INVESTMENTS IN PARTNERSHIPS

As of September 30, 2013 and 2012, the Partnership had limited partnership equity interests in three Local Partnerships owning two apartment complexes and four Local Partnerships which own four apartment complexes, respectively.

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



PROPERTY	CITY	STATE	UNITS
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 September 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 September 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 nine months ended
	September 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	$	601,264		$	1,218,727	$	1,819,991		$	533,516	$	3,188,620	$	3,722,136
Other	13,047			68,245		81,292			109,831		173,733		283,564
Total revenue	614,311			1,286,972		1,901,283			643,347		3,362,353		4,005,700

Expenses:
Operating	583,102			925,376		1,508,478			541,715		1,746,770		2,288,485
Interest	—			123,084		123,084			—		468,555		468,555
Depreciation and
amortization	95,270			158,201		253,471			93,251		498,839		592,090
	678,372			1,206,661		1,885,033			634,966		2,714,164		3,349,130

Net (loss) income	$	(64,061	)	$	80,311	$	16,250		$	8,381	$	648,189	$	656,570

Cash distribution	$	9,021		$	128,312	$	137,333		$	—	$	774,234	$	774,234

Cash distribution recorded as income	$	—		$	128,312	$	128,312		$	—	$	774,234	$	774,234

Partnership's share of Local
Partnership net (loss) income	(63,409		)	—		(63,409		)	8,296		—		8,296

Share of (loss) income from partnership	$	(63,409	)	$	128,312	$	64,903		$	8,296	$	774,234	$	782,530




	COMBINED STATEMENTS OF OPERATIONS
	(Unaudited)
		For the three months ended
		September 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		$	201,175		$	315,723	$	516,898		$	177,839	$	1,075,362	$	1,253,201
Other		3,474			22,718		26,192			36,611		67,306		103,917
Total revenue		204,649			338,441		543,090			214,450		1,142,668		1,357,118

Expenses:
Operating		181,917			232,820		414,737			180,572		579,000		759,572
Interest		—			29,666		29,666			—		156,185		156,185
Depreciation and
amortization		31,757			42,713		74,470			31,083		166,280		197,363
Total expenses		213,674			305,199		518,873			211,655		901,465		1,113,120

Net (loss) income		$	(9,025	)	$	33,242	$	24,217		$	2,795	$	241,203	$	243,998

Cash distribution		$	—		$	—	$	—		$	—	$	177,180	$	177,180

Cash distribution recorded as income		$	—		$	—	$	—		$	—	$	177,180	$	177,180

Partnership's share of Local
Partnership net (loss) income		(8,933		)	—		(8,933		)	2,765		—		2,765

Share of (loss) income from partnership		$	(8,933	)	$	—	$	(8,933	)	$	2,765	$	177,180	$	179,945



(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 September 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 $790,676 and $806,470, 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 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 September 30, 2013.



Property	Principal	Accrued Interest as of September 30, 2013	Maturity
Westport Village (1)	$840,000	$3,253,604	9/1/1999

(1) In receivership.

The purchase money note, which is nonrecourse to the Partnership, is generally secured by the Partnership's interest in the respective Local Partnership. There is no assurance that the underlying property will have sufficient appreciation and equity to enable the Partnership to pay the purchase money note's 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.

The purchase money note, related to Northridge Park, had a maturity date occuring in 2025. On March 4, 2013, the Local Partnership entered into a purchase and sale agreement to sell Northridge Park. Northridge Park sold on August 26, 2013. The Partnership negotiated a discounted payoff amount with the note holder and the purchase money note and related interest was satisfied concurrent with the sale.

As of the date of the sale, principal and accrued interest balances were $500,000 and $4,826,944, respectively. The Partnership's negotiated payoff amount was $3,485,055, which was sent to the note holder concurrent with the sale date of the Northridge Park property. The difference between the payoff amount and the principal and related accrued interest at the time of sale was $1,841,899. This amount was recorded as forgiveness of debt and is included in forgiveness of debt line item on the accompanying condensed consolidated statements of operations and accumulated losses.

Interest expense on the Partnership's purchase money notes for the three and nine month periods ended September 30, 2013 and 2012 was $92,387 and $357,127, respectively, and $124,569 and $373,707, respectively. The accrued interest payable on these purchase money notes of $3,253,604 and $7,723,421 as of September 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 September 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 September 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.

Tradewinds

On September 10, 2013, the Partnership entered into a sales agreement to sell the limited partner interest in Tradewinds West Limited Dividend Housing Association Limited Partnership, the Local Partnership that owns the property, Tradewinds, for $399,835. The sale closed on October 22, 2013 and the Partnership received $399,835 for its limited partner interest. At September 30, 2013, the investment basis in Tradewinds was $1,174,235, resulting in an impairment loss of $774,400. This amount is reflected in the accompanying condensed consolidated statements of operations as an impairment loss for the nine and three months ended September 30, 2013.

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 year 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 September 30, 2012.

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 property sold on August 26, 2013. The Partnership's basis in this Local Partnership at both the date of sale and December 31, 2012 was $0. At September 30, 2013, the Local Partnership is in the process of winding up and the Partnership still owns its limited partner interest in the Local Partnership.

As a result of the sale, the Partnership was entitled to $5,891,674 of proceeds resulting from the sale of the property. Of this amount , actual cash received was $2,406,619. The remaining amount was used to pay off the purchase money note (see Note 3b). Net unamortized acquisition fees and property purchase costs of $13,654 were written off and a disposition fee of $205,000 was paid to the Managing General Partner. Both of these amounts are included in the gain on disposition of property line item on the accompanying condensed statements of operations and accumulated losses.

During the three and nine months ended September 30, 2013, a gain of $5,673,020 was recorded as a result of the sale of Northridge Park.

e. Investment reconciliation

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



Investments in partnerships at December 31, 2012	$	1,246,665
Impairment loss	(774,400		)
Share of income from partnerships	64,903
Distribution from Local Partnerships	(137,333		)

Investments in partnerships at September 30, 2013	$	399,835