AETNA REAL ESTATE ASSOCIATES L P, SC 14D1, 1996-10-30

AETNA REAL ESTATE ASSOCIATES L P
SC 14D1, 1996-10-30
REAL ESTATE

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<PAGE> 1
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

- --------------------------------------------------------------------------------
AETNA REAL ESTATE ASSOCIATES, L.P.
(Name of Subject Company)

ACORN HILL PARTNERS L.L.C.
(Bidder)

LIMITED PARTNERSHIP DEPOSITARY UNITS
(Title of Class
of Securities)

008171 10 0
(CUSIP Number of Class
of Securities)

- --------------------------------------------------------------------------------
W. Edward Scheetz
Acorn Hill Partners L.L.C.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019

Copy to:
Peter M. Fass
Steven L. Lichtenfeld
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
(212) 856-7000

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

Calculation of Filing Fee
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Transaction Amount of
Valuation* Filing Fee
- ----------------------------- ---------------------------
<S> <C>
$31,761,360 $6,352.28
- --------------------------------------------------------------------------------
</TABLE>
*For purposes of calculating the filing fee only. This amount assumes
the purchase of 3,176,136 Limited Partnership Depositary Units ("Units") of the
subject company for $10 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.

Amount previously paid: N/A Filing party: N/A
Form or registration no.: N/A Date filed: N/A

(Continued on following pages)
(Page 1 of 7 pages)
<PAGE> 2
Cusip No.: 008171 10 0 14D-1 Page 2 of 7

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

ACORN HILL PARTNERS L.L.C.

- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) { }
(b) { }

- -------------------------------------------------------------------------------
3. SEC Use Only

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

AF; WC

- -------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(e) or 2(f)
[ ]

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

Delaware

- -------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person

5,000 Limited Partnership Depositary 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)

Less than 1%

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

OO
<PAGE> 3
ITEM 1. SECURITY AND SUBJECT COMPANY.

(a) The name of the subject company is Aetna Real Estate
Associates, L.P., a Delaware limited partnership (the "Partnership"), which has
its principal executive offices at 242 Trumbull Street, Hartford, Connecticut
06156.

(b) This Schedule 14D-1 relates to the offer by Acorn Hill
Partners L.L.C., a Delaware limited liability company (the "Purchaser") to
purchase up to 3,176,136 issued and outstanding Limited Partnership Depositary
Units ("Units") of the Partnership at $10 per Unit less the amount of any
distributions declared or made with respect to the Units between October 30,
1996 and the date of payment of the purchase price (the "Purchase Price") for
the Units by the Purchaser, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated October 30, 1996 (the "Offer to Purchase") and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively. Information concerning the number of outstanding
Units is set forth in the Introduction to the Offer to Purchase and is
incorporated herein by reference.

(c) The information set forth in Section 13 ("Purchase Price
Considerations") of the Offer to Purchase is incorporated herein by reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d) The information set forth in Section 10 ("Certain
Information Concerning the Purchaser") and Schedule I to the Offer to Purchase
is incorporated herein by reference.

(e) and (f) During the last five years, neither the Purchaser nor,
to the best of its knowledge, any of the persons listed in Schedule I or
referred to in Section 10 ("Certain Information Concerning the Purchaser") of
the Offer to Purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.

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

3
<PAGE> 4
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.

(a) None.

(b) The information set forth in Section 11 ("Background of the
Offer") of the Offer to Purchase is incorporated herein by reference.

ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a) The information set forth in Section 12 ("Source of Funds")
of the Offer to Purchase is incorporated herein by reference.

(b) Not applicable.

ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.

(a)-(b) The information set forth in Section 8 ("Purpose of the
Offer; Future Plans") of the Offer to Purchase is incorporated herein by
reference.

(c)-(e) Not applicable.

(f)-(g) The information set forth in Section 7 ("Effects of the
Offer") of the Offer to Purchase is incorporated herein by reference.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a)-(b) The information set forth in the Introduction and Section
10 ("Certain Information Concerning the Purchaser") of the Offer to Purchase is
incorporated herein by reference.

ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.

The information set forth in Section 10 ("Certain Information
Concerning the Purchaser") and Section 11 ("Background of the Offer") of the
Offer to Purchase is incorporated herein by reference.

ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth in Section 16 ("Certain Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.

4
<PAGE> 5
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.

Not applicable.

ITEM 10. ADDITIONAL INFORMATION.

(a) None.

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

(e) None.

(f) The information set forth in the Offer to Purchase and the
related Letter of Transmittal is incorporated herein in their entirety by
reference.

ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.

99.(a)(1) Offer to Purchase dated October 30, 1996.

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

99.(a)(3) Cover Letter, dated October 30, 1996, from Acorn Hill
Partners L.L.C. to the holders of Units.

99.(b) None.

99.(c)(1) Letter Agreement dated August 14, 1996, as amended as
of October 8, 1996 between Aetna Real Estate
Associates, L.P. and Liquidity Financial Group, L.P.
(the "Standstill Agreement").

99.(c)(2) Assumption Agreement dated as of October 30, 1996
between Liquidity Financial Group, L.P. and Acorn
Hill Partners L.L.C. relating to the Standstill
Agreement.

99.(c)(3) Option Agreement dated as of October 30, 1996 between
Liquidity Financial Group, L.P. and Apollo Real
Estate Investment Fund II, L.P.

99.(c)(4) Letter dated October 28, 1996 by Acorn Hill Partners
L.L.C. and agreed to by Aetna Real Estate Associates,
L.P. on October 29, 1996.

99.(d) None.

99.(e) Not applicable.

99.(f) None.

5
<PAGE> 6
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: October 30, 1996

ACORN HILL PARTNERS L.L.C.

By: AP-GP Prom Partners Inc., its
managing member

By: /s/ W. Edward Scheetz
--------------------------
Name: W. Edward Scheetz
Title: President

6
<PAGE> 7
EXHIBIT INDEX

EXHIBIT
NO. TITLE
- ------- -----

99.(a)(1) Offer to Purchase dated October 30, 1996. . . . . . . . . .

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

99.(a)(3) Cover Letter, dated October 30, 1996, from Acorn Hill Partners
L.L.C. to the holders of Units . . . . . . . . . . . . . . .

99.(c)(1) Letter Agreement dated August 14, 1996, as amended as of
October 8, 1996, between Aetna Real Estate Associates, L.P.
and Liquidity Financial Group, L.P. (the "Standstill
Agreement"). . . . . . . . . . . . . . . . . . . . . . . . .

99.(c)(2) Assumption Agreement dated as of October 30, 1996 between
Liquidity Financial Group, L.P. and Acorn Hill Partners L.L.C.
relating to the Standstill Agreement. . . . . . . . .

99.(c)(3) Option Agreement dated as of October 30, 1996 between
Liquidity Financial Group, L.P. and Apollo Real Estate
Investment Fund II, L.P. . . . . . . . . . . . . . . . . .

99.(c)(4) Letter dated October 28, 1996 by Acorn Hill Partners L.L.C.
and agreed to by Aetna Real Estate Associates, L.P. on October
29, 1996. . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 3,176,136 LIMITED PARTNERSHIP DEPOSITARY UNITS
of
AETNA REAL ESTATE ASSOCIATES, L.P.
at
$10 NET PER LIMITED PARTNERSHIP DEPOSITARY UNIT
by
ACORN HILL PARTNERS L.L.C.

***************************************************************************
* *
* THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT *
* 12:00 MIDNIGHT, NEW YORK CITY TIME, ON NOVEMBER 27, 1996, UNLESS *
* EXTENDED. *
* *
***************************************************************************

Acorn Hill Partners L.L.C., a Delaware limited liability company (the
"Purchaser"), hereby offers to purchase up to 3,176,136 of the issued and
outstanding Limited Partnership Depositary Units (the "Units") of Aetna Real
Estate Associates, L.P., a Delaware limited partnership (the "Partnership"), at
a purchase price of $10 per Unit, net to the seller in cash (the "Purchase
Price"), without interest thereon, 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, modified or amended
from time to time (which together constitute the "Offer"). The Purchase Price
will be automatically reduced by the aggregate amount of distributions per
Unit, if any, made or declared by the Partnership after October 30, 1996 and
on or prior to the Expiration Date (as defined in Section 1 ("Terms of the
Offer")). In addition, if a distribution is made or declared after the
Expiration Date but prior to the date on which the Purchaser pays the Purchase
Price for the tendered Units, the Purchaser will offset the amount otherwise
due a holder of Units (a "Unitholder") pursuant to the Offer in respect of the
tendered Units which have been accepted for payment but not yet paid for by the
amount of any such distribution. 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. The 3,176,136 Units
sought pursuant to the Offer represent, to the best knowledge of the Purchaser,
approximately 25% of the Units outstanding as of the date of this Offer.

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

THE PURCHASER IS NOT AFFILIATED WITH THE GENERAL PARTNERS OF THE
PARTNERSHIP.

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

THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF, AS OF THE EXPIRATION DATE, MORE THAN 3,176,136 UNITS ARE
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN, THE PURCHASER WILL ONLY
ACCEPT FOR PURCHASE ON A PRO RATA BASIS 3,176,136 UNITS, SUBJECT TO THE
TERMS AND CONDITIONS HEREIN. SEE SECTION 14 ("CONDITIONS OF THE
OFFER"). A UNITHOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH
UNITHOLDER; HOWEVER, TENDERS OF LESS THAN ALL UNITS OWNED BY A
UNITHOLDER THAT WOULD RESULT IN SUCH UNITHOLDER HOLDING LESS THAN 250
UNITS (100 UNITS IN THE CASE OF INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH
PLANS) OR TENDERS OF FRACTIONAL UNITS WILL NOT BE ACCEPTED.

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

Before tendering, Unitholders are urged to consider the following factors:

o The book value of each Unit (the "Book Value"), as reflected on the
Partnership's Form 10-Q for the quarter ended June 30, 1996, was $16.04
per Unit (the "Form 10-Q"). The Book Value represents the portion of
the excess of the Partnership's assets over its liabilities, as
determined in accordance with generally accepted accounting principles,
which is attributable to the Units. Book Value does not necessarily
reflect the fair market value of a Unit, which may be higher or lower
than the Book Value depending on several factors, including liquidity of
the Units and external economic and market factors. In addition, the
Partnership has reported in its Form 10-Q that the Net Asset Value (as
such term is defined in the Glossary) of each Unit, based on independent
appraisals, was $15.55 as of June 30, 1996.

o If the Purchaser is successful in acquiring a significant number of
Units pursuant to the Offer, the Purchaser could, after the Standstill
Expiration Date (as such term is defined in the Glossary), be in a
position to significantly influence all Partnership decisions on which
Unitholders may vote, including decisions regarding removal of any
General Partner, merger, sales of assets and liquidation of the
Partnership.
<PAGE> 2
IMPORTANT

Any (i) Unitholder, (ii) beneficial owner, in the case of Units owned by
Individual Retirement Accounts or Keogh Plans (a "Beneficial Owner"), or (iii)
person who has purchased Units but is not a Registered Owner (an "Assignee"),
desiring to tender any or all of such person's Units should either (1) complete
and sign the Letter of Transmittal, or a facsimile copy thereof, in accordance
with the instructions in the Letter of Transmittal and mail or deliver the
Letter of Transmittal, or a facsimile copy thereof, and any other required
documents to The Herman Group, Inc. (the "Information Agent/Depositary"), at
the address or facsimile number set forth below, or (2) request his or her
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for him or her. Unless the context requires otherwise, references
to Unitholders in this Offer to Purchase shall be deemed to also refer to
Beneficial Owners and Assignees. Questions or requests for assistance may be
directed to the Information Agent/Depositary at the address and telephone
number set forth below. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and other related documents may be directed
to the Information Agent/Depositary.

NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN
AUTHORIZED.

EACH UNITHOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE,
THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.

FOR ADDITIONAL INFORMATION CALL:

THE HERMAN GROUP, INC.
2121 SAN JACINTO STREET
26TH FLOOR
DALLAS, TX 75201
TELEPHONE: (800) 992-6174
FACSIMILE: (214) 999-9348 OR (214) 999-9323

ii
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. Terms of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Proration; Acceptance for Payment and Payment for Units . . . . . . . . . . . 4
3. Procedures for Tendering Units . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Extension of Tender Period; Termination; Amendment . . . . . . . . . . . . . . 8
6. Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . 9
7. Effects of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8. Purpose of the Offer; Future Plans . . . . . . . . . . . . . . . . . . . . . . 12
9. Certain Information Concerning the Partnership . . . . . . . . . . . . . . . 13
10. Certain Information Concerning the Purchaser . . . . . . . . . . . . . . . . . 17
11. Background Of The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12. Source Of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13. Purchase Price Considerations . . . . . . . . . . . . . . . . . . . . . . . . 20
14. Conditions of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15. Certain Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16. Certain Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Appendix A. Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Schedule I. Information with respect to the executive officers and directors
of AP-GP Prom Partners Inc. . . . . . . . . . . . . . . . . . . . . . . S-1
</TABLE>

iii
<PAGE> 4
TO THE HOLDERS OF LIMITED PARTNERSHIP DEPOSITARY UNITS OF AETNA REAL ESTATE
ASSOCIATES, L.P.:

INTRODUCTION

Acorn Hill Partners L.L.C., a Delaware limited liability company (the
"Purchaser"), hereby offers to purchase up to 3,176,136 of the issued and
outstanding Limited Partnership Depositary Units (the "Units") of Aetna Real
Estate Associates, L.P., a Delaware limited partnership (the "Partnership"), at
a purchase price of $10 per Unit, net to the seller in cash (the "Purchase
Price"), without interest, 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, modified or amended from
time to time (which together constitute the "Offer"). The Purchase Price will
be automatically reduced by the aggregate amount of distributions per Unit, if
any, made or declared by the Partnership after October 30, 1996 and on or prior
to the Expiration Date (as defined in Section 1 ("Terms of the Offer")). In
addition, if a distribution is made or declared after the Expiration Date but
prior to the date on which the Purchaser pays the Purchase Price for the
tendered Units, the Purchaser will offset the amount otherwise due a holder of
Units (a "Unitholder") pursuant to the Offer in respect of the tendered Units
which have been accepted for payment but not yet paid for by the amount of any
such distribution. Unitholders who tender their Units will not be obligated to
pay any commissions or Partnership transfer fees, which commissions and
transfer fees will be borne by the Purchaser. The 3,176,136 Units sought
pursuant to the Offer represent, to the best knowledge of the Purchaser,
approximately 25% of the Units issued and outstanding as of the date of this
Offer.

THE PURCHASER IS NOT AFFILIATED WITH THE GENERAL PARTNERS OF THE
PARTNERSHIP (THE "GENERAL PARTNERS"). THE OFFER IS NOT CONDITIONED UPON ANY
MINIMUM NUMBER OF UNITS BEING TENDERED. IF, AS OF THE EXPIRATION DATE, MORE
THAN 3,176,136 UNITS ARE VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN, THE
PURCHASER WILL ONLY ACCEPT FOR PURCHASE ON A PRO RATA BASIS 3,176,136 UNITS,
SUBJECT TO THE TERMS AND CONDITIONS HEREIN. SEE SECTION 14 ("CONDITIONS OF THE
OFFER"). A UNITHOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH UNITHOLDER;
HOWEVER, TENDERS OF LESS THAN ALL UNITS OWNED BY A UNITHOLDER THAT WOULD RESULT
IN SUCH UNITHOLDER HOLDING LESS THAN 250 UNITS (100 UNITS IN THE CASE OF
INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS) OR TENDERS OF FRACTIONAL UNITS
WILL NOT BE ACCEPTED.

The Purchaser is making this Offer because it believes that the Units
represent an attractive investment at the price offered. There can be no
assurance, however, that the Purchaser's judgment is correct, and, as a result,
ownership of Units (either by the Purchaser or Unitholders who retain their
Units) will remain a speculative investment. The Purchaser is acquiring the
Units for investment purposes and does not intend to change current management
or the operations of the Partnership and has no current plans for any
extraordinary transaction involving the Partnership.

FACTORS TO BE CONSIDERED BY UNITHOLDERS. In considering the Offer,
Unitholders are urged to consider the following factors:

o The Book Value per Unit, as reflected in the Form 10-Q, was $16.04 per
Unit. The Book Value represents the portion of the excess of the
Partnership's assets over its liabilities, as determined in accordance
with generally accepted accounting principles, which is attributable to
the Units. Book Value does not necessarily reflect the fair market
value of a Unit, which may be higher or lower than the Book Value
depending on several factors, including liquidity of the Units and
external economic and market factors. In addition, the Partnership has
reported in the Form 10-Q that the Net Asset Value (as such term is
defined in the Glossary) of each Unit, based upon independent
appraisals, was $15.55 as of June 30, 1996. Accordingly, the Purchase
Price could differ significantly from the net proceeds that would be
realized on a per Unit basis from a current sale of the Properties or
that may be realized upon a future liquidation of the Partnership.

o The Purchaser is making the Offer with a view to making a profit.
Accordingly, there may be a conflict between the desire of the Purchaser
to acquire the Units at a low price and the desire of the Unitholders to
sell their Units at a high price. Upon the liquidation of the
Partnership, the Purchaser will benefit to the extent the amount per
Unit it receives in the liquidation exceeds the Purchase Price, if any.
Therefore, Unitholders might receive more value if they hold their
Units, rather than tender, and receive proceeds from the liquidation of
the Partnership. Alternatively, Unitholders may prefer to receive the
Purchase Price
<PAGE> 5
now rather than wait for uncertain future net liquidation proceeds. No
independent person has been retained to evaluate or render any opinion
with respect to the fairness of the Purchase Price and no representation
is made by the Purchaser or any affiliate of the Purchaser as to such
fairness. When the assets of the Partnership are ultimately sold, the
return to Unitholders could be higher or lower than the Purchase Price.
Unitholders are urged to consider carefully all of the information
contained herein before accepting the Offer.

o If the Purchaser is successful in acquiring a significant number of
Units pursuant to the Offer, and following the expiration of the
Standstill Agreement (as such term is defined in the Glossary) on August
14, 1998 (the "Standstill Expiration Date"), the Purchaser could be in a
position to significantly influence all Partnership decisions on which
Unitholders may vote. If the maximum number of Units sought by the
Purchaser are tendered and accepted for payment pursuant to the Offer,
the Purchaser will own approximately 25% of the outstanding Units.
After the Standstill Expiration Date, this could effectively (i) prevent
non-tendering Unitholders from taking actions they desire but that the
Purchaser opposes and (ii) enable the Purchaser to take action desired
by it but opposed by non-tendering Unitholders. Generally, under the
Depositary Agreement and the Partnership Agreement, Unitholders holding
the majority of the Units are entitled, through the Assignor Limited
Partner, to take action with respect to a variety of matters, including:
dissolution of the Partnership; removal of the General Partners; approve
or disapprove the sale of all or substantially all of the Partnership's
assets; and most types of amendments to the Partnership Agreement.
Although the Purchaser has no current intentions with regard to any of
these matters, it will, following the Standstill Expiration Date, vote
the Units acquired pursuant to the Offer in its interest, which may, or
may not, be in the best interest of non-tendering Unitholders. Until
the Standstill Expiration Date, the Purchaser has agreed to vote its
Units in the same manner as the majority of all of the Unitholders who
vote on any proposal.

Unitholders may no longer wish to continue with their investment in the
Partnership for a number of reasons, including:

o Although not necessarily an indication of value, the $10 Purchase Price
is approximately an 11.5% premium over the $8.97 weighted average
selling price for Units reported for the limited secondary market during
the two-month period ended July 31, 1996. Such secondary market selling
prices do not take into account commissions charged by secondary market
makers effectuating such sales which the Purchaser believes, based on a
typical 25 Unit sales transaction, range from 5% to 8.75% of the sales
price (which would result in a reduction of the net proceeds to the
seller of at least approximately $0.45 per Unit).

o The Offer will provide Unitholders with an immediate opportunity to
liquidate their investment in the Partnership without the usual
transaction costs associated with market sales or partnership transfer
fees.

o The Purchaser believes that, based on the experience of its financial
advisor, Liquidity Financial Advisors, Inc. ("Liquidity Financial"), in
its efforts to obtain a list of Unitholders from the General Partners,
it may be difficult for third parties to obtain such Unitholder list
from the General Partners. If the General Partners resist the efforts
of other third parties to obtain a list of Unitholders, such action
could impede or delay the commencement of other tender offers for the
Units. There can be no assurance, however, that the General Partners
will resist the effort of third parties to obtain a list of Unitholders
or that other tender offers for the Units will not be commenced.

o Because the Purchaser is subject to the restrictions set forth in the
Standstill Agreement until August 14, 1998, the Purchaser will not,
until the expiration of such date, be able to remove and replace the
General Partners or cause any extraordinary transaction with respect to
the Partnership. Therefore, future returns from an investment in the
Units will continue to depend, in part, on the actions or inactions of
the General Partners. In addition, Unitholders are advised that the
Purchaser does not have any current plans to remove or replace the
General Partners or to effectuate any extraordinary transactions
involving the Partnership.

o Although there are some limited resale mechanisms available to the
Unitholders wishing to sell their Units, there is no formal trading
market for the Units. The Partnership's Form 10-K for the year ended

2
<PAGE> 6
December 31, 1995 (the "Form 10-K") states: "There is no established
public trading market for the Units." Accordingly, Unitholders who
desire liquidity may wish to consider the Offer. The Offer affords a
significant number of Unitholders an opportunity to dispose of their
Units for cash, which alternative otherwise might not be available to
them. However, the Purchase Price is not intended to represent either
the fair market value of a Unit or the fair market value of the
Partnership's assets on a per Unit basis.

o Unitholders who acquired their Units in the original offering should
receive a tax benefit from the sale of their Units in 1996.

o General disenchantment with real estate investments.

o General disenchantment with long-term investments in limited
partnerships because of, among other things, their illiquidity and the
inability of Unitholders to effectuate management control over the
Partnership's affairs through the annual election of General Partners.
Unitholders should note, however, that they do have the right (through
the Assignor Limited Partner) to remove the General Partners by a
majority vote.

o The Offer may be attractive to certain Unitholders who wish in the
future to avoid the expenses, delays and complications in filing complex
income tax returns which result from an ownership of Units.

o The Offer provides Unitholders with the opportunity to liquidate their
Units and to reinvest the proceeds in other investments should they
desire to do so. The Purchaser believes that the Units represent an
attractive investment at the Purchase Price. There can be no assurance,
however, that this judgment is correct. Ownership of Units will remain
a speculative investment.

Following the completion of the Offer, the Purchaser and its affiliates
may acquire additional Units. Any such acquisitions may be made through
private purchases, through one or more future tender offers or by any other
means deemed advisable, and may be at prices higher or lower than the price to
be paid for the Units purchased pursuant to the Offer. See Section 8 ("Purpose
of the Offer; Future Plans").

The Purchaser expressly reserves the right, in its sole discretion and
for any reason, to terminate the Offer at any time and to waive any or all of
the conditions of the Offer, although the Purchaser does not presently intend
to waive any such conditions. See Section 7 ("Effects of the Offer"). A
Unitholder may tender any or all of his or her Units; however, tenders of less
than all Units owned by a Unitholder that would result in such Unitholder
holding less than 250 Units (100 Units in the case of Individual Retirement
Accounts and Keogh Plans) or tenders of fractional Units will not be accepted.

According to the Form 10-K, there were 12,724,547 Units issued and
outstanding, held of record by approximately 19,657 Unitholders. The Purchaser
owns 5,000 Units.

Except as otherwise indicated, information contained in this Offer to
Purchase is based upon documents and reports publicly filed by the Partnership
with the Commission. Although the Purchaser has no information that any
statements contained in this Offer to Purchase are untrue, the Purchaser does
not take responsibility for the accuracy or completeness of any information
contained in this Offer to Purchase which is derived from such public
documents, or for any failure by the Partnership to disclose events which may
have occurred and may affect the significance or accuracy of any such
information but which are unknown to the Purchaser.

Each Unitholder must make his or her own decision based on his or her
particular circumstances. Unitholders should consult with their respective
advisors about the financial, tax, legal and other implications to them of
accepting the Offer. UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE, THE
RELATED LETTER OF TRANSMITTAL AND THE OTHER ACCOMPANYING MATERIALS CAREFULLY
BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.

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<PAGE> 7
THE TENDER OFFER

1. TERMS OF THE OFFER.

Upon the terms of the Offer (including the terms and conditions of any
extension or amendment of the Offer), the Purchaser will accept for payment and
pay for up to 3,176,136 Units that are validly tendered on or prior to the
Expiration Date (as hereinafter defined) and not withdrawn in accordance with
Section 4 ("Withdrawal Rights"). The term "Expiration Date" shall mean 12:00
midnight, New York City time, on November 27 , 1996, unless the Purchaser, in
its sole discretion, shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Purchaser, will
expire.

IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
PURCHASE PRICE OFFERED TO UNITHOLDERS, SUCH INCREASED PURCHASE PRICE SHALL BE
PAID FOR ALL UNITS ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT
SUCH UNITS WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.

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 then unsatisfied conditions and, subject to complying with
applicable rules and regulations of the Commission, purchase all Units validly
tendered, (iii) extend the Offer and, subject to the right of 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, or (iv)
amend the Offer.

The Purchaser's financial advisor, Liquidity Financial, provided the
Purchaser with a list of the Unitholders, and this Offer to Purchase, the
related Letter of Transmittal and, if required, any other relevant materials
are being mailed to Unitholders, Beneficial Owners and Assignees who hold
Units, to the extent their names and addresses are on this list.

2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS .

If more than 3,176,136 Units are validly tendered on or prior to the
Expiration Date and not properly withdrawn on or prior to the Expiration Date,
the Purchaser will only accept for payment, upon the terms and subject to the
conditions of the Offer, and pay for an aggregate of 3,176,136 Units so
tendered, pro rata according to the number of Units validly tendered and not
properly withdrawn on or prior to the Expiration Date, with appropriate
adjustments to (i) avoid purchases of tenders of fractional Units and (ii)
purchases that would violate Article IV of the Depositary Agreement
(collectively, the "Transfer Restrictions"). If the number of Units validly
tendered and not properly withdrawn on or prior to the Expiration Date is less
than or equal to 3,176,136 Units, the Purchaser will purchase all Units so
tendered and not properly withdrawn, upon the terms and subject to the
conditions of the Offer.

In the event that proration of tendered Units is required, and because
of the difficulty of determining the proration results, the Purchaser may not
be able to announce the final results of such proration until at least
approximately seven business days after the Expiration Date. Subject to the
Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to pay Unitholders the Purchase Price in
respect of Units tendered or return those Units promptly after the termination
or withdrawal of the Offer, the Purchaser does not intend to pay for any Units
accepted for payment pursuant to the Offer until the final proration results
are known.

Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will purchase, by accepting for payment,
and will pay for, all Units validly tendered and not withdrawn in accordance
with Section 4 on or prior

4
<PAGE> 8
to the Expiration Date as promptly as practicable following the Expiration
Date. In addition, subject to applicable rules of the Commission, the
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Units pending receipt of any regulatory or governmental approvals
specified in Section 15 ("Certain Legal Matters") or pending receipt of any
additional documentation required by the Letter of Transmittal. In all cases,
payment for Units accepted for payment pursuant to the Offer will be made only
after timely receipt by the Information Agent/Depositary of (a) the Letter of
Transmittal (or a facsimile copy thereof) properly completed and duly executed,
with required signature guarantees, (b) certificate(s) representing such Units
or timely confirmation, that is satisfactory to the Purchaser, that a transfer
of the certificate(s) representing the Units will occur (by book entry transfer
into the Purchaser's, or its designee's, account at The Depositary Trust
Company or another book entry transfer facility, notice of guaranteed delivery,
or otherwise), and (c) any other documents required by the Letter of
Transmittal.

For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment tendered Units when, as and if the Purchaser gives oral or
written notice to the Information Agent/Depositary of the Purchaser's
acceptance for payment of such Units pursuant to the Offer. No tender of Units
will be deemed to have been validly made until all defects and irregularities
with respect to such tender have been cured or waived. Upon the terms and
subject to the conditions of the Offer, payment for Units tendered and accepted
for payment pursuant to the Offer will in all cases be made by deposit of the
Purchase Price with the Information Agent/Depositary, which will act as agent
for the tendering Unitholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering Unitholders.

The Purchase Price will automatically be reduced by the aggregate amount
of distributions per Unit, if any, made or declared by the Partnership after
October 30, 1996 and on or prior to the Expiration Date. In addition, if a
distribution is made or declared after the Expiration Date but prior to the
date on which the Purchaser or its assignee pays for tendered Units, the
Purchaser will offset the amount otherwise due to such Unitholder pursuant to
the Offer in respect of tendered Units which have been accepted for payment but
not yet paid for by the amount of any such distribution. UNDER NO
CIRCUMSTANCES WILL THE PURCHASER PAY INTEREST ON THE PURCHASE PRICE FOR UNITS.

If any tendered Units are not purchased pursuant to the Offer for any
reason, the Letter of Transmittal with respect to such Units will be destroyed
by the Information Agent/Depositary. If, for any reason whatsoever, 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 ("Conditions of the Offer"), the
Information Agent/Depositary may, nevertheless, on behalf of the Purchaser and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Units, and
such Units may not be withdrawn except to the extent that the tendering
Unitholder is entitled to withdrawal rights as described in Section 4
("Withdrawal Rights").

3. PROCEDURES FOR TENDERING UNITS.

VALID TENDER. For Units to be validly tendered pursuant to the Offer, a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any other documents required by the Letter of
Transmittal, must be received by the Information Agent/Depositary at its
address on the back cover page of the Offer to Purchase on or prior to the
Expiration Date. In addition, either (i) the certificate(s) representing the
Units must be received by the Information Agent/Depositary along with the
Letter of Transmittal or (ii) the Purchaser must be satisfied that a timely
transfer of the certificate(s) representing the Units will occur (by the book
entry transfer into the Purchaser's, or its designee's, account at The
Depositary Trust Company or another book entry transfer facility, notice of
guaranteed delivery, or otherwise). A Unitholder may tender any or all Units
owned by such Unitholder; however, in order to comply with the Transfer
Restrictions, tenders of less than all Units owned by a Unitholder that would
result in such Unitholder holding less than 250 Units (100 Units in the case of
an Individual Retirement Account or Keogh Plan) or tenders of fractional Units
will not be accepted. See Instruction 1 to the Letter of Transmittal.

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 NOVEMBER 27, 1996, UNLESS
EXTENDED.

5
<PAGE> 9
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL, CERTIFICATE(S)
REPRESENTING UNITS 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 INFORMATION AGENT/DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. SEE INSTRUCTION
2 TO THE LETTER OF TRANSMITTAL.

TENDERS BY BENEFICIAL HOLDERS. Tenders of Units made by beneficial
holders of Units will be deemed an instruction to brokers, dealers, commercial
banks, trust companies, custodians and similar persons or entities whose names,
or the names of whose nominees, appear as the Registered Owner of such Units,
to tender such Units on behalf of such beneficial holder. A tender of Units can
only be made by the Registered Owner of such Units.

SIGNATURE GUARANTEES. The signature(s) on the Letter of Transmittal
must be guaranteed by a commercial bank, savings bank, credit union, savings
and loan association or trust company having an office, branch or agency in the
United States, a brokerage firm that is a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. (the "NASD") as provided in the Letter of Transmittal. See
Instruction 2 of the Letter of Transmittal.

BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible
application of backup federal income tax withholding with respect to payment of
the Purchase Price pursuant to the offer, a tendering Unitholder must provide
the Purchaser with such Unitholder's correct taxpayer identification number or
social security number by completing the Substitute Form W-9 included in the
Letter of Transmittal. See Instruction 3 to the Letter of Transmittal.

FIRPTA WITHHOLDING. To prevent the withholding of federal income tax in
an amount equal to 10% of the sum of the Purchase Price plus the amount of
Partnership liabilities allocable to each Unit purchased, 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 Instruction 3 to the Letter of
Transmittal.

APPOINTMENT AS PROXY; POWER OF ATTORNEY. By executing and delivering
the Letter of Transmittal, a tendering Unitholder irrevocably appoints the
Purchaser and the designees of the Purchaser and each of them as such
Unitholder's proxies, with full power of substitution, 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 (and with respect to any
and all other Units or other securities issued or issuable in respect of such
Units on or after the date hereof). All such proxies shall be considered
irrevocable and coupled with an interest in the tendered Units. 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 (and such other
Units and securities) will be revoked without further action, and no subsequent
proxies may be given nor any subsequent written consents executed (and, if
given or executed, will not be deemed effective). The Purchaser and its
designees will, with respect to the Units (and such other Units and securities)
for which such appointment is effective, be empowered to exercise all voting
and other rights of such Unitholder as they in their sole discretion may deem
proper pursuant to the Depositary Agreement or otherwise. The Purchaser
reserves the right to require that, in order for Units to be deemed validly
tendered, immediately upon the Purchaser's payment for such Units, the
Purchaser must be able to exercise full voting rights with respect to such
Units and other securities, including voting at any meeting of Unitholders.

In addition, pursuant to such appointment as attorneys-in-fact, the
Purchaser and its designees each will have the power, among other things, (i)
to seek to transfer ownership of such Units on the Partnership's (including the
Depositary's) books maintained by the Transfer Agent (and execute and deliver
any accompanying evidences of transfer and authenticity any of them may deem
necessary or appropriate in connection therewith, including, without
limitation, any documents or instruments required to be executed under the
Depositary Agreement or a "Transferor's (Seller's) Application for Transfer"
created by the NASD, if required), (ii) upon receipt by the Information
Agent/Depositary (as the tendering Unitholder's agent) of the Purchase Price,
to become a Registered Owner of the purchased Unit, to receive any and all
distributions made by the Partnership after the Expiration Date, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Units in accordance with

6
<PAGE> 10
the terms of the Offer, (iii) to execute and deliver to the Partnership, the
General Partners and/or the Depositary (as the case may be) a change of address
form instructing the Partnership to send any and all future distributions to
which the Purchaser is entitled pursuant to the terms of the Offer in respect
of tendered Units to the address specified in such form, and (iv) to endorse
any check payable to or upon the order of such Unitholder representing a
distribution to which the Purchaser is entitled pursuant to the terms of the
Offer, in each case on behalf of the tendering Unitholder.

ASSIGNMENT OF ENTIRE INTEREST IN THE PARTNERSHIP. By executing and
delivering the Letter of Transmittal, a tendering Unitholder irrevocably
assigns to the Purchaser and its assigns all of the, direct and indirect,
right, title and interest of such Unitholder in the Partnership with respect to
the Units tendered and purchased pursuant to the Offer, including, without
limitation, such Unitholder's right, title and interest in and to any and all
distributions made by the Partnership after the Expiration Date in respect of
the Units tendered by such Unitholder and accepted for payment by the
Purchaser, regardless of the fact that the record date for any such
distribution may be a date prior to the Expiration Date. The Purchaser will
seek to become a Registered Owner of Units in accordance with the Depositary
Agreement upon consummation of the Offer.

DETERMINATION OF VALIDITY. All questions as to the form of documents
and validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Units will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined
by it not to be in proper form, or the acceptance of or payment for which may,
in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right to waive any of the conditions of the Offer or any
defect or irregularity in any tender of Units of any particular Unitholder
whether or not similar defects or irregularities are waived in the case of
other Unitholders.

ASSIGNEE STATUS. Assignees must provide documentation to the
Information Agent/Depositary which demonstrates, to the satisfaction of the
Purchaser, such person's status as an assignee of a Unit.

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. No tender of Units will be deemed to have been validly made
until all defects and irregularities with respect to such tender have been
cured or waived. None of the Purchaser, any of its affiliates or assigns, if
any, the Information Agent/Depositary or any other person will be under any
duty to give any notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.

The Purchaser's acceptance for payment of Units tendered pursuant to the
procedures described above will constitute a binding agreement between the
tendering Unitholder and the Purchaser upon the terms and subject to the
conditions of the Offer.

4. WITHDRAWAL RIGHTS.

Tenders of Units made pursuant to the Offer are irrevocable, except that
Units tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time after December 29,
1996.

For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Information
Agent/Depositary at the address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name(s) of the
person(s) who tendered the Units to be withdrawn, the number of Units to be
withdrawn and the name(s) of the registered holder(s) of the Units, if
different from that of the person(s) who tendered such Units. Such notice of
withdrawal must also be signed by the same person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed
(including any signature guarantees, if applicable). If the Units are held in
the name of two or more persons, all such persons must sign the notice of
withdrawal. If certificates representing the Units have been delivered to the
Information Agent/Depositary, the serial numbers of the particular
certificates evidencing the Units to be withdrawn must also be furnished to the
Information Agent/Depositary as described above. Any Units properly withdrawn
will be deemed not validly tendered for purposes of the Offer, but may be
re-tendered at any subsequent time prior to the Expiration Date by following
the procedures described in Section 3 ("Procedures for Tendering Units").

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<PAGE> 11
If, for any reason whatsoever, acceptance for payment of any Units
tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept
for payment or pay for Units tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Information
Agent/Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Units and such Units may not be withdrawn except to the extent that the
tendering Unitholder is entitled to and duly exercises withdrawal rights as
described herein. The reservation by the Purchaser of the right to delay the
acceptance or purchase of or payment for Units is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires the Purchaser to pay the
consideration offered or return Units tendered by or on behalf of Unitholders
promptly after the termination or withdrawal of the Offer.

All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, any of its affiliates or assigns, if any, the Information
Agent/Depositary or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.

5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.

The Purchaser reserves the right, in its sole discretion and regardless
of whether any of the conditions set forth in Section 14 ("Conditions of the
Offer") shall have been satisfied, at any time and from time to time, (i) to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Units, (ii) to terminate
the Offer and not accept for payment any Units not already accepted for payment
or paid for, and (iii) to amend the Offer in any respect by giving oral or
written notice of such amendment to the Information Agent/Depositary.

If the Purchaser increases or decreases either the number of the Units
being sought or the consideration to be paid for any Units pursuant to the
Offer and the Offer is scheduled to expire at any time before the expiration of
a period of 10 business days from, and including, the date that notice of such
increase or decrease is first published, sent or given in the manner specified
below, the Offer will be extended until, at a minimum, the expiration of such
period of 10 business days. If the Purchaser makes a material change in the
terms of the Offer (other than a change in price or percentage of securities
sought) or in the information concerning the Offer, or waives a material
condition of the Offer, the Purchaser will extend the Offer, if required by
applicable law, for a period sufficient to allow Unitholders to consider the
amended terms of the Offer.

The Purchaser also reserves the right, in its sole discretion, in the
event any of the conditions specified under Section 14 ("Conditions of the
Offer") shall not have been satisfied and so long as Units have not theretofore
been accepted for payment, to delay (except as otherwise required by applicable
law) acceptance for payment of or payment for Units or to terminate the Offer
and not accept for payment or pay for Units.

If the Purchaser extends the period of time during which the Offer is
open, delays acceptance for payment of or payment for Units or is unable to
accept for payment or pay for Units pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Information
Agent/Depositary may, on behalf of the Purchaser, retain all Units tendered,
and such Units may not be withdrawn except as otherwise provided under Section
4 ("Withdrawal Rights"). The reservation by the Purchaser of the right to
delay acceptance for payment of or payment for Units is subject to applicable
law, which requires that the Purchaser pay the consideration offered or return
the Units deposited by or on behalf of Unitholders promptly after the
termination or withdrawal of the Offer.

Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser will have no obligation (except as otherwise required by applicable
law) to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service. In
the case of an extension of the Offer, the Purchaser will make a public
announcement of such extension no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.

8
<PAGE> 12
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 assuming that the
Partnership is a partnership for federal income tax purposes and that it is not
a "publicly traded partnership" as defined in Section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code"). This summary is based on 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 (if any), 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 A UNITHOLDER OF SELLING UNITS PURSUANT TO THE
OFFER.

CONSEQUENCES TO TENDERING UNITHOLDER. A 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 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). The
amount of such 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 by the Partnership to such Unitholder with respect
to such Units. In this regard, 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.

A Unitholder who acquired Units pursuant to the original offering of
Units by the Partnership will recognize a tax loss on a sale of Units pursuant
to the Offer. Even if the Unitholder is subject to the passive activity loss
limitation (discussed below), such loss generally could be deducted in full in
the year of sale (subject to other applicable limitations, including the
limitation on the deductibility of capital losses, discussed below) provided
the Unitholder sells all of his or its Units.

In general, the character (as capital or ordinary) of Unitholder's gain
or loss on a sale of a Unit pursuant to the Offer will be determined by
allocating the Unitholder's amount realized on the sale and his adjusted tax
basis in the Units sold between "Section 751 items," which are "substantially
appreciated inventory" and "unrealized receivables" (including depreciation
recapture) as defined in Code Section 751, and non-Section 751 items. The
difference between the portion of the Unitholder's amount realized that is
allocable to Section 751 items and the portion of the Unitholder's adjusted tax
basis in the Units sold that is so allocable will be treated as ordinary income
or loss, and the difference between the Unitholder's remaining amount realized
and adjusted tax basis will be treated as capital gain or loss assuming the
Units were held by the Unitholder as a capital asset. The Purchaser believes
that substantially all of any tax loss realized on a sale of Units pursuant to
the Offer will be treated as a capital loss under these rules, although it is
possible, because such Unitholder's adjusted tax basis in the Units sold will
be allocated to Section 751 items based on the Partnership's tax basis in these
items, that such Unitholder may recognize ordinary income with respect to the
portion of the Unitholder's amount realized on the sale of a Unit that is
attributable to Section 751 items while recognizing a capital loss with respect
to the balance of the selling price.

A Unitholder's capital gain (if any) or loss on a sale of Units pursuant
to the Offer will be treated as long-term capital gain or loss if the
Unitholder's holding period for the Units exceeds one year. Under current law
(which is subject to change), 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

9
<PAGE> 13
addition, corporations, but not non-corporate taxpayers, are allowed to carry
back excess capital losses to the three preceding taxable years.

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.
If the Unitholder recognizes a loss on the sale of Units, such loss generally
would not be subject to the passive activity loss limitation, and therefore,
could be deducted in full in the year of sale (subject to any other applicable
limitations), provided the Unitholder sells all his Units. If such Unitholder
is unable to sell all his Units, the deductibility of such losses would
continue to be subject to the passive activity loss limitation until the
Unitholder sells his remaining Units. See Section 7 ("Effects of the Offer").

A 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 property 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 SUCH
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. SEE INSTRUCTION 3 TO THE LETTER OF TRANSMITTAL.

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 from the Purchase Price payable to such
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.

CONSEQUENCES TO A NON-TENDERING UNITHOLDER. The Purchaser does not
anticipate that such Unitholder who does not tender his or her Units will
realize any material tax consequences as a result of the election not to
tender. However, if as a result of the Offer there is a sale or exchange of
50% or more of the total Units in Partnership capital and profits within a
12-month period, a termination of the Partnership for federal income tax
purposes would occur, and the taxable year of the Partnership would close. In
the case of such a sale or exchange, the Properties (subject to related debt)
of the Partnership would be treated as distributed to the partners, and
following the deemed distribution, contribution of the same properties would be
deemed to be made to a new partnership or to an association taxable as a
corporation. The Purchaser has not, however, had access to complete
information concerning assignments of Units and cannot, therefore, be certain
that the Partnership will not terminate for tax purposes as a result of sales
pursuant to the Offer. The consequences of a termination of the Partnership
could include changes in the methods of depreciation available to the
Partnership for tax purposes, changes in the tax basis of the Partnership's
assets, possible recognition of taxable gain resulting from any deemed cash
distribution in excess of the non-tendering Limited Partner's tax basis in his
or her Units, and possibly other consequences the extent of which cannot be
determined by the Purchaser without access to the books and records of the
Partnership. In addition, a termination of the Partnership could cause the
Partnership or its assets to become subject to unfavorable statutory or
regulatory changes enacted or issued prior to the termination but previously
not applicable to the Partnership or its assets because of protective
"transitional" rules. The Purchaser has reserved the right not to purchase
Units to the extent such purchase would cause a termination of the Partnership
for federal income tax purposes.

CONSEQUENCES TO A TAX-EXEMPT UNITHOLDER. Although certain entities are
generally exempt from federal income taxation, such tax-exempt entities
(including Individual Retirement Accounts (each an "IRA")) are subject to
federal income tax on any "unrelated business taxable income" ("UBTI"). UBTI
generally includes, among other things, income (other than, in the case of
property which is not "debt-financed property", interest, dividends, real
property rents not dependent upon income or profits, and gain from disposition
of non-inventory property) derived by certain trusts (including IRAs) from a
trade or business or by certain other tax-exempt organizations from a trade

10
<PAGE> 14
or business, the conduct of which is not substantially related to the exercise
of such organization's charitable, educational or other exempt purpose and
income to the extent derived from debt-financed property. UBTI would also
arise if the Partnership were treated for income tax purposes as a publicly
traded partnership.

To the extent the Partnership holds debt financed property or inventory
or other assets as a dealer, a tax-exempt Unitholder (including an IRA) could
realize UBTI on the sale of a Partnership interest. In addition, a tax-exempt
Unitholder will realize UBTI upon the sale of a Unit, if such Unitholder held
its Units as inventory or otherwise as dealer property, or acquired its Units
with acquisition indebtedness. However, any UBTI recognized by a tax-exempt
Unitholder as a result of a sale of a Unit, in general, may be offset by such
Unitholder's net operating loss carryover (determined without taking into
account any amount of income or deduction which is excluded in computing UBTI),
subject to applicable limitations.

EACH TAX-EXEMPT UNITHOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF SELLING OR NOT SELLING UNITS
PURSUANT TO THE OFFER.

7. EFFECTS OF THE OFFER.

CERTAIN RESTRICTIONS ON TRANSFER OF INTERESTS. The Depositary Agreement
restricts transfers of the Depositary Receipts that represent the Units if,
among other things, such transfer, when added to the total of all other
transfers of Depositary Receipts on the books of the Depositary during the
twelve months preceding the proposed transfer, would result in the transfer of
50% or more of the then outstanding Units. The Designated General Partner has
the right, upon written notice to the Depositary, to reduce such percentage
during any period when the volume of transfer of Units not represented by a
Depositary Receipt makes it prudent to do so. Consequently, sales of Units in
the secondary market and in private transactions during the twelve-month period
following completion of the Offer may be restricted, and requests for transfers
of Depositary Receipts during such twelve-month period may not be recognized.
The Purchaser does not intend to purchase Units to the extent such purchase
would violate the transfer restrictions set forth in the Depositary Agreement.
See Section 6 ("Federal Income Tax Considerations-- Consequences to a
Non-Tendering Unitholder") and Section 14 ("Conditions of the Offer").

EFFECT ON TRADING MARKET; REGISTRATION UNDER SECTION 12(G) OF THE
EXCHANGE ACT. If a substantial number of Units are purchased pursuant to the
Offer, the result will be a reduction in the number of Unitholders. In the
case of certain kinds of equity securities like the Units, a reduction in the
number of securityholders might be expected to result in a reduction in the
liquidity and volume of activity in the trading market for the security. The
Form 10-K states: "There is no established public trading market for the
Units." Therefore, the Purchaser does not believe a reduction in the number of
Unitholders will materially further restrict the Unitholders' ability to find
purchasers for their Units through secondary market transactions.

Partnership Profiles, Inc., which publishes the Partnership Spectrum,
tracks recent trades in certain limited partnership interests. The most recent
issue of the Partnership Spectrum (July/August, 1996) indicates that 88,293
Units traded in the period from June 1, 1996 through July 31, 1996 at per Unit
prices between $8.00 and $9.60 with a weighted average price of $8.97 per Unit.

The Units currently are registered under Section 12(g) of the Exchange
Act, which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser does not expect or intend that consummation of the Offer
will cause the Units to cease to be registered under Section 12(g) of the
Exchange Act. If the Units were to be held by fewer than 300 persons, the
Partnership could apply to de-register the Units under the Exchange Act.
Because the Units are widely held, however, the Purchaser expects that even if
it purchases the maximum number of Units in the Offer, the Units will continue
to be held of record by substantially more than 300 persons.

CONTROL OF ALL UNITHOLDER VOTING DECISIONS BY PURCHASER. Pursuant to
the Depositary Agreement, the Purchaser, through the Assignor Limited Partner,
will have the right to vote each Unit purchased pursuant to the Offer. If the
Purchaser is successful in acquiring a significant number of Units pursuant to
the Offer, and following the Standstill Expiration Date, the Purchaser could be
in a position to significantly influence all Partnership decisions on which
Unitholders may vote. If the maximum number of Units sought by the Purchaser
are tendered and

11
<PAGE> 15
accepted for payment pursuant to the Offer, the Purchaser will own
approximately 25% of the outstanding Units. After the Standstill Expiration
Date, this would effectively (i) prevent non-tendering Unitholders from taking
action they desire but that the Purchaser opposes and (ii) enable the Purchaser
to take action desired by it but opposed by non-tendering Unitholders.
Generally, under the Depositary Agreement and the Partnership Agreement,
Unitholders holding a majority of the Units are entitled, through the Assignor
Limited Partner, to take action with respect to a variety of matters,
including: removal of the General Partners; dissolution of the Partnership;
sale of all or substantially all of the Partnership's properties; and most
types of amendments to the Partnership Agreement. Although the Purchaser has
no current intentions with regard to any of these matters, it will, following
the Standstill Expiration Date, vote the Units acquired pursuant to the Offer
in its interest, which may, or may not, be in the best interest of
non-tendering Unitholders. Until the Standstill Expiration Date, the Purchaser
has agreed to vote its Units in the same manner as the majority of all the
Unitholders who vote on any proposals. See Section 8 ("Purpose of the Offer;
Future Plans") for certain contractual limitations of the Purchaser regarding
its participation in certain extraordinary transactions involving the
Partnership, including the solicitation of proxies to replace the General
Partners.

8. PURPOSE OF THE OFFER; FUTURE PLANS.

PURPOSE OF THE OFFER. The purpose of the Offer is to enable the
Purchaser to acquire a significant interest in the Partnership for investment
purposes based on its expectation that there may be underlying value in the
Properties. The Purchaser does not currently intend to change current
management or the operation of the Partnership and does not have current plans
for any extraordinary transaction involving the Partnership. However, these
plans could change at any time in the future. If the Purchaser's plans with
respect to the Partnership change in the future, the ability of the Purchaser
to influence actions on which Unitholders (through the Assignor Limited
Partner) have a right to vote will depend on the Unitholders' response to the
Offer (i.e., the number of Units tendered). If the Purchaser acquires only a
few Units pursuant to the Offer, it would not be in a position to influence
matters over which Unitholders have a right to vote. Conversely, if the
maximum number of Units sought are tendered and accepted for payment pursuant
to the Offer, the Purchaser will own approximately 25% of the issued and
outstanding Units and, as a result, will, following the Standstill Expiration
Date, be in a position to exert significant control over matters on which
Unitholders (through the Assignor Limited Partner) have a right to vote. The
purchase of the Units will allow the Purchaser to benefit from any of the
following: (a) any cash distributions from Partnership operations in the
ordinary course of business; (b) any distributions of net proceeds from the
sale of any Properties; and (c) any distributions of net proceeds from the
liquidation of the Partnership.

FUTURE PLANS. Following the completion of the Offer and subject to the
terms of the Standstill Agreement, the Purchaser and its affiliates may acquire
additional Units. Any such acquisition may be made through private purchases,
through one or more future tender offers or by any other means deemed
advisable, and may be at prices higher or lower than the price to be paid for
the Units purchased to the Offer.

Pursuant to an Assumption Agreement dated as of October 30, 1996
between the Purchaser and Liquidity Financial Group, L.P., an affiliate of
Liquidity Financial (a copy of which has been filed as Exhibit (c)(2) to the
Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission
on October 30, 1996), the Purchaser agreed to become bound by the restrictions
set forth in the Standstill Agreement. As a result, the Purchaser agreed that,
prior to the Standstill Expiration Date, it will not and it will cause certain
affiliates not to (i) acquire, attempt to acquire or make a proposal to
acquire, directly or indirectly, more than 25% (including Units acquired
through all other means) of the outstanding Units, (ii) seek to propose to
enter into, directly or indirectly, any merger, consolidation, business
combination, sale or acquisition of assets, liquidation, dissolution or other
similar transaction involving the Partnership, (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" or
"consents" (as such terms are used in the proxy rules of the Commission) to
vote, or seek to advise or influence any person with respect to the voting of
any voting securities of the Partnership, (iv) form, join or otherwise
participate in a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any voting securities of the Partnership, except
that those affiliates bound by the Standstill Agreement will not be deemed to
have violated it and formed a "group" solely by acting in accordance with the
Standstill Agreement, (v) disclose to any third party any intention, plan or
arrangement inconsistent with the terms of the Standstill Agreement, or (vi)
loan money to, advise, assist or encourage any person in connection with any
action inconsistent with the terms of the Standstill Agreement. In addition,
the Purchaser has agreed that until the

12
<PAGE> 16
Standstill Termination Date it will not sell any Units acquired by it unless
the buyer of such Units agrees to be bound by the Standstill Agreement.

9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP.

Information included herein concerning the Partnership is derived from
the Partnership's publicly-filed reports. Additional financial and other
information concerning the Partnership is contained in the Partnership's Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the
Commission. 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 Commission's Web site at http://www.sec.gov.
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. The Purchaser disclaims any responsibility for
the information included in such reports and extracted in this Offer to
Purchase.

THE PARTNERSHIP'S ASSETS AND BUSINESS

The Partnership is a limited partnership formed in 1986, under the laws
of the State of Delaware. Its principal executive offices are located at 242
Trumbull Street, Hartford, Connecticut 06156. Its telephone number is (203)
275-2178.

The Partnership is engaged in the business of investing in
income-producing apartment complexes, office buildings, shopping centers and
other commercial real estate offered by non-affiliated sellers. The
Partnership's principal objectives are to invest in Properties with the goals
of obtaining: (i) cash distributions from rental and interest income; (ii)
capital appreciation; and (iii) preservation and protection of capital.

As of December 31, 1995, the Partnership held interests in thirteen
Properties at a total cost of approximately $239.9 million. The Partnership
acquired its interests in the Properties either directly or indirectly through
joint ventures or other partnerships that own Properties. The Partnership
acquired all of its interests in the Properties entirely with cash. Neither
the Partnership, if it owns a Property directly, nor any joint venture or
partnership in which the Partnership has invested, have incurred any debt to
acquire or maintain any of the Properties.

The following table sets forth certain information regarding the
Properties as of December 31, 1995. More comprehensive information concerning
the Properties is included in the Form 10-K.

Properties

<TABLE>
<CAPTION>
Name Type Location Percentage Percentage Description
---- ---- -------- ---------- ---------- -----------
Leased Occupied
------ --------
<S> <C> <C> <C> <C> <C>
Cross Pointe Shopping Center Centerville, 90% 85% Approximately
Centre OH 211,345 square feet
of net rentable
space, located on a
25.8 acre site

Lincoln Square Residential Arlington 97% 95% A 240 unit
Apartments Heights, IL apartment project
located on a 12.7
acre site

Gateway Square Retail Center Hinsdale, IL 98% 98% Approximately
40,366 square feet
of rentable space,
located on a 3.7
acre site
</TABLE>

13
<PAGE> 17
<TABLE>
<CAPTION>
Name Type Location Percentage Percentage Description
---- ---- -------- ---------- ---------- -----------
Leased Occupied
------ --------
<S> <C> <C> <C> <C> <C>
Summit Village Residential Rosslyn, VA 99% 99% A 366 unit
apartment complex
located on a 6.2
acre site

Village Square Shopping Center Hazelwood, MO 63% 35% Approximately
Shopping Center 207,304 square feet
of net rentable
area, located on an
approximately 20
acre site

Marina Bay Industrial Richmond, CA 98% 98% Approximately
Industrial Park 165,780 square foot
industrial park
located on an 8.6
acre site

Town Center Commercial/Industrial Santa Fe 84% 72% Approximately
Business Park Springs, CA 456,700 square feet
of net rentable
area located on an
approximately 28
acre site

Oakland Pointe Shopping Center Pontiac, MI 89% 89% Portion owned by
Shopping Center the Partnership
contains
approximately
213,350 square feet
of rentable area on
approximately 32.1
acres

115 & 117 Commercial/Industrial Westborough, 115: 100% 115: 100% Two buildings
Flandus Road MA 117: 30% 117: 30% containing
approximately
115,175 square feet
of net rentable
area located on
approximately 26.6
acres

Three Riverside Commercial Andover, MA 79% 79% Approximately
Drive 91,350 square feet
of rentable area
located on
approximately 8.8
acres
</TABLE>

14
<PAGE> 18
<TABLE>
<CAPTION>
Name Type Location Percentage Percentage Description
---- ---- -------- ---------- ---------- -----------
Leased Occupied
------ --------
<S> <C> <C> <C> <C> <C>
Windmont Residential Dekalb 99% 97% A 178 unit
Apartments County, GA apartment complex
located on a 6.8
acre site

Powell Street Shopping Center Emeryville, 100% 100% Approximately
Plaza CA 169,551 square feet
of rentable space
located on
approximately 12.9
acres

Westgate Warehouse/Distribution Corona, CA 100% 100% Three buildings
Distribution consisting of
Center approximately
430,300 rentable
square feet located
on a 20.6 acre site
</TABLE>

15
<PAGE> 19
SELECTED FINANCIAL DATA. Set forth below is a summary of certain
financial data for the Partnership which has been excerpted from the Form 10-K
and the Form 10-Q. More comprehensive financial and other information is
included in such reports and other documents filed by the Partnership with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and other documents and all the financial information and
related notes contained therein.

Consolidated Statements of Income
For the Six Months Ended June 30, 1996 and 1995
(in thousands, except units and per unit amounts)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1996 1995
---- ----
<S> <C> <C>
Revenue:

Rental $13,950 $13,833
Interest 165 179
Other income 270 142
------- -------
14,385 14,154
Expenses:
Property operating 4,727 4,527
Depreciation and amortization 3,499 3,540
Investment portfolio fee - related parties 2,452 2,402
General and administrative 287 376
Bad debt 371 302
------- -------
11,336 11,147
Net income $ 3,049 $ 3,007
======= =======
Net income allocated:

To the General Partners $ 30 $ 30
To the Limited Partners 3,019 2,977
$ 3,049 $ 3,007
Weighted average number of limited partnership units
outstanding 12,724,547 12,724,547
========== ==========
Earnings per limited partnership unit $ .24 $ .23
======= =======
</TABLE>

16
<PAGE> 20
Consolidated Statements of Income for the
Years ended December 31,
(in thousands, except units and per unit amounts)

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Revenue . . . . . . . . . . . . . $ 28,438 $ 26,454 $ 26,389 $ 29,507 $ 30,948

Operating Income before
impairment of investment in real
estate . . . . . . . . . . . . . 5,002 4,144 4,492 4,457 4,258

Impairment of investment in real
estate . . . . . . . . . . . . . 4,408 -- -- -- --

Operating Income . . . . . . . . 594 4,144 4,492 4,457 4,258

Gain (Loss) on Sale of
Property . . . . . . . . . . . . (23) 355 2,358 4,111 --

Cash and Cash Equivalents . . . . 8,971 9,373 13,234 13,299 9,258

Total Assets (Historical Cost
Basis) . . . . . . . . . . . . . 209,334 217,854 225,248 244,264 254,299

Total Assets (Current Value
Basis) . . . . . . . . . . . . . 199,709 195,916 190,237 214,807 255,452

Rental Income . . . . . . . . . . 27,455 25,831 25,792 28,681 30,174

Interest Income . . . . . . . . . 367 301 339 372 336

Earnings per Weighted Average
Unit . . . . . . . . . . . . . . .04 .35 .54 .67 .33

Cash Distributions per Unit . . . .72 .91 1.92 1.31 .50

Net Asset Value per Unit . . . . 15.24 14.96 14.50 16.32 19.39
</TABLE>

10. CERTAIN INFORMATION CONCERNING THE PURCHASER.

The Purchaser was organized for the purpose of acquiring the Units
pursuant to the Offer. The principal executive office of the Purchaser is at
1301 Avenue of the Americas, 38th Floor, New York, New York 10019. The
managing member of the Purchaser (the "Managing Member") is AP-GP Prom Partners
Inc., a newly formed Delaware corporation which is ultimately controlled by
Apollo Real Estate Capital Advisors II, Inc. ("Advisors"), as general partner
of Apollo Real Estate Advisors II, L.P. ("AREA II"), the general partner of
Apollo Real Estate Investment Fund II, L.P., a recently formed private real
estate investment fund and the sole shareholder of the Managing Member. Since
its inception, the directors of Advisors have been Leon D. Black and John J.
Hannan, who were founding principals of Apollo Advisors, L.P., the respective
managing general partner of Apollo Investment Fund, L.P., AIF II, L.P. and
Apollo Investment Fund III, L.P., private securities investment funds, and,
together with William L. Mack, of Apollo Real Estate Advisors, L.P. ("AREA")
and AREA II, the respective managing general partners of Apollo Real Estate
Investment Fund, L.P. and Apollo Real Estate Investment Fund II, L.P. Mr. Mack
has been the President and Managing Partner of the Mack Organization, a
national owner and developer of and investor in office and industrial buildings
as well as other commercial properties principally in the New York/New Jersey
metropolitan area as well as throughout the United States since 1963. The
business address for Messrs. Black, Hannan and Mack is 1301 Avenue of the
Americas, New York, New York 10019.

For certain information concerning the executive officers and directors
of the Managing Member, see Schedule I to this Offer to Purchase.

17
<PAGE> 21
Except as otherwise set forth in this Offer to Purchase or Schedule I
hereto, (1) neither the Purchaser, the Managing Member, Advisors, and to the
best of Purchaser's knowledge, the persons listed on Schedule I, nor any
affiliate of the foregoing beneficially owns or has a right to acquire any
Units, (2) neither the Purchaser, the Managing Member, Advisors, and to the
best of Purchaser's knowledge, the persons listed on Schedule I, nor any
affiliate thereof or director, executive officer or subsidiary of the Managing
Member or Advisors has effected any transaction in the Units within the past 60
days, (3) neither the Purchaser, the Managing Member, Advisors, and to the best
of Purchaser's knowledge, any of the persons listed on Schedule I, nor any
director or executive officer of the Managing Member or Advisors 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, (4) 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, the Managing
Member, Advisors, or, to the best of Purchaser's knowledge, the persons listed
on Schedule I, on the one hand, and the Partnership or its affiliates, on the
other hand, and (5) there have been no contracts, negotiations or transactions
between the Purchaser, the Managing Member, Advisors, or, to the best of
Purchaser's knowledge, the persons listed on Schedule I, 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.

The Purchaser owns 5,000 Units, which represents less than 1% of the
number of Units outstanding as reported in the Form 10-K (the most recently
available filing containing such information). The Purchaser acquired such
5,000 Units on October 21, 1996 from an affiliate of Liquidity Financial at a
price per Unit of $10.

Liquidity Financial, a registered investment advisor, is acting as
financial advisor to the Purchaser in connection with the Offer and has
provided certain financial advisory services to the Purchaser in connection
with the Offer. See Section 11 ("Background of the Offer").

11. BACKGROUND OF THE OFFER.

In late 1994, representatives of Liquidity Financial met with
representatives of AREA to discuss a possible financial advisory relationship
between the parties. Specifically, Liquidity Financial proposed to act as
financial advisor to AREA with respect to strategic investments in limited
partnerships which are not controlled by AREA. Negotiations regarding this
proposed financial advisory relationship continued through the winter of 1995
and ultimately culminated in the execution in March 1995 of an agreement in
principle (the "1995 Agreement in Principle"). During the spring and summer of
1995, Liquidity Financial and AREA discussed the terms of a number of potential
tender offers for limited partnership interests, however no specific terms were
agreed on and no tender offers involving Liquidity Financial and AREA and their
respective affiliates were commenced. Ultimately, the 1995 Agreement in
Principle terminated pursuant to its terms.

Liquidity Financial has advised the Purchaser that following the
termination of the 1995 Agreement in Principle, it continued its business of
evaluating limited partnerships and utilized its position as a limited partner
to obtain lists of limited partners from a number of partnerships in which it
held interests. As part of this business plan, Liquidity Financial Group, L.P.
("LFG"), an affiliate of Liquidity Financial, requested in writing a list of
Unitholders from the Partnership in October 1995. Subsequent oral and written
requests for this list were made by representatives of LFG to representatives
of the Partnership in November 1995 through January 1996. In February 1996,
counsel for LFG demanded a copy of the list of Unitholders from the Partnership
on behalf of its client. During April 1996, an LFG representative met with a
representative of the Partnership for the purpose of negotiating an agreement
pursuant to which the Partnership would release the list of Unitholders to LFG.
Such negotiations culminated in the execution of the Standstill Agreement in
August 1996, at which time a list of Unitholders was delivered to LFG. LFG and
the Partnership subsequently agreed in October 1996 to amend the Standstill
Agreement for the purpose of clarifying the definition of the term "group" as
used therein. The Standstill Agreement requires LFG and its affiliates (which
includes Liquidity Financial) to cause any party which enters into an advisory
relationship with it relating to the Partnership to become bound by the terms
of the agreement.

18
<PAGE> 22
In July 1996, representatives of Liquidity Financial contacted
representatives of AREA II for the purpose of exploring a possible new
financial advisory relationship between Liquidity Fund and AREA II. These
discussions continued throughout the summer of 1996 and culminated in the
execution of a new Agreement in Principle in September 1996 (the "1996
Agreement in Principle"). The 1996 Agreement in Principle outlines the terms
of a financial advisory relationship between Liquidity Financial and its
affiliates and AREA II and its affiliates with respect to certain tender offers
for limited partnership interests. The 1996 Agreement in Principle identified
the Partnership as a potential target for such tender offers.

In late September 1996, a representative of the Partnership contacted a
representative of LFG for the purpose of determining whether LFG had
established any plans for its use of the list of Unitholders. On October 14,
1996, a representative of LFG contacted a representative of the Partnership for
the purpose of informing the Partnership that the Offer was likely to be
commenced in the near future and requested a waiver of the provision in the
Standstill Agreement which requires LFG to provide the Partnership with five
days prior written notice of any communication to Unitholders. In that
conversation, the Partnership's representative informed LFG's representative
that it was interested in reviewing the document that would be sent to
Unitholders. On October 17, 1996, LFG requested in writing a waiver of such
five day notice provision included in the Standstill Agreement with respect to
the Offer, which waiver the Partnership denied in writing the next day. On
October 22, 1996, LFG provided the Partnership with notice that the Purchaser
planned to commence the Offer five days after the Partnership's receipt of this
notice.

On October 24, 1996, a representative of LFG contacted a representative
of the Partnership for the purpose of (i) informing the Partnership of the
anticipated commencement date of the Offer and (ii) to request, on behalf of
the Purchaser, that the General Partners agree to recognize Purchaser as a
Registered Owner of Units upon Purchaser's acceptance of Units for payment
pursuant to the terms of the Offer; later that day a letter agreement was sent
to one of the General Partners requesting such recognition. On October 25,
1996, counsel for the Partnership informed counsel for the Purchaser that the
Partnership was not prepared at this time to agree to recognize the Purchaser
as a Registered Owner of Units upon consummation of the Offer. On October 28,
1996, counsel for the Purchaser contacted counsel for the Partnership
reiterating Purchaser's request that the General Partners recognize Purchaser
as a Registered Owner upon Purchaser's acceptance of Units for payment. On
October 29, 1996, a General Partner of the Partnership executed a letter to the
Purchaser indicating its agreement to recognize Purchaser, or cause Purchaser
to be recognized, as a Registered Owner of Units upon Purchaser's payment for
Units pursuant to the Offer, subject to compliance with the Partnership
Agreement, applicable partnership law and the requirements of the Transfer
Agent. Also on October 29, 1996, a representative of the Partnership contacted
a representative of the Purchaser for the purpose of confirming the
commencement date of the Offer. In a subsequent conversation that day, a
representative of LFG contacted a representative of the Partnership and
requested that the Partnership reconfirm the list of Unitholders.

On October 30 , 1996, immediately prior to the commencement of this
Offer, (i) Liquidity Financial and the Purchaser entered into a definitive
advisory agreement (the "Advisory Agreement") relating to the Offer, (ii) the
Purchaser, pursuant to the Assumption Agreement, agreed to become bound by the
terms of the Standstill Agreement, and (iii) Liquidity Financial provided the
Purchaser with its list of Unitholders. Pursuant to the terms of an option
agreement dated as of October 30, 1996, LFG has the option, for the 6 month
period following the Purchaser's acceptance for payment of the tendered Units,
to acquire, indirectly through a member of the Purchaser, up to a 5% interest
in the Purchaser.

12. SOURCE OF FUNDS.

The Purchaser expects that $31,761,360 (exclusive of fees and expenses)
would be required to purchase the Units sought pursuant to the Offer, if
tendered. The Purchaser presently contemplates that it will obtain all of such
funds from capital contributions from its members who have an aggregate net
worth substantially in excess of the amount required to purchase the Units.
However, the Purchaser may seek to obtain debt financing to facilitate the
purchase of Units, but no commitment has been obtained for any such debt
financing.

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13. PURCHASE PRICE CONSIDERATIONS.

The Purchaser has set the Purchase Price at $10 net per Unit (subject to
adjustment as set forth in this Offer to Purchase). The Purchaser established
the Purchase Price by analyzing a number of quantitative and qualitative
factors including: (i) the absence of a significant number of recent secondary
market resales of the Units; (ii) the lack of liquidity of an investment in the
Partnership; (iii) the Book Value and Net Asset Value of the Units; (iv) the
costs to the Purchaser associated with acquiring the Units; (v) the
administrative costs of continuing to own the Partnership's assets through a
publicly registered limited partnership; (vi) the possibility that Unitholders
may realize taxable income in excess of tax distributions from the Partnership
in future years; (vii) the inability of Unitholders to exercise effective
control over the management of the Partnership through the annual election of
the General Partners; and (viii) estimated transaction costs of completing the
Offer.

The Form 10-K states that "(t)here is no established public trading
market for the Units." Except for certain limited rights of Unitholders to
resell Units in subsequent Partnership offerings (if any), at present,
privately negotiated sales and sales through intermediaries (e.g., through the
trading system operated by Chicago Partnership Board, Inc., which publishes
sales by holders of Units) are the only means available to such Unitholder to
liquidate an investment in Units (other than the Offer) because the Units are
not listed or traded on any exchange or quoted on any NASDAQ list or system.
According to Partnership Spectrum, an independent third-party industry
publication, between June 1, 1996 and July 31, 1996, a total of 88,293 Units
traded at prices ranging from a low of $8.00 to a high of $9.60 per Unit with a
weighted average of $8.97 per Unit. Such gross sales prices reported by
Partnership Spectrum do not necessarily reflect the net sales proceeds received
by sellers of Units, which typically are reduced by commissions and other
secondary market transaction costs to amounts less than the reported prices.

The Book Value per Unit, as reflected in Form 10-Q, was $16.04 per Unit.
The Book Value represents the portion of the excess of the Partnership's assets
over its liabilities, as determined in accordance with generally accepted
accounting principles, which is attributable to the Units. Book Value does not
necessarily reflect the fair market value of a Unit, which may be higher or
lower than the Book Value depending on several factors, including liquidity of
the Units and external economic and market factors. In addition, the
Partnership has reported in the Form 10-Q that the Net Asset Value of each
Unit, based upon independent appraisals, was $15.55 as of June 30, 1996.
Neither Book Value nor Net Asset Value necessarily reflects the amount which
such Unitholder would ultimately receive if the Partnership were liquidated.
Such amount would likely be affected by several factors, including the time
required to effect a liquidation of the Partnership's assets and the ability of
the Partnership to realize the full value of its assets.

The Purchase Price 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 Purchase Price 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 assets owned by the Partnership.
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.

14. CONDITIONS OF THE OFFER.

Notwithstanding any other provisions of the Offer and in addition to
(and not in limitation of) the Purchaser's rights to extend and amend the Offer
at any time in its sole discretion, the Purchaser shall not be required to
accept for payment, purchase or pay for, subject to Rule 14e-1(c) under the
Exchange Act, any tendered Units (whether or not any Units have theretofore
been accepted for payment or paid for pursuant to the Offer), and may terminate
the Offer as to any Units not then paid for, if (i) the Purchaser shall not
have confirmed to its reasonable satisfaction that, upon purchase of the Units
pursuant to the Offer, the Purchaser will have full rights to ownership as to
all such Units, the Purchaser will become a Registered Owner of the purchased
Units for all purposes under the Depositary Agreement, and, if necessary, the
Purchaser will become a record owner of the Depositary Receipts representing
the purchased Units on the register of the Transfer Agent, (ii) the Purchaser
shall

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<PAGE> 24
not have confirmed to its reasonable satisfaction that, upon the purchase of
the Units pursuant to the Offer, the Transfer Restrictions will have been
satisfied, or (iii) 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 will not be required to accept for payment or pay for any Units not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such Units if, at any time on or after the date of the Offer and
before the acceptance of such Units for payment or the payment therefore, any
of the following conditions exist:

(a) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (iii) the commencement or escalation
of a war, armed hostilities or other national or international crisis involving
the United States, (iv) any limitation (whether or not mandatory) imposed by
any governmental authority on, or any other event that might have material
adverse significance with respect to, the nature or extension of credit by
banks or other lending institutions in the United States, or (v) in the case of
any of the foregoing, a material acceleration or worsening thereof; or

(b) any material adverse change (or any condition, event or
development involving a prospective material adverse change) shall have
occurred or be likely to occur in the business, prospects, financial condition,
results of operations, properties, assets, liabilities, capitalization,
partners' equity, licenses, franchises or businesses of the Partnership and its
subsidiaries taken as a whole; or

(c) there shall have been threatened, instituted or pending any
action, proceeding, application, audit, claim or counterclaim by any government
or governmental authority or agency, domestic or foreign, or by or before any
court or governmental, regulatory or administrative agency, authority or
tribunal, domestic, foreign or supranational, which (i) challenges the
acquisition by the Purchaser of the Units or seeks to obtain any material
damages as a result thereof, (ii) makes or seeks to make illegal, the acceptance
for payment, purchase or payment for any Units or the consummation of the Offer,
(iii) imposes or seeks to impose limitations on the ability of the Purchaser or
any affiliate of the Purchaser to acquire or hold or to exercise full rights of
ownership of the Units, including, but not limited to, the right to vote
(through the Assignor Limited Partner) any Units purchased by them on all
matters with respect to which Unitholders have the right to direct the Assignor
Limited Partner on the manner in which it will vote on matters presented to the
Limited Partners, (iv) may result in a material diminution in the benefits
expected to be derived by the Purchaser or any of its affiliates as a result of
the Offer, (v) requires divestiture by the Purchaser of any Units, (vi) might
materially adversely affect the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership or the Purchaser, or (vii) challenges or adversely affects the
Offer; or

(d) there shall be any action taken, or any statute, rule,
regulation, order or injunction shall have been enacted, promulgated, entered,
enforced or deemed applicable to the Offer, or any other action shall have been
taken, by any government, governmental authority or court, domestic or foreign,
other than the routine application to the Offer of waiting periods that has
resulted, or in the reasonable good faith judgment of the Purchaser could be
expected to result, in any of the consequences referred to in clauses (i)
through (vii) of paragraph (c) above; or

(e) the Partnership or any of its subsidiaries shall have authorized,
recommended, proposed or announced an agreement or intention to enter into an
agreement, with respect to any merger, consolidation, liquidation or business
combination, any acquisition or disposition of a material amount of assets or
securities, or any comparable event, not in the ordinary course of business
consistent with past practices; or

(f) the failure to occur of any necessary approval or authorization
by any federal or state authorities necessary to the consummation of the
purchase of all or any part of the Units to be acquired hereby, which in the
reasonable judgment of the Purchaser in any such case, and regardless of the
circumstances (including any action of the Purchaser) giving rise thereto,
makes it inadvisable to proceed with such purchase or payment; or

21
<PAGE> 25
(g) the Purchaser shall become aware that any material right of the
Partnership or any of its subsidiaries under any governmental license, permit
or authorization relating to any environmental law or regulation is reasonably
likely to be impaired or otherwise adversely affected as a result of, or in
connection with, the Offer; or

(h) the Partnership or either of its General Partners shall have
amended, or proposed or authorized any amendment to, the Partnership Agreement
or the Depositary Agreement or the Purchaser shall have become aware that the
Partnership or either of its General Partners have proposed any such amendment;
or

(i) the Partnership or either of its General Partners shall have
terminated the Depositary Agreement or the Purchaser shall have become aware
that the Partnership or either of its General Partners have proposed any such
termination.

The foregoing conditions are for the sole benefit of the Purchaser and its
affiliates and may be asserted by the Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by the Purchaser or any
of its affiliates) giving rise to such condition, or may be waived by the
Purchaser, in whole or in part, from time to time in its sole discretion. The
failure by the Purchaser at any time to exercise the foregoing rights will not
be deemed a waiver of such rights, which will be deemed to be ongoing and may
be asserted at any time and from time to time. Any determination by the
Purchaser concerning the events described in this Section 14 will be final and
binding upon all parties.

15. CERTAIN LEGAL MATTERS.

Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Partnership with the Commission and other
publicly available information regarding the Partnership, the Purchaser is not
aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Units as contemplated herein, or any
filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Units by the Purchaser pursuant to the
Offer as contemplated herein, other than the filing of a Tender Offer Statement
on Schedule 14D-1 (which has been filed) and any required amendments thereto.
Should any such approval or other action be required, 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 or the
Purchaser'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
in the event that such approvals were not obtained or such actions were not
taken.

APPRAISAL RIGHTS. Unitholders will not have appraisal rights as a
result of the Offer.

STATE ANTI-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 or other entities which are incorporated or
organized in such states or which have substantial assets, securityholders,
principal executive officers 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 or any state law allegedly applicable to the Offer
and nothing in this Offer to Purchase nor any action taken in connection
therewith 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
obliged to accept for purchase or pay for any Units tendered.

ERISA. By executing and returning the Letter of Transmittal, such
Unitholder will be representing that either (a) the Unitholder is not a plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code, or an entity deemed to hold
"plan assets" within the meaning

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<PAGE> 26
of 29.C.F.R. Section 2510.3-101 of any such plan; or (b) the tender and
acceptance of Units pursuant to the Offer will not result in a nonexempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

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

ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice and the FTC and certain waiting period requirements
have been satisfied. The Purchaser does not believe any filing is required
under the HSR Act with respect to its acquisition of Units contemplated by the
Offer.

16. CERTAIN FEES AND EXPENSES.

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

17. MISCELLANEOUS.

The Offer is being made to all Unitholders, Beneficial Owners and
Assignees, all to the extent known by the Purchaser. The Purchaser is not
aware of any state in which the making of the Offer is prohibited by
administrative or judicial action pursuant to a state statute. If the
Purchaser becomes aware of any state where the making of the Offer is so
prohibited, the Purchaser will make a good faith effort to comply with any such
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, the Purchaser cannot comply with any applicable
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) Unitholders in such state.

Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser has filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, furnishing certain
additional information with respect to the Offer. Such statement 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 with respect to
information concerning the Partnership in Section 9 ("Certain Information
Concerning the Partnership") (except that they will not be available at the
regional offices of the Commission).

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR 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.

Acorn Hill Partners L.L.C.

October 30, 1996

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APPENDIX A

GLOSSARY OF DEFINED TERMS

"Advisors" means Apollo Real Estate Capital Advisors II, Inc.

"Advisory Agreement" means the definitive advisory agreement entered
into between Liquidity Financial and the Purchaser as of October 30, 1996.

"AREA" means Apollo Real Estate Advisors, L.P.

"AREA II" means Apollo Real Estate Advisors II, L.P.

"Assignee" means a person who has purchased Units but is not a
Registered Owner.

"Assignor Limited Partner" means Hutton/AREA Assignor Corporation, a
Delaware corporation, or any successor to it.

"Assumption Agreement" means that certain Assumption Agreement dated as
of October 30, 1996 pursuant to which the Purchaser agreed to be bound by the
restrictions set forth in the Standstill Agreement.

"Available Cash Flow" means, with respect to any period, Net Cash From
Operations for that period without reduction for any unpaid Investment
Portfolio Fee.

"Beneficial Owner" means such Unitholder in the case of Units owned by
Individual Retirement Accounts or Keogh plans.

"Book Value" means the book value of each Unit, as reflected on the
Partnership's Form 10-Q for the quarter ended June 30, 1996. As reflected in
the Form 10-Q, the Book Value was $16.04 per Unit.

"business day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time, and any time period of business days will be computed in
accordance with Rule 14d-1(c)(6) under the Exchange Act.

"Capital Contribution" means the aggregate amount of cash contributed to
the Partnership with respect to the Interest of a Partner or Assignee.

"Capital Transaction" means any of the following: (i) a sale, repayment,
exchange, transfer, assignment, or other disposition of all or a portion of any
Investment (but not including occasional sales in the ordinary course of
business of inventory, operating equipment or furniture, fixtures, and
equipment); (ii) any financing or refinancing of, or with respect to, an
Investment; (iii) any condemnation or deeding in lieu of condemnation of all or
a portion of any Partnership property; (iv) any collection in respect of
property, hazard, or casualty insurance (but not rental interruption insurance)
or any damage award; or (v) any other transaction the proceeds of which, in
accordance with generally accepted accounting principles, are considered to be
capital in nature.

"Code" means the Internal Revenue Code of 1986, as amended.

"Commission" means the Securities and Exchange Commission.

"Depositary Agreement" means the Amended and Restated Depositary
Agreement, entered into as of January 1, 1988, by and among the Partnership,
the Assignor Limited Partner, the Depositary, Hutton/AREA Corporation, and the
Assignees and Limited Partners, from time to time.

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"Depositary" means Hutton/AREA Depositary Corporation, a Delaware
corporation, or any successor to it or designee of it under the Depositary
Agreement.

"Depositary Receipt" means an instrument evidencing a Unit or Units.

"Designated General Partner" means AREA GP Corporation, a Delaware
corporation and a general partner of the Partnership, or such other entity
acting as Designated General Partner and any successor to it as Designated
General Partner under the Depositary Agreement.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Expiration Date" has the meaning set forth in Section 1.

"Form 10-K" means the Partnership's Form 10-K for the year ended
December 31, 1995.

"Form 10-Q" means the Partnership's Form 10-Q for the quarter ended June
30, 1996.

"FTC" means the Federal Trade Commission.

"General Partners" means Aetna/Area Corporation, a Connecticut
corporation, and AREA GP Corporation, a Delaware corporation.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

"Independent Appraiser" is defined in Section 5.3 of the Partnership
Agreement.

"Information Agent/Depositary" means The Herman Group, Inc.

"Interest" means the interest of a Partner or Assignee in the
Partnership at any particular time, including the right of such person or
entity to any and all benefits to which a Partner or Assignee may be entitled
as provided in the Partnership Agreement, together with the obligations of such
person or entity to comply with the terms and provisions of the Partnership
Agreement.

"Investment" means the interest of the Partnership in a property, or in
a loan made with respect to any property, or in a joint venture or other
enterprise that has an interest in a property or in a loan made with respect to
a property.

"Investment Portfolio Fee" is defined in Section 6.6(a) of the
Partnership Agreement.

"IRA" means an individual retirement account.

"LFG" means Liquidity Financial Group, L.P., an affiliate of Liquidity
Financial.

"Limited Partner" means any person on entity admitted to the Partnership
as a limited partner.

"Liquidity Financial" means Liquidity Financial Advisors, Inc., the
Purchaser's financial advisor.

"Managing Member" means AP-GP Prom Partners Inc., a newly-formed
Delaware corporation and the managing member of the Purchaser.

"NASD" means the National Association of Securities Dealers, Inc.

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<PAGE> 29
"Net Asset Value" means the estimated current value of all of the
Partnership's assets (less Partnership funds set aside as a reserve pursuant to
the authority of Section 4.5 of the Partnership Agreement and Available Cash
Flow with respect to the fiscal quarter including the applicable Valuation
Date) less the accrued liabilities of the Partnership (other than (i) for
purposes of calculating the Investment Portfolio Fee, any liability for payment
of the Investment Portfolio Fee for the fiscal quarter including the applicable
Valuation Date, and (ii) for all other purposes, any liability for payment of
any unpaid Investment Portfolio Fee to the extent that such liability does not
exceed Available Cash Flow). The Partnership has reported in its Form 10-Q
that the Net Asset Value of each Unit, based on independent appraisals, was
$15.55 as of June 30, 1996.

"Net Cash From Operations" means, with respect to any fiscal year,
revenues (which do not include refundable deposits or unearned rent) of the
Partnership received in cash during such fiscal year, and Reserves set aside
out of such revenues during prior periods and no longer needed for the
Partnership's business, but not including cash proceeds attributable to a
Capital Transaction, less the sum of (i) amounts paid in cash by the
Partnership during such fiscal year for operating expenses of the Partnership
(excluding amounts paid from Reserves or funds provided by Capital
Contributions), for debt payments, and for the Investment Portfolio Fee,
Removal Compensation, and any other fees or payments to the General Partners,
(ii) any capital expenditures with respect to the Properties, and (iii) any
amount set aside for the restoration, increase, or creation of Reserves. Net
Cash From Operations shall be deemed to include the amount of any income tax
withheld with respect to revenues that are includable in Net Cash From
Operations.

"1995 Agreement in Principle" means the agreement executed in March 1995
that outlined an agreement in principle regarding the establishment of a
financial advisory relationship between Liquidity Financial and AREA with
respect to strategic investments in certain limited partnerships.

"1996 Agreement in Principle" means the agreement executed in September
1996 that outlined an agreement in principle regarding the establishment of a
financial advisory relationship between Liquidity Financial and AREA II with
respect to strategic investments in certain limited partnerships.

"Offer" has the meaning set forth in the Introduction.

"Offer to Purchase" means this Offer to Purchase dated October 30,
1996.

"Partners" means the General Partners and the Limited Partners,
collectively. Reference to a "Partner" shall be to any one of the Partners.

"Partnership" means Aetna Real Estate Associates, L.P., a Delaware
limited partnership.

"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of the Partnership, dated as of January 14, 1987.

"Permitted Temporary Investments" is defined in Section 6.4(xxxii) of
the Partnership Agreement.

"Properties" means the Partnership's properties.

"Purchase Price" has the meaning set forth in the Introduction.

"Purchaser" means Acorn Hill Partners L.L.C., a Delaware limited
liability company.

"Registered Owner" means a person or entity in whose name a Unit is
registered on the books of the Partnership's Depositary or Registrar.

"Removal Compensation" is defined in Section 9.5 of the Partnership
Agreement.

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"Reserves" means, with respect to any fiscal period, funds set aside or
amounts allocated during such period to reserves that shall be maintained in
amounts deemed sufficient by the General Partners for working capital and to
pay taxes, insurance, debt service, repairs, replacements or renewals, or other
costs or expenses incident to the operation and maintenance of the Partnership
and its ownership or operation of Investments.

"Standstill Agreement" means the letter agreement, dated August 14,
1996, as amended as of October 8, 1996, between the Partnership and LFG, which
agreement has been assumed by the Purchaser.

"Standstill Expiration Date" means August 14, 1998.

"TIN" means taxpayer identification number.

"Transfer Agent" means the transfer agent appointed as provided by the
Depositary Agreement.

"Transfer Restrictions" has the meaning set forth in Section 2.

"UBTI" means unrelated business taxable income.

"Unitholder" means a holder of Units.

"Units" means Limited Partnership Depositary Units.

"Valuation Date" means a date as of which Net Asset Value is determined,
and shall be as of the close of business on the last business day of each
fiscal quarter of the Partnership.

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SCHEDULE I

EXECUTIVE OFFICERS AND DIRECTORS OF AP-GP PROM PARTNERS INC.

Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
executive officer and director of AP-GP Prom Partners Inc. Each person listed
below is a citizen of the United States.

LEE S. NEIBART. Mr. Neibart has been an officer and a director of AP-GP Prom
Partners Inc. since October 1996 and an officer of Advisors since its
inception. Since 1993, Mr. Neibart has been associated with AREA and since May
1996 with Apollo Real Estate Advisors II, L.P. ("AREA II") which respectively
act as managing general partner of Apollo Real Estate Investment Fund, L.P.
("Apollo I") and Apollo Real Estate Investment Fund II, L.P. ("Apollo" and
together with Apollo I, the "Apollo Funds"). The Apollo Funds are private real
estate investment funds formed to invest in direct and indirect real property
interests, including direct property investments and public and private debt
and equity securities. Prior to 1993, Mr. Neibart was 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. Mr.
Neibart received his MBA degree from New York University. Mr. Neibart is also
a director of Capital Apartment Properties, Inc., Koger Equity, Inc., Roland
International, Inc. and a past President of the NAIOP in New York. Mr.
Neibart's business address is 1301 Avenue of the Americas, New York, New York
10019.

W. EDWARD SCHEETZ. Mr. Scheetz has been an officer and a director of AP-GP
Prom Partners Inc. since October 1996 and an officer of Advisors since its
inception. Since 1993, Mr. Scheetz has been a principal of AREA and since May
1996 of AREA II, which respectively act as managing general partner of Apollo I
and Apollo II. Prior to 1993, Mr. Scheetz was a principal of Trammell Crow
Ventures, a national real estate investment firm. Mr. Scheetz is also a
director of Capital Apartment Properties, Inc., Roland International, Inc.,
Koger Equity, Inc., Koll Management Services, Inc. and Western Pacific Housing
Corp. Mr. Scheetz' business address is 1301 Avenue of the Americas, New York,
New York 10019.

RICHARD MACK. Mr. Mack has been an officer and a director of AP-GP Prom
Partners Inc. since October 1996. Since May 1993, Mr. Mack has been associated
with AREA and since May 1996 has been associated with AREA II, which
respectively act as managing general partner of Apollo I and Apollo II. Prior
to May 1993, Mr. Mack attended Columbia Law School. Prior to April 1990, Mr.
Mack was employed by the real estate investment banking group at Shearson
Lehman Hutton, Inc., an investment banking and brokerage firm.

S-1
<PAGE> 32
Questions and requests for assistance may be directed to the Information
Agent/Depositary at the address and telephone number listed below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and other tender
offer materials may be obtained from the Information Agent/Depositary as set
forth below, and will be furnished promptly at the Purchaser's expense. The
Letter of Transmittal, certificate(s) representing the Units and any other
required documents should be sent or delivered by each Unitholder to the
Information Agent/Depositary at its address set forth below. To be effective,
a duly completed and signed Letter of Transmittal, together with the
certificate(s) representing Units, must be received by the Information
Agent/Depositary at the address (or facsimile number) set forth below before
12:00 midnight, New York City Time, on Wednesday, November 27, 1996. If
tendering by facsimile, please mail the original copies of all the required
documents to the Information Agent/Depositary at the address below.

THE HERMAN GROUP, INC.

By Mail/Hand or Overnight Delivery: 2121 San Jacinto Street
26th Floor
Dallas, Texas 75201

By Facsimile: (214) 999-9348 or (214)
999-9323

For Additional Information Call:

[THE HERMAN GROUP LOGO]

(800) 992-6174

<PAGE> 1
LETTER OF TRANSMITTAL
TO
TENDER LIMITED PARTNERSHIP DEPOSITARY UNITS
OF
AETNA REAL ESTATE ASSOCIATES, L.P.

PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 30, 1996
BY
ACORN HILL PARTNERS L.L.C.

<TABLE>
<CAPTION>
Number of Number of(1) Purchase Price Total Purchase Price(2)
Units Owned Units Tendered Per Unit if all Units Tendered
----------- -------------- -------------- -----------------------
<S> <C> <C> <C> <C>

(1) If no indication is marked above, all Units issued
to you will be deemed to have been tendered.

Please indicate changes or corrections to the address printed above. (2) Reduced by the amount of any distributions made or
declared by the Partnership subsequent to the
date of the Offer.
====================================================================================================================================
</TABLE>

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, NOVEMBER 27, 1996 (THE "EXPIRATION DATE") UNLESS
SUCH OFFER IS EXTENDED.

The undersigned hereby tender(s) to Acorn Hill Partners L.L.C., a Delaware
limited liability company (the "Purchaser"), the number of Limited Partnership
Depositary Units ("Units") of Aetna Real Estate Associates, L.P., a Delaware
limited partnership (the "Partnership"), specified above, pursuant to the
Purchaser's offer to purchase up to 3,176,136 of the issued and outstanding
Units at a purchase price of $10 per Unit, net to the seller in cash (the
"Purchase Price"), without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 30, 1996 (the
"Offer to Purchase") and this Letter of Transmittal (the "Letter of
Transmittal", which, together with the Offer to Purchase and any supplements,
modifications or amendments thereto, constitute the "Offer"), all as more fully
described in the Offer to Purchase. The Purchase Price will be automatically
reduced by the aggregate amount of distributions per Unit, if any, made or
declared by the Partnership after October 30, 1996 and on or prior to 12:00
midnight, New York City time, on November 27, 1996 (the "Expiration Date"). In
addition, if a distribution is made or declared after the Expiration Date but
prior to the date on which the Purchaser pays the Purchase Price for the
tendered Units, the Purchaser will offset the amount otherwise due a holder of
Units pursuant to the Offer in respect of tendered Units which have been
accepted for payment but not yet paid for by the amount of any such
distribution. UNITHOLDERS WHO TENDER THEIR UNITS WILL NOT BE OBLIGATED TO PAY
ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH COMMISSIONS OR PARTNERSHIP
TRANSFER FEES WILL BE BORNE BY THE PURCHASER. Receipt of the Offer to Purchase
is hereby acknowledged. Capitalized terms used but not defined herein have the
respective meanings ascribed to them in the Offer to Purchase.

By executing and delivering this Letter of Transmittal, a tendering
Unitholder irrevocably appoints the Purchaser and designees of the Purchaser
and each of them as such Unitholder's proxies, with full power of substitution,
in the manner set forth in this Letter of Transmittal 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 (and with respect to any and all
other Units or other securities issued or issuable in respect of such Unit on
or after the date hereof). All such proxies shall be considered irrevocable
and coupled with an interest in the tendered Units. 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 (and such other Units and securities)
will be revoked without further action, and no subsequent proxies may be given
nor any subsequent written consent executed (and, if given or executed, will
not be deemed effective). The Purchaser and its designees will, with respect
to the Units (and such other Units and securities) for which such appointment
is effective, 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 or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for a Unit to be deemed validly tendered, immediately
upon the Purchaser's payment for such Unit, the Purchaser must be able to
exercise full voting rights with respect to such Unit and other securities,
including voting at any meeting of Unitholders.

By executing and delivering the Letter of Transmittal, a tendering
Unitholder also irrevocably constitutes and appoints the Purchaser and its
designees as the Unitholder's attorneys-in-fact, each with full power of
substitution to the extent of the Unitholder's rights with respect to the Units
tendered by the Unitholder and accepted for payment by the Purchaser,
including, without limitation, the power to endorse the certificate(s)
representing Units and the power to complete and deliver an affidavit of lost
certificate. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts the tendered Units for payment. Upon such
acceptance for payment, all prior powers of attorney granted by the Unitholder
with respect to such Unit will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, the Purchaser
and its designees each will have the power, among other things, (i) to seek to
transfer ownership of such Units on the Partnership's (including the
Depositary's) books maintained by the Transfer Agent (and execute and deliver
any accompanying evidences of transfer and authenticity any of them may deem
necessary or appropriate in connection therewith, including, without
limitation, any documents or instruments required to be executed under the
Depositary Agreement or a "Transferor's (Seller's) Application for Transfer"
created by the NASD, if required), (ii) upon receipt by the Information
Agent/Depositary (as the tendering Unitholder's agent) of the Purchase Price,
to become a Registered Owner of the purchased Unit, to receive any and all
distributions made by the Partnership after the Expiration Date, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Units in accordance with the terms of the Offer, (iii) to execute and deliver
to the Partnership, the General Partners and/or the Depositary (as the case may
be) a change of address form instructing the Partnership to send any and all
future distributions to which the Purchaser is entitled pursuant to the terms
of the Offer in respect of tendered Units to the address specified in such
form, and (iv) to endorse any check payable to or upon the order of such
Unitholder representing a distribution to which the Purchaser is entitled
pursuant to the terms of the Offer, in each case on behalf of the tendering
Unitholder. This Power of Attorney shall not be affected by the subsequent
mental disability of the Unitholder, and the Purchaser shall not be required to
post bond in any nature in connection with this Power of Attorney.

By executing and delivering this Letter of Transmittal, a tendering
Unitholder irrevocably assigns to the Purchaser and its assigns all of the
right, title and interest of such Unitholder in the Partnership with respect to
the Units tendered and purchased pursuant to the Offer, including, without
limitation, such Unitholder's right, title and interest in and to any and all
distributions made by the Partnership after the Expiration Date in respect of
the Units tendered by such Unitholder and accepted for payment by the
Purchaser, regardless of the fact that the record date for any such
distribution may be a date prior to the Expiration Date. The Purchaser will
seek to become a Registered Owner in accordance with the Depositary Agreement
upon consummation of the Offer.

By executing this Letter of Transmittal, the undersigned represents that
either (a) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan; or (b) the tender and acceptance of Units pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.

The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer, the Purchaser will accept for payment from among those
Units validly tendered on or prior to the Expiration Date and not properly
withdrawn, the maximum number of Units permitted pursuant to the Offer on a pro
rata basis, with adjustments to avoid purchases of certain fractional Units and
purchases which would violate the terms of the Offer, based upon the number of
Units validly tendered prior to the Expiration Date and not properly withdrawn.

By executing and delivering this Letter of Transmittal, a beneficial holder
of Units will have been deemed to have made an instruction to brokers, dealers,
commercial banks, trust companies, custodians and similar persons or entities
whose names, or the names of whose nominees, appear as the Registered Owner of
the Units referred to in this Letter of Transmittal, to tender such Units to
the Purchaser on behalf of such beneficial holder.

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 Section 2 ("Proration;
Acceptance for Payment and Payment for Units") and Section 14 ("Conditions of
the Offer") of 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. Except as stated in Section 4
("Withdrawal Rights") of the Offer to Purchase, this tender is irrevocable,
provided Units tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date.
<PAGE> 2
================================================================================
SIGNATURE BOX

Please sign exactly as your name is printed (or corrected) above. For joint
owners, each joint owner must sign. All signatures must be guaranteed by an
Eligible Institution. (See Instruction 2.) The signatory hereto hereby
certifies under penalties of perjury the Taxpayer Identification Number (i.e.,
the signatory's social security number) furnished in the blank provided in this
Signature Box and the statements in Box A, Box B and, if applicable, Box C.
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the undersigned owns (or beneficially owns)
the Units tendered hereby and has full power and authority to validly tender,
sell, assign, transfer, convey and deliver the Units tendered hereby and that
when the same are accepted for payment 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, such Units will not
be subject to any adverse claims, the transfer and assignment contemplated
herein are in compliance with all applicable laws and regulations, and that
upon such transfer and assignment the undersigned will not own less than 250
Units (100 Units in the case of an IRA or KEOGH or similar account). 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 Section 4 ("Withdrawal Rights") of the Offer
to Purchase, this tender is irrevocable.

X
-------------------------------------------------------------------------------
(Signature of Owner) (Date)

X
-------------------------------------------------------------------------------
Taxpayer Identification Number of Owner (other than IRA's)

X
-------------------------------------------------------------------------------
(Signature of Co-Owner) (Date)

-------------------------------------------------------------------------------
(Title)
X
-------------------------------------------------------------------------------
(If the Units are held in a brokerage account, insert name of brokerage firm)

Telephone (Day) ( ) Telephone (Eve) ( )
--------------------- --------------------

GUARANTEE OF SIGNATURE (SEE INSTRUCTION 2):

Name of Eligible Institution:
---------------------------------------------------
Authorized Signature:
-----------------------------------------------------------

================================================================================
TAX CERTIFICATIONS
================================================================================
BOX A
SUBSTITUTE FORM W-9
(See Instruction 3)

The person signing this Letter of Transmittal hereby certifies the following to
the Purchaser under penalties of perjury:

(i) The Taxpayer Identification Number ("TIN") furnished in the space provided
for that purpose in the Signature Box of this Letter of Transmittal is the
correct TIN of the Unitholder, unless the Units are held in an Individual
Retirement Account ("IRA"); or if this box [ ] is checked, the Unitholder has
applied for a TIN. If the Unitholder has applied for a TIN, a TIN has not been
issued to the Unitholder, and either: (a) the Unitholder has mailed or
delivered an application to receive a TIN to the appropriate Internal Revenue
Service ("IRS") Center or Social Security Administration Office, or (b) the
Unitholder intends to mail or deliver an application in the near future, it is
hereby understood that if the 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

(ii) Unless this box [ ] is checked, the Unitholder is not subject to backup
withholding either because the Unitholder (a) is exempt from backup
withholding, (b) has not been notified by the IRS that the Unitholder is subject
to backup withholding as a result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Unitholder is no longer
subject to backup withholding.

Note: Place an "X" in the box in (ii) above, if you are unable to certify that
the Unitholder is not subject to backup withholding.
================================================================================

================================================================================
BOX B
FIRPTA AFFIDAVIT
(See Instruction 3)

Under Section 1445(c)(5) of the Code and Treas. Reg. 1.1445-IIT(d), a transferee
must withhold tax equal to 10% of the amount realized with respect to certain
transfers of an interest in a partnership if 50% or more of the value of its
gross assets consists of U.S. real property interests and 90% or more of the
value of its gross assets consists of U.S. real property interests plus cash or
cash equivalents, and 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:

(i) Unless this box [ ] is checked, the Unitholder, if an individual, is a U.S.
citizen or a resident alien for purposes of U.S. income taxation, and if other
than an individual, is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the Code and Income Tax
Regulations);

(ii) the Unitholder's U.S. social security number (for individuals) or employer
identification number (for non- individuals) is correct as furnished in the
blank provided for that purpose on the back of this Letter of Transmittal; and

(iii) the Unitholder's home address (for individuals), or office address (for
non-individuals), is correctly printed (or corrected) on the back of this Letter
of Transmittal. If a corporation, the jurisdiction of incorporation is
_________________________.

The person signing 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 C
SUBSTITUTE FORM W-8
(See Instruction 3)

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

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

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

(iii) 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.
================================================================================

For Units to be accepted for purchase, Unitholders should complete and sign
this Letter of Transmittal in the Signature Box and return it in the
self-addressed, postage-paid envelope enclosed, or by hand or overnight courier
to: The Herman Group, Inc., 2121 San Jacinto Street, 26th Floor, Dallas, TX
75201, or by Facsimile to: (214) 999-9323 or (214) 999-9348. Delivery of this
Letter of Transmittal or any other required documents to an address other than
the one set forth above or transmission via facsimile other than as set forth
above does not constitute valid delivery.

PLEASE CAREFULLY READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL
AND BOXES A, B AND C ABOVE.
<PAGE> 3
INSTRUCTIONS FOR COMPLETING LETTER OF TRANSMITTAL
Forming Part of the Terms and Conditions of the Offer

================================================================================
FOR ASSISTANCE IN COMPLETING THE LETTER OF TRANSMITTAL, CALL:
THE HERMAN GROUP, INC. AT (800) 992-6174
================================================================================

1. DELIVERY OF LETTER OF TRANSMITTAL. For convenience in responding to the
Offer, a self-addressed, postage-paid envelope had been enclosed with the
Offer to Purchase. However, to ensure receipt of the Letter of
Transmittal, it is suggested that you use an overnight courier or, if the
Letter of Transmittal is to be delivered by United States mail, that you
use certified or registered mail, return receipt requested.

To be effective, a duly completed and signed Letter of Transmittal,
together with the certificate(s) representing Units, must be received by
the Information Agent/Depositary at the address (or facsimile number) set
forth below before the Expiration Date, 12:00 Midnight, New York City Time
on Wednesday, November 27, 1996, unless extended. If you are not the
Registered Owner of the Units, but instead are the beneficial holder of
the Units, the certificate(s) representing the Units do not need to be
delivered to the Information Agent/Depositary. Your execution and delivery
of this Letter of Transmittal will serve as an instruction to the
Registered Owner to tender your Units pursuant to the Offer and deliver
(or make appropriate arrangements for delivery of) the certificate(s)
representing your Units to the Information Agent/Depositary. IF TENDERING
BY FACSIMILE, PLEASE TRANSMIT BOTH THE FRONT AND BACK OF THE LETTER OF
TRANSMITTAL AND THE CERTIFICATE(S) REPRESENTING UNITS AND THE TAX
CERTIFICATION PAGE AND MAIL THE ORIGINAL COPIES OF SUCH PAGES AND
DOCUMENTS TO THE INFORMATION AGENT/DEPOSITARY AT THE ADDRESS LISTED
ABOVE. LETTERS OF TRANSMITTAL WHICH HAVE BEEN DULY EXECUTED, BUT WHERE NO
INDICATION IS MARKED IN THE "NUMBER OF UNITS TENDERED" COLUMN, SHALL BE
DEEMED TO HAVE TENDERED ALL UNITS PURSUANT TO THE OFFER. Tenders of less
than all Units owned by a Unitholder that would result in such Unitholder
holding less than 250 Units (100 Units in the case of an IRA or Keogh
Plan) or tenders of fractional Units will not be accepted.

BY MAIL/HAND OR OVERNIGHT DELIVERY: THE HERMAN GROUP, INC.
2121 San Jacinto Street, 26th Floor
Dallas, Texas 75201

BY FACSIMILE: (214) 999-9323
or
(214) 999-9348

FOR ADDITIONAL INFORMATION CALL: (800) 992-6174

THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING UNITHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
INFORMATION AGENT/DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.

If Units are held in a brokerage account, please insert the name of the
brokerage firm in the space provided in the Signature Box on the back of
the Letter of Transmittal. All tendering holders of Units, by execution
of this Letter of Transmittal or facsimile hereof, waive any right to
receive any notice of the acceptance of their Units for payment.

2. SIGNATURES. All Unitholders must sign in the Signature Box on the back
of the Letter of Transmittal. If the Units are held in the names of two
or more persons, all such persons must sign the Letter of Transmittal.
When signing as a general partner, corporate officer, attorney-in-fact,
executor, custodian, administrator or guardian, please give full title and
send proper evidence of authority satisfactory to the Purchaser with this
Letter of Transmittal. With respect to most trusts, the Partnership will
generally require only the named trustee to sign the Letter of
Transmittal. For Units held in a custodial account for minors, only the
signature of the custodian will be required.

For IRA custodial accounts, the beneficial owner should return the
executed Letter of Transmittal to the Information Agent/Depositary as
specified in Instruction 1 herein. Such Letter of Transmittal will then
be forwarded by the Information Agent/Depositary to the custodian for
additional execution. Such Letter of Transmittal will not be considered
duly completed until after it has been executed by the custodian.

If any tendered Units are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of certificates.

ALL SIGNATURES ON THE LETTER OF TRANSMITTAL MUST BE GUARANTEED BY A
COMMERCIAL BANK, SAVINGS BANK, CREDIT UNION, SAVINGS AND LOAN ASSOCIATION
OR TRUST COMPANY HAVING AN OFFICE, BRANCH OR AGENCY IN THE UNITED STATES,
A BROKERAGE FIRM THAT IS A MEMBER FIRM OF A REGISTERED NATIONAL SECURITIES
EXCHANGE OR A MEMBER OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS,
INC. (EACH, AN "ELIGIBLE INSTITUTION").

3. U.S. PERSONS. A Unitholder who or which is a United States citizen OR a
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 Code and Income Tax
Regulations, should follow the instructions below with respect to
certifying Boxes A and B (on the reverse side of the Letter of
Transmittal).

TAXPAYER IDENTIFICATION NUMBER. To avoid 31% federal income tax backup
withholding, the Unitholder must furnish his, her or its TIN in the blank
provided for that purpose in the Signature Box on the back of the Letter
of Transmittal and certify under penalties of perjury Box A, B and, if
applicable, Box C. In the case of an individual person, such person's
social security number is his or her TIN.

(Continued on Back)
<PAGE> 4
WHEN DETERMINING THE TIN TO BE FURNISHED, PLEASE REFER TO THE FOLLOWING NOTE AS
A GUIDELINE:

NOTE: INDIVIDUAL ACCOUNTS should reflect their own TIN.
JOINT ACCOUNTS should reflect the TIN of the person whose name
appears first. TRUST ACCOUNTS should reflect the TIN assigned
to the Trust. IRA CUSTODIAL ACCOUNTS should reflect the TIN
of the custodian. CUSTODIAL ACCOUNTS FOR THE BENEFIT OF
MINORS should reflect the TIN of the minor. CORPORATIONS OR
OTHER BUSINESS ENTITIES should reflect the TIN assigned to
that entity. If you need additional information, please see
the enclosed copy of the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.

SUBSTITUTE FORM W-9 - BOX A.

(i) In order to avoid 31% federal income tax backup withholding, the
Unitholder must provide to the Purchaser in the blank provided for
that purpose in the Signature Box on the back of the Letter of
Transmittal the Unitholder's correct TIN and certify, under
penalties of perjury, that such Unitholder is not subject to such
backup withholding, The TIN being provided on the Substitute Form
W-9 is that of the registered Unitholder as indicated in the
Signature Box on the back of the Letter of Transmittal. If a
correct TIN is not provided, penalties may be imposed by the 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.

(ii) DO NOT CHECK THE BOX IN BOX A, PART (ii), UNLESS YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.

FIRPTA AFFIDAVIT - BOX. B. To avoid withholding of tax pursuant to
Section 1445 of the Code, each Unitholder who or which is a United States
Person (as defined in Instruction 3 above) must certify, under penalties
of perjury, the Unitholder's TIN and address, and that the 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. CHECK THE BOX
IN BOX B, PART (ii) ONLY IF YOU ARE NOT A U.S. PERSON, AS DESCRIBED
THEREIN.

4. FOREIGN PERSONS - BOX C. In order for a Unitholder who is a foreign
person (i.e., not a United States Person as defined in Instruction 3
above) to qualify as exempt from 31% backup withholding, such foreign
Unitholder must certify, under penalties of perjury, the statement in Box
C of this Letter of Transmittal attesting to that foreign person's status
by checking the box in such statement. UNLESS SUCH BOX IS CHECKED, SUCH
FOREIGN PERSON WILL BE SUBJECT TO 31% WITHHOLDING OF TAX UNDER SECTION
1445 OF THE CODE.

5. CONDITIONAL TENDERS. No alternative, conditional or contingent tenders
will be accepted.

6. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of a Letter
of Transmittal will be determined by the Purchaser and such determination
will be final and binding. The Purchaser's interpretation of the terms
and conditions of the Offer (including these instructions for the Letter
of Transmittal) also will be final and binding. The Purchaser will have
the right to waive any irregularities or conditions as to the manner of
tendering. Any irregularities in connection with tenders must be cured
within such time as the Purchaser shall determine unless waived by it.

The Letter of Transmittal will not be valid unless and until any
irregularities have been cured or waived. Neither the Purchaser nor the
Information Agent/Depositary is under any duty to give notification of
defects in a Letter of Transmittal and will incur no liability for
failure to give such notification.

7. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) (including
Depositary Receipts) representing Units has been lost, destroyed or
stolen, the Unitholder should promptly notify the Information
Agent/Depositary. The Unitholder will then be instructed as to the steps
that must be taken in order to replace the certificate(s).

8. ASSIGNEE STATUS. Assignees must provide documentation to the Information
Agent/Depositary which demonstrates, to the satisfaction of the
Purchaser, such person's status as an assignee.

9. INADEQUATE SPACE. If the space provided herein is inadequate, the
numbers of Units and any other information should be listed on a separate
schedule attached hereto and separately signed on each page thereof in
the same manner as this Letter of Transmittal is signed.

Questions and requests for assistance may be directed to the Information
Agent/Depositary at its address and telephone number listed below. Additional
copies of the Offer to Purchase, the Letter of Transmittal and other tender
offer materials may be obtained from the Information Agent as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also
contact your broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.

The Information Agent/Depositary for the Offer is:

[THE HERMAN GROUP INC. LOGO]

2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
or
Call Toll-Free (800) 992-6174

<PAGE> 1

ACORN HILL PARTNERS L.L.C.
1301 Avenue of the Americas
38th Floor
New York, New York 10019

October 30, 1996

$10 PER UNIT OFFER TO PURCHASE

To Unitholders in Aetna Real Estate Associates, L.P.:

ACORN HILL PARTNERS L.L.C., A DELAWARE LIMITED LIABILITY COMPANY
(THE "PURCHASER"), IS OFFERING TO PURCHASE UP TO 3,176,136 OF THE ISSUED AND
OUTSTANDING LIMITED PARTNERSHIP DEPOSITARY UNITS (THE "UNITS") OF AETNA REAL
ESTATE ASSOCIATES, L.P. (THE "PARTNERSHIP") FOR A CASH PURCHASE PRICE OF $10
PER UNIT, NET TO THE SELLER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET
FORTH IN THE ATTACHED OFFER TO PURCHASE DATED OCTOBER 30, 1996 AND THE RELATED
LETTER OF TRANSMITTAL (WHICH TOGETHER CONSTITUTE THE "OFFER").

Unless extended by the Purchaser, the Offer is effective until
midnight, New York City time, on November 27, 1996. The Offer is not
conditioned upon any minimum number of Units being tendered; however, tenders
of less than all Units owned by a Unitholder that would result in such
Unitholder holding less than 250 Units (100 Units in the case of Individual
Retirement Accounts and Keogh Plans) or tenders of fractional Units will not be
accepted.

The materials included in this package include important
information concerning the Purchaser, the terms and conditions to the Offer,
tax implications and instructions for tendering your Units. It is important
that you take some time to read carefully the enclosed Offer to Purchase, the
Letter of Transmittal and other accompanying materials in order to evaluate the
Offer being made by the Purchaser.

In reviewing the Offer, please note:

o Offer is a Premium to $8.97 per Unit Weighted Average Secondary
Market Price.

$8.97 per Unit was the weighted average selling price for
Units in the limited secondary market for the two months
ended July 31, 1996. Unitholders are advised, however,
that such amount is not necessarily indicative of value.

o No Commissions and No Transfer Fees.

The Purchaser will pay any transfer fees charged by the
Partnership in connection with transferring the ownership
of your Units pursuant to the Offer and commissions in
connection with tendering your Units pursuant to the
Offer.

o No More K-1 Reporting Costs if You Sell All of Your Units.

If you sell all of your Units you will avoid the expense,
delay, and complications in filing complex tax returns
which result from an ownership of Units.

You must decide whether to tender your Units based on your own
particular circumstances, including your judgment of the value of your Units
taking into account their upside potential and risks. You should consult with
your advisors about the financial, tax, legal and other implications to you of
accepting the Offer.

If you desire additional information regarding the Offer or need
assistance in tendering your Units, you may call The Herman Group, Inc., which
is acting as Information Agent/Depositary for the Offer, at (800) 992-6174.
Informed and courteous agents are available to assist you.

ACORN HILL PARTNERS L.L.C.

<PAGE> 1
AETNA REAL ESTATE ASSOCIATES, L.P.
3 World Financial Center - 29th Fl.
New York, N.Y. 10285

Personal and Confidential
Brent Donaldson
Liquidity Fund
2200 Powell Street, Suite 700
Emoryville, CA 96408

Dear Mr. Donaldson:

The purpose of this letter is to set forth our understanding with
regard to any proposed acquisition of outstanding units of limited partnership
interests ("Units") of Aetna Real Estate Associates, L.P., a Delaware limited
partnership (the "Partnership") from holders of Units (each, a "Unitholder" and
collectively, the "Unitholders") by Liquidity Financial Group ("you") or any
person who is your Affiliate (as defined below).

In response to your request dated June 6, 1996 and in consideration of
the agreements set forth in this letter agreement, the Partnership agrees to
provide you a current list of the names and addresses of the Unitholders along
with the number of Units owned by each of them is a computer readable form
reasonably requested by you. You agree that you may only use the list to
acquire up to 25% (including Units acquired through all other means) of the
Partnership's outstanding Units.

You represent and warrant that on the date hereof you beneficially own
not more than five thousand (5,000) Units. You also agree that prior to the
second anniversary of the date of this letter agreement, neither you nor any
person who is your Affiliate (as defined under Rule 405 of the Securities Act
of 1933, as amended) and, in addition including any person you or your
affiliate has an advisory relationship with who you will procure to be bound by
the terms of this agreement) will, without the prior written consent of the
Partnership, which may be withheld for any reason, directly or indirectly, (i)
in any manner including, without limitation, by tender offer (whether or not
pursuant to a filing made with the Securities and Exchange Commission),
acquire, attempt to acquire or make a proposal to acquire, directly or
indirectly, more than 25% (including Units acquired through all other means) of
the outstanding Units of the Partnership from any Unitholder, Unitholders or
otherwise, (ii) seek or propose to enter into, directly or indirectly, any
merger, consolidation, business combination, sale or acquisition of assets,
liquidation, dissolution or other similar transaction involving the
Partnership, (iii) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" or "consents" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) to vote, or seek to
advise or influence any person with respect to the voting of any voting
securities of the Partnership, (iv) form, join or otherwise participate in a
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) with respect to any voting securities
of the Partnership, (v) form, join or otherwise participate in a "group"
(within the meaning of Section 13(d)(e) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) with respect to any voting securities of the
Partnership, except that those affiliates bound by this agreement will not be
deemed to have violated this agreement and formed a "group" solely by acting in
accordance with this agreement, (vi) disclose to any third party any intention,
plan or arrangement inconsistent with the terms of this letter agreement or
(vii) loan money to, advise, assist or encourage any person in connection with
any action inconsistent with the terms of this letter agreement.

<PAGE> 2
Page 2

You also agree during such two year period that the Partnership shall
be entitled in its absolute sole discretion to deny any proposal or request,
directly or indirectly, to amend, waive or terminate any provision of this
letter agreement. In addition, you agree that you will notify the Partnership
at least five days before initiating any communication with Unitholders and
provide the Partnership a copy of such communication (if written) with such
notice.

You have advised us that, if requested by us, you will incorporate in
any communication with Unitholders a statement as to the net asset value per
unit as determined by the Partnership. In addition, if you commence a tender
offer for less than 5% of the outstanding Units, you will include verbatim the
following language in any such communication:

"TENDER OFFERS OF THIS NATURE ARE NOT REQUIRED TO COMPLY WITH CERTAIN
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION.
Accordingly, this tender offer does not need to comply with certain
disclosure requirements and rules governing tender offers set forth in
the Securities Exchange Act of 1934."

In addition, you hereby represent, warrant and covenant to the
Partnership that any tender offer to purchase Units commenced by you will be
conducted in compliance with Section 14(e) (misleading statements), Rule 14d-7
(additional withdrawal rights), Rule 14d-8 (pro rata requirements), Rule 14c-1
(unlawful tender offer practices) and Rule 14e-3 (non-public information) of
the Exchange Act, notwithstanding that such tender offer may be for less than
5.0% of the outstanding Units.

You understand that the general partners of the Partnership may
consider from time to time selling all or substantially all of the assets of
the Partnership or entering into any other transaction determined by the
general partners to be in the best interests of the Unitholders and the
Partnership. The result of any such transaction, if approved by a majority
vote of the Unitholders, might be the dissolution and liquidation of the
Partnership in accordance with the partnership agreement. Accordingly, in
order to avoid disrupting any possible sale of all or substantially all of the
Partnership's assets or any other transaction determined by the general
partners to be in the best interest of the Unitholders and the Partnership and
any required vote of Unitholders, you agree that, prior to the two-year
anniversary of the date of this letter agreement, all Units obtained by you
pursuant to any means will be voted by you on all issues in the same manner as
by the majority of all other Unitholders who vote on any such proposal.

If at any time during such two year period you are approached by any
third party concerning participation in any transaction involving the assets,
businesses or securities of the Partnership or involving any action
inconsistent with the terms of this letter agreement, you will promptly inform
the Partnership of the nature of any such contact and the parties thereto and
you may inform such third party that this letter agreement requires you to so
notify the Partnership. You shall not, without the prior written consent of
the Partnership, disclose to any third party the list of Unitholders' names,
addresses and number of Units held that was provided to you by the Partnership.

You will not sell any units owned by you prior to the second
anniversary of the date of this letter agreement, unless each buyer or
transferee agrees in writing with the Partnership to be bound by the terms and
conditions of this letter agreement until such second anniversary.

We each hereby acknowledge that we are aware, and that we will advise
our respective Affiliates, of our respective responsibilities under the
securities laws. We each agree that the other of us or our respective
Affiliates, as the case may be, shall be entitled to equitable relief,
including injunctive relief and specific

<PAGE> 3
Page 3

performance, in the event of any breach of the provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

In case any provision in or obligation under this letter agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

This letter agreement shall be governed by the laws of the State of
New York without giving effect to principles of conflicts of law thereof. This
letter agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together constitute one and the same instrument.

If you agree with the foregoing, please sign and return two copies of
this letter agreement, which will constitute our agreement with respect to the
subject matter of this letter agreement.

Very truly yours,

AREA GP Corporation

By: /s/ Robert J. Hellman
---------------------------------
Name: Robert J. Hellman
Title: Vice President

Confirmed and agreed to as of
the date first above written

LIQUIDITY FINANCIAL GROUP

By: /s/ Brent Donaldson
-------------------------------
Name: Brent Donaldson
Title: President

<PAGE> 1

ASSUMPTION AGREEMENT (this "Agreement"), dated as of October
30, 1996, between Liquidity Financial Group, L.P., a California limited
partnership ("LFG"), and Acorn Hill Partners L.L.C., a Delaware limited
liability company (the "LLC").

W I T N E S S E T H:

WHEREAS, LFG and Aetna Real Estate Associates, L.P., a
Delaware limited partnership (the "Partnership"), entered into a Letter
Agreement, dated as of August 14, 1996 and amended as of October 8, 1996 (the
"Letter Agreement"), pursuant to which LFG and its Affiliates (as defined
therein) agreed to certain restrictions in exchange for a current list (the
"List") of the names and addresses of the holders of the Partnership's Limited
Partnership Depositary Units (the "Units"); and

WHEREAS, the LLC (i) has retained or will retain Liquidity
Financial Advisors, Inc., an affiliate of LFG, as its financial advisor and
(ii) desires to use the List for purposes consistent with the terms of the
Letter Agreement.

NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the LLC agrees as follows:

1. The LLC hereby agrees to become bound by the Letter
Agreement to the extent LFG is so bound, as if the LLC had executed the Letter
Agreement as of August 14, 1996 and amended as of October 8, 1996; provided,
however, the LLC shall only have liability with respect to its actions or
inactions under the Letter Agreement and shall not be liable for any breach of
any representation, warranty or covenant by LFG or any other party to the
Letter Agreement.

2. Nothing contained herein shall require the LLC to
pay, perform or discharge any liabilities or obligations expressly assumed
hereunder so long as the LLC shall in good faith contest or cause to be
contested the amount or validity thereof.

<PAGE> 2

IN WITNESS WHEREOF, LFG and the LLC have caused this Agreement
to be duly executed as of the date first written above.

ACORN HILL PARTNERS L.L.C.,

By: AP-GP Prom Partners, Inc.,
its managing member

By: /s/ W. Edward Scheetz
--------------------------
Name: W. Edward Scheetz
Title: President

LIQUIDITY FINANCIAL GROUP, L.P.

By: Liquidity Financial Corporation,
its general partner

By: /s/ Brent Donaldson
----------------------------
Name: Brent Donaldson
Title: President

<PAGE> 1
OPTION AGREEMENT

AGREEMENT, dated as of October 30, 1996 (this "Agreement"), by
and between Liquidity Financial Group, L.P., a California limited partnership
(the "Optionee"), and Apollo Real Estate Investment Fund II, L.P., a Delaware
limited partnership (the "Fund").

W I T N E S S E T H:

WHEREAS, the Fund owns 29.23% of the outstanding limited
liability company interests (the "Acorn Hill Interests") of Acorn Hill LFG
L.L.C., a Delaware limited liability company ("Acorn Hill LFG");

WHEREAS, Acorn Hill LFG owns 17.1% of the outstanding limited
liability company interests (the "Bidder Interests") of Acorn Hill Partners
L.L.C., a Delaware limited liability company (the "Bidder");

WHEREAS, the Bidder has commenced or will commence a tender
offer (the "Tender Offer") to acquire up to 3,176,136 of the issued and
outstanding Limited Partnership Depositary Units (the "Units"), or
approximately 25%, of Aetna Real Estate Associates, L.P., a Delaware limited
partnership (the "Target"), at a price of $10 per Unit; and

WHEREAS, the Fund desires to grant to the Optionee an option
to acquire up to 100% of the Fund's Acorn Hill Interests (the "Option
Interests"), upon the terms and subject to the conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Optionee and the Fund hereby agree as follows:

1. Grant of the Option. The Fund hereby grants to the Optionee
the right to purchase (the "Option") all or any part of the Option Interests
from the Fund exercisable from the date Bidder accepts for payment Units
tendered pursuant to the Tender Offer until that date which is six months after
the date the Option becomes exercisable (the "Option Period"), at a purchase
price (the "Purchase Price") equal to five percent (5%) of the aggregate
consideration paid and expenses incurred by the Bidder for the Units in the
Tender Offer together with interest at a rate of 20% per annum based on a year
of 366 days (calculated from and after the date of the closing of the Tender
Offer through and including the date of the closing of the Option). If
Optionee does not exercise the entire Option, the Purchase Price shall be
reduced pro rata in accordance with the percentage of the entire Option
exercised by the Optionee.

<PAGE> 2
2. Exercise of the Option. The Option to purchase the Option
Interests shall be exercisable in whole or in part on the terms and subject to
the conditions hereinafter set forth:

(a) In the event that the Optionee is entitled to and
wishes to exercise the Option, the Optionee shall, during the Option Period,
send a written notice (the "Exercise Notice") to the Fund identifying the date
and place for the closing (the "Closing") of the Option Interests to be
purchased. Delivery of the Exercise Notice prior to the expiration of the
Option Period shall be sufficient to entitle the Optionee to purchase the
Option Interests notwithstanding that the Closing may occur after the
expiration of the Option Period; provided, however, that the Closing shall not
be more than fifteen (15) business days from the date that the Exercise Notice
is received by the Fund unless another date is agreed upon in writing by the
Fund and the Optionee.

(b) Payment of the Purchase Price for the Option
Interests to be acquired pursuant to the exercise of the Option will be made by
the Optionee at the Closing by delivering to the Fund, by wire transfer or by
certified check payable to the order of the Fund, an amount equal to the
Purchase Price.

3. Transferability of the Option. The Option may not be
assigned, transferred, or otherwise disposed of, or pledged or hypothecated or
in any way be subject to execution, attachment or other process. Any
assignment, transfer, pledge, hypothecation or other disposition of the Option
attempted contrary to the provisions of this Agreement or any levy, execution,
attachment or other process attempted upon the Option will be null and void and
without effect.

4. Sale of Option Interests. Except as provided in this
Agreement, the Fund shall not, without the express written consent of the
Optionee, during the Option Period, (i) sell or otherwise dispose of any or all
of the Option Interests, or (ii) convert such Option Interests into cash,
capital stock or other securities.

5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Acorn Hill Interests by reason of dividends, split-ups,
recapitalizations, combinations, exchanges of interests or the like, the type
and number of interests of Acorn Hill Interests subject to the Option and the
Purchase Price shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional Acorn Hill Interests become
outstanding as a result of any such change after the date of this Agreement,
the Option shall be adjusted so that, after such change and together with the
Acorn Hill Interests previously outstanding pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing change in Acorn Hill
Interests), it equals 29.23% of the number of Acorn Hill Interests then
outstanding.

6. Investment. The Optionee acknowledges that the Option
Interests are not being offered pursuant to a registration statement under the
Securities Act of 1933, as amended (the "Act"), or any other securities laws.
The Optionee acknowledges that the Option Interests are being acquired for the
Optionee's own account for investment purposes only and not with a view to, or
for sale in connection with, any public distribution thereof and will not sell,
or offer to sell or otherwise dispose of, any interest in the Option Interests
acquired by the Optionee in violation of the Act. The Optionee has had
substantial experience in business and financial matters and in making
investments of the type contemplated by this Agreement, is capable of
evaluating the merits and risks of the purchase of the Option Interests and is
able to bear the economic risks of such investment.

-2-
<PAGE> 3
7. Representations and Warranties of the Fund. The Fund hereby
represents and warrants to the Optionee as follows:

(a) Organization. The Fund is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware, has all requisite power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution and delivery by
the Fund of this Agreement and the performance by the Fund of its obligations
hereunder have been duly and validly authorized by the general partner of the
Fund and no other partnership actions on the part of the Fund are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.

(b) Authorization. This Agreement has been duly and validly
executed and delivered by the Fund and constitutes a valid and binding
agreement enforceable against the Fund in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

(c) Title to Option Interests. As of the date hereof,
the Fund is the legal, beneficial and record owner of the Option Interests.
The Fund has good and marketable title to all of the Option Interests, free and
clear of any liens, encumbrances, equities, restrictions and claims of every
kind and nature. No person other than the Fund has any interest in or right to
acquire any interest in any of the Option Interests. There are no rights,
options, convertible or exchangeable, instruments or interests or commitments,
agreements, arrangements or undertakings of any kind to which the Fund is a
party or by which the Fund is bound obligating the Fund to deliver, sell, or
cause to be sold or delivered, the Option Interests.

(d) No Conflicts. Except for authorizations, consents
and approvals as may be required hereunder, (i) no filing with, and permit,
authorization, consent or approval of any state or federal public body or
authority is necessary for the execution of this Agreement by the Fund and the
consummation by the Fund of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by the Fund and the
consummation by the Fund of the transactions contemplated hereby will (A)
conflict with any or result in any breach of any provision of the
organizational documents of the Fund, (B) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any indenture, license, contract,
agreement or other instrument or obligation to which the Fund is a party or by
which it may be bound, or (C) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Fund.

8. Representations and Warranties of the Optionee. The Optionee
hereby represents and warrants to the Fund as follows:

(a) Organization. The Optionee is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of California, has all requisite power and authority to execute and deliver
this Agreement and perform its obligations hereunder. The execution and
delivery by the Optionee of this Agreement and the performance by the Optionee
of its

-3-
<PAGE> 4
obligations hereunder have been duly and validly authorized by the general
partner of the Optionee and no other partnership actions on the part of the
Optionee are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.

(b) Authorization. This Agreement has been duly and
validly executed and delivered by the Optionee and constitutes a valid and
binding agreement enforceable against the Optionee in accordance with its
terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

(c) No Conflicts. Except for authorizations, consents
and approvals as may be required hereunder, (i) no filing with, and permit,
authorization, consent or approval of any state or federal public body or
authority is necessary for the execution of this Agreement by the Optionee and
the consummation by the Optionee of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by the Optionee and
the consummation by the Optionee of the transactions contemplated hereby will
(A) conflict with any or result in any breach of any provision of the
organizational documents of the Optionee, (B) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
indenture, license, contract, agreement or other instrument or obligation to
which the Optionee is a party or by which it may be bound, or (C) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Optionee.

9. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Option Interests
shall terminate upon the expiration of the Option Period.

10. Notices. Notices relating to this Agreement shall be in
writing and delivered in person or by hand delivery or certified mail, return
receipt requested, postage prepaid, as follows:

If to the Optionee:

Liquidity Financial Group, L.P.
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson

with a copy to:

Morgan, Lewis & Bockius
1800 M Street N.W.
Washington, D.C. 20036
Attention: Lloyd Feller, Esq.

-4-
<PAGE> 5

If to the Fund:

c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Fax: (212) 261-4060
Attention: W. Edward Scheetz
Richard Mack

with a copy to:

Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Fax: (212) 856-7823
Attention: Peter M. Fass, Esq.
Steven L. Lichtenfeld, Esq.

or to such other address as either party may designate by written notice to the
other in accordance with this provision, and is hereby deemed to have been
given or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, three (3) days
after mailing.

11. Benefits of Agreement. This Agreement shall inure to the
benefit and shall be binding upon the successors, heirs, legal representatives
and permitted assigns of the parties hereto.

12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the principles thereof respecting conflicts of laws.

13. Holidays. Whenever any payment to be made hereunder shall be
stated to be due on a Saturday, Sunday or any national holiday, such payment
may be made on the next succeeding business day.

14. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

15. Entire Understanding and Release. (a) This Agreement
contains the entire agreement between the Fund and the Optionee and supersedes
any and all prior agreements, understandings and undertakings, whether written
or oral, between the Fund and its officers, directors, employees or agents on
the one hand, and the Optionee on the other hand. No representations,
warranties, covenants or agreements, except those expressly set forth in this
Agreement will be deemed to have been made by either the Fund and its officers,
directors, employees or agents on the one hand, and the Optionee on the other
hand.

-5-
<PAGE> 6
(b) The Optionee hereby releases, acquits and forever
discharges the Fund and its partners, employees and agents, as well as each of
their respective heirs, personal representatives, successors and assigns, from
any and all losses, damages, claims, demands, debts, actions, causes of action,
suits, contracts, agreements, obligations, accounts, defenses and liabilities
of any kind or character whatsoever, known or unknown, suspected or
unsuspected, in contract or in tort, at law or in equity, which the Optionee
ever had, now has, or might hereafter have against the Fund and its partners,
employees and agents for or by reason of any matter, cause or thing whatsoever
which relates in any manner, in whole or in part, directly or indirectly, to
any agreement, understanding, or undertaking of the Fund and its partners,
employees, and agents in connection with the transactions contemplated by this
Agreement.

16. Severability. If any of the provisions of this Agreement
shall be held by a court of competent jurisdiction to be void or unenforceable,
the balance of the provisions of this Agreement shall remain in effect and be
enforced so as to give effect as nearly as possible to the intentions of the
Fund and the Optionee.

17. Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed an original.

-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

LIQUIDITY FINANCIAL GROUP

By: Liquidity Financial Corporation,
its general partner

By: /s/ Brent Donaldson
---------------------------------------------
Name: Brent Donaldson
Title: President

APOLLO REAL ESTATE INVESTMENT FUND II, L.P.

By: Apollo Real Estate Advisors II, L.P.,
its general partner

By: Apollo Real Estate Capital Advisors II, Inc.,
its general partner

By: /s/ W. Edward Scheetz
---------------------------------------------
Name: W. Edward Scheetz
Title: Vice President

<PAGE> 1
ACORN HILL PARTNERS L.L.C.
1301 AVENUE OF THE AMERICAS
38TH FLOOR
NEW YORK, NY 10019

October 28, 1996

Aetna Real Estate Associates, L.P.
AREA GP Corporation
3 World Financial Center
29th Floor
New York, New York 10285

Attention: Paul L. Abbott

Re: Contemplated Tender Offer

Gentlemen:

Acorn Hill Partners L.L.C. ("Bidder") anticipates making a tender offer
on Schedule 14D-1 to investors in Aetna Real Estate Associates, L.P. (the
"Partnership"), of which AREA GP Corporation is a general partner ("you").
Bidder will be advised by Liquidity Financial Advisors (LFA) and, therefore,
will agree to become subject to the terms of the Letter Agreement dated August
14, 1996 between the Partnership and an affiliate of LFA. Bidder hereby
requests your agreement to recognize Bidder, or cause Bidder to be recognized,
as a Registered Owner of Units upon Bidder's payment for Units pursuant to the
contemplated tender offer, subject to compliance with the Partnership
Agreement, applicable partnership law and the requirements of the transfer
agent for the Partnership's Units. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Offer to
Purchase, which is an exhibit to the Schedule 14D-1.

Please sign below to indicate your agreement and covenant to effect the
foregoing terms.

Very truly yours,

ACORN HILL PARTNERS L.L.C.

By: AP-GP Prom Partners Inc., its Managing
Member

By: /s/ Richard Mack
-----------------------------------------
Name: Richard Mack
Title: Vice President

Accepted and Agreed to this
29th day of October, 1996

AREA GP Corporation

By: /s/ Paul L. Abbott
---------------------------
Name: Paul L. Abbott
Title: President