CAMBRIDGE ADVANTAGED 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 March 25, 2002

OR

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

Commission File Number 0-13782

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

MASSACHUSETTS 13-3228969
- ---------------------------------------- --------------------------
(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 Advantaged Properties Limited Partnership (formerly Hutton Advantaged
Properties Limited Partnership) (the "Partnership") is a limited partnership
which was formed under the laws of the Commonwealth of Massachusetts on June 28,
1984. The General Partners of the Partnership ("General Partners") are Assisted
Housing Associates Inc. (formerly Cambridge Assisted Housing Associates Inc.)
(the "Assisted General Partner"), and Related Beta Corporation (the "Related
General Partner"), both of which are Delaware corporations affiliated with The
Related Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Associates Limited Partnership (formerly Hutton/Related
Associates Limited Partnership) ("Cambridge/Related"), a Massachusetts limited
partnership. The general partners of Cambridge/Related are the Assisted General
Partner and the Related General Partner. The General Partners manage and control
the affairs of the Partnership. See Item 10, Directors and Executive Officers of
the Registrant, below.

On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"), then an affiliate
of Lehman Brothers, Inc. The Assisted General Partner is also a partner of
Cambridge/Related and, therefore, as a result of the Transfer, such affiliate
also acquired the Assisted General Partner's general partner interest in
Cambridge/Related and C/R Special Partnership, the special limited partner of
the Partnership. 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 $1,334,116. See Note 8 - Related Party Transactions to the
Financial Statements included in Item 8. below.

Effective May 19, 1994, the Partnership's name was changed to Cambridge
Advantaged Properties Limited Partnership.

On August 9, 1984, pursuant to a prospectus dated August 9, 1984 as supplemented
by the supplements thereto dated September 7, 1984, October 5, 1984 and November
20, 1984 (as so supplemented, the "Prospectus"), the Partnership commenced a
public offering (the "Offering", as so supplemented). Pursuant to the Offering,
the Partnership issued 6,674 Units (as defined below) in 1984, each Unit
consisting of one initial limited partnership interest (the "Initial Limited
Partnership Interest") and one warrant to purchase an additional limited
partnership interest (the "Additional Limited Partnership Interest") and
together with the Initial Limited Partnership Interests (the "Limited
Partnership Interests") during the period from January 1, 1985 through January
25, 1985 (a "Unit"), and 5,400 Additional Limited Partnership Interests in 1985.
The Partnership received $53,754,300 (net of Offering expenses and sales
commissions of $6,615,700) as a result of the Offering. The Offering was
completed in March 1985 and no further issuance of Additional Limited
Partnership Interests is anticipated.

INVESTMENT OBJECTIVES/GOVERNMENT INCENTIVES

The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships"), each of which owns or leases and operates an existing
residential housing development (an "Apartment Complex") which is receiving some
form of local, state or federal assistance, including, without limitation,
mortgage insurance, rental assistance payments, permanent mortgage financing
and/or interest reduction payments ("Government Assistance"). In acquiring its
interests in the Local Partnerships ("Local Partnership Interests"), the
Partnership's investment objectives are to:

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(1) Provide current tax benefits in the form of passive tax losses which limited
partners may use to offset passive taxable 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 up 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
$5,420,000 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) are available to
offset the income expected to be generated from the sales effort.

Federal, state and local government agencies have provided significant
incentives in order to stimulate private investment in government assisted
housing. See "Government Programs and Regulations," below. Notwithstanding these
incentives, there remain significant risks. These risks include, but are not
limited to, the uncertainty as to the financial strength and expertise of the
general partners of the Local Partnerships ("Local General Partners"); the
long-term nature of investments in government-assisted housing has limited the
ability of the Partnership to vary its investment portfolio in response to
changing economic, financial and investment conditions; and changes in local
economic circumstances and housing patterns which have 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. Apartment Complexes
benefiting from Government Assistance also have 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 Local Partnership Interests owned by the Partnership were acquired from
unaffiliated sellers. The Partnership became the principal limited partner in
these Local Partnerships pursuant to local limited partnership agreements
entered into with the Local General Partners. As a limited partner, the
Partnership's liability for obligations of the Local Partnerships is limited to
its investment. The Local General Partners of the Local Partnerships retain
responsibility for maintaining, operating and managing the Apartment Complexes.
The Partnership is a limited partner, with an ownership interest of 98.99% in
each of the 12 remaining subsidiary partnerships.

Each Local Partnership also has as a special limited partner (the "Local
Affiliated Partner"), either C/R Special Partnership or another affiliate of the
General Partners, which under certain circumstances has the right to replace the
Local General Partners of the Local Partnership and also has certain rights with
respect to voting on or approving of certain matters, including the sale of an
Apartment Complex. These rights were given to the Local Affiliated Partner
rather than the Partnership to avoid claims that by the existence or exercise by
the Partnership of such rights it would be taking part in the control of the
Local Limited Partnerships' operations and should therefore incur liability as a
General Partner of the Local Partnerships. The Local Affiliated Partner has
agreed to exercise these rights as a fiduciary of the Limited Partners of the
Partnership.

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PURCHASE MONEY NOTES

Purchase money notes in the original amount of $85,458,825 were issued to the
selling partners of the subsidiary partnerships as part of the purchase price
and are secured only by the interest in the subsidiary partnership to which the
purchase money note relates (the "Purchase Money Notes"). A portion of these
Purchase Money Notes, in the original amount of $31,932,568 is an obligation at
the subsidiary partnership level, whereas the remaining $53,526,257 is recorded
at the Partnership level. The Purchase Money Notes generally provided for
compound interest at rates which, in general, ranged from 9% to 10% per annum
through August 31, 1989. Thereafter, simple interest has accrued, without
further interest thereon, through maturity as extended (see below). Purchase
Money Notes at March 25, 2002 and 2001 include $4,336,417 of interest accrued
through August 31, 1989.

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. Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase Money Note.
Continued accrual of such interest beyond the initial term, without payment,
reduces the effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and the
ultimate repayment dates of the Purchase Money Notes. The Purchase Money Notes,
after the extended maturity dates, call for the simple accrual of interest on
the balance of principal, interest and Purchase Money Note Extension Fees
Payable as of the date of maturity at one of the following two rates: (i) the
lesser of 12% or the legally allowable rate; or (ii) the lesser of prime plus 2%
or the lowest legally allowable rate. Unpaid interest of approximately
$22,909,000 and $51,597,000 as of March 25, 2002 and 2001, respectively, has
been accrued and is included in due to selling partners in the consolidated
balance sheets. 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 of the sale or refinancing of the Apartment Complex.

The Partnership extended the terms of the Purchase Money Notes (ranging from
August to December 1996) for up to three additional years (four years with
respect to three subsidiary partnerships and seven years with respect to three
subsidiary partnerships). 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 Purchase Money Notes with seven year
extensions have all been sold. Additionally, an oral agreement was reached in
August 2001 to extend the maturity dates of the remaining Purchase Money Notes
to September 2002 through October 2003. The Partnership is working with the
Local General Partners and Purchase Money Note holders to refinance or sell the
properties. No assurance can be given that management's efforts will be
successful. Of such fees incurred, $104,999 was accrued and added to the
Purchase Money Notes balance. The extension fees are being amortized over the
term of the extensions. 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 of principal, accrued interest and extension fees. The
Purchase Money Notes are without personal recourse to either the Partnership or
any of its partners and the selling partner's recourse, in the event of
nonpayment, would be to foreclose on the Partnership's interests in the
respective subsidiary partnerships.

Distributions aggregating approximately $4,452,000, $6,550,000 and $6,993,000
were made to the Partnership during each of the years ended March 25, 2002, 2001
and 2000, respectively, of which approximately $3,872,000, $5,147,000 and
$1,067,000, respectively, was used to pay principal, interest and extension fees
on the Purchase Money Notes. In addition, approximately $0,

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$598,000 and $6,000 for the 2001, 2000 and 1999 Fiscal Years, respectively, was
paid as "additional" interest on the Purchase Money Notes.

GOVERNMENT PROGRAMS AND REGULATIONS

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

The Local Partnerships which receive government assistance are subject to
low-income use restrictions which limit the owners' abilities 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.

The following eight Local Partnerships filed for incentives under the
Preservation Acts: Lansing, MI - Cranbrook Manor Apts., Romulus, MI - Oakbrook
Villa Apts., New Bedford, MA - Buttonwood Acres, Wyandotte, MI - Villa Apollo
Associates Limited Partnership and Villa Apollo # 2 Limited Partnership, South
Dartmouth, MA - Solemar, Sterling Heights, MI - Carlton Terrace Apartments, and
San Diego, CA - Lancaster Manor Apartments. Subsequently all of the properties
owned by these eight Local Partnerships were sold.

Funding for the 1996 Act is subject to appropriations by Congress. Congress has
not appropriated any funds for preservation since 1997. Accordingly, no
assurance can be given that any of the Local Partnerships will obtain such
incentives.

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 in instances where the existing Section 8 Contracts exceed
current market rents. 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 impacts 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 Legisla-

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tion into law. The bill provides, among other things, that owners of a property
that were 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 disposing of its investments. It
is anticipated that this process will take a number of years. As of March 25,
2002, the Partnership has disposed of forty-nine of its sixty-one original
investments. Subsequently, four additional properties have been sold. Five
additional investments are listed for sale and the Partnership anticipates that
the three remaining investments will be listed for sale by December 31, 2002.
There can be no assurance as to when or that 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 received by the Partnership will be sufficient
to return their original investment. Moreover, the Local General Partners and
noteholders generally have decision-making rights with respect to the sale of
each property which makes it more cumbersome for the General Partners to sell
each property.

In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the
"Trust"), a Delaware limited liability company which is wholly-owned by the
Partnership.

On July 21, 1999, the Partnership contributed its limited partnership interest
in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments,
Ltd., Dickens Ferry Apartments, Ltd., Bonnie Doone Apartments, Ltd., University
Gardens Apartments, Ltd., and Southside Village Apartments, Ltd. to the Trust.
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 should not be any tax effect to the limited
partners of the Partnership. All of these properties with the exception of
Saraland have been sold.

On April 13, 1999, the property and related assets and liabilities of Valley
Arms were sold to an unaffiliated third party for $1,600,000, resulting in a
gain in the amount of approximately $161,000. No proceeds were used to settle
the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,514,000, resulting in forgiveness of
indebtedness income.

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On June 18, 1999, the Partnership's limited partnership interest in Carlton
Terrace Apartments, Limited Partnership was sold to the general partners for
$589,623, resulting in a gain in the amount of approximately $1,675,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $3,323,000,
resulting in forgiveness of indebtedness income. The Purchase Money Notes were
assumed by the Local Partnership.

On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
Associates Limited Partnership was sold to the general partners for $220,138,
resulting in a gain in the amount of approximately $372,000. The Purchase Money
Notes were assumed by the Local Partnership. No proceeds were used to settle the
associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,129,000, resulting in forgiveness of
indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
#2 Associates Limited Partnership was sold to the general partners for $562,136,
resulting in a gain in the amount of approximately $1,709,000. The Purchase
Money Notes were assumed by the Local Partnership. No proceeds were used to
settle the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $4,728,000, resulting in forgiveness of
indebtedness income.

On December 14, 1999, the property and related assets and liabilities of
Oakbrook Villa Apartments were sold to an unaffiliated third party for
$8,350,000, resulting in a loss in the amount of approximately $522,000. The
Partnership used approximately $2,438,000 of the net proceeds to settle the
remaining principal balance of the Purchase Money Note and accrued interest
thereon which amounted to $7,205,000, resulting in forgiveness of indebtedness
income of approximately $4,366,000.

On October 18, 1999, the Partnership's limited partnership interest and the
related Purchase Money Note and interest thereon in Cranbrook Manor Apartments
("Cranbrook") was assigned to a third party effective January 1, 2000, resulting
in a gain of approximately $2,888,000. Fees due to an affiliate in the amount of
approximately $46,000 were forgiven resulting in forgiveness of indebtedness
income.

On January 6, 2000, the property and related assets and liabilities of Bellfort
Apts. ("Bellfort") were sold to an unaffiliated third party for $175,100,
resulting in a loss in the amount of approximately $4,445,000. No proceeds were
used to settle the associated Purchase Money Note and accrued interest which had
a total outstanding balance of approximately $11,511,000, operating deficit
loans and advances of approximately $558,000 and various payables of $162,000
resulting in forgiveness of indebtedness income.

On March 7, 2000, the property and related assets and liabilities of Conifer 307
("Fircrest") were sold to an unaffiliated third party for $2,500,000, resulting
in a gain in the amount of approximately $1,457,000. Approximately $1,397,000 of
the proceeds was used to pay off the Purchase Money Note.

On March 31, 2000, the Partnership's limited partnership interest in Caroline
Forest Apartments ("Caroline Forest") was sold to the Purchase Money Note holder
for $90,000, resulting in a loss in the amount of approximately $338,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $1,736,000,
resulting in forgiveness of indebtedness income.

On June 30, 2000, the Partnership sold 1% of its interest in Bonnie Doone
Apartments, Florence Apartments, Dickens Ferry Apartments and Decatur Apartments
to the Purchase Money Note holder, in each case, for $100. Simultaneously, the
Partnership assigned its remaining interest

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of 97.99% in each of such four Local Partnerships and the related Purchase Money
Notes and interest thereon to the Purchase Money Note holder, resulting in gains
of approximately $1,903,000, $2,373,000, $2,091,000 and $2,867,000,
respectively.

On July 14, 2000, the property and related assets and liabilities of Casa Ramon
Apartments were sold to an unaffiliated third party for $4,500,000, resulting in
a gain of approximately $2,999,000. The Partnership used approximately
$3,062,000 of the proceeds to pay off the Purchase Money Note and accrued
interest thereon which had a total outstanding balance of approximately
$3,172,000 resulting in forgiveness of indebtedness income of approximately
$111,000.

On November 7, 2000, the property and related assets and liabilities of
Cloisters Associates, Ltd. ("Sundown") were sold to an unaffiliated third party
for $2,800,000, resulting in a gain of approximately $713,000. The Partnership
used approximately $519,000 of the proceeds to pay off the Purchase Money Note
and accrued interest thereon, which amounted to $4,825,000, resulting in
forgiveness of indebtedness income of approximately $4,306,000.

On December 18, 2000, the Partnership's limited partnership interest in Solemar
at South Dartmouth, L.P. ("Solemar") was sold to a third party for $501,000,
resulting in a loss in the amount of $2,369,000. The Purchase Money Note was
assumed by the Local Partnership. No proceeds were used to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $5,473,000, resulting in a gain on sale of property.

On December 19, 2000, the property and related assets and liabilities of Conifer
208 ("Conifer") were sold to an unaffiliated third party for $1,750,000,
resulting in a gain of approximately $846,000. The Partnership used
approximately $1,231,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $1,691,000, resulting in forgiveness of indebtedness income of
approximately $460,000.

On December 20, 2000, the property and related assets and liabilities of
Cedarbay, Ltd. ("Cedarbay") were sold to an unaffiliated third party for
$2,049,600, resulting in a gain of approximately $52,000. The Partnership used
approximately $228,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $3,157,000, resulting in forgiveness of indebtedness income of
approximately $2,943,000 inclusive of forgiveness of approximately $14,000 in
accounts payable.

On January 5, 2001, the property and the related assets and liabilities of West
Scenic Apartments, Ltd. ("West Scenic") were sold back to the Purchase Money
Note Holder for $1,188,000 resulting in a loss of approximately $973,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$3,839,000, resulting in forgiveness of indebtedness income during the 2001
Fiscal Year.

On March 30, 2001 Nu-Elm Apartments ("Nu-Elm") entered into a purchase and sale
agreement with an unaffiliated third party for a purchase price of $1,300,000.
The contract has expired and the property was placed back on the market.

On April 11, 2001, the property and related assets and liabilities of Tall Pines
("Tall Pines") were sold to an unaffiliated third party for $2,145,000,
resulting in a gain of approximately $751,000. The Partnership used
approximately $1,015,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $3,424,000,
resulting in forgiveness of indebtedness income of approximately $2,409,000.

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On April 20, 2001, the property and related assets and liabilities of Northwoods
III Apartments were sold to an unaffiliated third party for $3,316,000,
resulting in a gain of approximately $1,266,000. The Partnership used
approximately $791,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,756,000,
resulting in forgiveness of indebtedness income of approximately $965,000.

On May 10, 2001, the property and related assets and liabilities of Ware Manor
Associates ("Ware Manor") were sold to an unaffiliated third party for
$1,364,500, resulting in a gain of approximately $389,000. The Partnership used
approximately $472,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,846,000,
resulting in forgiveness of indebtedness income of approximately $1,374,000.

On May 21, 2001, Lexington Village ("Lexington") entered into a purchase and
sale agreement with an unaffiliated third party purchaser for a purchase price
of $1,350,000. The closing is expected to occur in late 2002. No assurance can
be given that the closing will actually occur.

On June 27, 2001, the property and related assets and liabilities of Oakwood
Manor ("Oakwood") were sold to an unaffiliated third party purchaser for
$3,099,000, resulting in a loss of approximately $145,000. The Partnership used
approximately $1,077,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $6,803,000
resulting in forgiveness of indebtedness income of approximately $5,726,000.

On July 20, 2001, the property and related assets and liabilities of Washington
Highland Apts. ("Washington Highland") were sold to an unaffiliated third party
purchaser for $800,000, resulting in a loss of approximately $482,000. The
Partnership used approximately $238,000 of the proceeds to pay off the Purchase
Money Note and accrued interest thereon, which had a total outstanding balance
of $1,905,000 resulting in forgiveness of indebtedness income of approximately
$1,668,000.

On August 14, 2001, the Partnership's Limited Partnership Interest in Southside
Village Apts. ("Southside") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $218,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,926,000, resulting in gain on sale
of property of such amount.

On August 14, 2001 the Partnership's Limited Partnership Interest in University
Gardens Apts. ("University") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $330,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,246,000, resulting in gain on sale
of property of such amount.

On August 15, 2001 the Partnership's Limited Partnership Interest in Hackley
Village ("Hackley") was assigned to the Local General Partner resulting in a
loss of approximately $522,000. The Partnership paid approximately $9,000 to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $1,816,000, resulting in gain
on sale of property of such amount.

On September 20, 2001, Shelton Beach Apartments, Ltd. ("Shelton Beach") entered
into a purchase and sale agreement with an unaffiliated third party purchaser
for a purchase price of $2,333,333. Subsequently, on April 30, 2002, the
property and related assets and liabilities were sold (see Note 12).

On September 20, 2001, Northpointe II Apartments, Ltd. ("Northpointe II")
entered into a purchase and sale agreement with an unaffiliated third party
purchaser for a purchase price of

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$1,666,667. Subsequently, on April 30, 2002, the property and related assets and
liabilities were sold (see Note 12).

On November 13, 2001, the property and related assets and liabilities of Seymour
O'Brien Manor Apts. ("Seymour O'Brien") were sold to an unaffiliated third party
for $920,000, resulting in a loss of approximately $126,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $1,842,000.

On November 20, 2001, the property and related assets and liabilities of
Vincennes NiBlack Apts. ("Autumn Ridge") were sold to a unaffiliated third party
for $2,500,000, resulting in a loss of approximately $262,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $3,567,000.

On December 4, 2001, the Partnership's Limited Partnership Interests in
Greenwood Manor, Henslee Heights, Hereford Manor, Malvern Manor, and Southwest
Apartments were sold to the Local General Partner effective January 1, 2002 for
$11,988, $27,972, $11,988, $7,920, and $9,990, resulting in losses of
approximately $264,000, $685,000, $329,000, $303,000, and $159,000,
respectively. No proceeds were used to settle the related Purchase Money Notes
and interest thereon which were assigned to the Local General Partner, resulting
in gains on sale of properties of approximately $2,153,000, $2,692,000,
$1,682,000, $1,769,000, and $1,480,000, respectively.

On February 14, 2002, the property and related assets and liabilities of
Nottingham Woods Apartments were sold to an unaffiliated third party for
$1,900,000, resulting in a gain of approximately $1,123,000. The Partnership
used approximately $488,000 of the proceeds to settle the associated Purchase
Money Note and accrued interest thereon, which had a total outstanding balance
of approximately $3,251,000. Approximately $2,763,000 is included in accounts
payable, accrued expenses and other liabilities at March 25, 2002 and will
result in forgiveness of indebtedness income during the 2002 Fiscal Year.

On February 15, 2002, the property and related assets and liabilities of
Robindale East Apartments were sold to an unaffiliated third party for $735,519,
resulting in a loss of approximately $479,000. No proceeds were used to settle
the related Purchase Money Note and accrued interest thereon, which had a total
outstanding balance of approximately $2,904,000, which is included in accounts
payable, accrued expenses and other liabilities of March 25, 2002 and will
result in forgiveness of indebtedness income during the 2002 Fiscal Year.

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 with other rental housing in its area. However,
the rental assistance and the 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 employees. All services are performed for the
Partnership by its General Partners and their affiliates. The General Partners
receive compensation in connection with such activities as set forth in Items 11
and 13 herein. 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 Agreement ("Partnership Agreement").

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Item 2. Properties.

As of March 25, 2002, the Partnership holds a 98.99% limited partnership
interest in each of twelve Local Partnerships, which own twelve Apartment
Complexes receiving Government Assistance. During the fiscal year ended March
25, 2002, the properties and the related assets and liabilities owned by nine
subsidiary partnerships were sold and the Partnership's Local Partnerships
Interests in eight subsidiary partnerships were sold. Through the fiscal year
ended March 25, 2002, the properties and the related assets and liabilities
owned by twenty-five subsidiary partnerships were sold and the Partnership's
Local Partnership Interests in twenty-four subsidiary partnerships were sold
(see Item 7, below). Set forth below is certain information concerning the
Apartment Complexes and their operations and finances. See Schedule III to the
financial statements included herein for information regarding encumbrances and
for additional information pertaining to the Apartment Complexes.

Each of the Local Partnerships owns one Apartment Complex. The Apartment
Complexes owned as of March 25, 2002 are located in Alabama (3), Georgia (1),
Kentucky (1), Michigan (3), Missouri (1), North Carolina (1), Oregon (1) and
South Carolina (1).

The 12 Apartment Complexes owned by the Local Partnerships at March 25, 2002
contain a total of 1,163 rental units. The largest of the Apartment Complexes
consists of 186 units; the smallest Apartment Complex contains 50 units.
Construction of each Apartment Complex was completed between 1972 and 1978.

The remaining Apartment Complexes are occupied by low, moderate and
middle-income tenants, some of whom are elderly. Each Apartment Complex, except
for the Apartment Complex owned by Saraland Apartments, Ltd., is located in the
vicinity of other housing developments receiving Government Assistance.

-11-

All of the Apartment Complexes are subject to existing permanent first mortgages
(the "Mortgage Loans"). In some cases the Apartment Complexes are also subject
to supplemental mortgages (the "Supplemental Mortgage Loans"). See Schedule III.

LOCAL PARTNERSHIP SCHEDULE

-12-

LOCAL PARTNERSHIP SCHEDULE
(continued)

-13-

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: (1)
mortgage loan insurance, (2) rental subsidies and (3) 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 pro-

-14-

vided by institutions approved by HUD, including banks, savings and loan
companies and local housing authorities. Section 221(d)(4) of NHA provides for
federal insurance of private construction and permanent mortgage loans to
finance new construction of rental apartment complexes containing five or more
units. The most significant difference between the Section 221(d)(4) program and
the Section 221(d)(3) program is the maximum amount of the loan which may be
obtained. Under the Section 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
Section 221(d)(3) program is substantially similar to the Section 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.

(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) The Local Partnership receives monthly rent supplements from HUD through
MHFA and the New Bedford Housing Authority.

(c) MHFA provides interest credit subsidies pursuant to Section 13A of the
Massachusetts Acts of 1966. The Local Partnership also receives monthly rent
supplements from the Dartmouth Housing Authority and the South Shore Housing
Authority pursuant to Section 707 of the Massachusetts Act of 1966.

(d) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1997 (see Item 7. below).

(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998 (see Item 7. below).

(f) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 1998 (see Item 7. below).

(g) During the fiscal year ended March 25, 1998, the Local Partnership's
property was declared unsafe to live due to amounts of Benzene and Aldrene found
to be present in the air of some apartments (see Item 7. below).

-15-

(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999 (see Item 7. below).

(i) The Partnership's Local Partnership Interest in this Local Partnership was
sold during the fiscal year ended March 25, 1999 (see Item 7. below).

(j) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2000 (see Item 7. below).

(k) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000 (see Item 7. below).

(l) 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.

(m) The Partnership's Local Partnership Interest in this Local Partnership was
sold on March 31, 2000 (see Item 7. below).

(n) The property and the related assets and liabilities were sold during the
fiscal year ended March 31, 2001.

(o) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 21, 2001.

(p) The property and the related assets and liabilities were sold during the
fiscal year ended March 31, 2002.

(q) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 31, 2002.

Huntley #1 and Huntley #2 had decreases in occupancy rates of 10% and 12%,
respectively at December 31, 2001 as compared to December 31, 2000. Leases were
allowed to expire at both properties in anticipation of a major rehabilitation
project upon the sale of the properties, which occurred May 9, 2002 (see Note
12).

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

Rents from 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 continuously reviews the physical state of the properties and budgets
improvements when required, which are generally funded from cash flow from
operations or release of replacement reserve escrows.

Management continuously reviews the insurance coverage of the properties and
believes such coverage is adequate.

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

-16-

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 for the properties as shown in Schedule
III to the financial statements included herein.

Item 3. Legal Proceedings.

This information is incorporated by reference to the discussion of Saraland,
McConnell v. Hutton Advantaged Properties L.P., Southwest Apartments Ltd. and
University Gardens Apartments Ltd. and Southside Village Apartments Ltd. in the
Results of Operations of Certain Local Partnerships contained in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, below, and Note 11 to the financial statements.

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 and Note
11 to the financial statements..

-17-

PART II

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

As of March 25, 2002, the Partnership had issued and outstanding 12,074 Limited
Partnership Interests, of which 6,674 are Initial Limited Partnership Interests
and 5,400 are Additional Limited Partnership Interests, each representing a
$5,000 capital contribution to the Partnership, for aggregate gross proceeds of
$60,370,000. Additional Limited Partnership Interests are the Limited
Partnership Interests acquired upon the exercise of warrants or sold by the
Partnership upon the nonexercise of the warrants. The warrants are rights
granted pursuant to the Partnership Agreement as part of the purchase of an
Initial Limited Partner Interest. No further issuance of Initial Limited
Partnership Interests or Additional Limited Partnership Interests is anticipated
and all warrants have expired.

The offering of Units consisting of Initial Limited Partnership Interests and
warrants to purchase Additional Limited Partnership Interests terminated in
1984. The offering of Additional Limited Partnership Interests terminated in
March 1985.

No public market has developed, and it is not anticipated that any public market
will develop, for the secondary purchase and sale of any Limited Partnership
Interests. Limited Partnership Interests may be transferred only if certain
requirements are satisfied, including the rendering of an opinion of counsel to
the Partnership that 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.

As of May 30, 2002, there were approximately 4,408 registered holders of Limited
Partnership Interests.

In March 2001, a distribution of approximately $1,389,000 and $14,000 was paid
to the Limited Partners and General Partners, respectively, from net proceeds
from the sale of properties by Local Partnerships in which the Partnership had
invested (see Item 7. below). Of the total distributions of approximately
$1,403,000 for the year ended March 25, 2001, there was no return of capital
determined in accordance with U.S. generally accepted accounting principles. In
March 2000, a distribution of approximately $1,980,000 and $20,000 was paid to
the Limited Partners and General Partners, respectively, from net proceeds from
the sale of properties by Local Partnerships in which the Partnership had
invested (see Item 7. below). Of the total distributions of approximately
$2,000,000 for the year ended March 25, 2000, there was no return of capital
determined in accordance with U.S. generally accepted accounting principles. In
March 1998, a distribution of approximately $1,997,000 and $20,000 was paid to
the Limited Partners and General Partners, respectively, from net proceeds from
the sale of properties by Local Partnerships in which the Partnership had
invested (see Item 7. below). Of the total distributions of approximately
$2,017,000 for the year ended March 25, 1998, there was no return of capital
determined in accordance with U.S. generally accepted accounting principles.
With the exception of these distributions, the Partnership had made no
distributions to its Limited Partners from its inception on June 28, 1984 to
March 25, 2002. 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. The Partnership has invested as a
limited partner in Local Partnerships owning Apartment Complexes that receive
Governmental Assistance under programs which in many instances restrict the cash
return available to owners. See Item 8, Footnote 11(e) below, for a discussion
of these restrictions. The Partnership does not anticipate providing significant
cash distributions to its Limited Partners in circumstances other than
refinancing or sale of the Apartment Complexes or the Local Partnership
Interests.

-18-

Item 6. Selected Financial Data.

The information set forth below presents selected financial data of the
Partnership. Additional detailed financial information is set forth in audited
financial statements and footnotes contained in Item 8 hereof and in the
schedules contained in Item 14 hereof.

For the year ended March 25, 1999 there was a decrease in assets primarily due
to loss on impairment of assets. During the years ended March 25, 1999, 2000,
1999, 2001 and 2002, total assets decreased primarily due to depreciation and
the sale of properties (see Note 10 in Item 8, Financial Statements and
Supplementary Data), partially offset by net additions to property and
equipment. Long-term obligations and total liabilities decreased for the years
ended March 25, 1998, 1999, 2000, 2001 and 2002 primarily due to the forgiveness
of indebtedness on Purchase Money Notes and amounts due to selling partners as a
result of the sale, principal repayments of mortgage notes payable and payments
of interest on Purchase Money Notes, partially offset by accruals of interest on
Purchase Money Notes.

-19-

SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
---------------------------------------------

-20-

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

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

The Partnership's capital was originally invested primarily in 61 Local
Partnerships, in which the Partnership made an initial investment of $50,293,934
(including acquisition expenses). These investments are highly illiquid. At the
beginning of fiscal year 2001, the Partnership had interests in 29 Local
Partnerships. During the fiscal year ended March 25, 2002, the property and the
related assets and liabilities owned by nine subsidiary partnerships were sold
and the Partnership's Local Partnership Interests in eight subsidiary
partnerships were sold. Through the fiscal year ended March 25, 2002, the
properties and the related assets and liabilities owned by twenty-five
subsidiary partnerships were sold and the Partnership's Local Partnership
Interests in twenty-four subsidiary partnerships were sold. As of March 25,
2002, the Partnership owned interests in 12 Local Partnerships.

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. In
addition, the Partnership evaluates the amount of a potential environmental
liability independently from any potential claim for recovery (see below).

During the year ended March 25, 2002, cash and cash equivalents of the
Partnership increased approximately $24,000. This increase is due to cash
provided by operating activities ($1,358,000) and proceeds from the sale of
property ($15,420,000), which exceeded principal payments of Purchase Money
Notes ($3,776,000), repayments of mortgage notes payable ($10,121,000), a
decrease in the capitalization of minority interest ($203,000), costs paid
relating to sale of property ($557,000), an increase in mortgage escrow deposits
($236,000), distributions paid ($1,403,000) and acquisition of property and
equipment and property and equipment held for sale ($458,000). Included in the
adjustments to reconcile the net income to cash used in operating activities is
gain on sale of property ($16,927,000), forgiveness of indebtedness income
($21,389,000) and depreciation ($1,364,000).

The Partnership's primary sources of funds are the cash distributions from
operations of the Local Partnerships in which the Partnership has invested and
net proceeds from sales. These sources are available to meet obligations of the
Partnership. However, the cash distributions received from the Local
Partnerships to date have not been sufficient to meet all such obligations of
the Partnership. Accordingly, certain fees and expense reimbursements owed to
the General Partners amounting to approximately $3,217,000, $2,514,000 and
$2,293,000, were accrued and unpaid as of March 25, 2002, 2001 and 2000,
respectively.

Distributions aggregating approximately $4,452,000, $6,550,000 and $6,993,000
were made to the Partnership during the 2001, 2000 and 1999 Fiscal Years,
respectively, of which approximately $3,872,000, $5,147,000 and $1,067,000,
respectively, was used to pay principal, interest and extension fees on the
Purchase Money Notes. In addition, approximately $0, $598,000 and $6,000 for the
2001, 2000 and 1999 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes.

Partnership management fees owed to the General Partners amounting to
approximately $2,847,000 and $2,178,000 were accrued and unpaid as of March 25,
2002 and 2001, respectively. Without the General Partners' continued allowance
of accrual without payment of certain fees and expense reimbursements, the
Partnership will not be in a position to meet its obligations.

-21-

The General Partners have continued allowing the accrual without payment of
these amounts but are under no obligation to continue to do so. Proceeds
received from future sales will be used to pay any outstanding amounts due to
the General Partners.

GOVERNMENT PROGRAMS AND REGULATIONS

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

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

SALE OF UNDERLYING PROPERTIES/LOCAL PARTNERSHIP INTERESTS
For a discussion of the sale of properties in which the Partnership owns direct
and indirect interests, 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 for which the Partnership would be liable 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 that the Partnership would lose its
investment in the properties and any potential proceeds from the sale or
refinancing of the properties.

Except as described above, management is not aware of any trends or events,
commitments or uncertainties, which have not been otherwise 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 economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.

RESULTS OF OPERATIONS

Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
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, the property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows).

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.

-22-

For the year ended March 25, 2002, the Partnership has not recorded a loss on
impairment of assets. Through March 25, 2002, the Partnership has recorded
approximately $7,682,000 as a loss on impairment of assets.

The following is a summary of the results of operations of the Partnership for
the 2001, 2000 and 1999 Fiscal Years.

The results of operations of the Partnership, as well as the Local Partnerships,
excluding gain on sale of property, forgiveness of indebtedness income, other
income, loss on impairment of assets, administrative and management and
financial remained fairly constant for the 2001, 2000 and 1999 Fiscal Years.
Contributing to the relatively stable operations at the Local Partnerships is
the fact that all of the Apartment Complexes receive Government Assistance.

Net income during the 2001, 2000 and 1999 Fiscal Years totaled $33,764,246,
$26,846,739 and $22,903,337, respectively.

2001 VS. 2000

Rental income decreased by 36% for the 2001 Fiscal Year as compared to the 2000
Fiscal Year. Excluding Oakbrook Villa Apartments, Bellfort Apartments, Valley
Arms, Conifer 307, Casa Ramon Apartments, Cloisters (Sundown), Conifer 208,
Cedarbay, West Scenic Apartments, Tall Pines, Northwoods III Apartments, Ware
Manor, Oakwood Manor, Washington Highlands Apartments, Seymour O'Brien Manor
Apartments, and Vincennes NiBlack Apartments which sold their properties and the
related assets and liabilities and Cranbrook Manor Apartments, Caroline Forest
Apartments, Bonnie Doone Apartments, Dickens Ferry Apartments, Decatur
Apartments, Florence Apartments, Solemar, Southside Village Apartments,
University Gardens Apartments, Hackley Village, Greenwood Manor, Malvern Manor,
Hereford Manor, Henslee Heights, and Southwest Apartments in which the
Partnership sold its Local Partnership interests (collectively, the "Sold
Assets"), rental income increased by approximately 3% during the 2001 Fiscal
Year as compared to the 2000 Fiscal Year primarily due to rental rate increases.

Other income decreased approximately 22% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. Excluding the Sold Assets, other income increased
approximately 13% primarily due to an underaccrual of interest income at two
Local Partnerships in 2000, partially offset by a decrease in interest income at
the Partnership level as the result of lower cash and cash equivalent balances
in 2001.

Total expenses, excluding the Sold Assets, administrative and management,
financial and depreciation, remained fairly consistent with an increase of
approximately 2% for the 2001 Fiscal Year as compared to the 2000 Fiscal Year.

Administrative and management decreased approximately 39% for the 2001 Fiscal
Year as compared to the 2000 Fiscal Year. Excluding the Sold Assets, such
expense decreased approximately 12% primarily due to a decrease in legal
expenses at the Partnership level.

Financial decreased approximately 56% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. Excluding the Sold Assets, such expense decreased
approximately 27% primarily due to an decrease in the prime interest rate in
2001.

Depreciation decreased approximately 58% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. Excluding the Sold Assets, such expense increased
approximately 34% primarily due to the expiration of a sales contract at one
Local Partnership. The Local Partnership was classified as an asset held for
sale in 2000 and was not depreciated.

-23-

Administrative and management-related parties, operating, repairs and
maintenance, and taxes and insurance decreased approximately $319,000, $939,000,
$1,537,000, and $594,000 respectively, during the 2001 Fiscal Year compared to
the 2000 Fiscal Year. Excluding the Sold Assets, such expenses increased
(decreased) approximately ($22,000), $111,000, ($45,000), and $68,000,
respectively, during the 2001 Fiscal Year compared to the 2000 Fiscal Year.

Gain on sale of properties and forgiveness of indebtedness income will continue
to fluctuate as a result of the disposition of properties.

2000 VS. 1999
Rental income decreased by 28% for the 2000 Fiscal Year as compared to the 1999
Fiscal Year. Excluding Oakbrook Villa Apartments, Lancaster Manor Associates,
Ltd., Bellfort Apartments, Valley Arms, Conifer 307, Casa Ramon Apartments,
Cloisters (Sundown), Conifer 208, and Cedarbay which sold their properties and
related assets and liabilities and Park of Pecan I, Ltd., Park of Pecan II,
Ltd., Villa Apollo Associates Limited Partnership, Villa Apollo #2 Associates
Limited Partnership, Carlton Terrace Apartments Limited Partnership, Cranbrook
Manor Apartments, Caroline Forest Apartments, Bonnie Doone Apartments, Dickens
Ferry Apartments, Decatur Apartments, Florence Apartments and Solemar in which
the Partnership sold its Local Partnership interests (collectively, the "Sold
Assets"), rental income increased by approximately 2% during the 2000 Fiscal
Year compared to the 1999 Fiscal Year primarily due to rental rate increases.

Other income decreased approximately 5% for the 2000 Fiscal Year as compared to
the 1999 Fiscal Year. Excluding Sold Assets, income increased approximately 19%
primarily due to an increase in laundry income at two Local Partnerships as well
as an increase in interest income at the Partnership level due to higher cash
and cash equivalent balances in 2000.

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

Total expenses, excluding the Sold Assets and financial, remained fairly
consistent with an increase of approximately 2% for the 2000 Fiscal Year as
compared to the 1999 Fiscal Year.

Financial expense increased approximately 8% for the 2000 Fiscal Year as
compared to the 1999 Fiscal Year. Excluding the Sold Assets, such expense
increased approximately 55% during the 2000 Fiscal Year as compared to the 1999
Fiscal Year due to an increase in Purchase Money Note interest expense as a
result of certain Purchase Money Notes reaching maturity wherein the interest
rate increases pursuant to the Purchase Money Notes agreements.

Administrative and management, administrative and management-related parties,
operating, repairs and maintenance, taxes and insurance, and depreciation
decreased approximately $920,000, $461,000, $1,221,000, $2,346,000, $855,000 and
$1,703,000, respectively, during the 2000 Fiscal Year compared to the 1999
Fiscal Year. Excluding the Sold Assets and Pinewood, Summer Arms, Cabarrus Arms,
Oakwood Manor, Robindale East, West Scenic, Huntley #1, Huntley #2, Tall Pines,
Ware Manor, Washington Highlands, Vincennes Niblack and Seymour O'Brien for
depreciation only, such expenses increased (decreased) approximately $104,000,
($47,000), $91,000, $63,000, $64,000 and $17,000, respectively, during the 2000
Fiscal Year compared to the 1999 Fiscal Year.

-24-

RESULTS OF OPERATIONS OF CERTAIN LOCAL PARTNERSHIPS

SARALAND APARTMENTS, LTD.
Saraland Apartments, Ltd. ("Saraland") has been placed on the Environmental
Protection Agency's (EPA) "Superfund Cleanup List". During the year ended
December 31, 1996, the tenants of Saraland were moved to temporary housing to
facilitate cleanup of the site. However, as of February 1997, the EPA, along
with other agencies, concluded that the apartment residents should not return to
the site, and the tenants were permanently relocated. The EPA has since
concluded that the apartments will have to be demolished in order to accomplish
the removal of contamination that has been found to exist underneath the
buildings.

On March 21, 2001, Saraland filed a petition for relief under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Texas, Dallas Division. The schedules list total assets valued at $924 and
liabilities of $12,962,501. The value of the land is listed as undetermined and
the Department of Housing and Urban Development ("HUD") possesses a secured
claim related to mortgages it holds in the estimated amount of $681,527. The
filing was commenced in response to a nonjudicial foreclosure brought by HUD.

The remaining liabilities consist of unsecured nonpriority claims, the bulk of
which relate to a claim held by the U.S. Environmental Protection Agency
("USEPA") and Rentokil Initial Environmental Services, Inc., in the amount of
$12,000,000. This claim relates to a lawsuit under Section 107 of the
Comprehensive Environmental Response, Compensation and Liability Act, which is
currently pending in the District Court for the Southern District of Alabama
(the "District Court") against Saraland and others who it claims are potentially
responsible parties. Redwing Carriers, Inc., a codefendant in the USEPA lawsuit,
has commenced an action, also in the District Court, to recover all or a pro
rata share of its environmental response costs from Saraland and others.

Another lawsuit, pending in Circuit Court, Mobile County, Alabama, was filed by
the former tenants of Saraland against Saraland and Redwing Carriers, Inc., and
is also related to the environmental issues.

The Debtor has filed an Amended Plan of Reorganization which will be considered
by the Bankruptcy Court this summer. The plan provides for resolution of HUD,
EPA and general unsecured claims. The plan also requires the holders of
partnership interests, including the Partnership, to make new capital
contributions to preserve their interests in the reorganized company.

Due to the uncertainty of the outcome of these lawsuits, no loss contingency has
been accrued in the accompanying financial statements. The Local Partnership has
virtually abandoned the property, and is not making payments on its mortgage
loan.

The above conditions raise substantial doubt about Saraland's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of these uncertainties. The
Partnership's investment in Saraland was reduced to $0 by prior and current
years' losses at March 25, 2002 and 2001, respectively, and the minority
interest balance was $21,000 at both dates. Saraland's net loss after minority
interest amounted to approximately $36,000, $32,000 and $20,000 for the 2001,
2000 and 1999 Fiscal Years, respectively.

OAKWOOD MANOR, LTD.
The financial statements of Oakwood Manor, Ltd. ("Oakwood") have been prepared
assuming that Oakwood will continue as a going concern. On June 27, 2001,
Oakwood sold its sole revenue producing asset, an apartment complex, to an
unaffiliated third party purchaser for

-25-

$3,090,000. This factor raises substantial doubt about Oakwood's ability to
continue as a going concern. The financial statements of Oakwood do not include
any adjustments that might result from the outcome of this uncertainty, if
Oakwood is unable to continue as a going concern.

OTHER

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

There also are 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 units in the Apartment 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 the possibility 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. Furthermore, 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, such as fuel, utilities, and labor.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

Not applicable.

-26-

Item 8. Financial Statements and Supplementary Data.

-27-

INDEPENDENT AUDITORS' REPORT

To the Partners of
Cambridge Advantaged Properties
Limited Partnership and Subsidiaries

We have audited the consolidated balance sheets of Cambridge Advantaged
Properties Limited Partnership and Subsidiaries as of March 25, 2002 and 2001,
and the related consolidated statements of operations, changes in partners'
deficit, and cash flows for the years ended March 25, 2002, 2001 and 2000 (the
2001, 2000 and 1999 Fiscal Years, respectively). The 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 31 (2001 Fiscal Year), 43 (2000 Fiscal Year)
and 48 (1999 Fiscal Year) subsidiary partnerships whose net (losses) income
aggregated $1,523,249, $11,048,206 and $30,130,274 for the 2001, 2000 and 1999
Fiscal Years, respectively, and whose assets constituted 91% and 86% of the
Partnership's assets at March 25, 2002 and 2001, respectively, presented in the
accompanying consolidated financial statements. The financial statements 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.

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 Advantaged
Properties Limited Partnership and Subsidiaries at March 25, 2002 and 2001, and
the results of their operations and their cash flows for the years ended March
25, 2002, 2001 and 2000, in conformity with U.S. generally accepted accounting
principles.

-28-

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

As discussed in Note 11(a), the consolidated financial statements include the
financial statements of two subsidiary partnerships with significant
contingencies and uncertainties regarding their continuing operations. These
uncertainties raise substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. The auditors of these subsidiary
partnerships modified their reports due to the uncertainties of these subsidiary
partnerships' abilities to continue in existence. In addition, during the 2001
Fiscal Year two subsidiary partnerships adopted plans to sell their property and
liquidate in lieu of continuing their businesses. As a result, the financial
statements for these two subsidiary partnerships are presented on the
liquidating basis of accounting. These four subsidiary partnerships' net losses
aggregated $135,034 for the 2001 Fiscal Year, and their assets aggregated
$3,317,470 at March 25, 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 of and all accrued interest on the
Purchase Money Notes are due at final maturity. The remaining Purchase Money
Notes are now extended, with maturity dates ranging from September 2002 to
October 2003 and the Partnership is attempting to refinance or sell the
properties. 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 these uncertainties.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 5, 2002

-29-

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cedarbay, Ltd.

We have audited the accompanying statement of changes in net assets in
liquidation of Cedarbay, 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 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, on 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 audits 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 19, 2001

-30-

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cedarbay, Ltd.

We have audited the accompanying balance sheets of Cedarbay, Ltd. as of December
31, 1999 and 1998, and the related statements of revenue and expenses, partners'
capital and cash flows for the years then ended. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cedarbay, Ltd. as of December
31, 1999 and 1998, and the results of its operations, the changes in partners'
capital and cash flows for the years then ended, in conformity with generally
accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 1, 2000

-31-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Northwoods III Apartments, Ltd.

We have audited the accompanying statement of changes in net assets in
liquidation of Northwoods III Apartments, Ltd. for the period January 1, 2001
through August 23, 2001. 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 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
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 statements referred to above present fairly, in
all material respects, the changes in net assets in liquidation for the period
January 1, 2001 through August 23, 2001, in conformity with accounting
principles generally accepted in the United States of America.

As described in note A to the financial statement, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On April 23, 2001, 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
August 23, 2001

-32-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Northwoods III Apartments, Ltd.

We have audited the accompanying balance sheets of Northwoods III Apartments,
Ltd. as of December 31, 2000 and 1999, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northwoods III Apartments, Ltd.
as of December 31, 2000 and 1999, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

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

-33-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hackley Village Associates #1

We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of August 15, 2001, and the related
statements of income, and cash flows, and changes in partner's equity for the
period 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 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 above present fairly, in
all material respects, the financial position of Hackley Village Associates #1
as of August 15, 2001, and the results of its operations and its cash flows and
its changes in partners' equity for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject 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.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated October 3, 2001, on our consideration of Hackley Village Associates'
internal controls and a report dated October 3, 2001, on its compliance with
laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295

West Bloomfield, MI
October 3, 2001

-34-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hackley Village Associates #1

We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of December 31, 2000, and the related
statements of income, and cash flows, and changes in partner's equity 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 Hackley Village Associates #1
as of December 31, 2000, and the results of its operations and its cash flows
and its changes in partners' equity for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject 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.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated February 7, 2001, on our consideration of Hackley Village Associates'
internal controls and a report dated February 7, 2001, on its compliance with
laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
February 7, 2001

-35-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hackley Village Associates #1

We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of December 31, 1999, and the related
statements of income, and cash flows, and changes in partner's equity 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 Hackley Village Associates #1
as of December 31, 1999, and the results of its operations and its cash flows
and its changes in partners' equity for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject 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.

In accordance with Government auditing Standards, we have also issued a report
dated February 5, 2000, on our consideration of Hackley Village Associates'
internal controls and a report dated February 5, 2000, on its compliance with
laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
February 5, 2000

-36-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Huntley Associates

We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 2001, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 2001. 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 Project #047-44029 LDP-SUP as
at December 31, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issue a report
dated January 21, 2002 on our consideration of Huntley Associates' internal
controls and a report dated January 21, 2002 on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295

West Bloomfield, MI
January 21, 2002

-37-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Huntley Associates

We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 2000, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 2000. 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 Project #047-44029 LDP-SUP as
at December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issue a report
dated January 22, 2001 on our consideration of Huntley Associates' internal
controls and a report dated January 22, 2001 on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 2001

-38-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Huntley Associates

We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 1999, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 1998 and 1999. 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 Project #047-44029 LDP-SUP as
at December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with Government Auditing Standards, we have also issue a report
dated January 15, 2000 on our consideration of Huntley Associates' internal
controls and a report dated January 15, 2000 on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2000

-39-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Huntley Associates #2

We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 2001, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 2001. 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 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 Project #047-44063-LDP as at
December 31, 2001, and the results of its operations and the 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.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 16, 2002 on our consideration of Huntley Associates #2's internal
controls and a report dated January 16, 2002 on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295

West Bloomfield, MI
January 16, 2002

-40-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Huntley Associates #2

We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 2000, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 2000. 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 Project #047-44063-LDP as at
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 25, 2001 on our consideration of Huntley Associates #2's internal
controls and a report dated January 25, 2001 on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 25, 2001

-41-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Huntley Associates #2

We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 1999, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 1998 and 1999. 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 Project #047-44063-LDP as at
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 2000 on our consideration of Huntley Associates #2's internal
controls and a report dated January 15, 2000 on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2000

-42-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Seymour O'Brien Manor Apartments

We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at November 13,
2001, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the period ended November 13, 2001. 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 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 Project #073-44152 LDP as of
November 13, 2001, and the results of its operations and the 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.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 8, 2002 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 8, 2002 on
its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295

West Bloomfield, MI
January 8, 2002

-43-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Seymour O'Brien Manor Apartments

We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at December 31,
2000, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the year ended December 31, 2000. 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 Project #073-44152 LDP as of
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 15, 2001 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 15, 2001 on
its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2001

-44-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Seymour O'Brien Manor Apartments

We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at December 31,
1999, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the year ended December 31, 1999. 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 Project #073-44152 LDP as of
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 2000 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 19, 2000 on
its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 19, 2000

-45-

[Letterhead of Bordman & Winnick]

Independent Auditors Report

To the Partners of
Washington Highland Apartments

We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of July 20, 2001, and
the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statement of cash flows for the years
ended July 20, 2001. 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 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 above present fairly, in
all material respects, the financial position of HUD Project No. 073-44073 as of
July 20, 2001, and the results of its operations and the 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.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated September 13, 2001 on our consideration of Washington Highland Apartment
(a Limited Partnership) internal controls and a report dated September 13, 2001
on its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295

West Bloomfield, MI
September 13, 2001

-46-

[Letterhead of Bordman & Winnick]

Independent Auditors Report

To the Partners of
Washington Highland Apartments

We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of December 31, 2000,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statement of cash flows for the years
ended December 31, 2000. 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 HUD Project No. 073-44073 as of
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 14, 2001 on our consideration of Washington Highland Apartment (a
Limited Partnership) internal controls and a report dated January 14, 2001 on
its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 14, 2001

-47-

[Letterhead of Bordman & Winnick]

Independent Auditors Report

To the Partners of
Washington Highland Apartments

We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of December 31, 1999,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statements of cash flows for the year
ended December 31, 1999. 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 HUD Project No. 073-44073 as of
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 13, 2000 on our consideration of Washington Highland Apartment (a
Limited Partnership) internal controls and a report dated January 13, 2000 on
its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 13, 2000

-48-

[Letterhead of BORDMAN & WINNICK]

Independent Auditor's Report

To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments

We have audited the accompanying balance sheet of Project #073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as at November 20, 2001, and the related statements of
operations and changes in partner's equity for the period January 1, 2001 to
November 20, 2001. We have also audited the statements of cash flows for the
period January 1, 2001 to November 20, 2001. 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 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 Project # 073-58501 LDP as of
November 20, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the period January 1, 2001 to November 20,
2001 in conformity with accounting principles generally accepted in the United
States of America.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 8, 2002 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 8, 2002 on its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295

West Bloomfield, MI
January 8, 2002

-49-

[Letterhead of BORDMAN & WINNICK]

Independent Auditors Report

To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments

We have audited the accompanying balance sheet of Project No. 073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as at December 31, 2000, and the related statements of
operations and changes in partner's equity for the year then ended. We have also
audited the statements of cash flows for the year ended December 31, 2000. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial 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 Project # 073-58501 LDP as at
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 22, 2001 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 22, 2001 on its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 2001

-50-

[Letterhead of BORDMAN & WINNICK]

Independent Auditors Report

To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments

We have audited the accompanying balance sheet of Project No. 073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as of December 31, 1999, and the related statements of
operations and changes in partner's equity for the year then ended. We have also
audited the statements of cash flows for the year ended December 31, 1999. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial 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 Project No. 073-58501 LDP at
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 2000 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 26, 2000 on its compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 26, 2000

-51-

[Letterhead of Bordman & Winnick]

To the Partners of
Casa Ramon Apartments

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheet of Project #122-44476 LDP-SUP of
Casa Ramon Apartments (A Limited Partnership) as at July 14, 2000, and the
related statements of operations and changes in partner's equity for the period
then ended. We have also audited the statements of cash flows for the period
ended July 14, 2000. 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 Project #122-44476 LDP-SUP as
at July 14, 2000, and the results of its operations and the changes in partners'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on page 9) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Casa
Ramon Apartments. Such information has been subject to the auditing procedures
applied in the audit of basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated September 19, 2000 on our consideration of Casa Ramon Apartments' internal
controls and a report dated September 19, 2000, on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
September 19, 2000

-52-

[Letterhead of Bordman & Winnick]

To the Partners of
Casa Ramon Apartments

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheet of Project #122-44476 LDP-SUP of
Casa Ramon Apartments (A Limited Partnership) as at December 31, 1999, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the year ended
December 31, 1999. 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 Project #122-44476 LDP-SUP as
at December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 12) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Casa
Ramon Apartments. Such information has been subject to the auditing procedures
applied in the audit of basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 17, 2000 on our consideration of Casa Ramon Apartments' internal
controls and a report dated February 20, on its compliance with laws and
regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 17, 2000

-53-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Nu-Elm Apartments

We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 2001, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the year ended
December 31, 2001. 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 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 Project #084-44035 LDP as of
December 31, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles generally accepted in the United States
of America.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 31, 2002 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 31, 2002 on its
compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 31, 2002

-54-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Nu-Elm Apartments

We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 2000, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the year ended
December 31, 2000. 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 Project #084-44035 LDP as of
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 15, 2001 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 15, 2001 on its
compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2001

-55-

[Letterhead of Bordman & Winnick]

Independent Auditor's Report

To the Partners of
Nu-Elm Apartments

We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 1999, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the years ended
December 31, 1999 and December 31, 1998. 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 Project #084-44035 LDP as of
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 2000 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 27, 2000 on its
compliance with laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 27, 2000

-56-

[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]

Independent Auditors' Report

The Partners
Solemar at South Dartmouth Limited Partnership
Quincy, Massachusetts

We have audited the accompanying balance sheet of Solemar at South Dartmouth
Limited Partnership, MHFA Project No. 72-085-N, as of December 31, 2000, and the
related statements of operations, partners' equity (deficiency) 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 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 Solemar at South Dartmouth
Limited Partnership as of December 31, 2000, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United
States.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our report
dated January 30, 2001 on our consideration of the Partnership's internal
control over financial reporting and on its compliance with laws and
regulations. That report is a 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/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
January 30, 2001

-57-

[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]

Independent Auditors' Report

The Partners
Solemar at South Dartmouth Limited Partnership
Quincy, Massachusetts

We have audited the accompanying balance sheet of Solemar at South Dartmouth
Limited Partnership, MHFA Project No. 72-085-N, as of December 31, 1999, and the
related statements of operations, partners' equity (deficiency) 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 Solemar at South Dartmouth
Limited Partnership as of December 31, 1999, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report
dated February 23, 2000 on our consideration of the Partnership's internal
control over financial reporting and on its compliance with laws and
regulations. That report is a 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/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
February 23,2000

-58-

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

Independent Auditor's Report

To the Partners of
Decatur Apartments, Ltd.
Decatur, Alabama

We have audited the accompanying balance sheet of Decatur Apartments, Ltd. (the
Project), Project No. 062-44012-LD as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months 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 June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months 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 July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD programs, 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
July 24 2000

-59-

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

Independent Auditor's Report

To the Partners of
Decatur Apartments, Ltd.
Decatur, Alabama

We have audited the accompanying balance sheet of Decatur Apartments, Ltd. (the
Project), Project No. 062-44012-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 15, 2000 on our
consideration of the Project's internal controls and reports dated January 15,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, 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 15, 2000

-60-

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

Independent Auditor's Report

To the Partners of
Florence Apartments, Ltd.
Florence, Alabama

We have audited the accompanying balance sheet of Florence Apartments, Ltd. (the
Project), Project No. 062-44083-LD, as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months 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 June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months 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 July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 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
July 24, 2000

-61-

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

Independent Auditor's Report

To the Partners of
Florence Apartments, Ltd.
Florence, Alabama

We have audited the accompanying balance sheet of Florence Apartments, Ltd. (the
Project), 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 15, 2000 on our
consideration of the Project's internal controls and reports dated January 15,
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 15, 2000

-62-

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

Independent Auditor's Report

To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama

We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), 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. 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.

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 located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain. The
Project is also in default on the mortgage and future financing is uncertain.
These conditions raise 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.

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

-63-

[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report

To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama

We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), Project No. 062-44065-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 located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain. The
Project is also in default on the mortgage and future financing is uncertain.
These conditions raise 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 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.

-64-

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

-65-

[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report

To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama

We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), 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
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.

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 located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain.
These conditions raise 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.

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 31, 2000

-66-

[Letterhead of Crabtree & Associates, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)

We have audited the accompanying balance sheet of University Gardens Apartments
LTD., (a limited partnership) as of August 14, 2001 and the related statements
of income, changes in partners' equity, and cash flows for the period January 1,
2001 through August 14, 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 audit.

We conducted our audit in accordance with U.S. 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 University Gardens Apartments,
Ltd. as of August 14, 2001, and the results of its operations and its cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

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

/s/ Crabtree & Associates, L.L.P.
Certified Public Accountants
Azle, Texas
December 18, 2001

-67-

[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)

We have audited the accompanying balance sheet of University Gardens Apartments
LTD., Project No. 112-44200 LD, (a limited 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,
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, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of University Gardens Apartments
LTD. at 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 Guide, we have also
issued a report dated February 7, 2001 on our consideration of University
Gardens Apartments, Ltd.'s internal control structure and reports dated February
7, 2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.

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

/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 7, 2001

-68-

[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)

We have audited the accompanying balance sheet of University Gardens Apartments
LTD., Project No. 112-44200 LD, (a limited partnership) as of December 31, 1999
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,
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, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of University Gardens Apartments
LTD. at 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 Guide, we have also
issued a report dated February 11, 2000 on our consideration of University
Gardens Apartments, Ltd.'s internal control structure and reports dated February
11, 2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.

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

/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 11, 2000

-69-

[Letterhead of Crabtree & Associates, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)

We have audited the accompanying balance sheet of Southside Village Apartments
LTD., (a limited partnership) as of August 14, 2001 and the related statements
of income, changes in partners' equity, and cash flows for the period January 1,
2001 through August 14, 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 audit.

We conducted our audit in accordance with U.S. 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 Southside Village Apartments
Ltd. as of August 14, 2001, and the results of its operations and its cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

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

/s/ Crabtree & Associates, L.L.P.
Certified Public Accountants
Azle, Texas
December 18, 2001

-70-

[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)

We have audited the accompanying balance sheet of Southside Village Apartments
LTD., Project No. 113-44076 LD, (a limited 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,
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, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of Southside Village Apartments
LTD. at 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 Guide, we have also
issued a report dated February 11, 2001 on our consideration of Southside
Village Apartments, Ltd.'s internal control structure and reports dated February
11, 2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.

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

/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 11, 2001

-71-

[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)

We have audited the accompanying balance sheet of Southside Village Apartments
LTD., Project No. 113-44076 LD, (a limited partnership) as of December 31, 1999
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,
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, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of Southside Village Apartments
LTD. at 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 Guide, we have also
issued a report dated February 5, 2000 on our consideration of Southside Village
Apartments, Ltd.'s internal control structure and reports dated February 5, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the non-major HUD program and
specific requirements applicable to Affirmative Fair Housing.

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

/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 5, 2000

-72-

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

Independent Auditor's Report

To the Partners of
Dickens Ferry Apartments, Ltd.
Mobile, Alabama

We have audited the accompanying balance sheet of Dickens Ferry Apartments, Ltd.
(the Project), Project No. 062-44055-LD as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months 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 June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months 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 July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 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
July 24, 2000

-73-

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

Independent Auditor's Report

To the Partners of
Dickens Ferry Apartments, Ltd.
Mobile, Alabama

We have audited the accompanying balance sheet of Dickens Ferry Apartments, Ltd.
(the Project), Project No. 062-44055-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

-74-

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

Independent Auditor's Report

To the Partners of
Bonnie Doone Apartments, Ltd.
Athens, Alabama

We have audited the accompanying balance sheet of Bonnie Doone Apartments, Ltd.
(the Project), Project No. 062-44045-LD, as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months 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 June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months 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 July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD programs, 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
July 24, 2000

-75-

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

Independent Auditor's Report

To the Partners of
Bonnie Doone Apartments, Ltd.
Athens, Alabama

We have audited the accompanying balance sheet of Bonnie Doone Apartments, Ltd.
(the Project), Project No. 062-44045-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 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 15, 2000 on our
consideration of the Project's internal controls and reports dated January 15,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, 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 15, 2000

-76-

[Letterhead of Blume Loveridge & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS

Partners
Conifer 208, A Limited Partnership
Tacoma, Washington

We have audited the statement of net assets available for liquidation of Conifer
208, A Limited Partnership, as of December 31, 2000, and the related statement
of changes in net assets in liquidation for the period from December 21, 2000 to
December 31, 2000. In addition, we have audited the statement of income from
operations for the period from January 1, 2000 to December 21, 2000 and this
statement of changes in partners' equity and cash flows for the year 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 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 weather 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 described in Note 2 to the financial statements, closing on the sale of the
rental property occurred December 21, 2000, and the Partnership commenced
liquidation shortly thereafter. As a result, the Partnership has changed its
basis of accounting, for periods subsequent to December 21, 2000, from the
going-concern basis to liquidation basis.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for liquidation of Conifer 208
as of December 31, 2000, the results of its operations for the period January 1,
2000 to December 21, 2000, the changes in its net assets in liquidation for the
period from December 21, 2000 to December 31, 2000, and its cash flows for the
twelve months ended December 31, 2000 in conformity with generally accepted
accounting principles applied on the basis described in the preceding paragraph.

/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 5, 2001

-77-

[Letterhead of Blume Loveridge & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS

Partners
Conifer 208, A Limited Partnership
Tacoma, Washington

We have audited the accompanying balance sheets of Conifer 208, A Limited
Partnership, sponsor of FHA Project No. 171-44038, as of December 31, 1999 and
1998, and the related statements of income, changes in partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an audit to
obtain reasonable assurance about weather 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 Conifer 208, A Limited
Partnership, as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
9 to 13 is presented for purposes of additional analysis for the year ended
December 31, 1999, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report,
dated February 14, 2000, on our consideration of the Partnership's internal
controls and reports, dated February 14, 2000, on its compliance with laws and
regulations.

/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 14, 2000

-78-

[Letterhead of Blume Loveridge & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS

Partners
Conifer 307, A Limited Partnership
Tacoma, Washington

We have audited the statement of net assets available for liquidation of Conifer
307 Oreg.Ltd., (a Limited Partnership), as of May 31, 2000, and the related
statement of changes in net assets in liquidation for the period from March 9,
2000 to May 31, 2000. In addition, we have audited the statement of income from
operations for the period from January 1, 2000 to March 8, 2000 and the
statements of changes in partners' equity and cash flows for the five months
ended May 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 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 weather 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 described in Note 2 to the financial statements., closing on the sale of the
rental property occurred March 8, 2000, and the Partnership commenced
liquidation shortly thereafter. As a result, the Partnership has changed its
basis of accounting, for periods subsequent to March 8, 2000, from the
going-concern basis to liquidation basis.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for liquidation of Conifer 307
Oreg. Ltd. as of May 31, 2000, the results of its operations for the period
January 1, 2000 to March 8, 2000, the changes in its net assets in liquidation
for the period from March 9, 2000 to May 31, 2000, and its cash flows for the
five months ended May 31, 2000 in conformity with generally accepted accounting
principles applied on the basis described in the preceding paragraph.

/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
June 20, 2000

-79-

[Letterhead of Blume Loveridge & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS

Partners
Conifer 307 Oreg. Ltd.
Tacoma, Washington

We have audited the accompanying balance sheets of Conifer 307 Oreg. Ltd. (a
limited partnership), sponsor of FHA Project No. 126-44038, as of December 31,
1999 and 1998, and the related statements of operations, changes in partners'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an 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 Conifer 307 Oreg. Ltd., as of
December 31, 1999 and 1998, and the results of its operations, changes in
partners' equity and cash flow for the years then ended in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
10 to 14 is presented for purposes of additional analysis for the year ended
December 31, 1999, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report,
dated January 24, 2000, on our consideration of the Partnership's internal
controls and reports, dated January 24, 2000, on its compliance with laws and
regulations.

/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
January 24, 2000

-80-

[Letterhead of Blume Loveridge & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS

Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington

We have audited the accompanying balance sheets of Conifer 317, An Oregon
Limited Partnership, sponsor of FHA Project No. 126-44134, as of December 31,
2001, and the related statements of profit and loss, changes in partners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 an 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 Conifer 317, An Oregon Limited
Partnership, as of December 31, 2001, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

The Partnership is regulated by the U.S. Department of Housing and Urban
Development (HUD) as to rental charges, operating methods and reporting
requirements. The financial statements are presented in sufficient detail to
facilitate the electronic submission of certain financial information by the
Partnership to HUD's Real Estate Assessment Center.

Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying additional information
shown on pages 15 through 18 is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such additional
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report,
dated February 8, 2002, on our consideration of the Partnership's internal
controls and reports, dated February 8, 2002, on its compliance with laws and
regulations. 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/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 8, 2002

-81-

[Letterhead of Blume Loveridge & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS

Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington

We have audited the accompanying balance sheets of Conifer 317, An Oregon
Limited Partnership, sponsor of FHA Project No. 126-44134, as of December 31,
2000 and 1999, and the related statements of income, changes in partners' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an 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 Conifer 317, An Oregon Limited
Partnership, as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
10 to 14 is presented for purposes of additional analysis for the year ended
December 31, 2000, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report,
dated February 3, 2001, on our consideration of the Partnership's internal
controls and reports, dated February 3, 2001, on its compliance with laws and
regulations. 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 related audit.

/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 3, 2001

-82-

[Letterhead of Deloitte & Touche LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bellfort Associates, Ltd.

We have audited the accompanying balance sheets of Bellfort Associates, Ltd.
(the "Partnership"), a Texas limited partnership, as of January 12, 2000 and
December 31, 1999, and the related statements of operations, partners' equity
(deficiency), and cash flows for the period January 1, 2000 through January 12,
2000 and each of the two years in the period ended December 31, 1999 and 1998.
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
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Bellfort Associates, Ltd. as of January 12,
2000 and December 31, 1999, and the results of its operations and its cash flows
for the period January 1, 2000 through January 12, 2000 and each of the two
years in the period ended December 31, 1999 and 1998 in conformity with
accounting principles generally accepted in the United States of America

As discussed in Notes 1 and 4 to the financial statements, the Partnership sold
its income producing property on January 12, 2000 which raises substantial doubt
about the Partnership's ability to continue as a going concern. The General
Partner has indicated that the Partnership is expected to be terminated in 2000.

/s/ Deloitte & Touche LLP
Houston, Texas
August 23, 2000

-83-

[Letterhead of Deloitte & Touche LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bellfort Associates, Ltd.

We have audited the accompanying balance sheets of Bellfort Associates, Ltd.
(the "Partnership"), a Texas limited partnership, as of December 31, 1999 and
1998, and the related statements of operations, partners' deficiency, and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Bellfort Associates, Ltd. as of December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 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 4 to the
financial statements, the Partnership's operations have not generated and are
not expected to generate sufficient cash flows to service its existing debt
structure, and the Partnership's purchase note payable is due November 1, 1999.
These matters raise substantial doubt about the Partnership's ability to
continue as going concern. The Partnership's plans concerning these matters are
also described in Note 4. The financial statements do not include any
adjustments as of December 31, 1999 that might result from the outcome of this
uncertainty. As described in Note 4, in January 2000, the Partnership sold its
interest in the apartment project described in Note 1 in exchange for cash and
forgiveness of debt.

/s/ Deloitte & Touche LLP
Houston, Texas
March 20, 2000

-84-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Cloisters Associates, Ltd.
Atlanta, Georgia

We have audited the balance sheets of Cloisters Associates, Ltd.("the
Partnership") as of November 8, 2000 and December 31, 1999, and the related
statements of operations, changes in partners' capital (deficit), and cash flows
for the period ended November 8, 2000 and each of the two years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cloisters Associates, Ltd. at
November 8, 2000 and December 31, 1999, and the results of its operations and
its cash flows for the period ended November 8, 2000 and each of the two years
in the period ended December 31, 1999 in conformity with generally accepted
accounting principles.

/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
December 15, 2000

-85-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Cabarrus Arms Associates
Atlanta, Georgia

We have audited the balance sheets of Cabarrus Arms Associates ("the
Partnership") as of December 31, 2001 and 2000, and the related statements of
operations, changes in partners' capital (deficit) and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cabarrus Arms Associates at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.

/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
February 8, 2002

-86-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Cabarrus Arms Associates
Atlanta, Georgia

We have audited the balance sheets of Cabarrus Arms Associates ("the
Partnership") as of December 31, 2000 and 1999, and the related statements of
operations, changes in partners' capital (deficit), 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 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 Cabarrus Arms Associates at
December 31, 2000 and 1999, and the results of its operations 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/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 24, 2001

-87-

[Letterhead of Mauldin & Jenkins]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Summer Arms Apartments, Ltd.
Sumter, South Carolina

We have audited the accompanying balance sheets of Summer Arms Apartments, Ltd.
(a limited partnership) as of December 31, 2001, 2000 and 1999, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Summer Arms Apartments, Ltd. (a
limited partnership) as of December 31, 2001, 2000 and 1999, and the results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
February 1, 2002

-88-

[Letterhead of Mauldin & Jenkins]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lexington Village Company
Conyers, Georgia

We have audited the accompanying balance sheets of Lexington Village Company (a
limited partnership) as of December 31, 2001, 2000 and 1999, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lexington Village Company (a
limited partnership) as of December 31, 2001, 2000 and 1999, and the results of
its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
February 1, 2002

-89-

[Letterhead of Mauldin & Jenkins]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Ware Manor Associates
Waycross, Georgia

We have audited the accompanying balance sheets of Ware Manor Associates (a
limited partnership) as of June 20, 2001 and December 31, 2000 and 1999 and the
related statements of operations, changes in partners' equity and cash flows for
the period of January 1, 2001 to June 20, 2001 and for the years ended December
31, 2000 and 1999. 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 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 Ware Manor Associates (a
limited partnership) as of June 20, 2001 and December 31, 2000 and 1999, and the
results of its operations and its cash flows for the period of January 1, 2001
to June 20, 2001 and for years ended December 31, 2000 and 1999, in conformity
with accounting principles generally accepted in the United States of America.

/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
August 23, 2001

-90-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Nottingham Woods Apartments Limited
Atlanta, Georgia

We have audited the balance sheets of Nottingham Woods Apartments Limited ("the
Partnership") as of December 31, 2001 and 2000, and the related statements of
operations, changes in partners' deficit, and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nottingham Woods Apartments
Limited at December 31, 2001 and 2000, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
February 8, 2002, except for Note I,
which is as of February 14, 2002

-91-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Nottingham Woods Apartments Limited
Atlanta, Georgia

We have audited the balance sheets of Nottingham Woods Apartments Limited ("the
Partnership") as of December 31, 2000 and 1999, and the related statements of
operations, changes in partners' deficit, 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 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 Nottingham Woods Apartments
Limited at December 31, 2000 and 1999, and the results of its operations 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/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 25, 2001

-92-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Hathaway Court Associates
Atlanta, Georgia

We have audited the balance sheets of Hathaway Court Associates ("the
Partnership") as of December 31, 2001 and 2000, and the related statements of
operations, changes in partners' deficit, and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hathaway Court Associates at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.

/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
February 8, 2002

-93-

[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]

INDEPENDENT AUDITORS' REPORT

Partners
Hathaway Court Associates
Atlanta, Georgia

We have audited the balance sheets of Hathaway Court Associates ("the
Partnership") as of December 31, 2000 and 1999, and the related statements of
operations, changes in partners' capital deficit, 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 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 Hathaway Court Associates at
December 31, 2000 and 1999, and the results of its operations 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/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 26, 2001

-94-

[Letterhead of Mauldin & Jenkins]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Tall Pines Associates
LaGrange, Georgia

We have audited the accompanying balance sheets of Tall Pines Associates (a
limited partnership) as of June 20, 2001 and December 31, 2000 and 1999, and the
related statements of operations, changes in partners' equity and cash flows for
the period of January 1, 2001 to June 20, 2001 and for years ended December 31,
2000 and 1999. 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 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 Tall Pines Associates as of
June 20, 2001 and December 31, 2000 and 1999, and the results of its operations
and its cash flows for the period of January 1, 2001 to June 20, 2001 and for
years ended December 31, 2000 and 1999, in conformity with accounting principles
generally accepted in the United States of America.

/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
August 23, 2001

-95-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Shelton Beach Apartments, Ltd.

We have audited the accompanying statement of net assets in liquidation of
Shelton Beach Apartments, 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 Shelton Beach
Apartments, 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, the partnership has entered
into a purchase and sale agreement to sell the rental 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 12 through 14
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 11, 2002

-96-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Shelton Beach Apartments, Ltd.

We have audited the accompanying balance sheets of Shelton Beach Apartments,
Ltd. as of December 31, 2000 and 1999, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shelton Beach Apartments, Ltd.
as of December 31, 2000 and 1999, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

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

-97-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Northpointe II, Ltd.

We have audited the accompanying statement of net assets in liquidation of
Northpointe II, 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 Northpointe II, 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, the partnership has entered
into a purchase and sale agreement to sell the rental 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 12 through 14
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 11, 2002

-98-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Northpointe II, Ltd.

We have audited the accompanying balance sheets of Northpointe II, Ltd. as of
December 31, 2000 and 1999, and the related statements of revenue and expenses,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northpointe II, Ltd. as of
December 31, 2000 and 1999, and the results of its operations, the changes in
partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

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

-99-

[Letterhead of KPMG LLP]

Independent Auditors' Report

The Partners
Caroline Forest Apartments:

We have audited the accompanying balance sheet of Caroline Forest Apartments
Limited Partnership (a Virginia Limited Partnership) as of March 31, 2000, and
the related statements of profit and loss, changes in partners' equity and cash
flows for the three-month period 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 and the standards applicable to financial audits
contained in 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 Caroline Forest Apartments
Limited Partnership (aVirginia Limited Partnership) as of March 31, 2000, and
the results of its operations and its cash flows for the three-month period then
ended in conformity with accounting principles generally accepted in the United
States of America.

In accordance with Government Auditing Standards, we have also issued a report
dated July 7, 2000 on our consideration of the Partnership's internal control
over financial reporting and a report dated July 7, 2000 on our tests of its
compliance with certain provisions of laws and regulations. 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 made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplementary information as listed in the
accompanying table of contents, 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 audits 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/ KPMG LLP
Roanoke, Virginia
July 7, 2000

-100-

[Letterhead of KPMG LLP]

Independent Auditors' Report

The Partners
Caroline Forest Apartments:

We have audited the accompanying balance sheets of Caroline Forest Apartments (a
Virginia Limited Partnership) as of December 31, 1999 and 1998, and the related
statements of operations, changes in partners' equity and cash flows for each of
the years in the three-year period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Caroline Forest Apartments (a
Virginia Limited Partnership) as of December 31, 1999 and 1998, and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.

/s/ KPMG LLP
Roanoke, Virginia
February 15, 2000

-101-

[Letterhead of Frierson & Associates, PC]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Park of Pecan I, Ltd.:

We have audited the accompanying balance sheet of Park of Pecan I, Ltd., (a
Texas limited partnership) as of February 26, 1999, and the related statements
of loss and partners' deficit and cash flows for the period 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park of Pecan I, Ltd. as of
February 26, 1999, and the results of its operations 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 suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Frierson & Associates, P.C.
May 14, 1999
Houston, Texas

-102-

[Letter of Frierson & Associates, PC]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Park of Pecan II, Ltd.:

We have audited the accompanying balance sheet of Park of Pecan II, Ltd., (a
Texas limited partnership) as of February 26, 1999, and the related statements
of loss and partners' deficit and cash flows for the period 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park of Pecan II, Ltd. as of
February 26, 1999, and the results of its operations 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 suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Frierson & Associates, PC
Houston, Texas
May 14, 1999

-103-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Villa Apollo Associates Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034

We have audited the accompanying balance sheet of Villa Apollo Associates
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' deficiency, 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 Villa Apollo Associates 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 14, 2000

-104-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Carlton Terrace Apartments Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034

We have audited the accompanying balance sheet of Carlton Terrace Apartments
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' deficiency, and cash flows and, the
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 Carlton Terrace 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 15, 2000

-105-

[Letterhead of Kirschner Hutton Perlin, P.C.]

Independent Auditors' Report

Partners
Cranbrook Manor Apartments Limited Partnership

We have audited the accompanying balance sheet of Cranbrook Manor Apartments
Limited Partnership, Project No. 047-44002-LD-SUP, as of December 31, 1999, and
the related statements of profit and loss, changes in partners' 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 Cranbrook Manor Apartments
Limited Partnership as of December 31, 1999, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying additional information
(pages 12 to 14) 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.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership's inability to generate sufficient cash
flow to meet its obligations and sustain its operations raise substantial doubt
about the Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

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 28, 2000 on our
consideration of the Cranbrook Manor Apartments Limited Partnership's internal
control and a reports dated January 28, 2000 on its compliance with specific
requirements applicable to major HUD programs and specific requirements
applicable to Fair Housing and Non-Discrimination.

/s/ Kirschner Hutton Perlin, P.C.
E.I.N. 38-2308034
Audit Partner - Kenneth R. Perlin
Southfield, MI
January 28, 2000

-106-

[Letterhead of Kirschner Hutton Perlin, P.C.]

Independent Auditors' Report

To the Partners
Oakbrook Villa Apartments Limited Partnership

We have audited the accompanying balance sheet of Oakbrook Villa Apartments
Limited Partnership as of December 31, 1999, and the related statements of
operations, partners' 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 Oakbrook Villa Apartments
Limited Partnership as of December 31, 1999 and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Kirschner Hutton Perlin, P.C.
Southfield, Michigan
February 16, 2000

-107-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Pebble Creek LDHA

We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 2001, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years 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 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 above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 2001, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 10 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 2002 on our consideration of the partnership's internal
control structure and a report dated January 21, 21002 on its compliance with
laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 21, 2002

-108-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Pebble Creek LDHA

We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 2000, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years 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 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 above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 2000, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 10 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 18, 2001 on our consideration of the partnership's internal
control structure and a report dated January 18, 2001 on its compliance with
laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 18, 2001

-109-

[Letterhead of Bordman & Winnick]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Pebble Creek LDHA

We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 1999, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 1999 and 1998. 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 above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 1999, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 8 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 2000 on our consideration of the partnership's internal
control structure and a report dated January 15, 2000 on its compliance with
laws and regulations.

/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 15, 2000

-110-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
VILLA APOLLO #2 LIMITED PARTNERSHIP
28777 Northwestern Highway,
Suite 100
Southfield, MI 48034

We have audited the accompanying balance sheet of VILLA APOLLO #2 LIMITED
PARTNERSHIP (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' deficiency, 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 Villa Apollo #2 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

-111-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Greenwood Manor, Ltd.:

We have audited the accompanying financial statements of Greenwood Manor, 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 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 Greenwood Manor, Ltd. 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 17, 2002, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
January 17, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, 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 supplemental information
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part the basic financial statements of Greenwood Manor, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 17, 2002

-112-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Greenwood Manor, Ltd.:

We have audited the accompanying balance sheet of Greenwood Manor, 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 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 Greenwood Manor, Ltd. 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 18, 2001, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
January 18, 2001, on its compliance with specific requirements applicable to
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 audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part the basic financial statements of Greenwood Manor, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 18, 2001

-113-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Greenwood Manor, Ltd.:

We have audited the accompanying balance sheet of Greenwood Manor, 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 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 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenwood Manor, Ltd. 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 February 4, 2000, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
February 4, 2000, on its compliance with specific requirements applicable to
major HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination.

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

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 4, 2000

-114-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Malvern Manor, Ltd.:

We have audited the accompanying financial statements of Malvern Manor, 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 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, 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 25, 2002, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
January 25, 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 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 25, 2002

-115-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Malvern Manor, Ltd.:

We have audited the accompanying financial statements of Malvern Manor, Ltd.
(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, 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 24, 2001, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
January 24, 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 10 and 11 is presented for the purpose 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 24, 2001

-116-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Malvern Manor, Ltd.:

We have audited the accompanying financial statements of Malvern Manor, Ltd.
(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, 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' 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 February 23, 2000, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
February 23, 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 is presented for the purpose 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
February 23, 2000

-117-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Hereford Manor, Ltd.:

We have audited the accompanying financial statements of Hereford Manor, 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 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, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership at December 31,
2001, and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with accepted accounting principles
generally accepted in the United States of America.

In accordance with Government Auditing Standards and Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated January 21, 2002, on our
consideration of Hereford Manor, Ltd.'s internal control and reports dated
January 21, 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 9 and 10 is presented for the purpose 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 21, 2002

-118-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Hereford Manor, Ltd.:

We have audited the accompanying financial statements of Hereford Manor, Ltd.
(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, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership at 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 Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated February 2, 2001, on our
consideration of Hereford's internal control and reports dated February 2, 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 nondiscrimination. 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 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
February 12, 2001

-119-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Hereford Manor, Ltd.:

We have audited the accompanying financial statements of Hereford Manor, Ltd.
(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, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership at 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 Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated February 14, 2000, on our
consideration of Hereford's internal control and reports dated February 14,
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 nondiscrimination.

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 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
February 14, 2000

-120-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Henslee Heights, Ltd.:

We have audited the accompanying financial statements of Henslee Heights, 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 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, 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 of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 17, 2002, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated January 17, 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 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. 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 17, 2002

-121-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Henslee Heights, Ltd.:

We have audited the accompanying financial statements of Henslee Heights, Ltd.
(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, 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 of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 24, 2001, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated January 24, 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
nondiscrimination. Those reports are 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. 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 24, 2001

-122-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Henslee Heights, Ltd.:

We have audited the accompanying financial statements of Henslee Heights, Ltd.
(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, 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' 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 of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated February 11, 2000, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated February 11, 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
nondiscrimination.

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 - 13 is presented for the purpose of additional
analysis. 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 11, 2000

-123-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Oakwood Manor, Ltd.:

We have audited the accompanying special-purpose balance sheet of Oakwood Manor,
Ltd. (the "Partnership") as of June 27, 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 Advantaged 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 June 27,
2001, and the results of its operations and its cash flows for the period then
ended in conformity with the 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 Notes 1 and 7 to
the financial statements, the Partnership sold its sole revenue producing asset
during the period, which raises substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

This report is intended solely for the information and use of the partners of
Oakwood Manor, Ltd., management and Cambridge and should not be used for any
other purpose.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
November 28, 2001

-124-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Oakwood Manor, Ltd.:

We have audited the accompanying financial statements of Oakwood Manor, Ltd.
(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, 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 reported dated January 30, 2001, on our
consideration of Oakwood Manor, Ltd.'s internal control and a report dated
January 30, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to non-major 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 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 30, 2001

-125-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Oakwood Manor, Ltd.:

We have audited the accompanying financial statements of Oakwood Manor, Ltd.
(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, 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' 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 reported dated February 8, 2000, on our
consideration of Oakwood Manor, Ltd.'s internal control and a report dated
February 8, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to non-major 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 is presented for the purpose 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
February 8, 2000

-126-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
West Scenic Apartments, Ltd.:

We have audited the accompanying special-purpose balance sheet of West Scenic
Apartments, Ltd. (the "Partnership") as of January 5, 2001, and the related
special-purpose statements of income, partners' equity, and cash flows for the
five day 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 generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partner, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

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

In our opinion, such special-purpose financial statements present fairly, in all
material respects, the financial position of the Partnership as of January 5,
2001, and the results of its operations and its cash flows for the five day
period then ended in conformity with the basis of accounting described in Note
1.

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

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 16, 2001

-127-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
West Scenic Apartments, Ltd.:

We have audited the accompanying financial statements of West Scenic Apartments,
Ltd. (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, 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, we have also issued a report dated January 31,
2001, on our consideration of West Scenic Apartments, Ltd.'s internal control
and reports dated January 31, 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 10 and 11 is presented for the purpose 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 31, 2001

-128-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
West Scenic Apartments, Ltd.:

We have audited the accompanying financial statements of West Scenic Apartments,
Ltd. (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, 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' 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, we have also issued a report dated February 9,
2000, on our consideration of West Scenic Apartments, Ltd.'s internal control
and reports dated February 9, 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 is presented for the purpose 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
February 9, 2000

-129-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Robindale East Apartments, Ltd.:

We have audited the accompanying financial statements of Robindale East
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 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, 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 Robindale East Apartments, Ltd.'s internal control and a report
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 11 and 12 is presented for the purpose 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

-130-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Robindale East Apartments, Ltd.:

We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (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, 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 29, 20001, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
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 10 and 11 is presented for the purpose 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 29, 2001

-131-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Robindale East Apartments, Ltd.:

We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (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, 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' 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 February 10, 2000, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated February 10, 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 is presented for the purpose 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
February 10, 2000

-132-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Southwest Apartments, Ltd.:

We have audited the accompanying financial statements of Southwest 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 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, 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 21, 2002, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
January 21, 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 9 and 10 is presented for the purpose 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 21, 2002

-133-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Southwest Apartments, Ltd.:

We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (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, 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 25, 2001, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
January 25, 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 10 and 11 is presented for the purpose 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 25, 2001

-134-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Southwest Apartments, Ltd.:

We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (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, 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' 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 February 24, 2000, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
February 24 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 is presented for the purpose 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
February 24, 2000

-135-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Valley Arms, Ltd.:

We are engaged to audit the accompanying balance sheet of Valley Arms, Ltd. (the
"Partnership") as of December 31, 2000, and the related statements of profit and
loss, partners' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the General Partner.

Management has refused to provide written representations as to its
responsibility for the fair presentation of the financial statements and other
matters which could materially affect the amounts and classification of items
included in the financial statements. Such representations are required under
generally accepted auditing standards.

Since the management of the Partnership has refused to provide written
representations as noted in the preceding paragraph, the scope of our work was
not sufficient to enable us to express, and we do not express, and opinion on
the financial statements referred to above.

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 filed a petition for bankruptcy under
Chapter 11 during the year ended December 31, 1998, and sold its sole revenue
producing asset on April 13, 1999, 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.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 1, 2001

-136-

[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Valley Arms, Ltd.:

We are engaged to audit the accompanying balance sheet of Valley Arms, Ltd. (the
"Partnership") as of December 31, 1999, and the related statements of profit and
loss, partners' equity (deficit), and cash flows for the year then ended. These
financial statements are the responsibility of the General Partner.

Management has refused to provide written representations as to its
responsibility for the fair presentation of the financial statements and other
matters which could materially affect the amounts and classification of items
included in the financial statements. Such representations are required under
generally accepted auditing standards.

Since the management of the Company has refused to provide written
representations as noted in the preceding paragraph, the scope of our work was
not sufficient to enable us to express, and we do not express, and opinion on
the financial statements referred to above.

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 filed a petition for bankruptcy under
Chapter 11 during the year ended December 31, 1998, and sold its sole revenue
producing asset on April 13, 1999, 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
Valley Arms, Ltd., management and Cambridge and should not be used for any other
purpose.

/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
March 13, 2000

-137-

[Letterhead of Bick Fredman & Co.]

Independent Auditor's Report

The General and Limited Partners
Lancaster Manor Associates, Ltd.
Cleveland, Ohio

We have audited the statements of net assets in liquidation of Lancaster Manor
Associates, Ltd. (a California Limited Partnership), as of August 31, 1999, and
the related statement of changes in net assets in liquidation for the period
from March 17, 1999 to August 31, 1999. In addition, we have audited the
statement of operations for the period January 1, 1999 to March 16, 1999 and the
statement of partners' (deficit) equity and cash flow for the eight months ended
August 31, 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 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
misstatements. 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 described in Note 3 to the financial statements, the partners of Lancaster
Manor Associates, Ltd. approved a plan of liquidation on March 16, 1999, and the
Company commenced liquidation shortly thereafter. As a result, the Company has
changed its basis of accounting for periods subsequent to March 16, 1999 from
the going-concern basis to a liquidation basis.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Lancaster Manor
Associates, Ltd. as of August 31, 1999, the changes in net assets in liquidation
for the period from March 17, 1999 to August 31, 1999, and the results of its
operations for the period from January 1, 1999 to March 16, 1999, and its cash
flows for the eight months then ended in conformity with generally accepted
accounting principles applied on the bases described in the preceding
paragraph..

/s/ Bick Fredman & Co.
Cleveland, Ohio
September 2, 1999

-138-

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

See accompanying notes to consolidated financial statements.

-139-

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.

-140-

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT

See accompanying notes to consolidated financial statements.

-141-

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

-142-

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)

-143-

CAMBRIDGE ADVANTAGED 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.

-144-

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

NOTE 1 - Organization

Cambridge Advantaged Properties Limited Partnership (the "Partnership") was
formed pursuant to the laws of the Commonwealth of Massachusetts on June 28,
1984. The Partnership invests, 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") that is financed and/or operated with 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 Assisted Housing Associates Inc.,
(the "Assisted General Partner"), and Related Beta Corporation (the "Related
General Partner"), both of which are Delaware corporations affiliated with The
Related Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Associates Limited Partnership (formerly Hutton/Related
Associates Limited Partnership) ("Cambridge/Related"), a Massachusetts limited
partnership. The general partners of Cambridge/Related are the Assisted General
Partner and the Related General Partner. The General Partners manage and control
the affairs of the Partnership.

Pursuant to the public offering, the Partnership received $53,754,000 (net of
offering expenses and sales commissions of $6,615,700) from 4,452 investors in
12,074 limited partnership interests. The offering was completed in March 1985
and no further issuance of initial limited partnership interests or additional
limited partnership interests is anticipated.

As of March 25, 2002, the Partnership holds a 98.99% limited partnership
interest in each of the remaining Local Partnerships, which own Apartment
Complexes receiving Government Assistance. During the fiscal year ended March
25, 2002, the properties and the related assets and liabilities owned by nine
subsidiary partnerships were sold and the Partnership's Local Partnership
Interests in eight subsidiary partnerships were sold, respectively. Through the
fiscal year ended March 25, 2002, the properties and the related assets and
liabilities owned by twenty-five subsidiary partnerships were sold and the
Partnership's Local Partnership Interests in twenty-four subsidiary partnerships
were sold, respectively (see Note 10).

The terms of the Partnership Agreement provide, among other things, that profits
and 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 30, 43 and 48, subsidiary partnerships in which the Partnership is a limited
partner for the years ended March 25, 2002, 2001 and 2000, respectively. The
Partnership is a limited partner, with an ownership interest of 98.99% in each
of the subsidiary partnerships. The Partnership continues to hold its interest
in certain subsidiary partnerships which have sold their properties and have not
formally liquidated. Through the rights of the Partnership and/or an affiliate
of a General Partner, which affiliate 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

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

and financial decisions, the Partnership has a controlling financial interest in
the subsidiary partnerships.

For financial reporting purposes, the Partnership's fiscal year ends March 25.
All subsidiaries have fiscal years ending December 31. Accounts of subsidiaries
have been adjusted for intercompany transactions from January 1 through March
25. The Partnership's fiscal year ends on March 25 in order to allow adequate
time for the subsidiaries' financial statements to be prepared and consolidated.
The books and records 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 cash contributions and cash
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 approximately $49,000, $41,000 and $0 for the years ended March 25,
2002 (the "2001 Fiscal Year"), March 25, 2001 (the "2000 Fiscal Year") and March
25, 2000 (the "1999 Fiscal Year"), respectively. The Partnership's investment in
each subsidiary is equal to the respective subsidiary's partners' equity less
minority interest capital, if any. In consolidation, all subsidiary partnership
losses are included in the Partnership's capital account except for losses
allocated to minority interest capital.

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, construction period interest
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, the property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows).

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.

For the year ended March 25, 2002, the Partnership has not recorded a loss on
impairment of assets. Through March 25, 2002, the Partnership has recorded
approximately $7,682,000 as a loss on impairment of assets.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

c) Interest Subsidies

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

d) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term highly liquid instruments purchased with original maturities of
three months or less.

e) Income Taxes

No provision has been made for income taxes in the accompanying 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. In
addition, the Partnership evaluates the amount of a potential environmental
liability independently from any potential claim for recovery.

g) Use of Estimates

The preparation of financial statements in conformity with 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, CASH-RESTRICTED FOR TENANTS' SECURITY DEPOSITS AND
MORTGAGE ESCROW DEPOSITS
- -----------------------------------------------------------------------------
The carrying amount approximates fair value.

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

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

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

(a) Management believes it is not practical to estimate the fair value of the
mortgage notes payable because mortgage programs with similar characteristics
are not currently available to the Local Partnerships.

(b) For the reasons discussed in Note 7, it is not practicable to estimate the
fair value of these notes, or accrued interest thereon.

The carrying amount of other financial instruments that require such disclosure
approximates fair value.

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:

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

Property acquisition fees of $5,131,535 were earned by the General Partners of
the Partnership and have been capitalized as a cost of property and equipment.

Depreciation expense for the 2001, 2000 and 1999 Fiscal Years amounted to
$1,364,076, $3,212,290 and $4,915,594, respectively.

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

NOTE 5 - Mortgage Escrow Deposits

Mortgage escrow deposits consist of the following:

NOTE 6 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments of
approximately $93,000, including principal and interest at rates varying from
6.75% to 8.5% per annum, through March 2019. 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.

Under the terms of regulatory agreements with the Secretary of HUD, subsidiary
partnerships with mortgage note balances aggregating approximately $11,361,000
and $23,641,000 at December 31, 2001 and 2000, respectively, providing for
interest at rates ranging from 6.75% to 8.50% per annum, paid only that portion
of the monthly payments that would be required if the interest rate was in the
range of 1% - 3% per annum; the balance was subsidized under Section 236 of the
National Housing Act.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

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

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

NOTE 7 - Purchase Money Notes Payable

Purchase money notes in the original amount of $85,458,825 were issued to the
selling partners of the subsidiary partnerships as part of the purchase price
and are secured only by the interest in the subsidiary partnership to which the
purchase money note relates (the "Purchase Money Notes"). A portion of these
Purchase Money Notes, in the original amount of $31,932,568 is an obligation at
the subsidiary partnership level, whereas the remaining $53,526,257 is recorded
at the Partnership level. The Purchase Money Notes generally provided for
compound interest at rates which, in general, ranged from 9% to 10% per annum
through August 31, 1989. Thereafter, simple interest has accrued, without
further interest thereon, through maturity as extended (see below). Purchase
Money Notes at March 25, 2002 and 2001 include $4,336,417 of interest accrued
through August 31, 1989.

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. Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase Money Note.
Continued accrual of such interest beyond the initial term, without payment,
reduces the effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and the
ultimate repayment dates of the Purchase Money Notes. The Purchase Money Notes,
after the extended maturity dates, call for the simple accrual of interest on
the balance of principal, interest and Purchase Money Note Extension Fees
Payable as of the date of maturity at one of the following two rates: (i) the
lesser of 12% or the legally allowable rate; or (ii) the lesser of prime plus 2%
or the lowest legally allowable rate. Unpaid interest of approximately
$22,909,000 and $51,597,000 as of March 25, 2002 and 2001, respectively, has
been accrued and is included in due to selling partners in the consolidated
balance sheets. 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 of the sale or refinancing of the Apartment Complex.

The Partnership extended the terms of the Purchase Money Notes (ranging from
August to December 1996) for up to three additional years (four years with
respect to three subsidiary partnerships and seven years with respect to three
subsidiary partnerships). In connection

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

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
Purchase Money Notes with seven year extensions have all been sold.
Additionally, an oral agreement was reached in August 2001 to extend the
maturity dates of the remaining Purchase Money Notes to September 2002 through
October 2003. The Partnership is working with the Local General Partners and
Purchase Money Note holders to refinance or sell the properties. No assurance
can be given that management's efforts will be successful. Of such fees
incurred, $104,999 was accrued and added to the Purchase Money Notes balance.
The extension fees are being amortized over the term of the extensions. 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 of
principal, accrued interest and extension fees. The Purchase Money Notes are
without personal recourse to either the Partnership or any of its partners and
the selling partner's recourse, in the event of nonpayment, would be to
foreclose on the Partnership's interests in the respective subsidiary
partnerships.

Distributions aggregating approximately $4,452,000, $6,550,000 and $6,993,000
were made to the Partnership during each of the years ended March 25, 2002, 2001
and 2000, respectively, of which approximately $3,872,000, $5,147,000 and
$1,067,000, respectively, was used to pay principal, interest and extension fees
on the Purchase Money Notes. In addition, approximately $0, $598,000 and $6,000
for the 2001, 2000 and 1999 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes.

NOTE 8 - Related Party Transactions

The costs incurred to related parties 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 owed to the General
Partners amounting to approximately $2,847,000 and $2,178,000 were accrued and
unpaid as of March 25, 2002 and 2001, respectively. Without the General
Partners' continued allowance of accrual without payment of certain fees and
expense reimbursements, the Partnership will not be in a position to meet its
obligations. The General Partners have continued allowing the accrual without
payment of these amounts

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

but are under no obligation to continue to do so. Proceeds received from future
sales will be used to pay any outstanding amounts due to the General Partners.

(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 Related General Partner performs asset monitoring for the
Partnership. These services include site visits and evaluations of the
subsidiary partnerships' performance. Expense reimbursements and asset
monitoring fees owed to the Related General Partner amounting to $95,092 and
$61,187 were accrued and unpaid as of March 25, 2002 and 2001, respectively.

(c) C/R Special Partnership, the special limited partner, owning a .01%
interest, is entitled to receive a local administrative fee of up to $2,500 per
year from each subsidiary partnership.

NOTE 9 - Income Taxes

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

NOTE 10 - Sale of Properties

GENERAL

The Partnership is currently in the process of disposing of its investments. It
is anticipated that this process will take a number of years. As of March 25,
2002, the Partnership has disposed of forty-nine of its sixty-one original
investments. Subsequently, four additional properties have

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

been sold. Five additional investments are listed for sale and the Partnership
anticipates that the three remaining investments will be listed for sale by
December 31, 2002. There can be no assurance as to when or that 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 received by the Partnership
will be sufficient to return their original investment. Moreover, the Local
General Partners and noteholders generally have decision-making rights with
respect to the sale of each property which makes it more cumbersome for the
General Partners to sell each property.

In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the
"Trust"), a Delaware limited liability company which is wholly-owned by the
Partnership.

On July 21, 1999, the Partnership contributed its limited partnership interest
in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments,
Ltd., Dickens Ferry Apartments, Ltd., Bonnie Doone Apartments, Ltd., University
Gardens Apartments, Ltd., and Southside Village Apartments, Ltd. to the Trust.
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 should not be any tax effect to the limited
partners of the Partnership. All of these properties with the exception of
Saraland have been sold.

On April 13, 1999, the property and related assets and liabilities of Valley
Arms were sold to an unaffiliated third party for $1,600,000, resulting in a
gain in the amount of approximately $161,000. No proceeds were used to settle
the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,514,000, resulting in forgiveness of
indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Carlton
Terrace Apartments, Limited Partnership was sold to the general partners for
$589,623, resulting in a gain in the amount of approximately $1,675,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $3,323,000,
resulting in forgiveness of indebtedness income. The Purchase Money Notes were
assumed by the Local Partnership.

On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
Associates Limited Partnership was sold to the general partners for $220,138,
resulting in a gain in the amount of approximately $372,000. The Purchase Money
Notes were assumed by the Local Partnership. No proceeds were used to settle the
associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,129,000, resulting in forgiveness of
indebtedness income.

On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
#2 Associates Limited Partnership was sold to the general partners for $562,136,
resulting in a gain in the amount of approximately $1,709,000. The Purchase
Money Notes were assumed by the Local Partnership. No proceeds were used to
settle the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $4,728,000, resulting in forgiveness of
indebtedness income.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

On December 14, 1999, the property and related assets and liabilities of
Oakbrook Villa Apartments were sold to an unaffiliated third party for
$8,350,000, resulting in a loss in the amount of approximately $522,000. The
Partnership used approximately $2,438,000 of the net proceeds to settle the
remaining principal balance of the Purchase Money Note and accrued interest
thereon which amounted to $7,205,000, resulting in forgiveness of indebtedness
income of approximately $4,366,000.

On October 18, 1999, the Partnership's limited partnership interest and the
related Purchase Money Note and interest thereon in Cranbrook Manor Apartments
("Cranbrook") was assigned to a third party effective January 1, 2000, resulting
in a gain of approximately $2,888,000. Fees due to an affiliate in the amount of
approximately $46,000 were forgiven resulting in forgiveness of indebtedness
income.

On January 6, 2000, the property and related assets and liabilities of Bellfort
Apts. ("Bellfort") were sold to an unaffiliated third party for $175,100,
resulting in a loss in the amount of approximately $4,445,000. No proceeds were
used to settle the associated Purchase Money Note and accrued interest which had
a total outstanding balance of approximately $11,511,000, operating deficit
loans and advances of approximately $558,000 and various payables of $162,000
resulting in forgiveness of indebtedness income.

On March 7, 2000, the property and related assets and liabilities of Conifer 307
("Fircrest") were sold to an unaffiliated third party for $2,500,000, resulting
in a gain in the amount of approximately $1,457,000. Approximately $1,397,000 of
the proceeds was used to pay off the Purchase Money Note.

On March 31, 2000, the Partnership's limited partnership interest in Caroline
Forest Apartments ("Caroline Forest") was sold to the Purchase Money Note holder
for $90,000, resulting in a loss in the amount of approximately $338,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $1,736,000,
resulting in forgiveness of indebtedness income.

On June 30, 2000, the Partnership sold 1% of its interest in Bonnie Doone
Apartments, Florence Apartments, Dickens Ferry Apartments and Decatur Apartments
to the Purchase Money Note holder, in each case, for $100. Simultaneously, the
Partnership assigned its remaining interest of 97.99% in each of such four Local
Partnerships and the related Purchase Money Notes and interest thereon to the
Purchase Money Note holder, resulting in gains of approximately $1,903,000,
$2,373,000, $2,091,000 and $2,867,000, respectively.

On July 14, 2000, the property and related assets and liabilities of Casa Ramon
Apartments were sold to an unaffiliated third party for $4,500,000, resulting in
a gain of approximately $2,999,000. The Partnership used approximately
$3,062,000 of the proceeds to pay off the Purchase Money Note and accrued
interest thereon which had a total outstanding balance of approximately
$3,172,000 resulting in forgiveness of indebtedness income of approximately
$111,000.

On November 7, 2000, the property and related assets and liabilities of
Cloisters Associates, Ltd. ("Sundown") were sold to an unaffiliated third party
for $2,800,000, resulting in a gain of approximately $713,000. The Partnership
used approximately $519,000 of the proceeds to pay off the Purchase Money Note
and accrued interest thereon, which amounted to $4,825,000, resulting in
forgiveness of indebtedness income of approximately $4,306,000.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

On December 18, 2000, the Partnership's limited partnership interest in Solemar
at South Dartmouth, L.P. ("Solemar") was sold to a third party for $501,000,
resulting in a loss in the amount of $2,369,000. The Purchase Money Note was
assumed by the Local Partnership. No proceeds were used to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $5,473,000, resulting in a gain on sale of property.

On December 19, 2000, the property and related assets and liabilities of Conifer
208 ("Conifer") were sold to an unaffiliated third party for $1,750,000,
resulting in a gain of approximately $846,000. The Partnership used
approximately $1,231,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $1,691,000, resulting in forgiveness of indebtedness income of
approximately $460,000.

On December 20, 2000, the property and related assets and liabilities of
Cedarbay, Ltd. ("Cedarbay") were sold to an unaffiliated third party for
$2,049,600, resulting in a gain of approximately $52,000. The Partnership used
approximately $228,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $3,157,000, resulting in forgiveness of indebtedness income of
approximately $2,943,000 inclusive of forgiveness of approximately $14,000 in
accounts payable.

On January 5, 2001, the property and the related assets and liabilities of West
Scenic Apartments, Ltd. ("West Scenic") were sold back to the Purchase Money
Note Holder for $1,188,000 resulting in a loss of approximately $973,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$3,839,000, resulting in forgiveness of indebtedness income during the 2001
Fiscal Year.

On March 30, 2001 Nu-Elm Apartments ("Nu-Elm") entered into a purchase and sale
agreement with an unaffiliated third party for a purchase price of $1,300,000.
The contract has expired and the property was placed back on the market.

On April 11, 2001, the property and related assets and liabilities of Tall Pines
("Tall Pines") were sold to an unaffiliated third party for $2,145,000,
resulting in a gain of approximately $751,000. The Partnership used
approximately $1,015,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $3,424,000,
resulting in forgiveness of indebtedness income of approximately $2,409,000.

On April 20, 2001, the property and related assets and liabilities of Northwoods
III Apartments were sold to an unaffiliated third party for $3,316,000,
resulting in a gain of approximately $1,266,000. The Partnership used
approximately $791,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,756,000,
resulting in forgiveness of indebtedness income of approximately $965,000.

On May 10, 2001, the property and related assets and liabilities of Ware Manor
Associates ("Ware Manor") were sold to an unaffiliated third party for
$1,364,500, resulting in a gain of approximately $389,000. The Partnership used
approximately $472,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,846,000,
resulting in forgiveness of indebtedness income of approximately $1,374,000.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

On May 21, 2001, Lexington Village ("Lexington") entered into a purchase and
sale agreement with an unaffiliated third party purchaser for a purchase price
of $1,350,000. The closing is expected to occur in late 2002. No assurance can
be given that the closing will actually occur.

On June 27, 2001, the property and related assets and liabilities of Oakwood
Manor ("Oakwood") were sold to an unaffiliated third party purchaser for
$3,099,000, resulting in a loss of approximately $145,000. The Partnership used
approximately $1,077,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $6,803,000
resulting in forgiveness of indebtedness income of approximately $5,726,000.

On July 20, 2001, the property and related assets and liabilities of Washington
Highland Apts. ("Washington Highland") were sold to an unaffiliated third party
purchaser for $800,000, resulting in a loss of approximately $482,000. The
Partnership used approximately $238,000 of the proceeds to pay off the Purchase
Money Note and accrued interest thereon, which had a total outstanding balance
of $1,905,000 resulting in forgiveness of indebtedness income of approximately
$1,668,000.

On August 14, 2001, the Partnership's Limited Partnership Interest in Southside
Village Apts. ("Southside") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $218,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,926,000, resulting in gain on sale
of property of such amount.

On August 14, 2001 the Partnership's Limited Partnership Interest in University
Gardens Apts. ("University") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $330,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,246,000, resulting in gain on sale
of property of such amount.

On August 15, 2001 the Partnership's Limited Partnership Interest in Hackley
Village ("Hackley") was assigned to the Local General Partner resulting in a
loss of approximately $522,000. The Partnership paid approximately $9,000 to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $1,816,000, resulting in gain
on sale of property of such amount.

On September 20, 2001, Shelton Beach Apartments, Ltd. ("Shelton Beach") entered
into a purchase and sale agreement with an unaffiliated third party purchaser
for a purchase price of $2,333,333. Subsequently, on April 30, 2002, the
property and related assets and liabilities were sold (see Note 12).

On September 20, 2001, Northpointe II Apartments, Ltd. ("Northpointe II")
entered into a purchase and sale agreement with an unaffiliated third party
purchaser for a purchase price of $1,666,667. Subsequently, on April 30, 2002,
the property and related assets and liabilities were sold (see Note 12).

On November 13, 2001, the property and related assets and liabilities of Seymour
O'Brien Manor Apts. ("Seymour O' Brien") were sold to an unaffiliated third
party for $920,000, resulting in a loss of approximately $126,000. No proceeds
were used to settle the Purchase Money Note and

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

accrued interest thereon, resulting in forgiveness of indebtedness income of
approximately $1,842,000.

On November 20, 2001, the property and related assets and liabilities of
Vincennes NiBlack Apts. ("Autumn Ridge") were sold to a unaffiliated third party
for $2,500,000, resulting in a loss of approximately $262,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $3,567,000.

On December 4, 2001, the Partnership's Limited Partnership Interests in
Greenwood Manor, Henslee Heights, Hereford Manor, Malvern Manor, and Southwest
Apartments were sold to the Local General Partner effective January 1, 2002 for
$11,988, $27,972, $11,988, $7,920, and $9,990, resulting in losses of
approximately $264,000, $685,000, $329,000, $303,000, and $159,000,
respectively. No proceeds were used to settle the related Purchase Money Notes
and interest thereon which were assigned to the Local General Partner, resulting
in gains on sale of properties of approximately $2,153,000, $2,692,000,
$1,682,000, $1,769,000, and $1,480,000, respectively.

On February 14, 2002, the property and related assets and liabilities of
Nottingham Woods Apartments were sold to an unaffiliated third party for
$1,900,000, resulting in a gain of approximately $1,123,000. The Partnership
used approximately $488,000 of the proceeds to settle the associated Purchase
Money Note and accrued interest thereon, which had a total outstanding balance
of approximately $3,251,000. Approximately $2,763,000 is included in accounts
payable, accrued expenses and other liabilities of March 25, 2002 and will
result in forgiveness of indebtedness income during the 2002 Fiscal Year.

On February 15, 2002, the property and related assets and liabilities of
Robindale East Apartments were sold to an unaffiliated third party for $735,519,
resulting in a loss of approximately $479,000. No proceeds were used to settle
the related Purchase Money Note and accrued interest thereon, which had a total
outstanding balance of approximately $2,904,000, which is included in accounts
payable, accrued expenses and other liabilities at March 25, 2002 and will
result in forgiveness of indebtedness income during the 2002 Fiscal Year.

NOTE 11 - Commitments and Contingencies

a) Subsidiary Partnerships - Events of Default and Going Concern

The financial statements for two subsidiary partnerships have been prepared
assuming they will continue as a going concern. The circumstances described
below raise substantial doubt about the subsidiary partnerships' abilities to
continue as a going concern. The auditors for these subsidiary partnerships
modified their reports on the 2001 Fiscal Year financial statements due to the
uncertainty of the subsidiary partnerships' abilities to continue as a going
concern. The financial statements do not include any adjustments that would be
necessary in the event the subsidiary partnerships are unable to continue as a
going concern.

SARALAND APARTMENTS, LTD.
- -------------------------
Saraland Apartments, Ltd. ("Saraland") has been placed on the Environmental
Protection Agency's (EPA) "Superfund Cleanup List". During the year ended
December 31, 1996, the tenants of Saraland were moved to temporary housing to
facilitate cleanup of the site. However, as of February 1997, the EPA, along
with other agencies, concluded that the apartment

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

residents should not return to the site, and the tenants were permanently
relocated. The EPA has since concluded that the apartments will have to be
demolished in order to accomplish the removal of contamination that has been
found to exist underneath the buildings.

On March 21, 2001, Saraland filed a petition for relief under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Texas, Dallas Division. The schedules list total assets valued at $924 and
liabilities of $12,962,501. The value of the land is listed as undetermined and
the Department of Housing and Urban Development ("HUD") possesses a secured
claim related to mortgages it holds in the estimated amount of $681,527. The
filing was commenced in response to a nonjudicial foreclosure brought by HUD.

The remaining liabilities consist of unsecured nonpriority claims, the bulk of
which relate to a claim held by the U.S. Environmental Protection Agency
("USEPA") and Rentokil Initial Environmental Services, Inc., in the amount of
$12,000,000. This claim relates to a lawsuit under Section 107 of the
Comprehensive Environmental Response, Compensation and Liability Act, which is
currently pending in the District Court for the Southern District of Alabama
(the "District Court") against Saraland and others who it claims are potentially
responsible parties. Redwing Carriers, Inc., a codefendant in the USEPA lawsuit,
has commenced an action, also in the District Court, to recover all or a pro
rata share of its environmental response costs from Saraland and others.

Another lawsuit, pending in Circuit Court, Mobile County, Alabama, was filed by
the former tenants of Saraland against Saraland and Redwing and is also related
to the environmental issues.

The Debtor has filed an Amended Plan of Reorganization which will be considered
by the Bankruptcy Court this summer. The plan provides for resolution of HUD,
EPA and general unsecured claims. The plan also requires the holders of
partnership interests, including the Partnership, to make new capital
contributions to preserve their interests in the reorganized company.

Due to the uncertainty of the outcome of these lawsuits, no loss contingency has
been accrued in the accompanying financial statements. The Local Partnership has
virtually abandoned the property, and is not making payments on its mortgage
loan.

The above conditions raise substantial doubt about Saraland's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of these uncertainties. The
Partnership's investment in Saraland was reduced to $0 by prior and current
years' losses at March 25, 2002 and 2001, respectively, and the minority
interest balance was $21,000 and $21,000, respectively. Saraland's net loss
after minority interest amounted to approximately $36,000, $32,000 and $20,000
for the 2001, 2000 and 1999 Fiscal Years, respectively.

OAKWOOD MANOR, LTD.
- -------------------
The financial statements of Oakwood Manor, Ltd. ("Oakwood") have been prepared
assuming that Oakwood will continue as a going concern. On June 27, 2001,
Oakwood sold its sole revenue producing asset, an apartment complex, to an
unaffiliated third party purchaser for $3,090,000. This factor raises
substantial doubt about Oakwood's ability to continue as a going concern. The
financial statements of Oakwood do not include any adjustments that might

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

result from the outcome of this uncertainty, if Oakwood is unable to continue as
a going concern.

b) Subsidiary Partnership - Other

MCCONNELL V. HUTTON ADVANTAGED PROPERTIES L.P.
- ----------------------------------------------
On or about November 3, 1999, eight alleged holders of beneficial interests in
Purchase Money Notes issued by the Partnership in connection with the
Partnership's acquisition of Limited Partnership Interests in the West Scenic,
Oakwood and Robindale Local Partnerships brought an action in the Chancery Court
of Pulaski County, Arkansas, entitled McConnell, et al., v. Hutton Advantaged
Properties Limited Partnership, et al., Case No. EQ 99-5769 (the "McConnell
Action"). Plaintiffs' original complaint contained a single count alleging fraud
in connection with the Partnership's acquisition of limited partnership
interests in those three Local Partnerships and named as defendants the
Partnership, its general partners, its special limited partner and the general
partner of the special limited partner, as well as two other defendants who are
not affiliated with the Partnership. On or about December 27, 1999, the
plaintiffs in the McConnell Action amended their complaint to add a second count
alleging that the Purchase Money Notes involved in the McConnell Action had
matured and were in default.

Defendants (other than the two defendants who are not affiliated with the
Partnership) have reached a written agreement with plaintiffs to settle the
claims between them, which settlement contemplates the sale of real property
owned by the West Scenic, Oakwood, and Robindale limited partnerships and an
allocation of the sale proceeds between the plaintiffs, the Partnership and
others. On January 5, 2001, the property and the related assets and liabilities
of West Scenic were sold. On June 27, 2001, the property and related assets and
liabilities of Oakwood were sold. On February 15, 2002, the property and related
asset and liabilities of Robindale East were sold (see Notes 4 and 10 for a
description of such sales).

SOUTHWEST APARTMENTS LTD. (THE GOSSERS)
- ---------------------------------------
In or around November 1999, the Partnership received correspondence from an
attorney representing Dr. and Mrs. Bob Gosser, (the "Gossers") who are allegedly
the holders of beneficial interests in Purchase Money Notes issued by the
Partnership in connection with the Partnership's acquisition of limited
partnership interests in Southwest Apartments, Ltd. Local partnership in
December 1984. Those Purchase Money Notes issued by the Partnership have, on
their face, matured and have not been paid in full.

The Partnership thereafter entered into a settlement agreement with the Gossers
which contemplated the sale of the real property owned by Southwest Apartments,
Ltd. and an allocation of the proceeds from the sale between the Gossers, the
Partnership and others. Subsequently, the Partnership sold its partnership
interest in Southwest Apartments, Ltd. to Marshall B. Coffman, subject to the
agreement with the Gossers and pursuant to which Coffman agreed to indemnify the
Partnership in the event of a suit brought by the Gossers. On April 29, 2002,
counsel for the Gossers threatened to bring suit against the Partnership and
Coffman unless Coffman complied with the obligations set forth in the agreement.
The Partnership promptly placed Coffman on notice that in the event the
Partnership is sued by the Gossers, the Partnership will seek to hold Coffman
liable pursuant to the indemnification given by him for all damages sustained by
the Partnership including but not limited to its attorneys' fees.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

UNIVERSITY GARDENS APARTMENTS, LTD. AND SOUTHSIDE VILLAGE APARTMENTS, LTD.
- --------------------------------------------------------------------------
By letters dated December 29, 1999, from counsel for Skyline Properties, Inc.,
Trustee of the University Gardens Apartments, Ltd. Partners Liquidating Trust
and Southside Village Apartments, Ltd. Partners Liquidating Trust, ("Skyline"),
the Partnership was informed of Skyline's intent to file an involuntary
substitution affidavit pursuant to Section 7.1 of the relevant security
agreements. Pursuant to a standstill agreement between the parties, on August
14, 2001, both properties' Limited Partnership Interests were sold (see Notes 4
and 10).

c) Management Agreement

The subsidiary partnerships have entered into management agreements of which
some are with affiliates of the subsidiaries' general partners, which require
annual fees ranging from approximately 4% to 13% of gross rental revenues. Such
management fees amounted to $889,446, $1,395,709, and $1,957,698 for the 2001,
2000 and 1999 Fiscal Years, respectively.

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 March 25, 2002, uninsured cash and
cash equivalents approximated $2,159,000.

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 in instances where the existing Section 8 Contracts exceed
current market rents. 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

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

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.

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 25%
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.

NOTE 12 - Subsequent Events

On April 30, 2002, the property and related assets and liabilities of Shelton
Beach Apartments ("Northpointe I") were sold to an unaffiliated third party for
$2,333,333, resulting in a gain of approximately $417,000. The Partnership used
approximately $1,032,000 of proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $3,265,000, resulting in forgiveness of indebtedness income of
approximately $2,232,000.

On April 30, 2002, the property and related assets and liabilities of
Northpointe II were sold to an unaffiliated third party for $1,666,667 resulting
in a gain of approximately $286,000. The Partnership used approximately $517,000
of the proceeds to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$2,119,000, resulting in forgiveness of indebtedness income of approximately
$1,602,000.

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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2002

On May 9, 2002, the property and related assets and liabilities of Huntley #1
were sold to the Local General Partner for approximately $1,750,000, resulting
in a loss of approximately $391,000. The Partnership used approximately $865,000
of the proceeds to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$2,645,000, resulting in forgiveness of indebtedness income of approximately
$1,780,000.

On May 9, 2002, the property and related assets and liabilities of Huntley #2
were sold to the Local General Partner for approximately $1,750,000, resulting
in a gain of approximately $82,000. The Partnership used approximately $865,000
of the proceeds to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$1,725,000, resulting in forgiveness of indebtedness income of approximately
$860,000.

On May 21, 2002, Pinewood Village ("Conifer 317") entered into a purchase and
sale agreement with an unaffiliated third party purchaser for a purchase price
of $2,000,000. The closing is expected to occur in late 2002. No assurance can
be given that the closing will actually occur.

On May 30, 2002, the property and related assets and liabilities of Lexington
Village ("Lexington") were sold to an affiliate of the Local General Partner for
approximately $1,350,000, resulting in a gain of approximately $343,000. The
Partnership used approximately $592,000 of the proceeds to settle the
associated Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $2,853,000.

-162-

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

Not applicable

PART III

Item 10. Directors and Executive Officers of the Registrant.

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

Assisted Housing Associates, Inc. ("Assisted General Partner"), Related Beta
Corporation ("Related General Partner") and Cambridge/Related Associates Limited
Partnership ("Cambridge/Related") are all affiliates of 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 will manage and
control the affairs of the Partnership directly and by engaging other affiliates
of Related. The general partners of Cambridge/Related are the Assisted General
Partner and The Related General Partner.

The Assisted General Partner was incorporated in Delaware on June 25, 1985 and
the Related General Partner was incorporated in Delaware on January 23, 1984.

On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"), then an affiliate
of Lehman Brothers, Inc. The Assisted General Partner is also a partner of
Cambridge/Related and, therefore, as a result of the Transfer, such affiliate
also acquired the Assisted General Partner's general partner interest in
Cambridge/Related and C/R Special Partnership, the special limited partner of
the Partnership. 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 $1,334,116.

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

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

-163-

STEPHEN M. ROSS, 62, is 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. ("TRCLP") 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 Capital Company ("Capital") 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., Charter Municipal Mortgage Acceptance Company and
American 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 (which subsequently merged with Strook &
Strook & Lavan) 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 equity and debt funds. Prior to joining Capital 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 Capital 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 Capital 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.

GLENN F. HOPPS, 39, joined Capital in December 1990, and prior to that date Mr.
Hopps was employed by Marks Shron & Company and Weissbarth, Altman and
Michaelson certified pub-

-164-

lic accountants. Mr. Hopps graduated from New York State University at Albany
with a Bachelor of Science Degree in Accounting.

TERESA WICELINSKI, 36, joined Capital 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.

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

MICHAEL BRENNER, 56, is the Executive Vice President and Chief Financial Officer
of TRCLP. Prior to joining TRCLP in 1996, Mr. Brenner was a partner with Cooper
& 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, Carbone, Ms.
Kiley, 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 Amended and Restated Agreement of Limited Partnership of the Partnership,
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.

-165-

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

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

The General Partners own all of the outstanding general partnership interests in
the Partnership. The General Partners 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 March 25, 2002, security ownership by the General Partners and their
affiliates is as listed:

No director or executive officer of any General Partner owns any Initial Limited
Partnership Interests or Additional Limited Partnership Interests.

Item 13. Certain Relationships and Related Transactions.

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

C/R Special Partnership is the special limited partner of each Local
Partnership, with a .01% interest in profits, losses and distributions from such
Local Partnerships. As set forth in Item 1, C/R Special Partnership has been
admitted to the Local Partnerships for the purpose of monitoring the Local
Partnerships and exercising certain rights under the Local Partnership
Agreements on behalf of the Partnership.

-166-

PART IV

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

** Incorporated by reference to exhibits filed with Amendment No. 1 to
Cambridge Advantaged Properties L.P.'s Registration Statement on
Form S-11 Registration File No. 2-91993.

(b) REPORTS ON FORM 8-K
-------------------

No reports on Form 8-K were filed during the quarter.

-167-

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

(c) SUBSIDIARIES OF THE REGISTRANT (Exhibit 21)
------------------------------

(d) Not applicable

-168-

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 below on
its behalf by the undersigned, thereunto duly authorized.

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
(Registrant)

By: RELATED BETA CORPORATION
a General Partner

Date: June 19, 2002

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

By: ASSISTED HOUSING ASSOCIATES, INC.
a General Partner

Date: June 19, 2002

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

By: CAMBRIDGE AND RELATED ASSOCIATES
LIMITED PARTNERSHIP

By: Related Beta Corporation

Date: June 19, 2002

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

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 executive and
- ------------------ financial officer) of Related Beta
Alan P. Hirmes Corporation and Assisted Housing June 19, 2002
Associates, Inc.

/s/ Glenn F. Hopps Treasurer (principal accounting
- ------------------ officer) of Related Beta Corporation
Glenn F. Hopps and Assisted Housing Associates, Inc. June 19, 2002

/s/ Stephen M. Ross Director of Related Beta Corporation June 19, 2002
- -------------------
Stephen M. Ross

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of
Cambridge Advantaged Properties
Limited Partnership and Subsidiaries

In connection with our audits of the consolidated financial statements of
Cambridge Advantaged Properties Limited Partnership and Subsidiaries included in
the Form 10-K as presented in our opinion dated June 5, 2002 on pages 28 and 29,
and based on the reports of other auditors, we have also audited supporting
Schedule I for the 2001, 2000 and 1999 Fiscal Years and Schedule III at March
25, 2002. In our opinion, and based on the reports of the other auditors
(certain of which were modified due to the uncertainties 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
disposing of its investments. It is anticipated that this process will take a
number of years.

As discussed in Note 11(a), the consolidated financial statements include the
financial statements of two subsidiary partnerships with significant
contingencies and uncertainties regarding their continuing operations. These
uncertainties raise substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. The auditors of these subsidiary
partnerships modified their reports due to the uncertainties of these subsidiary
partnerships' abilities to continue in existence. In addition, during the 2001
Fiscal Year two subsidiary partnerships adopted plans to sell their property and
liquidate in lieu of continuing their businesses. As a result, the financial
statements for these two subsidiary partnerships are presented on the
liquidating basis of accounting. These four subsidiary partnerships' net losses
aggregated $135,034 for the 2001 Fiscal Year, and their assets aggregated
$3,317,470 at March 25, 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 of and all accrued interest on the
Purchase Money Notes are due at final maturity. The remaining Purchase Money
Notes are now extended, with maturity dates ranging from September 2002 to
October 2003 and the Partnership is attempting to refinance or sell the
properties. 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 these uncertainties.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 5, 2002

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

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

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP

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.

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP

CONDENSED STATEMENTS OF INCOME

(*) Includes suspended prior year losses in excess of investment in accordance
with equity method of accounting amounting to $445,165, $12,005,114 and
$23,339,586 for the years ended March 25, 2002, 2001 and 2000.

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

*Reclassified for comparative purposes.

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2002

CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2002
(continued)

(a) No carrying costs have been capitalized since all properties were acquired
after completion of construction.
(b) Furniture and fixtures, included in buildings and improvements, are
depreciated primarily by the straight-line method over the estimated useful
lives ranging from 5 to 15 years.
(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 at date of acquisition.
(d) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1997. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(f) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 1998. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(g) During the fiscal year ended March 25, 1998, the Local Partnership's
property was declared unsafe to live due to amounts of Benzene and Aldrene
found to be present in the air of some apartments. See Note 11 in Item 8,
Financial Statements and Supplementary Data.
(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(i) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 1999. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(j) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000. See Note 10 in Item 8, Financial
Statements and Supplementary Data
(k) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 2000. See Note 10 in Item
8, Financial Statements and Supplementary Data
(l) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2001.
(m) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 2001. (n) The Property and
the related assets and liabilities were sold during the fiscal year ended
March 25, 2002.
(o) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2002.

GEOGRAPHIC LOCATIONS: (1) Alabama, (2) Arkansas, (3) California, (4) Colorado,
(5) Georgia, (6) Florida, (7) Indiana, (8) Kentucky, (9) Massachusetts, (10)
Michigan, (11) Missouri, (12) North Carolina, (13) Oregon, (14) South Carolina,
(15) Texas, (16) Virginia, (17) Washington.

At the time the local partnerships were acquired by Cambridge Advantaged
Properties Limited Partnership, the entire purchase price paid by Cambridge
Advantaged 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