Common use of Outlook Clause in Contracts

Outlook. We continue to make progress toward the disposition of the Fund's properties during the next two years. Some of you have asked why we are beginning to sell now, just as the market has been exhibiting signs of strengthening. Our primary goal is to take advantage of rising property values as the Fund nears the end of its planned lifespan. As real estate markets have been improving during the past few years, we have used the opportunity to capture higher prices for investors. As usually happens in improving markets, the turnaround in real estate is broadly encouraging an increasing supply of new properties, which could eventually lead to an oversupply and softer prices down the road. This is normal as the real estate cycle runs its course. While we do not expect a recession in either real estate or the general economy to emerge in the near future, the country's economic expansion is almost six years old and is approaching an advanced stage, by historical measures. It is possible that by selling Fund properties during the next few years, we might miss some further advances in real estate values. However, with prices currently rising due to strong tenant and investor demand, supply growing in many markets, and the Fund nearing the end of its planned lifespan, we believe it is prudent to sell into that strength while prices are on the upswing. Sincerely, ▇▇▇▇▇ ▇. ▇▇▇▇▇ Chairman February 7, 1997 REAL ESTATE HOLDINGS December 31, 1996 (In thousands) Date Carrying Property Name Type and Location Acquired Amount _______________ _____________ _________ ________ Atlantic Industrial 10/86 $ 3,416 Gwinnett Co., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Industrial 11/86 3,407 Anaheim, California Oakbrook Corners Business Park 11/86 5,098 Gwinnett Co., Georgia Baseline Business Park 12/86 3,884 Tempe, Arizona Business Plaza Office 12/86 3,638 Ft. Lauderdale, Florida Tierrasanta Business Park 4/88 1,727 San Diego, California _______ 21,170 Held for Sale AMCC R&D/Office 9/87 7,772 San Diego, California ▇▇▇▇▇▇ ▇▇▇▇ Industrial 11/87 3,316 Elk Grove, Illinois ▇▇▇▇▇ Avenue Industrial 11/87 2,257 Wheeling, Illinois South Point Retail 4/88 1,515 Tempe, Arizona _______ $ 36,030 _______ _______ CONSOLIDATED BALANCE SHEETS (In thousands) December 31,December 31, 1996 1995 _________ _________ Assets

Outlook. We continue to make progress toward the disposition of the Fund's properties during the next two years. Some of you have asked why we are beginning to sell now, just as the market has been exhibiting signs of strengthening. Our primary goal is to take advantage of rising property values as the Fund nears the end of its planned lifespan. As real estate markets have been improving during the past few years, we have used the opportunity to capture higher prices for investors. As usually happens in improving markets, the turnaround in real estate is broadly encouraging an increasing supply of new properties, which could eventually lead to an oversupply and softer prices down the road. This is normal as the real estate cycle runs its course. While we do not expect a recession in either real estate or the general economy to emerge in the near future, the country's economic expansion is almost six years old and is approaching an advanced stage, by historical measures. It is possible that by selling Fund properties during the next few years, we might miss some further advances in real estate values. However, with prices currently rising due to strong tenant and investor demand, supply growing in many markets, and the Fund nearing the end of its planned lifespan, we believe it is prudent to sell into that strength while prices are on the upswing. Sincerely, James S. Riepe Cha▇▇▇▇▇ ▇. ▇▇▇▇▇ Chairman February ▇▇y 7, 1997 REAL ESTATE HOLDINGS December 31, 1996 (In thousands) Date Carrying Property Name Type and Location Acquired Amount _______________ _______________ _________ ________ Atlantic Industrial 10/86 $ 3,416 Gwinnett Co., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Industrial 11/86 3,407 AnaheimScripps Terrace Business Park 2/88 $2,185 San Diego, California Oakbrook Corners Business Park 11/86 5,098 Gwinnett Co., Georgia Baseline Business Park 12/86 3,884 Tempe, Arizona Business Plaza Office 12/86 3,638 Ft. Lauderdale, Florida Tierrasanta Business Park 4/88 1,727 San Diego, California Clark Avenue R&D/▇▇▇▇ce 10/88 2,597 King of Prussia, Pennsylvania River Run Retail 6/89 7,515 Miramar, Florida Westbrook Commons Ret▇▇▇ 12/90 4,911 Westchester, Illinois _______ 21,170 18,935 Held for Sale AMCC R&D/Office 9/87 7,772 San DiegoWood Dale Industri▇▇ 9/88 2,969 Wood Dale, California ▇▇▇Illinois Winnetka Industrial 3/88 4,082 Crystal, Minnesota Riverview Industrial 12/88 3,220 St. Paul, Minnesota So▇▇▇ ▇▇▇▇ Industrial 11/87 3,316 Elk Grove, Illinois ▇▇▇▇▇ Avenue Industrial 11/87 2,257 Wheeling, Illinois South Point Retail 4/88 1,515 Tempe, Arizona _______ $ 36,030 $30,721 _______ _______ CONSOLIDATED BALANCE SHEETS (In thousands) December 31,December 31, 1996 1995 _______________________ Assets Real Estate Property Investments Land. . . . . . . . . . . . . . . . $ 6,882 $ 12,181 Buildings and Improvements. . . . . 13,112 33,139 ________ _________ Assets