CAPITAL GROWTH MORTGAGE INVESTORS L P, SC 14D1, 1996-08-27

CAPITAL GROWTH MORTGAGE INVESTORS L P
SC 14D1, 1996-08-27
ASSET-BACKED SECURITIES

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------

SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
-----------------------

CAPITAL GROWTH MORTGAGE INVESTORS, L.P.
(Name of Subject Company)

PREVIOUSLY OWNED MORTGAGE ACCELERATED HIGH YIELD
PARTNERSHIPS INCOME FUND 3, L.P. INSTITUTIONAL INVESTORS, L.P.
(Bidder) (Bidder)

ACCELERATED HIGH YIELD ACCELERATED HIGH YIELD
INSTITUTIONAL FUND I, L.P. INCOME FUND I, L.P.
(Bidder) (Bidder)

ACCELERATED HIGH YIELD SUMMIT VENTURE
INCOME FUND II, L.P. (Bidder)
(Bidder)

MORAGA FUND 1, L.P. MORAGA GOLD, LLC
(Bidder) (Bidder)

BEAGLE FUND 7, L.P. CAL KAN, INC.
(Bidder) (Bidder)

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

NONE
(CUSIP Number of Class of Securities)
-----------------------

Copy to:
C.E. Patterson Paul J. Derenthal, Esq.
MacKenzie Patterson Inc. Derenthal & Dannhauser
1640 School Street, Suite 100 455 Market Street, Suite 1600
Moraga, California 94556 San Francisco, California 94105
(510) 631-9100 (415) 243-8070

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

* For purposes of calculating the filing fee only. This amount assumes the
purchase of 2,818,800 Assignee Units of Limited Partnership Interest ("Units")
of the subject company at $2.00 in cash per Unit.

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

Amount Previously Paid:
Form or Registration Number:
Filing Party:
Date Filed:

capgrw-1/14d2.1

<PAGE>

CUSIP NO. None 14D-1 Page 4 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

California

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 5 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Florida

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 6 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Florida

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 7 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

ACCELERATED HIGH YIELD INCOME FUND I, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Florida

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 7 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

ACCELERATED HIGH YIELD INCOME FUND II, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Florida

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 8 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

SUMMIT VENTURE

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Arizona

7. Aggregate Amount Beneficially Owned by Each Reporting Person 19,524

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0.003%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 9 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

MORAGA FUND 1, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization

California

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 10 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

MORAGA GOLD, LLC

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

California

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 11 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

BEAGLE FUND 7, L.P.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Colorado

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

CUSIP NO. None 14D-1 Page 12 of ___ Pages
--------

1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person

CAL KAN, INC.

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

(a) x
(b) __

3. SEC Use Only

4. Sources of Funds (See Instructions)

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

6. Citizenship or Place of Organization

Kansas

7. Aggregate Amount Beneficially Owned by Each Reporting Person 0

8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--

9. Percent of Class Represented by Amount in Row (7) 0%

10. Type of Reporting Person (See Instructions)

<PAGE>

Item 1. Security and Subject Company.

(a) The name of the subject partnership is Capital Growth Mortgage
Investors, L.P., a Delaware limited partnership (the "Partnership"), which has
its principal executive offices at 3 World Financial Center, 29th Floor, New
York, New York 10285.

(b) This Schedule relates to the offer by Previously Owned Mortgage
Partnerships Income Fund 3, L.P., Accelerated High Yield Institutional
Investors, L.P., Accelerated High Yield Institutional Fund I, L.P., Accelerated
High Yield Income Fund I, L.P., Accelerated High Yield Income Fund II, L.P.,
Summit Venture, Moraga Fund 1, L.P., Moraga Gold, LLC, Beagle Fund 7, L.P., and
Cal Kan, Inc., (the "Purchasers"), to purchase up to 2,818,800 outstanding
Depositary Units of Limited Partnership Interest (the "Units"), of the
Partnership at an amount equal to $2.00 per Unit less the amount of any
distributions made with respect to the Units between August 27, 1996 and
September 26, 1996, or such later date to which the Purchasers may extend the
offer, in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated August 27, 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. The Partnership had 7,047,000 Units outstanding
as of December 31, 1995.

Item 2. Identity and Background.

(a)-(d) The information set forth in "Introduction," "Certain
Information Concerning the Purchasers" and in Schedule I of the Offer to
Purchase is incorporated herein by reference.

(e)-(g) The information set forth in "Certain Information
Concerning the Purchasers" in the Offer to Purchase is incorporated herein by
reference. Other than as set forth in the Offer to Purchase, during the last
five years, neither the Purchasers nor any Affiliate (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) were a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding were or are subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws.

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

(a)-(b) Since January 1, 1992, there have been no transactions
between any of the persons identified in Item 2 and the Partnership or any of
the Partnership's affiliates.

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

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

(b)-(c) Not applicable.

<PAGE>

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

(a)-(e) The information set forth in "Introduction," and in "Future
Plans" of the Offer to Purchase is incorporated herein by reference.

(f)-(g) Not applicable.

Item 6. Interest in Securities of the Subject Company.

(a) The information set forth in "Certain Information Concerning
the Purchasers" of the Offer to Purchase is incorporated herein by reference.

(b) None.

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

The information set forth in "Certain Information Concerning the
Purchasers" of the Offer to Purchase is incorporated herein by reference.

Item 8. Persons Retained, Employed or To Be Compensated.

None.

Item 9. Financial Statements of Certain Bidders.

Not applicable.

Item 10. Additional Information.

(a) None.

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

(d) None.

(e) None.

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

Item 11. Material to be Filed as Exhibits.

(a)(1) Offer to Purchase dated August 27, 1996.

(a)(2) Letter of Transmittal.

<PAGE>

(a)(3) Form of Letter to Unitholders dated August 27, 1996.

(b)-(f) Not applicable.

<PAGE>

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: August 26, 1996 PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS
INCOME FUND 3, L.P.

By: MacKenzie Patterson, Inc.,
General Partner

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

ACCELERATED HIGH YIELD INSTITUTIONAL
INVESTORS, L.P.

By: MacKenzie Patterson, Inc.,
General Partner

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

ACCELERATED HIGH YIELD INSTITUTIONAL
FUND I, L.P.

By: MacKenzie Patterson, Inc.,
General Partner

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

ACCELERATED HIGH YIELD INCOME
FUND I, L.P.

By: MacKenzie Patterson, Inc.,
General Partner

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

<PAGE>

ACCELERATED HIGH YIELD INCOME
FUND II, L.P.

By: MacKenzie Patterson, Inc.,
General Partner

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

MORAGA FUND 1, L.P.

By: Moraga Partners, Inc.,
General Partner

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

MORAGA GOLD, LLC

By: Moraga Partners, Inc.,
Member

By: /s/ C. E. Patterson
C. E. Patterson
Title: President

By: David B. Gold Trust,
Member

By: /s/ Stephen Gold
Stephen Gold

BEAGLE FUND 7, L.P.

By: /s/ Robert Dixon
Robert Dixon,
General Partner

CAL KAN, INC.

By: /s/ C. E. Patterson
C. E. Patterson,
President

<PAGE>

SUMMIT VENTURE

By: /s/ Barry Zemel
Barry Zemel,
Partner

<PAGE>

EXHIBIT INDEX

Exhibit Description Page

(a)(1) Offer to Purchase dated August 27, 1996

(a)(2) Letter of Transmittal

(a)(3) Form of Letter to Unitholders dated August 27, 1996

<PAGE>

Exhibit (a)(1)

<PAGE>

OFFER TO PURCHASE FOR CASH UP TO 2,818,800
DEPOSITARY UNITS OF LIMITED PARTNERSHIP INTEREST

CAPITAL GROWTH MORTGAGE INVESTORS, L.P.

$2.00 Per Unit

PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, L.P.
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
ACCELERATED HIGH YIELD INCOME FUND II, L.P.
SUMMIT VENTURE
MORAGA FUND 1, L.P.
MORAGA GOLD, LLC
BEAGLE FUND 7, L.P.
CAL KAN, INC.

THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, PACIFIC STANDARD TIME, ON SEPTEMBER 26, 1996, UNLESS THE OFFER IS
EXTENDED.

Previously Owned Mortgage Partnerships Income Fund 3, L.P.,
Accelerated High Yield Institutional Investors, L.P., Accelerated High Yield
Institutional Fund I, L.P., Accelerated High Yield Income Fund I, L.P.,
Accelerated high Yield Income Fund II, L.P., Summit Venture, Moraga Fund 1,
L.P., Moraga Gold, LLC, Beagle Fund 7, L.P., Cal-Kan, Inc. (together the
"Purchasers") hereby offer to purchase up to 2,818,800 Depositary Units of
limited partnership interest (the "Units") in Capital Growth Mortgage Investors,
L.P., a Delaware limited partnership (the "Partnership"), at a purchase price
equal to $2.00 per Unit, less the amount of any distributions declared or made
with respect to the Units between August 27, 1996 (the "Offer Date") and
September 26, 1996, or such other date to which this Offer may be extended (the
"Expiration Date"), in cash, 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 or amended from
time to time (which together constitute the "Offer"). The 2,818,800 Units sought
pursuant to the Offer represent approximately 40% of the Units outstanding as of
December 31, 1995. None of the Purchasers or their affiliates are affiliated
with the Partnership or its general partner, CG Realty Funding, Inc. (the
"General Partner").

Holders of Units ("Unitholders") are urged to consider the
following factors:

- The purchase price offered by the Purchasers is less than
the General Partner's estimated value for ERISA tax
reporting purposes of $2.10 per Unit at December 31, 1995
and is also less than the Partnership's book value per Unit
of $2.11 as of December 31, 1995, and $2.20 as of June 30,
1996.

<PAGE>

- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future
distributions by the Partnership, and the purchase price
per Unit payable to a tendering Unitholder by the
Purchasers may be less than the total amount which might
otherwise be received by the Unitholder with respect to the
Unit over the remaining term of the Partnership.

- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the
ownership of the Units. In establishing the purchase price
of $2.00 per Unit, the Purchasers are motivated to
establish the lowest price which might be acceptable to
Unitholders consistent with the Purchasers' objectives.

- As a result of consummation of the Offer, the Purchasers
may be in a position to significantly influence all
Partnership decisions on which Unitholders may vote. The
Purchasers will vote the Units acquired in the Offer in its
own interest, which may be different from or in conflict
with the interests of the remaining Unitholders. See
Section 7 below.

- The Purchasers may accept only a portion of the Units
tendered by a Unitholder in the event a total of more than
2,818,800 Units are tendered.

THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 2,818,800 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN,
THE PURCHASERS WILL ACCEPT FOR PURCHASE 2,818,800 UNITS VALIDLY TENDERED BY
UNITHOLDERS ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN.

A UNITHOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH UNITHOLDER.

The Purchasers expressly reserve the right, in its sole discretion,
at any time and from time to time, (i) to extend the period of time during which
the Offer is open and thereby delay acceptance for payment of, and the payment
for, any Units, (ii) to terminate the Offer and not accept for payment any Units
not theretofore accepted for payment or paid for, (iii) upon the occurrence of
any of the conditions specified in Section 13 of this Offer to Purchase, to
delay the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iv) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.

August 27, 1996

<PAGE>

IMPORTANT

Any Unitholder desiring to tender any or all of such Unitholder's
Units should complete and sign the Letter of Transmittal (a copy of which is
printed on orange paper and enclosed with this Offer to Purchase) in accordance
with the instructions in the Letter of Transmittal and mail, deliver or telecopy
the Letter of Transmittal and any other required documents to MacKenzie
Patterson, Inc. (the "Depositary"), an affiliate of certain of the Purchasers,
at the address set forth below.

MacKenzie Patterson, Inc.
1640 School Street, Suite 100
Moraga, California 94556
Telephone: 800-854-8357

Questions or requests for assistance or additional copies of this
Offer to Purchase or the Letter of Transmittal may be directed to the Depositary
at 1-800-854-8357.
---------------------------

NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR
ANY REPRESENTATION ON BEHALF OF THE PURCHASERS 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.
---------------------------

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

The Purchasers have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 of the
General Rules and Regulations under the Exchange Act, 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 from the offices of the Commission in the manner specified above.

<PAGE>

TABLE OF CONTENTS

Page

INTRODUCTION............................................................ 5

TENDER OFFER............................................................ 7
Section 1. Terms of the Offer......................................... 7
Section 2. Proration; Acceptance for Payment and Payment for Units.... 8
Section 3. Procedures for Tendering Units............................... 9
Section 4. Withdrawal Rights............................................ 10
Section 5. Extension of Tender Period; Termination; Amendment........... 11
Section 6. Certain Federal Income Tax Consequences...................... 11
Section 7. Effects of the Offer......................................... 13
Section 8. Future Plans................................................. 14
Section 9. The Business of the Partnership.............................. 14
Section 10. Conflicts of Interest........................................ 16
Section 11. Certain Information Concerning the Purchasers................ 16
Section 12. Source of Funds.............................................. 17
Section 13. Conditions of the Offer...................................... 17
Section 14. Certain Legal Matters........................................ 19
Section 15. Fees and Expenses............................................ 19
Section 16. Miscellaneous................................................ 20

Schedule I - The Purchasers Their Respective Principals

capgrw-1/14d2.1

<PAGE>

To the Holders of Units of Limited Partnership Interest of Capital Growth
Mortgage Investors, L.P.

INTRODUCTION

The Purchasers hereby offer to purchase up to 2,818,800 Units of
the Partnership at a purchase price of $2.00 per Unit, less the amount of any
distributions declared or paid with respect to the Units between the Offer Date
and the Expiration Date ("Offer Price"), in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer. Unitholders who
tender their Units will not be obligated to pay any Partnership transfer fees,
or any other fees, expenses or commissions in connection with the tender of
Units. The Purchasers will pay all such costs and all charges and expenses of
the Depositary, an affiliate of the Purchasers, as depositary in connection with
the Offer. For further information concerning the of the Purchasers, see Section
11 below.

Neither any of the Purchasers nor the Depositary is affiliated with
the General Partner or with any of its affiliates.

Unitholders are urged to consider the following factors:

- The purchase price offered by the Purchasers is less than
the General Partner's estimated value for ERISA tax
reporting purposes of $2.10 per Unit as of December 31,
1995, and is also less than the Partnership's book value
per Unit of $2.11 as of December 31, 1995 and $2.20 as of
June 30, 1996.

- The Purchasers may accept only a portion of the Units
tendered by a Unitholder in the event a total of more than
2,818,800 Units are tendered.

The Offer will provide Unitholders with an opportunity to liquidate their
investment without the usual transaction costs associated with market sales.
Unitholders may no longer wish to continue with their investment in the
Partnership for a number of reasons, including the following:

- - the absence of a formal trading market for the Units and the
difficulty in selling units in secondary market transactions;

<PAGE>

- - general disenchantment with real estate investments, particularly long-term
investments in limited partnerships;

- - the continuing administrative costs and resultant negative financial impact
on the value of the Units of a publicly registered limited partnership;

- - a more immediate need to use the cash now tied up in an investment in the
Units;

- - a desire to eliminate the need for compliance with complicated and
costly tax return requirements and associated expenses which may
result from an investment in the Units.

The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 2,818,800 Units are validly tendered and not withdrawn,
the Purchasers will accept for purchase a total of 2,818,800 Units from
tendering Unitholders on a pro rata basis, subject to the terms and conditions
herein. See "Tender Offer - Section 13. Conditions of the Offer" for certain
conditions of the Offer. The Purchasers expressly reserve the right, in their
sole discretion and for any reason, to waive any or all of the conditions of the
Offer.

Establishment of the Offer Price

The Purchasers have set the Offer Price at $2.00 per Unit, less the
amount of any distributions declared or made with respect to the Units between
the Offer Date and Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors, including:
(i) the prices of recent secondary market resales of the Units; (ii) the lack of
liquidity of an investment in the Partnership; (iii) an estimate of the
liquidation value of the Partnership's assets; (iv) the costs to the Purchasers
associated with acquiring the Units; (v) the administrative costs of continuing
to own the Partnership's assets through a publicly registered limited
partnership; and (vi) the General Partner's estimate in the 1995 Annual Report
of a value of $2.10 per Unit.

The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. 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.

The Partnership's 10-K for the fiscal year ended December 31, 1995
states that "(t)here is no established trading market for the Units nor is there
anticipated to be any in the future." According to reports published by Robert
A. Stanger & Co., Inc. and Partnership Profiles, Inc., independent, third-party
sources, the low and high sales prices of Units during the six-month period from
November 1, 1995 through April 30, 1996 were $0.95 and $1.59 per Unit,
respectively. The gross sales prices reported also 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. In addition, the information published by these independent
sources is the product of their market research and does not constitute the
comprehensive transaction reporting of a securities exchange. Accordingly, the
Purchasers do not know whether the foregoing sales price information is accurate
or complete. During the period from March 26, 1996 through the date hereof,
affiliates of the Purchasers

<PAGE>

acquired or have contracted to acquire a total of 400 Units in privately
negotiated transactions with unrelated parties for a price of $1.55 per Unit.

The book value of each Unit, as reflected on the Partnership's Form
10-Q for the quarter ended June 30, 1996, was $2.20 per Unit and, as of December
31, 1995, the date of the Partnership's last audited financial statements, the
book value was $2.11 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. Book value also does not reflect the amount which a 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 as reflected in the book value.

General Background Information

Certain information contained in this Offer to Purchase which
relates to, or represents, statements made by the Partnership or the General
Partner, has been derived from information provided in reports filed by the
Partnership with the Securities and Exchange Commission.

According to publicly available information, there were 7,047,000
Units issued and outstanding at December 31, 1995, held by approximately 8,331
Unitholders. Affiliates of the Purchasers currently beneficially own an
aggregate of 19,524 Units, or approximately 0.003% of the outstanding Units (see
"Certain Information Concerning the Purchasers" below).

Tendering Unitholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unitholder.

If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.

Unitholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.

TENDER OFFER

Section 1. Terms of the Offer. Upon the terms and subject to the
conditions of the Offer, the Purchasers will accept for payment and pay for
Units validly tendered on or prior to the Expiration Date and not withdrawn in
accordance with Section 4 of this Offer to Purchase. The term "Expiration Date"
shall mean 12:00 midnight, Pacific Standard Time, on September 26, 1996, unless
and until the Purchasers shall have extended the period of time for which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date on which the Offer, as so extended by the Purchasers, shall
expire.

<PAGE>

The Offer is conditioned on satisfaction of certain conditions. See Section
13, which sets forth in full the conditions of the Offer. The Purchasers reserve
the right (but shall not be obligated), in its sole discretion and for any
reason, to waive any or all of such conditions. If, by the Expiration Date, any
or all of such conditions have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated) to (i) decline to purchase any
of the Units tendered, terminate the Offer and return all tendered Units to
tendering Unitholders, (ii) waive all the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Commission, purchase 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) to amend the Offer.

The Purchasers do not anticipate and has no reason to believe that
any condition or event will occur that would prevent the Purchasers from
purchasing tendered Units as offered herein.

Section 2. Proration; Acceptance for Payment and Payment for Units.
If the number of Units validly tendered prior to the Expiration Date and not
withdrawn is 2,818,800 or less, the Purchasers, upon the terms and subject to
the conditions of the Offer, will accept for payment all Units so tendered.

If the number of Units validly tendered prior to the Expiration
Date and not withdrawn exceeds 2,818,800, the Purchasers, upon the terms and
subject to the conditions of the Offer, will accept for payment Units so
tendered on a pro rata basis.

In the event that proration is required, because of the difficulty
of immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.

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
extension or amendment), the Purchasers will accept for payment, and will pay
for, Units validly tendered and not withdrawn in accordance with Section 4, as
promptly as practicable following the Expiration Date. In all cases, payment for
Units purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal.

For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unitholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unitholders. Under no circumstances will interest be paid on the Offer
Price by reason of any delay in making such payment.

If any tendered Units are not purchased for any reason, the Letter
of Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units,

<PAGE>

subject to any limitations of applicable law, and such Units may not be
withdrawn except to the extent that the tendering Unitholders are entitled to
withdrawal rights as described in Section 4.

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

Section 3. Procedures for Tendering Units.

Valid Tender. For Units to be validly tendered pursuant to the
Offer, a properly completed and duly executed Letter of Transmittal (a copy of
which is enclosed and printed on orange paper) with any other documents required
by the Letter of Transmittal must be received by the Depositary at its address
set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unitholder may tender any or all Units owned by such
Unitholder.

In order for a tendering Unitholder to participate in the Offer,
Units must be validly tendered and not withdrawn prior to the Expiration Date,
which is 12:00 midnight, Pacific Standard Time, on September 26, 1996, or such
date to which the Offer may be extended.

The method of delivery of the Letter of Transmittal 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 Depositary.

Backup Federal Income Tax Withholding. To prevent the possible
application of 31% backup federal income tax withholding with respect to payment
of the Offer Price for Units purchased pursuant to the Offer, a tendering
Unitholder must provide the Depositary with such Unitholder's correct taxpayer
identification number and make certain certifications that such Unitholder is
not subject to backup federal income tax withholding. Each tendering Unitholder
must insert in the Letter of Transmittal the Unitholder's taxpayer
identification number or social security number in the space provided on the
front of the Letter of Transmittal. The Letter of Transmittal also includes a
substitute Form W-9, which contains the certifications referred to above. (See
the Instructions 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 Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unitholder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such
Unitholder's taxpayer identification number and address and that the Unitholder
is not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")

Other Requirements. By executing a Letter of Transmittal as set
forth above, a tendering Unitholder irrevocably appoints the designees of the
Purchasers as such Unitholder's proxies, in the manner set forth in the Letter
of Transmittal, each with full power of substitution, to the full extent of such
Unitholder's rights with respect to the Units tendered by such Unitholder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unitholder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unitholder as they in their sole
discretion may deem proper at any meeting of Unitholders, by written consent or
otherwise. In addition,

<PAGE>

by executing a Letter of Transmittal, a Unitholder also assigns to the
Purchasers all of the Unitholder's rights to receive distributions from the
Partnership with respect to Units which are accepted for payment and purchased
pursuant to the Offer, other than those distributions declared or paid during
the period commencing on the Offer Date and terminating on the Expiration Date.

Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the procedures described above will be determined by the
Purchasers, in their sole discretion, which determination shall be final and
binding. The Purchasers reserve the absolute right to reject any or all tenders
if not in proper form or if the acceptance of, or payment for, the absolute
right to reject any or all tenders if not in proper form or if the acceptance
of, or payment for, the Units tendered may, in the opinion of the Purchasers'
counsel, be unlawful. The Purchasers also reserve the right to waive any defect
or irregularity in any tender with respect to any particular Units of any
particular Unitholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.

A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unitholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unitholders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).

Section 4. Withdrawal Rights. Except as otherwise provided in this
Section 4, all tenders of Units pursuant to the Offer are irrevocable, provided
that Units tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time after October 27, 1996
(or such later date as may apply in the event the Offer is extended).

For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.

If purchase of, or payment for, Units is delayed for any reason or
if the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be

<PAGE>

withdrawn except to the extent that tendering Unitholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.

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

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

Section 5. Extension of Tender Period; Termination; Amendment. The
Purchasers expressly reserve the right, in their sole discretion, at any time
and from time to time, (i) to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and the payment for, any
Units by giving oral or written notice of such extension to the Depositary, (ii)
to terminate the Offer and not accept for payment any Units not theretofore
accepted for payment or paid for, by giving oral or written notice of such
termination to the Depositary, (iii) upon the occurrence or failure to occur of
any of the conditions specified in Section 13, to delay the acceptance for
payment of, or payment for, any Units not heretofore accepted for payment or
paid for, by giving oral or written notice of such termination or delay to the
Depositary, and (iv) to amend the Offer in any respect (including, without
limitation, by increasing or decreasing the consideration offered or the number
of Units being sought in the Offer or both or changing the type of
consideration) by giving oral or written notice of such amendment to the
Depositary. Any extension, termination or amendment will be followed as promptly
as practicable by public announcement, the announcement in the case of an
extension to be issued no later than 9:00 a.m., Eastern Standard Time, on the
next business day after the previously scheduled Expiration Date, in accordance
with the public announcement requirement of Rule 14d-4(c) under the Exchange
Act. Without limiting the manner in which the Purchasers may choose to make any
public announcement, except as provided by applicable law (including Rule
14d-4(c) under the Exchange Act), the Purchasers will have no obligation to
publish, advertise or otherwise communicate any such public announcement, other
than by issuing a release to the Dow Jones News Service. The Purchasers may also
be required by applicable law to disseminate to Unitholders certain information
concerning the extensions of the Offer and any material changes in the terms of
the Offer.

If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unitholders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.

If the Purchasers make a material change in the terms of the Offer
or the information concerning the Offer or waives a material condition of the
Offer, the Purchasers will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum

<PAGE>

period during which an offer must remain open following a material change in the
terms of the offer or information concerning the offer, other than a change in
price or a change in percentage of securities sought, will depend upon the facts
and circumstances, including the relative materiality of the change in the terms
or information. With respect to a change in price or a change in percentage of
securities sought (other than an increase of not more than 2% of the securities
sought), however, a minimum ten business day period is generally required to
allow for adequate dissemination to security holders and for investor response.
As used in this Offer to Purchase, "business day" means any day other than a
Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, Pacific Daylight Time.

Section 6. Certain Federal Income Tax Consequences. THE FEDERAL
INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION
ONLY AND DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE
RELEVANT TO A PARTICULAR UNITHOLDER. For example, this discussion does not
address the effect of any applicable foreign, state, local or other tax laws
other than federal income tax laws. Certain Unitholders (including trusts,
foreign persons, tax-exempt organizations or corporations subject to special
rules, such as life insurance companies or S corporations) may be subject to
special rules not discussed below. This discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), existing regulations, court
decisions and Internal Revenue Service ("IRS") rulings and other pronouncements.
EACH UNITHOLDER TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR
AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER,
INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS.

The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.

Gain or Loss. A taxable Unitholder will recognize a gain or loss on
the sale of such Unitholder's Units in an amount equal to the difference between
(i) the amount realized by such Unitholder on the sale and (ii) such
Unitholder's adjusted tax basis in the Units sold. The amount realized by a
Unitholder will include the Unitholder's share of the Partnership's liabilities,
if any (as determined under Code section 752 and the regulations thereunder). If
the Unitholder reports a loss on the sale, such loss generally could not be
currently deducted by such Unitholder except against such Unitholder's capital
gains from other investments. In addition, such loss would be treated as a
passive activity loss. (See "Suspended Passive Activity Losses" below.)

The adjusted tax basis in the Units of a Unitholder will depend
upon individual circumstances. (See also "Partnership Allocations in Year of
Sale" below.) Each Unitholder who plans to tender hereunder should consult with
the Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in
the Unitholder's Units and the resulting tax consequences of a sale.

If any portion of the amount realized by a Unitholder is
attributable to such Unitholder's share of "unrealized receivables" or
"substantially appreciated inventory items" as defined in Code section 751, a
corresponding portion of such Unitholder's gain or loss will be treated as
ordinary gain or loss. It is possible that the basis allocation rules of Code
Section 751 may result in a Unitholder's recognizing ordinary income with
respect to the portion of the Unitholder's amount realized on the sale of a Unit
that is attributable to such items while recognizing a capital loss with respect
to the remainder of the Unit.

<PAGE>

A tax-exempt Unitholder (other than an organization described in
Code Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unitholder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.

Partnership Allocations in Year of Sale. A tendering Unitholder
will be allocated the Unitholder's pro rata share of the annual taxable income
and losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unitholder will assign to the
Purchasers its rights to receive certain cash distributions with respect to such
Units. Such allocations and any Partnership distributions for such period would
affect a Unitholder's adjusted tax basis in the tendered Units and, therefore,
the amount of gain or loss recognized by the Unitholder on the sale of the
Units.

Possible Tax Termination. The Code provides that if 50% or more of
the capital and profits interests in a partnership are sold or exchanged within
a single 12-month period, such partnership generally will terminate for federal
income tax purposes. It is possible, although deemed by the Purchasers to be
unlikely (given the limited number of Units subject to the Offer and the limited
secondary market for the Units), that the Partnership could terminate for
federal income tax purposes as a result of consummation of the Offer. If so, the
Partnership will be treated as having made a liquidating distribution of an
undivided interest in all of its assets to the Unitholders, the partners of the
Partnership after consummation of the Offer (i.e., the nontendering Unitholders
and the Purchasers) would be treated as having recontributed their interests in
Partnership assets to the Partnership, and the capital accounts of all partners
would be restated. A Unitholder would recognize gain on the liquidating
distribution only to the extent that the amount of cash deemed distributed to
the Unitholder exceeded the Unitholder's basis in the Units. Depending on the
Unitholders' bases in their Units and the Partnership's tax basis in its
property, a tax termination could affect, perhaps adversely, the amount of
depreciation deductions reported by the Partnership for the period following the
date of such termination. A tax termination of the Partnership also could have
the adverse effect on Unitholders whose tax year is not the calendar year, of
the inclusion of more than one year of Partnership tax items in one tax return
of such Unitholders, resulting in a "bunching" of income. In addition, a tax
termination could have the adverse effect on non- tendering Unitholders who
subsequently dispose of their Units at a gain of requiring them to treat a
greater portion of such gain as ordinary income (due to the application of Code
Section 735) than would otherwise be required absent a tax termination of the
Partnership.

Suspended "Passive Activity Losses". A Unitholder who sells all of
the Unitholder's Units would be able to deduct "suspended" passive activity
losses from the Partnership, if any, in the year of sale free of the passive
activity loss limitation. As a limited partner of the Partnership, which was
engaged in real estate activities, the ability of a Unitholder, who or which is
subject to the passive activity loss rules, to claim tax losses from the
Partnership was limited. Upon sale of all of the Unitholder's Units, such
Unitholder would be able to use any "suspended" passive activity losses first
against gain, if any, on sale of the Unitholder's Units and then against income
from any other source.

Foreign Unitholders. 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 Purchasers will withhold 10% of
the amount realized by a tendering Unitholder from the purchase price payment to
be made to such Unitholder unless the Unitholder properly completes and signs
the FIRPTA Affidavit included as part of the Letter of

<PAGE>

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.

Section 7. Effects of the Offer.

Limitations on Resales. The Partnership Agreement does not restrict
transfers of Units, provided a transfer results in an assignee holding at least
five hundred Units and complies with any applicable state securities laws.
Accordingly, the Purchasers neither anticipate any limitation on its right to
acquire the Units, nor that such acquisitions will have the effect of limiting
any further resales of Units.

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

Voting Power of Purchasers. Depending on the number of Units
acquired by the Purchasers pursuant to the Offer, the Purchasers may have the
ability to exert certain influence on matters subject to the vote of
Unitholders, though the maximum number of Units sought hereunder would not give
the Purchasers a controlling voting interest.

The Units are registered under the Exchange Act, which requires,
among other things that the Partnership furnish certain information to its
Unitholders and to the Commission and comply with the Commission's proxy rules
in connection with meetings of, and solicitation of consents from, Unitholders.
The Purchasers do not believe that the purchase of Units pursuant to the Offer
will result in the Units becoming eligible for deregistration under the Exchange
Act.

Section 8. Future Plans. Following the completion of the Offer, the
Purchasers, or their 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. Any such acquisition may
be at a consideration higher or lower than the consideration to be paid for the
Units purchased pursuant to the Offer.

The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. Although the Purchasers have no present intention to seek
control of the Partnership or to change the management or operations of the
Partnership, each of the Purchasers reserves the right, at an appropriate time,
to exercise its rights as a limited partner to vote on matters subject to a
limited partner vote, including a vote to cause the sale of the Partnership's
remaining assets and the liquidation and dissolution of the Partnership.

Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports. Additional information concerning the Partnership, its assets,
operations and management is contained in its annual reports on Form 10-K and
Quarterly Reports on Form 10-Q and other filings with the Securities and
Exchange Commission. Such reports and filings are available for inspection at
the Commission's principal office in Washington, D.C. and at its regional
offices in New York, New York and Chicago, Illinois. The Purchasers expressly
disclaim any responsibility for the information included in such reports and
extracted in this discussion.

The Partnership was organized in 1986 as a Delaware limited partnership

<PAGE>

for the purpose of investing in and originating zero coupon first and
second mortgage loans to partnerships sponsored by the General Partner's
affiliates. The Partnership currently owns two mortgage loan investments.

Selected Financial Data. Set forth below is a summary of certain
financial data for the Partnership which has been excerpted from the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1995
and its Quarterly Report on Form 10-Q for the six months ended June 30, 1996.

<PAGE>

The following table sets forth in comparative tabular form a summary of selected
financial data for each of the Partnership's last five full years and the six
months ended June 30, 1996:

<TABLE>

(in 000's except per Unit data)
<CAPTION>
Six Months
Ended For the years ended December 31,
6/30/96 1995 1994 1993 1992 1991

<S> <C> <C> <C> <C> <C> <C>
Net Interest Income (1) $ 732 $1,356 $1,221 $4,002 $5,057 $9,107
<S> <C>
Loan Prepayment Premium --- --- --- 4,550 --- ---
Total Income 737 1,363 3,250 8,625 5,150 9,114
Net Income (Loss) 598 1,088 2,677 7,707 (48,628)(2) 8,474
Net Income (Loss) per
Limited Partnership Unit
(7,047,000 outstanding) .08 .15 .38 1.09 (6.83)(2) 1.20
Cash Distributions per
Limited Partnership Unit -- -- .21(3) 6.84(4) -- --
Total Assets 15,519 14,934 13,838 12,688 53,662 102,576

<FN>
(1) Net allowance of $3,770,483 in 1995, $5,016,635 in 1994, $7,184,222 in
1993, $6,425,950 in 1992 and $1,545,794 in 1991. See Annual Report on Form 10-K,
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

(2) Includes valuation allowance of $52,874,238 against the Union Square and 417
Fifth Avenue loans.

(3) Represents the July 1994 distributions of proceeds from the Partnership's
share of the proceeds from the sale of the 417 Fifth Avenue property in May.

(4) Represents the September 1993 distribution of proceeds of the prepayment of
the EQK Loan in August 1993.
</FN>
</TABLE>
<PAGE>

Section 10. Conflicts of Interest. The Depositary is affiliated with
the Purchasers. Therefore, by virtue of this affiliation, the Depositary may
have inherent conflicts of interest in acting as Depositary for the Offer.

Section 11. Certain Information Concerning the Purchasers. The
Purchasers are Moraga Fund 1, L.P., a California limited partnership ("Moraga"),
Cal Kan, Inc., a Kansas corporation ("Cal Kan"), Moraga Gold LLC, a California
limited liability company ("Gold"), Previously Owned Mortgage Partnerships
Income Fund 3, L.P., a California limited partnership ("Pompi 3"), Accelerated
High Yield Institutional Fund I, L.P., a Florida limited partnership ("Inst'l
Fund"), Accelerated High Yield Institutional Investors, L.P., a Florida limited
partnership ("Inst'l Inv"), Accelerated High Yield Income Fund I L.P., a Florida
limited partnership ("Income 1"), Accelerated High Yield Income Fund II, L.P., a
Florida limited partnership ("Income 2"), Beagle Fund 7, a Colorado limited
partnership ("Beagle") and Summit Venture, an Arizona general partnership
("Summit").

The general partner of Moraga is Moraga Partners, Inc., which is owned and
controlled by C.E. Patterson and Thomas A. Frame. Mssrs. Patterson and Frame are
the sole shareholders, executive officers and directors of Cal Kan. The general
partner of Pompi 3, Income 1, Income 2, Inst'l Fund, and Inst'l Inv is MacKenzie
Patterson, Inc. The members of Gold are Moraga Partners, Inc. and the David B.
Gold Trust. Robert E. Dixon is the general partner of Beagle. Ira J. Gaines and
Barry Zemel are the co-general partners of Summit.

The principal place of business of all of the Purchasers, other than
Summit, is located at 1640 School Street, Suite 100, Moraga, California 94556.

The principal place of business of Summit and Mssrs. Gaines and Zemel
is 1717 E. Morton, Suite 220, Phoenix, Arizona 85020.

For information concerning the principals of the Purchasers, please
refer to Schedule I attached hereto.

During the period from March 1, 1996 through the date hereof,
affiliates of the Purchasers acquired or have contracted to acquire a total of
400 Units in privately negotiated transactions with unrelated parties for $1.55
per Unit. Other than the foregoing, neither the Purchasers nor any of their
affiliates has purchased any Units since March 1, 1996. The Purchasers and their
affiliates currently hold an aggregate of 19,524 Units, or approximately 0.003%
of the outstanding Units, as follows:

Unitholder Units

Ira Gaines 4,000
Barry Zemel 12,824
Duece Investment Money Purchase Pension Plan 2,700

The principal business address of the Unitholders identified in the
foregoing table is 1717 E. Morton, Suite 220, Phoenix, Arizona 85020.

The Purchasers have capital sufficient to fund the acquisition of all
Units subject to the Offer, the expenses to be incurred in connection with the
Offer, and all organization and operating costs of the Purchasers. The
Purchasers are not public companies and have not prepared audited financial
statements.

<PAGE>

The Purchasers have an aggregate net worth substantially in excess of $15
million, including net liquid assets of more than $6 million.

Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers 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,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, 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.

In March, 1990, Patterson Financial Services, Inc. and C. E. Patterson,
affiliates of the Purchasers, were found by the National Association of
Securities Dealers, Inc. to have violated certain of the compensation guidelines
applicable to its member broker-dealer firms. The determination was made in
connection with transactions executed by registered representatives of Patterson
Financial Services, Inc. for the purchase and sale of certain partnership
interests which occurred in 1987.

Section 12. Source of Funds. The Purchasers expect that $5,637,600
would be required to purchase 2,818,800 Units, if tendered, and an additional
$50,000 would be required to pay related fees and expenses. The Purchasers
anticipate funding all of the purchase price and related expenses through their
existing working capital.

Section 13. Conditions of the Offer. Notwithstanding any other term of
the Offer, the Purchasers shall not be required to accept for payment or to pay
for any Units tendered if all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained.

The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the acceptance of such Units for payment or the payment
therefor, any of the following conditions exists:

(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall
have been issued and shall remain in effect which (i) makes illegal,
delays or otherwise directly or indirectly restrains or prohibits the
making of the Offer or the acceptance for payment of or payment for any
Units by the

<PAGE>

Purchasers, (ii) imposes or confirms limitations on the ability of the
Purchasers effectively to exercise full rights of ownership of any
Units, including, without limitation, the right to vote any Units
acquired by the Purchasers pursuant to the Offer or otherwise on all
matters properly presented to the Partnership's Unitholders, (iii)
requires divestiture by the Purchasers of any Units, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as
a result of the transactions contemplated by the Offer or (v) might
materially adversely affect the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospectus of the Purchasers or the Partnership;

(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer by any federal or state court, government or
governmental authority or agency, other than the application of the
waiting period provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, which might, directly or
indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;

(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Partnership, which, in the reasonable judgment of the
Purchasers, is or may be materially adverse to the Partnership, or the
Purchasers shall have become aware of any fact that, in the reasonable
judgment of the Purchasers, does or may have a material adverse effect
on the value of the Units;

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

(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding
Units have been or are proposed to be acquired by another person
(including a "group" within the meaning of Section 13(d)(3) of the
Exchange Act), or (ii) any person or group that prior to such date had
filed a Statement with the Commission pursuant to Sections 13(d) or (g)
of the Exchange Act has increased or proposes to increase the number of
Units beneficially owned by such person or group as disclosed in such
Statement by two percent or more of the outstanding Units.

The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion. Any termination by the
Purchasers concerning the events described above will be final and binding upon
all parties.

<PAGE>

Section 14. Certain Legal Matters.

General. Except as set forth in this Section 14, the Purchasers are not
aware of any filings, approvals or other actions by any domestic or foreign
governmental or administrative agency that would be required prior to the
acquisition of Units by the Purchasers pursuant to the Offer. Should any such
approval or other action be required, it is the Purchasers's present intention
that such additional approval or action would be sought. While there is no
present intent to delay the purchase of Units tendered pursuant to the Offer
pending receipt of any such additional approval or the taking of any such
action, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Partnership's business, or that certain
parts of the Partnership's business might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action, any of which could cause the Purchasers to elect to
terminate the Offer without purchasing Units thereunder. The Purchasers'
obligation to purchase and pay for Units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 14.

Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units pursuant to the Offer.

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

State Takeover Laws. A number of states have adopted anti-takeover laws
which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, security holders, principal executive offices or principal
places of business therein. These laws are directed at the acquisition of
corporations and not partnerships. The Purchasers, therefore, do not believe
that any anti-takeover laws apply to the transactions contemplated by the Offer.

Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers 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 Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.

Section 15. Fees and Expenses. The Purchasers have not retained any
agents to solicit Unit holders in connection with the Offer. The Purchasers and
their employees and management may contact Unit holders by mail, telephone,
telex, telegraph and personal interview, and may request brokers, dealers,
commercial banks, trust companies and other nominees for holders to forward the
Offer material to the beneficial owners of Units.

The Purchasers have retained MacKenzie Patterson, Inc., an affiliate of
the Purchasers, to act as Depositary in connection with the Offer. The
Purchasers will pay the Depositary reasonable and customary compensation for its
services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including liabilities under the federal
securities laws. The Purchasers will also pay all costs and expenses of
printing, publication and mailing of the Offer.

<PAGE>

Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN
WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE PURCHASERS IS NOT AWARE OF
ANY JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR
THE ACCEPTANCE THEREOF WOULD BE ILLEGAL.

No person has been authorized to give any information or to make any
representation on behalf of the Purchasers 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.

August 27, 1996

<PAGE>

SCHEDULE I

THE PURCHASERS' PRINCIPALS

The Purchasers are Moraga Fund 1, L.P., a California limited
partnership ("Moraga"), Cal Kan, Inc., a Kansas corporation ("Cal Kan"), Moraga
Gold LLC, a California limited liability company ("Gold"), Previously Owned
Mortgage Partnerships Income Fund 3, L.P., a California limited partnership
("Pompi 3"), Accelerated High Yield Institutional Fund I, L.P., a Florida
limited partnership ("Inst'l Fund"), Accelerated High Yield Institutional
Investors, L.P., a Florida limited partnership ("Inst'l Inv"), Accelerated High
Yield Income Fund I L.P., a Florida limited partnership ("Income 1"),
Accelerated High Yield Income Fund II, L.P., a Florida limited partnership
("Income 2"), Beagle Fund 7, a Colorado limited partnership ("Beagle") and
Summit Venture, an Arizona general partnership ("Summit").

Each of the individuals named below is a citizen of the United States.

MacKenzie Patterson, Inc.

MacKenzie Patterson, Inc., is the general partner of Previously Owned
Mortgage Partnerships Income Fund 3, L.P., Accelerated High Yield Institutional
Investors, L.P., Accelerated High Yield Institutional Fund 1, L.P., Accelerated
High Yield Income Fund I, L.P. and Accelerated High Yield Income Fund II, L.P.
C.E. Patterson is the principal shareholder and principal officer of MacKenzie
Patterson, Inc.

C.E. Patterson is President of MacKenzie Patterson, Inc. He is the
co-founder and President of Patterson Financial Services, Inc. In 1981, Mr.
Patterson founded PFS with Berniece A. Patterson, as a financial planning firm.
Patterson Real Estate Services, a licensed California Real Estate Broker, was
founded in 1982. As President of PFS, Mr. Patterson is responsible for all
investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. He is a trustee of Consolidated
Capital Properties Trust, a liquidating trust formed out of the bankruptcy court
proceedings involving Consolidated Capital Properties, Ltd. Mr. Patterson is
also an officer and controlling shareholder of Cal-Kan, Inc., an executive
officer and controlling shareholder of Moraga Partners, Inc., general partner of
Moraga Fund 1, L.P. Mr. Patterson, through his affiliates, manages a number
of investment and real estate partnerships.

Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate,

<PAGE>

Pioneer Health Care Services, Inc., and is responsible for the day-to-day
operations of three nursing homes and over 250 employees.

Victoriaann Tacheira is vice president of MacKenzie Patterson, Inc.,
which she joined in 1988. Ms. Tacheira has eleven years of experience with the
NASD broker/dealer business and is experienced in all phases of broker/dealer
operations. She is licensed with the NASD as a General Securities Principal. She
is president and owner of North Coast Securities Corporation. Ms. Tacheira has
been certified by the College of Financial Planning in Denver, Colorado, as a
Financial ParaPlanner.

Moraga Partners, Inc.

Moraga Partners, Inc. is a California corporation which acts as general
partner of Moraga. It is owned by C.E. Patterson and Thomas A. Frame. Mr.
Patterson and Mr. Frame are also each an executive officer and director of
Moraga Partners, Inc. Information regarding Mr. Patterson is set forth above.

Thomas A. Frame has been the president of Paradigm Investment
Corporation, a real estate limited partnership secondary market firm, since
1986. In 1973, Mr. Frame was a co-founder of Transcentury Real Estate Masters,
Oakland, California, a residential and commercial real estate brokerage firm. In
1973 he also co-founded, and has since then been a partner in, Transcentury
Property Management Company, which has syndicated privately-placed real estate
limited partnerships owning multi-family residential properties. He is a trustee
of Consolidated Capital Properties Trust, a liquidating trust formed out of the
bankruptcy court proceedings involving Consolidated Capital Properties, Ltd. Mr.
Frame is co-owner and an executive officer and director of Cal Kan, Inc., and
co-owner and an officer of Moraga Partners, Inc., general partner of Moraga Fund
1, L.P. Mr. Frame, through his affiliates, manages over $6 million dollars in
investor capital and is currently managing a total of 1,150 residential units in
four states.

Cal Kan, Inc.

The shareholders, executive officers and directors of Cal Kan are C.E.
Patterson and Thomas Frame. See the discussion above for information concerning
Mr. Patterson and Mr. Frame.

Moraga Gold, LLC

The members of Moraga Gold, LLC are Moraga Partners, Inc. and the David
B. Gold Trust. Information concerning Moraga Partners, Inc. is set forth above.
The David B. Gold Trust is a private trust of which Barbara Lurie is the trustee
and Steven Gold is responsible for certain investments. The sole beneficiary of
the trust is a nonprofit charitable foundation. The business address of the
trust is One Maritime Plaza, Suite 725, San Francisco, California 94111. Barbara
Lurie has been employed for the last five years as a physician by the University
of California, San Francisco and the University of Minnesota. Steven Gold, a
California attorney, has been self-employed during the last five years analyzing
investments for his own account and for that of the trust. In addition, he has
participated in starting a number of business ventures, including T/O Devices,
an import/export company.

<PAGE>

Beagle Fund 7, L.P.

Beagle Fund 7, L.P., is a Colorado limited partnership of which Robert
Dixon is the general partner.

Robert E. Dixon received his BA in Economics from the University of
California at Los Angeles in 1992. He worked for Lehman Brothers in equity sales
and trading during 1993 and 1994. In October of 1994, he left Lehman Brothers to
work for MacKenzie Patterson, Inc., as a research analyst. In June of 1996 Mr.
Dixon left MacKenzie Patterson, Inc. to form Beagle Fund 7, L.P. Mr. Dixon is
also a registered representative with North Coast Securities of Moraga,
California.

Summit Venture

Summit Venture is an Arizona general partnership composed of Barry
Zemel and Ira Gaines.

Barry Zemel has over twenty years experience in all aspects of
financial controls, reporting and interpretation of financial statements and tax
planning and implementation. Mr. Zemel has ten years experience in analyzing and
purchasing pre-existing limited partnerships. He graduated with a degree in
Business Administration from the Baruch College at City College of New York in
1969, is a Certified Public Accountant in both Arizona and New York and
maintains current memberships in both the American Institute of Certified Public
Accountants and the Arizona Society of CPA's. Currently, and for more than five
years, Mr. Zemel has been involved full-time in investing for his own account.

Ira Jeffrey Gaines has been involved, full-time, in investing for his
own account for more than the last five years. In 1995 he became a partner in
Summit Venture which is a purchaser of interests in public and private
partnerships.

<PAGE>

Exhibit (a)(2)

<PAGE>

LETTER OF TRANSMITTAL

THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON
SEPTEMBER 26, 1996 (the "Expiration Date") UNLESS EXTENDED

Deliver to: MacKenzie Patterson, Inc.
1640 School Street, Suite 100
Moraga, California 94556

(PLEASE INDICATE CHANGES
OR CORRECTIONS TO THE
ADDRESS PRINTED ABOVE) For assistance: (800) 854-8357

To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date. Delivery of
this Letter of Transmittal or any other required documents to an address other
than as set forth above does not constitute valid delivery. The method of
delivery of all documents is at the election and risk of the tendering
Unitholder. Please use the pre-addressed, postage-paid envelope provided.
This Letter of Transmittal is to be completed by Unitholders of Capital
Growth Mortgage Investors, L.P. (the "Partnership"), pursuant to the procedures
set forth in the Offer to Purchase (as defined below). Capitalized terms used
herein and not defined herein have the meanings ascribed to such terms in the
Offer to Purchase.

PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS

Gentlemen:

The undersigned hereby tenders to Moraga Fund 1, L.P., Cal Kan, Inc.,
Moraga Gold, LLC, Accelerated High Yield Institutional Fund I, L.P., Accelerated
High Yield Institutional Investors, L.P., Accelerated High Yield Income Fund I,
L.P., Accelerated High Yield Income Fund II, L.P., Beagle Fund 7, L.P.,
Previously Owned Mortgage Partnerships Income Fund 3, L.P., and Summit Venture
(together the "Purchasers") all of the limited partnership units ("Units") in
the Partnership held by the undersigned as set forth above (or, if less than all
such Units, the number set forth below in the signature box) at $2.00 per Unit,
less the amount of any distributions made or declared with respect to the Units
between the Offer Date and the Expiration Date, (the "Offer Price") and upon the
other terms and subject to the conditions set forth in the Offer to Purchase,
dated August 27, 1996 (the "Offer to Purchase"), and this Letter of Transmittal
(which together constitute the "Offer"). Receipt of the Offer to Purchase is
hereby acknowledged.
The undersigned recognizes that, if more than 2,818,800 Units are
validly tendered prior to or on the Expiration Date and not properly withdrawn,
the Purchasers will, upon the terms of the Offer, accept for payment from among
those Units tendered prior to or on the Expiration Date 2,818,800 Units on a pro
rata basis, with adjustments to avoid purchases of certain fractional Units,
based upon the number of Units validly tendered prior to the Expiration Date and
not withdrawn.
Subject to and effective upon acceptance for payment of any of the
Units tendered hereby, the undersigned hereby sells, assigns and transfers to,
or upon the order of, Purchasers all right, title and interest in and to such
Units which are purchased pursuant to the Offer. The undersigned hereby
irrevocably constitutes and appoints the Purchasers as the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Units, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to deliver such Units and transfer ownership of
such Units, on the books of the Partnership, together with all accompanying
evidences of transfer and authenticity, to or upon the order of the Purchasers
and, upon payment of the purchase price in respect of such Units by the
Purchasers, to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Units all in accordance with the terms of the
Offer. Subject to and effective upon the purchase of any Units tendered hereby,
the undersigned hereby requests that each of the Purchasers be admitted to the
Partnership as a "substitute Limited Partner" under the terms of the Partnership
Agreement of the Partnership. Upon the purchase of Units pursuant to the Offer,
all prior proxies and consents given by the undersigned with respect to such
Units will be revoked and no subsequent proxies or consents may be given (and if
given will not be deemed effective). In addition, by executing this Letter of
Transmittal, the undersigned assigns to the Purchasers all of the undersigned's
rights to receive distributions from the Partnership with respect to Units which
are purchased pursuant to the Offer, other than distributions declared or paid
on or after the Offer Date and through the Expiration Date.
The undersigned hereby represents and warrants that the undersigned
owns the Units tendered hereby within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and has full power and authority to
validly tender, sell, assign and transfer the Units tendered hereby, and that
when any such Units are purchased by the Purchasers, the Purchasers will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchasers to be necessary or
desirable to complete the assignment, transfer and purchase of Units tendered
hereby.
The undersigned understands that a tender of Units to the Purchasers
will constitute a binding agreement between the undersigned and the Purchasers
upon the terms and subject to the conditions of the Offer. The undersigned
recognizes the right of the Purchasers to affect a change of distribution
address to MacKenzie Patterson, Inc. at 1640 School Street, Suite 100, Moraga,
California, 94556. The undersigned recognizes that under certain circumstances
set forth in the Offer to Purchase, the Purchasers 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 Purchasers. All authority herein conferred or agreed to
be conferred shall survive the death or incapacity of the undersigned and any
obligations of the undersigned shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.

===============================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C and D on the following page as necessary)
===============================================================================

<PAGE>

===============================================================================
Please sign exactly as your name is printed
or corrected) above, and insert your
Taxpayer Identification Number or Social Security
Number in the space provided below your signature. X___________________________
(Signature of Owner) (Date)
For joint owners, each joint owner must sign.
See Instructions 1. The signatory hereto hereby
certifies under penalties of perjury the statements
in Box B, Box C and, if applicable, Box D. If the
undersigned is tendering less than all Units held,
the number of Units tendered is set forth below.
Otherwise, all Units held by the undersigned are
tendered hereby. x__________________________
(Signature of Owner) (Date)
Taxpayer I.D. or Social Security # ____________
Telephone No. (day) ________ (eve.) _________
===============================================================================

===============================================================================
BOX A
- -------------------------------------------------------------------------------
Additional Information

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

Name and Capacity ___________________________________________________________
Address ____________________________________________________________________
Area Code and Telephone No. __________________________________________________

Notarization of Signature
(If required. See Instruction 1)
STATE OF ____________________)
) ss.:
COUNTY OF __________________)

On this ________ day of _______________, 199__, before me came personally
___________________________, to me known to be the person who executed the
foregoing Letter of Transmittal.
-----------------------------
Notary Public
OR
Signature Guarantee
(If required. See Instruction 1)

Name and Address of Eligible Institution: _____________________________________
Authorized Signature __________________________ Title _____________________
Name __________________________________________ Date ______________, 199___
===============================================================================
BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
- -------------------------------------------------------------------------------
The person signing this Letter of Transmittal hereby certifies the
following to the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of
this Letter of Transmittal is the correct TIN of the Unitholder, 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 IRS Center or Social Security Administration Office, or (b) the
Unitholder intends to mail or deliver an application in the near future (it
being understood that if the Unitholder does not provide a TIN to the Purchasers
within sixty (60) days, 31% of all reportable payments made to the Unitholder
thereafter will be withheld until a TIN is provided to the Purchasers); 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 a sa 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) if you are unable to certify
that the Unitholder is not subject to backup withholding.

===============================================================================
BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)

<PAGE>

- -------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership 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 equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchasers 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 estate or foreign trust (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations); (ii) the Unitholder's U.S.
social security number (for individuals) or employer identification number (for
non-individuals) is correctly printed in the signature box on the front 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 front 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 Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
===============================================================================
BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
- -------------------------------------------------------------------------------
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
the U.S. federal income tax laws, because the Unitholder:

(i) Is a nonresident alien individual or a foreign corporation, partnership,
estate or trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(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.
===============================================================================

<PAGE>

INSTRUCTIONS

Forming Part of the Terms and Conditions of the Offer

1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a
Unitholder must sign at the "X" on the bottom of the first page of
this Letter of Transmittal and insert the Unitholder's correct
Taxpayer Identification Number or Social Security Number ("TIN") in
the space provided below the signature. The signature must correspond
exactly with the name printed (or corrected) on the front of this
Letter of Transmittal without any change whatsoever. If this Letter of
Transmittal is signed by the registered Unitholder of the units, no
notarization or signature guarantee on this Letter of Transmittal is
required. Similarly, if Units are tendered for the account of a member
firm of a registered national security exchange, a member firm of the
National Association of Securities Dealer, Inc. or a commercial bank,
savings bank, credit union, savings and loan association or trust
company having an office, branch or agency in the United states (each
an "Eligible Institution"), no notarization or signature guarantee is
required. In all other cases, signatures on this Letter of Transmittal
must either be notarized or guaranteed by an Eligible Institution, by
completing the Notarization or Signature guarantee set forth in BOX A
of this Letter of Transmittal. If any tendered Units are registered in
the names of two or more joint holders, all such holders must sign
this Letter of Transmittal. If this Letter of Transmittal is signed by
trustees, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit
proper evidence satisfactory to the Purchasers of their authority to
so act. For Units to be validly tendered, a properly completed and
duly executed Letter of Transmittal, together with any required
notarizations or signature guarantees in BOX A, and any other
documents required by this Letter of Transmittal, must be received by
the depositary prior to or on the Expiration Date at its address or
facsimile number set forth on the front of this Letter of Transmittal.
No alternative, conditional or contingent tenders will be accepted.
All tendering Unitholders by execution of this Letter of Transmittal
waive any right to receive any notice of the acceptance of their
tender.

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

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

Box B - Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Unitholder must provide to the Purchasers the
Unitholder's correct Taxpayer Identification Number or Social Security
Number ("TIN") in the space provided below the signature line and
certify, under penalties of perjury, that such Unitholder is not
subject to such backup withholding. The TIN that must be provided is
that of the registered Unitholder indicated on the front of this Letter
of Transmittal. If a correct TIN is not provided, penalties may be
imposed by the Internal Revenue Service ("IRS"), in addition to the
Unitholder being subject to backup withholding. Certain Unitholders
(including, among others, all corporations) are not subject to backup
withholding. Backup withholding is not an additional tax. If
withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.

Box C - FIRPTA Affidavit. To avoid potential withholding of tax
pursuant to Section 1445 of the Internal Revenue Code, each Unitholder
who or which is a United States Person (as defined 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.

4. Box D - Foreign Persons. In order for a Unitholder who is a foreign
person (i.e., not a United States Person as defined in 3 above) to
qualify as exempt from 31% backup withholding, such foreign Unitholder
must certify, under penalties of perjury, the statement in BOX D of
this Letter of Transmittal attesting to that foreign person's status by
checking the box preceding such statement. However, such person will be
subject to withholding of tax under Section 1445 of the Code.

5. Additional Copies of Offer to Purchase and Letter of Transmittal.
Requests for assistance or additional copies of the Offer to
Purchase and this Letter of Transmittal may be obtained from the
Purchasers by calling 800-854-8357.

<PAGE>

Exhibit (a)(3)

<PAGE>
PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL FUND 1, L.P.
ACCELERATED HIGH YIELD INCOME FUND 1, L.P.
ACCELERATED HIGH YIELD INCOME FUND 2, L.P.
SUMMIT VENTURE
MORAGA FUND 1, L.P.
MORAGA GOLD, LLC
BEAGLE FUND 7, L.P.
CAL KAN, INC.
(THE "PURCHASERS")

August 27, 1996

OFFER TO PURCHASE CAPITAL GROWTH MORTGAGE INVESTORS, L.P. UNITS
FOR $2.00 PER UNIT

Dear Limited Partner:

As described in the enclosed Offer to Purchase and related Letter of
Transmittal (the "Offer"), the Purchasers identified above are offering to
purchase your Limited Partnership Units in Capital Growth Mortgage Investors,
L.P. ("Capital Growth") for $2.00 cash per Unit. The Offer will provide you with
an opportunity to liquidate all, or a portion of, your investment in Capital
Growth without the usual transaction costs associated with market sales or
partnership transfer fees. The Purchasers and their affiliates currently own or
control approximately 0.003% of the Units.

The General Partner of Capital Growth estimated at December 31, 1995
that, for ERISA tax reporting purposes, the value of the Units was $2.10 per
Unit. The book value of each Unit as of June 30, 1996, was $2.20 per Unit and,
as of December 31, 1995, the book value was $2.11 per Unit. The offer price of
$2.00 per Unit represents between 90% and 95% of these values and is
substantially in excess of recent secondary market trading prices for the Units.

Holders of Units ("Unitholders") are urged to consider the following
factors:

- The purchase price offered by the Purchasers is
less than the General Partner's estimated value for ERISA tax
reporting purposes of $2.10 per Unit at December 31, 1995 and
is also less than the Partnership's book value per Unit of
$2.11 as of December 31, 1995, and $2.20 as of June 30, 1996.

- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.

<PAGE>

- The Purchasers are making the Offer for investment
purposes and with the intention of making a profit from the
ownership of the Units. In establishing the purchase price of
$2.00 per Unit, the Purchasers are motivated to establish the
lowest price which might be acceptable to Unitholders
consistent with the Purchasers' objectives.

- As a result of consummation of the Offer, the
Purchasers may be in a position to significantly influence all
Partnership decisions on which Unitholders may vote. The
Purchasers will vote the Units acquired in the Offer in its
own interest, which may be different from or in conflict with
the interests of the remaining Unitholders.

- The Purchasers may accept only a portion of the
Units tendered by a Unitholder in the event a total of more
than 2,818,800 Units are tendered.

After carefully reading the enclosed Offer, if you elect to tender your
Units, mail (using the enclosed pre-addressed, postage-paid envelope) or
telecopy a duly completed and executed copy of the orange Letter of Transmittal
and Change of Address forms, and any other documents required by the Letter of
Transmittal, to the Depositary for the Offer at:

MacKenzie Patterson, Inc.
1640 School Street, Suite 100
Moraga, California 94556

If you have any questions or need assistance, please call the
Depositary at 800-854-8357.