US REALTY PARTNERS LTD PARTNERSHIP, 10KSB, 2000-03-30

US REALTY PARTNERS LTD PARTNERSHIP
10KSB, 2000-03-30
REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS

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March 21, 2000

United States
Securities and Exchange Commission
Washington, D.C. 20549

RE: U.S. Realty Partners Limited Partnership
Form 10-KSB
File No. 0-15656

To Whom it May Concern:

The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
Corporate General Partner.

Please do not hesitate to contact the undersigned with any questions or comments
that you might have.

Very truly yours,

Stephen Waters
Real Estate Controller

<PAGE>

FORM 10-KSB - ANNUAL OR TRANSITIONAL REPORT UNDER

SECTION 13 OR 15(d)
(As last amended by 34-31905, eff. 4/26/93)

FORM 10-KSB

(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]

For the fiscal year ended December 31, 1999
or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]

For the transition period from.........to.........

Commission file number 0-15656

U.S. REALTY PARTNERS LIMITED PARTNERSHIP
(Name of small business issuer in its charter)

South Carolina 57-0814502
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) (Identification No.)

55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602

(Address of principal executive offices)

Issuer's telephone number (864) 239-1000

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

None

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.

State issuer's revenues for its most recent fiscal year. $3,105,000

State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.

- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE

None

<PAGE>

PART I

Item 1. Description of Business

U.S. Realty Partners Limited Partnership (the "Partnership" or
"Registrant") was organized as a limited partnership under the laws of South
Carolina on January 23, 1986. The general partner responsible for management of
the Partnership's business is U.S. Realty I Corporation, a South Carolina
corporation (the "Corporate General Partner"). The only other general partner of
the Partnership was N. Barton Tuck, Jr. Mr. Tuck was not an affiliate of the
Corporate General Partner and was effectively prohibited by the Partnership's
partnership agreement (the "Partnership Agreement") from participating in the
management of the Partnership. In June 1999, Mr. Tuck's general partner interest
was purchased by AIMCO Properties, L.P., an affiliate of the Corporate General
Partner. The Corporate General Partner is a subsidiary of Apartment Investment
and Management Company ("AIMCO"). The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2005 unless terminated prior to such
date.

The Registrant is engaged in the business of operating and holding real estate
properties for investment. The Registrant commenced operations on August 26,
1986, and acquired its first property, a newly constructed apartment property,
on August 28, 1986. Prior to September 5, 1986, it acquired an existing
apartment property, a newly constructed shopping center and an existing shopping
center. The Registrant continues to own and operate two of these properties. The
shopping centers were sold on February 1, 1999 and July 2, 1999. See "Item 2.
Description of Properties."

Commencing on August 26, 1986, the Registrant delivered 1,222,000 Depositary
Unit Certificates, representing assignments of limited partnership interests
("DUCs"), to Wheat First Securities, Inc. and received $30,550,000 ($25.00 per
DUC) in proceeds. The DUCs were offered by several underwriters in minimum
investment amounts of 100 DUCs ($25.00 per DUC). The Registrant also received
$16,369,000 as proceeds from a contemporaneous private bond offering. The
Registrant used substantially all of the proceeds from these offerings to
acquire its initial four operating properties.

On April 1, 1993, the Partnership filed for protection under Chapter 11 of the
Federal Bankruptcy Code. The filing was made due to the Partnership's inability
to repay its secured debt due to an insurance company (see "Note E" of financial
statements). On April 23, 1993, the Partnership filed a Reorganization Plan
("the Plan") with the United States Bankruptcy Court for the District of South
Carolina. The significant provision of the Plan was the refinancing of the
secured debt. On July 23, 1993, the Court entered an order confirming the
Partnership's Plan. On January 27, 1994, the Court closed the case.

The Registrant has no employees. Management and administrative services are
provided by the Corporate General Partner and by agents retained by the
Corporate General Partner. With respect to the Partnership's residential
properties these services were provided by affiliates of the Corporate General
Partner for the years ended December 31, 1999 and 1998. With respect to the
Partnership's commercial properties these services were provided by affiliates
of the Corporate General Partner for the nine months ended September 30, 1998.
As of October 1, 1998 the management services were provided by an unaffiliated
party for the commercial properties.

<PAGE>

Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.

There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.

The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the registrant's remaining residential properties. The number and quality of
competitive properties, including those which may be managed by an affiliate of
the Corporate General Partner in such market area, could have a material effect
on the rental market for the apartments at the Registrant's properties and the
rents that may charged for such apartments. While the Corporate General Partner
and its affiliates own and/or control a significant number of apartment units in
the United States, such units represent an insignificant percentage of total
apartment units in the United States and competition for apartments is local.

A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.

Transfer of Control

Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate investment trust, with AIMCO
being the surviving corporation (the "Insignia Merger"). As a result, AIMCO
acquired 100% ownership interest in the Corporate General Partner. The Corporate
General Partner does not believe that this transaction has had or will have a
material effect on the affairs and operations of the Partnership.

<PAGE>

Item 2. Description of Properties

The following table sets forth the Registrant's investments in properties:

Date of
Property Purchase Type of Ownership Use

Governor's Park Apartments 08/29/86 Fee ownership subject to Apartment
Little Rock, Arkansas first mortgage 154 units

Twin Lakes Apartments 08/28/86 Fee ownership subject to Apartment
Palm Harbor, Florida first mortgage 262 units

</TABLE>

Schedule of Properties:

Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
federal tax basis.

<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
-------- ----- ------------ ---- ------ ---------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>

Governor's Park $ 6,368 $ 2,753 5-35 S/L $ 2,010

Twin Lakes 11,149 3,998 5-35 S/L 4,428
------ ------ ------
$17,517 $ 6,751 $ 6,438
====== ====== ======
</TABLE>

See "Note A" of the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy and "Note I - Change in Accounting
Principle".

<PAGE>

Schedule of Property Indebtedness:

The following table sets forth certain information relating to the loan
encumbering the Registrant's properties.

Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
1999 Rate Amortized Date Maturity (2)
---- ---- --------- ---- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>

U.S. Realty
Partnership $ 3,810 10.00% 95 months 08/01/01 (1)
======

</TABLE>

(1) The balance at maturity is directly related to the ability of the
Partnership to make cash flow payments per the mortgage agreement.

(2) See Item 7, Financial Statements - Note D for information with respect to
the Registrant's ability to repay this loan and other specific details
about the loan.

Rental Rates and Occupancy:

Average annual rental rates and occupancy for 1999 and 1998 for each property is
as follows:

Average Annual Average Annual
Rental Rates Occupancy
(per unit)

Property 1999 1998 1999 1998

Governor's Park $6,836 $6,696 95% 91%
Twin Lakes 7,703 7,475 97% 93%

The Corporate General Partner attributes the increase in occupancy at Twin Lakes
Apartments to a strong reputation in the Palm Harbor area concerning customer
service provided by the property's personnel. Management has been able to
maintain a higher standard of service for their tenants than local competition
at lower rental rates. The Corporate General Partner attributes the increase in
occupancy at Governor's Park Apartments to improved conditions in the apartment
industry in the Little Rock area.

As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The
Corporate General Partner believes that all of the properties are adequately
insured. Each property is an apartment complex which leases units for lease
terms of one year or less. No residential tenant leases 10% or more of the
available rental space. All properties are in good condition subject to normal
depreciation and deterioration as is typical for assets of this type and age.

<PAGE>

Schedule of Real Estate Taxes and Rates:

Real estate taxes and rates in 1999 for each property were as follows:

1999 1999
Billing Rate
(in thousands)
Governor's Park $ 63 6.39%
Twin Lakes 180 2.09%

Capital Improvements:
- --------------------

Governor's Park Apartments: The Partnership completed approximately $294,000 in
capital expenditures at Governor's Park Apartments as of December 31 ,1999,
consisting primarily of appliance and floor covering replacements, parking lot
improvements, fencing, and major landscaping. These improvements were funded
primarily from operations. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $46,200. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.

Twin Lakes Apartments: The Partnership completed approximately $192,000 in
capital expenditures at Twin Lakes Apartments as of December 31, 1999,
consisting primarily of floor covering replacements, parking lot improvements,
fencing and major landscaping. These improvements were funded primarily from
operations. The Partnership is currently evaluating the capital improvement
needs of the property for the upcoming year. The minimum amount to be budgeted
is expected to be $300 per unit or $78,600. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.

Item 3. Legal Proceedings

The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.

Item 4. Submission of Matters to a Vote of Security Holders

During the quarter ended December 31, 1999, no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.

<PAGE>

PART II

Item 5. Market for Partnership Equity and Related Partnership Matters

As of December 31, 1999, the number of DUC holders of record was 1.5%. Transfer
of DUCs is subject to certain suitability and other requirements. Due to the
security being delisted during 1990, no public trading market has developed for
the Units and it is not anticipated that such a market will develop in the
future.

No distributions were made in 1999 or 1998. Pursuant to the loan agreement, no
distributions can be made until all long-term debt is repaid.

Several tender offers were made by various parties, including affiliates of the
general partners, during the year ended December 31, 1999. As a result of these
tender offers, AIMCO and its affiliates currently own 475,380 depositary unit
certificate units of limited partnership units in the Partnership representing
approximately 38.90% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Corporate
General Partner because of their affiliation with the Corporate General Partner.

Item 6. Management's Discussion and Analysis or Plan of Operation

The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussions of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.

This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.

Results of Operations

The Registrant's net income for the year ended December 31, 1999 was
approximately $5,010,000 as compared to a net loss of approximately $76,000 for
the year ended December 31, 1998. (See "Note E" of the financial statements for
a reconciliation of these amounts to the Registrant's federal taxable losses).
The increase in net income is primarily attributable to the gain on sale of
discontinued operations of approximately $4,626,000 realized on the sale of The
Gallery-Knoxville and The Gallery-Huntsville. On February 1, 1999, The
Gallery-Knoxville, located in Knoxville, Tennessee, was sold to an unaffiliated
third party for $9,300,000. After closing expenses of approximately $283,000 the
net proceeds received by the Partnership were approximately $9,017,000. On July
2, 1999, The Gallery-Huntsville, located in Huntsville, Alabama, was sold to an
unaffiliated third party for approximately $7,310,000. After closing expenses of
approximately $261,000, the net proceeds received by the Partnership were
approximately $7,049,000. The Partnership used the proceeds from the sale of
both of the properties to pay down the debt encumbering the Partnership's
properties by approximately $15,875,000.

Excluding the impact of the operations and the sale of The Gallery-Knoxville and
The Gallery-Huntsville, the Registrant had a net income of approximately
$128,000 for the year ended December 31, 1999 as compared to a net loss of
approximately $1,478,000 for the year ended December 31, 1998. The increase in
the income from continuing operations for the year ended December 31, 1999 is
primarily the result of both an increase in total revenues and a decrease in
total expenses at the Partnership's residential properties. The increase in
total revenues is attributable to the increase in rental revenue at the
Partnership's residential properties. Rental revenue increased primarily due to
an increase in occupancy and the average rental rates at both Twin Lakes
Apartments and Governor's Park Apartments as noted in "Item 2. Description of
Properties."

The decrease in total expenses is primarily the result of a decrease in interest
expense, slight decreases in operating expense, and general and administrative
expense, which are partially offset by a slight increase in depreciation
expense. The decrease in operating expense is the result of a decrease in
insurance expense as a result of changing insurance carriers late in 1998 which
resulted in lower premiums.

Interest expense decreased as a result of the pay down of the mortgage
encumbering the Partnership's investment properties, with the net proceeds from
the sale of The Gallery-Knoxville and The Gallery-Huntsville as noted above.
General and administrative expense decreased as a result of a decrease in
management reimbursements allowed by the Partnership Agreement and audit fees.
Depreciation expense increased as a result of the capital improvements performed
at both the residential properties as noted in "Item 2. Description of
Properties". Property tax remained relatively constant for the comparable
periods. Also included in general and administrative expenses for the year ended
December 31, 1999 and 1998 are costs associated with the quarterly and annual
communications with investors and regulatory agencies.

Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Corporate General Partner. The effect of the change in 1999 was
to increase net income by approximately $95,000 ($0.08 per depository unit
certificate). The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
Corporate General Partner and affiliates.

As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the Corporate General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.

Liquidity and Capital Resources

All of the Partnership's cash is restricted pursuant to the terms of the
mortgage loan encumbering the Partnership's properties. At December 31, 1999 the
Partnership had approximately $512,000 of restricted cash from both continuing
and discontinued operations as compared to approximately $557,000 of restricted
cash from both continuing and discontinued operations at December 31, 1998. The
Partnership had approximately $1,205,000 of cash provided by operating
activities and approximately $15,566,000 of cash provided by investing
activities which was offset by approximately $16,772,000, of cash used in
financing activities. Cash provided by investing activities consisted of
proceeds from the sale of the two commercial properties (see discussion above)
partially offset by property improvements and replacements and net deposits to
restricted escrows. Cash used in financing activities consisted primarily of the
partial repayment and the monthly payments on the mortgage encumbering all of
the Partnership's properties.

The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, and local legal and regulatory requirements. The Partnership is
currently evaluating the capital improvement needs of the two remaining
properties for the upcoming year. The minimum to be budgeted is expected to be
$300 per unit or $124,800. Additional improvements may be considered and will
depend on the physical condition of the properties as well as replacement
reserves and anticipated cash flow generated by the properties.

The total mortgage indebtedness of $3,810,000 requires a balloon payment on
August 1, 2001. The Corporate General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity date. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure. Pursuant to the loan
agreement, Net Cash Flow of the Partnership is required to be paid to the
mortgage holder on a monthly basis to reduce accrued interest and principal. No
distributions can be made until all long-term debt is repaid.

Tender Offer

Year 2000 Compliance

General Description

The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Corporate General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.

Computer Hardware, Software and Operating Equipment

In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.

Third Parties

To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.

Costs

The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.

Risks Associated with the Year 2000

The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.

At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.

<PAGE>

Contingency Plans Associated with the Year 2000

The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.

Item 7. Financial Statements

U.S. REALTY PARTNERS LIMITED PARTNERSHIP

LIST OF FINANCIAL STATEMENTS

Report of Ernst & Young LLP, Independent Auditors

Balance Sheet - December 31, 1999

Statements of Operations - Years ended December 31, 1999 and 1998

Statements of Changes in Partners' (Deficit) Capital - Years ended
December 31, 1999 and 1998

Statements of Cash Flows - Years ended December 31, 1999 and 1998

Notes to Financial Statements

Report of Ernst & Young LLP, Independent Auditors

The Partners

U. S. Realty Partners Limited Partnership

We have audited the accompanying balance sheet of U. S. Realty Partners Limited
Partnership as of December 31, 1999, and the related statements of operations,
changes in partners' (deficit) capital and cash flows for each of the two years
in the period ended December 31, 1999. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of U. S. Realty
Partners Limited Partnership at December 31, 1999, and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

As discussed in Note I to the financial statements, the Partnership changed its
method of accounting to capitalize the cost of exterior painting and major
landscaping effective January 1, 1999.

/s/ERNST & YOUNG LLP

Greenville, South Carolina
February 24, 2000

U.S. REALTY PARTNERS LIMITED PARTNERSHIP

BALANCE SHEET

(in thousands, except unit data)

December 31, 1999

Assets
<S> <C> <C>

Restricted cash $ 512
Receivables and deposits, net of $190 for doubtful
accounts 156
Restricted escrows 283
Other assets 41
Investment properties (Notes D & G):
Land $ 2,123
Buildings and related personal property 15,394
17,517

Less accumulated depreciation (6,751) 10,766

$ 11,758

Liabilities and Partners' Capital
Liabilities

Accounts payable $ 153
Tenant security deposit liabilities 58
Accrued property taxes 70
Other liabilities 521
Due to Corporate General Partner 596
Mortgage notes payable (Note D) 3,810

Partners' Capital

General partners $ 4
Depositary unit certificate holders (2,440,000 units
authorized; 1,222,000 units issued and outstanding) 6,546 6,550

$ 11,758
</TABLE>

See Accompanying Notes to Financial Statements

<PAGE>

U.S. REALTY PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS

(in thousands, except unit data)

Years Ended December 31,
1999 1998
(restated)
Revenues:

Rental income $2,930 $2,655
Other income 175 159
Total revenues 3,105 2,814

Expenses:
Operating 1,096 1,134
General and administrative 184 227
Depreciation 489 459
Interest 967 2,225
Property taxes 241 247

Total expenses 2,977 4,292

Income (loss) from continuing operations 128 (1,478)
Income from discontinued operations 256 1,402
Gain on sale of discontinued
operations 4,626 --

Net income (loss) $5,010 $ (76)

Net income (loss) allocated to
general partners 451 (1)
Net income (loss) allocated to
depositary unit certificate
holders 4,559 (75)

$5,010 $ (76)

Net income (loss) per depositary unit certificate:

Income (loss) from continuing operations .10 $(1.20)
Income from discontinued operations .21 1.14
Gain on sale of discontinued
operations 3.42 --

$ 3.73 $ (.06)

See Accompanying Notes to Financial Statements

<PAGE>

U.S. REALTY PARTNERS LIMITED PARTNERSHIP

STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)

Depositary
Limited Unit
Partnership General Certificate
Units Partners Holders Total

Original capital contributions 1,222,000 $ 2 $30,550 $30,552

Partners' (deficit) capital
at December 31, 1997 1,222,000 $(446) $ 2,062 $ 1,616

Net loss for the year
ended December 31, 1998 -- (1) (75) (76)

Partners' (deficit) capital
at December 31, 1998 1,222,000 (447) 1,987 1,540

Net income for the year
ended December 31, 1999 -- 451 4,559 5,010

Partners' capital
at December 31, 1999 1,222,000 $ 4 $ 6,546 $ 6,550

</TABLE>

See Accompanying Notes to Financial Statements

<PAGE>

U.S. REALTY PARTNERS LIMITED PARTNERSHIP

STATEMENTS OF CASH FLOWS

(in thousands)

Years Ended
December 31,

1999 1998

Cash flows from operating activities:
<S> <C> <C>

Net income (loss) $ 5,010 $ (76)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 598 857
Amortization of lease commissions and software 4 13
Bad debt expense 190 42
Gain on sale of discontinued operations (4,626) --
Change in accounts:
Restricted cash 45 (225)
Receivables and deposits 74 (31)
Other assets (19) 39
Accounts payable 138 (13)
Tenant security deposit liabilities (62) (1)
Accrued property taxes (133) 69
Due to Corporate General Partner 36 12
Other liabilities (49) 49

Net cash provided by operating activities 1,206 735

Cash flows from investing activities:

Net proceeds from sale of investment property 16,066 --
Property improvements and replacements (489) (154)
Net deposits to restricted escrows (11) (5)

Net cash provided by (used in) investing
activities 15,566 (159)

Cash flows from financing activities:

Payments on mortgage notes payable (897) (576)
Repayment of mortgage note payable (15,875) --

Net cash used in financing activities (16,772) (576)

Net change in cash and cash equivalents -- --

Cash and cash equivalents at beginning of period -- --

Cash and cash equivalents at end of period $ -- $ --

Supplemental disclosure of cash flow information:

Cash paid for interest $ 953 $ 2,145

</TABLE>

See Accompanying Notes to Financial Statements

<PAGE>

U. S. REALTY PARTNERS LIMITED PARTNERSHIP

Notes to Financial Statements

December 31, 1999

Note A - Organization and Significant Accounting Policies

Organization: U.S. Realty Partners Limited Partnership (the "Partnership" or
"Registrant") was organized as a limited partnership under the laws of the State
of South Carolina on January 23, 1986. The general partner responsible for
management of the Partnership's business is U.S. Realty I Corporation, a South
Carolina Corporation (the "Corporate General Partner"). The only other general
partner of the Partnership was N. Barton Tuck, Jr. Mr. Tuck was not an affiliate
of the Corporate General Partner and was effectively prohibited by the
Partnership's partnership agreement (the "Partnership Agreement") from
participating in the management of the Partnership. In June 1999, Mr. Tuck's
general partner interest was purchased by AIMCO Properties, L.P. an affiliate of
the Corporate General Partner. The Corporate General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"). See "Note B - Transfer of
Control." The directors and officers of the Corporate General Partner also serve
as executive officers of AIMCO. The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2005, unless terminated prior to
such date. The Partnership commenced operations on August 26, 1986, and
completed its acquisition of two apartment complexes and two commercial
properties on September 4, 1986, all of which are located in the South. The
commercial properties were sold on February 1, 1999 and July 2, 1999.

The Depositary Unit Certificate ("DUC") holders are assignees of USS Assignor,
Inc. (the Limited Partner), an affiliate of the Corporate General Partner, and
as such will be entitled to receive the economic rights attributable to the
Limited Partnership Interests represented by their DUCs. DUC holders will for
all practical purposes be treated as limited partners of the Partnership.

Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated 98% to the DUC holders and 2% to the general partners until the DUC
holders have received annual noncumulative distributions equal to 10% of their
Adjusted Capital Values. Net cash from operations then will be distributed to
the general partners until the general partners collectively have received 7% of
net cash from operations distributed in that fiscal year. Thereafter, (after
repayment of any loans by the general partners to the Partnership), net cash
from operations will be distributed 93% to the DUC holders and 7% to the general
partners. According to the terms of the Partnership's loan agreements, no
distributions may be made until the long term debt is repaid.

During the first eight quarters following the issuance of the DUCs, the
Corporate General Partner was obligated to loan to the Partnership up to
approximately $811,000 to cover any deficiency in the quarterly cash
distributions. The Corporate General Partner loaned the Partnership $300,000
under this guarantee, which expired August 26, 1988. A deficiency arose when the
DUC holders did not receive annualized cash distributions equal to 10% of the
average of their Adjusted Capital Values. The loan bears interest at the lesser
of the rates being paid by the parent company of the Corporate General Partner
or two percentage points over the CitiBank, N.A. prime interest rate. The
repayment of the loan would reduce the amount subsequently available for
distribution to the DUC holders. This loan may not be repaid until the
Partnership's long term debt is repaid. The balance at December 31, 1999,
including accrued interest is $596,000.

Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between the Corporate General Partner and DUC holders
in accordance with the provisions of the Partnership Agreement.

Profits and losses generally will be allocated 99% to the DUC holders and 1% to
the Corporate General Partner. Income (loss) from operations per DUC for the
years ended December 31, 1999 and 1998, was computed as 99% of the income (loss)
from operations divided by 1,222,000 depositary units outstanding. The gain on
sale of discontinued operations was allocated in accordance with the Partnership
Agreement for the year ended December 31, 1999.

Investment Properties: Investment properties consist of two apartment complexes
and are stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with Financial Accounting Standards Board Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," the Partnership records impairment losses on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
Costs of apartment properties that have been permanently impaired have been
written down to appraised value. No adjustment for impairment of value was
recorded for the years ended December 31, 1999 and 1998. The Partnership sold
both of the shopping centers during 1999. The Gallery - Knoxville was sold on
February 1, 1999 and The Gallery-Huntsville was sold on July 2, 1999.

Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments at
an estimated borrowing rate currently available to the Partnership approximates
its carrying value.

Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the rental properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used: 1)
for real property over periods of 19 years for additions after May 8, 1985, and
before January 1, 1987, and 2) for personal property over 5 years for additions
after December 31, 1986, the modified accelerated cost recovery method is used
for depreciation of 1) real property additions over 27-1/2 years, and 2)
personal property additions over 5 years.

Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping (Note I).

Amortization: Computer software costs were amortized over six years and were
fully amortized as of December 31, 1998. Lease commissions were being amortized
over a period of one to ten years using the straight-line method over the term
of the respective leases and were included in other assets for the year ended
December 31, 1998. For the year ended December 31, 1999, lease commissions were
written off due to the sale of the Partnership's two commercial properties.

Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Corporate General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred. Commercial property leases vary from one to ten years. For leases with
scheduled rental increases, rental income was recognized on a straight-line
basis over the life of the applicable leases. Certain tenants had percentage
rent claims which provide for additional rent upon the tenant achieving certain
rental objections. Percentage rent totaled approximately $141,000 for 1998.

Restricted Cash

Tenant Security Deposits - The Partnership requires security deposits from
all apartment lessees for the duration of the lease. Deposits are refunded
when the tenant vacates the apartment if there has been no damage. The
Partnership held $58,000 of such funds at December 31, 1999.

Net Cash Flow Fund - The Partnership maintains a restricted cash account
for the purpose of repayment of the Partnership's debt. The Partnership
held approximately $459,000 of such funds at December 31, 1999. The
Partnership deposits Net Cash Flow, as defined in the loan agreement, into
this account to facilitate "Cash Sweeps" as defined in the loan agreement.
On a monthly basis, the Net Cash Flow Fund is disbursed or retained as
follows:

<PAGE>

Note A - Organization and Significant Accounting Policies (Continued)

(a) first, at any time as there shall be a balance of less than $150,000
in the Working Capital Account, an amount equal to the difference
between the actual balance and $150,000 but not in excess of twenty
percent (20%) of such Net Cash Flow shall be paid to the Partnership
for deposit into the Working Capital Account;

(b) second, to the payment of, or the reimbursement to the Partnership
for certain repairs and expenses and Capital Expenditures;

(d) fourth, to the payment of that portion of the Principal Balance
equal to accrued and unpaid interest therefore added to the
Principal Balance pursuant to the loan agreement;

(e) fifth, to the payment of the remaining Principal Balance and to any
and all other amounts payable to the Surety thereunder, including,
but not limited to, the additional interest.

Restricted Escrows

Capital Improvement Account - The Partnership established an interest
bearing bank account (see "Note D"), for the purpose of deposit and
expenditure of cash flow for Capital Expenditures. The Partnership shall
deposit from time to time from revenues a reasonable allowance for
Capital Expenditures, provided the amount of such deposit shall have been
approved in advance by the Surety. The Partnership may withdraw any
amounts on deposit in the Capital Expenditures Account to pay for Capital
Expenditures as they are made, provided the amount of such withdrawals
shall have been approved in advance by the Surety. At December 31, 1999,
the balance was approximately $123,000.

Working Capital Account - The Partnership established the "Working
Capital Account" for the purpose of providing a cash reserve available to
the Partnership (see "Note D"). On September 16, 1993, prior to making
the first deposit into the Net Cash Flow Fund, the Partnership deposited
$150,000 into the Working Capital Account. The bank holds the funds in
the Working Capital Account for the benefit of the Surety. The
Partnership has the right to access these funds without the consent of
the Surety under specific guidelines mutually agreed to by the
Partnership and the Surety. Specifically, the Working Capital Account may
be used to fund negative cash flow, or emergency or immediate funding
needs of a property. At December 31, 1999, the balance was approximately
$160,000.

Escrow for Taxes: All escrow funds are designated for the payment of real estate
taxes and are held by the Partnership. These funds totaled approximately
$169,000 at December 31, 1999 and are included in receivables and deposits.

Segment Reporting: Statement of Financial Standards ("SFAS" No. 131, Disclosure
about Segments of an Enterprise and Related Information ("Statement 131"),
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note H"
for required disclosures.

Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expense, was approximately $60,000
and $48,000 for the years ended December 31, 1999 and 1998, respectively.

Reclassifications: Certain reclassifications have been made to the 1998
financial statements to conform with the 1999 presentation.

Note B - Transfer of Control

Note C - Disposition of Property/Operating Segment

On February 1, 1999, The Gallery - Knoxville, located in Knoxville, Tennessee,
was sold to an unaffiliated third party for $9,300,000. After closing expenses
of approximately $283,000, the net proceeds received by the Partnership were
approximately $9,017,000. The Partnership was required to use the net proceeds
from the sale of the property to pay down the mortgage encumbering the
Partnership's properties. The sale of the property resulted in a gain on sale of
investment property of approximately $2,701,000. In connection with the sale, a
commission of approximately $93,000 was paid to the Corporate General Partner
(see Note F).

On July 2, 1999, The Gallery - Huntsville, located in Huntsville, Alabama, was
sold to an unaffiliated third party for $7,310,000. After closing expenses of
approximately $261,000, the net proceeds received by the Partnership were
approximately $7,049,000. The Partnership was required to use the net proceeds
from the sale of the property to pay down the mortgage encumbering the
Partnership's properties. The sale of the property resulted in a gain on sale of
investment property of approximately $1,925,000. In connection with the sale, a
commission of approximately $73,100 was paid to the Corporate General Partner
(see Note F).

The Gallery - Knoxville and The Gallery - Huntsville were the only commercial
properties owned by the Partnership and represented one segment of the
Partnership's operations. Due to the sale of these properties, the results of
the commercial segment have been shown as income from discontinued operations
and gain on sale of discontinued operations. Revenues of these properties were
approximately $588,000 and $2,479,000 for 1999 and 1998, respectively. Income
from discontinued operations was approximately $256,000 and $1,402,000 for 1999
and 1998, respectively.

Note D - Mortgage Note Payable

On October 15, 1993, the Partnership finalized the refinancing of all debt
encumbering its real estate assets. The debt has a stated interest rate of 10%,
which shall accrue and, to the extent such interest is not paid currently out of
Net Cash Flow, as defined in the loan agreement, shall be added to the principal
balance on August 16 of each year prior to the maturity date of August 1, 2001;
provided, however, that the amount of accrued and unpaid interest, shall at no
time exceed the sum of $1,740,733 and the balances in the Capital Expenditures
Account, the Working Capital Account, and the Tax Escrow Account established
under provisions of the loan agreement. Amounts in excess of this total must be
immediately paid by the Partnership. The loan agreement also calls for
additional interest of approximately $59,000, which accrues annually on August
1, and is payable on the earlier of the maturity date or the date on which the
principal balance and all accrued interest is paid.

The obligations of the Partnership to the Surety in connection with the issuance
of the debt are secured by a first mortgage or deed of trust on each of the
Partnership's properties and are cross-defaulted so that a default with respect
to one property is a default under each mortgage or deed of trust. The mortgage
note payable is non-recourse. The note does not require prepayment penalties if
repaid prior to maturity.

The principle terms of the note payable are as follows:

Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
1999 Rate Amortized Date Maturity
(in thousands)
U.S. Realty
Partnership $ 3,810 10.00% 95 months 08/01/01 (1)

(1) The balance at maturity is directly related to the ability of the
Partnership to make cash flow payments per the mortgage agreement.

At December 31, 1999 and 1998, approximately $17,000 and $97,000, respectively,
of accrued interest was included in other liabilities.

<PAGE>

Note E - Income Taxes

The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.

The following is a reconciliation of reported net income (loss) and Federal
taxable income (loss) (in thousands except per unit data):

Years Ended December 31,
1999 1998

Net income (loss) as reported $ 5,010 $ (76)
Add (deduct):
Depreciation differences (374) (685)
Difference in bad debt expense (286) 135
Difference in rents recognized 197 25
Change in prepaid rentals 37 (60)
Gain on sale of discontinued
operations (3,212) --
Other 73 (79)

Federal taxable income (loss) $1,445 $ (740)

Federal taxable income (loss) per DUC $ 1.17 $ (.60)
===== =====

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):

Net assets as reported $ 6,550
Land and buildings 1,318
Accumulated depreciation (5,646)
Syndication 2,774
Other 188

Net assets - tax basis $ 5,184

<PAGE>

Note F - Transactions with Affiliated Parties

The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
made to the Corporate General Partner and its affiliates during the year ended
December 31, 1999 and 1998:

1999 1998
(in thousands)

Property management fees (included in operating expenses)
expenses) $153 $255
Reimbursement for services of affiliates (included in
operating, general and administrative expenses, and
investment properties) 83 117
Real estate brokerage commissions (included in gain on
sale of discontinued operations) 166 --
Due to Corporate General Partner 596 560

During the years ended December 31, 1999 and 1998, affiliates of the Corporate
General Partner were entitled to receive 5% of gross receipts from both of the
Registrant's residential properties for providing property management services.
The Registrant paid to such affiliates $153,000 and $142,000 for the years ended
December 31, 1999 and 1998, respectively. For the nine months ended September
30, 1998 affiliates of the Corporate General Partner were entitled to receive
varying percentages of gross receipts from both of the Registrant's commercial
properties for providing property management services. The Registrant paid to
such affiliates $113,000 for the nine months ending September 30, 1998. No such
fees were paid for the year ended December 31, 1999 as these services were
provided by an unrelated third party effective October 1, 1998.

An affiliate of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $83,000 and
$117,000 for the year ended December 31, 1999 and 1998, respectively.

Pursuant to the Partnership Agreement, the Corporate General Partner is entitled
to receive a commission equal to 1% of the aggregate disposition price of sold
properties. The Partnership paid a commission of $93,000 and $73,100 to the
Corporate General Partner related to the sales of The Gallery - Knoxville and
The Gallery - Huntsville, respectively in 1999. These commissions are
subordinate to the limited partners receiving their original capital
contributions plus a cumulative preferred return of 10% per annum of their
adjusted capital investment, as defined in the Partnership Agreement. If the
limited partners have not received these returns when the Partnership
terminates, the Corporate General Partner will return these amounts to the
Partnership.

Several tender offers were made by various parties, including affiliates of the
general partners, during the year ended December 31, 1999. As a result of these
tender offers, AIMCO and its affiliates currently own 475,830 depositary unit
certificate units of limited partnership units in the Partnership representing
38.90% of the outstanding units. It is possible that AIMCO or its affiliates
will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Corporate
General Partner because of their affiliation with the Corporate General Partner.

Note G - Real Estate and Accumulated Depreciation

Investment Properties

Initial Cost
To Partnership
(in thousands)

Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Land Property Acquisition
(in thousands)

Governor's Park Apartments
Little Rock, Arkansas $ 423 $ 5,701 $ 244

Twin Lakes Apartments
Palm Harbor, Florida 1,928 9,283 (62)

Totals $2,351 $14,984 $ 182

The cost removed, net of additions, subsequent to the acquisition is primarily
due to write-downs and removals in prior years.

Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
<TABLE>
<CAPTION>

Buildings
and
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years

Governor's Park 423 5,945 6,368 2,753 1985 08/29/86 5-35

Twin Lakes 1,700 9,449 11,149 3,998 1986 08/28/86 5-35

Totals $2,123 $15,394 $17,517 $ 6,751

</TABLE>

Each of the Partnership's properties is secured by a first mortgage or deed of
trust in connection with the issuance of an Amended and Restated Surety Note,
Bond Notes and Suretyship Agreement.

Reconciliation of "Real Estate and Accumulated Depreciation":

Years Ended December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $33,460 $33,306
Property improvements 486 154
Disposals of property (16,429) --

Balance at end of year $17,517 $33,460

Accumulated Depreciation
Balance at beginning of year $11,380 $10,523
Additions charged to expense 598 857
Disposals of property (5,227) --

Balance at end of year $ 6,751 $11,380

The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $18,835,000 and $44,206,000
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $12,397,000 and $22,867,000,
respectively.

<PAGE>

Note H - Segment Reporting

Description of the types of products and services from which the reportable
segment derives its revenues:

The Partnership had two reportable segments: residential properties and
commercial properties. The Partnership's residential property segment consists
of two apartment complexes located in Arkansas and Florida. The Partnership
rents apartment units to tenants for terms that are typically twelve months or
less. The commercial property segment consisted of a shopping center located in
Alabama, which was sold on July 2, 1999 and a shopping center in Tennessee which
was sold on February 1, 1999. As a result of the sale of both commercial
properties during 1999 the commercial segment is shown as discontinued
operations.

Measurement of segment profit and loss:

The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant policies.

Factors management used to identify the enterprise's reportable segment:

The Partnership's reportable segment consists of investment properties that
offer different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.

Segment information for the years ended December 31, 1999 and 1998 is shown in
the tables below. The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.

1999
Residential Commercial Other Totals
----------- ---------- ----- ------
(discontinued)
(in thousands)

Rental income $ 2,930 $ -- $ -- $ 2,930
Other income 118 -- 57 175
Interest expense -- -- 967 967
Depreciation 489 -- -- 489
General and administrative expense -- -- 184 184
Income from discontinued operations -- 256 -- 256
Gain on sale of discontinued
operations -- 4,626 -- 4,626
Segment profit (loss) 1,222 4,882 (1,094) 5,010
Total assets 10,920 -- 838 11,758
Capital expenditures for investment
properties 486 3 -- 489

</TABLE>

<PAGE>

1998
Residential Commercial Other Totals
----------- ---------- ----- ------
(discontinued)
(in thousands)
<S> <C> <C> <C> <C>

Rental income $ 2,655 $ -- $ -- $ 2,655
Other income 128 -- 31 159
Interest expense -- -- 2,225 2,225
Depreciation 459 -- -- 459
General and administrative expense -- -- 227 227
Income from discontinued operations -- 1,402 -- 1,402
Segment profit (loss) 943 1,402 (2,421) (76)
Total assets 10,920 11,849 821 23,590
Capital expenditures for investment
properties 142 12 -- 154

</TABLE>

Note I - Change in Accounting Principle

<PAGE>

Item 8. Changes in and Disagreements with Accountant on Accounting
and Financial Disclosure

None.

<PAGE>

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act

The Registrant has no officers or directors. The Corporate General Partner of
the Registrant is U.S. Realty I Corporation. The names and ages of, as well as
the position and offices held by the present executive officers and director of
the Corporate General Partner are set forth below. There are no family
relationships between or among any officers and directors.

Name Age Position

Patrick J. Foye 42 Executive Vice President and Director

Martha L. Long 40 Senior Vice President and Controller

Patrick J. Foye has been Executive Vice President and Director of the Corporate
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.

Martha L. Long has been Senior Vice President and Controller of the Corporate
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Forms 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.

Item 10. Executive Compensation

None of the directors and officers of the Corporate General Partner received any
remuneration from the Registrant.

Item 11. Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Depositary Unit Certificate of the
Registrant as of December 31, 1999.

Entity Number of DUCs Percentage

AIMCO Properties, LP 475,380 38.90%
(an affiliate of AIMCO)

AIMCO Properties, LP is ultimately owned by AIMCO. Its business address is 2000
South Colorado Boulevard, Denver, Colorado.

No director or officer of the Corporate General Partner owns any Units.

Item 12. Certain Relationships and Related Transactions

1999 1998
(in thousands)
Property management fees $153 $255
Reimbursement for services of affiliates 83 117
Real estate brokerage commissions 166 --
Due to Corporate General Partner 596 560

Several tender offers were made by various parties, including affiliates of the
general partners, during the year ended December 31, 1999. As a result of these
tender offers, AIMCO and its affiliates currently own 475,830 depositary unit
certificate units of limited partnership units in the Partnership representing
38.90% of the outstanding units. It is possible that AIMCO or its affiliates
will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Corporate
General Partner because of their affiliation with the Corporate General Partner.

<PAGE>

Item 13. Exhibits, and Reports on Form 8-K

(a) Exhibits:

Exhibit 18, Independent Accountants' Preferability Letter for
Change in Accounting Principle, is filed as an exhibit to this
report.

Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.

(b) Reports on Form 8-K filed in the fourth quarter of calendar
year 1999:

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

U.S. REALTY PARTNERS LIMITED PARTNERSHIP

By: U.S. Realty I Corporation
Corporate General Partner

By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President

By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller

Date:

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

By: /s/Patrick J. Foye Date:
---------------------
Patrick J. Foye
Executive Vice President and Director

By: /s/Martha L. Long Date:
-----------------
Martha L. Long
Senior Vice President and Controller

<PAGE>

EXHIBIT INDEX

Exhibit

3 See Exhibit 4(a)

2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT (Incorporated by reference to Exhibit 2.1
of IPT's Current Report on Form 8-K, File No. 1-14179, dated
October 1, 1998).

4(a) Amended and Restated Certificate and Agreement of Limited
Partnership (included as Exhibit A to the Prospectus of
Registrant dated August 19, 1986 contained in Amendment No. 4
Registration Statement, No. 33-2996, of Registrant filed August
19, 1986 (the "Prospectus") and is incorporated herein by
reference).

(b) Subscription Agreement and Signature Page (included as Exhibit B
to the Prospectus and is incorporated herein by reference).

(c) Instruments governing the Bonds (filed as Exhibit 10C to
Amendment No. 4 to Registration Statement, No. 33-2996, of
Registrant filed August 19, 1986 and incorporated herein by
reference).

(d) First Amendment to U.S. Realty Partners Limited Partnership
Amended and Restated Agreement of Limited of Partnership (dated
August 15, 1986) dated October 14, 1993. [Filed as Exhibit 4(c)
to Form 10QSB for the quarter ended September 30, 1993 and
incorporated herein by reference.]

10(i) Contracts related to acquisition of properties:

(a) Purchase Agreement dated January 31, 1986 between The Gallery,
Ltd./LNDC Venture and U.S. Realty Partners Limited Partnership to
acquire The Gallery Shopping Plaza, Knoxville, Tennessee (filed
as Exhibit 10D to Amendment No. 1 to Registration Statement, No.
33-2996, of the Registrant filed August 19, 1986 incorporated
herein by reference).

(b) Form of Purchase Agreement by which U.S. Realty Partners Limited
Partnership expects to acquire The Gallery Shopping Plaza,
Huntsville, Alabama (filed as Exhibit 10E to Amendment No. 2 to
Registration Statement, No. 33-2996, of the Registrant filed
August 19, 1986 and incorporated herein by reference).

(ii) Form of Management Agreement with U.S. Shelter Corporation (filed
with Amendment No. 4 to Registration Statement No. 33-2996, of
Registrant filed August 19, 1986 and is incorporated herein by
reference).

<PAGE>

Exhibit

(iii)(a) Form of Master Lease and Management and Leasing
Sub-Agreement related to Purchase Agreement (see 10(b) between
Cazana/Huntsville Shopping Center, Ltd. and U.S. Shelter
Corporation) to acquire The Gallery Shopping Plaza, Huntsville,
Alabama (filed as Exhibit 10E to Amendment No. 4 to Registration
Statement, No. 33-2996, of the Registrant filed August 19, 1986
and incorporated herein by reference).

(b) Amended and Restated Surety Note, Bond Notes and Suretyship
Agreement by and between U.S. Realty Partners Limited Partnership
and Continental Casualty Company, dated October 15, 1993. *

(c) First Amended and Restated Mortgage, Assignment of Rents and
Security Agreement dated as of October 15, 1993 from U.S. Realty
Partners Limited Partnership, a Delaware limited partnership, to
Continental Casualty Company, an Illinois insurance company,
securing Twin Lakes Apartments, Palm Harbor, Florida. *

(d) State of Florida Uniform Commercial Code - Statement of Change -
Form UCC - 3 Rev. 11-88 by U.S. Realty Partners Limited
Partnership and Continental Casualty Company. *

(e) First Amended and Restated Mortgage, Assignment of Rents and
Security Agreement dated as of October 15, 1993 from U.S. Realty
Partners Limited Partnership, a Delaware limited partnership, to
Continental Casualty Company, an Illinois insurance company,
securing Governor's Park (formerly St. Croix) Apartments, Little
Rock, Arkansas. *

(f) Uniform Commercial Code - Standard Form Pulaski County, Arkansas,
Statements of Continuation, Partial Release, Assignment, etc. -
Form UCC-3 by U.S. Realty Partners Limited Partnership and
Continental Casualty Company. * (g) First Amended and Restated
Mortgage, Assignment of Rents and Security Agreement dated as of
October 15, 1993 from U.S. Realty Partners Limited Partnership, a
Delaware limited partnership, to Continental Casualty Company, an
Illinois insurance company, securing Gallery Shopping Plaza,
Huntsville, Alabama.*

(h) State of Alabama - Uniform Commercial Code, Statements of
Continuation, Partial Release Assignments, etc. - Form UCC-3 by
U.S. Realty Partners Limited Partnership and Continental Casualty
Company. *

<PAGE>

Exhibit

(i) First Amended and Restated Mortgage, Assignment of Rents and
Security Agreement dated as of October 15, 1993 from U.S. Realty
Partners Limited Partnership, a Delaware limited partnership, to
Continental Casualty Company, an Illinois insurance company,
securing Gallery Shopping Plaza, Knoxville, Tennessee.*

(j) State of Tennessee Uniform Commercial Code Statements of
Continuation Partial Release, Assignment, etc. - Form UCC-3 by
U.S. Realty Partners Limited Partnership and Continental Casualty
Company. *

(k) First Amended and Restated Assignment of Rents and Leases dated
October 15, 1993 from U.S. Realty Partners Limited Partnership to
Continental Casualty Company, securing Gallery Shopping Plaza,
Huntsville, Alabama and Gallery Shopping Plaza, Knoxville,
Tennessee. *

(l) Depositary Agreement dated as of October 15, 1993, among U.S.
Realty Partners Limited Partnership, First Union National Bank of
South Carolina and Continental Casualty Company. *

(m) Financial Statement - Form UCC-1, State of South Carolina, Office
of Secretary of State Jim Miles by US Realty Partners Limited
Partnership and Continental Casualty Company. *

(n) Incumbency Certificate by U.S. Realty I Corporation and U.S.
Realty Partners Limited Partnership. *

10.21Contract of Sale between Registrant and The Gallery of Knoxville
L.P., effective February 1, 1999 (filed February 9, 1999).

10.22Contract of Sale between Registrant and Huntgal, LLC, effective
July 2, 1999 (Filed July 13, 1999)

* Filed as Exhibits 10iii (a) through (m) to Form 10QSB for the
quarter ended September 30, 1993 and incorporated herein by
reference.

18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.

27 Financial Data Schedule.

99 Prospectus of Registrant dated August 19, 1986 (included in
Registration Statement, No. 33-2996, of Registrant and
incorporated herein by reference).

<PAGE>

Exhibit 18

February 7, 2000

Mr. Patrick J. Foye
Executive Vice President
U.S. Realty I Corporation

Corporate General Partner of U.S. Realty Partners Limited Partnership
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602

Dear Mr. Foye:

Note I of Notes to the Financial Statements of U.S. Realty Partners Limited
Partnership included in its Form 10-KSB for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the Corporate
General Partner.

There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.

Very truly yours,
/s/ Ernst & Young LLP

This schedule contains summary financial information extracted from US Realty
Partners 1999 Fourth Quarter 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.

</LEGEND>

<CIK> 0000788955
<NAME> US Realty Partners
<MULTIPLIER> 1,000

<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.

</FN>

</TABLE>