INVESTMENTS IN PARTNERSHIPS

As of June 30, 2013 and 2012 , the Partnership had limited partnership equity interests in three and four Local Partnerships, respectively, each of which owns an apartment complex.

A schedule of the apartment communities owned by the Local Partnerships at June 30, 2013 in which the Partnership is invested is provided below:



PROPERTY	CITY	STATE	UNITS
Northridge Park	Salinas	CA	104
Tradewinds	Traverse City	MI	122
Westport Village	Freeport	IL	121

Under the terms of the Partnership's investment in each Local Partnership, the Partnership was required to make capital contributions to the Local Partnerships. These contributions were payable in installments upon each Local Partnership achieving specified levels of construction and/or operations. At June 30, 2013 and 2012, all such capital contributions had been paid to the Local Partnerships.

a. Summarized financial information

Combined statements of operations for the three and four Local Partnerships in which the Partnership was invested as of June 30, 2013 and 2012, respectively, follow. The combined statements are compiled from information supplied by the management agent of the Local Partnership properties and are unaudited. The information for each of the periods is presented separately for those Local Partnerships which have investment basis (equity method), and for those Local Partnerships which have cumulative losses in excess of the amount of the Partnership's investments in those Local Partnerships (equity method suspended). Appended after the combined statements is information concerning the Partnership's share of income from partnerships related to cash distributions recorded as income, and related to the Partnership's share of income from Local Partnerships.




	COMBINED STATEMENTS OF OPERATIONS
	(Unaudited)
	For the six months ended
	June 30,
	2013								2012

	Equity Method			Suspended		Total			Equity Method		Suspended		Total

Number of Local Partnerships	1 (a)			2 (b)		3			1 (a)		3 (c)		4

Revenue
Rental	$	400,090		$	903,003	$	1,303,093		$	355,677	$	2,113,258	$	2,468,935
Other	9,572			45,527		55,099			73,221		106,427		179,648
Total revenue	409,662			948,530		1,358,192			428,898		2,219,685		2,648,583

Expenses:
Operating	401,185			692,556		1,093,741			361,143		1,167,770		1,528,913
Interest	—			93,418		93,418			—		312,370		312,370
Depreciation and
amortization	63,513			115,488		179,001			62,168		332,560		394,728
	464,698			901,462		1,366,160			423,311		1,812,700		2,236,011

Net (loss) income	$	(55,036	)	$	47,068	$	(7,968	)	$	5,587	$	406,985	$	412,572

Cash distribution	$	9,022		$	128,312	$	137,334		$	—	$	597,054	$	597,054

Cash distribution recorded as income	$	—		$	128,312	$	128,312		$	—	$	597,054	$	597,054

Partnership's share of Local
Partnership net (loss) income	(54,476		)	—		(54,476		)	5,531		—		5,531

Share of (loss) income from partnership	$(54,476)			$	128,312	$	73,836		$	5,531	$	597,054	$	602,585




	COMBINED STATEMENTS OF OPERATIONS
	(Unaudited)
		For the three months ended
		June 30,
		2013								2012

		Equity Method			Suspended		Total			Equity Method			Suspended		Total

Number of Local Partnerships		1 (a)			2 (b)		3			1 (a)			3 (c)		4

Revenue
Rental		$	203,193		$	903,003	$	1,106,196		$	162,859		$	1,065,718	$	1,228,577
Other		113			45,527		45,640			40,501			64,304		104,805
Total revenue		203,306			948,530		1,151,836			203,360			1,130,022		1,333,382

Expenses:
Operating		240,288			692,556		932,844			200,370			574,178		774,548
Interest		—			93,418		93,418			—			156,185		156,185
Depreciation and
amortization		31,776			115,488		147,264			31,084			166,280		197,364
Total expenses		272,064			901,462		1,173,526			231,454			896,643		1,128,097

Net (loss) income		$	(68,758	)	$	47,068	$	(21,690	)	$	(28,094	)	$	233,379	$	205,285

Cash distribution		$	—		$	103,223	$	103,223		$	—		$	—	$	—

Cash distribution recorded as income		$	—		$	103,223	$	103,223		$	—		$	—	$	—

Partnership's share of Local
Partnership net loss		(68,058		)	—		(68,058		)	(27,808		)	—		(27,808		)

Share of (loss) income from partnership		$	(68,058	)	$	103,223	$	35,165		$	(27,808	)	$	—	$	(27,808	)



(a) Tradewinds
(b) Northridge;Westport Village
(c) Fairway Park;Northridge;Westport Village

Cash distributions received from Local Partnerships which have investment basis (equity method) are recorded as a reduction of investments in partnerships and as cash receipts on the respective condensed consolidated balance sheets. Cash distributions received from Local Partnerships which have cumulative losses in excess of the amount of the Partnership's investments in those Local Partnerships (equity method suspended) are recorded as share of income from partnerships on the respective condensed consolidated statements of operations and accumulated losses and as cash receipts on the respective condensed consolidated balance sheets. As of June 30, 2013 and 2012, the Partnership's share of cumulative losses to date for two of the three and for three of the four Local Partnerships, respectively, exceeded the amount of the Partnership's investments in those Local Partnerships by $1,017,306 and $1,042,753, respectively. As 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 condensed consolidated financial statements.

b. Due on investments in partnerships and accrued interest payable

Purchase money notes

The Partnership executed certain purchase money notes payable as part of the acquisition of its equity interests in certain Local Partnerships. The notes are nonrecourse notes secured by a security interest in the Partnership's interests in the respective Local Partnership. The Partnership's obligations with respect to its investments in Local Partnerships, in the form of nonrecourse purchase money notes having an aggregate principal balance of $1,340,000 plus aggregate accrued interest of $7,988,161 as of June 30, 2013, are payable in full upon the earliest of: (i) sale or refinancing of the respective Local Partnership's rental property; (ii) payment in full of the respective Local Partnership's permanent loan; or (iii) maturity.

The purchase money note related to the following property matured and has not been paid or extended as of June 30, 2013.



Property	Principal	Accrued Interest as of June 30, 2013	Maturity
Westport Village (1)	$840,000	$3,224,525	9/1/1999

(1) In receivership.

The remaining purchase money note related to Northridge Park matures in 2025. On March 4, 2013, the Local Partnership entered into a purchase and sale agreement to sell Northridge Park. The Partnership is negotiating a discounted payoff of this purchase money note. As there can be no assurance as to the ultimate timing of the sale, no adjustments have been made to the purchase money note balance at June 30, 2013.

As of June 30, 2013, principal and accrued interest balances were $500,000 and $4,763,636, respectively.

The purchase money notes, which are nonrecourse to the Partnership, are generally secured by the Partnership's interest in the respective Local Partnerships. There is no assurance that the underlying properties will have sufficient appreciation and equity to enable the Partnership to pay the purchase money notes' principal and accrued interest when due. If a purchase money note is not paid in accordance with its terms, the Partnership will either have to renegotiate the terms of repayment or risk losing its partnership interest in the respective Local Partnership. In the event that a purchase money note remains unpaid upon maturity, the noteholder may have the right to foreclose on the Partnership's interest in the related Local Partnership.

The Partnership's inability to pay certain of the purchase money notes principal and accrued interest balances when due, and the resulting uncertainty regarding the Partnership's continued ownership interest in the related Local Partnerships, does not adversely impact the Partnership's financial condition because the purchase money notes are nonrecourse and secured solely by the Partnership's interest in the related Local Partnerships. Therefore, should the investment in any of the Local Partnerships with matured or maturing purchase money notes not produce sufficient value to satisfy the related purchase money notes, the Partnership's exposure to loss is limited because the amount of the nonrecourse indebtedness of each of the matured or maturing purchase money notes exceeds the carrying amount of the investment in each of the related Local Partnerships. Thus, even a complete loss of the Partnership's interest in these Local Partnerships would not have a material adverse impact on the financial condition of the Partnership.

Interest expense on the Partnership's purchase money notes for the three and six month periods ended June 30, 2013 and 2012 was $132,370 and $264,740, respectively, and $124,569 and $249,138, respectively. The accrued interest payable on these purchase money notes of $7,988,161 and $7,723,421 as of June 30, 2013 and December 31, 2012, respectively, is due upon the earliest of: (i) sale or refinancing of the respective Local Partnership's rental property; (ii) payment in full of the respective Local Partnerships' permanent loans; or (iii) maturity.

c. Pending sales

Westport Village

The mortgage loan encumbering the property associated with the Partnership's investment in Westport Village is in default. As of June 30, 2013, Westport Village was in receivership pending a foreclosure sale of the property. The Partnership's basis in the Local Partnership totaled $0 at both June 30, 2013 and December 31, 2012. There can be no assurance as to the ultimate timing of the foreclosure sale and/or transfer of ownership of the property.

Northridge Park

On March 4, 2013, a purchase and sale agreement was entered into between the Local Partnership that owns Northridge Park and a third party to sell the property for $10,250,000. The Partnership's basis in this Local Partnership at both June 30, 2013 and December 31, 2012 was $0.

The Partnership has been notified by the Local Partner that the contract for the sale of the Northridge Park property has been amended to provide the buyer additional time to close. It is anticipated that the sale of the Northridge Park property will close in September 2013. However, there can be no assurance that the sale will close by that time or at all.

d. Completed sales

Fairway Park

On October 26, 2012, a purchase and sale agreement was entered into between the Partnership and Morey Acquisition LLC to sell its limited partner interest in the local Partnership that owns the Fairway Park property for $8,710,000. On December 20, 2012, the sale was completed and the Partnership received proceeds of $8,710,000. The Partnership's basis in this Local Partnership at December 31, 2012 was $0. Net acquisition fees and property purchase costs of $8,294 and $4,130, respectively, were written off and netted against the gain on disposition of investment in partnerships during the three months ended December 31, 2012.

From the sale proceeds, the Partnership incurred and paid CRI, Inc. a fee in the amount of $415,560 for services provided in connection with the sale of the limited partnership interest in the Local Partnership. The net gain incurred on the sale was $8,282,016 for the year ended December 31, 2012.

Mary Allen West Tower

On October 13, 2011, the Mary Allen West Tower property was sold. The investment balance at December 31, 2011 was $4,767,709. This represents the distribution the partnership received from the sale of the property . The distribution proceeds were received on February 22, 2012.

From the sale proceeds, the partnership paid CRI, Inc. a fee in the amount of $70,000 for services provided in connection with the sale of the Mary Allen West Tower property. The fee was paid during the quarter ended June 30, 2012.

e. Investment reconciliation

The following is a reconciliation of investments in partnerships at June 30, 2013:



Investments in partnerships at December 31, 2012	$	1,246,665

Share of income from partnerships	73,836
Distribution from Local Partnerships	(137,334		)

Investments in partnerships at June 30, 2013	$	1,183,167