EREIM LP ASSOCIATES, 10-K405, 1997-03-31

EREIM LP ASSOCIATES
10-K405, 1997-03-31
LESSORS OF REAL PROPERTY, NEC

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required, Effective October 7, 1996] For
the fiscal year ended December 31, 1996

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]

Commission File Number 33-11064

EREIM LP ASSOCIATES
(Exact name of registrant as specified in governing instrument)

New York 58-1739527
(State of organization) (IRS Employer Identification No.)

787 Seventh Avenue, New York, N.Y. 10019
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (212) 554-1926

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None

Securities registered pursuant to Section 12(g) of the Act:

The Investment Guarantee Agreement (Title of Class) has
not been registered as of the date of this Report

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x No
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [x]

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant.

Not Applicable

DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the Prospectus of ML/EQ Real Estate Portfolio, L.P., a
Delaware limited partnership, dated April 23, 1987, as supplemented by
supplements dated March 3, 1988 and March 17, 1988 (File No. 33-11064) filed
pursuant to Rule 424 of the Securities Act of 1933, as amended, are
incorporated by reference in Parts I and II of this Annual Report on Form 10-K.

<PAGE> 2

PART I.

ITEM 1. BUSINESS

General. The registrant, EREIM LP Associates (the "Partnership"), is a
general partnership formed on December 18, 1986 under the Partnership Law of the
State of New York.

The Partnership's two general partners are EREIM LP Corp., a Delaware
corporation ("LP Corp."), and The Equitable Life Assurance Society of the
United States, a New York mutual life insurance company ("Equitable", and,
together with LP Corp., the "General Partners"). LP Corp. is an indirect,
wholly-owned subsidiary of Equitable.

The Partnership has issued an investment guaranty agreement dated as
of March 10, 1988 (the "Guaranty Agreement") to EML Associates (the "Venture"),
a joint venture formed in March 1988, between the Partnership and ML/EQ Real
Estate Portfolio, L.P. ("ML/EQ"), a Delaware limited partnership of which an
indirect, wholly-owned subsidiary of Equitable, EREIM Managers Corp., is the
Managing General Partner and an affiliate of Merrill Lynch & Co., Inc., MLH
Real Estate Associates Limited Partnership, is the Associate General Partner
(the "Associate General Partner"). The Guaranty Agreement has been assigned to
ML/EQ. Capitalized terms used in this annual report that are not defined
herein have the same meaning as in the Partnership Agreement of ML/EQ dated as
of February 9, 1988, which is included as an exhibit to this annual report.

ML/EQ offered to the public $150,000,000 of Beneficial Assignee
Certificates (the "BACs"), which evidence the economic rights attributable to
limited partnership interests in ML/EQ (the "Interests"), in an offering (the
"Offering") which commenced in 1987. The Offering was made pursuant to a
Prospectus dated April 23, 1987, as supplemented by Supplements dated December
29, 1987 (the "December Supplement"), March 3, 1988 (the "March 3 Supplement")
and March 17, 1988 (the "March 17 Supplement"), filed with the Securities and
Exchange Commission (the "SEC") in connection with a Registration Statement on
Form S-11 (No. 33-11064). The Prospectus as supplemented is hereinafter
referred to as the "Prospectus." The Offering terminated on March 29, 1988.
On March 10, 1988, ML/EQ's initial investor closing occurred at which time
ML/EQ received $92,190,120, representing the proceeds from the sale of
4,609,506 BACs. On May 3, 1988, ML/EQ's final investor closing occurred at
which time ML/EQ received $16,294,380, representing the proceeds from the sale
of an additional 814,719 BACs. In total, ML/EQ realized gross proceeds of
$108,484,500 from the Offering, representing the sale of 5,424,225 BACs.

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<PAGE> 3

of all of the Venture's distributions of Sale or Financing Proceeds on a pari
passu basis with ML/EQ. The amendment will have the effect of accelerating the
return of original contributions to BAC holders to the extent that Sale and
Financing Proceeds are realized prior to the dissolution of ML/EQ.

Business of the Partnership. The Partnership was formed to invest in a
diversified portfolio of properties and mortgage loans. The Partnership
considers its business to represent one industry segment, investment in real
property. The Partnership has, however, developed a concentration of real estate
investments with the inclusion of the Venture's interests in Northland Center
and Brookdale Center. Such properties were transferred to the Venture and
Equitable on July 22, 1994 and December 16, 1996, respectively. The Venture's
interest in Northland Center represented approximately 31% and 30% of the real
estate investments owned by the Venture as of December 31, 1996 and 1995,
respectively, and approximately 46% and 54% of total revenues of the Venture for
the years ended December 31, 1996 and 1995, respectively. The Venture's interest
in Brookdale Center represented approximately 12% of the real estate investments
owned by the Venture as of December 31, 1996 and approximately 15.3% of total
revenues of the Venture in the year ended December 31, 1996. Combined retail
real estate investments represented approximately 50% and 53% of real estate
investments owned by the Venture as of December 31, 1996 and 1995, respectively,
and approximately 67% and 66% of total revenues of the Venture for the years
ended December 31, 1996 and 1995, respectively. The Partnership conducts its
real estate investment business through the Venture. The capital of the Venture
was provided approximately 20% by the Partnership through the contribution of
interests in two zero coupon mortgage notes (see Item 2. PROPERTIES) and
approximately 80% by ML/EQ, the managing partner of the Venture, through the
contribution of net proceeds of the Offering.

Following the Offering, the Venture acquired a diversified portfolio of
real properties and mortgage loans secured by real properties. Based on original
acquisition prices, approximately 52% of the Venture's original contributed
capital was invested in existing income-producing real properties acquired
without permanent mortgage indebtedness (the "Properties"), approximately 25% of
such capital was invested in zero coupon or similar mortgage notes (the "Zero
Notes"), and the balance was invested in fixed-rate first mortgage loans (the
"Mortgage Loans"). The Properties and the properties that secured the mortgage
loans included commercial, industrial, residential and warehouse/distribution
properties.

At December 31, 1996, the Venture owned ten Properties (one of which
consists of two adjacent office buildings) and undivided interests in two
Properties (Northland Center and Brookdale Center) as a tenant in common with
Equitable. All references herein to the Venture's ownership of Northland Center
or Brookdale Center shall be deemed to refer to the Venture's undivided interest
as a tenant in common with Equitable, unless otherwise indicated. Nine of the
Properties were purchased at an aggregate cost of approximately $68.1 million.
Two of the Properties, Northland Center and The Bank of Delaware Building
(originally properties that secured a Zero Note and a Fixed-Rate Mortgage Loan,
respectively), were transferred to the Venture during 1994 in separate deed in
lieu of foreclosure transactions. The estimated fair market value of the
Venture's undivided interest in the Northland Center Zero Coupon Mortgage Note

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<PAGE> 4

Receivable immediately preceding the transfer was approximately $32.2 million
and the estimated fair market value of the Bank of Delaware Building Mortgage
Loan immediately preceding the transfer was approximately $8.5 million.
Brookdale Center (originally a property that secured a Zero Note) was
transferred to the Venture during December 1996 pursuant to a Chapter 11
bankruptcy plan for Midwest Real Estate Shopping Center L.P. ("Midwest"), a
publicly traded limited partnership (formerly Equitable Real Estate Shopping
Centers L.P.), the borrower. The estimated fair market value of the Venture's
undivided interest in the Brookdale Loan immediately preceding the transfer was
approximately $15.6 million. In addition, at December 31, 1996, the Venture
owned an interest in one remaining Mortgage Loan in the principal amount of $6.0
million. (Amounts identified are exclusive of closing costs.) Reference is made
to Item 2. PROPERTIES for information concerning the Properties and the Mortgage
Loan.

Real estate investments are recorded at historical cost less
accumulated depreciation. For purposes of financial statement presentation, the
Properties are stated at cost, unless it is determined that the value of the
Properties has been impaired to a level below depreciated cost. Impairment is
determined by calculating the sum of the estimated undiscounted future cash
flows including the projected undiscounted future net proceeds from sale of the
Property. In the event this sum is less than the depreciated cost of the
Property, the Property will be written down to estimated fair market value. With
respect to Mortgage Loans, management reviews the valuation of the underlying
security. If the Venture's portion of the estimated fair market value of the
underlying collateral declines below the recorded investment in the Mortgage
Loans, impairment will be recognized through the creation of a valuation
allowance.

Neither the Partnership nor the Venture has any real property
investments located outside the United States. The Partnership has no employees.

Leasing Information. See Item 2. PROPERTIES for information regarding
percentages of space under lease for each of the Properties and the properties
that secure the Mortgage Loans, as well as information relating to the
percentage of rentable space at each Property covered by leases that are
scheduled to expire in each of the years 1997 to 1999.

Competition. The Properties and the property that secures the Mortgage
Loan may compete with other properties in the areas in which they are located
for, among other things, desirable tenants. Competitors may include properties
owned or managed directly or indirectly by Equitable or its subsidiaries or
affiliates or by affiliates of the Associate General Partner. Owners of some of
these properties may have greater resources than the Venture or the owners of
the property that secures the Mortgage Loan and/or may be willing or able to
make greater concessions (e.g., lower rent or higher allowances for tenant
improvements) to attract tenants. Similarly, tenants of the Properties and the
property that secures the Mortgage Loan may compete for business with other
businesses in the area. Such competition may adversely affect the business (and,
in some cases, the viability) of such tenants and, particularly in the case of
retail tenants, may reduce the amount of rent received by the Venture under
percentage rent provisions. See Item 2. PROPERTIES for a discussion of
competition pressures experienced by the Venture's Richland Mall Property.

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<PAGE> 5

The Venture's income from Properties may be affected by many factors,
including reductions in rental income due to an inability to maintain occupancy
levels, adverse changes in general economic conditions, adverse local conditions
(such as decreases in demand for similar or competing facilities or competitive
over-building, adverse changes in tax, real estate, zoning and environmental
laws or decreases in employment), energy shortages or increased energy costs, or
acts of God (such as earthquakes and floods). In addition, the ability of the
borrowers on the Mortgage Loan to meet its obligations under such loan will be
affected by these same factors. See Item 2. PROPERTIES for a description of
difficulties experienced by certain of the Properties and the property that
secures the Mortgage Loan.

The holding period for the Properties was originally intended to be 7
to 10 years and ML/EQ currently does not anticipate that the Properties will be
sold prior to that time unless market conditions demand that earlier action be
taken. The Partnership can not state whether or not the Properties will be sold
within this original period. The ability of the Venture to dispose of its
Properties will be influenced by, among other things, prevailing interest rates
and the availability of mortgage financing at the time that the Properties are
offered for sale. For example, if high interest rates or shortages of mortgage
funds were prevailing at the time the Venture was attempting to dispose of a
Property, the sale or other disposition of such Property might be rendered
difficult or the Venture might be required to assume credit risks if it becomes
necessary to extend mortgage financing to buyers. Similarly, such factors may
affect and have affected the ability of the borrower under the Mortgage Loan
held by the Venture to sell or refinance the property that secures such loan,
which may adversely affect the ability of the borrower to pay such loan at
maturity. In this regard, it should be noted that many lenders have continued to
curtail extending credit to many businesses and industries, including real
estate owners and developers. The reasons for such action include, but are not
limited to, defaults experienced on such loans. There can be no assurance
whether or when the availability of credit for real estate financing will
increase. Liquidation or dissolution of the Venture will be delayed until the
sale, retirement or other disposition of the Mortgage Loan and Properties held
by the Venture (other than purchase money notes from the sale of a property) or
the liquidation of ML/EQ, but not beyond December 31, 2002. See INVESTMENT
GUARANTY AGREEMENT AND RELATED MATTERS below.

Conflicts of Interest. Equitable and its subsidiaries and affiliates
are among the largest managers of real estate assets in the country and certain
activities in which they currently or in the future may engage will be
competitive with the Partnership, ML/EQ, and the Venture. As Managing General
Partner of the managing partner of the Venture, EREIM Managers Corp. may
encounter various conflicts of interest in managing ML/EQ's and the Venture's
businesses. These conflicts may, for example, arise in connection with the
allocation of leasing or sale opportunities, selection of service providers such
as property managers (including whether to retain an affiliate or a
non-affiliate), determination to exercise or forbear exercise of certain rights
(e.g., eviction or foreclosure), or the timing of investment dispositions or
liquidations. While EREIM Managers Corp. believes that it will be able to
resolve such conflicts in an equitable manner, it is possible that such
conflicts may not be resolved in favor of ML/EQ, the Venture, or the
Partnership.

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<PAGE> 6

Presently, nine Properties are managed by Compass Management and
Leasing, Inc. ("Compass") and Compass Retail, Inc. ("Compass Retail"),
affiliates of Equitable. The property management agreements are at market rates
but not in excess of the rates permitted under the Partnership Agreement.

Working Capital Reserves. The Partnership has not established working
capital reserves at any level. The Partnership may establish and maintain such
working capital reserves as the General Partners from time to time may determine
appropriate, in light of the nature of the Venture's investments and other
considerations.

Insurance. The Properties are covered under insurance contracts which
provide comprehensive general liability as well as physical damage protection.
Such insurance contracts also cover other properties in accounts which are
advised or managed by Equitable or its subsidiaries as well as certain
properties in which Equitable, its subsidiaries, or its insurance company
separate accounts have an ownership interest.

Although the Venture carries comprehensive insurance on the Properties
and the terms of the Venture's Mortgage Loan requires the borrower to obtain and
maintain general liability, property damage and certain other insurance in
specified amounts, there are certain risks (such as earthquakes, floods and
wars) which may be uninsurable or not fully insurable at a cost believed to be
economically feasible. Moreover, there can be no assurance that particular risks
that are currently insurable will continue to be so, or that current levels of
coverage will continue to be available at a cost believed to be economically
feasible. The Managing General Partner, on behalf of the ML/EQ as managing
partner of the Venture, will use its discretion in determining the scope of
coverage, limits and deductible provisions on insurance, with a view to
maintaining appropriate insurance on the Properties at an appropriate cost.
Similarly, the Managing General Partner will use its discretion in determining
whether and when to permit the borrower under the Mortgage Loan to obtain and
maintain coverage that differs from the requirements of the mortgage, with a
view to requiring appropriate insurance on the property which secures the
Mortgage Loan in light of prevailing insurance market, economic, and other
factors. This may result, however, in insurance which will not cover the full
extent of a loss or claim.

Investment Guaranty Agreement and Related Matters. Under an investment
guaranty agreement dated March 10, 1988 by and between the Partnership and the
Venture (the "Guaranty Agreement"), the Partnership has guaranteed to pay the
Venture, if necessary, ninety days after the earlier of the sale, retirement, or
other disposition of all of the Mortgage Loans and Properties or the liquidation
of ML/EQ, an amount which when added to all distributions from ML/EQ to the
holders of BACs ("BAC Holders") will enable ML/EQ to provide the BAC Holders
with a minimum return (the "Minimum Return") equal to their Capital
Contributions plus a simple annual return equal to 9.75% multiplied by their
Adjusted Capital Contributions (as defined in the Guaranty Agreement) calculated
from the investor closing at which the BAC Holder acquired its BACs.

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<PAGE> 7

The Venture has assigned the Guaranty Agreement to ML/EQ in exchange
for ML/EQ's assumption of the Venture's obligations thereunder, including the
obligation to pay the Guaranty Fee. Any moneys distributed by ML/EQ to BAC
Holders and/or limited partners of ML/EQ ("Limited Partners") on account of
payments made under the Guaranty Agreement will be distributed to BAC Holders
and/or Limited Partners based on the total number of BACs or Interests owned by
each BAC Holder and/or Limited Partner as of the date the Minimum Return is
calculated.

If the Venture holds a purchase money note from the sale of a Property
at the time all other investments of ML/EQ and the Venture have been disposed of
and the proceeds distributed, any remaining obligation of the Partnership under
the Guaranty Agreement will be reduced by (i) the aggregate amount of all cash
payments to BAC Holders and Limited Partners and (ii) the discounted value (at
the market rate of interest of a U.S. Treasury security having a comparable
term) of principal and interest payments on the purchase money note. The
Partnership will be required to either purchase the purchase money note from the
Venture at its discounted value or guarantee timely payment of principal and
interest under the note, but only to the extent such note reduces obligations
under the Guaranty Agreement and so long as the note does not reduce obligations
below zero. If, the Venture sells a purchase money note at a premium over the
discounted value of the note, the premium will be paid to the Partnership to the
extent of any payments made under the Guaranty Agreement. Moreover, the
Partnership will be entitled to receive any cash payments paid to ML/EQ (other
than payments from a purchase money note guaranteed by the Partnership) to the
extent that it has made any payment under the Guaranty Agreement.

The obligation of the Partnership to pay the Minimum Return is subject
to reduction for (i) any Federal, state or local corporate income or franchise
tax imposed upon ML/EQ or the Venture, and (ii) any Federal, state or local
income, gross receipts, value-added, excise or similar tax imposed on ML/EQ or
the Venture not imposed under law at the time of the Offering, other than any
such local tax imposed as a result of owning real property in the locality. All
distributions from ML/EQ to BAC Holders from whatever source will reduce the
amount of the Partnership's obligation under the Guaranty Agreement. The
obligations of the Partnership under the Guaranty Agreement will terminate in
the event that upon the written consent or the affirmative vote of BAC Holders
or Limited Partners owning more than 50% of the Interests either (i) EREIM
Managers Corp. is removed as the Managing General Partner of ML/EQ or (ii) ML/EQ
is dissolved without the consent of EREIM Managers Corp. The maximum liability
of the Partnership under the Guaranty Agreement is $271,211,250. Subject to the
foregoing, the obligations of the Partnership under the Guaranty Agreement as of
December 31, 1996 are limited to $244,905,999 plus the value of the
Partnership's interest in the Venture less any amounts contributed by the
Partnership to the Venture to fund cash deficits.

The obligations of the Partnership under the Guaranty Agreement are
nonrecourse to Equitable but are recourse as to LP Corp. Equitable has entered
into an agreement dated as of March 10, 1988 (the "Keep Well Agreement") with LP
Corp. which provides that Equitable will make capital contributions to LP Corp.
in such amounts as to permit LP Corp. to pay its obligations

-7-
<PAGE> 8

with respect to the Guaranty Agreement as they become due; provided, however,
that the maximum liability of Equitable under the Keep Well Agreement is an
amount equal to the lesser of (i) two percent of the total admitted assets of
Equitable (as determined in accordance with New York Insurance Law) or (ii)
$271,211,250. Subject to the foregoing, the obligations of Equitable under the
Keep Well Agreement as of December 31, 1996 are $244,905,999. The Keep Well
Agreement provides that only LP Corp. and its successors will have the right to
enforce Equitable's obligations thereunder.

The Keep Well Agreement is an unsecured contractual liability of
Equitable and is not a policy of insurance. Since the Guaranty Agreement is
nonrecourse as to Equitable and the obligation under the Keep Well Agreement to
pay all obligations of LP Corp. is not for the benefit of third parties,
including ML/EQ and BAC Holders, BAC Holders will have no direct cause of action
against Equitable to enforce the obligations of Equitable under the Keep Well
Agreement. However, if the assets of the Partnership and LP Corp. are
insufficient to satisfy the Partnership's obligations under the Guaranty
Agreement, a proceeding in bankruptcy could be commenced against LP Corp. In
such event the debtor-in- possession or trustee in bankruptcy would have a claim
against Equitable to compel performance under the Keep Well Agreement. If the
Managing General Partner, which is an affiliate of Equitable, did not commence
an involuntary bankruptcy proceeding against LP Corp. on behalf of ML/EQ, MLH
Real Estate Assignor Inc., the initial limited partner of ML/EQ ("the Initial
Limited Partner") on behalf of BAC Holders would have a right to compel ML/EQ to
commence such involuntary bankruptcy proceeding.

The New York Insurance Law contains provisions limiting the amount of
an investment by a New York life insurance company, such as Equitable, in
certain of its subsidiaries and in real estate. The Keep Well Agreement provides
that Equitable's obligation thereunder is subject to compliance with any
applicable limitation on investment contained in the New York Insurance Law.

At December 31, 1996, 1995 and 1994, Equitable's total surplus,
calculated in accordance with the statutory method of accounting, was
approximately $2.26 billion, $2.20 billion and $2.12 billion, respectively. At
December 31, 1996, 1995 and 1994, Equitable's total consolidated capital,
calculated in accordance with the statutory method of accounting and consisting
of surplus and the Asset Valuation Reserve, was approximately $3.56 billion,
$3.55 billion and $3.11 billion, respectively.

The Equitable Companies Incorporated (the "Holding Company"), a
Delaware corporation, owns all of Equitable's outstanding capital stock.
Equitable and the Holding Company are subject to the informational requirements
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith file reports and other information, including financial
statements, with the Securities Exchange Commission under Commission File No.
0-25280 and 1-11166, respectively. Such reports and other information filed by
Equitable and the Holding Company can be inspected and copied at the public
reference facilities maintained by the SEC in Washington, D.C. and at certain of
its Regional Offices, and copies may be obtained from the Public Reference
Section of the SEC, Washington, D.C. 20549, at prescribed rates.

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<PAGE> 9

Equitable is a diversified financial service organization serving a
broad spectrum of insurance, investment management, and investment banking
customers. It has been in business since 1859. In 1992, it converted from a
mutual life insurance company into a stock life insurance company through a
process called "demutualization."

ITEM 2. PROPERTIES

At December 31, 1996, approximately 85.5% of the aggregate rentable
square feet of the Venture's Properties was leased. Leases covering
approximately 8.7%, 8.4% and 8.6% of the Properties rentable square feet are
scheduled to expire in 1997, 1998 and 1999, respectively.

Set forth below is a brief description of each of the Venture's
investments at December 31, 1996. Reference is made to Notes 3, 4, 5 and 9 of
the Notes to Consolidated Financial Statements in Item 8. FINANCIAL STATEMENTS.
The Venture has fee ownership of the land and improvements relating to each of
the Properties.
<TABLE>
<CAPTION>
Name, Location Approximate Date of Year of
and Type of Property Size Acquisition Completion
--------------------------- ------------ -------------- ----------
<S> <C> <C> <C>
1200 Whipple Road 257,500 3/17/88 1963
Union City, CA sq. ft.
warehouse/distribution

Richland Mall 182,577 7/19/88 1974-75
Bucks County, PA sq. ft.
shopping center

16/18 Sentry Park West 186,243 12/22/88 1988
Montgomery County, PA sq. ft.
office buildings

701 Maple Lane 58,230 12/27/88 1980
Bensenville, IL sq. ft.
warehouse/office
733 Maple Lane 23,520 12/27/88 1980
Bensenville, IL sq. ft.
warehouse/office

7550 Plaza Court 49,500 12/27/88 1980
Willowbrook, IL sq. ft.
warehouse/office

1850 Westfork Drive 103,505 1/6/89 1988
Lithia Springs, GA sq. ft.
warehouse/distribution

1345 Doolittle Drive 326,414 5/18/89 1964
San Leandro, CA sq. ft.
warehouse/distribution
</TABLE>

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<PAGE> 10

<TABLE>
<S> <C> <C> <C>
800 Hollywood Avenue 50,337 6/8/89 1979
Itasca, IL sq. ft.
warehouse/office

Northland Center 552,922(1) 7/22/94 1954
Southfield, MI sq. ft.
regional mall

The Bank of Delaware Building 314,313 11/15/94 1970
Wilmington, DE sq. ft.
office building

Brookdale Center 200,184(1) 12/16/96 1962
Brooklyn Center, MN sq. ft.
regional mall
</TABLE>

_____________
(1) Excludes square feet of properties owned by certain anchor stores.

Projected Annual Aggregate Lease Payments to be Received (in dollars)(1)

<TABLE>
<CAPTION>
Name of Property 1997 1998 1999 2000 2001 Thereafter
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1200 Whipple Rd. $1,009,340 $ 1,098,200 $ 1,261,675 $ 1,261,675 $1,261,675 $ 2,079,051
Richland Mall 535,461 895,060 890,321 861,898 806,035 9,275,140
16/18 Sentry Park West 2,897,834 2,723,867 2,413,557 1,704,002 656,762 2,197,216
701 and 733 Maple Lane 339,430 205,391 104,174 111,720 111,720 46,550
7550 Plaza Ct. 193,050 202,950 211,613 218,790 225,720 171,889
1850 Westfork Dr. 179,409 0 0 0 0 0
1345 Doolittle Dr. 838,192 859,468 708,686 451,216 86,400 86,400
800 Hollywood Ave. 204,284 206,382 210,786 213,932 213,932 89,138
Northland Center 3,667,672 3,400,990 3,133,558 2,791,510 2,241,635 5,273,995
The Bank of Delaware Building 947,717 900,331 874,389 848,175 635,142 1,998,357
Brookdale Center 2,585,919 2,446,716 2,289,332 1,893,076 1,658,142 5,642,619
--------- --------- --------- --------- --------- ---------
$13,398,308 $12,939,355 $12,098,092 $10,355,994 $7,897,163 $26,860,355
========== ========== ========== ========== ---------- ==========
</TABLE>

_____________
(1) Lease payments to be received under noncancelable operating leases in
effect as of December 31, 1996.

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<PAGE> 11

Range of Lease Expirations

<TABLE>
<CAPTION>
Name of Property Years
- -------------------------------- -------------
<S> <C>
1200 Whipple Road 2003
Richland Mall 1997-2018
16/18 Sentry Park West 1997-2007
701 and 733 Maple Lane 1998-2002
7550 Plaza Court 2002
1850 Westfork Drive 1997
1345 Doolittle Drive 1999-2002
800 Hollywood Avenue 2002
Northland Center 1997-2008
The Bank of Delaware Building 1997-2007
Brookdale Center 1997-2015
</TABLE>

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<PAGE> 12

Major Tenants

The following list sets forth major tenants for certain Properties
together with percentage of space used by such tenants:

<TABLE>
<CAPTION>
Properties Major Tenants Percentage of Leasable Space
-------------------------- ------------- ----------------------------
<S> <C> <C>
Richland Mall Bon Ton Department Store 46.2%
Redner's Market 30.1%

16/18 Sentry Park West J&B Software 10.0%

1345 Doolittle Drive Gruner & Jahr 44.1%
National Distribution Agency 23.5%
Jay-N Company 18.6%

Northland Center Hudson's Department Store (A)
J.C. Penney (A)
Montgomery Ward (A)
Target (A)

The Bank of Delaware Building PNC Bank 32.2%

Brookdale Center J.C. Penney (B)
Sears (B)
Mervyn's (B)
Dayton's (B)
Kohl's (B)
- ------------
</TABLE>

(A) Hudson's Department Store, J.C. Penney, Montgomery Ward, and Target
independently constructed and operate their stores at Northland Center and
each contributes common area maintenance payments for operating expenses
and real estate taxes under separate agreements. These stores covering
511,509 square feet, 283,534 square feet, 117,750 square feet, and 116,222
square feet, respectively, are not included in the gross leasable area of
the mall.

(B) Sears and Mervyn's owns their stores, the underlying land, and the parking
fields adjacent to their stores. Dayton's, J.C. Penney and Kohl's ground
lease the land underlying their stores, but own their buildings.
Contributions by the stores for common area maintenance, real estate taxes,
and HVAC costs are covered under separate agreements. These stores,
covering 211,004 square feet, 138,279 square feet, 195,368 square feet,
150,589 square feet and 75,000 square feet, respectively, are not included
in the gross leasable area of the mall.

All of the remaining Properties are leased in their entirety to their
respective tenants.

-12-
<PAGE> 13

Description of Properties

1200 Whipple Road is a one-story warehouse/distribution property located in
the Hayward-Fremont market area, approximately 25 miles southeast of San
Francisco. At December 31, 1996, the property was 100% leased to Broadway
Stores, Inc., under a lease which runs through August 2003. The property
is described in the March 17 Supplement, which is included as an exhibit to
this annual report.

Richland Mall is a one-level enclosed mall located in Richland Township,
Pennsylvania. Tenants include Bon Ton Department Store, Redner's Market
Footlocker, and Radio Shack. At December 31, 1996, the Mall was
approximately 95.0% leased with 9,062 square feet vacant. Excluding Bon
Ton Department stores and Redner's Market, the two anchor stores, the Mall
was 79.3% leased. Leases covering approximately 1.5%, 5.9% and 3.6% of the
space are scheduled to expire in 1997, 1998 and 1999, respectively.
Richland Mall is described in the Partnership's Current Report on Form 8-K
dated July 19, 1988 (the "July Report"), which is included as an exhibit to
this annual report.

Richland Mall has suffered from the continued weakness of the retail
sector. Additionally, the current design, which is essentially an enclosed
community center, has been unsuccessful in this market. Over the past
year, due to a decrease in mall traffic caused by this outdated design, a
number of retailers have vacated the center. Additionally, the Clemens
Market (25,988 square feet) vacated in November 1996, their lease having
expired and their new store having been completed approximately 1 1/2 miles
north of Richland. Wal-Mart, which has been attempting to enter this
market for the past few years, has received zoning approval and intends to
begin construction in April 1997. The Wal-Mart store is expected to open
in November 1997.

In an effort to strengthen Richland Mall's position in this market,
management has embarked on a plan that will (i) address the physical
drawbacks of the center and (ii) enhance tenant mix. Both of these goals,
if achieved, are expected to increase the consumer appeal of the center,
and thus, sales. The plan consists of three separate parts. The first
part consists of releasing the vacant grocery store to a new tenant. This
has been accomplished and a lease has been signed with Redner's Market
("Redner's"), a regional grocer. Redner's will take the Clemens space of
approximately 26,000 square feet and also will take additional mall store
space as well as common area, for a total store size of approximately
55,000 square feet. In order to accommodate Redner's, CVS and Radio Shack
will be moved to the front of the center. In doing this the remaining
tenants will be terminated, leaving the center with two vacant spaces,
measuring approximately 28,000 square feet and 19,000 square feet each.
The larger space,

-13-
<PAGE> 14

located at the front of the center, is currently in lease negotiations with
Ross Dress for Less, a national discount clothes retailer. The remaining
smaller space is located generally behind the proposed Ross store. This
space would only be attractive to a service type user, due to its poor
visibility and access. Although a lease has been signed with Redner's, the
lease is terminable by either Redner's or the landlord if the landlord does
not obtain the required permit from the health department. The landlord
believes it will obtain the required permit in the near future and that the
lease will be binding on both parties.

Upon completion of this project, Richland will no longer be an enclosed
community center, as the mall common area will be converted to leased
space. The tenant roster is expected to consist of Redner's, Bon-Ton, CVS,
Radio Shack and Ross Dress for Less, all of which are strong, credit-worthy
tenants with a proven ability to draw customers. The expenses associated
with the property are expected to drop substantially upon completion of the
project, as there will be no "mall" to clean, heat, and cool. Management
believes that this is the best strategy for repositioning the center. The
entire project is expected to be completed by the end of 1997.

16/18 Sentry Park West are two four-story office buildings that together
contain 186,243 rentable square feet. Tenants include Liberty Mutual
Insurance Company and The Prudential Insurance Company. At December 31,
1996, the property was approximately 97.6% leased. Leases covering
approximately 5.9%, 18.0% and 42.5% of the space are scheduled to expire in
1997, 1998 and 1999, respectively. The 16/18 Sentry Park West Property is
described in the Partnership's Current Report on Form 8-K dated December 2,
1988, which is included as an exhibit to this annual report.

701 Maple Lane, 733 Maple Lane and 7550 Plaza Court are three one-story
office/warehouse buildings located in the Chicago metropolitan area. At
December 31, 1996, the buildings were 100% leased. Tenants include Triangle
Engineered Products, Co., Acme Window Covers and Hi Performance, Inc. These
properties are described in the Partnership's Current Report on Form 8-K
dated December 27, 1988 (the "December Report"), which is included as an
exhibit to this annual report. One lease covering approximately 44.4% of
the space is scheduled to expire in 1998.

1850 Westfork Drive is a one-story warehouse/distribution facility located
approximately 15 miles west of the Atlanta central business district. At
December 31, 1996 the Property was 100% leased to Treadway Exports Limited
("Treadway"). The lease with Treadway commenced on September 1, 1992 and is
for an initial term of three years with two renewal options for a total of
an additional three years. On August 30, 1995, Treadway exercised the first
renewal option for a term of two years. This lease will expire on August
30, 1997. The 1850 Westfork Drive Property is described in the December
Report, which is included as an exhibit to this annual report.

1345 Doolittle Drive is a one-story warehouse/distribution property located
in San Leandro, California approximately one mile south of Oakland
International Airport. At December 31, 1996, the property was 100% leased.
Tenants include Gruner & Jahr Printing and Publishing, Stericycle, Inc.,
National Distribution Agency, Jay-N Company, and OKI Supply Company.

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<PAGE> 15

Leases covering approximately 25.5% of the property expire in 1999. The
1345 Doolittle Drive Property is described in the Partnership's Current
Report on Form 8-K dated May 18, 1989, which is included as an exhibit to
the annual report.

800 Hollywood Avenue is a one-story warehouse/office building located in
Itasca, Illinois. The building contains 2,500 rentable square feet of
office space and 47,837 rentable square feet of warehouse space. The
property is 100% leased to Concentric, Inc. through May 31, 2002. The
lease requires the tenant to pay 100% of real estate taxes, insurance, and
certain maintenance costs.

Northland Center, which was transferred to the Venture and Equitable by a
deed in lieu of foreclosure on July 22, 1994, is a regional enclosed mall
located in Southfield, Michigan. Tenants include Hudsons Department Store,
J.C. Penney, Montgomery Ward and Target. As of December 31, 1996, the
Center was approximately 79.9% leased (excluding the anchor stores).
Leases covering approximately 2.3%, 15.6% and 2.2% of the space (excluding
the anchor stores) are scheduled to expire in 1997, 1998 and 1999,
respectively.

On March 17, 1995, Equitable, the Venture and Dayton Hudson Corporation
signed an agreement allowing Target to locate a store at Northland. Target
is a division of Dayton Hudson, which currently operates a Hudson's
Department Store at Northland. Equitable and the Venture agreed to expend
funds in the amount of $1,700,000 (of which the Venture's share was
approximately $1,200,000) to ready a site for the Target store and to
partially demolish the Kohl's store and redemise the remaining portion of
Kohl's into mall shops. Target built its own store, which opened in April
1996.

Competitive conditions in the retail industry in general and shopping malls
in particular have remained difficult. The Venture has tried to reposition
its shopping malls to take advantage of the changing demographics of retail
customers. However, given the continuing competitive difficulties in the
retail industry, the Venture may be unable to sell its shopping malls at a
favorable price within the next few years.

The Bank of Delaware Building, which was transferred to the Venture by deed
in lieu of foreclosure on November 15, 1994, is a seventeen story office
building in Wilmington, Delaware. PNC Bank, a major tenant, occupies
102,808 square feet, or 32.7% of the building. PNC's lease expires in May
2005 and contains an option to renew. PNC's rent is substantially below
market rates. As of December 31, 1996, the building was approximately
52.3% leased. Over the past year, management has removed asbestos from a
number of the vacant floors in the building. Currently, approximately
34,000 square feet of the 149,802 square feet of vacant space still contain
asbestos, removal of which is scheduled for 1997. The majority of deferred
maintenance has been corrected, and thus contemplated capital expenditures
in 1997 will generally be for asbestos abatement, tenant improvements in
connection with actual leasing and leasing commissions. Leases covering
approximately 1.0%, 0.2% and 3.7% are scheduled to expire in 1997, 1998 and
1999, respectively.

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<PAGE> 16

Management has established an enhancement/stabilization and renovation
program for the Bank of Delaware building. See Item 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for further information regarding this renovation program.

Brookdale Center, which was transferred to the Venture and Equitable on
December 16, 1996, is a regional shopping mall located approximately five
miles northwest of the central business district of Minneapolis, Minnesota.
Anchor stores include J.C. Penney, Sears, Mervyn's, Dayton's and Kohl's.
As of December 31, 1996, Brookdale Center was approximately 69.5% leased
(excluding the anchor stores). Leases covering approximately 4.5%, 5.1%
and 4.5% of the space are scheduled to expire in 1997, 1998 and 1999,
respectively. See "-- Mortgage Loans Pursuant to Which the Venture
Acquired Properties" for a discussion of the events leading to Equitable
and the Venture's acquisition of Brookdale Center.

Management took possession of Brookdale Center on December 16, 1996, and is
currently evaluating future strategies with respect to the mall. The
ground lease and operating covenant for Dayton's, a major department store
and one of the mall anchors, has expired. The operating covenant for
Sears, another anchor tenant, expires in May 1997. While neither of these
tenants has indicated a desire to leave the center, substantial capital
expenditures could be required to obtain new ground leases/covenants from
these tenants. Management is also evaluating a renovation of the mall
common area and a plan to retenant the approximately 30% mall store
vacancy. No definitive course of action has been decided upon. A
comprehensive plan for this property should be complete in the second or
third quarter of 1997.

Outstanding Mortgage Loan

<TABLE>
<CAPTION>
Principal &
Name, Location Accrued Int.
and Type of Date of at Date of Interest
Property Investment Investment Rate Maturity
-------------------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Jericho Village 1/31/89 $6,000,000 10.25% 2/1/99
Weston, MA
apartment complex
</TABLE>

Jericho Village Loan is a first mortgage loan to the Wilcon Company
secured by an apartment complex in Weston, Massachusetts.
Interest-only payments on the loan in the amount of $51,250 are due
monthly in arrears during the term of the loan, with the full
principal amount of the loan due upon maturity of the loan on February
1, 1999. The borrower may prepay the loan in full subject to a
prepayment penalty based on a yield maintenance formula, but not less
than 2% of the principal balance of the loan. The property which
secures the loan consists of 22 free-standing one and two-story
apartment buildings, containing a total of 99 apartment units. At
December 31, 1996 the property was approximately 99% leased. The
Jericho Village Loan and the property which secures it are described
in the December Report, which is included as an exhibit to this annual
report.

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<PAGE> 17

Mortgage Loans Pursuant to which the Venture Acquired Properties

Northland Zero Note was a first mortgage note secured by Northland
Center, a regional enclosed mall which is located outside of Detroit,
Michigan. The Venture acquired its 71.66% participation interest in
1988 from Equitable which held the remaining 28.34% interest. The
Venture's participation interest had an estimated fair market value
(including accrued interest) at the time of acquisition of
$20,774,985. The borrower was Midwest. The note had an implicit
interest rate of 10.2 % compounded semiannually with the Venture's
portion of the principal and accrued interest totaling $42,882,504 due
June 30, 1995. The note provided that the borrower could elect to pay
interest currently; however, no interest was paid through July 22,
1994.

Management discontinued the accrual of interest on the Northland note
during the quarter ended June 30, 1993 as the accreted value of the
mortgage approximated the estimated fair market value of the Northland
Center. The Northland mortgage note and first mortgage were accounted
for as an in-substance foreclosure at December 31, 1993, and the zero
mortgage note was reclassified as an other real estate asset. The
Venture recognized a loss of $7,628,000 as of December 31, 1993 to
record Northland Center at its estimated fair market value. This
amount included $4,730,000 reserved by the Venture as its share of the
$6.6 million to be paid to Midwest on the transfer of Northland
Center.

On July 22, 1994, Midwest transferred Northland Center to the Venture
and Equitable in proportion to their respective undivided interests in
the Northland mortgage. Following the transfer which was retroactive
as of January 1, 1994, Northland Center was reclassified from other
real estate assets to rental properties and income and expenses were
recorded from that date. The Venture records its proportionate share
of the assets, liabilities, revenues, and expenses of the undivided
interests in the Northland Center in accordance with the tenancy in
common arrangements set forth in the Participation Agreement dated
September 27, 1988 between the Venture and Equitable, which is
included as an exhibit to this annual report. The Venture and
Equitable paid the owner $6.6 million at the time of transfer (an
amount which was determined to approximate the net present value of
the anticipated cash flow from Northland Center, subject to closing
adjustments, for the period from January 1, 1994 through June 30,
1995, the date the Northland mortgage would have matured).

For additional information concerning the Northland Note, reference is
made to the information under "REAL PROPERTY INVESTMENTS--The Zero
Notes" and "REAL PROPERTY INVESTMENT--Brookdale and Northland Zero
Notes" in the Prospectus, "REAL PROPERTY INVESTMENTS - The Zero Notes"
in the March 17 Supplement, and Note 1 to Notes to Financial
Statements to ML/EQ's Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1988, all of which information are included as exhibits
to this annual report.

-17-
<PAGE> 18

Bank of Delaware Building Loan was a first mortgage loan secured by a
17-story office building in the Wilmington central business district.
The owners of The Bank of Delaware Building defaulted on the mortgage
loan receivable and the Venture accounted for the transaction as an
in-substance foreclosure at December 31, 1993. Accordingly, the
mortgage loan receivable was reclassified to other real estate assets
at its estimated fair market value as of that date, and the Venture
began recording operating revenues and expenses of the building. In
the third quarter of 1994, the Venture recognized a loss of $1,000,000
due to valuing The Bank of Delaware Building at the most recent
estimated fair market value. Subsequently, on November 15, 1994, the
Venture acquired title to The Bank of Delaware Building by a deed in
lieu of foreclosure. In connection with the deed in lieu transaction,
the Venture received a $350,000 cash payment plus the property's
operating cash account, which reduced the loss on the transaction to
approximately $380,000.

Brookdale Zero Note was a first mortgage note secured by Brookdale
Center, a regional shopping mall located approximately five miles
northwest of the central business district of Minneapolis, Minnesota.
The Venture acquired its 71.66% participation interest in 1988 from
Equitable which held the remaining 28.34% interest. The Venture's
participation interest had a fair value (including accrued interest)
at the time of acquisition of $12,278,885. The borrower was Midwest.
The note had an implicit interest rate of 10.2% compounded
semiannually, with the Venture's portion of the principal and accrued
interest totaling $25,345,353 due June 30, 1995.

Management discontinued the accrual of interest relating to the
Brookdale note beginning with the second quarter of 1995 as the
accreted value of the mortgage approximated the estimated fair market
value of the Brookdale Center. The Venture's share of the note plus
accrued interest at the time was $24,730,409.

An internal review of the property, performed for the Venture as of
September 30, 1995, estimated the fair market value of Brookdale
Center to be $30,000,000. The Venture recorded a valuation allowance
of $3,232,210 to value its interest in the Brookdale Zero Note at an
amount equal to the Venture's participation interest in the note
multiplied by the estimated fair market value of the Center, or
$21,498,199. This valuation allowance was presented on the
consolidated balance sheets as a decrease in assets and partners'
capital and on the consolidated statements of operations as a
provision for impairment on zero coupon mortgage. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

On December 16, 1996, Brookdale Center was transferred to the Venture
and Equitable, as tenants in common pursuant to a Chapter 11
bankruptcy plan for Midwest that was approved by the Bankruptcy Court
on November 25, 1996. The consideration for this transfer was (i)
release of Midwest from its obligations under the Brookdale zero
coupon note and (ii) payment to Midwest of $500,000, of which the
Venture's portion was $358,303.

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<PAGE> 19

An internal review of the property, performed for the Venture as of
the date of transfer, estimated the fair market value of Brookdale
Center to be $21,700,000, of which Venture's portion was $15,550,364.
Following the transfer, Brookdale Center was reclassified from zero
coupon mortgage note receivable to rental properties and income and
expenses were recorded from that date. The Venture recognized a loss
of $6,211,644 to record Brookdale Center at its estimated fair market
value. The Venture records its proportionate share of the assets,
liabilities, revenues, and expenses of the undivided interest in
Brookdale Center in accordance with the Participation Agreement dated
March 3, 1988 between the Venture and Equitable, as amended on March
10, 1988, which is included as an exhibit to this annual report.

For additional information concerning the Brookdale Note and the
Brookdale Center, see "REAL PROPERTY INVESTMENTS--The Zero Notes" and
"REAL PROPERTY INVESTMENTS--Brookdale and Northland Zero Notes" in the
Prospectus, "REAL PROPERTY INVESTMENTS -- The Zero Notes" in the March
17 Supplement, and Note 1 to Notes to Financial Statements to the
Partnership's Quarterly Report on Form 10-Q for the quarter ended June
30, 1988, all of which information is included as exhibits to this
annual report.

Midwest is subject to the informational requirements under the
Exchange Act, and in accordance therewith files reports and other
information, including financial statements, with the Securities
Exchange Commission under Commission File No. 1-9331. Such reports and
other information filed by Midwest can be inspected and copied at the
public reference facilities maintained by the SEC in Washington, D.C.
and at certain of its Regional Offices, and copies may be obtained
from the Public Reference Section of the SEC, Washington, D.C. 20549,
at prescribed rates.

ITEM 3. LEGAL PROCEEDINGS

On November 29, 1995, a class action suit was filed in the Superior
Court of the State of California, County of San Diego (No. 694936), against
ML/EQ, Merrill Lynch, the principal operating subsidiary of Merrill Lynch, and
certain subsidiaries and limited partnerships affiliated with Merrill Lynch. The
complaint alleges, among other things, that defendants breached their fiduciary
duties, committed fraud and violated California business practice laws in
connection with the sale of certain limited partner interests. The suit has been
removed to the United States District Court for the Southern District of
California and transferred to the Southern District of New York. The case has
been dismissed with respect to ML/EQ on the grounds that the statute of
limitations be tolled through November 27, 1996.

Several class action suits have been filed against Midwest, the
general partner of Midwest, certain officers of such general partner, Lehman
Brothers, Inc., Equitable and Equitable Real Estate. The complaints allege,
among other things, that defendants breached their fiduciary duties and
violated federal securities laws in connection with the initial sale of BACs
the operation of Midwest, and Midwest's sale of Northland Center to the Venture
and Equitable. Neither the Venture, ML/EQ, or the Partnership has been named
as a party to the lawsuit.

-19-
<PAGE> 20

On October 30, 1996, the plaintiffs in one of the class action suits
previously filed against Midwest, Equitable and others filed a claim for
equitable subordination against Equitable in the Midwest bankruptcy proceeding.
The claim alleges, among other things, that Equitable breached a fiduciary duty
to Midwest's investors and violated federal securities laws in connection with
the initial sale of interests in Midwest and, as such, that Equitable should
not be entitled to preferential treatment in bankruptcy court. On December 16,
1996, Brookdale Center was transferred to the Venture and Equitable in a
bankruptcy court proceeding free and clear of any claims that Midwest or any
other creditors may have. Ultimate resolution of this claim is expected to
have no effect on Brookdale Center or the Venture.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

-20-
<PAGE> 21

PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK HOLDER
MATTERS

There is no market for the Guaranty Agreement and it is not expected
that one will develop. No public trading market for BACs or Interests exists
nor is it expected that one will develop. BACs are transferable as provided in
Article Seven of the Partnership Agreement. Subject to certain restrictions,
the General Partners of ML/EQ are authorized to impose restrictions on the
transfer of BACs or Interests (or take such other action as they deem necessary
or appropriate) so that ML/EQ is not treated as a "publicly-traded partnership"
as defined in Section 7704(b) of the Internal Revenue Code of 1986 (or any
similar provision of succeeding law) which could result in adverse tax
consequences.

BAC Holders will receive cash distributions, allocations of taxable
income and tax loss and guaranty proceeds as provided in Article Four of the
Partnership Agreement. For additional information regarding the Guaranty
Agreement, see Item 1. BUSINESS.

ITEM 6. SELECTED FINANCIAL DATA

The following sets forth a summary of the selected financial data for
the Partnership for the years ended December 31, 1996, 1995, 1994, 1993 and
1992.

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Revenue $1,562,188 $2,199,500 $2,909,580 $ 596,866 $ 3,346,781

Net Income $1,405,198 $2,024,609 $2,860,139 $578,581 $ 3,309,809

Total Assets $33,087,819 $32,743,147 $31,940,356 $29,940,317 $30,728,554
</TABLE>

The above selected financial data for the years 1994 through 1996
should be read in conjunction with the financial statements and the related
notes appearing elsewhere in this annual report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The Partnership has not established working capital reserves at any
level. The Partnership may establish and maintain such working capital
reserves as the General Partners, from time to time, determine are appropriate
in light of the Venture's investments and other considerations. The

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<PAGE> 22

Partnership owns a 20% interest in the Venture. At December 31, 1996, the
Venture owned interests in ten real properties, undivided interests in two real
properties as a tenant in common with Equitable and one Mortgage Loan on a real
property. Nine of the Properties were purchased at an aggregate cost of
approximately $68.1 million. Two of the Properties, Northland Center and The
Bank of Delaware Building (originally properties that secured a Zero Note and a
Fixed-Rate Mortgage Loan, respectively), were transferred to the Venture during
1994 in separate deed in lieu of foreclosure transactions. The estimated fair
market value of the Venture's undivided interest in the Northland Center Zero
Coupon Mortgage Note Receivable immediately preceding the transfer was
approximately $32.2 million and the estimated fair market value of the Bank of
Delaware Building Mortgage Loan immediately preceding the transfer was
approximately $8.5 million. Brookdale Center (originally a property that
secured a Zero Note) was transferred to the Venture during December 1996
pursuant to a Chapter 11 bankruptcy plan for Midwest Real Estate Shopping
Center, L.P. ("Midwest"), a publicly traded limited partnership (formerly
Equitable Real Estate Shopping Centers, L.P.), the borrower. The estimated
fair market value of the Venture's undivided interest in the Brookdale Loan
immediately preceding the transfer was approximately $15.6 million. At December
31, 1996, the Venture also had approximately $25.3 million in cash and cash
equivalents which is intended to be utilized primarily to fund the renovation
work on the Bank of Delaware Building, to fund possible costs incurred to
increase occupancy at Richland Mall, to fund capital improvements at the
Venture's other Properties, to cover general working capital requirements, and
to make distributions to the Venture's partners. These funds, in addition to
reserves from future operations, may also be used to fund improvements deemed
to be necessary on the Brookdale Center.

All of the Venture's properties and the Mortgage Loan were acquired
without mortgage indebtedness, and neither the Venture nor the Partnership has
incurred any borrowings. All of the Venture's Properties and its Mortgage
Loans are currently producing operating cash flow to the Venture which, net of
expenses of the Venture and the establishment or increase of reserves, is
distributable 20% to the Partnership and 80% to ML/EQ.

Under the terms of the Brookdale Zero Note, which was secured by
Brookdale Center, principal and interest in the aggregate amount of
$35,368,572 was due on June 30, 1995, of which the Venture's portion was
$25,345,353. Midwest defaulted on its obligation to repay the Brookdale Zero
Note in full on the maturity date. Notice of default was given to Midwest.
For book purposes, beginning the second quarter of 1995, the Venture
discontinued the accrual of interest on the Brookdale Zero Note as the accreted
value of the mortgage approximated the estimated fair market value of Brookdale
Center. Under the terms of the mortgage agreement, however, the Venture
continued to accrue interest off the books at the effective implicit rate of
10.2% until June 30, 1995. On July 1, 1995, the Venture began to accrue
interest off the books at the default rate of 19.0%.

Additionally, Equitable and the Venture commenced foreclosure
proceedings and a court-appointed receiver was named. The receiver was
responsible for collecting rent proceeds from the tenants at Brookdale Center
and applying the proceeds to payments of operating costs at Brookdale Center.
Any remaining funds were paid to Equitable and the Venture on account of the
Zero Note. The Venture recorded cash received from the operations of Brookdale
Center as interest income.

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<PAGE> 23

During 1996 and 1995, approximately $1,975,000 and $700,000, respectively were
remitted under the terms of the receivership. The Venture's portion of these
payments was approximately $1,415,000 and $502,000, respectively.

As of September 30, 1995, an internal review of the Brookdale Center
was performed for the Venture. Based on this review, the estimated fair market
value of Brookdale Center was $30,000,000 at that date. The Venture recorded a
valuation allowance of $3,232,210 to value the note at an amount equal to the
Venture's participation interest in the note multiplied by the estimated fair
market value of Brookdale Center, or $21,498,199. The valuation allowance is
presented on the consolidated balance sheets as a decrease in assets and
partners' capital and on the consolidated statements of operations as a loss on
write-down of zero coupon mortgage.

In April, 1996 the Lender agreed in principal to a workout arrangement
with Midwest on the Brookdale zero note under which Midwest filed for Chapter
11 bankruptcy protection and, with the support of Lender, submitted a plan or
reorganization to the Bankruptcy Court for approval. The workout arrangement
was memorialized in a nonbinding letter agreement dated April 11, 1996 (the
"Letter Agreement") between Midwest and Equitable and approved by the Board of
Directors of EREIM Managers Corp., the general partner of the Partnership, on
behalf of the Venture.

On June 20, 1996 Midwest filed a voluntary petition for Chapter 11
bankruptcy protection, as contemplated by the Letter Agreement, staying the
Brookdale foreclosure proceeding and terminating the receivership arrangement.
However, as further contemplated by the Letter Agreement, Midwest subsequently
obtained Bankruptcy Court approval to retain the management company that had
served as receiver prior to the bankruptcy filing as Brookdale's property
manager.

In addition, the Bankruptcy Court, with the agreement of Midwest and
Lender, entered a cash collateral order as contemplated by the Letter
Agreement, pursuant to which all positive cash flows from the property in
excess of property- related expenses and certain administrative costs of the
bankruptcy, not to exceed $25,000, were paid to the Lender during the
bankruptcy. The Venture recorded cash received from the operation of Brookdale
Center as interest income. During 1996, approximately $2,890,000 was remitted
under the terms of the cash collateral order. The Venture's portion of these
payments was approximately $2,071,000.

On December 16, 1996, Brookdale Center was transferred to the Venture
and Equitable as tenants in common, pursuant to a Chapter 11 bankruptcy plan
for Midwest that was approved by the Bankruptcy Court on November 25, 1996. The
consideration for this transfer was (i) release of Midwest from its obligations
under the Brookdale Zero Note and (ii) payment to Midwest of $500,000, of which
the Venture's portion was $358,303. Following the purchase, Brookdale Center
was reclassified from zero coupon mortgage note receivable to rental properties
and income and expenses were recorded from that date. The Venture recognized a
loss of $6,211,644 to record Brookdale Center at the estimated fair market
value. An internal review of the property, performed for the Venture as of the
date of transfer, estimated the fair market value of Brookdale Center to be
$21,700,000, of which Venture's portion was $15,550,364. Following the
transfer, Brookdale Center was reclassified from zero coupon mortgage note
receivable to rental properties and income

-23-
<PAGE> 24

and expenses were recorded from that date. The Venture recognized a loss of
$6,211,644 to record Brookdale Center at its estimated fair market value.

Management of the Venture has established an enhancement/stabilization
and renovation program for the Bank of Delaware Building which was transferred
to the Venture by deed in lieu of foreclosure on November 15, 1994. Estimated
costs for this program total $4.3 million, of which $1.6 million was incurred
in 1995, $1.2 million was incurred in 1996, and approximately $800,000,
$530,000 and $260,000 is expected to be incurred in 1997, 1998 and 1999,
respectively. As of December 31, 1996, approximately $2.6 million of these
costs had been expended. Approximately $159,000 in capital costs at the Bank
of Delaware Building have been accrued but not paid as of December 31, 1996.

Included in the estimated $4.3 million of renovation expenditures is
approximately $2.3 million for asbestos abatement, of which approximately $1.6
million has been expended. Also included in the $4.3 million is $400,000 for
sprinkler installation and $400,000 for exterior deferred maintenance and
$600,000 for interior and exterior common area cosmetic upgrades. To date,
approximately $170,000 remains to be expended for sprinkler installation, and
approximately $150,000 remains to be spent on the interior portion of the
common area upgrades. Management expects these upgrades to give the building a
fresher, more inviting look. Additional costs not included in the above
figures are estimated tenant improvements of $3.0 million. The tenant
improvement costs are directly associated with actual leasing and will only be
expended as leasing transactions occur in the building. As of December 31,
1996, approximately $190,000 had been expended for tenant improvements. Tenant
improvement costs of $2.8 million (excluding the $190,000 spent to date) are
expected to be expended over the next few years to tenant the currently vacant
space.

For 1996, the Partnership's distributions received from the Venture
totaled $600,000. In addition, the Partnership received payments totaling
$368,002 in respect of the fee for providing the guarantee of minimum return
pursuant to the Guarantee Agreement. The Partnership will continue to be
entitled to the recurring portion of the Guarantee Fee at the rate of .35% of
average annual adjusted capital contributions of BAC Holders. The Partnership
currently distributes all or substantially all of its share of cash
distributions from the Venture (as well as payments of the Guarantee Fee) to
its partners and expects to continue to do so.

Under the terms of the Guaranty Agreement which has been assigned to
ML/EQ, following the earlier of the sale or other disposition of the Properties
and Mortgage Loans or the liquidation of ML/EQ, the Partnership has guaranteed
to pay an amount which, when added to all distributions from ML/EQ to the BAC
Holders, will enable ML/EQ to provide the BAC Holders with a minimum return
equal to their original capital contributions plus a simple annual return equal
to 9.75% simple interest per annum multiplied by their adjusted capital
contributions, calculated from the investor closing at which an investor
acquired his or her BACs, subject to certain limitations. Since inception,
ML/EQ has made the following distributions:

-24-
<PAGE> 25

<TABLE>
<CAPTION>
Period Ended Date Paid Distribution per BAC
------------ --------- --------------------
<S> <C> <C>
December 31, 1990 February 28, 1991 $ 0.25
June 30, 1991 August 31, 1991 $ 0.50
December 31, 1991 February 28, 1992 $ 0.50
June 30, 1992 August 31, 1992 $0.662
December 31, 1992 February 28, 1993 $ 0.40
June 30, 1993 -- $ 0.00
December 31, 1993 February 28, 1994 $ 0.10
June 30, 1994 August 31, 1994 $ 0.10
December 31, 1994 February 28, 1995 $ 0.15
June 30, 1995 August 31, 1995 $ 0.15
December 31, 1995 February 29, 1996 $ 0.10
June 30, 1996 August 29, 1996 $ 0.10
December 31, 1996 February 28, 1997 $ 0.15
</TABLE>

The distribution made on August 31, 1992 to holders of record as of
June 30, 1992 includes a $0.162 distribution of Sale or Financing Proceeds
associated with the termination of the lease with Saab-Scania of America, Inc.
("Saab") at 1850 Westfork Drive. ML/EQ withheld the distribution for the
semiannual period that would have been made in August 1993. All of the
distributions made in 1994, 1995, and 1996 constitute distributions of Sale or
Financing Proceeds derived from a portion of the proceeds from the pay-off of
the Mortgage Loan to the Second Merritt Seven Joint Venture (the "201 Merritt
Seven Loan") on November 22, 1993. There were no distributions of
Distributable Cash from operations during 1994, 1995 and 1996. The
determination to withhold the 1994 distributions was based upon the then
anticipated needs of the Venture to fund capital improvements to Northland
Center in order to preserve the Venture's equity in the Northland Zero Note in
addition to other working capital needs of the Venture. The determination to
withhold the 1995 distributions was based on the likelihood of significant
capital expenditures for the renovation of The Bank of Delaware Building as
well as uncertainty regarding the level and timing of any expenditures relating
to Brookdale Center. The determination to withhold the 1996 distributions was
based on the needs of the Venture to fund significant capital expenditures for
the renovation of The Bank of Delaware Building, costs incurred at Richland
Mall to increase tenancy, and the Venture's pro rata share of costs incurred in
connection with the Brookdale zero coupon mortgage note. The amounts of
Distributable Cash will be dependent on the results of the Venture's and
ML/EQ's operations.

The levels of cash distributions from the Venture to the Partnership
and ML/EQ principally will be dependent on returns from the Venture's
investments, after taking account of capital expenditures and future reserve
requirements. These amounts are expected to fluctuate from time to time based
on changes in occupancy, rental and expense rates at the Venture's properties,
mortgage loan payment and maturity schedules, and other factors.

During 1994, 1995 and 1996, the Venture received approximately
$499,000, $1,502,000, and $179,000 respectively, for early lease termination
payments. These early lease termination payments are classified as Sale or
Financing Proceeds and are being held as reserve for future

-25-
<PAGE> 26

improvements on the Properties. The amount and timing of distributions from
Sale or Financing Proceeds depend upon payments of the Mortgage Loan and
maturity schedules, the timing of disposition of Properties, as well as the
need to allocate such funds to increase reserves.

The Venture, ML/EQ, and the Partnership are all intended to be
self-liquidating in nature, meaning that proceeds from the sale of properties
or principal repayments of loans will not be reinvested but instead will be
distributed to BAC Holders and partners, subject to certain limitations.

The obligations of the Partnership under the Guaranty Agreement are
nonrecourse as to Equitable but are recourse as to LP Corp. Equitable has
entered into a Keep Well Agreement with LP Corp. which provides that Equitable
will make capital contributions to LP Corp. in such amounts as to permit LP
Corp. to pay its obligations with respect to the Guaranty Agreement as they
become due; provided, however, that the maximum liability of Equitable under
the Keep Well Agreement is an amount equal to the lesser of (i) two percent of
the total admitted assets of Equitable (as determined in accordance with New
York Insurance Law) or (ii) $271,211,250. Subject to the foregoing, the
obligations of Equitable under the Keep Well Agreement as of December 31, 1996
are $244,905,999. The Keep Well Agreement provides that only LP Corp. and its
successors will have the right to enforce Equitable's obligation thereunder.
See "INVESTMENT GUARANTY AGREEMENT AND RELATED MATTERS."

As of December 31, 1996, the cumulative minimum return (computed at
9.75% simple interest per annum on ML/EQ's Limited Partners' Adjusted Capital
Contributions) was $92,031,083 plus the Limited Partners' Adjusted Capital
Contributions. The guarantee amount is the Minimum Return reduced by the
semiannual distributions of cash to the Limited Partners of ML/EQ, other than
cash distributed to the Limited Partners as a result of Sale or Financing
Proceeds, Guaranty Proceeds, and Liquidation Proceeds, as defined in ML/EQ's
Partnership Agreement. As of December 31, 1996, the cumulative amount of cash
distributions paid other than cash distributions paid as a result of Sale or
Financing Proceeds to the BAC Holders and limited partners was $11,662,084. As
of December 31, 1996, the cumulative amount of cash distributions paid as a
result of Sale or Financing Proceeds received by the Venture was $4,675,667.
Distributions constituting Sale or Financing Proceeds declared as of December
31, 1996, paid in February 1997, totaled $813,634. Assuming that the last
property is sold on December 31, 2002, upon expiration of ML/EQ, the
Partnership's maximum liability under the Guarantee Agreement as of December
31, 1996 is $244,905,999.

Financial Condition

The Partnership's financial statements reflect its proportional
ownership interest in, and its share of the results of operations of, the
Venture, through which the Partnership conducts its business of investment in
real property and first mortgages. Although the Partnership was formed in
1986, it did not commence operations until March 1988, following ML/EQ's
receipt of the first proceeds of the offering of BACs. Thereafter, utilizing
the net proceeds of the Offering, the Partnership and ML/EQ (through the
Venture) began the acquisition of real estate investments. The Venture
substantially completed its acquisition phase in 1989.

-26-
<PAGE> 27

The increase in investment in joint venture at December 31, 1996 as
compared to December 31, 1995, resulted from the excess of equity in net income
of the Venture over actual cash distributions from the Venture.

The increase in EREIM LP Corp.'s and Equitable's capital accounts at
December 31, 1996 as compared to December 31, 1995 is attributable to the
respective shares of net income of the Partnership in excess of cash
distributions by the Partnership to EREIM LP Corp. and Equitable.

Inflation has been at relatively low levels during the periods
presented in the financial statements and, as a result, has not had a
significant effect on the operations of the Partnership, the Venture or their
investments. Over the past several years, the rate of inflation has exceeded
the rate of rental rate growth in many of the Venture's properties. During the
recent real estate downturn, rental rated dropped, indicating a negative growth
rate. This negative growth appears to have ceased, and rental rates have
stabilized in many of the Properties' markets. Real recovery in rental rates,
if achieved at all, will likely occur over an extended period of time.

Results of Operations

Equity in net income of the Venture decreased approximately $632,000
from 1996 to 1995 due to a decrease in the Venture's net income. The Venture's
net income decreased as a result of a loss of approximately $6.2 million that
was recorded during 1996 to record the Venture's undivided interest in
Brookdale Center at its estimated fair market value compared to a valuation
allowance of approximately $3.2 million that was recorded during 1995 to value
the Brookdale Zero Note at an amount equal to the Venture's participation
interest on the note multiplied by the estimated fair market value of Brookdale
Center. Equity in net income of the Venture decreased approximately $693,000
from 1994 to 1995 due to a decrease in the Venture's net income. The Venture's
net income decreased approximately $3.5 million primarily as a result of the
valuation allowance of approximately $3.2 million established on the Brookdale
Note.

General and Administrative expenses decreased approximately $25,000
from 1995 to 1996 and increased approximately $21,000 from 1994 to 1995 due to
the timing of the accrual and payment of audit and tax fees in 1996 compared to
1995 and 1995 compared to 1994, respectively.

-27-
<PAGE> 28

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements are included in Item 14 of this
annual report:

EREIM LP ASSOCIATES

Independent Auditors' Report

Balance Sheets, December 31, 1996 and 1995

Statements of Income for the years ended
December 31, 1996, 1995 and 1994

Statements of Partners' Capital for the years ended
December 31, 1996, 1995 and 1994

Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994

Notes to Financial Statements

EML ASSOCIATES

Independent Auditor's Report

Balance Sheets, December 31, 1996 and 1995

Statements of Operations for the years ended
December 31, 1996, 1995, and 1994

Statements of Partners' Capital for the years ended
December 31, 1996, 1995, and 1994

Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994

Notes to Financial Statements

-28-
<PAGE> 29

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Partnership is a general partnership and has no directors or
officers.

For informational purposes only, certain information regarding LP
Corp. and its directors and officers is set forth below.

The names and titles of the directors and officers of LP Corp. as of
March 15, 1997 are as follows:

Name Age Office
- ---- --- ------
<S> <C> <C>
Harry D. Pierandri 52 Chairman of the Board
President, Chief Executive
Officer and Director

Joyce R. Frater 50 Vice President, Director
and Treasurer

B. Stanton Breon 37 Director

Janet E. Hannon 60 Secretary
</TABLE>

All of the directors have been elected to serve until the next annual
meeting of the shareholder of LP Corp. or until their successors are elected
and qualify. All of the officers have been elected to serve until their
successors are elected and qualify.

The business experience of the directors and executive officers of LP
Corp. is set forth below.

Harry D. Pierandri has been Chairman of the Board, President, Chief
Executive Officer and a director of LP Corp. since June 1987. Mr. Pierandri
joined Equitable in 1972 and is a Senior

-29-
<PAGE> 30

Executive Vice President of Equitable Real Estate Investment Management, Inc.
("Equitable Real Estate"), a wholly-owned subsidiary of Equitable, responsible
for managing the $3 billion Prime Property Fund, an open-end fund comprised of
all major property types. He has also been a Vice President of Equitable since
1981.

Joyce R. Frater has been Vice President and a director of LP Corp. since
June 1987. Ms. Frater joined Equitable in 1969, was elected Executive Vice
President in 1990 and was elected Senior Vice President of Equitable Real
Estate in 1984. Ms. Frater is responsible for institutional marketing and
communications.

B. Stanton Breon has been a Director of LP Corp. since March 1996. He
joined Equitable Real Estate in 1982 and was elected a Vice President in 1993.
He is currently responsible for the management of portfolios aggregating
approximately $1 billion of assets. Prior thereto, Mr. Breon was a Director of
Appraisal for the Philadelphia regional office of Equitable Real Estate,
responsible for valuation of real estate portfolios as well as coordination of
the Commercial Loan Restructuring/Workout division of the office.

Janet Hannon has been Secretary of LP Corp. since June 1987. Ms. Hannon
joined Equitable in 1986 and was elected Assistant Secretary of Equitable in
1989. Ms. Hannon performs the function of Corporate Secretary to numerous
investment and insurance subsidiaries of Equitable.

ITEM 11. EXECUTIVE COMPENSATION

All of the directors and officers of the LP Corp. are employees of
Equitable Real Estate. Neither they, nor any officer or director of Equitable
or Equitable Real Estate is separately compensated for services provided to the
General Partners or, on behalf of the General Partners or the Partnership, to
the Venture.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Partnership has not issued any voting securities. There are no
arrangements known to the Partnership, the operation of which may, at a
subsequent date, result in change in control of the Partnership. Certain
information regarding ownership of BACs is set forth under Item 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT in the Annual Report on
Form 10-K of ML/EQ for the fiscal year ended December 31, 1996, which is filed
as an exhibit to this annual report and incorporated herein by reference.

-30-
<PAGE> 31

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Reference is made to Item 2. PROPERTIES (and the relevant portions of
the Prospectus and Supplements thereto incorporated therein) for information
relating to the acquisition by the Venture of the Notes from Equitable.

-31-
<PAGE> 32

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. The following financial statements are filed with this report on
the pages indicated:

<TABLE>
<CAPTION>
Page
----
EREIM LP ASSOCIATES
- -------------------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . F-2

Balance Sheets, December 31, 1996 and 1995 . . . . . . . . . . . . F-3

Statements of Income for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . F-4

Statements of Partners' Capital for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . F-5

Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . F-6

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . F-7

EML ASSOCIATES Page
- -------------- ----

Independent Auditor's Report . . . . . . . . . . . . . . . . . . . F-14

Balance Sheets, December 31, 1996 and 1995 . . . . . . . . . . . . F-15

Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . F-16

Statements of Partners' Capital for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . F-17

Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . F-18

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . F-20
</TABLE>

-32-
<PAGE> 33

2. The following audited financial statement schedules are filed
with this report on the pages indicated:

<TABLE>
<CAPTION>
Page
----
Supplemental Schedules:
<S> <C>
Real Estate and Accumulated Depreciation
as of December 31, 1996 and for the years
ended December 31, 1996, 1995 and
1994 (Schedule III) . . . . . . . . . . . . . . . . . F-28

Mortgage Loans on Real Estate as of
December 31, 1996 and for the years
ended December 31, 1996, 1995 and
1994 (Schedule IV) . . . . . . . . . . . . . . . . . . F-29
</TABLE>

Schedules Not Filed:

All schedules except those indicated above have been omitted as the
required information is not applicable or the information is shown in the
financial statements or notes thereto.

3. Exhibits

See Item 14(c) below.

(b) The Partnership filed no current Reports on Form 8-K during the last
quarter of the period covered by this Report.

4. (a) Amended and Restated Agreement of Limited Partnership
of ML/EQ Estate Portfolio, L.P. dated April 23, 1987.
Included as an Exhibit to the Prospectus (see Exhibit
99(a)).

(b) Amendment to Amended and Restated Agreement of
Limited Partnership dated February 9, 1988
(incorporated by reference to Exhibit 4(b) to the
Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1987 of ML/EQ Real Estate Portfolio,
L.P. (File No. 33-11064) (the "1987 10-K")).

10. Material Contracts.

-33-
<PAGE> 34

(a) Form of Beneficial Assignee Certificate (incorporated
by reference to Exhibit 10(a) to Pre- Effective
Amendment No. 1 to the Registration Statement of the
Partnership (File No. 33- 11064)).

(b) Agreement Between General Partners of ML/EQ
(incorporated by reference to Exhibit 10(c) to the
1987 10-K).

(d) Investment Guaranty Agreement between the Venture and
the Partnership (incorporated by reference to Exhibit
10(e) to the 1987 10-K).

(e) Assignment Agreement between ML/EQ and Venture
(incorporated by reference to Exhibit 10(f) to the
1987 10-K).

(f) Keep Well Agreement between The Equitable Life
Assurance Society of the United States and EREIM LP
Corp. (incorporated by reference to Exhibit 10(g) to
the 1987 10-K).

(g) Amended and Restated Agreement of General Partnership
of EREIM LP Associates (incorporated by reference to
Exhibit 10(h) to the 1987 10-K).

(h) Promissory Notes and Mortgages Relating to Brookdale
and Northland (incorporated by reference to Exhibit
10(i) to Pre-Effective Amendment No. 1 to the
Registration Statement of the Partnership (File No.
33-11064)).

(i) Contract to Purchase 1200 Whipple Road, Union City,
California (incorporated by reference to Exhibit
10(j)) to Post-Effective Amendment No. 1 to the
Registration Statement of the Partnership (File No.
33-11064)).

(j) Lease Agreement Pertaining to 1200 Whipple Road,
Union City, California (incorporated by reference to
Exhibit 10(k) to Post-Effective Amendment No. 1 to
the Registration Statement of the Partnership (File
No. 33-11064)).

(k) Participation Agreements relating to Brookdale and
Northland Notes (incorporated by reference to Exhibit
10(1) to the 1987 10-K).

(l) Amendments to Participation Agreements relating to
Brookdale and Northland Notes (incorporated by
reference to Exhibit 10(1) to Annual Report on Form
10-K for the Fiscal Year Ended December 31, 1988 of
ML/EQ Real Estate Portfolio, L.P. (File No. 33-11064)
(the "1988 10-K").

-34-
<PAGE> 35

(m) Agreement of Sale between Richland Mall Associates
and EML Associates dated July 19, 1988 (incorporated
by reference to Exhibit No. 1 to Form 8-K dated July
19, 1988 of ML/EQ Real Estate Portfolio, L.P. (File
No. 33-11064)).

(n) Note and Mortgage dated September 27, 1988 relating
to the loan by EML to Second Merritt Seven
(incorporated by reference to Exhibit No. 1 to Form
8-K dated September 27, 1988 of ML/EQ Real Estate
Portfolio, L.P. (File No. 33-11064)).

(o) Form of Participation Agreement between The Equitable
Life Assurance Society of The United States and EML
Associates dated September 27, 1988 (incorporated by
reference to Exhibit No. 2 to Form 8-K dated
September 27, 1988 of ML/EQ Real Estate Portfolio,
L.P. (File No. 33-11064)).

(p) Agreement of Sale among EML, Blue Bell Office Campus
Associates, a Pennsylvania limited partnership, E. F.
Hansen Jr. and G. Eileen Hansen dated December 2,
1988 (incorporated by reference to Exhibit No. 1 to
Form 8-K dated December 2, 1988 of ML/EQ Real Estate
Portfolio, L.P. (File No. 33-11064)).

(q) Agreement of Sale between Provident Mutual Life
Insurance Company of Philadelphia and EML Associates
dated December 27, 1988 (incorporated by reference to
Exhibit No. 1 to Form 8-K dated December 27, 1988 of
ML/EQ Real Estate Portfolio, L.P. (File No.
33-11064)).

(r) Agreement of Sale between Anderson Partners
(Southside/Corporate Lakes) L.P., Gene Anderson,
Auerbach Associates Ltd. and EML Associates dated as
of December 31, 1988 (incorporated by reference to
Exhibit No. 2 to Form 8-K dated December 27, 1988 of
ML/EQ Real Estate Portfolio, L.P. (File No.
33-11064)).

(s) Note and Mortgage and Security Agreement dated
January 31, 1989 relating to loan by EML to The
Wilcon Company (incorporated by reference to Exhibit
No. 4 to Form 8-K dated December 27, 1988 of ML/EQ
Real Estate Portfolio, L.P. (File No. 33-11064)).

(t) Note and Mortgage dated February 28, 1989 relating to
the loan by EML to 300 Delaware Avenue Associates
(incorporated by reference to Exhibit 10(u) to the
1988 10-K.)

(u) Agreement of Sale among Lincoln San Leandro IV
Limited Partnership, Patrician Associates, Inc. and
EML Associates dated April 21, 1989

-35-
<PAGE> 36

(incorporated by reference to Exhibit (c)1 to Form
8-K dated May 18, 1989 of ML/EQ Real Estate
Portfolio, L.P. (File No. 33-11064)).

(v) Agreement dated March 25,1994 between The Equitable
Life Assurance Society of the United States and
Midwest Real Estate Shopping Center L.P. (formerly
Equitable Real Estate Shopping Centers L.P.)
(incorporated by reference to Exhibit 10(v) to Form
10-K for the year ended December 31, 1994 of EREIM LP
Associates) (the "1994 Form 10-K").

(w) Deed in Lieu of Foreclosure Agreement dated November
15, 1994 by and between Three Hundred Delaware Avenue
Associates, L.P. and EML Associates (incorporated by
reference to Exhibit 10(w) to the 1994 Form 10-K).

(x) Lease Termination Agreement dated as of January 27,
1995 by and between The Equitable Life Assurance
Society of the United States and Kohl's Department
Stores (incorporated by reference to Exhibit 10(x) to
the 1994 Form 10-K).

(y) Amendment to Lease Termination Agreement dated as of
February 17, 1995 by and between The Equitable Life
Assurance Society of the United States and Kohl's
Department Stores, Inc. (incorporated by reference
to Exhibit 10(y) to the 1994 Form 10-K).

(z) Purchase Agreement dated as of March 10, 1995 by and
among The Equitable Life Assurance Society of the
United States, the Venture and Dayton Hudson
Corporation (incorporated by reference to Exhibit
10(z) to the 1994 Form 10-K).

27. Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only.

99. Additional Exhibits.

(a) Prospectus dated April 23, 1987, as supplemented by
supplements dated March 3, 1988 and March 17, 1988
(incorporated by reference to Exhibit 28 to the 1987
10-K).

(b) Quarterly Report on Form 10-Q of ML/EQ Real Estate
Portfolio, L.P. for the quarter ended June 30, 1988
(incorporated by reference to File No. 33-11064)

(c) Current Report on Form 8-K of ML/EQ Real Estate
Portfolio, L.P dated July 19, 1988 (incorporated by
reference to File No. 33-11064).

-36-
<PAGE> 37

(d) Current Report on Form 8-K of ML/EQ Real Estate
Portfolio, L.P. dated September 27, 1988
(incorporated by reference to File No. 33-11064).

(e) Current Report on Form 8-K of ML/EQ Real Estate
Portfolio, L.P. dated December 2, 1988 (incorporated
by reference to File No. 33-11064).

(f) Current Report on Form 8-K of ML/EQ Real Estate
Portfolio, L.P. dated December 27, 1988 (incorporated
by reference to File No. 33-11064).

(g) Current Report on Form 8-K of ML/EQ Real Estate
Portfolio, L.P. dated May 18, 1989 (incorporated by
reference to File No. 33-11064).

(h) Audited Financial Statements of Midwest Shopping
Centers, L.P. (incorporated by reference to Annual
Report on Form 10-K for the year ended December 31,
1995, of Midwest Shopping Centers L.P. File No.
1-9331)

(i) Amendment to Joint Venture Agreement dated as of
January 1, 1997 between ML/EQ Real Estate Portfolio,
L.P. and EREIM LP Associates

-37-
<PAGE> 38

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized on the 28th day of
March, 1997.

EREIM LP ASSOCIATES

By: EREIM LP CORP. (General
Partner)

By: /s/ Harry D. Pierandri
----------------------------
HARRY D. PIERANDRI
President

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
registrant and in the capacities indicated on March 28, 1997.

Chairman of the Board of, President,
Chief Executive Officer and
Director (Principal Executive
Officer)
/s/ Harry D. Pierandri of EREIM LP Corp.
- -----------------------------------
HARRY D. PIERANDRI

Vice President and Director
/s/ Joyce R. Frater of EREIM LP Corp.
- -----------------------------------
JOYCE R. FRATER

/s/ B. Stanton Breon Director of EREIM LP Corp.
- -----------------------------------
B. STANTON BREON

-38-
<PAGE> 39

EREIM LP ASSOCIATES

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>

INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995
AND FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994:
Balance Sheets F-3
Statements of Income F-4
Statements of Partners' Capital F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>

F-1
<PAGE> 40

INDEPENDENT AUDITORS' REPORT

EREIM LP Associates:

We have audited the accompanying balance sheets of EREIM LP Associates (the
"Partnership") as of December 31, 1996 and 1995 and the related statements of
income, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1996 and
1995 and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP

Atlanta, Georgia
February 6, 1997

F-2
<PAGE> 41
EREIM LP ASSOCIATES

BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- ------------------------------------------------------------------------------

1996 1995
ASSETS

<S> <C> <C>
Cash $ 10,000 $ 10,000
Guaranty fee receivable from affiliate (Notes 3 and 4) 182,980 186,074
Investment in Joint Venture, at equity (Note 5) 32,894,839 32,547,073
------------ ------------

$ 33,087,819 $ 32,743,147
============ ============

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
Deferred guaranty fee (Notes 3 and 4) $ 1,497,086 $ 1,746,601
Due to affiliates 5,260 9,033
Accrued liabilities 22,712 24,584
------------ ------------

Total liabilities 1,525,058 1,780,218

PARTNERS' CAPITAL:
General partners:
Equitable 32,548,098 32,198,220
EREIM LP Corp. (985,337) (1,235,291)
------------ ------------

Total partners' capital 31,562,761 30,962,929
------------ ------------

$ 33,087,819 $ 32,743,147
============ ============
</TABLE>

See notes to financial statements.

F-3
<PAGE> 42

EREIM LP ASSOCIATES

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- -----------------------------------------------------------------------------

1996 1995 1994
<S> <C> <C> <C>
REVENUE:
Equity in net income of Joint Venture (Note 5) $ 947,766 $1,579,979 $2,272,880
Guaranty fee from affiliate (Notes 3 and 4) 614,422 619,521 623,908
Miscellaneous income 12,792
---------- ---------- ----------

Total revenue 1,562,188 2,199,500 2,909,580

EXPENSES:
Advisory fees 126,811 119,830 15,455
General and administrative 30,179 55,061 33,986
---------- ---------- ----------

Total expenses 156,990 174,891 49,441
---------- ---------- ----------

NET INCOME $1,405,198 $2,024,609 $2,860,139
========== ========== ==========
</TABLE>

See notes to financial statements.

F-4
<PAGE> 43

EREIM LP ASSOCIATES

STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EREIM
EQUITABLE LP CORP. TOTAL

<S> <C> <C> <C>
BALANCE - December 31, 1993 $29,452,958 $(1,758,271) $27,694,687

Capital contributions 48,946 495 49,441
Distributions to partners (281,200) (378,826) (660,026)
Net income 2,213,869 646,270 2,860,139
---------- ---------- ----------

BALANCE - December 31, 1994 31,434,573 (1,490,332) 29,944,241

Capital contributions 139,860 1,413 141,273
Distributions to partners (767,250) (379,944) (1,147,194)
Net income 1,391,037 633,572 2,024,609
---------- ---------- ----------

BALANCE - December 31, 1995 32,198,220 (1,235,291) 30,962,929

Capital contributions 161,010 1,626 162,636
Distributions to partners (594,000) (374,002) (968,002)
Net income 782,868 622,330 1,405,198
---------- ---------- ----------

BALANCE - December 31, 1996 $32,548,098 $ (985,337) $31,562,761
=========== ========== ===========
</TABLE>

See notes to financial statements.

F-5
<PAGE> 44

EREIM LP ASSOCIATES

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- ------------------------------------------------------------------------------

1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $1,405,198 $2,024,609 $2,860,139
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of Joint Venture (947,766) (1,579,979) (2,272,880)
Distributions from Joint Venture 600,000 775,000 271,249
Decrease in deferred guaranty fee (249,515) (249,514) (249,515)
(Decrease) increase in due to affiliates (3,773) 9,033
(Decrease) increase in accrued liabilities (1,872) 24,584
Decrease in guaranty fee receivable from
affiliate 3,094 2,188 1,592
---------- ---------- ----------

Net cash provided by operating activities 805,366 1,005,921 610,585

FINANCING ACTIVITIES:
Contributions from partners 162,636 141,273 49,441
Distributions to partners (968,002) (1,147,194) (660,026)
---------- ---------- ----------

Net cash used in financing activities (805,366) (1,005,921) (610,585)
---------- ---------- ----------

NET CHANGE IN CASH -- -- --

CASH:
Beginning of year 10,000 10,000 10,000
---------- ---------- ----------

End of year $ 10,000 $ 10,000 $ 10,000
========== ========== ==========
</TABLE>

See notes to financial statements.

F-6
<PAGE> 45

EREIM LP ASSOCIATES

NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995 AND FOR THE
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- --------------------------------------------------------------------------------
1. ORGANIZATION

EREIM LP Associates (the "Partnership") was formed on December 18, 1986 for
the primary purpose of serving as a general partner of EML Associates (the
"Venture"), a joint venture with ML/EQ Real Estate Portfolio, L.P.
("ML/EQ"). The Venture was formed to invest in existing income-producing
real properties, zero coupon or similar mortgage notes, and fixed rate
mortgage loans. The Partnership owns a 20% interest in the Venture.

The Partnership is a New York general partnership between The Equitable
Life Assurance Society of the United States ("Equitable") and EREIM LP
Corp., a wholly owned subsidiary of Equitable.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Partnership Allocations - In accordance with the provisions of the Amended
and Restated Agreement of General Partnership of EREIM LP Associates, all
income, gains, losses, deductions, credits, and distributions are allocated
to each partner in proportion to their respective capital contributions
(99% to Equitable and 1% to EREIM LP Corp.) except for fees received under
the Guaranty Agreement which are to be distributed entirely to the 1%
partner, EREIM LP Corp. Accordingly, all guarantee fee income is allocated
to EREIM LP Corp.

Investment in Joint Venture - The Partnership's investment in the Venture
is accounted for using the equity method.

Guaranty Fees - Guaranty fees are recognized as income ratably over the
15-year estimated life of the Partnership.

Income Taxes - No provisions for income taxes have been made since all
income and losses are allocated to the partners for inclusion in their
respective tax returns.

3. GUARANTY AGREEMENT

The Partnership has entered into a guaranty agreement with the Venture to
provide a minimum return to ML/EQ's limited partners on their capital
contributions. Payments on the guaranty are due 90 days following the
earlier of the sale or other disposition of all the properties and mortgage
loans and notes or the liquidation of ML/EQ. The minimum return will be an
amount which, when added to the cumulative distributions from ML/EQ to its
limited partners, will enable ML/EQ to provide its limited partners with a

F-7
<PAGE> 46

minimum return equal to their capital contributions plus a simple annual
return of 9.75% on their adjusted capital contributions, calculated from
the dates of ML/EQ's investor closings at which investors acquired their
Beneficial Assignee Certificates ("BACs"). Adjusted capital contributions
are the limited partners' original cash contributions reduced by
distributions of sale or financing proceeds and by distributions of certain
funds in reserves, as more particularly described in ML/EQ's Partnership
Agreement. The limited partners' original cash contributions have been
adjusted by that portion of distributions paid through December 31, 1996,
resulting from cash available to ML/EQ as a result of sale or financing
proceeds paid to the Venture. The minimum return is subject to reduction in
the event that certain taxes, other than local property taxes, are imposed
on ML/EQ or the Venture, and is also subject to certain other limitations.
Based upon the assumption that the last property is sold on December 31,
2002, upon expiration of the term of ML/EQ, the maximum liability of the
Partnership to the Venture under the guaranty agreement as of December 31,
1996 is limited to $244,905,999 plus the value of the Partnership's
interest in the Venture less any amounts contributed by the Partnership to
fund cash deficits. The Venture has assigned its rights under the guaranty
agreement to ML/EQ. ML/EQ will have recourse under the guaranty agreement
only to the Partnership and EREIM LP Corp. as a general partner of the
Partnership but not to Equitable. Equitable has entered into a Keep Well
Agreement with EREIM LP Corp. to permit EREIM LP Corp. to pay its
obligations with respect to the guaranty agreement as they become due;
provided, however, that the maximum liability of Equitable under the Keep
Well Agreement is an amount equal to the lesser of (i) 2% of the total
admitted assets of Equitable (as determined in accordance with New York
Insurance Law) or (ii) $271,211,250. The Keep Well Agreement provides that
only EREIM LP Corp. and its successors will have the right to enforce
Equitable's obligations to make capital contributions to EREIM LP Corp. to
pay its obligation with respect to the guaranty agreement.

Capital contributions by the BAC Holders totaled $108,484,500. As of
December 31, 1996, the cumulative 9.75% simple annual return was
$92,031,083. As of December 31, 1996, cumulative distributions by ML/EQ to
the BAC Holders totaled $16,337,751 of which $11,662,084 is attributable to
income from operations and $4,675,667 is attributable to sales of Venture
assets, principal payments on Mortgage Loans and other capital events.
Another $813,634 in capital proceeds was distributed to the BAC Holders in
February 1997. To the extent that future cash distributions to the limited
partners of ML/EQ are insufficient to meet the specified minimum return,
any shortfall will be funded by the guaranty.

Effective as of January 1, 1997, ML/EQ entered into an amendment to the
Joint Venture Agreement of the Venture between ML/EQ and the Partnership
pursuant to which the Partnership agreed to defer, without interest, its
rights to receive 20% of the Venture's distributions of Sale or Financing
Proceeds until ML/EQ has received aggregate distributions from the Venture
in an amount equal to the capital contributions made to ML/EQ by the BAC
holders plus a noncompounded cumulative return computed at the rate of
9.75% per annum on contributions outstanding from time to time. Prior to
the amendment, the Partnership had a right to receive 20% of all of the
Venture's distribution of Sale or Financing Proceeds on a pari passu basis
with ML/EQ. The amendment will have the effect of accelerating the return
of original contributions to BAC holders to the extent that Sale and
Financing Proceeds are realized prior to the dissolution of ML/EQ.

F-8
<PAGE> 47

4. GUARANTY FEE

The guaranty fee was initially paid by ML/EQ to the Partnership in six
semiannual installments, which commenced on June 30, 1988 and ended on
December 31, 1990, at an annual rate of 1.15% of gross proceeds from
ML/EQ's offering of BACs plus .35% of average annual adjusted capital
contributions of ML/EQ's limited partners. Subsequent to December 31, 1990,
the fee is payable on a semiannual basis at an annual rate of .35% of the
average annual adjusted capital contributions of ML/EQ's limited partners.

5. INVESTMENT IN JOINT VENTURE

On March 10, 1988, ML/EQ had its initial investor closing. ML/EQ
contributed $90,807,268 to the Venture. The Partnership contributed zero
coupon mortgage notes to the Venture in the amount of $22,701,817. The
Venture purchased an additional $5,675,453 of zero coupon mortgage notes
from Equitable.

On May 3, 1988, ML/EQ had its second and final investor closing. ML/EQ
contributed $14,965,119 to the Venture. The Partnership contributed zero
coupon mortgage notes to the Venture in the amount of $3,741,280 including
accrued interest. The Venture purchased an additional $935,320 of zero
coupon mortgage notes from Equitable to bring the total amount of zero
coupon mortgage notes owned by the Venture to $33,053,870 including accrued
interest as of the dates of acquisition. One of the zero notes was
accounted for as a deed in lieu of foreclosure by the Venture on July 22,
1994. The remaining note was due on June 30, 1995. The borrower defaulted
on its obligation to repay the loan, and the collateral, Brookdale Center,
was transferred to Equitable and the Venture on December 16, 1996 as
tenants in common, pursuant to a Chapter 11 bankruptcy plan of
reorganization filed with the Bankruptcy Court by the borrower.

F-9
<PAGE> 48

The financial position and results of operations of the Venture are
summarized as follows:

SUMMARY OF FINANCIAL POSITION
DECEMBER 31, 1996 AND 1995:
<TABLE>
<CAPTION>

1996 1995
<S> <C> <C>
Assets:
Rental properties $145,197,804 126,336,402
Accumulated depreciation (15,886,436) (12,421,010)
----------- -----------

Net rental properties 129,311,368 113,915,392

Zero coupon mortgage note receivable, net of
valuation allowance 21,498,199
Mortgage loan receivable 6,000,000 6,000,000
Cash and cash equivalents 25,329,713 19,734,941
Accounts receivable and accrued investment income 3,532,898 3,446,102
Deferred rent concessions 2,178,371 2,030,727
Deferred leasing costs 1,167,420 713,979
Prepaid expenses and other assets 683,920 495,509
Interest income receivable 111,134 140,921
----------- -----------

$168,314,824 167,975,770
============ ===========

Liabilities and equity:
Accounts payable and accrued real estate expenses $ 2,194,256 2,115,576
Accrued capital expenditures 1,120,796 2,647,092
Security deposits and unearned rent 525,578 477,737
Joint venturers' equity 164,474,194 162,735,365

$168,314,824 167,975,770
============ ===========

Partnership's share of Joint Venture equity $ 32,894,839 32,547,073
============ ===========
</TABLE>

F-10
<PAGE> 49

SUMMARY STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenue:
Rental income $20,700,739 $21,137,579 $22,512,719
Lease termination income 179,149 1,502,020 498,691
Interest on loans receivable 4,101,334 1,734,586 2,910,707
---------- ---------- ----------

Total revenue 24,981,222 24,374,185 25,922,117

Operating expenses:
Real estate operating expenses 8,254,939 8,231,795 9,649,243
Depreciation and amortization 4,044,983 3,129,283 2,185,362
Real estate taxes 2,365,348 2,437,099 2,691,844
Property management fees 477,385 507,820 476,905
Loss on write-down of zero coupon
mortgage notes 6,211,644 3,232,210
Loss on write-down of other real
estate assets 379,895
---------- ---------- ----------

Total operating expenses 21,354,299 17,538,207 15,383,249
---------- ---------- ----------

Income from property operations 3,626,923 6,835,978 10,538,868

Other income (expense):
Interest and other nonoperating income 1,115,979 1,068,026 831,587
General and administrative (4,073) (4,110) (6,053)
---------- ---------- ----------

Total other income 1,111,906 1,063,916 825,534
---------- ---------- ----------

Net income $ 4,738,829 $ 7,899,894 $11,364,402
=========== =========== ===========

Partnership's share of equity in net income
of Joint Venture $ 947,766 $ 1,579,979 $ 2,272,880
=========== =========== ===========
</TABLE>

F-11
<PAGE> 50

6. TAXABLE NET INCOME AND TAX NET WORTH

The following is a reconciliation of the Partnership's financial net income
to taxable net income and a reconciliation of partner's capital for
financial reporting purposes to net worth on a tax basis:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
Financial net income $ 1,405,198 $ 2,024,609 $ 2,860,139
Book to tax difference on guaranty
fee income (249,514) (249,514) (249,515)
Net book to tax difference from
Joint Venture (421,694) 659,751 (1,786,415)
----------- ----------- ----------

Taxable net income $ 733,990 $ 2,434,846 $ 824,209
=========== =========== ===========

Capital balance, financial reporting $31,562,761 $30,962,929 $29,944,241
Cumulative book to tax difference on
guaranty fee income 681,893 931,407 1,180,921
Cumulative book to tax income
differences from Joint Venture 268,412 690,106 30,355
----------- ----------- ----------

Net worth, tax basis $32,513,066 $32,584,442 $31,155,517
=========== =========== ===========
</TABLE>

F-12
<PAGE> 51

EML ASSOCIATES

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

PAGE

INDEPENDENT AUDITORS' REPORT F-14

FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995
AND FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

Balance Sheets F-15

Statements of Operations F-16

Statements of Partners' Capital F-17

Statements of Cash Flows F-18

Notes to Financial Statements F-20

SUPPLEMENTAL SCHEDULES AS OF DECEMBER 31, 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1996, 1995,
AND 1994:

Schedule III - Real Estate and Accumulated Depreciation F-28

Schedule IV - Mortgage Loans on Real Estate F-29

F-13
<PAGE> 52

INDEPENDENT AUDITORS' REPORT

EML Associates:

We have audited the accompanying balance sheets of EML Associates (the
"Venture") as of December 31, 1996 and 1995 and the related statements of
operations, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1996. Our audits also included the financial statement
schedules listed in the table of contents as supplemental schedules. These
financial statements and the supplemental schedules discussed below are the
responsibility of the Venture's management. Our responsibility is to express an
opinion on these financial statements and supplemental schedules based on our
audits.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of EML Associates at December 31, 1996 and 1995
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996 in conformity with generally accepted
accounting principles. Also, in our opinion, such supplemental schedules, when
considered in relation to the basic financial statements, present fairly in all
material respects the information shown therein.

February 6, 1997

Deloitte & Touche LLP

F-14
<PAGE> 53

EML ASSOCIATES

BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS 1996 1995
---- ----
<S> <C> <C>
REAL ESTATE INVESTMENTS:
Rental properties, net of accumulated depreciation (Note 3) $129,311,368 $113,915,392
Zero coupon mortgage note receivable, net of valuation
allowance (Note 4) 21,498,199

Mortgage loan receivable (Note 5) 6,000,000 6,000,000
----------- -----------

Total real estate investments 135,311,368 141,413,591

OTHER ASSETS:
Cash and cash equivalents 25,329,713 19,734,941
Accounts receivable and accrued investment income,
net of allowance for doubtful accounts of $748,994
in 1996 and $460,313 in 1995 3,532,898 3,446,102
Deferred rent concessions 2,178,371 2,030,727
Deferred leasing costs, net of accumulated amortization
of $604,828 in 1996 and $393,867 in 1995 1,167,420 713,979
Prepaid expenses and other assets 683,920 495,509
Interest income receivable 111,134 140,921
------------ ------------

Total other assets 33,003,456 26,562,179
------------ ------------

$168,314,824 $167,975,770
============ ============

LIABILITIES AND PARTNERS CAPITAL

LIABILITIES:
Accounts payable and accrued real estate expenses $ 2,194,256 $ 2,115,576
Accrued capital expenditures 1,120,796 2,647,092
Security deposits and unearned rent 525,578 477,737
------------ ------------

Total liabilities 3,840,630 5,240,405

COMMITMENTS AND CONTINGENCIES (Note 6)

PARTNERS' CAPITAL 164,474,194 162,735,365
------------ ------------

$168,314,824 $167,975,770
============ ============
</TABLE>

See notes to financial statements.

F-15
<PAGE> 54

EML ASSOCIATES

STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Rental income (Note 8) $20,700,739 $21,137,579 $22,512,719
Lease termination income (Note 8) 179,149 1,502,020 498,691
Interest on loans receivable (Note 4) 4,101,334 1,734,586 2,910,707
---------- ----------- -----------

Total revenue 24,981,222 24,374,185 25,922,117

OPERATING EXPENSES:
Real estate operating expenses 8,254,939 8,231,795 9,649,243
Depreciation and amortization 4,044,983 3,129,283 2,185,362
Real estate taxes 2,365,348 2,437,099 2,691,844
Property management fees (Note 7) 477,385 507,820 476,905
Loss on write-down of zero coupon mortgage
(Note 4) 6,211,644 3,232,210
Loss on write-down of other real estate assets
(Note 5) 379,895
---------- ---------- ----------

Total operating expenses 21,354,299 17,538,207 15,383,249
---------- ---------- ----------

INCOME FROM PROPERTY OPERATIONS 3,626,923 6,835,978 10,538,868

OTHER INCOME (EXPENSE):
Interest and other nonoperating income 1,115,979 1,068,026 831,587
General and administrative (4,073) (4,110) (6,053)
---------- ---------- ----------

Total other income 1,111,906 1,063,916 825,534
---------- ---------- ----------

NET INCOME $4,738,829 $7,899,894 $11,364,402
---------- ---------- -----------
</TABLE>

See notes to financial statements.

F-16
<PAGE> 55

EML ASSOCIATES

STATEMENTS OF PARTNERS CAPITAL
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
ML/EQ
EREIM LP Real Estate
Associates Portfolio, L.P. Total
---------- --------------- -----
<S> <C> <C> <C>
BALANCE - December 31, 1993 $29,740,463 $118,961,851 $148,702,314

Net income 2,272,880 9,091,522 11,364,402
Cash distributions (271,249) (1,084,996) (1,356,245)
----------- ------------ ------------

BALANCE - December 31, 1994 31,742,094 126,968,377 158,710,471

Net income 1,579,979 6,319,915 7,899,894
Cash distributions (775,000) (3,100,000) (3,875,000)
----------- ------------ ------------

BALANCE - December 31, 1995 32,547,073 130,188,292 162,735,365

Net income 947,766 3,791,063 4,738,829
Cash distributions (600,000) (2,400,000) (3,000,000)
----------- ------------ ------------

BALANCE - December 31, 1996 $32,894,839 $131,579,355 $164,474,194
=========== ============ ============
</TABLE>

See notes to financial statements.

F-17
<PAGE> 56

EML ASSOCIATES

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- --------------------------------------------------------------------------------

OPERATING ACTIVITIES:
Tenant rentals received 20,889,645 $20,922,265 $21,824,036
Interest received 5,247,100 2,122,704 1,455,296
Cash received from operations 26,136,745 23,044,969 23,279,332

Cash paid for operating activities (11,492,967) (10,826,016) (11,661,813)
----------- ----------- -----------

Net cash provided by operating activities 14,643,778 12,218,953 11,617,519

INVESTING ACTIVITIES:
Purchases and additions to rental properties (5,350,466) (7,884,868) (9,591,521)
Expenditures for deferred leasing costs (698,540) (450,045) (379,375)
Proceeds from other real estate assets 620,105
---------- ----------- ----------

Net cash used in investing activities (6,049,006) (8,334,913) (9,350,791)

FINANCING ACTIVITY - Cash distributions
to General Partners (3,000,000) (3,875,000) (1,356,245)
---------- ----------- ----------

NET INCREASE IN CASH AND CASH
EQUIVALENTS 5,594,772 9,040 910,483

CASH AND CASH EQUIVALENTS:
Beginning of year 19,734,941 19,725,901 18,815,418
---------- ----------- -----------

End of year 25,329,713 19,734,941 $19,725,901
========== =========== ===========
</TABLE>

(Continued)

F-18
<PAGE> 57

EML ASSOCIATES

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
- ----------------------------------------------------------------------------

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:

NET INCOME $4,738,829 7,899,894 $11,364,402

ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Depreciation and amortization 4,044,983 3,129,283 2,185,362
Loss on write-down of zero coupon mortgage 6,211,644 3,232,210
Loss on write-down of other real estate assets 379,895
Changes in assets (increase) decrease:
Interest accrual on zero coupon mortgage notes (614,944) (2,283,631)
Interest receivable 29,787 (56,075) 36,330
Accounts receivable and accrued investment income 129,517 (1,449,518) (1,197,729)
Prepaid expenses and other assets (31,760) 104,121 (375,094)
Deferred rent concessions (147,644) (278,299) (239,328)
Changes in liabilities increase (decrease):
Accounts payable and accrued real estate expenses (359,462) 260,828 1,537,326
Security deposits and unearned rent 27,884 (8,547) 209,986
---------- ----------- ------------
Total adjustments 9,904,949 4,319,059 253,117
---------- ----------- ------------

Net cash provided by operating activities 14,643,778 $12,218,953 $ 11,617,519
========== =========== ============
</TABLE>

SUPPLEMENTAL INFORMATION REGARDING NONCASH INVESTING ACTIVITIES:
The Venture accrued $1,120,796 and $2,647,092 in capital expenditures that
were not paid before December 31, 1996 and 1995, respectively.

The Venture reclassified $15,550,364 relating to Brookdale Center from zero
coupon mortgage note receivable to rental properties as a result of Brookdale
Center being conveyed to the Venture and Equitable on December 16, 1996.

The Venture reclassified $27,517,363 relating to Northland Center from other
real estate assets to rental properties as a result of the deed in lieu of
foreclosure transaction executed on July 22, 1994.

During 1994, the Venture took a $1,000,000 write-down on other real estate
assets which reduced other real estate assets relating to The Bank of
Building to $8,500,000. On November 15, 1994, a deed in lieu of foreclosure
was executed resulting in a reclassification of the remaining $8,500,000 from
other real estate assets to rental properties.

See notes to financial statements.

(Concluded)
F-19
<PAGE> 58

EML ASSOCIATES

1. ORGANIZATION

EML Associates (the "Venture") is a New York general partnership formed
March 10, 1988 between EREIM LP Associates, an affiliate of The Equitable
Life Assurance Society of the United States ("Equitable") and ML/EQ Real
Estate Portfolio, L.P., a Delaware limited partnership ("ML/EQ"). The
Venture was formed to invest in existing income-producing real properties,
zero coupon or similar mortgage notes, and fixed-rate mortgage loans.
EREIM LP Associates and ML/EQ own 20% and 80% interests in the Venture,
respectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Pro-rata Consolidation - The Venture records its proportionate share of
the assets, liabilities, revenues, and expenses of the undivided interests
in Northland Center and Brookdale Center.

Rental Properties - Rental properties are stated at cost. Cost is
allocated between land and buildings based upon preacquisition appraisals
of each property. The Venture has adopted Statement of Financial
Accounting Standards ("SFAS") 121, "Impairment of Long-Lived Assets."
Impairment is determined by calculating the sum of the estimated
undiscounted future cash flows including the projected undiscounted future
net proceeds from sale of property. In the event such sum is less than the
depreciated cost of the property, the property will be written down to
estimated fair market value.

Depreciation - Depreciation of buildings and building improvements is
provided using the straight-line method over estimated useful lives of
five to forty years. Tenant improvements are amortized using the
straight-line method over the life of the related lease.

Rental Income - Rental income is recognized on a straight-line basis over
the terms of the leases.

Zero Coupon Mortgage Note Receivable - During 1995, the Venture adopted
SFAS 114, "Accounting by Creditors for Impairment of a Loan," as amended
by SFAS 118. The Venture measures impairment of the zero coupon mortgage
note receivable based upon the estimated fair market value of the
underlying collateral. If the Venture's portion of the estimated fair
market value of the collateral declines below the recorded investment in
the loans, impairment will be recognized through the creation of a
valuation allowance. The Venture records interest received on the cash
method (Note 4).

Mortgage Loan Receivable - The mortgage loan receivable is stated at cost
(Note 5).

F-20
<PAGE> 59
Cash and Cash Equivalents - Cash equivalents include cash, demand
deposits, money market accounts and highly liquid short-term investments
purchased with original maturities of three months or less.

Income Taxes - No provisions for income taxes have been made since all
income and losses are allocated to the partners for inclusion in their
respective tax returns.

Reclassifications - Certain prior year amounts have been reclassified to
conform with the 1996 presentation.

Fair Value of Financial Instruments - Management has reviewed the various
assets and liabilities of the Venture in accordance with the SFAS 107,
"Disclosures about Fair Value of Financial Instruments," (which is not
applicable to real estate assets). Management has concluded that the
estimated fair market value of the Venture's financial instruments,
including the mortgage loan receivable, have terms such that the carrying
value approximates the estimated fair market value.

3 . RENTAL PROPERTIES

As of December 31, 1996, the Venture's rental properties consisted of the
following:

Office Square Feet Leased
- ------ ----------- ----------
<S> <C> <C> <C>
16 and 18 Sentry Park West Montgomery County, Pennsylvania 186,243 98%
The Bank of Delaware Building Wilmington, Delaware 314,313 52%

Industrial
1200 Whipple Road Union City, California 257,500 100%
701 and 733 Maple Lane Bensenville, Illinois 81,750 100%
7550 Plaza Court Willowbrook, Illinois 49,500 100%
800 Hollywood Avenue Itasca, Illinois 50,337 100%
1850 Westfork Drive Lithia Springs, Georgia 103,505 100%
1345 Doolittle Drive San Leandro, California 326,414 100%

Retail
Richland Mall Richland Township, Pennsylvania 182,577 95%
Northland Center Southfield, Michigan 552,992 80%
Brookdale Center Brooklyn Center, Minnesota 200,184 70%

</TABLE>

F-21

<PAGE> 60

The costs related to the rental properties are summarized below.

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land $ 27,551,185 $ 24,441,111
Buildings and improvements 117,646,619 101,895,291
------------ ------------

Total 145,197,804 126,336,402
Accumulated depreciation (15,886,436) (12,421,010)
----------- -----------

Net rental properties $129,311,368 $113,915,392
------------ ------------

Office $ 40,714,046 $ 38,972,689
Retail 73,447,730 56,662,049
Industrial 31,036,028 30,701,664
------------ ------------

Total 145,197,804 126,336,402
Accumulated depreciation (15,886,436) (12,421,010)
----------- -----------

Net rental properties $129,311,368 $113,915,392
============ ============
</TABLE>

4. ZERO COUPON MORTGAGE NOTES RECEIVABLE

Brookdale Center

The Venture held a 71.66% participation interest in a zero coupon mortgage
note. The property which secured this first mortgage note is Brookdale
Center which is located outside of Minneapolis, Minnesota. The Venture
acquired its participation interest in 1988 from Equitable which held the
remaining 28.34% interest. The Venture's participation interest had an
estimated fair market value (including accrued interest) at the time of
acquisition of $12,278,885. The borrower was Midwest Real Estate Shopping
Center L.P. ("Midwest"), a publicly traded limited partnership, (formerly
Equitable Real Estate Shopping Centers, L.P.). The note had an implicit
interest rate of 10.2% compounded semiannually with the Venture's portion
of the entire amount of principal and accrued interest totaling
$25,345,353 due on June 30, 1995.

Midwest defaulted on its obligation to repay the Brookdale zero note in
full on the maturity date. Notice of default was given to Midwest. For
book purposes, beginning with the second quarter of 1995, Management
discontinued the accrual of interest on the Brookdale zero note as the
accreted value of the mortgage approximated the estimated fair market
value of the Brookdale Center. Under the terms of the mortgage agreement,
however, the Venture continued to accrue interest off the books at the
effective implicit rate of 10.2% until June 30, 1995. On July 1, 1995, the
Venture began to accrue interest off the books on the Brookdale zero note
at the default rate of 19.0%. Equitable and the Venture (collectively
referred to as "Lender") commenced foreclosure by advertisement
proceedings and a court-appointed receiver was named. The receiver was
responsible for collecting rent proceeds from the tenants at Brookdale
Center and applying the proceeds to payments of operating costs at
Brookdale Center. Any remaining funds were paid to Lender on account of
the Brookdale zero note. The Venture recorded cash received from the
operation of Brookdale Center on a cash basis as interest income. During
1996 and 1995, approximately $1,975,000 and $700,000, respectively, was
remitted under the terms of the

F-22

<PAGE> 61
receivership. The Venture's portion of these payments was
approximately $1,415,000 and $502,000, respectively.

In April 1996, the Lender agreed in principle to a workout arrangement
with Midwest on the Brookdale zero note under which Midwest would file for
Chapter 11 bankruptcy protection and, with the support of Lender,
submit a plan of reorganization to Bankruptcy Court for approval. The
workout arrangement was memorialized in a nonbinding letter agreement
dated April 11, 1996 (the "Letter Agreement") between Midwest and
Equitable and approved by the Board of Directors of EREIM Managers Corp.,
the general partner of the Partnership, on behalf of the Venture.

On June 20, 1996 Midwest filed a voluntary petition for Chapter 11
bankruptcy protection, as contemplated by the Letter Agreement, staying
the Brookdale foreclosure proceeding and terminating the receivership
arrangement. As further contemplated by the Letter Agreement, Midwest
subsequently obtained Bankruptcy Court approval to retain the management
company that had served as receiver prior to the bankruptcy filing as
Brookdale's property manager.

In addition, the Bankruptcy Court, with the agreement of Midwest and
Lender, entered a cash collateral order as contemplated by the Letter
Agreement, pursuant to which all positive cash flow generated by the
property in excess of property-related expenses and certain administrative
costs of the bankruptcy, not to exceed $25,000, was paid to the Lender
during the bankruptcy. The Venture recorded cash received from the
operation of Brookdale Center as interest income. During 1996,
approximately $2,890,000 was remitted under the terms of the cash
collateral order. The Venture's portion of these payments was
approximately $2,071,000.

On December 16, 1996, Brookdale Center was transferred to the Venture and
Equitable, as tenants in common, pursuant to a Chapter 11 bankruptcy plan
for Midwest that was approved by the Bankruptcy Court on November 25,
1996. The consideration for this transfer was (i) release of Midwest from
its obligations under the Brookdale Zero Note and (ii) payment to Midwest
of $500,000, of which the Venture's portion was $358,303. An internal
review of the property, performed for the Venture as of the date of
transfer, estimated the fair market value of the Brookdale Center to be
$21,700,000, of which the Venture's portion was $15,550,364. Following the
transfer, Brookdale Center was reclassified from zero coupon mortgage note
receivable to rental properties and income and expenses were recorded from
that date. The Venture recognized a loss of $6,211,644 to record Brookdale
Center at its estimated fair market value.

Northland Center

Until July 22, 1994, the Venture also held a 71.66% participation interest
in a zero coupon mortgage note and the first mortgage on Northland Center
which is located outside of Detroit, Michigan. The Venture acquired its
participation interest in 1988 from Equitable which held the remaining
28.34% interest. The Venture's participation interest had an estimated
fair market value (including accrued interest) at the time of acquisition
of $20,774,985. The borrower was Midwest. The note had an implicit
interest rate of 10.2% compounded semiannually with the Venture's portion
of the entire amount of principal and accrued

F-23

<PAGE> 62

interest totaling $42,882,504 due on June 30, 1995. The note provided
that the borrower could elect to pay interest currently; however, no
interest was paid through July 22, 1994.

On July 22, 1994, Midwest transferred Northland Center to the Venture and
Equitable in proportion to their respective undivided interests in the
Northland Center mortgage. Following the transfer, which was retroactive
as of January 1, 1994, Northland Center was reclassified from other real
estate assets to rental properties and income and expenses were adjusted
as of that date. The Venture records its proportionate share of the
assets, liabilities, revenues, and expenses of the undivided interests in
Northland Center in accordance with the tenancy in common arrangements in
the Participation Agreement between the Venture and Equitable. The Venture
and Equitable paid the owner $6.6 million at the time of transfer (an
amount which was determined to approximate the net present value of the
anticipated cash flow from Northland Center, subject to closing
adjustments, for the period from January 1, 1994 through June 30, 1995,
the date the Northland Center mortgage would have matured).

In connection with the transfer of Northland Center, the Venture and
Equitable modified the agreement with Dayton Hudson, which operates one of
the anchor stores at Northland Center, and entered into an agreement to
add Montgomery Ward as an additional anchor. The Venture and Equitable
also commenced a renovation program at Northland Center. The renovations
were completed during the second quarter of 1995 at a total cost of
approximately $11.0 million, of which the Venture's share was
approximately $7.9 million.

5. MORTGAGE LOANS RECEIVABLE

In 1989, the Venture made a $6,000,000 nonrecourse first mortgage loan to
the Wilcon Company. The loan is collateralized by an apartment complex in
Weston, Massachusetts. The loan bears interest at 10.25% per annum with
interest only of $51,250 due monthly to the maturity date of February
1999.

In 1989, the Venture made a $9,500,000 nonrecourse first mortgage loan to
Three Hundred Delaware Avenue Associates. This loan was collateralized by
a 17-story office building in Wilmington, Delaware. The owners of The Bank
of Delaware Building defaulted on the mortgage loan receivable and the
Venture accounted for this transaction as an in-substance foreclosure at
December 31, 1993. Accordingly, the mortgage loan receivable was
reclassified to other real estate assets at its estimated fair market
value as of that date and the Venture began recording operating revenues
and expenses of the building. In the third quarter of 1994, the Venture
recognized a loss of $1,000,000 due to valuing The Bank of Delaware
Building to the most recent estimated fair market value. Subsequently, on
November 15, 1994, the Venture acquired title to The Bank of Delaware
Building by a deed in lieu of foreclosure. In connection with the deed in
lieu transaction, the Venture received a $350,000 cash payment plus the
property's operating cash account which reduced the loss on the
transaction to approximately $380,000.

6. GUARANTY AGREEMENT

EREIM LP Associates has entered into a guaranty agreement with the Venture
to provide a minimum return to ML/EQ's limited partners on their capital
contributions. The Venture has assigned its rights under the guaranty
agreement to ML/EQ. Payments on the guaranty are due 90 days following the
earlier of the sale or other disposition of all the properties and
mortgage loans and notes or the liquidation of ML/EQ. The minimum return
will be an amount which, when added to the cumulative distributions to the
limited partners of ML/EQ, will enable ML/EQ to provide their limited
partners with a minimum return equal to their capital contributions plus a
simple annual return of 9.75% on their adjusted capital contributions,
calculated from the dates of ML/EQ's investor closings at which investors
acquired their

F-24
<PAGE> 63

Beneficial Assignee Certificates ("BACs"). The BACs evidence the economic
rights attributable to limited partnership interests in ML/EQ. Adjusted
capital contributions are the limited partners' original cash
contributions reduced by distributions of sale or financing proceeds and
by distributions of certain funds in reserves, as more particularly
described in ML/EQ's Partnership Agreement. The limited partners' original
cash contributions have been adjusted by that portion of distributions
paid through December 31, 1996, resulting from cash available to ML/EQ
as a result of sale or financing proceeds paid to the Venture. The
minimum return is subject to reduction in the event that certain taxes,
other than local property taxes, are imposed on ML/EQ or the Venture and
is also subject to certain other limitations set forth in ML/EQ's
prospectus. Based upon the assumption that the last property is sold on
December 31, 2002, upon expiration of the term of ML/EQ, the maximum
liability of EREIM LP Associates under the guaranty agreement as of
December 31, 1996 is limited to $244,905,999, plus the value of EREIM LP
Associates' interest in the Venture less any amounts contributed by EREIM
LP Associates to the Venture to fund cash deficits.

Capital contributions by the BAC holders totaled $108,484,500. As of
December 31, 1996, the cumulative 9.75% simple annual return was
$92,031,083. As of December 31, 1996, cumulative distributions by ML/EQ to
the BAC holders totaled $16,337,751, of which $11,662,084 is attributable
to income from operations and $4,675,667 is attributable to sales of
Venture assets, principal payments on mortgage loans and other capital
events. Another $813,634 in capital proceeds was distributed to the BAC
holders in February 1997. To the extent that future cash distributions to
the limited partners are insufficient to provide the specified minimum
return, any shortfall will be funded by the guarantor, up to the above
described maximum.

Effective as of January 1, 1997, ML/EQ entered into an amendment to the
Joint Venture Agreement of the Venture between ML/EQ and EREIM LP
Associates pursuant to which EREIM LP Associates agreed to defer, without
interest, its rights to receive 20% of the Venture's distributions of
Sale or Financing Proceeds until ML/EQ has received aggregate
distributions from the Venture in an amount equal to the capital
contributions made to ML/EQ by the BAC holders plus a noncompounded
cumulative return computed at the rate of 9.75% per annum on
contributions outstanding from time to time. Prior to the amendment,
EREIM LP Associates had a right to receive 20% of all of the Venture's
distribution of Sales or Financing Proceeds on a pari passu basis with
ML/EQ. The amendment will have the effect of accelerating the return of
original contributions to BAC holders to the extent that Sale and
Financing Proceeds are realized prior to the dissolution of ML/EQ.

7. PROPERTY MANAGEMENT FEES

Properties are managed and leased by either third-party managing and
leasing agents or by affiliates of Equitable Real Estate, Compass
Management and Leasing, Inc. ("Compass"), and Compass Retail, Inc.
("Compass Retail"). Property management fees are generally established at
specified percentages of 1% to 5% of the gross receipts of the properties
as defined in the management agreements. Property management fees for
properties managed by Compass and Compass Retail were $406,995, $442,906,
and $217,513 in 1996, 1995, and 1994, respectively.

Leasing commissions are based on a percentage of the rent payable during
the term of the lease as specified in each lease agreement. Leasing
commissions paid by the Venture to Compass and Compass Retail were
$123,611, $93,519, and $0, in 1996, 1995, and 1994, respectively. Leasing
commissions are capitalized in deferred leasing costs on the balance sheet
or expensed in real estate operating expenses on the statement of
operations in accordance with the Venture's capitalization policy. The
Venture has reimbursed Compass and Compass Retail for payroll incurred of
$1,678,348, $1,974,425, and $763,727

F-25

<PAGE> 64

in 1996, 1995, and 1994 respectively. Payroll reimbursements are included
in real estate operating expenses on the statement of operations.
Additionally, the Venture has paid construction management fees to Compass
and Compass Retail of $92,024 and $167,861 in 1996 and 1995, respectively.
The construction management fees have been capitalized as a portion of the
construction projects to which they relate.

Compass Retail performed certain due diligence work with regard to the
workout arrangement with Midwest on the Brookdale zero note. Consulting
fees paid to Compass Retail during 1996 for due diligence work were
$72,047, of which the Venture's portion was $51,630. The consulting fees
are included in the statements of operations as a component of real estate
operating expenses.

8. LEASES

Future minimum rentals to be received for the properties under
noncancelable operating leases in effect as of December 31, 1996 are as
follows:

Year Ending
December 31,
----------

1997 $ 13,398,308
1998 12,939,355
1999 12,098,091
2000 10,355,994
2001 7,897,163
Thereafter 26,860,355
-------------

Total $ 83,549,266
=============

In addition to the minimum lease amounts, certain leases provide for
escalation charges to tenants for common area maintenance and real estate
taxes. The amount of escalation charges included in rental income totaled
$7,686,606, $7,792,848, and $9,007,436 for the years ended December 31,
1996, 1995, and 1994, respectively.

In the case of retail tenants, certain leases provide for percentage
rents. Contingent rentals which include percentage rents included in
rental income for the years ended December 31, 1996, 1995, and 1994
totaled $615,400, $601,316, and $525,673, respectively.

Information with respect to significant individual leases is as follows:

Gruner & Jahr Printing Company occupies approximately 44.1%
(143,852 square feet) of Doolittle Drive at an annual base rent of
$478,104 under a lease which expires in August 2000.

Hudson's Department Store, J.C. Penney, Montgomery Ward, and
Target operate stores at Northland Center and each contributes
common area maintenance payments for operating expenses and real
estate taxes under separate agreements. These stores, covering
511,509 square feet, 283,534 square feet, 117,750 square feet, and
116,222 square feet, respectively, are not included in the gross
leasable area of the mall.

Pursuant to an agreement with Kohl's Department Stores, Inc.
("Kohl's") finalized on February 17, 1995, Equitable agreed to
accept $1,750,000 in connection with the termination of the Kohl's
lease at Northland Center on behalf of the tenancy in common
arrangement between the Venture and

F-26

<PAGE> 65

Equitable. The Venture's portion of the termination payment was
approximately $1,254,062. Upon termination of the lease, Kohl's
was released from any remaining lease obligation under the original
lease agreement.

PNC Bank occupies approximately 32.7% of The Bank of Delaware
Building at an annual rent of $400,715. The majority of the lease
commitment expires in May 2005.

Broadway Stores, Inc. occupies the entire Whipple Road property
(257,500 square feet) at an annual rent of $1,026,156 under a lease
which expires August 24, 2003.

Dayton's, Sears, J.C. Penney, Mervyn's California, and Kohl's each
operate stores at Brookdale Center and each contributes common area
maintenance payments for operating expenses and real estate taxes
under separate agreements. These stores, covering 195,368 square
feet, 211,004 square feet, 150,589 square feet, 138,279 square feet,
and 75,000 square feet, respectively, are not included in the gross
leasable area of the mall. In addition, Kohl's and J.C. Penney pay
annual ground rent of $175,000 and $20,930, respectively.

F-27

<PAGE> 66

EML ASSOCIATES SECTION III
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996 AND FOR THE YEARS ENDED
DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
GROSS COST AT WHICH CARRIED
INITIAL COST TO COMPANY COSTS AT END OF THE YEAR
----------------------- CAPITALIZED ----------------------------------
BUILDINGS SUBSEQUENT TO BUILDINGS
AND ACQUISITION AND
DESCRIPTION LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL
----------- ---- ------------ ------------ ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL
1200 Whipple Road, Union City, California $ 2,759,162 $5,108,652 $161,659 $2,762,332 $5,267,141 $ 8,029,473

Maple Lane, Plaza Court, and Hollywood Avenue
Bensenville, Illinois 1,670,158 5,141,581 452,020 1,673,062 5,590,697 7,263,759

1850 Westfork Drive, Lithia Springs, Georgia 750,000 3,009,802 134,330 788,008 3,106,124 3,894,132

1345 Doolittle Drive, San Leandro, California 4,000,000 6,264,526 1,584,138 4,026,312 7,822,352 11,848,664

RETAIL
Richland Mall, Richland Township, Pennsylvania 1,115,321 11,648,922 543,669 1,115,535 12,192,377 13,307,912

Northland Center, Southfield, Michigan 7,424,476 24,822,493 12,342,485 7,424,476 37,164,978 44,589,454

Brookdale Center, Brooklyn Center, Minnesota 3,110,075 12,440,289 3,110,075 12,440,289 15,550,364

OFFICE
Sentry Park West, Montgomery County, Pennsylvania 2,624,777 23,971,032 2,626,034 2,651,385 26,570,458 29,221,843

The Bank of Delaware Building, Wilmington,
Delaware 4,000,000 4,500,000 2,992,203 4,000,000 7,492,203 11,492,203
----------- ----------- ----------- ----------- ------------ ------------
$27,453,969 $96,907,297 $20,836,538 $27,551,185 $117,646,619 $145,197,804
=========== =========== =========== =========== ============ ============
</TABLE>

<TABLE>
<CAPTION>
ACCUMULATED DATE OF DATE
DESCRIPTION APPRECIATION CONSTRUCTION ACQUIRED
------------- ------------ --------
<S> <C> <C> <C>
INDUSTRIAL
1200 Whipple Road, Union City, California $ 1,159,918 1963 03/17/88

Maple Lane, Plaza Court, and Hollywood Avenue
Bensenville, Illinois 1,097,241 1979-80 12/27/88, 6/8/8

1850 Westfork Drive, Lithia Springs, Georgia 621,959 1988 01/06/89

1345 Doolittle Drive, San Leandro, California 1,745,427 1964 05/18/89

RETAIL
Richland Mall, Richland Township, Pennsylvania 2,587,689 1974-75 07/19/88

Northland Center, Southfield, Michigan 2,661,507 1954 07/22/94

Brookdale Center, Brooklyn Center, Minnesota 25,917 1962 12/16/96

OFFICE
Sentry Park West, Montgomery County, Pennsylvania 5,614,713 1988 12/22/88

The Bank of Delaware Building, Wilmington,
Delaware 372,065 1970 11/15/94
-----------
$15,886,436
===========
<CAPTION>
RECONCILIATION OF BEGINNING AND ENDING
BALANCES 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Rental Properties:
Balance at beginning of year $126,336,402 $118,933,102 $ 70,527,171

Transfers by deed in lieu of foreclosure 40,746,969
Brookdale Center Acquisition 15,550,364
Improvements 3,311,038 7,403,300 7,658,962
------------ ------------ ------------
Balance at end of year $145,197,804 $126,336,402 $118,933,102
============ ============ ============
Accumulated Depreciation:
Balance at beginning of year $ 12,421,010 $ 9,734,036 $ 7,660,435
Depreciation for year 3,465,426 2,686,974 2,073,601
------------ ------------ ------------
Balance at end of year $ 15,886,436 $ 12,421,010 $ 9,734,036
============ ============ ============
</TABLE>

F-28
<PAGE> 67
EML ASSOCIATES

SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE SCHEDULE IV
AS OF 'DECEMBER 31, 1996 AND FOR THE YEARS ENDED
DECEMBER 31, 1996, 1995, AND 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FINAL PERIODIC AMOUNT AMOUNT PAYMENT
INTEREST MATURITY PAYMENT OF OF AT
DESCRIPTION RATE DATE TERMS MORTGAGES MORTGAGES MATURITY
----------- -------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
First mortgage loan on apartment complex
in Massachusetts 10.25 % February 1999 (d) $6,000,000 $6,000,000(a)(c) $6,000,000
========== =============== ==========
1996 1995 1994
---- ---- ----
<CAPTION>
<S> <C> <C> <C>
Balance at beginning of year 27,498,199 $30,115,465 $27,831,834
Interest accrued on zero coupons 614,944 2,283,631
Write-down of zero coupon mortgage (6,211,644)b (3,232,210)
Loans reclassified as rental properties (15,286,555)
------------ ----------- -----------

Balance at end of year $ 6,000,000 $27,498,199 $30,115,465
============= =========== ===========

</TABLE>

NOTES:

(a) This loan is not subject to any delinquencies.
(b) EREIM LP Associates, an affiliate, contributed a total of $9,823,108 of
zero coupon mortgage notes to the Venture, including principal plus
interest at the contribution date. The Venture recorded a valuation
allowance of $3,232,210 at September 30, 1995 to value the note at an
amount equal to the Venture's participation interest in the note multiplied
by the estimated fair market value of the underlying collateral. On
December 16, 1996, upon acquiring its undivided interest in the shopping
mall securing the zero coupon mortgage, the Venture recorded a loss
of $6,211,644 and recorded the property on its balance sheet at an amount
equal to the Venture's participation in the property multiplied by the
property's estimated fair market value.
(c) The aggregate tax basis is $6,000,000.
(d) Payments of interest only of $51,250 are due monthly until the maturity
date of February 1999.

F-29

<PAGE> 68

EXHIBIT INDEX

4. (a) Amended and Restated Agreement of Limited Partnership of ML/EQ
Estate Portfolio, L.P. dated April 23, 1987. Included as an
Exhibit to the Prospectus (see Exhibit 99(a)).

(b) Amendment to Amended and Restated Agreement of Limited Partnership
dated February 9, 1988 (incorporated by reference to Exhibit 4(b)
to the Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1987 of ML/EQ Real Estate Portfolio, L.P. (File No.
33-11064) (the "1987 10-K")).

10. Material Contracts.

(a) Form of Beneficial Assignee Certificate (incorporated by reference
to Exhibit 10(a) to Pre-Effective Amendment No. 1 to the
Registration Statement of the Partnership (File No. 33-11064)).

(b) Agreement Between General Partners of ML/EQ (incorporated by
reference to Exhibit 10(c) to the 1987 10-K).

(d) Investment Guaranty Agreement between the Venture and the
Partnership (incorporated by reference to Exhibit 10(e) to the 1987
10-K).

(e) Assignment Agreement between ML/EQ and Venture (incorporated by
reference to Exhibit 10(f) to the 1987 10- K).

(f) Keep Well Agreement between The Equitable Life Assurance Society of
the United States and EREIM LP Corp. (incorporated by reference to
Exhibit 10(g) to the 1987 10-K).

(g) Amended and Restated Agreement of General Partnership of EREIM LP
Associates (incorporated by reference to Exhibit 10(h) to the 1987
10-K).

(h) Promissory Notes and Mortgages Relating to Brookdale and Northland
(incorporated by reference to Exhibit 10(i) to Pre-Effective
Amendment No. 1 to the Registration Statement of the Partnership
(File No. 33- 11064)).

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<PAGE> 69

(i) Contract to Purchase 1200 Whipple Road, Union City, California
(incorporated by reference to Exhibit 10(j)) to Post-Effective
Amendment No. 1 to the Registration Statement of the Partnership
(File No. 33-11064)).

(j) Lease Agreement Pertaining to 1200 Whipple Road, Union City,
California (incorporated by reference to Exhibit 10(k) to
Post-Effective Amendment No. 1 to the Registration Statement of the
Partnership (File No. 33-11064)).

(k) Participation Agreements relating to Brookdale and Northland Notes
(incorporated by reference to Exhibit 10(1) to the 1987 10-K).

(l) Amendments to Participation Agreements relating to Brookdale and
Northland Notes (incorporated by reference to Exhibit 10(1) to
Annual Report on Form 10-K for the Fiscal Year Ended December 31,
1988 of ML/EQ Real Estate Portfolio, L.P. (File No. 33-11064) (the
"1988 10-K").

(m) Agreement of Sale between Richland Mall Associates and EML
Associates dated July 19, 1988 (incorporated by reference to
Exhibit No. 1 to Form 8-K dated July 19, 1988 of ML/EQ Real Estate
Portfolio, L.P. (File No. 33-11064)).

(n) Note and Mortgage dated September 27, 1988 relating to the loan by
EML to Second Merritt Seven (incorporated by reference to Exhibit
No. 1 to Form 8-K dated September 27, 1988 of ML/EQ Real Estate
Portfolio, L.P. (File No. 33-11064)).

(o) Form of Participation Agreement between The Equitable Life
Assurance Society of The United States and EML Associates dated
September 27, 1988 (incorporated by reference to Exhibit No. 2 to
Form 8-K dated September 27, 1988 of ML/EQ Real Estate Portfolio,
L.P. (File No. 33-11064)).

(p) Agreement of Sale among EML, Blue Bell Office Campus Associates, a
Pennsylvania limited partnership, E. F. Hansen Jr. and G. Eileen
Hansen dated December 2, 1988 (incorporated by reference to Exhibit
No. 1 to Form 8-K dated December 2, 1988 of ML/EQ Real Estate
Portfolio, L.P. (File No. 33-11064)).

(q) Agreement of Sale between Provident Mutual Life Insurance Company
of Philadelphia and EML Associates dated December 27, 1988
(incorporated by reference to Exhibit No. 1 to Form 8-K dated

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<PAGE> 70

December 27, 1988 of ML/EQ Real Estate Portfolio,
L.P. (File No. 33-11064)).

(r) Agreement of Sale between Anderson Partners (Southside/Corporate
Lakes) L.P., Gene Anderson, Auerbach Associates Ltd. and EML
Associates dated as of December 31, 1988 (incorporated by reference
to Exhibit No. 2 to Form 8-K dated December 27, 1988 of ML/EQ Real
Estate Portfolio, L.P. (File No. 33-11064)).

(s) Note and Mortgage and Security Agreement dated January 31, 1989
relating to loan by EML to The Wilcon Company (incorporated by
reference to Exhibit No. 4 to Form 8-K dated December 27, 1988 of
ML/EQ Real Estate Portfolio, L.P. (File No. 33-11064)).

(t) Note and Mortgage dated February 28, 1989 relating to the loan by
EML to 300 Delaware Avenue Associates (incorporated by reference to
Exhibit 10(u) to the 1988 10-K.)

(u) Agreement of Sale among Lincoln San Leandro IV Limited Partnership,
Patrician Associates, Inc. and EML Associates dated April 21, 1989
(incorporated by reference to Exhibit (c)1 to Form 8-K dated May
18, 1989 of ML/EQ Real Estate Portfolio, L.P. (File No.
33-11064)).

(v) Agreement dated March 25,1994 between The Equitable Life Assurance
Society of the United States and Midwest Real Estate Shopping
Center L.P. (formerly Equitable Real Estate Shopping Centers L.P.)
(incorporated by reference to Exhibit 10(v) to Form 10-K for the
year ended December 31, 1994 of EREIM LP Associates) (the "1994
Form 10-K").

(w) Deed in Lieu of Foreclosure Agreement dated November 15, 1994 by
and between Three Hundred Delaware Avenue Associates, L.P. and EML
Associates (incorporated by reference to Exhibit 10(w) to the 1994
Form 10-K).

(x) Lease Termination Agreement dated as of January 27, 1995 by and
between The Equitable Life Assurance Society of the United States
and Kohl's Department Stores (incorporated by reference to Exhibit
10(x) to the 1994 Form 10-K).

(y) Amendment to Lease Termination Agreement dated as of February 17,
1995 by and between The Equitable Life Assurance Society of the

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<PAGE> 71

United States and Kohl's Department Stores, Inc. (incorporated by
reference to Exhibit 10(y) to the 1994 Form 10-K).

(z) Purchase Agreement dated as of March 10, 1995 by and among The
Equitable Life Assurance Society of the United States, the Venture
and Dayton Hudson Corporation (incorporated by reference to Exhibit
10(z) to the 1994 Form 10-K).

27. Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only.

99. Additional Exhibits.

(a) Prospectus dated April 23, 1987, as supplemented by supplements
dated March 3, 1988 and March 17, 1988 (incorporated by reference
to Exhibit 28 to the 1987 10-K).

(b) Quarterly Report on Form 10-Q of ML/EQ Real Estate Portfolio, L.P.
for the quarter ended June 30, 1988 (incorporated by reference to
File No. 33-11064)

(c) Current Report on Form 8-K of ML/EQ Real Estate Portfolio, L.P
dated July 19, 1988 (incorporated by reference to File No.
33-11064).

(d) Current Report on Form 8-K of ML/EQ Real Estate Portfolio, L.P.
dated September 27, 1988 (incorporated by reference to File No.
33-11064).

(e) Current Report on Form 8-K of ML/EQ Real Estate Portfolio, L.P.
dated December 2, 1988 (incorporated by reference to File No.
33-11064).

(f) Current Report on Form 8-K of ML/EQ Real Estate Portfolio, L.P.
dated December 27, 1988 (incorporated by reference to File No.
33-11064).

(g) Current Report on Form 8-K of ML/EQ Real Estate Portfolio, L.P.
dated May 18, 1989 (incorporated by reference to File No.
33-11064).

(h) Audited Financial Statements of Midwest Shopping Centers, L.P.
(incorporated by reference to Annual Report on Form 10-K for the
year ended December 31, 1995, of Midwest Shopping Centers, L.P.
File No. 1-9331)

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<PAGE> 72

(i) Amendment to Joint Venture Agreement dated as of January 1, 1997
between ML/EQ Real Estate Portfolio, L.P. and EREIM LP Associates

-43-

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,000
<SECURITIES> 0
<RECEIVABLES> 182,980
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 192,980
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 33,087,819
<CURRENT-LIABILITIES> 27,972
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 31,562,761
<TOTAL-LIABILITY-AND-EQUITY> 33,087,819
<SALES> 0
<TOTAL-REVENUES> 1,562,188
<CGS> 0
<TOTAL-COSTS> 126,811
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,405,198
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,405,198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,405,198
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>

<PAGE> 1
EXHIBIT 99(i)

AMENDMENT effective as of January 1, 1997, to the Joint Venture
Agreement dated as of March 10, 1988 (the "Agreement") between ML/EQ Real
Estate Portfolio, L.P. (the "Managing Venturer") and EREIM LP Associates (the
"Equitable Venturer").

WHEREAS, the Managing Venturer and the Equitable Venturer (together,
the "Venturers") entered into the Agreement forming a joint venture (the
"Joint Venture") under the laws of the State of New York for the purposes
specified therein and to define the respective rights, interests and
obligations of the Venturers; and

WHEREAS, the Venturers now desire to amend certain provisions of the
Agreement as set forth herein;

NOW, THEREFORE, the Venturers agree as follows:

1. Terms defined in the Agreement and not defined herein shall have
the meanings assigned to them in the Agreement.

2. Defined Terms. The following defined terms shall be added to
Article One of the Agreement:

a. "Accrual Date" means, for purposes of the distribution of Sale or
Financing Proceeds to the Managing Venturer pursuant to Section 4.2A(vii), each
closing date of a purchase of BACs by BAC Holders or limited partners in the
Managing Venturer.

<PAGE> 2
b. "Adjusted Capital Contributions" means for each Fiscal Period, an
amount equal to the aggregate capital contributions made to the Managing
Venturer by the BAC Holders or limited partners in the Managing Venturer, as
reduced (but not below zero) by an amount equal to all distributions made by the
Managing Venturer to the BAC Holders and limited partners therein as a class out
of Sale or Financing Proceeds; provided, however, that capital contributions
shall not be reduced by the portion of Sale or Financing Proceeds from a Zero
Note in an amount equal to the lesser of (A) the accreted amount of the Zero
Note (in excess of the price at which the Zero Note was acquired by the Venture)
through the date of the Sale or Financing less 10% of the accreted amount on the
date the Zero Note was acquired by the Venture or (B) the unpaid Minimum Return
(as defined in the Guaranty Agreement) on the date of Sale or Financing.

c. "Guaranty Proceeds" means all cash receipts of the Managing
Venturer attributable to the Guaranty Agreement, including, without limitation,
payments received under paragraph 3 of the Guaranty Agreement.

d. "Minimum Rate" means 9-3/4%.

3. Distributions of Sale or Financing Proceeds; Distributions on
Liquidation. Section 4.2 of the Agreement is hereby amended as follows:

a. Section 4.2 (A)(vii) of the Agreement is hereby amended and
restated in its entirety as follows:

"(vii) Seventh, the balance of Sale or Financing

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<PAGE> 3
Proceeds remaining after such loans are repaid in full shall be distributed to
the Venturers in accordance with their respective Percentage Interests in the
Venture; provided, however, that distributions to the Equitable Venturer under
this Section 4.2A(vii) shall be deferred, without interest, in any Fiscal
Six-Month Period to the extent necessary to enable the Managing Venturer to
receive (x) distributions of Sale or Financing Proceeds in a cumulative amount
(taking into account all prior distributions of Sale or Financing Proceeds)
equal to the capital contributions made to the Managing Venturer by the BAC
Holders or limited partners therein reduced (but not below zero) by all
Guaranty Proceeds, and (y) a further amount which, when added to all Guaranty
Proceeds (excluding Guaranty Proceeds taken into account under the preceding
clause (x)) and all amounts distributed (taking into account all prior
distributions) to the Managing Venturer pursuant to Sections 4.1(vii),
4.2A(vii) (other than clause (x) hereof) and 4.2B(vii), equals a simple annual
return at the Minimum Rate multiplied by the Adjusted Capital Contributions
from each Accrual Date through the earlier of the close of the Fiscal Period in
respect of which the distribution is being made or the sale, retirement or other
disposition of all the Mortgage Loans and Properties or the Liquidation of the
Venture other than pursuant to Section 708(b)(1)(B) of the Code. Any
distributions so deferred shall be paid to the Equitable Venturer, prior to any
further distributions of Sale or Financing Proceeds to the Managing Venturer,
in each subsequent Fiscal Six-Month Period (if any) in which there are Sale or
Financing

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<PAGE> 4
Proceeds remaining for distribution under this Section 4.2A(vii) after the
Managing Venturer has received the amounts determined under the preceding
clauses (x) and (y)."

b. Section 4.2B(vii) shall be renumber as (viii), the word "Seventh"
in said subparagraph shall be deleted and replaced with the word "Eighth", and a
new subparagraph (vii) shall be inserted after subparagraph (vi), as follows:

"(vii) Seventh, to the Equitable Venturer to the extent of any Sale or
Financing Proceeds that have been deferred under Section 4.2A(vii) and remain
unpaid; and"

4. Taxable Income and Tax Loss. Section 4.3 of the Agreement is hereby
amended as follows:

a. The first sentence of Section 4.3B shall be revised to read as
follows:

"Except as provided in Sections 4.3F, 4.3G and 4.3H, all Taxable
Income for a fiscal year not arising from a Sale or Financing shall be
allocated to each Venturer, to the extent of and in proportion to the amounts of
Net Distributable Cash distributed to them for such year, including amounts
distributed under Section 4.2B(vii)."

b. Section 4.3D of the Agreement is hereby amended as follows:

(1) A new subparagraph (ii) shall be inserted after subparagraph (i),
as follows:

"(ii) Second, to each Venturer which either received or

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<PAGE> 5
is to receive, under Sections 3.2A(vii) or 4.2B(vii), a distribution of the
related Sale or Financing Proceeds (if any), in proportion to and up to the
amount of such distribution:"

(2) Subparagraphs (ii) and (iii) shall be renumbered as (iii) and (iv),
respectively, and the words "Second" and "Third", respectively, in said
subparagraphs shall be revised to be "Third" and "Fourth", respectively.

Except as herein provided, the Agreement shall continue in full force
and effect.

IN WITNESS WHEREOF, the Venturers have executed this Amendment this
31st day of December, 1996, effective as of the date first above written.

ML/EQ REAL ESTATE PORTFOLIO, L.P.

By: EREIM MANAGERS CORP.,
the Managing General Partner

By:
--------------------------------

EREIM LP ASSOCIATES

By: THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES,
a Partner

By:
---------------------------------

By: EREIM LP CORP., a Partner

By:
---------------------------------

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