UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

_X_       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

          For the fiscal year ended December 31, 1997

                                       OR

___       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

         For the transition period from _________________ to ___________________


         Commission file number 0-17660

                                 METRIC PARTNERS

                          GROWTH SUITE INVESTORS, L.P.,
                        a California Limited Partnership
             (Exact name of Registrant as specified in its charter)

                   CALIFORNIA                            94-3050708
         ----------------------------------   ----------------------------------
       (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)              Identification No.)

               1 California Street
            San Francisco, California                     94111-5415
         ---------------------------------    ----------------------------------
      (Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code: (415) 678-2000
                                                    (800) 347-6707 in all states

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
                                                            Assignee Units

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

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

      No market for the Limited Partnership  Assignee Units exists and therefore
a market value for such Units cannot be determined.



<PAGE>



                  METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                        a California Limited Partnership

                                     PART I

Item 1.    Business.

Metric Partners Growth Suite Investors,  L.P., a California Limited  Partnership
(the "Partnership"),  was organized in 1984 under the California Uniform Limited
Partnership  Act. On April 1, 1997,  Metric  Holdings,  Inc.  and Metric  Realty
Corp.,  the  partners of the  Managing  General  Partner,  Metric  Realty,  were
involved in certain corporate transactions.  Pursuant to these transactions, (i)
Metric Holdings,  Inc. was merged into a newly-formed  corporation  known as SSR
Realty  Advisors,  Inc.  ("SSR  Realty"),  which became the managing  partner of
Metric  Realty,  and (ii) Metric  Realty Corp.  was merged into Metric  Property
Management,  Inc.,  a  subsidiary  of SSR Realty.  Accordingly,  the partners of
Metric  Realty are now SSR Realty and Metric  Property  Management,  Inc.  After
consummation of these  transactions,  both partners of Metric Realty continue to
be wholly-owned  subsidiaries of Metropolitan  Life Insurance  Company,  as were
both  partners  prior to the  occurrence  of such  transactions.  The  associate
general  partner of the  Partnership  is GHI  Associates  II, L.P., a California
Limited  Partnership.  The general partner of GHI Associates II is Metric Realty
and the limited partner is Prudential-Bache Properties, Inc.

The Partnership's Registration Statement filed pursuant to the Securities Act of
1933 (No.  33-8610)  was  declared  effective  by the  Securities  and  Exchange
Commission on April 14, 1988. The Partnership  marketed its securities  pursuant
to its  Prospectus  dated  April  14,  1988  which was  thereafter  supplemented
(hereinafter  the  "Prospectus").  This Prospectus was filed with the Securities
and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933.

The principal  business of the  Partnership is to acquire,  hold for investment,
manage and ultimately  sell  all-suite,  extended stay hotels which are operated
under franchise licenses from Residence Inn by Marriott, Inc. The Partnership is
a "closed" limited partnership real estate syndicate.  For a further description
of the  Partnership's  business,  see the sections  entitled  "Risk Factors" and
"Investment Objectives and Policies" in the Prospectus.

Beginning  in  April  1988,  the  Partnership  offered  $60,000,000  in  Limited
Partnership  Assignee Units. The offering was closed on June 30, 1989 with total
funding of  $59,932,000.  The net proceeds of the offering were used to purchase
ten hotel properties,  which are described in Item 2. The acquisition activities
of the  Partnership  were  completed on March 16,  1990,  with the purchase of a
final hotel property,  the Residence Inn - Altamonte  Springs.  Since that time,
the principal  activity of the Partnership  has been managing its portfolio.  As
the Partnership's  long-term goal is to ultimately liquidate the portfolio,  the
markets  where the hotels are  located  are  monitored  on an ongoing  basis for
potential sales opportunities.  The Partnership entered into a purchase and sale
agreement for the Residence  Inn-Atlanta  (Perimeter  West) with an unaffiliated
buyer and sold the property on October 3, 1995. In 1997 the Partnership marketed
eight of the nine remaining hotels for sale, and on December 30, 1997 the hotels
were sold to an unaffiliated buyer.

Both the income and expenses of operating the properties  which the  Partnership
owns  are  subject  to  factors  outside  the  Partnership's  control,  such  as
oversupply  of similar  properties  resulting  from  overbuilding,  increases in
unemployment or population  shifts, or changes in patterns of needs of users. In
addition,  there are risks  inherent  in owning and  operating  hotels and other
lodging  facilities  because such  properties are management and labor intensive
and  especially  susceptible  to the  impact of  economic  and other  conditions
outside the control of the Partnership.

Expenses,  such as local real estate taxes and management expenses,  are subject
to change and cannot  always be reflected in room rate  increases  due to market
conditions.  The  profitability and marketability of developed real property may
be adversely affected by changes in general and local economic conditions and in
prevailing  interest  rates,  and  favorable  changes in such  factors  will not
necessarily  enhance the  profitability or marketability of such property.  Even
under the most  favorable  market  conditions,  there is no  guarantee  that the
remaining  property owned by the  Partnership can be sold or, if sold, that such
sale can be made upon favorable terms.

There have been, and it is possible there may be other, federal, state and local
legislation  and  regulations   enacted   relating  to  the  protection  of  the
environment.  The managing  general partner is unable to predict the extent,  if
any, to which such new legislation or regulations  might occur and the degree to
which such existing or new legislation or regulations might adversely affect the
remaining property owned by the Partnership.

                                        1

<PAGE>



Environmental  site assessments were performed for each of the properties at the
time of property acquisition.  No material adverse  environmental  conditions or
liabilities  were  identified at that time, nor were any  identified  during due
diligence conducted in conjunction with the sale of the Partnership's hotels. In
no case has the Partnership received notice that it is a potentially responsible
party with respect to an environmental clean-up site.

The Partnership and the hotel management company maintain property and liability
insurance on the Partnership's remaining property. The Partnership believes such
coverage to be adequate.

The Partnership is subject to the general competitive  conditions of the lodging
industry.  In addition,  the  Partnership's  property  competes in an area which
contains numerous other properties which may be considered competitive.

Item 2.    Properties.

A description of the hotel properties which the Partnership owns or has owned is
as follows:


Name and Location                         Rooms  Date of Purchase  Date of Sale
-----------------                         -----  ----------------  ------------
Residence Inn-Ontario                      200         04/88          12/97
 2025 East D Street
 Ontario, California

Residence Inn-Fort Wayne                    80         06/88          12/97
 4919 Lima Road
 Fort Wayne, Indiana

Residence Inn-Columbus East                 80         06/88          12/97
 2084 South Hamilton Road
 Columbus, Ohio

Residence Inn-Indianapolis                  88         06/88          12/97
 3553 Founders Road
 Indianapolis, Indiana

Residence Inn-Lexington                     80         06/88          12/97
 1080 Newtown Pike
 Lexington, Kentucky

Residence Inn-Louisville                    96         06/88          12/97
 120 North Hurtsbourne Lane
 Louisville, Kentucky

Residence Inn-Winston-Salem                 88         06/88          12/97
 7835 North Point Boulevard
 Winston-Salem, North Carolina

Residence Inn-Nashville (Airport)          168         05/89          N/A
  2300 Elm Hill Pike
  Nashville, Tennessee

Residence Inn-Atlanta (Perimeter West)     128         10/89          10/95
  6096 Barfield Road
 Atlanta, Georgia

Residence Inn-Altamonte Springs            128         03/90          12/97
  270 Douglas Avenue
 Altamonte Springs, Florida

See  the  Financial   Statements  in  Item  8  for  information   regarding  any
encumbrances to which the properties of the Partnership are subject.

                                        2

<PAGE>


<TABLE>
Occupancy  and room rates for the years ended  December 31, 1997,  1996 and 1995 are as follows:

<CAPTION>
                                                               Average                            Average
                                                           Occupancy Rate (%)               Daily Room Rate ($)
                                                       --------------------------       -----------------------

                                                         1997     1996     1995            1997    1996     1995
                                                         ----     ----     ----            ----    ----     ----
<S>                                                        <C>      <C>     <C>           <C>      <C>     <C>
HOTELS:
Residence Inn-Ontario(2)........................           71       74      72            80.20    69.60   67.84
Residence Inn-Columbus East(2)..................           88       87      89            74.22    74.54   68.98
Residence Inn-Fort Wayne(2).....................           85       88      93            66.25    67.45   62.43
Residence Inn-Indianapolis(2)...........                   76       82      80            79.25    76.06   75.69
Residence Inn-Lexington(2)..............                   89       91      84            77.49    71.92   71.90
Residence Inn-Louisville(2).............                   90       86      85            91.95    86.31   79.92
Residence Inn-Winston-Salem(2)........                     85       84      85            79.36    75.95   71.94
Residence Inn-Nashville (Airport).......                   82       76      77            85.71    78.74   77.43
Residence Inn-Atlanta (Perimeter West) (1)......          ---      ---      81              ---      ---   87.82
Residence Inn-Altamonte Springs(2)..............           84       86      82            91.45    83.73   78.31

<FN>
(1) Sold in October 1995.
(2) Sold in December 1997.
</FN>
</TABLE>

                               Project Operations

Project  Operations  for the years ended  December 31,  1997,  1996 and 1995 are
shown on the  following  three  pages.  Project  Operations  tables  reflect the
components of income or loss (before gain on sale) for each  property  which the
Partnership  owns  (or  has  owned)  and  the  components  of  the  loss  at the
Partnership  level.  In  addition,  non-cash  items  such  as  depreciation  and
amortization  are shown.  The tables  also  reflect  principal  payments  on the
Partnership's notes payable and capital improvements.


                                        3

<PAGE>
<TABLE>

                                           METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
                                                 a California Limited Partnership

                                           Project Operations of the Residence Inns for
                                                 the Year Ended December 31, 1997
                                                               (000's)

                                  Columbus  Fort    Indian-  Lexing-   Louis-  Winston   Nash-           Altamonte Partner-
                         Ontario   (East)   Wayne   apolis     ton     ville    Salem    ville   Atlanta  Springs    ship    Total
                         -------  -------  -------  -------  -------  -------  -------  -------  ------- --------  -------  -------
<S>                      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
REVENUES:
Hotel operations:
  Rooms                  $ 4,170  $ 1,905  $ 1,636  $ 1,936  $ 2,018  $ 2,883  $ 2,162  $ 4,285  $     0  $ 3,592  $     0  $24,587
  Telephone and other        230       73       72       68      122      154      126      221        0      125        0    1,191
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Hotel operations           4,400    1,978    1,708    2,004    2,140    3,037    2,288    4,506        0    3,717        0   25,778
Interest and other             0        0        0        0        0        0        0        0        0        0      415      415
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Total revenues             4,400    1,978    1,708    2,004    2,140    3,037    2,288    4,506        0    3,717      415   26,193
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

EXPENSES:
Hotel operations:
  Rooms                      827      465      340      499      330      523      493    1,007        0      739        0    5,223
  Administrative             545      282      211      234      298      388      252      400        0      398        0    3,008
  Marketing                  474      198      168      208      200      303      252      489        0      385        0    2,677
  Energy                     249      113       94       94       79       91      118      234        0      190        0    1,262
  Repair and maintenance     235      126       77      134      126      133      139      299        0      184        0    1,453
  Management fees            150       59       67       60       97      140       99      150        0      183        0    1,005
  Property taxes              95       88       47       14       50       76       85      116        0      160        0      731
  Other                      174       56       52       50       66       85       76      311        0      105        0      975
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Hotel operations           2,749    1,387    1,056    1,293    1,246    1,739    1,514    3,006        0    2,344        0   16,334
Depreciation and other
  amortization               259      115      120      141      139      148      141      520        0      176        0    1,759
Interest                     855      273      289      335      326      376      330      861        0      682        0    4,327
General and administrative     0        0        0        0        0        0        0        0        0        0      959      959
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Total expenses             3,863    1,775    1,465    1,769    1,711    2,263    1,985    4,387        0    3,202      959   23,379
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

INCOME(LOSS)(1)              537      203      243      235      429      774      303      119        0      515     (544)   2,814

Plus non-cash items - net    259      119      125      147      144      154      146      520        0      348        0    1,962
Less notes payable
  principal payments           0       20       21       25       24       28       24      133        0       91        0      366
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Project operations           796      302      347      357      549      900      425      506        0      772     (544)   4,410

Capital Improvements         261      284      121      225      118      161      389      428        0      263        0    2,250
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------
Project operations after
  capital improvements   $   535  $    18  $   226  $   132  $   431  $   739  $    36  $    78  $     0  $   509  ($  544) $ 2,160
                         =======  =======  =======  =======  =======  =======  =======  =======  =======  =======  =======  =======

(1) Before gain on sale of property.
Occupancy                     71%      88%      85%      76%      89%      90%      85%      82%       0%      84%               82%
ADR                      $  80.20 $  74.22 $  66.25 $  79.25 $  77.49 $  91.95 $  79.36 $  85.71 $   0.00 $  91.45           $ 81.77


                                                                 4
</TABLE>

<PAGE>
<TABLE>

                                           METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
                                                 a California Limited Partnership

                                           Project Operations of the Residence Inns for
                                                 the Year Ended December 31, 1996
                                                               (000's)

                                  Columbus  Fort    Indian-  Lexing-   Louis-  Winston   Nash-           Altamonte Partner-
                         Ontario   (East)   Wayne   apolis     ton     ville    Salem    ville   Atlanta  Springs    ship    Total
                         -------  -------  -------  -------  -------  -------  -------  -------  ------- --------  -------  -------
<S>                      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
REVENUES:
Hotel operations:
  Rooms                  $ 3,843  $ 1,923  $ 1,753  $ 2,031  $ 1,947  $ 2,653  $ 2,082  $ 3,744  $     0  $ 3,412  $     0  $23,388
  Telephone and other        242       82       98       94      140      160      134      148        0      124        0    1,222
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Hotel operations           4,085    2,005    1,851    2,125    2,087    2,813    2,216    3,892        0    3,536        0   24,610
Interest and other             0        0        0        0        0        0        0        0        0        0      435      435
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Total revenues             4,085    2,005    1,851    2,125    2,087    2,813    2,216    3,892        0    3,536      435   25,045
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

EXPENSES:
Hotel operations:
  Rooms                      698      458      366      490      342      482      444      930        0      689        0    4,899
  Administrative             467      254      234      287      287      270      287      627        9      379        0    3,101
  Marketing                  468      198      197      259      248      310      252      451        0      379        0    2,762
  Energy                     245      109       95      114       88      100      115      239        0      176        0    1,281
  Repair and maintenance     202      115       88      123      131      121      146      320        0      165        0    1,411
  Management fees            123       74       89       64       76      115       94      117        0      164        0      916
  Property taxes              94       71       29       76       52       77       63      112        0      164        0      738
  Other                      146       60       51       48       70       83       66      316        0       77        0      917
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Hotel operations           2,443    1,339    1,149    1,461    1,294    1,558    1,467    3,112        9    2,193        0   16,025
Depreciation and other
  amortization               505      218      224      264      258      301      263      496        0      404        0    2,933
Interest                     855      277      291      337      328      379      333      872        0      678        0    4,350
General and administrative     0        0        0        0        0        0        0        0        0        0    1,216    1,216
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Total expenses             3,803    1,834    1,664    2,062    1,880    2,238    2,063    4,480        9    3,275    1,216   24,524
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

INCOME(LOSS)                 282      171      187       63      207      575      153     (588)      (9)     261     (781)     521

Plus non-cash items - net    505      222      228      269      263      307      268      496        0      564        0    3,122
Less notes payable
  principal payments           3       18       19       22       22       25       22      129        0      100        0      360
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Project operations           784      375      396      310      448      857      399     (221)      (9)     725     (781)   3,283

Capital Improvements          84      179      276      319      361      221      430      548        0      153        0    2,571
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------
Project operations after
  capital improvements   $   700  $   196  $   120  ($    9) $    87  $   636  ($   31) ($  769) ($    9) $   572  ($  781) $   712
                         =======  =======  =======  =======  =======  =======  =======  =======  =======  =======  =======  =======


Occupancy                     74%      87%      88%      82%      91%      86%      84%      76%       0%      86%               82%
ADR                       $ 69.60 $  74.54 $  67.45 $  76.06 $  71.92 $  86.31 $  75.95 $  78.74 $   0.00 $  83.73          $  76.13


                                                                 5
</TABLE>

<PAGE>
<TABLE>

                                           METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
                                                 a California Limited Partnership

                                           Project Operations of the Residence Inns for
                                                 the Year Ended December 31, 1995
                                                               (000's)

                                  Columbus  Fort    Indian-  Lexing-   Louis-  Winston   Nash-           Altamonte Partner-
                         Ontario   (East)   Wayne   apolis     ton     ville    Salem    ville   Atlanta  Springs    ship    Total
                         -------  -------  -------  -------  -------  -------  -------  -------  ------- --------  -------  -------
<S>                      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
REVENUES:
Hotel operations:
  Rooms                  $ 3,603  $ 1,783  $ 1,693  $ 1,994  $ 1,751  $ 2,363  $ 1,956  $ 3,654  $ 2,496  $ 2,982  $     0  $24,275
  Telephone and other        244       66       94       99      135      157      111      173      153      142        0    1,374
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Hotel operations           3,847    1,849    1,787    2,093    1,886    2,520    2,067    3,827    2,649    3,124        0   25,649
Interest and other            53        0        0        0        0        0        0        7       54        0      344      458
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Total revenues             3,900    1,849    1,787    2,093    1,886    2,520    2,067    3,834    2,703    3,124      344   26,107
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

EXPENSES:
Hotel operations:
  Rooms                      672      396      331      444      380      416      391      877      493      767        0    5,167
  Administrative             385      298      196      292      236      264      280      415      533      325        0    3,224
  Marketing                  446      157      165      228      174      243      192      384      258      291        0    2,538
  Energy                     274      107       91       97       90       98      100      236      131      174        0    1,398
  Repair and maintenance     189      101       64      127      123      115      121      216      109      164        0    1,329
  Management fees            154      120      116      137      123      165      135      115      132      167        0    1,364
  Property taxes              78       89       80       79       51       80       66      105       82      167        0      877
  Other                      201       54       51       56       70       78       64      264       64       68        0      970
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Hotel operations           2,399    1,322    1,094    1,460    1,247    1,459    1,349    2,612    1,802    2,123        0   16,867
Depreciation and other
  amortization               496      206      204      253      245      286      248      597      349      626        0    3,510
Interest                     855      279      293      339      330      381      335      899      467      674        0    4,852
General and administrative     0        0        0        0        0        0        0        0        0        0      809      809
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Total expenses             3,750    1,807    1,591    2,052    1,822    2,126    1,932    4,108    2,618    3,423      809   26,038
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

INCOME(LOSS)(1)              150       42      196       41       64      394      135     (274)      85     (299)    (465)      69

Plus non-cash items - net    442      210      209      258      250      292      254      590      307      773        0    3,585
Less notes payable
  principal payments           5       17       17       20       20       23       20      100       28       83        0      333
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

Project operations           587      235      388      279      294      663      369      216      364      391     (465)   3,321

Capital Improvements         163      268      228      163      326      220       84      331      178      202        0    2,163
                         -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------  -------
Project operations after
  capital improvements   $   424  ($   33) $   160  $   116  ($   32) $   443  $   285  ($  115) $   186  $   189  ($  465) $ 1,158
                         =======  =======  =======  =======  =======  =======  =======  =======  =======  =======  =======  =======

(1) Before gain on sale of property.
Occupancy                     72%      89%      93%      80%      84%      85%      85%      77%      81%      82%               81%
ADR                      $  67.84 $  68.98 $  62.43 $  75.69 $  71.90 $  79.92 $  71.94 $  77.43 $  87.82 $  78.31          $  74.18
</TABLE>

                                                                 6

<PAGE>


Item 3.    Legal Proceedings.

There are no material  pending legal  proceedings to which the  Partnership is a
party or to which any of its assets are subject, except the following:

Metric Partners Growth Suite Investors,  L.P. vs. Kenneth E. Nelson,  The Nelson
Group, et al., San Francisco County Superior Court, Case No. 928065.

Nashville  Lodging Company vs. Metric Partners Growth Suite Investors,  L.P., et
al., Circuit Court, State of Wisconsin, Case No. 94CV001212.

Orlando  Residence,  Ltd.  (Plaintiff) vs.  Nashville  Lodging  Company,  Metric
Partners  Growth Suite  Investors,  L.P., et al.  (Defendants);  Metric Partners
Growth Suite  Investors,  L.P.  (Third Party  Plaintiff) vs. 2300 Elm Hill Pike,
Inc. et al.  (Third  Party  Defendant),  Tennessee  Chancery  Court for Davidson
County, Case No. 92-3086-III.


Orlando  Residence,  Ltd.  (Plaintiff)  vs.  2300 Elm Hill  Pike,  Inc.,  et al.
(Defendants/Third  Party Plaintiffs) vs. Metric Partners Growth Suite Investors,
L.P. (Third Party Defendant), Tennessee Chancery Court for Davidson County, Case
No. 94-1911-I.

Metric Partners Growth Suite Investors, L.P. vs. Nashville Lodging Co., 2300 Elm
Hill Pike, Inc., Orlando Residence,  Ltd., and LaSalle National Bank, as trustee
under that certain pooling and servicing agreement, dated July 11, 1995, for the
holders of the WHP Commercial Mortgage Pass Through Certificates,  Series 1995C1
and Robert Holland,  Trustee,  Chancery Court for Davidson County, in Nashville,
Tennessee, Case No. 96-1405-III.

Metric Partners Growth Suite Investors, L.P. vs. Joe Huddleston, Commissioner of
Revenue  for the State of  Tennessee,  Tennessee  Chancery  Court  for  Davidson
County, Case No. 94-1227-II. (This case was settled during the fourth quarter of
1997.)

Kenneth E.  Nelson  and  Nashville  Lodging  Co.,  vs.  Metric  Realty et.  al.,
Tennessee Chancery Court for Davidson County, Case No. 97-2189-III.

Metric  Realty,  et. al., vs.  Kenneth E. Nelson and Nashville  Lodging Co., San
Francisco  County  Superior Court,  Case No. 987134.  (This case was voluntarily
dismissed without prejudice by plaintiffs during the fourth quarter of 1997.)

For  information  regarding  these  lawsuits,  see  Management's  Discussion and
Analysis of Financial  Condition and Results of Operations and Item 8, Note 7 to
the Financial Statements.

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

No matter was submitted to a vote of security  holders during the period covered
by this report.

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.

The  Limited   Partnership   Assignee  Unit  holders  are  entitled  to  certain
distributions as provided in the Partnership  Agreement.  From inception through
January 29,  1998,  Assignee  Unit  holders  have  received  distributions  from
operations  and  sales  ranging  from  $608  -  $701  for  each  $1,000  limited
partnership assignee Unit, inclusive of $310 from sales proceeds.  No market for
Limited Partnership Assignee Units exists, nor is one expected to develop.

As  of  December  31,  1997,  the  approximate  number  of  holders  of  Limited
Partnership Assignee Units was as follows:

                                                                Number of
                Title of Class                               Record Holders*
                --------------                               ---------------

          Limited Partnership Assignee Units..................    4,646

-----
*Number of Investments

                                        7

<PAGE>



Item 6.    Selected Financial Data.
<TABLE>
The following  represents  selected  financial data for Metric  Partners  Growth
Suite Investors,  L.P., a California Limited  Partnership,  for each of the five
years  in the  period  ended  December  31,  1997.  The data  should  be read in
conjunction with the financial statements included elsewhere herein.
<CAPTION>
                                                                     For the Year Ended December 31,
                                                       ------------------------------------------------------------
                                                        1997(2)      1996        1995          1994          1993
                                                        -------      ----        ----          ----          ----
                                                                 (Amounts in thousands except per unit data)
<S>                                                    <C>         <C>         <C>           <C>           <C>
TOTAL REVENUES ...................................     $26,193     $25,045     $ 26,107      $ 25,008      $ 24,190
                                                       =======     =======     ========      ========      ========

NET INCOME (LOSS):
   Income (Loss) Before Gain on Sale of Properties     $ 2,814     $   521     $     69      $   (947)     $ (2,138)
   Gain on Sale of Properties ....................       7,505        --          3,275          --            --
                                                       -------     -------     --------      --------      --------
NET INCOME (LOSS) ................................     $10,319     $   521     $  3,344      $   (947)     $ (2,138)
                                                       =======     =======     ========      ========      ========


NET INCOME (LOSS) PER LIMITED
 PARTNERSHIP ASSIGNEE UNIT (1):
   Income (Loss) Before Gain on Sale of Properties     $    47     $     8     $     (1)     $    (19)     $    (39)
   Gain on Sale of Properties ....................         120        --             53          --            --
                                                       -------     -------     --------      --------      --------
NET INCOME (LOSS) PER LIMITED
 PARTNERSHIP ASSIGNEE UNIT .......................     $   167     $     8     $     52      $    (19)     $    (39)
                                                       =======     =======     ========      ========      ========


TOTAL ASSETS .....................................     $60,636     $67,436     $ 71,071      $ 74,936      $ 77,899
                                                       =======     =======     ========      ========      ========

LONG TERM OBLIGATIONS:
   Notes Payable .................................     $26,983     $42,518     $ 42,669      $ 48,800      $ 49,003
                                                       =======     =======     ========      ========      ========

CASH DISTRIBUTIONS PER LIMITED
 PARTNERSHIP ASSIGNEE UNIT .......................     $    40     $    68     $     32      $     30      $     30
                                                       =======     =======     ========      ========      ========
<FN>
-----
(1)        $1,000 original  contribution per limited partnership  assignee Unit,
           based on limited  partnership  assignee units outstanding  during the
           period, after allocation to the General Partners.
(2)        See discussion in Item 7 regarding future results of operations.
</FN>
</TABLE>

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

Introduction

This Item should be read in  conjunction  with  Financial  Statements  contained
elsewhere in this Report.

In anticipation of the year 2000, the Managing General Partner is implementing a
Year-2000 compliant  accounting software product to replace its existing system.
The new system will be fully  operational by early 1999.  All software  programs
currently  used by the  Managing  General  Partner  have  been  inventoried  and
programs  were  identified  which will  require  modification  to  correct  date
handling methodology.  Any necessary  modifications will be completed by the end
of 1998. The  Partnership's  Servicing and Transfer Agent,  Gemisys,  utilizes a
platform  programmed to correctly  interpret the change to the new century.  All
necessary changes will be undertaken at no cost to the Partnership.

The  Partnership  sold  eight of its nine  remaining  hotels in  December  1997.
Accordingly,  historical  financial  information will not be  representative  of
future results. Future results of operations will be dependant on the operations
of the Partnership's remaining hotel, the Residence Inn - Nashville, general and
administrative expenses and interest income, as well as the outcome of the legal
proceedings relating to this hotel.


                                        8

<PAGE>



Results of Operations

1997 Compared to 1996

Net income was  $10,319,000  in 1997 compared to net income of $521,000 in 1996.
The net income in 1997 is comprised of $2,814,000  income before gain on sale of
properties and $7,505,000 gain on sale of properties.  There was no gain on sale
of  properties in 1996.  Income  before gain on sale of properties  increased by
$2,293,000 in 1997 compared to 1996  primarily as a result of  depreciation  not
being  recorded after June 30, 1997 on the real estate assets held for sale (see
Note  1  to  the  financial  statements).   In  addition,   operations  improved
substantially at the Residence Inn - Nashville and the Partnership's general and
administrative expenses decreased.

Revenues from hotel operations  increased 5% for 1997 compared to 1996 due to an
overall  increase in average room rates and improved  occupancy at the Residence
Inn - Nashville.  Hotel operating  expenses increased by 2% for 1997 compared to
1996. The increase was primarily in room  operating  expenses as a result of the
increase in room  revenues.  Management  fees also  increased as a result of the
increase  in  revenues.  The  increases  in these two  categories  as well as an
increase in repair and maintenance  expenses were partially  offset by decreases
in  administrative,  marketing and energy costs. The decrease in  administrative
expenses was  primarily  due to a favorable  settlement  regarding  the disputed
sales and use taxes assessed by the State of Tennessee  against the Partnership.
As of December 31, 1996,  the  Partnership  had accrued  $205,000 for  potential
payment to the State of Tennessee,  $165,000 of which had been expensed in 1996.
In 1997 the Partnership proposed, and the State accepted, payment of $122,000 in
settlement.  Thus,  in 1997 a credit of $83,000 was recorded and that,  combined
with  the  $165,000   expense  booked  in  1996,   resulted  in  a  decrease  in
administrative expenses of $248,000 in 1997 compared to 1996.

Interest  income  decreased by $20,000 for 1997  compared to 1996 as a result of
lower  average  cash  balances  in 1997.  General  and  administrative  expenses
decreased substantially in 1997 compared to 1996 primarily due to a write-off of
a $194,000  receivable  in 1996 and the  recognition  in 1996 of a $74,000  cost
associated with the additional loan obligation on the Residence Inn - Nashville.

The  operations of the  properties and the markets in which they are located are
described below.

Residence  Inn -  Ontario:  Operations  were  positive  and  reflected  a slight
improvement  in  comparison  to the prior  year.  The  average  daily  room rate
increased $10.60 to $80.20.  Occupancy  declined by 3% to an average of 71%. The
local economy  continued to show signs of growth,  as reflected by the number of
new  construction  projects in the Ontario area.  Strong  competition,  however,
continued  throughout  the year from two existing  local  competitors as well as
from a recently opened Extended Stay America.

Residence  Inn - Columbus  East:  Operations  were  positive  for the year,  but
declined as compared to the prior year. Average occupancy remained favorable and
increased slightly to 88%, although the average daily room rate declined by $.32
to $74.22 as compared to 1996.  Occupancy  was strong at the property  from July
through  October  due in part to an  environmental  group that  occupied a large
block of rooms for this period. Economic growth appeared to slow somewhat in the
Columbus area during the year and the hotel market was competitive.

Residence Inn - Fort Wayne:  Operations were positive for the year, but declined
compared  to 1996  results.  Occupancy  was 85% as compared to 88% for the prior
year, and the average daily room rate decreased  $1.20 to $66.25.  The influx of
new  hotels  that came on line over the past year  impacted  the  market and the
operations  of the hotel.  Additionally,  an Extended  Stay America hotel opened
recently,  adding  101  rooms  to the  marketplace.  Companies  involved  in the
automotive industry comprised the largest share of business for the hotel during
the year.

Residence Inn - Indianapolis: Operations for the year were positive and improved
over 1996 despite an increasingly  competitive market. Occupancy declined to 76%
from 82% in the prior year;  however,  the average daily room rate  increased by
$3.19 to $79.25.  Hotel construction and expansion continued in the area despite
the forecasted decline in demand and the market remained extremely competitive.

Residence Inn - Lexington:  Operations for the year improved  significantly over
1996 results.  Occupancy  declined by 2% to 89; however,  the average daily room
rate increased $5.57 to $77.49 in comparison to the prior year.Market conditions
improved  toward  the end of  1997,  although  significant  new  competition  is
anticipated to impact the marketplace in the future.

                                        9

<PAGE>


Residence Inn - Louisville:  Operations for the year were positive and improved,
as compared to the prior year. Strong market  conditions in Louisville  resulted
in increases in both occupancy and room rates. Occupancy was 90% compared to 86%
in the prior year,  and the average room rate rose $5.64 to $91.95.  The economy
in the greater Louisville area remained  favorable,  due in part to its standing
as a mid-west  industrial  leader.  An aggressive  direct sales approach to both
current  and new  clients  was  utilized  throughout  the  year  to  counter-act
competition from several new hotels which opened in the area.

Residence  Inn -  Winston-Salem:  Operations  were  positive  for the year,  and
reflected  improvement as compared to the prior year. Occupancy averaged 85% for
1997, a slight  increase in comparison to the prior year. The average daily room
rate rose by $3.41 to $79.36  over the same  period.  The  Winston-Salem  market
appeared  to  stabilize  during the year,  although  competition  for  patronage
remained strong.

Residence  Inn - Altamonte  Springs:  Operations  were positive for the year and
improved in comparison  to the prior year.  The average daily room rate for 1997
was  $91.45,  an  increase  of $7.72 over the rate for the prior  year.  Leisure
travel and project assignment business were strong during the year,  providing a
stable patronage base for the hotel.

Residence Inn - Nashville:  Operations  were positive for the year and reflected
the greatest  improvement of the Partnership's  nine hotels in comparison to the
prior year.  Occupancy  increased 6% to 82% and the average daily room rate rose
$6.97 to $85.71,  in comparison to the prior year.  Market  conditions  improved
steadily over the year. During December,  typically the most difficult operating
month for hotels  due to the  holidays,  Residence  Inn-Nashville  averaged  67%
occupancy while competitors  averaged 50% - 60%. The leisure market continues to
play a strong  role in driving  both  occupancy  and room  rates;  however,  the
Opryland Theme Park will close this spring for a two-year renovation, which will
likely negatively impact the performance of the Partnership's hotel.

1996 Compared to 1995

Net income was $521,000 in 1996  compared to net income of  $3,344,000  in 1995.
The net income in 1995 was  comprised of $69,000  income  before gain on sale of
property and $3,275,000  gain on sale of property,  whereas there was no gain on
sale of property in 1996.  Income  before gain on sale of property  increased by
$452,000 in 1996  compared to 1995 despite the loss of income from the Residence
Inn - Atlanta.  Income before gain on sale of property increased at seven of the
nine remaining properties, although substantially reduced by an increase in loss
at the  Residence  Inn - Nashville  and an  increase in loss at the  Partnership
level.

Revenues from hotel operations decreased 4% for 1996 compared to 1995 due to the
sale of the Residence Inn - Atlanta in 1995. The remaining  nine  properties all
experienced  increases  in  revenue  totaling  7% as  average  daily  room rates
increased  or stayed even and  occupancy  increased  at five of the  properties.
Properties  experiencing  decreases in occupancy  had increases in room rates to
more than offset the decline in occupancy. Hotel operating expenses decreased 5%
primarily as a result of the sale of the Residence Inn - Atlanta in 1995.  Hotel
operating expenses,  exclusive of the effect of the sale of one hotel, increased
by 6% primarily due to significant  increases in  administrative  and repair and
maintenance  expenses at the Residence Inn - Nashville and in marketing costs at
all of the  hotels.  Administrative  expenses at the  Residence  Inn - Nashville
increased  due to the increase in accrual,  from $40,000 at December 31, 1995 to
$205,000 at December 31, 1996, for potential  payment to the State of Tennessee,
as a result of a sales and use tax audit covering the period 1989-1993.  Overall
management  fee  expense  decreased  compared  to 1995  due to the  restructured
agreements  with Marriott  Corporation,  which  provided for lower base fees and
introduced incentive fees on all the properties which are tied to the operations
of the  properties.  Furthermore,  the  agreements  provided  for an increase in
certain  marketing  fees  charged by Marriott  causing an increase in  marketing
costs for 1996 when  compared to 1995.  Interest and other  income  decreased by
$23,000  in 1996.  The  decrease  was the net  result of a $91,000  increase  in
interest income primarily due to higher cash balances, specifically the proceeds
from the sale of the  Residence  Inn -Atlanta and a $114,000  decrease in income
resulting from recognition in 1995 of deferred income relating to the terminated
management contracts for the Residence Inns - Ontario and Atlanta.  Depreciation
and amortization  decreased $577,000 in 1996 as compared to 1995 due to the sale
of one  hotel  in the  fourth  quarter  of 1995 as  well  as  fully  depreciated
furnishings at certain of the other hotels.  Interest expense decreased $502,000
in 1996  compared  to 1995  primarily  due to the  sale of the  Residence  Inn -


                                       10

<PAGE>



Atlanta.  General and  administrative  expenses  increased $407,000 in 1996 when
compared to 1995  primarily  due to the write-off of a $194,000  receivable  (as
discussed  below),  increases in legal costs associated with the Residence Inn -
Nashville and increases in  administrative  expenses.  In addition,  the $74,000
additional loan obligation,  assumed as a result of the Partnership becoming the
direct obligor on the first note on the Residence Inn - Nashville,  was recorded
as a Partnership  expense in 1996. See Note 4 to the Financial  Statements.  The
$194,000  receivable from a previous  management  company of the Residence Inn -
Ontario has been written  off. It was  previously  financially  supported by the
contemplated  sale to the Partnership by an affiliated entity of said management
company (the owner until August 1996 of the land  whereupon  the Residence Inn -
Nashville  is  located,  with  whom  the  Partnership  is  involved  in  various
litigations [see Note 7 to the Financial Statements, Legal Proceedings]) of such
land,  but  collection  is no longer  deemed  probable for  financial  statement
purposes only.

Partnership Liquidity and Capital Resources

Introduction

As presented  in the  Statements  of Cash Flows,  cash was provided by operating
activities.  Cash was provided by investing  activities  from sale of properties
and proceeds from cash  investments.  Cash was used by investing  activities for
purchases of cash investments and  improvements to properties.  Cash was used by
financing activities for note payable payments and distributions to partners.

The results of project operations before capital improvements for the year ended
December  31, 1997 are  determined  by net income or loss  adjusted for non-cash
items such as depreciation and amortization,  and reduced by principal  payments
made on the notes  payable  (see Item 2,  Properties).  The  project  operations
before capital  improvements is an indication of the operational  performance of
the property.  During 1997, all of the Partnership's  nine remaining  properties
generated   positive   project   operations   before   deductions   for  capital
improvements.  The  Partnership,  after taking into  account  results of project
operations  before  capital  improvements,  interest  income,  and  general  and
administrative  expenses, on an accrual basis, experienced positive results from
operations. Project operations should not be considered as an alternative to net
income or loss (as  presented in the financial  statements),  as an indicator of
the Partnership's operating performance,  or as an alternative to cash flow as a
measure of liquidity.  Project  operations  after capital  improvements  for any
given  year may not be  indicative  of the  property's  general  performance  as
capital improvements are likely to be made in large amounts when associated with
renovation programs.

The Partnership  considers cash investments to be those  investments  (primarily
commercial  paper) with an original  maturity  date of more than three months at
time of purchase.  The cash  investments  at December 31, 1997 are  described in
Note 1 to the Financial Statements.

The former management  company at the Residence  Inn-Ontario which is controlled
by Kenneth E.  Nelson  ("Nelson")  defaulted  on certain  obligations  under the
management  agreement.  As discussed in Note 7 to the financial  statements,  in
1991, the  Partnership  terminated the management  agreement and initiated legal
proceedings  against  the former  management  company.  The  management  company
withheld  $194,000 from property funds in unauthorized  management fees prior to
relinquishing  management  of  the  property.  The  $194,000  was  treated  as a
receivable  in the  Partnership's  financial  statements  until 1996 when it was
written off. See discussion in the Results of Operations  section. In March 1993
the  parties  verbally  agreed  to settle  the  lawsuit  (the "SF  Settlement");
however,  difficulties arose in consummating the settlement.  After a hearing in
May 1994,  the Court ruled in June that in the settlement  the  Partnership  had
agreed to purchase the land underlying the Residence  Inn-Nashville (the "Land")
from Nashville Lodging Company ("NLC"), an affiliate of Nelson, subject to a lis
pendens on the Land.

Following this ruling, the Partnership has attempted to negotiate and enter into
a settlement agreement and a land purchase agreement and related agreements (the
"Settlement  Documents")  among  itself and Nelson  and NLC and  another  Nelson
entity, 2300 Elm Hill Pike, Inc. ("2300").  To date, these parties have not been
able to reach agreement on all issues relating to the Settlement Documents.

As  discussed  in  Note  7 to  the  financial  statements,  in  May  1991  legal
proceedings  were  initiated  against  the  Partnership  and  others by  Orlando
Residence  Ltd.,  ("Orlando"),  holder of a promissory note issued by a previous
owner of the Residence  Inn-Nashville  (Airport) (the "Hotel").  Orlando claimed
the sale of the Hotel to the Partnership by NLC was intended to defraud,  hinder
and delay Orlando's recovery of the amount owed to it. The Partnership  obtained
a summary judgement dismissing the case against it on September 15, 1993.

                                       11

<PAGE>

In July 1994,  the Court in the case  filed by Orlando  ruled that the Hotel had
been  fraudulently  conveyed  to NLC by 2300 in 1986 and voided the  conveyance.
Judgements totaling more than $1,350,000 were subsequently entered by this Court
against Nelson,  NLC and 2300.  Based on this judgement,  Orlando  purchased the
Land at a judicial sale and became the landlord under the Lease.  This judgement
was reversed in December 1996 and NLC asked the Court to return ownership of the
Land to it. However, the Court has denied NLC's request.

In another  action in Nashville,  Tennessee,  2300 and NLC have alleged that the
Partnership  refused to purchase the Land as required by the SF  Settlement  and
demanded  indemnification  for all costs and losses of 2300 and NLC  relating to
Orlando's  claims.  In February  1996, the Court in this action granted a motion
filed by 2300 and NLC for partial summary judgement, ruling that the Partnership
had breached the SF  Settlement.  The action will continue to determine  damages
and other issues.  In February  1998, the Court  enjoined the  Partnership  from
conveying,  transferring, or otherwise disposing of its cash to any extent which
would leave less than $5 million  available for payment of any judgment  awarded
to 2300 and NLC. The Partnership does not believe it breached the SF Settlement.

See Note 7 to the financial  statements for more information about the foregoing
and other related proceedings.

It was  reported to  investors  in December  1996 that it was the  Partnership's
intention to proceed with the marketing for sale of the remaining  hotels in the
portfolio.  This  decision  was  reached  after  consideration  of many  factors
including the improvement in operations of the hotels, in combination with their
age and the increasing  competition in each of their respective markets, and the
recent  activity  of buyers  purchasing  hotels  similar  to those  owned by the
Partnership.  After  review of the 1996  year end  appraisals,  the  Partnership
interviewed  a number of real estate  brokerage  firms and selected  brokers who
began  marketing the hotels for sale.  The  Partnership  determined to forgo the
marketing of the Residence Inn - Nashville  pending  resolution of certain legal
proceedings.  The sale of eight of the  Partnership's  nine remaining hotels was
completed on December 30, 1997.

In January  1998,  the  Partnership  made two  distributions  to its general and
limited partners,  one totaling  $16,818,000,  representing a portion of the net
sales proceeds,  and another one totaling  $612,000  representing a distribution
from 1997 operations.  Additionally,  the Partnership anticipates making another
distribution to its partners in April 1998 totaling  $229,000 in order to comply
with certain states' tax withholding  requirements.  Taking these  distributions
into account and projecting 1998 operations,  the Partnership anticipates having
approximately  $12 million in average  cash  balance  for 1998.  The balance may
change depending upon the Partnership's decision with respect to the note on the
Residence  Inn - Nashville  (see below).  With  respect to the use of cash,  the
Partnership is under certain obligations and/or restrictions. In addition to the
$5  million  restriction  discussed  above  (and  in  Note  7 to  the  financial
statements),  the Partnership was required by the purchaser,  under the terms of
the sales  contract,  not to distribute $7.5 million of the sales proceeds for a
period of one year, which amount  represents the maximum  possible  liability of
the  Partnership  for any  breach  of the  sales  agreement.  There are no known
contingencies with respect to potential claims that could be brought against the
Partnership.  The $7.5  million is not  specifically  restricted  from any other
potential  use by the  Partnership,  including  the  payment of the  outstanding
balance due on the Residence Inn - Nashville loan.

The  balloon  mortgage  payment  for the  Residence  Inn -  Nashville,  totaling
approximately $8.5 million, is due on April 1, 1998 (see Note 4 to the financial
statements).  The  Partnership  has been unable to negotiate an extension of the
loan with the lender. If the Partnership  determines to pay the loan in full, it
would  have  to  seek  Court  permission  to use a  portion  of  the $5  million
restricted  by the Court (as noted  above) in order to pay off the  entire  loan
balance.  Additionally,  the  Partnership  is  involved  in a  number  of  legal
proceedings  relating  to the  Residence  Inn -  Nashville,  in one of which the
Partnership  has filed a motion for  permission  to interplead $2 million of the
balloon  mortgage  payment  with  respect to which  claims have been made by the
mortgage  lender and NLC and an order staying any  enforcement  of such lender's
security interest pending disposition of such claims.

In 1997, the Partnership spent $2,250,000 on capital improvements.  The majority
was spent on room,  meeting room and/or  gatehouse  renovations at the Residence
Inns  -  Columbus,  Fort  Wayne,  Indianapolis,  Winston-Salem,  Lexington,  and
Nashville.  Capital was spent on deck and stairway work and exterior painting at
the Residence Inns - Lexington and Nashville, doors and entryway improvements at
the  Residence Inn - Fort Wayne,  HVAC units at the Residence  Inns - Louisville
and Indianapolis,  siding replacements and painting of trim at the Residence Inn
- Altamonte  Springs,  and for lock upgrades at the  Residence  Inns - Columbus,
Indianapolis,  Lexington,  Louisville,  and  Winston-Salem.  Improvements to the
landscaping  and  grounds  were  made  at the  Residence  Inns -  Lexington  and
Nashville.  Voicemail  systems were  installed at the Residence Inns - Altamonte
Springs  and  Nashville.   In  1998,  the   Partnership   anticipates   spending
approximately $210,000 on capital improvements. These improvements are necessary
to enable the  remaining  property to remain  competitive  in the market and are
required under the franchise agreement.

                                       12

<PAGE>




During  the  second  and third  quarters  of 1995 the  Partnership  worked  with
Marriott in an effort to  restructure  contracts on certain  Partnership  hotels
under their  management.  An agreement was reached whereby  Marriott reduced the
base  management  fee,  and  incorporated  incentive  fees which are tied to the
operations of the properties.  The restructured  agreements also provided for an
increase  in  certain  marketing  fees  charged by  Marriott.  The length of the
contract  terms was  reduced.  In addition,  the  Partnership  was  permitted to
terminate the contract  after a five year term in connection  with a sale of the
hotels.  A termination fee was payable if the purchaser were not to continue the
Residence Inn by Marriott franchise.  In exchange,  the Partnership executed new
agreements  with Marriott for the  management  of the Residence  Inns located in
Altamonte Springs,  Nashville, and Ontario.  Effective January 1, 1996, Marriott
managed all nine of the Partnership's  remaining hotels.  Marriott  continues to
manage the Partnership's Residence Inn - Nashville.

In  accordance  with,  and as is  customary  in the  management  of hotels,  the
management  agreement  for the  remaining  hotel  provides for a  percentage  of
revenues to be placed in capital  replacement  funds.  The  capital  replacement
funds are used to fund on-going  capital  improvements  as well as room or other
major  renovation  programs.  The  capital  replacement  fund is being held in a
separate  account with  additions  generally  made monthly based on revenues and
expenditures  which are based on  approved  capital  expenditure  budgets by the
Partnership.  Unused funds are held in interest-bearing  accounts. To the extent
not available from the replacement fund, a capital improvement or renovation may
be funded from the Partnership's working capital reserve.

In 1996 and 1997 a number of  unsolicited  offers to purchase Units were made to
the  investors  in the  Partnership,  of which the  Partnership  was  aware.  As
required by applicable  securities laws, the Partnership  notified its investors
of its views  regarding  these  offers.  The  Partnership  took no position with
respect to the  offers  but rather  advised  the  holders  of  assignee  limited
partnership  Units  to  consult  their  personal  financial  advisors,   as  the
desirability  of any  particular  offer to any Unit holder could differ  greatly
depending upon such Unit holder's financial, tax, and other individual status.

Unit holders were also advised that the Partnership and its Transfer Agent would
take such action as the  Partnership  deemed  appropriate  to ensure that resale
transactions  did not result in termination of the Partnership for tax purposes,
cause the Partnership to be classified as a publicly traded partnership or cause
the  Partnership to be taxed as a corporation.  Unit holders were reminded that,
in order to protect its status as a partnership for federal income tax purposes,
secondary  market  activity in its Units would be limited to less than 5% of the
outstanding  Units per calendar  year,  and that,  for any of these  reasons the
Partnership may refuse to recognize a resale transaction.

In 1996,  trading  of  assignee  limited  partnership  Units of the  Partnership
reached 4.9% as of April 9. Subsequent to that date and through the remainder of
the calendar year, the Partnership  did not recognize  resale  transactions  for
1996, and its Transfer Agent returned all paperwork  regarding such transactions
to the  originators.  This action was taken by the General Partner in accordance
with its fiduciary  responsibility and with the advice of Counsel to protect the
Partnership's tax status as a limited Partnership.

At the  beginning of 1997 the  suspension  of resale  transactions  was removed;
however,  on February 26, 1997,  the  Partnership's  Transfer Agent informed the
General  Partner  that  trading  had again  reached  4.9%  (near the 5%  maximum
percentage),  at which time the General  Partner again  suspended  processing of
resale transactions. Unit holders were advised of that suspension, in accordance
with  Section 12.1 of the  Partnership  Agreement,  via a special  communication
dated February 27, 1997. All paperwork submitted from the time of the suspension
through the remainder of the calendar year was returned to the originator.

At the  beginning of 1998 the  suspension  of resale  transactions  was removed.
Through  March 15, 1998,  the  Partnership's  Transfer  Agent  processed  resale
transactions representing  approximately 3.2% of the total number of outstanding
Units.  Should  resale  transactions  representing  4.9% of the total  number of
outstanding Units be reached,  the General Partner will again suspend processing
of these transactions. In this event investors will be notified immediately.


                                       13

<PAGE>



Conclusion

The  Partnership  established  an estimated  value for the assignee Units in the
Partnership  as of December 31, 1997.  An appraisal of the  remaining  hotel was
commissioned  and  undertaken  by a firm  which is a  recognized  appraiser  and
consultant  to the hotel  industry.  The  primary  methodology  employed  in the
appraisal  used in the  evaluation,  which was selected by the appraiser and not
pursuant to any instructions  from the  Partnership,  was the income approach to
value  utilizing  a  discounted  cash flow  analysis.  In  conjunction  with the
preparation  of the  appraisal,  a discount rate was determined by the appraiser
based on several relevant  factors,  including,  but not limited to, the current
investment  climate  for hotel  properties,  local  hotel  market  and  economic
conditions, comparisons of occupancy and room rates with prevailing market rates
for similar properties and the status of the management contract for each hotel.
The Partnership  believes that the assumptions  utilized in the process were not
unreasonable.  The value of the property as determined by the appraisal process,
in combination with the book value of other  Partnership  assets and liabilities
as of December 31, 1997, and after deducting the  distributions  made on January
13 and 29, 1998,  has resulted in an estimated  net asset value of each assignee
Unit of $239.  (The  estimated  net asset  value does not take into  account any
distributions  that the  General  Partners  may be  obligated  to  return to the
Partnership prior to liquidation of the Partnership. See Note 2 to the financial
statements.)  As of December 31, 1996, the value of the properties as determined
by  the  appraisal  process,  in  combination  with  the  book  value  of  other
Partnership  assets  resulted in an estimated  net asset value of each  assignee
unit of $503.  The change in value from $503 as of December 31, 1996 to $239 was
primarily due to the  distribution of a portion of the proceeds from the sale of
the eight  Residence  Inns in the amount of $275 per assignee Unit. It should be
noted that  appraised  values  represent the opinion of the appraisal firm as of
the date of the appraisals and are based on market conditions at the time of the
appraisals and on assumptions  concerning future  circumstances which may or may
not be accurate.

This  valuation  is an estimate of the  assignee  Unit value only which has been
made as of December 31, 1997 based on the methodology  described herein and does
not  represent a market value.  There can be no assurance  that the sales of the
assets  in the  current  market  or at any time in the  future  would  yield net
proceeds  which on a per  assignee  Unit basis would be equal to or greater than
the estimated value.  Further,  there can be no assurance that sales of assignee
Units now or in the future  would yield net  proceeds  equal to or greater  than
this value. The assignee Units are illiquid and there is no formal liquid market
where they are regularly  traded.  However,  the  Partnership is aware that some
resales  have taken place in the informal  secondary  market.  In this  informal
market, transactions may or may not take place in any time period and occur at a
price  negotiated  between buyer and seller.  The  Partnership  has no knowledge
concerning  how a  particular  price may be  determined.  A total of 325  resale
transactions were recorded on the books of the Transfer Agent between January 1,
1997 and February 26, 1997 (at which time the Partnership suspended trading- see
above),  reflecting  prices  ranging  from $191 to $466 per Unit,  with a simple
average price (not weighted) of $283. In 1996 a total of 122 resale transactions
were recorded on the books of the Transfer Agent reflecting  prices between $100
and $340,  with a simple average price (not weighted) of $239 per Unit. In 1995,
sixty-five  resale  transactions,  of which the Partnership had knowledge,  were
recorded at a simple average price (not weighted) of $244 per assignee unit. The
Partnership's  knowledge of these  transactions is based solely on the books and
records of its Transfer Agent.

As  discussed  in Item 8,  Note 7,  there is  substantial  doubt  regarding  the
Partnership's ability to continue as a going concern.

                                       14

<PAGE>



Item 8.    Financial Statements and Financial Statement Schedules.
<TABLE>
                                   METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                                         a California Limited Partnership

                                                TABLE OF CONTENTS
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                          <C>
Report of Independent Auditors............................................................................      16
Financial Statements:
   Balance Sheets at December 31, 1997 and 1996...........................................................      17
   Statements of Operations for the Years ended December 31, 1997, 1996 and 1995..........................      18
   Statements of Partners' Equity for the Years ended
    December 31, 1997, 1996 and 1995......................................................................      19
   Statements of Cash Flows for the Years ended December 31, 1997, 1996 and 1995..........................      20
   Notes to Financial Statements..........................................................................   21-28
Financial Statement Schedule:
   Schedule III - Real Estate and Accumulated Depreciation at December 31, 1997 and 1996..................   29-31
</TABLE>

      Financial  statements and financial  statement schedules not included have
been omitted because of the absence of conditions  under which they are required
or because the information is included elsewhere in the financial statements.

                                       15

<PAGE>




                         REPORT OF INDEPENDENT AUDITORS

Metric Partners Growth Suite Investors, L.P., a California Limited Partnership:

      We have audited the accompanying  balance sheets of Metric Partners Growth
Suite Investors, L.P., a California Limited Partnership,  (the "Partnership") as
of  December  31,  1997 and  1996  and the  related  statements  of  operations,
partners' equity and cash flows for the three years in the period ended December
31, 1997. Our audit also included the financial  statement  schedule for 1997 of
the Partnership  listed in the accompanying  table of contents.  These financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

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

      In our opinion,  the financial  statements present fairly, in all material
respects,  the financial  position of the  Partnership  at December 31, 1997 and
1996 and the results of its operations and its cash flows for the three years in
the period  ended  December  31,  1997 in  conformity  with  generally  accepted
accounting  principles.  Also, in our opinion,  the financial statement schedule
for 1997 and 1996, when considered in relation to the basic financial statements
taken as a whole,  presents fairly in all material  respects the information set
forth therein.

      As discussed in Note 7 to the financial  statements,  the  Partnership  is
involved in litigation in connection with its one remaining hotel property.  The
property  is subject to a mortgage  note  payable  that  becomes due on April 1,
1998. The  Partnership  has been  unsuccessful  in obtaining an extension on the
note payable and may be unable to pay off or otherwise refinance the note. These
conditions raise substantial  doubt about the Partnership's  ability to continue
as a going  concern.  The  Partnership's  plans  as to  these  matters  are also
described in Note 4. The  accompanying  financial  statements do not include any
adjustments that might result from this uncertainty.


                                                               Ernst & Young LLP

San Francisco, California
March 30, 1998



<PAGE>

<TABLE>

                  METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                        a California Limited Partnership

                                 BALANCE SHEETS
                                  December 31,
<CAPTION>
                                                               1997           1996
                                                               ----           ----
                                     ASSETS
<S>                                                       <C>            <C>
CASH AND CASH EQUIVALENTS ..............................  $ 27,051,000   $  3,436,000
CASH INVESTMENTS .......................................     3,888,000      3,893,000
CASH IN ESCROW .........................................    19,214,000           --
RESTRICTED CASH ........................................       335,000        308,000
ACCOUNTS RECEIVABLE ....................................     1,295,000        715,000
PREPAID EXPENSES AND OTHER ASSETS ......................       178,000        209,000

PROPERTIES AND IMPROVEMENTS ............................    13,909,000     90,456,000
ACCUMULATED DEPRECIATION ...............................    (5,263,000)   (31,825,000)
                                                          ------------   ------------

NET PROPERTIES AND IMPROVEMENTS ........................     8,646,000     58,631,000

DEFERRED FINANCING COSTS ...............................          --           73,000
DEFERRED FRANCHISE FEES ................................        29,000        171,000
                                                          ------------   ------------

TOTAL ASSETS ...........................................  $ 60,636,000   $ 67,436,000
                                                          ============   ============

                        LIABILITIES AND PARTNERS' EQUITY

ACCOUNTS PAYABLE .......................................  $  1,542,000   $  1,107,000
ACCRUED PROPERTY TAXES .................................       116,000        311,000
ACCRUED PREPAYMENT PENALTIES ...........................       438,000           --
ACCRUED INTEREST .......................................       307,000        263,000
OTHER LIABILITIES ......................................     1,487,000      1,347,000
DEFERRED GAIN ON SALE OF PROPERTY ......................       300,000        300,000
NOTES PAYABLE ..........................................    26,983,000     42,518,000
                                                          ------------   ------------

TOTAL LIABILITIES ......................................    31,173,000     45,846,000
                                                          ------------   ------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' EQUITY:
 GENERAL PARTNERS ......................................       348,000         59,000
 LIMITED PARTNERS (59,932 units outstanding) ...........    29,115,000     21,531,000
                                                          ------------   ------------

TOTAL PARTNERS' EQUITY .................................    29,463,000     21,590,000
                                                          ------------   ------------

TOTAL LIABILITIES AND PARTNERS' EQUITY .................  $ 60,636,000   $ 67,436,000
                                                          ============   ============

                       See notes to financial statements.
</TABLE>

                                       17

<PAGE>


<TABLE>
                                   METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                                         a California Limited Partnership

                                             STATEMENTS OF OPERATIONS
                               For the Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
                                                                                   1997         1996          1995
                                                                                   ----         ----          ----
<S>                                                                            <C>          <C>          <C>
REVENUES:
Hotel operations ............................................................  $25,778,000  $24,610,000  $ 25,649,000
Interest and other ..........................................................      415,000      435,000       458,000
                                                                               -----------  -----------  ------------

Total revenues ..............................................................   26,193,000   25,045,000    26,107,000
                                                                               -----------  -----------  ------------

EXPENSES  (Including $513,000,  $461,000 and $410,000
paid to managing  general partner and affiliates in 1997, 1996 and
1995, respectively)
Hotel operations
        Rooms ...............................................................    5,223,000    4,899,000     5,167,000
        Administrative ......................................................    3,008,000    3,101,000     3,224,000
        Marketing ...........................................................    2,677,000    2,762,000     2,538,000
        Energy ..............................................................    1,262,000    1,281,000     1,398,000
        Repair and maintenance ..............................................    1,453,000    1,411,000     1,329,000
        Management fees .....................................................    1,005,000      916,000     1,364,000
        Property taxes ......................................................      731,000      738,000       877,000
        Other ...............................................................      975,000      917,000       970,000
                                                                               -----------  -----------  ------------
Total hotel operations ......................................................   16,334,000   16,025,000    16,867,000
Depreciation and other amortization .........................................    1,759,000    2,933,000     3,510,000
Interest ....................................................................    4,327,000    4,350,000     4,852,000
General and administrative ..................................................      959,000    1,216,000       809,000
                                                                               -----------  -----------  ------------

Total expenses ..............................................................   23,379,000   24,524,000    26,038,000
                                                                               -----------  -----------  ------------

INCOME BEFORE GAIN ON SALE OF PROPERTIES ....................................    2,814,000      521,000        69,000
Gain on sale of properties ..................................................    7,505,000         --       3,275,000
                                                                               -----------  -----------  ------------
NET INCOME ..................................................................  $10,319,000  $   521,000  $  3,344,000
                                                                               ===========  ===========  ============

NET INCOME PER LIMITED PARTNERSHIP
 ASSIGNEE UNIT:
Income (loss) before gain on sale of properties .............................  $        47  $         8  $         (1)
Gain on sale of properties ..................................................          120         --              53
                                                                               -----------  -----------  ------------
NET INCOME ..................................................................  $       167  $         8  $         52
                                                                               ===========  ===========  ============

CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP
 ASSIGNEE UNIT ..............................................................  $        40  $        68  $         32
                                                                               ===========  ===========  ============

                                             See notes to financial statements.
</TABLE>

                                                             18

<PAGE>

<TABLE>
                  METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                        a California Limited Partnership

                   STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
              For the Years Ended December 31, 1997, 1996 and 1995

<CAPTION>
                                                 General     Limited
                                                 Partner     Partners         Total
                                                 -------     --------         -----

<S>                                            <C>         <C>            <C>
BALANCE, January 1, 1995 ....................  $ (68,000)  $ 23,916,000   $ 23,848,000
Income (Loss) Before Gain on Sale of Property    105,000        (36,000)        69,000
Gain on Sale of Property ....................    102,000      3,173,000      3,275,000
Cash Distributions from Sale ................     (2,000)      (105,000)      (107,000)
Cash Distributions from Operations ..........    (37,000)    (1,798,000)    (1,835,000)
                                               ---------   ------------   ------------
BALANCE, DECEMBER 31, 1995 ..................    100,000     25,150,000     25,250,000
Net Income ..................................     43,000        478,000        521,000
Cash Distributions from Sale ................    (41,000)    (2,000,000)    (2,041,000)
Cash Distributions from Operations ..........    (43,000)    (2,097,000)    (2,140,000)
                                               ---------   ------------   ------------
BALANCE, DECEMBER 31, 1996 ..................     59,000     21,531,000     21,590,000
Income Before Gain on Sale of Properties ....      2,000      2,812,000      2,814,000
Gain on Sale of Properties ..................    336,000      7,169,000      7,505,000
Cash Distributions from Operations ..........    (49,000)    (2,397,000)    (2,446,000)
                                               ---------   ------------   ------------
BALANCE, DECEMBER 31, 1997 ..................  $ 348,000   $ 29,115,000   $ 29,463,000
                                               =========   ============   ============

                       See notes to financial statements.
</TABLE>

                                       19

<PAGE>


<TABLE>
                               METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                                    a California Limited Partnership

                                       STATEMENTS OF CASH FLOWS
                            For the Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
                                                                           1997            1996           1995
                                                                           ----            ----           ----
<S>                                                                    <C>            <C>            <C>
OPERATING ACTIVITIES:
Net income ..........................................................  $ 10,319,000   $    521,000   $  3,344,000
Adjustments to reconcile net income to net cash provided
 by operating activities:
        Depreciation and amortization ...............................     1,962,000      3,122,000      3,585,000
        Cost associated with note payable change (see Note 4) .......          --           74,000           --
        Gain on sale of properties ..................................    (7,505,000)          --       (3,275,000)
        Changes in operating assets and liabilities:
           Accounts receivable ......................................      (580,000)       319,000       (288,000)
           Prepaid expenses and other assets ........................        (1,000)       (13,000)       118,000
           Accounts payable, accrued expenses
            and other liabilities ...................................       206,000        176,000        678,000
                                                                       ------------   ------------   ------------
Net cash provided by operating activities ...........................     4,401,000      4,199,000      4,162,000
                                                                       ------------   ------------   ------------

INVESTING ACTIVITIES:
Proceeds from sale of properties ....................................    58,644,000           --        5,684,000
Capital improvements ................................................    (2,032,000)    (2,571,000)    (2,163,000)
Cash in escrow ......................................................   (19,214,000)          --             --
Restricted cash - increase ..........................................       (27,000)        (6,000)      (302,000)
Purchase of cash investments ........................................    (3,888,000)    (5,862,000)    (1,409,000)
Proceeds from sale of cash investments ..............................     3,893,000      1,969,000      1,409,000
                                                                       ------------   ------------   ------------
Net cash provided (used) by investing activities ....................    37,376,000     (6,470,000)     3,219,000
                                                                       ------------   ------------   ------------

FINANCING ACTIVITIES:
Notes payable principal payments ....................................   (15,716,000)      (360,000)      (333,000)
Cash distributions to partners ......................................    (2,446,000)    (4,181,000)    (1,942,000)
                                                                       ------------   ------------   ------------
Cash used by financing activities ...................................   (18,162,000)    (4,541,000)    (2,275,000)
                                                                       ------------   ------------   ------------

INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS ..........................................    23,615,000     (6,812,000)     5,106,000
Cash and cash equivalents at beginning of year ......................     3,436,000     10,248,000      5,142,000
                                                                       ------------   ------------   ------------

CASH AND CASH EQUIVALENTS
 AT END OF YEAR .....................................................  $ 27,051,000   $  3,436,000   $ 10,248,000
                                                                       ============   ============   ============



                           SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Interest paid in cash during the year ...............................  $  4,080,000   $  4,242,000   $  4,636,000
                                                                       ============   ============   ============


                SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Balance of note payable assumed by buyer ............................          --             --     $  5,922,000
                                                                       ============   ============   ============

Note payable increase (see Note 4) ..................................          --     $     74,000           --
                                                                       ============   ============   ============

Capital improvements - accrued ......................................  $    218,000           --             --
                                                                       ============   ============   ============

Accrued prepayment penalties ........................................  $    438,000           --             --
                                                                       ============   ============   ============

                                             See notes to financial statements.

</TABLE>
                                                             20

<PAGE>



                  METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                        a California Limited Partnership


                          NOTES TO FINANCIAL STATEMENTS


1.    Organization and Summary of Significant Accounting Policies

Organization  - Metric  Partners  Growth  Suite  Investors,  L.P.,  a California
Limited  Partnership  (the  "Partnership"),  was organized under the laws of the
State of California to acquire,  hold for  investment,  manage,  and  ultimately
sell, all-suite, extended stay hotels which are a franchise of the Residence Inn
by Marriott,  Inc. The managing  general  partner is Metric Realty,  an Illinois
general  partnership.  The Associate  General  Partner of the Partnership is GHI
Associates II, L.P., a California Limited Partnership, of which Metric Realty is
the general  partner  and  Prudential-Bache  Properties,  Inc.,  a  wholly-owned
subsidiary of Prudential Securities Group Inc., is the limited partner.  Through
March 31,  1997,  Metric  Realty was owned by Metric  Holdings,  Inc. and Metric
Realty Corp.  Metric Realty Corp. was the Managing Partner of Metric Realty.  On
April 1, 1997,  Metric  Holdings,  Inc. and Metric Realty Corp., the partners of
the Managing General Partner,  Metric Realty, were involved in certain corporate
transactions.  Pursuant to these  transactions,  (i) Metric  Holdings,  Inc. was
merged into a newly-formed  corporation known as SSR Realty Advisors, Inc. ("SSR
Realty"),  which became the managing  partner of Metric Realty,  and (ii) Metric
Realty Corp. was merged into Metric Property  Management,  Inc., a subsidiary of
SSR Realty.  Accordingly,  the partners of Metric  Realty are now SSR Realty and
Metric Property Management, Inc. After consummation of these transactions,  both
partners of Metric Realty continue to be wholly-owned individual subsidiaries of
Metropolitan  Life  Insurance  Company,  as  were  both  partners  prior  to the
occurrence of such transactions.  The Partnership was organized on June 28, 1984
and commenced operations on April 14, 1988. Capital contributions of $59,932,000
($1,000 per assignee Unit) were made by the limited partners.

Fair Value of  Financial  Instruments  - The  carrying  amounts of cash and cash
equivalents,  cash investments and restricted cash approximate their fair value.
The carrying amounts of the Partnership's  notes payable  approximate their fair
value due to the short term remaining under those notes.

Use of Estimates - The  preparation  of the  financial  statements in conformity
with  generally  accepted  accounting  principles  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  - The  Partnership  considers  all  highly  liquid
investments, primarily commercial paper, with an original maturity date of three
months or less at the time of purchase to be cash equivalents.

Cash Investments - Cash investments  include all cash investments not considered
cash or cash  equivalents.  The cash  investment at December 31, 1997 matures in
March 1998 and bear interest at an effective rate of 5.6% per annum.

Restricted Cash - Restricted cash consists of amounts related to the sale of the
Residence Inn - Atlanta  (Perimeter  West) which were  deposited  into an escrow
account. See Note 6.

Cash in Escrow - Cash in escrow consists of $19,070,000 due to the lender of the
notes  payable on six of the hotels  sold on December  30, 1997 and  $144,000 in
funds held in escrow pending final closing  settlement by the escrow agent.  The
$19,070,000  was paid to the lender on January 2, 1998.  The amount  represented
$18,469,000  principal due, $438,000  prepayment  penalties and $163,000 accrued
interest.  The $144,000  excess funds held by the escrow agent were  returned to
the Partnership on January 5, 1998. See Note 6.

Credit Risk - Financial instruments which potentially subject the Partnership to
concentrations  of credit risk include cash and cash  equivalents and restricted
cash. The  Partnership  places its cash deposits and temporary cash  investments
with creditworthy,  high-quality  financial  institutions.  The concentration of
such cash  deposits and  temporary  cash  investments  is not deemed to create a
significant risk to the Partnership.


                                       21

<PAGE>



Properties and  Improvements - Properties and  improvements  are stated at cost.
The Partnership  adopted FASB Statement No. 121,  "Accounting for the Impairment
of Long-Lived  Assets and for Long-Lived Assets to be Disposed Of", in 1996. The
statement was issued in March 1995 and requires impairment losses to be recorded
on long-lived  assets used in  operations  when  indicators  of  impairment  are
present and the  undiscounted  cash flows  estimated  to be  generated  by those
assets during the holding period are less than the assets' carrying  amount.  No
impairment  losses  were  recorded  as a  result  of  the  Partnership  adopting
Statement  No. 121.  Prior to 1996,  a  provision  for  impairment  of value was
recorded  when a decline in value of property  was  determined  to be other than
temporary.

In 1997,  the  Partnership  adopted a plan to market  for sale eight of its nine
remaining  hotels.  The  hotels  marketed  for sale  were the  Residence  Inns -
Ontario,   Fort  Wayne,  Columbus  (East),   Indianapolis  (North),   Lexington,
Louisville,  Winston  Salem and  Altamonte  Springs.  These  hotels were sold on
December 30, 1997 in a single transaction. See Note 6. Pursuant to Statement No.
121, the eight hotels,  when marketed,  were  classified as real estate held for
sale and no depreciation and  amortization of deferred  franchise fees for these
properties were recorded after June 30, 1997.

Gain on Sale of Properties - Sales are generally recorded at the close of escrow
or after title has been transferred to buyer and after appropriate payments have
been received and other criteria have been met.

Depreciation -  Depreciation  is computed  using the  straight-line  method over
estimated  useful lives of 30 years for buildings and improvements and six years
for furnishings.

Marketing - Marketing costs are expensed as incurred.

Deferred  Financing  Costs -  Financing  costs are  deferred  and  amortized  as
interest  expense  over the lives of the related  loans,  which are three to ten
years.

Deferred   Franchise  Fees  -  Franchise  fees,  paid  in  connection  with  the
acquisition of the Residence Inns, are deferred and amortized over the remaining
lives of the franchise agreements which range from ten to fifteen years.

Net Income  Per  Limited  Partnership  Assignee  Unit - Net  income per  limited
partnership  assignee  Unit is computed by dividing net income  allocated to the
limited partners by 59,932 assignee Units.

Income Taxes - No provision  for Federal and state income taxes has been made in
the  financial  statements  because  income  taxes  are  the  obligation  of the
partners.

2.    Transactions With the General Partners and Affiliates

In accordance with the Partnership agreement,  the Partnership is charged by the
managing   general   partner  and  affiliates  for  services   provided  to  the
Partnership. The amounts are as follows:

                                            1997           1996           1995
                                            ----           ----           ----

Partnership management fees .......       $213,000       $186,000       $160,000
Reimbursement of expenses .........        300,000        275,000        250,000
                                          --------       --------       --------

Total .............................       $513,000       $461,000       $410,000
                                          ========       ========       ========

Reimbursement of expenses include partnership accounting,  professional services
and investor services.

In accordance with the Partnership  agreement the general partners are allocated
their two percent  continuing  interest in the  Partnership's net income or loss
and cash distributions. In addition, in 1994 the general partners were allocated
gross  income of  $245,000 in  accordance  with and  calculated  pursuant to the
Partnership Agreement.  However, beginning in 1995, due to the general partners'
equity  account  balance,  the  Partnership  adjusted  and  limited  the  income
allocation  to the  general  partners  to  amounts  equal to their  two  percent
continuing  interest  in  cash   distributions.   Pursuant  to  the  Partnership
Agreement,  immediately prior to liquidation and if certain  distribution levels
to the limited  partners are not met,  the general  partners may be obligated to
return all or a portion of the cumulative amounts received in distributions.

                                       22

<PAGE>



The general partners were allocated taxable gain and loss in accordance with the
Partnership Agreement.

3.    Properties and Improvements

Hotel  properties and  improvements at December 31, 1997 and 1996 are summarized
as follows:

                                                   1997                 1996
                                                   ----                 ----

Land ...................................       $       --          $  9,358,000
Buildings and improvements .............         11,110,000          62,840,000
Furnishings ............................          2,799,000          18,258,000
                                               ------------        ------------

Total ..................................         13,909,000          90,456,000
Accumulated depreciation ...............         (5,263,000)        (31,825,000)
                                               ------------        ------------

Net properties and improvements ........       $  8,646,000        $ 58,631,000
                                               ============        ============

4.    Notes Payable

The $26,983,000 notes payable balance at December 31, 1997 represents $8,514,000
outstanding  balance  on  the  note  payable  related  to  the  Residence  Inn -
Nashville,  the Partnership's  remaining property,  and $18,469,000  outstanding
combined balance on the notes relating to six of the properties sold on December
30, 1997 which was paid on January 2, 1998. See Note 6.

With respect to the note on the Residence Inn - Nashville,  monthly  payments of
interest  and  principal  are made until April 1998 when the note  matures and a
balloon  payment  of  $8,491,000  is due.  The  Partnership  has been  unable to
negotiate an extension of the loan with the lender. The Partnership is currently
reviewing its options with regard to this matter,  including satisfying all or a
portion  of the  loan or  sale  of the  Hotel.  See  Note 7. If the  Partnership
determines  to pay the loan in full,  it would have to seek Court  permission to
use a portion of the $5 million restricted by the Court (as described in Note 7)
in order to pay off the entire loan balance.

The Residence Inn - Nashville (Airport) note payable with an original balance of
$9,250,000   originally  wrapped  an  existing  loan  which  had  a  balance  of
approximately  $9,336,000  at the time the  Partnership  acquired the  property.
However,  on April 15, 1996,  the  Partnership  made a payment of  approximately
$176,000  to the  lender  of the  underlying  mortgage  of the wrap  note on the
Residence  Inn - Nashville  (Airport).  The payment was made to cure defaults by
that  lender  to the  holder of the wrap  note for  non-payment  of the debt and
impound  payments due on January 1, 1996 and  February 1, 1996.  As described in
Note 7, Legal  Proceedings,  the  Partnership  is now the direct  obligor to the
first note holder and the note  payable  balance has been  increased by $74,000,
the difference between the balance of the first note and the balance of the wrap
note on April 15, 1996. The $74,000 cost incurred to prevent  foreclosure and to
eliminate  the wrap note was  recorded in 1996 as a general  and  administrative
expense in these financial statements. The terms of the first note vary slightly
from those of the wrap note.  The  interest  rate is 9.5% per annum on the first
note  compared to 9.9433% on the wrap note and monthly  payments of interest and
principal are approximately  $2,600 lower on the first note. Similar to the wrap
note, the first note matures in April 1998 and requires a balloon payment.  As a
further  consequence of the  Partnership  becoming a direct obligor to the first
note holder,  the payments due under the land lease on Residence Inn - Nashville
(Airport) are reduced by $50,000 per year. See Note 5.

Certain of the notes were  discounted over their term to yield interest at 10.15
to 10.5 percent per annum.  Discount  amortization  was  $149,000,  $135,000 and
$124,000 for the years ended  December 31,  1997,  1996 and 1995,  respectively.
Amortization of deferred  financing costs totaled  $54,000,  $54,000 and $50,000
for the years ended December 31, 1997, 1996 and 1995, respectively.

5.    Minimum Future Rental Commitments

One property, the Residence Inn-Nashville  (Airport), is utilized through a land
lease which  provides for lease payments of $100,000 per annum for the first ten
years, plus an additional $50,000 per annum until the purchase money note to the
seller is paid in full.  As described in Note 4, the purchase  money note to the
seller was paid in full in April  1996,  and the  $50,000  annual  payment is no

                                       23

<PAGE>



longer  due.  Prior to April 1996,  the  $50,000  was  payable in equal  monthly
installments  with payment of the balance being  subordinated  to returns to the
Partnership. Furthermore, up to $210,000 of the balance of the ground lease can,
and has  been,  applied  by the  Partnership  as an  offset  under  a  guarantee
agreement.  The portion of the accrued rent not paid currently  accrues interest
at a rate of ten percent per annum, compounded annually.  Furthermore, the lease
provides  for  additional  payments  based on 1.8% of the  revenues of the hotel
through April 15, 1998.

Beginning in the eleventh lease year, the annual lease payment is adjusted every
five years with the payment based on  application  of the then current  ten-year
United States Treasury Bond rate of interest,  to a valuation of the land at the
higher of its then fair market value or the option price in the lease. The lease
extends through May 25, 2049 and contains an option to purchase the fee interest
in the land.

Rental  expense  (including  the 1.8% of revenues)  for this lease was $178,000,
$186,000 and $219,000 in 1997, 1996 and 1995.

6.    Sale of Properties

The Partnership sold the Residence Inns - Ontario,  Columbus (East), Fort Wayne,
Indianapolis,  Lexington,  Louisville,  Winston Salem and  Altamonte  Springs on
December 30,  1997.  The  combined  sales price,  for the package of these eight
residence inns, was  $59,500,000.  After payment of the outstanding  balances on
the  loans  totaling  $33,819,000  and  expenses  of sale  totaling  $1,294,000,
including  $438,000 of  prepayment  penalties  on certain of the loans,  the net
proceeds to the Partnership were $24,387,000.  Pursuant to an agreement with the
lender on six of the eight  residence  inns,  the  outstanding  balances  on the
related six notes totaling $18,469,000, and the required prepayment penalties of
$438,000,  were not paid until January 2, 1998. To secure  payment to the lender
of the six notes mentioned,  a portion of the net sales proceeds was retained in
an escrow  account on December 30, 1997,  sufficient to pay off the  outstanding
principal balances, prepayment penalties due pursuant to the loan agreements and
interest  accrued to date of payoff,  and is  reflected in Cash in Escrow on the
December 31, 1997 balance sheet.

The  Partnership  was  required by the  purchaser,  under the terms of the sales
contract, not to distribute $7,500,000 of the sales proceeds for a period of one
year, which amount represents the maximum possible  liability of the Partnership
for any breach of the sales  agreement.  There are no known  contingencies  with
respect to potential claims that could be brought against the Partnership.

The Partnership  sold the Residence  Inn-Atlanta  (Perimeter West) on October 3,
1995.  The net sales price was  $11,350,000  after  deducting  $300,000 that was
deposited  into an  escrow  account  (the  "Shortfall  Guaranty  Account").  The
Partnership has guaranteed certain income levels to the buyer for the years from
1996 through 1998. To the extent these income levels are not attained, the buyer
will receive the  deficiency,  up to the maximum  $300,000,  from the  Shortfall
Guaranty Account. Any unused funds in the Shortfall Guaranty Account at December
31,  1998,  will be returned to the  Partnership  together  with  interest.  The
guaranteed income levels for 1996 and 1997 were achieved and no funds are due to
seller from the Short Fall  Guarantee  Account for those years.  Gain on sale of
$300,000 has been deferred until the contingency has been removed.

The buyer assumed the existing loan with a balance of $5,922,000.  After payment
of  expenses  of  sale,  the  proceeds  to the  Partnership  were  approximately
$5,384,000.   Of  that  amount,  $107,000,   representing  state  real  property
withholding  taxes due on the gain on sale, was paid to the State of Georgia and
recorded  as  cash  distributions  to  partners  from  sale in  these  financial
statements because such taxes are the obligation of the partners.

7.    Legal Proceedings

Metric Partners Growth Suite Investors,  L.P. vs. Kenneth E. Nelson,  The Nelson
Group, et al., San Francisco  County  Superior  Court,  Case No. 928065 (the "SF
Lawsuit"). [The lawsuits described below (other than the sales tax related case)
are related.  Terms  defined in the  description  of one case may be used in the
description of the other cases.]

This  lawsuit   relates  to  disputes  in  connection  with  management  of  the
Partnership's  Residence  Inn - Ontario  by an entity  controlled  by Kenneth E.
Nelson  ("Nelson")  from  April  1988 to  February  1991.  In  March  1993,  the
Partnership  and Nelson verbally agreed to settle the SF Lawsuit at a settlement
conference (the "SF  Settlement"),  whereby the Partnership  would purchase at a
discount the land (the "Land")  underlying  the  Partnership's  Residence  Inn -


                                       24

<PAGE>



Nashville  (the "Hotel")  currently  leased by the  Partnership  from  Nashville
Lodging Company ("NLC"), an entity controlled by Nelson.  Various  disagreements
between the Partnership and Nelson regarding the SF Settlement arose after March
1993 and documents to effectuate the SF Settlement were never executed.

In July 1994, the Court in the Nashville Case I, discussed below, ruled that the
Hotel had been  fraudulently  conveyed to NLC in 1986 and voided the conveyance.
The Court in the  Nashville  Case I ordered a sale of the Land,  subject  to all
prior  encumbrances,  including the ground lease of the Land by the  Partnership
(the  "Lease").  As  discussed in more detail  below (see  "Nashville  Case I"),
subsequent  to a  judicial  sale held on July 24,  1996,  the  Court  ruled in a
confirmation  hearing held in August 1996 that the Land would be sold to Orlando
Residence,  Ltd ("Orlando").  In December,  1996, the Tennessee Court of Appeals
reversed the judgement  underlying  the judicial  sale;  however,  the Court has
ruled against NLC on its motion that the Land be reinstated to NLC.

Orlando Residence Ltd. vs. Metric Partners Growth Suite Investors,  L.P. et al.,
Chancery  Court  for  Davidson  County,  in  Nashville,   Tennessee,   Case  No.
92-3086-III ("Nashville Case I")

2300 Elm Hill  Pike,  Inc.  ("2300")  (formerly  known  as  Nashville  Residence
Corporation  until  1986) was the  original  owner of the Hotel  (including  the
Land).  2300 conveyed its interest in the Hotel  (including  the Land) to NLC in
1986 by unrecorded  quitclaim deed. In April 1989, NLC sold the Hotel and leased
the Land to the Partnership pursuant to the Lease.

In October 1992, Orlando filed this lawsuit against NLC and its general partners
and the Partnership, alleging that the sale of the Hotel and the Land by 2300 to
NLC in 1986 and NLC's  subsequent sale of the Hotel and lease of the Land to the
Partnership in 1989 were fraudulent conveyances,  intended to hinder Plaintiff's
recovery of a judgment  against 2300. In August 1993,  the Court  dismissed this
action  against the  Partnership.  The  Partnership's  only material  continuing
interest in the case is its effect on ownership of the Land and the Lease.

In August  1994,  the Court held that the sale of the Hotel by 2300 to NLC was a
fraudulent  conveyance and voided the  conveyance.  The defendants  appealed the
judgment  for Orlando in this case to the  Tennessee  Court of Appeals,  but the
judgment was not stayed pending appeal. Oral argument on this appeal was held on
November  1, 1996,  and in  December  1996,  the Court of Appeals  reversed  the
judgement  for  Orlando,  sending  the case back to the lower  court for further
proceedings.

Prior to this reversal,  Orlando requested and the Court ordered a judicial sale
of the Land,  with the sale subject to  encumbrances  of record,  including  the
Lease.  The sale was a credit sale,  with the purchase  price due in six months.
This sale was held on July 24, 1996. At a  confirmation  hearing in August 1996,
the Court ordered the Land to be sold to Orlando. The Court further ordered that
Orlando was to become the landlord under the Lease. Because of this reversal and
the refusal of the Tennessee  Supreme Court to hear an appeal from Orlando,  NLC
asked the  Chancery  Court to return  ownership  of the Land to it,  which would
result in it again  becoming  the  landlord  under the  Lease.  The Court  heard
argument  regarding NLC's request on September 11, 1997, and later ruled against
NLC. Thus,  Orlando  continues to be the owner of the Land and the Partnership's
landlord under the Lease. NLC may appeal this ruling for Orlando.

Nashville  Lodging Company vs. Metric Partners Growth Suite  Investors,  L.P. et
al., Circuit Court, State of Wisconsin, Case No. 94CV001212.

In February 1994, NLC served this lawsuit on the Partnership. NLC alleges fraud,
breach of  settlement  contract  and breach of good faith and fair  dealing  and
seeks compensatory,  punitive and exemplary damages in an unspecified amount for
the Partnership's failure to consummate the SF Settlement. In February 1994, the
Partnership filed an answer and requested that the Court stay the action pending
resolution of the SF Lawsuit  including  all appeals.  The Court refused to stay
the action and discovery commenced.  In February 1995, the Court determined that
the  Partnership  could be sued in  Wisconsin  but  stayed  the case  until  the
settlement of the SF Lawsuit has been finalized.

Orlando  Residence  Ltd.  vs. 2300 Elm Hill Pike,  Inc.  and  Nashville  Lodging
Company vs. Metric Partners  Growth Suite  Investors,  L.P.,  Chancery Court for
Davidson County, in Nashville,  Tennessee,  Case No. 94-1911-I  ("Nashville Case
II").


                                       25

<PAGE>



Orlando filed this action against 2300 and NLC in the Davidson  County  Chancery
Court to  attempt to execute on its  judgment  against  Nelson,  NLC and 2300 in
Nashville Case I by subjecting the Land to sale. In May 1995, 2300 and NLC filed
a  third-party  complaint  against the  Partnership,  alleging it had refused to
purchase the Land as required by the SF Settlement.  2300 and NLC demand payment
by the  Partnership  of 2300 and NLC's costs of defending  Nashville Case II and
indemnification  for any loss resulting from the claims of Orlando,  among other
claims of damage.

In February  1996,  the Court granted a motion filed by 2300 and NLC for partial
summary  judgement,  ruling that the Partnership had breached the SF Settlement.
The action will continue to determine  damages and other issues.  Trial had been
set for February 9, 1998, but was continued to December 7, 1998. The Partnership
does not believe it breached the SF Settlement and will appeal this ruling at an
appropriate  time.  However,  no assurance  can be given that its appeal will be
successful.  In any event,  the Partnership does not believe that any damages it
might  ultimately be required to pay in this action will have a material adverse
effect on the Partnership.

In late October 1997,  2300 and NLC filed a motion for an injunction to prohibit
GSI from distributing proceeds from the sale of the Residence Inns owned by GSI,
pending a final  judgement  in this case.  A hearing on this  motion was held in
February  1998  and  the  Court  enjoined  the   Partnership   from   conveying,
transferring,  distributing  or  otherwise  disposing  of its cash to any extent
which would  leave less than $5 million  available  for payment of any  judgment
obtained by 2300 and NLC.

Metric Partners Growth Suite Investors,  L.P., vs.  Nashville  Lodging Co., 2300
Elm Hill Pike,  Inc.,  Orlando  Residence,  Ltd., and LaSalle  National Bank, as
trustee under that certain pooling and servicing agreement, dated July 11, 1995,
for the holders of the WHP Commercial Mortgage Pass Through Certificates, Series
1995C1 and Robert  Holland,  Trustee,  Chancery  Court for Davidson  County,  in
Nashville, Tennessee, Case No. 96-1405-III ("Nashville Case III").

GSI filed this  action May 3, 1996 to obtain,  among  other  things,  a judicial
determination  of the  rights  and  obligations  of GSI and NLC under the senior
mortgage on the Hotel ("Senior  Mortgage"),  a note held by NLC "wrapped around"
the Senior  Mortgage (the "Wrap Note") and the Lease as a  consequence  of GSI's
cure of certain defaults by NLC under the Senior Mortgage.  GSI believed that as
a result of such  cure,  it became the  direct  obligor to the lender  under the
Senior  Mortgage and that the Wrap Note had been  satisfied and the payments due
under the Lease  reduced by $50,000 per year.  GSI also sought  preliminary  and
permanent  injunctive  relief to prevent NLC from  attempting  to  accelerate or
foreclose  the Wrap Note and/or from  attempting  to enforce any  remedies  with
regard to the Lease in connection  with this matter and a judgment  establishing
that GSI is the  owner of the  Hotel,  subject  only to the  Lease  and  certain
specified security interests.

In May 1996, the Partnership  obtained a temporary  injunction  staying NLC from
undertaking  any efforts to exercise any  remedies  pursuant to the Wrap Note or
the Lease.  NLC and 2300 filed an answer in June,  together with a  counterclaim
against the  Partnership.  NLC and 2300 claimed damages from the Partnership and
asked the Court to permit  acceleration  of the Wrap Note and termination of the
Lease. In July 1996, the Partnership filed a motion for summary judgment in this
case,  asking  that the Court  award the relief  sought by it and that the Court
dismiss the  counterclaim  of NLC and 2300.  At a hearing on this motion held in
August 1996 the Court granted the  Partnership's  motion.  The  defendants  have
appealed all judgments for the Partnership in this case. The Partnership and the
defendants have agreed on an attorneys' fee award to the Partnership of $60,000,
but no  payment is  expected  until the  defendants'  appeal is  resolved.  Both
parties have filed briefs with the  appellate  court and oral  argument is to be
held in July 1998.

In late March 1998, the Partnership  filed a motion for permission to interplead
approximately  $2 million with respect to which claims have been made by NLC and
the lenders under the Senior  Mortgage and an order staying any  enforcement  of
such lender's security interest pending decision of such claims.

Metric  Realty et al vs.  Kenneth  E.  Nelson and  Nashville  Lodging  Co.,  San
Francisco  County  Superior  Court,  Case No.  987134 (the  "Declaratory  Relief
Action").

Kenneth E. Nelson and Nashville  Lodging Co. vs. Metric Realty et al.,  Chancery
Court for Davidson County in Nashville,  Tennessee,  Case No.  97-2189-III  (the
"Inducement Action").


                                       26

<PAGE>



In the  second  quarter  of 1997,  Nelson  alleged  that  Metric  Realty and GHI
Associates II, L.P., the Managing and Associate General Partners,  respectively,
of the Partnership, and certain of Metric Realty's affiliates (the "Affiliates")
and certain former and current employees of Metric Realty or its affiliates (the
"Employees") had improperly induced the Partnership to breach the SF Settlement.
In May 1997,  Metric Realty and GHI  Associates II, L.P., the Affiliates and the
Employees filed the Declaratory Relief Action against Nelson and NLC to obtain a
judgment that the plaintiffs did not improperly  cause the Partnership to breach
the SF Settlement.  In June 1997,  Nelson and NLC filed the Inducement Action in
the Chancery Court for Davidson County,  in Nashville,  Tennessee (the "Chancery
Court")  against  Metric  Realty,  GHI  Associates  II, L.P., the Affiliates and
certain  of  the  Employees  (the  "Inducement  Action   Defendants"),   seeking
unspecified  compensatory,  treble and punitive damages for the alleged improper
inducement of breach of contract.

As to the  Declaratory  Relief  Action,  the  defendants  filed motions to quash
service of  process,  to stay the case and to transfer  it to  Tennessee,  which
motions were denied by the Court on September  15, 1997. In November  1997,  the
plaintiffs determined to dismiss this action without prejudice.

As to the  Inducement  Action,  the  Inducement  Action  Defendants  removed the
lawsuit from the Chancery Court to the U.S. District Court for Tennessee on July
25, 1997.  On August 11,  1997,  Nelson asked the Court to remand this action to
the Chancery Court, and on January 28, 1998, the court remanded this action back
to Chancery Court. In the Inducement  Action,  Defendants have filed a motion to
dismiss the complaint  against the Employees and one of the Affiliates  named in
the action based on lack of  jurisdiction  and against the remaining  Affiliates
based on failure to state a claim.  The Chancery  Court has not yet taken action
on these matters.

The legal and other  expenses of the  Inducement  Action  Defendants in both the
Declaratory  Relief Action and the Inducement  Action arising as a result of the
allegations  made by  Nelson  will be paid by the  Partnership  pursuant  to the
indemnification  provisions of the Partnership's  limited partnership  agreement
and subject to the conditions set forth in those provisions.

Metric Partners Growth Suite Investors, L.P. vs. Joe Huddleston, Commissioner of
Revenue for the State of  Tennessee,  Chancery  Court for  Davidson  County,  in
Nashville, Tennessee, Case No. 94-1227-II.

GSI filed this action on April 25, 1994 to challenge  the  assessment of a sales
and use tax  deficiency  by the  State for the  period  1989  through  1993 (the
alleged  deficiency plus estimated accrued interest totaled $217,000 at June 30,
1997). In general, the claimed deficiency relates primarily to sales tax alleged
to be owed in  connection  with (i)  room  rental  to  federal  employees,  (ii)
telephone  calls by guests and (iii) food and beverage items used in the Hotel's
complimentary  breakfast and evening  social hour. In February 1997, GSI learned
that this case had been dismissed for failure to prosecute by its attorneys.  On
April 25, 1997, the Court granted the Partnership's motion to reinstate the case
and a trial was scheduled for the fourth quarter of 1997. In September 1997, GSI
proposed to settle this potential liability by paying approximately $122,000 and
agreeing to pay sales tax on complimentary  items going forward,  which proposal
was accepted by the State in late October  1997.  GSI paid the agreed  amount on
November 3, 1997, which completed the settlement of this proceeding.

As discussed in Note 4, the Partnership is currently  reviewing its alternatives
with  regard  to  the  Partnership's   remaining  Hotel  including   potentially
satisfying  all  or a  portion  of  the  loan,  or  sale  of  the  asset.  These
circumstances,  as well as (i) the  substantial  legal  fees and costs that have
been and are expected to be incurred by the  Partnership in connection  with the
existing  lawsuits,  (ii) the usual  uncertainty  of  litigation,  and (iii) the
effect of these lawsuits on the  Partnership's  present  ability to refinance or
sell the Hotel,  create  substantial  doubt about the  Partnership's  ability to
continue  as a going  concern.  The  accompanying  financial  statements  do not
include any adjustments that might result from these uncertainties.


                                       27

<PAGE>



8.    Reconciliation to Income Tax Method of Accounting
<TABLE>
The  differences  between the method of accounting  for income tax reporting and
the  accrual  method  of  accounting  used in the  financial  statements  are as
follows:
<CAPTION>
                                                            1997           1996            1995
                                                            ----           ----            ----
<S>                                                    <C>            <C>             <C>
Net income - financial statements ...................  $ 10,319,000   $     521,000   $  3,344,000
Differences resulted from:
   Gain on sale of property .........................       613,000            --          281,000
   Depreciation .....................................      (683,000)       (137,000)       (95,000)
   Prepayment penalties .............................      (438,000)           --             --
   Amortization of notes payable discount ...........       148,000         135,000        124,000
   Interest .........................................       (23,000)         (6,000)       (17,000)
   Other ............................................       (54,000)        (58,000)      (141,000)
                                                       ------------   -------------   ------------

Net income - income tax method ......................  $  9,882,000   $     455,000   $  3,496,000
                                                       ============   =============   ============

Taxable income per limited partnership assignee unit
 after giving effect to the allocation to the general
 partners ...........................................  $        161   $           3   $         53
                                                       ============   =============   ============

Net assets and liabilities - financial statements ...  $ 29,463,000   $  21,590,000   $ 25,250,000
Cumulative differences resulted from:
   Gain on sale of property .........................       300,000         300,000        300,000
   Depreciation .....................................        90,000         514,000        651,000
   Amortization of notes payable discount ...........          --         2,347,000      2,211,000
   Interest .........................................        76,000      (2,211,000)    (2,205,000)
   Capital account adjustment .......................          --         5,993,000      5,993,000
   Other ............................................        41,000          (6,000)        53,000
                                                       ------------   -------------   ------------

Net assets and liabilities - income tax method ......  $ 29,970,000   $  28,527,000   $ 32,253,000
                                                       ============   =============   ============
</TABLE>

9.  Subsequent Events

On January 13, 1998, the Partnership  distributed $16,819,000 of the $24,387,000
net sales  proceeds to the limited and general  partners.  On January 29, 1998 a
distribution  totaling $612,000 and the related partnership  management fees was
made representing a portion of the fourth quarter 1997 earnings from operations

                                       28

<PAGE>


<TABLE>
                                                                                                               SCHEDULE III
                                       METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                                             a California Limited Partnership

                                         REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                     December 31, 1997
<CAPTION>
COLUMN                COLUMN        COLUMN            COLUMN                 COLUMN             COLUMN    COLUMN    COLUMN
     A                   B             C                 D                      E                   F        G         H

                                                      Cost Capitalized
                                         Initial Cost     Subsequent     Gross Amount at Which
                                        to Partnership to Acquisition Carried at Close of Period(1)
                                        -------------- -------------- ----------------------------
                                                                                                 Accumu-    Date
                                             Buildings                        Buildings           lated      of      Date
                                               and                               and            Deprecia-   Con-      of
                             Encum-          Improve- Improve- Carrying        Improve-           tion     struc-   Acqui-
Description                  brances   Land    ments   ments     Costs Land     ments   Total(2) (3)(4)     tion    sition
-----------                  -------   ----    -----   -----     ----- ----     -----   -------- ------     ----    ------
<S>                            <C>          <C>       <C>     <C>              <C>      <C>        <C>        <C>   <C>
                                                          (Amounts in thousands)
HOTEL:

Residence Inn-Nashville (Airport)
   Nashville, Tennessee.......$8,514        $11,416   $3,018  $(525)           $13,909   $13,909  $5,263      1/85  5/26/89
                              ======        =======   ======  ======           =======   =======  ======



                                                  See accompanying notes.
</TABLE>
                                                             29

<PAGE>

<TABLE>

                                                                                                               SCHEDULE III
                                       METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
                                             a California Limited Partnership

                                         REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                     December 31, 1996
<CAPTION>
COLUMN                COLUMN        COLUMN            COLUMN                 COLUMN             COLUMN    COLUMN    COLUMN
     A                   B             C                 D                      E                   F        G         H

                                                     Cost Capitalized
                                         Initial Cost   Subsequent       Gross Amount at Which
                                        to Partnership to Acquisition Carried at Close of Period(1)
                                        -------------- -------------- -----------------------------
                                                                                                 Accumu-    Date
                                             Buildings                        Buildings           lated      of      Date
                                               and                               and            Deprecia-   Con-      of
                             Encum-          Improve- Improve- Carrying        Improve-           tion     struc-   Acqui-
Description                  brances   Land    ments   ments   Costs   Land      ments  Total(2) (3)(4)     tion    sition
-----------                  -------   ----    -----   -----   -----   ----      -----  -------- ------     ----    ------
<S>                           <C>    <C>    <C>      <C>     <C>     <C>      <C>      <C>      <C>         <C>     <C>
                                                          (Amounts in thousands)
HOTELS:

Residence Inn-Ontario
   Ontario, California....   $9,000  $3,338 $13,555 $1,316    $(775) $3,185  $14,249   $17,434  $5,550      2/86    4/29/88

Residence Inn-Columbus (East)
   Columbus, Ohio.........    2,654     587   5,277  1,086     (176)    571    6,203     6,774   2,652      1986    6/17/88

Residence Inn-Fort Wayne
   Fort Wayne, Indiana....    2,782     595   5,541    969     (229)    573    6,303     6,876   2,554      1985    6/17/88

Residence Inn-Indianapolis
   Indianapolis, Indiana..    3,228     996   6,128  1,462     (167)    973    7,446     8,419   3,092      1984    6/17/88

Residence Inn-Lexington                                                                                    11/85 &
   Lexington, Kentucky....    3,139     799   6,114  1,339      (92)    787    7,373     8,160   2,892      3/86    6/17/88

Residence Inn-Louisville
   Louisville, Kentucky...    3,624   1,093   6,880  1,419     (164)  1,070    8,158     9,228   3,476      1984    6/17/88

Residence Inn-Winston-Salem
   Winston-Salem,
   North Carolina.........    3,183     669   6,341  1,150     (132)    657    7,371     8,028   3,032      1986    6/17/88

Residence Inn-Nashville (Airport)
   Nashville, Tennessee...    8,647       -  11,416  2,590     (525)      -   13,481    13,481   4,747      1/85    5/26/89

Residence Inn-Altamonte Springs
 Altamonte Springs,                                                                                        1985 &
   Florida................    6,261   1,594   9,862     950    (350)  1,542   10,514    12,056   3,830      1988    3/16/90
                            ------- ------- ------- -------  ------- ------  -------   ------- -------

TOTAL.....................  $42,518  $9,671 $71,114 $12,281 $(2,610) $9,358  $81,098   $90,456 $31,825
                            =======  ====== ======= =======  ======= ======  =======   ======= =======


                                                See accompanying notes.
</TABLE>
                                                          30

<PAGE>



                                                                    SCHEDULE III


                  METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
                        A California Limited Partnership

                    REAL ESTATE AND ACCUMULATED DEPRECIATION

NOTES:
(1)   The aggregate costs for Federal income tax purposes are $13,985,000 and
      $90,733,000 as of December 31, 1997 and December 31, 1996, respectively.


(2)   Balance, January, 1, 1995....................................$ 96,213,000
      Cost of property and improvements sold....................... (10,491,000)
      Capital improvements.........................................   2,163,000
                                                                   ------------

      Balance, December 31, 1995...................................  87,885,000
      Capital improvements.........................................   2,571,000
                                                                   ------------

      Balance, December 31, 1996...................................  90,456,000
      Cost of properties and improvements sold..................... (78,797,000)
      Capital improvements.........................................   2,250,000
                                                                   ------------

      Balance, December 31, 1997..................................$  13,909,000
                                                                   ============

(3)   Balance, January, 1, 1995...................................$  28,008,000
      Accumulated depreciation on property and improvements sold...  (2,533,000)
      Additions charged to expense.................................   3,460,000
                                                                   ------------

      Balance, December 31, 1995...................................  28,935,000
      Additions charged to expense.................................   2,890,000
                                                                     ----------

      Balance, December 31, 1996...................................  31,825,000
      Accumulated depreciation on properties and improvements sold  (28,297,000)
      Additions charged to expense................................    1,735,000
                                                                   ------------
      Balance, December 31, 1997..................................$   5,263,000
                                                                   ============

(4)   Depreciation is computed on lives ranging from six to 30 years.


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

The information  called for by this item is incorporated  herein by reference to
the Registrant's Current Report on Form 8-K filed September 14, 1994 (Commission
File No. 0-17660).


                                       31

<PAGE>



                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

The  Partnership  has no  directors  or executive  officers.  For  informational
purposes only, the following are the names and additional  information  relating
to the directors  and  executive  officers of SSR Realty  Advisors,  Inc.  ("SSR
Realty"), the managing partner of Metric Realty, the managing general partner of
the Partnership.

      (a)  Directors

Thomas P. Lydon, Jr.
Director, President and Chief Executive Officer, SSR Realty

Mr. Lydon age 49, has been President and Chief Executive  Officer of SSR Realty,
or one of its predecessor  companies  since February 1995.  Prior to joining SSR
Realty  Advisors,  Inc.,  Mr.  Lydon was from  April  1992,  an  Executive  Vice
President of MBL Life Assurance  Corporation  ("MBL")  (formerly  Mutual Benefit
Life  Insurance  Company)  chosen by the New Jersey  Department  of Insurance to
oversee and reorganize the real estate  investment  division of MBL. Mr. Lydon's
experience  before joining MBL included  serving as Executive Vice President and
Principal of Manhattan Capital Realty  Corporation,  an investment banking firm,
from 1990 to 1992; as Senior Vice President of Unicorp American  Corporation,  a
real estate and banking firm,  from 1985 to 1990; as Partner and Executive  Vice
President of New York Urban  Servicing Co., Inc., and as Vice President of Chase
Manhattan  Bank,  N.A. Mr.  Lydon  graduated  from  Syracuse  University  with a
Bachelor's Degree in Business Administration in 1970.

Ralph F. Verni
Chairman of the Board, SSR Realty

Mr. Verni,  age 55, was elected to his position with a predecessor of SSR Realty
in March 1993. He joined State Street  Research and Management  Company  ("State
Street   Research"),   a  subsidiary  of  Metropolitan  Life  Insurance  Company
("MetLife"),  in 1992  as  Chairman  and  Chief  Executive  Officer  and  became
President in January 1993. He also serves as Director, President and CEO of SSRM
Holdings,  Inc., a wholly-owned  subsidiary of MetLife which in turn serves as a
holding company for several of MetLife's investment management subsidiaries.  He
is a trustee of 11 registered  investment companies in the State Street Research
Fund complex  which are managed by State Street  Research or an  affiliate.  Mr.
Verni  is a  member  of the  Board  of  Directors  of the  CML  Group,  Inc.,  a
publicly-traded  company.  In  addition,  Mr.  Verni is a member of the Advisory
Committee for the MIT Center for Real Estate Development, the Colgate University
Board of Trustees  and its Finance  Committee,  and the  Advisory  Committee  of
Commonwealth Capital Ventures,  L.P. Prior to joining State Street Research, Mr.
Verni was  President  and Chief  Executive  Officer  of New  England  Investment
Companies,  a holding company for the real estate,  investment  management,  and
broker/dealer  subsidiaries  of New England Mutual Life Insurance  Company ("The
New England"),  and was also the Chief Investment  Officer and a director of The
New England.  Prior to joining The New England in 1982,  Mr Verni spent 16 years
with The  Equitable  Life  Assurance  Company  in senior  investment  management
positions.  He holds a Bachelor's Degree from Colgate  University and a Master's
Degree in Business Administration from Columbia University.

Gerard P. Maus
Director, SSR Realty

Mr.  Maus,  age 46, was  elected as a director of a  predecessor  company of SSR
Realty  in March  1993.  He joined  State  Street  Research  as  Executive  Vice
President,  Chief Financial Officer and Chief Administrative Officer in February
1993.  Prior to joining State Street,  Mr. Maus served since 1983 as a financial
officer of New England and its  subsidiary,  New  England  Investment  Companies
("NEIC"),  most recently as Executive Vice President and Chief Financial Officer
of NEIC from 1990 to January 1993.  Prior to holding these  positions,  Mr. Maus
held  financial  positions  with Bank of New  England,  Coopers &  Lybrand,  and
Liberty Mutual Life Insurance Company.  He received a Bachelor of Arts Degree in
Business  Administration  from  Rutgers  University  in 1973 and is a  Certified
Public Accountant.


                                       32

<PAGE>



      (b)  Executive Officers

William A. Finelli
Managing Director and Chief Financial Officer, SSR Realty

Mr.  Finelli,  age 40, has been Managing  Director,  and Vice  President,  Chief
Financial  Officer  and  Treasurer  of SSR  Realty  or  one  of its  predecessor
companies  since August 1995. He is  responsible  for  overseeing the day to day
activity of the  accounting,  finance,  technology  and  valuation  areas of the
company. Before he joined SSR Realty, Mr. Finelli served from November 1983 as a
financial executive of MBL. His last position with MBL was Vice President - Real
Estate  Accounting.  Prior to his years at MBL,  Mr.  Finelli  was with  Ernst &
Young, a public accounting firm. Mr. Finelli  graduated from Rutgers  University
with a  Bachelor's  Degree  in  Accounting  in 1979  and is a  certified  public
accountant.

Herman H. Howerton
Managing Director and General Counsel, SSR Realty

Mr.  Howerton,  age 54,  has served as  General  Counsel  with SSR Realty or its
predecessor  companies  since 1988.  From 1984 to 1988,  he was  employed by Fox
Capital  Management  Corporation  ("FCMC") in various  legal  positions.  He was
employed by Cushman & Wakefield in commercial  leasing from 1983 to 1984.  Prior
to that,  from 1972 to 1982,  Mr.  Howerton  held  various  positions  with Itel
Corporation,   including  those  of  Vice   President-Administration   and  Vice
President,  General Counsel and Secretary. He received a Bachelor of Arts Degree
from California  State University at Fresno in 1965 and a Juris Doctorate Degree
from Harvard Law School in 1968.  He is a member of the State Bar of  California
and a licensed California real estate broker.

Ronald E. Zuzack
Managing Director, Multi-Housing Operating Company, SSR Realty

Mr. Zuzack, age 54, has been in charge of the Multi-Housing Operating Company of
SSR Realty since its  organization in April 1997, and was in charge of Portfolio
Services for certain predecessor  companies since March 1988. From 1981 to 1988,
he was employed by FCMC in various portfolio management positions. Prior to 1981
he was employed by Union Bank as Vice President/Manager Real Estate,  Sacramento
Region, and acted as Vice President,  Development and Property  Management while
employed by  Inter-Cal  Real Estate  Corporation.  He received  his  Bachelor of
Science  Degree  and  Master's  Degree  in  Business   Administration  from  the
University of Missouri.

Item 11.  Executive Compensation.

The Partnership  does not pay or employ any directors or officers.  Compensation
to the  directors  and officers of SSR Realty,  the  managing  partner of Metric
Realty (the managing general partner of the Partnership),  is paid by SSR Realty
or its affiliates and is not related to the results of the Partnership.

The Partnership has not established any plans pursuant to which plan or non-plan
compensation  has been paid or  distributed  during the last  fiscal  year or is
proposed to be paid or distributed in the future, nor has the Partnership issued
or  established  any  options  or  rights  relating  to the  acquisition  of its
securities or any plan relating to such options or rights.  However,  SSR Realty
is expected to receive  certain  allocations,  distributions  and other  amounts
pursuant  to the  Partnership's  limited  partnership  agreement.  In  addition,
included  in  the  expense  reimbursements  made  to  such  general  partner  or
affiliates by the Partnership is an allocation for a portion of the compensation
(including  employee benefit plans) paid to personnel rendering asset management
services to the Partnership.


                                       33

<PAGE>



Item 12.  Security Ownership of Certain Beneficial Owners and Management.

There is no person known to the Partnership  who owns  beneficially or of record
more than five percent of the voting securities of the Partnership.  Neither the
Partnership's  managing  general  partner nor  affiliates  of the  Partnership's
managing general partner have contributed capital to the Partnership.

The Partnership is a limited  partnership and has no officers or directors.  The
managing  general partner has  discretionary  control over most of the decisions
made by or for the  Partnership in accordance  with the terms of the Partnership
Agreement.  Each of the  directors  and officers of the managing  partner of the
Partnership's managing general partner, and all of these individuals as a group,
own less than one percent of the Partnership's voting securities.

There are no arrangements known to the Partnership, the operations of which may,
at a subsequent date, result in a change in control of the Partnership.

Item 13.  Certain Relationships and Related Transactions.

None;  except  that the  Partnership  in 1997 paid and in 1998 will pay fees and
expense   reimbursements   to  Metric  Realty  for  services   provided  to  the
Partnership.  See the Prospectus filed pursuant to Rule 424(b) of the Securities
Act of 1933,  which  is  incorporated  by  reference  herein,  and Note 2 to the
Financial  Statements in Item 8. All of the individuals  listed in Item 10 above
are officers and  employees  of and receive  compensation  from SSR Realty or an
affiliate.

                                     PART IV

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

(a)   1., 2. and 3. See Item 8 of Form  10-K for  Financial  Statements  for the
      Partnership, Notes thereto, and Financial Statement Schedules. (A table of
      contents to Financial  Statements  and  Financial  Statement  Schedules is
      included in Item 8 and incorporated herein by reference.)

(b)   No reports on Form 8-K were  required to be filed  during the last quarter
      of the period  covered  by this  Report  other  than the  letter  from the
      Registrant  to  investors  dated  December  26,  1997 filed on Form 8-K on
      December 30, 1997.  Subsequent to the close of the quarter, on January 13,
      1998 the  Registrant  filed a report on Form 8-K including the letter from
      the Registrant to investors  dated January 13, 1998. On January 14, 1998 a
      report  was  filed  on  Form  8-K  reporting  the  sale  of  eight  of the
      Partnership's hotels.

(b)   Financial Statement Schedules, if required by Regulation S-K, are included
      in Item 8.

                                       34

<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.

                              REGISTRANT

                              METRIC  PARTNERS  GROWTH  SUITE  INVESTORS,  L.P.,
                              a California Limited Partnership

                                             By:   Metric Realty,
                                                   an Illinois general
                                                   partnership,
                                                   its Managing General Partner

                                             By:   SSR Realty Advisors, Inc.,
                                                   a Delaware corporation,
                                                   its Managing General Partner


                                             By:   /s/ Thomas P. Lydon, Jr.
                                                   -----------------------------
                                                   Thomas P. Lydon, Jr.
                                                   President and Chief Executive
                                                   Officer, SSR Realty Advisors,
                                                   Inc.

                                             Date: March 30, 1998
                                                   -----------------------------

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


By: /s/ William A. Finelli                   By: /s/ Ralph F. Verni
    --------------------------------------       -------------------------------
    William A. Finelli                           Ralph F. Verni
    Managing Director and Chief Financial        Chairman of the Board,
    Officer, SSR Realty Advisors, Inc.           SSR Realty Advisors, Inc.



    By: /s/ Gerard P. Maus                   By: /s/ Thomas P. Lydon, Jr.
        ----------------------------------       -------------------------------
        Gerard P. Maus                           Thomas P. Lydon
        Director, SSR Realty Advisors, Inc.      Director, SSR Realty Advisors,
                                                 Inc.



Date:   March 30, 1998
        ----------------------------------

                                       35