<Page>
Exhibit 12.1
RATIOS OF EARNINGS AND "ADJUSTED" EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
The following table shows the ratio of earnings and "adjusted earnings" to
fixed charges and combined fixed charges and preferred share dividends of
Berkshire Income Realty, Inc. (the Company) , as adjusted assuming the offer
was completed on September 30, 2002, and of Berkshire Income Realty
Predecessor Group (the Predecessor). See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Berkshire Income
Realty Predecessor Group" for a discussion of the entities that comprise
Berkshire Income Realty Predecessor Group, which is deemed to be our
predecessor for accounting purposes. You should read this financial data in
conjunction with the unaudited pro forma condensed consolidated financial
statements of the Company and the combined financial statements of Berkshire
Income Realty Predecessor Group.
<Table>
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
----------------- ----------------- -------------------------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
2002(1) 2002(2) 2002 2001
----------------- ----------------- --------- --------------
Ratio of earnings to fixed charges(3) 1.77 2.82 1.89 -- (4)
Ratio of earnings to combined fixed charges
and preferred stock dividends(5) 1.30 1.36 -- (6) -- (6)
Ratio of adjusted earnings to fixed charges(7)(8) 2.27 3.32 2.49 -- (4)
Ratio of adjusted earnings to combined fixed
charges and preferred stock dividends(7)(9) 1.67 1.59 -- (10) -- (10)
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
------------ ------------- --------------------------------------------------
PRO FORMA PRO FORMA HISTORICAL
YEAR ENDED YEAR ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, --------------------------------------------------
2001(1) 2001(2) 2001 2000 1999 1998 1997
------------ ------------- -------- -------- --------- -------- --------
Ratio of earnings to fixed charges(3) 1.79 3.04 -- (4) -- (4) -- (4) -- (4) -- (4)
Ratio of earnings to combined fixed charges
and preferred stock dividends(5) 1.32 1.47 -- (6) -- (6) -- (6) -- (6) -- (6)
Ratio of adjusted earnings to fixed charges(7)(8) 2.65 3.91 1.07 1.14 1.43 1.61 1.14
Ratio of adjusted earnings to combined fixed
charges and preferred stock dividends(7)(9) 1.96 1.89 -- (10) -- (10) -- (10) -- (10) -- (10)
</Table>
(1) Assuming 9.96% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares and certain other transactions, including the
refinancing of the initial properties and the payoff of the participating
note, respectively, occurred at the beginning of the period presented, and
payment of preferred dividends on the Preferred Shares, occurred as of
January 1, 2001. This financial data should be read in conjunction with the
unaudited pro forma consolidated condensed financial statements of the
Company.
(2) Assuming 30% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares and certain other transactions, including the
refinancing of the initial properties and the payoff of the participating
note, respectively, occurred at the beginning of the period presented, and
payment of preferred dividends on the Preferred Shares, occurred as of
January 1, 2001. This financial data should be read in conjunction with the
unaudited pro forma consolidated condensed financial statement of the
Company.
(3) The ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. We defined "earnings" as income before minority interest and
extraordinary items plus fixed charges. We define "fixed charges" as
interest expense including amortization of deferred financing costs.
(4) The ratio is less than "1" due to charges for participating note interest
on the former Seasons of Laurel subordinate note payable which was paid off
in July of 2001.
(5) The ratio of earnings to combined fixed charges and preferred shares
dividends was computed by dividing earnings by combined fixed charges and
preferred share dividends. We define "earnings" and "fixed charges" as
described in Note (3) above. We define "preferred share dividends" as the
amount that would be required to cover preferred share dividends.
(6) Historical ratios of earnings to combined fixed charges and preferred
shares dividends have not been presented since the historical presentation
does not reflect payments for preferred shares dividends.
(7) We are presenting the ratios of "adjusted" earnings to fixed charges and
"adjusted" earnings to combined fixed charges and preferred share
dividends, for additional information. We do not consider these ratios more
important than the ratios of earnings to fixed charges and earnings to
combined fixed charges and preferred share dividends. We consider
"adjusted" earnings to be an alternative measure of performance of the
Company and the Predecessor which provides potential investors with an
understanding of the ability of the Company to pay fixed charges and
preferred share dividends. We define "adjusted" earnings as earnings as
described in Note (3) above plus depreciation and advisory fees less
capital expenditures. Advisory fees have been added back to earnings
because such fees are subordinate to preferred share dividends.
Depreciation has been added back to earnings because it is a non cash
charge. Capital expenditures have been deducted from earnings because they
represent a cash charge not reflected in earnings. "Adjusted" earnings
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of financial performance or to cash
flows from operating activities (determined in accordance with GAAP) as a
measure of liquidity and the items excluded from "adjusted" earnings are
significant components in understanding and evaluating financial
performance. The computation of "adjusted" earnings may not be comparable
to similarly titled or other alternative performance measures, including
funds from operations, presented by other companies. We believe that in
order to facilitate a clear understanding of the combined historical
results of the Predecessor and the pro forma results of the Company,
"adjusted" earnings should be examined in connection with net income and
cash flows from operating, investing and financing activities in the
combined financial statements and other information included in this
Prospectus.
<Page>
A reconciliation between GAAP earnings and "adjusted" earnings for the
historical results of the Berkshire Income Realty Predecessor Group and the pro
forma results of the Company are as follows:
<Table>
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
----------------- ----------------- -------------------------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
2002(a) 2002(b) 2002 2001
----------------- ----------------- --------- --------------
(Dollars in Thousands)
Income from operations before adjustments for
minority interests and extraordinary loss $ 3,617 $ 8,549 $ 3,028 $ (4,942)
Add:
Interest expense 4,687 4,687 3,415 11,330
Depreciation expense 3,836 3,836 3,836 3,523
Advisory fees (subordinate) 457 457 204 --
Deduct:
Capital expenditures (1,966) (1,966) (1,966) (708)
-------- -------- -------- --------
"Adjusted earnings" $ 10,631 $ 15,563 $ 8,517 $ 9,203
======== ======== ======== ========
Cash flow provided by (used in) operating activities 9,137(c) 14,992(c) 8,073 (5,489)
Cash flow provided by (used in) investing activities (2,165)(c) (2,165)(c) (2,165) (24,790)
Cash flow provided by (used in) financing activities (18,117)(c) (21,510)(c) 13,796 27,045
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
------------ ------------- ----------------------------------
PRO FORMA PRO FORMA HISTORICAL
YEAR ENDED YEAR ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, ----------------------------------
2001(a) 2001(b) 2001 2000 1999
------------ ------------- -------- -------- ---------
Income from operations before adjustments for
minority interests and extraordinary loss $ 4,991 $ 12,971 $ (3,179) $ (905) $ (595)
Add:
Interest expense 6,347 6,347 12,273 8,217 6,840
Depreciation expense 5,603 5,603 4,751 5,011 5,700
Advisory fees (subordinate) 610 610
Deduct:
Capital expenditures (732) (732) (732) (2,959) (2,190)
-------- -------- -------- -------- --------
"Adjusted earnings" $ 16,819 $ 24,799 $ 13,113 $ 9,364 $ 9,755
======== ======== ======== ======== ========
Cash flow provided by (used in) operating activities 3,485(c) 12,367(c) (6,008) 6,592 6,328
Cash flow provided by (used in) investing activities 1,482(c) 1,482(c) (33,081) (24,032) (2,458)
Cash flow provided by (used in) financing activities 26,423(c) 21,898(c) 35,180 23,559 (3,349)
<Caption>
THE PREDECESSOR GROUP
------------------------
HISTORICAL
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
-------- -----------
Income from operations before adjustments for
minority interests and extraordinary loss $ (46) $ (2,422)
Add:
Interest expense 5,600 6,814
Depreciation expense 6,017 6,197
Advisory fees (subordinate)
Deduct:
Capital expenditures (2,534) (2,794)
-------- --------
"Adjusted earnings" $ 9,037 $ 7,795
======== ========
Cash flow provided by (used in) operating activities 4,306 2,901
Cash flow provided by (used in) investing activities (1,646) (1,527)
Cash flow provided by (used in) financing activities (2,634) (1,030)
</Table>
- ------------------------
(a) Assuming 9.96% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares.
(b) Assuming 30% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares.
(c) A reconciliation between the Predecessor's historical cash flow
provided by (used in) operating, investing and financing activities to
the Company's pro forma cash flows provided by (used in) operating,
investing and financing activities is as follows. This reconciliation
should be read in conjunction with the unaudited pro forma condensed
financial statements of the Company and combined financial statements
of Berkshire Income Realty Predecessor Group:
<Table>
<Caption>
THE THE
THE COMPANY THE COMPANY COMPANY COMPANY
-------------- -------------- ------------- -------------
PRO FORMA PRO FORMA
NINE MONTHS NINE MONTHS PRO FORMA PRO FORMA
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2002(A) 2002(B) 2001(A) 2001(B)
-------------- -------------- ------------- -------------
(DOLLARS IN THOUSANDS)
Cash Flow provided by (used in) operating activities
Predecessor historical cash flow from operating
activities.............................................. $ 8,073 $ 8,073 $ (6,008) $ (6,008)
Pro forma cash flow adjustments
Increase in general and administrative expenses........... (338) (338) (450) (450)
Increase in advisory fees................................. (253) (253) (424) (424)
Dividends on Investment in GIT, GIT II, KIM, KIP, KIP II
and KIP III(d).......................................... 2,927 8,782 4,441 13,323
Removal of Seasons of Laurel participating loan
interest................................................ 6,591 6,591
Net change to interest expense............................ (1,272) (1,272) (665) (665)
--------- --------- -------- --------
Pro forma cash flow provided by (used in) operating
activities................................................ $ 9,137 $ 14,992 $ 3,485 $ 12,367
========= ========= ======== ========
Cash flow provided by (used in) investing activities
Predecessor historical cash flow from investing
activities.............................................. $ (2,165) $ (2,165) $(33,081) $(33,081)
Pro forma cash flow adjustments
Acquisition of affiliates' real estate limited partnership
interests............................................... 34,563 34,563
--------- --------- -------- --------
Pro forma cash flow provided by (used in) investing
activities................................................ $ (2,165) $ (2,165) $ (1,482) $ 1,482
========= ========= ======== ========
Cash flow provided by (used in) financing activities........
Predecessor historical cash flow from financing
activities.............................................. $ 13,796 $ 13,796 $ 35,180 $ 35,180
Pro forma cash flow adjustments
Company preferred stock dividends payable................. (1,688) (5,081) (2,250) (6,775)
Borrowings on mortgage notes payable(f)................... (102,080) (102,080) (41,500) (41,500)
Principal payments on mortgage notes payable(f)........... 71,855 71,855 34,993 34,993
--------- --------- -------- --------
Pro forma cash flow provided by (used in) financing
activities................................................ $ (18,117) $ (21,510) $ 26,423 $ 21,898
========= ========= ======== ========
</Table>
(d) Reflects dividend income on the Company's investment in the GIT, GIT II,
KIM, KIP, KIP II and KIP III earned for the period indicated prior
to the acquisition of the interests by the Company assuming holders
owning the applicable percentage of 9.96% or 30% of the interests of
each mortgage fund tendered their Interests in the offers. The Company's
pro forma share of the historical dividend distribution from for each of
the mortgage funds for the nine and twelve months ended September 30,
2002 and December 31, 2001 is as follows:
<Table>
<Caption>
THE COMPANY THE COMPANY THE COMPANY THE COMPANY
-------------- -------------- ------------- -------------
PRO FORMA PRO FORMA
NINE MONTHS NINE MONTHS PRO FORMA PRO FORMA
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2002(A) 2002(B) 2001(A) 2001(B)
-------------- -------------- ------------- -------------
Government Income Trust..................................... $ 768 $ 2,303 $ 1,024 $ 3,071
Government Income Trust II.................................. 1,139 3,418 1,764 5,291
Krupp Insured Mortgage Limited Partnership.................. 269 808 359 1,077
Krupp Insured Plus Limited Partnership...................... 225 675 300 900
Krupp Insured Plus Limited Partnership II................... 220 659 586 1,759
Krupp Insured Plus Limited Partnership III.................. 306 919 408 1,225
--------- --------- -------- --------
$ 2,927 $ 8,782 $ 4,441 $ 13,323
========= ========= ======== ========
</Table>
(e) Reflects an adjustment to remove the cash outflow related to the
acquisition of the limited partner interests in the Affiliates, which,
for pro forma purposes, is assumed to occur as of January 1, 2001, the
beginning of the period.
(f) Reflects an adjustment to remove the cash flows associated with the
refinancing of Century, Dorsey's Forge, Hannibal Grove, Seasons of
Laurel and Walden Pond as if the refinancings had occurred as of the
beginning of the period.
(8) The ratio of "adjusted" earnings to fixed charges was computed by dividing
"adjusted" earnings to fixed charges. We defined "adjusted" earnings as
income before minority interest and extraordinary items less fixed charges,
depreciation and subordinate advisory fees less capital expenditures, and
"fixed charges" as interest expenses including amortization of deferred
financing costs.
(9) The ratio of "adjusted" earnings to combined fixed charges and preferred
share dividends was computed by dividing "adjusted" earnings by combined
fixed charges and preferred share dividends. We define "adjusted earnings"
and "fixed charges" as described in Note (8) above. We defined "preferred
share dividends" as the amount of income that would be required to cover
preferred share dividends.
(10) Historical ratios of "adjusted" earnings to combined fixed charges and
preferred share dividends have not been presented since the historical
presentation does not reflect payments for preferred shares dividends.
<Page>
RATIOS OF EARNINGS AND "ADJUSTED" EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
(Dollars in Thousands)
<Table>
<Caption>
THE COMPANY THE COMPANY PREDECESSOR
----------------- ----------------- -------------------------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
2002(1) 2002(2) 2002 2001
----------------- ----------------- --------- --------------
Income (loss) before minority interests and
extraordinary loss $ 3,617 $ 8,549 $ 3,028 $ (4,942)
Fixed charges:
Interest expense 4,687 4,687 3,415 11,330
-------- -------- -------- --------
Income before minority interests and extraordinary
loss plus fixed charges $ 8,304 $ 13,236 $ 6,443 $ 6,388
======== ======== ======== ========
Total fixed charges (interest expense) $ 4,687 $ 4,687 $ 3,415 $ 11,330
======== ======== ======== ========
Ratio of earnings to fixed charges(5) 1.77 2.82 1.89 -- (4)
Preferred dividend requirements $ 1,688 $ 5,081
Total fixed charges 4,687 4,687
-------- --------
Total combined fixed charges and preferred stock dividends $ 6,375 $ 9,768
======== ========
Ratio of earnings to combined fixed charges
and preferred stock dividends(6) 1.30 1.36 (3) (3)
<Caption>
THE COMPANY THE COMPANY PREDECESSOR
------------ ------------- ---------------------------------
PRO FORMA PRO FORMA HISTORICAL
YEAR ENDED YEAR ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, ---------------------------------
2001(1) 2001(2) 2001 2000 1999
------------ ------------- -------- -------- ---------
Income (loss) before minority interests and
extraordinary loss $ 4,991 $ 12,971 (3,179) (905) (595)
Fixed charges:
Interest expense 6,347 6,347 12,273 8,217 6,840
-------- -------- -------- -------- --------
Income before minority interests and extraordinary
loss plus fixed charges $ 11,338 $ 19,318 $ 9,094 $ 7,312 $ 6,245
======== ======== ======== ======== ========
Total fixed charges (interest expense) $ 6,347 $ 6,347 $ 12,273 $ 8,217 $ 6,840
Ratio of earnings to fixed charges(5) 1.79 3.04 (7) (7) (7)
Preferred dividend requirements $ 2,250 $ 6,775
Total fixed charges 6,347 6,347
-------- --------
Total combined fixed charges and preferred stock dividends $ 8,597 $ 13,122
======== ========
Ratio of earnings to combined fixed charges
and preferred stock dividends(6) 1.32 1.47 (3) (3) (3)
<Caption>
PREDECESSOR
------------------------
HISTORICAL
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
-------- ----------
Income (loss) before minority interests and
extraordinary loss (46) (2,422)
Fixed charges:
Interest expense 5,600 6,814
-------- --------
Income before minority interests and extraordinary
loss plus fixed charges $ 5,554 $ 4,392
======== ========
Total fixed charges (interest expense) $ 5,600 $ 6,814
======== ========
Ratio of earnings to fixed charges(5) (7) (7)
Preferred dividend requirements
Total fixed charges
Total combined fixed charges and preferred stock dividends
Ratio of earnings to combined fixed charges
and preferred stock dividends(6) (3) (3)
</Table>
(1) Assuming 9.96% of the Interests in the mortgage funds are tendered in
exchange for Preferred shares.
(2) Assuming 30% of the Interests in the mortgage funds are tendered in
exchange for Preferred shares.
(3) Historical ratio of earnings to combined fixed charges and preferred shares
dividends has not been presented since the historical presentation does not
reflect payments for preferred dividends.
(4) The ratio is less than "1" due to charges for participating note interest
on the former Seasons of Laurel subordinate note payable, which was paid
off in July 2001.
(5) The ratio of earnings to fixed charges was computed by dividing earnings
by fixed charges. We define "earnings" as income before minority
interest and extraordinary items plus fixed charges. We define "fixed
charges" as interest expensed including amortization of deferred
financing costs.
(6) The ratio of earnings to combined fixed charges and preferred stock
dividends was computed by dividing earnings by combined fixed charges and
preferred stock dividends. We define "earnings" and "fixed charges" as
described in Note (5) above. We define "preferred stock dividends" as the
amount of net income that would be required to cover preferred stock
dividend requirements.
(7) The ratio is less than one due to non recurring charges of interest expense
on the participating note payable that was paid off in July 2001.
<Page>
Computation of Ratio of "Adjusted" Earnings to Combined Fixed
Charges and Preferred Shares Dividend
<Table>
<Caption>
THE COMPANY THE COMPANY PREDECESSOR
----------------- ----------------- -------------------------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
2002(1) 2002(2) 2002 2001
----------------- ----------------- --------- --------------
(Dollars in Thousands)
Income (loss) before minority interests and
extraordinary loss $ 3,617 $ 8,549 $ 3,028 $ (4,942)
Add:
Interest expense 4,687 4,687 3,415 11,330
Depreciation expense 3,836 3,836 3,836 3,523
Advisory fees (subordinate) 457 457 204 --
Deduct:
Capital expenditures (1,966) (1,966) (1,966) (708)
-------- -------- -------- --------
"Adjusted" earnings $ 10,631 $ 15,563 $ 8,517 $ 9,203
======== ======== ======== ========
Total fixed charges $ 4,687 $ 4,687 $ 3,415 $ 11,330
======== ======== ======== ========
Ratio of "adjusted" earnings to fixed charges(6)(8) 2.27 3.32 2.49 -- (4)
Preferred dividend requirements $ 1,688 $ 5,081
Total fixed charges 4,687 4,687
-------- --------
Total combined fixed charges and preferred stock dividends $ 6,375 $ 9,768
======== ========
Ratio of "adjusted" earnings to combined fixed charges
and preferred stock dividends(7) 1.67 1.59 (3) (3)
<Caption>
THE COMPANY THE COMPANY PREDECESSOR
------------ ------------- ---------------------------------
PRO FORMA PRO FORMA HISTORICAL
YEAR ENDED YEAR ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, ---------------------------------
2001(1) 2001(2) 2001 2000 1999
------------ ------------- -------- -------- ---------
(Dollars in Thousands)
Income (loss) before minority interests and
extraordinary loss $ 4,991 $ 12,971 $ (3,179) $ (905) $ (595)
Add:
Interest expense 6,347 6,347 12,273 8,217 6,840
Depreciation expense 5,603 5,603 4,751 5,011 5,700
Advisory fees (subordinate) 610 610
Deduct:
Capital expenditures (732) (732) (732) (2,959) (2,190)
-------- -------- -------- -------- --------
"Adjusted" earnings $ 16,819 $ 24,799 $ 13,113 $ 9,364 $ 9,755
======== ======== ======== ======== ========
Total fixed charges $ 6,347 $ 6,347 $ 12,273 $ 8,217 $ 6,840
======== ======== ======== ======== ========
Ratio of "adjusted" earnings to fixed charges(6) 2.65 3.91 1.07 1.14 1.43
Preferred dividend requirements $ 2,250 $ 6,775
Total fixed charges 6,347 6,347
-------- --------
Total combined fixed charges and preferred stock dividends $ 8,597 $ 13,122
======== ========
Ratio of "adjusted" earnings to combined fixed charges
and preferred stock dividends(7) 1.96 1.89 (3) (3) (3)
<Caption>
PREDECESSOR
------------------------
HISTORICAL
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
-------- ----------
(Dollars in Thousands)
Income (loss) before minority interests and
extraordinary loss $ (46) $ (2,422)
Add:
Interest expense 5,600 6,814
Depreciation expense 6,017 6,197
Asset management fee (subordinate)
Deduct:
Capital expenditures (2,534) (2,794)
-------- --------
"Adjusted" earnings $ 9,037 $ 7,795
======== ========
Total fixed charges $ 5,600 $ 6,814
======== ========
Ratio of "adjusted" earnings to fixed charges(6) 1.61 1.14
Preferred dividend requirements
Total fixed charges
Total combined fixed charges and preferred stock dividends
Ratio of "adjusted" earnings to combined fixed charges
and preferred stock dividends(7) (3) (3)
</Table>
(1) Assuming 10% of the Interests in the Mortgage Funds are tendered in
exchange for Preferred Shares.
(2) Assuming 25% of the Interests in the Mortgage Funds are tendered in
exchange for Preferred Shares.
(3) Historical ratio of earnings to fixed charges and to combined fixed charges
and preferred shares dividends have not been presented since the historical
presentation does not reflect payments for preferred share dividends.
(4) The ratio is less than "1" due to charges for participating note interest
on the former Seasons of Laurel subordinate note payable, which was paid
off in July 2001.
(5) We are presenting the ratios of "adjusted" earnings to fixed charges, and
"adjusted" earnings to fixed charges and preferred dividends, for
additional information. We do not consider these ratios more important than
the ratios of earnings to fixed charges and earnings to fixed charges and
preferred dividends. We believe that the adjusted earnings ratio provides
an appropriate measure of cash that will be available for paying the fixed
charges and preferred dividends.
(6) The ratio of "adjusted" earnings to fixed charges was computed by dividing
"adjusted" earnings to fixed charges. We defined "adjusted" earnings as
income before minority interest and extraordianry items plus fixed charges
and "fixed charges" as interest income, whether expensed or capitalized
and amortization of debt issues costs and including adjustments for adding
back depreciation and deducting capital improvements.
(7) The ratio of "adjusted" earnings to combined fixed charges and preferred
dividends was computed by dividing "adjusted" earnings to fixed charges
and preferred stock dividends. We define "adjusted" earnings as described
in Note (8) above.
(8) The ratio is less than one due to non recurring charges of interest expense
on the participating note payable that was paid off in July 2001.
<Page>
Capitalization
The following table shows the capitalization of Berkshire Income Reality, Inc
(the Company), assuming the Interests in the mortgage funds are tendered in
exchange for Preferred Shares and distribution of the Predecessore excess
working capital aggregating $18.5 million to KRF Company L.L.C. The table
also shows the capitalization of Berkshire Income Realty Predecessor Group
based on these same assumptions. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition of Berkshire Income Realty
Predecessor Group" for a discussion of the entities that comprise the
Berkshire Income Realty Predecessor Group, which is deemed to be our
predecessor for accounting purposes.
<Table>
<Caption>
THE PREDECESSOR
THE COMPANY THE COMPANY GROUP
----------------- ----------------- -----------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002(3) 2002(4) 2002
----------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS)
Mortgage notes payable $106,185 $106,185 $106,185
Minority common interest in operating partnership $ --(1)(2) $ --(1)(2) --
Owners' equity -- -- $ 5,179(1)
Stockholder's equity:
Preferred stock, $.01 par value liquidation preference $25.00 per share,
5,000,000 shares authorized, 1,000,000(1) and 3,010,941(2) shares
issued and outstanding, repectively 250(1)(2) 753(1)(2) --
Class A common stock, $.01 par value, 5,000,000 shares authorized,
0 shares issued and outstanding -- -- --
Class B common stock, $.01 par value, 5,000,000 shares authorized,
752,444(3) and 1,260,250(4) shares issued and outstanding,
repectively -- -- --
Additional paid in capital 12,181(1)(2) 62,460(1)(2)
-------- -------- --------
Total equity 12,431 63,213 5,179
-------- -------- --------
Total Capitalization $118,616 $169,398 $111,364
======== ======== ========
</Table>
(1) The pro forma balance sheet has been prepared on a historical cost basis
and does not reflect of the fair value of the real estate contributed by
KRF, which, based upon independent appraisals, is $63,785 in excess its net
historical cost, less minority interest.
(2) The preferred stock is senior to the common stock and minority common
interest in the Company's operating partnership.
(3) Assuming 9.96% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares.
(4) Assuming 30% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares.
<Page>
THE COMPANY AND THE BERKSHIRE INCOME REALTY PREDECESSOR GROUP
(Dollars in Thousands)
<Table>
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
----------------- ----------------- -------------------------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
2002(2) 2002(3) 2002 2001
----------------- ----------------- --------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
OPERATING DATA:
Revenue 21,341 26,273 18,889 18,018
Depreciation 3,836 3,836 3,836 3,523
Income (loss) before minority interest 3,617 8,549 3,028 (4,942)
Net income (loss) 1,696 5,131 423 (5,492)
Net income (loss) available for common $ 8 $ 50 $ -- $ --
Earnings per common share $ 0.010 $ 0.040
Weighted average number of common shares
outstanding 752,444 1,260,250
BALANCE SHEET DATA, AT PERIOD END:
Real estate, before accumulated
depreciation 172,334 172,334 172,334 162,021
Real estate, after accumulated
depreciation 85,779 85,779 85,779 79,142
Cash and cash equivalents 5,946 6,454 23,694 4,664
Total assets 122,052 172,834 114,800 87,529
Total long term obligations 106,185 106,185 106,185 78,480
Minority Interest -- -- -- 684
Stockholders' or owners' equity (deficit) 12,431 63,213 5,179 6,203
OTHER DATA:
"Adjusted" earnings(4) 10,631 15,563 8,517 9,203
Cash flow provided by (used in) operating
activities(5) 9,137 14,992 8,073 (5,489)
Cash flow provided by (used in) investing
activities(5) (2,165) (2,165) (2,165) (24,790)
Cash flow provided by (used in) financing
activities(5) (18,117) (21,510) 13,796 27,045
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
------------ ------------- ---------------------------------
PRO FORMA PRO FORMA HISTORICAL
YEAR ENDED YEAR ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, ---------------------------------
2001(2) 2001(3) 2001 2000 1999
------------ ------------- -------- -------- ---------
(Unaudited) (Unaudited)
OPERATING DATA:
Revenue 28,541 36,521 24,571 23,148 21,760
Depreciation 5,603 5,603 4,751 5,011 5,700
Income (loss) before minority interest 4,991 12,971 (3,179) (905) (595)
Net income (loss) 2,294 6,932 (3,664) (864) (595)
Net income (loss) available for common $ 44 $ 157 -- -- --
Earnings per common share $ 0.060 $ 0.120
Weighted average number of common shares
outstanding 752,444 1,260,250
BALANCE SHEET DATA, AT PERIOD END:
Real estate, before accumulated
depreciation -- -- 170,367 135,072 110,581
Real estate, after accumulated
depreciation -- -- 87,648 57,104 37,624
Cash and cash equivalents -- -- 3,990 7,899 1,780
Total assets -- -- 96,613 72,387 44,482
Total long term obligations -- -- 76,799 72,568 57,618
Minority Interest 619 1,385 --
Stockholders' or owners' equity (deficit) -- -- 17,352 (11,505) (19,250)
OTHER DATA:
"Adjusted" earnings(4) 16,819 24,799 13,113 9,364 9,755
Cash flow provided by (used in) operating
activities(5) 3,485 12,367 (6,008) 6,592 6,328
Cash flow provided by (used in) investing
activities(5) 1,482 1,482 (33,081) (24,032) (2,458)
Cash flow provided by (used in) financing
activities(5) 26,423 21,898 35,180 23,559 (3,349)
<Caption>
THE PREDECESSOR GROUP
------------------------
HISTORICAL
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
-------- ----------
(Unaudited) (Unaudited)
OPERATING DATA:
Revenue 20,910 20,177
Depreciation 6,017 6,197
Income (loss) before minority interest (46) (2,422)
Net income (loss) (46) (2,422)
Net income (loss) available for common -- --
Earnings per common share
Weighted average number of common shares
outstanding
BALANCE SHEET DATA, AT PERIOD END:
Real estate, before accumulated
depreciation 108,391 105,899
Real estate, after accumulated
depreciation 41,134 44,547
Cash and cash equivalents 1,260 1,507
Total assets 46,829 52,623
Total long term obligations 58,554 59,801
Minority Interest -- --
Stockholders' or owners' equity (deficit) (13,512) (9,772)
OTHER DATA:
"Adjusted" earnings(4) 9,037 7,795
Cash flow provided by (used in) operating
activities(5) 4,306 2,901
Cash flow provided by (used in) investing
activities(5) (1,646) (1,527)
Cash flow provided by (used in) financing
activities(5) (2,634) (1,030)
</Table>
- -----------
(1) The Pro Forma balance sheet has been prepared on a historical cost basis
and does not reflect the fair value of the real estate contributed by KRF,
which, based upon independent appraisals, $63,785 in excess of its net
historical cost, less minority interest.
(2) Assuming 9.96% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares.
(3) Assuming 30% of the Interests in the mortgage funds are tendered in
exchange for Preferred Shares.
(4) We consider "adjusted" earnings to be an alternative measure of performance
of the Company and the Predecessor which provides potential investors with
an understanding of the ability of the Company to pay fixed charges and
preferred dividends. We define "adjusted" earnings as income from
operations before adjustments for minority interests and extraordinary loss
(determined in accordance with GAAP) plus interest expense, depreciation
and advisory fees less capital expenditures. Advisory fees have been added
back to earnings as such fees are subordinate to preferred dividends.
Depreciation has been added back to earnings as it is a non cash charge.
Capital expenditures have been deducted from earnings as they represent a
cash charge not reflected in earnings. "Adjusted" earnings should not be
considered as an alternative to net income (determined in accordance with
GAAP) as an indication of financial performance or to cash flows from
operating activities (determined in accordance with GAAP) as a measure of
liquidity and the items excluded from "adjusted" earnings are significant
components in understanding and evaluating financial performance. The
computation of "adjusted" earnings may not be comparable to similarly
titled or other alternative performance measures, including funds from
operations, presented by other companies. We believe that in order to
facilitate a clear understanding of the combined historical results of the
Predecessor and the pro forma results of the Company, "adjusted" earnings
should be examined in connection with net income and cash flows from
operating, investing and financing activities in the combined financial
statements and other information included in this Prospectus.
A reconciliation between GAAP earnings and "adjusted" earnings for the
historical results of the Berkshire Income Realty Predecessor Group and the pro
forma results of the Company are as follows:
<Table>
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
----------------- ----------------- -------------------------------
PRO FORMA PRO FORMA HISTORICAL
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
2002(1) 2002(2) 2002 2001
----------------- ----------------- --------- --------------
(Dollars in Thousands)
Income from operations before adjustments for
minority interests and extraordinary loss $ 3,617 $ 8,549 $ 3,028 $ (4,942)
Add:
Interest expense 4,687 4,687 3,415 11,330
Depreciation expense 3,836 3,836 3,836 3,523
Advisory fees (subordinate) 457 457 204 --
Deduct:
Capital expenditures (1,966) (1,966) (1,966) (708)
-------- -------- -------- --------
"Adjusted earnings" $ 10,631 $ 15,563 $ 8,517 $ 9,203
======== ======== ======== ========
<Caption>
THE COMPANY THE COMPANY THE PREDECESSOR GROUP
------------ ------------- ---------------------------------
PRO FORMA PRO FORMA HISTORICAL
YEAR ENDED YEAR ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, ---------------------------------
2001(1) 2001(2) 2001 2000 1999
------------ ------------- -------- -------- ---------
(Dollars in Thousands)
Income from operations before adjustments for
minority interests and extraordinary loss $ 4,991 $ 12,971 $ (3,179) $ (905) $ (595)
Add:
Interest expense 6,347 6,347 12,273 8,217 6,840
Depreciation expense 5,603 5,603 4,751 5,011 5,700
Advisory fees (subordinate) 610 610
Deduct:
Capital expenditures (732) (732) (732) (2,959) (2,190)
-------- -------- -------- -------- --------
"Adjusted earnings" $ 16,819 $ 24,799 $ 13,113 $ 9,364 $ 9,755
======== ======== ======== ======== ========
<Caption>
THE PREDECESSOR GROUP
------------------------
HISTORICAL
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
-------- ----------
(Dollars in Thousands)
Income from operations before adjustments for
minority interests and extraordinary loss $ (46) $ (2,422)
Add:
Interest expense 5,600 6,814
Depreciation expense 6,017 6,197
Advisory fees (subordinate)
Deduct:
Capital expenditures (2,534) (2,794)
-------- --------
"Adjusted earnings" $ 9,037 $ 7,795
======== ========
</Table>
<Page>
(5) A reconcilation between the Predecessor historical cash flow provided by
(used in) operating , investing and financing activities to the
Company's pro forma cash flow provided by (used in) operating, investing
and financing activities. This reconciliation should be read in
conjunction with the unaudited pro forma condensed financial statements
of the Company and the combined financial statements of the Berkshire
Income Realty Predecessor Group.
<Table>
<Caption>
THE THE
THE COMPANY THE COMPANY COMPANY COMPANY
-------------- -------------- ------------- -------------
PRO FORMA PRO FORMA
NINE MONTHS NINE MONTHS PRO FORMA PRO FORMA
ENDED ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2002(a) 2002(b) 2001(a) 2001(b)
-------------- -------------- ------------- -------------
(DOLLARS IN THOUSANDS)
Cash Flow provided by (used in) operating activities
Predecessor historical cash flow from Operating
activities.............................................. $ 8,073 $ 8,073 $ (6,008) $ (6,008)
Pro forma cash flow adjustments
Increase in general and administrative expenses........... (338) (338) (450) (450)
Increase in advisory fees................................. (253) (253) (424) (424)
Dividends on Investment in GIT, GIT II, KIM, KIP, KIP II
and KIP III ............................................ 2,927 8,782 4,441 13,323
Removal of Seasons of Laurel participating interest
expenses................................................ 6,591 6,591
Net change to interest expense............................ (1,272) (1,272) (665) (665)
--------- --------- -------- --------
Pro forma cash flow provided by (used in) operating
activities................................................ $ 9,137 $ 14,992 $ 3,485 $ 12,367
========= ========= ======== ========
Cash flow provided by (used in) investing activities
Predecessor historical cash flow from investing
activities.............................................. $ (2,165) $ (2,165) $(33,081) $(33,081)
Acquisition of affiliates' real estate limited partnership
interests............................................... 34,563 34,563
--------- --------- -------- --------
Pro forma cash flow provided by (used in) investing
activities................................................ $ (2,165) $ (2,165) $ 1,482 $ 1,482
========= ========= ======== ========
Cash flow provided by (used in) financing activities........
Predecessor historical cash flow from financing
activities.............................................. $ 13,796 $ 13,796 $ 35,180 $ 35,180
Dividend on the Company's preferred stock................. (1,688) (5,081) (2,250) (6,775)
Borrowings on mortgage notes payable...................... (102,080) (102,080) (41,500) (41,500)
Principal payments on mortgage notes payable.............. 71,855 71,855 34,993 34,993
--------- --------- -------- --------
Pro forma cash flow provided by (used in) financing
activities................................................ $ (18,117) $ (21,510) $ 26,423 $ 21,898
========= ========= ======== ========
</Table>