MCNEIL REAL ESTATE FUND XI LTD, SC 14D1/A, 1996-09-26

MCNEIL REAL ESTATE FUND XI LTD
SC 14D1/A, 1996-09-26
OPERATORS OF NONRESIDENTIAL BUILDINGS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14D-1

TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
AND
AMENDMENT NO. 6 TO SCHEDULE 13D

McNEIL REAL ESTATE FUND XI, LTD.
(NAME OF SUBJECT COMPANY [ISSUER])

HIGH RIVER LIMITED PARTNERSHIP
CARL C. ICAHN
(BIDDERS)

LIMITED PARTNERSHIP UNITS
(TITLE OF CLASS OF SECURITIES)

582568 30 9
(CUSIP NUMBER OF CLASS OF SECURITIES)

KEITH L. SCHAITKIN, ESQ.
GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN
114 WEST 47TH STREET, 20TH FLOOR
NEW YORK, NEW YORK 10036
(212) 626-0800

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)

Calculation of Filing Fee

- --------------------------------------------------------------------------------
Transaction Valuation*: $15,693,287 Amount of filing fee: $3,139
- --------------------------------------------------------------------------------

* For purposes of calculating the filing fee only. This amount assumes the
purchase of 150,175 Units of the Partnership (consisting of all outstanding
Units other than Units owned by the Bidder and its affiliate) at $104.50 in cash
per Unit. The amount of the filing fee, calculated in accordance with Rule
0-11(d) under the Securities Exchange Act of 1934, as amended, equals 1/50th of
one percent of the aggregate of the cash offered by the bidder.

[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

Amount Previously Paid: $3,139.00
Form or Registration No.: Schedule 14D-1
Filing Party: High River Limited Partnership, Riverdale LLC,
Unicorn Associates Corporation and Carl C. Icahn
Date Filed: September 20, 1996

* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
===============================================================================

<PAGE>

AMENDMENT NO. 1 TO SCHEDULE 14D-1

This Amendment No. 1 amends the Tender Offer Statement on Schedule 14D-1
filed with the Commission on September 20, 1996 (the "Schedule 14D-1") by High
River Limited Partnership, a Delaware limited partnership (the "Purchaser"),
Riverdale LLC, a New York limited liability company, Unicorn Associates
Corporation, a New York corporation ("Unicorn"), and Carl C. Icahn
(collectively, the "Reporting Persons") relating to the tender offer by the
Purchaser to purchase any and all limited partnership units (the "Units") of
McNeil Real Estate Fund XI, Ltd., a California limited partnership, other than
Units owned by the Purchaser and Unicorn, at a purchase price of $104.50 per
Unit, net to the seller in cash, without interest, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated September 20, 1996 (the
"Offer to Purchase") and in the related Assignment of Partnership Interest, as
each may be supplemented or amended from time to time (which together constitute
the "Offer"), to include the information set forth below. This Amendment also
constitutes Amendment No. 6 to the Schedule 13D filed by the Reporting Persons
on November 13, 1995, as amended by Amendment Nos. 1 through 5 thereto filed on
November 15, 1995, January 16, 1996, May 24, 1996, August 5, 1996 and September
20, 1996, respectively. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Schedule 14D-1 and the Offer to
Purchase.

ITEM 10. ADDITIONAL INFORMATION

Item 10(f) is hereby supplemented and amended as follows:

The information set forth in the Offer to Purchase, dated September 20,
1996, as amended through September 25, 1996, a copy of which is attached hereto
as Exhibit 22, is incorporated herein by reference.

ITEM 11. MATERIAL TO BE FILED AS EXHIBITS

Item 11 is hereby supplemented and amended by adding the following:

<PAGE>

(a)

Exhibit 22. Offer to Purchase, dated September 20, 1996, as amended through
September 25, 1996
(filed herewith)

(c)

Exhibit 23. Power of Attorney of Carl C. Icahn, dated September 25, 1996,
appointing Theodore Altman as attorney-in-fact for purposes of
executing Amendments to the Schedule 14D-1.
(filed herewith)

Item 11 is hereby further amended as follows:

The description of Exhibit 8 in Item 11 of the Schedule 14D-1 is hereby
amended and restated in its entirety to read as follows:

Complaint filed by McNeil Pacific Investors Fund 1972, McNeil Real Estate
Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X,
Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd.,
McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil
Real Estate Fund XXIV, L.P., and McNeil Real Estate Fund XXV, L.P. as
plaintiffs, against the Purchaser and certain of its affiliates, as
defendants (without exhibits)

The description of Exhibit 19 in Item 11 of the Schedule 14D-1 (and in the
Exhibit Index thereto) is hereby amended and restated to read in its entirety as
follows:

Defendants' Answer to Complaint for Declaratory and Injunctive Relief filed
by Purchaser and certain of its affiliates, as defendants, against McNeil
Pacific Investors Fund 1972, McNeil Real Estate Fund V, Ltd., McNeil Real
Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate
Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund
XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund, XXIV,
L.P., and McNeil Real Estate Fund XXV, L.P., as plaintiffs

The description of Exhibit 20 in Item 11 of the Schedule 14D-1 (and in the
Exhibit Index thereto) is hereby amended and restated to read in its entirety as
follows:

Counterclaim of Purchaser for Injunctive and Other Relief re: Denial of
Access to a Partner to Limited Partnership Records filed by Purchaser and
certain of its affiliates, as defendants, against McNeil Pacific Investors
Fund 1972, McNeil Real Estate Fund V,

<PAGE>

Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd.,
McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil
Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXIV, L.P., and McNeil Real Estate Fund XXV, L.P., as
plaintiffs (without exhibits)

The description of Exhibit 21 in Item 11 of the Schedule 14D-1 (and in the
Exhibit Index thereto) is hereby amended and restated to read in its entirety as
follows:

Plaintiffs/Counter-Defendants' Answer to Counterclaim of Purchaser for
Injunctive and Other Relief filed by McNeil Pacific Investors Fund 1972,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd.,
McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil
Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real
Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., and McNeil Real
Estate Fund XXV, L.P., as plaintiffs, against Purchaser and certain of its
affiliates

<PAGE>

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

Dated: September 25, 1996

HIGH RIVER LIMITED PARTNERSHIP

By: RIVERDALE LLC, General Partner

By: /s/ ROBERT J. MITCHELL
------------------------------------
Robert J. Mitchell
Title: Vice President and Treasurer/Manager

RIVERDALE LLC

By: /s/ ROBERT J. MITCHELL
------------------------------------
Robert J. Mitchell
Title: Vice President and Treasurer/Manager

/s/ THEODORE ALTMAN
------------------------------------
Carl C. Icahn
By: Theodore Altman as Attorney-in-fact

UNICORN ASSOCIATES CORPORATION

By: /s/ EDWARD MATTNER
------------------------------------
Edward Mattner
Title: President

[Signature Page for Amendment No. 1 to McNeil Real Estate Fund
XI, Ltd. Schedule 14D-1 and Amendment No. 6 to Schedule 13D]

<PAGE>

EXHIBIT INDEX

Exhibit 22. Offer to Purchase, dated September 20, 1996, as amended through
September 25, 1996

Exhibit 23. Power of Attorney of Carl C. Icahn, dated September 25, 1996,
appointing Theodore Altman as attorney-in-fact for purposes of
executing amendments to the Schedule 14D-1

OFFER TO PURCHASE FOR CASH
ANY AND ALL UNITS OF LIMITED PARTNERSHIP INTEREST
IN
MCNEIL REAL ESTATE FUND XI, LTD.
FOR
$104.50 NET PER UNIT
BY
HIGH RIVER LIMITED PARTNERSHIP

- --------------------------------------------------------------------------------
THE OFFER AND RELATED WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON OCTOBER 18, 1996,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

IMPORTANT

HIGH RIVER LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Purchaser"), is offering to purchase any and all of the outstanding Units of
limited partnership interest ("Units") in McNEIL REAL ESTATE FUND XI, LTD., a
California limited partnership (the "Partnership"), at a purchase price of
$104.50 per Unit (the "Purchase Price"), net to the Seller in cash, without
interest, less the amount of distributions per unit, if any, declared or made by
the Partnership between August 15, 1996 and the date of payment of the Purchase
Price by the Purchaser, upon the terms and subject to the conditions set forth
in the Offer to Purchase, as it may be supplemented or amended from time to time
(the "Offer to Purchase"), and in the related Assignment of Partnership
Interest, including the instructions thereto, as it may be supplemented or
amended from time to time (the "Assignment of Partnership Interest" which,
collectively with the Offer to Purchase, constitute the "Offer"). LIMITED
PARTNERS WHO TENDER THEIR UNITS IN RESPONSE TO THE OFFER WILL NOT BE OBLIGATED
TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES. Because Carl C. Icahn
controls the Purchaser, he may be deemed to be a "Co-bidder" with the Purchaser.

Any holder of Units (each, a "Limited Partner") desiring to tender Units
should complete and sign the Assignment of Partnership Interest or a facsimile
thereof in accordance with the instructions in the Assignment of Partnership
Interest and mail or deliver the signed Assignment of Partnership Interest and
the associated certificates of beneficial interest in the Partnership (the
"Certificates") to the Depositary (as defined below). A Limited Partner may
tender any or all of the Units owned by that Limited Partner, provided, however,
that in order for a tender to be valid, the tender must satisfy the minimum
units requirements (the "Minimum Units Requirements") of the Partnership's
partnership agreement (the "Partnership Agreement"). See Section 3 of the Offer
to Purchase. For convenience, the relevant portions of the Partnership Agreement
are set forth in Exhibit A to this Offer.

(Continued on following page)

----------

For More Information or for Further Assistance, Please Call the Information
Agent:

BEACON HILL PARTNERS, INC.
(212) 843-8500 (COLLECT)
OR
(800) 253-3814 (TOLL FREE)

September 20, 1996,
as amended through
September 25, 1996

<PAGE>

Limited Partners are urged to consider the following factors:

The Purchaser is making the Offer with a view to making a profit.
Accordingly, there is a conflict between the desire of the Purchaser to
purchase Units at the lowest possible price and the desire of the Limited
Partners to sell their Units at the highest possible price.

o The Purchase Price represents 75% of the liquidation value per Unit, and
68% of the net asset value per Unit, in each case, as estimated by the
Purchaser. While the Purchaser believes that the actual current value of a
Unit may be substantially less than its estimate of liquidation value,
there is a substantial likelihood that the value realizable in an orderly
liquidation could be greater than the estimated liquidation value. The
Purchaser's estimate of liquidation value was based predominantly on
publicly available information relating to the Partnership and its
properties in the Partnership's Form 10-K for the fiscal year ended
December 31, 1995 (the "Form 10-K") and its Form 10-Q for the period ended
June 30, 1996 and, to a lesser extent, on the non-public Due Diligence
Information (as hereinafter defined) provided to the Purchaser in 1995. The
Purchaser's calculations are based on rough estimates and the values
resulting therefrom may not be indicative of actual values to any extent.
The Purchaser has not conducted any appraisal of the Partnership's
properties and has no independent basis whatsoever for determining the
accuracy or completeness of the Partnership's publicly filed financial
information or the Due Diligence Information. See Section 13 of the Offer
to Purchase. No representation is made by the Purchaser or any affiliate of
the Purchaser with respect to the fairness of the Purchase Price.

o The Purchaser (together with an affiliate) currently owns approximately
6.0% of the outstanding Units and may thereby be in a position to influence
voting decisions with respect to the partnership, including, without
limitation, decisions concerning amendments to the Partnership Agreement
and removal and replacement of the Partnership's General Partner. The
acquisition of additional Units pursuant to the Offer would enhance such
voting influence. As a result (i) those who remain Limited Partners after
the expiration of the Offer could be prevented from taking action they
desire but that the Purchaser opposes and (ii) the Purchaser may be able to
take action desired by the Purchaser but opposed by such remaining Limited
Partners. Generally, however, voting decisions other than certain decisions
concerning the removal and substitution of the Partnership's General
Partner require the consent of the Partnership's General Partner prior to
effectuation. Further, to the extent valid, Reorganization Transactions
require Supermajority Vote (as those terms are defined in the Partnership
Agreement) and the consent of the Partnership's general partner prior to
effectuation. See Section 10 of the Offer to Purchase.

o The terms of the Partnership Agreement require the Partnership's general
partner to begin to liquidate the Partnership's properties no later than
August 6, 1998, and to use commercially reasonable efforts to liquidate and
terminate the Partnership by December 31, 1999. If such a liquidation were
to occur, Limited Partners who sell their Units to the Purchaser pursuant
to the Offer will not participate in any such liquidation, which may be at
a price higher than the Purchase Price. See "Introduction" and Section 9 of
the Offer to Purchase.

o The Purchaser may seek to remove the Partnership's general partner and/or
its property manager, McNeil Real Estate Management, Inc. ("McREMI") (which
is an affiliate of the Partnership's general partner). Such removal may
require the Partnership to pay a fee and other payments to the
Partnership's general partner and/or its affiliates (including McREMI) and
may result in acceleration of certain of the Partnership's debt obligations
and/or the Partnership's incurrence of expenses pursuant to provisions of
such debt obligations, which may have an adverse effect on the Partnership.
See "Introduction" and Section 8 of the Offer to Purchase.

o As discussed in Section 6 of the Offer to Purchase, the sale of 50 percent
or more of the Units in the partnership over a period of twelve months will
result in the termination of the partnership for federal income tax
purposes. Such a termination would result in lower depreciation deductions
to the Partnership for the next few years. Accordingly, it is possible that
the acquisition of Units pursuant to the Offer, when combined with other
transfers within twelve months, will result in a termination of the
partnership for income tax purposes. In such a case, non-tendering Limited
Partners may, depending on their individual circumstances, have a greater
tax liability with respect to the partnership than they would have had in
the absence of a termination. See Section 6 of the Offer to Purchase.

Questions and requests for assistance or for additional copies of the Offer
to Purchase and the Assignment of Partnership Interest may be directed to the
Information Agent (as defined below) at the address and telephone number set
forth on the front and back covers of the Offer to Purchase. No soliciting
dealer fees or other payments to brokers for tenders are being paid by the
Purchaser.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.

<PAGE>

TABLE OF CONTENTS

PAGE
----
INTRODUCTION ............................................................ 1
THE OFFER ............................................................... 3
Section 1. Terms of the Offer; Expiration Date ...................... 3
Section 2. Acceptance for Payment and Payment for Units ............. 3
Section 3. Procedure for Tendering Units ............................ 4
Section 4. Withdrawal Rights ........................................ 5
Section 5. Extension of Tender Period; Termination; Amendment ....... 6
Section 6. Certain Federal Income Tax Matters ....................... 6
Section 7. Effects of the Offer ..................................... 8
Section 8. Future Plans of the Purchaser ............................ 9
Section 9. Certain Information Concerning the Partnership ........... 10
Section 10. Voting by the Purchaser .................................. 15
Section 11. Information Concerning the Purchaser and
Certain Affiliates of the Purchaser .................... 16
Section 12. Source of Funds .......................................... 19
Section 13. Background of the Offer .................................. 19
Section 14. Conditions of the Offer .................................. 22
Section 15. Certain Legal Matters .................................... 23
Section 16. Fees and Expenses ........................................ 24

SCHEDULE I -- Information with respect to the executive
officers/managers and the controlling member
of the general partner of the Purchaser and
the controlling stockholder and sole director
and the executive officer of Unicorn
Associates Corporation. .................................. I-1

EXHIBIT A -- Provisions of the Partnership Agreement relating
to the Minimum Units Requirements. ....................... A-1

i
<PAGE>

TO THE LIMITED PARTNERS OF
MCNEIL REAL ESTATE FUND XI, LTD.

INTRODUCTION

High River Limited Partnership hereby offers to purchase any and all Units
at the Purchase Price set forth above, net to the Seller in cash, without
interest, less the amount of distributions per unit, if any, declared or made by
the partnership between August 15, 1996 and the date of payment of the Purchase
Price by the Purchaser, upon the terms and subject to the conditions set forth
in the Offer. Limited Partners who tender their Units in response to the Offer
will not be obligated to pay any commissions or Partnership transfer fees. The
Purchaser has retained Beacon Hill Partners, Inc. to act as Information Agent
(the "Information Agent") and IBJ Schroder Bank & Trust Company to act as
Depositary (the "Depositary") in connection with the Offer. The Purchaser will
pay all charges and expenses in connection with the services of the Information
Agent and the Depositary. The Offer is not conditioned on any minimum number of
Units being tendered. Subject to the Minimum Units Requirements, a Limited
Partner may tender any or all of the Units owned by that Limited Partner.
Notwithstanding any provision contained in the Offer to Purchase or any related
document, under no circumstances will the Purchaser be required to accept any
Units the transfer of which to the Purchaser would be prohibited by the
Partnership Agreement or any regulation or procedure adopted thereunder.

Some Factors To Be Considered By Limited Partners. In considering the
Offer, Limited Partners may wish to consider the following:

o The Purchaser is making the Offer with a view to making a profit.
Accordingly, there is a conflict between the desire of the Purchaser to
purchase Units at the lowest possible price and the desire of the Limited
Partners to sell their Units at the highest possible price.

o The Purchaser (together with an affiliate) currently owns approximately
6.0% of the outstanding Units and may thereby be in a position to influence
voting decisions with respect to the Partnership, including, without
limitation, decisions concerning amendments to the Partnership Agreement
and removal and replacement of the Partnership's general partner. The
acquisition of additional Units pursuant to the Offer would enhance such
voting influence. As a result (i) those who remain Limited Partners after
the expiration of the Offer could be prevented from taking action they
desire but that the Purchaser opposes and (ii) the Purchaser may be able to
take action desired by the Purchaser which may be opposed by, and which may
not be in the best interests of, such remaining Limited Partners.
Generally, however, voting decisions other than certain decisions
concerning the removal and substitution of the Partnership's general
partner require the consent of the Partnership's general partner prior to
effectuation. Further, to the extent valid, Reorganization Transactions
require a Supermajority Vote (as those terms are defined in the Partnership
Agreement) and the Consent of the Partnership's General Partner prior to
effectuation.

o The terms of the Partnership Agreement require the Partnership's general
partner to begin to liquidate the partnership's properties no later than
August 6, 1998, and to use commercially reasonable efforts to liquidate and
terminate the partnership by December 31, 1999. If such a liquidation were
to occur, Limited Partners who sell their Units to the Purchaser pursuant
to the Offer will not participate in any such liquidation, which may be at
a price higher than the Purchase Price.

o Although the Purchaser is making the Offer for investment purposes and with
a view toward making a profit, it may, based upon the number of Units it
currently owns (together with an affiliate) and the number of Units it
acquires pursuant to the Offer, be in a position to influence control of
the business of the Partnership and to influence voting decisions with
respect to the Partnership and may seek to remove the Partnership's general
partner and/or McREMI. Such removal may require the Partnership to pay a
fee and other payments to the Partnership's general partner and/or its
affiliates (including McREMI) and may result in acceleration of certain of
the Partnership's debt obligations, and/or the Partnership's incurrence of
expenses pursuant to provisions of such debt obligations, which may have an
adverse effect on the Partnership. See Section 8 of the Offer to Purchase.

1
<PAGE>

estimate of liquidation value was based predominantly on publicly available
information relating to the Partnership and its properties in the
Partnership's Form 10-K and its Form 10-Q for the period ended June 30,
1996 and, to a lesser extent, on the non-public Due Diligence Information
provided to the Purchaser in 1995. The Purchaser's calculations are based
on rough estimates and the values resulting therefrom may not be indicative
of actual values to any extent. The Purchaser has not conducted any
appraisal of the Partnership's properties and has no independent basis
whatsoever for determining the accuracy or completeness of the
Partnership's publicly filed financial information or the Due Diligence
Information. See Section 13 of the Offer to Purchase. No representation is
made by the Purchaser or any affiliate of the Purchaser with respect to the
fairness of the Purchase Price.

o As discussed in Section 6 of the Offer to Purchase, the sale of 50 percent
or more of the Units in the Partnership over a period of twelve months will
result in the termination of the Partnership for federal income tax
purposes. Such a termination would result in lower depreciation deductions
to the Partnership for the next few years. Accordingly, it is possible that
the acquisition of Units pursuant to the Offer, when combined with other
transfers within twelve months, will result in a termination of the
Partnership for income tax purposes. In such a case, non-tendering Limited
Partners may, depending on their individual circumstances, have a greater
tax liability with respect to the Partnership than they would have had in
the absence of a termination. See Section 6 of the Offer to Purchase.

Limited Partners should consult with their respective advisors about the
financial, tax, legal and other implications of accepting the Offer. Limited
Partners are urged to read the Offer to Purchase and the related materials
carefully and in their entirety before deciding whether to tender their Units.

The Purchaser. The Purchaser is a Delaware limited partnership, the general
partner of which is Riverdale, LLC, a New York limited liability company
("Riverdale"). Riverdale is controlled by Mr. Icahn. See Section 11 of the Offer
to Purchase for a description of the Purchaser's business.

Conditions. The Offer is not conditioned on financing or on any minimum
number of Units being tendered. Certain other conditions, however, do apply. See
Section 14 of the Offer to Purchase.

Outstanding Units. According to publicly available information, there are
159,813 Units issued and outstanding, which, on February 16, 1996, were held by
8,674 Limited Partners. The Purchaser and its affiliate beneficially own 9,638
(or approximately 6% of the outstanding) Units. See Section 11 of the Offer to
Purchase.

Additional Information. The Partnership is subject to the information and
reporting requirements of the Securities Exchange Act of 1934, as amended
("Exchange Act"), and in accordance therewith is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Such reports and other information may be inspected
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and are
available for inspection and copying at the regional offices of the Commission
located in Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can also be obtained from the Public
Reference Room of the Commission in Washington, D.C. at prescribed rates.

ALL OF THE INFORMATION WITH RESPECT TO THE PARTNERSHIP CONTAINED IN THE
OFFER TO PURCHASE HAS BEEN DERIVED FROM DOCUMENTS AND REPORTS PUBLICLY FILED BY
THE PARTNERSHIP OR THE DUE DILIGENCE INFORMATION (AS DEFINED IN THE PORTION OF
SECTION 13 OF THE OFFER TO PURCHASE ENTITLED "DETERMINATION OF THE PURCHASE
PRICE"). ALTHOUGH THE PURCHASER HAS NO INFORMATION THAT ANY STATEMENTS OR
INFORMATION CONTAINED IN THE OFFER TO PURCHASE BASED UPON SUCH DOCUMENTS,
REPORTS AND DUE DILIGENCE INFORMATION ARE UNTRUE, THE PURCHASER CANNOT TAKE
RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONCERNING
THE PARTNERSHIP CONTAINED IN SUCH DOCUMENTS, REPORTS AND DUE DILIGENCE
INFORMATION OR FOR ANY FAILURE BY THE PARTNERSHIP TO DISCLOSE EVENTS WHICH MAY
HAVE OCCURRED AND MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH
INFORMATION BUT WHICH ARE UNKNOWN TO THE PURCHASER.

2
<PAGE>

THE OFFER

SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE.

Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept (and thereby purchase) any and all Units that are validly tendered
on or prior to the Expiration Date and not withdrawn in accordance with the
procedures set forth in Section 4 of the Offer to Purchase. For purposes of the
Offer, the term "Expiration Date" shall mean 12:00 midnight, New York City time,
on October 18, 1996, unless the Purchaser in its sole discretion shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as
extended by the Purchaser, shall expire. See Section 5 of the Offer to Purchase
for a description of the Purchaser's right to extend the period of time during
which the Offer is open and to amend or terminate the Offer.

If, prior to the Expiration Date, the Purchaser increases the consideration
offered to Limited Partners pursuant to the Offer, the increased consideration
will be paid for all Units accepted for payment pursuant to the Offer, whether
or not the Units were tendered prior to the increase in consideration.

The Purchaser will, upon the terms and subject to the conditions of the
Offer, accept for payment and pay any and all of the Units so tendered and not
properly withdrawn on or prior to the Expiration Date, with appropriate
adjustments to avoid (i) purchases of fractional Units and (ii) purchases that
would violate the Partnership Agreement and any relevant procedures or
regulations promulgated by the Partnership's General Partner. The Purchaser will
purchase all Units so tendered and not withdrawn, upon the terms and subject to
the conditions of the Offer.

The Offer is not conditioned upon financing or upon a minimum number of
Units being tendered, but is conditioned on satisfaction of certain other
conditions. See Section 14 of the Offer to Purchase, which sets forth in full
the conditions of the Offer. The Purchaser reserves the right (but in no event
shall be obligated), in its sole discretion, to waive any or all of those
conditions. If, on or prior to the Expiration Date, any or all of the conditions
have not been satisfied or waived, the Purchaser reserves the right to (i)
decline to purchase any of the Units tendered, terminate the Offer and return
all tendered Units to tendering Limited Partners, (ii) waive all the unsatisfied
conditions and, subject to complying with applicable rules and regulations of
the Commission, purchase all Units validly tendered,(iii) extend the Offer and,
subject to the right of Limited Partners to withdraw Units until the Expiration
Date, retain the Units that have been tendered during the period or periods for
which the Offer is extended, and (iv) amend the Offer.

The Offer to Purchase and the related Assignment of Partnership Interest
will be mailed pursuant to Rule 14d-5 under the Exchange Act. The Purchaser has
requested that the Partnership furnish it with a list of holders of Units for
the purpose of disseminating the Offer to such holders. If the Partnership
complies with such request, then the Purchaser will cause such mailing to be
made; otherwise, the Partnership is required by the Exchange Act and the rules
thereunder to cause such mailing to be made.

SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.

Upon the terms and subject to the conditions of the Offer, the Purchaser
will purchase by accepting for payment and will pay for any and all Units
validly tendered and not withdrawn in accordance with the procedures specified
in Section 4 of the Offer to Purchase, as promptly as practicable following the
Expiration Date. A tendering beneficial owner of Units whose Units are owned of
record by an Individual Retirement Account or other qualified plan will not
receive direct payment of the Purchase Price; rather, payment will be made to
the custodian of such account or plan. In all cases, payment for Units purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of a properly completed and duly executed Assignment of Partnership Interest (or
facsimile thereof, if followed by the signed original) and any other documents
required by the Assignment of Partnership Interest. See Section 3 of the Offer
to Purchase. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.

For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to the Offer, and thereby purchased, validly tendered
Units, if, as and when the Purchaser gives verbal or written notice to the
Depositary of the Purchaser's acceptance of those Units for payment pursuant to
the Offer.

If any tendered Units are not purchased for any reason, the Certificates
associated with such Units will be returned, without expense to such tendering
Limited Partner, as promptly as practicable following the expiration,
termination or withdrawal of the Offer. If for any reason, acceptance for
payment of, or payment for, any Units

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tendered pursuant to the Offer is delayed or the Purchaser is unable to accept
for payment, purchase or pay for Units tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights under Section 14 of the Offer to
Purchase, the Depositary may, nevertheless, on behalf of the Purchaser retain
tendered Units, and those Units may not be withdrawn except to the extent that
the tendering Limited Partners are entitled to withdrawal rights as described in
Section 4 of the Offer to Purchase; subject, however, to the Purchaser's
obligation under Rule 14e-1(c) under the Exchange Act to pay Limited Partners
the Purchase Price in respect of Units tendered or return those Units promptly
after termination or withdrawal of the Offer.

The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more persons, the right to purchase Units
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the rights
of tendering Limited Partners to receive payment for Units validly tendered and
accepted for payment pursuant to the Offer.

SECTION 3. PROCEDURE FOR TENDERING UNITS.

Valid Tender. To validly tender Units, a properly completed and duly
executed Assignment of Partnership Interest and any other documents required by
the Assignment of Partnership Interest (or facsimiles thereof, if followed by a
signed original) and the associated Certificates must be received by the
Depositary, at its address set forth on the back cover of the Offer to Purchase,
on or prior to the Expiration Date. Subject to the Minimum Units Requirements, a
Limited Partner may tender any or all of the Units owned by that Limited
Partner. No alternative, conditional or contingent tenders will be accepted.

Signature Requirements. In all cases, the signature of the Limited Partner
on the Assignment of Partnership Interest must be guaranteed by a member firm of
a registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or agency
in the United States. See Instruction 1 to the Assignment of Partnership
Interest.

In order for a tendering Limited Partner to participate in the Offer, its
Units must be validly tendered and not withdrawn on or prior to the Expiration
Date.

THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST, ALL OTHER
REQUIRED DOCUMENTS AND THE ASSOCIATED CERTIFICATES IS AT THE OPTION AND RISK OF
THE TENDERING LIMITED PARTNER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.

Appointment as Proxy. By executing an Assignment of Partnership Interest, a
tendering Limited Partner irrevocably appoints the Purchaser, its general
partner and its designees as the Limited Partner's attorneys-in-fact and
proxies, in the manner set forth in the Assignment of Partnership Interest, each
with full power of substitution, to the full extent of the Limited Partners's
rights with respect to the Units tendered by the Limited Partner and accepted
for payment by the Purchaser. Each such proxy shall be considered coupled with
an interest in the tendered Units. Such appointment will be effective when, and
only to the extent that, the Purchaser accepts the tendered Units for payment.
Upon such acceptance for payment, all prior proxies given by the Limited Partner
with respect to the Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
Purchaser, its general partner and the designees of the Purchaser will, as to
those Units, be empowered to exercise all voting and other rights of the Limited
Partner as they, in their sole discretion, may deem proper at any meeting of
Limited Partners, by written consent or otherwise. The Purchaser reserves the
right to require that, in order for Units to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of the Units, the
Purchaser must be able to exercise full voting rights with respect to the Units,
including voting at any meeting of Limited Partners then scheduled or acting by
written consent without a meeting. By executing the Assignment of Partnership
Interest, a tendering holder of Units agrees to execute all such documents and
take such other actions as shall be reasonably required to enable the Units
tendered to be voted in accordance with the directions of the Purchaser. The
proxy and power-of-attorney granted by a Limited Partner to the Purchaser upon
his execution of the Assignment of Partnership Interest (and all related and
associated rights, authority and power) shall be effective from the acceptance
for payment of the Units tendered and shall remain effective and be irrevocable
until August 1, 2006. The Purchaser may assign such proxy and/or
power-of-attorney to any person with or without assigning the related Units with
respect to which such proxy and/or power-of-attorney was granted.

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Assignment Of Interest In Future Distributions. By executing an Assignment
of Partnership Interest, a tendering Limited Partner irrevocably assigns to the
Purchaser and its assigns all of the right, title and interest of the Limited
Partner in and to any and all distributions in respect of the Units tendered
purchased pursuant to the Offer, other than those distributions declared or made
between August 15, 1996 and the date of payment of the Purchase Price by the
Purchaser.

Power-of-Attorney. By executing and delivering the Assignment of
Partnership Interest, a tendering Limited Partner also irrevocably appoints any
person nominated by the Purchaser or any designee thereof (the "Agent") as the
Limited Partner's attorney-in-fact with an irrevocable instruction to the Agent
to execute all or any instruments of transfer and/or other documents in the
Agent's discretion in relation to the Units tendered and to make all elections
and do all such other acts and things as may be necessary in connection with the
acceptance of the Offer by the Limited Partner and to vest in the Purchaser, or
as it may direct, the tendered Units.

Determination Of Validity; Rejection Of Units; Waiver Of Defects; No
Obligation To Give Notice Of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders of any
particular Units determined by it not to be in proper form or if the acceptance
of or payment for those Units may, in the opinion of the Purchaser's counsel, be
unlawful. The Purchaser also reserves the absolute right to waive or amend any
of the conditions of the Offer that it is legally permitted to waive as to the
tender of any particular Units and to waive any defect or irregularity in any
tender with respect to any particular Units of any particular Limited Partner.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Assignment of Partnership Interest) will be final and binding on
all parties. No tender of Units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither the
Purchaser, the Depositary nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any Units or will
incur any liability for failure to give any such notification.

Backup Federal Income Withholding. To prevent the possible application of
backup federal income tax withholding of 31% with respect to payment of the
Purchase Price, a tendering Limited Partner must provide the Purchaser with the
Limited Partner's correct taxpayer identification number by completing the
Substitute Form W-9 included in the Assignment of Partnership Interest. See the
Instructions to the Assignment of Partnership Interest and Section 6 of the
Offer to Purchase.

FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the amount of the Purchase Price plus Partnership
liabilities allocable to each Unit purchased, each tendering Limited Partner
must complete the FIRPTA Affidavit included in the Assignment of Partnership
Interest certifying the Limited Partner's taxpayer identification number and
address and that the Limited Partner is not a foreign person. See the
Instructions to the Assignment of Partnership Interest and Section 6 of the
Offer to Purchase.

A tender of Units pursuant to any of the procedures described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Limited Partner and the Purchaser on the terms set forth in the
Offer.

SECTION 4. WITHDRAWAL RIGHTS.

Tenders of Units pursuant to the Offer are irrevocable, except that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless already accepted for payment as provided in the
Offer to Purchase, may also be withdrawn at any time after November 18, 1996.

For withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at its address set forth
on the back cover of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered, the number of Units to be withdrawn
and the name in which the Certificates are registered, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person(s) who signed the Assignment of Partnership Interest in the same manner
as the Assignment of Partnership Interest was signed. If purchase of, or payment
for, Units is delayed for any reason or if the Purchaser is unable to purchase
or pay for Units for any reason, then, without prejudice to the Purchaser's
rights under the Offer, tendered Units may be retained by the Depositary and may
not be withdrawn, except to the extent that tendering Limited Partners are
entitled to withdrawal rights as set forth in this Section 4; subject, however,
to the Purchaser's

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obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited
Partners the Purchase Price in respect of Units tendered or return those Units
promptly after termination or withdrawal of the Offer.

Any Units properly withdrawn will be deemed not to be validly tendered for
purposes of the Offer. Withdrawn Units may be re-tendered, however, by following
the procedures described in Section 3 of the Offer to Purchase at any time prior
to the Expiration Date.

All questions as to the validity and form (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding on all parties.
Neither the Purchaser, the Depositary nor any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.

SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.

The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) to terminate the Offer and not accept for payment any Units not
theretofore accepted for payment or paid for, (iii) upon the occurrence of any
of the conditions specified in Section 14 of the Offer to Purchase, to delay the
acceptance for payment of, or payment for, any Units not already accepted for
payment or paid for, and (iv) to amend the Offer in any respect (including,
without limitation, by changing the consideration offered, the number of Units
being sought, or both). Notice of any such extension, termination or amendment
will promptly be disseminated to Limited Partners in a manner reasonably
designed to inform Limited Partners of such change in compliance with Rule
14d-4(c) under the Exchange Act. In the case of an extension of the Offer, the
extension will be followed by a press release or public announcement which will
be issued no later than 9:00 a.m., New York City time, on the next business day
after the scheduled Expiration Date, in accordance with Rule 14e-1(d) under the
Exchange Act.

If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Units) is delayed in its payment for Units
or is unable to pay for Units pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may
retain tendered Units and those Units may not be withdrawn except to the extent
tendering Limited Partners are entitled to withdrawal rights as described in
Section 4 of the Offer to Purchase; subject, however, to the Purchaser's
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited
Partners the Purchase Price in respect of Units tendered or return those Units
promptly after termination or withdrawal of the Offer.

If the Purchaser makes a material change in the terms of the Offer, or if
it waives a material condition to the Offer, the Purchaser will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during
which an offer must remain open following any material change in the terms of an
offer, other than a change in price or a change in percentage of securities
sought or a change in any dealer's soliciting fee, will depend upon the facts
and circumstances, including the materiality of the change. With respect to a
change in price or, subject to certain limitations, a change in the percentage
of securities sought or a change in any dealer's soliciting fee, a minimum of
ten business days from the date of such change is generally required to allow
for adequate dissemination to holders of Units. Accordingly, if prior to the
Expiration Date, the Purchaser changes the number of Units being sought, or
increases or decreases the consideration offered pursuant to an Offer, and if
such Offer is scheduled to expire at any time earlier than the tenth business
day from the date that notice of such increase or decrease is first published,
sent or given to holders of Units, such Offer will be extended at least until
the expiration of such ten business days. As used in the Offer to Purchase,
"business day" means any day other than a Saturday, Sunday or a federal holiday,
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.

SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.

The following summary is a general discussion of certain of the federal
income tax consequences of a sale of Units pursuant to the Offer. This summary
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations thereunder, administrative rulings, practice and
procedures and judicial authority, all as of the date of the Offer. All of the
foregoing are subject to change, and any such change could affect the continuing
accuracy of this summary. This summary does not discuss all aspects of federal
income taxation that may be relevant to a particular Limited Partner in light of
such Limited Partner's specific circumstances or to certain types of Limited

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Partners subject to special treatment under the federal income tax laws (for
example, foreign persons, dealers in securities, banks, insurance companies and
tax-exempt organizations), nor (except as otherwise expressly indicated) does it
describe any aspect of state, local, foreign or other tax laws. Sales of Units
pursuant to the Offer will be taxable transactions for federal income tax
purposes, and also may be taxable transactions under applicable state, local,
foreign and other tax laws. LIMITED PARTNERS SHOULD CONSULT THEIR RESPECTIVE TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO EACH SUCH LIMITED PARTNER OF
SELLING UNITS PURSUANT TO THE OFFER.

In general, a Limited Partner will recognize gain or loss on a sale of
Units pursuant to the Offer equal to the difference between (i) the Limited
Partner's "amount realized" on the sale and (ii) the Limited Partner's adjusted
tax basis in the Units sold. The amount of a Limited Partner's adjusted tax
basis in such Units will vary depending upon the Limited Partner's particular
circumstances. Such adjusted tax basis will take into account the Partnership's
liabilities allocable to the Units sold (as determined under Code Section 752
and the Treasury regulations promulgated thereunder) and will also be affected
by allocations of income, gain or loss, and any cash distributions made by the
Partnership with respect to the Units. The "amount realized" with respect to a
Unit will be a sum equal to the amount of cash received by the Limited Partner
for the Unit pursuant to the Offer (that is, the Purchase Price) plus the amount
of the Partnership's liabilities allocable to the Unit (as determined under Code
Section 752 and the Treasury regulations promulgated thereunder).

The gain or loss recognized by a Limited Partner on a sale of a Unit
pursuant to the Offer generally will be treated as a capital gain or loss if (as
is generally expected to be the case) the Unit was held by the Limited Partner
as a capital asset. That capital gain or loss will be treated as long-term
capital gain or loss if the tendering Limited Partner's holding period for the
Unit exceeds one year. Under current law, long-term capital gains of individuals
and other non-corporate taxpayers are taxed at a maximum marginal federal income
tax rate of 28%, whereas the maximum marginal federal income tax rate for
ordinary income of such persons is 39.6%. Capital losses are deductible only to
the extent of capital gains, except that non-corporate taxpayers may deduct up
to $3,000 of capital losses in excess of the amount of their capital gains
against ordinary income. Excess capital losses generally can be carried forward
to succeeding years (a corporation's carryforward period is five years and a
non-corporate taxpayer can carry forward such losses indefinitely); in addition,
a corporation is permitted to carry back excess capital losses to the three
preceding taxable years, provided the carryback does not increase or produce a
net operating loss for any of those years.

If any portion of the amount realized by a Limited Partner is attributable
to "unrealized receivables" (which includes depreciation recapture) or
"substantially appreciated inventory" as defined in Code Section 751, then a
portion of the Limited Partner's gain or loss may be ordinary rather than
capital.

A tendering Limited Partner will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Units sold in accordance with the provisions of the Partnership Agreement
concerning transfers of Units. Such allocation and any cash distributed by the
Partnership to the Limited Partner for that year will affect the Limited
Partner's adjusted tax basis in Units and, therefore, the amount of such Limited
Partner's taxable gain or loss upon a sale of Units pursuant to the Offer.

Under Code Section 469, a non-corporate taxpayer or personal service
corporation generally can deduct "passive activity losses" in any year only to
the extent of the person's passive activity income for that year. Closely held
corporations may not offset such losses against so-called "portfolio" income
(e.g., dividends or interest). Substantially all post-1986 losses of Limited
Partners from the Partnership are passive activity losses. Limited Partners may
have "suspended" passive activity losses from the Partnership (i.e., post-1986
net taxable losses in excess of statutorily permitted "phase-in" amounts and
which have not been used to offset income from other passive activities).

If a Limited Partner sells less than all of its Units pursuant to the
Offer, a loss recognized by that Limited Partner can be currently deducted
(subject to other applicable limitations) to the extent of the Limited Partner's
passive income from the Partnership for that year plus any other passive
activity income for that year, and a gain recognized by a Limited Partner upon
the sale of Units can be offset by the Limited Partner's current or "suspended"
passive activity losses (if any) from the Partnership and other sources. If, on
the other hand, a Limited Partner sells 100% of its Units pursuant to the Offer,
any "suspended" losses and any losses recognized upon the sale of the Units will
be offset first against any other net passive gain to the Limited Partner from
the sale of the Units and any other net passive activity

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income from other passive activity investments, and the balance of any
"suspended" net losses from the Units will no longer be subject to the passive
activity loss limitation and, therefore, will be deductible by such Limited
Partner from its other income (subject to any other applicable limitations). A
tendering Limited Partner must sell all of its Units to receive these tax
benefits.

Section 708(b) of the Code provides that a partnership terminates for
federal income tax purposes if there is a sale or exchange of 50 percent or more
of the total interest in partnership capital and profits within a twelve-month
period. Accordingly, it is possible that transfers made pursuant to the Offer,
in combination with other transfers made within twelve months of the Offer, will
result in a termination of the Partnership for federal income tax purposes. In
the event of a termination, the Partnership would subsequently be treated for
federal income tax purposes as a "new" partnership. Since the "new" partnership
would be treated as having acquired its assets on the date of the termination, a
new depreciation recovery period would begin on such date and the Partnership's
properties would be required to be depreciated over a greater period than is
currently being used, and accordingly, the aggregate present value of the
Partnership's depreciation deductions would be reduced.

Limited Partners (other than tax-exempt persons, corporations and certain
foreign persons) who tender Units may be subject to 31% backup withholding
unless those Limited Partners provide a taxpayer identification number ("TIN")
and certify that the TIN is correct or properly certify that they are awaiting a
TIN. A Limited Partner may avoid backup withholding by properly completing and
signing the Substitute Form W-9 included as part of the Assignment of
Partnership Interest. If a Limited Partner who is subject to backup withholding
does not properly complete and sign the Substitute Form W-9, the Purchaser will
withhold 31% from payments to such Limited Partner.

A Limited Partner who tenders Units must file an information statement with
his federal income tax return for the year of the sale which provides the
information specified in Treasury Regulations Section 1.751-1(a)(3). The selling
Limited Partner also must notify the Partnership of the date of the transfer and
the names, addresses and TINs of the transferor and transferee within 30 days of
the date of the transfer (or, if earlier, by January 15 of the following
calendar year).

Gain realized by a foreign Limited Partner on the sale of a Unit pursuant
to the Offer will be subject to federal income tax. Under Code Section 1445, the
transferee of an interest held by a foreign person in a partnership which owns
United States real property generally is required to deduct and withhold a tax
equal to 10% of the amount realized on the disposition. In order to comply with
this requirement, the Purchaser will withhold 10% of the amount realized (which
includes the Partnership's liabilities allocable to the tendered Units, as
discussed above) by a tendering Limited Partner unless the Limited Partner
properly completes and signs the FIRPTA Affidavit included as part of the
Assignment of Partnership Interest certifying the Limited Partner's TIN, that
such Limited Partner is not a foreign person and the Limited Partner's address.
Amounts withheld would be creditable against a Limited Partner's federal income
tax liability and, if in excess thereof, a refund could be obtained from the
Internal Revenue Service by filing a U.S. income tax return.

SECTION 7. EFFECTS OF THE OFFER.

Effect On Trading Market; Registration Under Section 12(g) Of The Exchange
Act. If a substantial number of Units are purchased pursuant to the Offer, the
likely result will be a reduction in the number of Limited Partners. In the case
of certain kinds of securities, a reduction in the number of security-holders
might be expected to result in a reduction in the liquidity and volume of
activity in the trading market for the security. In this case, however, there is
no established public trading market for the Units, and therefore, the Purchaser
does not believe a reduction in the number of Limited Partners will materially
further restrict the Limited Partners' abilities to find purchasers for their
Units.

The Units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that the Partnership is required to file periodic
reports with the Commission and to comply with the Commission's proxy rules. The
Purchaser does not expect or intend that consummation of the Offer will cause
the Units to cease to be registered under Section 12(g) of the Exchange Act. If
the Units were to be held by fewer than 300 persons, the Partnership could apply
to de-register the Units under the Exchange Act. Because the Units are widely
held, however, the Purchaser believes it is unlikely that the Units will be held
of record by less than 300 persons following the purchase of Units tendered
pursuant to the Offer.

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In the Purchaser's capacity as a Limited Partner of the Partnership, the
Purchaser will participate in any subsequent distributions to Limited Partners
to the extent of the Units currently owned by the Purchaser and Units purchased
pursuant to the Offer.

SECTION 8. FUTURE PLANS OF THE PURCHASER.

Future Plans. Although the Purchaser is making the Offer for investment
purposes and with a view to making a profit, it may, based upon the number of
Units it currently owns (together with an affiliate) and the number of Units it
acquires pursuant to the Offer, be in a position to influence control of the
Partnership and to influence voting decisions with respect to the Partnership.

The Purchaser is currently assessing the feasibility of removing the
Partnership's general partner and/or McREMI. Removal of the Partnership's
general partner requires the vote of Limited Partners holding a majority of the
Units. Removal of the Partnership's general partner and/or McREMI may, under
certain circumstances, require the Partnership to make certain payments to the
Partnership's general partner and/or its affiliates (including McREMI)
(collectively, the "Termination Payments") and may result in acceleration of
certain of the Partnership's debt obligations and/or the Partnership's
incurrence of expenses pursuant to provisions of such debt obligations, which
may have an adverse effect on the Partnership. If the Purchaser concludes that
it is feasible to remove the Partnership's general partner and/or McREMI or
otherwise take action which would result in the Partnership's general partner
and/or McREMI ceasing to act in their current capacities (such removal or
cessation, a "Termination") without the imposition of Termination Payments, it
will seek to do so. Absent the feasibility of the foregoing, the Purchaser will
consider whether or not to seek Termination of the Partnership's general partner
and/or McREMI. In connection with any such determination, the Purchaser will
consider the overall costs associated with such Termination. In connection with
any attempted Termination of the Partnership's general partner or McREMI, the
Purchaser will seek its appointment or the appointment of another party as the
successor general partner of the Partnership or the property manager of the
Partnership, as the case may be. The Purchaser has not previously acted as the
general partner or property manager of a limited partnership, such as the
Partnership, which is engaged in the business of owning real estate and has not,
at this time, sought to negotiate any arrangements with other parties to act in
such capacities.

Following the completion of the Offer, the Purchaser and/or persons related
to or affiliated with it may acquire additional Units or may sell Units. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers or by any other means deemed advisable. Any
acquisition may be at a price higher or lower than the price to be paid for the
Units purchased pursuant to the Offer, and may be for cash or other
consideration. The Purchaser also may consider selling some or all of the Units
it currently owns or acquires pursuant to the Offer to persons not yet
determined, which may include the Partnership's general partner and/or an
affiliate of the Partnership's general partner.

The Schofield Litigation. James F. Schofield, Gerald C. Gillett and Donna
S. Gillett have instituted class and derivative actions (collectively, the
"Schofield Litigation") in Superior Court of the State of California for the
County of Los Angeles and United States District Court for the Southern District
of New York against the general partner of the Partnership, its corporate
general partner, McREMI and Robert A. McNeil and Carole J. McNeil (the
"McNeils"), the Chairman and Co-Chairman, respectively, of the corporate general
partner of the Partnership's general partner (collectively, the "Defendants"),
together with the Partnership and fourteen other related partnerships
(collectively, the "Partnerships") as nominal defendants, alleging that the
Defendants have breached their fiduciary duty. Specifically, the Plaintiffs
allege that the Defendants have caused the Partnerships to enter into several
wasteful transactions that have no business purpose or benefit to the
Partnerships and that have rendered the Units highly illiquid and artificially
depressed the prices that are available for Units on the limited resale market.
Plaintiffs also allege that Defendants have engaged in a course of conduct to
prevent the acquisition of Units by Mr. Icahn by disseminating false, misleading
and inadequate information. Plaintiffs further allege that Defendants have acted
to advance their own personal interests at the expense of the Partnerships'
public Unit holders by failing to sell Partnership properties and failing to
make distributions to holders of Units and, thereby, have breached the
Partnership Agreements.

The Purchaser entered into a letter agreement (the "August 2 Agreement")
with Herbert Beigel, plaintiffs' counsel ("Plaintiffs' Counsel") in the
Schofield Litigation, on August 2, 1996 and amended the August 2 Agreement on
September 19, 1996 (the August 2 Agreement, as so amended, the "Letter
Agreement"). Pursuant to the Letter

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Agreement, among other things, the Purchaser agreed to commence tender offers
(the "Tender Offers") within the next six months for any and all outstanding
Units of the Partnership and eight of the other Partnerships. The Letter
Agreement provides, among other things, that (i) the Purchaser will commence, as
soon as possible, but in no event in more than six months, Tender Offers for any
and all of the outstanding Units of such Partnerships at a price that is not
less than 75% of the estimated liquidation value of the Units, which Tender
Offers may be subject to such other terms and conditions as the Purchaser
determines in its sole discretion; (ii) in the event that the Purchaser attains
the positions of general partner in any of such Partnerships: (a) the Purchaser
will take all actions necessary to cause a 25% reduction of fees of such
Partnership(s), including the current management incentive distribution fee, (b)
the Purchaser will not cause such Partnership(s) to take any action to
discontinue the Schofield Litigation with respect to those claims asserted
against the general partner which seek the receipt by the Partnerships of monies
that the general partner claims it is owed by the Partnerships and monies
previously paid by the Partnerships to the general partner and its affiliates
for fees they claimed were owed under the Partnership Agreements (the
"Receivable Claims"), and (c) the Purchaser and Plaintiffs' Counsel will in good
faith execute an appropriate Stipulation of Settlement based upon the terms of
the Letter Agreement, which stipulation shall not include a settlement or
provide a release of the Receivable Claims; and (iii) from and after the date of
the Letter Agreement, Plaintiffs' Counsel will not enter into any settlement of
the claims asserted in the Schofield Litigation which does not provide for all
of the consideration contained in that certain demand letter, dated June 24,
1996 (the "Demand Letter"), sent by Plaintiffs' Counsel to counsel for the
Partnerships in the Schofield Litigation. Such consideration consists of: (a)
the general partner or its affiliates causing a 25% reduction of all general
partner fees, including the management distribution fees, that are currently
payable by such Partnership(s) to the general partner of such Partnership and/or
its affiliates; (b) the general partners waiving all claims for outstanding
receivables claimed to be owed to them by the Partnership(s) and returning to
the Partnership(s) all receivables actually paid in the last two years; and (c)
the Defendants in the Schofield Litigation providing a liquidity option for the
Limited Partners of such Partnerships by commencing, or causing the general
partners to take all steps to solicit third parties to commence, tender offers
for any and all, but in no event less than 40%, of the outstanding Units of such
Partnerships in an amount that exceeds the prices paid for the previous tender
offers commenced by the Purchaser. The August 2 Agreement and Demand Letter were
described in and filed as exhibits to an amendment to the Purchaser's Schedule
13D (the "Schedule 13D Amendment") relating to the Partnership filed with the
Commission on August 5, 1996. See Section 13 of the Offer to Purchase.

SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP.

Information contained in this Section 9 is based upon documents and reports
publicly filed by the Partnership. Although the Purchaser has no information
that any statements contained in this Section 9 are untrue, the Purchaser cannot
take responsibility for the accuracy or completeness of any information
contained in this Section 9 or for any failure by the Partnership to disclose
events which may have occurred and may affect the significance or accuracy of
any such information but which are unknown to the Purchaser.

The Partnership was organized under the laws of the State of California.
Its principal executive offices are located at 13760 Noel Road, Suite 700, LB70,
Dallas, Texas 75240. Its telephone number is (214) 448-5800.

The Partnership's primary business is real estate ownership and related
operations. The primary purpose of the Partnership, as set forth in the
Partnership Agreement, is "to invest in, hold, manage and dispose of real estate
and real estate-related investments". Under the Partnership Agreement, the term
of the Partnership will continue until December 31, 2010, unless sooner
terminated as provided in the Partnership Agreement or by law. The terms of the
Partnership Agreement require the Partnership's general partner to begin to
liquidate the Partnership's properties no later than August 6, 1998, and to use
commercially reasonable efforts to liquidate and terminate the Partnership by
December 31, 1999.

10
<PAGE>

At December 31, 1995, the Partnership's investment portfolio consisted of
the following properties:

<TABLE>
<CAPTION>
Net Basis 1995 Date
Property Description of Property Debt Property Tax Acquired
- -------- ----------- --------- ---- ------------ --------
<S> <C> <C> <C> <C> <C>
Acacia Lakes(1) Apartments
Mesa, AZ 576 units $ 6,427,070 $ 8,937,249 $103,840 5/81

Gentle Gale (2) Apartments
Galveston, TX 133 units 1,859,855 2,629,508 82,953 5/81

Knollwood (3) Apartments
Kansas City, MO 315 units 2,455,810 4,472,878 71,798 5/81

The Park (4) Apartments
Joplin, MO 192 units 1,333,802 2,604,482 20,746 3/81

Rock Creek Apartments
Beaverton, OR 388 units 4,358,112 6,224,682 161,665 2/81

Sun Valley (5) Apartments
Charlotte, NC 311 Units 4,484,894 6,585,644 101,809 8/81

Villa Del Rio (6) Apartments
Jacksonville, FL 444 units 4,366,232 5,634,662 164,411 5/81

The Village (7) Apartments
Gresham, OR 152 units 1,966,056 2,595,335 92,495 5/81
----------- ----------- --------
$27,251,831 $39,684,440 $799,717
=========== =========== ========
</TABLE>

- ----------
Total: Apartments--2,511 units

(1) Acacia Lakes Apartments is owned by Acacia Lakes Fund XI Limited
Partnership which is wholly-owned by the Partnership.

(2) Gentle Gale Apartments is owned by Gentle Gale Fund XI Limited Partnership
which is wholly-owned by the Partnership.

(3) Knollwood Apartments is owned by Knollwood Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

(4) The Park Apartments is owned by The Park Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

(5) Sun Valley Apartments is owned by Sun Valley Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

(6) Villa Del Rio Apartments is owned by Villa Del Rio Fund XI Limited
Partnership which is wholly-owned by the Partnership.

(7) The Village Apartments is owned by Village Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

ACCUMULATED DEPRECIATION SCHEDULE.

The basis and accumulated depreciation of the Partnership's real estate
investments at December 31, 1995 and 1994 are set forth in the following tables:

Buildings and Accumulated Net Book
1995 Land Improvements Depreciation Value
---- ---- ------------ ------------ -----------
Acacia Lakes .... $1,953,090 $12,687,204 $(8,213,224) $ 6,427,070
Gentle Gale ..... 450,155 3,577,012 (2,167,312) 1,859,855
Knollwood ....... 330,547 6,423,419 (4,298,156) 2,455,810
The Park ........ 165,329 4,238,254 (3,069,781) 1,333,802
Rock Creek ...... 1,365,810 9,663,748 (6,671,446) 4,358,112
Sun Valley ...... 562,797 8,204,402 (4,282,305) 4,484,894
Villa Del Rio ... 636,634 9,261,056 (5,531,458) 4,366,232
The Village ..... 474,102 4,353,456 (2,861,502) 1,966,056
---------- ----------- ------------ -----------
$5,938,464 $54,408,551 $(37,095,184) $27,251,831
========== =========== ============ ===========

11
<PAGE>

Buildings and Accumulated Net Book
1994 Land Improvements Depreciation Value
---- ---- ------------ ------------ -----------
Acacia Lakes .... $1,953,090 $12,325,108 $ (7,717,064) $ 6,561,134
Gentle Gale ..... 450,155 3,476,917 (1,992,803) 1,934,269
Knollwood ....... 330,547 6,071,771 (4,041,889) 2,360,429
The Park ........ 165,329 4,133,153 (2,896,491) 1,401,991
Rock Creek ...... 1,365,810 9,423,597 (6,207,808) 4,581,599
Sun Valley ...... 562,797 7,899,254 (3,958,479) 4,503,572
Villa Del Rio ... 636,634 9,000,503 (5,167,379) 4,469,758
The Village ..... 474,102 4,258,205 (2,628,846) 2,103,461
---------- ----------- ------------ -----------
$5,938,464 $56,588,508 $(34,610,759) $27,916,213
========== =========== ============ ===========

SCHEDULE OF MORTGAGES.

The following table sets forth the mortgage notes payable of the
Partnership at December 31, 1995 and 1994. All mortgage notes are secured by
real estate investments.

Annual Monthly
Mortgage Lien Interest Payments/ December 31, December 31,
Property Position(a) Rates % Maturity Date(c) 1995 1994
-------- ----------- ------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Acacia Lakes First 8.700 $71,069 01/01 $ 8,937,249 $ 9,003,355
----------- -----------
Gentle Gale First
Discount (b) 8.150 22,327 07/03 2,694,292 2,740,563
(64,784) (71,678)
----------- -----------
2,629,508 2,668,885
----------- -----------
Knollwood First 7.750 32,506 05/24 4,472,878 4,514,538
----------- -----------
The Park First 10.500 24,021 05/24 2,604,482 2,618,451
----------- -----------
Rock Creek First 11.875 67,860 02/01 6,224,682 2,295,202
----------- -----------
Sun Valley First 7.875 48,384 06/24 6,585,644 6,645,073
----------- -----------
Villa Del Rio First
Discount (b) 8.150 47,843 07/03 5,773,484 5,872,634
----------- -----------
(138,822) (153,596)
----------- -----------
5,634,662 5,719,038
----------- -----------
The Village First 10.875 26,219 11/96 2,595,335 2,625,890
----------- -----------
$39,684,440 $40,090,432
=========== ===========
</TABLE>

- ----------
(a) The debt is non-recourse to the Partnership.
(b) Discounts are based on an effective interest rate of 8.62%.
(c) Balloon payments on the mortgage notes are due as follows:

Property Balloon Payment Date
-------- --------------- ----
The Village ............. $ 2,564,000 11/96
Acacia Lakes ............ 8,468,000 01/01
Rock Creek .............. 5,704,000 02/01
Gentle Gale ............. 2,197,000 07/03
Villa Del Rio ........... 4,707,000 07/03

Scheduled principal maturities of the mortgage notes, before
consideration of discounts of $203,606, areas follows:

1996 ........................... $ 3,035,587
1997 ........................... 481,222
1998 ........................... 526,120
1999 ........................... 575,334
2000 ........................... 629,296
Thereafter ..................... 34,640,487
-----------
Total ........................ $39,888,046
===========

12
<PAGE>

AVERAGE ANNUAL RENTAL RATE AND OCCUPANCY.

The following table sets forth the properties' occupancy rate and rent
per square foot for each of the last five years:

1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Acacia Lakes
Occupancy Rate ......... 96% 97% 98% 96% 88%
Rent Per Square Foot ... $ 7.44 $ 6.64 $ 5.94 $ 5.16 $ 4.57

Gentle Gale
Occupancy Rate ......... 88% 93% 98% 100% 94%
Rent Per Square Foot ... $ 7.86 $ 7.83 $ 7.70 $ 7.25 $ 5.73

Knollwood
Occupancy Rate ......... 96% 93% 98% 95% 90%
Rent Per Square Foot ... $ 5.53 $ 5.17 $ 4.77 $ 4.56 $ 4.37

The Park
Occupancy Rate ......... 90% 91% 93% 96% 90%
Rent Per Square Foot ... $ 6.18 $ 6.23 $ 5.98 $ 5.46 $ 5.22

Rock Creek
Occupancy Rate ......... 99% 94% 98% 96% 94%
Rent Per Square Foot ... $ 7.91 $ 7.54 $ 7.25 $ 6.94 $ 6.46

Sun Valley
Occupancy Rate ......... 97% 97% 87% 91% 88%
Rent Per Square Foot ... $ 7.12 $ 6.51 $ 5.81 $ 5.78 $ 5.58

Villa del Rio
Occupancy Rate ......... 100% 98% 92% 88% 87%
Rent Per Square Foot ... $ 5.46 $ 4.98 $ 4.87 $ 4.49 $ 4.39

The Village
Occupancy Rate ......... 100% 100% 97% 98% 94%
Rent Per Square Foot ... $ 7.96 $ 7.76 $ 7.52 $ 7.03 $ 6.62

13
<PAGE>

SELECTED FINANCIAL DATA.

Set forth below is a summary of certain financial information with respect
to the Partnership, which has been excerpted or derived from the Form 10-K and
the Partnership's Quarterly Report on the Form 10-Q for the six months ended
June 30, 1996.

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------------
Statements of Operations 1995 1994 1993 1992 1991
- ------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Rental revenue ................... $ 14,304,055 $ 13,313,091 $ 12,527,359 $ 11,621,595 $ 10,906,110
Total revenue .................... 14,451,813 13,425,413 12,757,233 11,970,421 11,176,171
Loss on disposition of real
estate .......................... -- -- -- -- --
Income (loss) before extraordinary
items ........................... 307,243 (193,822) (1,038,150) (1,316,607) (5,541,822)
Extraordinary items .............. -- -- (521,380) 86,660 3,984,010
Net income (loss) ................ 307,243 (193,822) (1,559,530) (1,229,947) (1,557,812)

Net income (loss) per limited
partnership unit:
Income (loss) before extraordinary
items ........................... $ 1.83 $ (3.98) $ (6.16) $ (7.81) $ (33.52)
Extraordinary items .............. -- -- (3.22) .51 24.33
------------ ------------ ------------ ------------ ------------
Net income (loss) ................ $ 1.83 $ (3.98) $ (9.38) $ (7.30) $ (9.19)
============ ============ ============ ============ ============

<CAPTION>
As of December 31,
----------------------------------------------------------------------------
Balance Sheets 1995 1994 1993 1992 1991
- -------------- ---- ---- ---- ---- ----
Real estate investments, net ..... $ 27,251,831 $ 27,916,213 $ 28,103,619 $ 28,192,464 $ 29,330,188
Total Assets ..................... 32,508,764 33,355,998 34,963,327 31,779,500 33,463,444
Mortgage notes payable, net ...... 39,684,440 40,090,432 40,463,926 33,292,396 33,746,137
Partners' deficit ................ (11,323,378) (10,759,568) (9,796,298) (7,611,239) (5,942,739)
</TABLE>

Six Months Ended June 30,
------------------------------
Statements of Operations 1996 1995
- ------------------------ ---- ----
Rental revenue ........................ $ 7,329,367 $ 7,013,905
Total revenue ......................... 7,387,996 7,080,421
Loss on disposition of real estate .... -- --
Income (loss) before
extraordinary items .................. 387,100 13,514
Extraordinary items ................... -- --
Net income (loss) ..................... 387,100 13,514
Net income (loss) per limited
partnership unit:
Income (loss) before
extraordinary items .................. $ 2.30 $ .08
Extraordinary items ................... -- --
Net income (loss) ..................... $ 2.30 $ .08

Balance Sheets As of June 30, 1996
- -------------- -------------------
Real estate investments, net ........... $ 26,910,745
Total assets ........................... 33,005,601
Mortgage notes payable, net ............ 39,456,796
Partners' deficit ...................... (11,377,942)

14
<PAGE>

COMPETITIVE CONDITIONS.

Due to a substantial investment of capital since 1992, Acacia Lakes has
increased its rent per square foot by 44% over the last four years.
Additionally, the property has maintained higher occupancy rates than the
average market rate of 93%. Rental rates at Acacia Lakes are averaging $.62 per
square foot, while many competitors are averaging $.66 per square foot.

Gentle Gale is located in Galveston, Texas, where the local economy is
dependent upon the University of Texas Medical Branch and tourism. Over the last
few years the economy has been sluggish and this has been reflected in the drop
in the occupancy rates at the property. Gentle Gale is currently mirroring an
average market rate of 88%. Gentle Gale competes with properties that are newer
and offer better amenity packages. The property has been upgrading the units and
offering rental discounts to remain competitive in the market.

Knollwood finished 1995 just above the average market rate of 95%. The
current rental rates per square foot are between $.52 and $.55 for Knollwood's,
townhouses and one and two bedroom apartments while the market rate per square
foot is between $.52 and $.54. Capital improvements are planned to improve the
curb appeal and upgrade the apartments to take advantage of the strong market
conditions.

The Park is the largest apartment community in Joplin, Missouri where the
market's average occupancy rate is 90%. The local economy is expected to remain
stable; however, during 1995, an additional 160 Units were built which saturated
the apartment market. The new units are entering the marketplace at $.44 per
square foot while The Park is averaging $.52 per square foot. To remain
competitive in the market, The Park has discounted rents.

Rock Creek is located in a strong rental market where the average occupancy
rate is 95% and the rent per square foot ranges from $.72. Over the past few
years the property has been upgrading the interiors of the units as well as
improving the outside appearance with landscaping and a renovation of the
clubhouse and office. These enhancements will allow the property to remain
competitive with rental rates per square foot averaging $.66. An additional
3,300 units are scheduled to be built in the market during 1996. With the growth
in employment, the market should absorb these additional units without any
adverse effect to the property.

Strong market conditions are beginning to stimulate new developments in the
area surrounding Sun Valley. As of December 31, 1995, an additional 3,950 units
were under construction with numerous other projects in the planning stages.
These new units will have no adverse effect on the property. With the capital
improvements made at the property over the last few years, the property has been
able to stay competitive with the newer properties. Sun Valley finished 1994
above the market average occupancy rate 96%.

Villa Del Rio's occupancy rate has increased by 12% since 1991 and finished
1995 above the market average of 94%. The overall occupancy rate for
Jacksonville has remained strong. The city experienced its highest level of new
construction of apartment communities since 1986. Currently, 3,000 units are
under construction with several other apartment communities in the planning
stages. These new units will have no adverse effect on the property. Villa Del
Rio's advantage over its competitors is design and layout of the property. All
units are single story apartments and the property is spread over 25 acres.

The Village finished the year fully leased for the second year in a row.
The area economy remains strong and occupancy rates were at their highest in 5
years. The market rental rate per square foot and the rental rate at The Village
is $.66. As a result of the strong economy, 5,500 units were absorbed during
1995. The Village should remain competitive in the marketplace.

Additional information concerning the Partnership, its assets, operations
and management is contained in its annual reports on the Form 10-K and quarterly
reports on the Form 10-Q and other filings with the Commission. Such reports and
filings are available for inspection at the Commission's principal office in
Washington, D.C., and at its regional offices in New York, New York and Chicago,
Illinois.

SECTION 10. VOTING BY THE PURCHASER.

Based upon the number of Units it currently owns, together with an
affiliate, and the number of Units it acquires pursuant to the Offer, the
Purchaser may be in a position to influence control of the Partnership and to
influence voting decisions with respect to the Partnership and the Purchaser may
seek to remove the Partnership's general partner. Under the Partnership
Agreement, Limited Partners holding a majority of the Units are entitled to
remove the

15
<PAGE>

Partnership's general partner at any time for cause and, beginning on August 6,
1995, without cause. Such removal may require the Partnership to pay a fee and
other payments to the Partnership's general partner and/or its affiliates and
may result in acceleration of certain of the Partnership's debt obligations
and/or the Partnership's incurrence of expenses pursuant to provisions of such
debt obligations, which may have an adverse effect on the Partnership. See
Section 8 of the Offer to Purchase. In addition, Limited Partners holding a
majority of the Units, with the concurrence of the Partnership's general
partner, are entitled to take action with respect to a variety of matters,
including dissolution of the Partnership and most types of amendments to the
Partnership Agreement, but the Purchaser has no present intention of doing so.

Reorganization Transactions require a Supermajority Vote (as those terms
are defined in the Partnership Agreement) and the consent of the Partnership's
general partner prior to effectuation. Generally, "Reorganization Transactions"
are defined as transactions in connection with which any Limited Partners will
be issued securities of any other entity in exchange for, or as a distribution
with respect to, Units; "Supermajority Vote" is defined as the vote of the
Limited Partners who own more than 80% of the total outstanding Units excluding
Units held by Interested Persons; and "Interested Persons" are defined as, among
others, persons who beneficially own 10% or more of the outstanding Units,
excluding certain affiliates of the Partnership's general partner.

SECTION 11. INFORMATION CONCERNING THE PURCHASER AND CERTAIN AFFILIATES OF THE
PURCHASER.

Riverdale is the general partner of the Purchaser, and Mr. Icahn is the
controlling member of Riverdale. Unicorn Associates Corporation ("Unicorn") is a
New York corporation indirectly wholly-owned by Mr. Icahn and of which he is the
sole director. Unicorn purchased Units in the 1995 Offer from Limited Partners
resident in California, pursuant to an assignment from the Purchaser of the
right to purchase such Units.

The business address of Mr. Icahn is 114 W. 47th Street, New York, New York
10036. The address of the principal office of each of the Purchaser, Riverdale
and Unicorn is 100 South Bedford Road, Mount Kisco, New York 10549.

Each of the Purchaser and Unicorn is primarily engaged in the business of
investing in securities. Riverdale is primarily engaged in the business of
investing in securities, including interests in real estate limited
partnerships, and acting as general partner of the Purchaser. Mr. Icahn's
present principal occupation or employment is set forth on Schedule I attached
hereto and is incorporated herein by reference.

The name, position, citizenship, business address, present principal
occupation or employment, material occupations, positions or employments during
the past five years and the principal business address of any business
corporation or other organization in which such occupation, position or
employment was carried on, of each executive officer/manager of Riverdale and
each executive officer of Unicorn are set forth on Schedule I attached hereto
and are incorporated herein by reference.

Neither the Purchaser, Riverdale, Unicorn, Mr. Icahn, nor any executive
officer/manager of Riverdale or executive officer of Unicorn has, during the
past five years, (a) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or a finding of any violation of such laws.

Except as set forth below and in Sections 8 and 13 of the Offer to
Purchase, neither the Purchaser, Riverdale, Unicorn nor, to the best of the
Purchaser's knowledge, any of the Persons listed on Schedule I nor any affiliate
of the foregoing (i) beneficially owns or has a right to acquire any Units, (ii)
has effected any transaction in the Units in the past 60 days, or (iii) has any
contract, arrangement, understanding or relationship with any other persons with
respect to any securities of the Partnership, including, but not limited to,
contracts, arrangements, understandings or relationships concerning the transfer
or voting thereof, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies.

The Purchaser and Unicorn currently own 9,638 (representing approximately
6.0% of the outstanding) Units. Of such Units, 8,202 are owned by the Purchaser
and the balance are owned by Unicorn. Fifty of such Units were purchased in an
auction transaction utilizing the Chicago Partnership Board, Inc. in July and
August 1995. The balance were purchased pursuant to the 1995 offer.

16
<PAGE>

Set forth below is financial information with respect to the Purchaser. The
Purchaser is not subject to periodic reporting requirements under the Exchange
Act. The financial information set forth below is unaudited. The Purchaser does
not prepare audited financial statements in the ordinary course of its business
and, accordingly, such audited financial statements were not available or
obtainable without unreasonable cost or expense.

HIGH RIVER LIMITED PARTNERSHIP

BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
(IN 000'S)

ASSETS:
Cash and Cash Equivalents .............................. $ 10,689
Marketable Securities .................................. 419,409
Investment in Partnerships--Real Estate L.P. ........... 17,279
Investment in Partnership--Other ....................... 833
--------
Total Assets .......................................... $448,210
========
LIABILITIES:
Due to Brokers ......................................... $162,614
Securities Sold Not Yet Purchased @ Market Value ....... 4,045
--------
Total Liabilities ..................................... $166,659

PARTNERS' CAPITAL ....................................... 281,551
--------
TOTAL LIABILITIES AND PARTNERS' CAPITAL ................. $448,210
========

17
<PAGE>

HIGH RIVER LIMITED PARTNERSHIP

STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
(IN 000'S)

INCOME:
Interest .......................................... $ 99
Capital Gains ..................................... 4,542
Dividends ......................................... 7,532
Unrealized Loss on Securities ..................... (3,152)
-------
9,021
-------
EXPENSE:
Interest .......................................... $ 4,079
Other ............................................. 29
-------
4,108
-------
NET INCOME ......................................... $ 4,913
=======

18
<PAGE>

SECTION 12. SOURCE OF FUNDS.

The Purchaser expects that approximately $15,693,287 will be required to
purchase 150,175 Units (consisting of the aggregate number of outstanding Units
as of February 16, 1996, net of units owned by the Purchaser and its affiliate),
if tendered (exclusive of related fees and expenses). The Purchaser will obtain
all of those funds from its liquid assets.

SECTION 13. BACKGROUND OF THE OFFER.

Prior Contacts with the Partnership. On or about July 27, 1995, the McNeils
and Mr. Icahn spoke by telephone. Mr. Icahn told the McNeils that he had been
informed that they were interested in selling the Partnership's general partner.
The McNeils said that they were not interested in selling the Partnership's
general partner but urged Mr. Icahn to contact their counsel, Scott Wallace. In
the conversation with the McNeils, Mr. Icahn indicated that he intended to make
a tender offer for Units and a joint tender offer was discussed. No agreements
were reached. In the days that followed up to on or about August 1, 1995, Mr.
Icahn participated in several telephone conversations with Mr. Wallace. The same
subjects were explored and Mr. Icahn confirmed his intention to conduct a tender
offer for Units. Again, no agreements were reached. One of these conversations,
which took place on or about August 1, 1995 among Scott Wallace, Mr. Icahn and a
former counsel for the Partnership, became a subject of the litigation described
below.

The Purchaser commenced a tender offer to purchase Units in the Partnership
and nine other Partnerships on August 4, 1995 (the "1995 Offer" and together
with the Purchaser's tender offers to purchase Units of the other Partnerships,
the "1995 Offers"). On August 9, 1995, the McNeils delivered a letter to the
Purchaser claiming that the former counsel divulged confidential information
concerning the McNeils' personal tax situation during the August 1, 1995
telephone conversation, that the 1995 Offers were based on confidential
information and that the Partnership would not mail the 1995 Offers unless the
Purchaser and Mr. Icahn signed a certificate concerning the purported
confidential information. On August 10, 1995, the Purchaser commenced an action
in the United States District Court for the Southern District of New York (the
"District Court") against the Partnership's general partner, its corporate
general partner, and the McNeils (collectively "Management"), as well as the
Partnership and the other Partnerships (collectively with Management, the
"Defendants") alleging Management breaches of fiduciary duty and that the
Defendants' failure to mail the 1995 Offers violated the Securities and Exchange
Commission's Rule 14d-5. On that same day, the District Court, upon the
Purchaser's application, issued a preliminary injunction against the Defendants
and ordered the Defendants to either furnish the Purchaser with a list of the
names and addresses of the Limited Partners or mail the Offer to the Limited
Partners on the Purchaser's behalf. The Defendants elected to mail. On August
16, 1995, the Partnership, through its counsel, declined the Purchaser's request
for a list of the Limited Partners, stating that the list was confidential and
since the Purchaser was not a Limited Partner, such information was not required
to be provided under applicable law. On August 17, 1995, the Purchaser sent a
letter to the Partnership's general partner requesting that the general partner
agree to cooperate in satisfying certain conditions of the 1995 Offers and to
facilitate the transfer of Units. On August 18, 1995, the Defendants served and
filed a Counterclaim and Answer (the "Counterclaim"). Defendants' Counterclaim
sought an injunction and alleged that the 1995 Offers were made in violation of
federal securities laws because, among other things, they failed to disclose
that the Purchaser based its Offers on confidential information. This action was
dismissed without prejudice in November 1995.

In November 1995, the Purchaser filed a second complaint in the District
Court alleging, among other things, that the Schedule 14d-9 filed by the
Partnership's general partner in connection with the 1995 Offers was materially
false and misleading in violation of federal securities laws and that the
general partner wrongfully refused to admit the Purchaser as a limited partner
to the Partnership and other Partnerships and asserting certain derivative
claims on behalf of the Partnership and certain of the other Partnerships. The
general partner subsequently admitted the Purchaser as a limited partner of the
Partnership and such other Partnerships. This action was dismissed without
prejudice on January 31, 1996.

On August 22 and 23, 1995, Mr. Icahn and a representative met with the
McNeils and their representatives regarding possible settlement of the pending
litigation respecting the 1995 Offers. Those discussions involved, among other
things, the possibility of a transaction pursuant to which Mr. Icahn or his
affiliates would acquire substantially all of the interest in the Partnership's
general partner and would acquire McREMI.

In connection with those settlement discussions, the Partnership's general
partner and the Purchaser agreed to a standstill arrangement whereby, among
other things, the Purchaser agreed to extend the expiration date of the 1995

19
<PAGE>

Offers and the Purchaser and its affiliates were permitted to conduct reasonable
due diligence (the "Due Diligence") with respect to the Partnership's general
partner, the Partnerships and their affiliates (subject to certain
confidentiality obligations). The Purchaser, Mr. Icahn and their affiliates also
agreed, subject to certain exceptions, that, prior to August 24, 1996, they
would not attempt to acquire any securities of partnerships (other than the
Partnerships) controlled by Robert A. McNeil, or propose to enter into business
combinations with them or make proxy solicitations with respect thereto.

From late August through September 19, 1995, representatives of Mr. Icahn
engaged in a "due diligence" review of certain non-public information regarding
McREMI, the Partnership's general partner, the Partnerships and their
affiliates, involving meetings with senior management and others, telephone
conferences and the exchange and review of documents.

Between August 24 and September 19, 1995, Mr. Icahn and representatives of
Mr. Icahn and his affiliates (including the Purchaser) and the McNeils, the
Partnership's general partner and their representatives engaged in ongoing
negotiations involving, among other things, discussion of: (i) a transaction in
which an affiliate of Mr. Icahn would acquire substantially all of the interests
in the Partnership's general partner and would acquire McREMI; (ii) potential
modifications to the outstanding 1995 Offers; (iii) cooperation to be provided
by the Partnership's general partner to facilitate the 1995 Offers; and (iv)
agreements with respect to settlement of outstanding litigation, both among the
parties and against the Partnership's general partner, McREMI and Mr. and Mrs.
McNeil, among others, instituted following the commencement of the 1995 Offers.
The negotiations and due diligence review involved extensive discussion of and
negotiation concerning many facets of the financial condition, tax aspects,
operations, and business of McREMI, the Partnership's general partner, the
Partnerships and their affiliates. On September 19, 1995, these negotiations
reached an impasse and were discontinued. Additional conversations after that
date failed to result in a resumption of negotiations.

On August 12, 1996, in anticipation of the commencement of the Offer and
Tender Offers for Units of certain other Partnerships, the Purchaser sent a
letter to the Partnership and the other Partnerships requesting lists of the
names, current residence or business addresses and certain other information
concerning the Limited Partners of the Partnership and such other Partnerships.
On August 19, 1996, the Partnerships commenced an action against the Purchaser,
Mr. Icahn and certain of their affiliates (collectively, the "Purchaser
Defendants") in United States District Court for the Central District of
California (the "California Federal Action") seeking, among other things, to
declare that the Partnerships are not required to provide the Purchaser with a
current list of the Limited Partners on the grounds that the Purchaser
Defendants commenced a tender offer in violation of the federal securities laws
by filing the Schedule 13D Amendment on August 5, 1996. See Section 8 of the
Offer to Purchase. On August 19, 1996, the Partnerships, through their counsel,
responded to the Purchaser's August 12 letter by refusing to provide the
Purchaser with a current list of the Limited Partners for the reasons set forth
above.

On August 23, 1996, the Purchaser Defendants filed, among other documents,
(a) an answer to the Partnerships' complaint in the California Federal Action
denying the allegations contained therein and asserting four affirmative
defenses; (b) a counterclaim seeking, among other things, injunctive relief
requiring the Partnerships to either make available to the Purchaser a copy of
the lists of Limited Partners or grant the Purchaser permission to inspect and
copy such lists; and (c) an application for a temporary restraining order
("TRO") and a preliminary injunction seeking access to the lists of Limited
Partners. On September 6, 1996, the Purchaser Defendants' TRO application was
denied. On September 12, 1996, the Partnerships filed an answer to the Purchaser
Defendants' counterclaim asserting six affirmative defenses and alleging that
the Purchaser Defendants were denied access to the lists of Limited Partners
because their requests for the lists were in connection with illegal tender
offers. Discovery is currently underway in the California Federal Action and the
matter is expected to go to trial in mid-October 1996.

Trading History of the Units. The Trading Summary for the period April 1,
1996 through May 30, 1996 ("Summary Period") appearing in the May/June 1996
issue of the Partnership Spectrum ("Trading Summary") indicated that, during the
Summary Period, an aggregate of 172 Units were traded in a total of 6 trades at
a price range of $50 to $64 per Unit and at a weighted average of $53.95 per
Unit. Limited Partners should be aware that the Form 10-K states as follows:
"[t]here is no established public trading market for limited partnership units
nor is one expected to develop." Therefore, the prices reflected in the Trading
Summary may not accurately reflect the value of the Partnership's assets or of
Units, and Limited Partners may or may not be able to sell their Units
independently of the Offer at the prices reflected in the Trading Summary.
Limited Partners should be aware that the Purchase Price in

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<PAGE>

the Offer is approximately 93.7% higher than the weighted average price for the
Summary Period, as reflected in the Trading Summary.

Determination of the Purchase Price. As described in Section 8 of the Offer
to Purchase, the Purchaser agreed, in the Letter Agreement, to commence a Tender
Offer for any and all Units of the Partnership (and certain other Partnerships)
at a price that is not less than 75% of the estimated liquidation value of the
Units. The Purchase Price represents 75% of the Purchaser's estimate of the
Units' liquidation value, as determined using the methodology described below.

In estimating liquidation value per Unit, the Purchaser first estimated net
asset value ("NAV Estimate"). The Purchaser prepared its NAV Estimate based on a
hypothetical sale (without taking into account any transaction costs) of all of
the Partnership's properties at their estimated aggregate value and the
distribution to the partners of the gross proceeds of that sale (net of existing
indebtedness), together with the Partnership's cash and proceeds from temporary
investments. The NAV Estimate prepared by the Purchaser does not take into
account: (i) real estate transaction costs that would be incurred on a sale of
the Partnership's properties, such as brokerage commissions and other selling
and closing expenses; (ii) timing considerations; or (iii) costs associated with
winding up the Partnership.

The Purchaser estimated the aggregate value of the Partnership's properties
in a hypothetical sale by reviewing publicly available financial information
relating to the Partnership for the fiscal year ended December 31, 1995 and six
months ended June 30, 1996, in order to determine an adjusted net income
(reduced by an amount intended to reflect normal capital expenditures and
operating expenses) of $6,823,132, and then capitalized that amount at 10.50%,
which the Purchaser believes represents an appropriate capitalization rate for a
real estate portfolio such as the Partnership's. As a result of that review
process, the Purchaser derived an NAV Estimate of $24,677,199, or $154.41 per
Unit (which includes cash and cash equivalents equal to approximately $2,686.044
or $16.81 per Unit). It should be noted that, while the Purchaser has access to
certain non-public information ("Due Diligence Information") relating to the
Partnership and its properties provided to it in 1995 in connection with its Due
Diligence (as described above in this Section 13 under "Prior Contacts with the
Partnership"), the Purchaser does not have access to more current information
concerning the Partnership or its properties, other than information that is
publicly available, that the Purchaser's calculations are based on rough
estimates and that the values resulting therefrom may not be indicative of
actual values to any extent. It should also be noted that investors may disagree
as to the appropriate capitalization rate to be applied, and Limited Partners
are advised that the utilization of a lower capitalization rate results in a
higher estimate of aggregate value.

In estimating liquidation value per Unit, the Purchaser adjusted its NAV
Estimate by deducting from that amount a reserve equal to 4% of the projected
property selling prices, which represents the Purchaser's estimate of the
estimated costs of brokerage commissions, title costs, legal fees, real estate
transfer taxes and other disposition expenses (assuming no prepayment penalties
on indebtedness encumbering the properties). The Purchaser further adjusted its
NAV Estimate to reflect the Partnership's other assets (excluding prepaid and
deferred expenses) and liabilities. Specifically, the Purchaser added the
amounts of cash segregated for security deposits, accounts receivable and escrow
deposits shown on the Partnership's unaudited balance sheet at June 30, 1996 and
subtracted accounts payable, accrued interest, accrued property taxes, accrued
expenses and security deposits and deferred rental revenue. The result of
$139.31 per Unit represents the Purchaser's estimate of the aggregate net
liquidating proceeds (before provision for the costs described in the following
sentence) that could be realized in an orderly liquidation of the Partnership,
based on the assumptions implicit in the calculations described above. The
Purchaser did not deduct any amounts in respect of the costs of conducting a
consent solicitation in order to obtain the Limited Partners' approvals for the
sales, as may be required by the Partnership Agreement, or winding up the
Partnership, because of the difficulty of estimating those amounts.

The Purchaser's analysis of liquidation value described above is merely
theoretical and does not itself reflect the value of the Units because (i) there
is no assurance that any such liquidation in fact will occur in the foreseeable
future and (ii) any liquidation in which the estimated fair market values
described above might be realized would take an extended period of time (at
least a year, and quite possibly significantly longer), during which the
Partnership and its partners would continue to be exposed to the risk of
fluctuations in asset values because of changing market conditions and other
factors. For any property sales in which the Partnership is required to
indemnify the buyer for matters arising after the closing, a portion of the
sales proceeds could be held by the Partnership until all possible claims were
satisfied, further extending the delay in the receipt by the Limited Partners of
liquidating proceeds. Because of these factors, the Purchaser believes the
actual current value of a Unit may be substantially less than its

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<PAGE>

estimate of the liquidation value. Conversely, there is a substantial likelihood
that the value realizable in an orderly liquidation could be greater than the
estimated liquidation value. A reduction in either operating expenses or capital
expenditures would result in a higher liquidation value under the method
described above. Similarly, a higher liquidation value would result if a buyer
applied lower capitalization rates (reflecting a willingness to accept a lower
rate of return on its investment) to the net operating income generated by the
Partnership's properties than the capitalization rates applied by the Purchaser.
Furthermore, the analysis described above is based on a series of assumptions,
some of which may not be correct. Accordingly, this analysis should be viewed
merely as indicative of the Purchaser's approach to valuing Units and not as any
way predictive of the likely result of any future transactions.

SECTION 14. CONDITIONS OF THE OFFER.

Notwithstanding any other term of the Offer, the Purchaser will not be
required to accept for payment or to pay for any Units tendered if all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expiration of waiting periods imposed by, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, necessary for the consummation of the transactions
contemplated by the Offer shall not have been filed, occurred or been obtained.
Furthermore, notwithstanding any other term of the Offer and in addition to the
Purchaser's right to withdraw the Offer at any time before the Expiration Date,
the Purchaser will not be required to accept for payment or pay for any Units
not theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such Units if, at any time on or after the date of the Offer and
before the acceptance of such Units for payment or the payment therefor, any of
the following conditions exists:

(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental authority or agency
shall have been issued and shall remain in effect which (i) makes illegal,
delays or otherwise directly or indirectly restrains or prohibits the
making of the Offer or the acceptance for payment, purchase of or payment
for any Units by the Purchaser, (ii) imposes or confirms limitations on the
ability of the Purchaser effectively to exercise full rights of ownership
of any Units, including, without limitation, the right to vote any Units
acquired by the Purchaser pursuant to the Offer or otherwise on all matters
properly presented to the Partnership's Limited Partners, (iii) imposes or
confirms limitations on the ability of the Purchaser to fully exercise the
voting rights conferred pursuant to its appointment as proxy in respect of
all tendered Units which it accepts for payment, (iv) requires divestiture
by the Purchaser of any Units, (v) causes any material diminution of the
benefits to be derived by the Purchaser as a result of the transactions
contemplated by the Offer, or (vi) might materially adversely affect the
Business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Purchaser or the Partnership;

(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer by any federal or state court, government or
governmental authority or agency, which might, directly or indirectly,
result in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;

(c) any change or development shall have occurred or been threatened
since the date of the Offer to Purchase, in the business, properties,
assets, liabilities, financial condition, operations, results of
operations, or prospects of the Partnership, which is outside the ordinary
course of the Partnership's business or may be materially adverse to the
Partnership, or the Purchaser shall have become aware of any fact that does
or may have a material adverse effect on the value of the Units;

(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation by any
governmental authority on, or other event which might affect, the extension
of credit by lending institutions or result in any imposition of currency
controls in the United States, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States, (v) a material change in United
States or other currency exchange rates or a suspension or a limitation on
the markets thereof, or (vi) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;

(e) the Partnership's general partner shall not have consented in
writing to, and shall not have taken all other action that the Purchaser
deems necessary, in the Purchaser's judgment, for the admission of the
Purchaser

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<PAGE>

to the Partnership, simultaneously with the consummation of the Offer, as a
substitute Limited Partner in respect of the Units purchased in accordance
with the Partnership Agreement and applicable law;

(f) the Partnership's general partner shall not have furnished to the
Purchaser such information as is necessary, in the Purchaser's judgment, to
verify that the person purporting to transfer Units to the Purchaser
pursuant to the Offer is in fact the owner of such Units as reflected on
the Partnership's books and records;

(g) the Partnership's general partner shall have caused the
Partnership to impose unreasonable transfer, substitution or similar fees,
including, without limitation, those that would otherwise apply to: (i) the
tender of Units by holders pursuant to the Offer, (ii) the transfer of such
Units to the Purchaser and (iii) the admission of the Purchaser as a
substitute Limited Partner in respect of such Units;

(h) there shall have been threatened, instituted or pending any action
or proceeding before any court or governmental agency or other regulatory
or administrative agency or commission or by any other person, challenging
the acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the judgment of the
Purchaser, adversely affecting the Purchaser or the Partnership;

(i) the Partnership shall have (i) issued, or authorized or proposed
the issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such
interests or other convertible securities, (ii) issued or authorized or
proposed the issuance of any other securities, in respect of, in lieu of,
or in substitution for, all or any of the presently outstanding Units, or
(iii) declared or paid any distribution, other than in cash, on any of its
partnership interests, or (iv) the Partnership or any of the Partnership's
general partner shall have authorized, proposed or announced its intention
to propose any merger, consolidation or business combination transaction,
acquisition of assets, disposition of assets or material change in its
capitalization, or any comparable event not in the ordinary course of
business;

(j) a tender offer or exchange offer for some or all of the Units is
made or publicly announced or proposed to be made, supplemented or amended
by any person other than the Purchaser; or

(k) the general partner of the Partnership shall have modified, or
taken any step or steps to modify, in any way, the procedures or
regulations applicable to the registration of Units or transfers of Units
on the books and records of the Partnership or the admission of transferees
of Units as Limited Partners.

The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to such
conditions or may be waived by the Purchaser in whole or in part at any time and
from time to time in its sole discretion. Any determination by the Purchaser
concerning the events described above will be final and binding upon all
parties. If the Purchaser, in its sole discretion, waives the condition
contained in the foregoing paragraph (g), then the Purchaser will, to the extent
of such waiver, pay all applicable fees referred to in such paragraph. No
assurance can be given that the Partnership's General Partner will voluntarily
take the actions referred to in paragraphs (e) and (f). Accordingly, in order to
cause the Partnership's General Partner to take such actions, the Purchaser may
be required to take appropriate actions, including, without limitation, the
commencement of litigation, the effect of which may be to delay payment for the
tendered Units (except to the extent, if any, that the Purchaser waives the
applicable conditions).

SECTION 15. CERTAIN LEGAL MATTERS.

General. Except as set forth in this Section 15, the Purchaser is not,
based on its review of publicly available filings by the Partnership with the
Commission and other publicly available information regarding the Partnership,
aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Units as contemplated herein, or any
filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Units by the Purchaser pursuant to the
Offer as contemplated herein. While there is no present intent to delay the
purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's business
might not have to be disposed of or other substantial conditions complied with
in order to obtain such approval or action, any of which could cause the
Purchaser to elect to terminate the Offer without purchasing Units thereunder.
The Purchaser's obligation to

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<PAGE>

purchase and pay for Units is subject to certain conditions, including
conditions related to the legal matters discussed in this Section 15 of the
Offer to Purchase.

Antitrust. The Purchaser does not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units contemplated by the Offer.

Margin Requirements. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.

State Laws. The Purchaser is not aware of any jurisdiction in which the
making of the Offer is not in compliance with applicable law. If the Purchaser
becomes aware of any jurisdiction in which the making of the Offer would not be
in compliance with applicable law, the Purchaser will make a good faith effort
to comply with any such law. If, after such good faith effort, the Purchaser
cannot comply with any such law, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) Limited Partners residing in such
jurisdiction. In those jurisdictions whose securities or blue sky laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be made on
behalf of the Purchaser, if at all, only by one or more registered brokers or
dealers licensed under the laws of that jurisdiction.

SECTION 16. FEES AND EXPENSES.

Except as set forth in this Section 16, the Purchaser will not pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
Units pursuant to the Offer. The Purchaser has retained IBJ Schroder Bank &
Trust Company to act as Depositary and Beacon Hill Partners, Inc. to act as
Information Agent in connection with the Offer. The Purchaser will pay the
Depositary and Information Agent reasonable and customary compensation for their
services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary and Information Agent against
certain liabilities and expenses in connection therewith, including liabilities
under the federal securities laws. The Purchaser will also pay all costs and
expenses of printing and mailing the Offer and its legal fees and expenses.

No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained herein or in the
Assignment of Partnership Interest and, if given or made, such information or
representation must not be relied upon as having been authorized.

The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (including exhibits), pursuant to Rule 14d-3 under the Exchange
Act, furnishing certain additional information with respect to the Offer, and
may file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
places and in the same manner as set forth in the Introduction of the Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).

HIGH RIVER LIMITED PARTNERSHIP

September 20, 1996,
as amended through
September 25, 1996

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<PAGE>

SCHEDULE I

Set forth below are the name and position of: (i) the controlling member
and each executive officer/manager of Riverdale LLC ("Riverdale"); and (ii) the
controlling stockholder and sole director and the executive officer of Unicorn
Associates Corporation ("Unicorn"). The business address of each of the
controlling member and each executive officer/manager of Riverdale and the
controlling stockholder and sole director and the executive officer of Unicorn
is 114 W. 47th Street, New York, New York 10036. The controlling member and each
executive officer/manager of Riverdale and the controlling stockholder and sole
director and the executive officer of Unicorn are each citizens of the United
States of America.

Name Position
---- --------
Carl C. Icahn ...................... Member (Riverdale); Controlling
Stockholder and Sole Director (Unicorn)

Edward E. Mattner .................. President/Manager (Riverdale);
President, Secretary and Treasurer
(Unicorn)

Robert J. Mitchell ................. Vice President and
Treasurer/Manager (Riverdale)

The following sets forth the (a) name, (b) present principal occupation or
employment and the name, principal business and address of any corporation or
other organization in which such employment or occupation is conducted and (c)
material occupations, positions, offices or employments during the last five
years, giving the starting and ending dates of each and the name, principal
business and address of any business corporation or other organization in which
such occupation, position, office or employment was carried on, of: (i) the
controlling member and each executive officer/manager of Riverdale; and (ii) the
controlling stockholder and sole director and the executive officer of Unicorn.

Name Principal Occupations For The Last Five Years
---- ---------------------------------------------
Carl C. Icahn ......... Mr. Icahn's present principal occupation is acting as
President and a Director of Icahn Holding Corporation,
a Delaware corporation ("IHC"), and Chairman of the
Board and a Director of various of IHC's subsidiaries,
including ACF Industries, Incorporated, a New Jersey
corporation ("ACF"). IHC is primarily engaged in the
business of holding, either directly or through
subsidiaries, a majority of the common stock of ACF and
its address is 100 South Bedford Road, Mount Kisco,
N.Y. 10549. ACF is primarily engaged in the business of
leasing, selling and manufacturing railroad freight and
tank cars and its address is 3301 Rider Trail South,
Earth City, Missouri 63045. Mr. Icahn has been
President and a Director of IHC since August 1982 and
has been a director of ACF since June 1984 and Chairman
of the Board of ACF since October 1984. Mr. Icahn also
maintains similar positions with various of ACF's
affiliates, including: (i) since 1968, Mr. Icahn has
been Chairman of the Board, President and a Director of
Icahn & Co., Inc., a Delaware corporation (collectively
with its predecessor companies by merger, ("Icahn &
Co."), which is a registered broker-dealer and a member
firm of the New York Stock Exchange, Inc. and whose
address is 1 Wall Street Court, New York, N.Y. 10005;
(ii) since November 1990, Mr. Icahn has been Chairman
of the Board and a Director of American Property
Investors, Inc., a Delaware corporation ("API") which
is primarily engaged in the business of acting as
general partner of American Real Estate Partners, L.P.,
and whose address is 90 South Bedford Road, Mount
Kisco, N.Y. 10549; and (iii) from 1986 until January
1993, when he resigned, Mr. Icahn was a Director and
Chairman of the Board of Trans World Airlines, Inc.
("TWA"), whose address is One City Centre, 515 N. Sixth
Street, St. Louis, Missouri 63101. Since June 1993, Mr.
Icahn has also served as a Director of Astrum
International Corp., a Delaware holding company
("Astrum") whose principal subsidiaries are Samsonite
Corporation, a manufacturer and distributor of luggage,
Culligan International Company, a manufacturer of water
purification and treatment equipment and McGregor
Corporation, a manufacturer and distributor of

I-1
<PAGE>

apparel products and a licensor of apparel brand names.
Astrum's address is 40301 Fisher Island Drive, Fisher
Island, Florida 33129.

Edward E. Mattner ..... Mr. Mattner's present principal occupation is acting as
a securities trader for various affiliates of Mr.
Icahn. Mr. Mattner has served in this capacity since
May 1976.

Robert J. Mitchell .... Mr. Mitchell's present principal occupation is acting
as Senior Vice President Finance of ACF. ACF is
primarily engaged in the business of leasing, selling
and manufacturing railroad freight and tank cars and
its address is 3301 Rider Trail South, Earth City,
Missouri 63045. Mr. Mitchell has served as Executive
Vice President Finance since March 1995 and also served
as Secretary of ACF since August 1993, Treasurer from
December 1984 to March 1995 and Assistant Secretary
from September 1986 to August 1993. Mr. Mitchell has
also served as Treasurer (since May 1988) and Chief
Financial Officer (since March 1995) of American
Railcar Industries, Inc., a subsidiary of ACF which is
primarily engaged in the business of repairing,
refurbishing, painting and maintaining railcars and in
manufacturing and selling parts for railcars and other
industrial purposes. The address of American Railcar
Industries, Inc. is 3301 Rider Trail South, Earth City,
Missouri 63045. Mr. Mitchell became the Treasurer of
TWA, whose address is One City Centre, 515 N. Sixth
Street, St. Louis, Missouri 63101, in 1987 and held
that position until he resigned, effective as of
January 5, 1993. From March 1982 until November 1984,
Mr. Mitchell was a Vice President-Department Head of
National Westminster Bank, USA, located at 175 Water
Street, New York, N.Y. 10038.

I-2
<PAGE>

EXHIBIT A

12. ISSUANCE, TRANSFER, AND EXCHANGE OF CERTIFICATES.

12.2. Registration of Units; Registration of Transfer and Exchange. (c)
Limited Partners shall have the right to assign ten (10) or more whole Units,
provided, however, unless prohibited by any applicable state securities law,
three (3) Units may be acquired or retained by IRA or Keogh Plans, and provided
further that a Limited Partner must assign all of his Units if he would
otherwise retain less than the minimum amount. Every Certificate surrendered for
registration of transfer or exchange shall be duly endorsed on the reverse side
thereof, or be accompanied by a written instrument of transfer in form
satisfactory to the General Partner or the Transfer Agent, as the case may be,
duly executed by the Limited Partner or such Limited Partner's attorney duly
authorized in writing. Every Certificate surrendered for registration of
transfer shall be accompanied by a Transfer application or other written
instrument of acceptance to the same effect in form satisfactory to the General
Partner or the Transfer Agent, as the case may be, duly executed by the
transferee or such transferee's attorney duly authorized in writing.

Notwithstanding anything to the contrary in this Paragraph 12, the General
Partner, in its discretion and upon notice to the Limited Partners, may adopt an
alternative procedure for the registration of Units and transfers of Units,
including, without limitation, providing for uncertificated securities.

A-1
<PAGE>

Manually signed facsimile copies of the Assignment of Partnership Interest
will be accepted. The Assignment of Partnership Interest and any other required
documents should be sent or delivered by each Limited Partner or such Limited
Partner's broker, dealer, bank, trust company or other nominee to the Depositary
as set forth below.

The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY

By Mail:

P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attn: Reorganization Operations Department

By Hand/Overnight Delivery:

One State Street
New York, New York 10004
Attn: Securities Processing Window,
Subcellar One, (SC-1)

By Facsimile:

(212) 858-2611

Confirm by Telephone:

(212) 858-2103

Questions and requests for assistance or for additional copies of the Offer
to Purchase and the Assignment of Partnership Interest may be directed to the
Information Agent at its telephone number and address listed below. You may also
contact your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.

The Information Agent for the Offer is:

BEACON HILL PARTNERS, INC.
90 Broad Street
New York, New York 10004
(212) 843-8500 (Collect)
or
(800) 253-3814 (Toll Free)

POWER OF ATTORNEY

KNOW EVERYONE BY THESE PRESENTS, which are intended to constitute a Power
of Attorney, that I, CARL C. ICAHN, residing at Museum Towers, 15 W. 53rd
Street, Apt. 51C, New York, New York, do hereby appoint THEODORE ALTMAN,
residing at 94 Haights Cross Road, Chappaqua, New York

MY ATTORNEY-IN-FACT TO ACT: As Attorney-In-Fact for the limited purpose of
executing amendments to statements on Schedule 14D-1 in connection with those
certain tender offers (the "McNeil Tender Offers") with respect to each of
McNeil Pacific Investors Fund 1972, McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate
Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX,
L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P.,
McNeil Real Estate Fund XXVI, L.P. and McNeil Real Estate Fund XXVII, L.P.

To induce any third party to act hereunder, I hereby agree that any third
party receiving a duly executed copy or facsimile of this instrument may act
hereunder, and that revocation or termination hereof, shall be ineffective as to
such third party unless and until actual notice or knowledge of such revocation
or termination shall have been received by such third party.

IN WITNESS WHEREOF, I have hereunto signed my name this 25th day of
September, 1996.

/s/ CARL C. ICAHN
--------------------------
Carl C. Icahn

STATE OF NEW YORK }
COUNTY OF NEW YORK }

On September 25, 1996 before me, Alice Blumberg, the undersigned officer,
personally appeared CARL C. ICAHN, known personally to me to be the individual
described in and who executed the foregoing instrument and acknowledged that he
executed the same.

/s/ ALICE BLUMBERG
--------------------------
Notary Public

[Signature Page to Power of Attorney for McNeil Partnerships]