UNITED INVESTORS GROWTH PROPERTIES, 10KSB, 1999-03-31

UNITED INVESTORS GROWTH PROPERTIES
10KSB, 1999-03-31
REAL ESTATE

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FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT
UNDER SECTION 13 OR 15(D)

FORM 10-KSB
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]

For the fiscal year ended December 31, 1998

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

For the transition period from to

Commission file number 0-17645

UNITED INVESTORS GROWTH PROPERTIES
(Name of small business issuer in its charter)

Missouri 43-1483928
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)

Issuer's telephone number (864) 239-1000

Securities registered under Section 12(b) of the Exchange Act:
None

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

Units of Limited Partnership Interest
(Title of class)

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

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

State issuer's revenues for its most recent fiscal year: $3,232,000.

State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1998. No market exists for the limited
partnership interests of the Registrant, and, therefore, no aggregate market
value can be determined.

DOCUMENTS INCORPORATED BY REFERENCE
None

PART I

ITEM 1. DESCRIPTION OF BUSINESS

United Investors Growth Properties (the "Registrant" or "Partnership"), a
Missouri Limited Partnership, was organized as a limited partnership under the
laws of the State of Missouri on July 1, 1988. The Partnership is governed by
an Agreement of Limited Partnership dated October 24, 1988. United Investors
Real Estate, Inc., a Delaware corporation, is the sole general partner (the
"General Partner" or "UIRE") of the Partnership. UIRE was wholly-owned by MAE
GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into
Insignia Properties Trust ("IPT"), which is a subsidiary of Apartment Investment
and Management Company ("AIMCO"). Thus the General Partner is now a wholly-
owned subsidiary of AIMCO. The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2018 unless terminated prior to such
date.

The Partnership's primary business is to operate and hold existing real estate
properties for investment. The Partnership acquired three multifamily
residential properties and a retail center which includes medical office space.
In addition, the Partnership owned a 60% interest in a joint venture which owned
a multifamily residential property. During the third quarter of 1995, the joint
venture property was sold. During the fourth quarter of 1998, the commercial
property was foreclosed on by the lender holding the mortgage encumbering the
property. The three remaining properties are further described in "Item 2.
Description of Properties" below.

Commencing on or about June 13, 1988, the Partnership offered, pursuant to a
Registration Statement filed with the Securities and Exchange Commission, up to
a maximum of 80,000 Units of limited partnership interest (the "Units") at $250
per Unit with a minimum required purchase of eight Units or $2,000 (four Units
or $1,000 for an Individual Retirement Account). Since its initial offering,
the Registrant has not received, nor are the limited partners required to make,
additional capital contributions. The offering of Units terminated June 13,
1990. Upon termination of the offering, the Partnership had accepted
subscriptions for 39,297 Units resulting in Gross Offering Proceeds of
$9,824,000.

The Managing General Partner of the Registrant intends to maximize the operating
results and, ultimately, the net realizable value of each of the Registrant's
properties in order to achieve the best possible return for the investors. Such
results may best be achieved by holding and operating the properties or through
property sales or exchanges, refinancing, debt restructurings or relinquishment
of the assets. The Registrant intends to evaluate each of its holdings
periodically to determine the most appropriate strategy for each of the assets.

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

The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner, has been providing such property management
services, for the years ended December 31, 1998 and 1997.

The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner in
such market area could have a material effect on the rental market for the
apartments at the Partnership's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates are a significant
factor in the United States in the apartment industry, competition for
apartments is local. In addition, various limited partnerships have been formed
by the General Partner and/or affiliates to engage in business which may be
competitive with the Partnership.

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

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

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

Transfer of Control

Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
("IPT") merged into Apartment Investment and Management Company, a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100%
ownership interest in Insignia Properties Trust ("IPT"), the entity which
controls the General Partner. The General Partner does not believe that this
transaction will have a material effect on the affairs and operations of the
Partnership.
ITEM 2. DESCRIPTION OF PROPERTIES:

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

Date of

Property Purchase Type of Ownership Use

Terrace Royale Apartments 11/01/88 Fee ownership subject Apartment

Bothell, Washington to first mortgage 80 units

Cheyenne Woods Apartments 04/18/89 Fee ownership subject Apartment

North Las Vegas, Nevada to first mortgage (1) 160 units

Deerfield Apartments 10/24/90 Fee ownership subject Apartment

Memphis, Tennessee to first mortgage (1) 136 units

(1) Property is held by a limited liability company in which the Registrant
owns a 100% interest.

SCHEDULE OF PROPERTIES (IN THOUSANDS):

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

Gross

Carrying Accumulated Useful Federal

Property Value Depreciation Life Method Tax Basis

(in thousands) (in thousands)

Terrace Royale $ 4,503 $ 1,446 5-40 yrs S/L $ 3,031

Cheyenne Woods 6,140 1,875 5-40 yrs S/L 4,279

Deerfield 4,639 1,371 5-40 yrs S/L 3,153

Totals $15,282 $ 4,692 $10,463

See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation
policy.
SCHEDULE OF PROPERTY INDEBTEDNESS:

The following table sets forth certain information relating to the loans
encumbering the Registrant's properties:

Principal Principal

Balance At Stated Balance

December 31, Interest Period Maturity Due At

Property 1998 Rate Amortized (A) Date Maturity (2)

(in thousands) (in thousands)

Terrace Royale $ 2,404 8.50%(1) 20 years 11/98 $ 2,417

Cheyenne Woods 3,806 7.67% 30 years 09/07 3,360

Deerfield 3,566 7.34% 30 years 12/04 3,303

Total $ 9,776 $ 9,080

(A) The mortgage loans on each of the properties mature at various times with
balloon payments due at maturity.

(1) The interest rate on the mortgage loan collateralized by the Terrace Royale
Apartments was fixed at an annual rate of 10% for the first five years
(through November 1993). The terms of the note were modified to reduce the
interest rate to 8.5% for the remaining five years. During the first
quarter of 1999, the General Partner negotiated replacement financing. A
forebearance agreement was in place from November 1, 1998 through the date
of refinance, so the loan was not in default (See "Note L" included in
"Item 7. Financial Statements" for more information).

(2) See "Item 7. Financial Statements - Note D" for information with respect to
the Registrant's ability to prepay these loans and other loan information.

RENTAL RATES AND OCCUPANCY:

Average Annual Average Annual

Rental Rates Occupancy

1998 1997 1998 1997

Terrace Royale Apts. $10,188/unit $9,519/unit 98% 95%

Cheyenne Woods Apts. 6,935/unit 6,792/unit 88% 95%

Deerfield Apts. 6,471/unit 6,387/unit 95% 90%

The General Partner attributes the decrease in occupancy at Cheyenne Woods to an
increase in first time home purchases in the area and increased competition as a
result of 20,000 new units built in the area during the last year. Deerfield's
occupancy increased due to an improved local market resulting from several new
employers in the Memphis area and the completion of road construction in front
of the property. Terrace Royale's occupancy increased due to an improved local
market.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the localities in
which they operate. The General Partner believes that all of the properties are
adequately insured. The properties are apartment complexes which lease their
units for terms of one year or less. No residential tenant leases 10% or more
of the available rental space. All of the properties are in good physical
condition, subject to normal depreciation and deterioration as is typical for
assets of this type and age.

REAL ESTATE TAXES AND RATES:

Real estate taxes and rates in 1998 for each property were:

1998 1998

Billing Rate

(in thousands)

Terrace Royale $72 1.54%

Cheyenne Woods 75 1.17%

Deerfield 90 5.59%

CAPITAL EXPENDITURES:

Terrace Royale Apartments

In 1998, the Partnership completed approximately $32,000 of capital improvements
at Terrace Royale Apartments consisting primarily of swimming pool repairs, and
carpet and vinyl replacement. These improvements were funded primarily from
cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
General Partner on interior improvements, it is estimated that the property
requires approximately $183,000 of capital improvements over the near term.
Capital improvements budgeted for, but not limited to, approximately $83,000 are
planned for 1999, including HVAC condensing units, carpet replacement, painting
the exterior of the buildings and other building improvements.

Cheyenne Woods

In 1998, the Partnership completed approximately $92,000 of capital improvements
at Cheyenne Woods, which consisted primarily of lighting improvements,
appliances, and carpet and vinyl replacements. These capital improvements were
funded from cash flow. Based on a report received from an independent third
party consultant analyzing necessary exterior improvements and estimates made by
the General Partner on interior improvements, it is estimated that the property
requires approximately $183,000 of capital improvements over the near term.
Capital improvements budgeted for, but not limited to, approximately $254,000
are planned for 1999 consisting of carpet and vinyl replacement and other
interior and exterior building improvements.

Deerfield Apartments:

During 1998, the Partnership completed approximately $89,000 of capital
improvements at Deerfield Apartments consisting primarily of signage, HVAC
condensing units, and carpet and vinyl replacements. These improvements were
funded from the Partnership's operating cash flow. Based on a report received
from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $183,000 of capital
improvements over the near term. Capital improvements planned for 1999 consist
of stairwell improvements, roof replacement, and other interior and exterior
building improvements. These improvements are budgeted for, but not limited to,
approximately $450,000.

The capital improvements planned for 1999 at the Partnership's properties will
be made only to the extent of cash available from operations and Partnership
reserves.

ITEM 3. LEGAL PROCEEDINGS

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

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

During the fiscal quarter ended December 31, 1998, no matters were submitted to
a vote of Unit holders through the solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS

The Partnership, a publicly held limited partnership, offered and sold 39,297
limited partnership units aggregating $9,824,000. The Partnership currently has
1,109 holders of record owning an aggregate of 39,287 Units. Affiliates of the
General Partner owned 3,926 Units or 9.993% at December 31, 1998. No public
trading market has developed for the Units, and it is not anticipated such a
market will develop in the future.

During the year ended December 31, 1998, a cash distribution of $400,000 ($10.08
per limited partnership unit) was paid from a portion of the net proceeds from
the mortgage refinancing at Deerfield. No distributions were made during the
year ended December 31, 1997. Future cash distributions will depend on the
levels of net cash generated from operations, refinancings, property sales and
the availability of cash reserves. The Partnership's distribution policy will be
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit any distributions to its partners in 1999 or
subsequent periods.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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

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

Results of Operations

The Registrant's net income for the year ended December 31, 1998 was
approximately $2,065,000, compared to a net loss of approximately $327,000 for
the year ended December 31, 1997. (See "Note G" of the consolidated financial
statements for a reconciliation of these amounts to the Registrant's Federal
taxable income (loss)). The increase in net income was primarily due to the
foreclosure of Greystone during December 1998. This foreclosure resulted in an
extraordinary gain on foreclosure in 1998 of approximately $2,242,000. (See
"Note C" of the consolidated financial statements included in "Item 7.
Financial Statements" for further discussion).

Net loss before extraordinary item for the year ended December 31, 1998 was
approximately $177,000, compared to a net loss of $327,000 for the year ended
December 31, 1997. The decrease in net loss was due primarily to an increase in
rental revenue partially offset by an increase in total expenses. Rental
revenue increased due to increased rental rates at all the Partnership's
residential properties and improved occupancy at Terrace Royale and Deerfield.
These increases were partially offset by decreased occupancy at Cheyenne Woods.
Rental revenue at Greystone remained stable, as an occupancy increase was offset
by decreased rental rates.
Total expenses increased due to increases in general and administrative expenses
which were partially offset by a decrease in interest expense. General and
administrative expenses increased primarily due to increased expense
reimbursements and legal fees related to the Greystone foreclosure. Included in
general and administrative expenses at both December 31, 1998 and 1997 are
management reimbursements to the General Partner allowed under the Partnership
Agreement. In addition, costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement are also included. Interest expense
decreased due to the refinancing of the debt of Cheyenne Woods and Deerfield
Apartments at lower interest rates during 1997. The increase in net income is
also attributable to the recognition of extraordinary loss on debt refinancing
of $36,000 resulting from the refinancing of debt on two of the Partnership's
properties during 1997.

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

Liquidity and Capital Resources

At December 31, 1998, the Registrant had cash and cash equivalents of
approximately $693,000 as compared to approximately $1,120,000 at December 31,
1997. The decrease in cash and cash equivalents is due to approximately
$289,000 of cash used in investing activities and approximately $567,000 of cash
used in financing activities which was partially offset by approximately
$429,000 of cash provided by operating activities. Cash used in investing
activities consisted of property improvements and replacements and deposits to
escrow accounts maintained by the mortgage lender. Cash used in financing
activities consisted of payments of principal made on the mortgages encumbering
the Registrant's properties, partner distributions, and additional loan costs
paid. The Partnership invests its working capital reserves in money market
accounts.

On December 15, 1998, the lender foreclosed on Greystone South Plaza Center.
The mortgage note payable had been in default since May 1998. In the General
Partner's opinion, it was not in the Partnership's best interest to contest the
foreclosure action. During the fourth quarter of 1998, the Partnership recorded
an extraordinary gain on the foreclosure of approximately $2,242,000.

On January 29, 1999, the Partnership refinanced the mortgage encumbering Terrace
Royale Apartments. The refinancing replaced indebtedness of approximately
$2,397,000 with a new mortgage in the amount of $3,500,000 at an interest rate
of 6.51%. Interest on the old mortgage was 8.5%. Payments are due on the first
day of each month until the loan matures on February 1, 2019. Total capitalized
loan costs were approximately $169,000. Terrace Royale's mortgage was never in
default due to a forbearance agreement that was in effect while the Partnership
was acquiring new financing.

On November 20, 1997, the Partnership refinanced the mortgage encumbering
Deerfield Apartments. The refinancing replaced indebtedness of approximately
$2,634,000 with a new mortgage in the amount of $3,600,000 at an interest rate
of 7.34%. Interest on the old mortgage was 9.15%. Payments are due on the
first day of each month until the loan matures on December 1, 2004. Total
capitalized loan costs were approximately $118,000. The Partnership recognized
an extraordinary loss in 1997 in the amount of approximately $14,000 due to the
write off of unamortized loan costs.

On August 8, 1997, the Partnership refinanced the mortgage encumbering Cheyenne
Woods Apartments. The refinancing replaced indebtedness of approximately
$3,800,000 with a new mortgage in the amount of $3,850,000 at an interest rate
of 7.67%. Interest on the old mortgage was 10.5%. Payments are due on the first
day of each month until the loan matures on September 1, 2007. Total
capitalized loan costs were approximately $87,000. The Partnership recognized an
extraordinary loss in 1997 in the amount of approximately $22,000 due to the
write off of unamortized loan costs.

The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Registrant and to comply with Federal,
state, and local legal and regulatory requirements. The Registrant has
budgeted, but is not limited to, approximately $787,000 in capital improvements
for all of the Registrant's properties in 1999. Budgeted capital improvements
at Deerfield include stairwell improvements, roof replacement, and other
interior and exterior building improvements. Budgeted capital improvements at
Terrace Royale include HVAC condensing units, carpet replacement, painting the
exterior of the buildings and other building improvements. Budgeted capital
expenditures at Cheyenne Woods include carpet and vinyl replacement and other
interior and exterior building improvements. The capital expenditures will be
incurred only if cash is available from operations or from Partnership reserves.
To the extent that such budgeted capital improvements are completed, the
Registrant's distributable cash flow, if any, may be adversely affected at least
in the short term.

The Partnership's current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $9,776,000 matures at various times with balloon
payments due at maturity. The General Partner will attempt to refinance such
indebtedness or sell the properties prior to such maturity date. If the
properties cannot be refinanced and/or sold for a sufficient amount, the
Partnership will risk losing such properties through foreclosure. The mortgage
encumbering Terrace Royale matured November 1, 1998. The General Partner
refinanced this loan on January 29, 1999 (see discussion above).

A cash distribution of approximately $400,000 was made during the year ended
December 31, 1998. This distribution represented a portion of the net proceeds
from the mortgage refinancing at Deerfield. No distributions were made during
the year ended December 31, 1997. The Registrant's distribution policy is
reviewed on a quarterly basis. There can be no assurance, however, that the
Registrant will generate sufficient funds from operations after required capital
expenditures to permit any distributions to its partners in 1999 or subsequent
periods.

Year 2000 Compliance

General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

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

Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.

The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.

Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase

Computer Hardware:

During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.

The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.

Computer software:

The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.

During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.

The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.

Operating Equipment:

The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.

Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.

The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.

The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.

Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000

The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.

The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.

The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.

Costs to Address Year 2000

The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.

Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.

In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.

Contingency Plans Associated with the Year 2000

The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7. FINANCIAL STATEMENTS

UNITED INVESTORS GROWTH PROPERTIES

LIST OF FINANCIAL STATEMENTS

Independent Auditors' Reports

Consolidated Balance Sheet - December 31, 1998

Consolidated Statements of Operations - Years ended December 31, 1998 and 1997

Consolidated Statements of Changes in Partners' Capital (Deficit) - Years ended
December 31, 1998 and 1997

Consolidated Statements of Cash Flows - Years ended December 31, 1998 and 1997

Notes to Consolidated Financial Statements

Independent Auditors' Report

The Partners
United Investors Growth Properties
(a Missouri Limited Partnership)

We have audited the accompanying consolidated balance sheet of United Investors
Growth Properties (a Missouri Limited Partnership) (the "Partnership") as of
December 31, 1998, and the related consolidated statements of operations,
changes in partners' capital (deficit) and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Partnership as
of December 31, 1998, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.

/s/ KPMG PEAT MARWICK LLP

Greenville, South Carolina
March 22, 1999

Independent Auditors' Report

The Partners
United Investors Growth Properties
(a Missouri Limited Partnership)

We have audited the accompanying consolidated statements of operations, changes
in partners' capital (deficit) and cash flows of United Investors Growth
Properties (a Missouri Limited Partnership) (the "Partnership") for the year
ended December 31, 1997. 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 audit.

In our opinion, the consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.

As discussed in Note C, the Partnership was in default on its mortgage of
Greystone South Plaza Center at December 31, 1997.

/s/ DELOITTE & TOUCHE LLP
Greenville, South Carolina
February 17, 1998
UNITED INVESTORS GROWTH PROPERTIES

CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)

December 31, 1998

Assets

Cash and cash equivalents $ 693

Receivables and deposits 229

Restricted escrows 130

Other assets 222

Investment properties (Notes D and H):

Land $ 1,480

Buildings and related personal property 13,802

15,282

Less accumulated depreciation (4,692) 10,590

$11,864

Liabilities and Partners' Capital

Liabilities

Accounts payable $ 95

Tenant security deposit liabilities 72

Accrued property taxes 45

Other liabilities 137

Mortgage notes payable (Notes C and D) 9,776

Partners' Capital

General partner's $ 12

Limited partners' (39,287 units issued

and outstanding) 1,727 1,739

$11,864

See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)

Years Ended December 31,

1998 1997

Revenues:

Rental income $ 3,089 $ 2,968

Other income 143 136

Total revenues 3,232 3,104

Expenses:

Operating 1,362 1,338

General and administrative 114 77

Depreciation 571 561

Interest 1,043 1,107

Property taxes 319 312

Total expenses 3,409 3,395

Net loss before extraordinary items (177) (291)

Extraordinary loss on debt refinancing -- (36)

Extraordinary gain on foreclosure (Note C) 2,242 --

Net income (loss) $ 2,065 $ (327)

Net income (loss) allocated to general partner (1%) $ 21 $ (3)

Net income (loss) allocated to limited partners (99%) 2,044 (324)

$ 2,065 $ (327)

Net income (loss) per limited partnership unit:

Loss before extraordinary items $ (4.45) $ (7.33)

Extraordinary gain on foreclosure 56.48 --

Extraordinary loss on debt refinancing -- (.91)

Net income (loss) per limited partnership unit $ 52.03 $ (8.24)

Distributions per limited partnership unit $ 10.08 $ --

See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES

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

Limited

Partnership General Limited

Units Partner's Partners' Total

Original capital contributions 39,297 $ -- $ 9,824 $ 9,824

Partners' (deficit) capital at

December 31, 1996 39,297 $ (2) $ 403 $ 401

Abandonment of limited

partnership units (Note I) (10) -- -- --

Net loss for the year ended

December 31, 1997 -- (3) (324) (327)

Partners' (deficit) capital at

December 31, 1997 39,287 (5) 79 74

Distribution to partners -- (4) (396) (400)

Net income for the year ended

December 31, 1998 -- 21 2,044 2,065

Partners' capital at

December 31, 1998 39,287 $ 12 $ 1,727 $ 1,739

See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Year Ended December 31,

1998 1997

Cash flows from operating activities:

Net income (loss) $ 2,065 $ (327)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Extraordinary gain on foreclosure (2,242) --

Depreciation 571 561

Amortization of loan costs, lease commissions,

and loan premiums, net (29) (31)

Extraordinary loss on debt refinancing -- 36

Gain on casualty event -- (22)

Change in accounts:

Receivables and deposits (27) (8)

Other assets (49) (54)

Accounts payable 65 (11)

Tenant security deposit liabilities 7 7

Accrued property taxes 5 82

Other liabilities 63 21

Net cash provided by operating activities 429 254

Cash flows from investing activities:

Property improvements and replacements (218) (182)

Net deposits to restricted escrows (71) (59)

Net insurance proceeds from casualty event -- 50

Net cash used in investing activities (289) (191)

Cash flows from financing activities:

Payments of mortgage notes payable (146) (175)

Repayment of mortgage notes payable -- (6,434)

Proceeds from debt refinancing -- 7,450

Loan costs paid (21) (183)

Distribution to partners (400) --

Net cash (used in) provided by

financing activities (567) 658

Net (decrease) increase in cash and cash equivalents (427) 721

Cash and cash equivalents at beginning of year 1,120 399

Cash and cash equivalents at end of year $ 693 $ 1,120

Supplemental disclosure of cash flow information:

Cash paid for interest $ 925 $ 1,154

See Accompanying Notes to Consolidated Financial Statements

UNITED INVESTORS GROWTH PROPERTIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)

SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES

Foreclosure

During the fourth quarter of 1998, Greystone South Plaza Center was foreclosed
upon by the lender. In connection with this foreclosure, the following accounts
were adjusted by the non-cash amounts noted below:

1998

Accounts receivable $ (21)
Restricted escrows (50)
Other assets (105)
Investment properties (3,530)
Accounts payable 13
Tenant security deposits 21
Accrued taxes 84
Other liabilities 5
Mortgage notes payable 3,749
Gain on foreclosure of property $ 166

See Accompanying Notes to Consolidated Financial Statements

UNITED INVESTORS GROWTH PROPERTIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1998

NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization: United Investors Growth Properties (the "Partnership" or
"Registrant"), a Missouri Limited Partnership, was organized in July 1988, and
the initial group of limited partners was admitted on October 24, 1988.
Additional partners were admitted through June 1990.

The Partnership was formed to operate and hold certain types of income-producing
real estate. United Investors Real Estate, Inc. (the "General Partner") is the
general partner. Effective December 31, 1992, 100% of the General Partner's
common stock was purchased by MAE GP Corporation ("MAE GP"). Effective February
25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is a
subsidiary of Apartment Investment and Management Company ("AIMCO"). Thus the
General Partner is now a wholly-owned subsidiary of AIMCO.

Basis of accounting: The accompanying financial statements of the Partnership
are prepared on the accrual basis and, therefore, revenue is recorded as earned
and costs and expenses are recorded as incurred.

Cash and Cash Equivalents: Includes cash on hand and in banks, money market
funds and certificates of deposit with original maturities less than 90 days.
At certain times, the amount of cash deposited at a bank may exceed the limit on
insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged the space and is current on rental payments.

Restricted Escrows: Replacement reserve accounts were established in 1997 with
the refinancing proceeds for Cheyenne Woods Apartments and Deerfield Apartments.
Each property makes monthly deposits to establish and maintain a Replacement
Reserve designated to cover necessary repairs and replacements of existing
improvements at the property. The reserve account balance at December 31, 1998,
is approximately $130,000 which includes interest.

Leases: The Partnership generally leases apartment units for twelve-month terms
or less. Commercial building lease terms are generally for terms of 3 to 10
years. The Partnership recognizes income as earned on its leases. In addition,
the General Partner's policy is to offer rental concessions during periods of
declining occupancy or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.

Investment Properties: Investment properties consist of three apartment
properties and are stated at cost. Acquisition fees are capitalized as a cost
of real estate. In accordance with Statement of Financial Accounting Standards
("SFAS") Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of", the Partnership records impairment
losses on long-lived assets used in operations when events and circumstances
indicate that the assets might be impaired and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amounts of
those assets. Costs of apartment and commercial properties that have been
permanently impaired have been written down to appraisal value. No adjustments
for impairment of value were recorded in the years ended December 31, 1998 or
1997.

Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 7 years.

Allocation of Profits, Gains and Losses:

Allocation of net income and loss - In accordance with the partnership
agreement, net income and net loss (as defined in the Partnership agreement,

income or loss of the Partnership determined without regard to gain or loss from
sale) shall be allocated 1% to the General Partner and 99% to the limited
partners.

Distributions - The Partnership allocates distributions 1% to the General
Partner and 99% to the limited partners.

Gain/Loss from a Sale - Gain from a sale shall be allocated as follows:

First to each partner who has a negative capital account, an amount equal to (or
in proportion to if less than) such partner's negative capital account balance.
Second, 99% to the limited partners and 1% to the General Partner, until each
limited partner has been allocated an amount equal to (or in proportion to if
less than) the excess, if any, of such limited partner's adjusted capital
investment over his capital account. Third, 99% to the limited partners and 1%
to the General Partner, until each limited partner has received a 10% per annum
preferred return on their adjusted capital investment or if greater, a 6%
cumulative annual return. Fourth, the balance will be allocated 85% to the
limited partners and 15% to the General Partner.

Anything in the Partnership Agreement to the contrary notwithstanding, the
interests of the General Partner, in the aggregate, in each material item of
income, gain, loss deduction and credit of the Partnership will be equal to at
least 1% of each item at all times during the existence of the Partnership.

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

Principles of consolidation: During 1994, Cheyenne Woods Apartments was
restructured into a lower tier partnership, known as Cheyenne Woods United
Investors, L.P. During the third quarter of 1997 Cheyenne Woods United
Investors, L.P. was restructured into a limited liability company known as
Cheyenne Woods United Investors, L.L.C. ("Cheyenne"). The Partnership owns 100%
of Cheyenne. Although legal ownership of the asset was transferred to a new
entity, the Partnership retained all economic benefits from the property. The
Partnership consolidates its interest in Cheyenne (whereby all accounts of
Cheyenne are included in the consolidated financial statements of the
Partnership with intercompany accounts being eliminated).

During the fourth quarter of 1997, Deerfield Apartments was transferred into a
limited liability company known as Deerfield Apartments, L.L.C. ("Deerfield").
The Partnership owns 100% of the new entity. Although legal ownership of the

asset was transferred to a new entity, the Partnership retained the ability to
control the major operating and financial policies of the property and all
economic benefits from the property. As a result, the Partnership consolidates
its interest in Deerfield (whereby all accounts of Deerfield are included in the
consolidated financial statements of the Partnership with intercompany accounts
being eliminated).

Loan costs: Loan costs of approximately $267,000, less accumulated amortization
of approximately $92,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.

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

Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information" ("Statement 131"), which is effective for years beginning after
December 15, 1997. Statement 131 established standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers (See "Note J" for disclosure).

Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $39,000 and $43,000 for the years ended
December 31, 1998 and 1997, respectively, were charged to operating expense as
incurred.

Reclassification: Certain reclassifications have been made to the 1997
information to conform to the 1998 presentation.

NOTE B - TRANSFER OF CONTROL

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

NOTE C - FORECLOSURE OF GREYSTONE SOUTH PLAZA CENTER

The following amounts were recorded in the consolidated financial statements for
the year ended December 31, 1998 (in thousands):

Net real estate (a) $(1,454)

Net other liabilities (53)

(1,507)

Debt discharged (b) 3,749

Extraordinary gain on foreclosure $ 2,242

(a) Amount is net of accumulated depreciation of approximately $677,000.

(b) Amount includes accrued interest.

The extraordinary gain on foreclosure includes non-cash activity of $166,000,
which represents the difference between the fair market value of the property at
foreclosure and the amount of the debt, including accrued interest,
extinguished. The remaining portion of the gain of $2,076,000 represents the
difference between the carrying value of the real estate and the estimated fair
value of the property at disposition.

The 1998 results of operations for Greystone South Plaza Center are summarized
in the following table (in thousands):

For the Period
From January 1 to
December 15, 1998
Revenues $ 538
Loss from operations (20)

NOTE D - MORTGAGE NOTES PAYABLE

The principle terms of mortgage notes payable are as follows:

Principal Monthly Principal

Balance At Payment Stated Balance

December 31, Including Interest Maturity Due At

Property 1998 Interest Rate Date Maturity

(in thousands) (in thousands)

Terrace Royale Apts. $ 2,404 $ 24 8.50% 11/98(1) $ 2,417

Cheyenne Woods Apts. 3,806 27 7.67% 09/07 3,360

Deerfield Apartments 3,566 25 7.34% 12/04 3,303

Total $ 9,776 $ 76 $ 9,080

(1) During the first quarter of 1999, the General Partner negotiated
replacement financing. See "Note L " for information on the refinancing.

The mortgage notes payable are nonrecourse and are secured by a pledge of the
respective properties and by a pledge of revenues from operation of the
respective properties. The mortgage loans collateralized by the Terrace Royale
Apartments, Cheyenne Woods Apartments and Deerfield Apartments each contain
clauses providing for prepayment penalties if the loans are repaid prior to
maturity. Further, the properties may not be sold subject to existing
indebtedness.

On January 29, 1999, the Partnership refinanced the mortgage encumbering Terrace
Royale Apartments (See "Note L" for further information).

The estimated fair value of the Partnership's aggregate debt is approximately
$9,776,000. This estimate is not necessarily indicative of the amounts the
Partnership may pay in actual market transaction.

Scheduled principal payments on the mortgage notes payable subsequent to
December 31, 1998, are as follows (in thousands):

1999 $ 2,478

2000 80

2001 87

2002 93

2003 101

Thereafter 6,937

$ 9,776

Included in the 1999 payments is the December 31, 1998, outstanding loan balance
on the Terrace Royale notes payable, as it matured in November 1998. The loan
was not in default due to a forebearance agreement in place with the lender
while the General Partner arranged to refinance the loan. Subsequent to
December 31, 1998, the mortgage notes encumbering Terrace Royale were refinanced
with a new maturity date of February 1, 2019 (see "Note L").

NOTE E - TRANSACTIONS WITH AFFILIATED PARTIES

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership Agreement provides for certain payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made to the General
Partner and affiliates during the years ended December 31, 1998 and 1997:

1998 1997

(in thousands)

Property management fees (included

in operating expenses) $159 $160

Reimbursement for services of affiliates

(included in operating, general and

administrative expenses and investment

properties) (1) $ 51 $ 42

(1) Included in "Reimbursement for services of affiliates" for the years ended
December 31, 1998 and 1997, is approximately $1,000 and $7,000,
respectively, in reimbursements for construction oversight costs.

Additionally, the Partnership paid approximately $4,000 and $21,000 during the
years ended December 31, 1998 and 1997, respectively, to affiliates of the
General Partner for reimbursements of costs related to the refinancing of
Deerfield in November 1997. These costs were capitalized as loan costs and are
being amortized over the term of the loan.

During the years ended December 31, 1998 and 1997, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates approximately
$133,000 and $130,000 for the years ended December 31, 1998 and 1997,
respectively. During the years ended December 31, 1997 and for the nine months
ending September 30, 1998 affiliates of the General Partner were entitled to
varying percentages of gross receipts from the Registrant's commercial property
as compensation for providing property management services. These services were
performed by affiliates of the General Partner during 1997 and for the nine
months ending September 30, 1998 and were approximately $30,000 and $26,000,
respectively. Effective October 1, 1998 (the effective date of the Insignia
Merger) these services for the commercial property were performed by
Insignia/ESG, which is no longer a related party.

An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $51,000 and $42,000 for the
years ended December 31, 1998 and 1997, respectively.

For the period January 1, 1997 to August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the General
Partner with an insurer unaffiliated with the General Partner. An affiliate of
the General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the master policy. The agent assumed the financial obligations
to the affiliate of the General Partner which receives payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the General Partner by virtue of the
agent's obligations was not significant.

NOTE F - OPERATING LEASES

Tenants of Greystone South Plaza Center were responsible for their own utilities
and maintenance of their space, and payment of their proportionate share of
common area maintenance, utilities, insurance and real estate taxes. A portion
of the real estate taxes, insurance, and common area maintenance expenses were
paid directly by the Partnership. The Partnership is then reimbursed by the
tenants for their proportionate share.

On December 10, 1998, Greystone South Plaza Center was foreclosed on by the
lender holding the mortgage encumbering the property, therefore, there are no
future minimum lease payments to be received for this property (See "Note C" for
discussion of the foreclosure).

NOTE G - PARTNER TAX INFORMATION

The following is a reconciliation between net loss as reported in the
consolidated financial statements and Federal taxable loss allocated to the

partners in the Partnership's tax return for the years ended December 31, 1998
and 1997 (in thousands, except per unit data):

1998 1997

Net income (loss) as reported $ 2,065 $ (327)

Add (deduct):

Deferred revenue and other liabilities (99) (111)

Depreciation differences (88) (81)

Accrued expenses (30) 18

Nondeductible reserves and allowances (2,923) 3

Other 4 --

Federal taxable income (loss) $(1,071) $ (498)

Federal taxable income (loss) per limited

partnership unit $(27.00) $(12.55)

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets at December 31, 1998 (in thousands):

Net assets as reported $1,739

Differences in basis of assets and

liabilities:

Accumulated depreciation (126)

Other assets and liabilities 63

Syndication costs 1,362

Net assets - tax basis $3,038

NOTE H - REAL ESTATE AND ACCUMULATED DEPRECIATION

Initial cost

To Partnership

(in thousands)

Buildings Net Cost

and Related Capitalized

Personal Subsequent to

Description Encumbrances Land Property Acquisition

(in thousands) (in thousands)

Terrace Royale $ 2,404 $ 653 $ 3,496 $ 354

Cheyenne Woods 3,806 587 4,980 573

Deerfield 3,566 240 3,891 508

Totals $ 9,776 $ 1,480 $12,367 $ 1,435

Gross Amount At Which Carried

At December 31, 1998

(in thousands)

Buildings

And

Personal Accumulated Date of Date Depreciable

Description Land Property Total Depreciation Construction Acquired Life-Years

(in thousands)

Terrace Royale $ 653 $ 3,850 $ 4,503 $ 1,446 1987-1988 11/01/88 5-40

Cheyenne Woods 587 5,553 6,140 1,875 1988 04/18/89 5-40

Deerfield 240 4,399 4,639 1,371 1986 10/24/90 5-40

Totals $1,480 $13,802 $15,282 $ 4,692

</TABLE>

Reconciliation of "Real Estate and Accumulated Depreciation":

Years Ended December 31,

1998 1997

(in thousands)

Investment Properties

Balance at beginning of year $17,195 $17,060

Property improvements 218 182

Disposition of property -- (47)

Dispositions through foreclosure (2,131) --

Balance at End of Year $15,282 $17,195

Accumulated Depreciation

Balance at beginning of year $ 4,798 $ 4,256

Additions charged to expense 571 561

Disposition of property -- (19)

Accumulated depreciation on

real estate foreclosed (677) --

Balance at End of Year $ 4,692 $ 4,798

The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998, is approximately $15,282,000. The accumulated depreciation
taken for Federal income tax purposes at December 31, 1998 is approximately
$4,819,000.

NOTE I - LIMITED PARTNERSHIP UNITS

In 1997, the number of Limited Partnership Units decreased by 10 units due to a
limited partner abandoning its units. In abandoning his or her Limited
Partnership Units, a limited partner relinquishes all right, title and interest
in the Partnership as of the date of abandonment. However, during the year of
abandonment, the Limited Partner will still be allocated his or her share of the
income or loss for the entire year. The loss per limited partnership units in
the accompanying consolidated statements of operations is calculated based on
the number of units outstanding at the beginning of the year.

NOTE J - SEGMENT REPORTING

Description of the types of products and services from which the reportable
segment derives its revenues: As defined by SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", the Partnership has two
reportable segments: residential properties and commercial properties. The

Partnership's residential property segment consists of three apartment complexes
in three states in the United States. The Partnership rents apartment units to
people for terms that are typically twelve months or less. The commercial
property segment consist of a retail shopping center located in Lenexa, Kansas.
This property leases space to a home furnishing retailer, various specialty
retail outlets, and several food enterprises at terms ranging from 3 to 10
years.

Measurement of segment profit or loss: The Partnership evaluates performance
based on net operating income, which is defined as income before interest
expense, depreciation, amortization of intangibles, casualty expense, gain or
loss on disposal of property, and gain or loss on extinguishment of debt. The
accounting policies of the reportable segment are the same as those described in
the summary of significant accounting policies.

Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments consist of investment properties that offer
different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.

Segment information for the years 1998 and 1997 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.

1998
Residential Commercial Other Totals
Rental income $ 2,553 $ 536 $ -- $ 3,089
Other income 113 2 28 143

Interest expense 798 248 (3) 1,043
Depreciation 516 55 -- 571
General and administrative expense -- -- 114 114
Gain on extraordinary item -- 2,242 -- 2,242
Segment (loss) income (74) 2,221 (82) 2,065
Total assets 11,187 1 676 11,864
Capital expenditures for investment
properties 212 6 -- 218

1997
Residential Commercial Other Totals
Rental income $ 2,456 $ 512 $ -- $ 2,968
Other income 119 6 11 136
Interest expense 855 255 (3) 1,107
Depreciation 515 46 -- 561
General and administrative expense -- -- 77 77
Loss on extraordinary item (36) -- -- (36)
Segment loss (231) (33) (63) (327)
Total assets 11,368 1,667 1,112 14,147
Capital expenditures for investment
properties 170 12 -- 182

NOTE K - LEGAL PROCEEDINGS

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

NOTE L - SUBSEQUENT EVENT

ITEM 8.CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

Effective September 23, 1998, the Registrant dismissed its prior Independent
Auditors, Deloitte & Touche LLP ("Deloitte") and retained as its new Independent
Auditors, KPMG Peat Marwick LLP. Deloitte's Independent Auditor's Report on the
Registrant's financial statements for the calendar year ended December 31, 1997
did not contain an adverse opinion or a disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
The decision to change Independent Auditors was approved by the General
Partner's directors. During the calendar year ended 1997 and through September
23, 1998, there were no disagreements between the Registrant and Deloitte on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope of procedure which disagreements if not resolved to the
satisfaction of Deloitte, would have caused it to make references to the subject
matter of the disagreements in connection with its reports.

Effective September 23, 1998, the Registrant engaged KPMG Peat Marwick LLP as
its Independent Auditors. During the last two calendar years and through
September 23, 1998, the Registrant did not consult KPMG Peat Marwick LLP
regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii)
of Regulation S-B.

PART III

ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

United Investor's Growth Properties (the "Registrant" or "Partnership") has no
officers or directors. United Investor Real Estate, Inc. ("UIRE" or the
"General Partner") manages and controls the Partnership and has general
responsibility and authority in all matters affecting its business. The General
Partner was wholly-owned by MAE GP Corporation ("MAE GP"). Effective February
25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is a
subsidiary of Apartment Investment and Management Company ("AIMCO"). Thus the
General Partner is now a wholly owned subsidiary of AIMCO.

The names of the directors and executive officers of UIRE, their ages and the
nature of all positions with UIRE presently held by them are set forth below.
There are no family relationships between or among any officers and directors.

Name Age Position

Patrick J. Foye 41 Executive Vice President and Director

Timothy R. Garrick 42 Vice President - Accounting and Director

Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the

law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council.
He received a B.A. from Fordham College and a J.D. from Fordham University Law
School.

Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of the General Partner since October 1, 1998.
Prior to that date, Mr. Garrick served as Vice President-Accounting Services of
Insignia Financial Group since June of 1997. From 1992 until June of 1997, Mr.
Garrick served as Vice President of Partnership Accounting and from 1990 to 1992
as an Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr.
Garrick served in various capacities with U.S. Shelter Corporation. From 1979
to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick
received his B.S. Degree from the University of South Carolina and is a
Certified Public Accountant.

ITEM 10. EXECUTIVE COMPENSATION

No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of the General Partner. The Partnership has no plan,
nor does the Partnership presently propose a plan, which will result in any
remuneration being paid to any officer or director upon termination of
employment. However, reimbursements and other payments have been made to the
Partnership's General Partner and its affiliates, as described in "Item 12"
below.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as provided below, as of January 1, 1999, no person was known by the
Partnership to be the beneficial owner of more than 5 percent (5%) of the Units
of the Partnership:

Entity Number of units Percent of total

United Investors Real Estate, Inc. 3,926 9.993%

United Investors Real Estate I is indirectly, ultimately owned by AIMCO. Its
business address is 55 Beattie Place, Greenville, SC 29602.

On October 1, 1998, Insignia Financial Group, Inc. merged into AIMCO, a real
estate investment trust, whose Class A Common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties, L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired indirect control of the General Partner. AIMCO and its affiliates
currently own 9.993% of the limited partnership interests in the Partnership.
AIMCO is presently considering whether it will engage in an exchange offer for
additional limited partnership interests in the Partnership. There is a
substantial likelihood that, within a short period of time, AIMCO OP will offer
to acquire limited partnership interests in the Partnership for cash or
preferred units or common units of limited partnerships interests in AIMCO OP.
While such an exchange offer is possible, no definite plans exist as to when or
whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.

A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-KSB shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

1998 1997

(in thousands)

Property management fees $159 $160

Reimbursement for services of affiliates (1) $ 51 $ 42

Additionally, the Partnership paid approximately $4,000 and $21,000 during the
years ended December 31, 1998 and 1997, respectively, to affiliates of the
General Partner for reimbursements of costs, related to the refinancing of
Deerfield in November 1997. These costs were capitalized as loan costs and are
being amortized over the term of the loan.

During the years ended December 31, 1998 and 1997, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates approximately
$133,000 and $130,000 for the years ended December 31, 1998 and 1997,
respectively. During the years ended December 31, 1997 and for the nine months
ending September 30, 1998 affiliates of the General Partners were entitled to
varying percentages of gross receipts from the Registrant's commercial property
as compensation for providing property management services. These services were
performed by affiliates of the General Partner during 1997 and for the nine
months ending September 30, 1998 and were approximately $30,000 and $26,000,
respectively. Effective October 1, 1998 (the effective date of the Insignia
Merger) these services for the commercial properties were performed by
Insignia/ESG, which is no longer a related party.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit 10.20 is filed as an exhibit to this report.

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

(b) Reports on Form 8-K filed in the fourth quarter of fiscal year
1998:

A Form 8-K dated September 23, 1998 (amended October 27, 1998) was
filed reporting the dismissal of Deloitte & Touche, LLP as the
registrant's Independent accountant.

Current Report on Form 8-K dated October 1, 1998 and filed October
16, 1998 disclosing the change in control of Registrant from
Insignia Financial Group, Inc. to AIMCO.

SIGNATURES

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

UNITED INVESTORS GROWTH PROPERTIES

By: United Investors Real Estate, Inc.,
Its General Partner

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

By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting

Date: March 31, 1999

In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the Partnership and in the capacities and on the
date indicated.

/s/ Patrick J. Foye Executive Vice President Date: March 31, 1999
Patrick J. Foye and Director

/s/ Timothy R. Garrick Vice President - Accounting Date: March 31, 1999
Timothy R. Garrick and Director

INDEX TO EXHIBITS

EXHIBIT

1.0 Form of Dealer Manager Agreement between the General Partner and the
Dealer Manager, including Form of Soliciting Broker Agreement;
incorporated by reference to Exhibit 1 to Partnership's Amendment to
Registration Statement (File No. 33-21114) previously filed on June 9,
1988.

1.1 Amendment to Dealer Manager Agreement; incorporated by reference to
Exhibit 1.1 to Post-Effective Amendment No. 2 to Partnership's
Registration Statement previously filed on March 21, 1989.

2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT; incorporated by reference to Exhibit 2.1 filed
with Registrant's Current Report on Form 8-K dated October 1, 1998.

4.1 Form of Subscription Agreement; incorporated by reference as part of
the Prospectus of Partnership contained in Partnership's Amendment to
Registration Statement previously filed on June 9, 1988.

4.2 Form of Agreement of Limited Partnership of Partnership; incorporated
by reference as part of the Prospectus of Partnership contained in
Partnership's Amendment to Registration Statement previously filed on
June 9, 1988.

4.3 Seventh Amendment to Agreement of Limited Partnership of Partnership;
incorporated by reference to Exhibit 4.3 to Partnership's Quarterly
Report on Form 10-Q previously filed on May 15, 1989.

4.4 Agreement of Joint Venture of Renaissance Village Associates dated
March 22, 1991 between United Investors Growth Properties (A Missouri
Limited Partnership) and United Investors Growth Properties II (A
Missouri Limited Partnership); incorporated by reference to Exhibit 4.4
to Partnership's Quarterly Report on Form 10-Q previously filed on
April 24, 1991.

10.1 Escrow Agreement among the Partnership, the General Partner, the Dealer
Manager, and Boston Safe Deposit & Trust Company; incorporated by
reference to Exhibit 10.1 to Partnership's Amendment to Registration
Statement previously filed on June 9, 1988.

10.1.1 Amendment to Escrow Agreement; incorporated by reference to Exhibit
10.1.1 to Partnership's Quarterly Report on Form 10-Q previously filed
on November 3, 1989.

10.2 Agreement of Purchase and Sale, dated June 9, 1988, with amendments
dated June 27, 1988 and July 5, 1988, respectively, between United
Investors Real Estate, Inc., as nominee for United Investors Growth
Properties, as purchaser, and Domion-Bothell Associates, as seller,
relating to Terrace Royale Apartments; incorporated by reference to
Exhibit 10.1 to Partnership's Quarterly Report on Form 10-Q previously
filed on August 11, 1988.

10.3 Promissory Note, dated October 3, 1988, between United Investors Real
Estate, Inc., as nominee for United Investors Growth Properties, as
borrower, and Confederation Life Insurance Company, as lender;
incorporated by reference to Exhibit 10.1 to Partnership's Quarterly
Report on Form 10-Q previously filed on November 14, 1988.

10.4 Deed of Trust, dated October 3, 1988, between United Investors Real
Estate, Inc., as nominee for United Investors Growth Properties, as
grantor, and Confederation Life Insurance Company, as beneficiary;
incorporated by reference to Exhibit 10.2 to Partnership's Quarterly
Report on Form 10-Q previously filed on November 14, 1988.

10.5 Agreement of Purchase and Sale, dated October 31, 1988, between United
Investors Real Estate, Inc., as purchaser and Cheyenne Woods Limited
Partnership, as seller, relating to Cheyenne Woods Apartments;
incorporated by reference to Exhibit 10.5 to Post-Effective Amendment
No. 1 to Partnership's Registration Statement previously filed on
February 1, 1989.

10.6 Promissory Note and Deed of Trust with respect to the Permanent Loan on
Cheyenne Woods Apartments; incorporated by reference to Exhibit 10.6 to
Partnership's Current Report on Form 8-K previously filed on April 28,
1989.

10.7 Agreement of Purchase and Sale, between United Investors Growth
Properties (A Missouri Limited Partnership), as purchaser, and Central
Life Assurance Company, as seller, executed by the parties on August 11
and August 14, 1989, relating to Greystone South Plaza Center, and
amendments thereto; incorporated by reference to Exhibit 10.7 to

Partnership's Current Report on Form 8-K previously filed on December
12, 1989.

10.8 Promissory Note and First Mortgage and Security Agreement with respect
to the Permanent Loans on Greystone South Plaza Center; incorporated by
reference to Exhibit 10.8 to Partnership's Current Report on Form 8-K
previously filed on December 12, 1989.

10.8.1 Modification Agreement between United Investors Growth Properties and
Central Life Assurance Company with respect to the Permanent Loans on
Greystone South Plaza Center; incorporated by reference to Exhibit
10.8.1 to Partnership's Quarterly Report on Form 10-Q previously filed
on August 13, 1991.

10.9 Master Lease dated November 27, 1989 between United Investors Growth
Properties and Central Life Assurance Company; incorporated by
reference to Exhibit 10.9 to Partnership's Current Report on Form 8-K
previously filed on December 12, 1989.

10.9.1 Lease Termination Agreement between United Investors Growth Properties
and Central Life Assurance Company, with respect to the Master Lease
dated November 27, 1989; incorporated by reference to Exhibit 10.9.1 to
Partnership's Quarterly Report on Form 10-Q previously filed on
November 12, 1991.

10.10 Agreement of Purchase and Sale, between United Investors Growth
Properties (A Missouri Limited Partnership), as purchaser, and
Deerfield Apartments Limited (A Tennessee Limited Partnership), as
seller, dated July 18, 1990, relating to Deerfield Apartments;

incorporated by reference to Exhibit 10.10 to Partnership's Quarterly
Report on Form 10-Q previously filed on August 15, 1990.

10.11 Promissory Note and Deed of Trust with respect to the Permanent Loan on
Deerfield Apartments; incorporated by reference to Exhibit 10.11 to
Partnership's Quarterly Report on Form 10-Q previously filed on
November 8, 1990.

10.12 Standby Loan Commitment with respect to the financing of Deerfield
Apartments; incorporated by reference to Exhibit 10.12 to Partnership's
Quarterly Report on Form 10-Q previously filed on November 8, 1990.

10.13 Agreement of Purchase and Sale, dated August 27, 1990, between United
Investors Real Estate, Inc., as purchaser, and Mueller Development
Company, as seller, relating to Renaissance Village Apartments, and
amendments thereto; incorporated by reference to Exhibit 10.2 to
Partnership's Post-Effective Amendment No. 1 Registration Statement
(File No. 33-34111) of United Investors Growth Properties II previously
filed on December 6, 1990.

10.13.1 Seventh and Eighth Amendments to Agreement of Purchase and Sale between
United Investors Real Estate, Inc., as purchaser, and Mueller
Development Company, as seller, relating to Renaissance Village
Apartments; incorporated by reference to Exhibit 10.13.1 to
Partnership's Quarterly Report on Form 10-Q previously filed on April
24, 1991.

10.14 Promissory Note and Deed of Trust with respect to the Permanent Loan on
Renaissance Village Apartments; incorporated by reference to Exhibit

10.14 to Partnership's Quarterly Report on Form 10-Q previously filed
on April 24, 1991.

10.15 Stock Purchase Agreement dated December 4, 1992 showing the purchase of
100% of the outstanding stock of United Investors Real Estate, Inc. by
MAE GP Corporation; incorporated by reference to Exhibit 10.15 to
Partnership's Current Report on Form 8-K previously filed on January
14, 1993.

10.16 Purchase and Sale Agreement, made as of the 19th of July 1995, by and
between Kauri Investments, Ltd., a Washington corporation, and
Renaissance Village Associates, JV, a Kansas joint venture.
(Incorporated by reference to the Annual Report on Form 10-KSB for the
year ended December 31, 1995)

10.17 Amendment to Purchase and Sale Agreement, made as of the 10th day of
August, 1995, by and between Kauri Investments, Ltd., a Washington
corporation, and Renaissance Village Associates, JV, as Kansas joint
venture. (Incorporated by reference to the Annual Report on Form 10-KSB
for the year ended December 31, 1995)

10.18 Multifamily Note dated August 7, 1997, by and between Cheyenne Woods,
L.L.C., a South Carolina limited liability company, and Green Park
Financial Limited Partnership, a District of Columbia Limited
Partnership. (Incorporated by reference to the Annual Report on Form
10-KSB for the year ended December 31, 1995)

10.19 Promissory Note dated November 20, 1997, by and between Deerfield
Apartments, L.L.C., a South Carolina limited liability company and
Lehman Brothers Holdings, Inc., a Delaware corporation.

10.20 Promissory Note dated January 29, 1999, by and between AIMCO Terrace
Royale, L.L.C., a South Carolina limited liability company and GMAC
Commercial Mortgage Corporation, a California Corporation.

16 Letter dated November 11, 1998 from the Registrant's former independent
accountants regarding its concurrence with the statements made by the
Registrant; incorporated by reference to Exhibit C file with the
Registrant's Current Report on Form 8-K dated September 23, 1998.

27 Financial Data Schedule

99.1 Portions of Prospectus of Partnership dated June 13, 1988; incorporated
by reference to Exhibit 99.1 to Partnership's Report on Form 10-K
previously filed on March 6, 1991.

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Growth Properties 1998 Year-Eng 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000831663
<NAME> UNITED INVESTORS GROWTH PROPERTIES
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 693
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 15,282
<DEPRECIATION> 4,692
<TOTAL-ASSETS> 11,864
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 9,776
0
0
<COMMON> 0
<OTHER-SE> 1,739
<TOTAL-LIABILITY-AND-EQUITY> 11,864
<SALES> 0
<TOTAL-REVENUES> 3,232
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,409
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,043
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,065
<EPS-PRIMARY> 52.03<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>

</TABLE>

EXHIBIT 10.20
FHLMC Loan No. 002636247

MULTIFAMILY NOTE
(WASHINGTON)

US $3,500,000.00 As of January 29, 1999

FOR VALUE RECEIVED, the undersigned ("BORROWER") jointly and severally (if more
than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation, the principal sum of Three Million Five Hundred
Thousand and no/100 Dollars (US $3,500,000.00), with interest on the unpaid
principal balance at the annual rate of Six and Fifty-One One Hundredths percent
(6.51%).

1. DEFINED TERMS. As used in this Note, (i) the term "LENDER" means the
holder of this Note, and (ii) the term "INDEBTEDNESS" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.

2. ADDRESS FOR PAYMENT. All payments due under this Note shall be
payable at Dresher Road, P.O. Box 1015, Horsham, PA 19044-8015, ATTN: Servicing
- - Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.

3. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.

(b) Consecutive monthly installments of principal and interest, each in
the amount of Twenty-Six Thousand, One Hundred Fifteen and 66/100 Dollars (US
$26,115.66), shall be payable on the first day of each month beginning on March
1, 1999, until the entire unpaid principal balance evidenced by this Note is
fully paid. Any accrued interest remaining past due for 30 days or more shall
be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on February 1, 2019 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "MATURITY DATE"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.

(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.

4. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender's discretion. Borrower agrees that neither Lender's
acceptance of a payment from Borrower in an amount that is less than all amounts
then due and payable nor Lender's application of such payment shall constitute
or be deemed to constitute either a waiver of the unpaid amounts or an accord
and satisfaction.

5. SECURITY. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "SECURITY INSTRUMENT"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.

6. ACCELERATION. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.

7. LATE CHARGE. If any monthly amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Lender
within ten (10) days after the amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to five (5%)
percent of such amount. Borrower acknowledges that its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the loan evidenced by this Note (the "LOAN"), and that it is
extremely difficult and impractical to determine those additional expenses.
Borrower agrees that the late charge payable pursuant to this Paragraph
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional expenses Lender will incur
by reason of such late payment. The late charge is payable in addition to, and
not in lieu of, any interest payable at the Default Rate pursuant to Paragraph
8.
8. DEFAULT RATE. So long as (a) any monthly installment under this Note
remains past due for 30 days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "DEFAULT RATE") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan, that, during the time that any monthly
installment under this Note is delinquent for more than 30 days, Lender will
incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender's ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment under this Note is delinquent for more than 30 days or any other
Event of Default has occurred and is continuing, Lender's risk of nonpayment of
this Note will be materially increased and Lender is entitled to be compensated
for such increased risk. Borrower agrees that the increase in the rate of
interest payable under this Note to the Default Rate represents a fair and
reasonable estimate, taking into account all circumstances existing on the date
of this Note, of the additional costs and expenses Lender will incur by reason
of the Borrower's delinquent payment and the additional compensation Lender is
entitled to receive for the increased risks of nonpayment associated with a
delinquent loan.

9. LIMITS ON PERSONAL LIABILITY.

(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit
or impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.

(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to zero percent (0%) of the unpaid principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.

(c) In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.

(d) For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability.

(e) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.

(f) In addition to any personal liability for the Indebtedness, Borrower
shall be personally liable to Lender for (1) the performance of all of
Borrower's obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.

(g) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "MORTGAGED PROPERTY" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.

10. VOLUNTARY AND INVOLUNTARY PREPAYMENTS.

(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:

(1) Borrower may voluntarily prepay all of the unpaid principal
balance of this Note on the last Business Day of a calendar month if Borrower
has given Lender at least 30 days prior notice of its intention to make such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes including the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of such month.
For purposes of this Note, a "BUSINESS DAY" means any day other than a Saturday,
Sunday or any other day on which Lender is not open for business. Borrower
shall not have the option to voluntarily prepay less than all of the unpaid
principal balance.

(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid principal
balance of this Note outstanding at the time of the acceleration, (A) all
accrued interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.

(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note prior
to the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.

(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than
180 days before the Maturity Date, or (B) any prepayment occurring as a result
of the application of any insurance proceeds or condemnation award under the
Security Instrument.

(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.

(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.

(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the Loan, and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment
premium provisions.

11. COSTS AND EXPENSES. Borrower shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.

12. FORBEARANCE. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.

13. WAIVERS. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.

14. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that law, and Borrower is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness that constitutes interest, as well as all other charges made in
connection with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.

15. COMMERCIAL PURPOSE. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.

16. COUNTING OF DAYS. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.

17. GOVERNING LAW. This Note shall be governed by the law of the
jurisdiction in which the Land is located.

18. CAPTIONS. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.

19. NOTICES. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be given
in accordance with Section 31 of the Security Instrument.

20. CONSENT TO JURISDICTION AND VENUE. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "PROPERTY
JURISDICTION"). The state and federal courts and authorities with jurisdiction
in the Property Jurisdiction shall have exclusive jurisdiction over all
controversies which shall arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.

21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.

ATTACHED SCHEDULES. THE FOLLOWING SCHEDULES ARE ATTACHED TO THIS NOTE:

|X | SCHEDULE A PREPAYMENT PREMIUM (REQUIRED)

|X | SCHEDULE B MODIFICATIONS TO MULTIFAMILY NOTE
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.

AIMCO TERRACE ROYALE, L.L.C., a Delaware limited liability company

BY: UNITED INVESTORS GROWTH PROPERTIES (A Missouri Limited Partnership), a
Missouri limited partnership, its sole member

By: United Investors Real Estate, Inc., a Delaware limited partnership, general
partner

By:____________________________
Name:________________________
Title:________________________

______________________________________
Borrower's Social Security/Employer ID Number

PAY TO THE ORDER OF
FEDERAL HOME LOAN MORTGAGE
CORPORATION WITHOUT RECOURSE
AS OF THE 29th DAY OF JANUARY, 1999.

GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation

By:_________________________________
Max W. Foore, Vice President
SCHEDULE A

PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:

(a) If the prepayment is made between the date of this Note and the date
that is 180 months after the first day of the first calendar month following the
date of this Note (the "YIELD MAINTENANCE PERIOD"), the prepayment premium shall
be the greater of:

(i) 1.0% of the unpaid principal balance of this Note; or

(ii) the product obtained by multiplying:

(A) the amount of principal being prepaid,

(B) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate,

For purposes of subparagraph (ii), the following definitions shall
apply:

MONTHLY NOTE RATE: one-twelfth (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.

PREPAYMENT DATE: in the case of a voluntary prepayment, the date on which the
prepayment is made; in any other case, the date on which Lender accelerates the
unpaid principal balance of the Note.

ASSUMED REINVESTMENT RATE: one-twelfth (1/12) of the yield rate as of the date
5 Business Days before the Prepayment Date, on the _______% U.S. Treasury
Security due _____________________, as reported in The Wall Street Journal,
expressed as a decimal calculated to five digits. In the event that no yield is
published on the applicable date for the Treasury Security used to determine the
Assumed Reinvestment Rate, Lender, in its discretion, shall select the non-
callable Treasury Security maturing in the same year as the Treasury Security
specified above with the lowest yield published in The Wall Street Journal as of
the applicable date. If the publication of such yield rates in The Wall Street
Journal is discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.

PRESENT VALUE FACTOR: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:
N = number of months remaining in Yield Maintenance Period

ARR = Assumed Reinvestment Rate

(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 180 days before the Maturity Date, the
prepayment premium shall be 1.0% of the unpaid principal balance of this Note.
SCHEDULE B

MODIFICATIONS TO MULTIFAMILY NOTE

1. The following paragraph is added to Paragraph 7 of the Note ("Late
Charges"):

Notwithstanding any contrary provision contained in this Note, if any sum
payable under this Note is not paid within three (3) days from the date on which
it is due or the earliest time permitted under applicable law for a late payment
charge to accrue, Borrower shall pay to Lender upon demand an amount equal to
the lesser of (a) five percent (5%) of such unpaid sum or (b) the maximum amount
permitted by applicable law in order to defray a portion of the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. If the
day when any payment required under this Note is due is not a Business Day (as
defined in Paragraph 10 of the Note), then payment shall be due on the first
Business Day thereafter.

2. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:

So long as (a) any monthly installment under this Note remains past due for more
than thirty (30) days or (b) any other event of Default has occurred and is
continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of (1) the maximum interest rate which may
be collected from Borrower under applicable law or (2) the greater of (i) three
percent (3%) above the Interest Rate or (ii) four percent (4.0%) above the then-
prevailing Prime Rate. As used herein, the term "Prime Rate" shall mean the
rate of interest announced by The Wall Street Journal from time to time as the
"Prime Rate".

3. Subparagraph (b) of Schedule A of the Note ("Prepayment Premium") is hereby
deleted and the following is substituted:

(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than six (6) months before the Maturity Date, the prepayment
premium shall be 1.0% of the unpaid principal balance of this Note.
4. Paragraph 9(c) of the Note is modified by the addition of the following:

(4) failure by Borrower to pay the amount of the water and sewer charges,
taxes, fire hazard or other insurance premiums and ground rents in accordance
with the terms of the Security Instrument.