-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lrku3xZmu5/OQ4bMxr0FT4LJXHa/G0YZiIAA7eao6kKlHQ5VPZWYXnwCbYKtIhpv 7dNxAcNb1GDljxuhj7G51A== 0000354521-05-000009.txt : 20080717 0000354521-05-000009.hdr.sgml : 20060818 20050329151529 ACCESSION NUMBER: 0000354521-05-000009 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050329 DATE AS OF CHANGE: 20051220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL REALTY INVESTORS LTD CENTRAL INDEX KEY: 0000354521 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 521219926 STATE OF INCORPORATION: DC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11149 FILM NUMBER: 05709517 BUSINESS ADDRESS: STREET 1: 11200 ROCKVILLE PIKE STREET 2: 5TH FLOOR CITY: ROCKVILLE STATE: MD ZIP: 20852 BUSINESS PHONE: 3014689200 MAIL ADDRESS: STREET 1: 1200 ROCKVILLE PIKE STREET 2: 5TH FLOOR CITY: ROCKVILLE STATE: MD ZIP: 20852 10KSB 1 f10ksb_123104-cri1.txt ANNUAL REPORT - -------------------------------------------------------------------------------- U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10-KSB ------------------ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 ------------------ Commission file number 0-11149 CAPITAL REALTY INVESTORS, LTD. Organized pursuant to the Laws of the District of Columbia ------------------ Internal Revenue Service - Employer Identification No. 52-1219926 11200 Rockville Pike, Rockville, Maryland 20852 (301) 468-9200 ------------------ Securities registered under Section 12(g) of the Exchange Act: UNITS OF LIMITED PARTNER INTEREST ------------------ Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB [X] State issuer's revenues for its most recent fiscal year $1,054,534. The units of limited partner interest of the registrant are not traded in any market. Therefore, the units of limited partner interest had neither a market selling price nor an average bid or asked price within the 60 days prior to the date of this filing. - -------------------------------------------------------------------------------- CAPITAL REALTY INVESTORS, LTD. 2004 ANNUAL REPORT ON FORM 10-KSB TABLE OF CONTENTS Page ---- PART I Item 1. Business........................................................ I-1 Item 2. Properties...................................................... I-5 Item 3. Legal Proceedings............................................... I-5 Item 4. Submission of Matters to a Vote of Security Holders............. I-5 PART II Item 5. Market for the Registrant's Partnership Interests and Related Partnership Matters .............................. II-1 Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................... II-2 Item 7. Financial Statements............................................ II-5 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure........................ II-6 Item 8A. Controls and Procedures......................................... II-6 Item 8B. Other Information............................................ II-6 PART III Item 9. Directors and Executive Officers of the Registrant.............. III-1 Item 10. Executive Compensation.......................................... III-2 Item 11. Security Ownership of Certain Beneficial Owners and Management.. III-2 Item 12. Certain Relationships and Related Transactions.................. III-3 Item 13. Exhibits........................................................ III-3 Item 14. Principal Accountant Fees and Services.......................... III-4 Signatures............................................................... III-5 Report of Independent Registered Public Accounting Firm.................. III-6 Financial Statements..................................................... III-7 PART I ------ ITEM 1. BUSINESS -------- Capital Realty Investors, Ltd. (the Partnership) is a limited partnership which was formed under the District of Columbia Limited Partnership Act on June 1, 1981. On December 31, 1981, the Partnership commenced offering 30,000 units of limited partner interest through a public offering which was managed by Merrill Lynch, Pierce, Fenner & Smith, Incorporated. The Partnership closed the offering on December 31, 1982, at which time 24,837 units of limited partner interest had become subscribed. As of December 31, 2004, 90 units of limited partner interest had been abandoned. The General Partners of the Partnership are C.R.I., Inc. (CRI), which is the Managing General Partner, current and former shareholders of CRI and Rockville Pike Associates, Ltd., a Maryland limited partnership which includes the shareholders of CRI and certain former officers and employees of CRI. Services for the Partnership are performed by CRI, as the Partnership has no employees of its own. The Partnership was formed to invest in real estate, which is the Partnership's principal business activity, by acquiring and holding limited partner interests in limited partnerships (Local Partnerships). The Partnership originally made investments in 18 Local Partnerships. As of December 31, 2004, the Partnership retained investments in 14 Local Partnerships. Each of these Local Partnerships owns a federal or state government-assisted apartment complex, which provides housing principally to the elderly and/or to individuals and families of low or moderate income. The original objectives of these investments, not necessarily in order of importance, were to: (i) preserve and protect the Partnership's capital; (ii) provide, during the early years of the Partnership's operations, current tax benefits to the partners in the form of tax losses which the partners could use to offset income from other sources; (iii)provide capital appreciation through increases in the value of the Partnership's investments and increased equity through periodic payments on the indebtedness on the apartment complexes; and (iv) provide cash distributions from sale or refinancing of the Partnership's investments and, on a limited basis, from rental operations. See Part II, Item 6, Management's Discussion and Analysis of Financial Condition and Results of Operations, for a discussion of factors affecting the original investment objectives. The Local Partnerships in which the Partnership invested were organized by private developers who acquired the sites, or options thereon, applied for mortgage financing and applicable mortgage insurance and/or subsidies, and who generally remain as the local general partners in the Local Partnerships. In most cases, the local general partners of the Local Partnerships retain responsibility for maintaining, operating and managing the projects. However, under certain circumstances, the Local Partnerships' partnership agreements permit removal of the local general partner and replacement with another local general partner or with an affiliate of the Partnership's Managing General Partner. I-1 PART I ------ ITEM 1. BUSINESS - Continued -------- As a result of its investment in the Local Partnerships, the Partnership became the principal limited partner in 18 (14 remaining as of December 31, 2004) Local Partnerships. As a limited partner, the Partnership's legal liability for obligations of the Local Partnerships is limited to its investment. In most cases, an affiliate of the Managing General Partner of the Partnership is also a general partner of the Local Partnerships. The local general partners and affiliates of the Managing General Partner may operate other apartment complexes which may be in competition for eligible tenants with the Local Partnerships' apartment complexes. Although each of the Local Partnerships in which the Partnership invested owns an apartment complex that must compete in the market place for tenants, interest subsidies and/or rent supplements from governmental agencies generally make it possible to offer certain of these dwelling units to eligible tenants at a cost significantly below the market rate for comparable conventionally financed dwelling units. Based on available data, the Managing General Partner believes there to be no material risk of market competition in the operations of the apartment complexes described below which would adversely impact the Partnership. I-2 PART I ------ ITEM 1. BUSINESS - Continued -------- A schedule of the apartment complexes owned by Local Partnerships in which the Partnership has an investment as of December 31, 2004, follows.

(continued) I-3 PART I ------ ITEM 1. BUSINESS - Continued --------

(1) All properties are multifamily housing complexes. No single tenant rents 10% or more of the rentable square footage. Residential leases are typically one year or less in length, with varying expiration dates, and substantially all rentable space is for residential purposes. (2) The amounts provided are the balances of first mortgage loans payable by the Local Partnerships as of December 31, 2004. (3) It is anticipated that the Local Partnership will extend its Section 8 HAP contract for a one year period at its expiration. (4) The mortgage note was restructured in accordance with HUD's Mark-to-Market Program in February 2003. The Section 8 HAP contract was extended through December 31, 2022, subject to the annual availability of funding by Congress. (5) The totals for the percentage of units occupied and the average effective annual rental per unit are based on a simple average. I-4 PART I ------ ITEM 2. PROPERTIES ---------- Through its ownership of limited partner interests in Local Partnerships, Capital Realty Investors, Ltd., indirectly holds an interest in the real estate owned by the Local Partnerships. See Part I, Item 1, for information concerning these properties. ITEM 3. LEGAL PROCEEDINGS ----------------- There are no material pending legal proceedings to which the Partnership is a party. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- No matters were submitted to a vote of security holders during the fourth quarter of 2004. I-5 PART II ------- ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS ------------------------------------------------- AND RELATED PARTNERSHIP MATTERS ------------------------------- (a) There is no established market for the purchase and sale of units of limited partner interest (Units) in the Partnership, although various informal secondary market services exist. Due to the limited markets, however, investors may be unable to sell or otherwise dispose of their Units. Unregistered Tender Offer ------------------------- On July 18, 2003, Equity Resource Arlington Fund (Equity) initiated an unregistered tender offer to purchase up to 495 of the outstanding Units in the Partnership at a price of $100 per Unit; the offer expired August 18, 2003. Equity is unaffiliated with the Partnership or the Managing General Partner. The price offered was determined solely at the discretion of Equity and does not necessarily represent the fair market value of each Unit. The Managing General Partner did not express any opinion and remained neutral toward the unregistered tender offer for the purchase of Units described above. (b) As of March 29, 2005, there were approximately 1,409 registered holders of Units in the Partnership. (c) On February 28, 2003, the Partnership made a cash distribution of $1,014,627 ($41 per Unit) to Limited Partners who were holders of record as of November 1, 2002. The distribution was a result of proceeds received from the sale of Baltic Plaza. On December 9, 2004, the Partnership made a cash distribution of $618,675 ($25 per Unit) to Limited Partners who were holders of record as of September 30, 2004, and a cash distribution of $19,134 to General Partners. The distributions were a result of cash resources accumulated from operations and distributions from Local Partnerships. II-1 PART II ------- ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Capital Realty Investors, Ltd.'s (the Partnership) Management's Discussion and Analysis of Financial Condition and Results of Operations section is based on the financial statements, and contains information that may be considered forward looking, including statements regarding the effect of governmental regulations. Actual results may differ materially from those described in the forward looking statements and will be affected by a variety of factors including national and local economic conditions, the general level of interest rates, governmental regulations affecting the Partnership and interpretations of those regulations, the competitive environment in which the Partnership operates, and the availability of working capital. Critical Accounting Policies ---------------------------- The Partnership has disclosed its selection and application of significant accounting policies in Note 1 of the notes to financial statements included in this annual report on Form 10-KSB at December 31, 2004. The Partnership accounts for its investments in partnerships (Local Partnerships) by the equity method because the Partnership is a limited partner in the Local Partnerships. As such the Partnership has no control over the selection and application of accounting policies, or the use of estimates, by the Local Partnerships. Environmental and operational trends, events and uncertainties that might affect the properties owned by the Local Partnerships would not necessarily have a significant impact on the Partnership's application of the equity method of accounting, since the equity method has been suspended for seven Local Partnerships which have cumulative losses in excess of the amount of the Partnership's investments in those Local Partnerships. New Accounting Pronouncement ---------------------------- In December 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (revised December 2003) (FIN 46-R), Consolidation of Variable Interest Entities. FIN 46-R clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest ("variable interest entities"). Variable interest entities within the scope of FIN 46-R will be required to be consolidated by their primary beneficiary. The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity's expected losses, receives a majority of its expected returns, or both. The Managing General Partner has evaluated the Partnership's investments in partnerships and has determined that they are not variable interest entities subject to consolidation by the Partnership under the provisions of FIN 46-R. General ------- The Partnership has invested, through Local Partnerships, primarily in federal or state government-assisted apartment complexes intended to provide housing to the elderly and/or to low and moderate income tenants. In conjunction with such governmental assistance, which includes federal and/or state financing at below-market interest rates and rental subsidies, the Local Partnerships agreed to regulatory limitations on (i) cash distributions, (ii) use of the properties, and (iii) sale or refinancing. These limitations typically were designed to remain in place for the life of the mortgage. II-2 PART II ------- ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS - Continued ----------------------------------- The original investment objectives of the Partnership primarily were to deliver tax benefits, as well as cash proceeds upon disposition of the properties, through the Partnership's investment in Local Partnerships. Regulatory restrictions on cash distributions from the properties limited the original projections of annual cash distributions from property operations. The original investment objectives of the Partnership have been affected by the Tax Reform Act of 1986, which virtually eliminated many of the incentives for the new construction or the sale of existing low income housing properties by limiting the use of passive loss deductions. Therefore, C.R.I., Inc. (the Managing General Partner) continues to concentrate on transferring the source of investment yield from tax benefits to cash flow wherever possible, thereby potentially enhancing the ability of the Partnership to share in the appreciated value of the properties. C.R.I., Inc. (the Managing General Partner) continues to evaluate the Partnership's underlying apartment complexes to develop strategies that maximize the benefits to investors. Issues that are at the forefront of the Managing General Partner's strategic planning include: the expiration of Section 8 Housing Assistance Payment (HAP) contracts, the restrictions on properties with state housing agency financing or Rural Economic Community Development (RECD) agency financing, the cessation of losses to the Partnership due to the complete depletion of low-income housing accelerated depreciation deductions on the Local Partnerships' properties, and the reduction of mortgage interest deductions as the mortgage loans move closer to maturity. Sundance Apartments Associates (Sundance Apartments), New Sharon Woods Associates (New Sharon Woods) and Lihue Associates (Lihue Gardens) have Section 8 HAP contracts covering 100% of their apartment units, which contracts expire in the next twelve months. It is anticipated that Sundance Apartments will extend its Section 8 HAP contract for a one-year period at expiration. It is anticipated that New Sharon Woods will extend its Section 8 HAP contract for a one-year period at expiration. The local managing general partner has entered into a contract for the sale of Lihue Gardens, which may close in July 2005. Most of the Local Partnerships in which the Partnership is invested have mortgage loans financed by various state housing agencies, and two Local Partnerships have mortgage loans financed by the RECD agency. Eleven of the Local Partnerships have Section 8 HAP contracts in place for all or substantially all of their apartment units, which Section 8 HAP contracts are generally regulated by HUD (the state housing agencies, RECD and HUD, collectively, the "Agencies"). Currently, these Section 8 HAP contracts expire from 2005 through 2023, and the Managing General Partner believes that, at expiration, the Agencies will strive to preserve the units as low income, or affordable, housing by exercising their rights under the mortgage and/or regulatory agreement to disallow prepayment of the mortgage or conversion of the units to market rate housing. The Managing General Partner continues to monitor the actions of the Agencies to assess how the Agencies will deal with expiring Section 8 HAP contracts and what impact the Agencies' strategies will have on the operations of the Local Partnerships and, consequently, the impact on the Partnership's investments in the Local Partnerships. As of December 31, 2004, the carrying amount of the Partnership's investments in and advances to Local Partnerships with Section 8 HAP contracts expiring in 2005 was $0. Sales of properties with state agency or RECD financing will be extremely difficult. Since the Agencies are unlikely to allow mortgage prepayment and/or sale for a conversion to market rate housing, prospective buyers are generally limited to tax credit buyers or not-for-profit organizations. II-3 PART II ------- ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS - Continued ----------------------------------- The Managing General Partner is working diligently on behalf of the Partnership to produce the best results possible under these difficult circumstances. While the Managing General Partner cannot predict the outcome for any particular property at this time, the Managing General Partner will continue to work with the Local Partnerships to develop strategies that maximize the benefits to investors. Financial Condition/Liquidity ----------------------------- As of December 31, 2004, the Partnership had approximately 1,438 investors who held a total of 24,747 units of limited partner interest which were originally sold for the aggregate amount of $24,747,000. The Partnership originally made investments in 18 Local Partnerships, of which 14 remain at December 31, 2004. The Partnership's liquidity, with unrestricted cash resources of $1,339,818 as of December 31, 2004, along with anticipated future cash distributions from the Local Partnerships, is expected to be adequate to meet its current and anticipated operating cash needs. As of March 29, 2005, there were no material commitments for capital expenditures. During 2004 and 2003, the Partnership received cash distributions of $481,665 and $454,582, respectively, from the Local Partnerships. The Partnership closely monitors its cash flow and liquidity position in an effort to ensure that sufficient cash is available for operating requirements. For the year ended December 31, 2004, the receipt of distributions from Local Partnerships and existing cash resources were adequate to support net cash used in operating activities and financing activities. For the year ended December 31, 2004, $40,789 of the distributions received were from Local Partnerships for which the Partnership's carrying value is zero (equity method suspended). The Partnership expects to receive a similar amount of distributions from these Local Partnerships in future years. On February 28, 2003, the Partnership made a cash distribution of $1,014,627 ($41 per Unit) to Limited Partners who were holders of record as of November 1, 2002. The distribution was a result of proceeds received from the sale of Baltic Plaza. On December 9, 2004, the Partnership made a cash distribution of $618,675 ($25 per Unit) to Limited Partners who were holders of record as of September 30, 2004 and a cash distribution of $19,134 to General Partners. The distributions were a result of cash resources accumulated from operations and distributions from Local Partnerships. The Managing General Partner currently intends to retain all of the Partnership's remaining undistributed cash for operating cash reserves. II-4 PART II ------- ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS - Continued ----------------------------------- Results of Operations --------------------- 2004 versus 2003 - ---------------- The Partnership's net income for the year ended December 31, 2004, increased from 2003, primarily due to an increase in share of income from partnerships, partially offset by an increase in total expenses and a decrease in interest and other income. Share of income from partnerships increased in 2004 primarily due to an increase in rental and other income at one property, partially offset by an increase in total expenses, and a decrease in operating expenses at another property, both partially offset by an increase in depreciation expense at another property. Other revenue decreased in the year 2004, partially offset by an increase in interest revenue due to higher cash and cash equivalent balances. General and administrative expenses decreased primarily due to lower reimbursed payroll costs, partially offset by higher reporting costs. Professional fees increased due to higher legal and audit expenses in 2004. Amortization of deferred costs decreased slightly due to the reclassification of Lihue Gardens to investment in partnership held for sale. For financial reporting purposes, the Partnership, as a limited partner in the Local Partnerships, does not record losses from the Local Partnerships in excess of its investment to the extent that the Partnership has no further obligation to advance funds or provide financing to the Local Partnerships. As a result, the Partnership's share of income from partnerships for the years ended December 31, 2004 and 2003, did not include losses of $309,187 and $517,138, respectively. Distributions of $40,789 and $93,006 received from two and four Local Partnerships during 2004 and 2003, respectively, and for which the Partnership's carrying value is zero (equity method suspended), were recorded as increases in the Partnership's share of income from partnerships in the year received. Inflation --------- Inflation allows for increases in rental rates, usually offsetting any higher operating and replacement costs. Furthermore, inflation generally does not impact the fixed rate long-term financing under which the Partnership's real property investments were purchased. Future inflation could allow for appreciated values of the Local Partnerships' properties over an extended period of time as rental revenues and replacement values gradually increase. The combined rental revenues of the Partnership's remaining 14 properties for the five years ended December 31, 2004, follow. Combined rental revenue amounts have been adjusted to reflect property sales and interests transferred during 2002 and prior years.

ITEM 7. FINANCIAL STATEMENTS -------------------- The information required by this item is contained in Part III. II-5 PART II ------- ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS --------------------------------------------- ON ACCOUNTING AND FINANCIAL DISCLOSURE -------------------------------------- None. ITEM 8A. CONTROLS AND PROCEDURES ----------------------- In February 2005, representatives of the Managing General Partner of the Partnership carried out an evaluation of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures, pursuant to Exchange Act Rules 13a-15 and 15d-15. The Managing General Partner does not expect that the Partnership's disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Based on the February 2005 evaluation, and subject to the foregoing, the Principal Executive Officer and Principal Financial Officer concluded that the Partnership's disclosure controls and procedures are effective as of the end of the period covered by this report to alert them in a timely manner to any material information relating to the Partnership that must be included in the Partnership's periodic SEC filings, and particularly during the period in which this report is being prepared. In addition, there have been no significant changes in the Partnership's internal control over financial reporting that occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting. ITEM 8B. OTHER INFORMATION ----------------- There has not been any information required to be disclosed in a report on Form 8-K during the quarter ended December 31, 2004, but not reported, whether or not otherwise required by this Form 10-KSB at December 31, 2004. II-6 PART III -------- ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -------------------------------------------------- (a) and (b) The Partnership has no directors, executive officers or employees of its own. (a) and (b) The names, ages and business experience of the directors and executive officers of C.R.I., Inc. (CRI), the Managing General Partner of the Partnership, follow. William B. Dockser, 68, has been the Chairman of the Board and a Director of CRI since 1974. Prior to forming CRI, he served as President of Kaufman and Broad Asset Management, Inc., an affiliate of Kaufman and Broad, Inc., which managed publicly held limited partnerships created to invest in low and moderate income multifamily apartment properties. Prior to joining Kaufman and Broad, he served in various positions at HUD, culminating in the post of Deputy FHA Commissioner and Deputy Assistant Secretary for Housing Production and Mortgage Credit, where he was responsible for all federally insured housing production programs. Before coming to the Washington, D. C. area, Mr. Dockser was a practicing attorney in Boston and served as a special Assistant Attorney General for the Commonwealth of Massachusetts. He holds a Bachelor of Laws degree from Yale University Law School and a Bachelor of Arts degree, cum laude, from Harvard University. H. William Willoughby, 58, has been President, Secretary and a Director of CRI since January 1990, and was Senior Executive Vice President, Secretary and a Director of CRI from 1974 to 1989. He is principally responsible for the financial management of CRI and its associated partnerships. Prior to joining CRI in 1974, he was Vice President of Shelter Corporation of America and a number of its subsidiaries dealing principally with real estate development and equity financing. Before joining Shelter Corporation, he was a senior tax accountant with Arthur Andersen & Co. He holds a Juris Doctor degree, a Master of Business Administration degree and a Bachelor of Science degree in Business Administration from the University of South Dakota. (c) There is no family relationship between any of the foregoing directors and executive officers. (d) Involvement in certain legal proceedings. None. III-1 PART III -------- ITEM 10. EXECUTIVE COMPENSATION ---------------------- (a), (b), (c), (d), (e), (f), (g), and (h) The Partnership has no officers or directors. However, in accordance with the Partnership Agreement, and as disclosed in the public offering, various kinds of compensation and fees were paid or are payable to the General Partners and their affiliates. Additional information required by this Item 10 is incorporated herein by reference to Notes 3 and 4 of the notes to financial statements contained in Part III. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ----------------------------------------------- AND MANAGEMENT -------------- (a) Security ownership of certain beneficial owners. The following table sets forth certain information concerning any person (including any "group") who is known by the Partnership to be the beneficial owner of more than five percent of the issued and outstanding units of additional limited partner interest (Units) at March 29, 2005.

(b) Security ownership of management. The following table sets forth certain information concerning all Units beneficially owned, as of March 29, 2005, by each director and by all directors and officers as a group of the Managing General Partner of the Partnership.

(c) Changes in control. There exists no arrangement known to the Partnership, the operation of which may, at a subsequent date, result in a change in control of the Partnership. There is a provision in the Limited Partnership Agreement which allows, under certain circumstances, the ability to change control. III-2 PART III -------- ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ---------------------------------------------- (a) and (b) Transactions with management and others. The Partnership has no directors or officers. In addition, the Partnership has had no transactions with individual officers or directors of the Managing General Partner of the Partnership other than any indirect interest such officers and directors may have in the amounts paid to the Managing General Partner or its affiliates by virtue of their stock ownership in CRI. Item 10 of this report, which contains a discussion of the fees and other compensation paid or accrued by the Partnership to the General Partners or their affiliates, is incorporated herein by reference. Note 3 of the notes to financial statements contained in Part III, which contains disclosure of related party transactions, is also incorporated herein by reference. (c) Certain business relationships. The Partnership's response to Item 12(a) is incorporated herein by reference. In addition, the Partnership has no business relationship with entities of which the officers and directors of the Managing General Partner of the Partnership are officers, directors or equity owners other than as set forth in the Partnership's response to Item 12(a). (d) Transactions with promoters. Not applicable. ITEM 13. EXHIBITS -------- Index of Exhibits (Listed according to the number assigned in the table in Item 601 of Regulation S-B.) Exhibit No. 4 - Instruments defining the rights of security holders, including indentures. a. Amended Certificate and Limited Partnership Agreement of Capital Realty Investors, Ltd. (Incorporated by reference to Exhibit No. 4 to Registrant's Registration Statement on Form S-11, as amended, dated December 4, 1981.) Exhibit No. 10 - Material Contracts. a. Management Services Agreement between CRI and Capital Realty Investors, Ltd. (Incorporated by reference to Exhibit No. 10(b) to Registrant's Registration Statement on Form S-11, as amended, dated December 4, 1981.) Exhibit No. 31.1 - Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit No. 31.2 - Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. III-3 PART III -------- ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES - Continued -------------------------------------- Exhibit No. 32 - Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit No. 99 - Additional Exhibits. a. Prospectus of the Partnership, dated December 31, 1981. (Incorporated by reference to Registrant's Registration Statement on Form S-11, as amended, dated December 4, 1981.) b. Reports of other auditors relating to the audits of the financial statements of Local Partnerships in which Capital Realty Investors, Ltd. has invested. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES -------------------------------------- During the years ended December 31, 2004 and 2003, the Partnership retained Grant Thornton LLP to provide services as follows. Year Ended December 31, ----------------------- 2004 2003 ------- ------- Audit fees $74,000 $67,000 Audit-related fees -- -- Tax fees (1) 14,500 13,500 All other fees -- -- ------- ------- Total billed $88,500 $80,500 ======= ======= (1) Preparation of Partnership federal and state tax returns. The Partnership has no directors or officers. The Board of Directors of the Managing General Partner of the Partnership, serving as the audit committee, has approved in advance 100% of the fees paid to, and services provided by, Grant Thornton LLP. Prior to approving Grant Thornton LLP's providing any non-audit services, the Board of Directors of the Managing General Partner of the Partnership would assess whether the provision of those services would compromise Grant Thornton LLP's independence. Grant Thornton LLP provided partnership tax return preparation services during the years ended December 31, 2004 and 2003, which services it was determined did not compromise Grant Thornton LLP's independence. III-4 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CAPITAL REALTY INVESTORS, LTD. ---------------------------------------------- (Registrant) by: C.R.I., Inc. ----------------------------------------- Managing General Partner March 29, 2005 by: /s/ William B. Dockser - -------------- ------------------------------------ DATE William B. Dockser, Director, Chairman of the Board, and Treasurer (Principal Executive Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 29, 2005 by: /s/ H. William Willoughby - -------------- ------------------------------------ DATE H. William Willoughby, Director, President, and Secretary March 29, 2005 by: /s/ Michael J. Tuszka - -------------- ------------------------------------ DATE Michael J. Tuszka, Vice President and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) III-5 Report of Independent Registered Public Accounting Firm To the Partners Capital Realty Investors, Ltd. We have audited the accompanying balance sheets of Capital Realty Investors, Ltd. (a District of Columbia limited partnership) (the Partnership) as of December 31, 2004 and 2003, and the related statements of operations, changes in partners' (deficit) 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 did not audit the financial statements of the Local Partnerships. The Partnership's share of income from these Local Partnerships constitutes $1,000,171 and $926,466 of income in 2004 and 2003, respectively, included in the Partnership's 2004 and 2003 net income. The financial statements of these Local 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 amount included for these Local Partnerships, is based solely upon the reports of the other auditors. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. The Partnership is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based upon our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Capital Realty Investors, Ltd., as of December 31, 2004 and 2003, and the results of its operations, changes in partners' (deficit) capital and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Grant Thornton LLP Vienna, Virginia March 22, 2005 III-6 CAPITAL REALTY INVESTORS, LTD. BALANCE SHEETS ASSETS

The accompanying notes are an integral part of these financial statements. III-7 CAPITAL REALTY INVESTORS, LTD. STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these financial statements. III-8 CAPITAL REALTY INVESTORS, LTD. STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL

The accompanying notes are an integral part of these financial statements. III-9 CAPITAL REALTY INVESTORS, LTD. STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these financial statements. III-10 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Organization ------------ Capital Realty Investors, Ltd. (the Partnership) was formed under the District of Columbia Limited Partnership Act on June 1, 1981, and shall continue until December 31, 2030, unless sooner dissolved in accordance with the terms of the Partnership Agreement. The Partnership was formed to invest in real estate by acquiring and holding limited partner interests in limited partnerships (Local Partnerships) which own and operate federal or state government-assisted or conventionally financed apartment properties located throughout the United States, which provide housing principally to the elderly or to individuals and families of low or moderate income. The General Partners of the Partnership are C.R.I., Inc. (CRI), which is the Managing General Partner, current and former shareholders of CRI, and Rockville Pike Associates, Ltd., a Maryland limited partnership which includes the shareholders of CRI and certain former officers and employees of CRI. The Partnership sold 24,837 units at $1,000 per unit of limited partner interest through a public offering. The offering period was terminated on December 31, 1982. As of December 31, 2004, 90 units of limited partner interest had been abandoned. b. Method of accounting -------------------- The financial statements of the Partnership are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. c. Investments in and advances to partnerships ------------------------------------------- The investments in and advances to Local Partnerships (see Note 2) are accounted for by the equity method because the Partnership is a limited partner in the Local Partnerships. Under this method, the carrying amount of the investments in and advances to Local Partnerships is (i) reduced by distributions received and (ii) increased or reduced by the Partnership's share of earnings or losses, respectively, of the Local Partnerships. As of December 31, 2004 and 2003, the Partnership's share of cumulative losses of seven of the Local Partnerships exceeded the amount of the Partnership's investments in and advances to those Local Partnerships by $6,515,443 and $6,238,929, respectively. Since the Partnership has no further obligation to advance funds or provide financing to these Local Partnerships, the excess losses have not been reflected in the accompanying financial statements. Distributions of $40,789 and $93,006 received from two and four Local Partnerships during 2004 and 2003, respectively, and for which the Partnership's carrying value is zero (equity method suspended) were recorded as increases in the Partnership's share of income from partnerships in the year received. Costs incurred in connection with acquiring these investments have been capitalized and are being amortized using the straight-line method over the estimated useful lives of the properties owned by the Local Partnerships. III-11 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued d. Cash and cash equivalents ------------------------- Cash and cash equivalents consist of all money market funds, time and demand deposits, and repurchase agreements with original maturities of three months or less. e. Offering costs -------------- The Partnership incurred certain costs in connection with the offering and selling of units of limited partnership interest. Such costs were recorded as a reduction of partners' capital when incurred. f. Income taxes ------------ For federal and state income tax purposes, each partner reports on his or her personal income tax return his or her share of the Partnership's income or loss as determined for tax purposes. Accordingly, no provision has been made for income taxes in these financial statements. g. Use of estimates ---------------- In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, the Partnership is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and of revenues and expenses during the reporting periods. Actual results could differ from those estimates. h. Fair Value of Financial Instruments ----------------------------------- The financial statements include estimated fair value information as of December 31, 2004, as required by Statement of Financial Accounting Standards No. 107 (SFAS No. 107), Disclosure About Fair Value of Financial Instruments. Such information, which pertains to the Partnership's financial instruments (primarily cash and cash equivalents), is based on the requirements set forth in SFAS No. 107 and does not purport to represent the aggregate net fair value of the Partnership. The balance sheet carrying amounts for cash and cash equivalents approximate estimated fair values of such assets. i. New accounting pronouncement ---------------------------- In December 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (revised December 2003) (FIN 46-R), Consolidation of Variable Interest Entities. FIN 46-R clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest ("variable interest entities"). Variable interest entities within the scope of FIN 46-R will be required to be consolidated by their primary beneficiary. The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity's expected losses, receives a majority of its expected returns, or both. The Managing General Partner has evaluated the Partnership's investments in partnerships and has determined that they are not variable interest entities subject to consolidation by the Partnership under the provisions of FIN 46-R. III-12 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS a. Interests in profits, losses and cash distributions made by Local ---------------------------------------------------------------------- Partnerships ------------ The Partnership has a 74.99% to 98.98% interest in profits, losses and cash distributions (as restricted by various federal and state housing agencies) (collectively, the Agencies) of each Local Partnership. An affiliate of the Managing General Partner of the Partnership is also a general partner of each Local Partnership. As stipulated by the Local Partnerships' partnership agreements, the Local Partnerships are required to make annual cash distributions from surplus cash flow, if any. During 2004 and 2003, the Partnership received cash distributions from rental operations of the Local Partnerships of $481,665 and $454,582, respectively. As of December 31, 2004 and 2003, ten and nine of the Local Partnerships had aggregate surplus cash, as defined by their respective regulatory Agencies, in the amounts of $585,276 and $533,449, respectively, which may be available for distribution in accordance with their respective regulatory Agencies' regulations. The cash distributions to the Partnership from the operations of the Local Partnerships may be limited by the Agencies' regulations. Such regulations limit annual cash distributions to a percentage of the owner's equity investment in a rental property. Funds in excess of those which may be distributed to owners are generally required to be placed in a residual receipts account held by the governing state or federal agency for the benefit of the property. In addition, local general partners have the authority to withhold funds if needed for property repairs, improvements, or other property needs. Upon sale or refinancing of a property owned by a Local Partnership, or upon the liquidation of a Local Partnership, the proceeds from such sale, refinancing or liquidation shall be distributed in accordance with the respective provisions of each Local Partnership's partnership agreement. In accordance with such provisions, the Partnership would receive from such proceeds its respective percentage interest of any remaining proceeds, after payment of (i) all debts and liabilities of the Local Partnership and certain other items, (ii) the Partnership's capital contributions plus certain specified amounts as outlined in each partnership agreement, and (iii) certain special distributions to general partners and related entities of the Local Partnership. III-13 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN PARTNERSHIPS - Continued b. Advance to Local Partnership ---------------------------- As of both December 31, 2004 and 2003, the Partnership had advanced funds, including accrued interest, totaling $290,896 to Shallowford Oaks. For financial reporting purposes, this loan has been reduced to zero by the Partnership as a result of losses at the Local Partnership level during prior years. c. Property matters ---------------- Baltic Plaza ------------ On June 24, 2001, the local managing general partner entered into a contract to sell the property owned by Sencit Baltic Associates (Baltic Plaza). On December 19, 2002, Baltic Plaza was sold. Cash proceeds received by the Partnership totaled $2,053,358. As part of the consideration, the Local Partnership took back a 30-year purchase money note in the principal amount of $2,300,000, collateralized by the partnership interests of the general partner of the maker/purchaser. The Local Partnership assigned the purchase money note to an escrow for the benefit of its partners (with CRI serving as escrow agent), so that the Local Partnership entity can be dissolved. The purchase money note bears interest at 4.6% compounded annually, and requires a minimum annual payment equal to 50% of the maker/purchaser's annual audited cash flow, as defined, with the balance of unpaid principal, if any, plus accrued interest, due and payable on December 31, 2032. As of March 29, 2005, no payments of principal or interest have been received on this purchase money note, and the maker certified to the Partnership that no cash flow was available for distribution in 2004. The Partnership's 98% beneficial interest in this purchase money note is reflected in the accompanying balance sheets at December 31, 2004 and December 31, 2003, at its original principal balance of $2,300,000 plus estimated accrued but unpaid interest, all discounted to $619,000 to provide for an effective interest rate commensurate with the investment risk, with an offsetting credit of $619,000 to deferred gain on disposition of investment in partnership, due to uncertainty of collection of the purchase money note and related interest. In January 2003, the Managing General Partner was paid a disposition fee of $223,511 related to the sale, which was accrued and netted against the related gain on disposition of investments in partnerships at December 31, 2002. Lihue Gardens ------------- In February 2004, the local managing general partner entered into a contract to sell the property owned by Lihue Associates (Lihue Gardens), although closing cannot occur until the purchaser obtains the lender and regulatory authority consents. The sale may close in July 2005. There is no assurance that a sale of the property will occur. Due to the impending sale of the property related to the Partnership's interest in Lihue Gardens, the Partnership's basis in the Local Partnership, along with the net unamortized amount of acquisition fees and property purchase costs, which totaled $129,881 at December 31, 2004, has been reclassified to investment in partnership held for sale in the accompanying balance sheet at that date. III-14 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN PARTNERSHIPS - Continued Warner House ------------ The mortgage note secured by the property owned by Warner Housing Partnership (Warner House) was restructured in accordance with HUD's Mark-to-Market Program in February 2003. The Section 8 HAP contract was extended through March 1, 2023, subject to the annual availability of funding by Congress. d. Summarized financial information -------------------------------- Combined balance sheets and combined statements of operations for the 14 Local Partnerships in which the Partnership is invested as of December 31, 2004, follow. The information is presented separately for seven Local Partnerships which have investment basis (equity method), and for seven Local Partnerships for which the Partnership's carrying value is zero (equity method suspended).

III-15 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN PARTNERSHIPS - Continued

Combined balance sheets and combined statements of operations for the 14 Local Partnerships in which the Partnership is invested as of December 31, 2003, follow. The information is presented separately for seven Local Partnerships which have investment basis (equity method), and for seven Local Partnerships for which the Partnership's carrying value is zero (equity method suspended). III-16 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN PARTNERSHIPS - Continued

III-17 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN PARTNERSHIPS - Continued

All of the cash distributions recorded as income are included in share of income from partnerships on the statements of operations for the respective years, and are recorded as cash receipts on the respective balance sheets. Cash distributions recorded as a reduction of the related investment are recorded as cash receipts on the respective balance sheets, and are recorded as a reduction of investments in and advances to partnerships, also on the respective balance sheets. e. Reconciliation of the Local Partnerships' financial statement net ---------------------------------------------------------------------- income to taxable income ------------------------ For federal income tax purposes, the Local Partnerships report on a basis whereby: (i) certain revenue and the related assets are recorded when received rather than when earned; (ii) certain costs are expensed when paid or incurred rather than capitalized and amortized over the period of benefit; and (iii) a shorter life is used to compute depreciation on the property as permitted by Internal Revenue Service (IRS) Regulations. These returns are subject to examination and, therefore, possible adjustment by the IRS. III-18 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 2. INVESTMENTS IN PARTNERSHIPS - Continued A reconciliation of the Local Partnerships' financial statement net income reflected above to taxable income follows. For the years ended December 31, ---------------------------- 2004 2003 ---------- ---------- Financial statement net income $ 719,396 $ 396,315 Differences between financial statement and tax depreciation, amortization, and miscellaneous differences 1,731,345 1,756,019 ---------- ---------- Taxable income $2,450,741 $2,152,334 ========== ========== 3. RELATED PARTY TRANSACTIONS In accordance with the terms of the Partnership Agreement, the Partnership paid the Managing General Partner a fee for services in connection with the review, selection, evaluation, negotiation and acquisition of the interests in the Local Partnerships. The fee amounted to $993,480, which is equal to four percent of the Limited Partners' capital contributions to the Partnership. The acquisition fee was capitalized and is being amortized over a 40-year period using the straight-line method. In accordance with the terms of the Partnership Agreement, the Partnership is obligated to reimburse the Managing General Partner for its direct expenses in connection with managing the Partnership. For the years ended December 31, 2004 and 2003, the Partnership paid $136,701 and $184,843, respectively, to the Managing General Partner as direct reimbursement of expenses incurred on behalf of the Partnership. Such expenses are included in general and administrative expenses in the accompanying statements of operations. In accordance with the terms of the Partnership Agreement, the Partnership is obligated to pay the Managing General Partner an annual incentive management fee (Management Fee) after all other expenses of the Partnership are paid. The amount of the Management Fee shall be equal to 0.25% of invested assets, as defined in the Partnership Agreement, and shall be payable from the Partnership's cash available for distribution, as defined in the Partnership Agreement, as of the end of each calendar year, as follows: (i) First, on a monthly basis as an operating expense before any distributions to limited partners in an annual amount equal to $95,208; and (ii) Second, after distributions to the limited partners in the amount of one percent of the gross proceeds of the offering, the balance of such 0.25% of invested assets. For each of the years ended December 31, 2004 and 2003, the Partnership paid the Managing General Partner a Management Fee of $95,208. III-19 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 3. RELATED PARTY TRANSACTIONS - Continued The Managing General Partner and/or its affiliates may receive a fee of not more than two percent of the sales price of an investment in a Local Partnership or the property it owns, payable under certain conditions upon the sale of an investment in a Local Partnership or the property it owns. The payment of the fee is subject to certain restrictions, including the achievement of a certain level of sales proceeds and making certain minimum distributions to limited partners. In accordance with the terms of the Partnership Agreement, in January 2003 the Managing General Partner was paid a disposition fee of $223,511 related to the sale of Baltic Plaza in December 2002, which was accrued and netted against the related gain on disposition of investment in partnership at December 31, 2002. 4. PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS All profits and losses are allocated 97% to the limited partners and 3% to the General Partners. The net proceeds resulting from the liquidation of the Partnership or the Partnership's share of the net proceeds from any sale or refinancing of the Local Partnerships or their rental properties which are not reinvested shall be distributed and applied as follows: (i) to the payment of debts and liabilities of the Partnership (including all expenses of the Partnership incident to the sale or refinancing) other than loans or other debts and liabilities of the Partnership to any partner or any affiliate; such debts and liabilities, in the case of a non-liquidating distribution, to be only those which are then required to be paid or, in the judgment of the Managing General Partner, required to be provided for; (ii) to the establishment of any reserves which the Managing General Partner deems reasonably necessary for contingent, unmatured or unforeseen liabilities or obligations of the Partnership; (iii)to the limited partners in the amount of their capital contributions without deduction for prior cash distributions other than prior distributions of proceeds from any sale or refinancing; (iv) to the repayment of any unrepaid loans theretofore made by any partner or any affiliate to the Partnership for Partnership obligations and to the payment of any unpaid amounts owing to the General Partners pursuant to the Partnership Agreement; (v) to the General Partners in the amount of their capital contributions; (vi) thereafter, for their services to the Partnership, in equal shares to certain general partners (or their designees), whether or not any is then a general partner, an aggregate fee of one percent of the gross proceeds resulting from (A) such sale (if the proceeds are from a sale rather than a refinancing) and (B) any prior sales from which such one percent fee was not paid to the General Partners or their designees; and, (vii)the remainder, 15% to the General Partner (or their assignees) and 85% to the limited partners (or their assignees). Fees payable to certain general partners (or their designees) under (vi) above, together with all other property disposition fees and any other commissions or fees payable upon the sale of apartment properties, shall not in the aggregate exceed the lesser of the competitive rate or six percent of the sales price of the apartment properties. Pursuant to the Partnership Agreement, all cash available for distribution, as defined, shall be distributed, not less frequently than annually, 97% to the limited partners and three percent to the General Partners, after payment of the Management Fee (see Note 3), as specified in the Partnership Agreement. On February 28, 2003, the Partnership made a cash distribution of $1,014,627 ($41 per Unit) to Limited Partners who were holders of record as of November 1, 2002. The distribution was a result of proceeds received from the sale of Baltic Plaza. On December 9, 2004, the Partnership made a cash distribution of $618,675 ($25 per Unit) to Limited Partners who were holders of record as of September 30, 2004 and a cash distribution of $19,134 to General Partners. The distributions were a result of cash resources accumulated from operations and distributions from Local Partnerships. III-20 CAPITAL REALTY INVESTORS, LTD. NOTES TO FINANCIAL STATEMENTS 4. PARTNERSHIP PROFITS AND LOSSES, AND DISTRIBUTIONS - Continued As defined in the Partnership Agreement, after the payment of the distributions described in the previous paragraph, after the establishment of any reserves deemed necessary by the Managing General Partner and after payment of the Management Fee, the Partnership had no remaining cash available for distribution for the years ended December 31, 2004 and 2003. The Managing General Partner currently intends to retain all of the Partnership's remaining undistributed cash for operating cash reserves. 5. RECONCILIATION OF THE PARTNERSHIP'S FINANCIAL STATEMENT NET INCOME TO TAXABLE INCOME For federal income tax purposes, the Partnership reports on a basis whereby: (i) certain expenses are amortized rather than expensed when incurred; (ii) certain costs are amortized over a shorter period for tax purposes, as permitted by IRS Regulations, and (iii) certain costs are amortized over a longer period for tax purposes. The Partnership records its share of income or losses from its investments in limited partnerships for federal income tax purposes as reported on the Local Partnerships' federal income tax returns (see Note 2.e.), including losses in excess of related investment amounts. These returns are subject to examination and, therefore, possible adjustment by the IRS. A reconciliation of the Partnership's financial statement net income to taxable income follows.

# # # III-21 EXHIBIT No. 99 b. Reports of other auditors relating to the audits of the financial statements of Local Partnerships in which Capital Realty Investors, Ltd. has invested. GRAPHIC 3 crilogo.gif GRAPHIC begin 644 crilogo.gif M1TE&.#=A=`&5`'<``"'^&E-O9G1W87)E.B!-:6-R;W-O9G0@3V9F:6-E`"P` M````=`&5`(?^!@;^``#^&1G^%A;^#`S^"@K^`0'^!`3^%17^"PO^%Q?^#0W^ M%!3^#@[^$1'^#P_^'Q_^&QO^"0G^!P?^$!#^$A+^!07^&AK^'1W^`@+^"`C^ M$Q/^'!S^&!C^`P/^'A[^.SO^(B+^*"C^)B;^.3G^*BK^)27^.CK^)R?^*2G^ M(R/^("#^-S?^-C;^-#3^)"3^,C+^/S_^(2'^/3W^,S/^.#C^*RO^+R_^/C[^ M,##^+2W^,3'^/#S^-37^+"S^75W^3$S^5U?^5%3^7U_^2$C^6%C^04'^6UO^ M5E;^4E+^0T/^147^65G^0D+^3D[^34W^1$3^2TO^2DK^6EK^557^0$#^1D;^ M7%S^4U/^45'^4%#^3T_^7E[^1T?^24G^8V/^>7G^:&C^;6W^8F+^8&#^=G;^ M?7W^GK^86'^=77^>WO^<'#^?'S^=W?^7^_?W^[>W^XN+^^/C^[.S^Z^O^\O+^\_/^[N[^ M]_?^X^/^Y^?^^?G^ZNK^\/#^^_O^Z>G^]?7^\?'^YN;^Z.C^X>'^]/3^[^\! 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EX-31 4 exhibit31_123104-cri1.htm CERTIFICATION REQUIRED UNDER SECTION 302 EXHIBIT 31

EXHIBIT 31.1

CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William B. Dockser, certify that:

I have reviewed this annual report on Form 10-KSB for the year ended December 31, 2004, of CAPITAL REALTY INVESTORS, LTD.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of small business issuer’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls over financial reporting.

		CAPITAL REALTY INVESTORS, LTD.
		(Small Business Issuer)

		by: C.R.I., Inc.
		Managing General Partner

March 29, 2005		by: /s/ William B. Dockser
DATE		William B. Dockser, Director, Chairman of the Board, and Treasurer (Principal Executive Officer)

This certification is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

EXHIBIT 31.2

CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael J. Tuszka, certify that:

I have reviewed this annual report on Form 10-KSB for the year ended December 31, 2004, of CAPITAL REALTY INVESTORS, LTD.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls over financial reporting.

		CAPITAL REALTY INVESTORS, LTD.
		(Small Business Issuer)

		by: C.R.I., Inc.
		Managing General Partner

March 29, 2005		by: /s/ Michael J. Tuszka
DATE		Michael J. Tuszka, Vice President and Chief Accounting Officer (Principal Financial Officer)

This certification is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

EX-32 5 exhibit32_123104-cri1.htm CERTIFICATION REQUIRED UNDER SECTION 906 Exhibit 32

EXHIBIT 32

CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

We, the undersigned, certify that, to the best of our knowledge, this annual report on Form 10-KSB for the year ended December 31, 2004, of CAPITAL REALTY INVESTORS, LTD., and containing the financial statements, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in this annual report fairly presents, in all material respects, the financial condition and results of operations of the small business issuer.

		CAPITAL REALTY INVESTORS, LTD.
		(Small Business Issuer)
		by: C.R.I., Inc.
		Managing General Partner
March 29, 2005		by: /s/ William B. Dockser
DATE		William B. Dockser, Director, Chairman of the Board, and Treasurer (Principal Executive Officer)
March 29, 2005		by: /s/ Michael J. Tuszka
DATE		Michael J. Tuszka, Vice President and Chief Accounting Officer (Principal Financial Officer)

This certification accompanies this annual report and is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose, and shall not be deemed filed by the small business issuer for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-99 6 exhibit99_123104-cri1.txt REPORTS OF OTHER AUDITORS [GRAPHIC OMITTED][GRAPHIC OMITTED] INDEPENDENT AUDITORS' REPORT To the Partners February 14, 2005 Capitol Senior Limited Dividend Housing Association Lansing, Michigan We have audited the accompanying balance sheets of Capitol Senior Limited Dividend Housing Association, MSHDA Development No. 630 as of December 31, 2004 and 2003, and the related statements of profit and loss, partners' equity (deficit) 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 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 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 Capitol Senior Limited Dividend Housing Association as of December 31, 2004 and 2003 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. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on pages 15 to 21 is presented for 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 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. In accordance with Government Auditing Standards, we have also issued a report dated February 14, 2005 on our consideration of Capitol Senior Limited Dividend Housing Association's internal control over financial reporting and on our tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. [GRAPHIC OMITTED][GRAPHIC OMITTED] [GRAPHIC OMITTED][GRAPHIC OMITTED] INDEPENDENT AUDITOR'S REPORT To the Partners of Property Management Section The Chestnut Associates California Housing Finance Agency Sacramento, California Sacramento, California I have audited the accompanying balance sheet of The Chestnut Associates, a limited partnership, CHFA Project #79-88-N, as of December 31, 2004, 2003 and 2002 and the related statements of operations, cash flows and the statement of changes in partners' capital for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I have conducted my audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the 2004, 2003 and 2002 financial statements referred to above present fairly, in all material respects, the financial position of The Chestnut Associates as of December 31, 2004, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, I have also issued a report dated February 23, 2005 on my consideration of The Chestnut Associates internal control structure and reports dated February 23, 2005 on its compliance with specific requirements applicable to major HUD programs, and specific requirements applicable to Affirmative Fair Housing. My audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary information included in the report is presented for the purposes of additional analysis and is not a required part of the financial statements of The Chestnut Associates, CHFA Project #79-88-N. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in my opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. Ronald Rienks Certified Public Accountant Sacramento, California February 23, 2005 THE KAPLAN PARTNERS LLP Certified Public Accountants 180 North LaSalle Street Suite 2505 Chicago, Illinois 60601 312-641-2555 INDEPENDENT AUDITOR'S REPORT TO THE PARTNERS OF COURT PLACE ASSOCIATES PEKIN, ILLINOIS We have audited the accompanying Balance Sheets of COURT PLACE ASSOCIATES (An Illinois Limited Partnership) (IHDA Project No. ML-154) as of December 31, 2004 and 2003, and the related Statements of Operations, Partners' Accumulated (Deficit), 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 U.S. generally accepted auditing standards and the standards applicable to financial audits contained in the Government Auditing Standards issued by the Comptroller General of the United States and the Illinois Housing Development Authority's "Financial Reporting and Audit Guidelines for Mortgagors of Multifamily Housing Developments." Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of COURT PLACE ASSOCIATES as of December 31, 2004 and 2003, and the results of its operations, the changes in partners' accumulated (deficit) and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Our audits were 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 as pages 21 through 30) is presented for 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, are fairly stated in all material respects in relation to the financial statements taken as a whole. In accordance with Government Auditing Standards and the Illinois Housing Development Authority's "Financial Reporting and Audit Guidelines for Mortgagors of Multifamily Housing Developments", we have also issued reports dated February 1, 2005, on our consideration of COURT PLACE ASSOCIATES internal control over financial reporting and on our tests of compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of those reports are to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial report or compliance. 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. The Kaplan Partners LLP February 1, 2005 Report of Independent Auditors Partners Frederick Heights Limited Partnership We have audited the accompanying balance sheet of Frederick Heights Limited Partnership as of December 31, 2004, and the related statements of income, changes in equity, and cash flows for the year then ended. These financial statements are the responsibility of the management of Frederick Heights Limited Partnership. 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 Frederick Heights Limited Partnership as of December 31, 2004, and the results of its operations and its cash flows for the year then ended, in conformity with auditing standards generally accepted in the United States of America. /S/Goodman & Company, L.L.P. McLean, Virginia March 8, 2005 Independent Auditors' Report To the Partners of Frederick Heights Limited Partnership We have audited the accompanying balance sheet of Frederick Heights Limited Partnership as of December 31, 2003, 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 Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Frederick Heights Limited Partnership as of December 31, 2003, and the results of its operations and its cash flows for the year then ended, in conformity with auditing standards 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 supplementary data included on pages 16 through 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 16, 2004 on our consideration of Frederick Heights Limited Partnership's internal controls and on its compliance with specific requirements applicable to major HUD programs, affirmative fair housing and laws and regulations applicable to the financial statements. Those reports are an integral part of the audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Reitberger, Pollekoff and Kozak, P.C. Vienna, Virginia January 16, 2004 Lead Auditor: Robert A. Kozak EIN: 54-1639552 REITBERGER POLLEKOFF & KOZAK. P.C. Certified Public accountants Independent Auditors Report To the Partners Lihue Associates c/o CR1, Inc. I 200 Rockville Pike Rockville, Maryland 20852 We have audited the accompanying balance sheet of Lihue Associates (a Washington limited partnership), USDA-RD Project No- 61-003-840880868 as of December 31, 2004, and the related statements of operations, changes in partners deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnerships 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 Lihue Associates USDA-RD Project No. 61-003-840880868 as of December 31, 2004, and the results of its operations, changes in partners deficit, and its 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, we have also issued a report dated January 25, 2005 on our consideration of Lihue Associates' internal control structure and a report dated January 25, 2005, on its compliance with laws and regulations. Those reports are an integral part of the 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/ Reitberger, Pollekoff & Kozak, P.C. Vienna, Virginia January 25, 2005 1950 Old Gallows Road * Suite 440 * Vienna, Virginia 22182 Telephone: 703-506-9700 * Fax: 703-506-9707 Independent Auditors' Report To the Partners Lihue Associates c/o CRI, Inc. 11200 Rockville Pike Rockville, Maryland 20852 We have audited the accompanying balance sheet of Lihue Associates (a Washington limited partnership), USDA-RD Project No. 61-003-840880868 as of December 31, 2003, and the related statements of operations, 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 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 Lihue Associates USDA-RD Project No. 61-003-840880868 as of December 31, 2003, and the results of its operations, changes in partners' deficit, and its 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, we have also issued a report dated January 26, 2004 on our consideration of Lihue Associates' internal control structure and a report dated January 26, 2004, on its compliance with laws and regulations. Those reports are an integral part of the audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Reitberger, Pollekoff, and Kozak, P.C. Vienna, Virginia January 26, 2004 THE KAPLAN PARTNERS LLP Certified Public Accountants 180 North LaSalle Street Suite 2505 Chicago, Illinois 60601 312-641-2555 INDEPENDENT AUDITOR'S REPORT TO THE PARTNERS OF LINDEN PLACE ASSOCIATES We have audited the accompanying Balance Sheets of LINDEN PLACE ASSOCIATES (An Illinois Limited Partnership) (IHDA Project No. ML-154) as of December 31, 2004 and 2003, and the related Statements of Operations, Partners' Capital (Accumulated Deficit), 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 U.S. generally accepted auditing standards and the standards applicable to financial audits contained in the Government Auditing Standards issued by the Comptroller General of the United States and the Illinois Housing Development Authority's "Financial Reporting and Audit Guidelines for Mortgagors of Multifamily Housing Developments." Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of LINDEN PLACE ASSOCIATES as of December 31, 2004 and 2003, and the results of its operations, the changes in partners' capital (accumulated deficit) and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Our audits were 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 as pages 22 to 31) is presented for 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, are fairly stated in all material respects in relation to the financial statements taken as a whole. In accordance with Government Auditing Standards and the Illinois Housing Development Authority's "Financial Reporting and Audit Guidelines for Mortgagors of Multifamily Housing Developments", we have also issued reports dated January 26, 2005, on our consideration of LINDEN PLACE ASSOCIATES internal control over financial reporting and on our tests of compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of those reports are to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. 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. The Kaplan Partners LLP January 26, 2005 DIEFENBACH o DELIO o KEARNEY & DEDIONISIO CERTIFIED PUBLIC ACCOUNTANTS Independent Auditors' Report To the Partners of Tandem Associates (A Limited Partnership) We have audited the accompanying balance sheets of Tandem Associates (a limited partnership), Project Number PHFA R-773-8F as of December 31, 2004 and 2003, and the related statements of income, equity from operations, changes in 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 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 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 Tandem Associates (a limited partnership), Project Number PHFA R-773-8F as of December 31, 2004 and 2003, and the results of its operations, changes in partners' capital, and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information shown on pages 13 to 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Tandem Associates. 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. In accordance with Government Auditing Standards, we have also issued a report dated January 25, 2005, on our consideration of Tandem Associates' (a limited partnership) internal control over financial reporting and our test of its compliance with certain provisions of laws, regulations, contracts and grants. This report is 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. DIEFENBACH DELIO KEARNEY & DeDIONISIO Erie, Pennsylvania January 25, 2005 COVER 7 filename7.htm Cover Letter

  CRI, Inc.
  The CRI Building
  11200 Rockville Pike
  Rockville, Maryland 20852
  (301) 468-9200

March 29, 2005

Securities and Exchange Commission
450 5th Street, N. W.
Washington, D.C. 20549
ATTN: Document Control

Registrant: Capital Realty Investors, LTD.

Commission File No.: 0-11149

To whom it may concern:

Attached is Registrant's annual report on Form 10-KSB for the year ended December 31, 2004.

	Sincerely,
	/s/Michael J. Tuszka
	Michael J. Tuszka Vice President and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer)

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