CAMBRIDGE RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP - 10-K Annual Report

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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 February 28, 2002

OR

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

Commission File Number 0-12634

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

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

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

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

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

None

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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]

DOCUMENTS INCORPORATED BY REFERENCE
None

PART I

Item 1. Business.

GENERAL

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

The Partnership completed its initial public offering (the "Offering") on May 4,
1984. Pursuant to the Offering, the Partnership issued 5,019 Initial Limited
Partnership Interests in 1984 and 5,019 Additional Limited Partnership Interests
in 1985, resulting in $50,190,000 in Gross Proceeds and $36,638,700 of net
proceeds available for investment and reserves. The Partnership is currently in
the process of winding up its operations and disposing of its investments. It is
anticipated that this process will take a number of years. See "Sales of
Underlying Properties/Local Partnership Interests" below. As of February 28,
2002, the Partnership has disposed of thirty of its forty-four original
investments.

INVESTMENT OBJECTIVES/GOVERNMENT INCENTIVES

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

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

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

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

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

The Partnership is in the process of winding down its operations as it continues
to sell its assets;. therefore investment objectives (1), (2) and (4) are no
longer applicable. The Partnership has to date distributed approximately
$6,683,000 from sales transactions and expects to continue to make distributions
from excess sales proceeds, although such aggregate distributions are not
currently anticipated to equal the original investment. The Partnership will no
longer be generating passive losses due to the sale of properties. However,
passive losses previously allocated (to the extent unused by a limited partner)
are available to offset the income expected to be generated from the sales
effort.

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Federal, state and local government agencies have provided significant
incentives in order to stimulate private investment in government assisted
housing. The intent of these incentives is to reduce certain market risks and
permit investors to receive (i) tax benefits, (ii) limited cash distributions
and (iii) long-term capital appreciation. Notwithstanding these factors, there
remain significant risks. These risks include, and are not limited to, the
financial strength and expertise of the local general partners. The long-term
nature of the investments in government-subsidized housing and the continuance
of government incentives has limited the ability of the Partnership to vary its
investment portfolio in response to changing economic, financial and investment
conditions; such investments have also been subject to changes in local economic
circumstances and housing patterns which have had an impact on real estate
values and, in the Partnership's current liquidation phase, the ability to
achieve a profit on the sale of the apartment complexes. These Apartment
Complexes have also required greater management expertise and have had higher
operating expenses than conventional apartment buildings. See Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, below.

INVESTMENTS

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

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

PURCHASE MONEY NOTES

Nonrecourse purchase money notes (the "Purchase Money Notes") were issued to the
selling partners of the Subsidiary Partnerships as part of the purchase price,
and are secured only by the Partnership's interest in the Subsidiary Partnership
to which the Purchase Money Note relates.

The Purchase Money Notes, which provide for simple interest, will not be in
default if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding Subsidiary Partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. As of February 28, 2002, the maturity dates of the Purchase
Money Notes associated with the remaining properties owned by the Subsidiary
Partnerships were extended for three to five years (see below). Any interest not
paid currently accrues, without further interest thereon, through the extended
due date of each of the Purchase Money Notes, respectively. Continued accrual of
such interest without payment would

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impact the effective rate of the Purchase Money Notes, specifically by reducing
the current effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and ultimate
repayment dates of the Purchase Money Notes. Unpaid interest of $24,682,606 and
$30,335,470 at February 28, 2002 and 2001, respectively, has been accrued and is
included in the caption due to selling partners. In general, the interest on and
the principal of each Purchase Money Note is also payable to the extent of the
Partnership's actual receipt of proceeds from the sale or refinancing of the
Apartment Complex, or in some cases the Local Partnership Interest to which the
Purchase Money Note relates.

The Partnership was permitted to extend the term of the Purchase Money Notes for
up to five additional years. In connection with such extensions, the Partnership
incurred an extension fee of 1/2% per annum of the outstanding principal balance
of the Purchase Money Notes. The Partnership sent an extension notice to each
Purchase Money Note holder that pursuant to the Purchase Money Note, it was
extending the maturity. However in certain cases, the Partnership did not pay
the extension fee at that time, deferring such payment to the future. All
Purchase Money Notes are now extended with maturity dates ranging from July to
October 2002. Extension fees of $737,826 were accrued and added to the Purchase
Money Notes balance.

The Partnership expects that upon final maturity it will be required to
refinance or sell its investments in the Local Partnerships in order to pay the
Purchase Money Notes and accrued interest thereon. Based on the historical
operating results of the Local Partnerships and the current economic conditions
including changes in tax laws, it is unlikely that the proceeds from such sales
will be sufficient to meet the outstanding balances. Management is working with
the Purchase Money Note holders to restructure and/or refinance the Purchase
Money Notes. No assurance can be given that management's efforts will be
successful. The Purchase Money Notes are without personal recourse to either the
Partnership or any of its partners and the sellers' recourse, in the event of
non-payment, would be to foreclose on the Partnership's interests in the
respective Local Partnerships.

GOVERNMENT PROGRAMS AND REGULATIONS

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

The Local Partnerships that receive government assistance are subject to
low-income use restrictions which limited the owners' ability to sell or
refinance the properties. In order to maintain the existing inventory of
affordable housing, Congress passed a series of related acts including the
Emergency Low Income Preservation Act of 1987, the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (together the "Preservation
Acts") and the Housing Opportunity Program Extension Act of 1996 (the "1996
Act"). In exchange for maintaining the aforementioned use restrictions, the
Preservation Acts provided financial incentives for owners of government
assisted properties. The 1996 Act provided financial assistance by funding the
sale of such properties to not-for-profit owners and also restores the owners'
abilities to prepay their HUD mortgage and convert the property to condominiums
or market-rate rental housing. Local general partners had filed for incentives
under the Preservation Acts or the 1996 Act for the following local
partnerships: San Diego - Logan Square Gardens Company, Albuquerque - Lafayette
Square Apts. Ltd., Westgate Associates Limited, Riverside Gardens, a Limited
Partnership, Pacific Palms, a Limited Partnership, Canton Commons Associates,
Rosewood Manor Associates, Bethany Glen Associates and South Munjoy Associates,
Limited. As of February 28, 2002, all of these Local Partnerships were sold
except for Logan

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Square and Lafayette Square. The Preservation Acts have subsequently been
repealed or revoked. The local general partner of the Logan Square and Lafayette
Square properties is currently negotiating purchase and sale contracts.

In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals instead of the above-market rentals which is generally the case
under existing Section 8 Contracts. As a result, Section 8 Contracts that are
renewed in the future in projects insured by the Federal Housing Administration
("FHA") may not provide sufficient cash flow to permit owners of properties to
meet the debt service requirements of these existing FHA-insured mortgages.
MAHRA also provides for the restructuring of these mortgage loans so that the
annual debt service on the restructured loan (or loans) can be supported by
Section 8 rents established at the market rents. The restructured loans will be
held by the current lender or another lender. There can be no assurance that a
property owner will be permitted to restructure its mortgage indebtedness
pursuant to the new rules implementing MAHRA or that an owner, or the holder of
the mortgage, would choose to restructure the mortgage if it were able to
participate. MAHRA went into effect on September 11, 1998 when interim
regulations implementing the program were published. It should be noted that
there are many uncertainties as to the economic and tax impact on a property
owner because of the combination of the reduced Section 8 contract rents and the
restructuring of the existing FHA-insured mortgage loan under MAHRA.

On October 21, 1998 President Clinton signed the Fiscal Year 1999 Departments of
Veteran Affairs, Housing and Urban Development and Independent Agencies
Appropriation Legislation into law. The bill provides, among other things, that
owners of a property that was eligible for prepayment had to give notice of such
prepayment to HUD tenants and to the chief executive of the state or local
government for the jurisdiction in which the housing is located. The notice must
be provided not less than 150 days, but not more than 270 days, before such
payment. Moreover, the owner may not increase the rent charged to tenants for a
period of 60 days following such prepayment. The bill also provides for
tenant-based vouchers for eligible tenants (generally below 80% of area median
income) at the true comparable market rents for unassisted units in order to
protect current residents from substantial increases in rent.

On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent
Agencies Appropriations Act (the "Appropriations Act"). The Appropriations Act
contains revisions to the HUD Mark-to-Market Program and other HUD programs
concerning the preservation of the HUD housing stock. On December 29, 1999 HUD
issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in
Fiscal Year 2000" reflecting the changes in the Appropriations Act and
superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice
99-36 clarifies many of the earlier uncertainties with respect to the earlier
HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market
Program which allows owners with Section 8 contracts to increase the rents to
market levels where contract rents are currently below market.

SALES OF UNDERLYING PROPERTIES/LOCAL PARTNERSHIP INTERESTS

GENERAL

The Partnership is currently in the process of winding up its operations and
disposing of its investments. It is anticipated that this process will take a
number of years. As of February 28, 2002, the Partnership has disposed of thirty
of its forty-four original investments. Subsequently, on March 27, 2002 two
additional investments were sold. Six additional investments are listed for sale
and the General Partner anticipates that the six remaining investments will

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be listed for sale by December 31, 2002. There can be no assurance as to when
the Partnership will dispose of its last remaining investments or the amount of
proceeds which may be received. However, based on the historical operating
results of the Local Partnerships and the current economic conditions including
changes in tax laws, it is unlikely that the proceeds from such sales will be
sufficient to return the limited partners original investment.

In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed two entities: Cambridge Liquidating Trust LLC ("Trust I"), a
Massachusetts limited liability company which is owned 99.99% by the Partnership
and .01% by affiliates of Related; and, Cambridge Liquidating Trust II ("Trust
II"), a Massachusetts general partnership which is owned 99% by Cambridge
Liquidating GP II, L.L.C. ("GP II") and 1% by Cambridge Liquidating GP I, L.L.C.
("GP I"). Both GP I and GP II are owned by the Partnership.

On December 30, 1998, the Partnership contributed its limited partnership
interest in Bethany Glen Associates, Westwood, Ltd., Parktowne, Ltd., Rolling
Meadows Apartments, Ltd., Buena Vista Apartments, Ltd. and Wingate Associates,
Ltd. to Trust I. On December 31, 1998, the Partnership contributed its limited
partnership interests in Grandview-Blue Ridge Manor Limited,
Breckenridge-Chaparral Apartments II, Ltd., El Paso-Gateway East, Ltd.,
Albequerque-Lafayette Square Apartments, Ltd., Corpus Christi-Oso Bay
Apartments, Ltd., Westgate Associates Limited, San Diego-Logan Square Gardens
Co., Ardmore-Rolling Meadows of Ardmore, Ltd., Fort Worth-Northwoods Apartments,
Ltd. and Stephenville-Tarleton Arms Apartments, Ltd. to Trust II. In each case,
the interests were contributed subject to each respective Purchase Money Note.
The contribution did not involve any consideration being paid to the
Partnership, therefore, there was no tax effect to the limited partners of the
Partnership. Bethany Glen, Westwood, Parktowne, Rolling Meadows, Buena Vista and
Westgate have been sold.

INFORMATION REGARDING DISPOSITION

On June 18, 1999, the Partnership's limited partnership interest in Warren Manor
Apartments Limited Partnership was sold to the local general partners for
approximately $935,000, resulting in a loss in the amount of approximately
$3,548,000. No proceeds were used to settle the associated Purchase Money Note
and accrued interest which had a total outstanding balance of approximately
$9,187,000, resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Golf Manor
Apartments Limited Partnership was sold to the local general partners for
approximately $255,000, resulting in a loss in the amount of approximately
$544,000. No proceeds were used to settle the associated Purchase Money Note and
accrued interest which had a total outstanding balance of approximately
$2,227,000, resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Warren Woods
Apartments, L.P. was sold to the local general partners for approximately
$377,000, resulting in a loss in the amount of approximately $1,914,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $3,532,000,
resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Rosewood
Manor Apartments Limited Partnership was sold to the local general partners for
approximately $406,000, resulting in a loss in the amount of approximately
$1,031,000. No proceeds were used to settle the associated Purchase Money Note
and accrued interest which had a total outstanding balance of approximately
$3,568,000, resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Canton
Commons Apartments Limited Partnership was sold to the local general partners
for approximately $855,000,

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resulting in a gain in the amount of approximately $987,000. No proceeds were
used to settle the associated Purchase Money Note and accrued interest which had
a total outstanding balance of approximately $7,816,000, resulting in
forgiveness of indebtedness income.

On November 8, 1999, the property and the related assets and liabilities of
Bethany Glen Associates ("Bethany") were sold to an unaffiliated third party for
$3,450,000, resulting in a gain in the amount of approximately $1,582,000. The
Partnership used $2,494,000 of the net proceeds to settle the associated
Purchase Money Note and accrued interest thereon which had a total outstanding
balance of approximately $2,889,000, resulting in forgiveness of indebtedness
income of $395,000.

On April 28, 2000, the property and the related assets and liabilities of
Pacific Palms were sold to a third party for approximately $4,900,000, resulting
in a gain of approximately $2,554,000. The Partnership used approximately
$1,668,000 of the net proceeds to settle the associated Purchase Money Notes and
accrued interest thereon which had a total outstanding balance of approximately
$5,214,000, resulting in forgiveness of indebtedness of approximately
$3,546,000. The Partnership netted approximately $1,940,000 of cash which was
placed into working capital to pay Partnership expenses.

On September 14, 2000, the property and the related assets and liabilities of
Westwood Apartments Company, Ltd. ("Westwood") were sold to an unaffiliated
third party for $2,025,000, resulting in a loss of approximately $356,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$3,059,000, resulting in forgiveness of indebtedness income.

On September 14, 2000, the property and the related assets and liabilities of
Parktowne Ltd. ("Parktowne") were sold to an unaffiliated third party for
$2,500,000, resulting in a gain of approximately $476,000. The Partnership used
approximately $844,000 of the net proceeds to settle the associated Purchase
Money Note and accrued interest thereon, which had an outstanding balance of
approximately $1,804,000, resulting in forgiveness of indebtedness income of
approximately $960,000.

On December 1, 2000, the property and the related assets and liabilities of
Westgate Associates, Limited ("Westgate") were sold to an unaffiliated third
party for $2,055,000, resulting in a loss of approximately $164,000. The
Partnership used approximately $601,000 of the net proceeds to settle the
associated Purchase Money Note and accrued interest thereon, which had a total
outstanding balance of approximately $1,516,000, resulting in forgiveness of
indebtedness income of approximately $915,000.

On December 20, 2000, the property and the related assets and liabilities of New
Jersey, Ltd. ("New Jersey") were sold to an unaffiliated third party for
$2,049,600 resulting in a gain of approximately $65,000. The Partnership used
approximately $500,000 of the net proceeds to settle the associated Purchase
Money Note and accrued interest thereon, which had an outstanding balance of
approximately $2,369,000 resulting in forgiveness of indebtedness income of
approximately $1,869,000.

On March 16, 2001, the property and the related assets and liabilities of
Char-Mur Apartments ("Char-Mur") were sold to an affiliate of the Local General
Partner for $475,000, resulting in a loss in the amount of approximately
$193,000. The Partnership used approximately $85,000 to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $986,000, resulting in forgiveness of indebtedness
income of $901,000.

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On April 19, 2001, San Diego - Logan Square Gardens Company ("Logan") entered
into a purchase and sale agreement to sell the property and the related assets
and liabilities to an unaffiliated third party purchaser for a purchase price of
$9,500,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

On August 31, 2001, the property and the related assets and liabilities of
Rolling Meadows Apartments, Ltd. ("Rolling Meadows") were sold to an
unaffiliated third party purchaser for $1,925,000 resulting in a loss in the
amount of approximately $485,000. The Partnership used approximately $201,000 to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $3,757,000 resulting in
forgiveness of indebtedness income of approximately $3,556,000.

On September 4, 2001, Albuquerque - Lafayette Square Apartments, Ltd.
("Lafayette") entered into a purchase and sale agreement to sell the property
and the related assets and liabilities to an unaffiliated third party purchaser
for a purchase price of $7,000,000. The closing is expected to occur in late
2002. No assurances can be given that the sale will actually occur.

On September 25, 2001, Forth Worth - Northwood Apartments, Ltd ("Northwood")
entered into a purchase and sale agreement to sell the property and the related
assets and liabilities to an affiliate of the Local General Partner for a
purchase price of $3,800,000. The closing is expected to occur in late 2002. No
assurances can be given that the sale will actually occur.

On October 25, 2001, El Paso - Gateway East, Ltd. ("Gateway") entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an unaffiliated third party purchaser for a purchase price of
$2,700,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

On November 1, 2001 Wingate Associates, Limited ("Wingate") entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an affiliate of the Local General Partner for a purchase price of
$2,600,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

On November 26, 2001, the Partnership's Limited Partnership Interest in Buena
Vista Manor Apartments, Ltd. ("Buena Vista") was sold to the Local General
Partners for $125,000 resulting in a loss in the amount of approximately
$596,000. No proceeds were used to settle the associated Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of approximately
$5,092,000 resulting in a gain of approximately $5,092,000.

On December 4, 2001, the Partnership's Limited Partnership Interest in Crossett
Apartments, Ltd. ("Crossett") was sold to the Local General Partner effective
January 1, 2002 for $7,920 resulting in a loss of approximately $212,000 and the
related Purchase Money Note was assigned to the Local General Partner. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$1,117,000 resulting in a gain on sale of property of approximately $1,117,000.

On December 4, 2001, the Partnership's Limited Partnership Interest in Cedar
Hill Apartments, Ltd. ("Cedar Hill") was sold to the Local General Partner
effective January 1, 2002 for $11,988 resulting in a loss of approximately
$479,000 and the related Purchase Money Note was assigned to the Local General
Partner. No proceeds were used to settle the associated Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of approximately
$1,220,000 resulting in a gain on sale of property of approximately $1,220,000.

On December 18, 2001, Bay Village Company ("Bay Village") entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an affiliate of the Local

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General Partner for a purchase price of $6,075,000. The closing is expected to
occur in late 2002. No assurances can be given that the sale will actually
occur.

OPERATING FUNDS

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

TAX MATTERS

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

COMPETITION

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

EMPLOYEES

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

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Item 2. Properties.

As of February 28, 2002, the Partnership holds a 98.99% limited partnership
interest in each of nineteen Local Partnerships, which own nineteen residential
Apartment Complexes receiving Government Assistance. During the fiscal year
ended February 28, 2002, the property and the related assets and liabilities
owned by two Local Partnerships were sold and the Partnership's Local
Partnership Interest in three other Local Partnerships were sold. Through the
fiscal year ended February 28, 2002, the properties and the related assets and
liabilities owned by fifteen Local Partnerships were sold and the Partnership's
Local Partnership Interest in fifteen other Local Partnerships were sold. Set
forth below is a schedule of these Local Partnerships, including certain
information concerning the Apartment Complexes (the "Local Partnership
Schedule"). See Schedule III to the financial statements included herein for
additional information, including encumbrances, pertaining to the Apartment
Complexes.

LOCAL PARTNERSHIP SCHEDULE

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LOCAL PARTNERSHIP SCHEDULE
(CONTINUED)

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LOCAL PARTNERSHIP SCHEDULE
(CONTINUED)

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LOCAL PARTNERSHIP SCHEDULE
(CONTINUED)

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

1) HUD provides mortgage insurance for rental housing projects pursuant to a
number of sections of Title II of the National Housing Act ("NHA"), including
Section 236, Section 221(d)(4), Section 221(d)(3) and Section 220. Under all of
these programs, HUD will generally provide insurance equal to 100% of the total
replacement cost of the project to non-profit owners and 90% of the total
replacement cost to limited-distribution owners. Mortgages are provided by
institutions approved by HUD, including banks, savings and loan companies and

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local housing authorities. Section 221(d)(4) of NHA provides for federal
insurance of private construction and permanent mortgage loans to finance new
construction of rental apartment complexes containing five or more units. The
most significant difference between the 221(d)(4) program and the 221(d)(3)
program is the maximum amount of the loan which may be obtained. Under the
221(d)(3) program, non-profit sponsors may obtain a permanent mortgage equal to
100% of the total replacement cost; no equity contribution is required of a
non-profit sponsor. In all other respects, the 221(d)(3) program is
substantially similar to the 221(d)(4) program.

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

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

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

(c) State of jurisdiction is Alabama.

(d) State of jurisdiction is Michigan.

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

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

-14-

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

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

(i) The property and the related assets and liabilities were sold during the
fiscal year ended February 28, 1999 (see Note 10 in Item 8. Financial Statements
and Supplemental Data).

(j) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended February 28, 1999 (see Note 10 in Item 8.
Financial Statements and Supplemental Data).

(k) As a result of on-going litigation related to the Roar Properties (as
defined herein), occupancy rates have not been provided by the management agent
pursuant to the instructions from the Local General Partner.

(l) The property and the related assets and liabilities were sold during the
fiscal year ended February 29, 2000 (see Note 10 in Item 8. Financial Statements
and Supplemental Data).

(m) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended February 29, 2000 (see Note 10 in Item 8.
Financial Statements and Supplemental Data).

(n) The property and the related assets and liabilities were sold during the
fiscal year ended February 28, 2001 (see Note 10 in Item 8. Financial Statements
and Supplemental Data).

(o) The property and the related assets and liabilities were sold during the
fiscal year ended February 28, 2002 (see Note 10 in Item 8. Financial Statements
and Supplemental Data).

(p) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended February 28, 2002 (see Note 10 in Item 8.
Financial Statements and Supplemental Data).

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

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

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

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

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

-15-

Item 3. Legal Proceeding.

On or about July 24, 2000, three limited partnerships controlled by the Purchase
Money Note holder commenced litigation in the Circuit Court of Jefferson County,
Alabama against the Partnership, captioned as follows: MOBILE EASTWYCK III
APARTMENTS, LTD. V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET
AL., CV-00-4431, MOBILE APARTMENTS, LTD. V. SHEARSON + RELATED HOUSING
PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4432, and ZEIGLER PARTNERS LTD. V.
SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4433
(collectively, the "Litigations"). In addition, on or about March 2001, Wallace,
Jordan, Ratliff and Brandt, LLC ("Wallace, Jordan") commenced an interpleader
action in the Civil Court of Jefferson County, Alabama, entitled WALLACE,
JORDAN, RATLIFF AND BRANDT, LLC V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED
PARTNERSHIP ET AL., CV-01-001155 ("the interpleader action").

On April 3, 2002, the Litigations and the interpleader action were fully
resolved and dismissed with prejudice.

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

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

PART II

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

At February 28, 2002, the Partnership had issued and outstanding 10,038 Limited
Partnership Interests, of which 5,019 are Initial Limited Partnership Interests
and 5,019 are Additional Limited Partnership Interests, each representing a
$5,000 capital contribution per unit to the Partnership, for aggregate gross
proceeds of $50,190,000. Additional Limited Partnership Interests are the
Limited Partnership Interests acquired upon the exercise of warrants or sold by
the Partnership upon the non-exercise of the warrants. The warrants are rights
granted pursuant to the Partnership Agreement as part of the purchase of an
Initial Limited Partnership Interest. No further issuance of Initial Limited
Partnership Interests or Additional Limited Partnership Interests is anticipated
and all warrants have expired. As of February 28, 2002, the Partnership had
4,117 registered holders of Limited Partnership Interests.

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

In March 2002 and 2001, distributions of approximately $0 and $511,000 and $0
and $5,000 were paid to the limited partners and General Partners, respectively,
from net proceeds from the sale of properties (see Item 7. below). Of the total
distributions of approximately $0 and $516,000 for the years ended February 28,
2002 and February 28, 2001, there was no return of capital determined in
accordance with U.S. generally accepted accounting principles. There are no
material restrictions upon the Partnership's present or future ability to make
distributions in accordance with the provisions of the Partnership Agreement.
However, the Partnership has invested in Local Partnerships owning Apartment
Complexes which receive Government Assistance under programs which in many
instances restrict the cash return available to owners. See Item 8, Note 11(i).
The Partnership does not anticipate providing cash distribu-

-16-

tions to its Limited Partners in circumstances other than refinancing or sale,
nor do the General Partners expect that the Partnership will distribute
sufficient net proceeds from sales or refinancings to return the Limited
Partners' original investment.

Item 6. Selected Financial Data.

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

During the years ended February 28, 1998, 1999, February 29, 2000, February 28,
2001, and 2002 total assets decreased primarily due to the sale of properties
(see Item 8., Note 10), depreciation and a loss for the impairment of assets,
partially offset by an increase in cash and cash equivalents resulting from net
proceeds from the sales and net additions to property and equipment. Long-term
obligations and total liabilities decreased for the years ended February 28,
1998, 1999, February 29, 2000, February 28, 2001, and 2002 primarily due to the
repayment of and forgiveness of indebtedness on Purchase Money Notes, mortgage
notes payable and amounts due to selling partners as a result of the sale of
underlying properties, partially offset by accruals of interest on Purchase
Money Notes.

-17-

Selected Quarterly Financial Data (Unaudited)

-18-

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

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

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

During the fiscal year ended February 28, 2002, the property and the related
assets and liabilities owned by two Local Partnerships and the Partnership's
Limited Partnership Interest in three Local Partnerships were sold to third
parties. Through the fiscal year ended February 28, 2002, the properties and the
related assets and liabilities owned by fifteen Local Partnerships were sold and
the Partnership's Local Partnership Interest in fifteen other Local Partnerships
were sold.

The Partnership had a working capital reserve of approximately $135,000 and
$1,200,000 (which does not include approximately $516,000 of net proceeds from
the sale of properties which was distributed to the limited partners and General
Partners in March 2001) at February 28, 2002 and 2001, respectively. The working
capital reserve is temporarily invested in money market accounts which can be
easily liquidated to meet obligations as they arise. The General Partners
believe that the Partnership's reserves, net proceeds from future sales and
future cash flow distributions will be adequate for its operating needs, and
plans to continue investing available reserves in short-term investments. The
General Partners fees are being paid currently other than approximately
$1,759,000 of Partnership management fees which were accrued and continue to be
deferred.

During the fiscal year ended February 28, 2002, cash and cash equivalents of the
Partnership and its consolidated Local Partnerships decreased approximately
$1,697,000. This decrease was due to an increase in mortgage escrow deposits
relating to investing activities ($635,000), acquisition of property and
equipment ($593,000), distributions ($516,000), payments to selling partners
($22,000) and net principal payments of mortgage notes and purchase money notes
($3,642,000) which exceeded proceeds from the sale of properties ($2,564,000),
cash provided by operating activities ($1,020,000) and an increase in minority
interest ($126,000). Included in the adjustments to reconcile the net income to
cash provided by operating activities is gain on sale of properties
($5,464,000), forgiveness of indebtedness income ($4,457,000) and depreciation
($1,137,000).

Cash flow distributions aggregating $71,144, $196,814 and $166,699 were made to
the Partnership in the 2001, 2000 and 1999 Fiscal Years, respectively. Of such
distributions, $56,426, $118,246 and $100,019, respectively, was used to pay
interest on the Purchase Money Notes. Distribution of proceeds from sales
aggregating $289,581 and $5,988,453 were made to the Partnership in the 2001 and
2000 Fiscal Years, respectively of which $286,080 and $3,612,653, respectively,
was used to pay principal and interest on the Purchase Money Notes.

PURCHASE MONEY NOTES

For a discussion of Purchase Money Notes Payable, see Note 7 to the Financial
Statements.

-19-

GOVERNMENT PROGRAMS AND REGULATIONS

For a discussion of Government Programs and Regulations, see Item 1. Business.

SALES OF UNDERLYING PROPERTIES/LOCAL PARTNERSHIP INTERESTS

GENERAL

The Partnership is currently in the process of winding up its operations and
disposing of its investments. It is anticipated that this process will take a
number of years. As of February 28, 2002, the Partnership has disposed of thirty
of its forty-four original investments. Subsequently, on March 27, 2002 two
additional investments were sold. Six additional investments are listed for sale
and the General Partner anticipates that the six remaining investments will be
listed for sale by December 31, 2002. There can be no assurance as to when the
Partnership will dispose of its last remaining investments or the amount of
proceeds which may be received. However, based on the historical operating
results of the Local Partnerships and the current economic conditions including
changes in tax laws, it is unlikely that the proceeds from such sales will be
sufficient to return the limited partners original investment.

In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed Trust I, a Massachusetts limited liability company which is
owned 99.99% by the Partnership and .01% by affiliates of Related; and, Trust
II, a Massachusetts general partnership which is owned 99% by GP II and 1% by GP
I. Both GP I and GP II are owned by the Partnership.

On December 30, 1998, the Partnership contributed its limited partnership
interest in Bethany Glen Associates, Westwood, Ltd., Parktowne, Ltd., Rolling
Meadows Apartments, Ltd., Buena Vista Apartments, Ltd. and Wingate Associates,
Ltd. to Trust I. On December 31, 1998, the Partnership contributed its limited
partnership interests in Grandview-Blue Ridge Manor Limited,
Breckenridge-Chaparral Apartments II, Ltd., El Paso-Gateway East, Ltd.,
Albequerque-Lafayette Square Apartments, Ltd., Corpus Christi-Oso Bay
Apartments, Ltd., Westgate Associates Limited, San Diego-Logan Square Gardens
Co., Ardmore-Rolling Meadows of Ardmore, Ltd., Fort Worth-Northwoods Apartments,
Ltd. and Stephenville-Tarleton Arms Apartments, Ltd. to Trust II. In each case,
the interests were contributed subject to each respective Purchase Money Note.
The contribution did not involve any consideration being paid to the
Partnership, therefore, there was no tax effect to the limited partners of the
Partnership. Bethany Glen, Westwood, Parktowne, Rolling Meadows, Buena Vista and
Westgate have been sold.

INFORMATION REGARDING DISPOSITION

For a discussion of the sale of properties in which the Partnership owns direct
and indirect interest, see Note 10 to the Financial Statements.

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

Except as described above, management is not aware of any trends or events,
commitments or uncertainties which have not otherwise been disclosed that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the properties around the United States so that
if one area of the United States is experiencing downturns in the econ-

-20-

omy, the remaining properties in the portfolio may be experiencing upswings.
However, the geographic diversification of the portfolio may not protect against
a general downturn in the national economy.

RESULTS OF OPERATIONS

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

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

Through February 28, 2002, the Partnership has recorded approximately $8,889,000
as a loss on impairment of assets.

The following is a summary of the results of operations of the Partnership for
the Fiscal Years ended February 28, 2002, February 28, 2001 and February 29,
2000 (the 2001, 2000 and 1999 Fiscal Years, respectively).

The results of operations of the Partnership, as well as the Local Partnerships,
excluding gain on sale of property and forgiveness of indebtedness income,
remained fairly constant during the 2001, 2000 and 1999 Fiscal Years.
Contributing to the relatively stable operations at the Local Partnerships is
the fact that a large portion of the Local Partnerships are operating under
Government Assistance Programs which provide for rental subsidies and/or
reductions of mortgage interest payments under HUD Section 8 and Section 236
Programs. Currently, thirteen of the fourteen Local Partnerships are receiving
rental subsidies and fourteen have mortgages with interest subsidies, which
reduce the effective interest rates to a range of 1% to 2% per annum.

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

The net income for the 2001, 2000 and 1999 Fiscal Years aggregated $7,475,627,
$10,075,724 and $18,166,465, respectively. These represent income per Limited
Partnership unit of $738, $993 and $1,792, respectively.

-21-

Excluding the 2001, 2000 and 1999 Fiscal Years in which the Partnership
generated passive income, the Partnership has met the investment objective of
generating tax benefits in the form of passive losses (which Limited Partners
may use to offset passive income from other sources). This passive income may be
offset by the carryforward of any unused passive losses from prior years;
however, to date the Partnership has been unable to provide cash distributions
to the Limited Partners other than from the proceeds of sale of underlying
properties.

2001 VS. 2000
Rental income decreased by approximately 14% during the 2001 Fiscal Year as
compared to the 2000 Fiscal Year. Excluding New Jersey, Westgate, Parktowne,
Westwood, Pacific Palm, Char-Mur and Rolling Meadows which sold their properties
and Buena Vista, Cedar Hill and Crossett in which the Partnership's interest was
sold (collectively the "Sold Assets"), rental income increased approximately 6%
during the 2001 Fiscal Year as compared to the 2000 Fiscal Year primarily due to
rental increases and decreases in vacancies at several Local Partnerships.

Other income decreased approximately $99,000 during the year ended February 28,
2002 as compared to 2001. Excluding the Sold Assets, other income increased
approximately $62,000, primarily due to larger cash and cash equivalent balances
earning interest at three Local Partnerships, increased laundry income at a
fourth Local Partnership and a state grant received at a fifth Local
Partnership.

A gain on sale of properties and forgiveness of indebtedness was recorded in the
2001 Fiscal Year (see Notes 10 and 11, respectively, in Item 8. Financial
Statements and Supplemental Data).

Total expenses, excluding Sold Assets, administrative and management, operating
and taxes and insurance, remained fairly consistent with a decrease of less than
2% for the 2001 Fiscal Year as compared to the 2000 Fiscal Year.

Administrative and management decreased approximately $108,000 for the year
ended February 28, 2002, as compared to 2001. Excluding the Sold Assets,
administrative and management increased approximately $325,000, primarily due to
amortization of the Purchase Money Note extension fees.

Operating decreased approximately $91,000 for the year ended February 28, 2002,
as compared to 2001. Excluding the Sold Assets, operating increased
approximately $294,000, primarily due to an increase in utility costs at five
Local Partnerships.

Taxes and insurance decreased approximately $165,000 for the year ended February
28, 2002, as compared to 2001. Excluding the Sold Assets, taxes and insurance
increased approximately $151,000, primarily due to increases of insurance
premiums at three Local Partnerships. .

Repairs and maintenance, financial and depreciation expense decreased
approximately $536,000, $813,000 and $469,000, respectively, for the 2001 Fiscal
Year as compared to the 2000 Fiscal Year. Excluding the Sold Assets, and Zeigler
Boulevard Ltd, Eastwyck III, Ltd., Wingate Associates, Ltd., Logan Square,
Lafayette Square, Gateway East, Ltd, Bay Village and Northwood Apts. Ltd., for
depreciation only, such expenses remained fairly consistent with decreases of
approximately $74,000, $12,000 and $9,000 respectively, for the 2001 Fiscal Year
as compared to the 2000 Fiscal Year. Zeigler Boulevard Ltd., Eastwyck III, Ltd,
Wingate Associates, Ltd., Logan Square, Lafayette Square, Gateway East, Ltd.,
Bay Village and Northwood Aparts, Ltd. are not depreciated during the period
because they are classified as assets held for sale

-22-

2000 VS. 1999
Rental income decreased by approximately 25% during the 2000 Fiscal Year as
compared to the 1999 Fiscal Year. Excluding New Jersey, Westgate, Parktowne,
Westwood, Pacific Palm and Bethany Glen, which sold their properties and Canton
Commons, Golf Manor, Rosewood Manor, Warren Manor and Warren Woods, in which the
Partnership's interest was sold (collectively the "Sold Assets"), rental income
increased approximately 4% during the 2000 Fiscal Year as compared to the 1999
Fiscal Year primarily due to rental increases and decreases in vacancies at
several Local Partnerships.

A gain on sale of properties and forgiveness of indebtedness was recorded in the
2000 Fiscal Year (see Notes 10 and 11, respectively, in Item 8. Financial
Statements and Supplemental Data).

Total expenses, excluding Sold Assets and loss on impairment of assets remained
fairly consistent with a decrease of less than 1% for the 2000 Fiscal Year as
compared to the 1999 Fiscal Year.

Administrative and management, administrative and management-related parties,
operating, repairs and maintenance, taxes and insurance, financial and
depreciation expense decreased approximately $907,000, $364,000, $409,000,
$1,139,000, $646,000, $1,006,000 and $963,000, respectively, for the 2000 Fiscal
Year as compared to the 1999 Fiscal Year. Excluding the Sold Assets, and Zeigler
Boulevard Ltd, Eastwyck III, Ltd., Rolling Meadows Apartments, Ltd., Wingate
Associates Limited and Buena Vista Manor Apartments, Ltd. for depreciation only,
such expenses remained fairly consistent with (decreases) increases of
approximately ($309,000), ($3,000), $107,000, $166,000, $67,000, $2,000 and
($31,000), respectively, for the 2000 Fiscal Year as compared to the 1999 Fiscal
Year. Zeigler Boulevard Ltd., Eastwyck III, Ltd, Rolling Meadows Apartment Ltd.,
Wingate Associates Limited and Buena Vista Manor Apartments, Ltd. are not
depreciated during the period because they are classified as assets held for
sale

A loss on impairment of assets was recorded in the 1999 Fiscal Year (see Note 4
in Item 8. Financial Statements and Supplemental Data).

RESULTS OF OPERATIONS OF CERTAIN LOCAL PARTNERSHIPS

CADDO PARISH-VILLAS SOUTH, LTD.
Caddo Parish-Villas South, Ltd. ("Villas South") continues to be in default of
its original mortgage agreement. Until November 1995, the project operated under
a provisional workout agreement with HUD. During November 1995, the mortgage
note was sold to a conventional mortgagee. These items raise substantial doubt
about Villas South's ability to continue as a going concern. Villas South is in
the process of trying to renegotiate the terms of the notes with the new
mortgage holders, but there can be no assurance that the renegotiation will be
successful. Villas South filed for protection under Chapter 11 of the United
States Bankruptcy Code on November 12, 1996 and the equivalent of a receiver has
been appointed. The bankruptcy case was subsequently dismissed on April 18,
2002. The Partnership's investment in Villas South was approximately $0 at both
February 28, 2002 and 2001 and the minority interest balance was zero at each
date. Villas South's net loss after minority interest amounted to approximately
$0, $0 and $0, for the 2001, 2000 and 1999 Fiscal Years, respectively.
Accordingly, for the Fiscal Year ended February 28, 1999 a loss on impairment in
the amount of $3,191,072 was recognized and the building was written down to
zero.

-23-

CHAR-MUR APARTMENTS, LTD.
The financial statements of Char-Mur Apartments, Ltd. ("Char-Mur") have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. On March
16, 2001, Char-Mur sold its sole revenue producing asset, an apartment complex,
to an affiliate of the Local General Partner for $475,000. As of March 16, 2001,
immediately subsequent to the sale, Char-Mur's remaining liabilities exceeded
its remaining assets by approximately $120,000.

SAN DIEGO - LOGAN SQUARE GARDENS COMPANY
For the year ended December 31, 2000, San Diego - Logan Square Gardens Company
("Logan Square") financial statements opinion expressed doubt about the entity's
ability to continue as a going concern. The conditions that raised this doubt
included a history of negative cash flows and a significant bank overdraft. As
of December 31, 2001, the substantial doubt about the entity's ability to
continue as a going concern for a reasonable period of time has been alleviated
for the following reasons. Logan Square has been appraised for $9,350,000, as
is, and $11,400,000 if rehabilitated, evidencing its eventual viability. Rent
increases have been obtained. Management of Logan Square is pursuing further
rent increases in conjunction with HUD's Mark up to Market program. Management
of Logan Square indicates its willingness to fund operating losses until
positive cash flow is attained.

OTHER

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

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

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

None.

-24-

Item 8. Financial Statements and Supplementary Data.

SEQUENTIAL
PAGE
----------
(a) 1. Financial Statements

Independent Auditors' Report 26

Consolidated Balance Sheets at February 28, 2002 and 2001 96

Consolidated Statements of Income for the Years Ended
February 28, 2002, 2001 and February 29, 2000 97

Consolidated Statements of Partners' Deficit for the
Years Ended February 28, 2002, 2001 and February 29, 2000 98

Consolidated Statements of Cash Flows for the Years Ended
February 28, 2002, 2001 and February 29, 2000 99

Notes to Consolidated Financial Statements 102

-25-

INDEPENDENT AUDITORS' REPORT

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

We have audited the consolidated balance sheets of Cambridge + Related Housing
Properties Limited Partnership and Subsidiaries as of February 28, 2002 and
2001, and the related consolidated statements of income, partners' deficit, and
cash flows for the years ended February 28, 2002, February 28, 2001 and February
29, 2000 (the 2001, 2000 and 1999 Fiscal Years, respectively). These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements for 19 (2001 Fiscal Year),
24 (2000 Fiscal Year) and 29 (1999 Fiscal Year) subsidiary partnerships whose
(losses) income constituted $(787,626), $1,221,181 and ($6,455,621) of the
Partnership's net (loss) income during the 2001, 2000 and 1999 Fiscal Years,
respectively, and whose assets constituted 85% (2001 Fiscal Year) and 93% (2000
Fiscal Year) of the Partnership's assets at February 28, 2002 and February 28,
2001, presented in the accompanying consolidated financial statements. The
financial statements for 18 (2001 Fiscal Year), 23 (2000 Fiscal Year) and 28
(1999 Fiscal Year) of these subsidiary partnerships were audited by other
auditors whose reports thereon have been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for these
subsidiary partnerships, is based solely upon the reports of the other auditors.
The financial statements of one (2001, 2000 and 1999 Fiscal Years) of these
subsidiary partnerships were unaudited.

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

In our opinion, based upon our audits, and the reports of the other auditors,
the accompanying consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cambridge + Related
Housing Properties Limited Partnership and Subsidiaries at February 28, 2002 and
2001, and the results of their operations, and their cash flows for the years
ended February 28, 2002, February 28, 2001 and February 29, 2000, in conformity
with U.S. generally accepted accounting principles.

As discussed in Note 10, the Partnership is currently in the process of winding
up its operations and disposing of its investments. It is anticipated that this
process will take a number of years.

As discussed in Note 11(a), one subsidiary partnership is in default of its
mortgage agreement and another subsidiary partnership's liabilities exceed
assets. This raises substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. The financial statements for one of
these subsidiary partnerships were unaudited and the auditors for the other
subsidiary partnership modified their report due to the uncertainty of the
ability of the subsidiary partnership to continue in existence. In addition,
during the 2001 Fiscal Year three subsidiary partnerships adopted plans to sell
their properties and liquidate in lieu of continuing their businesses. As a
result, the financial statements for these three subsidiary partnerships are
presented on the liquidating basis of accounting. Such subsidiary partnerships'
assets aggregated $4,413,072 at February 28, 2002. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

-26-

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

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI, LLP

New York, New York
May 14, 2002

-27-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
New Jersey, Ltd.

We have audited the accompanying statement of changes in net assets in
liquidation of New Jersey, Ltd. as of December 31, 2000. This financial
statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.

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

In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 2000 in conformity with generally accepted accounting principles.

As described in note A to the financial statement, effective as of June 19,
2000, the partnership adopted a plan to sell the rental property and liquidate
the partnership in lieu of continuing the business. On December 20, 2000, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.

Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman

Bethesda, Maryland
February 2, 2001

-28-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
New Jersey, Ltd.

We have audited the accompanying balance sheet of New Jersey, Ltd. as of
December 31, 1999, and the related statements of operations, partners' equity
(deficit) and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Jersey, Ltd., as of
December 31, 1999 and the results of its operations, the changes in partners'
equity (deficit) and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 20 through 24
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 5,
2000 on our consideration of New Jersey, Ltd.'s internal control and on its
compliance with specific requirements applicable to major HUD programs and fair
housing and non-discrimination.

/s/ Reznick Fedder & Silverman
Lead Auditor: Philip A. Weitzel
Boston, Massachusetts
Taxpayer Identification Number: 52-1088612
January 25, 2000

-29-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Zeigler Boulevard, Ltd.

We have audited the accompanying statement of net assets in liquidation of
Zeigler Boulevard, Ltd. as of December 31, 2001, and the related statement of
changes in net assets in liquidation for the year then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

As discussed in note A to the financial statements, during 2001, the Partnership
adopted a plan to sell the rental property and liquidate the Partnership in lieu
of continuing the business. As a result, the partnership's financial statements
are presented on the liquidation basis of accounting.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Zeigler Boulevard, Ltd.,
as of December 31, 2001, and the changes in net assets in liquidation for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.

As discussed in note A to the financial statements, there is a letter of intent
to purchase the property.

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

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 25, 2002

-30-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Zeigler Boulevard, Ltd.

We have audited the accompanying balance sheet of Zeigler Boulevard, Ltd. as of
December 31, 2000, and the related statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Zeigler Boulevard, Ltd., as of
December 31, 2000, and the results of its operations, the changes in partners'
equity and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 21 through 25
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated March 14,
2001 on our consideration of Zeigler Boulevard, Ltd's internal control and on
its compliance with specific requirements applicable to major HUD programs and
fair housing and non-discrimination. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audit.

/s/ Reznick Fedder & Silverman
Lead Auditor: Stephen Shumrak
Bethesda, Maryland
Taxpayer Identification Number: 52-1088612
March 14, 2001

-31-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Zeigler Boulevard, Ltd.

We have audited the accompanying balance sheet of Zeigler Boulevard, Ltd. as of
December 31, 1999, and the related statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Zeigler Boulevard, Ltd., as of
December 31, 1999, and the results of its operations, the changes in partners'
equity and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 20 through 24
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 27,
2000 on our consideration of Zeigler Boulevard, Ltd's internal control and on
its compliance with specific requirements applicable to major HUD programs and
fair housing and non-discrimination.

/s/ Reznick Fedder & Silverman
Lead Auditor: Philip A. Weitzel
Boston, Massachusetts
Taxpayer Identification Number: 52-1088612
January 27, 2000

-32-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Eastwyck III, Ltd.

We have audited the accompanying statement of net assets in liquidation of
Eastwyck III, Ltd. as of December 31, 2001, and the related statement of changes
in net assets in liquidation for the year then ended. These financial statements
are the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

As discussed in note A to the financial statements, during 2001, the Partnership
adopted a plan to sell the rental property and liquidate the Partnership in lieu
of continuing the business. As a result, the Partnership's financial statements
are presented on the liquidation basis of accounting.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Eastwyck III, Ltd., as
of December 31, 2001, and the changes in net assets in liquidation for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.

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

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 25, 2002

-33-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Eastwyck III, Ltd.

We have audited the accompanying balance sheet of Eastwyck III, Ltd., as of
December 31, 2000, and the related statements of operations, partners' equity
(deficit) and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eastwyck III, Ltd., as of
December 31, 2000, and the results of its operations, the changes in partners'
equity (deficit) and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 20 through 23
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated March 14,
2001 on our consideration of Eastwyck III, Ltd.'s internal control and on its
compliance with specific requirements applicable to major HUD programs and fair
housing and non-discrimination. Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Reznick Fedder & Silverman
Lead Auditor: Stephen Shumrak
Bethesda, Maryland
Taxpayer Identification Number: 52-1088612
March 14, 2001

-34-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Eastwyck III, Ltd.

We have audited the accompanying balance sheet of Eastwyck III, Ltd., as of
December 31, 1999, and the related statements of operations, partners' equity
(deficit) and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eastwyck III, Ltd., as of
December 31, 1999, and the results of its operations, the changes in partners'
equity (deficit) and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 20 through 23
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with Government Auditing Standards, and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 24,
2000 on our consideration of Eastwyck III, Ltd.'s internal control and on its
compliance with specific requirements applicable to major HUD programs and fair
housing and non-discrimination.

/s/ Reznick Fedder & Silverman
Lead Auditor: Philip A. Weitzel
Boston, Massachusetts
Taxpayer Identification Number: 52-1088612
January 24, 2000

-35-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Breckenridge-Chaparral
Apartments II, Ltd. (the Project), Project No. 113-44016-LD as of December 31,
2001, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with GOVERNMENT
AUDITING STANDARDS and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-36-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Breckenridge-Chaparral
Apartments II, Ltd. (the Project), Project No. 113-44016-LD as of December 31,
2000, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with Government
Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-37-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Breckenridge-Chaparral
Apartments II, Ltd. (the Project), Project No. 113-44016-LD as of December 31,
1999, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor FIUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-38-

[Letterhead of Reznick, Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Westwood Apartments Company, Ltd.

We have audited the accompanying statement of changes in net assets in
liquidation of Westwood Apartments Company, Ltd. for the year ended December 31,
2000. This financial statement is the responsibility of the partnership's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.

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

In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 2000, in conformity with generally accepted accounting principles.

As described in note A to the financial statement, during 1999, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On September 14, 2000, the partnership sold the
rental property. As a result, the partnership's financial statement is presented
on the liquidation basis of accounting.

Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 15, 2001

-39-

[Letterhead of Reznick, Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Westwood Apartments Company, Ltd.

We have audited the accompanying statement of net assets in liquidation of
Westwood Apartments Company, Ltd. as of December 31, 1999, and the related
statement of changes in net assets in liquidation for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

As discussed in note A to the financial statements, during 1999, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. As a result, the partnership's financial statements
are presented on the liquidation basis of accounting.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Westwood Apartments
Company, Ltd. as of December 31, 1999, and the changes in net assets in
liquidation for the year then ended, in conformity with generally accepted
accounting principles.

As described in note A to the financial statements, there is a letter of intent
to purchase the property.

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

/s/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
February 8, 2000

-40-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Parktowne, Ltd.

We have audited the accompanying statement of changes in net assets in
liquidation of Parktowne, Ltd. as of December 31, 2000. This financial statement
is the responsibility of the partnership's management. Our responsibility is to
express an opinion on this financial statement based on our audit.

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

In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 2000, in conformity with generally accepted accounting principles.

As described in note A to the financial statement, during 1999, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On September 14, 2000, the partnership sold the
rental property. As a result, the partnership's financial statement is presented
on the liquidation basis of accounting.

Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 16, 2001

-41-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Parktowne, Ltd.

We have audited the accompanying statement of net assets in liquidation of
Parktowne, Ltd. as of December 31, 1999, and the related statement of changes in
net assets in liquidation for the year then ended. These financial statements
are the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

As discussed in note A to the financial statements, during 1999, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. As a result, the partnership's financial statements
are presented on the liquidation basis of accounting.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Parktowned, Ltd. as of
December 31, 1999, and the changes in net assets in liquidation for the year
then ended, in conformity with generally accepted accounting principles.

As discussed in note A to the financial statements, there is a letter of intent
to purchase the property.

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

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 8, 2000

-42-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Corpus Christi-Oso Bay
Apartments, Ltd. (the Project), Project No. 115-44129-LDP, as of December 31,
2001, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

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

/s/ BROWDER & ASSOCIATES P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-43-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Corpus Christi-Oso Bay
Apartments, Ltd. (the Project), Project No. 115-44129-LDP, as of December 31,
2000, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

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

/s/ BROWDER & ASSOCIATES P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-44-

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

Independent Auditor's Report

To the Partners of
Corpus Christi-Oso Bay Apartments, Ltd. HUD Field Office Director
Corpus Christi, Texas San Antonio, TX

We have audited the accompanying balance sheet of Corpus Christi-Oso Bay
Apartments, Ltd. (the Project), Project No. 115-44129-LDP, as of December 31,
1999, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination.

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

/s/ BROWDER & ASSOCIATES P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-45-

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

Independent Auditor's Report

To The Partners
Bethany Glen Associates
(A Limited Partnership)

We have audited the accompanying balance sheets of Bethany Glen Associates, as
of November 9, 1999 (Date of Liquidation) and December 31, 1998, and the related
statements of operations, partners' equity, and cash flows for the periods then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethany Glen Associates as of
November 9, 1999 (Date of Liquidation) and December 31, 1998, and the results of
its operations and its cash flows for the periods then ended in conformity with
generally accepted accounting principles applied on the basis described in the
following paragraph.

As described in Note 1 to the financial statements, the partners of Bethany Glen
Associates approved a sale of the principal assets of the Partnership on June 1,
1999, and the partnership commenced liquidation shortly thereafter. As a result,
the partnership has changed its basis of accounting for the period subsequent to
June 1, 1999 to the liquidation basis.

/s/ Grass Coffey & Scharlau, C.P.A.'s, P.C.
Phoenix, Arizona
November 10, 1999

-46-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Albuquerque-Lafayette Square
Apartments, Ltd. (the Project), Project No. 116-44022-LDP, as of December 31,
2001, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with GOVERNMENT
AUDITING STANDARDS and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-47-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Albuquerque-Lafayette Square
Apartments, Ltd. (the Project), Project No. 116-44022-LDP, as of December 31,
2000, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with Government
Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-48-

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

Independent Auditor's Report

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

We have audited the accompanying balance sheet of Albuquerque-Lafayette Square
Apartments, Ltd. (the Project), Project No. 116-44022-LDP, as of December 31,
1999, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-49-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of Warren Manor Apartments
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' equity, and cash flows and,
supplemental schedules on pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Warren Manor Apartments Limited
Partnership as of June 18, 1999 and the results of its operations and its cash
flows for the period January 1, 1999 through June 18, 1999, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are presented
fairly in all material respects in relation to the basic financial statements
taken as a whole.

/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 19, 2000

-50-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of Golf Manor Apartments Limited
Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' equity, and cash flows and,
supplemental schedules on pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Golf Manor Apartments Limited
Partnership as of as of June 18, 1999 and the results of its operations and its
cash flows for the period January 1, 1999 through June 18, 1999 in conformity
with generally accepted accounting principles. The supporting data included in
this report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are presented
fairly in all material respects in relation to the basic financial statements
taken as a whole.

/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 15, 2000

-51-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of Warren Woods Apartments
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' equity, and cash flows and,
supplemental schedules on Pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Warren Woods Apartments Limited
Partnership as of June 18, 1999 and the results of its operations and its cash
flows for the period January 1, 1999 through June 18, 1999, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are presented
fairly in all material respects in relation to the basic financial statements
taken as a whole.

/s/ NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI
January 19, 2000

-52-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of Canton Commons Apartments
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' equity, and cash flows and ,
supplemental schedules on Pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Canton Commons Apartments Limited
Partnership as of June 18, 1999 and the results of its operations and its cash
flows for the period January 1, 1999 through June 18, 1999, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are presented
fairly in all material respects in relation to the basic financial statements
taken as a whole.

/s/ NESSEL, SMITH, LEFF & BORSEN, PLLC
Certified Public Accountants
Farmington Hills, MI
January 5, 2000

-53-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of Rosewood Manor Apartments (a
limited partnership) as of June 18, 1999 and the related statements of revenue
and expense, partners' equity, and cash flows and, supplemental schedules on
pages 9-11 for the period January 1, 1999 through June 18, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Rosewood Manor Apartments as of June
18, 1999 and the results of its operations and its cash flows for the period
January 1, 1999 through June 18, 1999, in conformity with generally accepted
accounting principles. The supporting data included in this report have been
subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 17, 2000

-54-

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

Independent Auditor's Report

To the Partners of
San Diego-Logan Square Gardens Company HUD Field Office Director
San Diego, California San Diego, CA

We have audited the accompanying balance sheet of San Diego-Logan Square Gardens
Company (the Project), Project No. 129-44051-LD, as of December 31, 2001, and
the related statements of profit and loss, changes in owners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Project's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-55-

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

Independent Auditor's Report

To the Partners of
San Diego-Logan Square Gardens Company HUD Field Office Director
San Diego, California San Diego, CA

We have audited the accompanying balance sheet of San Diego-Logan Square Gardens
Company (the Project), Project No. 129-44051-LD, as of December 31, 2000, and
the related statements of profit and loss, changes in owners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Project's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is in a poor cash position. This condition
raises substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in the footnotes
to the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

-56-

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-57-

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

Independent Auditor's Report

To the Partners of
San Diego-Logan Square Gardens Company HUD Field Office Director
San Diego, California San Diego, CA

We have audited the accompanying balance sheet of San Diego-Logan Square Gardens
Company (the Project), Project No. 129-44051-LD, as of December 31, 1999, and
the related statements of profit and loss, changes in owners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Project's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-58-

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

Independent Auditor's Report
To the Partners of
Blue Ridge Manor, Ltd. HUD Field Office Director
Grandview, Missouri Kansas City, MO

We have audited the accompanying balance sheet of Blue Ridge Manor, Ltd. (the
Project), Project No. 084-44127-LDP, as of December 31, 2001, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
and specific requirements applicable to Fair Housing and Non-Discrimination.
Those reports are an integral part of an audit performed in accordance with
GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report
in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-59-

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

Independent Auditor's Report
To the Partners of
Blue Ridge Manor, Ltd. HUD Field Office Director
Grandview, Missouri Kansas City, MO

We have audited the accompanying balance sheet of Blue Ridge Manor, Ltd. (the
Project), Project No. 084-44127-LDP, as of December 31, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
and specific requirements applicable to Fair Housing and Non-Discrimination.
Those reports are an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-60-

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

Independent Auditor's Report
To the Partners of
Blue Ridge Manor, Ltd. HUD Field Office Director
Grandview, Missouri Kansas City, MO

We have audited the accompanying balance sheet of Blue Ridge Manor, Ltd. (the
Project), Project No. 084-44127-LDP, as of December 31, 1999, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
and specific requirements applicable to Fair Housing and Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-61-

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

Independent Auditor's Report

To the Partners of
Ardmore-Rolling Meadows of Ardmore, Ltd. HUD Field Office Director
Ardmore, Oklahoma Oklahoma City, OK

We have audited the accompanying balance sheet of Ardmore-Rolling Meadows of
Ardmore, Ltd. (the Project), Project No. 117-44044-LD, as of December 31, 2001,
and the related statements of profit and loss, changes in owners' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-62-

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

Independent Auditor's Report

To the Partners of
Ardmore-Rolling Meadows of Ardmore, Ltd. HUD Field Office Director
Ardmore, Oklahoma Oklahoma City, OK

We have audited the accompanying balance sheet of Ardmore-Rolling Meadows of
Ardmore, Ltd. (the Project), Project No. 117-44044-LD, as of December 31, 2000,
and the related statements of profit and loss, changes in owners' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-63-

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

Independent Auditor's Report

To the Partners of
Ardmore-Rolling Meadows of Ardmore, Ltd. HUD Field Office Director
Ardmore, Oklahoma Oklahoma City, OK

We have audited the accompanying balance sheet of Ardmore-Rolling Meadows of
Ardmore, Ltd. (the Project), Project No. 117-44044-LD, as of December 31, 1999,
and the related statements of profit and loss, changes in owners' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, and specific requirements applicable to Fair Housing and
Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-64-

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

Independent Auditor's Report

To the Partners of
El Paso-Gateway East Apartments, Ltd. HUD Field Office Director
El Paso, Texas Fort Worth, TX

We have audited the accompanying balance sheet of El Paso-Gateway East
Apartments, Ltd. (the Project), Project No. 133-44016-LD, as of December 31,
2001, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with GOVERNMENT
AUDITING STANDARDS and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-65-

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

Independent Auditor's Report

To the Partners of
El Paso-Gateway East Apartments, Ltd. HUD Field Office Director
El Paso, Texas Fort Worth, TX

We have audited the accompanying balance sheet of El Paso-Gateway East
Apartments, Ltd. (the Project), Project No. 133-44016-LD, as of December 31,
2000, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with Government
Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-66-

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

Independent Auditor's Report

To the Partners of
El Paso-Gateway East Apartments, Ltd. HUD Field Office Director
El Paso, Texas Fort Worth, TX

We have audited the accompanying balance sheet of El Paso-Gateway East
Apartments, Ltd. (the Project), Project No. 133-44016-LD, as of December 31,
1999, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-67-

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

Independent Auditor's Report

To the Partners of
Fort Worth-Northwood Apartments, Ltd. HUD Field Office Director
Fort Worth, Texas Fort Worth, TX

We have audited the accompanying balance sheet of Fort Worth-Northwood
Apartments, Ltd. (the Project), Project No. 113-44025-LDP-SUP, as of December
31, 2001, and the related statements of profit and loss, changes in owners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
and specific requirements applicable to Fair Housing and Non-Discrimination.
Those reports are an integral part of an audit performed in accordance with
GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report
in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-68-

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

Independent Auditor's Report

To the Partners of
Fort Worth-Northwood Apartments, Ltd. HUD Field Office Director
Fort Worth, Texas Fort Worth, TX

We have audited the accompanying balance sheet of Fort Worth-Northwood
Apartments, Ltd. (the Project), Project No. 113-44025-LDP-SUP, as of December
31, 2000, and the related statements of profit and loss, changes in owners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with Government
Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-69-

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

Independent Auditor's Report

To the Partners of
Fort Worth-Northwood Apartments, Ltd. HUD Field Office Director
Fort Worth, Texas Fort Worth, TX

We have audited the accompanying balance sheet of Fort Worth-Northwood
Apartments, Ltd. (the Project), Project No. 113-44025-LDP-SUP, as of December
31, 1999, and the related statements of profit and loss, changes in owners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-70-

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

Independent Auditor's Report

To the Partners of
Stephenville-Tarleton Arms Apartments, Ltd. HUD Field Office Director
Stephenville, Texas Fort Worth, TX

We have audited the accompanying balance sheet of Stephenville-Tarleton Arms
Apartments, Ltd. (the Project), Project No. 113-44034-LD, as of December 31,
2001, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2002 on our
consideration of the Project's internal controls and reports dated January 15,
2002 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
and specific requirements applicable to Fair Housing and Non-Discrimination.
Those reports are an integral part of an audit performed in accordance with
GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report
in considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002

-71-

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

Independent Auditor's Report

To the Partners of
Stephenville-Tarleton Arms Apartments, Ltd. HUD Field Office Director
Stephenville, Texas Fort Worth, TX

We have audited the accompanying balance sheet of Stephenville-Tarleton Arms
Apartments, Ltd. (the Project), Project No. 113-44034-LD, as of December 31,
2000, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with Government
Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001

-72-

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

Independent Auditor's Report

To the Partners of
Stephenville-Tarleton Arms Apartments, Ltd. HUD Field Office Director
Stephenville, Texas Fort Worth, TX

We have audited the accompanying balance sheet of Stephenville-Tarleton Arms
Apartments, Ltd. (the Project), Project No. 113-44034-LD, as of December 31,
1999, and the related statements of profit and loss, changes in owners' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination.

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

/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000

-73-

[Robert Ercolini & Company LLP Letterhead]

INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying balance sheets of Bay Village Company (a
Massachusetts Limited Partnership) as of December 31, 2001 and 2000 and the
related statements of operations, partners' equity, and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bay Village Company as of
December 31, 2001 and 2000, and the results of its operations, changes in
partners' equity, and its cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 21, 2002

-74-

[Robert Ercolini & Company LLP Letterhead]

INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying balance sheets of Bay Village Company (a
Massachusetts Limited Partnership) as of December 31, 2000 and 1999 and the
related statements of operations, partners' equity, and cash flows for each of
the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bay Village Company as of
December 31, 2000 and 1999, and the results of its operations, changes in
partners' equity, and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with generally accepted accounting
principles.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 22, 2001

-75-

[CFL Accounting Services Letterhead]

Independent Auditors' Report

To The Partners of
Buena Vista Manor Apartments, Ltd.

I have audited the accompanying balance sheet of Buena Vista Manor Apartments,
Ltd. as of November 26, 2001, and the related statements of income, changes in
partners' capital, and cash flows for the eleven months then ended. These
financial statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit. The financial statements of Buena Vista Manor Apartments, Ltd. as of
December 31, 2000 were audited by other auditors whose report dated January 20,
2001 expressed an unqualified opinion on those statements.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Buena Vista Manor Apartments, Ltd.,
as of November 26, 2001, and the results of its operations, changes in partners'
capital, and cash flows for the eleven months then ended in conformity with U.S.
generally accepted accounting principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the CONSOLIDATED AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 20, 2001, on my
consideration of Buena Vista Manor Apartments, Ltd.'s internal control, and
reports dated January 20, 2001, on its compliance with specific requirements
applicable to its major HUD programs and specific requirements applicable to
Fair Housing and Non-Discrimination.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information included in the report is presented for the purposes of additional
analysis and is not a required part of the basic financial statements of Buena
Vista Manor Apartments, Ltd. Such information has been subjected to the auditing
procedures applied to the audit of the basic financial statements and, in my
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.

/s/ CFL Accounting Services
Nashville, Tennessee
February 7, 2002

-76-

[Akersloot, Patterson & Associates, P.L.L.C. Letterhead]

Independent Auditors' Report

To The Partners of
Buena Vista Manor Apartments, Ltd.

We have audited the accompanying balance sheet of Buena Vista Manor Apartments,
Ltd. (a limited partnership), which includes HUD Project No. 086-35009-SUP-LD as
of December 31, 2000, and the related statements of operations, changes in
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards,
GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United
States, and the CONSOLIDATED AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Office
of the Inspector General. 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 the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Buena Vista Manor Apartments,
Ltd., (a limited partnership) as of December 31, 2000, and the results of its
operations, changes in partners' equity, and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the CONSOLIDATED AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 20, 2001, on our
consideration of Buena Vista Manor Apartments, Ltd.'s internal control, and
reports dated January 20, 2001, on its compliance with specific requirements
applicable to its major HUD programs and specific requirements applicable to
Fair Housing and Non-Discrimination.

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

/s/ Akersloot, Patterson & Associates, P.L.L.C.
January 20, 2001
Brentwood, Tennessee

-77-

[Akersloot, Wall & Associates, P.L.L.C. Letterhead]

Independent Auditors' Report

To The Partners of
Buena Vista Manor Apartments, Ltd.

We have audited the accompanying balance sheet of Buena Vista Manor Apartments,
Ltd. (a limited partnership), which includes HUD Project No. 086-35009-SUP-LD as
of December 31, 1999, and the related statements of operations, changes in
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Office
of the Inspector General. 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 the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Buena Vista Manor Apartments,
Ltd., (a limited partnership) as of December 31, 1999, and the results of its
operations, changes in partners' equity, and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

/s/ Akersloot, Wall & Associates, P.L.L.C.
January 18, 2000
Brentwood, Tennessee

-78-

[CBEW Professional Group, LLP. Letterhead]

Independent Auditor's Report

To the Partners
Rolling Meadows Apartments, Ltd.

We have audited the accompanying balance sheet of Rolling Meadows Apartments,
Ltd., (A Limited Partnership) , as of December 31, 2001 and 2000, and the
related statements of income, changes in partners' capital (deficit) and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Rolling
Meadows Apartments, Ltd. at December 31, 2001 and 2000 and the results of its
operations and changes in partners' capital (deficit) and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.

/s/ CBEW Professional Group, LLP
Certified Public Accountants
Cushing, Oklahoma
January 3, 2002

-79-

[CBEW Professional Group, LLP. Letterhead]

Independent Auditor's Report

To the Partners
Rolling Meadows Apartments, Ltd.

We have audited the accompanying balance sheet of Rolling Meadows Apartments,
Ltd., (A Limited Partnership) , HUD Project No.: 117-44009-LD, as of December
31, 2000 and 1999, and the related statements of income, changes in partners'
capital (deficit) and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of HUD Project
No. 117-44009-LD Rolling Meadows Apartments, Ltd. at December 31, 2000 and 1999
and the results of its operations and changes in partners' capital (deficit) and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 6, 2001, on our
consideration of Rolling Meadows Apartments, LTD.'s internal control and reports
dated February 6, 2001, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Fair Housing and
Non-Discrimination and specific requirements applicable to nonmajor HUD program
transactions.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information shown on pages 14-19
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of HUD Project No. 117-44009-LD, Rolling
Meadows Apartments, Ltd. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ CBEW Professional Group, LLP
Certified Public Accountants
Cushing, Oklahoma
February 6, 2001

-80-

[EDWARD LEMKIN Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Westgate Associates Limited

I have audited the accompanying balance sheet of Westgate Associates Limited,
HUD Project No.: 026-44008-SHM (a Vermont limited partnership) as of December 1,
2000, and the related statements of income, changes in partners' capital, and
cash flows for the period then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Westgate Associates Limited, HUD
Project No.: 026-44008-SHM, as of December 1, 2000, and the results of its
operations, changes in partners' capital, and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 4, 2001, on my
consideration of Westgate Associates Limited's internal control and reports
dated January 4, 2001, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Fair Housing and
Non-Discrimination, and specific requirements applicable to nonmajor HUD
programs transactions.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 16-18 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of
Westgate Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Edward Lemkin
Certified Public Accountant
Orange, Connecticut
January 4, 2001

-81-

[EDWARD LEMKIN Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Westgate Associates Limited

I have audited the accompanying balance sheet of Westgate Associates Limited,
HUD Project No.: 026-44008-SHM (a Vermont limited partnership) as of December
31, 1999, and the related statements of income, changes in partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Westgate Associates Limited, HUD
Project No.: 026-44008-SHM, as of December 31, 1999, and the results of its
operations, changes in partners' capital, and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 31, 2000, on my
consideration of Westgate Associates Limited's internal control and reports
dated January 31, 2000, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Fair Housing and
Non-Discrimination, and specific requirements applicable to nonmajor HUD
programs transactions.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 16-19 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of
Westgate Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Edward Lemkin
Certified Public Accountant
Orange, Connecticut
January 31, 2000

-82-

[EDWARD LEMKIN Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Wingate Associates Limited

I have audited the accompanying balance sheet of Wingate Associates Limited, HUD
Project No.: 024-44018-LDP (a New Hampshire limited partnership), as of December
31, 2001, and the related statements of income, changes in partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Wingate Associates Limited, HUD
Project No.: 024-44018-LDP, as of December 31, 2001, and the results of its
operations, changes in partners' capital, and cash flows for the year then ended
in conformity with accounting principles generally accepted in the United States
of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 25, 2002, on my
consideration of Wingate Associates Limited's internal control and reports dated
January 25, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to Fair Housing and
Non-Discrimination, and specific requirements applicable to nonmajor HUD
programs transactions. Those reports are an integral part of an audit performed
in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of my audit.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 19-21 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
partnership. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in my opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Edward Lemkin
Certified Public Accountant
Orange, Connecticut
January 25, 2002

-83-

[EDWARD LEMKIN Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Wingate Associates Limited

I have audited the accompanying balance sheet of Wingate Associates Limited, HUD
Project No.: 024-44018-LDP (a New Hampshire limited partnership), as of December
31, 2000, and the related statements of income, changes in partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Wingate Associates Limited, HUD
Project No.: 024-44018-LDP, as of December 31, 2000, and the results of its
operations, changes in partners' capital, and cash flows for the year then ended
in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 20, 2001, on my
consideration of Wingate Associates Limited's internal control and reports dated
January 20, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to Fair Housing and
Non-Discrimination, and specific requirements applicable to nonmajor HUD
programs transactions.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 17-20 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of Wingate
Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Edward Lemkin
Certified Public Accountant
Orange, Connecticut
January 20, 2001

-84-

[EDWARD LEMKIN Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Wingate Associates Limited

I have audited the accompanying balance sheet of Wingate Associates Limited, HUD
Project No.: 024-44018-LDP (a New Hampshire limited partnership), as of December
31, 1999, and the related statements of income, changes in partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Wingate Associates Limited, HUD
Project No.: 024-44018-LDP, as of December 31, 1999, and the results of its
operations, changes in partners' capital, and cash flows for the year then ended
in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 30, 2000, on my
consideration of Wingate Associates Limited's internal control and reports dated
January 30, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to Fair Housing and
Non-Discrimination, and specific requirements applicable to nonmajor HUD
programs transactions.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 17-20 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of Wingate
Associates Limited. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Edward Lemkin
Certified Public Accountant
Orange, Connecticut
January 30, 2000

-85-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cedar Hill Apartments:

We have audited the accompanying balance sheet of Cedar Hill Apartments, (the
"Partnership") as of December 31, 2001 and for the year then ended, listed in
the foregoing table of contents. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cedar Hill Apartments as of
December 31, 2001, and the results of its operations, changes in partners'
equity, and cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 16, 2002, on our
consideration of Cedar Hill Apartments' internal control and reports dated
January 16, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and are not a required part of the basic financial statements of Cedar
Hill Apartments. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 16, 2002

-86-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cedar Hill Apartments:

We have audited the accompanying balance sheet of Cedar Hill Apartments, (the
"Partnership") as of December 31, 2000 and the related statements of income,
changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Cedar Hill Apartments as of December 31,
2000, and the results of its operations, changes in partners' equity, and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 29, 2001, on our
consideration of Cedar Hill Apartments' internal control and reports dated
January 29, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 9 and 10 is presented for the purpose of additional
analysis and are not a required part of the basic financial statements of Cedar
Hill Apartments. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 29, 2001

-87-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cedar Hill Apartments:

We have audited the accompanying balance sheet of Cedar Hill Apartments, (the
"Partnership") as of December 31, 1999 and the related statements of income,
changes in partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Cedar Hill Apartments as of December 31,
1999, and the results of its operations, changes in partners' equity, and cash
flows for the year then ended in conformity with generally accepted accounting
principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 25, 2000, on our
consideration of Cedar Hill Apartments' internal control and reports dated
January 25, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and are not a required part of the basic financial statements of Cedar
Hill Apartments. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 25, 2000

-88-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Char-Mur Apartments:

We have audited the accompanying special-purpose balance sheet of Char-Mur
Apartments (the "Partnership") as of March 16, 2001, and the related
special-purpose statements of income, partners' equity, and cash flows for the
period then ended. These financial statements are the responsibility of the
General Partner. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

The accompanying special-purpose financial statements have been prepared, as
described in Note 1 to the financial statements, for the purpose of
consolidation with those of Cambridge + Related Housing Properties Limited
Partnership ("Cambridge"), and on the basis of accounting practices specified by
the management of Cambridge. These financial statements are not intended to be a
presentation in conformity with accounting principles generally accepted in the
United States of America.

In our opinion, such special-purpose financial statements present fairly, in all
material respects, the financial position of the Partnership as of March 16,
2001, and the results of its operations and its cash flows for the period then
ended in conformity with basis of accounting described in Note 1.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 and 8 to
the financial statements, the Partnership sold its sole revenue producing asset
during the period and its liabilities exceed its assets by approximately
$120,000 at March 16, 2001, which raises substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

This report is intended solely for the information and use of the partners of
Char-Mur Apartments, management and Cambridge and should not be used for any
other purpose.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
June 13, 2001

-89-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Char-Mur Apartments:

We have audited the accompanying financial statements of Char-Mur Apartments
(the "Partnership") as of December 31, 2000, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has incurred a net loss and its total
current liabilities exceed its total current assets, which raises substantial
doubt about its ability to continue as a going concern. Management's plan
regarding those matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 9, 2001, on our
consideration of Char-Mur Apartments' internal control and reports dated
February 9, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

-90-

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 9, 2001

-91-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Char-Mur Apartments:

We have audited the accompanying financial statements of Char-Mur Apartments
(the "Partnership") as of December 31, 1999, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has incurred a net loss and its total
current liabilities exceed its total current assets, which raises substantial
doubt about its ability to continue as a going concern. Management's plan
regarding those matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000, on our
consideration of Char-Mur Apartments' internal control and reports dated January
27, 2000, on its compliance with specific requirements applicable to major HUD
programs, specific requirements applicable to nonmajor HUD transactions and
specific requirements applicable to fair housing and non-discrimination.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 27, 2000

-92-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Crossett Apartments, Ltd.:

We have audited the accompanying financial statements of Crossett Apartments,
Ltd. (the "Partnership") as of December 31, 2001, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2001, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 16, 2002, on our
consideration of Crossett Apartments, Ltd.'s internal control, and reports dated
January 16, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirement applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 9 and 10 are presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, is fairly stated,
in all material respects, in relation to the basic financial statements taken as
a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 16, 2002

-93-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Crossett Apartments, Ltd.:

We have audited the accompanying balance sheet of Crossett Apartments, Ltd. (the
"Partnership") as of December 31, 2000, and the related statements of income,
changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the General Partner. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of Hud Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 20, 2001, on our
consideration of Crossett Apartments, Ltd.'s internal control and reports dated
January 20, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirement applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 9-10 are presented for purposes of additional analysis and
is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, is fairly stated,
in all material respects, in relation to the basic financial statements taken as
a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 20, 2001

-94-

[Jeffrey, Phillips, Mosley & Scott, P.A. - Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Crossett Apartments, Ltd.:

We have audited the accompanying balance sheet of Crossett Apartments, Ltd. (the
"Partnership") as of December 31, 1999, and the related statements of income,
changes in partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the General Partner. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' capital, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of Hud Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 25, 2000, on our
consideration of Crossett Apartments, Ltd.'s internal control and a report dated
January 25, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirement applicable to fair housing and
non-discrimination.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 25 ,2000

-95-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

See accompanying notes to consolidated financial statements.

-96-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to consolidated financial statements.

-97-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT

See accompanying notes to consolidated financial statements.

-98-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in Cash and Cash Equivalents

-99-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in Cash and Cash Equivalents
(continued)

-100-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in Cash and Cash Equivalents
(continued)

See accompanying notes to consolidated financial statements.

-101-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

NOTE 1 - Organization

Cambridge + Related Housing Properties Limited Partnership, (the "Partnership")
was formed pursuant to the laws of the State of Massachusetts on April 28, 1983.
The Partnership invests, as a limited partner, in other limited partnerships
(referred to herein as "Local Partnerships", "subsidiary" or "subsidiary
partnerships"), each of which owns and operates an existing apartment complex
(an "Apartment Complex") which is receiving some form of local, State or Federal
assistance, including mortgage insurance, rental assistance payments, permanent
mortgage financing and/or interest reduction payments ("Government Assistance").

The general partners of the Partnership are Government Assisted Properties, Inc.
(the "Assisted General Partner") and Related Housing Programs Corporation (the
"Related General Partner"), both of which are Delaware corporations affiliated
with an affiliate of The Related Companies, L.P. ("Related"), a New York limited
partnership, and Cambridge/Related Housing Associates Limited Partnership
("Cambridge Related Associates"), a Massachusetts limited partnership,
(together, the "General Partners"). The general partners of Cambridge Related
Associates are the Assisted General Partner and the Related General Partner.

Pursuant to the public offering, which occurred during 1983 through 1985, the
Partnership received $50,190,000 of gross proceeds from 4,297 investors. No
further issuance of Initial Limited Partnership Interests or Additional Limited
Partnership Interests is anticipated.

As of February 28, 2002, the Partnership holds an interest in each of the
remaining Local Partnerships, which own Apartment Complexes receiving Government
Assistance. During the fiscal year ended February 28, 2002, the properties and
the related assets and liabilities owned by two Local Partnerships were sold and
the Partnership's Local Partnership Interest in three other Local Partnerships
were sold. Through the fiscal year ended February 28, 2002, the properties and
the related assets and liabilities owned by fifteen Local Partnerships were sold
and the Partnership's Local Partnership Interest in fifteen other Local
Partnerships were sold (See Note 10).

The terms of the Amended and Restated Agreement and Certificate of Limited
Partnership of the Partnership (the "Partnership Agreement") provide, among
other things, that profits or losses, in general, be shared 99% by the limited
partners and 1% by the General Partners.

NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Consolidation

The consolidated financial statements include the accounts of the Partnership
and 19, 24 and 30 subsidiary partnerships in which the Partnership is a limited
partner for the years ended February 28, 2002, 2001, and February 29, 2000,
respectively. Through the rights of the Partnership and/or a General Partner,
which General Partner has a contractual obligation to act on behalf of the
Partnership, to remove the general partner of the subsidiary partnerships and to
approve certain major operating and financial decisions, the Partnership has a
controlling financial interest in the subsidiary partnerships.

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

For financial reporting purposes, the Partnership's fiscal year ends on the last
day of February. All subsidiaries have fiscal years ending December 31. Accounts
of subsidiaries have been adjusted for intercompany transactions from January 1
through the last day of February. The Partnership's fiscal year ends on the last
day of February in order to allow adequate time for the subsidiaries' financial
statements to be prepared and consolidated. The books and records of the
Partnership are maintained on the accrual basis of accounting, in accordance
with U.S. generally accepted accounting principles ("GAAP").

All intercompany accounts and transactions have been eliminated in
consolidation.

Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from contributions and distributions to
the minority interest partners.

Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated $0, $0 and $68,520 for the years ended February 28, 2002, February
28, 2001 and February 29, 2000, (the 2001, 2000 and 1999 Fiscal Years),
respectively. The Partnership's investment in each subsidiary is equal to the
respective subsidiary's partners' equity less minority interest capital, if any.

b) Property and Equipment

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

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

Through February 28, 2002, the Partnership has recorded approximately $8,889,000
as a loss on impairment of assets.

c) Interest Subsidies

Interest expense has been reduced by interest subsidies (Note 6).

-103-

d) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term investments with an original maturity of three months or less.

e) Income Taxes

No provision has been made for income taxes in the accompanying consolidated
financial statements since such taxes, if any, are the responsibility of the
individual partners. For income tax purposes, the Partnership has a fiscal year
ending December 31 (Note 9).

f) Loss Contingencies

The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated.

g) Use of Estimates

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

NOTE 3 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for non-trading
purposes) for which it is practicable to estimate that value:

CASH AND CASH EQUIVALENTS, CERTIFICATES OF DEPOSIT, CASH-RESTRICTED FOR TENANTS'
SECURITY DEPOSITS AND MORTGAGE ESCROW DEPOSITS

The carrying amount approximates fair value because of the short maturity of
those instruments.

MORTGAGE NOTES PAYABLE
The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.

-104-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

The estimated fair values of the Partnership's mortgage notes payable are as
follows:

(a) The mortgage notes payable are insured by the Department of Housing and
Urban Development (the "HUD") primarily in accordance with Section 236 of the
National Housing Act. New loans are no longer being insured in accordance with
Section 236 and presently existing loans are subject to restrictions regarding
prepayment. Management believes the estimation of fair value to be
impracticable.

(b) For the reasons discussed in Note 11(b), it is not practicable to estimate
the fair value of these notes.

*The carrying amount of other assets and liabilities, except for related party
liabilities, reported on the statement of financial position that require such
disclosure approximate fair value. Regarding the fair value of the related party
liabilities, it has been determined that fair value is not practicable to
determine due to the unique nature, repayment terms and related conditions
pertaining to these instruments.

-105-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

NOTE 4 - Property and Equipment and Property and Equipment-Held for Sale

The components of property and equipment and their estimated useful lives are as
follows:

Depreciation expense for the 2001, 2000 and 1999 Fiscal Years amounted to
$1,137,341, $1,606,397 and $2,569,844, respectively.

The components of property and equipment-held for sale are as follows:

During the year ended December 31, 1999, Westgate Associates, Limited and
Wingate Associates, Limited had losses on impairment of assets of $38,079 and
$58,645 respectively.

NOTE 5 - Mortgage Escrow Deposits

Mortgage escrow deposits consist of the following:

-106-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

NOTE 6 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments of
approximately $167,000, including principal and interest at rates ranging from
6.75% to 9.0% per annum, through May 2022. Each subsidiary partnership's
mortgage note payable is collateralized by the land and buildings of the
respective subsidiary partnership, the assignment of certain subsidiary
partnership's rents and leases and is without further recourse.

Certain mortgage notes with balances aggregating $9,368,178 and $12,769,956 at
December 31, 2001 and 2000, respectively, which bear interest at rates ranging
from 7% to 8.5% per annum, were eligible for interest rate subsidies under the
terms of regulatory agreements with HUD. Accordingly, the subsidiary
partnerships paid only that portion of the monthly payments that would be
required if the interest rate was in the range of 1% to 1.75% per annum; the
balance was subsidized under Section 236 of the National Housing Act.

Annual principal payment requirements for each of the next five fiscal years are
as follows:

The above principal payment requirements have been adjusted for principal
acceleration which may result from the event of default of Caddo Parish-Villas
South, Ltd.

The mortgage agreements require monthly deposits to reserves for replacements
aggregating approximately $73,000 and monthly deposits to escrow accounts for
real estate taxes, insurance and other (Note 5).

NOTE 7 - Purchase Money Notes Payable

Nonrecourse purchase money notes (the "Purchase Money Notes") were issued to the
selling partners of the Subsidiary Partnerships as part of the purchase price,
and are secured only by the Partnership's interest in the Subsidiary Partnership
to which the Purchase Money Note relates.

The Purchase Money Notes, which provide for simple interest, will not be in
default if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding Subsidiary Partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. As of February 28, 2002, the maturity dates of the Purchase
Money Notes associated with the remaining properties owned by the Subsidiary
Partnerships were extended for three to five years (see below). Any interest not
paid currently accrues, without further interest thereon, through the extended
due date of each of the Purchase Money Notes, respectively. Continued accrual of
such interest without payment would impact the effective rate of the Purchase
Money Notes, specifically by reducing the current

-107-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

effective interest rate of 9%. The exact effect is not determinable inasmuch as
it is dependent on the actual future interest payments and ultimate repayment
dates of the Purchase Money Notes. Unpaid interest of $24,682,606 and
$30,335,470 at February 28, 2002 and 2001, respectively, has been accrued and is
included in the caption due to selling partners. In general, the interest on and
the principal of each Purchase Money Note is also payable to the extent of the
Partnership's actual receipt of proceeds from the sale or refinancing of the
Apartment Complex, or in some cases the Local Partnership Interest to which the
Purchase Money Note relates.

The Partnership was permitted to extend the term of the Purchase Money Notes for
up to five additional years. In connection with such extensions, the Partnership
incurred an extension fee of 1/2% per annum of the outstanding principal balance
of the Purchase Money Notes. The Partnership sent an extension notice to each
Purchase Money Note holder that's pursuant to the Purchase Money Note, it was
extending the maturity. However in certain cases, the Partnership did not pay
the extension fee at that time, deferring such payment to the future. All
Purchase Money Notes are now extended with maturity dates ranging from July to
October 2002. Extension fees of $737,826 were accrued and added to the Purchase
Money Notes balance.

The Partnership expects that upon final maturity it will be required to
refinance or sell its investments in the Local Partnerships in order to pay the
Purchase Money Notes and accrued interest thereon. Based on the historical
operating results of the Local Partnerships and the current economic conditions
including changes in tax laws, it is unlikely that the proceeds from such sales
will be sufficient to meet the outstanding balances. Management is working with
the Purchase Money Note holders to restructure and/or refinance the Purchase
Money Notes. No assurance can be given that management's efforts will be
successful. The Purchase Money Notes are without personal recourse to either the
Partnership or any of its partners and the sellers' recourse, in the event of
non-payment, would be to foreclose on the Partnership's interests in the
respective Local Partnerships.

Cash flow distributions aggregating $71,144, $196,814 and $166,699 were made to
the Partnership in the 2001, 2000 and 1999 Fiscal Years, respectively. Of such
distributions, $56,426, $118,246 and $100,019, respectively, was used to pay
interest on the Purchase Money Notes. Distribution of proceeds from sales
aggregating $289,581 and $5,988,453 were made to the Partnership in the 2001 and
2000 Fiscal Years, respectively, of which $286,080 and $3,612,653, respectively,
was used to pay principal and interest on the Purchase Money Notes.

-108-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

NOTE 8 - Related Party Transactions

The costs incurred to related parties for the years ended February 28, 2002,
February 28, 2001 and February 29, 2000 were as follows:

(a) After all other expenses of the Partnership are paid, an annual partnership
management fee of up to .5% of invested assets is payable to the Partnership's
general partners and affiliates. Partnership management fees have been charged
to operations and are included in administrative and management-related parties'
expenses. Partnership management fees owed to the General Partners amounting to
approximately $1,759,000 and $1,092,000 were accrued and unpaid as of February
28, 2002 and 2001, respectively.

(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.

(c) Property management fees paid by Local Partnerships to affiliates of the
Local Partnerships amounted to approximately $346,258, $499,165 and $847,745 for
the 2001, 2000 and 1999 Fiscal Years, respectively. Of such fees $0, $75,455 and
$108,880 was paid to a company which is also an affiliate of the Related General
Partner for the 2001, 2000 and 1999 Fiscal Years, respectively.

(d) Cambridge/Related Associates, a limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $2,500
from each subsidiary partnership.

(e) The Partnership entered into an agreement with the local general partner of
Parktowne Ltd. and Westwood Apartment Company Ltd., which provides for an annual
incentive fee

-109-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

based on cash flow distributed from the respective properties. Such fee amounted
to $0 and $7,605 for the years ended February 28, 2002 and 2001, respectively.

Cambridge/Related Associates has a .01% interest, as a limited partner, in each
of the subsidiary partnerships.

Due to local general partners and affiliates at December 31, 2001 and 2000
consists of the following:

-110-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

NOTE 9 - Income Taxes

A reconciliation of the financial statement net income to the income tax income
for the Partnership and its consolidated subsidiaries is as follows:

NOTE 10 - Sale of Properties

GENERAL

The Partnership is currently in the process of winding up its operations and
disposing of its investments. It is anticipated that this process will take a
number of years. As of February 28, 2002, the Partnership has disposed of thirty
of its forty-four original investments. Subsequently, on March 27, 2002 two
additional investments were sold. Six additional investments are listed for sale
and the General Partner anticipates that the six remaining investments will

-111-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

be listed for sale by December 31, 2002. There can be no assurance as to when
the Partnership will dispose of its last remaining investments or the amount of
proceeds which may be received. However, based on the historical operating
results of the Local Partnerships and the current economic conditions including
changes in tax laws, it is unlikely that the proceeds from such sales will be
sufficient to return the limited partners, original investment.

In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed two entities: Cambridge Liquidating Trust LLC ("Trust I"), a
Massachusetts limited liability company which is owned 99.99% by the Partnership
and .01% by affiliates of Related; and, Cambridge Liquidating Trust II ("Trust
II"), a Massachusetts general partnership which is owned 99% by Cambridge
Liquidating GP II, L.L.C. ("GP II") and 1% by Cambridge Liquidating GP I, L.L.C.
("GP I"). Both GP I and GP II are owned by the Partnership.

On December 30, 1998, the Partnership contributed its limited partnership
interest in Bethany Glen Associates, Westwood, Ltd., Parktowne, Ltd., Rolling
Meadows Apartments, Ltd., Buena Vista Apartments, Ltd. and Wingate Associates,
Ltd. to Trust I. On December 31, 1998, the Partnership contributed its limited
partnership interests in Grandview-Blue Ridge Manor Limited,
Breckenridge-Chaparral Apartments II, Ltd., El Paso-Gateway East, Ltd.,
Albequerque-Lafayette Square Apartments, Ltd., Corpus Christi-Oso Bay
Apartments, Ltd., Westgate Associates Limited, San Diego-Logan Square Gardens
Co., Ardmore-Rolling Meadows of Ardmore, Ltd., Fort Worth-Northwoods Apartments,
Ltd. and Stephenville-Tarleton Arms Apartments, Ltd. to Trust II. In each case,
the interests were contributed subject to each respective Purchase Money Note.
The contribution did not involve any consideration being paid to the
Partnership, therefore, there was no tax effect to the limited partners of the
Partnership. Bethany Glen, Westwood, Parktowne, Rolling Meadows, Buena vista and
Westgate have been sold.

INFORMATION REGARDING DISPOSITION

On June 18, 1999, the Partnership's limited partnership interest in Warren Manor
Apartments Limited Partnership was sold to the local general partners for
approximately $935,000, resulting in a loss in the amount of approximately
$3,548,000. No proceeds were used to settle the associated Purchase Money Note
and accrued interest which had a total outstanding balance of approximately
$9,187,000, resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Golf Manor
Apartments Limited Partnership was sold to the local general partners for
approximately $255,000, resulting in a loss in the amount of approximately
$544,000. No proceeds were used to settle the associated Purchase Money Note and
accrued interest which had a total outstanding balance of approximately
$2,227,000, resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Warren Woods
Apartments, L.P. was sold to the local general partners for approximately
$377,000, resulting in a loss in the amount of approximately $1,914,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $3,532,000,
resulting in forgiveness of indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Rosewood
Manor Apartments Limited Partnership was sold to the local general partners for
approximately $406,000, resulting in a loss in the amount of approximately
$1,031,000. No proceeds were used to settle

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $3,568,000, resulting in forgiveness of
indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Canton
Commons Apartments Limited Partnership was sold to the local general partners
for approximately $855,000, resulting in a gain in the amount of approximately
$987,000. No proceeds were used to settle the associated Purchase Money Note and
accrued interest which had a total outstanding balance of approximately
$7,816,000, resulting in forgiveness of indebtedness income.

On November 8, 1999, the property and the related assets and liabilities of
Bethany Glen Associates ("Bethany") were sold to an unaffiliated third party for
$3,450,000, resulting in a gain in the amount of approximately $1,582,000. The
Partnership used $2,494,000 of the net proceeds to settle the associated
Purchase Money Note and accrued interest thereon which had a total outstanding
balance of approximately $2,889,000, resulting in forgiveness of indebtedness
income of $395,000.

On April 28, 2000, the property and the related assets and liabilities of
Pacific Palms were sold to a third party for approximately $4,900,000, resulting
in a gain of approximately $2,554,000. The Partnership used approximately
$1,668,000 of the net proceeds to settle the associated Purchase Money Notes and
accrued interest thereon which had a total outstanding balance of approximately
$5,214,000, resulting in forgiveness of indebtedness of approximately
$3,546,000. The Partnership netted approximately $1,940,000 of cash which was
placed into working capital to pay Partnership expenses.

On September 14, 2000, the property and the related assets and liabilities of
Westwood Apartments Company, Ltd. ("Westwood") were sold to an unaffiliated
third party for $2,025,000, resulting in a loss of approximately $356,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$3,059,000, resulting in forgiveness of indebtedness income.

On September 14, 2000, the property and the related assets and liabilities of
Parktowne Ltd. ("Parktowne") were sold to an unaffiliated third party for
$2,500,000, resulting in a gain of approximately $476,000. The Partnership used
approximately $844,000 of the net proceeds to settle the associated Purchase
Money Note and accrued interest thereon, which had an outstanding balance of
approximately $1,804,000, resulting in forgiveness of indebtedness income of
approximately $960,000.

On December 1, 2000, the property and the related assets and liabilities of
Westgate Associates, Limited ("Westgate") were sold to an unaffiliated third
party for $2,055,000, resulting in a loss of approximately $164,000. The
Partnership used approximately $601,000 of the net proceeds to settle the
associated Purchase Money Note and accrued interest thereon, which had a total
outstanding balance of approximately $1,516,000, resulting in forgiveness of
indebtedness income of approximately $915,000.

On December 20, 2000, the property and the related assets and liabilities of New
Jersey, Ltd. ("New Jersey") were sold to an unaffiliated third party for
$2,049,600 resulting in a gain of approximately $65,000. The Partnership used
approximately $500,000 of the net proceeds to settle the associated Purchase
Money Note and accrued interest thereon, which had an out-

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

standing balance of approximately $2,369,000 resulting in forgiveness of
indebtedness income of approximately $1,869,000.

On March 16, 2001, the property and the related assets and liabilities of
Char-Mur Apartments ("Char-Mur") were sold to an affiliate of the Local General
Partner for $475,000, resulting in a loss in the amount of approximately
$193,000. The Partnership used approximately $85,000 to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $986,000, resulting in forgiveness of indebtedness
income of $901,000.

On April 19, 2001, San Diego - Logan Square Gardens Company ("Logan") entered
into a purchase and sale agreement to sell the property and the related assets
and liabilities to an unaffiliated third party purchaser for a purchase price of
$9,500,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

On August 31, 2001, the property and the related assets and liabilities of
Rolling Meadows Apartments, Ltd. ("Rolling Meadows") were sold to an
unaffiliated third party purchaser for $1,925,000 resulting in a loss in the
amount of approximately $485,000. The Partnership used approximately $201,000 to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $3,757,000 resulting in
forgiveness of indebtedness income of approximately $3,556,000.

On September 4, 2001, Albuquerque - Lafayette Square Apartments, Ltd.
("Lafayette") entered into a purchase and sale agreement to sell the property
and the related assets and liabilities to an unaffiliated third party purchaser
for a purchase price of $7,000,000. The closing is expected to occur in late
2002. No assurances can be given that the sale will actually occur.

On September 25, 2001, Forth Worth - Northwood Apartments, Ltd ("Northwood")
entered into a purchase and sale agreement to sell the property and the related
assets and liabilities to an affiliate of the Local General Partner for a
purchase price of $3,800,000. The closing is expected to occur in late 2002. No
assurances can be given that the sale will actually occur.

On October 25, 2001, El Paso - Gateway East, Ltd. ("Gateway") entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an unaffiliated third party purchaser for a purchase price of
$2,700,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

On November 1, 2001 Wingate Associates, Limited ("Wingate") entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an affiliate of the Local General Partner for a purchase price of
$2,600,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

On November 26, 2001, the Partnership's Limited Partnership Interest in Buena
Vista Manor Apartments, Ltd. ("Buena Vista") was sold to the Local General
Partners for $125,000 resulting in a loss in the amount of approximately
$596,000. No proceeds were used to settle the associated Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of approximately
$5,092,000 resulting in a gain of approximately $5,092,000.

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

On December 4, 2001, the Partnership's Limited Partnership Interest in Crossett
Apartments, Ltd. ("Crossett") was sold to the Local General Partner effective
January 1, 2002 for $7,920 resulting in a loss of approximately $212,000 and the
related Purchase Money Note was assigned to the Local General Partner. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$1,117,000 resulting in a gain on sale of property of approximately $1,117,000.

On December 4, 2001, the Partnership's Limited Partnership Interest in Cedar
Hill Apartments, Ltd. ("Cedar Hill") was sold to the Local General Partner
effective January 1, 2002 for $11,988 resulting in a loss of approximately
$479,000 and the related Purchase Money Note was assigned to the Local General
Partner. No proceeds were used to settle the associated Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of approximately
$1,220,000 resulting in a gain on sale of property of approximately $1,220,000.

On December 18, 2001, Bay Village Company ("Bay Village") entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an affiliate of the Local General Partner for a purchase price of
$6,075,000. The closing is expected to occur in late 2002. No assurances can be
given that the sale will actually occur.

NOTE 11 - Commitments and Contingencies

a) Events of Default and Going Concern

CADDO PARISH-VILLAS SOUTH, LTD.
Caddo Parish-Villas South, Ltd. ("Villas South") continues to be in default of
its original mortgage agreement. Until November 1995, the project operated under
a provisional workout agreement with HUD. During November 1995, the mortgage
note was sold to a conventional mortgagee. These items raise substantial doubt
about Villas South's ability to continue as a going concern. Villas South is in
the process of trying to renegotiate the terms of the notes with the new
mortgage holders, but there can be no assurance that the renegotiation will be
successful. Villas South filed for protection under Chapter 11 of the United
States Bankruptcy Code on November 12, 1996 and the equivalent of a receiver has
been appointed. The bankruptcy case was subsequently dismissed on April 18,
2002. The Partnership's investment in Villas South was approximately $0 at both
February 28, 2002 and 2001 and the minority interest balance was zero at each
date. Villas South's net loss after minority interest amounted to approximately
$0, $0 and $0, for the 2001, 2000 and 1999 Fiscal Years, respectively.
Accordingly, for the Fiscal Year ended February 28, 1999 a loss on impairment in
the amount of $3,191,072 was recognized and the building was written down to
zero.

CHAR-MUR APARTMENTS, LTD.
The financial statements of Char-Mur Apartments, Ltd. ("Char-Mur") have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. On March
16, 2001, Char-Mur sold its sole revenue producing asset, an apartment complex,
to an affiliate of the Local General Partner for $475,000. As of March 16, 2001,
immediately subsequent to the sale, Char-Mur's remaining liabilities exceeded
its remaining assets by approximately $120,000.

-115-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

SAN DIEGO - LOGAN SQUARE GARDENS COMPANY
For the year ended December 31, 2000, San Diego - Logan Square Gardens Company
("Logan Square") financial statements opinion expressed doubt about the entity's
ability to continue as a going concern. The conditions that raised this doubt
included a history of negative cash flows and a significant bank overdraft. As
of December 31, 2001, the substantial doubt about the entity's ability to
continue as a going concern for a reasonable period of time has been alleviated
for the following reasons. Logan Square has been appraised for $9,350,000, as
is, and $11,400,000 if rehabilitated, evidencing its eventual viability. Rent
increases have been obtained. Management of Logan Square is pursuing further
rent increases in conjunction with HUD's Mark up to Market program. Management
of Logan Square indicates its willingness to fund operating losses until
positive cash flow is attained.

b) Purchase Money Notes

As part of the purchase price of its investment in the Local Partnerships, the
Partnership issued approximately $61,029,000 of Purchase Money Notes. As of the
end of the 2001 Fiscal Year, unpaid accrued interest on the Purchase Money Notes
amounted to approximately $24,682,000. The principal of and all accrued interest
on the Purchase Money Notes is due at maturity. The Partnership was permitted to
extend the term of the Purchase Money Notes for up to five additional years. In
connection with such extensions, the Partnership incurred an extension fee of
1/2% per annum of the outstanding principal balance of the assets. The
Partnership sent an extension notice to each Purchase Money Note holder that
pursuant to the note, it was extending the maturity. However, in certain cases
the Partnership did not pay the extension fee at that time, deferring such
payment to the future. The holders of the Note could argue that until the fee is
paid the Note has not been properly extended.

c) Legal Proceeding

On or about July 24, 2000, three limited partnerships controlled by the Purchase
Money Note holder commenced litigation in the Circuit Court of Jefferson County,
Alabama against the Partnership, captioned as follows: MOBILE EASTWYCK III
APARTMENTS, LTD. V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET
AL., CV-00-4431, MOBILE APARTMENTS, LTD. V. SHEARSON + RELATED HOUSING
PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4432, and ZEIGLER PARTNERS LTD. V.
SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4433
(collectively, the "Litigations"). In addition, on or about March 2001, Wallace,
Jordan, Ratliff and Brandt, LLC ("Wallace, Jordan") commenced an interpleader
action in the Civil Court of Jefferson County, Alabama, entitled WALLACE,
JORDAN, RATLIFF AND BRANDT, LLC V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED
PARTNERSHIP ET AL., CV-01-001155 ("the interpleader action").

On April 3, 2002, the Litigations and the interpleader action were fully
resolved and dismissed with prejudice.

-116-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

d) Uninsured Cash and Cash Equivalents

The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") up to $100,000. As of February 28, 2002, uninsured cash and
cash equivalents and mortgage escrow deposits approximated $9,000.

e) Housing Assistance Payments Contracts

In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals instead of the above-market rentals which is generally the case
under existing Section 8 Contracts. As a result, Section 8 Contracts that are
renewed in the future in projects insured by the Federal Housing Administration
("FHA") may not provide sufficient cash flow to permit owners of properties to
meet the debt service requirements of these existing FHA-insured mortgages.
MAHRA also provides for the restructuring of these mortgage loans so that the
annual debt service on the restructured loan (or loans) can be supported by
Section 8 rents established at the market rents. The restructured loans will be
held by the current lender or another lender. There can be no assurance that a
property owner will be permitted to restructure its mortgage indebtedness
pursuant to the new rules implementing MAHRA or that an owner, or the holder of
the mortgage, would choose to restructure the mortgage if it were able to
participate. MAHRA went into effect on September 11, 1998 when interim
regulations implementing the program were published. It should be noted that
there are many uncertainties as to the economic and tax impact on a property
owner because of the combination of the reduced Section 8 contract rents and the
restructuring of the existing FHA-insured mortgage loan under MAHRA.

f) Other

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 36%
of the properties are located in any single state. There are also substantial
risks associated with owning properties receiving Government Assistance, for
example the possibility that Congress may not appropriate funds to enable HUD to
make rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owner's equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships during the period that the subsidy
agreements are in existence without HUD's approval. Furthermore, there may not
be market demand for apartments at full market rents when the rental assistance
contracts expire.

-117-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002

NOTE 12 - Subsequent Events

On March 27, 2002, the Partnership's limited partnership interest in Eastwyck
III, Ltd. ("Eastwyck") Limited Partnership was sold to the Local General
Partners for approximately $5,000 resulting in a loss in the amount of
approximately $166,000. No proceeds were used to settle the associated Purchase
Money Note and accrued interest which had a total outstanding balance of
approximately $1,220,000 resulting in forgiveness of indebtedness income.

On March 27, 2002, the property and the related assets and liabilities of
Ziegler Boulevard, Ltd. ("Ziegler") were sold to an unaffiliated third party for
approximately $2,379,000 resulting in a gain in the amount of approximately
$157,000. The Partnership used approximately $340,000 to settle the associated
Purchase Money Note and accrued interest thereon which had a total outstanding
balance of approximately $2,746,000 resulting in forgiveness of indebtedness
income of approximately $2,406,000.

-118-

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

None
PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or officers. The Partnership's affairs are
managed and controlled by the General Partners.

Government Assisted Properties, Inc. (the "Assisted General Partner") and
Related Housing Programs Corporation (the "Related General Partners") are
affiliated with The Related Companies, L.P. ("Related"). The general partner of
Related is The Related Realty Group, Inc., of which Stephen M. Ross is
president, director and a stockholder. The General Partners manage and control
the affairs of the Partnership by engaging other affiliates of Related.

The Assisted General Partner was incorporated in Delaware on April 15, 1983 and
the Related General Partner was incorporated in Delaware on July 2, 1982.

On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"). In addition to
the Transfer, an affiliate of the Related General Partner also acquired the
Assisted General Partner's general partner interest in Cambridge/Related Housing
Associates Limited Partnership, the special limited partner of the Partnership.
Pursuant to the Partnership's Amended and Restated Partnership Agreement, the
consent of the limited partners was not required to approve the Transfer. In
connection with the Transfer, the Partnership paid to the Assisted General
Partner the accrued asset management fees owed to it in the aggregate amount of
$1,000,814. See Note 8 to the Financial Statements in Item 8 above.

Certain information concerning the directors and officers of the General
Partners are set forth below.

-119-

The director and officers of the Related General Partner are as follows:

STEPHEN M. ROSS, 62, President, Director and shareholder of The Related Realty
Group, Inc., the general partner of The Related Companies, L.P. He graduated
from the University of Michigan School of Business Administration with a
Bachelor of Science degree and from Wayne State University School of Law with a
Juris Doctor degree. Mr. Ross then received a Master of Laws degree in taxation
from New York University School of Law. He joined the accounting firm of Coopers
& Lybrand in Detroit as a tax specialist and later moved to New York, where he
worked for two large Wall Street investment banking firms in their real estate
and corporate finance departments. Mr. Ross formed the predecessor of The
Related Companies, L.P. in 1972 to develop, manage, finance and acquire
subsidized and conventional apartment developments. Mr. Ross also serves on the
Board of Trustees of Charter Municipal Mortgage Acceptance Company.

ALAN P. HIRMES, 47, has been a Certified Public Accountant in New York since
1978. Prior to joining Related in October 1983, Mr. Hirmes was employed by
Weiner & Co., Certified Public Accountants. Mr. Hirmes is also a Vice President
of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts
degree. Mr. Hirmes also serves on the Board of Directors of Aegis Realty, Inc.
and Charter Municipal Mortgage Acceptance Company.

STUART J. BOESKY, 46, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of
Kaye Fialkow Richard & Rothstein, and from 1978 to 1980 was a consultant
specializing in real estate at the accounting firm of Laventhol & Horwath. Mr.
Boesky graduated from Michigan State University with a Bachelor of Arts degree
and from Wayne State School of Law with a Juris Doctor degree. He then received
a Master of Laws degree in Taxation from Boston University School of Law. Mr.
Boesky also serves on the Board of Directors of Aegis Realty, Inc., Charter
Municipal Mortgage Acceptance Company and American Mortgage Acceptance Company.

DENISE L. KILEY, 42, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in RCC sponsored
corporate, public and private

-120-

equity and debt funds. Prior to joining Related in 1990, Ms. Kiley had
experience acquiring, financing and asset managing multifamily residential
properties. From 1981 through 1985 she was an auditor with Price Waterhouse. Ms.
Kiley holds a Bachelor of Science in Accounting from Boston College.

MARC D. SCHNITZER, 41, joined Related in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983.

MARK E. CARBONE, 45, rejoined Related in 1998 where his primary responsibility
has been disposition of real estate. From 1994 to 1998 he was President of WHC,
Inc., a distressed asset real estate fund. From 1986 to 1994 he was President of
Marigold Real Estate and Development, Inc., a real estate development company
located in Greenwich, CT. From 1979 to 1986 he was a Vice President at Related
Capital Company. He received a Bachelor of Arts in Government from Harvard
University in 1979.

ROBERT BORDONARO, 48, is a Vice President - Finance of Related. He has also
served as Controller of Related. Mr. Bordonaro has been a Certified Public
Accountant in New York since 1977. Prior to joining Related, Mr. Bordonaro was
employed by the accounting firms of Weiner & Co. from 1982 to 1985 and Arthur
Young from 1975 to 1981. Mr. Bordonaro graduated summa cum laude from New York
University with a Bachelor of Science degree and with a Masters degree in
Business Administration.

GLENN F. HOPPS, 39, joined Related in December 1990, and prior to that date was
employed by Marks Shron & Company and Weissbarth, Altman and Michaelson
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science Degree in Accounting.

TERESA WICELINSKI, 36, joined Related in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski, graduated from Pace University with a Bachelor of Arts Degree in
Accounting.

SUSAN J. McGUIRE, 55, graduated from William Cullen Bryant High School in
Woodside, New York, and attended Queensboro Community College. Since January
1977, she has served as Assistant to the President and Office Manager at
Capital. From May 1973 to January 1977, she was employed as an administrative
assistant with Condren, Walker & Co., Inc., an investment banking firm in New
York City.

-121-

The directors and executive officers of the Assisted General Partner are as
follows:

MICHAEL BRENNER, 56, is a Director of Aegis, and is the Executive Vice President
and Chief Financial Officer of TRCLP. Prior to joining TRCLP in 1996, Mr.
Brenner was a partner with Coopers & Lybrand, having served as managing partner
of its Industry Programs and Client Satisfaction initiatives from 1993-1996,
managing partner of the Detroit group of offices from 1986-1993 and Chairman of
its National Real Estate Industry Group from 1984-1986. Mr. Brenner graduated
summa cum laude from the University of Detroit with a Bachelors degree in
Business Administration and from the University of Michigan with a Masters of
Business Administration, with distinction. Mr. Brenner also serves on the Board
of Trustees of Charter Municipal Mortgage Acceptance Company and Aegis Realty,
Inc.

Biographical information with respect to Messrs. Hirmes, Boesky, Schnitzer,
Kiley, Carbone, Hopps and Ms. Wicelinski is set forth above.

Item 11. Executive Compensation.

The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the General Partners for their services. However, under the terms of
the Partnership Agreement, the General Partners and their affiliates are
entitled to receive compensation from the Partnership in consideration of
certain services rendered to the Partnership by such parties. In addition, the
General Partners collectively hold a 1% interest in all profits, losses and
distributions attributable to operations and a subordinated 15% interest in such
items attributable to sales and refinancings. See Note 8 to the Financial
Statements in Item 8 above, which information is incorporated herein by
reference thereto. Certain directors and officers of the General Partners
receive compensation from the General Partner and their affiliates for services
performed for various affiliated entities which may include services performed
for the Partnership.

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The levels of
compensation payable to the General Partners and/or their affiliates is limited
by the terms of the Partnership Agreement and may not be increased therefrom on
a discretionary basis.

-122-

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

The General Partners own all of the outstanding general partnership interests in
the Partnership. The General Partners collectively have a 1% interest in all
profits, losses and distributions of the Partnership from operations and a
subordinated 15% interest in such items from sale or refinancing proceeds.
Except as aforesaid, no person is known to own beneficially in excess of 5% of
the outstanding partnership interests.

At February 28, 2002, security ownership by the General Partners and their
affiliates was as follows:

The Assisted General Partner and the Related General Partner each hold a .5%
general partnership interest in Cambridge Related Associates. Ronald W. Weiss
and J. Michael Fried each own a 49.5% limited partner interest in Cambridge
Related Associates. Ronald W. Weiss is not affiliated with the Assisted or
Related General Partner. J. Michael Fried is no longer affiliated as of December
31, 1999.

Item 13. Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain relationships with the
General Partner and its affiliates, as discussed in Item 11 and also Note 8 to
the Financial Statements in Item 8 above, which is incorporated herein by
reference thereto. However, there have been no direct financial transactions
between the Partnership and the directors and officers of the General Partners.

-123-

PART IV

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

SEQUENTIAL
PAGE
----------
(a) 1. Financial Statements

Independent Auditors' Report 26

Consolidated Balance Sheets at February 28,
2002 and 2001 96

Consolidated Statements of Income for the Years
Ended February 28, 2002, 2001 and February 29,
2000 97

Consolidated Statements of Partners' Deficit
for the Years Ended February 28, 2002, 2001 and
February 29, 2000 98

Consolidated Statements of Cash Flows for the
Years Ended February 28, 2002, 2001 and
February 29, 2000 99

Notes to Consolidated Financial Statements 102

(a) 2. FINANCIAL STATEMENT SCHEDULES

Independent Auditors' Report 127

Schedule I - Condensed Financial Information of
Registrant 128

Schedule III - Real Estate and Accumulated
Depreciation 131

All other schedules have been omitted because the
required information is included in the financial
statements and notes thereto or they are not
applicable or not required.

(a) 3. EXHIBITS

(3) The Partnership's Amended and Restated Agreement
and Certificate of Limited Partnership, as filed
with the Secretary of State of the Commonwealth
of Massachusetts, incorporated by reference to
Exhibit (3) to the Partnership's Annual Report on
Form 10-K for the fiscal year ended February 29,
1984 (Commission File #0-12634).

(21) The Local Partnerships set forth in Item 2 may
be considered subsidiaries of the Registrant

(b) REPORTS ON FORM 8-K

None

-124-

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.

CAMBRIDGE + RELATED HOUSING PROPERTIES
LIMITED PARTNERSHIP

By: GOVERNMENT ASSISTED PROPERTIES, INC.,
a general partner

Date: May 23, 2002

By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President

and

By: RELATED HOUSING PROGRAMS CORPORATION,
a general partner

Date: May 23, 2002

By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President

-125-

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

SIGNATURE TITLE DATE
- ----------------------- ------------------------------------ ------------

/s/ Alan P. Hirmes President (principal financial
- ------------------ officer) of Related Housing
Alan P. Hirmes Programs Corporation and
Government Assisted Properties, Inc. May 23, 2002

/s/ Glenn F. Hopps Treasurer (principal accounting
- ------------------ officer) of Related Housing
Glenn F. Hopps Programs Corporation and
Government Assisted Properties, Inc. May 23, 2002

/s/ Stephen M. Ross
- ------------------- Director of Related Housing
Stephen M. Ross Programs Corporation May 23, 2002

-126-

INDEPENDENT AUDITORS' REPORT

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

In connection with our audits of the consolidated financial statements of
Cambridge + Related Housing Properties Limited Partnership and Subsidiaries
included in this Form 10-K as presented in our opinion dated May 14, 2002 on
pages 26 and 27, and based on the reports of other auditors, we have also
audited supporting Schedules I and III for the 2001, 2000 and 1999 Fiscal Years.
In our opinion, and based on the reports of other auditors (certain of which
were modified due to the uncertainty of these subsidiary partnerships' abilities
to continue in existence), these consolidated schedules present fairly, when
read in conjunction with the related consolidated financial statements, the
financial data required to be set forth therein.

As discussed in Note 10, the Partnership is currently in the process of winding
up its operations and disposing of its investments. It is anticipated that this
process will take a number of years.

As discussed in Note 11(a), one subsidiary partnership is in default of its
mortgage agreement and another subsidiary partnership's liabilities exceed
assets. This raises substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. The financial statements for one of
these subsidiary partnerships were unaudited and the auditors for the other
subsidiary partnership modified their report due to the uncertainty of the
ability of the subsidiary partnership to continue in existence. In addition,
during the 2001 Fiscal Year three subsidiary partnerships adopted plans to sell
their properties and liquidate in lieu of continuing their businesses. As a
result, the financial statements for these three subsidiary partnerships are
presented on the liquidating basis of accounting. Such subsidiary partnerships'
assets aggregated $4,413,072 at February 28, 2002. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

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

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI, LLP

New York, New York
May 14, 2002

-127-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)

CONDENSED BALANCE SHEETS

ASSETS

Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' deficit on the consolidated balance sheet will differ
from partners' deficit shown above.

-128-

CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF OPERATIONS

(*) Includes suspended prior year losses in excess of investment in accordance
with equity method of accounting amounting to $0, $0 and ($66,913) for 2002,
2001 and 2000.

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF CASH FLOWS

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral

FEBRUARY 28, 2002

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CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral

FEBRUARY 28, 2002

(a) Properties are subject to mortgage notes and purchase money notes, as shown
above.
(b) No carrying costs have been capitalized since all properties were acquired
after completion of construction.
(c) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight-line method over the estimated useful
lives determined by the Partnership date of acquisition.
(d) Furniture and fixtures, included in building and improvements, are
depreciated primarily by the straight-line method over the estimated useful
lives ranging from 5 to 15 years.
(e) These amounts differ from the amounts presented in the audited financial
statements of these subsidiary partnerships due to a difference in
accounting between these partnerships and the other forty-one subsidiary
partnerships. This difference, which is significant to the individual
subsidiary partnerships, relates to discounts on the respective mortgages
payable and the related acquisition cost and current carrying value of
property and equipment.

GEOGRAPHIC LOCATIONS: (1) Vermont, (2) New Hampshire, (3) Maine, (4) Tennessee,
(5) Oklahoma, (6) Colorado, (7) Michigan, (8) California, (9) Massachusetts,
(10) Texas, (11) Missouri, (12) Arizona, (13) Mississippi, (14) Alabama, (15)
South Carolina, (16) New Mexico, (17) Louisiana, (18) Arkansas

At the time the local partnerships were acquired by Cambridge + Related Housing
Properties Limited Partnership, the entire purchase price paid by Cambridge +
Related Housing Properties Limited Partnership was pushed down to the local
partnerships as property and equipment with an offsetting credit to capital.
Since the projects were in the construction phase at the time of acquisition,
the capital accounts were insignificant at the time of purchase. Therefore,
there are no material differences between the original cost basis for tax and
GAAP.

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