UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)

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

For the fiscal year ended February 28, 1998
                                       OR

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

                         Commission File Number 0-12634

           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
           ----------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        Massachusetts                                          13-3161322
        -------------                                          ----------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

625 Madison Avenue, New York, New York                            10022
--------------------------------------                            -----
    (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code (212) 421-5333

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

        None

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

        Initial Limited Partnership Interests
        -------------------------------------
        Title of Class

        Additional Limited Partnership Interests
        ----------------------------------------
        Title of Class

        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 (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Park III
of this Form 10-K or any amendment to this Form 10-K. [X]
               DOCUMENTS INCORPORATED BY REFERENCE
  None
Page 1 of 187

<PAGE>

                                     PART I

Item 1.  Business.

General

Cambridge + Related Housing Properties Limited Partnership (the "Partnership")
is a limited partnership which was formed under the laws of the Commonwealth of
Massachusetts on April 28, 1983. The general partners of the Partnership are
Government Assisted Properties, Inc. (the "Assisted General Partner") and
Related Housing Programs Corporation (the "Related General Partner"), both of
which are Delaware corporations affiliated with an affiliate of The Related
Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Housing Associates Limited Partnership ("Cambridge Related
Associates"), a Massachusetts limited partnership, (together the "General
Partners"). The general partners of Cambridge Related Associates are the
Assisted General Partner and the Related General Partner. The General Partners
manage and control the affairs of the Partnership. See Item 10, Directors and
Executive Officers of the Registrant, below.

On August 4, 1983, the Partnership commenced a public offering (the "Offering"),
pursuant to a prospectus dated August 4, 1983, as supplemented by the
supplements thereto dated February 1, 1984, October 13, 1983 and September 26,
1983 (the "Prospectus"). Pursuant to the Offering, the Partnership issued 5,019
Initial Limited Partnership Interests in 1984 and 5,019 Additional Limited
Partnership Interests in 1985, resulting in $50,190,000 in Gross Proceeds and
$36,638,700 of net proceeds available for investment and reserves. The Offering
was completed on May 4, 1984 and no further issuance of Initial Limited
Partnership Interests and Additional Limited Partnership Interests is
anticipated.

Investment Objectives/Government Incentives

The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships"), each of which owns and operates an existing residential housing
development (an "Apartment Complex") which is receiving some form of local,
state or federal assistance, such as mortgage insurance, rental assistance
payments, permanent mortgage financing and/or interest reduction payments
("Government Assistance"). The Partnership's investment objectives are to:

(1) provide current tax benefits in the form of passive losses which holders of
Limited Partnership Interests may use to offset passive income from other
sources;

(2) provide long-term capital appreciation through an increase in the value of
the Partnership's investments in Local Partnerships;

(3) provide cash distributions from sale or refinancing transactions; and

(4) preserve and protect the Partnership's capital.

Federal, state and local government agencies have provided significant
incentives in order to stimulate private investment in government assisted
housing. The intent of these incentives is to reduce certain market risks and
permit investors to receive (i) tax benefits, (ii) limited cash distributions
and (iii) long-term capital appreciation. Notwithstanding these factors, there
remain significant risks. These risks include, and are not limited to, the
financial strength and expertise of the local general partners. The long-term
nature of the investments in government-subsidized housing and the continuance
of government incentives limits the ability of the Partnership to vary its
investment portfolio in response to changing economic, financial

                                       2
<PAGE>

and investment conditions; such investments are also subject to changes in local
economic circumstances and housing patterns which have an impact on real estate
values. These Apartment Complexes also require greater management expertise and
may have higher operating expenses than conventional apartment buildings. See
Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operations, below.

Investments

The interests in the Local Partnerships in which the Partnership invested
("Local Partnership Interests") were acquired from unaffiliated sellers. The
Partnership became the principal limited partner in these Local Partnerships
pursuant to local limited partnership agreements. The Partnership has acquired a
98.99% interest in each of the Local Partnerships. As a limited partner, the
Partnership's liability for obligations of the Local Partnerships is limited to
its investment. The general partners of the Local Partnerships ("Local General
Partners") retain responsibility for maintaining, operating and managing the
Apartment Complexes. Under certain circumstances, the Partnership has the right
to replace the Local General Partner of the Local Partnership.

The Partnership purchased the Local Partnership Interests for a purchase price
consisting in each case of a cash down payment, a deferred cash payment due in
April of the following year and a Purchase Money Note, secured in each case by
the Local Partnership Interest for which it was given in payment. The cash
payments were made in part as the purchase price of the Local Partnership
Interests and in part as capital contributions to the Local Partnerships. Such
contributions were generally used by the Local Partnership to pay partnership
management fees to the Local General Partners and fees to the Local General
Partners for guaranteeing the funding of operating deficits (generally for a
period of three to five years and subject to a maximum amount).

Purchase Money Notes

Nonrecourse Purchase Money Notes in the original amount of $61,029,115 were
issued to the selling partners of the subsidiary partnerships as part of the
purchase price and are secured only by the Partnership's interest in the
subsidiary partnership to which the note relates.

The Purchase Money Notes, which provide for simple interest at the rate of 9%
per annum through maturity, which will occur during the period July 1998 to
December 1999, will not be in default during the basic term (generally fifteen
years) if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding subsidiary partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. Any interest not paid currently accrues, without further
interest thereon, through the due date of the note. All accrued and unpaid
interest must be paid on the due date of the note, unless the Partnership
exercises an extension right. Continued accrual of such interest without payment
would impact the effective rate of the notes, specifically by reducing the
current effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and ultimate
repayment dates of the notes. Unpaid interest of $54,826,676 and $63,426,985 at
February 28, 1998 and 1997, respectively, has been accrued and is included in
the caption due to selling partners. In general, the interest on and the
principal of each Purchase Money Note is also payable to the extent of the
Partnership's actual receipt of proceeds from the sale or refinancing of the
Apartment Complex, or in some cases the Local Partnership Interest to which the
Purchase Money Note relates.

The Partnership may elect, upon the payment of an extension fee of 1 1/2% per
annum of the outstanding principal amount, to extend the term of the Purchase
Money Note for up to five additional years. The Partnership may also defer
payment of any accrued and unpaid interest

                                       3
<PAGE>

until the due date of the note. The Partnership expects that upon maturity it
will be required to refinance or sell its investments in the Local Partnerships
in order to pay the Purchase Money Notes and accrued interest thereon. Based on
the historical operating results of the Local Partnerships and the current
economic conditions including changes in tax laws, it is uncertain as to whether
the proceeds from such sales will be sufficient to meet the outstanding
balances. Management is working with the selling partners to restructure and/or
refinance the notes. The Purchase Money Notes are without personal recourse to
either the Partnership or any of its partners and the sellers' recourse, in the
event of non-payment, would be to foreclose on the Partnership's interests in
the respective Local Partnerships.

Government Programs and Regulations

The General Partners will carefully analyze the opportunities available upon the
expiration of the properties' U.S. Department of Housing and Urban Development
("HUD") contracts, as well as the tax consequences of each option to investors.
Prior to expiration of the properties' HUD contracts, and based on the
historical operating results and current economic conditions including changes
in tax laws, it is uncertain as to whether there would be a return to the
investors upon the sale of the applicable properties in the Partnership's
portfolio.

The Local Partnerships which receive government assistance are subject to
low-income use restrictions which limited the owners' ability to sell or
refinance the properties. In order to maintain the existing inventory of
affordable housing, Congress passed a series of related acts including the
Emergency Low Income Preservation Act of 1987, the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (together the "Preservation
Acts") and the Housing Opportunity Program Extension Act of 1996 (the "1996
Act"). In exchange for maintaining the aforementioned use restrictions, the
Preservation Acts provide financial incentives for owners of government assisted
properties. The 1996 Act provides financial assistance by funding the sale of
such properties to not-for-profit owners and also restores the owners ability to
prepay their HUD mortgage and convert the property to condominiums or
market-rate rental housing. Local general partners have filed for incentives
under the Preservation Acts or the 1996 Act for the following local
partnerships: San Diego - Logan Square Gardens Company, Albuquerque - Lafayette
Square Apts. Ltd., Westgate Associates Limited, Riverside Gardens, a Limited
Partnership, Pacific Palms, a Limited Partnership, Canton Commons Associates,
Rosewood Manor Associates, Bethany Glen Associates and South Munjoy Associates,
Ltd. The South Munjoy Associates, Ltd. property and the Riverside Gardens
limited partnership were sold on September 9, 1997 and April 27, 1998,
respectively. The local general partners of the other properties are either
negotiating purchase and sale contracts or exploring their alternatives under
the 1996 Act.

Funding for the 1996 Act is subject to appropriations by Congress. Congress
funded $624 million in fiscal year 1996 for the preservation of housing.
Congress had funded approximately $325 million for preservation for 1997 fiscal
year. Congress did not allocate any funds for preservation for the 1998 fiscal
year, effectively ending the preservation effort for the time being. Management
is working with the local general partners in an effort to find alternative exit
strategies.

HUD previously released the American Community Partnerships Act (the "ACPA").
The ACPA is HUD's blueprint for providing for the nation's housing needs in an
era of static or decreasing budget authority. Two key proposals in the ACPA that
could affect the Local Partnerships are: a discontinuation of project-based
Section 8 subsidy payments, and an attendant reduction in debt on properties
that were supported by the Section 8 payments. The ACPA calls for a transition
during which the project-based Section 8 payments would be converted to a
tenant-based voucher system. Any FHA insured debt would then be
"marked-to-market" that is revalued in light of the reduced income stream.

                                       4
<PAGE>

Several industry sources have commented to HUD and Congress that in the event
the ACPA was fully enacted in its present form, the reduction in mortgage
indebtedness would be considered taxable income to owners such as the limited
partners in the Partnership. The regulations governing the "marked to market"
transition has yet to be released; in the interim, HUD has agreed to short term
extensions of any expiring project-based Section 8 contracts, but there is no
guarantee that such extensions will be available in the future.

In September 1997, Congress enacted the Multi-family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRAA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals instead of the above-market rentals which is generally the case
under existing Section 8 Contracts. As a result, Section 8 Contracts that are
renewed in the future in projects insured by the Federal Housing Administration
("FHA") may not provide sufficient cash flow to permit owners of properties to
meet the debt service requirements of these existing FHA-insured mortgages.
MAHRAA also provides for the restructuring of these mortgage loans so that the
annual debt service on the restructured loan (or loans) can be supported by
Section 8 rents established at the market rents. The restructured loans will be
held by the current lender or another lender. There can be no assurance that a
property owner will be permitted to restructure its mortgage indebtedness
pursuant to the new rules implementing MAHRAA or that an owner would choose to
restructure the mortgage if it were able to participate. MAHRAA is supposed to
go into effect on October 28, 1988; regulations implementing the program must be
issued prior to that time. It should be noted that there are many uncertainties
as to the economic and tax impact on a property owner because of the combination
of the reduced Section 8 contract rents and the restructuring of the existing
FHA-insured mortgage loan under MAHRAA.

Sales of Underlying Properties/Local Partnership Interests

On June 3, 1996, the property and the related assets and liabilities of Roper
Mountain Apartments Ltd. ("Roper Mountain") were sold to a third party for
$4,735,000, resulting in a gain in the amount of $1,871,046. The Partnership
used $1,320,500 of the net proceeds to settle the associated Purchase Money Note
and accrued interest thereon which had a total outstanding balance of
$2,304,994, resulting in forgiveness of indebtedness income of $984,494.

Rolling Meadows of Chickasha ("Chickasha"), a subsidiary partnership, had
previously filed a petition under Chapter 11 of the Bankruptcy Code ("Chapter
11") which had been dismissed. HUD notified Chickasha that it intended to
commence foreclosure proceedings. Chickasha was in default and under HUD control
as a mortgagee in possession. On August 15, 1996, the Partnership's limited
partnership interest in Chickasha was sold to a third party for $75,000,
resulting in a gain in the amount of $472,720 and forgiveness of indebtedness
income of $1,768,800 as a result of forgiveness of the mortgage note payable to
HUD and accrued interest thereon. No proceeds were used to settle the associated
purchase money note and accrued interest which had a total outstanding balance
of $1,723,095. Therefore the entire forgiveness of indebtedness income realized
by the Partnership from this transaction is $3,491,895.

On September 17, 1996, the property and the related assets and liabilities of
Oakland-Keller Plaza ("Keller Plaza") were sold to a third party for $8,800,000
resulting in a gain in the amount of $4,937,099. The Partnership used $3,472,792
of the net proceeds to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of $4,065,887 resulting in
forgiveness of indebtedness income of $593,095. In 1997, additional proceeds
were received and paid to the Purchase Money Note Holder resulting in a decrease
in the forgiveness of indebtedness income of $65,567.

                                       5
<PAGE>

On April 25, 1997, the Partnership's Local Partnership Interest in Los
Caballeros Apartments ("Los Caballeros") was sold to the general partners of Los
Caballeros for $100,000, resulting in a gain in the amount of $501,309. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon which had a total outstanding balance of $3,187,950, resulting
in forgiveness of indebtedness income.

On March 14, 1996, South Munjoy Associates, Limited ("South Munjoy") entered
into a purchase and sale of real estate agreement with Mainland Development
Company of Portland, Maine ("Mainland Development") to sell the project, subject
to HUD approval and other contingencies. On September 9, 1997, the property and
the related assets and liabilities of South Munjoy were sold to Montfort Housing
Limited Partnership (which is an affiliate of Mainland Development) for
$3,000,000, resulting in a loss in the amount of $225,247. The Partnership used
$1,312,741 of the net proceeds to settle the associated Purchase Money Note and
accrued interest thereon which had a total outstanding balance of $3,246,553,
resulting in forgiveness of indebtedness income of $1,933,812.

On December 12, 1997, the Partnership limited partnership interest in Grosvenor
South Apartments Limited Partnership and Grosvenor South Apartments #2 Limited
Partnership (together, the "Grosvenors") were sold to the general partners of
the Grosvenors for $1,114,300, resulting in a loss in the amount of $1,409,038.
No proceeds were used to settle the associated Purchase Money Notes and accrued
interest which had a total outstanding balance of $5,058,313, resulting in
forgiveness of indebtedness income.

On December 12, 1997, the Partnership's limited partnership interest in Clinton
Plaza Apartments Limited Partnership and Clinton Plaza Apartments #2 Limited
Partnership (together the "Clintons") were sold to the general partners of the
Clintons for $1,673,400, resulting in a loss in the amount of $2,768,841. No
proceeds were used to settle the associated Purchase Money Notes and accrued
interest which had a total outstanding balance of $9,689,980, resulting in
forgiveness of indebtedness income.

On January 16, 1998, the property and related assets and liabilities of Country
Ltd. ("Country") and Northbrook III, Ltd. ("Northbrook") were sold to a third
party for approximately $3,247,000 and $1,998,000, respectively, resulting in
gains of approximately $868,000 and $577,000, respectively. The Partnership used
approximately $860,000 and $90,000, respectively, of the net proceeds to settle
the associated Purchase Money Note and accrued interest thereon which had total
outstanding balances of $2,517,000 and $77,000, respectively, resulting in
forgiveness of indebtedness income (loss) of $1,656,000 and $(13,000),
respectively.

On April 21, 1998, the Partnership's limited partnership interest in Oklahoma
City - Town and Country Village Apartments, Ltd. ("Town and Country") was
assigned to the local general partner and the related purchase money note and
interest thereon were canceled. Town & Country's liabilities in excess of assets
at December 31, 1997 amounted to approximately $4,700,000 and the related
purchase money note and accrued interest thereon amounted to approximately
$7,400,000.

On April 27, 1998, the property and the related assets and liabilities of
Riverside Gardens Limited Partnership ("Riverside") and Cudahy Gardens Limited
Partnership ("Cudahy") were sold to a third party for approximately $1,900,000
and $340,000, respectively, plus the assumption of the related mortgage notes.
The Partnership used approximately $442,000 and $47,000, respectively, of the
net proceeds to settle the associated Purchase Money Note and accrued interest
thereon which had total outstanding balances of $5,393,000 and $2,700,000,
respectively, resulting in forgiveness of indebtedness increase of $4,956,000
and $2,623,000, respectively.

                                       6
<PAGE>

On May 19, 1998, the Pacific Palm Limited Partnership entered into a letter of
intent to sell the property to an unaffiliated third party for a price of
$4,500,000. The letter of intent is conditioned upon several factors;
accordingly, no assurances can be given that the sale will actually occur.

The general partners of one subsidiary partnership, Westgate Associates, Limited
("Westgate"), have signed an option agreement to sell the project to the Vermont
Housing Finance Agency, subject to HUD approval and other contingencies, on or
before December 31, 1998. The Partnership's investment in Westgate was
approximately $814,000 at February 28, 1998. Westgate's assets constituted
approximately 3% of the consolidated total assets at February 28, 1998.

Operating Funds

The expenditures required for operating the business of the Partnership are met
out of the cash flow distributions from Local Partnerships. Accordingly, the
Partnership believes that it will not be necessary to raise additional funds to
meet the expenditures of operating its business. However, during the course of
operations of the various Local Partnerships it may become necessary, from time
to time, to use either their own or the Partnership's assets as security for
loans to provide additional working capital.

Tax Matters
The Tax Reform Act of 1986 (the "TRA") provides as of 1991 that the passive
losses generated by the Partnership can only be used to shelter passive income
or, in the alternative, may be carried forward to offset a gain upon the sale of
properties.

Competition
The real estate business is highly competitive and each of the Local
Partnerships in which the Partnership has invested owns an Apartment Complex
which must compete for tenants in the marketplace. However, the rental
assistance and preferred interest rates on mortgage financing generally make it
possible to offer the apartments to eligible tenants at a cost to the tenant
significantly below the market rate for comparable conventionally financed
apartments in the area.

Employees
The Partnership does not have any direct employees. All services are performed
for the Partnership by its General Partner and their affiliates. The General
Partners receive compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partners
and certain of their affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnership's Amended and Restated Agreement and Certificate of Limited
Partnership (the "Partnership Agreement").

Item 2.  Properties.

As of February 28, 1998, the Partnership holds a 98.99% limited partnership
interest in each of thirty-three Local Partnerships, which own thirty-four
residential Apartment Complexes receiving Government Assistance. During the
fiscal year ended February 28, 1998, the properties and the related assets and
liabilities owned by three subsidiary partnerships were sold to third parties
and the Partnership's Local Partnership Interest in five other Local
Partnership's were sold to a third party and the Local Partnership's general
partners, respectively. Through the fiscal year ended February 28, 1998, the
properties and the related assets and liabilities owned by five subsidiary
partnerships were sold to third parties and the Partnership's Local Partnership
Interest in six other Local Partnership's were sold to a third party and the
Local Partnership's general partners, respectively. Subsequently in April, 1998,
the property and the related

                                       7
<PAGE>

assets and liabilities of two subsidiary partnerships were sold to third parties
and the Partnership's local partnership interest in one limited partnership was
sold to a third party (see Item 7. below). Set forth below is a schedule of
these Local Partnerships, including certain information concerning the Apartment
Complexes (the "Local Partnership Schedule"). See Schedule III to the financial
statements included herein for additional information pertaining to the
Apartment Complexes.

                                   Local Partnership Schedule
<TABLE>
<CAPTION>

                                               Government
                                               Assistance            Percentage of Units  
                                    Year      ------------         Occupied at December 31,
Name and Location of Property       Com-          HUD        -----------------------------------
(Number of Units) (b)               pleted    Programs (a)   1997    1996   1995    1994    1993
---------------------               ------    ------------   ----    ----   ----    ----    ----
<S>                                   <C>      <C>    <C>      <C>    <C>     <C>     <C>     <C>
Caddo Parish-Villas South, Ltd.       1972   ss.221(d)(4)      86%    86%     86%     95%     94%
  Shreveport, Louisiana (172)

Oklahoma City-Town and                1973   ss.207            67%    57%     81%     82%     82%
  Country Village
  Apartments, Ltd.
  Oklahoma City, Oklahoma (201)(j)

Rolling Meadows of
  Chickasha, Ltd.                     1972   ss.236           (f)    (f)      72%     72%     72%
  Chickasha, Oklahoma (112)

New Jersey, Ltd.                      1977   ss.221(d)(4)      98%    93%     95%     97%     97%
  Mobile, Alabama (112)

Zeigler Boulevard, Ltd.               1981   ss.221(d)(4)      99%    88%     92%     90%     97%
  Mobile, Alabama (112)

Eastwyck III, Ltd.                    1979   ss.221(d)(4)      96%    98%     94%     99%    100%
  Mobile, Alabama (48)

Breckenridge-Chaparral
  Apartments II, Ltd.                 1973   ss.236            98%    98%     99%     99%     98%
  Breckenridge, Texas (88)

Country, Ltd.                         1978   ss.221(d)(4)      94%    92%     90%     92%     95%
  Ridgeland, Mississippi (112)(c)(g)

Westwood Apartments
  Company, Ltd.                       1978   ss.221(d)(4)      68%    86%     83%     90%     91%
  Montgomery, Alabama (176)

Parktowne, Ltd.                       1978   ss.221(d)(4)      97%    89%     98%     95%     94%
  Montgomery, Alabama (144)

Corpus Christi-Oso Bay
  Apartments, Ltd.                    1973   ss.236           100%    98%     99%    100%    100%
  Corpus Christi, Texas (104)

Northbrook III, Ltd.                  1981   ss.221(d)(4)      85%    94%     92%     92%     97%
</TABLE>

                                       8
<PAGE>


                           Local Partnership Schedule
                                  (continued)

<TABLE>
<CAPTION>
                                               Government
                                               Assistance            Percentage of Units  
                                    Year      ------------         Occupied at December 31,
Name and Location of Property       Com-          HUD        -----------------------------------
(Number of Units) (b)               pleted    Programs (a)   1997    1996   1995    1994    1993
---------------------               ------    ------------   ----    ----   ----    ----    ----
<S>                                   <C>      <C>    <C>      <C>    <C>     <C>     <C>     <C>
  Jackson, Mississippi (68)(c)(g)            ss.8

Bethany Glen Associates               1971   ss.221(d)(3)      97%    99%     95%     98%     95%
  Glendale, Arizona (150)                    ss.8

Albuquerque-Lafayette
  Square Apts., Ltd.                  1973   ss.236            99%    99%    100%    100%     99%
  Albuquerque, New Mexico (188)

Roper Mountain Apartments             1979   ss.221(d)(4)     (e)    (e)      97%     97%     95%
  Greenville, South Carolina (152)

Warren Manor Apartments
  Limited Partnership
  Warren, Michigan
     Warren Manor I (344)             1968   ss.221(d)(4)      97%    94%     95%     97%     96%
     Warren Manor II (136)            1970   ss.221(d)(4)      96%    93%     95%     95%     96%

Golf Manor Apartments                 1970   ss.221(d)(4)      96%    95%     97%     95%     94%
  Limited Partnership
  Roseville, Michigan (128)

Warren Woods Apartments               1971   ss.221(d)(4)      96%    98%     98%     99%     97%
  Limited Partnership
  Warren, Michigan (192)

Canton Commons Apartments             1973   ss.221(d)(4)      96%    98%     99%     99%     99%
  Canton, Michigan (452)                     ss.236
                                             ss.8

Los Caballeros Apartments             1976   ss.236           (h)     88%     93%     97%     97%
  Thornton, Colorado (144) (d)

Rosewood Manor Apartments             1972   ss.236            96%    99%     99%    100%     99%
  Rosewood, Michigan (207)                   ss.8

Grosvenor South Apartments            1969   ss.221(d)(3)     (h)     98%     96%     94%     95%
  Limited Partnership
  Taylor, Michigan (182)

Grosvenor South Apartments            1969   ss.221(d)(4)     (h)     98%     90%     83%     84%
  #2 Limited Partnership
  Taylor, Michigan (54)
</TABLE>

                                       9
<PAGE>


                           Local Partnership Schedule
                                  (continued)
<TABLE>
<CAPTION>
                                               Government
                                               Assistance            Percentage of Units  
                                    Year      ------------         Occupied at December 31,
Name and Location of Property       Com-          HUD        -----------------------------------
(Number of Units) (b)               pleted    Programs (a)   1997    1996   1995    1994    1993
---------------------               ------    ------------   ----    ----   ----    ----    ----
<S>                                   <C>      <C>    <C>      <C>    <C>     <C>     <C>     <C>
Clinton Plaza Apartments              1969   ss.221(d)(3)     (h)     99%     96%     92%     99%
  Limited Partnership
  Clinton, Michigan (168)

Clinton Plaza Apartments              1970   ss.221(d)(3)     (h)     99%     95%     93%     97%
  #2 Limited Partnership
  Clinton, Michigan (192)

Oakland-Keller Plaza                  1972   ss.236           (e)    (e)     100%    100%    100%
  Oakland, California (200)                  ss.8

San Diego-Logan Square
  Gardens Company                     1970   ss.236           100%   100%    100%    100%    100%
  San Diego, California (170)                ss.8

Grandview-Blue Ridge Manor, Ltd.      1972   ss.236            74%    91%     94%     98%     95%
  Grandview, Missouri (80)

Ardmore-Rolling Meadows
  of Ardmore, Ltd.                    1974   ss.236            91%    98%     97%     98%    100%
  Ardmore, Oklahoma (101)

El Paso-Gateway East, Ltd.            1972   ss.236           100%   100%     99%    100%    100%
  El Paso, Texas (104)                       ss.8

Fort Worth-Northwood
  Apartments, Ltd.                    1972   ss.236            97%    98%     98%     97%     98%
  Fort Worth, Texas (100)

Stephenville-Tarleton Arms
  Apartments, Ltd.                    1972   ss.236            94%    97%     99%     99%    100%
  Stephenville, Texas (128)                  ss.8

Cudahy Gardens,
  a Limited Partnership               1971   ss.236            98%   100%     98%     99%    100%
  Cudahy, California (100)(i)                ss.8

Pacific Palms,
  a Limited Partnership               1972   ss.236            95%    92%     94%     95%     97%
  Palm Springs, California (139)

Riverside Gardens,
  a Limited Partnership               1971   ss.236            99%    94%     96%     95%     99%
  Riverside, California (192)(i)
</TABLE>
                                       10
<PAGE>


                           Local Partnership Schedule
                                  (continued)
<TABLE>
<CAPTION>
                                               Government
                                               Assistance            Percentage of Units  
                                    Year      ------------         Occupied at December 31,
Name and Location of Property       Com-          HUD        -----------------------------------
(Number of Units) (b)               pleted    Programs (a)   1997    1996   1995    1994    1993
---------------------               ------    ------------   ----    ----   ----    ----    ----
<S>                                   <C>      <C>    <C>      <C>    <C>     <C>     <C>     <C>

Bay Village Company                   1971   ss.236            96%    98%     98%     98%     99%
  Fall River, Massachusetts (206)            ss.8

Buena Vista Manor
  Apartments, Ltd.                    1969   ss.221(d)(3)      96%    98%     93%     94%     97%
  Nashville, Tennessee (200)                 ss.8

Rolling Meadows
  Apartments, Ltd.                    1971   ss.236            99%    99%     95%     95%     96%
  Midwest City, Oklahoma (200)               ss.8

Westgate Associates, Limited          1971   ss.236            98%    98%     97%     94%     95%
  Brattleboro, Vermont (100)                 ss.8

Wingate Associates, Limited           1972   ss.236            98%    98%     99%     97%     99%
  Laconia, New Hampshire (100)               ss.8

South Munjoy
  Associates, Limited                 1966   ss.221(d)(3)     (g)     91%     98%     98%     99%
  Portland, Maine (140)

Cedar Hill Apartments, Ltd.           1973   ss.236            97%    97%    100%    100%    100%
  Monticello, Arkansas (60)

Char-Mur Apartments, Ltd.             1973   ss.236            71%    88%     89%     88%     97%
  Trumann, Arkansas (48)

Crossett Apartments, Ltd.             1973   ss.236           100%   100%    100%    100%     99%
  Crossett, Arkansas (50)
</TABLE>

(a) The Partnership invested in Local Partnerships owning existing Apartment
Complexes which receive either federal or state subsidies. HUD, through FHA,
administers a variety of subsidies for low and moderate-income housing. FHA
administers similar housing programs for non-urban areas. The federal programs
generally provide one or a combination of the following forms of assistance: (i)
mortgage loan insurance, (ii) rental subsidies, (iii) reduction of mortgage
interest payments.

i) HUD provides mortgage insurance for rental housing projects pursuant to a
number of sections of Title II of the National Housing Act ("NHA"), including
Section 236, Section 221(d)(4), Section 221(d)(3) and Section 220. Under all of
these programs, HUD will generally provide insurance equal to 100% of the total
replacement cost of the project to non-profit owners and 90% of the total
replacement cost to limited-distribution owners. Mortgages are provided by
institutions approved by HUD, including banks, savings and loan companies and
local housing authorities. Section 221(d)(4) of NHA provides for federal
insurance of private construction and permanent mortgage loans to finance new
construction of rental apartment complexes containing five or more units. The
most significant difference between the 221(d)(4)

                                       11
<PAGE>

program and the 221(d)(3) program is the maximum amount of the loan which may be
obtained. Under the 221(d)(3) program, non-profit sponsors may obtain a
permanent mortgage equal to 100% of the total replacement cost; no equity
contribution is required of a non-profit sponsor. In all other respects the
221(d)(3) program is substantially similar to the 221(d)(4) program.

ii) Many of the tenants in HUD insured projects receive some form of rental
assistance payments, primarily through the Section 8 Housing Assistance Payments
Program (the "Section 8 Program"). Apartment Complexes not receiving assistance
through the Section 8 Program ("Section 8 Payments") will generally have
limitations on the amounts of rent which may be charged. One requirement imposed
by HUD regulations effective for apartment complexes initially approved for
Section 8 payments on or after November 5, 1979, is to limit the amount of the
owner's annual cash distributions from operations to 10% of the owner's equity
investment in an Apartment Complex if the apartment complex is intended for
occupancy by families, and to 6% of the owner's equity investment in an
Apartment Complex intended for occupancy by elderly persons. The owner's equity
investment in the apartment complex is 10% of the project's replacement cost as
determined by HUD. HUD released the American Community Partnerships Act (the
"ACPA"). The ACPA is HUD's blueprint for providing for the nation's housing
needs in an era of static or decreasing budget authority. Two key proposals in
the ACPA that could affect the Local Partnerships are: a discontinuation of
project-based Section 8 subsidy payments and an attendant reduction in debt on
properties that were supported by the Section 8 payments. The ACPA calls for a
transition during which the project-based Section 8 would be converted to a
tenant-based voucher system. Any FHA insured debt would then be
"marked-to-market", that is revalued in light of the reduced income stream, if
any.

iii) Section 236 Program. As well as providing mortgage insurance, the Section
236 program also provides an interest credit subsidy which reduces the cost of
debt service on a project mortgage, thereby enabling the owner to charge the
tenants lower rents for their apartments. Interest credit subsidy payments are
made monthly by HUD directly to the mortgagee of the Project. Each payment is in
an amount equal to the difference between (i) the monthly interest payment
required by the terms of the mortgage to pay principal, interest and the annual
mortgage insurance premium and (ii) the monthly payment which would have been
required for principal and interest if the mortgage loan bore interest at the
rate of 1%. These payments are credited against the amounts otherwise due from
the owner of the Project, who makes monthly payments of the balance.

(b) State of jurisdiction is the same state as the location unless otherwise
indicated.

(c) State of jurisdiction is Alabama.

(d) State of jurisdiction is Michigan.

(e) The property and the related assets and liabilities were sold during the
fiscal year ended February 28, 1997 (see Note 10 in Item 8. Financial Statements
and Supplemental Data).

(f) The Partnership's Local Partnership Interest in this Local Partnership was
sold during the fiscal year ended February 28, 1997 (see Note 10 in Item 8.
Financial Statements and Supplemental Data).

(g) The property and the related assets and liabilities were sold during the
fiscal year ended February 28, 1998 (see Note 10 in Item 8. Financial Statements
and Supplemental Data).

                                       12
<PAGE>

(h) The partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended February 28, 1998 (see Note 10 in Item 8.
Financial Statements and Supplemental Data).

(i) On April 27, 1998, the property and the related assets liabilities of
Riverside and Cudahy were sold to a third party for approximately $1,900,000 and
$340,000, respectively, plus the assumption of the related mortgage notes (see
Item 7 below).

(j) On April 21, 1998, the partnership's Local Partnership Interests in Town and
Country were assigned to the local general partner and the related purchase
money note and interest thereon were canceled.

All leases are generally for periods not greater than one to two years and no
tenant occupies more than 10% of the rentable square footage.

Commercial tenants (to which average rental per square foot applies) comprise
less than 5% of the rental revenues of the Partnership. Rents for the
residential units are determined annually by HUD and reflect increases in
consumer price indices in various geographic areas.

Management of the Local Partnership continuously reviews the physical state of
the properties and budgets improvements when required which are generally funded
from cash flow from operations or release of replacement reserve escrows. No
improvements are expected to require additional financing.

See Item 1, Business, above for the general competitive conditions to which the
properties described above are subject.

Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated 1% of the aggregate cost of the properties as shown in Schedule III
to the financial statements included herein.

Item 3.  Legal Proceedings.

The Partnership is a Plaintiff in the Oklahoma County District Court in Oklahoma
against Jerry L. Womack and Womack Property Management, Inc., an Oklahoma
corporation. In this action entitled Shearson + Related Housing Properties
Limited Partnership and Shearson/Related Housing Associates Limited Partnership
v. Jerry L. Womack and Womack Property Management, Inc., the Partnership seeks
judgment for damages caused by the individual defendant's resignation as general
partner of Rolling Meadows of Chickasha, Ltd. (Rolling Meadows), of which the
Partnership is a limited partner, and by the corporate defendant's mismanagement
of the apartment project owned by Rolling Meadows. The individual defendant has
counterclaimed against the Plaintiffs, alleging that they breached an agreement
to advance funds to Rolling Meadows sufficient to pay operating losses on the
property, thereby damaging such defendant in an amount exceeding $10,000. The
corporate defendant has counterclaimed against the Plaintiffs for unpaid
management fees and expenses approximating $6,000. Both counterclaims seek costs
and attorneys' fees.

Discovery is continuing in the action. The Plaintiffs are responding vigorously
to the counterclaims and intend to continue doing so. While it is impossible to
predict with certainty, counsel believes the counterclaims have no substantial
merit and that an outcome unfavorable to the Partnership is unlikely.

                                       13
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fiscal year
covered by this report through the solicitation of proxies or otherwise.

                                     PART II

Item 5. Market for the Registrant's Limited Partnership Interests and Related
        Security Holder Matters.

At February 28, 1998, the Partnership had issued and outstanding 10,038 Limited
Partnership Interests, of which 5,019 are Initial Limited Partnership Interests
and 5,019 are Additional Limited Partnership Interests, each representing a
$5,000 capital contribution per unit to the Partnership, for aggregate Gross
Proceeds of $50,190,000. Additional Limited Partnership Interests are the
Limited Partnership Interests acquired upon the exercise of Warrants or sold by
the Partnership upon the non-exercise of the Warrants. The Warrants are rights
granted pursuant to the Partnership Agreement as part of the purchase of an
Initial Limited Partner Interest. No further issuance of Initial Limited
Partnership Interests or Additional Limited Partnership Interests is anticipated
and all Warrants have expired. As of February 28, 1998, the Partnership had
4,304 registered holders of Limited Partnership Interests.

Limited Partnership Interests are not traded in any organized market. It is not
anticipated that any public market will develop for the purchase and sale of any
Limited Partnership Interests. Limited Partnership Interests may be transferred
only if certain requirements are satisfied, including that in the opinion of
counsel to the Partnership such transfer would not cause a termination of the
Partnership under Section 708 of the Internal Revenue Code and would not violate
any federal or state securities laws.

In March 1998 and 1997, distributions of approximately $2,011,000 and $1,100,000
and $20,000 and $11,000 were paid to the limited partners and General Partners,
respectively, from net proceeds from the sale of properties (see Item 7. below).
Of the total distributions of approximately $2,031,000 and $1,111,000 for the
years ended February 28, 1998 and 1997, $0 and $1,111,000 ($110.68 per unit or
100%) represents a return of capital determined in accordance with generally
accepted accounting principles. With the exception of these distributions, the
Partnership has made no distributions to its Limited Partners from its inception
on April 28, 1983 through February 28, 1997. There are no material restrictions
upon the Partnership's present or future ability to make distributions in
accordance with the provisions of the Partnership's Amended and Restated
Agreement and Certificate of Limited Partnership (the "Partnership Agreement").
However, the Partnership has invested in Local Partnerships owning Apartment
Complexes which receive Government Assistance under programs which in many
instances restrict the cash return available to owners. See Item 8, Note 11(i).
The Partnership does not anticipate providing cash distributions to its Limited
Partners in circumstances other than refinancing or sale.

There has recently been an increasing number of requests for the list of holders
of Limited Partnership Interests in limited partnerships such as the
Partnership. Often these requests are made by a person who, only a short time
before making the request, acquired merely a small number of Limited Partnership
Interests in the Partnership and seeks the list for an improper purpose, a
purpose that is not in the best interest of the Partnership or is harmful to the
Partnership. In order to best serve and protect the interests of the Partnership
and all of its investors, the General Partners of the Partnership have adopted a
policy with respect to requests for the Partnership's list of holders of Limited
Partnership Interests. This policy is intended to protect investors from
unsolicited and coercive offers to acquire the interests of holders of

                                       14
<PAGE>

Limited Partnership Interests and does not limit any other rights the General
Partners may have under the Partnership Agreement or applicable law.

                                       15
<PAGE>

Item 6.  Selected Financial Data.

The information set forth below presents selected financial data of the
Partnership. Additional financial information is set forth in the audited
financial statements in Item 8 hereof.

<TABLE>
<CAPTION>

                                                         Year ended
                           -----------------------------------------------------------------------
                           February 28,   February 28,   February 29,   February 28,   February 28
OPERATIONS                     1998           1997           1996          1995           1994
----------                 ------------   ------------   ------------  ------------   ------------
<S>                        <C>            <C>            <C>           <C>            <C>         
Revenues                   $ 24,780,246   $ 37,586,529   $ 30,593,556  $ 29,701,842   $ 29,030,972
Operating expenses           36,942,698     44,453,062     38,678,297    38,217,539     37,934,050
                           ------------   ------------   ------------  ------------   ------------
Loss before minority        (12,162,452)    (6,866,533)    (8,084,741)   (8,515,697)    (8,903,078)
  interest and 
  extraordinary item
Minority interest in           (102,344)       (18,466)         1,752           481          2,771
  (income) loss of         ------------   ------------   ------------  ------------   ------------
  subsidiaries             
Loss before                 (12,264,796)    (6,884,999)    (8,082,989)   (8,515,216)    (8,900,307)
  extraordinary item
Extraordinary                21,447,564      5,069,484              0             0              0
  item-forgiveness of      ------------   ------------   ------------  ------------   ------------
  indebtedness
Net income (loss)          $  9,182,768   $ (1,815,515)  $ (8,082,989) $ (8,515,216)  $ (8,900,307)
                           ============   ============   ============  ============   ============
Loss before                $     (1,209)  $       (679)  $       (797) $       (840)  $       (878)
  extraordinary item 
  per limited
  partnership unit
Extraordinary item per            2,115            500              0             0              0
  limited partnership      ------------   ------------   ------------  ------------   ------------
  unit                     
Net gain (loss) per        $        906   $       (179)  $       (797)  $      (840)   $      (878)
  limited partnership      ============   ============   ============  ============   ============
  unit
                                                        Year ended
                           -----------------------------------------------------------------------
                           February 28,   February 28,   February 29,  February 28,   February 28,
FINANCIAL POSITION             1998           1997           1996          1995           1994
------------------         ------------   ------------   ------------  ------------   ------------
Total assets               $900,771,154   $110,362,021   $126,569,652  $131,246,707   $136,066,706
                           ============   ============   ============  ============   ============

Long-term obligations      $156,769,256   $184,080,536   $195,424,384  $192,369,107   $188,963,924
                           ============   ============   ============  ============   ============

Total liabilities          $166,092,977   $193,616,657   $206,901,246  $203,484,636   $199,784,883
                           ============   ============   ============  ============   ============

Minority interest          $    167,391   $     80,374   $     76,347  $     87,023   $     91,559
                           ============   ============   ============  ============   ============
</TABLE>

During the years ended February 28, 1994 through February 29, 1996, total assets
decreased primarily due to depreciation, partially offset by net additions to
property and equipment. During the same periods, long-term obligations and total
liabilities increased primarily due to accruals of interest on Purchase Money
Notes, partially offset by payments equal to 60% of the cash flow distributions
from the underlying properties. During the years ended February 28, 1997 and
1998, total assets decreased primarily due to the sale of properties (see Item
8., Note 10), depreciation and a loss for the impairment of assets, partially
offset by an increase in cash and cash equivalents resulting from net proceeds
from the sales and net additions to property and equipment. Long-term
obligations and total liabilities decreased for the years ended February 28,
1997 and 1998 primarily due to the repayment of and forgiveness of indebtedness
on Purchase Money Notes, mortgage notes payable and amounts due to selling
partners as a result of the sale of underlying properties, partially offset by
accruals of interest on Purchase Money Notes.

                                       16
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

Liquidity and Capital Resources

General

The Partnership's sources of funds are (i) cash distributions from operations of
the Local Partnerships in which the Partnership has invested, (ii) interest
earned on funds, and (iii) cash in working capital reserves. All these sources
of funds are available to meet the obligations of the Partnership.

The Partnership's capital has been invested primarily in forty-four Local
Partnerships. As of December 1984, the Partnership had completed its cash
investment of approximately $36,638,000 (including expenses) in the Local
Partnerships. During the fiscal year ended February 28, 1998, the properties and
the related assets and liabilities owned by three subsidiary partnerships were
sold to third parties and the Partnership's Local Partnership Interest in five
other Local Partnership's were sold to a third party and the Local Partnership's
general partners, respectively. Through the fiscal year ended February 28, 1998,
the properties and the related assets and liabilities owned by five subsidiary
partnerships were sold to third parties and the Partnership's Local Partnership
Interest in six other Local Partnership's were sold to a third party and the
Local Partnership's general partners, respectively. Subsequently in April, 1998,
the property and the related assets and liabilities of two subsidiary
partnerships were sold to third parties and the Partnership's local partnership
interest in one limited partnership was sold to a third party.

The Partnership had a working capital reserve of approximately $2,339,000 (which
does not include approximately $2,031,000 of net proceeds from sale of
properties which was distributed to limited partners and General Partners in
March 1998) and $1,211,000 ( which does not include approximately $1,112,000 of
net proceeds from sale of properties which was distributed to limited partners
and General Partners in March 1997) at February 28, 1998 and 1997, respectively,
of which $206,000 and $202,000 is restricted to secure an overdraft in Town and
Country's bank account and to secure operating credit lines at seven other Local
Partnerships. The working capital reserve is temporarily invested in bank
certificates of deposits or money market accounts which can be easily liquidated
to meet obligations as they arise. The General Partners believe that the
Partnership's reserves, net proceeds from future sales and future cash flow
distributions will be adequate for its operating needs, and plans to continue
investing available reserves in short-term investments. In March 1998 and 1997,
a distribution of approximately $2,011,000 and $1,100,000, and $21,000 and
$11,000 was paid to the limited partners and General Partners, respectively,
from net proceeds from the sale of properties.

During the fiscal year ended February 28, 1998, cash and cash equivalents of the
Partnership and its 41 consolidated Local Partnerships (including the activity
through the dates of sale for the eight Local Partnerships noted above)
increased approximately $88,000. This increase was primarily due to cash flow
from operations ($2,049,000), decrease in mortgage escrow deposits ($483,000)
and proceeds from sale of properties ($5,888,000), which exceeded principal
payments of mortgage notes and purchase money notes payable ($5,331,000),
payments of interest on purchase money notes ($542,000), costs paid relating to
sale of properties ($111,000), distributions ($1,112,000) and acquisitions of
property and equipment ($1,217,000). Included in the adjustments to reconcile
the net loss to cash provided by operating activities is loss on sale of
properties ($3,902,000), forgiveness of indebtedness income ($21,448,000),
depreciation ($5,623,000) and a loss on impairment of assets ($435,000).

                                       17
<PAGE>

Purchase Money Notes

Nonrecourse Purchase Money Notes in the original amount of $61,029,115 were
issued to the selling partners of the subsidiary partnerships as part of the
purchase price, and are secured only by the Partnership's interest in the
subsidiary partnership to which the note relates.

The Purchase Money Notes, which provide for simple interest at the rate of 9%
per annum through maturity, which will occur during the period July 1998 to
December 1999, will not be in default during the basic term (generally fifteen
years) if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding subsidiary partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. Any interest not paid currently accrues, without further
interest thereon, through the due date of the note. All accrued and unpaid
interest must be paid on the due date of the note, unless the Partnership
exercises an extension right. Continued accrual of such interest without payment
would impact the effective rate of the notes, specifically by reducing the
current effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and ultimate
repayment dates of the notes. Unpaid interest of $54,826,676 and $63,426,985 at
February 28, 1998 and 1997, respectively, has been accrued and is included in
the caption due to selling partners. In general, the interest on and the
principal of each Purchase Money Note is also payable to the extent of the
Partnership's actual receipt of proceeds from the sale or refinancing of the
Apartment Complex, or in some cases the Local Partnership Interest to which the
Purchase Money Note relates.

The Partnership may elect, upon the payment of an extension fee of 1 1/2% per
annum of the outstanding principal amount, to extend the term of the Purchase
Money Note for up to five additional years. The Partnership may also defer
payment of any accrued and unpaid interest until the due date of the note. The
Partnership expects that upon maturity it will be required to refinance or sell
its investments in the Local Partnerships in order to pay the Purchase Money
Notes and accrued interest thereon. Based on the historical operating results of
the Local Partnerships and the current economic conditions including changes in
tax laws, it is uncertain as to whether the proceeds from such sales will be
sufficient to meet the outstanding balances. Management is working with the
selling partners to restructure and/or refinance the notes. The Purchase Money
Notes are without personal recourse to either the Partnership or any of its
partners and the sellers' recourse, in the event of non-payment, would be to
foreclose on the Partnership's interests in the respective Local Partnerships.

Cash flow distributions aggregating $311,625, $504,167 and $874,592 were made to
the Partnership in the 1997, 1996 and 1995 Fiscal Years which does not include
$5,397 and $43,287 escrow monies held for the Preservation Acts program in the
1997 and 1996 Fiscal Years. Of such distributions, $214,171, $302,500 and
$487,931, respectively, was used to pay interest on the Purchase Money Notes.
Distribution of proceeds from sales aggregating $4,136,943 were made to the
Partnership in the 1997 Fiscal Year of which $2,238,811 and $90,000,
respectively, was used to pay principal and interest on the Purchase Money
Notes.

Government Programs and Regulations

The Local Partnerships which receive government assistance are subject to
low-income use restrictions which limit the owners' ability to sell or refinance
the properties. In order to maintain the existing inventory of affordable
housing, Congress passed a series of related acts including the Emergency Low
Income Preservation Act of 1987, the Low-Income Housing Preservation and
Resident Homeownership Act of 1990 (together the "Preservation Acts") and the
Housing Opportunity Program Extension Act of 1996 (the "1996 Act"). In exchange
for maintaining the aforementioned use restrictions, the Preservation Acts
provide financial incentives

                                       18
<PAGE>

for owners of government assisted properties. The 1996 Act provides financial
assistance by funding the sale of such properties to not-for-profit owners and
also restores the owners ability to prepay their HUD mortgage and convert the
property to condominiums or market-rate rental housing. Local general partners
have filed for incentives under the Preservation Acts or the 1996 Act for the
following local partnerships: San Diego - Logan Square Gardens Company,
Albuquerque - Lafayette Square Apts. Ltd., Westgate Associates Limited,
Riverside Gardens, a Limited Partnership, Pacific Palms, a Limited Partnership,
Canton Commons Associates, Rosewood Manor Associates, Bethany Glen Associates
and South Munjoy Associates, Ltd. The South Munjoy Associates, Ltd. property and
the Riverside Gardens property were sold on September 9, 1997 and April 27,
1998, respectively. The local general partners of the other properties are
either negotiating purchase and sale contracts or exploring their alternatives
under the 1996 Act.

Funding for the 1996 Act is subject to appropriations by Congress. Congress
funded $624 million in fiscal year 1996 for the preservation of housing.
Congress had funded approximately $325 million for preservation for 1997 fiscal
year. Congress did not allocate any funds for preservation for the 1998 fiscal
year, effectively ending the preservation effort for the time being. Management
is working with the local general partners in an effort to find alternative exit
strategies.

HUD previously released the American Community Partnerships Act (the "ACPA").
The ACPA is HUD's blueprint for providing for the nation's housing needs in an
era of static or decreasing budget authority. Two key proposals in the ACPA that
could affect the Local Partnerships are: a discontinuation of project-based
Section 8 subsidy payments, and an attendant reduction in debt on properties
that were supported by the Section 8 payments. The ACPA calls for a transition
during which the project-based Section 8 payments would be converted to a
tenant-based voucher system. Any FHA insured debt would then be
"marked-to-market" that is revalued in light of the reduced income stream.

Several industry sources have commented to HUD and Congress that in the event
the ACPA were fully enacted in its present form, the reduction in mortgage
indebtedness would be considered taxable income to owners such as the limited
partners in the Partnership. The regulations governing the "marked to market"
transition has yet to be released; in the interim, HUD has agreed to short-term
extensions of any expiring project-based Section 8 contracts, but there is no
guarantee that such extensions will be available in the future.

In September 1997, Congress enacted the Multi-family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRAA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals instead of the above-market rentals which is generally the case
under existing Section 8 Contracts. As a result, Section 8 Contracts that are
renewed in the future in projects insured by the Federal Housing Administration
("FHA") may not provide sufficient cash flow to permit owners of properties to
meet the debt service requirements of these existing FHA-insured mortgages.
MAHRAA also provides for the restructuring of these mortgage loans so that the
annual debt service on the restructured loan (or loans) can be supported by
Section 8 rents established at the market rents. The restructured loans will be
held by the current lender or another lender. There can be no assurance that a
property owner will be permitted to restructure its mortgage indebtedness
pursuant to the new rules implementing MAHRAA or that an owner would choose to
restructure the mortgage if it were able to participate. MAHRAA is supposed to
go into effect on October 28, 1988; regulations implementing the program must be
issued prior to that time. It should be noted that there are many uncertainties
as to the economic and tax impact on a property owner because of the combination
of the reduced Section 8 contract rents and the restructuring of the existing
FHA-insured mortgage loan under MAHRAA.

                                       19
<PAGE>

Sales of Underlying Properties/Local Partnership Interests

On April 25, 1997, the Partnership's Local Partnership Interest in Los
Caballeros Apartments ("Los Caballeros") was sold to the general partners of Los
Caballeros for $100,000, resulting in a gain in the amount of $501,309. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon which had a total outstanding balance of $3,187,950, resulting
in forgiveness of indebtedness income.

On March 14, 1996, South Munjoy Associates, Limited ("South Munjoy") entered
into a purchase and sale of real estate agreement with Mainland Development
Company of Portland, Maine ("Mainland Development") to sell the project, subject
to HUD approval and other contingencies. On September 9, 1997, the property and
the related assets and liabilities of South Munjoy were sold to Montfort Housing
Limited Partnership (which is an affiliate of Mainland Development) for
$3,000,000, resulting in a loss in the amount of $225,247. The Partnership used
$1,312,741 of the net proceeds to settle the associated Purchase Money Note and
accrued interest thereon which had a total outstanding balance of $3,246,553,
resulting in forgiveness of indebtedness income of $1,933,812.

On December 12, 1997, the Partnership limited partnership interest in Grosvenor
South Apartments Limited Partnership and Grosvenor South Apartments #2 Limited
Partnership (together, the "Grosvenors") were sold to the general partners of
the Grosvenors for $1,114,300, resulting in a loss in the amount of $1,409,038.
No proceeds were used to settle the associated Purchase Money Notes and accrued
interest which had a total outstanding balance of $5,058,313, resulting in
forgiveness of indebtedness income.

On December 12, 1997, the Partnership's limited partnership interest in Clinton
Plaza Apartments Limited Partnership and Clinton Plaza Apartments #2 Limited
Partnership (together the "Clintons") were sold to the general partners of the
Clintons for $1,673,400, resulting in a loss in the amount of $2,768,841. No
proceeds were used to settle the associated Purchase Money Notes and accrued
interest which had a total outstanding balance of $9,689,980, resulting in
forgiveness of indebtedness income.

On January 16, 1998, the property and related assets and liabilities of Country
Ltd. ("Country") and Northbrook III, Ltd. ("Northbrook") were sold to a third
party for approximately $3,247,000 and $1,998,000, respectively, resulting in
gains of approximately $868,000 and $577,000, respectively. The Partnership used
approximately $860,000 and $90,000, respectively, of the net proceeds to settle
the associated Purchase Money Note and accrued interest thereon which had total
outstanding balances of $2,517,000 and $77,000, respectively, resulting in
forgiveness of indebtedness income (loss) of $1,656,000 and $(13,000),
respectively.

On April 21, 1998, the Partnership's limited partnership interest in Oklahoma
City - Town and Country Village Apartments, Ltd. ("Town and Country") was
assigned to the local general partner and the related purchase money note and
interest thereon were canceled. Town & Country's liabilities in excess of assets
at December 31, 1997 amounted to approximately $4,700,000 and the related
purchase money note and accrued interest thereon amounted to approximately
$7,400,000.

On April 27, 1998, the property and the related assets and liabilities of
Riverside Gardens Limited Partnership ("Riverside") and Cudahy Gardens Limited
Partnership ("Cudahy") were sold to a third party for approximately $1,900,000
and $340,000, respectively, plus the assumption of the related mortgage notes.
The Partnership used approximately $442,000 and $47,000, respectively, of the
net proceeds to settle the associated Purchase Money Note and accrued

                                       20
<PAGE>

interest thereon which had total outstanding balances of $5,393,000 and
$2,700,000, respectively, resulting in forgiveness of indebtedness increase of
$4,956,000 and $2,623,000, respectively.

On May 19, 1998, the Pacific Palm Limited Partnership entered into a letter of
intent to sell the property to an unaffiliated third party for a price of
$4,500,000. The letter of intent is conditioned upon several factors;
accordingly, no assurances can be given that the sale will actually occur.

The general partners of one subsidiary partnership, Westgate Associates, Limited
("Westgate"), have signed an option agreement to sell the project to the Vermont
Housing Finance Agency, subject to HUD approval and other contingencies, on or
before December 31, 1998. The Partnership's investment in Westgate was
approximately $814,000 at February 28, 1998. Westgate's assets constituted
approximately 3% of the consolidated total assets at February 28, 1998.

For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships below. Since the maximum
loss the Partnership would be liable for is its net investment in the respective
Local Partnerships, the resolution of the existing contingencies is not
anticipated to impact future results of operations, liquidity or financial
condition in a material way.

Except as described above, management is not aware of any trends or events,
commitments or uncertainties which have not otherwise been disclosed that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.

Results of Operations

Property and equipment are carried at the lower of depreciated cost or estimated
amounts recoverable through future operations and ultimate disposition of the
property. Property and equipment to be held and used are carried at cost which
includes the purchase price, acquisition fees and expenses, and any other costs
incurred in acquiring the properties. The cost of property and equipment is
depreciated over their estimated useful lives using accelerated and
straight-line methods. Expenditures for repairs and maintenance are charged to
expense as incurred; major renewals and betterments are capitalized. At the time
property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. Property investments themselves
are reduced to estimated fair value (generally using discounted cash flows) when
the property is considered to be impaired and the depreciated cost exceeds
estimated fair value.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. All property and equipment for subsidiary partnerships whose assets
and liabilities are under sales contracts are classified as assets held for
sale.

                                       21
<PAGE>

Through February 28, 1998, the Partnership has recorded $5,601,000 as a loss on
impairment of assets.

The following is a summary of the results of operations of the Partnership for
the years ended February 28, 1998, February 28, 1997 and February 29, 1996 (the
1997, 1996 and 1995 Fiscal Years, respectively).

The results of operations of the Partnership, as well as the Local Partnerships,
excluding gain on sale of property and forgiveness of indebtedness income,
remained fairly constant during the 1997, 1996, and 1995 Fiscal Years.
Contributing to the relatively stable operations at the Local Partnerships is
the fact that a large portion of the Local Partnerships are operating under
Government Assistance Programs which provide for rental subsidies and/or
reductions of mortgage interest payments under HUD Section 8 and Section 236
Programs. Currently, eleven of the thirty-five Local Partnerships are receiving
rental subsidies and twenty-one have mortgages with interest subsidies, which
reduce the effective interest rates to a range of 1% to 2% per annum.

The Partnership's primary source of income continues to be its portion of the
Local Partnership's operating results. The majority of Local Partnership income
continues to be in the form of rental income with the corresponding expenses
being divided among operations, depreciation, and mortgage interest. In
addition, the Partnership incurred interest expense relating to the Purchase
Money Notes issued when the Local Partnerships Interests were acquired.

The net income (loss) for the 1997, 1996 and 1995 Fiscal Years aggregated
$9,182,768, $(1,815,515) and $8,082,989, respectively. These represent income
(losses) per Limited Partnership unit of $906, $(179) and $(797), respectively.

Excluding 1997 and 1996, in which the Partnership generated passive income, the
Partnership has met the investment objective of generating tax benefits in the
form of passive losses (which Limited Partners may use to offset passive income
from other sources ). This passive income may be offset by the carryforward of
any unused passive losses from prior years; however, to date the Partnership has
been unable to provide cash distributions to the Limited Partners other than
from the proceeds of sale of underlying properties.

1997 vs. 1996
Rental income decreased approximately 6% during the 1997 Fiscal Year as compared
to 1996. Excluding Roper Mountain, Keller Plaza and South Munjoy, which sold
their properties and Chickasha, Los Cabelleros, Clinton Plaza, Clinton Plaza #2,
Grosvenor Plaza and Grosvenor Plaza #2, in which the Partnership's interest was
sold, rental income increased approximately 1% during the 1997 Fiscal Year as
compared to 1996 primarily due to rental rate increases.

A gain on sale of properties and forgiveness of indebtedness income was recorded
in the 1997 Fiscal Year (see Notes 10 and 11, respectively, in Item 8. Financial
Statements and Supplemental Data).

Total expenses excluding Roper Mountain, Keller Plaza, Chickasha, Los
Cabelleros, South Munjoy, Clinton Plaza, Clinton Plaza #2, Grosvenor Plaza and
Grosvenor Plaza #2 and loss on impairment of assets remained fairly consistent
with an increase of less than 1% for the 1997 Fiscal Year as compared to 1996.

Depreciation expense decreased approximately $791,000 for the 1997 Fiscal Year
as compared to 1996 primarily due to decreases relating to the sale of Roper
Mountain, Keller Plaza, Chickasha, Los Caballeros, South Munjoy, Clinton Plaza,
Clinton Plaza #2, Grosvenor Plaza and

                                       22
<PAGE>

Grosvenor Plaza #2. Excluding these sold properties, such expense remained
fairly consistent with a decrease of $325,000 for the 1997 Fiscal Year as
compared to 1996.

A loss on impairment of assets was recorded in the 1997 Fiscal Year (see Note 4
in Item 8. Financial Statements and Supplemental Data).

1996 vs. 1995
Rental income decreased approximately 1% during the 1996 Fiscal Year as compared
to 1995. Excluding Roper Mountain and Keller Plaza, which sold their properties
on June 3, 1996 and September 17, 1996, and Chickasha, in which the
Partnership's interest was sold on August 15, 1996, rental income increased
approximately 2% during the 1996 Fiscal Year as compared to 1995 primarily due
to rental rate increases.

Other income increased approximately $67,000 during the 1996 Fiscal Year as
compared to 1995. Excluding Roper Mountain, Keller Plaza and Chickasha, such
income increased approximately $93,000 primarily due to the receipt of proceeds
from a fire insurance recovery claim by one Local Partnership, and an increase
in interest income due to higher cash and cash equivalent balances resulting
from net proceeds from the sale of the properties owned by Roper Mountain and
Keller Plaza.

A gain on sale of properties and forgiveness of indebtedness income was recorded
in the 1996 Fiscal Year (see Notes 10 and 11, respectively, in Item 8. Financial
Statements and Supplemental Data).

Total expenses excluding Roper Mountain, Keller Plaza and Chickasha, selling and
renting expenses and administrative and management-related parties remained
fairly consistent with an increase of approximately 2% for the 1996 Fiscal Year
as compared to 1995.

Administrative and management-related parties increased approximately $875,000
for the 1996 Fiscal Year as compared to 1995 primarily due to an increase in
partnership management fees.

Selling and renting expenses increased approximately $35,000 for the 1996 Fiscal
Year as compared to 1995. Excluding Roper Mountain, Keller Plaza and Chickasha,
such expenses increased approximately $46,000 primarily due to increases in
advertising at three Local Partnerships and small increases in such expenses at
three other Local Partnerships.

A loss on impairment of assets was recorded in the 1996 Fiscal Year (see Note 4
in Item 8. Financial Statements and Supplemental Data).

Results of Operations of Certain Local Partnerships

Caddo Parish-Villas South, Ltd.
Caddo Parish-Villas South, Ltd. ("Villas South") continues to be in default of
its original mortgage agreement. Until November 1995, the project operated under
a provisional workout agreement with HUD. During November 1995, the mortgage
note was sold to a conventional mortgagee. These items raise substantial doubt
about Villas South's ability to continue as a going concern. The auditors for
Villas South modified their report for the 1995 Fiscal Year due to the
uncertainty of the ability of Villas South to continue in existence. Villas
South is in the process of trying to renegotiate the terms of the notes with the
new mortgage holders, but there can be no assurance that the renegotiation will
be successful. Villas South filed for protection under Chapter 11 of the United
States Bankruptcy Code on November 12, 1996 and the equivalent of a receiver has
been appointed. The Partnership's investment in Villas South was approximately
$222,000 and $373,000 at February 28, 1998 and 1997, respectively, and the

                                       23
<PAGE>

minority interest balance was zero at each date. Villas South's net loss after
minority interest amounted to approximately $151,000, $151,000, and $151,000 for
the 1997, 1996 and 1995 Fiscal Years, respectively.

Oklahoma City-Town and Country Village Apartments, Ltd.
On April 21, 1998 the Partnership limited partnership interest in Oklahoma City
- Town and Country Village Apartments, Ltd. ("Town and Country") was assigned to
the local general partner and the related purchase money note and interest
thereon were canceled. Town & Country's liabilities in excess of assets at
December 31, 1997 amounted to approximately $4,700,000 and the related purchase
money note and accrued interest thereon amounted to approximately $7,400,000.
Prior to its sale, Town and Country was in default of its original mortgage
agreement. Until November 1995, the project operated under a provisional workout
agreement with HUD. On November 1, 1995, the mortgage note was sold to a
conventional mortgagee. No payments were being made on this loan. In addition,
the physical condition of the project continued to deteriorate and by order of
the District Court of Oklahoma County during December 1997, a receiver was
appointed to preserve and protect the mortgaged property pending foreclosure. At
December 31, 1997, total liabilities exceeded total assets by approximately
$4,700,000. These items raised substantial doubt about Town and Country's
ability to continue as a going concern. The auditors for Town and Country
modified their reports for the 1997, 1996, and 1995 Fiscal Years due to the
uncertainty of the ability of Town and Country to continue in existence. Town
and Country is in the process of trying to renegotiate the terms of the notes
with the new mortgage holders, but there can be no assurance that the
renegotiation will be successful. The Partnership's investment in Town & Country
was reduced to zero by current and prior years' losses at February 28, 1998 and
1997, and the minority interest balance was zero at each date. Town & Country's
net loss after minority interest amounted to approximately $216,000, $4,741,000
and $350,000 for the 1997, 1996 and 1995 Fiscal Years, respectively.

Char-Mur Apartments, Ltd.
During the year ended December 31, 1996, Char-Mur Apartments, Ltd. ("Char-Mur ")
incurred a net loss of approximately $31,000 and, as of that date, the local
partnership's total current liabilities exceeded its total current assets by
approximately $78,500. These factors, among others, raise substantial doubt
about the partnership's ability to continue as a going concern. Char-Mur's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to comply with
the terms of its mortgage, to obtain additional capital contributions from
partners, and ultimately, to attain successful operations. Management is making
all efforts possible to increase the occupancy and the rental income of the
project and to make the necessary improvements to enhance the property, in an
attempt to improve Char-Mur's cash flow. The partnership's investment in
Char-Mur was approximately $221,000 and $252,000 at February 28, 1998 and 1997,
respectively, and the minority interest balance was zero at each date.
Char-Mur's net loss after minority interest amounted to approximately $31,000,
$25,000 and $26,000 for the 1997, 1996 and 1995 Fiscal Years, respectively.

                                       24
<PAGE>

Year 2000 Compliance

As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The General Partners are in the process of working with the
Partnership's service providers to prepare for the year 2000. Based on
information currently available, the Partnership does not expect that it will
incur significant operating expenses or be required to incur material costs to
be year 2000 compliant.

Other

The Local General Partner of Grandview-Blue Ridge Manor, Ltd., Oakland-Keller
Plaza, Country, Ltd., Stephenville-Tarleton Arms Apartments, Ltd., El
Paso-Gateway East, Ltd., Breckenridge-Chaparral Apartments II, Ltd., Corpus
Christi-Oso Bay Apartments, Ltd., Oklahoma City-Town and Country Village
Apartments, Ltd., Ardmore-Rolling Meadows of Ardmore, Ltd., Caddo Parish-Villas
South, Ltd., Albuquerque-Lafayette Square Apartments, Ltd. and San Diego-Loan
Square Gardens Company passed away. The coexecutors of his estate are currently
acting on his behalf until a successor can be named.

The Partnership's investment, as a limited partner in the Local Partnerships, is
subject to the risks incident to the potential losses arising from management
and ownership of improved real estate. The Partnership's investments could also
be adversely affected by poor economic conditions generally, which could
increase vacancy levels, rental payment defaults, and increased operating
expenses, any or all of which could threaten the financial viability of one or
more of the Local Partnerships.

There are also substantial risks associated with the operation of Apartment
Complexes receiving Government Assistance. These include governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes; difficulties in obtaining government approval
for rent increases; limitations on the percentage of income which low and
moderate-income tenants may pay as rent; the possibility that Congress may not
appropriate funds to enable HUD to make the rental assistance payments it has
contracted to make; and that when the rental assistance contracts expire there
may not be market demand for apartments at full market rents in a Local
Partnership's Apartment Complex.

The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Inflation generally does not impact the fixed
long-term financing under which real property investments were purchased.
Inflation also affects the Local Partnerships adversely by increasing operating
costs, particularly items such as fuel, utilities and labor. However, continued
inflation should allow for appreciated values of the Local Partnerships'
Apartment Complexes over a period of time as rental revenues and replacement
costs continue to increase, the benefit of which may be recognized at the point
in time when the Partnership is required to refinance or sell its investments in
Local Partnerships in order to meet its obligations under the Purchase Money
Notes.

There has recently been an increasing number of requests for the list of holders
of Limited Partnership Interests in limited partnerships such as the
Partnership. Often these requests are made by a person who, only a short time
before making the request, acquired merely a small number of Limited Partnership
Interests in the Partnership and seeks the list for an improper purpose, a
purpose that is not in the best interest of the Partnership or is harmful to the
partnership. In order to best serve and protect the interests of the Partnership
and all of its inves-

                                       25
<PAGE>

tors, the General Partners have adopted a policy with respect to requests for
the Partnership's list of holders of Limited Partnership Interests. This policy
is intended to protect investors from unsolicited and coercive offers to acquire
the interests of holders of Limited Partnership Interests and does not limit any
other rights the General Partners may have under the Partnership Agreement or
applicable law.

                                       26
<PAGE>

Item 8.    Financial Statements and Supplementary Data.

<TABLE>
<CAPTION>
                                                                                      Sequential
                                                                                         Page
                                                                                      ----------


<S>        <C>                                                                           <C>
(a) 1.     Financial Statements                                                          

           Independent Auditors' Report                                                   28 
                                                                                             
           Consolidated Balance Sheets at February 28, 1998 and 1997                     152 
                                                                                             
           Consolidated Statements of Operations for the years ended February             
           28, 1998, February 28, 1997 and February 29, 1996                             153    
                                                                                             
           Consolidated Statements of Partners' Deficit for the years ended               
           February 28, 1998, February 28, 1997 and February 29, 1996                    154
                                                                                             
           Consolidated Statements of Cash Flows for the years ended February             
           28, 1998, February 28, 1997 and February 29, 1996                             155
                                                                                             
           Notes to Consolidated Financial Statements                                    157 
</TABLE>


                                       27
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Partners of
Cambridge + Related Housing Properties Limited Partnership and Subsidiaries

We have audited the consolidated balance sheets of Cambridge + Related Housing
Properties Limited Partnership and Subsidiaries as of February 28, 1998 and
1997, and the related consolidated statements of operations, partners' deficit,
and cash flows for the years ended February 28, 1998, 1997 and February 29, 1996
(the 1997, 1996 and 1995 Fiscal Years, respectively). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did not
audit the financial statements for 38 (1997 Fiscal Year ), 41 (1996 Fiscal Year)
and 38 (1995 and 1994 Fiscal Years) subsidiary partnerships whose (income)
losses constituted ($1,698,893), $1,883,068 and of the Partnership's net loss
during the 1997, 1996 and 1995 Fiscal Years, respectively, and whose assets
constituted 85% (1997 Fiscal Year) and 89% (1996 Fiscal Year) of the
Partnership's assets at February 28, 1997 and February 29, 1996, presented in
the accompanying consolidated financial statements. The financial statements for
37 (1997 Fiscal Year), 39 (1996 Fiscal Year) and 37 (1995 Fiscal Year), of these
subsidiary partnerships were audited by other auditors whose reports thereon
have been furnished to us, and our opinion expressed herein, insofar as it
relates to the amounts included for these subsidiary partnerships, is based
solely upon the reports of the other auditors. The financial statements of one
(1997 Fiscal Year), two (1996 Fiscal Year) and one (1995 Fiscal Year) of these
subsidiary partnerships were unaudited.

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

In our opinion, based upon our audits, and the reports of the other auditors,
the accompanying consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cambridge + Related
Housing Properties Limited Partnership and Subsidiaries at February 28, 1998 and
1997, and the results of their operations, and cash flows for the years ended
February 28, 1998, 1997 and February 29, 1996, in conformity with generally
accepted accounting principles.

As discussed in Note 11(a), three of the subsidiary partnerships are in default
of their mortgage agreements. This raises substantial doubt about these
subsidiary partnerships' abilities to continue as going concerns. The auditors
of two (1997 Fiscal Year), and one (1996 and 1995 Fiscal Years) of these
subsidiary partnerships have modified their reports, due to the uncertainty of
the ability of the subsidiary partnerships to continue in existence.
Management's plans regarding these matters are also discussed in Note 11(a). The
financial statements for one (1997, 1996 and 1995 Fiscal Years) of these
subsidiary partnerships were not audited. Such subsidiary partnerships' losses
constituted $398,321, $4,917,277 and $426,975 of the Partnership's net loss
during the 1998, 1997 and 1996 Fiscal Years and assets constituted 5% and 4% of
the Partnership's total assets at February 28, 1998 and 1997, respectively. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

                                       28
<PAGE>

As discussed in Note 7, the principal of and all accrued interest on the
purchase money notes are due at maturity, which will occur, during 1998 to 1999.
The Partnership expects that upon maturity it will be required to refinance or
sell its investments in the subsidiary partnerships in order to pay the purchase
money notes and related interest obligations. It is uncertain as to whether the
proceeds from such sales will be sufficient to meet the outstanding balances of
the purchase money notes and accrued interest thereon. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

TRIEN, ROSENBERG, ROSENBERG, WEINBERG, CIULLO & FAZZARI, L.L.P.

New York, New York
April 29, 1998


                                       29
<PAGE>



          [BROWDER & ASSOCIATES, P.C.-LETTERHEAD - BIRMINGHAM, ALABAMA]


                          Independent Auditor's Report

To the Partners of
CADDO PARISH-VILLAS SOUTH, LTD.
Shreveport, Louisiana


We have audited the accompanying balance sheet of CADDO PARISH-VILLAS SOUTH,
LTD. as of DECEMBER 31, 1995, and the related statements of income, changes in
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

The project's financial statements do not disclose information about matters
that raise substantial doubt about its ability to continue as a going concern.
The project is not in compliance with the terms of its original mortgage loan
agreement with its lender, but is making payments on the loan as described in
Note C to the financial statements. Management has plans to significantly
improve the physical condition of the property, with the goal of increasing
rental revenues and occupancy. There are, however, significant uncertainties
surrounding its ability to continue its operations and to satisfy its
creditors on a timely basis. In our opinion, disclosure of that information is
required to conform with generally accepted accounting principles.

In our opinion, except for the omission of the information discussed in the
preceding paragraph, the financial statements referred to above present
fairly, in all material respects, the financial position of CADDO
PARISH-VILLAS SOUTH, LTD. as of DECEMBER 31, 1995, and the results of its
operations, changes in partners' equity and cash flows for the year then ended
in conformity with generally accepted accounting principles.

<PAGE>

The accompanying financial statements have been prepared assuming that CADDO
PARISH-VILLAS SOUTH, LTD. will continue as a going concern. The conditions
described in the third paragraph of this report raise substantial doubt about
the project's ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying information included in the
report is presented for the purpose of additional analysis and are not a
required part of the basic financial statements of CADDO PARISH-VILLAS SOUTH,
LTD. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken
as a whole.


/s/ BROWDER & ASSOCIATES, P.C.

BROWDER & ASSOCIATES, P.C.

January 22, 1996

<PAGE>



                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report

To the Partners of
Town & Country Village Apartments, Ltd.
Oklahoma City, Oklahoma

We have audited the accompanying balance sheet of Town & Country Village
Apartments, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is not in compliance with the terms of its
original mortgage loan agreement, and has discontinued making payments on the
loan. A receiver has been appointed to preserve and protect the mortgaged
property pending foreclosure. These conditions raise substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.



/s/ Browder & Associates, P.C.
------------------------------

Birmingham, Alabama                      Federal Employer Identification Number:
February 16, 1998                                                     63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                     [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report


To the Partners of
OKLAHOMA CITY-TOWN & COUNTRY VILLAGE APARTMENTS, LTD.
Oklahoma City, Oklahoma


We have audited the accompanying balance sheet of OKLAHOMA CITY-TOWN & COUNTRY
VILLAGE APARTMENTS, LTD., Project No. , as of DECEMBER 31, 1996, and the related
statements of income, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of OKLAHOMA CITY-TOWN & COUNTRY
VILLAGE APARTMENTS, LTD. as of DECEMBER 31, 1996, and the results of its
operations, changes in partners' equity and cash flows for the year then ended
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that OKLAHOMA
CITY-TOWN & COUNTRY VILLAGE APARTMENTS, LTD. will continue as a going concern.
As discussed in Note J to the financial statements the project is not in
compliance with the terms of its original mortgage loan agreement, and has
discontinued making payments on the loan. These conditions raise substantial
doubt about the project's ability to continue as a going concern.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying information included in the report
are presented for the purpose of additional analysis and are not a required part
of the basic financial statements of OKLAHOMA CITY-TOWN & COUNTRY VILLAGE
APARTMENTS, LTD. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.


/s/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                    Federal Employer       
February 13, 1997                                      Identification Number: 
                                                            63-0986156        


Audit Principal: E.O. Browder, Jr.

<PAGE>

                     [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of
OKLAHOMA CITY-TOWN & COUNTRY VILLAGE APARTMENTS, LTD.
Oklahoma City, Oklahoma


We have audited the accompanying balance sheet of OKLAHOMA CITY-TOWN & COUNTRY
VILLAGE APARTMENTS, LTD., as of December 31, 1995, and the related statements
of income, changes in partners' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

The project's financial statements do not disclose information about matters
that raise substantial doubt about its ability to continue as a going concern.
The project is not in compliance with the terms of its original mortgage loan
agreement, but continues to make payments on the loan as described in Note C
to the financial statements. Management has conducted market research and
believes planned changes in marketing strategy can significantly improve
occupancy. Management is also giving serious consideration to restructuring
debt in 1996 by filing for bankruptcy. There are, however, significant
uncertainties surrounding the project's ability to continue its operations and
to satisfy its creditors on a timely basis. In our opinion, disclosure of that
information is required to conform with generally accepted accounting
principles.

<PAGE>

In our opinion, except for the omission of the information discussed in the
preceding paragraph, the financial statements referred to above present
fairly, in all material respects, the financial position of OKLAHOMA CITY-TOWN 
& COUNTRY VILLAGE APARTMENTS, LTD. as of December 31, 1995, and the results of
its operations, changes in partners' equity and cash flows for the year then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
OKLAHOMA CITY-TOWN & COUNTRY VILLAGE APARTMENTS, LTD. will continue as a going
concern. The conditions described in the third paragraph of this report raise
substantial doubt about the project's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of OKLAHOMA CITY-TOWN & COUNTRY VILLAGE
APARTMENTS, LTD. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.


/s/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama
January 22, 1996

<PAGE>

                   [Letterhead of Reznick Fedder & Silverman]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
New Jersey, Ltd.

        We have audited the accompanying balance sheet of New Jersey, Ltd. as of
December 31, 1997 and the related statements of profit and loss (on HUD Form No.
92410), partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

        We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a reasonable basis for our
opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of New Jersey, Ltd., as
of December 31, 1997 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.

        Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

<PAGE>

        In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," (the "Guide"), we have also issued
reports dated January 29, 1998 on our consideration of New Jersey, Ltd's
internal control and on its compliance with specific requirements applicable to
major and nonmajor HUD programs, fair housing and non-discrimination, and laws
and regulations applicable to the financial statements.

/s/ Reznick Fedder & Silverman
------------------------------

Boston, Massachusetts                           Federal Employer
January 29, 1998                                Identification Number:

                                                52-1088612

Audit Principal: Philip A. Weitzel

<PAGE>
                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
New Jersey, Ltd.

     We have audited the accompanying balance sheet of New Jersey, Ltd. as of
December 31, 1996 and the related statements of profit and loss (on HUD Form No.
92410), partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a reasonable basis for our
opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New Jersey, Ltd., as of
December 31, 1996 and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

<PAGE>

     In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," (the "Guide"), we have also issued
reports dated January 29, 1997, on our consideration of New Jersey, Ltd's
internal control structure and on its compliance with specific requirements
applicable to major and nonmajor HUD programs, affirmative fair housing, and
laws and regulations applicable to the financial statements.

                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Atlanta, Georgia                             Federal Employer
January 29, 1997                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (770) 844-0644
<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners
New Jersey, Ltd.


     We have audited the accompanying balance sheet of New Jersey, Ltd. as of
December 31, 1995 and the related statements of profit and loss (on HUD Form
No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of New Jersey, Ltd.,
as of December 31, 1995 and the results of its operations, the changes in
partners' equity and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.

<PAGE>

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
20 through 26 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated February 2, 1996 on our consideration of New Jersey, Ltd's
internal control structure and on its compliance with specific requirements
applicable to major and nonmajor HUD programs, affirmative fair housing, and
laws and regulations applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina                    Federal Employer
February 2, 1996                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (704) 332-9100

<PAGE>


                   [Letterhead of Reznick Fedder & Silverman]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Zeigler Boulevard, Ltd.

        We have audited the accompanying balance sheet of Zeigler Boulevard,
Ltd. as of December 31, 1997 and the related statements of profit and loss (on
HUD Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

        We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a reasonable basis for our
opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Zeigler Boulevard,
Ltd., as of December 31, 1997, and the results of its operations, the changes in
partners' equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

        Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

<PAGE>

        In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 29, 1998 on our consideration of Zeigler Boulevard, Ltd's internal
control and on its compliance with specific requirements applicable to major and
nonmajor HUD programs, fair housing and non-discrimination, and laws and
regulations applicable to the financial statements.

/s/ Reznick Fedder & Silverman

Boston, Massachusetts                           Federal Employer
January 29, 1998                                 Identification Number:
                                                 52-1088612

Audit Principal: Philip A. Weitzel




<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners
Zeigler Boulevard, Ltd.


     We have audited the accompanying balance sheet of Zeigler Boulevard, Ltd.
as of December 31, 1996, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Zeigler Boulevard,
Ltd., as of December 31, 1996, and the results of its operations, the changes
in partners' equity and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
19 through 25 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

<PAGE>

     In accordance with Government Auditing Standards, and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 29, 1997 on our consideration of Zeigler Boulevard, Ltd's internal
control structure and on its compliance with specific requirements applicable to
major and nonmajor HUD programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Atlanta, Georgia                             Federal Employer
January 29, 1997                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (770) 844-0644

<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners
Zeigler Boulevard, Ltd.


     We have audited the accompanying balance sheet of Zeigler Boulevard, Ltd.
as of December 31, 1995, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Zeigler Boulevard,
Ltd., as of December 31, 1995, and the results of its operations, the changes
in partners' equity and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.

<PAGE>

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
21 through 27 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
 
     In accordance with Government Auditing Standards, we have also issued
reports dated January 31, 1996 on our consideration of Zeigler Boulevard, 
Ltd's internal control structure and on its compliance with specific
requirements applicable to major and nonmajor HUD programs, affirmative fair
housing, and laws and regulations applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina                    Federal Employer
January 31, 1996                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (704) 332-9100


<PAGE>

                   [Letterhead of Reznick Fedder & Silverman]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Eastwyck III, Ltd.

        We have audited the accompanying balance sheet of Eastwyck III, Ltd., as
of December 31, 1997, and the related statements of profit and loss (on HUD Form
No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

        We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a reasonable basis for our
opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Eastwyck III, Ltd.,
as of December 31, 1997, and the results of its operations and its cash flows 
for the year then ended, in conformity with generally accepted accounting
principles.

        Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.


<PAGE>

        In accordance with Government Auditing Standards, and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 29, 1998 on our consideration of Eastwyck III, Ltd.'s internal control
and on its compliance with specific requirements applicable to major and
nonmajor HUD programs, fair housing and non-discrimination, and laws and
regulations applicable to the financial statements.

/s/ Reznick Fedder & Silverman
------------------------------

Boston, Massachusetts                           Federal Employer
January 29, 1998                                Identification Number:

                                                52-1088612

Audit Principal: Philip A. Weitzel



<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Eastwyck III, Ltd.


     We have audited the accompanying balance sheet of Eastwyck III, Ltd., as
of December 31, 1996, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Eastwyck III, Ltd., as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
19 through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

<PAGE>

     In accordance with Government Auditing Standards, and the "Consolidated
Audit Guide for Audits of HUD Programs," we we have also issued reports dated
February 2, 1997 on our consideration of Eastwyck III, Ltd.'s internal control
structure and on its compliance with specific requirements applicable to major
HUD programs, affirmative fair housing, and laws and regulations applicable to
the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Atlanta, Georgia                             Federal Employer
February 2, 1997                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (770) 844-0644
<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Eastwyck III, Ltd.

     We have audited the accompanying balance sheet of Eastwyck III, Ltd. as
of December 31, 1995, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Eastwyck III,
Ltd., as of December 31, 1995, and the results of its operations, the changes
in partners' equity and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.

<PAGE>

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
20 through 25 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated January 29, 1996 on our consideration of Eastwyck III, Ltd.'s
internal control structure and on its compliance with specific requirements
applicable to major HUD programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina                    Federal Employer
January 29, 1996                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (704) 332-9100

<PAGE>

                   [Letterhead of Browder & Associates, P.C.]

                          Independent Auditor's Report

To the Partners of
Breckenridge-Chaparral Apartments II, Ltd.
Breckenridge, Texas


We have audited the accompanying balance sheet of Breckenridge-Chaparral
Apartments II, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/ Browder & Associates, P.C.
------------------------------

Birmingham, Alabama                      Federal Employer Identification Number:
January 19, 1998                                                      63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report


To the Partners of
BRECKENRIDGE-CHAPARRAL II, LTD.
Breckenridge, Texas

                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS


We have audited the accompanying balance sheet of BRECKENRIDGE-CHAPARRAL II,
LTD., Project No. 113-44016-LD, as of DECEMBER 31, 1996, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BRECKENRIDGE-CHAPARRAL II,
LTD. as of DECEMBER 31, 1996, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 20, 1997 on our consideration of
BRECKENRIDGE-CHAPARRAL II, LTD.'s internal control structure and reports dated
January 20, 1997 on its compliance with specific requirements applicable to the
major HUD program, specific requirements applicable to the non-major HUD
program, specific requirements applicable to Affirmative Fair Housing, and laws
and regulations applicable to the basic financial statements.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of BRECKENRIDGE-CHAPPARAL II, LTD. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/s/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 20, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of
BRECKENRIDGE-CHAPARRAL II, LTD.
Breckenridge, Texas

                                                     HUD Field Office Director
                                                             FORT WORTH. TEXAS

We have audited the accompanying balance sheet of BRECKENRIDGE-CHAPARRAL II,
LTD., Project No. 113-44016-LD, as of DECEMBER 31, 1995, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BRECKENRIDGE-CHAPARRAL II,
LTD. as of DECEMBER 31, 1995, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of
BRECKENRIDGE-CHAPARRAL II, LTD.'s internal control structure and reports dated
January 22, 1996 on its compliance with laws and regulations applicable to the
basic financial statements, the major HUD program, and the nonmajor HUD
program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of BRECKENRIDGE-CHAPPARAL II, LTD. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/s/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                   [Letterhead of Reznick Fedder & Silverman]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Country, Ltd.

       We have audited the accompanying balance sheet of Country, Ltd. as of
December 31, 1997 and the related statements of profit and loss (on HUD Form No.
92410), partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

       We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a reasonable basis for our
opinion.

       In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Country, Ltd., as of
December 31, 1997, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

       Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 23 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

<PAGE>

       In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated on
January 29, 1998 on our consideration of Country, Ltd.'s internal control and on
its compliance with specific requirements applicable to major HUD programs, fair
housing and non-discrimination, and laws and regulations applicable to the
financial statements.

/s/ Reznick Fedder & Silverman

Boston, Massachusetts                           Federal Employer
January 29, 1998                                  Identification Number:
(except for Note G                                52-1088612
which is as of April 10, 1998)

Audit Principal: Philip A. Weitzel



<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT


To the Partners
Country, Ltd.


     We have audited the accompanying balance sheet of Country, Ltd., as of
December 31, 1996, and the related statements of profit and loss (on HUD Form
No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Country, Ltd., as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
19 through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

<PAGE>

     In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," (the "Guide"), we have also issued
reports dated on January 29, 1997, our consideration of Country, Ltd.'s internal
control structure and on its compliance with specific requirements applicable to
major HUD programs, affirmative fair housing, and laws and regulations
applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Atlanta, Georgia                             Federal Employer
January 29, 1997                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (770) 844-0644

<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners
Country, Ltd.

     We have audited the accompanying balance sheet of Country, Ltd. as of
December 31, 1995, and the related statements of profit and loss (on HUD Form
No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Country, Ltd., as
of December 31, 1995, and the results of its operations, the changes in
partners' equity and its cash flows for the year then ended, in conformity
with generally accepted accountinq principles.

<PAGE>

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
20 through 26 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated February 2, 1996 on our consideration of Country, Ltd.'s
internal control structure and on its compliance with specific requirements
applicable to major HUD programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina                    Federal Employer
February 2, 1996                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (704) 332-9100


<PAGE>

                   [Letterhead of Reznick Fedder & Silverman]

                           INDEPENDENT AUDITORS' REPORT

To the Partners
Westwood Apartments Company, Ltd.

        We have audited the accompanying balance sheets of Westwood Apartments
Company, Ltd. as of December 31, 1997 and 1996, and the related statements of
revenue and expenses, partners' capital and cash flows for the years then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Westwood Apartments
Company, Ltd. as of December 31, 1997 and 1996, and the results of its
operations, the changes in partners' capital and cash flows for the years then
ended, in conformity with generally accepted accounting principles.

        Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 11
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

                                        /s/ Reznick Fedder & Silverman

Bethesda, Maryland
February 3, 1998



<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT


To the Partners
Westwood Apartments Company, Ltd.


     We have audited the accompanying balance sheets of Westwood Apartments
Company, Ltd. as of December 31, 1996 and 1995, and the related statements of
revenue and expenses, partners' capital and cash flows for the years then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Westwood
Apartments Company, Ltd. as of December 31, 1996 and 1995, and the results of
its operations, the changes in partners' capital and cash flows for the years
then ended, in conformity with generally accepted accounting principles.

     Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
12 through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.


                                                  /S/ REZNICK FEDDER & SILVERMAN

Bethesda, Maryland
February 7, 1997


<PAGE>

                   [Letterhead of Reznick Fedder & Silverman]

                          INDEPENDENT AUDITORS' REPORT

To the Partners 
Parktowne, Ltd.

        We have audited the accompanying balance sheets of Parktowne, Ltd. as of
December 31. 1997 and 1996, and the related statements of revenue and expenses,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Parktowne, Ltd. as
of December 31, 1997 and 1996, and the results of its operations, the changes in
partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

        Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 11
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

                                        /s/ Reznick Fedder & Silverman

Bethesda, Maryland
February 4, 1998



<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT

To the Partners
Parktowne, Ltd.


     We have audited the accompanying balance sheets of Parktowne, Ltd. as of
December 31, 1996 and 1995, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

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

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Parktowne, Ltd. as
of December 31, 1996 and 1995, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity
with generally accepted accounting principles.

     Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
11 through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.


                                                  /S/ REZNICK FEDDER & SILVERMAN

Bethesda, Maryland
February 7, 1997

<PAGE>

                   [Letterhead of Browder & Associates, P.C.]

                          Independent Auditor's Report

To the Partners of
Corpus Christi-Oso Bay Apartments, Ltd.
Corpus Christi, Texas

We have audited the accompanying balance sheet of Corpus Christi-Oso Bay
Apartments, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/ BROWDER & ASSOCIATES P.C.

Birmingham, Alabama                      Federal Employer Identification Number:
January 16, 1998                                                      63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report


To the Partners of
CORPUS CHRISTI-OSO BAY APARTMENTS, LTD.
Corpus Christi, Texas

                                                      HUD Field Office Director
                                                            SAN ANTONIO, TEXAS


We have audited the accompanying balance sheet of CORPUS CHRISTI-OSO BAY
APARTMENTS, LTD., Project No. 115-44129-LDP, as of DECEMBER 31, 1996, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the project's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General in July 1993. Those standards and the Guide 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
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CORPUS CHRISTI-OSO BAY
APARTMENTS, LTD. as of DECEMBER 31, 1996, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in conformity
with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 20, 1997 on our consideration of CORPUS
CHRISTI-OSO BAY APARTMENTS, LTD.'s internal control structure and reports dated
January 22, 1997 on its compliance with laws and regulations applicable to the
basic financial statements, specific requirements applicable to the major HUD
programs and specific requirements applicable to Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements of CORPUS CHRISTI-OSO BAY APARTMENTS, LTD. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 20, 1997                                        Identification Number:
                                                                    63-0986156
Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of
CORPUS CHRISTI-OSO BAY APARTMENTS, LTD.
Corpus Christi, Texas

                                                      HUD Field Office Director
                                                            SAN ANTONIO, TEXAS


We have audited the accompanying balance sheet of CORPUS CHRISTI-OSO BAY
APARTMENTS, LTD., Project No. 115-44129-LDP, as of DECEMBER 31, 1995, and the
related statements of income, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CORPUS CHRISTI-OSO BAY
APARTMENTS, LTD. as of DECEMBER 31, 1995, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of CORPUS
CHRISTI-OSO BAY APARTMENTS, LTD.'s internal control structure and reports
dated January 22, 1996 on its compliance with laws and regulations applicable
to the basic financial statements and the major HUD programs.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying information included in the
report is presented for the purpose of additional analysis and are not a
required part of the basic financial statements of CORPUS CHRISTI-OSO BAY
APARTMENTS, LTD. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156
Audit Principal: E.O. Browder, Jr.


<PAGE>

                   [Letterhead of Reznick Fedder & Silverman]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Northbrook III, Ltd.

        We have audited the accompanying balance sheet of Northbrook III, Ltd.
as of December 31, 1997, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

        We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a reasonable basis for our
opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Northbrook III,
Ltd., as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.

        Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 20
through 25 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.


<PAGE>

          In accordance with Government Auditing Standards, and the
"Consolidated Audit Guide for Audits of HUD Programs," we have also issued
reports dated January 29, 1998 on our consideration of Northbrook III, Ltd.'s
internal control and on its compliance with specific requirements applicable to
major and nonmajor HUD programs, fair housing and non-discrimination, and laws
and regulations applicable to the financial statements.

/s/ Reznick Fedder & Silverman

Boston, Massachusetts                             Federal Employer
January 29, 1998                                   Identification Number:
(except for Note G                                 52-1088612
  which is as of April 10, 1998)

Audit Principal: Philip Weitzel


<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners
Northbrook III, Ltd.


     We have audited the accompanying balance sheet of Northbrook III, Ltd. as
of December 31, 1996, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northbrook III, Ltd., as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
19 through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

<PAGE>

     In accordance with Government Auditing Standards, and the "Consolidated
Audit Guide for Audits of Hud Programs," we have also issued reports dated
February 2, 1997 on our consideration of Northbrook III, Ltd.'s internal control
structure and on its compliance with specific requirements applicable to major
and nonmajor HUD programs, affirmative fair housing, and laws and regulations
applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Atlanta, Georgia                             Federal Employer
February 2, 1997                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (770) 844-0644
<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners
Northbrook III, Ltd.


     We have audited the accompanying balance sheet of Northbrook III, Ltd. as
of December 31, 1995, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Northbrook III,
Ltd., as of December 31, 1995, and the results of its operations, the changes
in partners' equity and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.

<PAGE>

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
20 through 26 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated February 2, 1996 on our consideration of Northbrook III, Ltd.'s
internal control structure and on its compliance with specific requirements
applicable to major and nonmajor HUD programs, affirmative fair housing, and
laws and regulations applicable to the financial statements.


                                             /S/ REZNICK FEDDER & SILVERMAN
                                             /S/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina                    Federal Employer
February 2, 1996                               Identification Number:
                                               52-1088612

Audit Principal: Michael C. Beck
                 (704) 332-9100
<PAGE>


                 [Letterhead of Grass & Coffey, C.P.A.'s, P.C.]

                          Independent Auditor's Report

To The Partners
Bethany Glen Associates
(A Limited Partnership)

We have audited the accompanying balance sheets of Bethany Glen Associates, as
of December 31, 1997 and 1996, and the related statements of operations,
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethany Glen Associates as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

                                              /s/ Grass & Coffey, C.P.A.'s, P.C.

January 28, 1998
Phoenix, Arizona


<PAGE>

                          [GRASS & COFFEY-LETTERHEAD]

                         Independent Auditor's Report

To The Partners
Bethany Glen Associates
(A Limited Partnership)

We have audited the accompanying balance sheets of Bethany Glen Associates, as
of December 31, 1996 and 1995, and the related statements of operations,
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethany Glen Associates as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.


/S/ GRASS & COFFEY, C.P.A.'s, P.C.

February 11, 1997
Phoenix, Arizona

<PAGE>

                   [Letterhead of BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report

To the Partners of
Albuquerque-Lafayette Square Apartments,
Ltd.
Albuquerque, New Mexico

We have audited the accompanying balance sheet of Albuquerque-Lafayette Square
Apartments, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/ Browder & Associates, P.C.

Birmingham, Alabama                      Federal Employer Identification Number:
January 19, 1998                                                      63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
ALBUQUERQUE-LAFAYETTE SQUARE APARTMENTS, LTD.
Albuquerque, New Mexico

                                                     HUD Field Office Director
                                                       ALBUQUERQUE, NEW MEXICO


We have audited the accompanying balance sheet of ALBUQUERQUE-LAFAYETTE SQUARE
APARTMENTS, LTD., Project No. 116-44022-LDP, as of DECEMBER 31, 1996, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ALBUQUERQUE-LAFAYETTE SQUARE
APARTMENTS, LTD. as of DECEMBER 31, 1996, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 20, 1997 on our consideration of
ALBUQUERQUE-LAFAYETTE SQUARE APARTMENTS, LTD.'s internal control structure and
reports dated January 20, 1997 on its compliance with laws and regulations
applicable to the basic financial statements, specific requirements applicable
to the major HUD program, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of ALBUQUERQUE-LAFAYETTE SQUARE APARTMENTS,
LTD. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken
as a whole.

/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 20, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>


                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
ALBUQUERQUE-LAFAYETTE SQUARE APARTMENTS, LTD.
Albuquerque, New Mexico

                                                     HUD Field Office Director
                                                       ALBUQUERQUE, NEW MEXICO

We have audited the accompanying balance sheet of ALBUQUERQUE-LAFAYETTE SQUARE
APARTMENTS, LTD., Project No. 116-44022-LDP, as of DECEMBER 31, 1995, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ALBUQUERQUE-LAFAYETTE SQUARE
APARTMENTS, LTD. as of DECEMBER 31, 1995, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of
ALBUQUERQUE-LAFAYETTE SQUARE APARTMENTS, LTD.'s internal control structure and
reports dated January 22, 1996 on its compliance with laws and regulations
applicable to the basic financial statements, the major HUD Program, and the
nonmajor HUD program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of ALBUQUERQUE-LAFAYETTE SQUARE APARTMENTS,
LTD. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken
as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [REZNICK FEDDER & SILVERMAN-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners 
Roper Mountain Apartments, Ltd.

     We have audited the accompanying balance sheets of Roper Mountain
Apartments, Ltd. as of December 31, 1996 and 1995, and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Roper Mountain Apartments,
Ltd. as of December 31, 1996 and 1995, and the results of its operations, the
changes in partners' equity (deficit) and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

     Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information is
presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.


/S/ REZNICK FEDDER & SILVERMAN

Boston, Massachusetts
January 15, 1997

<PAGE>


               [Letterhead of Nessel, Smith, Leff & Borsen, PLLC]

                          INDEPENDENT AUDITORS' REPORT

WARREN MANOR APARTMENTS LIMITED PARTNERSHIP
28777 Northwestern Highway, Suite 100 
Southfield, MI 48034

We have audited the accompanying comparative balance sheet of Warren Manor
Apartments Limited Partnership (a limited partnership) as of December 31, 1997
and 1996 and the related comparative statements of revenue and expense,
partners' equity, and cash flows and, supplemental schedules on pages 9-11 for
the years then ended. 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Warren Manor Apartments Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Nessel, Smith, Leff & Borsen, PLLC

NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI

January 30, 1998


<PAGE>

                 [WEINTRAUB, NESSEL & SMITH, PLLC-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

WARREN MANOR APARTMENTS LIMITED PARTNERSHIP
28777 Northwestern Highway, Suite 100 
Southfield, MI 48034


     We have audited the accompanying comparative balance sheet of Warren
Manor Apartments Limited Partnership (a limited partnership) as of December
31, 1996 and 1995 and the related comparative statements of revenue and
expense, partners' equity, cash flows and, supplemental schedules on pages 9-11
for the years then ended. 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 audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly
in all material respects the financial position of Warren Manor Apartments
Limited Partnership as of December 31, 1996 and 1995 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are
presented fairly in all material respects in relation to the basic financial
statements taken as a whole.


/S/ WEINTRAUB, NESSEL & SMITH, PLLC

WEINTRAUB, NESSEL & SMITH, PLLC
Certified Public Accountants
Farmington Hills, MI


February 6, 1997

<PAGE>


               [Letterhead of Nessel, Smith, Leff & Borsen, PLLC]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Golf Manor Apartments Limited Partnership
28777 Northwestern Highway, Suite 100 
Southfield, MI 48034

We have audited the accompanying Comparative Balance Sheet of Golf Manor
Apartments Limited Partnership (a limited partnership) as of December 31, 1997
and 1996 and the related Comparative Statements of Revenue and Expense,
Partners' Equity, Cash Flows and Supplemental Schedules on Pages 9-11 for the
years then ended. 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Golf Manor Apartments Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Nessel, Smith, Leff & Borsen, PLLC
--------------------------------------

NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI

January 28, 1998


<PAGE>

                 [WEINTRAUB, NESSEL & SMITH, PLLC-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT


To the Partners 
Golf Manor Apartments Limited Partnership 
28777 Northwestern Highway, Suite 100
Southfield, MI 48034


     We have audited the accompanying Comparative Balance Sheet of Golf Manor
Apartments Limited Partnership (a limited partnership) as of December 31, 1996
and 1995 and the related Comparative Statements of Revenue and Expense,
Partners' Equity, Cash Flows and Supplemental Schedules on Pages 9-11 for the
years then ended. 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 audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly
in all material respects the financial position of Golf Manor Apartments
Limited Partnership as of December 31, 1996 and 1995 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are
presented fairly in all material respects in relation to the basic financial
statements taken as a whole.


/S/ WEINTRAUB, NESSEL & SMITH, PLLC

WEINTRAUB, NESSEL & SMITH, PLLC
Certified Public Accountants
Farmington Hills, MI


January 24, 1997

<PAGE>



                [Nessel, Smith, Leff & Borsen, PLLC Letterhead]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Warren Woods Apartments Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034

We have audited the accompanying Comparative Balance Sheet of Warren Woods
Apartments Limited Partnership (a limited partnership) as of December 31, 1997
and 1996 and the related Comparative Statements of Revenue and Expense,
Partners' Equity, Cash Flows and Supplemental Schedules on Pages 9-11 for the
years then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Warren Woods Apartments Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.


/s/ NESSEL, SMITH, LEFF & BORSEN, PLLC

NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI

February 6, 1998



<PAGE>

                 [WEINTRAUB, NESSEL & SMITH, PLLC-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners 
Warren Woods Apartments Limited Partnership 
28777 Northwestern Highway, Suite 100 
Southfield, MI 48034

     We have audited the accompanying Comparative Balance Sheet of Warren
Woods Apartments Limited Partnership (a limited partnership) as of December
31, 1996 and 1995 and the related Comparative Statements of Revenue and
Expense, Partners' Equity, Cash Flows and Supplemental Schedules on Pages 9-11
for the years then ended. 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 audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects the financial position of Warren Woods Apartments
Limited Partnership as of December 31, 1996 and 1995 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are
presented fairly in all material respects in relation to the basic financial
statements taken as a whole.


/S/ WEINTRAUB, NESSEL & SMITH, PLLC

WEINTRAUB, NESSEL & SMITH, PLLC
Certified Public Accountants
Farmington Hills, MI

January 29, 1997

<PAGE>



                [Nessel, Smith, Leff & Borsen, PLLC Letterhead]


                          INDEPENDENT AUDITORS' REPORT


To the Partners
Canton Commons Apartments Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034

We have audited the accompanying Comparative Balance Sheet of Canton Commons
Apartments Limited Partnership (a limited partnership) as of December 31, 1997
and 1996 and the related Comparative Statements of Revenue and Expense,
Partners' Equity, Cash Flows and Supplemental Schedules on Pages 9-11 for the
years then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Canton Commons Apartments Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ NESSEL, SMITH, LEFF & BORSEN, PLLC

NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI

January 30, 1998



<PAGE>

                 [WEINTRAUB, NESSEL & SMITH, PLLC-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT

To the Partners 
Canton Commons Apartments Limited Partnership 
28777 Northwestern Highway, Suite 100 
Southfield, MI 48034


     We have audited the accompanying Comparative Balance Sheet of Canton
Commons Apartment Limited Partnership (a limited partnership) as of December
31, 1996 and 1995 and the related Comparative Statements of Revenue and
Expense, Partners' Equity, Cash Flows and Supplemental Schedules on Pages
9-11 for the years then ended. 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 audit.

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

     In our opinion, the financial statements referred to above present fairly
in all material respects the financial position of Canton Commons Apartments
Limited Partnership as of December 31, l996 and 1995 and the result of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are
presented fairly in all material respects in relation to the basic financial
statements taken as a whole.


/S/ WEINTRAUB, NESSEL & SMITH, PLLC

WEINTRAUB, NESSEL & SMITH, PLLC
Certified Public Accountants
Farmington Hills, MI


January 23, 1997

<PAGE>


                [Nessel, Smith, Leff & Borsen, PLLC Letterhead]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Los Caballeros Apartments
28777 Northwestern Highway, Suite 100
Southfield, Michigan 48034

We have audited the accompanying Balance Sheet of Los Caballeros Apartments (a
limited partnership) as of and April 25, 1997 and the related Statements of
Revenue and Expense, Partners' Deficiency, Cash Flows and Supplemental
Information on Pages 9-11 for the period then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Los Caballeros Apartments as of
April 25, 1997 and the results of its operations and its cash flows for the
period then ended, in conformity with generally accepted accounting principles.
The supporting data included in this report have been subjected to the same
auditing procedures applied in the examination of the basic financial statements
and, in our opinion, are presented fairly in all material respects in relation
to the basic financial statements taken as a whole.

The accompanying financial statements have been prepared assuming the limited
partnership will continue as a going concern. As discussed in the notes to the
financial statements, Los Caballeros Apartments has been rendered in default of
their regulatory agreement, in default with the three Housing Assistance
Payments contracts and is therefore, as a result, in default under the mortgage.
These problems raise substantial doubt about the entity's ability to continue as
a going concern.

/s/ NESSEL, SMITH, LEFF & BORSEN, PLLC

NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI

February 10, 1998


<PAGE>

                 [WEINTRAUB, NESSEL & SMITH, PLLC-LETTERHEAD]


                         INDEPENDENT AUDITORS' REPORT


Los Caballeros Apartments
28777 Northwestern Highway, Suite 100
Southfield, Michigan 48034



We have audited the accompanying Comparative Balance Sheet of Los Caballeros
Apartments (a limited partnership) as of December 31, 1996 and 1995 and the
related Comparative Statements of Revenue and Expense, Partners' Equity, Cash
Flows and Supplemental Information on Pages 11-12 for the years then ended.
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 audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material missatatement. 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly in
all material respects the financial position of Los Caballeros Apartments as
of December 31, 1996 and 1995 and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles. The supporting data included in this report have been
subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.

The accompanying financial statements have been prepared assuming the limited
partnership will continue as a going concern. As discussed in the notes to the
financial statements, Los Caballeros Apartments has been rendered in default of
their regulatory agreement, in default with the three Housing Assistance Payment
contracts, and is therefore, as a result, in default under the mortgage. These
problems raise substantial doubt about the entity's ability to continue as a
going concern.


/S/ WEINTRAUB, NESSEL & SMITH, PLLC

WEINTRAUB, NESSEL & SMITH, PLLC
Certified Public Accountants
Farmington Hills, MI


February 6, 1997,

except for Going Concern Note,
as to which the date is
February 13, 1997



<PAGE>


                [Nessel, Smith, Leff & Borsen, PLLC Letterhead]

                          INDEPENDENT AUDITORS' REPORT


To the Partners
ROSEWOOD MANOR APARTMENTS
28777 Northwestern Highway, Suite 100
Southfield, MI 48034

We have audited the accompanying Comparative Balance Sheet of Rosewood Manor
Apartments (a limited partnership) as of December 31, 1997 and 1996 and the
related Statements of Revenue and Expense, Partners' Equity, and Cash Flows and
Supplemental schedules on Page 9-11 for the year then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Rosewood Manor Apartments as of
December 31, 1997 and 1996 and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles. The supporting data included in this report have been subjected to
the same auditing procedures applied in the examination of the basic financial
statements and, in our opinion, are presented fairly in all material respects in
relation to the basic financial statements taken as a whole.


/s/ Nessel, Smith, Leff & Borsen, PLLC

NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI

January 28, 1998




<PAGE>

                 [WEINTRAUB, NESSEL & SMITH, PLLC-LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT


To the Partners
ROSEWOOD MANOR APARTMENTS
28777 Northwestern Highway, Suite 100
Southfield, MI 48034


We have audited the accompanying Comparative Balance Sheet of Rosewood Manor
Apartments (a limited partnership) as of December 31, 1996 and 1995 and the
related Statements of Revenue and Expense, Partners' Equity, and Cash Flows and
Supplemental schedules on Page 9-11 for the year then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Rosewood Manor Apartments as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles. The supporting data included in this report have been subjected to
the same auditing procedures applied in the examination of the basic financial
statements and, in our opinion, are presented fairly in all material respects in
relation to the basic financial statements taken as a whole.


/S/ WEINTRAUB, NESSEL & SMITH, PLLC

WEINTRAUB, NESSEL & SMITH, PLLC
Certified Public Accountants
Farmington Hills, MI

January 28, 1997

<PAGE>



                     [Bocknek, Berger & Ghersi Letterhead]


                          Independent Auditors' Report


Grosvenor South Apartments Limited Partnership
One Towne Square, Suite 1913
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                 GROSVENOR SOUTH APARTMENTS LIMITED PARTNERSHIP
                             (a Limited partnership)

as of December 12, 1997, and the related Statements of Revenue and Expense,
Partners' Equity and Cash Flows for the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Grosvenor South Apartments
Limited Partnership as of December 12, 1997, and the results of its operations,
changes in partners' equity and its cash flows for the period then ended in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is presented
for the purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


/s/ BOCKNEK, BERGER & GHERSI
----------------------------
BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 5, 1998


<PAGE>

                     [BOCKNEK, BERGER & GHERSI-LETTERHEAD]

                         Independent Auditors' Report

GROSVENOR SOUTH APARTMENTS LIMITED PARTNERSHIP
One Towne Square, Suite 1913
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                GROSVENOR SOUTH APARTMENTS LIMITED PARTNERSHIP
                            (a Limited partnership)

as of December 31, 1996 and 1995, and the related Statements of Revenue and
Expense, Partners' Equity and Cash Flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GROSVENOR SOUTH APARTMENTS
LIMITED PARTNERSHIP as of December 31, 1996 and 1995, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is
presented for the purposes of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.


/S/ BOCKNEK, BERGER & GHERSI

BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 1, 1997

<PAGE>



                      [Bocknek, Berger & Ghersi Letterhead]


                          Independent Auditors' Report

Grosvenor South Apartments #2 Limited Partnership
One Towne Square, Suite 1913
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                GROSVENOR SOUTH APARTMENTS #2 LIMITED PARTNERSHIP
                             (a Limited partnership)

as of December 12, 1997, and the related Statements of Revenue and Expense,
Partners' Equity and Cash Flows for the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Grosvenor South Apartments #2
Limited Partnership as of December 12, 1997, and the results of its operations,
changes in partners' equity and its cash flows for the period then ended in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is presented
for the purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ BOCKNEK, BERGER & GHERSI
----------------------------
BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 5, 1998


<PAGE>

                     [BOCKNEK, BERGER & GHERSI-LETTERHEAD]

                         Independent Auditors' Report

GROSVENOR SOUTH APARTMENTS #2 LIMITED PARTNERSHIP
One Towne Square, Suite 1913
Southfield, Michigan 48076


Gentlemen:

We have audited the accompanying Balance Sheet of

                GROSVENOR SOUTH APARTMENTS #2 LIMITED PARTNERSHIP
                            (a Limited partnership)

as of December 31, 1996 and 1995, and the related Statements of Revenue and
Expense, Partners' Equity and Cash Flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GROSVENOR SOUTH APARTMENTS #2
LIMITED PARTNERSHIP as of December 31, 1996 and 1995, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is
presented for the purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.



/S/ BOCKNEK, BERGER & GHERSI

BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 1, 1997

<PAGE>



                     [Bocknek, Berger & Ghersi Letterhead]


                          Independent Auditors' Report

Clinton Plaza Apartments Limited Partnership
One Towne Square, Suite 1913
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                  CLINTON PLAZA APARTMENTS LIMITED PARTNERSHIP
                             (a Limited partnership)

as of December 12, 1997, and the related Statements of Revenue and Expense,
Partners' Equity and Cash Flows for the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clinton Plaza Apartments
Limited Partnership as of December 12, 1997, and the results of its operations,
changes in partners' equity and its cash flows for the period then ended in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is presented
for the purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Bocknek, Berger & Ghersi
----------------------------

BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 5, 1998


<PAGE>

                    [BOCKNEK, BERGER & GHERSI-LETTERHEAD]

                         Independent Auditors' Report


CLINTON PLAZA APARTMENTS LIMITED PARTNERSHIP
One Towne Square, Suite 1913 
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                 CLINTON PLAZA APARTMENTS LIMITED PARTNERSHIP
                            (a Limited partnership)

as of December 31, 1996 and 1995, and the related Statements of Revenue and
Expense, Partners' Equity and Cash Flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CLINTON PLAZA APARTMENTS
LIMITED PARTNERSHIP as of December 31, 1996 and 1995, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is
presented for the purposes of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.


/S/ BOCKNEK, BERGER & GHERSI

BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 1, 1997
<PAGE>



                     [Bocknek, Berger & Ghersi Letterhead]


                          Independent Auditors' Report

Clinton Plaza Apartments #2 Limited Partnership
One Towne Square, Suite 1913
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                 CLINTON PLAZA APARTMENTS #2 LIMITED PARTNERSHIP
                             (a Limited partnership)

as of December 12, 1997, and the related Statements of Revenue and Expense,
Partners' Equity and Cash Flows for the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clinton Plaza Apartments #2
Limited Partnership as of December 12, 1997, and the results of its operations,
changes in partners' equity and its cash flows for the period then ended in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is presented
for the purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


/s/ Bocknek, Berger & Ghersi
----------------------------
BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 5, 1998


<PAGE>

                    [BOCKNEK, BERGER & GHERSI-LETTERHEAD]

                         Independent Auditors' Report


CLINTON PLAZA APARTMENTS #2 LIMITED PARTNERSHIP
One Towne Square, Suite 1913 
Southfield, Michigan 48076

Gentlemen:

We have audited the accompanying Balance Sheet of

                CLINTON PLAZA APARTMENTS #2 LIMITED PARTNERSHIP
                            (a Limited partnership)

as of December 31, 1996 and 1995, and the related Statements of Revenue and
Expense, Partners' Equity and Cash Flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CLINTON PLAZA APARTMENTS #2
LIMITED PARTNERSHIP as of December 31, 1996 and 1995, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended in conformity with qenerally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information is
presented for the purposes of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.


/S/ BOCKNEK, BERGER & GHERSI

BOCKNEK, BERGER & GHERSI
Certified Public Accountants
Professional Corporation
Bloomfield Hills, Michigan

February 1, 1997

<PAGE>

                   [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report


To the Board of Directors of
OAKLAND-KELLER PLAZA


We have audited the accompanying balance sheet of OAKLAND-KELLER PLAZA as of
DECEMBER 31, 1996, and the related statements of income, changes in partners'
equity, and cash flows for the year then ended. 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 audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of OAKLAND-KELLER PLAZA as of
DECEMBER 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.


/S/ BROWDER & ASSOCIATES, P.C.
BROWDER & ASSOCIATES, P.C.


Birmingham, Alabama 
February 24, 1997   

<PAGE>

                     [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report


To the Partners of
OAKLAND-KELLER PLAZA
Oakland, California

                                                     HUD Field Office Director
                                                     SAN FRANCISCO, CALIFORNIA

We have audited the accompanying balance sheet of OAKLAND-KELLER PLAZA,
Project No. 121-44216-LDP, as of December 31, 1995, and the related statements
of profit and loss, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of OAKLAND-KELLER PLAZA as of
DECEMBER 31, 1995, and the results of its operations, changes in partners'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of OAKLAND-KELLER
PLAZA's internal control structure and reports dated January 22, 1996 on its
compliance with laws and regulations applicable to the basic financial
statements, the major HUD program, and the nonmajor HUD program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of OAKLAND-KELLER PLAZA. Such information
has been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156
Audit Principal: E.O. Browder, Jr.

<PAGE>

                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report

To the Partners of
San Diego-Logan Square Gardens Company
San Diego, California

We have audited the accompanying balance sheet of San Diego-Logan Square Gardens
Company (the Project), as of December 31, 1997, and the related statements of
profit and loss, changes in partners' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.


/s/ Browder & Associates, P.C.
Birmingham, Alabama                    Federal Employer Identification Number:
January 19, 1998                                                     63-0986156

Audit Principal: E.O. Browder, Jr.




<PAGE>

                   [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
SAN DIEGO-LOGAN SQUARE GARDENS COMPANY 
San Diego, California

                                                       HUD Field Office Director
                                                           SAN DIEGO, CALIFORNIA

We have audited the accompanying balance sheet of SAN DIEGO-LOGAN SQUARE
GARDENS COMPANY, Project No. 129-44051-LD, as of DECEMBER 31, 1996, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD
Programs (the "Guide") issued by the U.S. Department of Housing and Urban
Development, Office of Inspector General in July 1993. Those standards and the
Guide 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SAN DIEGO-LOGAN SQUARE GARDENS
COMPANY as of DECEMBER 31, 1996, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 20, 1997 on our consideration of SAN DIEGO-LOGAN
SQUARE GARDENS COMPANY's internal control structure and reports dated January
20, 1997 on its compliance with specific requirements applicable to the major
HUD programs, specific requirements applicable to Affirmative Fair Housing, and
laws and regulations applicable to the basic financial statements.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of SAN DIEGO-LOGAN SQUARE GARDENS COMPANY.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements, and in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 20, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.



<PAGE>

                   [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
SAN DIEGO-LOGAN SQUARE GARDENS COMPANY 
San Diego, California

                                                      HUD Field Office Director
                                                         SAN DIEGO, CALIFORNIA

We have audited the accompanying balance sheet of SAN DIEGO-LOGAN SQUARE
GARDENS COMPANY, Project No. 129-44051-LD, as of DECEMBER 31, 1995, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD
Programs (the "Guide") issued by the U.S. Department of Housing and Urban
Development, Office of Inspector General in July 1993. Those standards and the
Guide 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SAN DIEGO-LOGAN SQUARE GARDENS
COMPANY as of DECEMBER 31, 1995, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of SAN DIEGO-LOGAN
SQUARE GARDENS COMPANY's internal control structure and reports dated January
22, 1996 on its compliance with laws and regulations applicable to the basic
financial statements and the major HUD programs.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of SAN DIEGO-LOGAN SQUARE GARDENS COMPANY.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>


                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report
To the Partners of
Blue Ridge Manor, Ltd.
Grandview, Missouri

We have audited the accompanying balance sheet of Blue Ridge Manor, Ltd. (the
Project), as of December 31, 1997, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's  management.
Our responsibility is to express an opinion on these financial statements based 
on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.


/s/ Browder & Associates, P.C.

Birmingham, Alabama                    Federal Employer Identification Number:
January 16, 1998                                                     63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of
GRANDVIEW-BLUE RIDGE MANOR
Grandview, Missouri

                                                     HUD Field Office Director
                                                         KANSAS CITY, MISSOURI

We have audited the accompanying balance sheet of GRANDVIEW-BLUE RIDGE MANOR,
Project No. 084-44127-LDP, as of DECEMBER 31, 1996, and the related statements
of profit and loss, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GRANDVIEW-BLUE RIDGE MANOR as
of DECEMBER 31, 1996, and the results of its operations, changes in partners'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 20, 1997 on our consideration of GRANDVIEW-BLUE
RIDGE MANOR's internal control structure and reports dated January 20, 1997 on
its compliance with specific requirements applicable to the major HUD program,
and specific requirements applicable to Affirmative Fair Housing and, laws and
regulations applicable to the basic financial statements.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of GRANDVIEW-BLUE RIDGE MANOR. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 20, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]


                         Independent Auditor's Report


To the Partners of
GRANDVIEW-BLUE RIDGE MANOR
Grandview, Missouri

                                                     HUD Field Office Director
                                                         KANSAS CITY, MISSOURI

We have audited the accompanying balance sheet of GRANDVIEW-BLUE RIDGE MANOR,
Project No. 084-44127-LDP, as of DECEMBER 31, 1995, and the related statements
of profit and loss, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GRANDVIEW-BLUE RIDGE MANOR as
of DECEMBER 31, 1995, and the results of its operations, changes in partners'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of GRANDVIEW-BLUE
RIDGE MANOR's internal control structure and reports dated January 22, 1996 on
its compliance with laws and regulations applicable to the basic financial
statements and the major HUD programs.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of GRANDVIEW-BLUE RIDGE MANOR. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>


                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report


To the Partners of
Ardmore-Rolling Meadows of Ardmore, Ltd.
Ardmore, Oklahoma

We have audited the accompanying balance sheet of Ardmore-Rolling Meadows of
Ardmore, Ltd. (the Project), as of December 31, 1997, and the related statements
of profit and loss, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the Project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in 
relation to the financial statements taken as a whole.

/s/ Browder & Associates, P.C.
Birmingham, Alabama                    Federal Employer Identification Number:
January 19, 1998                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
ROLLING MEADOWS OF ARDMORE, LTD.-PECAN CREEK 
Ardmore, Oklahoma

                                                     HUD Field Office Director
                                                       OKLAHOMA CITY, OKLAHOMA

We have audited the accompanying balance sheet of ROLLING MEADOWS OF
ARDMORE, LTD.-PECAN CREEK, Project No. 117-44044-LD, as of DECEMBER 31, 1996,
and the related statements of profit and loss, changes in partners' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING MEADOWS OF ARDMORE,
LTD.-PECAN CREEK as of DECEMBER 31, 1996, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in conformity
with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 10, 1997 on our consideration of ROLLING MEADOWS
OF ARDMORE, LTD.-PECAN CREEK's internal control structure and reports dated
February 10, 1997 on its compliance with specific requirements applicable to the
major HUD program, specific requirements applicable to the non-major HUD
program, specific requirements applicable to Affirmative Fair Housing, and laws
and regulations applicable to the basic financial statements.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements of ROLLING MEADOWS OF ARDMORE, LTD.-PECAN CREEK.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
February 10, 1997                                       Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
ARDMORE-ROLLING MEADOWS OF ARDMORE, LTD. 
Ardmore, Oklahoma

                                                     HUD Field Office Director
                                                       OKLAHOMA CITY, OKLAHOMA

We have audited the accompanying balance sheet of ARDMORE-ROLLING MEADOWS OF
ARDMORE, LTD., PROJECT No. 117-44044-LD, as of DECEMBER 31, 1995, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ARDMORE-ROLLING MEADOWS OF
ARDMORE, LTD. as of DECEMBER 31, 1995, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of ARDMORE-ROLLING
MEADOWS OF ARDMORE, LTD.'s internal control structure and reports dated
January 22, 1996 on its compliance with laws and regulations applicable to the
basic financial statements. the major HUD program, and the nonmajor HUD
program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of ARDMORE-ROLLING MEADOWS OF ARDMORE, LTD.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>


                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report

To the Partners of
El Paso-Gateway East Apartments, Ltd.
El Paso, Texas

We have audited the accompanying balance sheet of El Paso-Gateway East
Apartments, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/ Browder & Associates, P.C.
Birmingham, Alabama                    Federal Employer Identification Number:
January 19, 1998                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of
EL PASO-GATEWAY EAST, LTD.
El Paso, Texas
                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS

We have audited the accompanying balance sheet of EL PASO-GATEWAY EAST, LTD.,
Project No. 133-44016-LD, as of DECEMBER 31, 1996, and the related statements
of profit and loss, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EL PASO-GATEWAY EAST, LTD.
as of DECEMBER 31, 1996, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 20, 1997 on our consideration of EL PASO-GATEWAY
EAST, LTD.'s internal control structure and reports dated January 20, 1997 on
its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD program, specific
requirements applicable to the nonmajor HUD program and specific requirements
applicable to Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of EL PASO-GATEWAY EAST, LTD. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 20, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]


                         Independent Auditor's Report


To the Partners of
EL PASO-GATEWAY EAST, LTD.
El Paso, Texas
                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS

We have audited the accompanying balance sheet of EL PASO-GATEWAY EAST, LTD.,
Project No. 133-44016-LD, as of DECEMBER 31, 1995, and the related statements
of profit and loss, changes in partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EL PASO-GATEWAY EAST, LTD.
as of DECEMBER 31, 1995, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of EL
PASO-GATEWAY EAST, LTD.'s internal control structure and reports dated January
22, 1996 on its compliance with laws and regulations applicable to the basic
financial statements, the major HUD program, and the nonmajor HUD program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of EL PASO-GATEWAY EAST, LTD. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>


                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report

To the Partners of
Fort Worth-Northwood Apartments, Ltd.
Fort Worth, Texas

We have audited the accompanying balance sheet of Fort Worth-Northwood
Apartments, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in 
relation to the financial statements taken as a whole.

/s/ Browder & Associates, P.C.
Birmingham, Alabama                    Federal Employer Identification Number:
January 19, 1998                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                          Independent Auditor's Report

To the Partners of 
FORT WORTH-NORTHWOOD APARTMENTS, LTD. 
Fort Worth, Texas

                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS

We have audited the accompanying balance sheet of FORT WORTH-NORTHWOOD
APARTMENTS, LTD., Project No. 113-44025, as of DECEMBER 31, 1996, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FORT WORTH-NORTHWOOD
APARTMENTS, LTD. as of DECEMBER 31, 1996, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 29, 1997 on our consideration of FORT
WORTH-NORTHWOOD APARTMENTS, LTD.'s internal control structure and reports dated
January 29, 1997 on its compliance with laws and regulations applicable to the
basic financial statements, specific requirements applicable to the major HUD
program, specific requirements applicable to the non-major HUD program and
specific requirements applicable to Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of FORT WORTH-NORTHWOOD APARTMENTS, LTD.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 29, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                          Independent Auditor's Report

To the Partners of 
FORT WORTH-NORTHWOOD APARTMENTS, LTD. 
Fort Worth Texas

                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS

We have audited the accompanying balance sheet of FORT WORTH-NORTHWOOD
APARTMENTS, LTD., Project No. 113-44025, as of DECEMBER 31, 1995, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FORT WORTH-NORTHWOOD
APARTMENTS, LTD. as of DECEMBER 31, 1995, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting Principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration of FORT
WORTH-NORTHWOOD APARTMENTS, LTD.'s internal control structure and reports
dated January 22, 1996 on its compliance with laws and regulations applicable
to the basic financial statements, the major HUD program, and the nonmajor HUD
program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of FORT WORTH-NORTHWOOD APARTMENTS, LTD.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.

<PAGE>


                   [LETTERHEAD OF BROWDER & ASSOCIATES, P.C.]

                          Independent Auditor's Report

To the Partners of
Stephenville-Tarleton Arms Apartments, Ltd.
Stephenville, Texas

We have audited the accompanying balance sheet of Stephenville-Tarleton Arms
Apartments, Ltd. (the Project), as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/ Browder & Associates, P.C.
Birmingham, Alabama                    Federal Employer Identification Number:
January 19, 1998                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]

                         Independent Auditor's Report

To the Partners of 
STEPHENVILLE-TARLETON ARMS APARTMENTS, LTD. 
Stephenville, Texas

                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS

We have audited the accompanying balance sheet of STEPHENVILLE-TARLETON ARMS
APARTMENTS, LTD., Project No. 113-44034-LD, as of DECEMBER 31, 1996, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of STEPHENVILLE-TARLETON ARMS
APARTMENTS, LTD. as of DECEMBER 31, 1996, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 29, 1997 on our consideration of
STEPHENVILLE-TARLETON ARMS APARTMENTS, LTD.'s internal control structure and
reports dated January 29, 1997 on its compliance with laws and regulations
applicable to the basic financial statements, specific requirements applicable
to the major HUD program, specific requirements applicable to the non-major HUD
program, and specific requirements applicable to Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of STEPHENVILLE-TARLETON ARMS APARTMENTS,
LTD. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken
as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 29, 1997                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>

                    [BROWDER & ASSOCIATES, P.C.-LETTERHEAD]


                         Independent Auditor's Report


To the Partners of 
STEPHENVILLE-TARLETON ARMS APARTMENTS, LTD. 
Stephenville, Texas

                                                     HUD Field Office Director
                                                             FORT WORTH, TEXAS

We have audited the accompanying balance sheet of STEPHENVILLE-TARLETON ARMS
APARTMENTS, LTD., Project No. 113-44034-LD, as of December 31, 1995, and the
related statements of profit and loss, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide") issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993. Those standards and the Guide
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of STEPHENVILLE-TARLETON ARMS
APARTMENTS, LTD. as of DECEMBER 31, 1995, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated January 22, 1996 on our consideration OF
STEPHENVILLE-TARLETON ARMS APARTMENTS, LTD.'s internal control structure and
reports dated January 22, 1996 on its compliance with laws and regulations
applicable to the basic financial statements, the major HUD program, and the
nonmajor HUD program.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements of STEPHENVILLE-TARLETON ARMS APARTMENTS,
LTD. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken
as a whole.


/S/ BROWDER & ASSOCIATES, P.C.

Birmingham, Alabama                                           Federal Employer
January 22, 1996                                        Identification Number:
                                                                    63-0986156

Audit Principal: E.O. Browder, Jr.


<PAGE>



                   [Robert Ercolini & Company LLP Letterhead]


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

The General Partners of
Bay Village Company
(a Massachusetts Limited Partnership)
Boston, Massachusetts

We have audited the accompanying balance sheets of Bay Village Company (a
Massachusetts Limited Partnership) as of December 31, 1997 and 1996 and the
related statements of operations, partners equity, and cash flows for each of
the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bay Village Company (a
Massachusetts Limited Partnership) as of December 31, 1997 and 1996, and the
results of its operations, changes in partners' equity, and its cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.


/s/ Robert Ercolini & Company LLP

Boston, Massachusetts
January 23, 1998



<PAGE>

                   [ROBERT ERCOLINI & COMPANY LLP-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT


The General Partners of
Bay Village Company
(a Massachusetts Limited Partnership)
Boston, Massachusetts


We have audited the accompanying balance sheets of Bay Village Company (a
Massachusetts Limited Partnership) as of December 31, l996 and 1995 and the
related statements of operations, partners' equity, and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bay Village Company (a
Massachusetts Limited Partnership) as of December 31, 1996 and 1995, and the
results of its operations, changes in partners' equity, and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.


/S/ ROBERT ERCOLINI & COMPANY LLP
Boston, Massachusetts

January 30, 1997

<PAGE>



             [Williams, Crosslin, Sparks & Vaden, P.C. Letterhead]

          REPORT ON AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                          Independent Auditors' Report
                          ----------------------------

To The Partners of
Buena Vista Manor Apartments, Ltd.
(A Tennessee Limited Partnership)
Nashville, Tennessee

We have audited the accompanying balance sheet of Buena Vista Manor Apartments,
Ltd., (a Tennessee limited partnership), HUD Project No. 086-35009-SUP-LD as of
December 31, 1997, and the related statements of profit and loss, changes in
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Buena Vista Manor Apartments, Ltd.,
at December 31, 1997, and the results of its operations, changes in partners'
equity and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information contained in the report
shown on pages 16 to 24 is presented for the purpose of additional analysis and
is not a required part of the basic financial statements of Buena Vista Manor
Apartments, Ltd. Such information has been subjected to the procedures applied
in the audit of the financial statements and, in our opinion, is fairly
presented in all material respects in relation to the financial statements taken
as a whole.
<PAGE>


To The Partners of
Buena Vista Manor Apartments, Ltd.
Page 2

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs" (the "Guide") issued by the U.S. Department of
Housing and Urban Development, Office of Inspector General in August 1997, we
have also issued reports dated January 26, 1998 on our consideration of Buena
Vista Manor Apartments, Ltd.'s, internal controls, its compliance with laws and
regulations, its compliance with specific requirements applicable to major
HUD-assisted programs and its compliance with specific requirements applicable
to fair housing and non-discrimination.

/s/ Williams, Crosslin, Sparks & Vaden, P.C.

Nashville, Tennessee
January 26, 1998



<PAGE>

            [WILLIAMS, CROSSLIN, SPARKS & VADEN, P.C.-LETTERHEAD]

         REPORT ON AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA


                        Independent Auditors' Report

To The Partners of
Buena Vista Manor Apartments, Ltd.
(A Tennessee Limited Partnership)
Nashville, Tennessee


We have audited the accompanying balance sheet of Buena Vista Manor
Apartments, Ltd., (a Tennessee limited partnership), HUD Project No.
086-35009-SUP-LD as of December 31, 1996, and the related statements of profit
and loss, changes in partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of Buena Vista Manor Apartments,
Ltd., at December 31, 1996, and the results of its operations, changes in
partners' equity and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued reports
dated January 31, 1997 on our consideration of Buena Vista Manor Apartments,
Ltd.'s, internal control structure, its compliance with laws and regulations,
its compliance with specific requirements applicable to major HUD-assisted
programs and its compliance with specific requirements applicable to
affirmative fair housing.

<PAGE>

To the Partners of
Buena Vista Manor Apartments, Ltd.
Page 2


Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information contained in the report
shown on pages 16 to 24 is presented for the purpose of additional analysis
and is not a required part of the basic financial statements of Buena Vista
Manor Apartments, Ltd. Such information has been subjected to the procedures
applied in the audit of the financial statements and, in our opinion, is
fairly presented in all material respects in relation to the financial
statements taken as a whole.


/S/ WILLIAMS, CROSSLIN, SPARKS & VADEN, P.C.

Nashville, Tennessee
January 31, 1997

<PAGE>

  [WILLIAMS, CROSSLIN, SPARKS & VADEN, P.C.-LETTERHEAD - NASHVILLE, TENNESSEE]

         REPORT ON AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                        Independent Auditors' Report

To The Partners of
Buena Vista Manor Apartments, Ltd.
(A Tennessee Limited Partnership)
Nashville, Tennessee


We have audited the accompanying balance sheet of Buena Vista Manor
Apartments, Ltd., (a Tennessee limited partnership), HUD Project No.
086-35009-SUP-LD as of December 31, 1995, and the related statements of profit
and loss, changes in partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards issued by the Comptroller General
of the United States. Those standards and the Guide 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of Buena Vista Manor Apartments,
Ltd., at December 31, 1995, and the results of its operations, changes in
partners' equity and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued reports
dated January 26, 1996 on our consideration of Buena Vista Manor Apartments,
Ltd.'s, internal control structure, its compliance with laws and regulations,
its compliance with specific requirements applicable to major HUD-assisted
programs and its compliance with specific requirements applicable to
affirmative fair housing.

<PAGE>

To the Partners of
Buena Vista Manor Apartments, Ltd.
Page 2


Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information contained in the report
shown on pages 15 to 24 is presented for the purpose of additional analysis
and is not a required part of the basic financial statements of Buena Vista
Manor Apartments, Ltd. Such information has been subjected to the procedures
applied in the audit of the financial statements and, in our opinion, is
fairly presented in all material respects in relation to the financial
statements taken as a whole.


/S/ WILLIAMS, CROSSLIN, SPARKS & VADEN, P.C.

January 26, 1996

<PAGE>



               [Onstott, Craddick & Hyde CPA's, Inc. Letterhead]


Independent Auditor's Report
-----------------------------

To the Partners
Rolling Meadows Apartments, Ltd.

We have audited the accompanying balance sheet of HUD Project No. 117-44009-LD,
Rolling Meadows Apartments, LTD., (a limited partnership) as of December 31,
1997, and the related statements of income, changes in partners' capital and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 117-44009-LD,
Rolling Meadows Apartments, Ltd. at December 31, 1997 and the results of its
operations and changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 25, 1998, on our
consideration of Rolling Meadows Apartments, LTD.'s internal control and reports
dated February 25, 1998, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Affirmative Fair
Housing, and specific requirements applicable to nonmajor HUD program
transactions.


/s/ Onstott, Craddick & Hyde CPA's, Inc.

Onstott, Craddick & Hyde CPA's, Inc.
Oklahoma City, Oklahoma
February 25, 1998



<PAGE>

              [ONSTOTT, CRADDICK & HYDE, CPA'S, INC.-LETTERHEAD]

                         Independent Auditors' Report

To the Partners
Rolling Meadows Apartments, Ltd.


We have audited the balance sheet of HUD Project No. 117-44009-LD, Rolling
Meadows Apartments, LTD., (a limited partnership) as of December 31, 1996, and
the related statements of profit and loss, changes in partners' capital and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 117-44009-LD,
Rolling Meadows Apartments, Ltd. at December 31, 1996 and the results of its
operations and changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 25, 1997, on our
consideration of Rolling Meadows Apartments, LTD.'s internal control structure
and reports dated February 25, 1997, on its compliance with specific
requirements applicable to major HUD programs, specific requirements applicable
to Affirmative Fair Housing, and specific requirements applicable to nonmajor
HUD program transactions.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplementary information (shown
on Schedules 1 to 14) are presented for the purposes of additional analysis and
are not a required part of the financial statements of Rolling Meadows
Apartments, Ltd. Such information has been subjected to the auditing procedures
applied in the audit of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.


/S/ ONSTOTT, CRADDICK & HYDE CPA's, INC.

Onstott, Craddick & Hyde CPA's, Inc.
Oklahoma City, Oklahoma
February 25, 1997

<PAGE>

  [ONSTOTT, CRADDICK & HYDE, CPA'S, INC.-LETTERHEAD - OKLAHOMA CITY, OKLAHOMA]

                         Independent Auditors' Report

To the Partners
Rolling Meadows Apartments, Ltd.


We have audited the balance sheet of HUD Project No. 117-44009-LD, Rolling
Meadows Apartments, LTD., (a limited partnership) as of December 31, 1995, and
the related statements of profit and loss, changes in partners' capital and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 117-44009-LD,
Rolling Meadows Apartments, Ltd. at December 31, 1995 and the results of its
operations and changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report (shown
on Schedules 1 to 14) are presented for the purposes of additional analysis
and are not a required part of the financial statements of Rolling Meadows
Apartments, Ltd. Such information has been subjected to the auditing
procedures applied in the audit of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.


/S/ ONSTOTT, CRADDICK & HYDE CPA's, INC.

Onstott, Craddick & Hyde CPA's, Inc.
February 20, 1996

<PAGE>



                           [EDWARD LEMKIN Letterhead]


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

To the Partners
Westgate Associates Limited

      I have audited the accompanying balance sheet of Westgate Associates
Limited, HUD Project No.: 026-44008-SHM (a Vermont limited partnership) as of
December 31, 1997, and the related statements of profit & loss (HUD Form
#92410), partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.

      I conducted my audit in accordance with generally accepted auditing
standards and Governing Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my
opinion.

      In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Westgate Associates Limited,
HUD Project No.: 026-44008-SHM, as of December 31, 1997, and the results of its
operations, its changes in partners' capital, and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

      In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, I have also issued a report dated February 3, 1998, on my
consideration of Westgate Associates Limited's internal control structure and
reports dated February 3, 1998, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to Fair
Housing and Non-Discrimination, and specific requirements applicable to nonmajor
HUD programs transactions.

      My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 17-25 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of
Westgate Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

                                                     /s/ Edward Lemkin
                                                     -----------------
                                                     EDWARD LEMKIN
                                                     Certified Public Accountant

Orange, Connecticut
February 3, 1998



<PAGE>

                          [EDWARD LEMKIN-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT

To the Partners
Westgate Associates Limited

     I have audited the accompanying balance sheet of Westgate Associates
Limited, HUD Project No.: 026-44008-SHM (a Vermont limited partnership) as of
December 31, 1996, and the related statements of profit & loss (HUD Form
#92410), partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
My responsibility is to express an opinion on these financial statements
based on my audit.

     I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Westgate
Associates Limited, HUD Project No.: 026-44008-SHM, as of December 31, 1996,
and the results of its operations, its changes in partners' capital and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

     In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated February 3, 1997 on my
consideration of Westgate Associates Limited's internal control structure and
reports dated February 3, 1997, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to
Affirmative Fair Housing, and specific requirements applicable to nonmajor HUD
program transactions.

     My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 17-25 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of
Westgate Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


                                                    /S/ EDWARD LEMKIN

                                                      EDWARD LEMKIN
                                               Certified Public Accountant

Orange, Connecticut
February 3, 1997

<PAGE>

                          [EDWARD LEMKIN-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT

To the Partners
Westgate Associates Limited

     I have audited the accompanying balance sheet of Westgate Associates
Limited, HUD Project No.: 026-44008-SHM (a Vermont limited partnership) as of
December 31, 1995, and the related statements of profit & loss (HUD Form
#92410), partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
My responsibility is to express an opinion on these financial statements
based on my audit.

     I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Westgate
Associates Limited, HUD Project No.: 026-44008-SHM, as of December 31, 1995,
and the results of its operations, its changes in partners' capital and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

     In accordance with Government Auditing Standards, I have also issued a
report dated February 2, 1996 on consideration of Westgate Associates
Limited's internal control structure and a report dated February 2, 1996 on
its compliance with laws and regulations.

     The accompanying supplemental information (shown on pages 17 to 25) is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in my opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.


                                                    /S/ EDWARD LEMKIN

                                                      EDWARD LEMKIN
                                               Certified Public Accountant

Orange, Connecticut
February 2, 1996

<PAGE>



                           [EDWARD LEMKIN Letterhead]


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

To the Partners
Wingate Associates Limited

      I have audited the accompanying balance sheet of Wingate Associates
Limited, HUD Project No.: 024-44018-LDP (a New Hampshire limited partnership),
as of December 31, 1997, and the related statements of profit & loss (HUD Form
#92410), partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.

      I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my
opinion.

      In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wingate Associates Limited,
HUD Project No.: 024-44018-LDP, as of December 31, 1997, and the results of its
operations, its changes in partners' capital, and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

      In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, I have also issued a report dated February 3, 1998, on my
consideration of Wingate Associates Limited's internal control structure and
reports dated February 3, 1998, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to Fair
Housing and Non-Discrimination, and specific requirements applicable to nonmajor
HUD programs transactions.

      My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 17-25 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of Wingate
Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all respects in relation to the basic financial
statements taken as a whole.

                                                     /s/ Edward Lemkin          
                                                     
                                                     EDWARD LEMKIN
                                                     Certified Public Accountant

Orange, Connecticut
February 3, 1998




<PAGE>

                          [EDWARD LEMKIN-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT

To the Partners
Wingate Associates Limited


     I have audited the accompanying balance sheet of Wingate Associates
Limited, HUD Project No.: 024-44018-LDP (a New Hampshire limited partnership)
as of December 31, 1996, and the related statements of profit & loss (HUD Form
#92410), partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

     I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wingate Associates
Limited, HUD Project No.: 024-44018-LDP, as of December 31, 1996, and the
results of its operations, its changes in partners' capital and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.

     In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated February 1, 1997, on my
consideration of Wingate Associates Limited's internal control structure and
reports dated February 1, 1997, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to
Affirmative Fair Housing, and specific requirements applicable to nonmajor HUD
program transactions.

     My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 17-25 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of Wingate
Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

                                                    /S/ EDWARD LEMKIN

                                                      EDWARD LEMKIN
                                               Certified Public Accountant

Orange, Connecticut
February 1, 1997

<PAGE>

                          [EDWARD LEMKIN-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT

To the Partners
Wingate Associates Limited


     I have audited the accompanying balance sheet of Wingate Associates
Limited, HUD Project No.: 024-44018-LDP (a New Hampshire limited partnership)
as of December 31, 1995, and the related statements of profit & loss (HUD Form
#92410), partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

     I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wingate Associates
Limited, HUD Project No.: 024-44018-LDP, as of December 31, 1995, and the
results of its operations, its changes in partners' capital and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.

     In accordance with Government Auditing Standards, I have also issued a
report dated February 3, 1996 on my consideration of Wingate Associates
Limited's internal control structure and a report dated February 3, 1996 on
its compliance with laws and regulations.

     The accompanying supplemental information (shown on pages 17 to 25) is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in my opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.


                                                    /S/ EDWARD LEMKIN

                                                      EDWARD LEMKIN
                                               Certified Public Accountant

Orange, Connecticut
February 3, 1996

<PAGE>


                           [EDWARD LEMKIN Letterhead]

                          INDEPENDENT AUDTOR'S REPORT
                          ---------------------------

To the Partners
South Munjoy Associates Limited

      I have audited the accompanying statement of loss on sale of apartment
project of South Munjoy Associates Limited, HUD Project No.: 022-55002-LDP-R (a
Maine limited partnership) as of September 9, 1997, and the related statements
of profit & loss (HUD Form #92410), partners' capital, and cash flows for the
period then ended. These financial statements are the responsibility of the
partnership's management. My responsibility is to express an opinion on these
financial statements based on my audit.

      I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards issued by the Comptroller General of
the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my
opinion.

      In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of South Munjoy Associates
Limited, HUD Project No.: 022-55002-LDP-R, as of September 9, 1997, and the
results of its operations, its changes in partners' capital, and its cash flows
for the period then ended in conformity with generally accepted accounting
principles.

      In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, I have also issued a report dated January 11, 1998, on my
consideration of South Munjoy Associates Limited's internal control structure
and reports dated January 11, 1998, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to Fair
Housing and Non-Discrimination, and specific requirements applicable to nonmajor
HUD programs transactions.

      My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 16 to 22 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of South
Munjoy Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


                                                     /s/ Edward Lemkin          
                                                     
                                                     EDWARD LEMKIN
                                                     Certified Public Accountant

Orange, Connecticut
January 11, 1998



<PAGE>

                          [EDWARD LEMKIN-LETTERHEAD]

                         INDEPENDENT AUDITOR'S REPORT

To the Partners
South Munjoy Associates Limited


     I have audited the accompanying balance sheet of South Munjoy Associates
Limited, HUD Project No.: 022-55002-LDP-R (a Maine limited partnership) as of
December 31, 1996, and the related statements of profit & loss (HUD Form
#92410), partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

     I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of South Munjoy Associates
Limited, HUD Project No.: 022-55002-LDP-R, as of December 31, 1996, and the
results of its operations, its changes in partners' capital, and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

     In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated February 3, 1997, on my
consideration of South Munjoy Associates Limited's internal control structure
and reports dated February 3, 1997, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to
Affirmative Fair Housing, and specific requirements applicable to nonmajor HUD
program transactions.

     My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 18 to 26 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of South
Munjoy Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


                                                    /S/ EDWARD LEMKIN

                                                      EDWARD LEMKIN
                                               Certified Public Accountant

Orange, Connecticut
February 3, 1997

<PAGE>

                          [EDWARD LEMKIN-LETTERHEAD]

                          INDEPENDENT AUDITOR'S REPORT

To the Partners
South Munjoy Associates Limited


     I have audited the accompanying balance sheet of South Munjoy Associates
Limited, HUD Project No.: 022-55002-LDP-R (a Maine limited partnership) as of
December 31, 1995, and the related statements of profit & loss (HUD Form
#92410), partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

     I conducted my audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of South Munjoy Associates
Limited, HUD Project No.: 022-55002-LDP-R, as of December 31, 1995, and the
results of its operations, its changes in partners' capital, and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

     In accordance with Government Auditing Standards, I have also issued a
report dated February 6, 1996 on my consideration of South Munjoy Associates
Limited's internal control structure and a report dated February 6, 1996 on
its compliance with laws & regulations.

     The accompanying supplemental information (shown on pages 18 to 26) are
presented for the purpose of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in my opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.


                                                    /S/ EDWARD LEMKIN

                                                      EDWARD LEMKIN
                                               Certified Public Accountant

Orange, Connecticut
February 6, 1996

<PAGE>


               [Jeffrey Phillips Mosley & Scott, P.A. Letterhead]


INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners 
Cedar Hill Apartments:

We have audited the accompanying financial statements of Cedar Hill Apartments
(Project Number 082-44064 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. It 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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 16, 1998, on our
consideration of Cedar Hill Apartments' internal control and reports dated
January 16, 1998, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.


/s/ Jeffrey Phillips Mosley & Scott, P.A.

Little Rock, Arkansas
January 16, 1998


<PAGE>

   [JEFFREY PHILLIPS MOSLEY & SCOTT, P.A. - LETTERHEAD - LITTLE ROCK ARKANSAS]

INDEPENDENT AUDITORS' REPORT

To The Partners
Cedar Hill Apartments:

We have audited the accompanying financial statements of Cedar Hill Apartments
(Project Number 082-44064 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1996, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1996, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 16, 1977, on our consideration of Cedar Hill Apartments's internal
control structure and a report dated January 16, 1997, on its compliance with
laws and regulations.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11 - 15 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued July 1993 by the U.S. Department of Housing and Urban
Development, Office of Inspector General. Such schedules, which are the
responsibility of the General Partner, have been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

                  /s/ JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.


Little Rock, Arkansas
January 16, 1997

<PAGE>


  [JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.-LETTERHEAD - LITTLE ROCK, ARKANSAS]


INDEPENDENT AUDITORS' REPORT


To the Partners 
Cedar Hill Apartments:

We have audited the accompanying special-purpose balance sheet of Cedar Hill
Apartments (the "Partnership") as of December 31, 1995, and the related
special-purpose statements of profit and loss, partners' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the General Partner. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

The accompanying special-purpose financial statements have been prepared, as
described in Note 1 to the financial statements, for the purpose of
consolidation with those of Cambridge + Related Housing Properties Limited
Partnership ("Cambridge"), and on the basis of accounting practices specified
by the management of Cambridge. These financial statements are not intended to
be a presentation in conformity with generally accepted accounting principles.

In our opinion, such special-purpose financial statements present fairly, in
all material respects, the financial position of the Partnership at December
31, 1995, and the results of its operations and its cash flows for the year
then ended in conformity with the basis of accounting described in Note 1.

This report is intended solely for the information and use of the partners of
Cedar Hill Apartments, management and Cambridge and should not be used for any
other purpose.


/S/ JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.

January 26, 1996

<PAGE>



             [JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A., - LETTERHEAD]


INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners
Char-Mur Apartments:

We have audited the accompanying financial statements of Char-Mur Apartments
(Project Number 082-44035 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has incurred a net loss and its total
current liabilities exceed its total current assets, which raises substantial
doubt about its ability to continue as a going concern. Management's plan
regarding those matters also are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 23, 1998, on our
consideration of Char-Mur Apartments' internal control and reports dated January
23, 1998, on its compliance with specific requirements applicable to major HUD
programs, specific requirements applicable to nonmajor HUD transactions and
specific requirements applicable to fair housing and non-discrimination.
<PAGE>


Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.

Little Rock, Arkansas 
January 28, 1998





<PAGE>


              [JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.-LETTERHEAD]


INDEPENDENT AUDITORS' REPORT


To the Partners 
Char-Mur Apartments:

We have audited the accompanying financial statements of Char-Mur Apartments
(Project Number 082-44035 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1996, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1996, and
the results of its operations, changes in partners' equity, and cash flows for
the year ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 20, 1997, on our consideration of Char-Mur Apartments internal
control structure and a report dated January 20, 1997, on its compliance with
laws and regulations.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11 - 15 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued July 1993 by the U.S. Department of Housing and Urban
Development, Office of Inspector General. Such schedules, which are the
responsibility of the General Partner, have been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


/S/ JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.

Little Rock, Arkansas
January 20, 1997



<PAGE>

[JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.-LETTERHEAD-LITTLE ROCK, ARKANSAS]



INDEPENDENT AUDITORS' REPORT


To the Partners
Char-Mur Apartments:


We have audited the accompanying special-purpose balance sheet of Char-Mur
Apartments (the "Partnership") as of December 31, 1995, and the related
special purpose statements of profit and loss, partners' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the General Partner. Our responsibility is to express an opinion on these
financial statement based on our audit.

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

The accompanying special-purpose financial statements have been prepared, as
described in Note 1 to the financial statements, for the purpose of
consolidation with those of Cambridge + Related Housing Properties Limited
Partnership ("Cambridge"), and on the basis of accounting practices specified
by the management of Cambridge. These financial statements are not intended to
be a presentation in conformity with generally accepted accounting principles.

In our opinion, such special-purpose financial statements present fairly, in
all material respects, the financial position of the Partnership at December
31, 1995, and the results of its operations and its cash flows for the year
then ended in conformity with the basis of accounting described in Note 1.

This report is intended solely for the information and use of the partners of
Char-Mur Apartments, management and Cambridge and should not be used for any
other purpose.


/S/ JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.

February 4, 1996

<PAGE>



             [JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A. - LETTERHEAD]


INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners 
Crossett Apartments, Ltd.:

We have audited the accompanying financial statements of Crossett Apartments,
Ltd. (Project Number 082-44063 LD/SUP) (a limited partnership hereinafter
referred to as the "Partnership") as of December 31, 1997, and for the year then
ended, listed in the foregoing table of contents. These financial statements are
the responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of Hud Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 13, 1998, on our
consideration of Crossett Apartments, Ltd.'s internal control and a report dated
January 13, 1998, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirement applicable to fair housing and
non-discrimination.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.


/s/ Jeffrey Phillips Mosley & Scott, P.A.

Little Rock, Arkansas
January 13, 1998


<PAGE>

              [JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.-LETTERHEAD]


INDEPENDENT AUDITORS' REPORT


To the Partners 
Crossett Apartments, Ltd.:

We have audited the accompanying financial statements of Crossett Apartments,
Ltd. (Project Number 082-44063 LD/SUP) (a limited partnership hereinafter
referred to as the "Partnership") as of December 31, 1996, and for the year then
ended, listed in the foregoing table of contents. These financial statements are
the responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1996, and
the results of its operations, changes in partners' equity and cash flows for
the year then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 14, 1997, on our consideration of Crossett Apartments, Ltd.'s
internal control structure and a report dated January 14, 1997, on its
compliance with laws and regulations.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11 - 15 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued July 1993 by the U.S. Department of Housing and Urban
Development, Office of Inspector General. Such schedules, which are the
responsibility of the General Partner, have been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


/S/ JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.

Little Rock, Arkansas
January 14, 1997

<PAGE>

[JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.-LETTERHEAD-LITTLE ROCK, ARKANSAS]



INDEPENDENT AUDITORS' REPORT


To the Partners
Crossett Apartments, Ltd.:


We have audited the accompanying special-purpose balance sheet of Crossett
Apartments, Ltd. (the "Partnership") as of December 31, 1995, and the related
special-purpose statements of profit and loss, partners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

The accompanying special-purpose financial statements have been prepared, as
described in Note 1 to the financial statements, for the purpose of
consolidation with those of Cambridge + Related Housing Properties Limited
Partnership ("Cambridge"), and on the basis of accounting practices specified
by the management of Cambridge. These financial statements are not intended to
be a presentation in conformity with generally accepted accounting principles.

In our opinion, such special-purpose financial statements present fairly, in
all material respects, the financial position of the Partnership at December
31, 1995, and the results of its operations and its cash flows for the year
then ended in conformity with the basis of accounting described in Note 1.

This report is intended solely for the information and use of the partners of
Crossett Apartments, Ltd., management and Cambridge and should not be used for
any other purpose.


/S/ JEFFREY, PHILLIPS, MOSLEY & SCOTT, P.A.

February 6, 1996


<PAGE>


           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                           ASSETS
                                                                             February 28,
                                                                   ------------------------------
                                                                         1998            1997*
                                                                   -------------      -----------
<S>                                                                 <C>              <C>         
Property and equipment - at cost, less accumulated
  depreciation (Notes 2, 4, 6 and 7)                                $ 66,541,368     $ 90,519,156
Property and equipment-held for sale                                   8,372,413        3,011,363
Cash and cash equivalents (Notes 2 and 11)                             6,069,843        5,981,506
Certificates of deposit (Note 11)                                        205,509          201,986
Cash - restricted for tenants' security deposits                         843,561        1,082,255
Mortgage escrow deposits (Notes 5, 6 and 11)                           6,784,348        8,098,227
Rents receivable                                                         304,888          303,172
Prepaid expenses and other assets                                        955,224        1,164,356
                                                                    ------------     ------------

  Total assets                                                      $ 90,077,154     $110,362,021
                                                                    ============     ============

                              LIABILITIES AND PARTNERS' DEFICIT

Mortgage notes payable (Notes 6 and 11)                             $ 55,464,577     $ 63,599,388
Purchase money notes payable (Note 7)                                 46,352,956       56,929,115
Due to selling partners (Note 7)                                      54,951,723       63,552,033
Accounts payable, accrued expenses and other liabilities               4,637,981        4,448,032
Tenants' security deposits payable                                       843,561        1,082,255
Due to general partners of subsidiaries and their
  affiliates (Note 8)                                                    502,593        1,152,253
Due to general partners and affiliates (Note 8)                        1,308,614        1,742,027
Distributions payable (Note 12)                                        2,030,972        1,111,554
                                                                    ------------     ------------

                                                                     166,092,977      193,616,657
                                                                    ------------     ------------

Minority interest (Note 2)                                               167,391           80,374
                                                                    ------------     ------------

Commitments and contingencies (Note 11)

Partners' deficit:

  Limited partners                                                   (74,972,851)     (82,053,129)
  General Partners                                                    (1,210,363)      (1,281,881)
                                                                    ------------     ------------
  Total partners' deficit                                            (76,183,214)     (83,335,010)
                                                                    ------------     ------------

  Total liabilities and partners' deficit                           $ 90,077,154     $110,362,021
                                                                    ============     ============
</TABLE>

*Reclassified for comparative purposes

See accompanying notes to consolidated financial statements.

                                       30
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                      Year Ended
                                                      --------------------------------------------
                                                      February 28,   February 28,     February 29,
                                                          1998          1997*              1996*
                                                      ------------   ------------     ------------
<S>                                                  <C>             <C>              <C>        
Revenues
  Rentals, net                                       $ 27,748,364    $29,409,734      $29,764,899
  Other                                                   933,699        895,930          828,657
  Gain (loss) on sale of properties (Note 10)          (3,901,817)     7,280,865                0
                                                     ------------    -----------      ----------- 

   Total revenues                                      24,780,246     37,586,529       30,593,556
                                                     ------------    -----------      ----------- 

Expenses
  Administrative and management                         4,689,821      5,001,343        4,726,125
  Administrative and management-related
   parties (Note 8)                                     2,644,719      2,773,362        1,898,169
  Operating                                             4,756,064      5,101,730        4,991,453
  Repairs and maintenance                               7,855,877      8,003,384        7,891,374
  Taxes and insurance                                   3,777,360      4,107,619        4,223,636
  Financial, principally interest                       7,099,494      7,824,329        8,329,170
  Depreciation                                          5,684,363      6,475,294        6,618,370
  Loss on impairment of assets (Note 4)                   435,000      5,166,001                0
                                                     ------------    -----------      ----------- 

   Total expenses                                      36,942,698     44,453,062       38,678,297
                                                     ------------    -----------      ----------- 

Loss before minority interest and extraordinary item  (12,162,452)    (6,866,533)      (8,084,741)
Minority interest in (income) loss of subsidiaries       (102,344)       (18,466)           1,752
                                                     ------------    -----------      ----------- 

Loss before extraordinary item                        (12,264,796)    (6,884,999)      (8,082,989)
Extraordinary item - forgiveness of
  indebtedness income (Note 10)                        21,447,564      5,069,484                0
                                                     ------------    -----------      ----------- 

Net income (loss)                                    $  9,182,768    $(1,815,515)     $(8,082,989)
                                                     ============    ===========      =========== 
                                                                                     
Loss before extraordinary item - limited partners    $(12,142,148)   $(6,816,149)     $(8,002,159)
Extraordinary item - limited partners                  21,233,088      5,018,789                0
                                                     ------------    -----------      ----------- 
                                                                                     
Net income (loss) - limited partners                 $  9,090,940    $(1,797,360)     $(8,002,159)
                                                     ============    ===========      =========== 
                                                                                     
Number of limited partnership units outstanding            10,038         10,038           10,038
                                                     ------------    -----------      ----------- 
                                                                                     
Loss before extraordinary item per                                                   
  limited partnership unit                           $     (1,209)   $      (679)     $      (797)
                                                                                     
Extraordinary per limited partnership unit                  2,115            500                0
                                                      -----------     ----------       ----------
                                                                                     
Net income (loss) per limited partnership unit       $        906    $      (179)     $      (797)
                                                     ============    ===========      =========== 
</TABLE>

*Reclassified for comparative purposes.

See accompanying notes to consolidated financial statements.

                                       31
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT

<TABLE>
<CAPTION>

                                                                       Limited           General
                                                         Total         Partners          Partners
                                                      -----------     ----------       ----------
<S>                                                  <C>            <C>               <C>         
Balance -March 1, 1995                               $(72,324,952)  $(71,153,172)     $(1,171,780)

Net loss - year ended February 29, 1996                (8,082,989)    (8,002,159)         (80,830)
                                                     ------------   ------------      ----------- 

Balance - February 29, 1996                           (80,407,941)   (79,155,331)      (1,252,610)

Net loss - year ended February 28, 1997                (1,815,515)    (1,797,360)         (18,155)

Distributions                                          (1,111,554)    (1,100,438)         (11,116)
                                                     ------------   ------------      ----------- 

Balance - February 28, 1997                           (83,335,010)   (82,053,129)      (1,281,881)

Net income - year ended February 28, 1998               9,182,768      9,090,940           91,828

Distributions                                          (2,030,972)    (2,010,662)         (20,310)
                                                     ------------   ------------      ----------- 

Balance - February 28, 1998                          $(76,183,214)  $(74,972,851)     $(1,210,363)
                                                     ============   ============      =========== 
</TABLE>

See accompanying notes to consolidated financial statements.

                                       32
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      Increase in Cash and Cash Equivalents
<TABLE>
<CAPTION>

                                                                     Year Ended
                                                       ------------------------------------------
                                                       February 28,   February 28,    February 29,
                                                           1998          1997             1996
                                                       ----------     ----------       ----------
<S>                                                  <C>            <C>              <C>
Cash flows from operating activities:
  Net income (loss)                                  $  9,182,768   $ (1,815,515)    $ (8,082,989)
                                                     ------------   ------------     ------------
  Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
  Loss (gain) on sale of properties (Note 10)           3,901,817     (7,280,865)               0
  Extraordinary item - forgiveness of
   indebtedness income (Note 10)                      (21,447,564)    (5,069,484)               0
  Depreciation                                          5,622,990      6,475,294        6,618,370
  Loss on impairment of assets (Note 4)                   435,000      5,166,001                0
  (Increase) decrease in assets
   Cash restricted for tenants' security deposits         (47,498)        71,378          (28,634)
   Mortgage escrow deposits                               (11,761)       119,009         (103,030)
   Rents receivable                                       (49,706)       (21,323)         (73,199)
   Prepaid expenses and other assets                       19,926       (153,863)         (46,385)
  Increase (decrease) in liabilities
   Due to selling partners                              4,814,077      5,286,095        5,492,620
   Accounts payable, accrued expenses and
    other liabilities                                    (211,558)       374,003          315,471
   Tenants' security deposits payable                      45,357        (21,016)          28,634
   Increase in due to general partners of
    subsidiaries and their affiliates                     329,919        206,629          122,780
   Decrease in due to general partners of
    subsidiaries and their affiliates                    (203,647)       (52,644)        (182,063)
   Due to general partners and affiliates                (433,413)    (1,247,843)          76,511
   Minority interest in income (loss) of
    subsidiaries                                          102,344         18,466           (1,752)
                                                     ------------   ------------     ------------
    Total adjustments                                  (7,133,717)     3,869,837       12,219,323
                                                     ------------   ------------     ------------
  Net cash provided by operating activities             2,049,051      2,054,322        4,136,334
                                                     ------------   ------------     ------------

Cash flows from investing activities:
  (Increase) decrease in certificates of deposit           (3,523)        53,014                0
  Proceeds from sale of properties                      5,887,700     13,535,000                0
  Costs paid relating to sale of properties              (111,240)      (248,628)               0
  Acquisitions of property and equipment               (1,217,360)    (1,127,796)      (1,308,380)
  Decrease (increase) in mortgage escrow deposits         482,988       (301,306)        (281,261)
                                                     ------------   ------------     ------------
  Net cash provided by (used in)
   investing activities                                 5,038,565     11,910,284       (1,589,641)
                                                     ------------   ------------     ------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       33
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      Increase in Cash and Cash Equivalents
<TABLE>
<CAPTION>

                                                                        Year Ended
                                                       -------------------------------------------
                                                       February 28,    February 28,    February 29,
                                                          1998             1997           1996
                                                       ------------    ------------    -----------
<S>                                                    <C>             <C>             <C>        
Cash flows from financing activities:
  Distributions                                          (1,111,554)              0              0
  Principal payments of mortgage notes payable           (3,329,416)     (7,150,114)    (1,949,412)
  Payments to selling partners                             (541,831)     (1,795,793)      (487,931)
  Principal payments of purchase money
   notes payable                                         (2,001,151)     (3,300,000)             0
  Decrease in minority interest                             (15,327)        (14,439)        (8,924)
                                                       ------------    ------------    -----------
  Net cash used in financing activities                  (6,999,279)    (12,260,346)    (2,446,267)
                                                       ------------    ------------    -----------

Net increase in cash and cash equivalents                    88,337       1,704,260        100,426
Cash and cash equivalents, beginning of year              5,981,506       4,277,246      4,176,820
                                                       ------------    ------------    -----------
Cash and cash equivalents, end of year                 $  6,069,843    $  5,981,506    $ 4,277,246
                                                       ============    ============    ===========

Supplemental disclosure of cash flows information:
  Cash paid during the year for interest               $  2,378,132    $  3,862,613    $ 2,725,430
                                                       ============    ============    ===========

Supplemental disclosures of noncash investing
  and financing activities:
  Distributions payable                                $  2,030,972    $  1,111,554    $         0
  Forgiveness of indebtedness (Note 10):
  Decrease in purchase money notes payable                8,575,008        (800,000)             0
  Decrease in due to selling partners                    12,872,556      (2,500,684)             0
  Decrease in mortgage notes payable                              0      (1,083,352)             0
  Decrease in accounts payable, accrued
   expenses and other liabilities                                 0        (685,448)             0

Summarized below are the components of the
  gain on sale of properties:
  Decrease in property and equipment, net of
   accumulated depreciation                              13,776,108       7,619,769              0
  Decrease in cash-restricted for tenants'
   security deposits                                        286,192           1,822              0
  Decrease in rents receivable                               47,990           6,294              0
  Decrease in mortgage escrow deposits                      842,652          53,071              0
  Decrease in prepaid expenses and other assets             189,206          25,527              0
  Increase in prepaid expenses - notes receivable                 0         (75,000)             0
  Increase (decrease) in accounts payable, accrued
   expenses and other liabilities                           401,507      (1,573,792)             0
  Decrease in tenants' security deposits payable           (284,051)        (52,184)             0
  Decrease in mortgage payable                           (4,805,395)              0              0
  Decrease in due to general partners and affiliates       (775,932)              0              0
</TABLE>

See accompanying notes to consolidated financial statements.

                                       34
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

NOTE 1 - Organization

Cambridge + Related Housing Properties Limited Partnership, (the "Partnership")
was formed pursuant to the laws of the State of Massachusetts on April 28, 1983.
The Partnership invests, as a limited partner, in other limited partnerships
(referred to herein as "Local Partnerships" "subsidiary" or "subsidiary
partnerships"), each of which owns and operates an existing Apartment Complex
which is receiving some form of local, state or federal assistance, including
mortgage insurance, rental assistance payments, permanent mortgage financing
and/or interest reduction payments ("Government Assistance").

As of February 28, 1998, the Partnership holds an interest in thirty-three Local
Partnerships, each of which owns one Apartment Complex which receives Government
Assistance. During the fiscal year ended February 28, 1998, the properties and
the related assets and liabilities owned by three Local Partnerships were sold
to third parties and the Partnership's Local Partnership Interest in five other
Local Partnership's were sold to a third party and the Local Partnership's
general partners, respectively. Through the fiscal year ended February 28, 1998,
the properties and the related assets and liabilities owned by five Local
Partnerships were sold to third parties and the Partnership's Local Partnership
Interest in six other Local Partnership's were sold to a third party and the
Local Partnership's general partners, respectively. A portion of the net
proceeds were used to settle the associated purchase money notes and accrued
interest thereon (See Note 10).

The general partners of the Partnership are Government Assisted Properties, Inc.
(the "Assisted General Partner") and Related Housing Programs Corporation (the
"Related General Partner"), both of which are Delaware corporations affiliated
with an affiliate of The Related Companies, L.P. ("Related"), a New York limited
partnership, and Cambridge/Related Housing Associates Limited Partnership
("Cambridge Related Associates"), a Massachusetts limited partnership, together
(the "General Partners"). The general partners of Cambridge Related Associates
are the Assisted General Partner and the Related General Partner.

Pursuant to the public offering, which occurred during 1983 through 1985, the
Partnership received $50,190,000 of Gross Proceeds from 4,297 investors. No
further issuance of Initial Limited Partnership Interests or Additional Limited
Partnership Interests is anticipated.

The terms of the Amended and Restated Agreement and Certificate of Limited
Partnership of the Partnership (the "Partnership Agreement") provide, among
other things, that profits or losses, in general, be shared 99% by the limited
partners and 1% by the General Partners.

NOTE 2 - Summary of Significant Accounting Policies

a)  Basis of Consolidation

The consolidated financial statements include the accounts of the Partnership
and 41 (three of which only have activity through the date of sale of their
properties and the related assets and liabilities and five of which only have
activity through the date of sale of the Partnership's interest) 44 (two of
which only have activity through the date of sale of their properties and the
related assets and liabilities and one of which only has activity through the
date of sale of the

                                       35
<PAGE>

           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

Partnership's interest) and 44 subsidiary partnerships in which the Partnership
is a limited partner for the years ended February 28, 1998, February 28, 1997
and February 29, 1996, respectively. Through the rights of the Partnership
and/or a General Partner, which General Partner has a contractual obligation to
act on behalf of the Partnership, to remove the general partner of the
subsidiary partnerships and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in the
subsidiary partnerships.

For financial reporting purposes, the Partnership's fiscal year ends on the last
day of February. All subsidiaries have fiscal years ending December 31. Accounts
of subsidiaries have been adjusted for intercompany transactions from January 1
through the last day of February. The Partnership's fiscal year ends on the last
day of February in order to allow adequate time for the subsidiaries financial
statements to be prepared and consolidated. The books and records of the
Partnership are maintained on the accrual basis of accounting, in accordance
with generally accepted accounting principles ("GAAP").

All intercompany accounts and transactions have been eliminated in
consolidation.

Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arises from contributions and distributions to
the minority interest partners.

Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated $84,862, $0 and $19,987 for the years ended February 28, 1998,
February 28, 1997 and February 29, 1996, (the 1997, 1996 and 1995 Fiscal Years),
respectively. The Partnership's investment in each subsidiary is equal to the
respective subsidiary's partners' equity less minority interest capital, if any.

b)  Property and Equipment

Property and equipment are carried at the lower of depreciated cost or estimated
amounts recoverable through future operations and ultimate disposition of the
property. Property and equipment to be held and used are carried at cost which
includes the purchase price, acquisition fees and expenses, and any other costs
incurred in acquiring the properties. The cost of property and equipment is
depreciated over their estimated useful lives using accelerated and
straight-line methods. Expenditures for repairs and maintenance are charged to
expense as incurred; major renewals and betterments are capitalized. At the time
property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. Property investments themselves
are reduced to estimated fair value (generally using discounted cash flows) when
the property is considered to be impaired and the depreciated cost exceeds
estimated fair value.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. All property and equipment for subsidiary partnerships whose assets
and liabilities are under sales contracts are classified as assets held for
sale.

                                       36
<PAGE>

           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

Through February 28, 1998, the Partnership has recorded $5,601,000 as a loss on
impairment of assets.

c)  Interest Subsidies

Interest expense has been reduced by interest subsidies (Note 6).

d)  Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term investments with an original maturity of three months or less.

e)  Income Taxes

No provision has been made for income taxes in the accompanying consolidated
financial statements since such taxes, if any, are the responsibility of the
individual partners. For income tax purposes, the Partnership has a fiscal year
ending December 31 (Note 9).

f)  Loss Contingencies

The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated.

g)  Use of Estimates

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

NOTE 3 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for non-trading
purposes) for which it is practicable to estimate that value:

Cash and Cash Equivalents, Certificates of Deposit, Cash-Restricted for Tenants'
Security Deposits and Mortgage Escrow Deposits The carrying amount approximates
fair value because of the short maturity of those instruments.

Mortgage Notes Payable
The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.

                                       37
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

The estimated fair values of the Partnership's mortgage notes payable are as
follows:

<TABLE>
<CAPTION>

                                             February 28, 1998             February 28, 1997
                                          ----------------------        -----------------------
                                          Carrying                      Carrying
                                          Amount      Fair Value        Amount*      Fair Value
                                          ------      ----------        -------      ----------
<S>                                      <C>          <C>            <C>             <C>
Mortgage Notes Payable for
  which it is:

Practicable to estimate
  fair value                             $26,476,390  $26,427,849    $33,009,830     $32,233,224
Not Practicable (a)                      $28,988,187  $         0    $30,589,558     $         0

Purchase Money Notes
  Payable for which it is
  Not Practicable (b)                    $46,352,956  $         0    $56,929,115     $         0
</TABLE>

(a) The mortgage notes payable are insured by HUD primarily in accordance with
Section 236 of the National Housing Act. New loans are no longer being insured
in accordance with Section 236 and presently existing loans are subject to
restrictions regarding prepayment. Management believes the estimation of fair
value to be impracticable.

(b) For the reasons discussed in Note 11(b) it is not practicable to estimate
the fair value of these notes.

The carrying amount of other assets and liabilities, except for related party
liabilities, reported on the statement of financial position that require such
disclosure approximate fair value. Regarding the fair value of the related party
liabilities, it has been determined that fair value is not practicable to
determine due to the unique nature, repayment terms and related conditions
pertaining to these instruments.

NOTE 4 - Property and Equipment and Property and Equipment-Held for Sale

The components of property and equipment and their estimated useful lives are as
follows:

<TABLE>
<CAPTION>

                                                          February 28
                                            ---------------------------------------    Estimated
                                                    1998                1997           Useful Lives
                                            ------------------   ------------------    ------------

<S>                                         <C>                  <C>                   <C>
Land                                        $   7,509,212        $   9,397,856
Building and improvements                     119,051,633          151,812,055         15-40 years
Furniture and fixtures                          7,386,093            8,261,748          3-10 years
                                             ------------        -------------
                                              133,946,938          169,471,659
Less:  Accumulated depreciation                67,405,570           78,952,503
                                             ------------         ------------

                                            $  66,541,368        $  90,519,156
                                             ============         ============
</TABLE>

Depreciation expense for the 1997, 1996 and 1995 Fiscal Years amounted to
$5,684,363, $6,475,294 and $6,618,370, respectively.

                                       38
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998


The components of property and equipment-held for sale are as follows:

<TABLE>
<CAPTION>

                                                        February 28,
                                               ------------------------------
                                                  1998                1997
                                               -----------        -----------
<S>                                            <C>                <C>        
Land                                           $   821,064        $   209,015
Building and improvement                        14,580,663          3,993,469
Furniture and fixtures                             436,719             40,053
                                               -----------         ----------
                                                15,838,446          4,242,537
Less:  Accumulated depreciation                  7,466,033          1,231,174
                                               -----------         ----------
                                                            
                                               $ 8,372,413        $ 3,011,363
                                               ===========        ===========
</TABLE>                                                  

During the year ended December 31, 1997, Cudahy Gardens had a loss on impairment
of assets of $435,000.

During the year ended December 31, 1996, the physical condition of the property
owned by Oklahoma City-Town and Country Village Apartments Ltd. deteriorated
significantly. Repairs were restricted to making units ready for new tenants.
Three apartments damaged by fire in 1995 and 1996 were not repaired. Vacancies
increased significantly. The project is in default on its mortgage and is in a
cash overdraft position. The conditions described are not expected to reverse in
the near future. Future cash flows are estimated to be significantly less than
the carrying value of the property. As a result, impairment of property and
equipment is recognized in the financial statements in accordance with SFAS No.
121. The cost of property and equipment has been written down to $100,000. This
amount was determined by projecting future cash flows on the assumption that the
current level of vacancies will not decrease in the remaining estimated useful
life of the property. Impairment of $4,376,899 has been recognized as the
difference between the carrying value before impairment at December 31, 1996 and
the present value of estimated cash flows. On April 21, 1998, the Partnership's
limited partnership interest in Oklahoma City - Town and Country Village
Apartments, Ltd. ("Town and Country") was assigned to the local general partner
and the related purchase money note and interest thereon were canceled. Town &
Country's liabilities in excess of assets at December 31, 1997 amounted to
approximately $4,700,000 and the related purchase money note and accrued
interest thereon amounted to approximately $7,400,000.

On December 5, 1996, HUD rendered formal notification to Los Caballeros
Apartments ("Los Caballeros") that it has been declared in default of its
contractual obligations with HUD as a result of the physical deficiencies cited.
On February 13, 1997, Republic National Bank formally notified Los Caballeros
that it has been declared in default under their mortgage as a consequence of
the property's default under the regulatory agreement. Additionally, Los
Caballeros is in default under the three Housing Assistance Payments contracts.
A loss on impairment of fixed assets has been recognized in Los Caballeros' 1996
financial statements in the amount of $789,102. On April 25, 1997, the
Partnership's Local Partnership Interest in Los Caballeros was sold to the
general partners of Los Caballeros for $100,000 (see Note 10).

                                       39
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

NOTE 5 - Mortgage Escrow Deposits

Mortgage escrow deposits consist of the following:

<TABLE>
<CAPTION>

                                                        February 28,
                                               ------------------------------
                                                    1998              1997
                                               -------------      -----------
<S>                                              <C>              <C>       
Reserve for replacements                         $4,255,686       $5,357,492
Real estate taxes, insurance and other            2,508,864        2,655,681
Preservation Acts                                    19,798           85,054
                                                -----------      -----------

                                                 $6,784,348       $8,098,227
                                                 ==========       ==========
</TABLE>

NOTE 6 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments of
approximately $453,000, including principal and interest at rates ranging from
7% to 9% per annum, through May 2022. Each subsidiary partnership's mortgage
note payable is collateralized by the land and buildings of the respective
subsidiary partnership, the assignment of certain subsidiary partnership's rents
and leases and is without further recourse.

Certain mortgage notes with balances aggregating $28,824,405 and $32,591,409 at
December 31, 1997 and 1996, respectively, which bear interest at rates ranging
from 7% to 8.5% per annum, were eligible for interest rate subsidies under the
terms of regulatory agreements with the Secretary of the Department of Housing
and Urban Development ("HUD"). Accordingly, the subsidiary partnerships paid
only that portion of the monthly payments that would be required if the interest
rate was in the range of 1% to 1.75% per annum; the balance was subsidized under
Section 236 of the National Housing Act.

Annual principal payment requirements for each of the next five fiscal years are
as follows:
<TABLE>
<CAPTION>

Year Ending December 31                       Amount
-----------------------                     ----------
<S>                                        <C>        
1998                                       $13,308,712
1999                                         1,812,789
2000                                         1,940,707
2001                                         2,078,058
2002                                         2,224,189
Thereafter                                  34,100,122
                                            ----------
                                           $55,464,577
                                           ===========
</TABLE>

The above principal payment requirements have been adjusted for principal
acceleration which may result from the event of default of two subsidiary
partnerships as well as the sale of the Partnership's interest in two and the
assets and liabilities of two subsidiary partnerships with mortgage note
balances aggregating $5,951,520 at December 31, 1997 with mortgage note balances
aggregating $5,663,355 at December 31, 1997 (Note 11(a)).

                                       40
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

The mortgage agreements require monthly deposits to reserves for replacements
aggregating approximately $120,000 and monthly deposits to escrow accounts for
real estate taxes, insurance and other (Note 5).

NOTE 7 - Purchase Money Notes Payable

Nonrecourse Purchase Money Notes in the original amount of $61,029,115 were
issued to the selling partners of the subsidiary partnerships as part of the
purchase price, and are secured only by the Partnership's interest in the
subsidiary partnership to which the note relates.

The Purchase Money Notes, aggregating $46,352,956 at February 28, 1998 provide
for simple interest at the rate of 9% per annum through maturity, which will
occur during the period July 1998 to December 1999, will not be in default
during the basic term (generally fifteen years) if not less than 60% of the cash
flow actually distributed to the Partnership by the corresponding subsidiary
partnership (generated by the operations, as defined) is applied first to
accrued interest and then to current interest thereon. Any interest not paid
currently accrues, without further interest thereon, through the due date of the
note. All accrued and unpaid interest must be paid on the due date of the note,
unless the Partnership exercises an extension right. Continued accrual of such
interest without payment would impact the effective rate of the notes,
specifically by reducing the current effective interest rate of 9%. The exact
effect is not determinable inasmuch as it is dependent on the actual future
interest payments and ultimate repayment dates of the notes. Unpaid interest of
$54,826,676 and $63,426,985 at February 28, 1998 and 1997, respectively, has
been accrued and is included in the caption due to selling partners. In general,
the interest on and the principal of each Purchase Money Note is also payable to
the extent of the Partnership's actual receipt of proceeds from the sale or
refinancing of the Apartment Complex, or in some cases the Local Partnership
Interest to which the Purchase Money Note relates.

The Partnership may elect, upon the payment of an extension fee of 1 1/2% per
annum of the outstanding principal amount, to extend the term of the Purchase
Money Note for up to five additional years. The Partnership may also defer
payment of any accrued and unpaid interest until the due date of the note. The
Partnership expects that upon maturity it will be required to refinance or sell
its investments in the Local Partnerships in order to pay the Purchase Money
Notes and accrued interest thereon. Based on the historical operating results of
the Local Partnerships and the current economic conditions including changes in
tax laws, it is uncertain as to whether the proceeds from such sales will be
sufficient to meet the outstanding balances. Management is working with the
selling partners to restructure and/or refinance the notes. The Purchase Money
Notes are without personal recourse to either the Partnership or any of its
partners and the sellers' recourse, in the event of non-payment, would be to
foreclose on the Partnership's interests in the respective Local Partnerships.

Cash flow distributions aggregating $311,625, $504,167 and $874,592 were made to
the Partnership in the 1997, 1996 and 1995 Fiscal Years which does not include
$5,397 and $43,287 escrow monies held for the Preservation Acts program in the
1997 and 1996 Fiscal Years. Of such distributions, $214,171, $302,500 and
$487,931, respectively, was used to pay interest on the purchase money notes.
Distribution of proceeds from sales aggregating $4,136,943 were made to the
Partnership in the 1997 Fiscal Year of which $2,238,811 and $90,000,
respectively, was used to pay principal and interest on the Purchase Money
Notes.

                                       41
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

NOTE 8  -Related Party Transactions

The costs incurred to related parties for the years ended February 28, 1998,
February 28, 1997 and February 29, 1996 were as follows:

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                     --------------------------------------------
                                                     February 28,   February 28,     February 29,
                                                        1998            1997             1996
                                                     ----------      ----------       ----------
<S>                                                  <C>             <C>              <C>        
Partnership management fees (a)                      $  950,977      $  966,000       $  121,650
Expense reimbursement (b)                               148,493         208,772          152,409
Property management fees (c)                          1,503,178       1,572,340        1,597,860
Local administrative fee (d)                             26,250          26,250           26,250
                                                     ----------      ----------       ----------

                                                     $2,628,898      $2,773,362       $1,898,169
                                                     ==========      ==========       ==========
</TABLE>

(a) After all other expenses of the Partnership are paid, an annual partnership
management fee of up to .5% of invested assets is payable to the Partnership's
general partners and affiliates. Partnership management fees have been charged
to operations and are included in administrative and management-related parties
expenses. Partnership management fees owed to the General Partners amounting to
approximately $426,000 and $936,000 were accrued and unpaid as of February 28,
1998 and 1997.

(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.

(c) Property management fees paid by Local Partnerships to affiliates of the
Local Partnerships amounted to approximately $1,503,178, $1,572,340 and
$1,597,860 for the 1997, 1996 and 1995 Fiscal Years, respectively. Of such fees
$268,192, $330,024 and $330,475 was paid to a company which is also an affiliate
of the Related General Partner for the 1997, 1996 and 1995 Fiscal Years,
respectively.

(d) Cambridge Related Associates, a limited partner of the subsidiary
partnerships is entitled to receive a local administrative fee of up to $2,500
from each subsidiary partnership.

Cambridge Related Associates has a .01% interest, as a limited partner, in each
of the subsidiary partnerships.

As of January 1, 1992, Related Credit Properties III, Inc., an affiliate of the
Related General Partner, became the local general partner of three subsidiary
partnerships, Pacific Palms, a Limited Partnership, Cudahy Gardens, a Limited
Partnership, and Riverside Gardens, a Limited Partnership. On April 27, 1998,
the property and related assets and liabilities of Cudahy

                                       42
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

Gardens and Riverside Gardens were sold to a third party for approximately
$340,000 and $1,900,000, respectively, plus the assumption of the related
mortgage notes.

Due to local general partners and affiliates at December 31, 1997 and 1996
consists of the following:

<TABLE>
<CAPTION>

                                                                               December 31,
                                                                      ---------------------------
                                                                          1997            1996
                                                                      ----------       ----------
<S>                                                                  <C>              <C>        
Operating advances (*)                                               $   221,252      $   259,361
General partner distributions                                             50,000           61,290
Management and other operating advances                                  231,341          831,602
                                                                      ----------       ----------

                                                                     $   502,593       $1,152,253
                                                                      ==========        =========
</TABLE>

(*) Operating advances include three and four loans payable to local general
partners and affiliates for the years ended December 31, 1997 and 1996,
respectively, which are unsecured, non-interest bearing and are payable out of
available surplus cash, of the respective subsidiary partnership, or at the time
of sale or refinancing.

                                       43
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

NOTE 9 - Income Taxes

A reconciliation of the financial statement net income (loss) to the income tax
income (loss) for the Partnership and its consolidated subsidiaries is as
follows:

<TABLE>
<CAPTION>

                                                                  Year Ended December 31
                                                     ---------------------------------------------
                                                          1997           1996             1995
                                                     ------------    -----------      ------------
<S>                                                  <C>             <C>              <C>         
Financial statement net income (loss)                $  9,182,768    $(1,815,515)     $(8,082,989)
                                                     
Difference between depreciation expense              
recorded for financial reporting purposes            
and the accelerated cost recovery system             
utilized for income tax purposes                       (1,596,191)    (1,435,732)      (1,574,305)
                                                     
Difference resulting from accruals for               
financial reporting purposes not                     
deductible for tax purposes until paid                    (18,542)        38,371          (24,384)
                                                     
Difference resulting from parent company             
having a different fiscal year for income            
tax and financial reporting purposes                     (935,853)       708,043            7,263
                                                     
Difference between gain on sale of                   
properties recorded for financial                    
reporting purposes and for income tax                
purposes                                               10,981,175      4,285,757                0
                                                     
Loss on impairment of assets                              435,000      5,166,001                0
                                                     
Difference between extraordinary                     
item-forgiveness of indebtedness income              
recorded for financial reporting purposes            
and for income tax purposes                            (1,641,970)    (1,769,101)               0
                                                     
Other                                                     265,417        429,491                0
                                                     ------------    -----------      -----------
                                                     
Net income (loss) as shown on the income             
tax return for the calendar year ended               $ 16,671,804    $ 5,607,315      $(9,674,415)
                                                     ============    ===========      =========== 
</TABLE>                                     

NOTE 10 - Sale of Properties

On June 3, 1996, the property and the related assets and liabilities of Roper
Mountain Apartments Ltd. ("Roper Mountain") were sold to a third party for
$4,735,000, resulting in a gain in the amount of $1,871,046. The Partnership
used $1,320,500 of the net proceeds to settle the associated Purchase Money Note
and accrued interest which had a total outstanding balance of $2,304,994,
resulting in forgiveness of indebtedness income of $984,494.

                                       44
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

Rolling Meadows of Chickasha ("Chickasha"), a subsidiary partnership, had
previously filed a petition under Chapter 11 of the Bankruptcy Code ("Chapter
11") which had been dismissed. HUD notified Chickasha that it intended to
commence foreclosure proceedings. Chickasha was in default and under HUD control
as a mortgagee in possession. On August 15, 1996, the Partnership's Local
Partnership Interest in Chickasha was sold to a third party for $75,000,
resulting in a gain in the amount of $472,720 and forgiveness of indebtedness
income of $1,768,800 as a result of forgiveness of the mortgage note payable to
HUD and accrued interest thereon. No proceeds were used to settle the associated
Purchase Money Note and accrued interest which had a total outstanding balance
of $1,723,095, resulting in additional forgiveness of indebtedness income.
Therefore the entire forgiveness of indebtedness income realized by the
Partnership from this transaction is $3,491,895.

On September 17, 1996, the property and the related assets and liabilities of
Oakland-Keller Plaza ("Keller Plaza") were sold to a third party for $8,800,000,
resulting in a gain in the amount of $4,937,099. The Partnership used $3,472,792
of the net proceeds to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of $4,065,887, resulting in
forgiveness of indebtedness income of $593,095. In 1997, additional proceeds
were received and paid to the Purchase Money Note Holder resulting in a decrease
in the forgiveness of indebtedness income of $65,567.

On April 25, 1997, the Partnership's Local Partnership Interest in Los
Caballeros Apartments ("Los Caballeros") was sold to the general partners of Los
Caballeros for $100,000, resulting in a gain in the amount of $501,309. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon which had a total outstanding balance of $3,187,950, resulting
in forgiveness of indebtedness income.

On March 14, 1996, South Munjoy Associates, Limited ("South Munjoy") entered
into a purchase and sale of real estate agreement with Mainland Development
Company of Portland, Maine ("Mainland Development") to sell the project, subject
to HUD approval and other contingencies. On September 9, 1997, the property and
the related assets and liabilities of South Munjoy were sold to Montfort Housing
Limited Partnership (which is an affiliate of Mainland Development) for
$3,000,000, resulting in a loss in the amount of $225,247. The Partnership used
$1,312,741 of the net proceeds to settle the associated Purchase Money Note and
accrued interest thereon which had a total outstanding balance of $3,246,553,
resulting in forgiveness of indebtedness income of $1,933,812.

On December 12, 1997, the Partnership limited partnership interest in Grosvenor
South Apartments Limited Partnership and Grosvenor South Apartments #2 Limited
Partnership (together, the "Grosvenors") were sold to the general partners of
the Grosvenors for $1,114,300, resulting in a loss in the amount of $1,409,038.
No proceeds were used to settle the associated Purchase Money Notes and accrued
interest which had a total outstanding balance of $5,058,313, resulting in
forgiveness of indebtedness income.

On December 12, 1997, the Partnership's limited partnership interest in Clinton
Plaza Apartments Limited Partnership and Clinton Plaza Apartments #2 Limited
Partnership (together the "Clintons") were sold to the general partners of the
Clintons for $1,673,400, resulting in a loss in the amount of $2,768,841. No
proceeds were used to settle the associated Purchase Money

                                       45
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

Notes and accrued interest which had a total outstanding balance of $9,689,980,
resulting in forgiveness of indebtedness income.

On January 16, 1998, the property and related assets and liabilities of Country
Ltd. ("Country") and Northbrook III, Ltd. ("Northbrook") were sold to a third
party for approximately $3,247,000 and $1,998,000, respectively, resulting in
gains of approximately $868,000 and $577,000, respectively, which will be
reflected in the May 31, 1998 financial statements. The Partnership used
approximately $860,000 and $90,000, respectively, of the net proceeds to settle
the associated Purchase Money Note and accrued interest thereon which had total
outstanding balances of $2,517,000 and $77,000, respectively, resulting in
forgiveness of indebtedness income (loss) of $1,656,000 and $(13,000),
respectively.

NOTE 11 - Commitments and Contingencies

a)  Events of Default and Going Concern

Caddo Parish-Villas South, Ltd.
Caddo Parish-Villas South, Ltd. ("Villas South") continues to be in default of
its original mortgage agreement. Until November 1995, the project operated under
a provisional workout agreement with HUD. During November 1995, the mortgage
note was sold to a conventional mortgagee. These items raise substantial doubt
about Villas South's ability to continue as a going concern. The auditors for
Villas South modified their report for the 1995 Fiscal Year due to the
uncertainty of the ability of Villas South to continue in existence. Villas
South is in the process of trying to renegotiate the terms of the notes with the
new mortgage holders, but there can be no assurance that the renegotiation will
be successful. Villas South filed for protection under Chapter 11 of the United
States Bankruptcy Code on November 12, 1996 and the equivalent of a receiver has
been appointed. The Partnership's investment in Villas South was approximately
$222,000 and $373,000 at February 28, 1998 and 1997, respectively, and the
minority interest balance was zero at each date. Villas South's net loss after
minority interest amounted to approximately $151,000, $151,000, and $151,000 for
the 1997, 1996 and 1995 Fiscal Years, respectively.

Oklahoma City-Town and Country Village Apartments, Ltd.
On April 21, 1998 the Partnership limited partnership interest in Oklahoma City
- Town and Country Village Apartments, Ltd. ("Town and Country") was assigned to
the local general partner and the related purchase money note and interest
thereon were canceled. Town & Country's liabilities in excess of assets at
December 31, 1997 amounted to approximately $4,700,000 and the related purchase
money note and accrued interest thereon amounted to approximately $7,400,000.
Prior to its sale, Town and Country was in default of its original mortgage
agreement. Until November 1995, the project operated under a provisional workout
agreement with HUD. On November 1, 1995, the mortgage note was sold to a
conventional mortgagee. No payments were being made on this loan. In addition,
the physical condition of the project continued to deteriorate and by order of
the District Court of Oklahoma County during December 1997, a receiver was
appointed to preserve and protect the mortgaged property pending foreclosure. At
December 31, 1997, total liabilities exceeded total assets by approximately
$4,700,000. These items raised substantial doubt about Town and Country's
ability to continue as a going concern. The auditors for Town and Country
modified their reports for the 1997, 1996, and 1995 Fiscal Years due to the
uncertainty of the ability of Town and

                                       46
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

Country to continue in existence. Town and Country is in the process of trying
to renegotiate the terms of the notes with the new mortgage holders, but there
can be no assurance that the renegotiation will be successful. The Partnership's
investment in Town & Country was reduced to zero by current and prior years'
losses at February 28, 1998 and 1997, and the minority interest balance was zero
at each date. Town & Country's net loss after minority interest amounted to
approximately $216,000, $4,741,000 and $350,000 for the 1997, 1996 and 1995
Fiscal Years, respectively.

Char-Mur Apartments, Ltd.
During the year ended December 31, 1996, Char-Mur Apartments, Ltd. ("Char-Mur ")
incurred a net loss of approximately $31,000 and, as of that date, the local
partnership's total current liabilities exceeded its total current assets by
approximately $78,500. These factors, among others, raise substantial doubt
about the partnership's ability to continue as a going concern. Char-Mur's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to comply with
the terms of its mortgage, to obtain additional capital contributions from
partners, and ultimately, to attain successful operations. Management is making
all efforts possible to increase the occupancy and the rental income of the
project and to make the necessary improvements to enhance the property, in an
attempt to improve Char-Mur's cash flow. The partnership's investment in
Char-Mur was approximately $221,000 and $252,000 at February 28, 1998 and 1997,
respectively, and the minority interest balance was zero at each date.
Char-Mur's net loss after minority interest amounted to approximately $31,000,
$25,000 and $26,000 for the 1997, 1996 and 1995 Fiscal Years, respectively.

b)  Purchase Money Notes

As part of the purchase price of its investment in the Local Partnerships, the
Partnership issued approximately $61,029,000 of Purchase Money Notes. As of the
end of the 1997 Fiscal Year, unpaid accrued interest on the Purchase Money Notes
amounted to approximately $54,827,000. The principal of and all accrued interest
on the Purchase Money Notes is due at maturity, which will occur during the
period July 1998 to December 1999. During the fiscal year ended February 28,
1998, the properties and related assets and liabilities owned by three
subsidiary partnerships were sold to third parties and the Partnership's Local
Partnership Interest in five other Local Partnerships were sold to a third party
and the Local Partnership's general partners. Through the fiscal year ended
February 28, 1998, the properties and related assets and liabilities owned by
five subsidiary partnerships were sold to third parties and the Partnership's
Local Partnership Interest in six other Local Partnership's were sold to a third
party and the Local Partnership's general partner, respectively. A portion of
the net proceeds were used to settle the associated purchase money notes and
accrued interest thereon (see Note 10). The Partnership may elect, upon the
payment of an extension fee of 1 1/2% per annum of the outstanding principal
amount, to extend the term of the Purchase Money Notes for up to five additional
years (see Note 7). Management is working with the selling partners to
restructure and/or refinance the notes. The sellers recourse, in the event of
non-payment, would be to foreclose on the Partnership's interests in the
respective Local Partnerships.

                                       47
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

c)  Certificate of Deposit

The Partnership has a certificate of deposit in the amount of $75,509 at
February 28, 1998 to secure an overdraft in Town and Country's bank account. The
amount of the overdraft was approximately $41,000 at December 31, 1997.

d)  Other Restricted Cash

In addition, the Partnership and/or its subsidiary partnerships may from time to
time use a portion of their cash or property to secure operating credit lines.
As of February 28, 1998, $130,000 of the Partnership's funds have been so
pledged to secure operating credit lines at five subsidiary partnerships.

e)  Guarantees

The Partnership has guaranteed approximately $79,000 of advances to certain
subsidiary partnerships from their general partners and affiliates.

f)  Legal Proceedings

The Partnership is a Plaintiff in the Oklahoma County District Court in Oklahoma
against Jerry L. Womack and Womack Property Management, Inc., an Oklahoma
corporation. In this action entitled Shearson + Related Housing Properties
Limited Partnership and Shearson/Related Housing Associates Limited Partnership
v. Jerry L. Womack and Womack Property Management, Inc., the Partnership seeks
judgment for damages caused by the individual defendant's resignation as general
partner of Rolling Meadows of Chickasha, Ltd. (Rolling Meadows), of which the
Partnership was a limited partner, and by the corporate defendant's
mismanagement of the apartment project owned by Rolling Meadows. The individual
defendant has counterclaimed against the Plaintiffs, alleging that they breached
an agreement to advance funds to Rolling Meadows sufficient to pay operating
losses on the property, thereby damaging such defendant in an amount exceeding
$10,000. The corporate defendant has counterclaimed against the Plaintiffs for
unpaid management fees and expenses approximating $6,000. Both counterclaims
seek costs and attorneys' fees.

Discovery is continuing in the action. The Plaintiffs are responding vigorously
to the counterclaims and intend to continue doing so. While it is impossible to
predict with certainty, counsel believes the counter claims have no substantial
merit and that an outcome unfavorable to the Partnership is unlikely.

g)  Uninsured Cash and Cash Equivalents

The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. As of February 28, 1998, uninsured cash and
cash equivalents and mortgage escrow deposits approximated $6,824,000.

                                       48
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

h)  Sale of Subsidiary Partnership

The general partners of one subsidiary partnership, Westgate Associates, Limited
("Westgate"), have signed an option agreement to sell the project to the Vermont
Housing Finance Agency, subject to HUD approval and other contingencies, on or
before December 31, 1998. The Partnership's investment in Westgate was
approximately $814,000 at February 28, 1998. Westgate's assets constituted
approximately 3% of the consolidated total assets at February 28, 1998.

i)  Other

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 15%
of the properties are located in any single state. There are also substantial
risks associated with owning properties receiving Government Assistance, for
example the possibility that Congress may not appropriate funds to enable HUD to
make rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owners equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships during the period that the subsidy
agreements are in existence without HUD's approval. Furthermore, there may not
be market demand for apartments at full market rents when the rental assistance
contracts expire.

NOTE 12 - Subsequent Events

In March 1998, a distribution of approximately $2,011,000 and $20,000 which was
accrued at February 28, 1998 was paid to the limited partners and General
Partners, respectively, from net proceeds from the sale of underlying
properties.

On April 21, 1998, the Partnership's limited partnership interest in Oklahoma
City - Town and Country Village Apartments, Ltd. ("Town and Country") was
assigned to the local general partner and the related purchase money note and
interest thereon were canceled. Town & Country's liabilities in excess of assets
at December 31, 1997 amounted to approximately $4,700,000 and the related
purchase money note and accrued interest thereon amounted to approximately
$7,400,000.

On April 27, 1998, the property and the related assets and liabilities of
Riverside Gardens Limited Partnership ("Riverside") and Cudahy Gardens Limited
Partnership ("Cudahy") were sold to a third party for approximately $1,900,000
and $340,000, respectively, plus the assumption of the related mortgage notes.
The Partnership used approximately $442,000 and $47,000, respectively, of the
net proceeds to settle the associated Purchase Money Note and accrued interest
thereon which had total outstanding balances of $5,393,000 and $2,700,000,
respectively, resulting in forgiveness of indebtedness increase of $4,956,000
and $2,623,000, respectively.

On May 19, 1998, the Pacific Palm Limited Partnership entered into a letter of
intent to sell the property to an unaffiliated third party for a price of
$4,500,000. The letter of intent is condi-

                                       49
<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1998

tioned upon several factors; accordingly, no assurances can be given that the
sale will actually occur.

                                       50
<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

None
                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

The Partnership has no directors or officers. The Partnership's affairs are
managed and controlled by the General Partners.

Government Assisted Properties, Inc. (the "Assisted General Partner") and
Related Housing Programs Corporation (the "Related General Partners") are
affiliated with The Related Companies, L.P. ("Related"). The general partner of
Related is The Related Realty Group, Inc., of which Stephen M. Ross is
president, director and a stockholder. The General Partners manage and control
the affairs of the Partnership by engaging other affiliates of Related.

The Assisted General Partner was incorporated in Delaware on April 15, 1983 and
the Related General Partner was incorporated in Delaware on July 2, 1982.

On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"). In addition to
the Transfer, an affiliate of the Related General Partner also acquired the
Assisted General Partner's general partner interest in Cambridge/Related Housing
Associates Limited Partnership, the special limited partner of the Partnership.
Pursuant to the Partnership's Amended and Restated Partnership Agreement, the
consent of the limited partners was not required to approve the Transfer. In
connection with the Transfer, the Partnership paid to the Assisted General
Partner the accrued asset management fees owed to it in the aggregate amount of
$1,000,814. See Note 8 to the Financial Statements in Item 8 above.

Certain information concerning the directors and officers of the General
Partners who may be deemed directors or executive officers of the Partnership
are set forth below.

The director and officers of the Related General Partner are as follows:

<TABLE>
Name                                      Position
----                                      --------
<S>                                       <C>     
Stephen M. Ross                           Director

J. Michael Fried                          President and Director

Alan P. Hirmes                            Vice President

Stuart J. Boesky                          Vice President

Frank P. Cerbini                          Vice President

Glenn F. Hopps                            Treasurer

Lynn A. McMahon                           Secretary

Susan J. McGuire                          Assistant Secretary
</TABLE>

                                       51
<PAGE>

STEPHEN M. ROSS, 58, President, Director and shareholder of The Related Realty
Group, Inc., the general partner of The Related Companies, L.P. He graduated
from the University of Michigan School of Business Administration with a
Bachelor of Science degree and from Wayne State University School of Law with a
Juris Doctor degree. Mr. Ross then received a Master of Laws degree in taxation
from New York University School of Law. He joined the accounting firm of Coopers
& Lybrand in Detroit as a tax specialist and later moved to New York, where he
worked for two large Wall Street investment banking firms in their real estate
and corporate finance departments. Mr. Ross formed the predecessor of The
Related Companies, L.P. in 1972 to develop, manage, finance and acquire
subsidized and conventional apartment developments.

J. MICHAEL FRIED, 54, the sole shareholder of one of the general partners of
Related Capital Company ("Capital"), a real estate finance and acquisition
affiliate of Related. In that capacity, he is responsible for all of Capital's
syndication, finance, acquisition and investor reporting activities. Mr. Fried
practiced corporate law in New York City with the law firm of Proskauer Rose
Goetz & Mendelsohn from 1974 until he joined Capital in 1979. Mr. Fried
graduated from Brooklyn Law School with a Juris Doctor degree, magna cum laude;
from Long Island University Graduate School with a Master of Science degree in
Psychology; and from Michigan State University with a Bachelor of Arts degree in
History.

ALAN P. HIRMES, 43, has been a Certified Public Accountant in New York since
1978. Prior to joining Related in October 1983, Mr. Hirmes was employed by
Weiner & Co., Certified Public Accountants. Mr. Hirmes is also a Vice President
of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts
degree.

STUART J. BOESKY, 41, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of
Kaye Fialkow Richard & Rothstein, and from 1978 to 1980 was a consultant
specializing in real estate at the accounting firm of Laventhol & Horwath. Mr.
Boesky graduated from Michigan State University with a Bachelor of Arts degree
and from Wayne State School of Law with a Juris Doctor degree. He then received
a Master of Laws degree in Taxation from Boston University School of Law.

FRANK P. CERBINI, 41, rejoined Related in 1992 where his primary responsibility
has been disposition of real estate. From 1990 to 1992 he was Marketing Director
at Carlton Property Auctions; during 1992 he was Vice President of USAuction,
Inc. From 1987 to 1990 he was Vice President at Marigold Real Estate, a real
estate development company located in Greenwich, CT. From 1980 to 1986 he was in
acquisition officer at Related Capital Company. He received a Bachelor of
Science in Economics from Manhattan College in 1979.

GLENN F. HOPPS, 35, joined Related in December 1990, and prior to that date was
employed by Marks Shron & Company and Weissbarth, Altman and Michaelson
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science Degree in Accounting.

LYNN A. McMAHON, 42, has served as Assistant to the President of Capital since
1983. From 1978 to 1983 she was employed at Sony Corporation of America in the
Government Relations Department.

SUSAN J. McGUIRE, 51, graduated from William Cullen Bryant High School in
Woodside, New York, and attended Queensboro Community College. Since January
1977, she has served as Assistant to the President and Office Manager at
Capital. From May 1973 to January 1977,

                                       52
<PAGE>

she was employed as an administrative assistant with Condren, Walker & Co.,
Inc., an investment banking firm in New York City.

The directors and executive officers of the Assisted General Partner are as
follows:

<TABLE>
Name                                      Position
----                                      --------
<S>                                       <C>
J. Michael Fried                          President and Director

Alan P. Hirmes                            Vice President

Stuart J. Boesky                          Vice President

Marc D. Schnitzer                         Vice President

Denise L. Kiley                           Vice President

Glenn F. Hopps                            Treasurer

Lynn A. McMahon                           Secretary
</TABLE>

MARC D. SCHNITZER, 37, joined Related in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983.

DENISE L. KILEY, 38, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining Related in
1990, Ms. Kiley had experience acquiring, financing and asset managing
multifamily residential properties. From 1981 through 1985 she was an auditor
with Price Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from
Boston College.

Biographical information with respect to Messrs. Fried, Hirmes, Boesky, Hopps
and Ms. McMahon is set forth above.

Item 11.  Executive Compensation.

The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the General Partners for their services. However, under the terms of
the Partnership Agreement , the General Partners and their affiliates are
entitled to receive compensation from the Partnership in consideration of
certain services rendered to the Partnership by such parties. In addition, the
General Partners collectively hold a 1% interest in all profits, losses and
distributions attributable to operations and a subordinated 15% interest in such
items attributable to sales and refinancings. See Note 8 to the Financial
Statements in Item 8 above, which information is incorporated herein by
reference thereto. Certain directors and officers of the General Partners
receive compensation from the General Partner and their affiliates for services
performed for various affiliated entities which may include services performed
for the Partnership.

                                       53
<PAGE>

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The levels of
compensation payable to the General Partners and/or their affiliates is limited
by the terms of the Partnership Agreement and may not be increased therefrom on
a discretionary basis.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

The General Partners own all of the outstanding general partnership interests in
the Partnership. The General Partners collectively have a 1% interest in all
profits, losses and distributions of the Partnership from operations and a
subordinated 15% interest in such items from sale or refinancing proceeds.
Except as aforesaid, no person is known to own beneficially in excess of 5% of
the outstanding partnership interests.

At February 28, 1998, security ownership by the General Partners and their
affiliates was as follows:

<TABLE>
<CAPTION>

                        Name and Address of                        Amount of         Percentage
Title of Class          Beneficial Ownership                Beneficial Ownership       of Class
--------------          --------------------                --------------------       --------
<S>                     <C>                                       <C>                  <C>
General Partnership     Government Assisted
Interest in the         Properties, Inc.                          $   1                 25%
Partnership             625 Madison Avenue
                        New York, NY  10022

                        Related Housing Programs
                        Corporation                                   1                 25%
                        625 Madison Avenue
                        New York, NY  10022

                        Cambridge/Related Housing
                        Associates Limited Partnership              998                 50%
                        625 Madison Avenue
                        New York, NY  10022
</TABLE>

The Assisted General Partner and the Related General Partner each hold a .5%
general partnership interest in Cambridge Related Associates. Ronald W. Weiss
and J. Michael Fried each own a 49.5% limited partner interest in Cambridge
Related Associates. Ronald W. Weiss is not affiliated with the Assisted or
Related General Partner.

Item 13.  Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain relationships with the
General Partner and its affiliates, as discussed in Item 11 and also Note 8 to
the Financial Statements in Item 8 above, which is incorporated herein by
reference thereto. However, there have been no direct financial transactions
between the Partnership and the directors and officers of the General Partners.

Affiliates of the Related General Partner earned approximately $268,000 in
management fees during the 1997 Fiscal Year for providing property management
services to eight of the Local Partnerships.

                                       54
<PAGE>

In accordance with the partnership agreements, Cambridge Related Associates was
named as the general partner of the following five Local Partnerships: New
Jersey, Ziegler Boulevard, Eastwyck III, Country and Northbrook III.

                                       55
<PAGE>

                                     PART IV

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

<TABLE>
<CAPTION>
                                                                      Sequential
                                                                         Page
                                                                      ----------

<S>        <C>                                                         <C>
(a) 1.     Financial Statements                                            

           Independent Auditors' Report                                     28
                                                                              
           Consolidated Balance Sheets at February 28, 1998 and            
           1997                                                            152
                                                                              
           Consolidated Statements of Operations for the years             
           ended February 28, 1998, February 28, 1997 and                     
           February 29, 1996                                               153
                                                                              
           Consolidated Statements of Partners' Deficit for the            
           years ended February 28, 1998, February 28, 1997 and               
           February 29, 1996                                               154
                                                                              
           Consolidated Statements of Cash Flows for the years              
           ended February 28, 1998, February 28, 1997 and                  
           February 29, 1996                                               155
                                                                           
           Notes to Consolidated Financial Statements                      157

(a) 2.     Financial Statement Schedules

           Independent Auditors' Report                                    181

           Schedule I - Condensed Financial Information of
           Registrant                                                      182

           Schedule III - Real Estate and Accumulated
           Depreciation                                                    185

           All other schedules have been omitted because the
           required information is included in the financial
           statements and notes thereto or they are not
           applicable or not required.

(a) 3.     Exhibits

(3)        The Partnership's Amended and Restated Agreement and
           Certificate of Limited Partnership, as filed with the
           Secretary of State of the Commonwealth of
           Massachusetts, incorporated by reference to Exhibit
           (3) to the Partnership's Annual Report on Form 10-K
           for the fiscal year ended February 29, 1984
           (Commission File #0-12634).

(21)       The Local Partnerships set forth in Item 2 may be
           considered subsidiaries of the Registrant

(27)       Financial Data Schedule (filed herewith)                        187

(b)        Reports on Form 8-K

           None
</TABLE>

                                       56
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                     CAMBRIDGE + RELATED HOUSING PROPERTIES
                               LIMITED PARTNERSHIP



                                    By:   GOVERNMENT ASSISTED PROPERTIES, INC.,
                                          a general partner

Date: May 22, 1998

                                          By:  /s/ J. Michael Fried
                                               ----------------------
                                               J. Michael Fried
                                               President and Director


                                    and


                                    By:   RELATED HOUSING PROGRAMS CORPORATION,
                                          a general partner

Date: May 22, 1998

                                          By:  /s/ J. Michael Fried
                                               ----------------------
                                               J. Michael Fried
                                               President and Director

<PAGE>

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

<TABLE>
<CAPTION>

       Signature                           Title                                Date
       ---------                           -----                                ----
<S>                               <C>                                        <C>
                                  President  and Chief Executive
/s/ J. Michael Fried              Officer (principal executive officer)
--------------------              and Director of Related  Housing
J. Michael Fried                  Programs Corporation and
                                  Government Assisted Properties, Inc.       May 22, 1998


/s/ Alan P. Hirmes                Vice President (principal financial
--------------------              officer) of Related Housing
Alan P. Hirmes                    Programs Corporation and
                                  Government Assisted Properties, Inc.       May 22, 1998


/s/ Glenn F. Hopps                Treasurer (principal accounting
--------------------              officer) of Related Housing
Glenn F. Hopps                    Programs Corporation and
                                  Government Assisted Properties, Inc.       May 22, 1998


/s/ Stephen M. Ross
-------------------               Director of Related Housing
Stephen M. Ross                   Programs Corporation                       May 22, 1998

</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Partners of
Cambridge + Related Housing Properties Limited Partnership and Subsidiaries


In connection with our audits of the consolidated financial statements of
Cambridge + Related Housing Properties Limited Partnership and Subsidiaries
included in this Form 10-K as presented in our opinion dated April 29, 1998 on
page , and based on the reports of other auditors, we have also audited
supporting Schedules I and III for the 1997, 1996 and 1995 Fiscal Years. In our
opinion, and based on the reports of other auditors (certain of which were
modified due to the uncertainty of these subsidiary partnerships' abilities to
continue in existence), these consolidated schedules present fairly, when read
in conjunction with the related consolidated financial statements, the financial
data required to be set forth therein.

As discussed in Note 11(a), three of the subsidiary partnerships are in default
of their mortgage agreements. This raises substantial doubt about these
subsidiary partnerships' abilities to continue as going concerns. The auditors
of two (1997 Fiscal Year) and one (1996 and 1995 Fiscal Years), of these
subsidiary partnerships have modified their reports, due to the uncertainty of
the ability of the subsidiary partnerships to continue in existence.
Management's plans regarding these matters are also discussed in Note 11(a). The
financial statements for one (1997, 1996 and 1995 Fiscal Years) of these
subsidiary partnerships were not audited. Such subsidiary partnerships' losses
constituted $398,321, $4,917,277 and $426,975 of the Partnership's net loss
during the 1998, 1997 and 1996 Fiscal Years and assets constituted 5% and 4% of
the Partnership's total assets at February 28, 1998 and 1997, respectively. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

As discussed in Note 7, the principal of and all accrued interest on the
purchase money notes are due at maturity, which will occur, during 1998 to 1999.
The Partnership expects that upon maturity it will be required to refinance or
sell its investments in the subsidiary partnerships in order to pay the purchase
money notes and related interest obligations. It is uncertain as to whether the
proceeds from such sales will be sufficient to meet the outstanding balances of
the purchase money notes and accrued interest thereon. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

TRIEN, ROSENBERG, ROSENBERG, WEINBERG, CIULLO & FAZZARI, L.L.P.

New York, New York
April 29, 1998

<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT



Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)


<TABLE>
<CAPTION>
                            CONDENSED BALANCE SHEETS

                                     ASSETS
                                                                            February 28,
                                                                    -----------------------------
                                                                         1998            1997
                                                                    ------------     ------------
<S>                                                                 <C>              <C>         
Cash and cash equivalents                                           $  4,164,863     $  2,120,859
Certificates of deposit                                                  205,509          201,986
Investment in subsidiary partnerships                                 28,801,010       41,362,927
Other assets                                                             121,477          175,538
                                                                    ------------     ------------

  Total assets                                                      $ 33,292,859     $ 43,861,310
                                                                    ============     ============

                        LIABILITIES AND PARTNERS' DEFICIT           

Purchase money notes payable                                        $ 46,352,956     $ 56,929,115
Due to general partner and affiliates                                    314,365          791,514
Due to selling partners                                               54,842,675       63,442,985
Other liabilities                                                         17,665           17,601
Distribution payable                                                   2,030,972        1,111,554
                                                                    ------------     ------------
Total liabilities                                                    103,558,633      122,292,769

Partners' deficit                                                    (70,265,774)     (78,431,459)
                                                                    ------------     ------------

  Total liabilities and partners' deficit                           $ 33,292,859     $ 43,861,310
                                                                    ============     ============
</TABLE>


Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' deficit on the consolidated balance sheet will differ
from partners' deficit shown above.

<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT


                       CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                    ----------------------------------------------
                                                    February 28,     February 28,     February 29,
                                                        1998             1997             1996*
                                                    ------------     -----------      ------------
Revenues
<S>                                                 <C>              <C>              <C>        
  Other                                             $     86,033     $    66,982      $    15,254
                                                    ------------     -----------      -----------
                                                    
                                                          86,033          66,982           15,254
                                                    ------------     -----------      -----------
                                                    
Expenses                                            
                                                    
  Administrative and management                          187,319         195,043          180,897
  Administrative and management-                    
   related parties                                     1,115,291       1,174,772          274,059
  Financial, principally interest                      4,814,077       5,286,095        5,492,620
                                                    ------------     -----------      -----------
                                                    
                                                       6,116,687       6,655,910        5,947,576
                                                    ------------     -----------      -----------
                                                      (6,030,654)     (6,588,928)      (5,932,322)
                                                    
  Loss on sale of investments in subsidiary         
   partnerships                                       (3,676,571)              0                0
  Forgiveness of indebtedness income                  21,447,564       3,207,855                0
  Equity in (loss) income of subsidiary             
   partnerships (a)                                   (1,543,682)      4,371,713       (1,763,546)
                                                    ------------     -----------      -----------
                                                    
Net income (loss)                                   $ 10,196,657     $   990,640      $(7,695,868)
                                                    ============     ===========      ===========
</TABLE>


(a) Includes suspended prior year losses in excess of investment in accordance
with equity method of accounting amounting to ($377,597) and ($2,097,399) for
1998 and 1997.


*Restated for comparative purposes to reflect investments in certain subsidiary
partnerships at zero.

<PAGE>
           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                     Year Ended
                                                      ---------------------------------------------
                                                      February 28,     February 28,    February 29,
                                                         1998             1997             1996*
                                                      -----------      -----------     ------------
<S>                                                   <C>              <C>             <C>         
Cash flows from operating activities:                                                
Net income (loss)                                     $ 10,196,657     $   990,640     $(7,695,868)
                                                      ------------     -----------     -----------
                                                                                     
Adjustments to reconcile net income (loss) to                                        
  net cash (used in) operating activities:                                           
  Loss on sale of investments in subsidiary                                          
   partnerships                                          3,676,571               0               0
  Forgiveness of indebtedness income                   (21,447,564)     (3,207,855)              0
                                                                                     
  (Increase) decrease in assets:                                                     
  (Increase) decrease in certificates of deposit            (3,523)         53,014               0
  Equity in loss (income) of subsidiary                                              
   partnerships                                          1,543,682      (4,371,713)      1,763,546
  Decrease (increase) in other assets                       54,061         (82,321)        (39,226)
                                                                                     
  Increase (decrease) in liabilities:                                                
  Due to general partners and affiliates                  (477,149)     (1,254,385)         59,593
  Due to selling partners                                4,814,077       5,286,095       5,492,620
  Other liabilities                                             64             (65)           (677)
                                                      ------------     -----------     -----------
  Total adjustments                                    (11,839,781)     (3,577,230)      7,275,856
                                                      ------------     -----------     -----------
   Net cash (used in) operating activities              (1,643,124)     (2,586,590)       (420,012)
                                                      ------------     -----------     -----------

Cash flows from investing activities:                                                
  Proceeds from sale of investments in subsidiary                                    
   partnerships                                          2,887,700               0               0
  Investment in subsidiary                                 (23,486)              0               0
  Distributions from subsidiaries                        4,477,450       9,750,025         874,592
                                                      ------------     -----------     -----------
  Net cash provided by investing activities              7,341,664       9,750,025         874,592
                                                      ------------     -----------     -----------
                                                                                     
Cash flows from financing activities:                                                
  Principal payments of purchase money notes            (2,001,151)     (3,300,000)              0
  Payments to selling partners                            (541,831)     (1,795,794)       (487,932)
  Distributions to partners                             (1,111,554)              0               0
                                                      ------------     -----------     -----------
  Net cash used in financing activities                 (3,654,536)     (5,095,794)       (487,932)
                                                      ------------     -----------     -----------
                                                                                     
Net increase (decrease) in cash and                                                  
  cash equivalents                                       2,044,004       2,067,641         (33,352)
Cash and cash equivalents, beginning of year             2,120,859          53,218          86,570
                                                      ------------     -----------     -----------
                                                                                     
Cash and cash equivalents, end of year                $  4,164,863     $ 2,120,859     $    53,218
                                                      ============     ===========     ===========
</TABLE>

*Restated for comparative purposes to reflect investments in certain subsidiary
partnerships at zero.

<PAGE>


           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                FEBRUARY 28, 1998
<TABLE>
<CAPTION>

                                                                                                         Gross Amount at which
                                                                                            Cost           Carried At Close 
                                                             Initial Cost to Partnership  Capitalized         of Period       
                                                             ---------------------------  Subsequent to ----------------------
                                                                           Buildings and  Acquisition:            Buildings and  
Subsidiary Partnership's Residential Property   Encumbrances     Land       Improvements  Improvements   Land     Improvements   
---------------------------------------------  ------------   -----------   ------------ ------------  ---------- ------------   
<S>                                            <C>        <C>           <C>           <C>          <C>           <C>             
(9)  Bay Village Company                       $4,343,683 $    333,604  $   6,053,390 $    652,868 $    334,015  $   6,705,847   
(12) Bethany Glen Associates                    2,386,135      341,004      3,025,540      412,722      341,415      3,437,851   
(11) Grandview-Blue Ridge Manor, Limited        1,434,595      128,604      2,011,867       25,279      129,015      2,036,735   
(4)  Buena Vista Manor Apts. Ltd.               3,138,075      258,604      4,355,907      643,911      294,581      4,963,841   
(7)  Canton Commons Apartments                  9,270,958      683,605     11,875,258      210,342      684,016     12,085,189   
(18) Cedar Hill Apartments, Ltd.                  985,691       67,419      1,337,361       51,892       69,380      1,387,292   
(10) Breckenridge-Chaparral Apartments II, Ltd. 1,446,578      123,604      2,010,522      163,915      124,015      2,174,026   
(18) Char-mur Apartments                          811,793       55,048      1,080,372       41,634       57,009      1,120,045   
(7)  Clinton Plaza Apartments L. P.                     0      238,604      4,443,787   (4,682,391)           0              0   
(7)  Clinton Plaza Apartments #2 L. P.                  0      288,604      5,293,492   (5,582,096)           0              0   
(18) Crossett Apartments, Ltd.                    916,285       61,840      1,176,962       79,375       63,801      1,254,376   
(8)  Cudahy Gardens, Ltd.                       2,281,498      168,604      3,092,733     (306,821)     169,016      2,785,500   
(10) El Paso-Gateway East, Ltd.                 1,784,822      158,604      2,422,623      328,567      164,656      2,745,138   
(7)  Golf Manor Apartments, Ltd.                1,964,430      183,605      3,060,084      124,235      184,016      3,183,908   
(7)  Grosvenor South Apartments L. P.                   0      233,604      4,341,549   (4,575,153)           0              0   
(7)  Grosvenor South Apartments #2 L. P.                0       81,104      1,460,463   (1,541,567)           0              0   
(3)  Oakland-Keller Plaza                               0      358,605      5,742,056   (6,100,661)           0              0   
(16) Lafayette Square Apartment's Ltd.          3,219,644      348,604      4,116,308      321,188      349,015      4,437,085   
(8)  San Diego-Logan Square Gardens Co.         3,949,021      308,604      5,005,103      538,226      309,015      5,542,918   
(6)  Los Caballeros Apartments                          0      223,604      4,124,963   (4,348,567)           0              0   
(3)  South Munjoy Associates Ltd.                       0      208,604      3,456,920   (3,665,524)           0              0   
(13) Country, Ltd.                              1,672,848      210,827      3,807,680       16,147      211,238      3,823,416   
(13) Northbrook III, Ltd.                       1,348,760      131,383      2,305,900       17,754      131,794      2,323,243   
(10) Forth Worth-Northwood Apartments, Ltd.     1,581,643      118,604      2,226,552      283,561      119,015      2,509,702   
(10) Corpus Christi-Oso Bay Apartments, Ltd.    1,868,589      158,604      2,501,173      214,820      159,015      2,715,582   
(8)  Pacific Palms, Ltd.                        3,710,274      233,604      4,819,956      620,616      234,015      5,440,161   
(14) Zeigler Blvd., Ltd.                        2,853,063      218,605      3,945,003      121,652      219,016      4,066,244   
(14) Parktowne, Ltd.                            2,495,147      176,605      3,273,501      116,893      177,016      3,389,983   
(8)  Riverside Gardens, Ltd.                    4,236,906      308,604      5,357,903      727,732      309,016      6,085,223   
(5)  Rolling Meadows Apts., Ltd.                3,358,243      258,604      4,418,421      586,277      259,015      5,004,287   
(5)  Ardmore-Rolling Meadows of Ardmore, Ltd.   1,680,053      138,604      2,320,412      263,839      118,015      2,604,840   
(5)  Rolling Meadows of Chickasha, Limited              0      128,604      2,298,164   (2,426,768)           0              0   
(15) Roper Mountain Apartments                          0      258,605      4,925,617   (5,184,222)           0              0   
(7)  Rosewood Manor Apartments                  4,084,519      508,604      5,328,672      414,169      509,016      5,742,429   
(14) New Jersey, Ltd.                           2,391,363      178,605      3,214,241      112,737      179,016      3,326,567   
(10) Stephenville-Tarleton Arms                 2,161,683      238,604      2,832,970      167,489      239,015      3,000,048   
(5)  Oklahoma City-Town & Country Village       6,369,797      408,604      7,307,195   (4,253,696)     100,000      3,362,103   
(17) Caddo Parish-Villas South, Ltd.            5,168,558      298,604      6,019,236      183,248      299,015      6,202,073   
(14) Eastwyck III, Ltd.                         1,212,773      108,605      1,790,877        8,226      109,016      1,798,692   
(7)  Warren Manor Apts., Ltd.-Property A and B  7,065,322      758,604     10,506,325      337,217      759,015     10,843,131   
(7)  Warren Woods Apartments, Ltd.              3,145,212      308,605      4,697,009       98,940      309,016      4,795,538   
(1)  Westgate Associates Ltd.                   1,990,046      183,604      2,824,512      200,822      184,015      3,024,923   
(14) Westwood Apartments Company, Limited       3,299,732      233,605      4,168,757       37,126      234,016      4,205,472   
(2)  Wingate Associates Ltd.                    2,189,794      198,604      2,968,529      363,583      199,016      3,331,700   
                                             ------------  -----------   ------------  -----------   ----------   ------------   

                                             $101,817,533  $10,619,983   $173,345,865 $(34,180,464)  $8,330,276   $141,455,108   
                                             ============  ===========   ============ ============   ==========   ============   
</TABLE>

<TABLE>
<CAPTION>

                                              Gross Amount at which                                     Life on which
                                                 Carried At Close                                       Depreciation in
                                                    of Period                                           Latest Income
                                                 ---------------- Accumulated   Year of       Date      Statement is
Subsidiary Partnership's Residential Property         Total       Depreciation  Construction  Acquired  Computed(c)(d)
---------------------------------------------        ---------    ------------  ------------  --------  --------------
<S>                                                  <C>         <C>                           <C>          <C>  
(9)  Bay Village Company                             $ 7,039,862 $  3,311,145      (c)         10/83        15-30
(12) Bethany Glen Associates                           3,779,266    2,269,534      (c)         10/83        10-30
(11) Grandview-Blue Ridge Manor, Limited               2,165,750    1,032,722      (c)         9/83         30
(4)  Buena Vista Manor Apts. Ltd.                      5,258,422    3,359,777      (c)         11/83        20-30
(7)  Canton Commons Apartments                        12,769,205    7,017,300      (c)         8/83         25
(18) Cedar Hill Apartments, Ltd.                       1,456,672      529,759      (c)         12/84        20-35
(10) Breckenridge-Chaparral Apartments II, Ltd         2,298,041    1,023,150      (c)         9/83         30
(18) Char-mur Apartments                               1,177,054      429,725      (c)         12/84        35
(7)  Clinton Plaza Apartments L. P.                            0            0      (c)         8/83         30
(7)  Clinton Plaza Apartments #2 L. P.                         0            0      (c)         8/83         30
(18) Crossett Apartments, Ltd.                         1,318,177      557,707      (c)         12/84        30
(8)  Cudahy Gardens, Ltd.                              2,954,516    1,587,054      (c)         9/83         10-30
(10) El Paso-Gateway East, Ltd.                        2,909,794    1,302,340      (c)         9/83         25-30
(7)  Golf Manor Apartments, Ltd.                       3,367,924    1,858,170      (c)         8/83         25
(7)  Grosvenor South Apartments L. P.                          0            0      (c)         8/83         30
(7)  Grosvenor South Apartments #2 L. P.                       0            0      (c)         8/83         30
(3)  Oakland-Keller Plaza                                      0            0      (c)         9/83         15-30
(16) Lafayette Square Apartment's Ltd.                 4,786,100    2,134,265      (c)         9/83         15-30
(8)  San Diego-Logan Square Gardens Co.                5,851,933    2,664,661      (c)         9/83         7-30
(6)  Los Caballeros Apartments                                 0            0      (c)         9/83         30
(3)  South Munjoy Associates Ltd.                              0            0      (c)         11/83        30-40
(13) Country, Ltd.                                     4,034,654    1,809,552      (c)         8/83         5-30
(13) Northbrook III, Ltd.                              2,455,037    1,097,283      (c)         8/83         30
(10) Forth Worth-Northwood Apartments, Ltd.            2,628,717    1,175,116      (c)         9/83         10-30
(10) Corpus Christi-Oso Bay Apartments, Ltd.           2,874,597    1,285,287      (c)         9/83         27.5-30
(8)  Pacific Palms, Ltd.                               5,674,176    3,652,686      (c)         9/83         9-30
(14) Zeigler Blvd., Ltd.                               4,285,260    1,915,473      (c)         8/83         40
(14) Parktowne, Ltd.                                   3,566,999    1,609,091      (c)         8/83         15-30
(8)  Riverside Gardens, Ltd.                           6,394,239    2,972,144      (c)         9/83         15-30
(5)  Rolling Meadows Apts., Ltd.                       5,263,302    2,808,026      (c)         11/83        27
(5)  Ardmore-Rolling Meadows of Ardmore, Ltd.          2,722,855    1,286,286      (c)         9/83         15-30
(5)  Rolling Meadows of Chickasha, Limited                     0            0      (c)         11/83        27
(15) Roper Mountain Apartments                                 0            0      (c)         8/83         25
(7)  Rosewood Manor Apartments                         6,251,445    2,641,500      (c)         9/83         30
(14) New Jersey, Ltd.                                  3,505,583    1,561,302      (c)         8/83         30
(10) Stephenville-Tarleton Arms                        3,239,063    1,458,813      (c)         9/83         15-40
(5)  Oklahoma City-Town & Country Village              3,462,103    3,362,103      (c)         9/83         10-30
(17) Caddo Parish-Villas South, Ltd.                   6,501,088    3,011,001      (c)         9/83         15-30
(14) Eastwyck III, Ltd.                                1,907,708      868,298      (c)         8/83         30
(7)  Warren Manor Apts., Ltd.-Property A and B        11,602,146    6,252,011      (c)         8/83         25
(7)  Warren Woods Apartments, Ltd.                     5,104,554    2,798,928      (c)         8/83         25
(1)  Westgate Associates Ltd.                          3,208,938    1,070,840      (c)         11/83        40
(14) Westwood Apartments Company, Limited              4,439,488    2,024,565      (c)         8/83         15-30
(2)  Wingate Associates Ltd.                           3,530,716    1,133,989      (c)         11/83        30-40
                                                     -----------  -----------

                                                    $149,785,384  $74,871,603
                                                    ============  ===========


</TABLE>


<PAGE>



           CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
             Partnership Property Pledged as Collateral (Continued)
                                FEBRUARY 28, 1998


(a)   Properties are subject to mortgage notes and purchase money notes, as
      shown below.
(b)   No carrying costs have been capitalized since all properties were acquired
      after completion of construction.
(c)   Since all properties were acquired as operating properties, depreciation
      is computed using primarily the straight line method over the estimated
      useful lives determined by the Partnership date of acquisition.
(d)   Furniture and fixtures, included in building and improvements, are
      depreciated primarily by the straight line method over the estimated
      useful lives ranging from 5 to 15 years.
(e)   These amounts differ from the amounts presented in the audited financial
      statements of these subsidiary partnerships due to a difference in
      accounting between these partnerships and the other forty-one subsidiary
      partnerships. This difference, which is significant to the individual
      subsidiary partnerships, relates to discounts on the respective mortgages
      payable and the related acquisition cost and current carrying value of
      property and equipment.

Geographic Locations: (1) Vermont, (2) New Hampshire, (3) Maine, (4) Tennessee,
(5) Oklahoma, (6) Colorado, (7) Michigan, (8) California, (9) Massachusetts,
(10) Texas, (11) Missouri, (12) Arizona, (13) Mississippi, (14) Alabama, (15)
South Carolina, (16) New Mexico, (17) Louisiana, (18) Arkansas

<TABLE>
<CAPTION>

                                           Cost of Property and Equipment                   Accumulated Depreciation
                                 ---------------------------------------------    ------------------------------------------
                                                                         Year Ended
                                 ----------------------------------------------------------------------------------------------
                                   February 28,     February 28,      February 29,      February 28,    February 28,   February 29,
                                      1998              1997              1996              1998           1997           1996
                                      ----              ----              ----              ----           ----           ----
<S>                              <C>                <C>               <C>               <C>            <C>            <C>        
Balance at beginning of period   $173,714,196       $192,104,269      $190,857,683      $80,183,677    $80,440,482    $73,883,906
Additions during period:
  Improvements                      1,282,938          1,127,796         1,308,380
  Depreciation expense                                                                    5,684,363      6,475,294      6,618,370
Reductions during period:
  Dispositions                    (24,776,750)       (14,351,868)          (61,794)     (10,996,437)    (6,732,099)       (61,794)
  Loss on impairment of assets       (435,000)        (5,166,001)                0                0              0              0
                                 ------------      -------------      -------------   -------------   ------------    -----------

Balance at end of period         $149,785,384       $173,714,196      $192,104,269      $74,871,603    $80,183,677    $80,440,482
                                 ============      =============      =============   =============   ============    ===========
</TABLE>

At the time the local partnerships were acquired by Cambridge & Related Housing
Properties Limited Partnership, the entire purchase price paid by Cambridge &
Related Housing Properties Limited Partnership was pushed down to the local
partnerships as property and equipment with an offsetting credit to capital.
Since the projects were in the construction phase at the time of acquisition,
the capital accounts were insignificant at the time of purchase. Therefore,
there are no material differences between the original cost basis for tax and
GAAP.