MRI BUSINESS PROPERTIES FUND LTD, SC 14D1, 1995-06-02

MRI BUSINESS PROPERTIES FUND LTD
SC 14D1, 1995-06-02
REAL ESTATE

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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

-----------------------

MRI BUSINESS PROPERTIES FUND, LTD.
(Name of Subject Company)

DEFOREST VENTURES I L.P.
(Bidder)

UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class
of Securities)

NONE
(CUSIP Number of Class
of Securities)

-----------------------

Michael L. Ashner Copy to:
DeForest Capital I Corporation Mark I. Fisher
100 Jericho Quadrangle Rosenman & Colin
Suite 214 575 Madison Avenue
Jericho, New York 11735-2717 New York, New York 10022-2585
(516) 822-0022 (212) 940-8877

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

Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction Amount of
Valuation* Filing Fee
---------- ----------

$2,128,303.90 $425.66
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*For purposes of calculating the filing fee only. This amount assumes the
purchase of 18,264 units of limited partnership interest ("Units") of the
subject company for $116.53 per Unit in cash.

|_| 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 date of its filing.

- --------------------------
CUSIP No. None
- --------------------------

- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person

DeForest Ventures I L.P.
I.R.S. I.D. No. 11-3230287

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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) |_|

(b) |_|

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3. SEC Use Only

- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)

WC; OO

- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) of 2(f)

|_|

- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization

Delaware

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7. Aggregate Amount Beneficially Owned by Each Reporting
Person

22,312 Units

- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes

Certain Shares (See Instructions)

|_|
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)

27.16%

- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)

Item 1. Security and Subject Company.

(a) The name of the subject company is MRI Business Properties Fund,
Ltd., a California limited partnership (the "Partnership"), which has its
principal executive offices at 5665 Northside Drive, N.W., Suite 370, Atlanta,
Georgia 30328.

(b) This Schedule relates to the offer by DeForest Ventures I L.P., a
Delaware limited partnership (the "Purchaser"), to purchase up to 18,264
outstanding units of limited partnership interest ("Units") of the Partnership
at $116.53 per Unit, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated June 2, 1995 (the "Offer
to Purchase") and the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. The number of Units
outstanding is set forth under "INTRODUCTION" in the Offer to Purchase and is
incorporated herein by reference.

(c) The information set forth under "THE TENDER OFFER -- Section 13.
Background of the Offer" of the Offer to Purchase is incorporated herein by
reference.

Item 2. Identity and Background.

(a)-(d) The information set forth under "INTRODUCTION", "THE TENDER
OFFER -- Section 11. Certain Information Concerning the Purchaser" and Schedule
1 of the Offer to Purchase is incorporated herein by reference.

(e)-(f) During the last five years, neither the Purchaser, the General
Partner nor, to the best of its knowledge, any of the persons listed in Schedule
1 of the Offer to Purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) were a party to a

civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding were or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.

(g) The information set forth in Schedule 1 of the Offer to Purchase
is incorporated herein by reference.

Item 3. Past Contracts, Transactions or Negotiations with the Subject Company.

(a) The information set forth in "THE TENDER OFFER -- Section 10.
Conflicts of Interest and Transactions with Affiliates" and "THE TENDER OFFER --
Section 13. Background of the Offer" of the Offer to Purchase is incorporated
herein by reference. In addition, the information set forth in Note 2 to the
financial statements of the Partnership included in the Form 10-K of the
Partnership for the fiscal year ended September 30, 1994 (such Note being
referred to as the "Form 10-K Note"), a copy of which is attached hereto as
Exhibit (g)(i), Note 2 to the financial statements of the Partnership included
in the Form 10-Q of the Partnership for the six months ended March 31, 1995
(such Note being referred to as the "Form 10-Q Note"), a copy of which is
attached hereto as Exhibit (g)(ii), and Item 1. "Business --

Subsequent Events" of Form 10-K of the Partnership for the fiscal year ended
September 30, 1994 (the "1994 Form 10K"), a copy of which is attached hereto as
Exhibit (g)(iii), is incorporated herein by reference.

(b) The information set forth in "THE TENDER OFFER -- Section 13.
Background of the Offer" of the Offer to Purchase is incorporated herein by
reference. In addition, the information set forth in the Form 10-K Note, the
Form 10-Q Note and Item 1 of the 1994 Form 10-K is incorporated herein by
reference.

Item 4. Source and Amount of Funds or Other Consideration.

(a)-(b) The information set forth in "THE TENDER OFFER -- Section 10.
Conflicts of Interest and Transactions with Affiliates" and "THE TENDER OFFER --
Section 12. Source of Funds" of the Offer to Purchase is incorporated herein by
reference.

Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.

(a)-(b) The information set forth in "THE TENDER OFFER -- Section 8.
Future Plans" and "THE TENDER OFFER -- Section 13. Background of the Offer" of
the Offer to Purchase is incorporated herein by reference.

(d) The information set forth in "THE TENDER OFFER -- Section 8.
Future Plans" of the Offer to Purchase is incorporated herein by reference.

(e)-(g) Not applicable.

Item 6. Interest in Securities of the Subject Company.

(a) The information set forth in "INTRODUCTION" and "THE TENDER OFFER
- -- Section 11. Certain Information Concerning the Purchaser" of the Offer to
Purchase is incorporated herein by reference.

(b) None.

Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.

The information set forth in "THE TENDER OFFER -- Section 11. Certain
Information Concerning the Purchaser" and "THE TENDER OFFER -- Section 12.
Source of Funds" of the Offer to Purchase is incorporated herein by reference.

Item 8. Persons Retained, Employed or to be Compensated.

None.

Item 9. Financial Statements of Certain Bidders.

The information set forth in "THE TENDER OFFER -- Section 11. Certain
Information Concerning the Purchaser" and Schedule 2 of the Offer to Purchase is
incorporated herein by reference.

Item 10. Additional Information.

(a) None.

(b)-(d) The information set forth in "THE TENDER OFFER -- Section 15.
Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.

(e) None.

(f) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, and which are incorporated herein in their entirety by

reference.

Item 11. Material to be Filed as Exhibits.

(a)(1) Offer to Purchase dated June 2, 1995.

(a)(2) Letter of Transmittal.

(a)(3) Form of Cover Letter, dated June 2, 1995, from
DeForest Ventures I L.P. to Unitholders.

(b)(1) Master Agreement, dated as of November 21, 1994,
among DeForest Capital II Corporation, DeForest
Ventures II L.P., NPI-AP Management, L.P., National
Property Investors, Inc. and Kidder Peabody Mortgage
Capital Corporation.

(b)(2) Letter Agreement supplementing the Master Agreement,
dated November 30, 1994, among DeForest Capital II
Corporation, DeForest Ventures II L.P., NPI-AP
Management, L.P., National Property Investors, Inc.,
DeForest Capital I Corporation, DeForest Ventures I
L.P. and Kidder Peabody Mortgage Capital Corporation.

NationalProperty Investors, Inc. and PaineWebber Real
Estate Securities Inc.

(b)(4) Loan Agreement, dated as of November 30, 1994,
between DeForest Capital I Corporation, DeForest
Ventures I L.P. and Kidder Peabody Mortgage Capital
Corporation.

(b)(5) Amendment No. 1 to the Loan Agreement, dated as of
May 5, 1995, among DeForest Ventures I L.P. and
PaineWebber Real Estate Securities Inc.

(c)(1) Agreement, dated December 1, 1994, by and between
Lisle W. Payne and Ventures I relating to certain
distributions which may be received by Ventures I.

(c)(2) Agreement, dated December 1, 1994, by and between
Janet E. Larson, individually and as Trustee of the
Larson Family Revocable Trust and Ventures I relating

to certain distributions which may be received by
Ventures I.

(d) None.

(e)-(f) Not applicable.

(g)(i) Note 2 to the financial statements of MRI Business
Properties Fund, Ltd. included in the Form 10-K of
MRI Business Properties Fund, Ltd. for the fiscal
year ended September 30, 1994.

(g)(ii) Note 2 to the financial statements of MRI Business
Properties Fund, Ltd. included in the Form 10-Q of
MRI Business Properties Fund, Ltd. for the six months
ended March 31, 1995.

(g)(iii) Item 1. "Business - Subsequent Events" of the Form
10-K of MRI Business Properties Fund, Ltd. for the
fiscal year ended September 30, 1994.

Signatures

After due 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: June 2, 1995
DEFOREST VENTURES I L.P.
By: DeForest Capital I Corporation,
its General Partner

By: /s/ Michael L. Ashner
------------------------------
Name: Michael L. Ashner
Title: President

Exhibit Index

Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------

(a)(1) Offer to Purchase dated June 2, 1995 . . . . . . . . . . . . .

(a)(2) Letter of Transmittal . . . . . . . . . . . . . . . . . . . .

(a)(3) Form of Cover Letter, dated June 2, 1995,
from DeForest Ventures I L.P. to
Unitholders . . . . . . . . . . . . . . . . . . . . . . . . .

(b)(1) Master Agreement, dated as of November
21, 1994, among DeForest Capital II
Corporation, DeForest Ventures II L.P.,
NPI-AP Management, L.P., National
Property Investors, Inc. and Kidder
Peabody Mortgage Capital Corporation . . . . . . . . . . . . *

(b)(2) Letter Agreement supplementing the
Master Agreement, dated November 30,
1994, among DeForest Capital II
Corporation, DeForest Ventures II L.P.,
NPI-AP Management, L.P., National
Property Investors, Inc., DeForest
Capital I Corporation DeForest Ventures
I L.P. and Kidder Peabody Mortgage
Capital Corporation . . . . . . . . . . . . . . . . . . . . *

(b)(3) Amendment No. 2 to the Master Agreement,
dated as of May 5, 1995, among DeForest
Capital I Corporation, DeForest Ventures
I L.P., DeForest Capital II Corporation,
DeForest Ventures II L.P., NPI-AP
Management, L.P., National Property
Investors, Inc. and PaineWebber Real
Estate Securities Inc. . . . . . . . . . . . . . . . . . . **

(b)(4) Loan Agreement, dated as of November 30,
1994, between DeForest Capital I Corporation,
DeForest Ventures I L.P. and Kidder
Peabody Mortgage Capital Corporation . . . . . . . . . . . . *

(b)(5) Amendment No. 1 to the Loan Agreement, dated
as of May 5, 1995, among DeForest Ventures I
L.P. and PaineWebber Real Estate Securities
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . **

(c)(1) Agreement, dated December 1, 1994, by
and between Lisle W. Payne and Ventures
I relating to certain distributions
which may be received by Ventures I . . . . . . . . . . . **

(c)(2) Agreement, dated December 1, 1994, by
and between Janet E. Larson, individually
and as Trustee of the Larson Family
Revocable Trust and Ventures I relating
to certain distributions which may be
received by Ventures I . . . . . . . . . . . . . . . . . . **

(d) None . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)-(f) Not applicable . . . . . . . . . . . . . . . . . . . . . .

(g)(i) Note 2 to the financial statements of
MRI Business Properties Fund, Ltd. included
in the Form 10-K of MRI Business Properties
Fund Ltd. for the fiscal year ended
September 30, 1994 . . . . . . . . . . . . . . . . . . . .

(g)(ii) Note 2 to the financial statements of
MRI Business Properties Fund, Ltd.
included in the Form 10-Q of MRI Business
Properties Fund, Ltd. for the six months
ended March 31, 1995 . . . . . . . . . . . . . . . . . . .

(9)(iii) Item 1. "Business - Subsequent Events" of
the Form 10-K of MRI Business Properties
Fund, Ltd. for the fiscal year ended
September 30, 1994 . . . . . . . . . . . . . . . . . . . . .

* Incorporated by reference to the Purchaser's Amendment No. 2 to
Schedule 14D-1 (Final Amendment) filed November 30, 1994 in respect of
the Purchaser's offer to purchase Units of Limited Partnership Interest
of Century Properties Fund XII.

** Incorporated by reference to the Purchaser's Schedule 14D-1 filed on
June 2, 1995 in respect to the Purchaser's offer to purchase Units of
Limited Partnership Interest of Century Properties Fund XII.

Offer to Purchase
Up to 18,264 Units of Limited Partnership Interest
of
MRI BUSINESS PROPERTIES FUND, LTD.
for
$116.53 Per Unit
by
DEFOREST VENTURES I L.P.

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THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995, UNLESS EXTENDED.
- --------------------------------------------------------------------------------

This offer is being made pursuant to the terms of the settlement of a class
action litigation described below. DeForest Ventures I L.P., a Delaware limited
partnership (the "Purchaser"), hereby offers to purchase up to 18,264 of the
outstanding Units of Limited Partnership Interest (the "Units") of MRI Business
Properties Fund, Ltd., a California limited partnership (the "Partnership"), for
$116.53 per Unit, upon the terms and subject to the conditions set forth in this
Offer to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal as each may be supplemented or amended from time to time (which
together constitute the "Offer"). The 18,264 Units sought pursuant to the Offer
represent approximately 22% of the total Units outstanding as of June 2, 1995.

In order to avoid a termination of the Partnership for federal income tax
purposes, the Purchaser will not purchase Units pursuant to the Offer if, after
giving effect such purchase, 50% or more of the outstanding interests in the
Partnership would have been transferred in the 12-month period preceding the
consummation of the Offer. In order to avoid such a tax termination while at the
same time providing to each tendering Unitholder upon consummation of the Offer
$116.53 (the "Cash Consideration") for each Unit tendered, the Purchaser has
structured the Offer to include a non-recourse loan in the event that more than
16,184 of the outstanding Units (the "Transfer Limitation") are tendered.
Accordingly, if more than 16,184 of the outstanding Units are tendered, the
aggregate Cash Consideration paid to each tendering Unitholder will represent
(i) the Cash Consideration per Unit payable to purchase the number of Units
tendered by such Unitholder which under the Transfer Limitation the Purchaser is
permitted to purchase ("Purchase Proceeds"), and (ii) the proceeds of a
non-recourse loan ("Loan Proceeds") to such Unitholder (a "Loan") equal to the
Cash Consideration per Unit payable in respect of the Units tendered by such
Unitholder which under the Transfer Limitation the Purchaser is not permitted to
purchase (the "Retained Units"). The Loan will be secured only by the Retained
Units. The acceptance of a Loan will not impose any personal liability on a
tendering Unitholder for the payment of any principal or interest in respect of
such Loan.

Northern District of Georgia, Atlanta Division, (the "Court").

The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 18,264 Units are validly tendered and not withdrawn,
subject to the Transfer Limitation and the delivery of Loan Proceeds (as
hereinafter defined), the Purchaser will accept for purchase on a pro rata basis
18,264 Units, subject to the terms and conditions herein.

A Unitholder must tender all Units owned by such Unitholder in order for
the tender to be valid.

If necessary to effect the terms of the Settlement, and subject to
obtaining the approval of the Court and/or counsel for the settling plaintiffs
in the Action, the Purchaser may amend the Offer or extend the period of time
during which the Offer is open and thereby delay acceptance for payment of, and
the payment for, any

Units. Any such 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 Securities Exchange Act of 1934 (the "Exchange Act").

-----------------------------

If you have any questions or need additional information, you may contact
the Purchaser at:

DeForest Ventures I L.P.
(404) 916-9055 or (404) 850-9640

June 2, 1995

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----

<S> <C>
INTRODUCTION......................................................................... 1

THE TENDER OFFER..................................................................... 3
Section 1. Terms of the Offer.............................................. 3
Section 2. Proration; Acceptance for Payment and Payment for Units......... 4

Section 3. Procedures for Tendering Units.................................. 4
Section 4. Withdrawal Rights............................................... 6
Section 5. Extension of Tender Period; Termination; Amendment.............. 6
Section 6. Certain Federal Income Tax Consequences......................... 7
Section 7. Effects of the Offer........................................... 10
Section 8. Future Plans................................................... 11
Section 9. Certain Information Concerning the Partnership................. 11
Section 10. Conflicts of Interest and Transactions With Affiliates......... 11
Section 11. Certain Information Concerning the Purchaser.................... 12
Section 12. Source of Funds................................................. 13
Section 13. Background of the Offer......................................... 16
Section 14. Conditions of the Offer......................................... 21
Section 15. Certain Legal Matters........................................... 22
Section 16. Fees and Expenses............................................... 22
Section 17. Miscellaneous................................................... 22

Exhibit A Form of Note and Security Agreement

Schedule 1 Information with respect to Directors and Executive
Officers of DeForest Capital

Schedule 2 Financial Statements of the Purchaser and DeForest
Capital

Schedule 3 Subject Partnerships
</TABLE>

To the Holders of Units of
Limited Partnership Interest
of MRI Business Properties Fund, Ltd.

INTRODUCTION

This offer is being made pursuant to the terms of the settlement of a class
action litigation described below. DeForest Ventures I L.P., a Delaware limited
partnership (the "Purchaser"), hereby offers to purchase up to 18,264 of the
outstanding Units of Limited Partnership Interest (the "Units") of MRI Business
Properties Fund, Ltd., a California limited partnership (the "Partnership"), for
$116.53 per Unit, upon the terms and subject to the conditions set forth in this
Offer to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal as each may be supplemented or amended from time to time (which
together constitute the "Offer"). Holders of Units ("Unitholders") who tender
their Units will not be obligated to pay any commissions or partnership transfer
fees, which commissions and fees will be borne by the Purchaser. A Unitholder
must tender all Units owned by such Unitholder in order for the tender to be
valid.

In order to avoid a termination of the Partnership for federal income tax
purposes (see "THE TENDER OFFER - Section 5. Certain Federal Income Tax
Consequences" for a discussion of the effects of such a termination), the

Purchaser will not purchase Units pursuant to the Offer if, after giving effect
to such purchase, 50% or more of the outstanding interests in the Partnership
would have been transferred in the 12-month period preceding the consummation of
the Offer. In order to avoid such a tax termination while at the same time
providing to each tendering Unitholder upon consummation of the Offer $116.53
for each Unit tendered the "Cash Consideration"), the Purchaser has structured
the Offer to include a non-recourse loan in the event that more than 16,184 of
outstanding Units (the "Transfer Limitation") are tendered. Accordingly, if more
than 16,184 of the outstanding Units are tendered, the aggregate Cash
Consideration paid to each tendering Unitholder will represent (i) the Cash
Consideration per Unit payable to purchase the number of Units tendered by such
Unitholder which under the Transfer Limitation the Purchaser is permitted to
purchase ("Purchase Proceeds"), and (ii) the proceeds of a non-recourse loan
("Loan Proceeds") to such Unitholder (a "Loan") equal to the Cash Consideration
per Unit payable in respect to the Units tendered by such Unitholder which under
the Transfer Limitation the Purchaser is not permitted to purchase (the
"Retained Units"). The Loan will be secured only by the Retained Units. (See
"THE TENDER OFFER - SECTION 1. Terms of the Offer" for further information
relating to the Loans.) The acceptance of a Loan will not impose any personal
liability on a tendering Unitholder for the payment of any principal or interest
in respect of its Loan. Each Loan may be satisfied, at its maturity, by
surrendering to the Purchaser the Retained Units or, at the sole option of the
tendering Unitholder, by a payment in cash equal to the then outstanding balance
of principal and accrued interest in respect of such Loan. In establishing the
number of Units constituting the Transfer Limitation, the Purchaser took into
account the historical transfer volume for Units, as well as the number of Units
acquired by the Purchase in the Original Tender Offer (as defined below) for
Units, in order to continue to permit the historical level of transfers after
the consummation of the Offer.

The Offer is being made pursuant to the terms of a court approved
Settlement Agreement (the "Settlement Agreement") which governs the terms and
conditions of a settlement (the "Settlement") of the class action litigation
(the "Action") entitled In Re DeForest Tender Offer Securities Litigation (Civil
Action No. 1:94- CV-2983-JEC) filed in the United States District Court for the
Northern District of Georgia, Atlanta Division, (the "Court"). Pursuant to the
Settlement Agreement, Unitholders who tender their Units may also be entitled to
an additional cash payment (the "Residual Settlement Premium"). The per Unit
amount of the Residual Settlement Premium, which is not expected to be material,
is dependent on the amount of attorney's fees awarded by the Court following
expiration of the Offer and will be determined in accordance with the terms of
the Settlement Agreement. (See "THE TENDER OFFER - Section 13. Background of the
Offer".)

The subject matter of the Action relates to tender offers for units of
limited partnership interests in the Partnership and 18 other limited
partnerships (collectively, the "Subject Partnerships") commenced by the
Purchaser and an affiliated purchaser in October 1994 (the "Original Tender
Offers"). (See "THE TENDER OFFER - Section 13. Background of the Offer").
Schedule 3 to this Offer to Purchase sets forth the names of the Subject
Partnerships. As described in the Notice of Class Action and Hearing of Proposed
Settlement

previously delivered to Unitholders in connection with the Action (the
"Settlement Notice"), the Settlement, among other things, provides (i)
Unitholders who did not tender their Units in the Original Tender Offer for
Units with the opportunity to sell their Units pursuant to the Offer at a price
equal to the price offered in the Original Tender Offer for Units plus $10.53
(the "Settlement Premium") and (ii) for payment of the Settlement Premium to
each person who tendered Units in the Original Tender Offer for Units. Like the
Original Tender Offer, the Offer will provide Unitholders with an opportunity to
liquidate their investment without the usual transaction costs associated with
market sales.

The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 18,264 Units are validly tendered and not withdrawn,
subject to the Transfer Limitation and the delivery of Loan Proceeds, the
Purchaser will accept for purchase on a pro rata basis 18,264 Units, subject to
the terms and conditions herein.

As discussed herein, the Purchaser is affiliated with the general partners
of the Partnership and, accordingly, the general partners of the Partnership
have certain conflicts of interest with respect to the Offer. The Partnership
has indicated in its statement on Schedule 14D-9 filed with the Securities and
Exchange Commission (the "Commission") that, because of such conflicts, it makes
no recommendation and is remaining neutral as to whether a Unitholder should
accept the Offer. (See "THE TENDER OFFER - Section 13. Background of the Offer";
and "Section 10. Conflicts of Interest and Transactions with Affiliates".)

The general partner of the Purchaser is DeForest Capital I Corporation, a
Delaware corporation ("DeForest Capital") which is affiliated with NPI Equity
Investments II, Inc. ("NPI Equity"), the entity which, on December 6, 1993,
assumed management and obtained control of Montgomery Realty Company-83 and MRI
Associates, Ltd., the general partners of the Partnership (together, the
"General Partner"). (See "THE TENDER OFFER - Section 13. Background of the
Offer".)

Unitholders who desire liquidity may wish to consider the Offer. However,
each Unitholder must make his or her own decision based upon such Unitholder's
particular circumstances, including the Unitholder's own financial needs, other
investment opportunities and tax position. Each Unitholder should consult with
his or her own advisors, tax, financial or otherwise, in evaluating the terms of
and whether to tender Units pursuant to the Offer.

The $106 purchase price in the Original Tender Offer for Units (the
"Original Purchase Price") was determined as a result of the Purchaser's own
independent analysis. The Settlement Premium was determined and agreed to as
part of the Settlement. No independent person has been retained to evaluate or
render any opinion with respect to the fairness of the Cash Consideration.
Unitholders are urged to consider carefully all of the information contained
herein before accepting the Offer. (See "THE TENDER OFFER - Section 13.
Background of the Offer".)

According to information supplied by the Partnership, of the 82,158 Units

issued and outstanding, 59,846 of such Units are held by 4,947 Unitholders who
are not affiliated with the Purchaser. The Purchaser and its affiliates own
22,312 Units, constituting approximately 27% of the Units outstanding.

Certain information contained in this Offer to Purchase which relates to
the Partnership, or represents statements made by the General Partner, has been
derived from information provided to the Purchaser by the General Partner.

Unitholders are urged to read this Offer to Purchase, the accompanying
Letter of Transmittal and the Note and Security Agreement annexed hereto as
Exhibit A carefully before deciding whether to tender their Units.

THE TENDER OFFER

Section 1. Terms of the Offer. Upon the terms of the Offer, and subject to
the Transfer Limitation, the Purchaser will pay for Units validly tendered on or
prior to the Expiration Date and not withdrawn in accordance with Section 4 of
this Offer to Purchase. The term "Expiration Date" shall mean 12:00 Midnight,
New York City time, on June 30, 1995, unless, in order to effect the Settlement,
and subject to obtaining the approval of the Court and/or counsel for the
settling plaintiffs in the Action, the Purchaser extends the period of time
during which the Offer is open. In the event the Offer is so extended, the term
"Expiration Date" shall mean the latest time and date on which the Offer, as
extended by the Purchaser, shall expire.

If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.

The Offer is conditioned on satisfaction of certain conditions. See Section
14, which sets forth in full the conditions of the Offer. The Purchaser reserves
the right (but shall not be obligated), in its sole discretion, to waive any or
all of such conditions. If, on or prior to the Expiration Date, any or all of
such conditions have not been satisfied or waived, the Purchaser may (i) decline
to purchase any of the Units tendered, terminate the Offer and return all
tendered Units to tendering Unitholders, (ii) waive all the unsatisfied
conditions and, subject to complying with applicable rules and regulations of
the Commission, purchase, or make a Loan with respect to, all Units validly
tendered, or (iii) subject to obtaining the approval of the Court and/or counsel
for the settling plaintiffs in the Action, extend the Offer and, subject to the
right of Unitholders 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.

If up to 16,184 Units are validly tendered and not withdrawn, upon
consummation of the Offer, all Units tendered will be purchased for $116.53 per
Unit. Subject to the proration requirements of Section 2, if more than 16,184
Units are validly tendered and not withdrawn, each tendering Unitholder will

receive $116.53 for each Unit tendered in a combination of Purchase Proceeds and
Loan Proceeds. The number of Units with respect to which a Unitholder will
receive Purchase Proceeds will be determined by multiplying the number of Units
tendered by such Unitholder by a fraction the numerator of which is 16,184 and
the denominator of which is the total number of Units tendered pursuant to the
Offer and not withdrawn. The balance payable to such Unitholder will be paid as
Loan Proceeds.

Each Loan will bear interest at the rate of 9% per annum. Interest and
principal will not be due and payable prior to the scheduled maturity date of
the Loan, except that the Loan shall become due upon certain bankruptcy events
of the Unitholder and, in certain circumstances, on the demand of the Purchaser.
Any distributions in respect of the Retained Units are required to be applied to
pay outstanding amounts of interest and principal. Each Loan will mature by its
terms on January 2, 1996, and will be payable by payment of cash in the
principal amount of the Loan plus accrued interest thereon. If the Purchaser
does not receive a cash payment in repayment of a Loan within 15 days from the
date the Loan is due, the Purchaser will apply the Retained Units held in
respect of such Loan against the amount due in full satisfaction of the Loan.
EXCEPT THROUGH THE APPLICATION OF ANY DISTRIBUTIONS IN RESPECT OF RETAINED UNITS
(AS DISCUSSED BELOW), THE LOANS WILL NOT BE PREPAYABLE. THE ACCEPTANCE OF A LOAN
WILL NOT IMPOSE ANY PERSONAL LIABILITY ON A TENDERING UNITHOLDER FOR THE PAYMENT
OF ANY PRINCIPAL OR INTEREST IN RESPECT OF ITS LOAN. EACH LOAN MAY BE SATISFIED,
AT ITS MATURITY, BY SURRENDERING TO THE PURCHASER THE RETAINED UNITS OR, AT THE
SOLE OPTION OF THE TENDERING UNITHOLDER, BY A PAYMENT IN CASH EQUAL TO THE THEN
OUTSTANDING BALANCE OF PRINCIPAL AND ACCRUED INTEREST IN RESPECT OF SUCH LOAN.

Any distribution payable to a Unitholder in respect of the Retained Units
will be applied at the time such distribution is made first to accrued interest
on the Loan and then to the principal amount of the Loan and

any amounts remaining after such application will be remitted to the Unitholder.
Each Unitholder will agree not to exercise its voting rights with respect to the
Retained Units in favor of a dissolution of the Partnership or in any manner
inconsistent with the terms of the Loan. Each Unitholder who tenders Units in
accordance with the Offer, and does not withdraw such tender in accordance with
the terms of Section 4, shall have irrevocably elected to receive the proceeds
of the Loan if more than 16,184 Units are validly tendered and not withdrawn,
and to be bound by the terms of the Loan, including the repayment thereof, the
pledge of the Unitholder's Retained Units to secure such repayment, the
application of distributions made in respect of the Retained Units and the
limitation on voting rights as described above.

The terms and conditions of the Loan are set forth in the form of Note and
Security Agreement attached hereto as Exhibit A, which Exhibit is incorporated
by reference herein in its entirety.

Section 2. Proration; Acceptance for Payment and Payment for Units. If the
number of Units validly tendered on or prior to the Expiration Date and not

withdrawn is 18,264 or less, subject to the Transfer Limitation and the delivery
of Loan Proceeds, the Purchaser will accept for payment, subject to the terms
and conditions of the Offer, all Units so tendered.

If the number of Units validly tendered on or prior to the Expiration Date
and not withdrawn exceeds 18,264, subject to the Transfer Limitation and the
delivery of Loan Proceeds, the Purchaser will accept for payment, subject to the
terms and conditions of the Offer, Units so tendered on a pro rata basis (with
such adjustments to avoid purchase of fractional Units).

The Purchaser will deliver the Cash Consideration for Units validly
tendered and not withdrawn in accordance with Section 4 as promptly as
practicable following the Expiration Date. In all cases, Cash Consideration will
be delivered only after timely receipt by Purchaser of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), duly executed
signature page for the Note and Security Agreement and any other documents
required by the Letter of Transmittal. (See "Section 3. Procedures for Tendering
Units".) Under no circumstances will interest be paid on the Cash Consideration
by reason of any delay in making such payment.

If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units will be destroyed by the Purchaser.
However, Retained Units will be held by the Purchaser subject to the terms of a
Unitholder's Loan. If for any reason acceptance for payment of, or payment for,
any Units 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, the
Purchaser may retain tendered Units and such Units may not be withdrawn except
to the extent that the tendering Unitholders are entitled to withdrawal rights
as described in Section 4; provided, however, that the Purchaser is required,
pursuant to Rule 14e-1(c) under the Exchange Act, to pay Unitholders the Cash
Consideration in respect of Units tendered or return such Units promptly after
termination or withdrawal of the Offer.

Section 3. Procedures for Tendering Units.

Valid Tender. To validly tender Units, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), duly executed signature
page for the Note and Security Agreement and any other documents required by the
Letter of Transmittal, must be received by the Purchaser on or prior to the
Expiration Date. A Unitholder must tender all Units owned by such Unitholder in
order for the tender to be valid.

Signature Requirements. If the Letter of Transmittal and signature page for
the Note and Security Agreement is signed by the registered holder of the Units
and payment is to be made directly to that holder, then no notarization or
signature guarantee is required on the Letter of Transmittal. Similarly, if the
Units are tendered for the account of 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 (each an "Eligible

Institution"), no notarization or signature guarantee is required on the Letter
of Transmittal. However, in all other cases, all signatures on the Letter of
Transmittal and signature page for the Note and Security Agreement must either
be notarized or guaranteed by an Eligible Institution.

In order for a tendering Unitholder to participate in the Offer, Units must
be validly tendered and not withdrawn on or prior to the Expiration Date, which
is 12:00 Midnight, New York City time, on June 30, 1995.

The method of delivery of the Letter of Transmittal, signature page for the
Note and Security Agreement and all other required documents is at the option
and risk of the tendering Unitholder and delivery will be deemed made only when
actually received by the Purchaser.

A tendering Unitholder will be notified after the Expiration Date as to the
number of such Unitholder's Units, if any, which were not purchased but which
are being held by the Purchaser as Retained Units for a Loan to such Unitholder.
Such notice will also provide the principal amount of any such Loan.

Backup Federal Income Tax Withholding. To prevent the possible application
of backup federal income tax withholding with respect to payment of the Cash
Consideration and the Residual Settlement Premium, a tendering Unitholder must
provide the Purchaser with such Unitholder's correct taxpayer identification
number by completing the Substitute Form W-9 included in the Letter of
Transmittal. (See the Instructions to the Letter of Transmittal and "Section 6.
Certain Federal Income Tax Consequences".)

FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Cash Consideration plus the Residual
Settlement Premium plus the amount of Partnership liabilities allocable to the
Units tendered, each Unitholder must complete the FIRPTA Affidavit included in
the Letter of Transmittal certifying such Unitholder's taxpayer identification
number and address and that the Unitholder is not a foreign person. (See the
Instructions to the Letter of Transmittal and "Section 6. Certain Federal Income
Tax Consequences".)

Other Requirements. By executing a Letter of Transmittal, a tendering
Unitholder irrevocably appoints the designees of the Purchaser as such
Unitholder's proxies, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such Unitholder's rights
with respect to the Units tendered by such Unitholder and accepted for payment
by the Purchaser. Such appointment will be effective when, and only to the
extent that, the Purchaser accepts such Units for payment. Upon such acceptance
for payment, all prior proxies given by such Unitholder with respect to such
Units will, without further action, be revoked, and no subsequent proxies may be
given (and if given will not be effective). The designees of the Purchaser will,
as to such Units, be empowered to exercise all voting and other rights of such
Unitholder as they in their sole discretion may deem proper at any meeting of
Unitholders, 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 such Units, the Purchaser must be
able to exercise full voting rights with respect to such Units, including voting
at any meeting of Unitholders then scheduled. In addition, by executing a Letter
of Transmittal, a Unitholder also assigns to the Purchaser all of the
Unitholder's rights to receive distributions from the Partnership with respect
to Units which are purchased pursuant to the Offer. (See "Section 6. Certain
Federal Income Tax Consequences" and "Section 9. Certain Information Concerning
the Partnership".)

By executing a Letter of Transmittal, a Unitholder irrevocably agrees to
accept the proceeds of a Loan in respect of its Retained Units on the terms and
conditions set forth in the Note and Security Agreement. Such Unitholder also
directs the Partnership to deliver any and all distributions payable on the
Retained Units to the Purchaser for credit against amounts outstanding in
respect of the Loan, and the Purchaser may, in the name and behalf of such
Unitholder, execute and deliver to the Partnership a written confirmation of
such direction. In addition, by executing a Letter of Transmittal, a Unitholder
appoints the designees of the Purchaser as its attorney-in-fact (such
appointment being coupled with an interest, and irrevocable) to execute and
cause to be

filed and recorded any and all documents on behalf of the Unitholder and to take
any and all other actions reasonably deemed necessary by the Purchaser to
perfect or continue the perfection of the security interest in the Retained
Units that secures any Loan made to such Unitholder. FURTHERMORE, BY EXECUTING A
LETTER OF TRANSMITTAL, A UNITHOLDER WHO HAS PREVIOUSLY REQUESTED EXCLUSION FROM
THE SETTLEMENT WILL BE DEEMED TO HAVE REVOKED SUCH REQUEST AND THEREUPON BE
BOUND BY THE SETTLEMENT AND ALL ORDERS AND FINAL JUDGMENTS RENDERED IN THE
ACTION.

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 procedures described above will be determined by the
Purchaser, in its sole discretion, which determination shall be final and
binding. The Purchaser reserves the absolute right to reject any or all tenders
if not in proper form (including, without limitation, the proper execution of
the Note and Security Agreement) or if the acceptance of, or payment for, the
Units tendered may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the right to waive any defect or irregularity in any
tender with respect to any particular Units of any particular Unitholder, and
the Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the Instructions thereto) will be final
and binding. Neither the Purchaser 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.

A tender of Units pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Unitholder and the

Purchaser on the terms set forth in the Offer.

Section 4. Withdrawal Rights. Except as otherwise provided in this Section
4, all tenders of Units pursuant to the Offer are irrevocable, provided 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 this
Offer to Purchase, may also be withdrawn at any time after June 30, 1995.

For withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Purchaser at the address set forth
on the back cover of this Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Units to be withdrawn and must
be signed by the person(s) who signed the Letter of Transmittal in the same
manner as the Letter of Transmittal 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 Purchaser and may not be withdrawn except to the extent that
tendering Unitholders are entitled to withdrawal rights as set forth in this
Section 4; provided, however, that the Purchaser is required, pursuant to Rule
14e-1(c) under the Exchange Act, to pay Unitholders the Cash Consideration in
respect of Units tendered or return such 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
any of the procedures described in Section 3 at any time prior to the Expiration
Date.

Section 5. Extension of Tender Period; Termination; Amendment. If necessary
to effect the terms of the Settlement, and subject to obtaining the approval of
the Court and/or counsel for the settling plaintiffs in the Action, the
Purchaser may amend the Offer or extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units. Any such 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 Purchaser may
retain tendered Units and such Units may not be withdrawn except to the extent
tendering Unitholders are entitled to withdrawal rights as described in Section
4; provided, however, that the Purchaser is required, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unitholders the Cash Consideration in respect of
Units tendered or return such Units promptly after termination or withdrawal of

the Offer.

If the Purchaser makes a material change in the terms of the Offer (which
change may only be made with approval of the Court and/or counsel for the
settling plaintiffs in the Action) or if there is a material change in the
information concerning 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 a material change in the terms of the offer or
information concerning the offer will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information. In
the Commission's view, an offer should remain open for a minimum of five
business days from the date the material change is first published, sent or
given to securityholders, and if material changes are made with respect to
information that approaches the significance of price or the percentage of
securities sought, a minimum of ten business days may be required to allow for
adequate dissemination to securityholders and for investor response. As used in
this 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 Consequences. The following summary
is a general discussion of certain 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 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 Unitholder in light of such Unitholder's specific circumstances or to
certain types of Unitholders 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 does it discuss 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 may
also be taxable transactions under applicable state, local, foreign and other
tax laws. EACH UNITHOLDER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF SELLING UNITS AND RECEIVING A
LOAN PURSUANT TO THE OFFER.

A taxable Unitholder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unitholder's
"amount realized" on the sale and (ii) the Unitholder's adjusted tax basis in
the Units sold. The amount of a Unitholder's adjusted tax basis in Units sold
pursuant to the Offer will vary depending upon the Unitholder's particular
circumstances, and will be affected by both allocations of Partnership income,
gain or loss and any cash distributions made to a Unitholder for 1995 with
respect to such Units. The "amount realized" with respect to a Unit sold
pursuant to the Offer will be a sum equal to the amount of cash received by the
Unitholder for the Unit plus the amount of Partnership liabilities allocable to
the Unit (as determined under Code Section 752). If a Unitholder receives a Loan
pursuant to the Offer and later transfers ownership of the Retained Units to the
Purchaser in satisfaction of the Loan, the unpaid balance (including accrued and
unpaid interest) of such Loan would be includible in the Unitholder's amount

realized on such subsequent sale, but interest accrued on the Loan may be
non-deductible as personal interest. (See the discussion of certain tax aspects
of the Loan below.) However, assuming no principal payments are made on a Loan
prior to maturity, the amount of interest is anticipated to be only
approximately $53 per $1,000 loaned.

Based on the results of Partnership operations through December 31, 1994,
and without giving effect to Partnership operations or transactions since that
time, it is estimated that, depending on the Unitholder's date of entry into the
Partnership, a taxable Unitholder who or which sells Units pursuant to the Offer
that were

acquired by such Unitholder at the time of the Partnership's original offering
of Units will recognize a loss for federal income tax purposes of between $43.47
and $48.67 per Unit less the amount of the Residual Settlement Premium. It also
is estimated that such Unitholder has "suspended" passive activity losses (i.e.,
post-1986 net taxable losses in excess of statutorily provided "phase-in"
amounts) from the Partnership of $499 per Unit (subject to reduction to the
extent such Unitholder utilized any of such losses to offset passive activity
income from other investments). Once the Unitholder sells all his Units, such
losses should no longer be subject to the passive activity loss limitation, and
therefore should be deductible by such Unitholder from his other income subject
to any other applicable limitations. However, if a Unitholder is unable to sell
all of his Units pursuant to the Offer, such losses will not be deductible
(except to the extent of the Unitholder's passive activity income from other
sources) until the Retained Units are transferred to the Purchaser upon maturity
of the Unitholder's Loan in 1996 or are otherwise sold. (See the discussion of
the passive activity loss limitation below and "Section 7. Effects of the
Offer".) Tendering Unitholders will be allocated a pro rata share of the
Partnership's taxable income or loss with respect to Units sold pursuant to the
Offer through the effective date of the sale, even though such Unitholders will
assign to the Purchaser their right to receive cash distributions with respect
to such Units.

The gain or loss recognized by a Unitholder on a sale of a Unit pursuant to
the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unitholder as a capital asset. Such capital gain or loss will be
treated as long-term capital gain or loss if the tendering Unitholder'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 other 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, corporations, but not non-corporate taxpayers, are allowed to carry
back excess capital losses to the three preceding taxable years.

If any portion of the amount realized by a Unitholder is attributable to
"unrealized receivables" (which includes depreciation recapture) or
"substantially appreciated inventory" as defined in Code Section 751, then a
portion of the Unitholder's gain or loss may be ordinary rather than capital. It
is possible that the basis allocation rules of Code Section 751 may result in a
Unitholder's recognizing ordinary income with respect to such items while
recognizing a larger capital loss with respect to the remainder of the Unit,
even though such Unitholder has an overall loss on the sale.

The portion of the Residual Settlement Premium that is received by a
Unitholder with respect to the Retained Units, if any, will be taxable to a
Unitholder as ordinary income even if the Unitholder later transfers the
Retained Units in satisfaction of the Loan and even if such transfer results in
the Unitholder's recognition of a capital loss.

If tendering Unitholders receive Loans, they will be allocated a pro rata
share of the Partnership's taxable income or loss for all of 1995 with respect
to the Retained Units even though any cash distributions with respect to such
Units will be applied against the Loans. Amounts so applied might not be
deductible, and, if the Retained Units are transferred to Purchaser in 1996 at a
loss, such loss would not offset the taxable income (if any) allocated to a
Unitholder in 1995 on account of the Retained Units. (See the discussion of
certain tax aspects of the Loans below.)

Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent of
such person's passive activity income for such year, and closely held
corporations may not offset such losses against so-called "portfolio" income. A
loss recognized by a Unitholder upon a sale of a Unit pursuant to the Offer can
be currently deducted (subject to other applicable limitations) to the extent of
such Unitholder's taxable income from the Partnership for that year, and gain
recognized by a Unitholder upon such sale can be offset by such Unitholder's
passive activity losses (if any) from the Partnership. If a Unitholder disposes
of all his Units pursuant to the Offer, such Unitholder generally will

be able to deduct his remaining passive activity losses (if any) from the
Partnership that could not previously be deducted by such Unitholder due to the
foregoing limitation. However, if more than 16,184 Units are tendered pursuant
to the Offer, a tendering Unitholder will be unable to sell all of his Units in
1995 upon consummation of the Offer. In that event, a tendering Unitholder with
"suspended" passive activity losses from the Partnership will be unable to
deduct such losses until the Retained Units are transferred to the Purchaser in
satisfaction of the Unitholder's Loan in 1996, or are otherwise sold.

A taxable Unitholder (other than corporations and certain foreign
individuals) who tenders Units may be subject to 31% backup withholding unless
the Unitholder provides a taxpayer identification number ("TIN") and certifies
that the TIN is correct or properly certifies that he is awaiting a TIN. A

Unitholder may avoid backup withholding by properly completing and signing the
Substitute Form W-9 included as part of the Letter of Transmittal. If a
Unitholder 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 Unitholder.

Gain realized by a foreign Unitholder on a sale of a Unit pursuant to the
Offer will be subject to federal income tax. Under Section 1445 of the Code, the
transferee of a partnership interest held by a foreign person is generally
required to deduct and withhold a tax equal to 10% of the amount realized on the
disposition. The Purchaser will withhold 10% of the amount realized by a
tendering Unitholder unless the Unitholder properly completes and signs the
FIRPTA Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder'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.

If Loans are made to Unitholders, amounts withheld by the Purchaser from
payments to a Unitholder with respect to the Retained Units will be applied
against the principal balance of the Unitholder's Loan, and, if such Loan is
later satisfied by the Unitholder's transfer of the Retained Units, will be paid
by the Purchaser to the Internal Revenue Service at that time.

If more than 16,184 Units are validly tendered and not withdrawn, only a
pro rata portion of the tendered Units will be treated by the Purchaser as
purchased pursuant to the Offer. The excess of the Cash Consideration paid to
each tendering Limited Partner over the amounts attributable to the purchased
Units will be received as the proceeds of nonrecourse Loans secured by a pledge
of the Retained Units. The Purchaser intends to treat the Loans as debt
instruments for federal income tax purposes. Nevertheless, a taxing authority
may assert that 100% of the tendered Units must be treated as sold pursuant to
the Offer. If such an assertion were to prevail, all Units tendered would be
treated for income tax purposes as having been sold in 1995, and the Partnership
would be treated as having terminated for income tax purposes when the Loans
were made. The effect of a tax termination on the Partnership and, therefore, on
non-tendering Unitholders and tendering Unitholders as to the Retained Units,
would include a reduction in the Partnership's depreciable tax basis in its
properties and a lengthening of the period of time over which the Partnership
recognizes depreciation deductions for tax purposes. A termination of the
Partnership for income tax purposes also could have the adverse effect on
Unitholders whose tax year differs from the calendar year of the inclusion of
more than one year of the Partnership's tax items in one tax return of such
Unitholders. In addition, a tax termination could have the adverse effect on
Unitholders who subsequently dispose of their Units at a gain of requiring them
to treat a greater portion of such gain as ordinary income (due to the
application of Code Section 735) than would be required under Code Section 751
(discussed above).

Assuming that the Loans are respected as debt for tax purposes, it is
unclear whether a Unitholder will be entitled to deduct interest accruing
thereon before such interest is paid, which would be at maturity of the Loan or
in the event cash distributions are made with respect to the Retained Units. The

deductibility of interest paid by a Unitholder will depend on how the Unitholder
uses the Loan proceeds (i.e., whether the Unitholder uses the Loan proceeds to
pay personal expenses or make additional investments, and, if the latter,
whether such investments are "passive activity" or "portfolio" investments).
Personal interest is generally nondeductible, and there are limitations on the
deductibility of investment interest and interest allocable to passive
activities.

Unitholders should consult their tax advisors concerning the application of
these rules and limitations to their particular circumstances.

If a Loan is treated as indebtedness incurred by a tax-exempt Limited
Partner to acquire or improve property, income from such property will be
taxable to the tax-exempt Unitholder as unrelated debt-financed income within
the meaning of Code Section 514. Tax-exempt Unitholders should consult their tax
advisors with respect to the tax consequences of tendering Units pursuant to the
Offer.

A taxable Unitholder who satisfies a Loan by transferring the Retained
Units to the Purchaser will recognize gain or loss upon such transfer under the
rules discussed above, with the then outstanding Loan balance (including any
accrued and unpaid interest) being treated as an amount realized by the
Unitholder on the transfer of the Retained Units.

Section 7. Effects of the Offer.

Limitations on Resales. Pursuant to authority contained in the Partnership
Agreement, the General Partner restricts transfers of Units if a transfer, when
considered with all other transfers during the same applicable twelve-month
period, would cause a termination of the Partnership for federal or applicable
state income tax purposes (which termination may occur when 50% or more of the
Units are transferred in a twelve-month period). If the secondary market in
private transactions were to become more active, sales of Units on the secondary
market for the twelve-month period following completion of the Offer may be
limited. The Partnership will not process any requests for recognition of
substitution of Unitholders upon a transfer of Units during such twelve-month
period which the General Partner believes may cause a tax termination. In
determining the Transfer Limitation, the Purchaser took this restriction into
account so as to permit transfers of up to 821 of the outstanding Units to occur
prior to January 1996 without violating this restriction.

Effect on Trading Market. There is no established public trading market for
the Units and, therefore, a reduction in the number of Unitholders should not
materially further restrict the Unitholders' ability to find purchasers for
their Units.

Control of all Unitholder Voting Decisions by Purchaser; Effect of
Affiliation with General Partner. Like Units acquired in the Original Tender
Offer for Units, the Purchaser will have the right to vote each Unit purchased

pursuant to the Offer. As a result of the Original Tender Offer for Units, the
Purchaser is in a position to significantly influence all voting decisions with
respect to the Partnership. Consummation of the Offer may further enhance such
voting influence. Accordingly, the Purchaser could (i) prevent non-tendering
Unitholders from taking action they desire but that the Purchaser opposes and
(ii) take action desired by the Purchaser but opposed by non-tendering
Unitholders. Under the Partnership Agreement, Unitholders holding a majority of
the Units are entitled to take action with respect to a variety of matters. When
voting on such matters, the Purchaser will vote Units owned and acquired by it
in its interest, which, because of its affiliation with the General Partner,
will also likely be in the interest of the General Partner. However, in
connection with the Original Tender Offers, the Purchaser has agreed for the
benefit of non-tendering Unitholders, and the Purchaser hereby reaffirms such
agreement, that (i) it will vote its Units against any proposal (including a
proposal by the Purchaser, the General Partner and any affiliates thereof) to
increase the existing fees and other compensation presently received by the
General Partner and any of its affiliates from the Partnership, and (ii) with
respect to any other matter proposed by the Purchaser, the General Partner or
any of their affiliates, the Purchaser will vote its Units in proportion to the
votes cast by other Unitholders. Except for the foregoing, no other limitations
are imposed on the Purchaser's right to vote each Unit purchased, including any
vote on the removal of the General Partner.

The Units are registered under the Exchange Act, which requires, among
other things, that the Partnership furnish certain information to its
Unitholders and to the Commission and comply with the Commission's proxy rules
in connection with meetings of, and solicitation of consents from, Unitholders.

Purchase of Units pursuant to the Offer will not result in the Units becoming
eligible for deregistration under the Exchange Act.

Section 8. Future Plans. The Purchaser is acquiring the Units pursuant to
the Offer in connection with the Settlement and otherwise for investment
purposes. Subject to the limitation on resales discussed in Section 7, following
the completion of the Offer, the Purchaser may acquire additional Units. Any
such acquisition may be made through private purchases or by any other means
deemed advisable; provided, however, as part of the Settlement, the Purchaser
has agreed not to initiate or participate (as a member of any group or as an
investor or creditor of the tender offer(s)) in any tender offer for Units for a
period of 24 months following the Expiration Date, except in response to a
tender offer by a party who is not an affiliate of the Purchaser. Any such
acquisition may be at a price higher or lower than the price to be paid for the
Units purchased pursuant to the Offer. Neither the Purchaser nor the General
Partner has any present plans or intentions with respect to a liquidation, sale
of assets or refinancing of any of the Partnership's properties. However, the
Purchaser believes that consistent with its fiduciary obligations the General
Partner will continue to review any opportunities such as sales or refinancings
and will seek to maximize returns to investors in the Units. The General
Partner's stated intentions are to manage the Partnership's assets to maximize

capital appreciation, improve property operations and reduce Partnership debt.
See "Section 10. Conflicts of Interest and Transactions with Affiliates" for
certain information concerning the General Partner's potential conflict of
interest with respect to sales or refinancings.

Section 9. Certain Information Concerning the Partnership. The Partnership
was organized on June 20, 1983, under the laws of the State of California. Its
principal executive offices are located at 5665 Northside Drive, N.W., Suite
370, Atlanta, Georgia 30328. Its telephone number is (404) 916-9050.

The Partnership's primary business is real estate related operations.

Unitholders are referred to the financial and other information included in
the Partnership's Annual Report on Form 10-K for the fiscal year ended September
30, 1994, and the Partnership's Quarterly Report on Form 10-Q for the six months
ended March 31, 1995. Such reports and other documents may be examined and
copies may be obtained from the offices of the Commission at 450 Fifth Street,
N.W., Washington, D.C 20549, and at the regional offices of the Commission
located in the Northwestern Atrium Center, 500 Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, New York, New York 10048.
Copies should be available by mail upon payment of the Commission's customary
charges by writing to the Commission's principal offices at 450 Fifth Street,
N.W., Washington, D.C. 20549.

Section 10. Conflicts of Interest and Transactions with Affiliates. The
General Partner, the Purchaser and their affiliates have conflicts of interest
with respect to the Offer as set forth below.

Conflicts of Interest With Respect to the Offer. The General Partner has a
conflict of interest with respect to the Offer, including as a result of its
affiliation with the Purchaser. (See "Section 13. Background of the Offer".)

Voting by the Purchaser. As a result of the Original Tender Offers, the
Purchaser is in a position to significantly influence all Partnership decisions
on which Unitholders may vote. Consummation of the Offer may further enhance
such voting influence. However, the Purchaser has agreed, for the benefit of
non-tendering Unitholders that (i) it will vote its Units against any proposal
(including a proposal by the Purchaser, the General Partner and any affiliates
thereof) to increase the existing fees and other compensation presently received
by the General Partner and any of its affiliates from the Partnership, and (ii)
with respect to any other matter proposed by the Purchaser, the General Partner
or any of their affiliates, the Purchaser will vote its Units in proportion to
the votes cast by other Unitholders. Except for the foregoing, no other
limitations are imposed on the Purchaser's right to vote each Unit purchased,
including any vote on the removal of the General Partner. (See "Section 7.
Effects of the Offer".)

Repayment of Tender Offer Loan. A loan (the "Original DeForest Loan") was
obtained by the Purchaser in connection with the Original Tender Offers. (See

"Section 13. Background of the Offer".) On May 8, 1995, following the expiration
of the draw down period for the Original Deforest Loan, the agreement governing
the Original DeForest Loan (the "Original Loan Agreement") was amended (as
amended, the "Amended Loan Agreement") to provide for additional debt financing
(such additional debt financing together with the Original DeForest Loan being
referred to herein as, the "Amended DeForest Loan") for the purchase of units by
the Purchaser in the Settlement Tender Offers (as defined in Section 13). The
Purchaser services the Amended DeForest Loan with Purchaser Cash Flow and Tender
Cash Flow (as defined in Section 12). One of several possible sources of Tender
Cash Flow is the Purchaser's distributable portion of the proceeds of any sales
or refinancings of Partnership properties attributable to Units owned by the
Purchaser. Consequently, a conflict of interest may exist for the General
Partner in determining whether and when to sell and/or refinance the
Partnership's properties. Any such conflict, however, may be mitigated by the
fact that (i) proceeds from the sale or refinancing of properties owned by other
Subject Partnerships may be available to the Purchaser (see "Section 12. Source
of Funds."), (ii) there exist other repayment sources, including capital
contributions from the Purchaser's partners, (iii) certain of the Purchaser's
partners have agreed to advance funds to the Purchaser in order to enable the
Purchaser to make timely interest payments, and (iv) the Purchaser may be able
to refinance all or a portion of the Amended DeForest Loan.

Distributions upon Sales or Refinancings. As mentioned above, one source of
Tender Cash Flow is the Purchaser's distributable portion of the proceeds of any
sales or refinancings of Partnership properties attributable to Units owned by
the Purchaser. The Amended Loan Agreement provides that the Purchaser is
required to make a prepayment on the Amended DeForest Loan of an amount equal to
75% (100% in the case of a refinancing) of the Purchaser's distributable portion
of the proceeds of such sale or refinancing, whether or not distributed by the
Partnership. Consequently, unless the Purchaser otherwise has funds available to
make such a required prepayment, a conflict of interest may exist for the
General Partner in determining whether and when to cause the Partnership to
distribute the proceeds of any such sale or refinancing to the Partnership's
partners.

Transactions with Affiliates. The General Partner of the Partnership, an
affiliate of the Purchaser, owns a 2% interest in the Partnership and thus
receives, as a continuing interest in the Partnership, an amount equal to a 2%
allocation of the Partnership's profits and losses, and 2% of distributions. The
General Partner and its affiliates are also entitled to be reimbursed for
certain expenses and to receive certain fees pursuant to the terms of the
Partnership Agreement; however, as a result of the Settlement, the General
Partners and their affiliates will no longer be entitled to receive a portion of
such expense reimbursements to the extent such expenses exceed the amount
reimbursed during the 1994 fiscal year, subject to increases for inflation. (See
"Section 13. Background of the Offer" for a discussion of the material terms of
the Settlement.)

For information as to the amounts paid to the General Partner and its
affiliates during the last three fiscal years and the six months ended March 31,
1995, see Note 2 to the Financial Statements of the Partnership in the Form 10-K
of the Partnership for the fiscal year ended September 30, 1994 and Note 2 to
the Financial Statements of the Partnership in the Form 10-Q of the Partnership
for the six months ended March 31, 1995.

As part of the Settlement, the General Partners have agreed to provide the
Partnership with a $750,000 credit line. (See "Section 13. Background of the
Offer" for a discussion of the material terms of the Settlement.)

Section 11. Certain Information Concerning the Purchaser. The Purchaser was
organized for the purpose of acquiring the Units in the Original Tender Offers.
The principal executive office of the Purchaser and DeForest Capital is at 5665
Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. DeForest Capital was
organized for the purpose of acting as the general partner of the Purchaser.

For certain information concerning the directors and executive officers of
DeForest Capital, the general partner of the Purchaser, see Schedule 1 to this
Offer to Purchase.

For certain financial information concerning the Purchaser and DeForest
Capital, see Schedule 2 to this Offer to Purchase.

The Purchaser has entered into agreements with Lisle Payne and Janet Larson
(the "Former Affiliates"), two former affiliates of Fox Realty Investors
("FRI"), an affiliate of the General Partner, pursuant to which the Purchaser
has agreed to pay to the Former Affiliates the portion of any distribution
received by the Purchaser or its affiliates on account of the Units owned by the
Purchaser or its affiliates which are attributable to capital contributions by
such Former Affiliates to restore the deficit in a general partner's capital
account. (See "Section 13. Background of the Offer" for a discussion of the
General Partner's capital account restoration obligations.) Pursuant to each
such agreement, the Purchaser will receive approximately $60,000 per year from
each Former Affiliate until February 1998.

Except as otherwise set forth herein, (i) neither the Purchaser, DeForest
Capital, to the best of Purchaser's knowledge, the persons listed on Schedule 1
nor any affiliate of the foregoing beneficially owns or has a right to acquire
any Units, (ii) neither the Purchaser, DeForest Capital, to the best of
Purchaser's knowledge, the persons listed on Schedule 1, nor any affiliate
thereof or director, executive officer or subsidiary of DeForest Capital has
effected any transaction in the Units within the past 60 days, (iii) neither the
Purchaser, DeForest Capital, to the best of Purchaser's knowledge, any of the
persons listed on Schedule 1, nor any director or executive officer of DeForest
Capital has any contract, arrangement, understanding or relationship with any
other person 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, (iv) there have been no transactions or
business relationships which would be required to be disclosed under the rules
and regulations of the Commission between any of the Purchaser, DeForest Capital
or, to the best of Purchaser's knowledge, the persons listed on Schedule 1, on
the one hand, and the Partnership or its affiliates, on the other hand, and (v)

there have been no contracts, negotiations or transactions between the
Purchaser, DeForest Capital or, to the best of Purchaser's knowledge, the
persons listed on Schedule 1, on the one hand, and the Partnership or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.

QAL Associates and QALA II Associates, each an affiliate of the Purchaser
with an address at 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753,
own 10 and 30 Units, respectively.

Section 12. Source of Funds. As described in Section 13, in connection with
the Original Tender Offers, the Purchaser obtained the Original DeForest Loan in
the original principal amount of $21,223,858, and DeForest II (as defined in
Section 13) obtained a loan (the "Original NPI Loan", and together with the
Original DeForest Loan, the "Original Loans") in the original principal amount
of $13,250,690, in each case from Kidder Peabody Mortgage Capital Corporation
("Kidder"). Kidder subsequently assigned the Original Loans to PaineWebber Real
Estate Securities Inc. (the "Lender"), the successor in interest to Kidder. On
May 8, 1995, following the expiration of the draw down period for the Original
Loans, the Original Loans were amended to provide for additional debt financing
to be used in connection with consummation of the Settlement, including
consummation of the Settlement Tender Offers. The aggregate principal amount of
the Amended DeForest Loan and the "Amended NPI Loan" (defined as the Original
NPI Loan as increased by the additional debt financing allocated to DeForest II)
may not exceed $55 million. Subject to such limitation and to reduction by the
amount of additional debt financing allocated to DeForest II in connection with
consummation of the Settlement by DeForest II, the maximum increase in the
principal amount of the Original DeForest Loan will be approximately
$19,019,000, of which approximately $14,655,000 is available for the Settlement
Tender Offers.

Approximately $2,128,304 in the aggregate would be required by the
Purchaser to purchase or make a Loan with respect to the 18,264 Units sought
pursuant to the Offer, if tendered. The Purchaser may obtain up to approximately
$1,885,922 of such aggregate amount from the additional debt financing subject
to

reduction dependent upon the amount of the additional debt financing allocated
to DeForest II to consummate the other Settlement Tender Offers and the success
of the Purchaser in the other Settlement Tender Offers. Any funds required by
the Purchaser to consummate the Offer and the other Settlement Tender Offers in
excess of the amount available to it from the additional debt financing will be
obtained from the Purchaser's partners.

The Amended DeForest Loan and the Amended NPI Loan (together, the "Amended
Loans") are governed by the terms of the Amended Loan Agreement. Except as
indicated below, the terms of the Amended Loans, including the covenants of the
respective borrowers and the terms relating to interest and maturity, are not

materially different from the terms which governed the Original Loans prior to
execution of the Amended Loan Agreement. Any changes in such terms are generally
reflective of the increased principal amount of the Amended Loans as well as the
additional collateral for the Amended Loans to be acquired by the respective
borrowers in the Settlement Tender Offers and to be pledged to the Lender.

The Amended DeForest Loan and the Amended NPI Loan are cross-defaulted and
cross-collateralized. The Amended DeForest Loan and the Amended NPI Loan are
each due and payable on November 21, 1995. However, the respective borrowers
have the right to extend the Amended Loans for two consecutive one-year periods
provided that the Amended Loans are not in default. Interest on each Amended
Loan accrues monthly and is payable in arrears at a rate per annum equal to 250
basis points over LIBOR through November 21, 1995, 350 basis points over LIBOR
through November 21, 1996 (if extended through such date) and 450 basis points
over LIBOR through November 21, 1997 (if extended through such date). As of May
16, 1995 the LIBOR rate was 6.0625% per annum.

The Lender is also entitled to additional interest on the Amended Loans in
the form of a residual fee. Payment of the Lender's additional interest,
however, is subordinate to the prior return of the aggregate capital
contributions received by the Purchaser and DeForest II, together with a 15% per
annum return thereon. The residual fee consists of the greater of 20% or a
specified percentage of Tender Cash Flow until the Lender has received a 17% per
annum rate of return. The specified percentage to be received by the Lender will
be based upon the actual monthly outstanding balance of the Amended Loans and
the period of time during which the Amended Loans were outstanding, and will
continue to be paid to the Lender after its receipt of a 17% per annum rate of
return. "Tender Cash Flow" is the amount to be received by the Purchaser with
respect to the units of limited partnership interest acquired in the Original
Fox Tender Offers and acquired or held by the Purchaser in connection with the
Settlement Tender Offers (together with the units of limited partnership
interest acquired by DeForest II in the Original NPI Tender Offers and the
Settlement Tender Offers, the "Tendered Units"), whether in the form of
distributions from the NPI Partnerships or as proceeds from the sale or other
disposition of such Tendered Units.

Although the Amended Loans are prepayable at any time without premium or
penalty, a prepayment is required upon the occurrence of certain events. The
Purchaser is required to prepay the outstanding principal amount of the Amended
DeForest Loan utilizing Purchaser Cash Flow (as defined herein), if any,
remaining after its application to the payment of interest on the Amended Loans.
Further, whether or not distributed to the Purchaser, 75% (increased from 60% in
connection with entering into the Amended Loan Agreement) of the Purchaser's
distributable portion of the net proceeds of a sale (and 100% of the net
proceeds of a refinancing) of a property owned by a Fox Partnership is required
to be applied in prepayment of the Amended DeForest Loan. (See "Section 10.
Conflicts of Interest and Transactions With Affiliates" for a discussion of
certain potential conflicts of interest resulting from the Purchaser's
obligation to prepay the Amended DeForest Loan with the proceeds of sales or
refinancings of Partnership properties.) "Purchaser Cash Flow" means the cash
revenues, with certain exceptions, to be received by NPI-AP Management, L.P.
("NPI-AP Management"), an affiliate of the Purchaser, and by certain other
entities affiliated with NPI less allowable operating expenses. Each of NPI-AP
and NPI have guaranteed the Amended Loans.

As collateral security for the Amended Loans, among other things, the
Purchaser and DeForest II have pledged and collaterally assigned the Tendered
Units (or upon acquisition thereof pursuant to the Settlement Tender Offers will
pledge and collaterally assign Tendered Units) to the Lender, and their
respective partners

have pledged all partnership interests in the borrowers. As additional
collateral security, all outstanding shares of the common stock of NPI Equity
(and its parent NPI) and all partnership interests in NPI-AP Management have
been pledged to the Lender by the holders thereof.

The Amended Loan Agreement contains customary affirmative and negative
reporting and operational covenants. The Amended Loan Agreement also provides
that certain actions (i.e., bankruptcy or insolvency and default under mortgage
indebtedness) by Subject Partnerships having in the aggregate an Attributed Net
Value (as defined below) of more than 20% of the Attributed Net Value of all
Subject Partnerships constitute a default under the Amended Loans. "Attributed
Net Value" of any Subject Partnership represents the purchase price actually
paid by the Purchaser or DeForest II for Tendered Units of a Subject Partnership
multiplied by the number of Tendered Units actually acquired at such price.

The Purchaser and DeForest II have timely made all required payments of
principal and interest on the Original Loans. The Purchaser anticipates that,
over the remaining course of the Amended Loans or any refinancing thereof, the
allocable share of sale or refinancing proceeds to be received by it or by
DeForest II on account of Tendered Units, together with the Purchaser Cash Flow
available to service the Amended Loans, will continue to be sufficient to retire
the principal balance of the Amended Loans or any replacement loans. However, it
is the Purchaser's belief that unless properties owned by one or more of the
Subject Partnerships are sold or refinanced, repayment of the Amended Loans will
be dependent upon the ability of the Purchaser or DeForest II to obtain
replacement financing. (See "Section 10. Conflicts of Interest and Transactions
with Affiliates" for a discussion of certain potential conflicts of interest
resulting from consummation of the Original DeForest Loan.) There are 84
individual properties owned by the Subject Partnerships. Neither the General
Partner nor the Purchaser is aware of any property owned by a Subject
Partnership which is contemplated for current sale other than the following:

(i) Century Properties Fund XIV has entered into contracts for the sale
of its Greenbriar Plaza and Duck Creek properties for purchase prices of
$1,060,000 and $2,240,000 respectively. The anticipated net proceeds to the
partnership from these sales is expected to be approximately $925,000 from
the Greenbriar Plaza sale and 1,950,000 from the Duck Creek sale. The sales
are subject to customary closing conditions, including title, survey and
environmental review;

(ii) Century Properties Growth Fund XXII has entered into a contract
for the sale of its Monterey Village property for a purchase price of

$10,500,000 with anticipated net proceeds to the partnership of
approximately $3,200,000. The sale is contingent upon the buyer's
satisfactory completion of its due diligence review;

(iii) MRI Business Properties Fund, Ltd. II ("MRI II") has entered into
a contract for the sale of its Marriott Riverwalk property for a purchase
price of $49,600,000 with anticipated net proceeds to the partnership of
approximately $30,000,000, and has entered into a non-binding letter of
intent for the sale of its Marriott Somerset property for $25,000,000 with
anticipated net proceeds to the partnership of approximately $2,500,000.
The sale of the Marriott Riverwalk is subject to customary closing
conditions, and the sale of the Marriott Somerset will be contingent upon
the buyer's satisfactory completion of its due diligence review. MRI II is
also currently marketing its interests in both its Holiday Inn Crowne Plaza
property and its Radisson South property; and

(iv) MRI Business Properties Fund, Ltd. III ("MRI III") has entered
into a contract for the sale of its Embassy Suites property for a purchase
price of $19,600,000 with anticipated net proceeds to the partnership of
approximately $19,500,000. The sale is contingent upon the buyer's
satisfactory completion of its due diligence review. MRI III is also
currently marketing its interest in its Holiday Inn Crowne Plaza property.

In addition, neither the Purchaser nor Deforest II has made any plans or
arrangements to refinance the Amended Loans. Assuming all of the foregoing
properties which are under contract or subject to letters of

intent are sold for the purchase prices indicated and the proceeds of such sales
are distributed by the respective partnerships, the Purchaser's share of such
proceeds on account of units currently owned in such partnerships, together with
the Purchaser's share of the proceeds from the April 1995 sale of Plumtree
Apartments by Century Properties Fund XV, would aggregate approximately
$17,950,000 .

Section 13. Background of the Offer.

Acquisition of Control. On December 6, 1993, NPI Equity, a wholly-owned
subsidiary of NPI, an affiliate of the Purchaser, assumed management and
obtained control of the General Partner of the Partnership, the respective
general partners of the other Subject Partnerships set forth on Schedule 3 under
the heading "Fox Partnerships" (together with the Partnership, the "Fox
Partnerships"), and certain other affiliated partnerships, by being appointed as
substitute managing partner of FRI, a partner of the General Partner and the
direct or indirect general partner of certain of the other Fox Partnerships and
such other affiliated partnerships, and by entering into a voting trust
agreement with the beneficial owners of the outstanding shares of stock of Fox
Capital Management Corporation ("FCMC"), another direct or indirect general
partner of certain of the other Fox Partnerships and such other affiliated
partnerships. Three of the eleven former individual general partners of FRI are

limited partners of the Purchaser.

In connection with the acquisition by NPI Equity of management and control
of the Fox Partnerships and such other affiliated partnerships, NPI Realty
Advisors, Inc. ("NPI Realty"), an affiliate of NPI Equity, acquired for cash and
notes an aggregate of approximately $10,800,000 of loans made by FRI and/or FCMC
to the Fox Partnerships and such other affiliated partnerships (the "Partnership
Advances") for the outstanding balance of such loans. All of the Partnership
Advances have since been repaid by the borrower thereof from, among other
sources, the proceeds of the sales of certain properties of the Fox Partnerships
and such other affiliated partnerships.

On October 12, 1994, NPI sold one-third of its stock to an affiliate of
Apollo Real Estate Advisors, L.P. ("Apollo"). (See Item 1. "Business -
Subsequent Events" of the Partnership's Form 10-K for the fiscal year ended
September 30, 1994 for additional information with respect to this transaction.)
Certain individual beneficial owners of NPI and an entity affiliated with Apollo
formed both the Purchaser and DeForest Capital on September 30, 1994 for the
purpose of making the Original Tender Offers.

The Original Tender Offers. On October 17, 1994, the Purchaser commenced
the Original Tender Offers for units of limited partnership interest in the Fox
Partnerships (the "Original Fox Tender Offers"), and the Purchaser's affiliate,
DeForest Ventures II L.P. ("DeForest II"), commenced the Original Tender Offers
(the "Original NPI Tender Offers") for units of limited partnership interest in
the Subject Partnerships set forth on Schedule 3 under the heading "NPI
Partnerships" (the "NPI Partnerships"). The Original NPI Tender Offers and the
Original Fox Tender Offers were consummated on November 18, 1994 and November
29, 1994, respectively.

Original Tender Offer Financing. The Purchaser purchased the Units tendered
in the Original Tender Offer for Units as well as the units of limited
partnership interest tendered in the other Original Fox Tender Offers, in part,
with the proceeds of the $21,223,858 Original DeForest Loan. The balance of the
purchase price for such units was obtained through capital contributions from
the Purchaser's partners. The Lender also provided the $13,250,690 Original NPI
Loan to DeForest II in connection with DeForest II's purchase of units in the
Original NPI Tender Offers. As of May 8, 1995, the outstanding principal balance
of the Original DeForest Loan and the Original NPI Loan, was $21,223,858 and
$12,403,079, respectively. As discussed in Section 12, prior to execution of the
Amended Loan Agreement, the Original Loans were governed by terms not materially
different from the terms governing the Amended Loans (see "Section 12. Source of
Funds" for a discussion of the terms of the Amended Loans.)

The Action. The Action consolidates two of the litigations filed in
response to the Original Tender Offers. The following sets forth certain
background information relating to such litigations:

The Ruben Action. On November 7, 1994, Plaintiffs Bonnie L. Ruben and

Sidney Finkel (the "Original Ruben Plaintiffs") filed their original complaint
(the "Ruben Action") with the Court entitled Bonnie L. Ruben, et. al. v.
DeForest Ventures I L.P., et. al. (Civil Action No 1:94CV-2983-JEC), alleging
claims relating to the Original Fox Tender Offers on behalf of the limited
partners in the Fox Partnerships. The complaint included claims for violation of
Section 14(e) of the Securities Exchange Act of 1934 against the tender
offerors, for breach of fiduciary duties by the General Partners of the Fox
Partnerships, for breach of the Partnership Agreements of the Fox Partnerships,
and for aiding and abetting such breaches. The Original Ruben Plaintiffs moved
for a temporary restraining order and a preliminary injunction to enjoin the
Original Fox Tender Offers. On November 18, 1994, following a hearing, the Court
denied the Original Ruben Plaintiffs' motion for a temporary restraining order
enjoining the Original Fox Tender Offers and other matters, and scheduled a
hearing on the Original Ruben Plaintiffs' preliminary injunction motion for
November 28, 1994. On November 22, 1994, the Original Ruben Plaintiffs withdrew
their motion for a preliminary injunction. On December 29, 1994, the Original
Ruben Plaintiffs, joined by Plaintiff Robert Lewis (collectively, the "Ruben
Plaintiffs"), filed their First Amended Complaint, alleging claims related both
to the Original Fox Tender Offers and the Original NPI Tender Offers, on behalf
of limited partners in the Fox Partnerships and the NPI Partnerships,
respectively.

The Andrews Action. On December 16, 1994, a complaint (the "Andrews
Action") was filed in the Court by Plaintiff James Andrews and others (the
"Andrew Plaintiffs") with the Court entitled James Andrews, et. al. v. Fox
Capital Management Corp., et al., (Civil Action No 1:94CV-3351-JEC), alleging
similar claims to those alleged in the Ruben Action.

By order of the Court, dated February 23, 1995, the Ruben Action and the
Andrews Action were consolidated.

The Settlement also settles the two other class actions which were filed in
response to the Original Tender Offers. The following sets forth certain
background information relating to such litigations:

The Whiteside Action. On November 3, 1994, a complaint (the "Whiteside
Action") was filed in the Superior Court of the State of California in and for
the County of San Mateo entitled Whiteside, et al. v. Fox Capital Management
Corp. (Case No. 390018), alleging claims under California state law in
connection with the Original Fox Tender Offers on behalf of certain limited
partners in the Fox Partnerships, and an amended complaint was filed in that
action on December 28, 1994, alleging claims related both to the Original Fox
Tender Offers and to the Original NPI Tender Offers, on behalf of certain
limited partners of the Fox Partnerships and the NPI Partnerships, respectively.
The court in the Whiteside Action denied plaintiff's motions for a temporary
restraining order and a preliminary injunction to enjoin the Original Fox Tender
Offers.

The Vernon Action. On November 22, 1994, a complaint (the "Vernon
Action") was filed in the Illinois Circuit Court entitled Vernon v. DeForest
Ventures I L.P., et. al. (No. 94 CH 0150592) containing allegations similar to
those contained in the Action.

Each defendant in the Action has at all times denied the allegations of

wrongdoing and the merits of any and all claims asserted in the Action and in
the Whiteside and Vernon Actions.

The Settlement. After extensive arm's-length negotiations between counsel
for the Plaintiffs in the various litigations and counsel for the Defendants,
the parties to the litigations entered into an Amended Stipulation of Settlement
dated as of March 14, 1995. As described in the Settlement Notice, the
Settlement provides that in full and final disposition of all claims with
respect to any transaction or occurrence constituting the subject matter of the
Action, the following consideration was provided with respect to the Fox
Partnerships:

Monetary Payment to Class Members who tendered in the Original Tender
Offers. Each unitholder who tendered units of limited partnership interest in
the Original Fox Tender Offers will receive a payment equal to the sum of the
Settlement Premium plus the Residual Settlement Premium in the Settlement Tender
Offer applicable to such unitholder's Fox Partnership. Accordingly, unitholders
who tendered units in the Original Fox

Tender Offers, and unitholders who tender units in the Settlement Tender Offers
relating to the same Fox Partnership, will have received the same consideration
with respect to tendered units which are purchased pursuant to such Offers.

Settlement Tender Offers. The Purchaser was required to make the Offer, and
similar tender offers (together with the Offer, the "Settlement Tender Offers")
were required to be made with respect to the other Subject Partnerships.

Establishment of Credit Line. The respective general partners of the Fox
Partnerships, or their affiliates, will provide a credit line to each Fox
Partnership in an amount determined by multiplying $150,000 by the number of
properties owned directly or indirectly by such Fox Partnership, with interest
at the lesser of the prime rate plus 1% or the interest rate permitted under the
respective partnership agreement of the Fox Partnerships for short term loans to
such Fox Partnership by its general partners. The principal amount of such loans
will be payable on the earliest to occur of either the sale or refinancing of
any property owned by the applicable Fox Partnership or upon liquidation of such
Fox Partnership. Interest on such loans will be payable out of first available
cash flow or upon sale or refinancing of any property owned by the applicable
Fox Partnership.

Limitation on Expense Reimbursement. The annual amount of general and
administrative expenses (other than that portion attributable to outside legal
and accounting fees) which is reimbursable to the respective general partners of
each Fox Partnership from such Fox Partnership may not exceed the amount
reimbursed to such general partners during the 1994 fiscal year, subject to
increases for inflation.

Prohibition on Roll-up Transactions. The respective general partners of the
Fox Partnerships will adopt a policy of prohibiting the Fox Partnerships from

entering into a Roll-up Transaction in which such general partners or their
affiliates are a party prior to December 31, 1999, unless such transaction is
approved by a majority of the limited partnership interests held by
non-affiliates of such general partners. A Roll-up Transaction is defined to
mean (i) any merger or consolidation of a Fox Partnership with any other entity
if as a result thereof limited partners of such partnership will be issued
securities in any other entity in exchange for, or as a distribution with
respect to, the units of such partnership; or (ii) any sale of all or
substantially all of the assets of a Fox Partnership to another entity if as a
result thereof limited partners of such partnership will be issued securities in
any other entity in exchange for, or as a distribution with respect to, the
units of such partnership; or (iii) any transaction involving an exchange of
units of a Fox Partnership for securities in any other entity whether through a
voluntary exchange or otherwise; or (iv) any other similar transaction or series
of transactions, if, as a result of a transaction or any series of related
transactions, any of the limited partners of such partnership will be issued
securities in any other entity in exchange for, or as a distribution with
respect to, the units in such partnership; or (v) any sale of all or
substantially all of the assets of a Fox Partnership or termination and
dissolution of a Fox Partnership, if in either case, the general partner of such
partnership or any of its affiliates has a material financial interest in such
transaction (other than in its capacity as a general or limited partner in such
partnership).

Elimination of Fees. The respective general partners of the Fox
Partnerships and their affiliates will not be entitled to any subordinated
incentive fees otherwise payable pursuant to the respective partnership
agreements of the Fox Partnerships.

No Additional Tender Offers. Neither the Purchaser nor any of its
affiliates will initiate or participate in (as a member of any group or as an
investor in or creditor of the tender offeror(s)) any tender offer for the
outstanding units of one or more of the Subject Partnerships after completion of
the Settlement Tender Offers for a period of 24 months following the completion
of the Settlement Tender Offers, except in response to a tender offer by a party
who is not an affiliate of the Purchaser.

At a May 19, 1995 hearing on the Settlement, the Court approved the
Settlement and entered an order (the "Order") determining that the terms of the
Settlement were fair, reasonable and adequate and dismissing the Action with
prejudice. Unless an appeal is filed, the Court's order will become final,
binding and non-appealable on June 19, 1995.

Payment of Settlement Expenses. Depending on the number of units tendered
in the Settlement Tender Offers, the Subject Partnerships will be obligated to
pay a portion of Class Members' counsel's fees. In the case of the Partnership,
such payment will not exceed $41,900.

Establishment of Cash Consideration. The Purchaser has set the Cash

Consideration at $116.53 per Unit as compared to the Original Purchase Price of
$106 per Unit in the Original Tender Offer for Units. As discussed above, the
Cash Consideration was determined in connection with the Settlement and
represents the price offered in the Original Tender Offer increased by the
Settlement Premium. (See "Section 13. Background of the Offer".)

As discussed in the Offer to Purchase relating to the Original Tender Offer
for Units, the Original Purchase Price was established by analyzing a number of
both quantitative and qualitative factors which existed at the time of the
Original Tender Offers, including: (i) secondary market activity with respect to
the Units; (ii) the lack of liquidity of, and lack of current income derived
from, an investment in the Partnership; (iii) an estimate of the underlying
value of the Partnership's assets; (iv) the costs to the Purchaser associated
with acquiring the Units in the Original Tender Offer; and (v) the
administrative costs of continuing to own the Partnership's assets through a
publicly registered limited partnership.

Secondary sales activity has been very limited and sporadic. Since the
Original Tender Offers, according to information obtained from trade
publications that report on public real estate limited partnerships, Units that
were transferred in the secondary market were sold at prices approximating the
Original Purchase Price.

Set forth below is updated information with respect to the underlying value
of the Partnership's assets.

The Purchaser is offering to purchase Units which are a relatively illiquid
investment and which do not presently generate current income and is not
offering to purchase the Partnership's underlying assets. Consequently, the
Purchaser does not believe that the underlying asset value of the Partnership is
determinative in arriving at the Cash Consideration. Nevertheless, the Purchaser
derived an estimated net value (the "Derived Value") for the Partnership's
assets. In determining the Derived Value, the Purchaser first calculated the
"Adjusted Value" of each of the Partnership's properties. The Adjusted Value was
determined by subtracting a replacement reserve (the "Replacement Reserve") from
a property's earnings before interest, depreciation and amortization ("EBIDA")
for the twelve month period commencing on April 1, 1994 and ending March 31,
1995, which earnings were based upon the Partnership's actual operating results.
This amount was then divided by a capitalization rate (the "Cap Rate") to
determine the property's Adjusted Value. The Replacement Reserve used in
calculating the Adjusted Value was $.65 per square foot for such property. The
Cap Rate used in calculating the Adjusted Value was 10.5% for the Partnership's
properties constructed after 1980 and 11% for all other properties.

The Purchaser believes that the Replacement Reserve and Cap Rates utilized
by it are within a range of reserves and capitalization rates currently employed
in the marketplace. The utilization of different Replacement reserves and
capitalization rates could also be appropriate. Unitholders should be aware that
the use of lower Replacement reserves and/or capitalization rates would result
in higher Adjusted Values for the Partnership's properties.

The following table applies the method used by the Purchaser to determine
the Adjusted Value.

- -------------------------------------------------------------------------------------------------------------
Year Replacement Adjusted
Property Built EBIDA Reserve Cap Rate Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Parkway 1976 $153,000 $75,567 11.00% $ 703,936
Village
- -------------------------------------------------------------------------------------------------------------
Mardot II 1974 $262,000 $43,550 11.00% $1,985,909
- -------------------------------------------------------------------------------------------------------------
Priest 1981 $152,000 $20,092 10.50% $1,256,267
Office
Building
- -------------------------------------------------------------------------------------------------------------
Resource 1982 $309,000 $39,650 10.50% $2,565,238
Park West
- -------------------------------------------------------------------------------------------------------------
Norwood 1929 $536,000 $77,540 11.00% $4,167,818
Tower
- -------------------------------------------------------------------------------------------------------------
</TABLE>

To determine the Derived Value of the Partnership's assets, the Purchaser
then added to the aggregate Adjusted Value the net amount of all cash and cash
equivalents of the Partnership at March 31, 1995, which net amount equaled
$3,624,000. Finally, the Adjusted Value was reduced by subtracting approximately
$1,132,000 of long term debt of the Partnership outstanding at March 31, 1995.
The resulting Derived Value of the Partnership's assets was approximately
$13,171,168 or $157 per Unit (based upon the percentage of capital distributions
to which Unitholders are entitled).

The Purchaser believes that realization by the Partnership of the Derived
Value may be impacted by several factors affecting real estate assets generally,
including: (i) the age of its properties, and (ii) the continued sale of
properties acquired by financial institutions and government agencies. In
addition, no deduction was made in calculating the Derived Value on account of
closing costs which would be incurred upon the sale by the Partnership of its
properties, including brokerage commissions, title costs, legal fees and
transfer taxes. No Partnership properties or assets have been identified for
sale, and neither the General Partner nor the Purchaser has any present plans or
intentions with respect to liquidation of the Partnership.

Unitholders should also be aware that, in connection with Apollo's decision
to make an investment in the Purchaser and its affiliates, Apollo retained an
independent third party to conduct an equity analysis of, among other entities,
the Partnership as of June 30, 1994. The foregoing analysis estimated the equity

value of the Partnership at an amount equivalent to $140 per Unit. However,
Unitholders are advised that this valuation was not prepared with a view toward
public disclosure (including disclosure in this Offer) and that Apollo does not
as a matter of course make public its internal valuations. The fact that Apollo
commissioned this evaluation of the Partnership in connection with its decision
to make an investment in the Purchaser and its affiliates should not be
considered as an indication that either Apollo or the Purchaser considers this
valuation as an accurate indicator of the net amount the Partnership could
realize for its assets.

The Partnership Agreement provides, among other things, that upon
dissolution of the Partnership subsequent to the sale of all of the
Partnership's properties, the General Partner is required to contribute capital
to the Partnership in an amount equal to any deficit then existing in its
capital account. Through ownership of Units by the Purchaser, an affiliate of
the General Partner, the potential liability of the General Partner and its
affiliates is effectively reduced. Although there was a deficit in the capital
account of the General Partner of $542,744 as of the end of the Partnership's
last fiscal year (equal to $6.61 per Unit), such amount is subject to future
reduction through allocation of a portion of the taxable gain, if any, that
results from the sale by the Partnership of its properties under the Partnership
Agreement. Consequently, the ultimate amount, if any, of

the deficit and the date on which it would be paid are indeterminable.
Accordingly, the Purchaser has attributed no value to this obligation in
establishing the Cash Consideration.

Pursuant to the Settlement Agreement, it was agreed that the Cash
Consideration would be $116.53 reflecting the price offered in the Original
Tender Offer increased by the Settlement Premium. The Cash Consideration
represents the price at which the Purchaser is willing to purchase Units. No
independent person has been retained to evaluate or render any opinion with
respect to the fairness of the Cash Consideration and no representation is made
by the Purchaser or any affiliate of the Purchaser as to such fairness. The
Purchaser did not attempt to obtain current independent valuations or appraisals
of the underlying properties and other assets owned by the Partnership; however,
the Purchaser is aware of the equity analysis referred to above. As indicated
above, the Purchaser does not believe that such valuations or appraisals should
be determinative as to the Purchaser's establishment of the Cash Consideration.
Other measures of the value of the Units may be relevant to Unitholders.
Unitholders are urged to consider carefully all of the information contained
herein and consult with their own advisors, tax, financial or otherwise, in
evaluating the terms of the Offer before deciding whether to tender Units.

Partnership Makes No Recommendation. The Partnership has indicated in its
Statement on Schedule 14D-9 filed with the Commission that it makes no
recommendation and is remaining neutral as to whether Unitholders should tender
their Units pursuant to the Offer because the General Partner of the Partnership
is subject to an inherent conflict of interest resulting from the General

Partner's affiliation with the Purchaser.

Section 14. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchaser shall 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 expirations 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, the
Purchaser shall 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 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 Unitholders, or (iii) requires divestiture
by the Purchaser of any Units;

(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 (iii)
of paragraph (a) above; or

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.

Section 15. Certain Legal Matters.

General. Except as set forth in this Section 15, the Purchaser is not aware
of any filings, approvals or other actions by any domestic or foreign
governmental or administrative agency that would be required prior to the

acquisition of Units by the Purchaser pursuant to the Offer. Should any such
approval or other action be required, it is the Purchaser's present intention
that such additional approval or action would be sought. 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 held
separate 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
purchase and pay for Units is subject to certain conditions, including
conditions related to the legal matters discussed in this Section 15.

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, such regulations are not applicable to the Offer.

State Takeover Laws. A number of states have adopted anti-takeover laws
which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, securityholders, principal executive offices or principal
places of business therein. Although the Purchaser has not attempted to comply
with any state anti-takeover statutes in connection with the Offer, the
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver of
such right. If any state anti-takeover statute is applicable to the Offer, the
Purchaser might be unable to accept for payment or purchase Units tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, the Purchaser may not be obligated to accept for purchase or pay for
any Units tendered.

Section 16. Fees and Expenses. 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 will pay all costs and expenses of
printing and mailing the Offer.

Section 17. Miscellaneous. 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) the holders of Units residing in
such jurisdiction.

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 Letter

of Transmittal 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 Schedule 14D-1, 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 Section 9
hereof (except that they will not be available at the regional offices of the
Commission).

DEFOREST VENTURES I L.P.

June 2, 1995

Exhibit A

NOTE AND SECURITY AGREEMENT
, 1995

Loan # [ ]

The undersigned borrower (the "Borrower"), for value received, promises to
pay to DeForest Ventures I L.P., a Delaware limited partnership (the "Lender"),
the Principal Amount of this Note as determined pursuant to Section 1 below, and
accrued interest thereon, on the terms and conditions herein set forth.

This Note evidences a non-recourse loan (the "Loan") made by the Lender to
the Borrower in connection with the offer to purchase (the "Offer") units of
limited partnership interest ("Units") of MRI Business Properties Fund, Ltd., a
California limited partnership (the "Partnership"), made by the Lender pursuant
to that certain Offer to Purchase dated June 2, 1995 and the accompanying Letter
of Transmittal. The Borrower tendered Units in the Offer, certain of which,
after application of the proration provisions of the Offer (the "Proration
Provisions"), were accepted for purchase (the "Purchased Units") and certain of
which (the "Retained Units"), after application of the Proration Provisions,
were not accepted for purchase and are pledged hereby as collateral for the Loan
evidenced by this Note.

1. Principal Amount. The principal amount (the "Principal Amount") of this
Note shall be that amount which is equal to the number of Retained Units

multiplied by $116.53. The Principal Amount of this Note shall be due and
payable on January 2, 1996 (the "Maturity Date"), and shall not be prepayable
except through the application of "Distributions" (as defined below) in
accordance with Section 7 of this Note.

2. Interest. This Note shall bear interest at a rate per annum of 9%.
Interest on this Note shall accrue from the date of this Note (which shall be
the date which is two days after the Expiration Date (as defined in the Offer)
of the Offer) and shall be payable in arrears on the Maturity Date. Interest
shall not be prepayable except through the application of Distributions in
accordance with Section 7 of this Note. Interest will be computed on the basis
of a 365-day year and the actual number of days elapsed.

3. Payment of Principal and Interest. The Principal Amount of this Note,
and accrued interest thereon, may be paid, at the election of the Borrower,
EITHER (i) by delivery to the Lender on or after the Maturity Date but not later
than January 17, 1996 of a certified check made payable to the Lender in an
amount (the "Cash Payment Amount") equal to the sum of (x) the Principal Amount,
plus (y) the amount of accrued interest on the Principal
Amount through the date of payment, minus (z) the amount of all Distributions
applied on or prior to the date of payment in accordance with Section 7 of this
Note, OR (ii) by transferring ownership of the Retained Units to the Lender. In
order for the Borrower to elect to make payment pursuant to the preceding clause
(i), the Lender must receive the Cash Payment Amount on or prior to January 17,
1996. If the Cash Payment Amount is not so received by the Lender on or prior to
such date, the Borrower shall be deemed to have elected the payment option set
forth in clause (ii) above.

4. Non-recourse. Anything contained herein to the contrary notwithstanding,
no recourse shall be had for the payment of the Loan evidenced by this Note or
for any claim based thereon or otherwise in respect thereof or for the payment
or performance of any other obligation based on or in respect of the Loan, and
no personal liability shall be asserted or enforceable, against (i) the Borrower
or (ii) any officer, director, partner, shareholder or affiliate of the
Borrower, and the enforcement of any judgment for breach by the Borrower of its
obligations hereunder shall be made only against the Collateral. The foregoing
provisions of this Section shall not prevent recourse to the Collateral or
constitute a waiver, release or discharge of the Loan evidenced by this Note or
impair in any manner any right, remedy or recourse the Lender may have against
Borrower for actual fraud.

5. Security Interest. In order to secure the due and punctual payment of
all amounts due hereunder and performance of all other obligations of the
Borrower under this Note, the Borrower hereby grants to the Lender a first
priority security interest in all of the Borrower's right, title and interest in
and to the Retained Units and all proceeds thereof (together, the "Collateral").
The Borrower represents and warrants that it owns and has full power and
authority to pledge the Collateral and that, other than this pledge, the
Collateral is free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer thereof and is not subject to any adverse claims. The Lender will have
all the rights of a secured party under the Uniform Commercial Code (as in
effect in all applicable jurisdictions) with respect to the Collateral. The
Borrower irrevocably appoints the designees of the Lender as the Borrower's

attorney-in-fact to execute and cause to be filed or recorded any and all
documents on behalf of the Borrower as may be necessary to perfect or continue
the perfection of the security interest herein granted, including, without
limitation, filing Uniform Commercial Code financing statements with respect to
the Collateral on behalf of the Borrower, or without the signature of the
Borrower, to the extent permitted by law.

6. Delivery and Transfer of Collateral. Letters of Trans- mittal regarding
the tendered Units have heretofore been delivered to the Lender. The Lender
shall have the right at any time upon the occurrence of a failure by Borrower to
make any payments

hereunder when due (a "Default"), to endorse, assign or otherwise transfer to or
register in the name of the Lender any or all of the Collateral. If the Lender
has not timely received the Cash Payment Amount from the Borrower as provided in
Section 3 of this Note then the Lender may endorse, assign or otherwise transfer
the Retained Units to the Lender and cause the Retained Units to be registered
in the name of the Lender. The Borrower hereby agrees with the Lender that the
Partnership shall make an appropriate notation on the Partnership's Unit
register which evidences the delivery and, when applicable, the transfer of the
Collateral. If requested by the Lender, the Borrower will execute and deliver
any assignment or other instrument reasonably requested by the Lender to confirm
the validity of any action taken by the Lender pursuant to the provisions of
this Section 6. The Borrower hereby agrees promptly to notify the Lender in
writing prior to changing its address, principal place of business or chief
executive office or name.

7. Distributions. The Borrower agrees that all distributions, income,
profits or proceeds paid or payable to the Borrower in respect of the Collateral
("Distributions") shall be applied by the Lender first to reduce the amounts
owing hereunder in respect of accrued interest hereon and second, if any
Distributions remain unapplied, to reduce the Principal Amount hereof. The
Lender shall remit all amounts remaining after such applications to the
Borrower.

8. Voting Rights. So long as no Default has occurred hereunder, the
Borrower shall be entitled to exercise any and all voting and other consensual
rights pertaining the Collateral for any purpose not inconsistent with the terms
or purpose of this Note; provided, however, that the Borrower shall not in any
way exercise such rights in favor of a dissolution of the Partnership or in any
manner which may have an adverse affect on the value of the Collateral or on the
Lender's rights hereunder.

9. Default; Acceleration. Upon the occurrence of a Default, all rights of
the Borrower to exercise voting and other consensual rights shall cease without
any action or the giving of any notice and such rights shall thereupon be vested
in the Lender. Upon the commencement of any bankruptcy or similar proceeding
(whether voluntary or involuntary) with respect to the Borrower, the insolvency
of the Borrower or any assignment by the Borrower for the benefit of its

creditors, the Principal Amount and all accrued interest hereon shall
automatically and immediately become due and payable by the Borrower.

10. Prepayment. Other than through the application of Distributions, this
Note may not be prepaid in whole or in part.

11. Joint and Several Liability. If this Note is signed by more than one
Borrower, the obligations of each such Borrower hereunder shall be joint and
several obligations of each such Borrower.

12. Notices. Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing and shall be
delivered personally, by telecopier or by express courier service by registered
or certified mail, return receipt requested, postage prepaid, as follows:

(a) If to the Lender:

DeForest Ventures I L.P.
5665 Northside Drive, N.W.
Suite 370
Atlanta, Georgia 30328-5805

(b) If to the Borrower, to the same address to which copies of the Offer
were sent, unless another address is specified in a notice delivered to the
Lender pursuant to Section 6 of this Note.

All such notices and communications shall, when mailed or personally
delivered, be effective upon receipt, or when telegraphed, telexed, or cabled,
be effective upon confirmation of receipt by addressee or when sent by overnight
courier, be effective one day after delivery to such courier, except that
notices and communications to the Lender shall not be effective until received
by the Lender.

13. Miscellaneous.

(a) The Borrower hereby waives diligence, presentment, demand, protest,
notice of the acceptance of this Note and all other notices of any kind relating
to the enforcement of this Note. No delay or omission on the part of the Lender
in exercising any right hereunder shall operate as a waiver of any such right or
of any other right hereunder and a waiver of any such right on any one occasion
shall not be construed as a bar to or waiver of any such right on any future
occasion.

(b) The Borrower agrees to pay on demand all costs and expenses (including
legal costs and attorneys' fees) incurred or paid by the Lender in enforcing
this Note.

(c) This Note shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to the conflict of laws

provisions thereof.

(d) If any one or more of the provisions contained in this Note shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired.

(e) The provisions of this Note may, from time to time, be amended, or
compliance with any agreement or condition contained

herein waived, with the written consent of the Lender and the Borrower.

(f) This Note shall inure to the benefit of any successor or assign of the
Lender and any other holder of this Note.

(g) Upon request of the Lender, the Borrower shall execute and deliver any
and all documents and instruments as the Lender may deem necessary to effectuate
the terms of, and to carry out the intent of, this Note.

(h) This Note may be executed in any number of counterparts, each of which
together shall constitute a single instrument.

(i) Nothing set forth in this Note shall be construed as a commitment by
the Lender to make any advance or loan to or for the benefit of the Borrower
other than the Loan to be made with respect to the Retained Units upon
consummation of the Offer.

NOTE AND SECURITY AGREEMENT SIGNATURE PAGE

WITNESSETH, the undersigned hereby executes this Note and Security
Agreement as of the date first above written.

BORROWER(1)

-------------------------------------

- --------
(1) Each Borrower must sign exactly as such Borrower's name appears on the
face of the Letter of Transmittal.

Schedule 1

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
director and executive officer of DeForest Capital. Except for Mr.
Koenigsberger, who is a citizen of Guatemala, each person listed below is a
citizen of the United States.

Present Principal Occupation or Employment;
Material Occupation, Position, Office
or Employment for the Past Five Years

Michael L. Ashner. Since October 1994, Mr. Ashner has been a Director,
President and Co-Chairman of DeForest Capital and DeForest Capital II
Corporation ("DeForest Capital II"), the general partner of the NPI Purchaser.
Since June 1994, Mr. Ashner has been a Director, President and Co-Chairman of
NPI, and since December 1984 has been a Director and President of NPI Equity.
Mr. Ashner has also been a Director and executive officer of NPI Property
Management Corporation ("NPI Management"), the general partner of NPI-AP
Management, L.P., since April 1984, and is currently NPI Management's Chairman.
Since 1981, Mr. Ashner has also served as President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships. Mr. Ashner's business address is 100 Jericho Quadrangle, Suite

214, Jericho, New York 11753.

Martin Lifton. Since October 1994, Mr. Lifton has been a Director and
Chairman of DeForest Capital and DeForest Capital II, and since June 1994 has
been a Director and Chairman of NPI. Since November 1991, Mr. Lifton has been a
Director and executive officer of NPI Equity, and is currently NPI Equity's
Chairman. Mr. Lifton has also been a Director and/or executive officer of NPI
Management since November 1991, and is currently a Director and NPI Management's
Co-Chairman. Mr. Lifton has also served as Chairman and President of The Lifton
Company, a real estate investment firm, since January 1985, and as Chairman of
The Bank of Great Neck, a Great Neck, New York bank, since March 1986. Mr.
Lifton's business address is 100 Jericho Quadrangle, Suite 214, Jericho, New
York 11753.

W. Edward Scheetz. Mr. Scheetz has been a Director of DeForest Capital,
DeForest Capital II, NPI and NPI Equity since October 1994. Since May 1993, Mr.
Scheetz has been a limited partner of Apollo Real Estate Advisors, L.P.
("Apollo"), the managing general partner of Apollo Real Estate Investment Fund,
L.P., a private investment fund. Mr. Scheetz has also served as a Director of
Roland International, Inc. ("Roland"), a real estate investment company, since
January 1994, as a Director of Capital Apartment Properties, Inc. ("CAP"), a
multi-family residential real estate investment trust, since January 1994 and as
a Director of Southwest Realty Corp. ("SRC"), an office portfolio real estate
investment trust since January 1995. From 1989, to May 1993, Mr. Scheetz was a
principal of Trammell Crow Ventures, a national real estate investment firm. Mr.
Scheetz' business address is 1301 Avenue of the Americas, 38th floor, New York,
New York 10019.

Ricardo Koenigsberger. Mr. Koenigsberger has been a Director of DeForest
Capital, DeForest Capital II, NPI and NPI Equity since October 1994. Since
October 1990, Mr. Koenigsberger has been an associate of Apollo and of Lion
Advisors, L.P., which acts as financial advisor to and representative for
certain institutional investors with respect to securities investments. For more
than one year prior thereto, Mr. Koenigsberger was an associate with Drexel
Burnham Lambert Incorporated. Mr. Koenigsberger's business address is 1301
Avenue of the Americas, 38th floor, New York, New York 10019.

Arthur N. Queler. Mr. Queler has been a Director, Executive Vice President,
Secretary and Treasurer of DeForest Capital and DeForest Capital II since
October 1994, and of NPI since June 1994. Mr. Queler has been a Director and
executive officer of NPI Equity and NPI Management since December 1984 and April
1984, respectively. Mr. Queler has also served as President of ANQ Securities,
Inc., a NASD registered broker-dealer firm which has been responsible for
supervision of licensed brokers and coordination with a nationwide broker-
dealer network for the marketing of NPI investment programs, since 1983. Mr.
Queler's business address is 5665 Northside Drive, N.W., Suite 370, Atlanta,
Georgia 30328.

Lee S. Neibart. Mr. Neibart has been a Director of DeForest Capital,

DeForest Capital II, NPI and NPI Equity since October 1994. Mr. Neibart has
directed portfolio management for Apollo since 1993. From 1989 to 1993, Mr.
Neibart also served as Executive Vice President and Chief Operating Officer of
the Robert Martin Company, a private real estate development and management firm
based in Westchester County, New York, and from 1982 to 1985 Mr. Neibart served
as President of the New York Chapter of the National Association of Industrial
Office Parks, a professional real estate organization. Mr. Neibart is also a
Director of Roland, a Director of CAP and a Director of SRC. Mr. Neibart's
business address is 1301 Avenue of the Americas, 38th floor, New York, New York
10019.

G. Bruce Lifton. Since October 1994, Mr. Lifton has been a Director and
Vice President of DeForest Capital and DeForest Capital II. Mr. Lifton has also
been Vice President of NPI and NPI Equity since January 1991 and November 1991,
respectively, and a Director and Vice President of NPI Management since June
1994. Mr. Lifton has also served as Vice President of The Lifton Company since
September 1986. Mr. Lifton is a son of Martin Lifton and the brother of Steven
Lifton. Mr. Lifton's business address is 5665 Northside Drive, N.W., Suite 370,
Atlanta, Georgia 30328.

Steven Lifton. Mr. Lifton has been a Vice President of DeForest Capital and
DeForest Capital II since October 1994 and of NPI Management since June 1994.
Since June 1994, Mr. Lifton has been a Director and Vice President of NPI. Mr.
Lifton has been Vice President of NPI Equity since November 1991 and a Director
since October 1994. Mr. Lifton has also served as Senior Vice President of The
Lifton Company since September 1984 and as a Director of The Bank of Great Neck
since March 1986. Steven Lifton is a son of Martin Lifton and the brother of G.
Bruce Lifton. Mr. Lifton's business address is 100 Jericho Quadrangle, Suite
214, Jericho, New York 11753.

Schedule 2

FINANCIAL STATEMENTS OF THE PURCHASER AND DEFOREST CAPITAL

INDEPENDENT AUDITORS' REPORT

The Partners
DeForest Ventures I L.P.

We have audited the accompanying balance sheet of DeForest Ventures
I L.P., as of May 15, 1995, and the statements of income, changes
in partners' capital and of cash flows for the periods from
September 30, 1994 (inception) to December 31, 1994 and January 1,
1995 to May 15, 1995. These financial statements are the
responsibility of the Partnership's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
DeForest Ventures I L.P., as of May 15, 1995, and the results of
its operations and its cash flows for the periods September 30,
1994 (inception) to December 31, 1994 and January 1, 1995 to May
15, 1995, in conformity with generally accepted accounting
principles.

Tauber & Balser, P.C.

Atlanta, Georgia
May 26, 1995

F-1

DEFOREST VENTURES I L.P.

BALANCE SHEET
MAY 15, 1995

ASSETS

Investments in limited partnerships . . . . . . . . . . . $ 36,425,000

Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . 407,000

Other assets. . . . . . . . . . . . . . . . . . . . . . . 818,000

Restricted cash . . . . . . . . . . . . . . . . . . . . . 4,364,000
------------
$ 42,014,000
============

LIABILITIES AND PARTNERS' EQUITY

Note payable. . . . . . . . . . . . . . . . . . . . . . . $ 25,689,000

Accounts payable and accrued expenses . . . . . . . . . . 1,183,000

Accrued litigation settlement . . . . . . . . . . . . . . 4,350,000

Other liability . . . . . . . . . . . . . . . . . . . . . 123,000

Partners' equity. . . . . . . . . . . . . . . . . . . . . 10,669,000
------------
$ 42,014,000
============

SEE NOTES TO FINANCIAL STATEMENTS

F-2

DEFOREST VENTURES I L.P.
STATEMENTS OF INCOME
JANUARY 1, 1995 TO MAY 15, 1995 AND
SEPTEMBER 30, 1994 (INCEPTION) TO DECEMBER 31, 1994

1995 1994
---- ----
REVENUES:

Income from investments
in partnerships . . . . . . . . . $ 100,000 $ 405,000
Interest. . . . . . . . . . . . . . 23,000 117,000
----------- ---------
123,000 522,000

EXPENSES:
Interest . . . . . . . . . . . . . . 1,371,000 306,000
General, administrative,
and other. . . . . . . . . . . . . 389,000 106,000
----------- ---------
1,760,000 412,000
----------- ---------

NET INCOME (LOSS) . . . . . . . . . . $(1,637,000) $ 110,000
=========== =========

- --------------------------------------------------------------------------------

DEFOREST VENTURES I L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
JANUARY 1,1995 TO MAY 15, 1995 AND
SEPTEMBER 30, 1994 (INCEPTION) TO DECEMBER 31, 1994

GENERAL LIMITED
PARTNER PARTNERS TOTAL
------- -------- -----
PARTNERS' CAPITAL, BEGINNING . . $ - $ - $ -

CAPITAL CONTRIBUTED. . . . . . . 119,000 11,781,000 11,900,000

NET INCOME . . . . . . . . . . . 1,000 109,000 110,000
-------- ----------- -----------
PARTNERS' CAPITAL,
DECEMBER 31, 1994. . . . . . . 120,000 11,890,000 12,010,000

CAPITAL CONTRIBUTED. . . . . . . - 296,000 296,000

NET INCOME . . . . . . . . . . . (16,000) (1,621,000) (1,637,000)
-------- ----------- -----------

PARTNERS' CAPITAL,
MAY 15, 1995 $104,000 $10,565,000 $10,669,000
======== =========== ===========

SEE NOTES TO FINANCIAL STATEMENTS

F-3

DEFOREST VENTURES I L.P.
STATEMENTS OF CASH FLOWS

JANUARY 1, 1995 TO MAY 15, 1995 AND
SEPTEMBER 30, 1994 (INCEPTION) TO DECEMBER 31, 1994

1995 1994
---- ----
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . $(1,637,000) $ 110,000
----------- -----------
Adjustments:
Undistributed earnings from partnership
investments . . . . . . . . . . . . . . . (100,000) (404,000)
Amortization . . . . . . . . . . . . . . . 101,000 29,000
Changes in:
Other assets . . . . . . . . . . . . . . (5,000) -
Accounts payable and other liabilities . 999,000 306,000
----------- -----------
Total adjustments. . . . . . . . . . . . . 995,000 (69,000)
----------- -----------
Net cash provided (used) by operating
activities. . . . . . . . . . . . . . . . (642,000) 41,000
----------- -----------
Cash flows from investing activities:
Cash payments for investments
in partnerships. . . . . . . . . . . . . (606,000) (30,963,000)
Cash payments for organizational costs . . - (200,000)
Cash restricted for investments. . . . . . (4,364,000) -
----------- -----------
Net cash used in investing activities. . . . (4,970,000) (31,163,000)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable. . . . . . . . 4,466,000 21,224,000
Proceeds from capital contributions. . . . 296,000 11,900,000
Cash payments for loan fees. . . . . . . . (44,000) (701,000)
----------- -----------
Net cash provided from financing
activities. . . . . . . . . . . . . . . . . 4,718,000 32,423,000
----------- -----------
Net increase (decrease) in cash
and equivalents . . . . . . . . . . . . . . (894,000) 1,301,000

Cash, beginning. . . . . . . . . . . . . . . 1,301,000 -
----------- -----------
Cash, ending . . . . . . . . . . . . . . . . $ 407,000 $ 1,301,000
=========== ============
Supplemental disclosures of cash flow information:

Cash paid during the period for interest. . . $ 554,000 $ 151,000
=========== ============
Non-cash financing and investing activities:
In 1995, accrued litigation settlement of $4,350,000 increased
investments in limited partnerships.

SEE NOTES TO FINANCIAL STATEMENTS

F-4

DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS
MAY 15, 1995

NOTE 1 - ORGANIZATION

DeForest Ventures I L.P., a Delaware Limited Partnership
("DeForest"), was formed on September 30, 1994 for the purpose of
acquiring limited partnership units in various affiliated limited
partnerships (the "Limited Partnerships"). The general partner of
DeForest is DeForest Capital I Corporation ("DeForest Capital").

Concurrently with this transaction, DeForest Ventures II L.P.
("DeForest II"), a Delaware Limited Partnership, was formed for the
purpose of acquiring limited partnership units in various other
affiliated limited partnerships.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investment in Limited Partnerships:

Investment in limited partnership units are carried at the sum of
the per unit purchase price plus acquisition costs adjusted for
DeForest's share of earnings or losses.

Income recognition:

Income or loss on the limited partnership units owned are
recognized quarterly based on the reported income or loss of the
respective Limited Partnerships.

NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS

DeForest holds limited partner units in various Limited
Partnerships that are accounted for on the equity method.
DeForest's cost was approximately equal to its share of the net
assets.

F-5

DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 15, 1995

NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)

Summary financial information of the Limited Partnerships as of the
quarter ended March 31, 1995 are as follows (000's omitted):

Land and buildings . . . . . . . . . . . . . $ 444,037
Other assets . . . . . . . . . . . . . . . . 48,905
Notes payable - real estate. . . . . . . . . (347,554)
Other liabilities. . . . . . . . . . . . . . (17,874)
---------
Net assets . . . . . . . . . . . . . . . . . $ 127,514
=========
DeForest share of net assets . . . . . . . . $ 36,425
=========
Net income for period. . . . . . . . . . . . $ 974
=========
DeForest share of net income . . . . . . . . $ 100
=========

The limited partnerships are:

Percentage Carrying
owned value
---------- --------

Century Properties Fund XII . . . . . . . 34% $ 1,955,000
Century Properties Fund XIII. . . . . . . 38 4,132,000
Century Properties Fund XIV . . . . . . . 37 3,484,000
Century Properties Fund XV. . . . . . . . 38 5,128,000
Century Properties Fund XVI . . . . . . . 31 689,000
Century Properties Fund XVII. . . . . . . 29 2,062,000
Century Properties Fund XVIII . . . . . . 24 461,000
Century Properties Fund XIX . . . . . . . 23 1,371,000
Century Properties Fund XXII. . . . . . . 18 1,357,000
MRI Business Properties Fund, Ltd. . . . 27 4,503,000
MRI Business Properties Fund, Ltd. II . . 29 7,526,000
MRI Business Properties Fund, Ltd. III. . 25 4,757,000
-----------
$36,425,000

The limited partnerships are engaged in the business of owning and
operating commercial and residential real estate.

F-6

DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 15, 1995

NOTE 4 - RESTRICTED CASH

Under the terms of the loan agreement, funds advanced are deposited
to a restricted account and are used only for the acquisition of
limited partnership units and associated costs. The balance at May
15, 1995 represents the expected outlay necessary to comply with
the settlement of the litigation described in Note 7.

The restricted cash is invested in short-term highly liquid
investments, consisting of U.S. Government securities. The
carrying amount approximates fair value because of the short-term
maturity of these investments.

NOTE 5 - NOTE PAYABLE

DeForest and DeForest II obtained loans of $21,224,000 and
$13,251,000, respectively, which were used to fund the acquisition
of units in the Limited Partnerships. Under the terms of the
loans, interest at a rate per annum of 250 basis points over LIBOR
is payable monthly. As of May 15, 1995 the LIBOR rate was 6.0625%.
The lender is also entitled to additional interest on the amended
loans in the form of a residual fee. Payment of the residual fee
is subordinate to the return of capital contributions together with
a 15% return thereon. The additional interest is calculated on a
formula basis and has been accrued to achieve a minimum 17% per
annum effective rate of return. The formula could result in
additional interest greater than a 17% per annum return.

Principal is payable upon receipt of proceeds from sales of
properties in the Limited Partnerships. The loans are cross
defaulted and cross-collateralized with all the tendered limited
partnership units. The obligation of DeForest II at May 15, 1995
was $13,709,000. All outstanding common stock and partnership
interests of certain affiliates are pledged as additional
collateral. The loans are due November 21, 1995, with a right to
extend for two consecutive one-year periods. The basis points over
LIBOR increase 100 points with each extension.

On May 8, 1995, the loans were amended to provide for the
additional debt financing to be used in connection with the
consummation of the settlement of the litigation described in Note
7. As amended, the lender has agreed to provide up to an aggregate
of an additional $20,525,452 of financing to DeForest and DeForest
II.

F-7

DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 15, 1995

NOTE 6 - RELATED PARTIES

Shareholders who control DeForest Capital also control the managing
general partner of all of the Limited Partnerships.

NOTE 7 - LITIGATION

On May 19, 1995, a settlement was approved by the U.S. District
Court for the Northern District of Georgia for a class action for
claims relating to tender offers made for the purchase of limited
partnership units in the Limited Partnerships. Pursuant to the
terms of the settlement, in consideration for dismissal and release
of all claims made in the class action, among other things,
DeForest will pay additional amounts to each unit holder who
tendered their units of the Limited Partnerships. Total payments
to be made under the settlement are approximately $4,350,000, which
has been accrued by DeForest. In addition, a second tender offer
will be made to all holders of limited partnership units in the
Limited Partnerships who had not previously sold their shares at
prices in excess of the initial tender price. Unless an appeal is
filed, the Court's order will become final, binding, and non-appealable
on June 19, 1995.

F-8

Independent Auditors' Report

Board of Directors
DeForest Capital I Corporation

We have audited the accompanying balance sheet of DeForest Capital
I Corporation, as of May 15, 1995. This financial statement is the
responsibility of the Company's management. Our responsibility is
to express an opinion on this financial statement based on our
audit.

We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above present
fairly, in all material respects, the financial position of

DeForest Capital I Corporation, as of May 15, 1995, in conformity
with generally accepted accounting principles.

Tauber & Balser, P.C.

Atlanta, Georgia
May 26, 1995

F-9

DEFOREST CAPITAL I CORPORATION
BALANCE SHEET
MAY 15, 1995

ASSET

Investment in DeForest Ventures I L.P. . . . . . . $ 104,000
===========

STOCKHOLDERS' EQUITY

Capital stock, par value $.01,
7,500 shares authorized, 600
issued and outstanding . . . . . . . . . . . . . $ 6
Additional paid in capital . . . . . . . . . . . . 1,118,994
Notes receivable from stockholders. . . . . . . . . (1,000,000)
Deficit . . . . . . . . . . . . . . . . . . . . . . (15,000)
-----------
$ 104,000
===========

- --------------------------------------------------------------------------------

DEFOREST CAPITAL I CORPORATION
NOTES TO FINANCIAL STATEMENT
MAY 15, 1995

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICY

DeForest Capital I Corporation ("DeForest Capital I"), a Delaware

Corporation, was incorporated on September 30, 1994 and serves as
the general partner of DeForest Ventures I L.P. ("DeForest").
DeForest was formed for the purpose of acquiring limited
partnership units in various limited partnerships (the "Limited
Partnerships").

NOTE 2 - STOCKHOLDERS' EQUITY

Shareholders of DeForest Capital I have contributed $119,000 in
cash and $1,000,000 in negotiable demand promissory notes.

NOTE 3 - RELATED PARTIES

Shareholders who control DeForest Capital I also control the
general partners of all of the Limited Partnerships.

F-10

NOTE 4 - INVESTMENT IN DEFOREST I

DeForest has a 1% investment as the general partner in DeForest I
that is accounted for on the equity method. The investment is
carried at cost, adjusted for its share or earnings or losses.

Summary financial information of DeForest I as of May 15, 1995 is
as follows (000's omitted):

Investment in limited partnerships . . . $ 37,813
Cash . . . . . . . . . . . . . . . . . . 407
Cash, restricted for investments . . . . 4,364
Other assets . . . . . . . . . . . . . . 818
Note payable . . . . . . . . . . . . . . (25,689)
Accrued litigation settlement. . . . . . (4,350)
Other liabilities. . . . . . . . . . . . (1,306)
--------
Net assets . . . . . . . . . . . . . . . $ 10,669
========

NOTE 5 - LITIGATION

previously sold their shares at prices in excess of the initial
tender price. Unless an appeal is filed, the Court's order will
become final, binding, and non-appealable on June 19, 1995.

F-11

Schedule 3

Subject Partnerships

NPI PARTNERSHIPS

National Property Investors II

National Property Investors III

National Property Investors 4

National Property Investors 5

National Property Investors 6

National Property Investors 7

National Property Investors 8

FOX PARTNERSHIPS

Century Properties Fund XII

Century Properties Fund XIII

Century Properties Fund XIV

Century Properties Fund XV

Century Properties Fund XVI

Century Properties Fund XVII

Century Properties Fund XVIII

Century Properties Fund XIX

Century Properties Growth Fund XXII

MRI Business Properties Fund, Ltd.

MRI Business Properties Fund, Ltd. II

MRI Business Properties Fund, Ltd. III

The Letter of Transmittal, signature page for the Note and Security
Agreement and any other required documents should be sent or delivered by each
Unitholder or his broker, dealer, commercial bank, trust company or other
nominee to the Purchaser at its address set forth below:

DEFOREST VENTURES I L.P.

By Hand, Mail (insured or registered
recommended) or Overnight Delivery:

DeForest Ventures I L.P.
c/o Gemisys
7103 South Revere Parkway
Englewood, CO 80112

For Telephone Information:

(404) 916-9055 or (404) 850-9640

Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be directed to the Purchaser at the telephone number and address listed
above. You may also contact your broker for assistance concerning the Offer. To
confirm delivery of your Letter of Transmittal and related documents, please
contact the Purchaser.

MRI BUSINESS PROPERTIES FUND, LTD.
LETTER OF TRANSMITTAL

Taxpayer Identification Number

THE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON JUNE 30, 1995 (the
"Expiration Date") UNLESS EXTENDED.

Deliver to: DeForest Ventures I L.P.
c/o Gemisys
7103 South Revere Parkway
Englewood, CO 80112

For assistance (404) 916-9055 or
call: (404) 850-9640

To participate in the Offer, a duly executed copy of this Letter of
Transmittal, the attached signature page to the Note and Security Agreement and
any other documents required by this Letter of Transmittal must be received by
the Purchaser on or prior to the Expiration Date. Delivery of this Letter of
Transmittal or any other required documents to an address other than as set
forth above does not constitute valid delivery. The method of delivery of all
documents is at the election and risk of the tendering Unitholder. Please use
the pre-addressed, postage-paid envelope provided.

This Letter of Transmittal is to be completed by Unitholders of MRI
Business Properties Fund, Ltd., a California limited partnership (the
"Partnership"), pursuant to the procedures set forth in the Offer to Purchase
(as defined below). Capitalized terms used herein and not defined herein have
the meanings ascribed to such terms in the Offer to Purchase.

PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS

Gentlemen:

The undersigned hereby tenders to DeForest Ventures I L.P., a Delaware
limited partnership (the "Purchaser"), the number of units ("Units") of limited
partnership interest in the Partnership set forth above at $116.53 per Unit upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated June 2, 1995 (the "Offer to Purchase"), and this Letter of Transmittal
(which together constitute the "Offer"). Receipt of the Offer to Purchase is
hereby acknowledged. By executing this Letter of Transmittal, the undersigned
hereby revokes all previous requests, if any, for exclusion from the Settlement
and acknowledges that the undersigned shall be bound by the Settlement and all
orders and final judgments rendered in the Action.

The undersigned recognizes that, if more than 18,264 Units are validly
tendered prior to or on the Expiration Date and not properly withdrawn, the
Purchaser will, upon the terms of the Offer and subject to the delivery of Loan
Proceeds, accept for payment from among those Units tendered prior to or on the
Expiration Date 18,264 Units on a pro rata basis, with adjustments to avoid
purchases of certain fractional Units, based upon the number of Units validly
tendered prior to the Expiration Date and not withdrawn. The undersigned agrees
that, if more than 16,184 Units are validly tendered prior to or on the
Expiration Date and not properly withdrawn, subject to the proration
requirements and other terms of the Offer, the undersigned will receive from the
Purchaser, $116.53 for each Unit tendered in a combination of Purchase Proceeds
and Loan Proceeds, all as described in the Offer to Purchase.

Subject to and effective upon acceptance for payment of any of the Units
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchaser all right, title and interest in and to such Units which
are purchased pursuant to the Offer. The undersigned hereby irrevocably
constitutes and appoints the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to deliver such Units and transfer ownership of such
Units on the books of the Partnership, together with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchaser and, upon
payment of the purchase price in respect of such Units by the Purchaser, to
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Units all in accordance with the terms of the Offer. Subject to and
effective upon the purchase of any Units tendered hereby, the undersigned hereby
requests that the Purchaser be admitted to the Partnership as a "substitute
Limited Partner" under the terms of the Partnership Agreement of the
Partnership. Upon the purchase of Units pursuant to the Offer, all prior proxies
and consents given by the undersigned with respect to such Units will be revoked
and no subsequent proxies or consents may be given (and if given will not be
deemed effective). In addition, by executing this Letter of Transmittal, the
undersigned assigns to the Purchaser all of the undersigned's rights to receive
distributions from the Partnership with respect to Units which are purchased
pursuant to the Offer.

By validly tendering Units hereby, the undersigned agrees to receive a Loan
in respect of Retained Units if more than 16,184 Units are validly tendered
prior to or on the Expiration Date and not properly withdrawn and the Offer is
consummated. The undersigned agrees to be bound by the terms of any such Loan,
including the terms of repayment and the pledge of the Retained Units to secure
repayment of the Loan. The undersigned acknowledges that the complete terms of
the Note and Security Agreement are set forth in Exhibit A to the Offer to
Purchase. The undersigned directs the Partnership to deliver any and all
distributions payable on the Retained Units to the Purchaser for credit against
amounts outstanding in respect of the Loan and the Purchaser may, in the name
and on behalf of the undersigned, execute and deliver to the Partnership a
written confirmation of such direction. In addition, by executing this Letter of
Transmittal, the undersigned appoints the designees of the Purchaser as its
attorney-in-fact (such appointment being coupled with an interest, and
irrevocable) to execute and cause to be filed and recorded any and all documents
on behalf of the undersigned and to take any and all other actions reasonably
deemed necessary by the Purchaser to perfect or continue the perfection of the

security interest in the Retained Units that secures any Loan made to the
undersigned.

The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. The undersigned further represents and warrants
that any Retained Units will, when pledged to secure a Loan to the undersigned,
be free and clear of all liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer thereof,
and such Retained Units will not be subject to any adverse claim, other than the
pledge to secure the Loan. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchaser to be necessary or
desirable to complete the assignment, transfer, purchase or pledge of Units
tendered hereby.

The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, the
Purchaser may not be required to accept for payment any of the Units tendered
hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment will be destroyed by the
Purchaser. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.

TO TENDER UNITS, SIGN AT THE "X" BELOW IN BOX A AND SIGN THE ATTACHED
NOTE AND SECURITY AGREEMENT SIGNATURE PAGE. TO AVOID WITHHOLDING ON
AMOUNTS PAYABLE WITH RESPECT TO UNITS, COMPLETE BOXES B, C AND D, AS
APPLICABLE (SEE INSTRUCTIONS 3A, 3B AND 4, RESPECTIVELY).

DO NOT RETURN CERTIFICATES WITH THIS LETTER OF TRANSMITTAL

- --------------------------------------------------------------------------------
BOX A
- --------------------------------------------------------------------------------
SIGN HERE TO TENDER

Certification - Under penalties of perjury, the undersigned hereby certifies the
following:

(1) The TIN shown in the Substitute Form W-9 (Box B) is the correct TIN of

the Unitholder who is submitting this Letter of Transmittal (and who is required
by law to provide such TIN), or such Unitholder is waiting for a TIN to be
issued and either (a) has mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Office or (b)
intends to mail or deliver an application in the near future (it being
understood that if such Unitholder does not provide a TIN to the Purchaser
within sixty (60) days, 31% of all reportable payments made to the Unitholder
thereafter will be withheld until a TIN is provided to the Purchaser); and

(2) The Unitholder who is submitting this Letter of Transmittal and who is
required by law to provide such TIN is not subject to backup withholding either
because such Unitholder (a) is exempt from backup withholding, or (b) has not
been notified by the IRS that such Unitholder is subject to backup withholding
as a result of a failure to report all interest or dividends or (c) the IRS has
notified such Unitholder that such Unitholder is no longer subject to backup
withholding. (See Instruction 3(A))

If the undersigned is unable to certify that the Unitholder submitting this
Letter of Transmittal is not subject to backup withholding, such Unitholder
should so indicate by striking through certification (2) above.

(3) The undersigned has completed the FIRPTA Affidavit (Box C) or the
Substitute Form W-8 (Box D), as applicable, and the information provided by the
undersigned therein is true and accurate. (See Instructions 3(B) and 4)

SIGNATURE(S) OF UNITHOLDER(S)

All registered Unitholders must sign exactly as name(s) appear(s) above. (Attach
additional sheets, if necessary)

(Signature)__X_________________________________________

(Signature)__X_________________________________________ Date___________, 1995

If signing as a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 1.

Name(s) and Capacity______________________________________________________
Address___________________________________________________________________
Area Code and Telephone No._______________________________________________

Notarization of Signature
(If required. See Instruction 1)

STATE OF______________________________________)
) ss.:
COUNTY OF ____________________________________)

On this_____day of_______________, 1995, before me came personally
_____________________________ ______________________________, to me known to be
the person who executed the foregoing Letter of Transmittal.

--------------------------------
Notary Public

Signature Guarantee
(If required. See Instruction 1)

Name and Address of Eligible Institution________________________________________

Authorized
Signature_______________ Name_____________ Title__________ Date___________, 1995

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BOX B
- --------------------------------------------------------------------------------

SUBSTITUTE FORM W-9
(Attach additional copies for joint Unitholders)
(See Instruction 3(A))

Please provide the TIN of the Unitholder submitting this Letter of Transmittal
or, if such Unitholder is awaiting a TIN, check the "Awaiting TIN" box.

Social Security Number or
Employer Identification Number_________________________________________

Awaiting TIN [ ]
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BOX C
- --------------------------------------------------------------------------------

FIRPTA AFFIDAVIT (For U.S. Persons)
(Attach additional copies for joint Unitholders)
(See Instruction 3(B))

Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.I445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership in
which 50% or more of the value of the gross assets consists of U.S. real
property interests and 90% or more of the value of the gross assets consist of
U.S. real property interests plus cash or cash equivalents, if the holder of the
partnership interest is a foreign person. To inform the Purchaser that no
withholding is required with respect to the Unitholder's interest in the

Partnership, the person signing this Letter of Transmittal hereby certifies the
following under penalties of perjury:

(1) The Unitholder, if an individual, is not a nonresident alien for
purposes of U.S. income taxation, and if not an individual, is not a foreign
corporation, foreign partnership, foreign trust, or foreign estate (as those
terms are defined in the Internal Revenue Code and Income Tax Regulations);

(2) The Unitholder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is __________________
_______________________;

(3) The Unitholder's home address (for individuals), or office address and
(if applicable) place of incorporation (for non-individuals)
is______________________________________________________________________________
______________________________________________________________________________.

The person submitting this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BOX D
- --------------------------------------------------------------------------------
SUBSTITUTE FORM W-8
(Attach additional copies for joint Unitholders)
(See Instruction 4)

By checking this box [ ], the person submitting this Letter of Transmittal
certifies that the Unitholder is an "exempt foreign person" for purposes of the
backup withholding rules under the U.S. federal income tax laws, because the
Unitholder:

(1) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;

(2) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and

(3) Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or barter
exchange.
- --------------------------------------------------------------------------------

INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer

1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a Unitholder
must sign at the "X" in Box A of this Letter of Transmittal. The signature must

correspond exactly with the name printed on the front of this Letter of
Transmittal without any change whatsoever. If this Letter of Transmittal is
signed by the registered Unitholder of the Units, no notarization or signature
guarantee on this Letter of Transmittal is required. Similarly, if Units are
tendered for the account of a member firm of a registered national security
exchange, a member firm 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 (each
an "Eligible Institution"), no notarization or signature guarantee is required.
In all other cases, signatures on this Letter of Transmittal must either be
notarized or guaranteed by an Eligible Institution, by completing the
Notarization or Signature Guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Units are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Purchaser of their authority to so
act. For Units to be validly tendered, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
notarizations or signature guarantees in BOX A, the attached signature page to
the Note and Security Agreement and any other documents required by this Letter
of Transmittal, must be received by the Purchaser prior to or on the Expiration
Date at its address set forth on the front of this Letter of Transmittal. No
alternative, conditional or contingent tenders will be accepted. All tendering
Unitholders by execution of this Letter of Transmittal waive any right to
receive any notice of the acceptance of their tender.

2. Transfer Taxes. The Purchaser will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.

3. U.S. Persons. A Unitholder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership, a
domestic trust or a domestic estate (collectively, "United States persons") as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:

(A) Substitute Form W-9. In order to avoid 31% federal income tax backup
withholding on payments to the Unitholder, the tendering Unitholder must provide
to the Purchaser the Unitholder's correct Taxpayer Identification Number ("TIN")
by completing the Substitute Form W-9 set forth in BOX B of this Letter of
Transmittal, and, by signing in Box A, must certify under penalties of perjury,
that such Unitholder is not subject to such backup withholding. If a correct TIN
is not provided, penalties may be imposed by the Internal Revenue Service
("IRS") in addition to the Unitholder being subject to backup withholding.
Certain Unitholders (including, among others, all corporations) are not subject
to backup withholding. Backup withholding is not an additional tax. If
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.

The TIN that must be provided on the Substitute Form W-9 is that of the
registered Unitholder indicated on the front of this Letter of Transmittal. If
the tendering Unitholder has applied for but has not been issued a TIN or

intends to apply for a TIN in the near future, the Unitholder should check the
"Applied For" box in Box B of this Letter of Transmittal. If the "Applied For"
box is checked in the Substitute Form W-9 and the Purchaser is not provided with
the Unitholder's TIN within 60 days, the Purchaser will withhold 31% of all
subsequent payments, if any, to the Unitholder until such TIN is provided to the
Purchaser.

(B) FIRPTA Affidavit. To avoid potential withholding of tax pursuant to
Section 1445 of the Internal Revenue Code in an amount equal to 10% of the
amounts payable to the Unitholder plus the amount of any liabilities of the
Partnership allocable to each Unit tendered, a Unitholder who or which is a
United States person must complete the FIRPTA Affidavit contained in BOX C of
this Letter of Transmittal stating, under penalties of perjury, such
Unitholder's TIN and address, and that such Unitholder is not a foreign person.
Tax withheld under Section 1445 of the Internal Revenue Code is not an
additional tax. If withholding results in an overpayment of tax, a refund may be
obtained from the IRS.

4. Foreign Persons. In order for a Unitholder who or which is a foreign person
(i.e., a person who is not a United States person as defined in 3 above) to
qualify as exempt from 31% backup withholding, such foreign Unitholder must
certify, under penalties of perjury, the statement in BOX D of this Letter of
Transmittal attesting to that foreign person's status by checking the box
preceding such statement. In any event, the Purchaser intends to withhold from a
foreign Unitholder 10% of the amounts payable to the Unitholder plus the amount
of liabilities of the Partnership allocable to each Unit tendered, pursuant to
Section 1445 of the Internal Revenue Code. Backup withholding and tax withheld
under Section 1445 of the Internal Revenue Code are not additional taxes. If
withholding results in an overpayment of tax, a refund may be obtained from the
IRS.

5. Additional Copies of Offer to Purchase and Letter of Transmittal. Requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Purchaser by calling (404) 916-9055 or
(404) 850-9640.

NOTE AND SECURITY AGREEMENT SIGNATURE PAGE

WITNESSETH, the undersigned hereby executes this Note and Security
Agreement as of the date first above written.

BORROWER(1)

-------------------------------------

- --------
(1) Each Borrower must sign exactly as such Borrower's name appears on the
face of the Letter of Transmittal.

DEFOREST VENTURES I L.P.
5665 NORTHSIDE DRIVE, N.W., SUITE 370
ATLANTA, GEORGIA 30328

June 2, 1995

Dear Limited Partner:

As described in the enclosed Offer to Purchase and related Letter of
Transmittal (the "Offer"), DeForest Ventures I L.P. is offering to purchase
Units of Limited Partnership Interest of the Partnership identified in the
Offer.

The Offer is being made in accordance with the settlement of a class action
lawsuit brought against, among others, DeForest Ventures I L.P. We suggest that
you review the enclosed Offer to Purchase for information pertaining to the
settlement of the class action.

Please note that in order to tender any of your Units in the Partnership,
you must tender all of your Units in the Partnership - no partial tenders will
be accepted.

We suggest that you review the enclosed Offer with your personal financial
and tax advisor. After carefully reading the enclosed Offer, if you elect to
tender your Units, mail (using the enclosed pre-addressed, postage-paid
envelope) a duly completed and executed copy of the Letter or Transmittal, the
Note and Security Agreement signature page and any documents required by the
Letter of Transmittal to:

DeForest Ventures I L.P.
c/o Gemisys
7103 South Revere Parkway
Englewood, Colorado 80112

If you have any questions, please call DeForest Ventures I L.P. at the
number set forth in the Offer.

DEFOREST VENTURES I L.P.

MRI BUSINESS PROPERTIES FUND, LTD.
(a limited partnership)

NOTE 2 TO

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES

In accordance with the Partnership Agreement, the Partnership may be
charged by the general partner and affiliates for services provided to the
Partnership. From March 1988 to December 1992 such amounts were assigned
pursuant to a services agreement by the general partner and affiliates to Metric
Realty Services, L.P., which performed partnership management and other services
for the Partnership.

On January 1, 1993, Metric Management, Inc., a company which is not
affiliated with the general partner, commenced providing certain property and
portfolio management services to the Partnership under a new services agreement.
As provided in the new services agreement effective January 1, 1993, no
reimbursements were made to the general partner and affiliates after December
31, 1992. Subsequent to December 31, 1992, reimbursements were made to Metric
Management, Inc. On December 16, 1993, the services agreement with Metric
Management, Inc. was modified and, as a result thereof, the Partnership's
general partner assumed responsibility for various Partnership services between
December 23, 1993 and April 1, 1994. Related party expenses for the years ended
September 30, 1994, 1993 and 1992 are as follows:

1994 1993 1992
---- ---- ----
Property management fees $ -- $ 39,000 $162,000
Reimbursement of expenses:
Partnership accounting 69,000 51,000 171,000
Real estate tax reduction
fees 34,000 -- --
Professional services -- 13,000 42,000
Investor services 15,000 8,000 27,000
-------- -------- --------
Total $118,000 $111,000 $402,000
======== ======== ========

In accordance with the Partnership Agreement, the general partner was
allocated its continuing interest of two percent of the Partnership's net loss
and taxable loss. There were no cash distributions to the general partner for
the years ended September 30, 1994, 1993 and 1992.

MRI BUSINESS PROPERTIES FUND, LTD.

NOTE 2 TO

CONSOLIDATED FINANCIAL STATEMENTS

FORM 10-Q - MARCH 31, 1995

2. Transactions with Related Parties

An affiliate of MGP received reimbursement of administrative expenses
amounting to $54,000 and $22,000 during the six months ended March 31, 1995 and
1994, respectively. These reimbursements are included in general and
administrative expenses.

MRI BUSINESS PROPERTIES FUND, LTD.
(A limited partnership)

PART I

Item 1. Business.

Subsequent Events

On October 12, 1994, NPI sold one-third of the stock of NPI to an affiliate
("Apollo") of Apollo Real Estate Advisors, L.P., for $325,000. Apollo is
entitled to designate three of the seven directors of NPI Equity II. In
addition, the approval of certain major actions on behalf of Registrant requires
the affirmative vote of at least five directors of NPI Equity II.

On October 12, 1994, affiliates of Apollo acquired for aggregate
consideration of approximately $14,800,000 (i) one-third of the stock of the
respective general partners of DeForest Ventures I L.P. ("DeForest I") and
DeForest Ventures II L.P. ("DeForest II") and (ii) an additional equity interest
in NPI-AP Management, L.P. ("NPI-AP"), an affiliate of NPI (bringing its total
equity interest in such entity to one-third). NPI-AP is the sole limited partner
of DeForest II and one of the limited partners of DeForest I. DeForest I was
formed for the purpose of making tender offers (the "Tender Offers") for limited
partnership interests in Registrant as well as 11 affiliated limited
partnerships. DeForest II has been formed for the purpose of making tender
offers for limited partnership interest in 7 affiliated limited partnerships.