TOTAL RETURN

                 AMONG DVL, INC. INDEX, DOW JONES EQUITY MARKET
                INDEX AND DOW JONES REAL ESTATE INVESTMENT INDEX

                         FISCAL YEAR ENDING DECEMBER 31


        [The table below represents a line chart in the printed piece.]

DOW JONES US TOTAL MARKET INDEX (DJDOW)
                                  TOTAL RETURN    INDEX TOTAL RETURN
                    12/31/95          163.42      100.00     12/29/95
                    12/31/96          199.41      122.02
                    12/31/97          262.84      160.84
                    12/31/98          328.28      200.88
                    12/31/99          402.88      246.53
                    12/31/00          365.54      223.68     12/29/00

DVL, INC. (DVI)
                    12/31/95           14.00      100.00     12/29/95
                    12/31/96              13       92.86
                    12/31/97           18.50      132.14
                    12/31/98           18.00      128.57
                    12/31/99           15.19      108.48
                    12/31/00           17.06      121.88     12/29/00

DOW JONES REAL ESTATE INDEX (DJREA)
                    12/31/95          159.26      100.00     12/29/95
                    12/31/96          214.38      134.61
                    12/31/97          253.15      158.95
                    12/31/98          199.69      125.39
                    12/31/99          189.08      118.72
                    12/31/00          241.11      151.39     12/29/00


                                    33
<PAGE>


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

     A.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth certain  information as of December 31, 2000
regarding  the  ownership  of common  stock of the Company by each person who is
known to the management of the Company to have been the beneficial owner of more
than 5% of the outstanding shares of the Company's common stock.


     NAME AND ADDRESS OF       AMOUNT AND NATURE OF
      BENEFICIAL OWNER         BENEFICIAL OWNERSHIP          PERCENT OF CLASS*
     -------------------       --------------------          -----------------

Lawrence J.  Cohen               3,351,388 (1)(4)                    17.0%

Milton Neustadter                1,973,991 (1)(5)                    10.7%

Jay Chazanoff                    3,142,948 (2)(6)                    16.1%

Ron Jacobs                       2,941,860 (2)(7)                    15.2%

Stephen Simms                    2,941,959 (2)(8)                    15.2%

Keith B.  Stein                  3,039,303 (3)(9)                    15.6%

Robert W.  Barron                2,772,926 (3)(10)                   14.4%

Adam Frieman                     2,661,212 (3)(11)                   13.9%

Peter Offerman                   2,584,567 (3)(12)                   13.5%

Joseph Huston                    2,555,875 (3)(13)                   13.4%

Jan Sirota                       2,584,567 (3)(14)                   13.5%

Neal Polan                       2,584,567 (3)(15)                   13.5%

Michael Zarriello                2,584,567 (3)(16)                   13.5%

Mark Mahoney                     2,572,925 (3)(17)                   13.4%

The SIII Associates Limited      3,914,446 (3)(18)                   19.3%
Partnership Third Addison
Park Corporation and
Gary L. Shapiro

                                       34
<PAGE>


NOTES TO TABLE

      In each  instance  where a named  individual  is listed as the holder of a
currently  exercisable option or Warrant,  the shares which may be acquired upon
exercise  thereof have been deemed  outstanding for the purpose of computing the
percentage  owned by such  person,  but not for the  purpose  of  computing  the
percentage owned by any other person, except with respect to options or Warrants
held by other members of a Holder's Holder Group (as defined  below).  An option
or Warrant is deemed to be currently  exercisable if it may be exercised  within
60 days.  The number of Warrants  attributed to each Holder herein is based upon
the number  originally  issued,  and is subject to  adjustment  to eliminate any
possible dilution, as described in "Changes of Control" below.

(1)   As described  in detail  below in "Changes of  Control",  such persons are
members of the Pembroke  Group (as defined in "Changes of Control"  below),  and
said persons share  dispositive  power with each other as to 1,689,629 shares of
the Company's  Common Stock  issuable to the members of the Pembroke  Group upon
the exercise of Warrants by such members,  which shares  constitute 50.1% of all
of the shares issuable to the members of the Pembroke Group upon the exercise of
Warrants.  The address of each member of the  Pembroke  Group is c/o Lawrence J.
Cohen, 70 East 55th Street,  Seventh Floor,  New York, NY 10022.  The members of
the Pembroke Group explicitly disclaim beneficial ownership of all of the shares
of Common Stock and Warrants (and shares of Common Stock  issuable upon exercise
of Warrants) owned by the other members of the Pembroke Group.

(2)   As described  in detail  below in "Changes of  Control",  such persons are
members of the Millennium Group (as defined in "Changes of Control" below),  and
said persons share  dispositive  power with each other as to 2,172,275 shares of
the Company's  Common Stock issuable to the members of the Millennium Group upon
the exercise of Warrants by such members,  which shares  constitute 50.1% of all
of the shares issuable to the members of the Millennium  Group upon the exercise
of Warrants.  The address of each member of the Millennium Group is c/o Lawrence
J. Cohen, 70 East 55th Street, Seventh Floor, New York, NY 10022. The members of
the Millennium  Group  explicitly  disclaim  beneficial  ownership of all of the
shares of Common Stock and Warrants  (and shares of Common Stock  issuable  upon
exercise of Warrants) owned by the other members of the Millennium Group.

(3)   As described  in detail  below in "Changes of  Control",  such persons are
members of the Florida  Group (as defined in  "Changes in Control"  below),  and
said persons share  dispositive  power with each other as to 2,498,498 shares of
the Company's Common Stock issuable to the members of the Florida Group upon the
exercise of Warrants (as defined in "Changes in Control" below) by such members,
which shares  constitute  50.1% of all of the shares  issuable to the members of
the Florida  Group upon the exercise of Warrants.  The address of each member of
the Florida Group is c/o Keith Stein,  70 East 55th Street,  Seventh Floor,  New
York, NY 10022.

                                       35
<PAGE>


(4)   Based upon a Schedule 13D, as amended,  as filed with the  Securities  and
Exchange   Commission  (the  "Commission")  on  November  18,  1999,  Mr.  Cohen
possesses:  (i) the sole power to vote 3,104,540  shares of Common Stock,  which
includes  2,879,802  shares of Common Stock  issuable upon exercise of Warrants;
(ii)  shared  power to vote 0 shares of Common  Stock;  (iii) the sole  power to
dispose of 1,661,759 shares of Common Stock,  which includes 1,437,021 shares of
Common Stock issuable upon exercise of Warrants;  and (iv) shared power with the
other  member of the  Pembroke  Group to dispose of  1,689,629  shares of Common
Stock,  which  includes  1,442,781  shares of  Common  Stock  issuable  upon the
exercise  of  Warrants  held by Mr.  Cohen and  246,848  shares of Common  Stock
issuable  upon  exercise of Warrants  held by the other  member of the  Pembroke
Group. Mr. Cohen explicitly  disclaims beneficial ownership of all of the shares
of Common Stock and Warrants (and shares of Common Stock  issuable upon exercise
of Warrants) owned by the other member of the Pembroke Group.

(5)   Based upon a Schedule  13D, as amended,  as filed with the  Commission  on
November 18, 1999, Mr. Neustadter possesses:  (i) the sole power to vote 531,210
shares of Common Stock,  which includes  492,710 shares of Common Stock issuable
upon  exercise of Warrants;  (ii) shared power to vote 0 shares of Common Stock;
(iii) the sole  power to  dispose  of  284,362  shares of  Common  Stock,  which
includes 245,862 shares of Common Stock issuable upon exercise of Warrants;  and
(iv)  shared  power with the other  member of the  Pembroke  Group to dispose of
1,689,629 shares of Common Stock,  which includes 246,848 shares of Common Stock
issuable  upon the exercise of Warrants  held by Mr.  Neustadter  and  1,442,781
shares of Common  Stock  issuable  upon  exercise of Warrants  held by the other
member of the Pembroke Group. Mr.  Neustadter  explicitly  disclaims  beneficial
ownership  of all of the  shares of Common  Stock and  Warrants  (and  shares of
Common Stock  issuable upon  exercise of Warrants)  owned by the other member of
the Pembroke Group.

(6)   Based upon a Schedule  13D, as amended,  as filed with the  Commission  on
November 18, 1999, Mr. Chazanoff possesses: (i) the sole power to vote 1,811,156
shares of Common Stock, which includes 1,677,610 shares of Common Stock issuable
upon  exercise of Warrants;  (ii) shared power to vote 0 shares of Common Stock;
(iii) the sole  power to  dispose  of  970,673  shares of  Common  Stock,  which
includes 837,127 shares of Common Stock issuable upon exercise of Warrants;  and
(iv) shared power with the other members of the  Millennium  Group to dispose of
2,172,275 shares of Common Stock,  which includes 840,483 shares of Common Stock
issuable  upon the  exercise of Warrants  held by Mr.  Chazanoff  and  1,331,792
shares of Common  Stock  issuable  upon  exercise of Warrants  held by the other
members of the Millennium Group. Mr. Chazanoff  explicitly  disclaims beneficial
ownership  of all of the  shares of Common  Stock and  Warrants  (and  shares of
Common Stock  issuable upon exercise of Warrants)  owned by the other members of
the Millennium Group.

(7)   Based upon a Schedule  13D, as amended,  as filed with the  Commission  on
November 18, 1999,  Mr. Jacobs  possesses:  (i) the sole power to vote 1,435,481
shares of Common Stock, which includes 1,329,134 shares of Common Stock issuable
upon  exercise of Warrants;  (ii) shared power to vote 0 shares of Common Stock;
(iii) the sole  power to  dispose  of  769,585  shares of  Common  Stock,  which
includes  1,329,134  shares of Common Stock  issuable upon exercise of Warrants;
and (iv) shared power with the other members of the Millennium  Group to dispose
of 2,172,275  shares of Common Stock,  which  includes  665,896 shares of Common
Stock  issuable  upon the exercise of Warrants  held by Mr. Jacobs and 1,506,379
shares of Common Stock

                                       36
<PAGE>


issuable upon  exercise of Warrants held by the other members of the  Millennium
Group. Mr. Jacobs explicitly disclaims beneficial ownership of all of the shares
of Common Stock and Warrants (and shares of Common Stock  issuable upon exercise
of Warrants) owned by the other members of the Millennium Group.

(8)   Based upon a Schedule  13D, as amended,  as filed with the  Commission  on
November 18, 1999,  Mr. Simms  possesses:  (i) the sole power to vote  1,435,480
shares of Common Stock, which includes 1,329,134 shares of Common Stock issuable
upon  exercise of Warrants;  (ii) shared power to vote 0 shares of Common Stock;
(iii) the sole  power to  dispose  of  769,584  shares of  Common  Stock,  which
includes 663,238 shares of Common Stock issuable upon exercise of Warrants;  and
(iv) shared power with the other members of the  Millennium  Group to dispose of
2,172,275 shares of Common Stock,  which includes 665,896 shares of Common Stock
issuable upon the exercise of Warrants held by Mr. Simms and 1,506,379 shares of
Common Stock issuable upon exercise of Warrants held by the other members of the
Millennium Group. Mr. Simms explicitly  disclaims beneficial ownership of all of
the shares of Common  Stock and Warrants  (and shares of Common  Stock  issuable
upon exercise of Warrants) owned by the other members of the Millennium Group.

(9)   Based upon a Schedule  13D, as amended,  as filed with the  Commission  on
November 18, 1999,  Mr. Stein  possesses:  (i) the sole power to vote  1,006,963
shares of Common Stock,  which includes  930,456 shares of Common Stock issuable
upon  exercise of Warrants;  (ii) shared power to vote 0 shares of Common Stock;
(iii) the sole  power to  dispose  of  540,805  shares of  Common  Stock,  which
includes 464,298 shares of Common Stock issuable upon exercise of Warrants;  and
(iv)  shared  power with the other  members of the  Florida  Group to dispose of
2,498,498 shares of Common Stock,  which includes 466,158 shares of Common Stock
issuable upon the exercise of Warrants held by Mr. Stein and 2,032,340 shares of
Common Stock issuable upon exercise of Warrants held by the other members of the
Florida Group. Mr. Stein explicitly disclaims beneficial ownership of all of the
shares of Common Stock and Warrants  (and shares of Common Stock  issuable  upon
exercise of Warrants) owned by the other members of the Florida Group.

(10)  To the Company's  knowledge,  Mr. Barron possesses:  (i) the sole power to
vote 512,687  shares of Common Stock,  which  includes  475,567 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock; (iii) the sole power to dispose of 274,428 shares of Common Stock,
which  includes  237,308  shares of  Common  Stock  issuable  upon  exercise  of
Warrants;  and (iv) shared power with the other  members of the Florida Group to
dispose of 2,498,498  shares of Common Stock,  which includes  238,259 shares of
Common  Stock  issuable  upon the  exercise of Warrants  held by Mr.  Barron and
2,260,239  shares of Common Stock issuable upon exercise of Warrants held by the
other members of the Florida Group.

                                       37
<PAGE>


(11)  To the Company's knowledge,  Mr. Frieman possesses:  (i) the sole power to
vote 314,391  shares of Common Stock,  which  includes  302,749 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock; (iii) the sole power to dispose of 162,714 shares of Common Stock,
which  includes  151,072  shares of  Common  Stock  issuable  upon  exercise  of
Warrants;  and (iv) shared power with the other  members of the Florida Group to
dispose of 2,498,498  shares of Common Stock,  which includes  151,677 shares of
Common  Stock  issuable  upon the exercise of Warrants  held by Mr.  Frieman and
2,346,821  shares of Common Stock issuable upon exercise of Warrants held by the
other members of the Florida Group.

(12)  To the Company's knowledge,  Mr. Offerman possesses: (i) the sole power to
vote 160,795  shares of Common Stock,  which  includes  149,153 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock;  (iii) the sole power to dispose of 86,069 shares of Common Stock,
which includes 74,427 shares of Common Stock issuable upon exercise of Warrants;
and (iv) shared power with the other  members of the Florida Group to dispose of
2,498,498  shares of Common Stock,  which includes 74,726 shares of Common Stock
issuable upon the exercise of Warrants held by Mr. Offerman and 2,423,772 shares
of Common Stock  issuable upon exercise of Warrants held by the other members of
the Florida Group.

(13)  To the Company's  knowledge,  Mr. Huston possesses:  (i) the sole power to
vote 107,192  shares of Common  Stock,  which  includes  99,431 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock;  (iii) the sole power to dispose of 57,377 shares of Common Stock,
which includes 49,616 shares of Common Stock issuable upon exercise of Warrants;
and (iv) shared power with the other  members of the Florida Group to dispose of
2,498,498  shares of Common Stock,  which includes 49,815 shares of Common Stock
issuable upon the exercise of Warrants  held by Mr. Huston and 2,448,683  shares
of Common Stock  issuable upon exercise of Warrants held by the other members of
the Florida Group.

(14)  To the Company's  knowledge,  Mr. Sirota possesses:  (i) the sole power to
vote 160,795  shares of Common Stock,  which  includes  149,153 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock;  (iii) the sole power to dispose of 86,069 shares of Common Stock,
which includes 74,427 shares of Common Stock issuable upon exercise of Warrants;
and (iv) shared power with the other  members of the Florida Group to dispose of
2,498,498  shares of Common Stock,  which includes 74,726 shares of Common Stock
issuable upon the exercise of Warrants  held by Mr. Sirota and 2,423,772  shares
of Common Stock  issuable upon exercise of Warrants held by the other members of
the Florida Group.

(15)  To the Company's  knowledge,  Mr. Polan  possesses:  (i) the sole power to
vote 160,795  shares of Common Stock,  which  includes  149,153 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock;  (iii) the sole power to dispose of 86,069 shares of Common Stock,
which includes 74,427 shares of Common Stock issuable upon exercise of Warrants;
and (iv) shared power with the other  members of the Florida Group to dispose of
2,498,498  shares of Common Stock,  which includes 74,726 shares of Common Stock
issuable upon the exercise of Warrants held by Mr. Polan and 2,423,772 shares of
Common Stock issuable upon exercise of Warrants held by the other members of the
Florida Group.

                                       38
<PAGE>


(16)  To the Company's knowledge, Mr. Zarriello possesses: (i) the sole power to
vote 160,795  shares of Common Stock,  which  includes  149,153 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock;  (iii) the sole power to dispose of 86,069 shares of Common Stock,
which includes 74,427 shares of Common Stock issuable upon exercise of Warrants;
and (iv) shared power with the other  members of the Florida Group to dispose of
2,498,498  shares of Common Stock,  which includes 74,726 shares of Common Stock
issuable  upon the  exercise of Warrants  held by Mr.  Zarriello  and  2,423,772
shares of Common  Stock  issuable  upon  exercise of Warrants  held by the other
members of the Florida Group.

(17)  To the Company's knowledge,  Mr. Mahoney possesses:  (i) the sole power to
vote 149,153  shares of Common Stock,  which  includes  149,153 shares of Common
Stock issuable upon exercise of Warrants;  (ii) shared power to vote 0 shares of
Common Stock;  (iii) the sole power to dispose of 74,427 shares of Common Stock,
which includes 74,427 shares of Common Stock issuable upon exercise of Warrants;
and (iv) shared power with the other  members of the Florida Group to dispose of
2,498,498  shares of Common Stock,  which includes 74,726 shares of Common Stock
issuable upon the exercise of Warrants held by Mr. Mahoney and 2,423,772  shares
of Common Stock  issuable upon exercise of Warrants held by the other members of
the Florida Group.

(18)  To the  Company's  knowledge,  the  SIII  Associates  Limited  Partnership
possesses:  (i) the sole power to vote 2,634,908  shares of Common Stock,  which
includes  2,433,054  shares of Common Stock  issuable upon exercise of Warrants;
(ii)  shared  power to vote 0 shares of Common  Stock;  (iii) the sole  power to
dispose of 1,415,948 shares of Common Stock,  which includes 1,214,094 shares of
Common Stock issuable upon exercise of Warrants;  and (iv) shared power with the
other  members of the  Florida  Group to dispose of  2,498,498  shares of Common
Stock,  which  includes  1,218,960  shares of  Common  Stock  issuable  upon the
exercise  of  Warrants  held by the  SIII  Associates  Limited  Partnership  and
1,279,538  shares of Common Stock issuable upon exercise of Warrants held by the
other  members of the Florida  Group.  Third  Addison  Park  Corporation  is the
general partner of the SIII Associates Limited Partnership,  and Gary L. Shapiro
is the chief executive officer of Third Addison Park Corporation.

                                       39
<PAGE>


B.    SECURITY OWNERSHIP OF MANAGEMENT

      The following table sets forth certain information as of December 31, 2000
regarding  ownership  of  Common  Stock by (i) each  director  and  nominee  for
director,  (ii) each of the executive officers named in the Summary Compensation
Table  contained  herein,  and (iii) all  executive  officers and directors as a
group (7 persons). Unless otherwise indicated, each stockholder listed below has
sole voting and  investment  power with respect to the shares set forth opposite
such  stockholder's  name.  All  persons  listed  below have an address  c/o the
Company's principal executive offices in New York.

Name of                      Amount and Nature of          Percentage
Beneficial Owner             Beneficial Ownership           of Class
----------------             --------------------          ----------

Alan E.  Casnoff                     585,000 (2)                 3.5%
Gary Flicker                         125,000 (3)                   **
Myron Rosenberg                      348,854 (4)                 2.1%
Frederick E.  Smithline              117,550 (5)                   **
Keith B.  Stein                    3,039,303 (6)                15.6%
Allen Yudell                          75,000 (7)                   **
All current directors
and executive officers
as a group (6 persons)             4,290,707 (8)               21.14%

      * In each instance  where a named  individual is listed as the holder of a
currently  exercisable option or warrant,  the shares which may be acquired upon
exercise  thereof have been deemed  outstanding for the purpose of computing the
percentage  owned by such  person,  but not for the  purpose  of  computing  the
percentage owned by any other person, except the group referred to in note 8. An
option or warrant is deemed to be currently  exercisable  if it may be exercised
within 60 days.

      ** Less than 1%

(1)   Messrs. Casnoff and Flicker are executive officers of the Company. Messrs.
Rosenberg,  Smithline and Yudell are the regular directors, and Mr. Stein is the
special purpose director.

(2)   Excludes  480 shares held by Mr.  Casnoff's  adult son, as to which shares
Mr. Casnoff disclaims  beneficial  ownership.  Includes 26,000 shares owned by a
corporation  partially owned and controlled by Mr.  Casnoff,  and 375,000 shares
which may be acquired upon the exercise of currently exercisable options.

(3)   Represents  125,000  shares  which may be  acquired  upon the  exercise of
currently exercisable options.

(4)   Includes 4,300 shares held by Mr.  Rosenberg's wife, as to which shares he
disclaims beneficial ownership, and 60,000 shares which may be acquired upon the
exercise of currently exercisable options.

(5)   Includes 550 shares held by Mr.  Smithline and his brother as  tenants-in-
common and 6,000 shares held by Mr.  Smithline's  wife, as to which 6,000 shares
Mr. Smithline disclaims beneficial ownership.  Also includes 60,000 shares which
may be acquired upon the exercise of currently exercisable options.

                                       40
<PAGE>


(6)   Based upon a Schedule  13D, as amended,  as filed with the  Commission  on
November 18, 1999,  Mr. Stein  possesses:  (i) the sole power to vote  1,006,963
shares of Common Stock,  which includes  930,456 shares of Common Stock issuable
upon  exercise of Warrants;  (ii) shared power to vote 0 shares of Common Stock;
(iii) the sole  power to  dispose  of  540,805  shares of  Common  Stock,  which
includes 464,298 shares of Common Stock issuable upon exercise of Warrants;  and
(iv)  shared  power with the other  members of the  Florida  Group to dispose of
2,498,498 shares of Common Stock,  which includes 466,158 shares of Common Stock
issuable upon the exercise of Warrants held by Mr. Stein and 2,032,340 shares of
Common Stock issuable upon exercise of Warrants held by the other members of the
Florida Group. Mr. Stein explicitly disclaims beneficial ownership of all of the
shares of Common Stock and Warrants  (and shares of Common Stock  issuable  upon
exercise of Warrants) owned by the other members of the Florida Group.

(7)   Represents  75,000  shares  which may be  acquired  upon the  exercise  of
currently exercisable options.

(8)   Number of shares and percentage owned includes  3,734,303 shares which may
be acquired through exercise of currently  exercisable options and Warrants held
by  certain  of the named  persons.  The  number of  outstanding  shares for the
purpose of  computation  of percentage  of ownership by the group  includes such
shares.

      C.    CHANGES IN CONTROL

      In connection with the Original Loan by NPM in September 1996, the Company
issued to, or for the  benefit  of, the  members of the  Florida  Group (who are
affiliates of NPM) and the Pembroke and Millennium Groups (who are affiliates of
NPM and NPO, Warrants to purchase such number of shares of Common Stock as, when
added to the  1,000,000  shares  issued  to the  members  of the  Holder  Groups
contemporaneously  with the Warrants,  represent  rights to acquire up to 49% of
the outstanding  Common Stock on a fully diluted basis. In accordance with their
terms,  the Warrants were  originally  exercisable  commencing  January 1999 and
expire after  December  31,  2007.  Pursuant to a  stockholders  agreement  (the
"Agreement")  entered into among each of the parties that  acquired the Warrants
(each, a "Holder"),  such parties agreed,  among other things, that the Warrants
could not be exercised  until  September 27, 1999. If and at such time as any or
all of the Warrants are exercised,  it is possible that a "change in control" of
the Company,  within the meaning of applicable  rules and regulations  under the
Securities  and Exchange Act of 1934, as amended (the  "Exchange  Act"),  may be
deemed to occur, depending upon the extent of exercise.

      Pursuant to the Agreement,  the Holders have agreed to certain limitations
on the disposition of Common Stock and Warrants owned or held by them, which are
described below. The Holders presently have rights of first  refusal/first offer
with respect to the  disposition  of shares of Common Stock and Warrants held by
other Holders (unless the disposition is made to certain specified affiliates of
a Holder).  Subject to the  above-mentioned  rights of first refusal/first offer
and certain  other  limitations,  (i) through  September  27, 1999, a Holder may
dispose of up to one-half  (or more  subject to the consent of a majority of the
Holders in such  Holder's  Holder  Group) of his shares of Common Stock and (ii)
after September 27,

                                       41
<PAGE>


1999,  a  Holder  may  dispose  of all of his or  its  shares  of  Common  Stock
(excluding shares issuable upon exercise of Warrants).  A Holder may not dispose
of his Warrants (except to another Holder or certain  specified  affiliates of a
Holder) or  convert,  exercise  or  exchange  any of such  Warrants  until after
September 27, 1999.  After  September 27, 1999,  subject to the  above-mentioned
rights of first refusal/first offer and certain other limitations,  a Holder may
dispose of up to an  aggregate  of 49.9% (or more,  subject to the  consent of a
majority of the other  Holders in such  Holder's  Holder Group) of his shares of
Common  Stock  issuable  upon  exercise of his Warrants  after giving  effect to
conversion,  exercise or exchange of such Warrants.  The "Holder Groups" consist
of the "Millennium  Group",  the "Pembroke Group" and the "Florida  Group".  The
members of the Millennium Group are Jay Chazanoff, Ron Jacobs and Stephen Simms.
The members of the Pembroke  Group are Lawrence J. Cohen and Milton  Neustadter.
The members of the Florida Group are Stephen L. Gurba,  Peter Offermann,  Joseph
Huston, Jan Sirota, Neal Polan, Michael Zarriello,  Adam Frieman,  Mark Mahoney,
Keith B. Stein,  Robert W. Barron and Gary Shapiro  (through his holdings in The
SIII Associates  Limited  Partnership and Third Addison Park  Corporation).  For
further  information  regarding the foregoing,  see "Certain  Relationships  and
Related Transactions" below.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            NPM AND NPO TRANSACTIONS

      The Company consummated a multi-faceted transaction on September 27, 1996,
pursuant to which: (i) certain existing indebtedness of the Company was acquired
by NPM, under an Amended and Restated Loan Agreement  dated as of March 27, 1996
pursuant to which the Company became  indebted to NPM in the original  principal
amount of $8,382,000;  (ii) 1,000,000 shares of Common Stock  (representing 6.0%
of the Common  Stock now  outstanding)  were  issued to, and  purchased  by, the
Holders (see Item 12(C) above);  (iii) the Certificate of  Incorporation  of the
Company  was  amended to permit the  issuance of  warrants,  to limit  change of
ownership  of capital  stock of the Company  and to  designate  Preferred  Stock
together with rights,  powers and  preferences  (including the  appointment of a
special purpose director); (iv) Warrants to purchase additional shares of Common
Stock (which,  when added to the 1,000,000 shares acquired,  represent rights to
acquire up to 49% of the  outstanding  Common Stock,  on a fully diluted  basis)
were issued to, or for the benefit of, the Holders;  (v) 100 shares of Preferred
Stock were issued to an affiliate of NPM;  (vi) most,  but not all,  convertible
securities and warrants  existing and outstanding  prior to the transaction were
converted into Common Stock;  and (vii) the Company  continued the engagement of
NPO to perform  administrative  and advisory  services relating to the assets of
the  Company and its  affiliated  partnerships,  pursuant to an Asset  Servicing
Agreement dated March 27, 1996.

      In 1997,  NPM advanced the Company an  additional  $200,000.  In addition,
from January 1998 through May 1999, NPM advanced  additional amounts aggregating
$370,000 to DVL.  These  advances  were not  required  under the  Original  Loan
Documents.  In May 1999, the Company paid all remaining  outstanding amounts due
on the loan to NPM. As of March 15, 2001,  the Company had accrued  service fees
to NPO in the amount of approximately $373,000.

                                       42
<PAGE>


      The members of the Millenium  Group,  the Pembroke Group,  and the Florida
Group are  affiliates  of NPM,  and  therefore  have a material  interest in the
transactions between the Company and NPM, described in the preceding paragraphs.
Keith B. Stein,  the special purpose  director of the Company is an affiliate of
NPM, and therefore has a material interest in said transactions.  The members of
the Millenium Group and the Pembroke Group are affiliates of NPO.

      In June 1998,  the Company  entered into a management  services  agreement
with a limited  partnership  (in which certain of its partners are affiliates of
NPO) to render  services for a fee. This agreement  shall terminate with 30 days
notice by either party. As compensation,  the Company receives the following (a)
a monthly fee of $5,000 through November 2000, and (b) after all the partners of
the partnership have earned a 20% internal rate of return, compounded quarterly,
on their capital  contributions,  an amount of cash equal to 25% of the profits,
as defined in the agreement. For 2000 and 1999 the Company received compensation
under such agreement equal to $362,500 and $480,000, respectively.

      In addition,  the Company  entered into a service  agreement  with another
limited  partnership  whose  general  partner is an  affiliate of NPO, to render
certain accounting and  administrative  services.  As compensation,  the Company
receives  a monthly  fee of $3,000,  and  expense  reimbursements  of $1,000 per
month.  The Company  received  aggregate  compensation  under such  agreement of
$48,000 each year.

      The Company  entered into a property  management  agreement with an entity
that is part of the  Opportunity  Fund  pursuant to which DVL provides  property
management  services in exchange for fees equal to 3% of rent  collections.  For
2000 and 1999, the Company received  compensation  equal to $27,000 and $12,000,
respectively.

      In November 1999, the Company entered into a management  service agreement
with an entity whose partners are affiliates of NPO to render certain accounting
and administrative services. As compensation, the Company receives a monthly fee
of  $2,000,  a monthly  deferred  fee of $6,500 and an annual  incentive  fee if
certain levels of profitability are obtained. For 2000 and 1999, the Company was
paid $24,000 and $4,000 and accrued  fees of $78,000 and $13,000,  respectively.
In early  2001,  the  Company was paid an  aggregate  amount of  $91,000,  which
represented all of the deferred fees through December 31, 2000.

      The Millenium Group, an affiliate of NPO, received  approximately $94,000,
$145,000  and  $71,000  for 2000,  1999,  and 1998,  respectively,  representing
compensation and  reimbursement  of expenses for collection  services on limited
partner notes.  In 2000 and 1999 the Company paid to the Millenium Group $25,000
each year and the Pembroke Group,  another affiliate of NPO, $55,000 and $75,000
respectively,  for professional fees. In 1998, the Company paid to the Millenium
Group $25,000 for professional fees.

      OPPORTUNITY FUND

      The Company,  Blackacre,  PNM, and Pem Mil are parties to the  Opportunity
Agreement.  The  Opportunity  Agreement  has a term of three  years,  subject to
earlier termination if certain maximum capital  contributions have been reached.
The Opportunity  Agreement provides for an arrangement (the "Opportunity  Fund")
whereunder,  with respect to certain  transactions  involving the acquisition of
limited  partnership  interests  of, or mortgage  loans to,  Affiliated  Limited
Partnerships  in which the  Company is  general  partner,  or which the  Company
already owns, if the Company, due to financial constraints,  is unable to pursue
such business opportunity with its own funds from its reserves or available from
operations, or by obtaining financing from a third party or issuing equity (each
such opportunity,  an  "Opportunity"),  then the Opportunity Fund has a right of
first refusal to finance such Opportunity.

                                       43
<PAGE>


      The Opportunity  Fund is expected to pursue each  Opportunity with respect
to which it exercises  its right of first  refusal  through the use of a special
purpose limited liability company. All of the required capital contributions are
to be provided by BCG and the NPO Affiliates. The Company will receive up to 20%
of the profits from an Opportunity after BCG and the NPO Affiliates  receive the
return of their  investment  plus preferred  returns ranging from 12% to 20%. As
part of its obligation under the Opportunity Agreement, certain employees of DVL
also perform certain  services on behalf of the Opportunity  Fund. Pem Mil is to
serve as managing  member of each  special  purpose  limited  liability  company
formed in connection with the Opportunity Fund, for which it receives out of the
proceeds  generated from Opportunities a maximum aggregate annual fee based upon
capital invested by the members in consideration for management services.

      The  transactions  in which the Opportunity  Fund may engage include,  for
example,  acquisition of partnership interests from existing limited partners of
Affiliated  Limited  Partnerships and investment in certain  properties owned by
the Company or such partnerships  where capital may be required to enhance value
but is not currently  available to the Company.  There can be no assurance  that
the Opportunity  Fund's  activities will generate  profit  distributions  to the
Company.

      As of March 1, 2001, the Opportunity  Fund has purchased 15 wrap mortgages
of Affiliated  Limited  Partnerships from unaffiliated third parties (seven were
purchased in 1998, one was purchased in 1999 and seven  mortgages were purchased
in 2000),  acquired limited  partnership units from unaffiliated  individuals in
three Affiliated  Limited  Partnerships,  and acquired a leasehold interest of a
tenant of an  Affiliated  Limited  Partnership.  In addition,  during 1999,  the
Opportunity  Fund acquired a property of an Affiliated  Limited  Partnership and
the land  underlying this property from DVL. During 2000, DVL purchased three of
the mortgages owned by the Opportunity  Fund and the Opportunity  Fund was fully
satisfied on an additional  four mortgage  loans, as each of the properties that
secured these four mortgage loans was sold. As of March 1, 2001, the Opportunity
Fund owns eight mortgages.  During 2000, DVL was paid approximately  $8,000 from
the investments by the Opportunity  Fund,  which was used to pay amounts owed by
DVL under a note in favor of an entity that is part of the Opportunity Fund.

                                       44
<PAGE>


                                     PART IV


ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)    The following documents are filed as a part of this report:

       (1)    The  Financial  Statements  required  by Item 8 of this report are
              listed below:

                                     Item 8
                                                                  Page No.
                                                                  --------

              Independent Auditors' Report                          F- 1

              Consolidated Balance Sheets -
              December 31, 2000 and 1999                            F- 2

              Consolidated Statements of Operations
              for each of the years in the three year period
              ended December 31, 2000                               F- 4

              Consolidated Statements of Shareholders'
              Equity for each of the years in the three
              year period ended December 31, 2000                   F- 6

              Consolidated Statements of Cash Flows for
              each of the years in the three year period
              ended December 31, 2000                               F- 7

              Notes to Consolidated Financial Statements            F- 10

       (2)    The Financial Statement Schedules required by
              Item 8 of this report are listed below:

              Schedule III - Real Estate and Accumulated
              Depreciation

Other  schedules are omitted  because of the absence of  conditions  under which
they are required or because the required  information is given in the financial
statements or notes thereto.

                                    45
<PAGE>


       (3)    INDEX OF EXHIBITS

       The following is a list of the Exhibits filed as a part of this report
       (those marked * are filed herewith):

       3.     ARTICLES OF INCORPORATION AND BY-LAWS.

       (a)    DVL's Certificate of Incorporation, filed March 28, 1977 (Incorpo-
              rated by reference to Exhibit 6(d) to DVL's Form S-1 Registra-
              tion Statement No. 2-58847 dated April 28, l977.)

       (b)    DVL's Certificate of Amendment to Certificate of Incorporation,
              filed July 13, 1977 (Incorporated by reference to Exhibit 6(e) to
              Amendment No. 1. to DVL's Form S-1 Registration Statement No.
              2-58847 dated August 25, l977.)

       (c)    DVL's Certificate of Amendment to Certificate of Incorporation,
              filed August 3, 1982. (Incorporated by reference to Exhibit 3(c)
              to DVL's Form 10-K for the fiscal year ended December 31, 1982.)

       (d)    DVL's Certificate of Amendment to Certificate of Incorporation,
              filed May 27, 1983. (Incorporated by reference to Exhibit 3(d) to
              DVL's Form 10-K for the fiscal year ended December 31, 1983.)

       (e)    DVL's Certificate of Amendment to Certificate of Incorporation,
              filed July 24, 1987. (Incorporated by reference to Exhibit 3(e) to
              DVL's Form 10-K for the fiscal year ended December 31, 1987).

       (f)    DVL's Certificate of Amendment to Certificate of Incorporation,
              filed December 20, 1993. (Incorporated by reference to DVL's Form
              10-K for fiscal year ended December 31, 1993.)

       (g)    DVL's Certificate of Amendment to Certificate of Incorporation,
              filed December 4, 1995 (Incorporated by reference to DVL's proxy
              statement dated October 13, 1995 - Exhibit A).

       (h)    DVL's Certificate of Amendment to Certificate of Incorporation
              filed September 17, 1996. (Incorporated by reference to DVL's
              proxy statement dated July 31, 1996 - Exhibit I.)

       (i)    DVL's Certificate of Amendment of Certificate of Incorporation
              filed February 7, 2000. (Incorporated by reference to DVL's Form
              10-K for the fiscal year ended December 31, 1999.)

       (j)    DVL's By-Laws, as in full force and effect at all times since
              March 28, l977. (Incorporated by reference to Exhibit 3(c) to
              DVL's Form 10-K for the fiscal year ended December 31, 1980.)

       (k)    DVL's First Amendment to By-Laws dated as of January 1, 1994.
              (Incorporated by reference to Exhibit 3(d) to DVL's Form 10-K for
              the fiscal year ended December 31, 1995.)

       (l)    DVL's Second Amendment to By-Laws, effective September 17, 1996
              (Incorporated by reference to DVL's proxy statement dated July 31,
              1996 - Exhibit J.)

       (m)    DVL's Third Amendment to the By-Laws, effective February 1, 2000.
              (Incorporated by reference to DVL's Form 10-K for the fiscal year
              ended December 31, 1999.)

                                       46
<PAGE>


       10.    MATERIAL CONTRACTS.

       10.1   Voting Trust Agreement between R&M Holding Company and Alan
              Casnoff dated May 15, 1991. (Incorporated by reference to Exhibit
              10(a)(18) to DVL's Form 10-K for the fiscal year ended December
              31, 1991.)

       10.2   Stipulation of Settlement of IN RE KENBEE LIMITED PARTNERSHIP
              LITIGATION dated August 12, 1992. (Incorporated by reference to
              Exhibit 10(b)(25) to DVL's Form 10-K for the fiscal year ended
              December 31, 1995.)

       10.3   Stipulation of Partial Settlement and Order in IN RE DEL-VAL
              FINANCIAL CORPORATION SECURITIES LITIGATION Master File #MDL872.
              (Incorporated by reference to Exhibit 10(b)(28) to DVL's Form 10-K
              for the fiscal year ended December 31, 1995.)

       10.4   Amended and Restated Loan Agreement between DVL and NPM, dated as
              of March 27, 1996. (Incorporated by reference to Exhibit 10(b)(33)
              to DVL's Form 10-K for the fiscal year ended December 31, 1995.)

       10.5   Asset Servicing Agreement between DVL, PSC, Kenbee Realty and NPO
              dated as of March 27, 1996. (Incorporated by reference to Exhibit
              10(b)(34) to DVL's Form 10-K for the fiscal year ended December
              31, 1995.)

       10.6   Third Voting Trust Extension between R&M Holding Company and Alan
              Casnoff dated March 7, 1996. (Incorporated by reference to Exhibit
              10(b)(35) to DVL's Form 10-K for the fiscal year ended December
              31, 1995.)

       10.7   Amended and Restated Loan Agreement between DVL, and NPM, dated
              dated March 27, 1996 (Incorporated by reference to Proxy State-
              ment dated July 31, 1996 - Exhibit A.)

       10.8   Amended and Restated Negotiable Promissory Note from DVL to NPM
              (Incorporated by reference to DVL's Proxy Statement dated July
              July 31, 1996 - Exhibit B.)

       10.9   Asset Servicing Agreement between DVL and NPO (Incorporated by
              Reference to DVL's Proxy Statement dated July 31, 1996 - Exhibit
              C.)

       10.10  Stock Purchase Agreement between DVL and NPM (Incorporated by
              Reference to DVL's Proxy Statement dated July 31, 1996 - Exhibit
              D.)

       10.11  Securities Purchase Agreement between DVL and NPM (Incorporated by
              Reference to DVL's Proxy Statement dated July 31, 1996 -
              Exhibit E.)

       10.12  Common Stock Warrant issued by DVL to NPO (Incorporated by
              Reference to DVL's Proxy Statement dated July 31, 1996 -
              Exhibit F.)

       10.13  DVL 1996 Stock Option Plan (Incorporated by Reference to DVL's
              Proxy Statement dated July 31, 1996 - Exhibit K.)

                                       47
<PAGE>


       10.14  Amendment to DVL 1996 Stock Option Plan effective February 1,
              2000. (Incorporated by reference to DVL's Form 10-K for fiscal
              year ended December 31, 1999.)

       10.15  Employment Agreement and Indemnification Agreement comprising

              Exhibit A thereto, between DVL and Gary Flicker, dated April 16,
              1997 (effective as of said date) (Incorporated by reference to to
              Exhibit 10.2 to DVL's Form 10-Q for the quarter ended June 30,
              1997).

       10.16  Amendment dated as a July 10, 1996, to Amended and Restated Loan
              Agreement dated as of March 27, 1996 between DVL and NPM. (In-
              corporated by reference to Exhibit 10.3.1 to DVL's Form 10-Q for
              the quarter ended June 30, 1997.)

       10.17  Second Amendment dated as of September 27, 1996, to Amended and
              Restated Loan Agreement dated as of March 27, 1996 between DVL and
              NPM. (Incorporated by reference to Exhibit 10.3.2 to DVL's Form
              10-Q for the quarter ended June 30, 1997.)

       10.18  Third Amendment dated as of March 6, 1997, to Amended and Restated
              Loan Agreement dated as of March 27, 1996 between DVL and NPM and
              Promissory Note dated as of March 6, 1997, comprising Exhibit A-1
              thereto. (Incorporated by reference to Exhibit 10.3.3 to DVL's
              Form 10-Q for the quarter ended June 30, 1997.)

       10.19  Fourth Amendment dated as of October 20, 1997, among DVL, Black-
              acre, NPM and NPO, to Amended and Restated Loan Agreement, dated
              as of March 27, 1997, as amended, between DVL and NPM. (Incorpo-
              rated by reference to Exhibit 10.1 to DVL's Form 10-Q for the
              quarter ended September 30, 1997.)

       10.20  Promissory Note dated as of October 20, 1997, in the original
              principal amount of $1,760,000 from DVL to Blackacre. (Incorpo-
              rated by reference to Exhibit 10.2 to DVL's Form 10-Q for the
              quarter ended September 30, 1997.)

       10.21  Subordination Agreement, dated as of October 20, 1997, among DVL,
              Blackacre, NPM and NPO. (Incorporated by reference to Exhibit 10.3
              to DVL's Form 10-Q for the quarter ended September 30, 1997).

       10.22  Agreement Among Members dated April 10, 1998, by and among Black-
              acre, PNM, Pem Mil, and DVL. (Incorporated by reference to DVL's
              Form 10-K for the fiscal year ended December 31, 1998.)

       10.23  Management Services Agreement dated June 1, 1998, by and between
              DVL and PBD Holdings, LP ("PBD"). (Incorporated by reference to
              DVL's Form 10-K for the fiscal year ended December 31, 1998.)

       10.24  Waiver of Event of Default and Agreement regarding the Demand and
              Payment of Fees dated March 1999 by NPO. (Incorporated by
              reference to DVL's Form 10-K for the fiscal year ended December
              31, 1998.)

       10.25  Waiver of Event of Default and Agreement regarding the Demand and
              Payment of Fees dated March 2000 by NPO. (Incorporated by
              reference to DVL's Form 10-K for the fiscal year ended December
              31, 1999.)

                                       48
<PAGE>


       10.26  Loan Agreement, Promissory Note and Pledge, Collateral Assignment
              and Security Agreement, each dated as of March, 2000, each relat-
              ing to a loan from Pennsylvania Business Bank to DVL in the orig-
              inal principal amount of $1,000,000. (Incorporated by reference to
              DVL's Form 10-Q for the quarter ended June 30, 2000.)

       10.27  Term Loan Note and Term Loan Agreement, each dated as of March,
              2000, each relating to a loan from Bankphiladelphia to DVL in the
              original principal amount of $1,450,000. (Incorporated by
              reference to DVL's Form 10-Q for the quarter ended June 30, 2000.)

       10.28  First Amendment to Loan Agreement, Pledge Agreement, Promissory
              Note and Other Documents dated August 2000, relating to a loan
              from Pennsylvania Business Bank to DVL, Inc. in the original
              principal amount of $1,000,000. (Incorporated by reference to
              DVL's Form 10-Q for the quarter ended September 30, 2000.)

       10.29  Mortgage Assignment Agreement dated August 2000, relating to an
              assignment and sale of two mortgage loans from Rumson Mortgage
              Holdings, LLC to DVL, Inc. for a total sale price of $900,000.
              (Incorporated by reference to DVL's Form 10-Q for the quarter
              ended September 30, 2000.)

       10.30  Note in the original principal amount of $200,000, dated August
              2000, relating to the sale of two mortgage loans from Rumson
              Mortgage Holdings, LLC to DVL, Inc. (Incorporated by reference to
              DVL's Form 10-Q for the quarter ended September 30, 2000.)

      *10.31  Agreement of Purchase and Sale, dated as of October 2, 2000,
              relating to the purchase of real estate assets by Del Toch, LLC
              from Passaic Avenue South Associates.

      *10.32  Agreement of Purchase and Sale, dated as of October 12, 2000,
              relating to the purchase of land by Delborne Land Company, LLC
              from Mcany of Kearny, Inc.

      *10.33  Waiver of Event of Default and Agreement regarding demand and
              payment of fees dated March 2001 by NPO.

      *11.    Schedule of Computation of Net Earnings Per Share.

       21.    SUBSIDIARIES OF DVL.

              The Company's only significant subsidiaries are Professional
              Service Corporation (a Delaware Corporation), Del Toch, LLC (a
              Delaware Limited Liability Corporation), and Delborne Land
              Company, LLC (a Delaware Limited Liability Corporation).

(b)    No reports on Form 8-K were filed during the quarter ended December 31,
       2000.

                                          49
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, DVL has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                     DVL, INC.



Date: March --, 2001             By:
                                     ---------------------------
                                     Alan E. Casnoff, President
                                     and Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of DVL and in
the capacities and on the dates indicated.

Signature                    Title                            Date
---------                    -----                            ----


--------------------------
Alan E. Casnoff              President and Chief Executive    March --, 2001
                             Officer (Principal Executive
                             Officer)


--------------------------
Gary Flicker                 Executive Vice President and     March --, 2001
                             Chief Financial Officer
                            (Principal Financial and
                             Accounting Officer)


--------------------------
Frederick E. Smithline       Director                         March --, 2001



--------------------------
Allen Yudell                 Director                         March --, 2001



--------------------------
Myron Rosenberg              Director                         March --, 2001

                                       50


<PAGE>



                                      SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, DVL has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                     DVL, INC.



Date: March --, 2001             By: /s/ Alan E. Casnoff
                                     ---------------------------
                                     Alan E. Casnoff, President
                                     and Chief Executive Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed  below by the  following  persons on behalf of DVL and in
the capacities and on the dates indicated.

Signature                    Title                            Date
---------                    -----                            ----

/s/ Alan E. Casnoff
--------------------------
Alan E. Casnoff              President and Chief Executive    March --, 2001
                             Officer (Principal Executive
                             Officer)

/s/ Gary Flicker
--------------------------
Gary Flicker                 Executive Vice President and     March --, 2001
                             Chief Financial Officer
                            (Principal Financial and
                             Accounting Officer)

/s/ Frederick E. Smithline
--------------------------
Frederick E. Smithline       Director                         March --, 2001


/s/ Allen Yudell
--------------------------
Allen Yudell                 Director                         March --, 2001


/s/ Myron Rosenberg
--------------------------
Myron Rosenberg              Director                         March --, 2001

                                          51
<PAGE>


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                 Consolidated Financial Statements of DVL, Inc.
                and Subsidiaries and Independent Auditors Report




                                                                  Page
                                                                  ----
Independent Auditors' Report                                      F- 1

Consolidated Balance Sheets-December 31, 2000 and 1999            F- 2

Consolidated Statements of Operations for each of the
  years in the three year period ended December 31, 2000          F- 4

Consolidated Statements of Shareholders' Equity
 for each of the years in the three year period
  ended December 31, 2000                                         F- 6

Consolidated  Statements  of Cash  Flows for each of the
  years in the three year period ended December 31, 2000          F- 7

Notes to Consolidated Financial Statements                        F- 10

Schedule III - Real Estate and Accumulated Depreciation

<PAGE>


Richard A.  Eisner & Company, LLP
575 Madison Avenue
New York, New York  10022


INDEPENDENT AUDITORS' REPORT


Board of Directors and Shareholders
DVL, Inc.
New York, New York

     We have audited the accompanying  consolidated  balance sheets of DVL, Inc.
and subsidiaries as of December 31, 2000 and 1999, and the related  consolidated
statements of operations,  shareholders'  equity, and cash flows for each of the
years  in the  three-year  period  ended  December  31,  2000.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion, the financial  statements  enumerated above present fairly,
in all material respects,  the consolidated  financial position of DVL, Inc. and
subsidiaries as at December 31, 2000 and 1999, and the  consolidated  results of
their operations and their  consolidated cash flows for each of the years in the
three-year  period  ended  December  31,  2000  in  conformity  with  accounting
principles generally accepted in the United States of America.

     Our audits referred to above included Schedule III for each of the years in
the  three-year  period ended  December 31, 2000. In our opinion,  such schedule
presents  fairly  the  information  set forth  therein  in  accordance  with the
applicable accounting regulations of the Securities and Exchange Commission.

RICHARD A. EISNER & COMPANY, LLP

New York, New York
March 9, 2001


With respect to Note 13
March 30, 2001


                                       F-1
<PAGE>


                            DVL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  (in thousands)

                                                               December 31,
                                                           --------------------
                                                             2000        1999
                           ASSETS                          --------    --------
                           ------

Loans receivable (including amounts maturing after one
 year)
  Affiliates:
     Mortgages due from affiliated partnerships            $ 53,979    $ 48,038
     Unearned interest                                      (12,340)     (5,810)
                                                           --------    --------
     Net mortgage loans receivable from affiliated
      partnerships                                           41,639      42,228


  Others:
     Non-performing loans collateralized by limited
      partnership interests                                     389         764
     Due from affiliated partnerships                           170          48
                                                           --------    --------
  Total loans receivable                                     42,198      43,040
  Allowance for loan losses                                   5,534       6,697
                                                           --------    --------
  Net loans receivable                                       36,664      36,343

Cash (including restricted cash of $213 and $81 for 2000
  and 1999, respectively)                                     1,184       1,270
Investments
  Real estate at cost                                         3,737         494
  Real estate lease interests                                 1,215       1,351
  Affiliated limited partnerships (net of allowance for
   loss of $647 and $927 for 2000 and 1999, respectively)     1,157       1,326
  Other investments (net of allowance for loss of $400
   for 2000 and 1999)                                           648         648
Prepaid financing and other assets                              832         426
                                                           --------    --------
    Total assets                                           $ 45,437    $ 41,858
                                                           ========    ========

See notes to consolidated financial statements.


                                       F-2
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands) except share data


                                                               December 31,
                                                           --------------------
                                                             2000        1999
                                                           --------    --------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Liabilities:
  Underlying mortgages payable                             $ 26,019    $ 27,692
  Long-term debt - Blackacre Bridge Capital, LLC              2,080       1,868
  Long-term debt - Rumson                                       202           -
  Long-term debt - Other                                      5,577         285
  Notes payable - litigation settlement                       3,028       3,003
  Asset Service Fee Payable - NPO                               373       1,467
  Accounts payable, security deposits and accrued
   liabilities                                                  585         475
                                                           --------    --------
     Total liabilities                                       37,864      34,790
                                                           --------    --------

Commitments and contingencies

Shareholders' equity:

  Preferred  stock $10.00 par value,  authorized -
    100 shares for 2000 and 1999,
    issued - 100 shares
    for 2000 and 1999                                             1           1
  Preferred stock, $.01 par value, authorized 5,000,000
    shares for 2000 and 0 shares for 1999, issued - 0
    shares for 2000 and 1999                                      -           -
  Common stock, $.01 par value, authorized -
   90,000,000 shares for 2000 and 40,000,000 shares
    for 1999, issued - 16,560,450 shares for 2000 and
    1999                                                        166         166
  Additional paid-in capital                                 95,288      95,288
  Deficit                                                   (87,882)    (88,387)
                                                           --------    --------
     Total shareholders' equity                               7,573       7,068
                                                           --------    --------
     Total liabilities and shareholders' equity            $ 45,437    $ 41,858
                                                           ========    ========
See notes to consolidated financial statements.


                                       F-3
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands except share data)

                                                 Year Ended December 31,
                                           ----------------------------------
                                              2000        1999        1998
                                           ----------  ----------  ----------

Income from affiliates:
  Interest on mortgage loans               $    3,436  $    3,549  $    4,523
  Gain on satisfaction of mortgage loans          256       1,639         173
  Partnership management fees                     454         405         417
  Transaction and other fees from
   partnerships                                   413         502         497
  Distributions from investments                  253         265         148
  Rent and other income                             6          15          36
Income from others:
  Net rental income                               523         532         330
  Management Fees                                 500         533          59
  Distributions from investments                  149          34          31
  Other income and interest                        73         261         108
                                           ----------  ----------  ----------
                                                6,063       7,735       6,322
                                           ----------  ----------  ----------
Operating expenses:
  Interest on underlying mortgages              2,329       2,640       3,445
  Recovery of provision for losses                (37)        (48)       (153)
  General and administrative                    1,309       1,327       1,142
  Asset Servicing Fee - NPO Management LLC        623         600         600
  Legal and professional fees                     393         427         157
Interest expense
  NPM Capital LLC                                  -          665         780
  Blackacre Bridge Capital, LLC                   275         245         171
  Litigation Settlement Notes                     502         481         584
  NPO                                             149         281         194
  Rumson                                           10           -           -
  Others                                          311          91         160
                                           ----------  ----------  ----------
                                                5,864       6,709       7,080
                                           ----------  ----------  ----------
Income (loss) before extraordinary
 gain                                             199       1,026        (758)
Extraordinary gain on the settlements
 of indebtedness                                  306       1,267         202
                                           ----------   ---------  ----------
      Net income (loss)                    $      505  $    2,293  $     (556)
                                           ==========  ==========  ==========

                                      (continued)


                                       F-4
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands except per share data)
                                   (continued)


                                                 Year Ended December 31,
                                           ----------------------------------
                                              2000        1999        1998
                                           ----------  ----------  ----------

Basic earnings (loss) per share:
  Income(loss) before extraordinary gain   $      .01  $      .06  $     (.04)
    Extraordinary gain                            .02         .08         .01
                                           ----------  ----------  ----------
      Net income (loss)                    $      .03  $      .14  $     (.03)
                                           ==========  ==========  ==========

Diluted earnings (loss) per share:
  Income (loss) before extraordinary gain  $      .01  $      .02  $     (.04)
  Extraordinary gain                              .00         .02         .01
                                           ----------  ----------  ----------
  Net income (loss)                        $      .01  $      .04  $     (.03)
                                           ==========  ==========  ==========
Weighted average shares outstanding -
  basic                                    16,560,450  16,560,450  16,508,329
Effect of dilutive securities              79,777,136  50,422,788      --
                                           ----------  ----------  ----------
Weighted average shares outstanding -
  diluted                                  96,337,586  66,983,238  16,508,329
                                           ==========  ==========  ==========


See notes to consolidated financial statements.


                                               F-5
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        (in thousands except share data)

<TABLE>
<CAPTION>
                                                   Preferred Stock           Common Stock       Additional
                                                  -----------------     ---------------------     paid-in
                                                  Shares     Amount       Shares       Amount     capital     Deficit        Total
                                                  ------     ------     ----------     ------     -------     --------      -------
<S>                                                <C>     <C>        <C>            <C>        <C>         <C>           <C>
Balance-January 1, 1998                              100     $    1     16,232,450     $  162     $95,240     $(90,124)     $ 5,279

Issuance of common stock in connection
  with the loan from Blackacre Bridge, LLC            --         --        328,000          4          48           --           52

Net loss                                              --         --             --         --          --         (556)        (556)
                                                  ------     ------     ----------     ------     -------     --------      -------
Balance-December 31, 1998                            100          1     16,560,450        166      95,288      (90,680)       4,775
Net income                                            --         --             --         --          --        2,293        2,293
                                                  ------     ------     ----------     ------     -------     --------      -------
Balance-December 31, 1999                            100          1     16,560,450        166      95,288      (88,387)       7,068

Net Income                                            --         --             --         --          --          505          505
                                                  ------     ------     ----------     ------     -------     --------      -------

Balance-December 31, 2000                            100     $    1     16,560,450     $  166     $95,288     $(87,882)     $ 7,573
                 === ====                         ======     ======     ==========     ======     =======     ========      =======

</TABLE>

See notes to consolidated financial statements.

                                       F-6
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                                     Year Ended December 31,
                                                 ------------------------------
                                                   2000       1999       1998
                                                 --------   --------   --------

Cash flows from operating activities:
 Income (loss) before extraordinary gain         $    199   $  1,026   $   (758)
  Adjustments to reconcile income (loss) before
   extraordinary gains to net cash provided by
   (used) in) operating activities
    Recovery of provision for losses                  (37)       (48)      (153)
    Accrued interest added to indebtedness            273        247        460
    Gain on satisfactions of mortgage loans          (256)    (1,639)      (173)
    Amortization of unearned interest on loans
     receivable                                       (62)       (67)        63
    Amortization of real estate lease interests       136        138        132
    Amortization of debt discount                       -        234        105
    Imputed interest on notes                         502        481        584
    Amortization of deferred credits                    -          -       (296)
    Net (increase) decrease in other assets          (268)       614        (39)
    Net increase (decrease) in accounts payable
     and accrued liabilities                          110        (90)      (376)
    Net (decrease) increase in asset service
     fee payable - NPO                             (1,094)      (247)       789
    Net (increase) decrease in due from
     affiliated partnerships                         (122)       383          3
                                                 --------   --------   --------
      Net cash (used in) provided by operating
       activities                                    (619)     1,032        341
                                                 --------   --------   --------
Cash flows from investing activities:
Collections on loans receivable                     4,949     14,851      9,393
Investments in loans receivable                    (2,426)        --         --
Real estate purchases and capital improvements     (3,381)        --         --
Net decrease (increase) in affiliated limited
   partnership interests and other investments        169        123        (23)
Proceeds on sale of real estate                         -        300          -
                                                 --------   --------   --------
      Net cash (used in) provided by investing
        activities                               $   (689)  $ 15,274   $  9,370
                                                 --------   --------   --------

                                   (continued)

                                       F-7
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (continued)


                                                     Year Ended December 31,
                                                 ------------------------------
                                                   2000       1999       1998
                                                 --------   --------   --------

Cash flows from financing activities:
  Proceeds from new borrowings                   $  6,425   $    588   $    600
  Repayment of indebtedness                          (992)    (4,707)    (3,457)
  Payments on underlying mortgages payable         (4,040)   (10,952)    (6,662)
  Payments related to debt tender offer              (171)      (357)      (296)
                                                 --------   --------   --------

     Net cash (used in) financing activities        1,222    (15,428)    (9,815)
                                                 --------   --------   --------

Net (decrease) increase in cash                       (86)       878       (104)
Cash, beginning of year                             1,270        392        496
                                                 --------   --------   --------

Cash, end of year                                $  1,184   $  1,270   $    392
                                                 ========   ========   ========

Supplemental disclosure of cash flow information:

  Cash paid during the year for interest         $  2,499   $  2,382   $  3,396
                                                 ========   ========   ========

  Cash paid for income taxes                     $     35   $     21   $      6
                                                 ========   ========   ========


                                   (continued)

                                       F-8
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (continued)


                                                   Year Ended December 31,
                                                 ---------------------------
                                                   2000      1999      1998
                                                 -------   -------   -------


Supplemental disclosure of non-cash investing
 and financing activities:

  Net reduction of Notes Payable - Debt
   Tender Offer                                  $   306   $ 1,267   $   202
                                                 =======   =======   =======

  Reduction in accrued liabilities upon
   issuance of Common Stock                      $     -   $     -   $    52
                                                 =======   =======   =======
  Real estate asset acquired in satisfaction
   of mortgage receivable                        $     -   $     -   $   416
                                                 =======   =======   =======

  Note received in sale of affiliated
   partnership units                             $     -   $     -   $    88
                                                 =======   =======   =======


See notes to consolidated financial statements.


                                       F-9
<PAGE>


                           DVL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies

a.   THE COMPANY:  DVL, Inc. ("DVL or the  "Company") is a Delaware  corporation
headquartered  in New  York,  New  York.  DVL's  common  stock is  traded on the
over-the-counter  market and is quoted on the OTC Bulletin  Board  maintained by
the NASD under the symbol  "DVLN".  DVL is a commercial  finance  company  which
manages numerous real estate properties and partnerships, and holds and services
commercial  mortgage loans.  DVL's  investments  consist primarily of commercial
mortgage loans due from affiliated partnerships, loans due from limited partners
collateralized   by  their   interests  in  affiliated   partnerships,   limited
partnership  investments  in  affiliated  partnerships  and  other  real  estate
interests.  DVL has three 100% owned active  subsidiaries:  Professional Service
Corporation  ("PSC"), Del Toch, LLC ("Del Toch"), and Delborne Land Company, LLC
("Delborne"),  all of which are consolidated for accounting  purposes.  DVL does
not  consolidate  any of the various  partnerships in which it holds the general
partner and limited partner interests nor does DVL account for such interests on
the equity method due to the following: (i) DVL's interest in the partnership as
the  general  partner is a 1%  interest,  (which 1%  interest  is payable to the
limited partnership settlement fund pursuant to the 1993 settlement of the class
action  between  the  limited  partners  and DVL);  (ii) under the terms of such
settlement,  the  limited  partners  have the right to remove DVL as the general
partner  upon the vote of 70% or more of the limited  partners;  (iii) all major
decisions must be approved by a limited partnership Oversight Committee in which
DVL is not a member,  (iv) there are no operating  policies or decisions made by
the  partnership,  due to the triple net lease  arrangements for the partnership
properties  and  (v)  there  are  no  financing   policies   determined  by  the
partnerships  as all mortgages were either in place prior to DVL's obtaining its
interest and all potential refinancings are reviewed by the Oversight Committee.
Accordingly, DVL accounts for its investments in the limited partnerships, which
are  considered  affiliates,  on a cost basis with the cost basis  adjusted  for
impairments which took place in prior years.  Accounting for such investments on
the equity  method  would not  result in any  material  change to the  Company's
financial position or results of operations.

     Also, DVL has two inactive subsidiaries: Del-Val Capital Corp. ("DVCC") and
RH  Interests,  Inc.  ("RH")  which have been  consolidated  in these  financial
statements.  All material intercompany  transactions and accounts are eliminated
in consolidation.

b.   USE OF ESTIMATES:  The  preparation  of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

c.   ALLOWANCE FOR LOSSES: Specific loss reserves are provided as required based
on  management's  evaluation  of the  underlying  collateral  on  each  loan  or
investment (Note 4).

                                      F-10
<PAGE>


d.   DEPRECIATION: Depreciation is provided by charges to operations on either a
straight-line  basis or accelerated  basis at rates which will allocate the cost
of the assets over their estimated useful lives.

e.   DEFERRED  CHARGES:  Deferred  charges  applicable  to  debt  financing  are
amortized over the term of the debt using the effective interest rate method.

f.   INCOME  RECOGNITION:   Interest  income  is  not  recognized  on  the  non-
performing portion of DVL's loan portfolio. A loan is considered non- performing
when scheduled interest or principal payments are not received on a timely basis
and, in the opinion of management, the collection of such payments in the future
appears  doubtful.  DVL accounts for  increases  and  decreases in the amount or
timing of expected  future cash flows on its loan  portfolio  by  adjusting  the
valuation  allowance,  not to exceed the recorded  investment in the loan.  Cash
receipts on  restructured  loans are  treated as interest  income as a result of
previous  write-downs  of such  loans  due to  prior  impairments.  DVL  records
contingent  rents in the period in which the  contingency is resolved.  Gains on
sales of real estate to affiliates were recognized in income generally under the
installment method,  whereby the gain on the portion of the sales price which is
not  received  in  cash  is  deferred  at  the  time  of  sale  and   recognized
proportionately as cash is subsequently  collected. As of December 31, 1998, DVL
is no longer recognizing any income under the installment method. DVL recognized
$47,000 of installment  income in 1998. No installment  income was recognized in
1999 and 2000.

g.   IMPAIRMENT OF REAL ESTATE INVESTMENTS AND REAL ESTATE LEASE INTERESTS:  DVL
does not have any  impaired  real estate  investments  and/or real estate  lease
interests  at December 31, 2000.  All assets are  analyzed  annually  based upon
prior  appraised  values,  which  are  adjusted  every  year  based on cash flow
assumptions set forth in such appraisals.  As of December 31, 2000, the analysis
of such assets reflect the full recovery of those investments.

h.   RESTRICTED  CASH: As of December 31, 2000 and 1999, DVL had restricted cash
of $213,000 and $81,000,  respectively. The restricted cash at December 31, 1999
represented  funds that were deposited  into an escrow  account  pursuant to the
terms of a lease entered into by DVL which  required that the funds be set aside
as a security deposit. This escrow account was closed in 2000 as a result of the
purchase  by the Company of the leased  real  estate  assets.  (See Note 5). The
restricted cash at December 31, 2000,  represents  monies owed to the Settlement
Fund (Note 2) from a 2000 refinancing.  There are  corresponding  liabilities of
$213,000  and  $81,000,  respectively,  included  in  accounts  payable on DVL's
balance sheet.

i.   UNEARNED  INTEREST ON MORTGAGE LOANS AND LOAN  ORIGINATION  FEES AND COSTS:
Unearned  interest on mortgage loans is recognized as income using the effective
interest method over the life of the corresponding  loans.  Presently,  DVL does
not receive loan  origination  fees as the Company is not  originating new loans
receivable.

                                      F-11
<PAGE>


j.   FAIR VALUE OF  FINANCIAL  INSTRUMENTS:  As  disclosed in Note 4, DVL's loan
portfolio  is valued  based on the value of the  underlying  collateral.  As all
loans  are  either  receivables  from  affiliated  limited  partnerships  or are
collateralized  by  interests  in  affiliated  limited  partnerships,  it is not
practical  to  estimate  fair  value  of the  loans.  Due to the  nature  of the
relationship between the limited partnerships and DVL's general partner interest
in the limited  partnerships and the authority of the Oversight  Committee,  the
amount  at which  the  loans  could  be  exchanged  with  third  parties  is not
reasonably  determinable,  as any  such  estimate  would  have to  consider  the
intention of the Oversight  Committee,  the amounts owed, if any, to DVL for its
interests in the  partnerships  and any  transaction  fees to which DVL might be
entitled.

k.   FEDERAL INCOME TAXES: DVCC, PSC, RH, Del Toch, and Delborne are included in
DVL's consolidated federal income tax return.

     The Company  accounts for income taxes under the provisions of Statement of
Financial  Accounting  Standards No. 109 ("FAS 109"), which requires the Company
to recognize deferred tax assets and liabilities for the future tax consequences
attributable to differences  between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. In addition, FAS
109 requires the  recognition  of future tax benefits such as net operating loss
carryforwards,  to the extent that  realization  of such benefits is more likely
than not.

     At December 31, 2000, DVL had net operating loss  carryforwards  for income
tax purposes of  approximately  $61 million  available to offset future  taxable
income, if any,  expiring through 2019, with  approximately $54 million expiring
through 2007.  Temporary  differences  arise from differences  between financial
reporting and income tax reporting relating primarily to provisions for loan and
other losses and remaining  notes  outstanding of the notes payable  pursuant to
the shareholder  litigation  settlement,  which are currently not deductible for
income tax  purposes.  DVL's  deferred tax asset of  approximately  $31 million,
which is comprised of the tax benefit of net  operating  loss  carryforwards  of
approximately $25 million,  temporary  differences  represented primarily by the
excess in tax basis of  mortgages  receivable  over  book  basis of $3  million,
non-deductible  loan  reserves  of $2  million,  and the  issuance  of the notes
payable  pursuant to the  shareholder  litigation  of $1 million which are fully
reserved for due to the  uncertainty  of realizing  taxable income in the future
(Notes 2 and 11).  DVL's total  deferred tax asset and the  valuation  allowance
increased by  approximately  $1 million in 2000. The difference  between the tax
provision at the statutory  rate of 34% and the provision of 0% reflected on the
accompanying  financial  statements  is  principally  due to the increase in the
valuation allowance.

l.   EARNINGS  PER  SHARE:  All  income is  attributable  to common  stock.  The
preferred  stock  issued by DVL at the present  time total 100 shares with a par
value of $10.00 per  share.  There are no  cumulative  dividends  or  accretion.
Diluted  earnings  per share  includes the  dilutive  effect of the  outstanding
litigation  settlement  notes payable  (Note 7), the NPM warrants  (Note 6d) and
stock options (Note 10).

m.   RECENTLY  ISSUED  ACCOUNTING  STANDARDS:   There  are  no  recently  issued
accounting  standards,  based upon DVL's current operations,  which would affect
DVL's disclosures or method of accounting.

                                      F-12
<PAGE>


2.   Basis of Presentation and Financial Condition

     DVL's cash in-flow generated by its mortgage portfolio is currently used to
pay the underlying  first  mortgages,  and any excess was used to fund principal
and  interest  payments  on the NPM Loan (as here after  defined),  based on the
collateral  interest of NPM Capital  LLC in the  mortgages  (Note 6), and to pay
certain other creditors. The NPM Loan was repaid in May 1999. NPO Management LLC
("NPO") has agreed to defer amounts due under its management  agreement  through
December 31, 2001, unless DVL would have, after making such payments, sufficient
cash to fund its operations through that date.  Management  estimates that DVL's
anticipated cash flow provided by operations will be sufficient to meet its cash
requirements through January 2002.

     In November 1992, DVL, Kenbee  Management,  Inc.  ("Kenbee"),  DVL's former
manager,  and the limited partners of certain affiliated  partnerships reached a
settlement in the limited partnership class action litigation  ("Limited Partner
Settlement")  and,  concurrently with this settlement,  DVL reached  settlements
with a number of its creditors  providing for the restructuring of a substantial
portion of DVL's defaulted indebtedness and loan guarantees. The Limited Partner
Settlement established a settlement fund into which DVL is required to deposit a
portion of its cash flow received from Affiliated Limited Partnership  mortgages
and other loans receivable from Affiliated  Limited  Partnerships,  as well as a
contribution  of 5% of DVL's net income  subject to certain  adjustments  in the
years 2001 to 2012.

     DVL has implemented  significant measures to reduce its operating expenses.
DVL has in the past and  expects in the future to  continue  to augment its cash
flow with  additional  cash provided by proceeds from the sale or refinancing of
assets and/or borrowings.

3.   Loans Receivable and Underlying Mortgages

     Virtually all of DVL's loans  receivable arose out of transactions in which
Affiliated  Limited  Partnerships  purchased  commercial,  office and industrial
properties  typically leased on a long-term basis to unaffiliated,  creditworthy
tenants.  Each mortgage loan is collateralized by a lien, primarily  subordinate
to senior  liens,  on real estate owned by an  Affiliated  Limited  Partnership.
DVL's loan  portfolio is comprised of long-term  wrap-around  and other mortgage
loans due from  Affiliated  Limited  Partnerships;  and  loans due from  limited
partners  collateralized by their interests in Affiliated  Limited  Partnerships
("Partners'   Notes")  and  were  principally  pledged  to  collateralize  DVL's
indebtedness  to NPM (Note  6),  until May  1999,  at which  time,  the loan was
repaid.

     DVL's mortgage  portfolio included 26 and 24 loans with net carrying values
of $33,639,000 and  $31,621,000 as of December 31, 2000 and 1999,  respectively,
which are due from Affiliated Limited Partnerships that own properties leased to
Wal-Mart  Stores,  Inc.  Wal-Mart is a public  company  subject to the reporting
requirements  of the SEC.  Wal-Mart has closed  certain of its stores located on
the properties subject to the Company's mortgages.  However,  Wal-Mart continues
to pay the required rent with respect to such leases.  Net carrying value refers
to the unpaid principal balance less any allowance for reserves,  and any amount
which  represents  future  interest  based  upon the  purchase  of the loan at a
discount.

     DVL is liable for underlying  first  mortgages on a substantial  portion of
its  mortgage  portfolio.  The  underlying  mortgages  are payable to  unrelated
financial  institutions and bear interest at rates of 6.66% to 14.0% and require
principal and interest  payments  solely from the proceeds of the wrap mortgages
receivable.

                                      F-13
<PAGE>


     During 2000, DVL purchased  five wrap mortgage  loans from an  unaffiliated
third  party which are secured by real  estate  properties  owned by  Affiliated
Limited  Partnerships  in which  DVL is the  general  partner.  The  loans  were
purchased  for an aggregate  price of  $1,210,000  plus closing  costs,  paid as
follows:  cash of $135,000,  a $75,000 unsecured  promissory note payable to the
seller  of the loans  maturing  on March 1,  2001,  without  interest,  and bank
financings of $1,000,000. This $75,000 note was paid in full in March 2001. This
bank financing is a self-amortizing loan that originally was scheduled to mature
on April 1,2005 with interest accruing at the annual rate of prime plus 1.5% and
requires  payments to be made from the net cash proceeds DVL will receive on the
mortgage loans.  The wrap mortgage loans were  previously  owned by DVL and were
transferred  to the seller in 1992 in settlement of  indebtedness.  In May 2000,
DVL, as the general partner of an Affiliated Limited  Partnership that owned one
of the real estate  properties that secured this bank loan,  negotiated the sale
of the partnership's property. DVL received $700,000 in connection with the sale
as the mortgage holder which DVL paid to the bank to reduce the loan.

     During 2000,  DVL purchased two  additional  mortgage  loans from an entity
that is part of the Opportunity  Fund (see  "Opportunity  Fund",  defined below)
which are secured by real estate owned by  Affiliated  Limited  Partnerships  in
which DVL is the general  partner.  The loans were  purchased  for an  aggregate
price of  $900,000,  paid as  follows:  the  issuance to the seller of a secured
promissory  note in the amount of  $200,000  maturing  on August  31,  2002 with
interest  accrued at the rate of 12% per  annum,  compounded  monthly,  and bank
financing of $700,000 which was added to the loan described  above. The maturity
date of the loan was extended until May 1, 2006.

     In 2000, the Company  obtained  additional  bank financing in the amount of
$1,450,000  that  is  secured  by the  assignment  of  three  existing  mortgage
receivables  and a $405,000 face value mortgage  receivable  which was purchased
from an  entity  that is part of the  Opportunity  Fund  for  $315,000.  The net
proceeds  of this loan were used to repay one  existing  underlying  mortgage of
approximately  $92,000  and the  balance  of the  funds  were  used for  general
corporate  purposes  including  the  payment of accrued  fees to NPO.  This bank
financing is a self-amortizing  loan that matures on April 1, 2005 with interest
accruing  at the annual  rate of prime plus 1.5% and  requires  payments be made
from the net cash proceeds DVL will receive on these  mortgage  loans.  In 1998,
the Company  refinanced one mortgage which  generated  approximately  $40,000 in
excess of the existing underlying  mortgage.  The net excess funds from the 1998
refinancing were used to pay the expenses of the  refinancings,  and to pay down
the  loan  to NPM  Capital  LLC  ("NPM")  as  required  by the  applicable  loan
agreements.  During 1999, DVL did not refinance any of its wrap  mortgages.  The
amounts obtained from all of the refinancings  were primarily based on the value
of the base  rents due from  tenants  during  the  period of the base lease term
subsequent  to the payoff of the existing  first  mortgages.  As a result of the
refinancings,  the Company's  asset base available for future  refinancings  has
diminished.

     The  Limited  Partner  Settlement,  as well as the  settlements  with other
limited  partnerships,   resulted  in  the  modification  of  terms  of  certain
performing mortgage loans receivable from Affiliated Limited  Partnerships which
bore  interest  at  effective  rates  of up to 15% per  annum,  aggregating  net
carrying values of $4,853,000, and $5,874,000 subject to underlying mortgages of
$3,488,000  and  $4,165,000  at December  31, 2000 and 1999,  respectively,  and
mature through 2027. The effect of the  modification on these mortgages on DVL's
interest income for 2000 was not material.

                                      F-14
<PAGE>


     In  addition,  at the time of the  settlement,  the  terms of the  loans to
Kenbee  collateralized  by similar loans were  restructured and modified.  These
loans originally bore interest at 3% over DVL's average interest rate for short-
term  borrowings and matured through 1996. The  restructured  and modified loans
due directly from the partnerships  bear interest at stated rates of up to 15.5%
and mature through 2031. As of December 31, 2000 and 1999 the modified loans due
directly from the partnerships aggregated net carrying values of $24,224,000 and
$27,314,000  subject to underlying  mortgages of  $18,905,000  and  $21,926,000,
respectively.  DVL recognized  interest  income on these  restructured  mortgage
loans of  approximately  $309,000,  $360,000 and $378,000,  for 2000,  1999, and
1998,  respectively.  Had these  loans not been in default and had the terms not
been  modified,  interest  income  relating  to  these  notes  would  have  been
approximately $2,500,000 in 2000, $3,000,000 in 1999, and $4,000,000 in 1998.

                                  F-15
<PAGE>


     DVL's mortgage and other loans due from Affiliated Limited Partnerships, an
unaffiliated entity and limited partners are as follows:

<TABLE>
<CAPTION>
                                                             2000                                            1999
                                                 ------------------------------------    -----------------------------------------
                                                                   Accrued                                    Accrued
                                                                   Interest  Allowance                        Interest   Allowance
                                                 Number            Included  For Loan     Number              Included   For Loan
Mortgage Loans Due From Affiliated Partnerships   of      Loan     In Loan   Losses        of        Loan     In Loan    Losses
(dollar amounts in thousands)                    Loans   Balance   Balance   (Note 4)     Loans     Balance   Balance    (Note 4)
-----------------------------------------------  ------  -------   --------  --------    -------    -------   --------   ---------
<S>                                               <C>    <C>        <C>      <C>           <C>     <C>         <C>       <C>
Long-term wrap-around mortgage loans ranging
  from $393 to $2,625 in 2000 and from $512 to
  $2,157 in 1999 maturing at various dates
  through May 2029 (a)                            16     $ 23,127   $ 74     $    --        9      $ 13,398    $  52     $   527

Other long-term mortgage loans ranging from
  $1,363 to $1,436 in 2000 and from $1,395 to
  $1,442 in 1999 maturing at various dates
  through May 2029 (b)                             2        2,799     --         545        2         2,837       --         191

Long-term wrap-around and other mortgage
  loans acquired from Kenbee pursuant to
  the Limited Partner Settlement ranging
  from $285 and $3,308 in 2000 and from $298 to
  $3,390 in 1999 maturing at various dates
  through June 2031 (c)                           20       28,053     --       4,705       21        31,803       --       5,365
                                                  --     --------  -----     -------      ---      --------   ------     -------
Total mortgage loans                              38       53,979     74       5,250       32        48,038       52       6,083

Loans Collateralized By Limited Partnership Interests
-----------------------------------------------------
Loans ranging from $1 and $58 in 2000 and
  from $1 to $68 in 1999 in default (d)           24          389     --         284       45           764       --         614

Due from affiliated partnerships
--------------------------------
Advances and Other                                16          170     --          --       17            48       --           -
                                                  --     --------  -----     -------      ---      --------   ------      ------
Total loans receivable                            78       54,538  $  74     $ 5,534       94        48,850   $   52     $ 6,697
Less unearned interest on partnership mortgage   ===               =====     =======      ===                 ======     =======
  loans                                                    12,340                                     5,810
                                                         --------                                  --------
Net loans receivable                                     $ 42,198                                  $ 43,040
                                                         ========                                  ========

Underlying mortgages ranging from $30 and $2,836 in
2000 and from $105 to $2,903 in 1999 maturing at
various dates through 2011                               $ 26,019                                  $ 27,692
                                                         ========                                  ========
</TABLE>

                                                                      F-16
<PAGE>


Activity on all collateralized loans is as follows:

                                                 2000        1999        1998
                                               --------    --------    --------
                                                        (in thousands)

Balance, beginning of year                     $ 48,802    $ 65,861    $ 77,811
Investments in loans receivables                 13,584          --          --
Collections on loans to affiliates               (4,949)    (14,851)     (9,393)
Unearned interest offset against loans
 satisfied, sold and written off                 (2,199)     (2,066)       (324)
Loans written-off and written down                 (870)       (142)     (2,233)
                                               --------    --------    --------
Balance, end of year                           $ 54,368    $ 48,802    $ 65,861
                                               ========    ========    ========

Unearned interest activity is as follows:
                                                 2000        1999        1998
                                               --------    --------    --------
                                                        (in thousands)

Balance, beginning of year                     $  5,810    $  7,944    $  8,350
Additional unearned interest in
  connection with new loans receivable            8,791          --          --
Amortization to income                              (62)        (68)        (82)
Decrease in connection with the
 satisfaction or write-off of loans              (2,199)     (2,066)       (324)
                                               --------    --------    --------
Balance, end of year                           $ 12,340    $  5,810    $  7,944
                                               ========    ========    ========


     (a)  DVL  previously   funded  certain   wrap-around   mortgages  due  from
Affiliated  Limited  Partnerships,  whereby the  original  principal of the wrap
equaled the  outstanding  balance of an underlying  first mortgage loan plus the
amount of funds advanced by DVL to the  partnership.  These loans mature through
May 2029,  bear  interest at  effective  rates from 10% to 51% per annum and are
collateralized  primarily  by second  mortgages  on  commercial  and  industrial
properties  located in various states.  DVL is responsible to make principal and
interest  payments on the first  mortgage  loan to the extent  received from the
borrower  and, in certain  instances,  has the right to refinance or pay off the
first mortgage loan and succeed to its seniority. Currently, the partnerships or
the tenants are making the  underlying  mortgage  payments  directly  and DVL is
applying such payments to its wrap-around mortgage loans. To the extent that the
underlying mortgage payment is less than the wrap-around  mortgage payment,  the
partnership  is obligated to pay DVL the balance.  These  wrap-around  loans are
subject to underlying  mortgage  loans of  $7,114,000 in 2000 and  $5,766,000 in
1999,  which bear interest at rates ranging from 7.5% to 13.125% per annum,  are
payable to unaffiliated lenders in monthly installments, mature on various dates
through August 2011 and are  collateralized  by liens senior to DVL's liens. See
Note 6 for the five year maturities of such underlying loans.

                                  F-17
<PAGE>


     (b)  DVL's other  long-term  mortgage  loans,  exclusive of its wrap-around
mortgages,  are collateralized by two first mortgages aggregating $2,799,000 and
$2,837,000  at December  31,  2000 and 1999,  respectively.  These loans  mature
through  December 2029,  bear interest at effective rates of up to 15% per annum
and  are   collateralized  by  first  mortgages  on  commercial  and  industrial
properties  located  in  various  states.  The  principal  maturities  of  DVL's
commercial mortgage loan portfolio,  excluding wrap-around mortgages, in each of
the next five  years are  $41,000  in 2001,  $44,000  in 2002,  $47,000 in 2003,
$51,000 in 2004 and $55,000 in 2005. All such commercial  mortgage loans and the
wrap-around  mortgages are  collateralized by liens on commercial and industrial
properties located in various states.

     (c)  DVL  acquired  long-term  wrap-around  and  other  mortgage  loans  to
Affiliated Limited Partnerships pursuant to the Limited Partner Settlement.  The
principal  balance  of such  loans  when  acquired  in 1992  equaled  DVL's  net
investment  in the  related  loan  previously  due  from  Kenbee  less  specific
write-downs of $18,223,000 on certain of these loans based upon the  anticipated
cash flow to be  generated  by each loan  (Note 4).  Although  these  loans have
stated  interest  rates of up to 15.5% per annum,  interest,  if any, is imputed
based upon the anticipated cash flow to be generated by each loan. The loans are
collateralized by first, second and third mortgages on commercial and industrial
properties  located  in  various  states  and  mature  through  June  2031.  DVL
subordinated its second mortgage position on sixteen of these loans as part of a
refinancing  in 1994.  The  wrap-around  loans are  subject  to senior  liens of
$18,905,000  in 2000 and  $21,926,000  in 1999,  which  bear  interest  at rates
ranging  from 7.5% to 14% per annum,  are payable to  unaffiliated  lenders on a
zero coupon basis and in monthly  installments,  mature on various dates through
January 2012 and are  collateralized by liens senior to DVL's liens. The payment
of the underlying  first  mortgages are also being made by the  partnerships  or
tenants as discussed in (a) above.  See Note 6 for the five year  maturities  of
such underlying loans.

     (d)  DVL made loans  directly  to limited  partners to finance up to 80% of
their partnership  investments.  As a result of the Limited Partner  Settlement,
DVL received loans due from limited partners in 1992 in replacement of loans due
from Kenbee  collateralized  by such  Partners'  Notes.  All such partner  loans
matured at various dates through  December 1995 and bore interest at fixed rates
of 15%  to  16%  per  annum  and at  variable  rates  up to 2 1/2%  over  prime.
Substantially,  all of these loans were non- performing at December 31, 2000 and
1999.  The Company is pursuing  collection  efforts  and is  foreclosing  on the
limited  partnership  interests  pledged as collateral when  collection  efforts
fail.

4.   Allowance for Losses and Other Reserves

Allowance for loan loss activity is as follows:

                                                             2000         1999
                                                           -------      -------
                                                               (in thousands)
Balance, beginning of year                                 $ 6,697      $ 8,435
Loans satisfied, written-off or written-down                (1,163)      (1,738)
                                                           -------      -------
Balance, end of year                                       $ 5,534      $ 6,697
                                                           =======      =======

                                      F-18
<PAGE>


     DVL's  allowance for loan losses is based upon the value of the  collateral
underlying  each  loan  in  its  portfolio.   Management's  evaluation  of  such
collateral  previously resulted in substantial loan write-offs and a substantial
allowance  for loan losses.  The  evaluation  considered  the magnitude of DVL's
non-performing  loan  portfolio,  updated  internally  generated  appraisals  of
certain properties and updated information on certain properties.

     The allowance for losses on DVL's mortgage loan portfolio was calculated by
first comparing the appraised value of the property  collateralizing  a mortgage
loan,  net of liens  senior  to DVL's  liens,  to DVL's  net  investment  in the
mortgage loan.  For those  mortgages  which were  modified,  further losses were
provided for by then comparing  DVL's net investment in the mortgage loan,  less
any allowance  necessary based upon the appraised value of the property,  to the
anticipated cash flow to be generated by the terms of the mortgage or the amount
anticipated  to be  received  through  the  liquidation  of  the  mortgage.  The
partnership  properties  were valued based upon the cash flow  generated by base
rents and anticipated  percentage  rents or base rent escalations to be received
by the partnership. The value of partnership properties which are not subject to
percentage rents was based upon historical appraisals. Management believes that,
generally,  the values of such properties have not changed as the tenants, lease
terms and timely  payment of rent have not  changed.  When any such changes have
occurred,   management   revalued  the  property  as  it   reasonably   believed
appropriate.  The  value of the  partnership  properties  which are  subject  to
percentage rents was based upon internally generated appraisals. Such appraisals
valued the future percentage rents utilizing assumed sales growth percentages of
up to 3% annually,  based upon each  individual  store's sales  history  through
January  31,  2000.   Management   evaluates   and  updates   such   appraisals,
periodically,  and  considers  changes in the status of the existing  tenancy in
such  evaluations.  Certain other properties were valued based upon management's
estimate of the current  market value for each specific  property  using similar
procedures.

     Based upon the  ratification  of the  enforceability  and validity of DVL's
portfolio of Partners' Notes by the Limited  Partner  Settlement and the payment
experience on such notes, management re-evaluated each note in its portfolio for
specific  loss  reserves.  As of December  31, 2000 and 1999,  the notes  deemed
uncollectible  were  provided for assuming an  estimated  residual  value of the
related partnership  investment of approximately 14% of the original investment,
which reflects management's estimate of the investment's net realizable value.

                                      F-19
<PAGE>


5.   Investments

     REAL ESTATE

     At December 31, 2000, DVL's land investments  consisted of three properties
in New Jersey which were previously pledged to collateralize indebtedness to NPM
(Note 6)until May 1999, at which time the NPM loan was repaid (Note 6). Prior to
May 1999,  DVL owned an  additional  parcel  which  was  leased to an  affiliate
partnership under a long-term lease with annual rents of approximately  $30,000.
In April 1999,  DVL sold this  property for $300,000,  to an  affiliated  entity
which  is part of the  Opportunity  Fund  resulting  in a gain  of  $90,000.  An
adjoining parcel was also leased to an Affiliated  Limited  Partnership  under a
long term lease,  however,  this  partnership had been in default in its monthly
obligations.  In November  1998,  DVL, as mortgagee,  foreclosed on the building
that secured its mortgage loan  receivable.  DVL had a net carrying value of its
mortgage receivable of approximately $417,000 at the time of foreclosure and has
recorded its building at this same cost basis,  as it  approximated  the current
market  value  of the  property.  The  partnership  which  had  the  land  lease
obligation to DVL, that DVL foreclosed  upon, was liquidated  with no additional
monies paid under its land lease agreement.

     During 2000, DVL purchased the land,  buildings,  and  improvements  from a
limited partnership which owned seven buildings located in an industrial park in
Kearny,  NJ for an aggregate  purchase price of $3,000,000,  plus closing costs.
Prior to the  purchase,  the  Company had been  leasing all of these  buildings,
under a  master  lease  agreement,  and  subletting  this  property  to  various
unrelated  tenants.  The  acquisition  was  funded  with bank  financing  in the
original principal amount of $3,000,000 and cash of approximately  $255,000. The
bank  financing  accrues  interest  at the rate of 10% per  annum  and  requires
monthly  interest-only  payments  until December 1, 2001, at which time the loan
matures. The Company may extend the loan under the same terms until June 1, 2002
by paying an extension fee of $15,000.

     In early 2001,  DVL  purchased the fee title in a parcel of land in Kearny,
NJ from an unrelated third party for a purchase price of $365,000,  plus closing
costs. The acquisition was funded with bank financing in the original  principal
amount of  $200,000  and cash of  approximately  $175,000.  This bank  financing
accrues   interest  at  the  rate  of  9.5%  per  annum  and  requires   monthly
interest-only  payments until December 31, 2001, at which time the loan matures.
The  Company  may extend the loan  under the same terms  until June 1, 2002,  by
paying an extension fee of $750.

     AFFILIATED LIMITED PARTNERSHIPS

     DVL acquired various interests in Affiliated Limited Partnerships  pursuant
to the terms of certain settlement agreements and through purchases.  Management
valued all of these investments at approximately 14% of the original  investment
amount due to potential anticipated losses upon liquidation of these investments
(Notes 2, 3, 4, and 6).  During  2000,  1999 and 1998,  DVL  recorded  income of
$253,000, $265,000 and $148,000,  respectively, from distributions received from
these investments.

                                           F-20
<PAGE>


The activity on DVL's  investments  in  Affiliated  Limited  Partnerships  is as
follows:

                                                           2000           1999
                                                         -------        -------
                                                              (in thousands)

Balance, beginning of year                               $ 1,326        $ 1,449
Various interests acquired through
 purchases and foreclosed partner notes                        3             45
Distributions received from sales                           (447)          (413)
Income from distributions                                    253            265
Write-offs and reserves                                       22            (20)
                                                         -------        -------
Balance, end of year                                     $ 1,157        $ 1,326
                                                         =======        =======

     At December  31,  2000,  all of DVL's  investments  in  Affiliated  Limited
Partnerships are pledged to collateralize its indebtedness (Note 6).

     OTHER INVESTMENTS

     In  connection  with  a  1993  litigation  settlement  with  three  related
partnerships  that opted out of the Limited  Partner  Settlement,  DVL  received
limited partnership  interests in three  partnerships.  These partnerships' sole
assets are the restructured  partnership mortgage loans on the properties leased
to Wal-Mart  Stores,  Inc.  by the three  partnerships  which  opted out.  These
investments  were valued based upon the anticipated cash flow to be generated by
the  restructured  mortgage loans (Notes 3(c) and 4).  Management has reserved a
total of $400,000 as of December 31, 2000 and 1999  primarily  resulting  from a
decrease  in  the  value  of the  underlying  collateral  of  one  of the  three
partnership mortgage loans. Prior to 1998, as distributions were received or the
investments  were disposed of, the carrying  value was reduced and no income was
recognized. In 2000 and 1999, distributions in the amount of $28,000 and $34,000
were received by DVL and these amounts were recognized as income since it is now
anticipated that the expected future cash flow will exceed the carrying value.

                                      F-21
<PAGE>


6.   Long-Term Debt and Loans Payable Underlying Wrap-around Mortgages

     DVL's long-term debt is comprised of the following loans payable:

                                                                2000      1999
                                                               ------     ------
                                                                 (in thousands)
Indebtness restructured in 1995 collateralized
 by commercial mortgages maturing in 2001                      $  198     $  285
Loan collateralized by commercial mortgage loans
 and real estate bearing interest at prime plus
 1.5% per annum maturing May, 2006 (a)                            987         --
Loan collateralized by commercial mortgage loans
 and real estate bearing interest at prime plus
 1.5% per annum maturing April, 2005 (a)                        1,317         --
Unsecured promissory note maturing March 2001,
 without interest (paid in full March 2001)                        75         --
Loan collateralized by real estate bearing
 interest at 10% per annum, maturing
 December, 2001 (b)                                             3,000         --
                                                               ------     ------
                                                                5,577        285

Loan collateralized by commercial mortgages
 and real estate bearing interest at 12% per
 annum, maturing September 2002 (c)                             2,080      1,868

Loan collateralized by DVL's interest in the
 Opportunity Fund bearing interest at 12% per
 annum maturing August 2002 (a)                                   202         --

Loan  indebtedness  due NPM bearing  interest at
 10.25% maturing in September 2002, collater-
 alized by commercial mortgages and real estate
 (loan repaid May 1999)(d)                                         --         --
                                                               ------     ------
 Total long-term debt                                          $7,859     $2,153
                                                               ======     ======


     (a)  See loans receivable and underlying mortgages (Note 3).

     (b)  See Investments-Real Estate (Note 5) for financing agreements.

     (c)  See Debt Tender Offer (Note 7) for description of financing  agreement
with Blackacre Bridge Capital, LLC.

     (d)  To better enable DVL to resolve its liquidity problems and to meet its
certain  mandatory  repayment  requirements,  on September 27, 1996, DVL and NPM
closed a loan  transaction  under a certain Loan Agreement  dated March 27, 1996
(the "Original  Loan  Agreement"),  pursuant to which NPM purchased  three loans
from three creditors, and agreed to make principal installment payments of up to
$600,000 on DVL's obligation to two additional  creditors (the "Original Loan").
NPM has fulfilled this additional funding obligation.  The three purchased loans
represented  an aggregate  outstanding  balance of  $7,501,000.  Two of the five
loans had negotiated discounts of $2,773,000.

                                      F-22
<PAGE>


The actual amount loaned by NPM at the closing,  which included the balances due
to the above mentioned creditors,  less the realized discount, plus NPM's costs,
equaled $5,232,000.  Included in the loan balance were NPM's costs (in excess of
$175,000)  incurred in connection  with this  transaction,  such excess  totaled
approximately  $503,000.  In  consideration  of NPM's loan enabling DVL to avail
itself of discounts to existing lenders, and for providing DVL with the extended
payment schedule,  the principal amount of the loan was increased by $3,150,000.
All such funds advanced at the closing were consolidated into a single note with
NPM  in  the  amount  of  $8,382,000.  For  financial  reporting  purposes,  DVL
recognized an extraordinary loss of $880,000 on this transaction in 1996.

     In March and April 1997,  NPM advanced  DVL an  aggregate of $200,000  (the
"Additional  Advances").  In addition,  from January 1998 through May 1999,  NPM
advanced additional amounts aggregating  $370,000 to DVL. These advances,  which
were not required  under the Original Loan  Agreement,  bore interest at 15% per
annum  and were paid  pari  passu  with said  loan.  The  Original  Loan and the
Additional  Advances are referred to in the aggregate  herein as the "NPM Loan".
In May 1999, DVL paid all remaining amounts due on the NPM loan.

     Under the terms of the NPM Loan, the principal balance was payable over six
years with  interest at the rate of 10.25%.  DVL was  required  to make  certain
mandatory  payments towards the principal balance over the term of the loan. The
first such payment (when combined with all prior principal  reductions)  must be
sufficient to reduce the  principal  balance of the NPM Loan by 15%, and was due
by March 31, 1998.  The next such  payment,  which must be  sufficient  to cause
cumulative  principal  reductions to aggregate 33% of the principal balance, was
due by December 31, 1998.  The third such  payment,  which must be sufficient to
cause cumulative principal reductions to aggregate 50% of the principal balance,
was  due  by  September  30,  1999.  DVL's  principal  payments  exceeded  these
requirements  from  September 27, 1996 through May 1999 when the entire loan was
repaid.

     The rate of interest on the NPM Loan was  approximately  36%  including the
$880,000  extraordinary  loss.  The  effective  annual  interest rate to DVL for
financial  reporting  purposes,  as currently  computed,  including  DVL's costs
associated with the NPM Loan and the value of the Warrants (described below) was
15%. These rates are based on payments made through May 1999.

     In  connection  with the  transactions  contemplated  by the Original  Loan
Agreement in March 1996, DVL and NPO (an affiliate of NPM) entered into an Asset
Servicing Agreement,  pursuant to which NPO is providing DVL with administrative
and  advisory  services  relating  to the  assets  of  DVL  and  its  affiliated
partnerships.  In  consideration  for such services,  DVL is required to pay NPO
$600,000  per year (with cost of living  increases  beginning  in 1999) over the
seven  (7)  year  term  of the  asset  servicing  agreement,  subject  to  early
termination under certain conditions.  DVL had the right to defer up to $600,000
of such fees, with interest at 15% per annum,  during the first two years and to
defer reduced  amounts  during the third year.  DVL had accrued  service fees of
$373,000 as of December 31, 2000.  NPO has waived any Event of Default which may
exist under the Asset Servicing Agreement during the period through December 31,
2001 based on the fact that the amount of accrued  service fees has exceeded the
operative limitations since mid-1997, and may continue to do so. The waiver does
not affect NPO's right to receive  payment of all  deferred  service  fees,  and
interest  thereon,   which  are  currently   outstanding  or  which  may  become
outstanding through December 31, 2001.

                                      F-23
<PAGE>


     In connection with the Original Loan,  affiliates of NPM acquired 1,000,000
shares (the "Base  Shares") of DVL Common  Stock for  $200,000.  The Base Shares
currently represent  approximately 6% of the outstanding common stock of DVL. An
affiliate of NPM also  acquired 100 shares of  preferred  stock for $1,000.  DVL
issued to affiliates of NPM and NPO warrants (the  "Warrants")  to purchase such
number of shares of Common  Stock as, when added to the Base  Shares,  represent
rights to acquire up to 49% of the  outstanding  Common  Stock of DVL on a fully
diluted basis.  The original  exercise price of the Warrants was $.16 per share,
subject  to  applicable  anti-dilution  provisions  and  subject  to  a  maximum
aggregrate  exercise  price of $1,900,000.  The Warrants  expire on December 31,
2007.  Except under certain  circumstances,  they were not exercisable  prior to
September 1999 in accordance with the terms of such Warrants. The limitations on
exercise  were  intended  primarily to help  preserve the  utilization  of DVL's
carryforwards  of net  operating  losses  and  credits  for  federal  income tax
purposes.  The Warrants were valued for financial statement purposes at $516,000
at the date of  issuance  and  such  value  resulted  in a debt  discount  to be
amortized  using the  effective  interest  rate  method.  No Warrants  have been
exercised through December 31, 2000.

     The aggregate  amount of  restructured  and other  long-term debt and loans
payable underlying  wrap-around mortgages (Note 4) maturing during the next five
years is as follows:

                                                         Loans Payable
                                          Long-term     Underlying Wrap
                                            Debt        Around Mortgages
                                          ---------     ----------------
                                                  (in thousands)

        2001                              $   3,655         $ 2,070
        2002                                  2,748           2,280
        2003                                    519           2,511
        2004                                    707           2,465
        2005                                    230           2,688
     Thereafter                                   -          14,005
                                          ---------         -------
                                          $   7,859         $26,019
                                          =========         =======


     7.   Notes   Payable  -  Litigation   Settlement/Debt   Tender  Offers  and
Redemptions

     In December 1995, DVL completed its obligations  under a 1993 settlement of
its class action litigation. The settlement,  which was approved by the court in
1993,  provided that DVL would issue the  plaintiffs  (1) 900,000  shares of DVL
common  stock at a  minimum  price of $1.50  per  share  (or  notes to cover any
deficiency in the event that aggregate  market value was less than  $1,340,000);
(2) $9  million  face  value of notes due in ten  years,  with  interest  at 10%
payable in kind for five years, callable after the third year and payable in the
tenth year in cash or with DVL common  stock  equal to 110% of the face value of
the notes (valued in 1993 at $3,690,000 by an independent investment banker) and
(3) $1.4 million plus interest at 3% from August 16, 1993 and expenses,  payable
in cash or DVL common stock.  In December 1995, DVL issued the 900,000 shares of
common  stock and as a result of the  deficiency  in its  market  value,  issued
additional  notes with the same terms, in the face amount of $1,386,851  (valued
at $330,000 by DVL).  In payment of the $1.4 million plus interest and expenses,
DVL issued 4,017,582 shares of common stock in December 1995.

                                      F-24
<PAGE>


     In December 1995, DVL issued notes (the "Notes") in the aggregate principal
amount of $10,386,851 as a series in conjunction with the settlement agreed upon
in the DVL  stockholder  class action  matter  entitled IN RE DEL-VAL  FINANCIAL
CORP. SECURITIES LITIGATION.  The Notes, which are general unsecured obligations
of DVL,  accrue  interest  at the rate of ten  (10%)  percent  per  annum,  with
principal  under the  Notes,  together  with all  accrued  and  unpaid  interest
thereunder,  due on  December  31,  2005.  Pursuant  to the terms of the  Notes,
accrued and unpaid interest payable on any of the first five  anniversary  dates
following  the  issuance of the Notes is  payable,  at the option of DVL, by the
issuance  of similar  additional  Notes  with a  principal  amount  equal to the
accrued and unpaid interest  obligation then due. On the five anniversary  dates
following  the  issuance  of the  Notes,  the  Company  satisfied  its  interest
obligations  thereunder by issuing such  additional  Notes in lieu of payment of
any cash.

     Since October  1997,  the Company  conducted  three cash tender offers (the
"Offers")  at a Tender  Offer price of $0.12 per $1.00  principal  amount of the
Company's 10% redeemable  promissory  notes due December 31, 2005 (the "Notes").
The first two Offers were financed with a loan from Blackacre discussed below.

The results were as follows:

                     Principal Amount   Principal Amount
                       of Notes             of Notes          Extraordinary
                      Purchased by         Purchased by           Gains to
                          DVL             by Blackacre              DVL
                    ----------------    ----------------       ------------

Offer # 1          $ 6,224,390          $   392,750           $   202,000
                                                                  (1998)
                                                              $ 2,906,000
                                                                  (1997)

Offer # 2          $ 2,413,652          $   423,213           $ 1,267,000
                                                                  (1999)

Offer # 3          $   378,270          $    - 0 -            $   306,000
                                                                  (2000)


     The  Company  has had the  option to redeem  the  outstanding  Notes  since
January 1, 1999 by issuing additional shares of Common Stock with a then current
market value  (determined  based on a formula set forth in the Notes),  equal to
110% of the face  value  of the  Notes  plus any  accrued  and  unpaid  interest
thereon.  Because  the  applicable  market  value of the  Common  Stock  will be
determined at the time of redemption,  it is not possible currently to ascertain
the  precise  number of shares  of  Common  Stock  that may have to be issued to
redeem the outstanding  Notes. The redemption of the notes may cause significant
dilution  for  current  shareholders.  The  actual  dilutive  effect  cannot  be
currently  ascertained  since it depends on the number of shares to be  actually
issued to satisfy the Notes. The Company  currently  intends to exercise at some
point in the future its redemption option to the extent it does not buy back the
outstanding Notes by means of cash tender offers or cash redemptions.

     Notes with an aggregate principal amount of approximately $3,725,000 remain
outstanding as of December 31, 2000 (discounted  value  $3,028,000).  The offers
have  reduced  the  potential   dilutive  effective  on  the  Company's  current
stockholders that would result from redemption of the notes for shares of Common
Stock.  However,  given the  aggregate  principal  amount of Notes which  remain
outstanding,  the  potential  dilutive  effect  of such a  redemption  is  still
significant.

                                      F-25
<PAGE>


     In order to fund the  acquisition  of the  Notes in the  first  and  second
offers and pay the  related  costs and  expenses,  the Company  entered  into an
amended financing arrangement (the "BC Arrangement") with Blackacre, NPM and NPO
as of October 20, 1997,  in the form of a Fourth  Amendment to a Loan  Agreement
between such parties (as amended,  the "Amended Loan Agreement),  permitting the
Company to borrow up to $1,760,000 (the amount actually  borrowed by the Company
pursuant to the BC  Arrangement  is  referred to as the "BC Loan").  The BC Loan
matures on  September  30, 2002 and bears  interest at the rate of 12% per annum
compounded  monthly  and  payable at  maturity.  Total  borrowings  under the BC
Arrangement  were $1,560,000 as of December 31, 2000. In addition,  Blackacre is
entitled  to  acquire  15% of all Notes  acquired  by the  Company  in excess of
$3,998,000  under  the same  terms  and  conditions  as the  Company.  Blackacre
acquired Notes  aggregating  $392,750 under these terms from the First Offer and
$423,213 from the Second Offer. DVL funded the Third Offer with available cash.

     As further  consideration for Blackacre's providing the Company with the BC
Loan, the Company issued to Blackacre 653,000 shares of Common Stock.

     The  Company's  obligations  under  the BC Loan are  secured  by all of the
assets of the Company  currently pledged to NPO under the Amended Loan Agreement
and the other documents executed in connection therewith.  The BC Loan is senior
to all  indebtedness  of the Company  other than  indebtedness  to NPO and, with
respect to individual assets, the related secured lender. The effective interest
rate to the Company for financial  reporting  purposes,  including the Company's
costs associated with the BC Loan, and the value of the 653,000 shares issued to
Blackacre in connection  therewith,  is  approximately  14% per annum.  Interest
payable  in  connection  with the BC Loan will be  deferred  until  the  Company
satisfies all of its obligations owing to NPO. However, since April 27, 2000 the
Company must pay principal  payments of 15% of all proceeds that would otherwise
be remitted to NPO, to Blackacre.  Thereafter,  interest and  principal  will be
paid from 100% of the proceeds  then  available to the Company from the mortgage
collateral held as security for the BC Loan.

     During December 2000, the Company sent  redemption  letters to note holders
who hold Notes that aggregate  approximately  $106,000 offering to pay the Notes
in cash at the face value. As of December 31, 2000, no monies were disbursed and
the Company has established  restricted cash with corresponding  liabilities for
amounts due.

8.   OTHER TRANSACTIONS WITH AFFILIATES

     A.   OPPORTUNITY FUND

     In April 1998, DVL, an affiliate of Blackacre and affiliates of NPO entered
into a certain Agreement Among Members (the "Opportunity Agreement"),  providing
for an arrangement (the "Opportunity Fund"), pursuant to which entities would be
formed,  from time to time,  to enter into certain  transactions  involving  the
acquisition of limited partnership interests in the assets of, or mortgage loans
to, affiliated limited  partnerships or other assets in which the Company has an
interest.  These investment  opportunities  will be presented to the Opportunity
Fund on a first refusal basis, if the Company, due to financial constraints,  is
unable to pursue such business opportunity with its own funds.

The  Opportunity  Fund is expected to pursue each  Opportunity  with  respect to
which it  exercises  its  right of first  refusal  through  the use of a special
purpose limited liability company. All of the required capital contributions are
to be provided by Blackacre and the NPO Affiliates.  The Company will receive up
to 20% of the  profits  from an  opportunity  after  BCG and the NPO  Affiliates
receive the return of their  investment plus preferred  returns ranging from 12%
to 20% per annum.

                                      F-26
<PAGE>


     As of March 1, 2001, the  Opportunity  Fund has purchased 15 wrap mortgages
of Affiliated  Limited  Partnerships from unaffiliated third parties (seven were
purchased in 1998, one was purchased in 1999 and seven  mortgages were purchased
in 2000),  acquired limited  partnership units from unaffiliated  individuals in
three Affiliated  Limited  Partnerships,  and acquired a leasehold interest of a
tenant of an  Affiliated  Limited  Partnership.  In addition,  during 1999,  the
Opportunity  Fund acquired a property of an Affiliated  Limited  Partnership and
the land  underlying this property from DVL. During 2000, DVL purchased three of
the mortgages owned by the Opportunity  Fund for an aggregate  purchase price of
$900,000 and the  Opportunity  Fund was fully  satisfied on an  additional  four
mortgage loans, as each of the properties that secured these four mortgage loans
was sold. As of March 1, 2001, the Opportunity Fund owns eight mortgages. During
2000, DVL was paid approximately  $8,000 from the investments by the Opportunity
Fund,  which  was used to pay  amounts  owed by DVL  under a note in favor of an
entity that is part of the Opportunity Fund.

B.   In June 1998, the Company entered into a management services agreement with
a limited  partnership  (in which certain of its partners are affiliates of NPO)
to render  services for a fee. This  agreement  may be  terminated  with 30 days
notice by either party. As compensation,  the Company receives the following (a)
a monthly fee of $5,000 through November 2000, and (b) after all the partners of
the partnership have earned a 20% internal rate of return, compounded quarterly,
on their capital  contributions,  an amount of cash equal to 25% of the profits,
as defined in the  agreement.  For 2000,  1999,  and 1998 the  Company  received
compensation  under such  agreement  equal to $362,500,  $480,000,  and $35,000,
respectively.

C.   In  addition,  the Company  entered into a service  agreement  with another
limited  partnership  whose  general  partner is an  affiliate of NPO, to render
certain accounting and  administrative  services.  As compensation,  the Company
receives  a monthly  fee of $3,000,  and  expense  reimbursements  of $1,000 per
month.  For 2000,  1999, and 1998 the Company  received  aggregate  compensation
under such agreement of $48,000, $48,000, and $36,000, respectively.

D.   The Company  entered into a property  management  agreement  with an entity
that is part of the  Opportunity  Fund  pursuant to which DVL provides  property
management  services in exchange for fees equal to 3% of rent  collections.  For
2000 and 1999, the Company received  compensation  equal to $27,000 and $12,000,
respectively.

E.   In November 1999, the Company entered into a management  service  agreement
with an entity whose partners are affiliates of NPO to render certain accounting
and administrative services. As compensation, the Company receives a monthly fee
of  $2,000,  a monthly  deferred  fee of $6,500 and an annual  incentive  fee if
certain levels of profitability are attained. For 2000 and 1999, the Company was
paid $24,000 and $4,000 and accrued  fees of $78,000 and $13,000,  respectively.
In early  2001,  the  Company was paid an  aggregate  amount of  $91,000,  which
represented all of the deferred fees through December 31, 2000.

F.   The Millenium Group, an affiliate of NPO,  received  $94,000,  $145,000 and
$71,000 for 2000, 1999, and 1998,  respectively,  representing  compensation and
reimbursement  of expenses for collection  services on limited partner notes. In
2000 and 1999 the Company paid to the Millenium  Group $25,000 each year and the
Pembroke Group, another affiliate of NPO, $55,000 and $75,000 respectively,  for
professional  fees. In 1998, the Company paid to the Millenium Group $25,000 for
professional fees.

                                      F-27
<PAGE>


9.   Deferred Credits

     DVL's  deferred  credits were  comprised of deferred  gains on the sales of
real estate to affiliates.  At December 31, 1998, all deferred credits have been
amortized.

Activity on deferred credits is as follows:

                                                        1998
                                                       -------
                                                    (in thousands)

     Balance, beginning of year                        $   296
     Amortization to income                                (47)
     Deferred gain on foreclosure recognized upon
      cancellation of mortgage loans                      (249)
                                                       -------
     Balance, end of year                              $     0
                                                       =======

10.  Stock Option Plans

     DVL has  elected  to follow  Accounting  Principles  Board  Opinion  No. 25
"Accounting   for  Stock   Issued  to   Employees"   ("APB   25")  and   related
interpretations  in accounting  for its employee  stock  options.  Under APB 25,
where the exercise price of DVL's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation is recognized.

     Pro forma  information  regarding  net  income  and  earnings  per share is
required by Statement of Financial  Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). Such information has been determined
as if DVL has  accounted  for its employee  stock  options  under the fair value
method of that statement.  The effect of applying SFAS No. 123 on 1998, 1999 and
2000 pro  forma  net  income  (loss) is not  necessarily  representative  of the
effects on reported net income for future years due to, among other things:  (1)
vesting  period of the stock options  and(2) the fair value of additional  stock
options in future years. Had compensation cost for DVL's stock option plans been
determined  based upon the fair  value at the grant  date for  awards  under the
plans  consistent with the methodology  prescribed under SFAS No. 123, DVL's net
income (loss) in 2000, 1999, and 1998, would have been  approximately  $505,000,
$2,270,000,  and ($567,000),  and diluted  earnings per share would have been of
$.01, $.04, and ($.04), respectively.

     DVL's 1996 Stock  Option Plan,  as amended  (the  "Plan")  provides for the
grant  of  options  to  purchase  up to  2,500,000  shares  of  Common  Stock to
directors,  officers and key employees of DVL. It includes  automatic  grants of
15,000 options to individuals  upon their becoming  non-employee  directors,  as
well as  automatic  annual  grants  of  15,000  options  to each  non-  employee
director.

     All options are non-qualified stock options.

     In February  2000, DVL amended the Plan to increase the number of shares of
common stock available under the Plan by an additional 1,000,000 shares.

     As of December 31, 2000,  there were  outstanding  1,278,131  ten (10) year
options.  Under the Plan,  the  Company  had  1,221,869  shares of common  stock
remaining under the Plan for future grants of stock options.

                                      F-28
<PAGE>


     The following table summarizes the activity under the Plan:

                                         Year Ended December 31,
                       ---------------------------------------------------------
                               2000               1999                1998
                       ------------------   -----------------  -----------------
                                Weighted            Weighted            Weighted
                                 Average             Average             Average
                                Exercise            Exercise            Exercise
                        Shares    Price     Shares    Price     Shares    Price
                       --------- -------   -------- --------  --------- --------

Options Outstanding
 at Beginning of Year  1,175,131  $0.19   1,020,131   $0.18     892,131   $0.20
Granted                  120,000   0.10     205,000    0.21     128,000    0.10
Cancelled                (17,000)  0.21     (50,000)   0.12          -       -
                       ---------  -----   ---------   -----   ---------   -----
Options Outstanding
 at End of Year        1,278,131   0.18   1,175,131    0.19   1,020,131    0.18
                       =========  =====   =========   =====   =========   =====
Options Exercisable
 at End of Year        1,278,131  $0.18   1,175,131   $0.19   1,020,131   $0.18
                       =========  =====   =========   =====   =========   =====


                               Year Ended December 31, 2000
                     ----------------------------------------------
               Options Outstanding                     Options Exercisable
--------------------------------------------------    ---------------------
                                         Weighted
                            Weighted      Average                 Weighted
  Range of                   Average     Remaining                 Average
  Exercise                  Exercise      Life In                 Exercise
   Price        Shares       Price         Years      Shares        Price
-----------   ---------     --------     ---------   ---------    --------

$.08   0.12     225,000      $0.09         8.26        225,000      $0.09
 .13 - 0.19     205,000       0.16         7.38        205,000       0.16
 .20 - 0.22     848,131       0.21         6.13        848,131       0.21
-----------   ---------      -----       ------      ---------      ------
      TOTAL   1,278,131      $0.18         6.71      1,278,131      $0.18
              =========      =====       ======      =========      ======

     The weighted-average fair value at date of grant for options granted during
the years ended  December  31, 2000,  1999 and 1998 was $.09,  $.17 and $.08 per
option,  respectively.  The fair value of options at date of grant was estimated
using the Black-Scholes option price model utilizing the following assumptions:

                                                  December 31,
                                 -----------------------------------------------
                                      2000              1999            1998
                                 -------------     -------------  --------------

Risk-free interest rates         5.83% - 6.56%     5.00% - 5.92%   4.81% - 5.54%
Expected option life in years         10                10               10
Expected stock price volatility       85%               85%              80%
Expected divided yield                 0%                0%               0%

                                      F-29
<PAGE>


11.  Commitments, Contingent Liabilities and Legal Proceedings

COMMITMENTS AND CONTINGENT LIABILITIES

     Pursuant to the terms of the Limited  Partner  Settlement,  a fund has been
established  into which DVL is required to deposit 20% of the cash flow received
on its mortgage loans from Affiliated  Limited  Partnerships  after repayment of
certain  creditors,  50% of DVL's  receipts  from  certain  loans to and general
partnership investments in Affiliated Limited Partnerships and a contribution of
5% of DVL's net income subject to certain  adjustments in the years 2001 through
2012.  DVL has not  provided  for such  contingencies  and record as they became
payable.

     No monies have been paid to the fund through December 31, 1999 as DVL had a
receivable  from the fund  for  expenses  paid by DVL on  behalf  of  Affiliated
Limited  Partnerships.  During 2000, the Company paid $117,000 to the fund which
represented all amounts due to/from the fund as of December 31, 2000, except for
monies  owed to the fund of  approximately  $213,000  that was the result of the
refinancing of three mortgage loans receivable.  This amount due is reflected as
restricted cash with a  corresponding  liability  recorded.  All amounts paid or
accrued were expensed.

     In  August  1998,   DVL  entered  into  a  lease  of  premises   comprising
approximately  6,000  square  feet.  The lease for such  office  space is due to
expire on  February  7, 2003.  The base rent is  $227,160  per annum,  plus real
estate and operating expense escalation clauses.  Net rent expense was $189,000,
$187,000 and $-0- in 2000, 1999, and 1998, respectively.

12.  Shareholders' Equity

     As a  result  of  the  shareholder  class  action  settlement,  DVL  issued
4,017,582 shares of common stock in December 1995 (Note 7).

     On February 27, 1998, DVL issued 328,000 shares to the lender in connection
with the debt tender offer (Note 7).

     See  Note  6(d)  and 7 with  respect  to  Warrants  and  Notes,  which  are
redeemable  at the Company's  option in stock.  Depending on the market price of
the Company's stock, there may not be sufficient  authorized shares available to
be issued upon the redemption of the Warrants and the Notes.

     The 100 shares of issued preferred stock carry no specified dividend but do
receive any  dividend  approved  by the Board.  To date,  no  dividend  has been
authorized  by the Board.  On  liquidation,  the preferred is paid at face value
before the common stock.

     o  In February  2000,  DVL amended its  Certificate  of  Incorporation  and
        increased  its  number  of  authorized  shares  of  capital  stock  from
        40,000,100  to  95,000,100  in  order  to (a)  increase  the  number  of
        authorized  shares of DVL's common stock, $.01 par value from 40,000,000
        to  90,000,000  and (b)  authorize  5,000,000  shares of  "blank  check"
        preferred stock, $.01 par value.

13.  Subsequent Events

     On March 30, 2001, the Company's  newly-formed wholly owned subsidiary,  S2
Holdings,  Inc.,  ("S2")  entered into an agreement  for the purchase of a 99.9%
Class B member  interest in Receivables  II-A LLC, a limited  liability  company
("Receivables  II-A"),  from Receivables II-A Holding Company LLC ("Seller"),  a
newly  formed  indirect  wholly  owned  subsidiary  of a company  engaged in the
acquisition and management of periodic payment  receivables.  The Class B member
interest will entitle S2 to be allocated 99.9% of all items of income,  loss and
distribution.  Receivables  II-A  owns  all of the  equity  interests  in  three
subsidiary  limited  liability  companies  that  have  previously  acquired  and
securitized  four portfolios of periodic payment  receivables.  Receivables II-A
solely  has the right to receive  the  residual  cash flow from the  securitized
receivables after payment to the securitized noteholders.

                                      F-30
<PAGE>


     S2  will  purchase  its  interest  for  an  aggregate   purchase  price  of
$25,399,000. The purchase price will be paid by the issuance of promissory notes
by S2 in the aggregate  amount of  $25,325,000,  which are limited  recourse and
payable from the future monthly cash flow received by S2 as  distributions  from
the periodic payment receivables owned by Receivables II-A's  subsidiaries.  The
notes  will  mature  on  December  31,  2021,  bear  interest  at the rate of 8%
annually,  and will be secured by a pledge of S2's interest in Receivables  II-A
and all proceeds  and  distributions  related to such  interest.  The  principal
amount of the notes and the purchase  price may be increased or decreased,  from
time to time,  based upon the  performance  of the underlying  receivables.  The
balance of the purchase  price will be paid by the issuance by DVL of a warrant,
valued at $74,000,  for the purchase of 2 million  shares of the common stock of
DVL,  exercisable until February 15, 2011 at a price of $.20 per share. DVL also
will issue its  guaranty of up to  $2,532,500  of the purchase  price,  which is
callable after December 31, 2021.

     Pursuant to the terms and conditions of the  transaction,  S2 deposited the
promissory notes and the pledge, and DVL deposited the warrant and its guarantee
in escrow  pending  the  closing.  The  closing  of the  purchase  is subject to
satisfaction of certain conditions precedent,  including the receipt of consents
and  approvals to the  transaction  by certain  rating  agencies  that rated the
securitizations  and by a  senior  lender  to the  Seller.  The  transaction  is
expected  to close by May 1,  2001,  but  there  can be no  assurance  that such
consents and approvals will be obtained or that the transaction will close.

                                            F-31
<PAGE>


DVL, INC.  AND SUBSIDIARIES
Schedule III- REAL ESTATE AND ACCUMULATED DEPRECIATION
IN THOUSANDS

<TABLE>
<CAPTION>
                                                 Costs
                                              Capitalized
                                               Subsequent       Gross Amount
                                               to  Acqui-     of Which Carried
                                 INITIAL COST    sition      At Close of Period
                               ---------------  --------  -----------------------
                                      Building  Building         Building          Accumu-                         Line on Which
                                        and       and             and               lated   Date of           Depreciation in Latest
                    Encum-            improve   improve-         improve-          Depre-  Construc-   Date      Income Statement
Description         brances    Land    ments     ments    Land     ment     Total  ciation    tion   Acquired       is Computed
-----------         -------    ----   --------  --------  ----   --------   -----  ------- --------  -------- ----------------------
<S>                  <C>       <C>     <C>         <C>    <C>     <C>      <C>       <C>      <C>      <C>      <C>
Warehouse
Manufacturing
Kearny, New Jersey   $   --    $ 80    $  426      $--    $ 80    $  426   $  506    $23      1977     11/98    Straight-line method
                                                                                                                     40 years
Warehouse Manu-
facturing & Retail
Kearny, New Jersey   $3,000    $648    $2,590      $--    $648    $2,590   $3,238    $ 3      1977     12/00    Straight-line method
                                                                                                                     40 years

Leasehold Improve-
ments
Bogota, New Jersey   $   --    $ --    $   19      $19    $ --    $   19   $   19    $--      2000     12/00    Straight-line method
                                                                                                                     40 years

</TABLE>

                                                       Year ended December 31,
                                                      2000       1999       1998
                                                    ----------------------------
(A) Reconciliation of Real Estate Owned

Balance at beginning of year                        $  506      $ 706       $289
Additions during the year                            3,257          9        417
Deletions during the year                               --       (209)        --
                                                    ------      -----       ----
Balance at end of year                              $3,763      $ 506       $706
                                                    ======      =====       ====

                                                       Year ended December 31,
                                                      2000       1999       1998
                                                    ----------------------------
(A) Reconciliation of Accumulated Depreciation

Balance at beginning of year                        $   13      $   2       $ --
Additions during the year:  Depreciation                13         11          2
                                                    ------      -----       ----
Balance at end of year                              $   26      $  13       $  2
                                                    ======      =====       ====

                 See notes to consolidated financial statements

<PAGE>


EXHIBIT 11

                           DVL, INC. and Subsidiaries
                        Computation of Earnings Per Share
                 (in thousands except share and per share data)
                                   (unaudited)

                                                           Year Ended
                                                          December 31,
                                                   ----------------------------
                                                      2000             1999
                                                   -----------      -----------

Income before extraordinary gain                   $       199      $     1,026

Interest expense on litigation/settlement
  notes                                                    502              481
                                                   -----------      -----------
Ordinary income                                            701            1,507

Extraordinary gain                                         306            1,267
                                                   -----------      -----------
Net income                                         $     1,007      $     2,774
                                                   ===========      ===========
Weighted average number of common
 shares outstanding - basic                         16,560,450       16,560,450

Shares issuable upon exercise of
 dilutive options and warrants                      97,577,336       61,028,722

Less shares assumed repurchased                    (17,800,200)     (10,605,934)
                                                   -----------      -----------
Weighted average number of common
 shares outstanding - diluted                       96,337,586       66,983,238
                                                   ===========      ===========
Basic earnings per share:
 Income before extraordinary gain                  $       .01      $       .06
 Extraordinary gain                                        .02              .08
                                                   -----------      -----------
Net income                                         $       .03      $       .14
                                                   ===========      ===========
Diluted earnings per share:
 Income before extraordinary gain                  $       .01      $       .02
 Extraordinary gain                                        .00              .02
                                                   -----------      -----------
Net income                                         $       .01      $       .04
                                                   ===========      ===========

<PAGE>


                              DVL, INC. -- TABLE 1
            LONG TERM MORTGAGES DUE FROM AFFILIATED PARTNERSHIPS (5)

                        DECEMBER 31, 2000 (In Thousands)

<TABLE>
<CAPTION>
                                                        Net     Under-
                 Location of                            Mtg.    Lying                                    Security
Affiliated        Property       Mortgage  Unearned    Loan     Loan               Monthly              [Mortgage(s)
Partnership     Securing Loan    Balance   Interest   Receiv.  Balance    Yield    Amort.    Maturity      Upon]        Tenant(s)
-----------------------------------------------------------------------------------------------------------------------------------
<S>             <C>              <C>       <C>        <C>      <C>         <C>       <C>     <C>        <C>            <C>
Alexandria      Wellsville, NY   $   847   $   622    $  225   $    30     51%       $ 1     February   Land and       Eckerd
Associates                                                                                   2027       a commercial   Stores, Inc.
                                                                                                        building (1)

Alma            Alma, AR           1,929       738     1,191       776     15%       $12     March      Land and       Wal-Mart
Associates (3)                                                                               2027       a commercial   Stores, Inc.
                                                                                                        building (1)

Ava Associates  Ossipee, NH          812       549       263         -     16%       $ -     February   Land and       Hannaford
Associates (3)                                                                               2027       a commercial   Bros. Co.
                                                                                                        building (1)

Brent           Brent, AL          1,440       532       908       587     15%       $ 9     February   Land and       Wal-Mart
Associates (3)                                                                               2027       a commercial   Stores, Inc.
                                                                                                        building (1)

Champlain       Champlain, NY      1,370       734       636         -     21%       $ -     January    Land and       Ames Dept.
Associates                                                                                   2020       a commercial   Stores, Inc.
                                                                                                        building (1)

Checotah        Checotah, OK       1,514       612       902       596     15%       $ 9     February   Land and       Wal-Mart
Associates (3)                                                                               2027       a commercial   Stores, Inc.
                                                                                                        building (1)

Fairbury        Fairbury, NE       1,750       731     1,019       685     15%       $10     August     Land and       Wal-Mart
Associates (3)                                                                               2027       a commercial   Stores, Inc.
                                                                                                        building (1)

Fort Edward     Fort Edward, NY    1,436        73     1,363         -     12%       $14     May        Land and a     Grand Union
Associates                                                                                   2029       supermarket    Stores, Inc.

FYS             Yakima, WA           393        85       308         -     10%       $ 1     August     Land and a     Kroger Co.
Associates                                                                                   2021       supermarket

Hoosick Falls   Hoosick Falls, NY  1,363       657       706         -     15%       $10     August     Land and a     Grand Union
Associates                                                                                    2021      supermarket    Stores, Inc.
</TABLE>


<PAGE>



                         DVL, INC. -- TABLE 1: CONTINUED
            LONG TERM MORTGAGES DUE FROM AFFILIATED PARTNERSHIPS (5)

                        DECEMBER 31, 2000 (In Thousands)

<TABLE>
<CAPTION>
                                                       Net      Under-
                 Location of                           Mtg.     Lying                                 Security
Affiliated        Property       Mortgage  Unearned   Loan      Loan            Monthly               [Mortgage(s)
Partnership     Securing Loan    Balance   Interest  Receiv.   Balance   Yield  Amort.    Maturity     Upon]        Tenant(s)
------------------------------------------------------------------------------------------------------------------------------------
<S>             <C>              <C>       <C>       <C>       <C>        <C>     <C>      <C>        <C>            <C>
Jena            Jena, LA         $ 2,625   $ 1,905   $   720   $   658    35%     $ 1      February   Land and       Wal-Mart
Associates                                                                                 2027       a commercial   Stores, Inc.
                                                                                                      building (1)

Kinder          Kinder, LA            20         -        20         -    N/A      N/A       N/A      Land and       Wal-Mart
Associates (6)                                                                                        a commercial   Stores, Inc.
                                                                                                      building (1)

Orange Park     Jacksonville, FL   1,426       567       859       827    12%     $9 with  January    Land and       Toys "R" Us,
Associates                                                                        a final  2020       a commercial   Inc.
                                                                                  pmt. of             building (1)
                                                                                  $672

Port Isabel     Port Isabel, TX    2,106       773     1,333       844    15%     $12      February   Land and       Wal-Mart
Associates (3)                                                                             2027       a commercial   Stores, Inc.
                                                                                                      building (1)

Stigler         Stigler, OK        2,577     1,895       682       579    28%     $ 2      August     Land and       Wal-Mart
Associates                                                                                 2027       a commercial   Stores, Inc.
                                                                                                      building (1)

St.  Albans     St.  Albans, VT    1,930       829     1,101       828    30%     $15      May        Land and a     Fonda Group
Associates                                                                                 2029       commercial
                                                                                                      building (1)

Tilton          Tilton, NH         1,287       775       512         -    N/A     $13      September  Land and a     Various
Associates (2)                                                                             2020       shopping       unaffiliated
                                                                                                      center         companies

Watseka         Watseka, IL        1,101       263       838       704    12%     Varying  December   Land and a     K Mart
Associates                                                                                 2015       commercial     Corporation (4)
                                                                                                      building (1)
                                 -------   -------   -------   -------
                                 $25,926   $12,340   $13,586   $ 7,114
</TABLE>

--------------

(1)  These loans are wrap-around loans.

(2)  In early 2001, the property that secures this loan was sold at a
     foreclosure auction. DVL is awaiting finalization of this sale and
     anticipates receiving proceeds on its mortgage loan.

(3)  These loans were restructured as part of the Limited Partner Settlement.
     The settlement may have the effect of reducing DVL's yield in the future,
     which reduced yield is dependent on the actual additional debt service
     received on these mortgages in the future.

(4)  Building is currently vacant, however, tenant is obligated under the terms
     of the lease to continue to pay rent.

(5)  DVL's net investment in these mortgages was $6,472,000 and $4,659,000 at
     December 31, 2000 and 1999, respectively. The increase resulted from the
     purchase of eight new mortgage loans in 2000 partially offset by
     collections on certain mortgages.

(6)  This loan was purchased and the property was sold during 2000. Amount shown
     reflects amounts due at December 31, 2000 that was satisfied in 2001.

<PAGE>


                              DVL, INC. -- TABLE 2
              LONG TERM MORTGAGES DUE FROM AFFILIATED PARTNERSHIPS

                        DECEMBER 31, 2000 (In Thousands)

<TABLE>
<CAPTION>
                                                   Partner-  Under-   Net Amt.  Net
                            Location               ship      lying    of Col-   Mtg.
                            of Property            Mortgage  Loan     lateral   Loans
Affiliated Partnership      Securing Loan          Balance   Balance  Pledged   Recvable   Maturity        Tenant
-----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                    <C>       <C>      <C>       <C>        <C>              <C>
Aledo Associates LP         Aledo, IL (2)(5)       $ 1,929   $ 1,019  $   910   $ 1,262    November 2018    Wal-Mart Stores, Inc.
Caldwell Associates         Caldwell, TX (2)         1,695       895      800     1,160    May 2019         Wal-Mart Stores, Inc.
Cherokee Associates         Woodstock, GA (2)        2,997     2,836      161     2,850    July 2023        Wal-Mart Stores, Inc.
Clinton Associates          Clinton, IL (2)(5)       3,395       838    2,557     1,932    June 2029        Wal-Mart Stores, Inc.
Columbus Associates         Columbus, TX (2)(5)      3,875       968    2,907     1,889    December 2029    Wal-Mart Stores, Inc.
Covington Associates        Covington, GA (2)(5)     4,705     1,346    3,359     1,960    January 2030     Wal-Mart Stores, Inc.(4)
Douglas Associates          Douglas, GA (2)(5)       2,208       997    1,211     2,179    December 2023    Wal-Mart Stores, Inc.
                                                                                                             operating as - Buds

Douglasville Associates     Douglasville, GA (2)(5)  5,809     1,463    4,346     3,308    June 2031        Wal-Mart Stores, Inc.
Elmira Associates           Elmira, NY (2)             724         -      724       285    November 2021    Fays Drug Company, Inc.
Iowa Park Associates LP     Iowa Park, TX (2)        1,770       740    1,030     1,021    March 2021       Wal-Mart Stores, Inc.
Lawrenceburg Associates     Lawrenceburg, KY (2)     2,986       798    2,188     1,102    December 2029    Wal-Mart Stores, Inc.
Marlow Associates           Marlow, OK (2)(5)        2,551       638    1,913       853    December 2029    Wal-Mart Stores, Inc.
Marshall Associates LP      Marshall, IL (2)(5)      1,645       912      733     1,123    November 2018    Wal-Mart Stores, Inc.
Mt. Pleasant Associates LP  Mt. Pleasant, IA (2)(5)  2,387     1,217    1,170     1,525    November 2019    Wal-Mart Stores, Inc.
Robstown Associates LP      Robstown, TX (2)         1,959       889    1,070       962    October 2020     Wal-Mart Stores, Inc.(4)
Sonya Associates LP         Booneville, MO (2)       1,625       991      634     1,243    June 2018        Wal-Mart Stores, Inc.
Southfield Associates       Southfield, MI (3)       3,483       659    2,824       904    July 2026        Pitney-Bowes, Inc.
Van Buren Associates LP     Clinton, AR (2)          1,383       812      571     1,036    April 2020       Wal-Mart Stores, Inc.
Waynesboro Associates LP    Waynesboro, MS (2)(5)        -         -        -        10    January 2019     Wal-Mart Stores, Inc.(4)
Winder Associates           Winder, GA (2)           1,827       887      940     1,449    March 2021       Wal-Mart Stores, Inc.
                                                   -------   -------  -------   -------

                                                   $48,953   $18,905  $30,048   $28,053
</TABLE>

----------

(1)  These loans were acquired pursuant to the Limited Partner Settlement from
     Kenbee. DVL's loan balance equals it's net investment in the related loan
     due previously from Kenbee, less specific write-downs on certain loans
     based upon the anticipated cash flow to be generated by each loan.

(2)  The loans due from these partnerships are secured by mortgages upon land
     and commercial buildings.

(3)  The loans due from these partnerships are secured by mortgages upon land
     and office buildings.

(4)  Building is currently vacant, however, tenant is obligated under the terms
     of the lease to continue to pay rent.

(5)  The property securing this mortgage was sold in 2000. Amount shown reflects
     amounts due at December 31, 2000 that was satisfied in 2001.

(6)  DVL's total loan balances of these mortgages were $28,053,000 and
     $31,803,000 at December 31, 2000 and 1999, respectively. The decrease
     resulted from the satisfaction of certain mortgage indebtedness (eg.
     Clanton and Waynesboro) and collections on certain mortgages.