FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

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

                                    Form 10-K

[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 December 31, 2001

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
      [No Fee Required]

             For the transition period from _________to _________

                         Commission file number 0-11723

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
            (Exact name of registrant as specified in its charter)

         California                                              94-2883067
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                          55 Beattie Place, PO Box 1089
                       Greenville, South Carolina 29602
                   (Address of principal executive offices)

                            Issuer's telephone number
                                 (864) 239-1000

        Securities registered under Section 12(b) of the Exchange Act:

                                      None

        Securities registered under Section 12(g) of the Exchange Act:

                            Limited Partnership Units
                                (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 (Sec.  229.405 of this chapter) is not contained  herein,  and
will not be contained,  to the best of the registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (Amended by Exch.
Act Rel No. 28869, eff. 5/1/91). Yes ___  No  X

State the aggregate market value of the Limited Partnership Units ("Units") held
by  non-affiliates  computed by reference to the price at which the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 2001. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>

                                     PART I

Item 1.     Description of Business

General

Consolidated   Capital   Institutional   Properties/2   (the   "Partnership"  or
"Registrant")  was organized on April 12, 1983, as a limited  partnership  under
the  California  Uniform  Limited   Partnership  Act.  On  July  22,  1983,  the
Partnership registered with the Securities and Exchange Commission ("SEC") under
the  Securities Act of 1933 (File No.  2-83540) and commenced a public  offering
for the sale of Units.  The Units represent  equity interests in the Partnership
and  entitle the  holders  thereof to  participate  in certain  allocations  and
distributions of the Partnership. The sale of Units terminated on July 21, 1985,
with 912,182 Units sold at $250 each, or gross proceeds of approximately  $227.8
million to the  Partnership.  As permitted under its Partnership  Agreement (the
original  partnership  agreement of the Partnership with all amendments shall be
referred to as the "Partnership Agreement"), the Partnership has repurchased and
retired a total of 3,048 Units for a total of $611,000.  During 1999, 10.4 units
were abandoned and accordingly retired by the Partnership.  The Partnership may,
at its absolute  discretion,  repurchase Units, but is under no obligation to do
so. Since its initial offering, the Registrant has not received, nor are limited
partners required to make, additional capital contributions.

Upon the Partnership's formation in 1983, CCEC, a Colorado corporation,  was the
corporate general partner. In 1988, through a series of transactions,  Southmark
Corporation  ("Southmark")  acquired  controlling  interest in CCEC. In December
1988,  CCEC filed for  reorganization  under  Chapter  11 of the  United  States
Bankruptcy Code ("Chapter 11"). In 1990, as part of CCEC's  reorganization plan,
ConCap Equities,  Inc. ("CEI" or the "General  Partner") acquired CCEC's general
partner  interests in the Partnership and in 15 other affiliated  public limited
partnerships (the "Affiliated  Partnerships")  and CEI replaced CCEC as managing
general  partner in all 16  partnerships.  The  selection  of CEI as the general
partner was  approved by a majority of the limited  partners in the  Partnership
and in each of the Affiliated  Partnerships  pursuant to a  solicitation  of the
Limited  Partners  dated  August 10,  1990.  As part of this  solicitation,  the
Limited  Partners  also  approved an amendment to the  Partnership  Agreement to
limit changes of control of the Partnership. The General Partner is a subsidiary
of Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust. The Partnership Agreement provides that the Partnership
is to terminate on December 31, 2013 unless terminated prior to such date.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 430,935.30 limited partnership units
in the Partnership  representing 47.40% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  As a result of
its  ownership  of 47.40% of the  outstanding  units,  AIMCO is in a position to
influence all such voting decisions with respect to the Registrant.  When voting
on matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

The  Partnership's  primary  business and only  industry  segment is real estate
related  operations.  See "Item 8.  Financial  Statements - Note A" for detailed
disclosure of the Partnership's  segment reporting.  The Partnership was formed,
for the benefit of its Limited  Partners (herein so called and together with the
General  Partner  shall be  called  the  "Partners"),  to lend  funds to  Equity
Partners/Two  ("EP/2"), a California general partnership in which certain of the
partners were former  shareholders  and former  management  of CCEC,  the former
corporate general partner of the Partnership.  See "Status of Master Loan" for a
description of the loan and settlement of EP/2's  bankruptcy.  Through  December
31, 2001, the Partnership had advanced a total of approximately  $183,470,000 to
EP/2 and its  successor  under the Master  Loan (as defined in "Status of Master
Loan").  As of December  31, 2001,  the balance of the Master  Loan,  net of the
allowance for possible  losses,  was  approximately  $11,294,000.  EP/2 used the
proceeds  from these loans to acquire  eleven (11)  apartment  buildings and ten
(10) office complexes, which collateralized the Master Loan. EP/2's successor in
bankruptcy (as more fully  described in "Status of Master Loan")  currently owns
three (3)  apartment  buildings and is currently  rebuilding a fourth  apartment
building which secure the Master Loan.

The Registrant  has no employees.  Management  and  administrative  services are
performed by the General Partner and by agents of the General Partner.

Status of Master Loan

Prior  to  1989,  the  Partnership  had  loaned  funds  totaling   approximately
$176,000,000 to EP/2 subject to a nonrecourse note (the "Master Loan"), pursuant
to the Master Loan Agreement  dated July 22, 1983,  between the  Partnership and
EP/2. The  Partnership  secured the Master Loan with deeds of trust or mortgages
on real property  purchased with the funds advanced as well as by the assignment
and pledge of promissory notes from the partners of EP/2.

During 1989, EP/2 defaulted on certain interest payments that were due under the
Master  Loan.  Before the  Partnership  could  exercise  its  remedies  for such
defaults,  EP/2 filed for bankruptcy  protection in a Chapter 11  reorganization
proceeding. On October 18, 1990, the bankruptcy court approved EP/2's consensual
plan of reorganization  (the "Plan"). In November 1990, EP/2 and the Partnership
consummated a closing under the Plan pursuant to which,  among other things, the
Partnership  and EP/2 executed an amended and restated loan  agreement (the "New
Master  Loan  Agreement"),   EP/2  was  converted  from  a  California   general
partnership to a California  limited  partnership,  Consolidated  Capital Equity
Partners/Two,  L.P.,  ("CCEP/2")  and  CCEP/2  renewed  the  deeds of trust  and
mortgages  on all the  properties  collaterally  securing  the New  Master  Loan
Agreement.  ConCap Holdings,  Inc. ("CHI"), a Texas corporation and wholly-owned
subsidiary of CEI, is the sole general partner of CCEP/2 and an affiliate of the
Partnership. The general partners of EP/2 became limited partners in CCEP/2. CHI
has full  discretion  with respect to conducting  CCEP/2's  business,  including
managing CCEP/2's  properties and initiating and approving capital  expenditures
and asset  dispositions and refinancings.  Under the new partnership  agreement,
CCEP/2 is managed by CHI primarily for the benefit of the Partnership.  CCEP/2's
primary  objective  is to conduct its  business to  maximize  the  Partnership's
recovery under the New Master Loan Agreement.

Under the terms of the New Master Loan  Agreement,  interest  accrues at 10% and
payments are due  quarterly  in an amount  equal to Excess Cash Flow,  generally
defined in the New Master Loan Agreement as net cash flow from operations  after
third-party  debt  service  and capital  improvements.  If such Excess Cash Flow
payments are less than the current accrued interest during the quarterly period,
the unpaid interest is added to principal,  compounded annually,  and is payable
at the loan's  maturity.  If such Excess Cash Flow payments are greater than the
current accrued interest,  the excess amount is applied to the principal balance
of the loan.  Any net  proceeds  from  sale or  refinancing  of any of  CCEP/2's
properties  are paid to the  Partnership  under the terms of the New Master Loan
Agreement.  The Master Loan matured in November  2000.  The General  Partner has
been  negotiating  with  CCEP/2  with  respect  to its  options  which  included
foreclosing on the properties  that  collateralize  the Master Loan or extending
the terms of the Master  Loan.  The General  Partner has decided to foreclose on
the  properties  that  collaterize  the Master Loan.  Subsequent to December 31,
2001, the Partnership Agreement was amended to allow the Partnership to directly
or indirectly  own  investment  properties.  The General  Partner will begin the
process of executing  deeds in lieu of  foreclosure  during the first quarter of
2002 on the three active  properties of CCEP/2.  The deed in lieu of foreclosure
on the fourth property,  which is currently being rebuilt, will be executed at a
later date. As the deeds are executed,  title in the properties  currently owned
by CCEP/2 will be vested in the  Partnership,  subject to the existing  liens on
such properties including the first mortgage loans. As a result, the Partnership
will become responsible for the operations of such properties.

Effective  January 1, 1993,  the  Partnership  and CCEP/2 amended the New Master
Loan  Agreement  to  stipulate  that Excess  Cash Flow would be computed  net of
capital  improvements.  Such  expenditures were formerly funded from advances on
the Master Loan from the Partnership to CCEP/2. This amendment and change in the
definition  of Excess  Cash Flow has the effect of  reducing  the  Partnership's
interest  income  from  the  Master  Loan  by the  amount  of  CCEP/2's  capital
expenditures since such amounts were previously excluded from Excess Cash Flow.

Segments

Segment data for the years ended  December 31, 2001,  2000, and 1999 is included
in "Item 8.  Financial  Statements - Note A" and is an integral part of the Form
10-K.

Item 2.     Property

As of December 31, 2001 and 2000, the Partnership has no real estate assets.

Item 3.     Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition of interests in certain  General  Partner  entities by
Insignia  Financial  Group,  Inc.  ("Insignia")  and entities which were, at one
time,  affiliates of Insignia;  past tender offers by the Insignia affiliates to
acquire  limited  partnership  units;  management  of  the  partnerships  by the
Insignia  affiliates;  and the series of transactions which closed on October 1,
1998 and  February 26, 1999 whereby  Insignia  and  Insignia  Properties  Trust,
respectively,  were merged into AIMCO.  The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998,  the Corporate  General  Partner filed a motion  seeking  dismissal of the
action.  In lieu of responding to the motion,  the  plaintiffs  filed an amended
complaint.  The  Corporate  General  Partner  filed  demurrers  to  the  amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December  14,  1999,  the General  Partner  and its  affiliates  terminated  the
proposed settlement.  In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement.  On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken  from the order on  October  5,  2000.  On
December 4, 2000, the Court  appointed the law firm of Lieff Cabraser  Heimann &
Bernstein  LLP as new  lead  counsel  for  plaintiffs  and the  putative  class.
Plaintiffs  filed a third  amended  complaint on January 19,  2001.  On March 2,
2001,  the  General  Partner  and its  affiliates  filed a demurrer to the third
amended  complaint.  On May 14, 2001,  the Court heard the demurrer to the third
amended  complaint.  On July 10,  2001,  the Court  issued  an order  sustaining
defendants'  demurrer on certain grounds.  On July 20, 2001,  Plaintiffs filed a
motion for  reconsideration  of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action  complaint.  On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint,  which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer.  The Court has dismissed without
leave  to amend  certain  of the  plaintiffs'  claims.  On  February  11,  2002,
plaintiffs  filed a motion seeking to certify a putative class  comprised of all
non-affiliated  persons  who own or have owned  units in the  partnerships.  The
General  Partner and affiliated  defendants  oppose the motion and a hearing has
been  scheduled  for April 29,  2002.  The Court has set the matter for trial in
January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first  amended  complaint in its entirety for  violating the
Court's  July 10, 2001 order  granting  in part and denying in part  defendants'
demurrer in the Nuanes action, or  alternatively,  to strike certain portions of
the  complaint  based on the statute of  limitations.  Other  defendants  in the
action demurred to the fourth amended complaint,  and,  alternatively,  moved to
strike the  complaint.  On December  11, 2001,  the court heard  argument on the
motions and took the matters under  submission.  On February 4, 2002,  the Court
served  notice of its order  granting  defendants'  motion to strike  the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action.

The  General  Partner  does not  anticipate  that any  costs,  whether  legal or
settlement  costs,   associated  with  these  cases  will  be  material  to  the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

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

On October 18, 2001, the Partnership  sought the vote of the limited partners to
amend the Partnership  Agreement to authorize the  Partnership to acquire,  own,
operate, improve, manage, lease, finance,  refinance, sell and exchange any real
property  acquired  as a result of any  transaction  under the Master  Loan with
CCEP/2 or any  transaction  involving  property  acquired  from  CCEP/2  that is
intended to qualify as a like-kind  exchange under the Internal Revenue Code. As
of February 5, 2002, the requiste percent of limited  partnership units voted in
favor of the Partnership  Agreement  Amendment.  As of February 5, 2002, a total
number of 486,543.90  units had voted,  including the 431,331.70  units owned by
affiliates of the General Partner,  of which 458,978.50 units had voted in favor
of the amendment, 22,200.20 units voted against the amendment and 5,365.20 units
abstained.


                                     PART II

Item 5.     Market for Registrant's  Units of Limited  Partnership and Related
            Security Holder Matters

The Partnership,  a publicly-held limited partnership,  offered and sold 912,182
limited partnership units aggregating  $227,800,000.  The Partnership  currently
has 23,692 holders of record owning an aggregate of 909,123.60 Units. Affiliates
of the  General  Partner  owned  430,935.30  units or  approximately  47.40%  at
December 31, 2001. No public trading market has developed for the Units,  and it
is not anticipated that such a market will develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1999, 2000 and 2001.

                                                Distributions
                                                           Per Limited
                                        Aggregate        Partnership Unit

       01/01/99 - 12/31/99         $37,995,000 (1)            $41.73

       01/01/00 - 12/31/00          13,383,000 (2)             14.70

       01/01/01 - 12/31/01           2,428,000 (3)              2.67

(1)   Consists of $323,000 from surplus funds and $32,000,000 from sale proceeds
      of CCEP/2 commercial  properties  distributed 100% to the limited partners
      and $5,672,000  from operations  (approximately  $5,616,000 to the limited
      partners  or  $6.18  per  limited  partnership  unit)  distributed  to all
      partners.

(2)   Consists of $2,000,000  (approximately  $1,980,000 to the limited partners
      or  $2.18  per  limited   partnership  unit)  from  operations  which  was
      distributed  to all partners and  $4,200,000  all to the limited  partners
      (approximately  $4.62  per  limited  partnership  unit)  from  refinancing
      proceeds of Windmere  Apartments  and  Highcrest  Townhomes  in CCEP/2 and
      $7,183,000 (approximately $7.90 per limited partnership unit) from surplus
      funds distributed all to the limited partners.

(3)   Consists  of  approximately  $1,299,000  (approximately  $1.43 per limited
      partnership unit) from the refinancing proceeds of Canyon Crest Apartments
      in CCEP/2 and  $1,129,000  (approximately  $1.24 per  limited  partnership
      unit)  from  surplus  cash due to the  receipt of  interest  income on the
      master  loan.  Both  distributions  were  distributed  100% to the limited
      partners.

The  Partnership's  cash  available  for  distribution  is reviewed on a monthly
basis.  Until  the  deeds  in lieu of  foreclosure  are  executed,  future  cash
distributions will depend on CCEP/2's ability to make payments on the account of
the  Master  Loan  and  the  availability  of  cash  reserves.  There  can be no
assurance,  however,  that the Partnership  will generate  sufficient funds from
operations  to permit any  additional  distributions  to its partners in 2002 or
subsequent periods.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 430,935.30 limited partnership units
in the Partnership  representing 47.40% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  As a result of
its  ownership  of 47.40% of the  outstanding  units,  AIMCO is in a position to
influence all such voting decisions with respect to the Registrant.  When voting
on matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

Item 6.     Selected Financial Data

The  following  table sets forth a summary  of  certain  financial  data for the
Partnership.  This summary should be read in conjunction with the  Partnership's
financial   statements  and  notes  thereto  appearing  in  "Item  8.  Financial
Statements and Supplementary Data".
<TABLE>
<CAPTION>

                                           FOR THE YEARS ENDED DECEMBER 31,
                                2001         2000        1999        1998        1997
STATEMENTS OF OPERATIONS
                                           (in thousands, except unit data)

<S>                            <C>         <C>          <C>        <C>          <C>
Total Revenues                 $ 1,934     $ 1,520      $ 1,328    $ 15,367     $ 6,755

Total Expenses                    (513)       (644)        (520)       (820)       (480)

Net income                     $ 1,421      $ 876        $ 808     $ 14,547     $ 6,275

Net income per Limited
  Partnership Unit             $ 1.55       $ 0.95      $ 0.88      $ 15.84     $ 6.83

Distributions per Limited
  Partnership Unit             $ 2.67      $ 14.70      $ 41.73     $ 3.28      $ 10.98

Limited Partnership Units
  outstanding                  909,124     909,124      909,124     909,134     909,134


                                                  AS OF DECEMBER 31,
BALANCE SHEETS                  2001         2000        1999        1998        1997
                                                    (in thousands)

Total assets                  $ 11,796     $ 12,804    $ 25,323    $ 62,466    $ 50,906
</TABLE>

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

The  matters  discussed  in  this  Form  10-K  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained  in this Form  10-K and the  other  filings  with the  Securities  and
Exchange  Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations,  including  forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operations. Accordingly,
actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of factors,  including those
identified herein.

This item should be read in conjunction with the financial  statements and other
items contained elsewhere in this report.

Results of Operations

The  Partnership's net income for the years ended December 31, 2001 and 2000 was
approximately $1,421,000 and $876,000,  respectively. The increase in net income
is due  primarily  to the  increase  in total  revenues  and a decrease in total
expenses.  Total  revenues  increased  due to the  increase in the  reduction of
impairment  loss on the  investment in the Master Loan,  offset by a decrease in
interest  income.  Interest  income  decreased  due to a  decrease  in  interest
payments  received on the Master Loan and due to lower cash balances  maintained
in interest bearing accounts. The interest payments on the Master Loan decreased
as a result of a decrease in excess cash flow payments received from CCEP/2.

The   decrease  in  total   expenses  is  due  to  a  decrease  in  general  and
administrative expenses.  General and administrative expenses decreased due to a
decrease in reimbursements to the General Partner.

2000 Compared with 1999

The  Partnership's net income for the years ended December 31, 2000 and 1999 was
approximately $876,000 and $808,000, respectively. The increase in net income is
due  primarily to an increase in interest  income on the net  investment  in the
Master Loan partially  offset by an increase in total expenses.  Interest income
on the  investment  in the Master Loan  increased  as a result of an increase in
excess cash flow payments  received from CCEP/2.  The increase in total expenses
is due to an increase in general and administrative expenses.

General and  administrative  expenses  increased for the year ended December 31,
2000,  primarily  due to an increase  in the costs of  services  included in the
management   reimbursements   to  the  General  Partner  as  allowed  under  the
Partnership  Agreement  which  were  partially  offset  by a  decrease  in legal
expenses  related  to  previous  litigation  and to a  decrease  in the costs of
communications with the investors.

Liquidity and Capital Resources

At  December  31,  2001,  the  Registrant  had  cash  and  cash  equivalents  of
approximately  $381,000 as compared to approximately  $2,143,000 at December 31,
2000.  The net  decrease of  approximately  $1,762,000  is due to  approximately
$2,428,000 of cash used in financing  activities,  which was partially offset by
approximately   $310,000  of  cash   provided  by   operating   activities   and
approximately  $356,000 of cash provided by investing activities.  Cash provided
by investing activities consisted of principal receipts on the Master Loan. Cash
used in financing activities consisted of distributions to partners.

At  December  31,  2000,  the  Partnership  had  cash and  cash  equivalents  of
approximately $2,143,000 as compared to approximately $6,846,000 at December 31,
1999. The decrease in cash and cash equivalents of  approximately  $4,703,000 is
due to approximately $13,383,000 of cash used in financing activities, which was
partially  offset by  approximately  $7,724,000  of cash  provided by  investing
activities and approximately  $956,000 of cash provided by operating activities.
Cash  provided by investing  activities  consisted of principal  receipts on the
Master Loan. Cash used in financing  activities  consisted of  distributions  to
partners.  The  Partnership  invests  its working  capital  reserves in interest
bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures required to meet the ongoing operating needs of the Partnership and
to comply with Federal, state and local legal and regulatory requirements.  Such
assets are  currently  thought to be sufficient  for any near-term  needs of the
Partnership. See "CCEP/2 Property Operations" for discussion on CCEP/2's ability
to provide future cash flow as Master Loan debt service.

The Partnership made distributions totaling approximately  $2,428,000 during the
twelve  months  ended  December  31,  2001.  Of this,  approximately  $1,299,000
(approximately $1.43 per limited partnership unit) was paid from the refinancing
proceeds  of  Canyon  Crest  Apartments  in  CCEP/2.  The  remaining  $1,129,000
(approximately $1.24 per limited partnership unit) consisted of surplus cash due
to the receipt of interest  income on the Master Loan. Both  distributions  were
distributed 100% to the limited partners.

The   Partnership   distributed   approximately   $2,000,000   from   operations
(approximately  $1,980,000 to the limited partners,  or approximately  $2.18 per
limited  partnership  unit) and $4,200,000 all to the limited  partners from the
refinancing  proceeds of Windmere  Apartments and Highcrest  Townhomes in CCEP/2
(approximately  $4.62 per limited  partnership  unit) and  $7,183,000 all to the
limited partners from surplus cash (approximately  $7.90 per limited partnership
unit) during the twelve months ended December 31, 2000.

Until the deeds in lieu of foreclosure are executed,  future cash  distributions
will depend on CCEP/2's  ability to make  payments on account of the Master Loan
and the  availability  of cash reserves.  The  Partnership's  cash available for
distribution is reviewed on a monthly basis. There can be no assurance, however,
that the Partnership  will have  sufficient  funds from operations to permit any
additional distributions to its partners in 2002 or subsequent periods.

During the year ended December 31, 2001, the Partnership received  approximately
$356,000 as principal payments on the Master Loan consisting of cash received on
certain  investments  held by CCEP/2 which are required to be transferred to the
Partnership per the Master Loan Agreement.

CCEP/2 Property Operations

CCEP/2 had a net loss of  approximately  $26,218,000 for the year ended December
31,  2001  on  revenues  of  approximately  $5,557,000  versus  a  net  loss  of
$24,620,000 on revenues of approximately  $5,858,000 for the year ended December
31, 2000.  CCEP/2  recognizes  interest expense on the New Master Loan Agreement
obligation according to the note terms, although payments to the Partnership are
required  only to the extent of Excess  Cash Flow,  as defined  therein.  During
2001,  CCEP/2's  consolidated  statement of operations  includes  total interest
expense attributable to the Master Loan of approximately  $26,651,000,  of which
$25,747,000  represents interest accrued in excess of required payments.  CCEP/2
is  expected  to  continue  to  generate  operating  losses  as a result of such
interest accruals and noncash charges for depreciation.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expense  amounting  to  approximately  $584,000,  $172,000,  and
$237,000 for the years ended December 31, 2001,  2000,  and 1999,  respectively.
Included in these amounts are fees related to construction  management  services
provided by an  affiliate  of the  General  Partner of  approximately  $395,000,
$70,000  and  $29,000  for the years ended  December  31,  2001,  2000 and 1999,
respectively. The construction management service fees are calculated based on a
percentage  of current  and  certain  prior  year  additions  to the  investment
properties and are being depreciated over 15 years.

For  services  provided  in  connection  with the  refinancings  of three of the
Partnership's residential properties during 2000, the General Partner was paid a
commissions  related to the  refinancings of  approximately  $165,000 during the
year ended December 31, 2000.

For  acting as real  estate  broker in  connection  with the sales of six of the
Partnership's  commercial properties during 1999, the General Partner was paid a
real  estate  commission  of  approximately  $1,134,000  during  the year  ended
December  31,  1999.  A  commission  of $447,000  was paid during the year ended
December  31, 1999  relating to the sale of Richmond  Plaza which was accrued at
December 31, 1999.

In addition to the compensation  and  reimbursements  described above,  interest
payments are made to and loan advances are received from CCIP/2  pursuant to the
Master Loan Agreement.  Such interest payments totaled  approximately  $904,000,
$1,198,000,  and $998,000 for the years ended December 31, 2001, 2000, and 1999,
respectively.  These  payments were based upon the results of operations for the
Partnership's  properties.  CCEP/2 made principal payments on the Master Loan of
approximately  $356,000,  $7,724,000,  and  $33,111,000,  for  the  years  ended
December 31, 2001, 2000, and 1999, respectively.  These funds were received from
distributions  from  three  affiliated   partnerships,   excess  cash  from  the
Partnership's  investment  properties,   proceeds  received  from  the  sale  of
commercial  properties,  and proceeds  received from the refinancing of three of
the  Partnership's  residential  properties.  These  funds  are  required  to be
transferred to the Partnership under the terms of the Master Loan.

During  the year  ended  December  31,  2000,  the  General  Partner  of  CCEP/2
determined that it was in the best interest of CCEP/2 to repay the mortgage note
on Village  Brooke.  Accordingly,  funds which had previously been restricted to
rebuild the property were used to repay the mortgage  note which had  encumbered
the property of approximately  $6,517,000.  The  reconstruction of Village Brook
began in September 2001. An extraordinary  loss on early  extinguishment of debt
of  approximately  $35,000 was recognized as a result of unamortized  loan costs
associated with this mortgage.

On October 3, 2000,  CCEP/2  refinanced  the  mortgage  note payable on Windmere
Apartments.  The refinancing replaced mortgage indebtedness of $3,000,000 with a
new  mortgage of  $6,075,000.  The mortgage  was  refinanced  at a rate of 7.83%
compared to the prior rate of 7.33%.  Payments of approximately  $50,000 are due
on the first day of each month until the loan  matures on  November  1, 2010.  A
balloon payment of approximately $3,905,000 is due at maturity. Capitalized loan
costs incurred for the refinancing were  approximately  $155,000 at December 31,
2000.  Additional  loan costs of  approximately  $7,000 were incurred during the
year ended December 31, 2001.  Prepayment penalties of approximately $95,000 and
the write-off of unamortized loan costs of approximately  $50,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $145,000.

On October 31, 2000,  CCEP/2  refinanced  the mortgage note payable on Highcrest
Townhomes.  The refinancing replaced mortgage  indebtedness of $4,000,000 with a
new  mortgage of  $6,760,000.  The mortgage  was  refinanced  at a rate of 7.72%
compared to the prior rate of 7.33%.  Payments of approximately  $55,000 are due
on the first day of each month until the loan  matures on  February  1, 2010.  A
balloon payment of approximately $4,868,000 is due at maturity. Capitalized loan
costs incurred for the refinancing were  approximately  $141,000 at December 31,
2000.  Additional loan costs of  approximately  $10,000 were incurred during the
year ended December 31, 2001. Prepayment penalties of approximately $142,000 and
the write-off of unamortized loan costs of approximately  $52,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $194,000.

On December  21, 2000,  CCEP/2  refinanced  the mortgage  note payable on Canyon
Crest Apartments.  The refinancing replaced mortgage  indebtedness of $2,000,000
with a new mortgage of  $3,640,000.  The mortgage  was  refinanced  at a rate of
7.10% compared to the prior rate of 7.33%. Payments of approximately $28,000 are
due on the first day of each month until the loan  matures on January 1, 2011. A
balloon payment of approximately $2,613,000 is due at maturity. Capitalized loan
costs incurred for the refinancing were  approximately  $100,000 at December 31,
2000.  Additional loan costs of  approximately  $12,000 were incurred during the
year ended December 31, 2001.  Prepayment penalties of approximately $98,000 and
the write-off of unamortized loan costs of approximately  $38,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $136,000.

Lahser One, Lahser Two, Crescent Centre, Central Park Place, Central Park Plaza,
Town Center Plaza and Richmond Plaza were the only commercial  properties  owned
by CCEP/2 and  represented  one  segment of  CCEP/2's  operations.  All of these
properties  were sold during 1999 and  accordingly the results of the commercial
segment  have  been  shown  as  gain on sale  of and  income  from  discontinued
operations  as  of  December  31,  1999.   Revenues  of  these  properties  were
approximately  $9,005,000 for the year ended December 31, 1999. No revenues from
the properties  were recorded during the years ended December 31, 2001 and 2000.
Income  from  and  gain on sale of  discontinued  operations  was  approximately
$20,756,000 for the year ended December 31, 1999.

On  September  10,  1999,  the five  commercial  properties  located in Michigan
(Lahser One, Lahser Two,  Crescent Centre,  Central Park Place, and Central Park
Plaza) were sold to an unaffiliated  third party for $26,125,000.  After closing
expenses  of  approximately   $1,727,000  the  net  proceeds   received  by  the
Partnership were approximately $24,398,000.  The sale of the properties resulted
in a gain on sale of investment property of approximately $10,392,000.

On September 22, 1999, Town Center Plaza, located in Santa Ana, California,  was
sold to an unaffiliated  third party for $11,650,000.  After closing expenses of
approximately  $1,004,000,  the net proceeds  received by the  Partnership  were
approximately  $10,646,000.  The Partnership  used some of the proceeds from the
sale  of  the  property  to  pay  off  the  debt  encumbering  the  property  of
approximately $2,316,000. The sale of the property resulted in a gain on sale of
investment   property  of   approximately   $4,862,000   and  a  loss  on  early
extinguishment of debt of approximately $7,000.

On December 23, 1999, Richmond Plaza, located in Richmond, Virginia, was sold to
an unaffiliated third party for $14,900,000. Closing expenses were approximately
$784,000.  The debt  encumbering the property of  approximately  $14,500,000 was
assumed  by the  buyer.  The sale of the  property  resulted  in a loss on early
extinguishment of debt of approximately $24,000 and a gain on sale of investment
property of approximately $5,499,000 at December 31, 1999.

In April 1999,  one of CCEP/2's  residential  properties,  Village  Brooke,  was
completely  destroyed by a tornado.  It is estimated that the property sustained
approximately  $16,000,000  in damages.  As of December 31, 2001,  approximately
$11,302,000 in insurance proceeds have been received,  with additional  proceeds
expected in the near  future.  All of the  property's  fixed  assets and related
accumulated  depreciation  were written off as a result of this  casualty.  Lost
rents of  approximately  $417,000 and $750,000 have been recorded as of December
31, 2000 and 1999,  respectively.  A casualty gain of approximately $250,000 was
recognized  at December 31, 2000 as a result of receiving  additional  insurance
proceeds which were previously not recognized net of  approximately  $577,000 of
additional  clean  up  and  demolition  costs  incurred.   A  casualty  gain  of
approximately $5,473,000 was recognized at December 31, 1999.

In April  1999,  an  electrical  fire  occurred  at Town  Center.  The  property
sustained  approximately  $181,000  in damages and  realized a casualty  loss of
approximately  $33,000.  This property was  subsequently  sold in September 1999
(see above) and the purchaser of the property  assumed the remaining  obligation
related to the fire.

Item 7a.    Market Risk Factors

The  Partnership is exposed to market risks  associated  with its Master Loan to
Affiliate  ("Loan").  Receipts  (interest income) on the Loan are based upon the
operations  and  cash  flow  of  the  underlying   investment   properties  that
collateralize the Loan. Both the income and expenses of operating the investment
properties are subject to factors outside of the Partnership's  control, such as
an oversupply of similar properties  resulting from  overbuilding,  increases in
unemployment or population  shifts,  reduced  availability of permanent mortgage
financing, changes in zoning laws, or changes in the patterns or needs of users.
The  investment  properties  are also  susceptible to the impact of economic and
other  conditions  outside of the  control of the  Partnership  as well as being
affected  by current  trends in the market  area  which  they  operate.  In this
regard, the General Partner of the Partnership  closely monitors the performance
of the properties collateralizing the loans.

Based upon the fact that the loan is  considered  impaired  under  Statement  of
Financial  Accounting  Standards No. 114, "Accounting by Creditor for Impairment
of a Loan",  interest rate fluctuations do not affect the recognition of income,
as income is only recognized to the extent of cash flow. Therefore,  market risk
factors do not affect the  Partnership's  results of operations as it relates to
the Loan. See "Item 8 - Financial  Statements and  Supplementary  Data - Note C"
for further information.

Item 8.     Financial Statements and Supplementary Data

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2, L.P.

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Balance Sheets as of December 31, 2001 and 2000

      Statements of  Operations  for the Years ended  December 31, 2001,  2000
      and 1999

      Statements of Changes in Partners'  (Deficit)  Capital for the Years ended
      December 31, 2001, 2000 and 1999

      Statements  of Cash Flows for the Years ended  December 31,  2001,  2000
      and 1999

      Notes to Financial Statements


<PAGE>


              Report of Ernst & Young LLP, Independent Auditors



The Partners
Consolidated Capital Institutional Properties/2


We  have  audited  the  accompanying  balance  sheets  of  Consolidated  Capital
Institutional  Properties/2  as of December  31, 2001 and 2000,  and the related
statements of operations, changes in partners' (deficit) capital, and cash flows
for each of the  three  years in the  period  ended  December  31,  2001.  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 auditing standards generally accepted
in 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  Partnership's  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  Consolidated   Capital
Institutional Properties/2 at December 31, 2001 and 2000, and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2001, in conformity with accounting  principles  generally accepted
in the United States.


                                                          /s/ERNST & YOUNG LLP



Greenville, South Carolina
February 15, 2002


<PAGE>



               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2

                                 BALANCE SHEETS
                       (in thousands, except unit data)


<TABLE>
<CAPTION>
                                                                  December 31,
                                                                2001          2000
Assets
<S>                                                           <C>            <C>
   Cash and cash equivalents                                  $    381       $ 2,143
   Accounts receivable                                             100            --
   Other assets                                                     21            11

   Investment in Master Loan to affiliate                       39,423        39,779
      Less: Allowance for impairment loss                      (28,129)      (29,129)
                                                                11,294        10,650
                                                              $ 11,796      $ 12,804
Liabilities and Partners' (Deficit) Capital
Liabilities
   Accounts Payable                                             $ --          $ 1
   Other liabilities                                                45            45
   Distributions payable                                           141           141
                                                                   186           187
Partners' (Deficit) Capital
   General partner                                                (407)         (421)
   Limited partners (909,123.60 units outstanding)              12,017        13,038
                                                                11,610        12,617
                                                              $ 11,796      $ 12,804

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2

                            STATEMENTS OF OPERATIONS
                       (in thousands, except unit data)
<TABLE>
<CAPTION>


                                                           Years Ended December 31,
                                                         2001         2000        1999
Revenues:
<S>     <C>    <C>    <C>    <C>    <C>    <C>
   Interest income on net investment
     in Master Loan to affiliate                        $ 904        $ 1,198      $ 998
   Reduction of provision for impairment loss            1,000            --          --
   Interest income on investments                           30           322         330
      Total revenues                                     1,934         1,520       1,328

Expenses:
   General and administrative                              513           644         520
      Total expenses                                       513           644         520

Net income (Note I)                                    $ 1,421        $ 876       $ 808


Net income allocated to general partner (1%)             $ 14          $ 9         $ 8

Net income allocated to limited partners (99%)           1,407           867         800

                                                       $ 1,421        $ 876       $ 808

Net income per Limited Partnership Unit                 $ 1.55       $ 0.95      $ 0.88

Distribution per Limited Partnership Unit               $ 2.67       $ 14.70     $ 41.73

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>
               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2

             STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                       (in thousands, except unit data)

<TABLE>
<CAPTION>

                                                                              Total
                                      Limited                               Partners
                                    Partnership     General     Limited      Capital
                                       Units        Partner     Partners    (Deficit)

<S>                                   <C>             <C>       <C>         <C>
Original capital contributions        912,182         $ 1       $228,046    $228,047

Partners' (deficit) capital at
   December 31, 1998                  909,134       $ (362)     $ 62,673    $ 62,311

Abandonment of units                      (10)           --           --          --

Distributions to partners                  --           (56)     (37,939)    (37,995)

Net income for the year ended
   December 31, 1999                       --             8          800         808

Partners' (deficit) capital
   at December 31, 1999               909,124          (410)      25,534      25,124

Distributions to partners                  --           (20)     (13,363)    (13,383)

Net income for the year ended
   December 31, 2000                       --             9          867         876

Partners' (deficit) capital at
   December 31, 2000                  909,124          (421)      13,038      12,617

Distributions to partners                  --            --       (2,428)     (2,428)

Net income for the year ended
   December 31, 2001                       --            14        1,407       1,421

Partners' (deficit) capital at
   December 31, 2001                  909,124       $ (407)     $ 12,017    $ 11,610

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2

                            STATEMENTS OF CASH FLOWS
                                (in thousands)
<TABLE>
<CAPTION>


                                                        Years Ended December 31,
                                                       2001        2000        1999
Cash flows from operating activities:
<S>                                                  <C>           <C>        <C>
  Net income                                         $ 1,421       $ 876      $ 808
  Adjustments to reconcile net income to
   net cash provided by operating activities:
   Reduction of provision for impairment loss          (1,000)         --          --
   Change in accounts:
      Accounts receivable                                (100)
      Interest receivable on Master Loan                   --          92         (92)
      Other assets                                        (10)         --           1
      Accounts payable                                     (1)          1          --
      Other liabilities                                    --         (13)         44
          Net cash provided by operating
            activities                                    310         956         761

Cash flows provided by investing activities:
  Principal receipts on Master Loan                       356       7,724      33,111

Cash flows used in financing activities:
  Distributions to partners                            (2,428)    (13,383)    (37,995)

Net decrease in cash and cash equivalents              (1,762)     (4,703)     (4,123)

Cash and cash equivalents at beginning
  of period                                             2,143       6,846      10,969

Cash and cash equivalents at end of period            $ 381       $ 2,143    $ 6,846

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2

                          NOTES TO FINANCIAL STATEMENTS


Note A - Organization and Summary of Significant Accounting Policies

Organization: Consolidated Capital Institutional Properties/2 (the "Partnership"
or  "Registrant"),  a California  Limited  Partnership,  was formed on April 12,
1983, to lend funds through non-recourse notes with participation interests (the
"Master Loan").  The loans were made to, and the real properties that secure the
Master  Loan were  purchased  and  owned by,  Equity  Partners/Two  ("EP/2"),  a
California  general  partnership  in which  certain of the partners  were former
shareholders and former management of Consolidated  Capital Equities Corporation
("CCEC"),  the former  corporate  general  partner of the  Partnership.  Through
December 31, 2001, the Partnership had advanced approximately $183,470,000 under
the Master Loan.

During 1989, EP/2 defaulted on certain interest payments that were due under the
Master  Loan.  Before the  Partnership  could  exercise  its  remedies  for such
defaults,  EP/2 filed for bankruptcy  protection  under Chapter 11 of the United
States Bankruptcy Code ("Chapter 11"). On October 18, 1990, the bankruptcy court
approved EP/2's  consensual  plan of  reorganization  (the "Plan").  In November
1990, EP/2 and the Partnership  consummated a closing under the Plan pursuant to
which,  among other  things,  the  Partnership  and EP/2 executed an amended and
restated loan  agreement (the "New Master Loan  Agreement").  EP/2 was converted
from a  California  general  partnership  to a California  limited  partnership,
Consolidated  Capital Equity Partners/Two,  L.P. ("CCEP/2"),  and CCEP/2 renewed
the deeds of trust and mortgages on all the properties collaterally securing the
New Master Loan Agreement.  ConCap Holdings,  Inc. ("CHI"),  a Texas corporation
and wholly-owned subsidiary of CEI, is the sole general partner of CCEP/2 and an
affiliate  of the  Partnership.  The general  partners  of EP/2  became  limited
partners in CCEP/2. CHI has full discretion with respect to conducting  CCEP/2's
business,  including  managing CCEP/2's  properties and initiating and approving
capital  expenditures and asset dispositions and refinancings.  See "Note C" for
further discussion of EP/2's bankruptcy settlement.

Upon the Partnership's formation in 1983, CCEC, a Colorado corporation,  was the
corporate general partner. In December 1988, CCEC filed for reorganization under
Chapter 11. In 1990, as part of CCEC's  reorganization  plan,  ConCap  Equities,
Inc., a Delaware  corporation  (the "General  Partner" or "CEI") acquired CCEC's
general partner  interests in the Partnership and in 15 other affiliated  public
limited  partnerships  and replaced CCEC as managing  general  partner in all 16
partnerships.  The General  Partner is a subsidiary of Apartment  Investment and
Management Company ("AIMCO").  See "Note B - Transfer of Control." The directors
and officers of the General  Partner also serve as executive  officers of AIMCO.
The  Partnership  Agreement  provides  that the  Partnership  is to terminate on
December  31,  2013  unless  terminated  prior  to such  date.  The  Partnership
commenced  operations  on July 22,  1983.  The  Partnership  was  formed for the
benefit of its Limited Partners to lend funds to EP/2.

The Partnership is the holder of a note receivable  which is  collateralized  by
three  existing  apartment  properties  and  one  apartment  property  which  is
currently being rebuilt located  throughout the United States.  See "Note C" for
further discussion of the status of the note receivable.

Use of Estimates:  The  preparation of financial  statements in conformity  with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and  accompanying  notes.  Actual results could differ
from those estimates.

Cash and Cash  Equivalents:  Includes cash on hand and in banks and money market
accounts.  At certain  times,  the amount of cash deposited at a bank may exceed
the limit on insured deposits.  Cash balances included approximately $381,000 at
December 31, 2001 that are  maintained by the affiliated  management  company on
behalf of affiliated entities in cash concentration accounts.

Investment in Master Loan:  The  Partnership  has adopted  Financial  Accounting
Standards Board Statement No. 114,  "Accounting by Creditors for Impairment of a
Loan"("Statement  114").  Under the  standard,  the  allowance for credit losses
related to loans that are identified for evaluation in accordance with Statement
114 is based on  discounted  cash  flows  using  the  loan's  initial  effective
interest  rate or the  fair  value  of the  collateral  for  certain  collateral
dependent loans.

Income Taxes: No provision has been made in the financial statements for Federal
income  taxes  because,  under  current  law, no Federal  income  taxes are paid
directly  by the  Partnership.  The  Unit  holders  are  responsible  for  their
respective  shares of Partnership  net income or loss. The  Partnership  reports
certain transactions differently for tax than for financial statement purposes.

Partners' (Deficit) Capital:  The Partnership  Agreement provides for net income
and net losses for both financial and tax reporting purposes to be allocated 99%
to the Limited Partners and 1% to the General Partner.  "Distributable Cash from
Operations",  as defined in the Partnership Agreement, is to be allocated 99% to
the Limited  Partners and 1% to the General  Partner.  Distributions  of surplus
funds are to be allocated 100% to the Limited Partners.

Net Income Per Limited Partnership Unit: Net income per Limited Partnership Unit
("Unit") is computed by dividing net income allocated to the Limited Partners by
the number of Units outstanding. Per Unit information has been computed based on
909,123.60 Units outstanding in 2001, 2000, and 1999.

Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107,  "Disclosures about Fair Value of Financial  Instruments",  as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair  Value  of  Financial  Instruments",  requires  disclosure  of  fair  value
information  about  financial  instruments,  whether  or not  recognized  in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a  current  transaction  between  willing  parties,  other  than in a forced  or
liquidation  sale.  The  Partnership  believes  that the carrying  amount of its
financial  instruments  approximates  their  fair  value due to the  short  term
maturity of these  instruments.  The carrying  amount of the  Partnership's  net
investment  in the Master Loan  approximates  fair value due to the fact that it
has been valued based on the fair value of the underlying collateral.

Allowance  for  Impairment  Loss:  Allowances to reduce the carrying cost of the
Master Loan are  provided  when it is probable  that  reasonably  estimable  net
realizable  values are less than the recorded  carrying cost of such investment.
Gains or losses  that result from the  ongoing  periodic  evaluation  of the net
realizable value of the Master Loan are credited or charged, as appropriate,  to
operations in the period in which they are identified.  If a collateral party is
sold,  CCEP/2  remains  liable for any  outstanding  debt under the Master  Loan
Agreement,  however,  the  value of the net  investment  in  Master  Loan on the
Partnership's books would be written down to the appropriate level.

Segment   Reporting:   Statement  of  Financial   Standards  ("SFAS")  No.  131,
"Disclosure about Segments of an Enterprise and Related Information" ("Statement
131") established  standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports. It also established standards for related disclosures
about products and services,  geographic areas, and major customers.  As defined
in SFAS No. 131, the Partnership has only one reportable segment.  Moreover, due
to the very nature of the Partnership's operations, the General Partner believes
that segment-based disclosures will not result in a more meaningful presentation
than the financial statements as presently presented.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate  investment  trust,  with AIMCO
being the surviving  corporation  (the "Insignia  Merger").  As a result,  AIMCO
acquired 100% ownership  interest in the General  Partner.  The General  Partner
does not believe that this transaction has had or will have a material effect on
the affairs and operations of the Partnership.

Note C - Net Investment in Master Loan

At December 31, 2001,  the recorded  investment in the Master Loan is considered
to be impaired  under SFAS No. 114. The  Partnership  measures the impairment of
the loan  based  upon the fair  value  of the  collateral  due to the fact  that
repayment of the loan is expected to be provided solely by the  collateral.  For
the year  ended  December  31,  2001,  the  Partnership  recorded  approximately
$1,000,000 in income based upon an increase in the fair value of the collateral.
No such income was recorded in 2000 and 1999 as the recorded value of the Master
Loan  approximated  the fair value of the  collateral  at December  31, 2000 and
1999.

The  principal  balance  of the  Master  Loan  due to  the  Partnership  totaled
approximately  $39,423,000  and  $39,779,000  at  December  31,  2001 and  2000,
respectively.  Interest  due to the  Partnership  pursuant  to the  terms of the
Master Loan  Agreement,  but not  recognized in the income  statements,  totaled
approximately  $25,747,000,  $23,722,000,  and  $23,964,000  for the years ended
December 31, 2001, 2000 and 1999, respectively.

At December 31, 2001 and 2000, such cumulative  unrecognized  interest  totaling
approximately  $249,719,000  and $223,972,000 was not included in the balance of
the  investment  in  Master  Loan as it is not  expected  to be  collected.  The
allowance for possible losses totaled approximately  $28,129,000 and $29,129,000
at December 31, 2001 and 2000, respectively.

No advances were made to CCEP/2 during the years ended  December 31, 2001,  2000
or 1999 as an advance on the Master Loan.  The  properties  owned by CCEP/2 have
approximately  $16,096,000 in liens on the  collateral  that are superior to the
Master Loan.

The investment in Master Loan consists of the following:

                                                As of December 31,
                                                2001           2000
                                                  (in thousands)
  Master Loan funds advanced, at
    beginning of year                         $39,779        $47,503
  Principal receipts on Master Loan              (356)        (7,724)
  Master Loan funds advanced, at
    end of year                               $39,423        $39,779

The allowance for impairment  loss on Master Loan to affiliates  consists of the
following:
<TABLE>
<CAPTION>

                                                        As of December 31,
                                                   2001         2000        1999
                                                          (in thousands)
 Allowance for impairment loss on Master
<S>                                              <C>          <C>          <C>
   Loan to affiliate, beginning of year          $29,129      $29,129      $29,129
 Reduction of provision for impairment loss       (1,000)          --           --

 Allowance for impairment loss on Master
   Loan to affiliate, end of year                $28,129      $29,129      $29,129
</TABLE>

The  fair  value of the  collateral  properties  was  determined  using  the net
operating  income of the  collateral  properties  capitalized  at a rate  deemed
reasonable  for the type of property  adjusted for market  conditions,  physical
condition of the property and other factors,  or by obtaining an appraisal by an
independent  third  party.  This  methodology  has not changed from that used in
prior  calculations  performed by the General  Partner in  determining  the fair
value  of  the  collateral  properties.  The  $1,000,000  net  reduction  in the
provision for impairment loss that was recognized during the year ended December
31,  2001 is  attributed  to an  increase  in the net  realizable  value  of the
collateral properties. The General Partner evaluates the net realizable value on
a semi-annual basis. The increase was deemed to be attributable to major capital
improvement  projects  and the strong  effort to complete  deferred  maintenance
items that have been ongoing over the past few years at the various  properties.
This enabled the properties to increase their respective  occupancy levels or in
some cases to maintain the properties' high occupancy levels.  The vast majority
of this work was funded by cash flow from the collateral properties  themselves.
Based upon the  consistent  increase in net  realizable  value of the collateral
properties,  the General  Partner  determined  the  increase to be  permanent in
nature and  accordingly  reduced the allowance for impairment loss on the master
loan during the year ended  December 31, 2001.  There had not been any change in
the net realizable  value of the remaining  collateral  properties for the years
ended  December  31, 2000 and 1999 and  accordingly,  there was no change in the
allowance for impairment loss during the years ended December 31, 2000 or 1999.

Approximately $904,000, $1,198,000 and $998,000 for the years ended December 31,
2001, 2000, and 1999, respectively was recorded as interest income on investment
in the Master  Loan to an  affiliate  based upon cash  generated  as a result of
improved  operations of the properties  which secure the loan. A cash payment of
$904,000  was  received  from CCEP/2  during the first  quarter of 2001.  Of the
$1,198,000  received during 2000, $853,000 was received from Village Brooke as a
result  of its  receipt  of a portion  of the  insurance  proceeds  due from the
destruction  of the property (see the  Financial  Statements of CCEP/2 "Note C -
Casualty Event",  included in these financial  statements).  In addition, a cash
payment of $345,000  was received  from CCEP/2 as an excess cash payment  during
2000.  Excess cash  payments of $575,000 and $423,000  were received from CCEP/2
during the second and fourth quarters, respectively of 1999.

During the years ended  December  31,  2001,  2000,  and 1999,  the  Partnership
received approximately $356,000,  $7,724,000,  and $33,111,000 respectively,  in
principal payments on the Master Loan. Of these amounts, approximately $356,000,
$134,000,  and $1,077,000 represent cash received on certain investments held by
CCEP/2 which are required to be  transferred to the  Partnership  per the Master
Loan agreement and excess cash payments from CCEP/2 for the years ended December
31,  2001,  2000,  and  1999,  respectively.   Of  the  remaining  amounts,  the
Partnership  received during 2000 approximately  $5,500,000 of net proceeds from
the refinanacing of three of CCEP/2's properties and approximately $2,090,000 of
funds previously reserved associated with the destruction of Village Brook which
were  released  during 2000 and during  1999  approximately  $32,034,000  of net
proceeds from the sale of seven of CCEP/2's properties.

Terms of the New Master Loan Agreement

Under the terms of the New Master Loan  Agreement,  interest  accrues at 10% and
payments are due  quarterly  in an amount  equal to Excess Cash Flow,  generally
defined in the New Master Loan Agreement as net cash flow after third party debt
service and capital  improvements.  If such Excess Cash Flow  payments  are less
than the  current  accrued  interest  during the  quarterly  period,  the unpaid
interest is added to principal, compounded annually, and is payable at maturity.
If such Excess Cash Flow payments are greater than the current accrued interest,
the  excess  amount is  applied to the  principal  balance of the loan.  Any net
proceeds from the sale or refinancing of any of CCEP/2's  properties are paid to
the Partnership under the terms of the New Master Loan Agreement. The New Master
Loan  Agreement   matured  in  November  2000.  The  General  Partner  had  been
negotiating  with CCEP/2 with respect to its options which included  foreclosing
on the properties that  collateralize  the Master Loan or extending the terms of
the Master Loan. The General  Partner has decided to foreclose on the properties
that  collaterize  the  Master  Loan.  Subsequent  to  December  31,  2001,  the
Partnership  Agreement  was  amended to allow the  Partnership  to  directly  or
indirectly own investment properties. The General Partner will begin the process
of executing  deeds in lieu of  foreclosure  during the first quarter of 2002 on
the three active  properties of CCEP/2.  The deed in lieu of  foreclosure on the
fourth property,  which is currently being rebuilt,  will be executed at a later
date.  As the deeds are executed,  title in the  properties  currently  owned by
CCEP/2 will be vested in the Partnership,  subject to the existing liens on such
properties including the first mortgage loans. As a result, the Partnership will
become responsible for the operations of such properties.

Effective  January 1, 1993,  the  Partnership  and CCEP/2 amended the New Master
Loan  Agreement  to  stipulate  that Excess  Cash Flow would be computed  net of
capital  improvements.  Such  expenditures were formerly funded from advances on
the Master Loan from the Partnership to CCEP/2. This amendment and change in the
definition  of  Excess  Cash  Flow has the  effect  of  reducing  income  on the
investment in Master Loan by the amount of CCEP/2's capital expenditures,  since
such amounts were previously excluded from Excess Cash Flow.

EP/2's   Bankruptcy   Settlement:   In   November   1990,   pursuant  to  EP/2's
reorganization  plan described in "Note A", the Partnership and EP/2 consummated
a closing  pursuant to which:  (1) the  Partnership  and EP/2  executed  the New
Master Loan Agreement more fully described  above;  (2) CCEP/2 renewed the deeds
of trust on all the  collateral  securing the Master Loan;  (3) the  Partnership
received cash of approximately $2,500,000, including $1,800,000 from the general
partners of EP/2 related to their promissory notes; (4) the Partnership accepted
assignment  of certain  partnership  interests in affiliated  partnerships  (the
"Affiliated  Partnership  Interests"),  which were valued by  management  of the
Partnership at approximately  $2,500,000,  as additional collateral securing the
Master  Loan;  and (5) all claims  between the  Partnership  and EP/2's  general
partners were released.

EP/2 was the holder of a note  receivable  secured by North Park Plaza which had
not been  performing  according to the note terms since 1989.  In the process of
negotiating the final bankruptcy  settlement  discussed above, EP/2 assigned its
interest  in the note  receivable  to the  Partnership.  While  the  Partnership
foreclosed  upon and  acquired  North Park  Plaza in July 1990,  CCEP/2 is still
obligated for $6,600,000 under the Master Loan  attributable to North Park Plaza
not extinguished in the foreclosure proceeding.

Note D - Transaction with Affiliated Parties

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership  activities.
The Partnership  Agreement (the  "Agreement")  provides for reimbursement to the
General  Partner and its affiliates  for costs  incurred in connection  with the
administration of Partnership  activities.  The following  payments were made to
the General  Partner and  affiliates  during the years ended  December 31, 2001,
2000, and 1999:

                                                For the years ended December 31,
                                                   2001        2000        1999
                                                         (in thousands)
Reimbursements for services of affiliates
  (included in general and administrative
    expenses)                                     $ 349        $ 444      $ 217

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expenses  amounting  to  approximately  $349,000,  $444,000  and
$217,000 for the years ended December 31, 2001, 2000, and 1999, respectively.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 430,935.30 limited partnership units
in the Partnership  representing 47.40% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  As a result of
its  ownership  of 47.40% of the  outstanding  units,  AIMCO is in a position to
influence all such voting decisions with respect to the Registrant.  When voting
on matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

Note E - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition of interests in certain  General  Partner  entities by
Insignia  Financial  Group,  Inc.  ("Insignia")  and entities which were, at one
time,  affiliates of Insignia;  past tender offers by the Insignia affiliates to
acquire  limited  partnership  units;  management  of  the  partnerships  by the
Insignia  affiliates;  and the series of transactions which closed on October 1,
1998 and  February 26, 1999 whereby  Insignia  and  Insignia  Properties  Trust,
respectively,  were merged into AIMCO.  The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998,  the Corporate  General  Partner filed a motion  seeking  dismissal of the
action.  In lieu of responding to the motion,  the  plaintiffs  filed an amended
complaint.  The  Corporate  General  Partner  filed  demurrers  to  the  amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December  14,  1999,  the General  Partner  and its  affiliates  terminated  the
proposed settlement.  In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement.  On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken  from the order on  October  5,  2000.  On
December 4, 2000, the Court  appointed the law firm of Lieff Cabraser  Heimann &
Bernstein  LLP as new  lead  counsel  for  plaintiffs  and the  putative  class.
Plaintiffs  filed a third  amended  complaint on January 19,  2001.  On March 2,
2001,  the  General  Partner  and its  affiliates  filed a demurrer to the third
amended  complaint.  On May 14, 2001,  the Court heard the demurrer to the third
amended  complaint.  On July 10,  2001,  the Court  issued  an order  sustaining
defendants'  demurrer on certain grounds.  On July 20, 2001,  Plaintiffs filed a
motion for  reconsideration  of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action  complaint.  On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint,  which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer.  The Court has dismissed without
leave  to amend  certain  of the  plaintiffs'  claims.  On  February  11,  2002,
plaintiffs  filed a motion seeking to certify a putative class  comprised of all
non-affiliated  persons  who own or have owned  units in the  partnerships.  The
General  Partner and affiliated  defendants  oppose the motion and a hearing has
been  scheduled  for April 29,  2002.  The Court has set the matter for trial in
January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first  amended  complaint in its entirety for  violating the
Court's  July 10, 2001 order  granting  in part and denying in part  defendants'
demurrer in the Nuanes action, or  alternatively,  to strike certain portions of
the  complaint  based on the statute of  limitations.  Other  defendants  in the
action demurred to the fourth amended complaint,  and,  alternatively,  moved to
strike the  complaint.  On December  11, 2001,  the court heard  argument on the
motions and took the matters under  submission.  On February 4, 2002,  the Court
served  notice of its order  granting  defendants'  motion to strike  the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action.

The  General  Partner  does not  anticipate  that any  costs,  whether  legal or
settlement  costs,   associated  with  these  cases  will  be  material  to  the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Note F - Distributions

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1999, 2000 and 2001.

                                                Distributions
                                                            Per Limited
                                        Aggregate        Partnership Unit

       01/01/99 - 12/31/99         $37,995,000 (1)            $41.73

       01/01/00 - 12/31/00          13,383,000 (2)             14.70

       01/01/01 - 12/31/01           2,428,000 (3)              2.67

(1)   Consists of $323,000 from surplus funds and $32,000,000 from sale proceeds
      of CCEP/2 commercial  properties  distributed 100% to the limited partners
      and $5,672,000  from operations  (approximately  $5,616,000 to the limited
      partners  or  $6.18  per  limited  partnership  unit)  distributed  to all
      partners.

(2)   Consists of $2,000,000  (approximately  $1,980,000 to the limited partners
      or  $2.18  per  limited   partnership  unit)  from  operations  which  was
      distributed  to all partners and  $4,200,000  all to the limited  partners
      (approximately  $4.62  per  limited  partnership  unit)  from  refinancing
      proceeds of Windmere  Apartments  and  Highcrest  Townhomes  in CCEP/2 and
      $7,183,000 (approximately $7.90 per limited partnership unit) from surplus
      funds distributed all to the limited partners.

(3)   Consists  of  approximately  $1,299,000  (approximately  $1.43 per limited
      partnership unit) from the refinancing proceeds of Canyon Crest Apartments
      in CCEP/2 and  $1,129,000  (approximately  $1.24 per  limited  partnership
      unit)  from  surplus  cash due to the  receipt of  interest  income on the
      master  loan.  Both  distributions  were  distributed  100% to the limited
      partners.

Note G - Abandonment of Units

In 1999, the number of limited  partnership units decreased by 10 due to limited
partners  abandoning  their units. In abandoning his or her Limited  Partnership
Units,  a limited  partner  relinquished  all right,  title and  interest in the
Partnership  as of  the  date  of  abandonment.  However,  during  the  year  of
abandonment,  the limited partner is allocated his or her share of the income or
loss for that  year.  The net  income  (loss) per  limited  partnership  unit is
calculated  based on the number of units  outstanding  at the  beginning  of the
year.

Note H - Partner Tax Information

The  following  is a  reconciliation  between  net  income  as  reported  in the
financial  statements and federal  taxable loss allocated to the partners in the
Partnership's information return for the years ended December 31, 2001, 2000 and
1999 (in thousands, except per unit data):
<TABLE>
<CAPTION>

                                             2001            2000            1999

<S>                                         <C>              <C>            <C>
Net income as reported                      $ 1,421          $ 876          $ 808
Add (deduct):
Accrued expenses                                  2              11             44
Interest income                                (904)         (1,198)        (1,129)
Valuation allowances                         (1,000)             --             --
Other                                          (100)             --            (35)

Federal taxable loss                        $ (581)         $ (311)         $ (312)

Federal taxable loss per limited
partnership unit                            $ (0.63)        $ (0.34)       $ (0.34)
</TABLE>

The tax basis of the  Partnership's  assets  and  liabilities  is  approximately
$75,701,000 and $77,703,000  greater than the assets and liabilities as reported
in the financial statements at December 31, 2001 and 2000, respectively.

Note I - Selected Quarterly Financial Data (unaudited)

The following is a summary of the unaudited  quarterly results of operations for
the Partnership (in thousands, except per unit data):
<TABLE>
<CAPTION>

                                       Year Ended December 31, 2001
                                   1st        2nd        3rd         4th
                                 Quarter    Quarter    Quarter     Quarter     Total

<S>                               <C>         <C>      <C>           <C>      <C>
Total revenues                    $ 923       $ 6      $ 1,002       $ 3      $ 1,934
Total expenses                       192        151        132          38        513
Net income (loss)                 $ 731      $ (145)    $ 870       $ (35)    $ 1,421
Net income (loss) per
  Limited Partnership Unit       $ 0.80     $ (0.16)    $ 0.95     $ (0.04)    $ 1.55
Distributions per Limited
  Partnership Unit               $ 1.43      $ 1.24      $ --       $ --       $ 2.67


                                       Year Ended December 31, 2000
                                   1st        2nd        3rd         4th
                                 Quarter    Quarter    Quarter     Quarter     Total

Total revenues                    $ 75      $ 1,283      $ 82       $ 80      $ 1,520
Total expenses                        87        179        242         136        644
Net (loss) income                 $ (12)    $ 1,104     $ (160)     $ (56)     $ 876
Net (loss) income per
  Limited Partnership Unit       $ (0.01)    $ 1.20    $ (0.17)    $ (0.07)    $ 0.95
Distributions per Limited
  Partnership Unit                $ --       $ 2.18     $ 0.64     $ 11.88    $ 14.70

</TABLE>

Item 9.     Changes in and  Disagreements  with  Accountants on Accounting and
            Financial Disclosure

            None.

<PAGE>

                CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.

                           AS OF DECEMBER 31, 2001


LIST OF CONSOLIDATED FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Consolidated Balance Sheets as of December 31, 2001 and 2000

      Consolidated  Statements of Operations  for the Years Ended December 31,
      2001, 2000 and 1999

      Consolidated  Statements  of  Partners'  Deficit  for  the  Years  Ended
      December 31, 2001, 2000 and 1999

      Consolidated  Statements of Cash Flows for the Years Ended  December 31,
      2001, 2000 and 1999

      Notes to Consolidated Financial Statements


<PAGE>


              Report of Ernst & Young LLP, Independent Auditors



The Partners
Consolidated Capital Equity Partners/Two, L.P.

We have audited the  accompanying  consolidated  balance sheets of  Consolidated
Capital  Equity  Partners/Two,  L.P. as of December  31, 2001 and 2000,  and the
related consolidated statements of operations, changes in partners' deficit, and
cash flows for each of the three years in the period  ended  December  31, 2001.
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 auditing standards generally accepted
in 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  Partnership's  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  consolidated  financial  position of  Consolidated
Capital  Equity  Partners/Two,  L.P.  at  December  31,  2001 and 2000,  and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  31, 2001,  in  conformity  with  accounting
principles generally accepted in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
that the Partnership will continue as a going concern. As discussed in Note A to
the consolidated  financial  statements,  the Partnership has incurred operating
losses,  suffers from inadequate  liquidity,  has an accumulated  deficit and is
unable to repay the Master Loan balance, which matured in 2000. These conditions
raise substantial  doubt about the Partnership's  ability to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note A. The consolidated  financial statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.


                                                          /s/ERNST & YOUNG LLP



Greenville, South Carolina
February 15, 2002


<PAGE>




                CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.

                           CONSOLIDATED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>

                                                                   December 31,
                                                                2001           2000
Assets
<S>                                                           <C>            <C>
  Cash and cash equivalents                                   $ 1,307        $ 2,972
  Receivables and deposits (net of allowance of $4 and
   $259, respectively)                                             210            433
  Restricted escrows                                               104            406
  Other assets                                                     416            426
  Investment properties (Notes E, F and H)
   Land                                                          2,731          2,731
   Buildings and related personal property                      20,617         18,296
                                                                23,348         21,027
   Less accumulated depreciation                               (13,615)       (12,434)
                                                                 9,733          8,593

                                                              $ 11,770       $ 12,830
Liabilities and Partners' Deficit
Liabilities
  Accounts payable                                             $ 328          $ 143
  Tenant security deposit liabilities                              109            115
  Accrued property taxes                                           535            533
  Other liabilities                                                194            250
  Mortgage notes payable (Note F)                               16,094         16,452
  Master loan and interest payable (in default) (Note E)       289,142        263,751

                                                               306,402        281,244
Partners' Deficit
  General Partner                                                (2,932)        (2,670)
  Limited Partners                                            (291,700)      (265,744)
                                                              (294,632)      (268,414)

                                                              $ 11,770       $ 12,830

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>
                CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                (in thousands)
<TABLE>
<CAPTION>



                                                     For the Years Ended December 31,
                                                     2001          2000          1999
Revenues:
<S>                                                 <C>           <C>           <C>
   Rental income                                    $ 4,540       $ 4,788       $ 5,597
   Other income                                       1,017           820           610
   Casualty gain                                         --           250         5,473
      Total revenues                                  5,557         5,858        11,680

Expenses:
   Operating                                          1,902         1,976         2,173
   General and administrative                           323           430           510
   Depreciation                                       1,181         1,117         1,145
   Interest                                          27,927        25,912        26,210
   Property taxes                                       442           533           570
      Total expenses                                 31,775        29,968        30,608

Loss before discontinued operations and
  extraordinary item                                (26,218)      (24,110)      (18,928)

Income from discontinued operations                      --            --             3

Gain on sale of discontinued operations                  --            --        20,753

(Loss) income before extraordinary item             (26,218)      (24,110)        1,828

Extraordinary loss on early extinguishment
   of debt (Note F)                                      --          (510)          (31)
Net (loss) income                                  $(26,218)     $(24,620)      $ 1,797

Net (loss) income allocated to general
  partner (1%)                                      $ (262)       $ (246)        $ 18
Net (loss) income allocated to limited
 partners (99%)                                     (25,956)      (24,374)        1,779
                                                   $(26,218)     $(24,620)      $ 1,797

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>


                CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.

                 CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
                                (in thousands)

<TABLE>
<CAPTION>

                                       General          Limited
                                       Partner          Partners           Total

Partners' deficit at
<S>        <C> <C>                     <C>             <C>              <C>
  December 31, 1998                    $ (2,442)       $(243,149)       $(245,591)

Net income for the year ended
  December 31, 1999                          18            1,779            1,797

Partners' deficit at
  December 31, 1999                     (2,424)         (241,370)        (243,794)

Net loss for the year ended
  December 31, 2000                       (246)          (24,374)         (24,620)

Partners' deficit at
  December 31, 2000                     (2,670)         (265,744)        (268,414)

Net loss for the year ended
  December 31, 2001                       (262)          (25,956)         (26,218)

Partners' deficit at
  December 31, 2001                   $ (2,932)        $(291,700)       $(294,632)

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>
                CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

<TABLE>
<CAPTION>
                                                             For The Years Ended December 31,
                                                              2001         2000         1999
Cash flows from operating activities:
<S>                                                         <C>          <C>           <C>
  Net (loss) income                                         $(26,218)    $(24,620)     $ 1,797
  Adjustments to reconcile net (loss) income to net
   cash provided by (used in) operating activities:
     Depreciation                                              1,181        1,117        3,843
     Amortization of loan costs and lease commissions             33           52           60
     Gain on sale of discontinued operations                      --           --      (20,753)
     Extraordinary loss on early extinguishment of debt           --          510           31
     Casualty gain                                                --         (250)      (5,473)
     Change in accounts:
      Restricted cash                                             --        7,750       (7,750)
      Receivables and deposits                                   223          420        1,218
      Other assets                                              (166)           3          337
      Accounts payable                                          (245)        (180)          56
      Tenant security deposit liabilities                         (6)         (79)        (387)
      Accrued property taxes                                       2          (13)        (199)
      Other liabilities                                          (56)        (562)        (123)
      Interest on Master Loan                                 25,747       23,722       23,963
        Net cash provided by (used in) operating
         activities                                              495        7,870       (3,380)

Cash flows from investing activities:
  Insurance proceeds received                                    172          308        8,406
  Property improvements and replacements                      (1,891)      (1,126)      (2,431)
  Proceeds from sale of discontinued operations                   --           --       35,180
  Net withdrawals from (deposits to) restricted escrows          302         (267)        (550)
        Net cash (used in) provided by investing
         activities                                           (1,417)      (1,085)      40,605

Cash flows from financing activities:
  Prepayment penalty                                              --         (335)          (4)
  Loan costs paid                                                (29)        (396)          --
  Principal payments on mortgage notes payable                  (358)         (63)        (247)
  Principal payments on Master Loan                             (356)      (7,724)     (33,111)
  Proceeds from mortgage notes payable                            --       16,475           --
  Repayment of mortgage notes payable                             --      (15,517)      (2,315)
        Net cash used in financing activities                   (743)      (7,560)     (35,677)

Net (decrease) increase in cash and cash
  equivalents                                                 (1,665)        (775)       1,548
Cash and cash equivalents at beginning of period               2,972        3,747        2,199
Cash and cash equivalents at end of period                  $ 1,307       $ 2,972      $ 3,747
Supplemental disclosure of cash flow information:
  Cash paid for interest                                    $ 2,125       $ 2,155      $ 3,630
Supplemental disclosure of non-cash information:
  Fixed assets in accounts payable                           $ 430         $ --         $ --
  Assumption of mortgage note payable by purchaser of
   Richmond Plaza                                             $ --         $ --       $ 14,500

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note A - Organization and Summary of Significant Accounting Policies

The financial statements of Consolidated Capital Equity Partners/Two,  L.P. (the
"Partnership" or "CCEP/2") have been prepared assuming that the Partnership will
continue  as a going  concern.  The  Partnership  continues  to incur  operating
losses,  suffers from inadequate  liquidity,  has an accumulated deficit, and is
unable to repay the Master Loan balance which matured in 2000.  The  Partnership
realized a net loss of approximately $26,218,000 for the year ended December 31,
2001.  The General  Partner  expects the  Partnership  to continue to incur such
losses from operations.

The   Partnership's   indebtedness   to   Consolidated   Capital   Institutional
Properties/2  ("CCIP/2")  under the Master Loan of  approximately  $289,142,000,
including  accrued  interest,  matured in November 2000.  Concap Holdings,  Inc.
("CHI" or the  "General  Partner")  had been in  negotiations  with  CCIP/2 with
respect to its options which  included  CCIP/2  foreclosing on the properties in
CCEP/2 which collateralized the Master Loan or extending the terms of the Master
Loan.  The  Partnership  does not have the  means  with  which to  satisfy  this
obligation. No other sources of additional financing have been identified by the
Partnership,  nor does the  General  Partner  have any other plans to remedy the
liquidity  problems the Partnership is currently  experiencing.  At December 31,
2001,  partners' deficit was approximately  $294,632,000.  CCIP/2 has decided to
foreclose on the  properties  that  collaterize  the Master Loan.  Subsequent to
December  31,  2001,  the  Partnership  Agreement of CCIP/2 was amended to allow
CCIP/2 to directly or indirectly  own investment  properties.  CCIP/2 will begin
the process of executing  deeds in lieu of foreclosure  during the first quarter
of 2002 on the three active  properties of the Partnership.  The deed in lieu of
foreclosure on the fourth property,  which is currently being rebuilt (see "Note
C"), will be executed at a later date.  As the deeds are executed,  title in the
properties currently owned by the Partnership will be vested in CCIP/2,  subject
to the existing liens on the properties including the first mortgage loans. When
the  Partnership  no longer has title to the  properties,  it will be dissolved.

As a result of the above,  there is  substantial  doubt about the  Partnership's
ability to continue as a going concern.  The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or amounts and  classifications of liabilities that may
result from these uncertainties.

Organization:  Equity  Partners/Two  ("EP/2"),  a California  Corporate  General
Partnership,  was  formed  on April 28,  1983,  to  engage  in the  business  of
acquiring,  operating and holding equity  investments in  income-producing  real
estate  properties.  Certain  of  the  general  partners  of  EP/2  were  former
shareholders and former management of Consolidated  Capital Equities Corporation
("CCEC"),  the former corporate general partner of CCIP/2. On November 16, 1990,
pursuant to the bankruptcy  settlement  discussed below, EP/2's general partners
executed a new partnership  agreement (the "New Partnership  Agreement") whereby
EP/2 converted from a general  partnership to a California limited  partnership,
CCEP/2.  The general partners of EP/2 became limited partners of CCEP/2.  ConCap
Holdings, Inc. ("CHI"), a Texas corporation, is CCEP/2's General Partner.

The operations of EP/2 were financed  substantially  through  nonrecourse  notes
with  participation  interests  (the "Master  Loan") from  CCIP/2,  a California
limited partnership. These notes are secured by the real properties owned by and
notes  receivable on sold properties owed to CCEP/2.  The Partnership  Agreement
provides that the Partnership is to terminate on June 24, 2011 unless terminated
prior to such date. The Partnership  commenced operations on April 28, 1983. The
Partnership  currently  owns  three  apartment  properties  one each  located in
Colorado,  Illinois,  and Texas and is currently  rebuilding a fourth  apartment
building  which is  located  in Ohio.  Six  commercial  properties  were sold in
September, 1999 and one commercial property was sold in December 1999.

Principles of Consolidation:  The financial statements include all the amounts
of the  Partnership and its 99.00% owned  partnership.  The General Partner of
the consolidated  partnerships is ConCap  Holdings,  Inc. ConCap Holdings Inc.
may be removed as the general partner of the  consolidated  partnership by the
Registrant;  therefore,  the  consolidated  partnerships  are  controlled  and
consolidated by the  Registrant.  All  significant  interpartnership  balances
have been eliminated.

EP/2  Bankruptcy  and  Reorganization:  During 1989,  EP/2  defaulted on certain
interest  payments  that were due to CCIP/2  under the Master  Loan and,  before
CCIP/2  was able to  exercise  its  remedies  for such  default,  EP/2 filed for
bankruptcy protection in a Chapter 11 reorganization proceeding ("Chapter 11").

On October 18, 1990, the bankruptcy  court approved  EP/2's  consensual  plan of
reorganization  (the "Plan"). On November 16, 1990, CCIP/2 consummated a closing
under the Plan  pursuant to which:  (1) CCIP/2 and EP/2  executed an amended and
restated loan agreement  ("New Master Loan  Agreement");  (2) CCEP/2 renewed the
deeds of trust on all collateral  securing the Master Loan; (3) EP/2 paid CCIP/2
cash of approximately  $2.5 million,  including $1.8 million  contributed by the
Corporate  General Partners of EP/2 related to their  promissory  notes; (4) the
general partners of EP/2 contributed certain partnership interests in affiliated
partnerships ("General Partnership Interests"),  which were valued by management
of  CCIP/2 at  approximately  $2.5  million,  that  were  assigned  to CCIP/2 as
additional  collateral  securing  the Master  Loan and (5) all  liabilities  and
claims between EP/2's  general  partners and CCIP/2 were released.  See "Note E"
for a description of the terms of the New Master Loan Agreement.

The  Corporate  Managing  General  Partner  of  EP/2  was  Consolidated  Capital
Enterprises,  Inc. ("CCEI"), a Georgia corporation. In December 1988, CCEC filed
for Chapter 11  protection.  In October 1990,  as part of CCEC's  reorganization
plan, CCEC sold its general partner interest in CCIP/2 to ConCap Equities,  Inc.
("CEI"), a Delaware  corporation.  Pursuant to the New Partnership  Agreement as
discussed above, CHI, a wholly-owned  subsidiary of CEI, became the sole general
partner of CCEP/2,  replacing  CCEI,  and the former  general  partners  of EP/2
became limited  partners of CCEP/2.  Pursuant to the New Partnership  Agreement,
CCEP/2 is managed by CHI and CHI has full  discretion with respect to conducting
CCEP/2's  business.  CHI and the limited  partners are  hereinafter  referred to
collectively  as the  "Partners."  All of  CEI's  outstanding  stock is owned by
Insignia  Properties Trust, an affiliate of Apartment  Investment and Management
Company ("AIMCO"). (See "Note B - Transfer of Control").

Use of Estimates:  The  preparation of financial  statements in conformity  with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and  accompanying  notes.  Actual results could differ
from those estimates.

Cash and Cash  Equivalents:  Includes cash on hand and in banks and money market
accounts.  At certain  times,  the amount of cash deposited at a bank may exceed
the limit on insured deposits. Cash balances include approximately $1,289,000 at
December 31, 2001 that are  maintained by the affiliated  management  company on
behalf of affiliated entities in cash concentration accounts.

Tenant  Security  Deposits:  The  Partnership  requires  security  deposits from
lessees  for the  duration  of the lease and are  included  in  receivables  and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged the space and is current on rental payments.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the apartment  properties and related personal property.  For
Federal income tax purposes,  the  accelerated  cost recovery  method is used 18
years for additions  after March 15, 1984,  and before May 9, 1985, and 19 years
for additions  after May 8, 1985, and before January 1, 1987. As a result of the
Tax Reform Act of 1986,  for  additions  after  December 31, 1986,  the modified
accelerated  cost recovery method is used for  depreciation of (1) real property
additions over 27 1/2 years and (2) personal property additions over 5 years.

Loan Costs: Loan costs of approximately  $425,000 and approximately  $397,000 at
December  31, 2001 and 2000,  respectively,  less  accumulated  amortization  of
approximately  $41,000 and $7,000, at December 31, 2001 and 2000,  respectively,
are included in other assets and are being  amortized on a  straight-line  basis
over the life of the loans.  The  amortization  expense is  included in interest
expense. As a result of the refinance of three of the Partnership's  residential
properties,  Windmere  Apartments,  Highcrest Townhomes  Apartments,  and Canyon
Crest  Apartments,  and the repayment of the mortgage notes which had encumbered
the Partnership's  other  residential  property,  Village Brooke,  loan costs of
approximately  $175,000,  net of accumulated  amortization,  were written off in
2000.

Advertising:  The  Partnership  expenses the costs of  advertising  as incurred.
Advertising costs of approximately $93,000, $116,000, and $159,000 for the years
ended December 31, 2001, 2000, and 1999,  respectively,  were charged to expense
as incurred.

Investment Properties: Investment properties consist of four apartment complexes
and are  stated  at cost.  Acquisition  fees are  capitalized  as a cost of real
estate.  In accordance with Financial  Accounting  Standards Board Statement No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets  to Be  Disposed  Of",  the  Partnership  records  impairment  losses  on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired  and the  undiscounted  cash flows  estimated to be
generated by those assets are less than the  carrying  amounts of those  assets.
Costs of properties that have been  permanently  impaired have been written down
to appraised  value. No adjustments for impairment of value were recorded in the
years  ended  December  31,  2001,  2000,  and  1999.  See  "Recent   Accounting
Pronouncements" below.

Leases: The Partnership  generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the General Partner's policy is to offer rental concessions during  particularly
slow months or in response to heavy  competition from other similar complexes in
the area. Concessions are charged against rental income as incurred.

The Partnership  leased certain  commercial space to tenants under various lease
terms.  The leases were  accounted for as operating  leases in  accordance  with
"Financial  Accounting  Standards  Board  Statement  No. 13". Some of the leases
contained  stated  rental  increases  during  their term.  For leases with fixed
rental increases,  rents were recognized on a straight-line basis over the terms
of the lease. For all other leases, minimum rents were recognized over the terms
of the leases. The Partnership sold its last commercial properties during 1999.

Restricted Escrows:

Reserve  Account:  A general  Reserve  Account was  established in 1996 with the
refinancing  proceeds for each mortgaged property.  These funds were established
to cover  necessary  repairs and  replacements  of existing  improvements,  debt
service,   out  of  pocket   expenses   incurred  for  ordinary  and   necessary
administrative tasks, and payment of real property taxes and insurance premiums.
The Partnership was required to make quarterly  deposits of net operating income
(as  defined  in  the  mortgage  note)  from  each  refinanced  property  to the
respective reserve account.  The balance at December 31, 1999, was approximately
$139,000 which includes  interest.  As a result of the  refinancings of three of
the residential properties in 2000, the reserve accounts were no longer required
and the balances in each property's account was refunded during 2000.

Completion/Repair  Escrow: A completion/repair escrow account was established in
2000 with the refinancing proceeds for Windmere Apartments, Highcrest Townhomes,
and Canyon  Crest  Apartments.  The funds were  established  to cover  necessary
repairs and complete  various capital  projects as noted for each property.  The
balance at December 31, 2001 and 2000 was  approximately  $104,000 and $406,000,
respectively, which includes interest.

Lease  Commissions:  Lease  commissions were capitalized and amortized using the
straight-line method over the life of the applicable lease. The seven commercial
properties for which lease  commissions  were  applicable were sold during 1999,
and the corresponding balance in lease commissions was written off.

Allocation  of Net Income and Cash  Distributions:  Pursuant to the  Partnership
Agreement,  net  income  and net losses  for both  financial  and tax  reporting
purposes are allocated 99% to the Limited Partners and 1% to CHI.  Distributions
to the Partners are not allowed until CCEP/2 has fully paid and performed  under
the terms of the Master Loan.

Income Taxes: No provision has been made in the financial statements for Federal
income  taxes  because  under  current  law,  no Federal  income  taxes are paid
directly by CCEP/2.  The Partners are responsible for their respective shares of
CCEP/2's net income or loss. CCEP/2 reports certain transactions differently for
tax than for financial statement purposes.

The tax basis of the  Partnership's  assets  and  liabilities  is  approximately
$238,559,000  and  $212,361,000  greater  than the  assets  and  liabilities  as
reported in the financial  statements  for the years ended December 31, 2001 and
2000, respectively.

Recent  Accounting  Pronouncements:  In August 2001, the Financial  Accounting
Standards  Board  issued  SFAS No.  144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived Assets".  SFAS No. 144 provides accounting guidance for
financial   accounting  and  reporting  for  the  impairment  or  disposal  of
long-lived assets.  SFAS No. 144 supersedes SFAS No. 121,  "Accounting for the
Impairment of Long-Lived  Assets and for Long-Lived Assets to be Disposed Of".
SFAS No. 144 is effective for fiscal years  beginning after December 15, 2001.
The  General  Partner  does not  anticipate  that  its  adoption  will  have a
material  effect on the  financial  position or results of  operations  of the
Partnership.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate  investment  trust,  with AIMCO
being the surviving  corporation  (the "Insignia  Merger").  As a result,  AIMCO
acquired 100% ownership  interest in the General  Partner.  The General  Partner
does not believe that this transaction has had or will have a material effect on
the affairs and operations of the Partnership.

Note C - Casualty Event

In April 1999, one of the Partnership's residential properties,  Village Brooke,
was  completely  destroyed  by a  tornado.  It is  estimated  that the  property
sustained  approximately  $16,000,000  in  damages.  As of  December  31,  2001,
approximately  $11,302,000  in  insurance  proceeds  have  been  received,  with
additional insurance proceeds expected in the near future. All of the property's
fixed assets and related  accumulated  depreciation were written off as a result
of this casualty.  Lost rents of  approximately  $417,000 and $750,000 have been
recorded as of  December  31, 2000 and 1999,  respectively.  A casualty  gain of
approximately  $250,000  was  recognized  at  December  31,  2000 as a result of
receiving additional insurance proceeds which were previously not recognized net
of approximately  $577,000 of additional clean up and demolition costs incurred.
A casualty gain of approximately $5,473,000 was recognized at December 31, 1999.
The  reconstruction  of the property began in September 2001. The Partnership is
negotiating with several insurance  companies as to the final settlement amount.
The  Partnership  expects  to  receive  additional  funds;  however,  the  final
settlement amount cannot be reasonably estimated.

In April  1999,  an  electrical  fire  occurred  at Town  Center.  The  property
sustained  approximately  $181,000  in damages and  realized a casualty  loss of
approximately  $33,000 which is included in operating expense.  The property was
sold in September 1999 (see "Note D"). The purchaser of the property assumed the
remaining obligations related to the fire.

Note D - Sale of Investment Property-Discontinued Operations

Lahser One, Lahser Two, Crescent Centre, Central Park Place, Central Park Plaza,
Town Center Plaza and Richmond Plaza were the only commercial  properties  owned
by the Partnership and represented one segment of the Partnership's  operations.
All of these properties were sold during 1999 and accordingly the results of the
commercial  segment  have  been  shown  as  gain  on  sale  of and  income  from
discontinued  operations for the year ended December 31, 1999. Revenues of these
properties were  approximately  $9,005,000 for the year ended December 31, 1999.
No revenues from the  properties  were recorded  during the years ended December
31, 2001 and 2000.  Income from and gain on sale of discontinued  operations was
approximately $20,756,000 for the year ended December 31, 1999.

On  September  10,  1999,  the five  commercial  properties  located in Michigan
(Lahser One, Lahser Two,  Crescent Centre,  Central Park Place, and Central Park
Plaza) were sold to an unaffiliated  third party for $26,125,000.  After closing
expenses  of  approximately   $1,727,000  the  net  proceeds   received  by  the
Partnership were approximately $24,398,000.  The sale of the properties resulted
in a gain on sale of investment property of approximately $10,392,000.

On September 22, 1999, Town Center Plaza, located in Santa Ana, California,  was
sold to an unaffiliated  third party for $11,650,000.  After closing expenses of
approximately  $1,004,000,  the net proceeds  received by the  Partnership  were
approximately  $10,646,000.  The Partnership  used some of the proceeds from the
sale  of  the  property  to  pay  off  the  debt  encumbering  the  property  of
approximately $2,316,000. The sale of the property resulted in a gain on sale of
investment   property  of   approximately   $4,862,000   and  a  loss  on  early
extinguishment of debt of approximately $7,000.

On December 23, 1999, Richmond Plaza, located in Richmond, Virginia, was sold to
an unaffiliated third party for $14,900,000. Closing expenses were approximately
$784,000.  The debt  encumbering the property of  approximately  $14,500,000 was
assumed by the buyer.  The sale of the  property  resulted  in a gain on sale of
investment   property  of   approximately   $5,499,000   and  a  loss  on  early
extinguishment of debt of approximately $24,000 at December 31, 1999.

Note E - Master Loan and Accrued Interest Payable

The Master Loan principal and accrued  interest payable balances at December 31,
2001 and 2000, are approximately  $289,142,000 and  approximately  $263,751,000,
respectively.

Terms of Master Loan Agreement

Under  the  terms of the  Master  Loan,  interest  accrues  at 10% per annum and
payments are due  quarterly  in an amount  equal to Excess Cash Flow,  generally
defined in the Master  Loan  Agreement  as net cash flow from  operations  after
capital  improvements  and  third-party  debt service.  If such Excess Cash Flow
payments are less than the current accrued interest during the quarterly period,
the unpaid interest is added to principal,  compounded annually,  and is payable
at the loan's  maturity.  If such Excess Cash Flow payments are greater than the
currently  payable  interest,  the excess  amount is  applied  to the  principal
balance  of the loan.  The net  proceeds  from the  refinancing  of three of the
residential  properties  during the year  ended  December  31,  2000 and the net
proceeds  from the  sale of the  commercial  properties  during  the year  ended
December 31, 1999 were paid to CCIP/2 as required  under the terms of the Master
Loan Agreement.

Effective  January 1, 1993,  CCEP/2 and CCIP/2 amended the Master Loan Agreement
to   stipulate   that  Excess  Cash  Flow  would  be  computed  net  of  capital
improvements. Such expenditures were formerly funded from advances on the Master
Loan from  CCIP/2 to CCEP/2.  This  amendment  and change in the  definition  of
Excess  Cash Flow has the effect of reducing  Master Loan  payments to CCIP/2 by
the amount of CCEP/2's capital  expenditures  since such amounts were previously
excluded  from  Excess  Cash  Flow.  The  amendment  will  have no effect on the
computation of interest expense on the Master Loan.

No advances were  received from CCIP/2 during the years ended  December 31, 2001
and 2000 as an advance on the Master  Loan.  The Master Loan matured in November
2000.  The  General  Partner  has  determined  that the Master  Loan and related
interest  payable has no  determinable  fair value since payments are limited to
net cash  flows,  as  defined,  but is not  believed to be in excess of the fair
values of the underlying collateral.

The General  Partner has been in  negotiations  with CCIP/2 with  respect to its
options which  included  CCIP/2  foreclosing  on the  properties in CCEP/2 which
collateralize  the Master Loan or extending the terms of the Master Loan. CCIP/2
has decided to foreclose on the  properties  that  collaterize  the Master Loan.
Subsequent to December 31, 2001, the Partnership Agreement of CCIP/2 was amended
to allow CCIP/2 to directly or indirectly own investment properties. CCIP/2 will
begin the process of  executing  deeds in lieu of  foreclosure  during the first
quarter of 2002 on the three active  properties of the Partnership.  The deed in
lieu of foreclosure  on the fourth  property,  which is currently  being rebuilt
(see "Note C"),  will be executed at a later  date.  As the deeds are  executed,
title in the properties  currently  owned by the  Partnership  will be vested in
CCIP/2,  subject to the existing  liens on the  properties  including  the first
mortgage loans.  When the Partnership no longer has title to the properties,  it
will be dissolved.

During 2001,  CCEP/2 paid down the Master Loan by $356,000.  These payments were
made from  distributions  received from three  affiliated  partnerships.  During
2000, CCEP/2 paid down the Master Loan by $7,724,000.  These principal  payments
were made from  distributions  received from three  affiliated  partnerships and
from  proceeds  received  from  the  refinance  of  three  of the  Partnership's
residential  properties.  During  1999,  CCEP/2  paid  down the  Master  Loan by
$33,111,000. These principal payments were made from distributions received from
three affiliated  partnerships,  excess cash from the  Partnership's  investment
properties  and  from  proceeds  received  from  the  sale of the  Partnership's
commercial properties.

Note F - Mortgage Notes Payable
<TABLE>
<CAPTION>

                      Principal     Principal    Monthly                        Principal
                      Balance At   Balance At    Payment   Stated                Balance
                     December 31, December 31,  Including Interest  Maturity      Due At
Property                 2001         2000      Interest    Rate      Date       Maturity
                                (in thousands)                                (in thousands)
Canyon Crest
<S>                    <C>           <C>          <C>       <C>     <C>   <C>    <C>
  1st Mortgage         $ 3,562       $ 3,640      $ 28      7.10%   01/01/11     $ 2,613
Highcrest Townhomes
  1st Mortgage           6,599         6,748        55      7.72%   02/01/10       4,868
Windemere
  1st Mortgage           5,933         6,064        50      7.83%   11/01/10       3,905

Totals                 $16,094       $16,452      $133                           $11,386
</TABLE>

On October 3, 2000,  CCEP/2  refinanced  the  mortgage  note payable on Windmere
Apartments.  The refinancing replaced mortgage indebtedness of $3,000,000 with a
new  mortgage of  $6,075,000.  The mortgage  was  refinanced  at a rate of 7.83%
compared to the prior rate of 7.33%.  Payments of approximately  $50,000 are due
on the first day of each month until the loan  matures on  November  1, 2010.  A
balloon payment of approximately $3,905,000 is due at maturity. Capitalized loan
costs incurred for the refinancing were  approximately  $155,000 at December 31,
2000.  Additional  loan costs of  approximately  $7,000 were incurred during the
year ended December 31, 2001.  Prepayment penalties of approximately $95,000 and
the write-off of unamortized loan costs of approximately  $50,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $145,000.

On October 31, 2000,  CCEP/2  refinanced  the mortgage note payable on Highcrest
Townhomes.  The refinancing replaced mortgage  indebtedness of $4,000,000 with a
new  mortgage of  $6,760,000.  The mortgage  was  refinanced  at a rate of 7.72%
compared to the prior rate of 7.33%.  Payments of approximately  $55,000 are due
on the first day of each month until the loan  matures on  February  1, 2010.  A
balloon payment of approximately $4,868,000 is due at maturity. Capitalized loan
costs incurred for the refinancing were  approximately  $141,000 at December 31,
2000.  Additional loan costs of  approximately  $10,000 were incurred during the
year ended December 31, 2001. Prepayment penalties of approximately $142,000 and
the write-off of unamortized loan costs of approximately  $52,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $194,000.

On December  21, 2000,  CCEP/2  refinanced  the mortgage  note payable on Canyon
Crest Apartments.  The refinancing replaced mortgage  indebtedness of $2,000,000
with a new mortgage of  $3,640,000.  The mortgage  was  refinanced  at a rate of
7.10% compared to the prior rate of 7.33%. Payments of approximately $28,000 are
due on the first day of each month until the loan  matures on January 1, 2011. A
balloon payment of approximately $2,613,000 is due at maturity. Capitalized loan
costs incurred for the refinancing were  approximately  $100,000 at December 31,
2000.  Additional loan costs of  approximately  $12,000 were incurred during the
year ended December 31, 2001.  Prepayment penalties of approximately $98,000 and
the write-off of unamortized loan costs of approximately  $38,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $136,000.

During the year ended December 31, 2000, the General Partner  determined that it
was in the best  interest  of the  Partnership  to repay  the  mortgage  note on
Village  Brooke.  Accordingly,  funds which had  previously  been  restricted to
rebuild the property were used to repay the mortgage  note which had  encumbered
the  property  of  approximately  $6,517,000.  An  extraordinary  loss on  early
extinguishment  of debt of  approximately  $35,000 was recognized as a result of
unamortized loan costs associated with this mortgage.

The mortgage notes payable are  nonrecourse and are  collateralized  by deeds of
trust on the real property.  The mortgage notes require prepayment  penalties if
repaid prior to maturity. All of these notes are superior to the Master Loan.

Scheduled  principal  payments of mortgage notes payable  subsequent to December
31, 2001, are as follows (in thousands):

         Years Ending December 31,
                    2002                    $    394
                    2003                         426
                    2004                         459
                    2005                         495
                    2006                         535
                 Thereafter                   13,785

                   Total                    $ 16,094

Note G - Related Party Transactions

CCEP/2  has no  employees  and is  dependent  on the  General  Partner  and  its
affiliates for the management and administration of all partnership  activities.
Affiliates  of  the  General  Partner  provide  property  management  and  asset
management  services to the  Partnership.  CCEP/2 paid property  management fees
based upon collected gross rental revenues for property  management  services in
each of the years ended  December  31, 2001,  2000,  and 1999.  The  Partnership
Agreement  (the  "Agreement")  also  provides for  reimbursement  to the General
Partner  and  its  affiliates   for  costs  incurred  in  connection   with  the
administration of CCEP/2's activities.

Also, CCEP/2 is subject to an Investment  Advisory  Agreement between CCEP/2 and
an affiliate of the General Partner.  This agreement provides for an annual fee,
payable in monthly  installments,  to an  affiliate  of the General  Partner for
advising and consulting  services for CCEP/2's  properties.  The General Partner
and its affiliates received reimbursements and fees for the years ended December
31, 2001, 2000, and 1999 as follows:
<TABLE>
<CAPTION>

                                                        2001        2000      1999
                                                              (in thousands)
 Property management fees (included in
<S>                                                     <C>        <C>        <C>
  operating expenses)                                   $ 346      $ 257      $ 304
 Investment advisory fees (included in general
   and administrative expense)                             59         178       178
 Reimbursement for services of affiliates
  (included in operating, general and
  administrative expenses, and investment
  properties)                                             584         172       237
 Real estate brokerage commissions (included in
 gain on sale of discontinued operations)                  --          --     1,581
 Refinancing fees (included in capitalized loan
 costs)                                                    --         165        --
</TABLE>

During the years ended  December 31, 2001,  2000,  and 1999,  affiliates  of the
General  Partner  were  entitled  to  receive  5% of  gross  receipts  from  the
Registrant's  residential properties for providing property management services.
The Registrant paid to such affiliates  approximately  $346,000,  $257,000,  and
$304,000 for the years ended December 31, 2001, 2000, and 1999, respectively.

An affiliate of the General Partner received  investment advisory fees amounting
to approximately  $59,000,  $178,000,  and $178,000 for the years ended December
31, 2001, 2000, and 1999, respectively.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expense  amounting  to  approximately  $584,000,  $172,000,  and
$237,000 for the years ended December 31, 2001,  2000,  and 1999,  respectively.
Included in these amounts are fees related to construction  management  services
provided by an  affiliate  of the  General  Partner of  approximately  $395,000,
$70,000  and  $29,000  for the years ended  December  31,  2001,  2000 and 1999,
respectively. The construction management service fees are calculated based on a
percentage  of current  and  certain  prior  year  additions  to the  investment
properties and are being depreciated over 15 years.

For  services  provided  in  connection  with the  refinancings  of three of the
Partnership's  residential  properties,  the  General  Partner  was  paid  total
commissions  related to the  refinancings of  approximately  $165,000 during the
year ended December 31, 2000.

For acting as real estate  broker in  connection  with the sales of seven of the
Partnership's commercial properties,  the General Partner was paid a real estate
commission of approximately  $1,134,000 during the year ended December 31, 1999.
A  commission  of  $447,000  was paid  during the year ended  December  31, 1999
relating to the sale of Richmond Plaza which was accrued at December 31, 1999.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated with the General Partner.  During the year ended December 31, 2001,
the  Partnership  paid  AIMCO  and  its  affiliates  approximately  $95,000  for
insurance coverage and fees associated with policy claims administration.

In addition to the compensation  and  reimbursements  described above,  interest
payments are made to CCIP/2 pursuant to the Master Loan Agreement. Such interest
payments totaled approximately $904,000,  $1,198,000, and $998,000 for the years
ended  December 31, 2001,  2000, and 1999,  respectively.  No advances were made
under the Master Loan Agreement  during the years ended December 31, 2001, 2000,
and 1999.  Additionally,  CCEP/2 made  principal  payments on the Master Loan of
approximately $356,000, $7,724,000 and $33,111,000, for the years ended December
31,  2001,  2000  and  1999,  respectively.   These  funds  were  received  from
distributions  from  three  affiliated   partnerships,   excess  cash  from  the
Partnership's  investment  properties,   proceeds  received  from  the  sale  of
commercial  properties and from proceeds  received from the refinancing of three
of the Partnership's residential properties.

Note H - Real Estate and Accumulated Depreciation

The investment  properties owned by the Partnership  consist of the following at
December 31, 2001 (in thousands):
<TABLE>
<CAPTION>

                                    Building
                                    & Related
                                     Personal                Accumulated    Depreciable
 Description               Land      Interest      Total     Depreciation   Life-Years

<S>                        <C>        <C>         <C>          <C>             <C>
 Canyon Crest              $ 145      $ 3,997     $ 4,142      $ 2,774         3-20
 Highcrest Townhomes          707       8,364       9,071        5,969         3-20
 Village Brooke             1,099       1,684       2,783           --         3-20
 Windmere                     780       6,572       7,352        4,872         3-20

 Total                    $ 2,731     $20,617     $23,348      $13,615
</TABLE>

Note I - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its General Partner and several of
their  affiliated  partnerships and corporate  entities.  The action purports to
assert  claims on behalf of a class of  limited  partners  and  derivatively  on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia  Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia;  past
tender offers by the Insignia  affiliates to acquire limited  partnership units;
management of the  partnerships  by the Insignia  affiliates;  and the series of
transactions  which  closed on October 1, 1998 and  February  26,  1999  whereby
Insignia and Insignia  Properties Trust,  respectively,  were merged into AIMCO.
The plaintiffs seek monetary damages and equitable  relief,  including  judicial
dissolution of the  Partnership.  On June 25, 1998, the General  Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs  filed an amended  complaint.  The  Corporate  General  Partner filed
demurrers to the amended complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December  14,  1999,  the General  Partner  and its  affiliates  terminated  the
proposed settlement.  In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement.  On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken  from the order on  October  5,  2000.  On
December 4, 2000, the Court  appointed the law firm of Lieff Cabraser  Heimann &
Bernstein  LLP as new  lead  counsel  for  plaintiffs  and the  putative  class.
Plaintiffs  filed a third  amended  complaint on January 19,  2001.  On March 2,
2001,  the  General  Partner  and its  affiliates  filed a demurrer to the third
amended  complaint.  On May 14, 2001,  the Court heard the demurrer to the third
amended  complaint.  On July 10,  2001,  the Court  issued  an order  sustaining
defendants'  demurrer on certain grounds.  On July 20, 2001,  Plaintiffs filed a
motion for  reconsideration  of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action  complaint.  On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint,  which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer.  The Court has dismissed without
leave  to amend  certain  of the  plaintiffs'  claims.  On  February  11,  2002,
plaintiffs  filed a motion seeking to certify a putative class  comprised of all
non-affiliated  persons  who own or have owned  units in the  partnerships.  The
General  Partner and affiliated  defendants  oppose the motion and a hearing has
been  scheduled  for April 29,  2002.  The Court has set the matter for trial in
January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first  amended  complaint in its entirety for  violating the
Court's  July 10, 2001 order  granting  in part and denying in part  defendants'
demurrer in the Nuanes action, or  alternatively,  to strike certain portions of
the  complaint  based on the statute of  limitations.  Other  defendants  in the
action demurred to the fourth amended complaint,  and,  alternatively,  moved to
strike the  complaint.  On December  11, 2001,  the court heard  argument on the
motions and took the matters under  submission.  On February 4, 2002,  the Court
served  notice of its order  granting  defendants'  motion to strike  the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action.

The  General  Partner  does not  anticipate  that any  costs,  whether  legal or
settlement  costs,   associated  with  these  cases  will  be  material  to  the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Note J - Selected Quarterly Financial Data (unaudited)

The following is a summary of the unaudited  quarterly results of operations for
the Partnership (in thousands):
<TABLE>
<CAPTION>

                                                Year Ended December 31, 2001
                                      1st         2nd        3rd        4th
                                    Quarter     Quarter    Quarter    Quarter     Total

<S>                                 <C>         <C>        <C>        <C>        <C>
Revenues                            $ 1,259     $ 1,315    $ 1,701    $ 1,282    $ 5,557
Expenses                              7,971       7,850      7,916      8,038      31,775

Net loss                            $(6,712)    $(6,535)   $(6,215)   $(6,756)   $(26,218)


                                                Year Ended December 31, 2000
                                      1st         2nd        3rd        4th
                                    Quarter     Quarter    Quarter    Quarter     Total

Revenues                            $ 1,665     $ 2,447    $ 1,266     $ 480     $ 5,858
Expenses                              7,670       7,488      7,431      7,379      29,968

Loss before extraordinary item       (6,005)     (5,041)    (6,165)    (6,899)    (24,110)
Extraordinary loss on early
  extinguishment of debt                 --         (35)        --       (475)       (510)

Net loss                            $(6,005)    $(5,076)   $(6,165)   $(7,374)   $(24,620)
</TABLE>


                                    PART III

Item 10.    Directors  and  Executive  Officers of the General  Partner of the
            Partnership

The  Registrant  has no officers or directors.  The General  Partner is ConCap
Equities,  Inc.  ("CEI").  The names and ages of, as well as the  position and
offices held by the present  executive  officers and  directors of the General
Partner  are set forth  below.  There are no family  relationships  between or
among any officers or directors.

Name                      Age      Position

Patrick J. Foye           44       Executive Vice President and Director
Martha L. Long            42       Senior Vice President and Controller

Patrick J. Foye has been  Executive Vice President and Director of the General
Partner  since  October  1,  1998.  Mr.  Foye has  served  as  Executive  Vice
President  of AIMCO  since May 1998.  Prior to joining  AIMCO,  Mr. Foye was a
partner in the law firm of Skadden,  Arps, Slate, Meagher & Flom LLP from 1989
to 1998 and was Managing Partner of the firm's  Brussels,  Budapest and Moscow
offices from 1992 through 1994.  Mr. Foye is also Deputy  Chairman of the Long
Island  Power  Authority  and  serves  as a  member  of  the  New  York  State
Privatization  Council.  He received a B.A.  from  Fordham  College and a J.D.
from Fordham University Law School.

Martha L. Long has been  Senior Vice  President  and  Controller  of the General
Partner since October 1998 as a result of the acquisition of Insignia  Financial
Group, Inc. As of February 2001, Ms. Long was also appointed head of the service
business for AIMCO.  From June 1994 until January 1997,  she was the  Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997,  retaining  that title until  October  1998.  From 1988 to June
1994,  Ms. Long was Senior Vice  President and  Controller for The First Savings
Bank, FSB in Greenville, South Carolina.

One or more of the above persons are also directors and/or officers of a general
partner (or general partner of a general partner) of limited  partnerships which
either have a class of  securities  registered  pursuant to Section 12(g) of the
Securities Exchange Act of 1934, or are subject to the reporting requirements of
Section  15(d) of such Act.  Further,  one or more of the above persons are also
directors and/or officers of Apartment Investment and Management Company and the
general  partner  of  AIMCO  Properties,  L.P.,  entities  that  have a class of
securities  registered  pursuant to Section 12(g) of the Securities Exchange Act
of 1934, or are subject to the reporting  requirements of Section 15 (d) of such
Act.

The  executive  officers  and  director  of  the  General  Partner  fulfill  the
obligations  of the Audit  Committee  and  oversee the  Partnership's  financial
reporting  process on behalf of the General Partner.  Management has the primary
responsibility for the financial  statements and the reporting process including
the systems of internal controls. In fulfilling its oversight  responsibilities,
the executive  officers and director of the General Partner reviewed the audited
financial  statements with management including a discussion of the quality, not
just the  acceptability,  of the accounting  principles,  the  reasonableness of
significant  judgments,   and  the  clarity  of  disclosures  in  the  financial
statements.

The  executive  officers and director of the General  Partner  reviewed with the
independent  auditors,  who are  responsible  for  expressing  an opinion on the
conformity of those audited  financial  statements  with  accounting  principles
generally accepted in the United States,  their judgments as to the quality, not
just the  acceptability,  of the  Partnership's  accounting  principles and such
other  matters as are required to be discussed  with the Audit  Committee or its
equivalent under auditing standards  generally accepted in the United States. In
addition,  the  Partnership  has  discussed  with the  independent  auditors the
auditors' independence from management and the Partnership including the matters
in the written  disclosures  required by the  Independence  Standards  Board and
considered  the   compatibility   of  non-audit   services  with  the  auditors'
independence.

The executive  officers and director of the General  Partner  discussed with the
Partnership's  independent auditors the overall scope and plans for their audit.
In  reliance on the reviews and  discussions  referred to above,  the  executive
officers and director of the General  Partner has approved the  inclusion of the
audited  financial  statements in the Form 10-K for the year ended  December 31,
2001 for filing with the Securities and Exchange Commission.

The General Partner has reappointed Ernst & Young LLP as independent auditors to
audit the financial  statements of the  Partnership for the current fiscal year.
Fees for the last fiscal year were audit services of  approximately  $24,000 and
non-audit services (principally tax-related) of approximately $13,000.

Item 11.    Executive Compensation

None  of  the  directors  and  officers  of the  General  Partner  received  any
remuneration from the Registrant.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

Except  as  noted  below,  no  person  was  known  by the  Registrant  to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 2001:


Entity                                  Number of Units      Percentage

Reedy River Properties
  (an affiliate of AIMCO)                  168,736.5           18.56%
Insignia Properties, LP
  (an affiliate of AIMCO)                   17,240.6            1.90%
AIMCO Properties, LP
  (an affiliate of AIMCO)                  177,439.5           19.51%
Cooper River Properties, LLC
  (an affiliate of AIMCO)                   67,518.7            7.43%


Reedy River Properties,  Insignia  Properties,  LP, and Cooper River Properties,
LLC are  indirectly  ultimately  owned by AIMCO.  Their  business  address is 55
Beattie Place, Greenville, SC 29602.

AIMCO Properties,  LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.

No  directors  or  officers  of  the  General  Partner  owns  any  Units  of the
Partnership of record or beneficially.

Item 13.    Certain Relationships and Related Transactions

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.

The Partnership  Agreement (the  "Agreement")  provides for reimbursement to the
General  Partner and its affiliates  for costs  incurred in connection  with the
administration of Partnership  activities.  The following  payments were made to
the General  Partner and  affiliates  during the years ended  December 31, 2001,
2000, and 1999:

                                                For the years ended December 31,
                                                   2001        2000        1999
                                                         (in thousands)

Reimbursements for services of affiliates         $ 349        $ 444      $ 217

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expenses  amounting  to  approximately  $349,000,  $444,000  and
$217,000 for the years ended December 31, 2001, 2000, and 1999, respectively.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated with the General Partner.  During the year ended December 31, 2001,
the  Partnership  paid  AIMCO  and  its  affiliates  approximately  $95,000  for
insurance coverage and fees associated with policy claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 430,935.30 limited partnership units
in the Partnership  representing 47.40% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  As a result of
its  ownership  of 47.40% of the  outstanding  units,  AIMCO is in a position to
influence all such voting decisions with respect to the Registrant.  When voting
on matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.


                                     PART IV


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

      (a)   Exhibits

            Exhibit 3.2, Fourth Amendment to the amended and restated limited
            partnership agreement of CCIP/2 dated January 8, 2002.

      (b)   Reports  on Form 8-K filed in the fourth  quarter  of fiscal  year
            2001:

            None.



<PAGE>


                                   SIGNATURES



Pursuant to the  requirements of Section 13 or 15(d) 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.


                                    CONSOLIDATED     CAPITAL     INSTITUTIONAL
                                    PROPERTIES/2


                                    By:   ConCap Equities, Inc.
                                          Its General Partner


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President
                                          and Controller


                                    Date:


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 on the date indicated.


/s/Patrick J. Foye                                    Date:
Patrick J. Foye
Executive Vice President and Director


/s/Martha L. Long                                     Date:
Martha L. Long
Senior Vice President and Controller


<PAGE>


               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 2

                                  EXHIBIT INDEX


Exhibit Number    Description of Exhibit

      2.1         Agreement  and Plan of  Merger,  dated as of October 1, 1998
                  between AIMCO and IPT.

      3.1         Certificates of Limited Partnership, as amended to date.

      3.2         Fourth Amendment to the amended and restated limited
                  partnership agreement of CCIP/2 dated January 8, 2002
                  (Incorporated by reference to the annual report on Form 10-K
                  for the year ended December 31, 2001).

     10.1         Amended Loan Agreement dated November 15, 1990 (the "Effective
                  Date"), by and between the Partnership and EP/2  (Incorporated
                  by  reference  to the Annual  Report on Form 10-K for the year
                  ended December 31, 1990 ("1990 Annual Report")).

     10.2         Assumption  Agreement as of the Effective Date, by and between
                  EP/2 and CCEP/2  (Incorporated by reference to the 1990 Annual
                  Report).

     10.3         Assignment  of  Claims  as of  the  Effective  Date,  by and
                  between  the   Partnership   and  EP/2.   (Incorporated   by
                  reference to the 1990 Annual Report).

     10.4         Assignment of  Partnership  Interests in CC Office  Associates
                  and Broad and Locust  Associates  dated November 16, 1990 (the
                  effective date), by and between EP/2 and CCEP/2  (Incorporated
                  by reference to the 1990 Annual Report).

     10.5         Property  Management  Agreement  No. 113 dated  October  23,
                  1990, by and between the Partnership and CCEC  (Incorporated
                  by  reference to the  Quarterly  Report on Form 10-Q for the
                  quarter ended September 30, 1990).

     10.6         Bill of Sale and  Assignment  dated  October 23, 1990,  by and
                  between  CCEC and ConCap  Services  Company  (Incorporated  by
                  reference to the Quarterly Report on Form 10-Q for the quarter
                  ended September 30, 1990).

     10.7         Assignment  and  Assumption  dated  October 23,  1990,  by and
                  between  CCEC  and  ConCap  Management   Limited   Partnership
                  ("CCMLP")  (Incorporated  by reference to the Quarterly Report
                  on Form 10-Q for the quarter ended September 30, 1990).

     10.8         Assignment  and  Agreement as to Certain  Property  Management
                  Services  dated  October 23,  1990,  by and between  CCMLP and
                  ConCap  Capital  Company  (Incorporated  by  reference  to the
                  Quarterly  Report on Form 10-Q for the quarter ended September
                  30, 1990).

     10.9         Assignment  and  Agreement  dated  October  23,  1990,  by and
                  between  CCMLP and The Hayman  Company (100 Series of Property
                  Management   Contracts)(Incorporated   by   reference  to  the
                  Quarterly  Report on Form 10-Q for the quarter ended September
                  30, 1990).

     10.10        Construction  Management  Cost  Reimbursement  Agreement dated
                  January 1, 1991, by and between the Partnership and The Hayman
                  Company.  (Incorporated  by reference to the Annual  Report on
                  Form 10-K for the year ended December 31, 1991).

     10.11        Investor  Services  Agreement  dated  October 23, 1990, by and
                  between the Partnership and CCEC (Incorporated by reference to
                  the  Quarterly  Report  on Form  10-Q  for the  quarter  ended
                  September 30, 1990).

     10.12        Assignment  and  Assumption   Agreement   (Investor   Services
                  Agreement)  dated  October 23,  1990 by and  between  CCEC and
                  ConCap Services Company.

     10.13        Letter of Notice dated  December 20,  1991,  from  Partnership
                  Services, Inc. ("PSI") to the Partnership regarding the change
                  in  ownership  and  dissolution  of  ConCap  Services  Company
                  whereby   PSI  assumed  the   Investor   Services   Agreement.
                  (Incorporated  by reference to the Annual  Report on Form 10-K
                  for the year ended December 31, 1991).

     10.14        Financial  Services  Agreement  dated October 23, 1990, by and
                  between the Partnership and CCEC (Incorporated by reference to
                  the  Quarterly  Report  on Form  10-Q  for the  quarter  ended
                  September  30,  1990)  (Incorporated  by reference to the 1990
                  Annual Report).

     10.15        Assignment  and  Assumption   Agreement   (Financial  Services
                  Agreement)  dated  October 23,  1990,  by and between CCEC and
                  ConCap  Capital  Company  (Incorporated  by  reference  to the
                  Quarterly  Report on Form 10-Q for the quarter ended September
                  30, 1990).

     10.16        Letter of Notice  dated  December  20,  1991,  from PSI to the
                  Partnership  regarding the change in ownership and dissolution
                  of ConCap  Capital  Company  whereby PSI assumed the Financial
                  Services  Agreement.  (Incorporated by reference to the Annual
                  Report on Form 10-K for the year ended December 31, 1991).

     10.17        Property  Management  Agreement  No. 501 dated  February 16,
                  1993,   by  and  between  the   Partnership   and   Coventry
                  Properties,  Inc.  (Incorporated  by reference to the Annual
                  Report on Form 10-K for the year ended December 31, 1992).

     10.18        Property  Management  Agreement  No. 412 dated May 13, 1993,
                  by and  between  Consolidated  Capital  Equity  Partners/Two
                  L.P.  and  Coventry   Properties,   Inc.   (Incorporated  by
                  reference  to the  Quarterly  Report  on Form  10-Q  for the
                  quarter ended September 30, 1993).

     10.19        Assignment and  Assumption  Agreement  (Property  Management
                  Agreement  No.  412)  dated  May 13,  1993,  by and  between
                  Coventry Properties,  Inc., R&B Apartment Management Company
                  Inc.  and  Partnership  Services,   Inc.   (Incorporated  by
                  reference  to the  Quarterly  Report  on Form  10-Q  for the
                  quarter ended September 30, 1993).

     10.20        Assignment and Agreement as to Certain  Property  Management
                  Services  dated  May  13,  1993,  by  and  between  Coventry
                  Properties,    Inc.   and   Partnership    Services,    Inc.
                  (Incorporated  by reference to the Quarterly  Report on Form
                  10-Q for the quarter ended September 30, 1993).

     10.21        Property  Management  Agreement  No. 413 dated May 13, 1993,
                  by and  between  Consolidated  Capital  Equity  Partners/Two
                  L.P.  and  Coventry   Properties,   Inc.   (Incorporated  by
                  reference  to the  Quarterly  Report  on Form  10-Q  for the
                  quarter ended September 30, 1993).

     10.22        Assignment and  Assumption  Agreement  (Property  Management
                  Agreement  No.  413)  dated  May 13,  1993,  by and  between
                  Coventry   Properties,   Inc.,   R&B  Apartment   Management
                  Company, Inc. and Partnership Services,  Inc.  (Incorporated
                  by  reference to the  Quarterly  Report on Form 10-Q for the
                  quarter ended September 30, 1993).

     10.23        Assignment and Agreement as to Certain  Property  Management
                  Services  dated  May  13,  1993,  by  and  between  Coventry
                  Properties,    Inc.   and   Partnership    Services,    Inc.
                  (Incorporated  by reference to the Quarterly  Report on Form
                  10-Q for the quarter ended September 30, 1993).

     10.24        Contract  for sale of real  estate for North Park Plaza  dated
                  September 12, 1996, between Consolidated Capital Institutional
                  Properties/2,  a California limited partnership and North Park
                  Southfield, L.L.C., a Michigan limited liability company.

     10.25        Contract  for sale of real estate for Lahser One,  Lahser Two,
                  Crescent  Centre,  Central Park Place,  and Central Park Plaza
                  dated   September  10,  1999  between   Consolidated   Capital
                  Institutional  Properties/2,  a California limited partnership
                  and Southfield  Office  Properties,  LLC. (Filed with Form 8-K
                  dated September 10, 1999).

     10.26        Second  amendment  to  purchase  and sale  contract  between
                  Consolidated   Capital   Institutional    Properties/2,    a
                  California   limited   partnership  and  Southfield   Office
                  Properties,  LLC for sale of real  estate  for  Lahser  One,
                  Lahser  Two,  Crescent  Centre,   Central  Park  Place,  and
                  Central Park Plaza (Filed with Form 8-K dated  September 10,
                  1999).

     10.27        Reinstatement  of and Third  amendment  to  purchase  and sale
                  contract   between    Consolidated    Capital    Institutional
                  Properties/2,  a California limited partnership and Southfield
                  Office Properties, LLC for sale of real estate for Lahser One,
                  Lahser Two,  Crescent Centre,  Central Park Place, and Central
                  Park Plaza (Filed with Form 8-K dated September 10, 1999).

     10.28        Contract  for sale of real estate for Towne Center Plaza dated
                  September 22, 1999 between Consolidated Capital  Institutional
                  Properties/2  , a California  limited  partnership  and Colton
                  Real Estate Group,  d/b/a The Colton  Company (Filed with Form
                  8-K/A dated September 22, 1999).

     10.29        Contract  for sale for real  estate for  Richmond  Plaza dated
                  December 23, 1999 between Consolidated  Capital  Institutional
                  Properties/2,   a  California  limited   partnership  and  The
                  Bernstein  Companies  (Filed with Form 8-K dated  December 23,
                  1999).

     10.30        Multifamily  Note dated  October 2, 2000 between  Consolidated
                  Capital  Equity   Partners/Two   L.P.,  a  California  limited
                  partnership,  and GMAC  Commercial  Mortgage  Corporation  for
                  refinance  of  Windmere  Apartments  (Filed  with  Form 8-K on
                  November 27, 2000).

     10.31        Multifamily  Note dated October 31, 2000 between  Consolidated
                  Capital  Equity   Partners/Two   L.P.,  a  California  limited
                  partnership,  and GMAC  Commercial  Mortgage  Corporation  for
                  refinance of Highcrest  Townhomes  Apartments (Filed with Form
                  8-K on November 27, 2000).

     10.32        Multifamily Note dated December 22, 2000 between  Consolidated
                  Capital  Equity   Partners/Two   L.P.,  a  California  limited
                  partnership,  and GMAC  Commercial  Mortgage  Corporation  for
                  refinance of Canyon Crest  Apartments  (filed with Form 8-K on
                  January 22, 2001).

     11           Statement  regarding  computation  of Net Income per Limited
                  Partnership  Unit  (Incorporated  by  reference to Note 1 of
                  Item 8 - Financial Statements of this Form 10-K).

     16           Letter,  dated  August  12,  1992,  from  Ernst & Young to the
                  Securities  and  Exchange   Commission   regarding  change  in
                  certifying accountant.  (Incorporated by reference to Form 8-K
                  dated August 6, 1992).

     28.1         Fee Owner's Limited  Partnership  Agreement dated November 14,
                  1990 (Incorporated by reference to the 1990 Annual Report).

<PAGE>
                                FOURTH AMENDMENT
                TO THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
                    OF CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2


            THIS  FOURTH   AMENDMENT  TO  THE  AMENDED  AND   RESTATED   LIMITED
PARTNERSHIP AGREEMENT OF CONSOLIDATED CAPITAL  INSTITUTIONAL  PROPERTIES/2 (this
"Amendment")  is entered into as of the 8th day of January,  2002,  by and among
ConCap Equities,  Inc., a Delaware corporation (the "General Partner"), and each
of the Limited  Partners.  All  capitalized  terms used herein but not otherwise
defined shall have the meanings ascribed thereto in the "Partnership  Agreement"
(as defined below).

            WHEREAS,   Consolidated  Capital   Institutional   Properties/2,   a
California  limited  partnership  (the  "Partnership"),  exists pursuant to that
certain  Limited  Partnership  Agreement of Consolidated  Capital  Institutional
Properties/2,  dated as of April 12, 1983, as amended and restated by an Amended
and Restated Limited Partnership Agreement of Consolidated Capital Institutional
Properties/2,  dated June 24, 1983,  as further  amended by that  certain  First
Amendment to the Consolidated  Capital  Institutional  Properties/2  Amended and
Restated Limited  Partnership  Agreement,  dated as of July 15, 1985, as further
amended by that certain  Second  Amendment  to the Amended and Restated  Limited
Partnership Agreement of Consolidated Capital Institutional Properties/2,  dated
as of October 23, 1990 and as further amended by that certain Third Amendment to
the Amended and Restated Limited Partnership  Agreement of Consolidated  Capital
Agreement  of  Consolidated  Capital  Institutional  Properties/2,  dated  as of
October 17, 2000 (as so amended, the "Partnership Agreement"); and

            WHEREAS,  the General Partner has obtained consents of the requisite
percentage-in-interest  of the Limited Partners (i.e.,  Limited Partners holding
greater  than  fifty  percent  (50%)  of  the  Units)  necessary  to  amend  the
Partnership Agreement as provided in this Amendment.

            NOW, THEREFORE,  in consideration of the premises,  the agreement of
the parties herein  contained,  and other good and valuable  consideration,  the
receipt and  sufficiency  of which is hereby  acknowledged  and  confessed,  the
parties hereby agree as follows:

     1. Definitions. Section 1.04 of the Partnership Agreement is hereby amended
to add the following definitions and current subsections 1.04(a) through (v) are
hereby renumbered accordingly:

            "(a) 'Adjusted  Capital Account Deficit' shall mean, with respect to
any Partner,  the deficit balance,  if any, in such Partner's Capital Account as
of the  end  of the  relevant  Partnership  Year,  after  giving  effect  to the
following adjustments:

                  (i) Credit to such  Capital  Account  any  amounts  which such
Partner is obligated to restore or is deemed to be obligated to restore pursuant
to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5); and

                  (ii) Debit to such  Capital  Account  the items  described  in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)."

          "(g)  'Capital  Account'  shall have the meaning  specified in Section
          3.05."

          "(i) 'Code' shall mean the Internal Revenue Code of 1986, as amended."

          "(s)  'Nonrecourse  Deductions'  shall have the  meaning  set forth in
          Treasury Regulations Sections 1.704-2(b)(1) and 1.704-2(c)."

          "(t)  'Nonrecourse  Liability'  shall  have the  meaning  set forth in
          Treasury   Regulations   Section   1.704-2(b)(3)   of   the   Treasury
          Regulations."

          "(v)  'Partners'  shall  mean the  General  Partners  and the  Limited
          Partners."

          "(w)  'Partner  Nonrecourse  Debt' shall have the meaning set forth in
          Treasury Regulations Section 1.704-2(b)(4)."

          "(x)  'Partner  Nonrecourse  Debt Minimum  Gain' shall mean an amount,
          with  respect  to  each  Partner   Nonrecourse   Debt,  equal  to  the
          Partnership Minimum Gain that would result if such Partner Nonrecourse
          Debt were treated as a Nonrecourse Liability, determined in accordance
          with Treasury Regulations Section 1.704-2(i)(3)."

          "(y) 'Partner Nonrecourse Deductions' shall have the meaning set forth
          in Treasury Regulations Section 1.704-2(i)."

          "(aa)  'Partnership  Minimum Gain' shall have the meaning set forth in
          Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1)."

          "(bb)   'Partnership   Year'  shall  mean  the  taxable  year  of  the
          Partnership, which shall be the fiscal year ending December 31."

          "(gg) 'Treasury  Regulations'  shall mean the income tax  regulations,
          including temporary regulations, as may be amended hereafter from time
          to time (including  corresponding  provisions of succeeding income tax
          regulations), promulgated under the Code."

     2. Net Profits  and Net  Losses.  The  definition  of "Net  Profits and Net
Losses"  contained  in Section  1.04(o) of the  Partnership  Agreement is hereby
amended to read as follows:

          "(o) 'Net  Profits and Net Losses'  shall  mean,  with  respect to any
          period,  the  taxable  income  or loss,  as the  case  may be,  of the
          Partnership  for such period,  determined in  accordance  with Section
          703(a) of the Code (for this purpose, all items of income, gain, loss,
          deduction  or credit  required  to be  separately  stated  pursuant to
          Section  703(a)(1) of the Code shall be included in taxable  income or
          loss); provided, however, that: (i) any income of the Partnership that
          is exempt  from  federal  income  tax,  and not  otherwise  taken into
          account  in  computing  Net  Profits or Net  Losses  pursuant  to this
          definition  shall  be  added  to such  income  or  loss,  and (ii) any
          expenditures  of  the   Partnership   during  such  period  which  are
          described,    or   treated   under   Treasury    Regulations   Section
          1.704-1(b)(2)(iv)(i) as described, in Section 705(a)(2)(B) of the Code
          and not  otherwise  taken into account in computing Net Profits or Net
          Losses  shall  be  subtracted   from  such  taxable  income  or  loss.
          Notwithstanding anything to the contrary contained in this definition,
          income,  gain or loss resulting from the disposition of,  distribution
          to a Partner of, or depreciation,  amortization or other cost recovery
          deductions with respect to, any Partnership asset shall be computed by
          reference to the book value of the asset  disposed of,  distributed or
          depreciated,  amortized or otherwise  recovered,  notwithstanding that
          the adjusted tax basis of such asset differs from its book value.

     3. Surplus Funds.  The definition of "Surplus  Funds"  contained in Section
1.04(u) of the Partnership Agreement is hereby amended to read as follows:

          "(u)  'Surplus  Funds' shall mean the  Partnership's  share of the net
          cash funds or proceeds resulting from the Partnership's receipt of (a)
          principal and additional  interest from the Participating  Note issued
          by the  Borrower  or  (b)  any  funds  from  the  sale,  financing  or
          refinancing of any of the Partnership's properties,  and in each case,
          (i) after deduction of all expenses  incurred in connection  therewith
          and (ii) less such amounts for working capital reserves as the General
          Partner deems reasonably necessary for future Partnership operations."

     4. Purpose of Partnership and Investment Objectives. The first paragraph of
Section 1.05 of the Partnership Agreement is hereby amended to read as follows:

            "Purpose of  Partnership  and Investment  Objectives.  The principal
            purpose  of the  Partnership  is to lend  funds  in  return  for the
            Participating  Note  secured  by deeds  of trust on real  properties
            (including   apartment  buildings,   shopping  centers,   industrial
            projects,  office  buildings and other similar  properties) as shall
            from time to time be acquired by the  Borrower or such other  entity
            or entities of which the general partner or managing general partner
            is the Borrower. The Participating Notes offer the potential for (i)
            preserving and protecting the Limited  Partners'  original  Invested
            Capital;  (ii)  providing  quarterly   distributions  from  interest
            received  from the Borrower or other  sources;  and (iii)  providing
            special payments to the extent of additional  interest received from
            such  Participating  Note;  and to  engage  in any and  all  general
            business  activities  related to and  incidental to those  purposes,
            including,   without   limitation,   the   acquisition,   ownership,
            improvement, management, operation, leasing, financing, refinancing,
            sale or exchange of any real or personal  property  obtained  (x) in
            connection with the exercise of any remedy available to it under the
            Participating  Note  or  the  Master  Loan  Agreement  or  (y)  in a
            transaction (a "1031  Transaction")  that is intended to a like-kind
            exchange under Section 1031 of the Internal Revenue Code of 1986, as
            amended,  or any successor statute,  at law or in equity;  provided,
            however,  that  the  Partnership  shall  not own or  lease  property
            jointly or in  partnership  with others but it may transfer any such
            property to a single-purpose wholly-owned subsidiary."

            5.    Powers and Duties of the General Partner.

            (a) The fourth  sentence of the first  paragraph  of Section 2.01 of
the Partnership Agreement is hereby amended to read as follows:

                  "The General Partner shall have the right, power and authority
            granted to General Partner hereunder or by law, or both, to obligate
            and bind  the  Partnership  and,  on  behalf  and in the name of the
            Partnership,  to take  such  action  as the  General  Partner  deems
            necessary  or  advisable,  including,  without  limitation:  making,
            executing and delivering loan and other agreements,  such as leases,
            assignments   and  transfers  and  agreements  to  purchase,   sell,
            exchange,  lease or otherwise  deal with real or personal  property,
            escrow instructions, advances under the Participating Note, pledges,
            deeds of trust, mortgages and other security agreements,  promissory
            notes,  checks,  drafts and other  negotiable  instruments,  and all
            other  documents  and  agreements  which the General  Partner  deems
            reasonable  or  necessary  in   connection   with  the  lending  and
            investment  of the  Partnership's  net proceeds  resulting  from the
            Capital Contributions received;  managing such assets and borrowings
            against the assets of the Partnership, including notes and contracts
            receivables  from  the  sale  of the  Partnership  assets;  and  the
            acquisition, ownership, improvement, management, operation, leasing,
            financing,  refinancing,  sale or  exchange  of any real or personal
            property   (including   the   transfer   of  such   property   to  a
            single-purpose  wholly-owned subsidiary of the Partnership) obtained
            (i) in  connection  with the exercise of any remedy  available to it
            under the Participating Note or the Master Loan Agreement or (ii) in
            a 1031 Transaction, at law or in equity."

            (b) The penultimate sentence of the second paragraph of Section 2.01
of the Partnership Agreement is amended to read as follows:

                  "The  Partnership  shall not be  permitted  to  purchase  real
            property,  directly or indirectly,  but it may acquire real property
            upon  exercising  any remedy  under the  Participating  Note and the
            Master Note Loan Agreement or in a 1031 Transaction."

     6. Capital  Accounts.  Article III of the  Partnership  Agreement is hereby
amended to add Section 3.05 and the current  Section  3.05 is hereby  renumbered
Section 3.06 and the Sections of Article III  thereafter  are hereby  renumbered
accordingly:

               "3.05 Capital  Accounts.  A capital account  ("Capital  Account")
               shall be established  and maintained on the  Partnership's  books
               with  respect  to  each  Partner,  in  accordance  with  Treasury
               Regulations Section 1.704-1(b)."

     7. Special Allocations.  Article III of the Partnership Agreement is hereby
amended to add  Section  3.09 and the  Sections of Article  III  thereafter  are
hereby renumbered accordingly.

               "3.09   Special   Allocations.   Notwithstanding   the  foregoing
               provisions of this Article III, the following special allocations
               ("Special Allocations") shall be made in the following order:

            (a)  Minimum  Gain  Chargeback.  Except  as  otherwise  provided  in
Treasury  Regulations  Section  1.704-2(f),  if  there  is  a  net  decrease  in
Partnership  Minimum Gain during a Partnership  Year, then each Partner shall be
allocated items of Partnership  income and gain for such  Partnership Year (and,
if necessary,  for subsequent  years) in an amount equal to such Partner's share
of the net decrease in Partnership  Minimum Gain,  determined in accordance with
Treasury Regulations Section 1.704-2(g)(2). Allocations pursuant to the previous
sentence  shall be made in proportion to the respective  amounts  required to be
allocated to each Partner pursuant  thereto.  The items to be so allocated shall
be determined in accordance  with Treasury  Regulations  Section  1.704-2.  This
Section  3.09(a)  is  intended  to  comply  with  the  minimum  gain  chargeback
requirement of Treasury  Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.

            (b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Treasury  Regulations Section 1.704-2(i),  if there is a net decrease in Partner
Nonrecourse  Debt Minimum Gain  attributable to Partner  Nonrecourse Debt during
any  Partnership  Year,  each  Partner  shall be  specially  allocated  items of
Partnership  income and gain for such Partnership  Year (and, if necessary,  for
subsequent  Partnership Years) in an amount equal to such Partner's share of the
net decrease in Partner Nonrecourse Debt Minimum Gain,  determined in accordance
with Treasury  Regulations Section  1.704-2(i)(4).  Allocations  pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant  thereto.  The items to be so allocated
shall  be   determined  in  accordance   with  Treasury   Regulations   Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 3.09(b) is intended to comply with
the minimum gain chargeback  requirements in Treasury Regulations 1.704-2(i) and
shall be interpreted consistently therewith.

            (c)  Qualified  Income  Offset.   In  the  event  that  any  Partner
unexpectedly receives any adjustments, allocations or distributions described in
Treasury Regulations Sections  1.704-1(b)(2)(ii)(d)(4),  (5) or (6) with respect
to such Partner's Capital Account, items of Partnership income and gain shall be
specially  allocated to each such Partner in an amount and manner  sufficient to
eliminate,  to the extent  required by the  Treasury  Regulations,  the Adjusted
Capital  Account  Deficit  of such  member as  quickly  as  possible;  provided,
however,  that an allocation pursuant to this Section 3.09(c) shall be made only
if and to the extent that such Partner  would have an Adjusted  Capital  Account
Deficit after all other  allocations  provided for herein have been  tentatively
made as if this Section 3.09(c) were not in this Agreement.

               (d) Nonrecourse  Deductions.  Any Nonrecourse  Deductions for any
               Partnership Year shall be specially allocated ninety-nine percent
               (99%) to the Limited Partners and one percent (1%) to the General
               Partners.

               (e)  Partner  Nonrecourse  Deductions.  Any  Partner  Nonrecourse
               Deductions  for any  Partnership  Year shall be  allocated to the
               Partner who bears the  economic  risk of loss with respect to the
               Partner  Nonrecourse  Debt  to  which  such  Partner  Nonrecourse
               Deductions   are   attributable   in  accordance   with  Treasury
               Regulations Section 1.704-2(i).

               (f) Limitations on Loss Allocation. No allocation of Net Loss (or
               items  thereof)  shall be made to any  Partner to the extent that
               such  allocation  would  create or increase  an Adjusted  Capital
               Account Deficit with respect to such Partner.

               (g)  Curative  Allocation.  The  allocations  set  forth  in this
               Section  3.09 (the  "Regulatory  Allocations")  are  intended  to
               comply  with  certain  regulatory  requirements,   including  the
               requirements  of Treasury  Regulations  Sections  1.704-1(b)  and
               1.704-2.  Notwithstanding  the provisions of Section  3.09(a) and
               (b)  hereof,  the  Regulatory  Allocations  shall be  taken  into
               account  in  allocating  other  items of income,  gain,  loss and
               deduction  among the  Partners  so that,  to the extent  possible
               without violating the requirements  giving rise to the Regulatory
               Allocations,  the net amount of such  allocations  of other items
               and Regulatory  Allocations to each Partner shall be equal to the
               net amount that would have been allocated to each such Partner if
               the Regulatory Allocations had not occurred."

     8. Distributions of Distributable Cash from Operations.  Section 3.07(c) of
the Partnership  Agreement is hereby renumbered as new Section 3.10 and retitled
as set forth below. The Sections of Article III thereafter are hereby renumbered
accordingly.

               "3.10   Distributions  of  Distributable  cash  from  Operations.
               Distributable Cash From Operations to the extent deemed available
               by the General  Partners for  distribution,  shall be distributed
               quarterly,  as follows:  ninety-nine percent (99%) to the Limited
               Partners and one percent (1%) to the General Partners;  provided,
               however, that the General Partners, in the exercise of reasonable
               business judgment, may determine to retain in the Partnership all
               or any part of such amount to meet the working  capital  needs of
               the   Partnership.    Distributions,   if   any,   which   exceed
               Distributable Cash From Operations shall be allocated one hundred
               percent (100%) to the Limited Partners.  Distributable  Cash From
               Operations and Distributions which are distributed to the Limited
               Partners   may,   pursuant  to  generally   accepted   accounting
               principles  or on a cash  basis,  be  deemed  to be a  return  of
               capital to the extent they exceed the Partnership's net income or
               cash  flow,   respectively.   To  the  extent  original   Capital
               Contributions  (including  Partnership  working capital reserves)
               are used for Distributions of Distributable  Cash From Operations
               or Distributions it would reduce the amount of capital  available
               for  loans  to  the  Borrower  and  the  amount   available   for
               Partnership  working  capital  reserves and would be considered a
               return of original Capital Contributions but would not reduce the
               Limited Partners' Invested Capital."

     9. Liquidation Proceeds.  Section 9.02(c) of the Partnership Agreement will
be amended to read as follows:

      "(c) The proceeds of such liquidation  shall be applied and distributed to
      the Partners in  proportion  to and to the extent of positive  balances in
      their respective Capital Accounts."

     10. Miscellaneous.

a.   Effect of Amendment. In the event of any inconsistency between the terms of
     the  Partnership  Agreement and the terms of this  Amendment,  the terms of
     this  Amendment  shall  prevail.  In the event  any  conflict  or  apparent
     conflict  between any of the  provisions  of the  Partnership  Agreement as
     amended by this Amendment,  such conflicting provisions shall be reconciled
     and construed to give effect to the terms and intent of this Amendment.

b.   Ratification.   Except  as  otherwise   expressly   modified  hereby,   the
     Partnership Agreement shall remain in full force and effect, and all of the
     terms and provisions of the Partnership Agreement,  as herein modified, are
     hereby ratified and reaffirmed.  Except as amended hereby,  the Partnership
     Agreement shall continue, unmodified, and in full force and effect.

c.   Counterparts. This Amendment may be executed in as many counterparts as may
     be deemed necessary and convenient,  and by the different parties hereto on
     separate counterparts,  each of which, when so executed, shall be deemed an
     original,  but all  such  counterparts  shall  constitute  one and the same
     instrument.

d.   Governing  Law.  This  Amendment  shall be  governed by and  construed  and
     enforced in accordance  with the laws of the State of  California,  without
     regard to its principles of conflicts of law.

<PAGE>

            IN WITNESS  WHEREOF,  the parties have executed this Amendment as of
the date first set forth above.

                                    THE GENERAL PARTNER:

                                    CONCAP EQUITIES, INC.,
                                    a Delaware corporation


                                    By:
                                          Patrick J. Foye
                                          Executive Vice President

                                    THE LIMITED PARTNERS:

                                    AIMCO PROPERTIES, L.P.
                                    a Delaware limited partnership

                                    By:   AIMCO-GP, INC.
                                          its General Partner

                                    By:
                                          Patrick J. Foye
                                          Executive Vice President

                                    COOPER RIVER PROPERTIES, L.L.C.
                                    a Delaware limited liability company


                                    By:
                                           Patrick J. Foye
                                          Executive Vice President

                                    AIMCO IPLP, L.P.
                                    a Delaware limited partnership

                                By: AIMCO/IPT, INC.
                                    its General Partner

                                    By:
                                          Patrick J. Foye
                                          Executive Vice President

                                    REEDY RIVER PROPERTIES, L.L.C.
                                    a Delaware limited liability company

                                    By:
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:
                                          Patrick J. Foye
                                          Executive Vice President of ConCap
                                          Equities, Inc., agent and attorney-in
                                          -fact for each of the remaining
                                          Limited Partners of the Partnership