<ARTICLE> 5
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,355,879
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,440,748
<PP&E> 31,381,408
<DEPRECIATION> 7,601,850
<TOTAL-ASSETS> 26,416,550
<CURRENT-LIABILITIES> 4,198,766
<BONDS> 23,184,986
<COMMON> 0
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<OTHER-SE> 397,260
<TOTAL-LIABILITY-AND-EQUITY> 26,416,550
<SALES> 6,238,484
<TOTAL-REVENUES> 6,366,093
<CGS> 0
<TOTAL-COSTS> 4,707,034
<OTHER-EXPENSES> 312,656
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,000,171
<INCOME-PRETAX> (653,768)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (653,768)
<EPS-PRIMARY> (48.30)
<EPS-DILUTED> (48.30)
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<TEXT>
Financial Statements
Decade Companies Income Properties
Years ended December 31, 1997 and 1996
with Report of Independent Auditors
Decade Companies Income Properties 31, 1997 and 1996
CONTENTS
Report of Independent Auditors 1
Financial Statements
Balance Sheet 2
Statements of Operations 3
Statements of Partners' Capital (Deficit) 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Report of Independent Auditors
The Partners
Decade Companies Income Properties 31, 1997, and the related
statements of operations, partners' capital (deficit) and
cash flows for each of the two years in the period ended
December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Decade Companies Income Properties 31, 1997,
and the results of its
operations and its cash flows for each of the two years in
the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
/S/ ERNST & YOUNG LLP
January 27, 1998
Chicago, Illinois
Decade Companies Income Properties
ASSETS
Cash and cash equivalents $ 2,171,502
Prepaid expenses and other assets 84,869
Escrow deposits 184,377
Investment properties, at cost:
Land 5,305,536
Buildings and improvements 23,405,877
Equipment 2,669,995
31,381,408
Less accumulated depreciation (7,601,850)
23,779,558
Deferred financing costs, net
of accumulated amortization of $81,290 196,244
$26,416,550
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Tenant security deposits $ 147,050
Accounts payable 56,328
Unearned rent 38,810
Accrued real estate taxes 247,456
Accrued interest payable 37,217
Distributions payable 167,504
Payables to affiliates 3,752,757
Mortgage notes payable 22,898,887
27,346,009
Partners' capital (deficit):
General Partner (84,069)
Limited Partners (Interests
authorized -- 18,000; Interests
outstanding -- 13,400.27) (845,390)
(929,459)
$26,416,550
See accompanying notes.
Decade Companies Income Properties
Year ended
December 31
1997 1996
Operating revenue associated
with investment properties:
Rentals $6,001,015 $5,838,844
Other 237,469 244,275
6,238,484 6,083,119
Operating expenses associated
with investment properties:
Operating 2,589,010 2,563,565
Administrative 291,793 256,871
Depreciation 1,114,581 1,093,732
Interest, including
amortization of financing
costs 1,774,830 1,659,554
Real estate taxes 711,650 699,785
6,481,864 6,273,507
Loss from operations of
investment properties (243,380) (190,388)
Other Partnership income (expenses)
Interest income 127,609 152,515
Interest on payables
to affiliates (225,341) (28,588)
Administrative expenses (312,656) (222,160)
(410,388) (98,233)
Net loss $ (653,768) $(288,621)
Net loss attributable to
General Partner (1%) $ (6,538) $ (2,886)
Net loss attributable to
Limited Partners (99%) (647,230) (285,735)
$ (653,768) $(288,621)
Weighted average Limited
Partnership Interests
Outstanding 13,400.27 17,127.97
Net loss per weighted average
Limited Partnership Interest $ (48.30) $ (16.68)
See accompanying notes.
Decade Companies Income Properties
General Limited
Limited Partner's Partners'
Partnership Capital Capital
Interests (Deficit) (Deficit) Total
Balances at January 1, 1996 17,466.31 $(69,185) $3,110,465 $3,041,280
Distributions to Partners -- (2,730) (604,163) (606,893)
Repurchase of Limited Partners'
Interests (4,066.04) -- (1,634,546) (1,634,546)
Tender offer costs -- -- (113,960) (113,960)
Net loss for the year -- (2,886) (285,735) (288,621)
Balances at December 31, 1996 13,400.27 (74,801) 472,061 397,260
Distributions to Partners -- (2,730) (670,018) (672,748)
Tender offer costs -- -- (203) (203)
Net loss for year -- (6,538) (647,230) (653,768)
Balances at December 31, 1997 13,400.27 $(84,069) $(845,390) $(929,459)
See accompanying notes.
Decade Companies Income Properties
Year ended December 31,
1997 1996
Operating activities
Net loss for the year $(653,768) $(288,621)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation 1,114,581 1,093,732
Amortization of deferred
financing costs 34,942 23,261
Changes in operating assets
and liabilities:
Prepaid expenses and other
assets 50,705 2,246
Escrow deposits (6,476) 8,802
Tenant security deposits (27,079) 4,760
Accounts payable (55,236) 30,210
Unearned Rent 38,810 --
Accrued real estate taxes 12,275 (34,187)
Accrued interest payable (281) (473)
Payables to affiliates 185,446 60,823
Net cash provided by
operating activities 693,919 900,553
Investing activities
Withdrawal from Like-Kind
Exchange Escrow Trust -- 497,390
Net additions to
investment properties (181,061) (175,960)
Net cash (used in)
provided by investing
activities (181,061) 321,430
Financing activities
Repurchase of Limited
Partners' Interests -- (1,634,546)
Payment of tender offer
costs (203) (113,960)
Net proceeds from issuance
of mortgage note payable -- 6,700,000
Proceeds from note payable
to bank -- --
Payments on note payable
to bank -- --
Additions to debt issue
costs -- (208,009)
Payments on mortgage notes
payable (286,099) (2,743,547)
Distributions paid to
Limited Partners (670,018) (654,990)
Distributions paid to
General Partner (5,459) (2,824)
Net cash (used in)
provided by financing
activities (961,779) 1,342,124
(Decrease) increase in
cash and cash equivalents (448,921) 2,564,107
Cash and cash equivalents
at beginning of year 2,620,423 56,316
Cash and cash equivalents
at end of year $2,171,502 $2,620,423
See accompanying notes.
Decade Companies Income Properties
1. ORGANIZATION AND BASIS OF ACCOUNTING
ORGANIZATION
Decade Companies Income Properties -- A Limited Partnership
(the Partnership) was organized as a limited partnership
under the laws of the State of Wisconsin pursuant to a
Certificate and an Agreement (the Agreement) of Limited
Partnership dated June 6, 1985, for the purpose of investing
primarily in residential and commercial real property. The
Agreement terminates on or before December 31, 2005. The
Partnership began operations June 9, 1986. The Partnership
operates three residential apartment complexes located in
Madison, Wisconsin, Clearwater, Florida, and St. Petersburg,
Florida.
The Partnership consists of a General Partner, Decade
Companies -- A General Partnership (Decade Companies), of which
Jeffrey Keierleber and Decade 80, Inc. are the general
partners, and 1,297 Limited Partners at December 31, 1997.
BASIS OF ACCOUNTING
The accompanying financial statements, which have been
prepared in accordance with generally accepted accounting
principles (GAAP), will differ from the income tax returns
due to the different treatment of various items as specified
by the Internal Revenue Code. The net effect of these
accounting differences is as follows for 1997:
GAAP Tax
Basis Basis
(In Thousands)
Total assets $26,416 $26,281
Partners' capital (deficit):
General Partner (84) (72)
Limited Partners (845) 4,636
Net loss:
General Partner (7) (3)
Limited Partners (647) (287)
Decade Companies Income Properties
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
CASH EQUIVALENTS
The Partnership considers all highly liquid investments with
a maturity of three months or less when purchased to be cash
equivalents.
DEPRECIATION
Depreciation is computed by the straight-line method using
estimated useful lives of 30 years for the buildings and
improvements and 5 years for related equipment.
INVESTMENT PROPERTY
The Partnership evaluates investment properties periodically
for indication of impairment, including recurring operating
losses and other significant adverse changes in the business
climate that affect the recovery of the recorded asset
value. If investment property is considered impaired, a
loss is provided to reduce the net carrying value of the
asset to its estimated fair value. Management is not aware
of any indicator that would result in any significant
impairment loss.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the straight-
line method over the term of the agreement (see Note 5) and
are included as a component of interest expense in the
financial statements.
FEES TO AFFILIATES
Fees related to the offering, organizational and acquisition
stages of the Partnership paid to the General Partner or
affiliates, and deferred interest related thereto, are
limited to a maximum amount as defined in the Partnership
prospectus. The Partnership is considered at the maximum
amount of fees as of December 31, 1997 (see Note 7).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Acquisition fees, mortgage placement and mortgage brokerage
fees, property management fees and real estate sales
commissions are payable to the General Partner or affiliates
of the General Partner. These fees are capitalized or
charged to expense as follows:
Acquisition Fees
Acquisition fees designated for selection, negotiation and
purchase of Partnership properties have been capitalized as
investment property and allocated to land, buildings and
improvements and equipment based on appraised values. The
portions allocated to buildings, improvements and equipment
are being depreciated over the respective lives of the
buildings, improvements and equipment.
Mortgage Placement and Mortgage Brokerage Fees
Fees for services rendered in locating potential borrowers
and investigating their credit-worthiness for placement of
mortgage loans are payable by the Partnership to the extent
not paid by the mortgagor. Any fees paid by the Partnership
will be charged to expense over the terms of the mortgage
loans.
Property Management Fees
Fees for property management and rental services are being
charged to expenses over the period property management
services are being performed. The fee is defined in the
partnership agreement.
Real Estate Sales Commissions
Fees may be earned for services rendered related to the sale
of Partnership property, as defined in the Partnership
prospectus. Payment of such fees to an affiliate of the
General Partner shall be subordinated to a return to the
Limited Partners equal to their original capital
contribution plus a 6% per annum cumulative return.
EXPENSES OF OFFERINGS
Sales commissions, underwriting fees and reimbursed
syndication costs paid to the General Partner or affiliates
of the General Partner in connection with the capital
offering have been recorded as a charge to Limited Partners'
capital, as well as certain costs associated with tender
offer purchases of Limited Partner Interests.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REIMBURSED EXPENSES
The Partnership reimburses the General Partner and
affiliates of the General Partner for the actual cost of
goods and materials used by or for the Partnership in the
course of performing the general functions of the
Partnership. These general functions include accounting,
investor communications, investor documentation, legal
services, tax services, computer services, risk management,
and any other related operational and administrative
expenses necessary for the prudent organization and
operation of the Partnership.
ALLOCATIONS AND DISTRIBUTIONS
Pursuant to the Agreement, net income and losses from
operations (exclusive of those from the sale or disposition
of Partnership properties) are to be allocated 99% to the
Limited Partners and 1% to the General Partner. In computing
net income and losses from operations, depreciation expense
is allocated differently to taxable and nontaxable entities.
Any gains from the sale or disposition of Partnership
properties will be allocated: 1) 99% to the Limited Partners
and 1% to the General Partner until the cumulative gains are
equal to any losses from the sale or disposition of
Partnership property for all prior periods; 2) to the
Limited Partners until their cumulative gains equal the sum
of all sales commissions, underwriting fees, and reimbursed
syndication costs for the current year and all prior years,
any losses from the sale or disposition of Partnership
property for the current year and all prior years, and an
amount equal to 6% per annum, cumulative and noncompounded,
on the Limited Partners' capital investment minus prior
distributions of cash available for distribution or to the
extent that prior distributions of sales proceeds exceed the
Limited Partners' original capital investment ("priority
return") from the inception of the Partnership to the end of
the current year; 3) to the General Partner an amount equal
to the distributions made to the General Partner under
(iii)(b) below; 4) to the General Partner an amount equal to
the distributions made to the General Partner pursuant to
(iv) below; 5) to the Limited Partners until cumulative
gains allocated to them are equal to (v) below; 6) to the
Limited Partners until cumulative gains allocated to them
are equal to (vi) below; and 7) to the General Partner until
cumulative gains allocated to the General Partner are equal
to (vii) below. Any losses from the sale or disposition of
Partnership properties will be allocated 99% to the Limited
Partners and 1% to the General Partner.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash available for distribution, as defined in the
Agreement, will be distributed 99% to the Limited Partners
and 1% to the General Partner. Proceeds from the sale or
disposition of Partnership properties, if any, remaining
after repayment of any General Partner's loan and payment of
deferred fees, will be distributed as follows: (i) to the
Limited Partners, an amount equal to 100% of their original
capital contribution minus any prior distributions of sales
proceeds; (ii) to the Limited Partners, an amount to provide
their priority return; (iii) to the General Partner an
amount equal to the greater of the excess of (a) its capital
contribution over the sum of all prior distributions of
sales proceeds or (b) 1% of such sales proceeds; (iv) in the
case of the sale of any property in which brokerage services
are actually performed by the General Partner or an
affiliate, to the General Partner or an affiliate, an amount
equal to its subordinated real estate commission(generally
up to 3% of the aggregated selling price of all properties);
(v) of the remaining proceeds, 88% to the Limited Partners;
(vi) then, to the Limited Partners, the deficiency, if any,
in return of capital plus a cumulative preference of 10% per
annum on their capital investment; and (vii) to the General
Partner, the remaining balance (not to exceed 12% of the
proceeds remaining after the distributions in accordance
with (i) through (iv) above).
NET LOSS PER LIMITED PARTNERSHIP INTEREST
Net loss per Limited Partnership Interest is based on 99% of
net loss as allocated to the Limited Partners divided by the
weighted average number of Interests outstanding during the
year.
3. REPURCHASE OF LIMITED PARTNERS' INTERESTS
On November 29, 1996, the Partnership repurchased and
retired 4,066.036 Limited Partnership Interests for $402 per
Interest. The Partnership paid $1,634,546 to these Limited
Partners prior to December 31, 1996. Costs related to the
tender offer amounted to approximately $113,960 in 1996 and
$203 in 1997, and were charged against Limited Partners'
capital.
4. INVESTMENT PROPERTIES
Investment properties owned at December 31, 1997, are as
follows:
Costs Capitalized
Initial Cost to Partnership Subsequent to Acquisition
Buildings and Buildings and
Description Encumbrances Land Improvements Equipment Improvements Equipment
(In Thousands)
Meadows II Apartments
Madison, Wisconsin $ 6,523 $1,144 $ 9,227 $ 44 $ 7 $ 393
Town Place Apartments
Clearwater, Florida 6,589 1,518 5,270 252 -- 434
Pelican Sound Apartments
St. Petersburg, Florida 9,787 2,644 8,801 861 101 287
$22,899 $5,306 $23,298 $1,555 $108 $1,114
Gross Amount at Which Carried
Buildings and Accumulated
Description Land Improvements Equipment Total Depreciation
(In Thousands)
Meadows II Apartments
Madison, Wisconsin $1,144 $ 9,234 $ 835 $11,213 $3,443
Town Place Apartments
Clearwater, Florida 1,518 5,270 686 7,474 1,973
Pelican Sound Apartments
St. Petersburg, Florida 2,644 8,902 1,148 12,694 2,186
$5,306 $23,406 $2,669 $31,381 $7,602
Description Date of Construction Date Acquired
Meadows II Apartments,
Madison, Wisconsin In phases through 1980 January 1989
Town Place Apartments,
Clearwater, Florida 1985 February 1990
Pelican Sound Apartments,
St. Petersburg, Florida 1987 November 1993
4. INVESTMENT PROPERTIES (CONTINUED)
A reconciliation of the cost and accumulated depreciation of
the investment properties at December 31, 1997 follows (in
thousands):
Cost:
Balance at beginning of year $31,104
Additions to investment properties 278
Balance at end of year $31,382
Accumulated depreciation:
Balance at beginning of year $ 6,487
Provision for the year 1,115
Balance at end of year $ 7,602
The aggregate cost of the investment properties for federal
income tax purposes is $28,402,550 because the acquisition
fees and sales commission payable to the General Partner are
capitalizable for financial reporting purposes only. The
accumulated depreciation for federal income tax purposes was
$7,048,100 at December 31, 1997.
5. MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following at December
31, 1997:
Mortgage note payable in monthly
installments of $21,952, including
interest at 7.5%, with final payment
due December 1, 2021. $ 2,928,463
Mortgage note payable with interest
accruing at 2.48% over the monthly
weighted average cost of funds of
the bank, adjusted monthly, with
maximum and minimum rates of 14.75%
and 6.75%, respectively (7.421% at
December 31, 1997). Monthly payments
of principal and interest are computed
annually ($27,698 commencing
January 10, 1998). The final payment is
due December 10, 2004. 3,594,533
Mortgage note payable in monthly
installments of $52,286, including
interest at 8.25%, with final payment
due May 16, 2003. 6,588,672
Mortgage note payable with monthly
interest installments at 7.0% for two
years. Monthly installments of $67,184,
including interest at 7.0%, thereafter,
with final payment due December 1, 1998,
unless the term is extended for an
additional five years as described in the
mortgage note agreement. 9,787,219
$22,898,887
The 7.5% mortgage note is insured under the National Housing
Act and, as a result, the operation of the rental property
is subject to the terms of the Regulatory Agreement between
the Partnership and the Department of Housing and Urban
Development (HUD). The mortgage is secured by the Meadows II
property. Under the terms of the Regulatory Agreements,
certain actions, including the payment of any distributions
to the Partners from surplus cash generated by the Project,
require the approval of The Federal Housing Administration
as an agent for HUD.
Among other requirements, the Regulatory Agreement between
the Partnership and HUD requires a complete annual financial
report to be provided to the Secretary of HUD for the
portion of the property (Phase IV) which secures the HUD
mortgage loan. During 1997 HUD rejected, for purported
noncompliance, the Partnership's financial reports for 1995
and 1996. Similar financial reports for the years 1989 to
1994 were submitted to, and accepted by, HUD. HUD is
requesting that separate books and records be maintained to
segregate the operation of Phase IV as if it were a separate
property.
5. MORTGAGE NOTES PAYABLE (CONTINUED)
The Partnership has not resolved this matter with HUD, and
HUD has not taken any further action. As one of its
remedies, HUD may attempt to declare the mortgage note to be
in default and consequently the mortgage note may become
due upon demand. Upon such event the Partnership has not
decided which course of action will be taken. The
Partnership more likely than not would seek to refinance the
debt with another lender during the foreclosure period.
However, the Partnership would not consider the possibility
of reverting the property to the mortgage lender, in which
case the Partnership would sustain a loss. As of December
31, 1997, the carrying amount of the affected real estate
pledged as collateral was $3,489,344 and related outstanding
debt was $2,928,463. No provision for gain or loss, if any,
has been made in the financial statements.
The Meadows II, Town Place and Pelican Sound Apartments
investment properties and all associated operating revenues
are pledged as collateral for the mortgage notes payable.
Interest paid with respect to the mortgage notes and other
indebtedness was $1,740,169, and $1,636,766 in 1997 and
1996, respectively. Aggregate annual maturities of the
mortgage notes payable for the five years subsequent to
December 31, 1997, are as follows: $9,970,000 -- 1998;
$198,000 -- 1999; $214,000 -- 2000; $232,000 -- 2001 and
$251,000 -- 2002.
6. INCOME TAXES
The Partnership pays no income taxes. Partnership losses or
income and taxes attributable thereto will be the
responsibility of the various Partners.
Differences between the net loss as reported herein and net
loss reported for federal income tax purposes arise from
temporary differences related to depreciation, disposition
of investment property and accrual-basis adjustments. The
following is a reconciliation of reported net loss and net
loss reported for federal income tax purposes:
YEAR ENDED DECEMBER 31,
1997 1996
Net loss as reported
for financial reporting
purposes $(653,768) $(288,621)
Add:
Depreciation 178,228 124,096
Accrual basis adjustments 185,446 60,824
Net loss reported for
federal income tax
purposes $(290,094) $(103,701)
7. TRANSACTIONS WITH RELATED PARTIES
Decade Companies and its general partners are general
partners for other limited partnerships which have invested
in real estate. The Partnership also shares certain
management and accounting employees and other expenses with
entities that are controlled by Decade Companies and its
general partner. The Partnership has executed certain
contracts providing for the following fees payable to the
General Partner or to affiliates of the General Partner:
Decade Companies
In accordance with restrictions set forth in the prospectus,
the General Partner reviewed the calculations of front end
fees allowed under the Limited Partnership Agreement during
1997 and calculated additional acquisition fees of $97,150
and interest on acquisition fees of $196,753 payable to the
General Partner. The additional acquisition fee was
capitalized to the basis of the property and the interest
expense representing amounts incurred for 1997 has been
included with interest expense in the financial statements.
Accordingly, acquisition fees of $2,243,785 are payable to
Decade Companies at December 31, 1997. Such fees were
capitalized as part of the cost of the investment
properties. Accrued interest on these fees were $594,424 at
December 31, 1997.
In addition, mortgage placement fees of $90,246 are payable
to Decade Companies at December 31, 1997.
Decade Properties, Inc.
Decade Properties, Inc. (Decade Properties) earned the
following amounts from the Partnership: property management
fees ($490,418 -- 1997; $471,576 -- 1996) interest on real estate
sales commissions ($28,588 -- 1997; $28,588 -- 1996).
Real estate sales commissions of $440,700 are payable to
Decade Properties at December 31, 1997. Accrued interest on
these fees was $347,792 at December 31, 1997. The payment
of these fees is subordinated to the Limited Partners as
detailed in the Partnership Prospectus.
In addition, other miscellaneous amounts are payable
including payroll reimbursement and property management fees
totaling $35,810 and $75,705 at December 31, 1997 and 1996,
respectively.
7. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
Deferred fees payable to affiliates bear interest at the
minimum rate required under the Internal Revenue Code (the
Code) to avoid imputed interest under the Code and is
payable only from sales proceeds, Partnership operations or
cash reserves. However, as described above and in Note 2,
interest has not been earned on certain deferred fees for
1996.
Reimbursed expenses paid by the General Partner or
affiliates of the General Partner on behalf of the
Partnership were as follows: Decade Companies
($116,628 -- 1997; $93,929 -- 1996) and Decade Properties
($842,319 -- 1997; $906,474 -- 1996).
8. Fair Values of Financial Instruments
Cash and Cash Equivalents
The carrying amount reported in the balance sheet for cash
and cash equivalents approximates its fair value.
Long-Term Debt
The fair value of the Partnership's borrowings under its
variable rate agreement approximates its carrying value, and
the fair value of the mortgage note payable due December 1,
1998, approximates its carrying value due to its short term
nature. The fair value of the Partnership's fixed rate
mortgage notes payable is estimated using a discounted cash
flow analysis, based on the borrowing rates for similar
types of borrowing arrangements. The fair value based on
this analysis is approximately $23,230,000 for all mortgages
at December 31, 1997.