SOUTHEAST ACQUISITIONS III L P, PRER14A, 1997-08-29

SOUTHEAST ACQUISITIONS III L P
PRER14A, 1997-08-29
LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES)

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SOUTHEAST ACQUISITIONS III, L.P.
250 KING OF PRUSSIA ROAD
RADNOR, PENNSYLVANIA
19087

September 15, 1997

Dear Limited Partner:

Southeast Acquisitions, Inc., general partner (the "General Partner") of
Southeast Acquisitions III, L.P. (the "Partnership") is soliciting your vote on
two sets of alternative amendments to the Partnership agreement (the
"Alternative Amendments"). The sets of Alternative Amendments would make the
following modifications to the Partnership agreement:

First Alternative Amendments:

- Extend the Partnership until December 31, 2001

- Substitute a new general partner

- Authorize new fees, commissions and rights to sell Partnership
properties for the new general partner

- Give the new general partner the exclusive right to sell Partnership
properties

- Modify the Limited Partners' rights to consent to certain sales of
Partnership properties

Second Alternative Amendments:

- Extend the Partnership until December 31, 2001

- Retain the General Partner

- Authorize new fees, commissions and rights to sell Partnership
properties for the General Partner

- Give the General Partner the exclusive right to sell Partnership
properties

- Eliminate the Limited Partners' rights to consent to certain sales of
Partnership properties

Although only one of the sets of Alternative Amendments can be adopted, if
neither is adopted, the General Partner would continue to act as general partner
under the current terms of the Partnership agreement.

The General Partner recommends that you vote for either one of the sets of
Alternative Amendments.

The enclosed Proxy Statement discusses the sets of Alternative Amendments in
further detail. We encourage you to read the Proxy Statement and then vote your
units by filling out the enclosed proxy card and returning it to D.F. King &
Co., Inc. in the enclosed,

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postage paid, business reply envelope. If you have any questions concerning the
sets of Alternative Amendments, please call the General Partner at (610)
964-7178.

The enclosed Proxy Statement has been mailed by certified mail to the record
holders of Partnership units. Thank you for your consideration of these
proposals.

Very truly yours,

SOUTHEAST ACQUISITIONS, INC.
General Partner of Southeast Acquisitions III, L.P.

Arthur W. Mullin
President

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SOUTHEAST ACQUISITIONS III, L.P.

NOTICE OF SPECIAL MEETING OF

THE LIMITED PARTNERS ON OCTOBER 28, 1997

To the Limited Partners of Southeast Acquisitions III, L.P.:

A special meeting (the "Special Meeting") of the limited partners (the "Limited
Partners") of Southeast Acquisitions III, L.P. (the "Partnership") will be held
at 301 South Perimeter Park Drive, Suite 100 Nashville, Tennessee 37211 on
Wednesday, October 28, 1997 at 2 p.m. Central Daylight Savings Time, or at any
adjournment thereof, to consider and vote upon two sets of alternative
amendments (the "Alternative Amendments") to the Restated Limited Partnership
Agreement of Southeast Acquisitions III, L.P. (the "Partnership Agreement").
ALTHOUGH ONLY ONE SET OF ALTERNATIVE AMENDMENTS CAN BE ADOPTED, IF NEITHER IS
ADOPTED, THE GENERAL PARTNER WILL CONTINUE TO ACT AS GENERAL PARTNER UNDER THE
CURRENT TERMS OF THE PARTNERSHIP AGREEMENT.

The First Alternative Amendments would:

- Extend the term of the Partnership from its current expiration date of
December 31, 1999 to December 31, 2001;

- Substitute Southern Management Group , LLC, a Tennessee
Limited Liability Company (the "New General Partner") for Southeast
Acquisitions, Inc. (the "General Partner") as the new general partner
of the Partnership;

- Authorize new commissions and new management fees for the New General
Partner;

- Give the New General Partner the exclusive right to sell the
Properties; and

- Modify the Partnership Agreement to require that, except in the
liquidation of the Partnership, a majority in interest of the Limited
Partners must consent to a sale or disposition at one time of 60% or
more of the real estate acreage held by the Partnership as of
August 28, 1997 unless the sale or disposition returns to the
Limited Partners at least the original Acquisition Cost of the assets
sold or disposed of.

The Second Alternative Amendments would:

- Extend the term of the Partnership from its current expiration date of
December 31, 1999 to December 31, 2001 with Southeast Acquisitions,
Inc. remaining as General Partner;

- Authorize new commissions, payable to the General Partner on the sale
or sales of the Properties, effective as of the date the Second
Alternative

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Amendments are adopted, and new management fees for the General
Partner, effective following December 31, 1999;

- Give the General Partner the exclusive right to sell the Properties;
and

- Delete from the Partnership Agreement the requirement that, unless in a
liquidation or where the net proceeds provide Limited Partners with
distributions equal to the Unpaid Cumulative Return plus their Adjusted
Capital Contributions, a majority in interest of the Limited Partners
must consent to a sale or disposition at one time of all or
substantially all the assets of the Partnership.

You may vote in favor of or against or abstain from voting with respect to each
amendment contained in the proposed sets of Alternative Amendments. However, the
adoption of any amendment contained in a set of Alternative Amendments is
conditioned upon the adoption of all of the amendments within that set of
Alternative Amendments.

For example, a Limited Partner may vote "FOR" an individual proposal in the
First Alternative Amendments and "AGAINST" the remaining proposals. Because the
adoption of the entire set of amendments is conditional on each individual
proposal receiving more than 50% of the votes of all the Units, it is possible
that the Limited Partner's vote against (or abstention from voting on) such
remaining proposals could have the effect of a vote against all of the proposals
in the First Alternative Amendments if the proposals which the Limited Partner
votes against do not receive the required vote for passage.

The accompanying proxy statement (the "Proxy Statement") describes each set of
Alternative Amendments. The Proxy Statement also contains as exhibits copies of
the Partnership Agreement and the proposed sets of Alternative Amendments.

The General Partner recommends that you vote for either one of the sets of
Alternative Amendments.

Only Limited Partners of record as of the close of business on September 15,
1997 are entitled to notice of, and to vote at, the Special Meeting. Such
Limited Partners may vote at the Special Meeting either in person or by proxy.
Even if you plan to attend the Special Meeting, please complete, sign, date,
and return the accompanying proxy card in the enclosed stamped and
self-addressed envelope so that the proxy holders may vote the Units that you
hold as a Limited Partner pursuant to your instructions. If you attend the
Special Meeting, you may revoke your proxy and vote such Units in person.

Very truly yours,

SOUTHEAST ACQUISITIONS, INC.,
General Partner

September 15, 1997

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SOUTHEAST ACQUISITIONS III, L.P.

PROXY STATEMENT

SPECIAL MEETING OF THE LIMITED PARTNERS

TO BE HELD ON OCTOBER 28, 1997

Southeast Acquisitions III, L.P. (the "Partnership") will hold a special meeting
of its limited partners (the "Limited Partners") at 301 South Perimeter Park
Drive, Suite 100, Nashville, Tennessee 37211, at 2 pm on Wednesday, October 28,
1997, Central Daylight Savings Time, or at any adjournment thereof (the "Special
Meeting") to consider and vote upon two sets of alternative amendments (the
"Alternative Amendments") to the Restated Limited Partnership Agreement of
Southeast Acquisitions III, L.P. (the "Partnership Agreement"). ALTHOUGH ONLY
ONE SET OF ALTERNATIVE AMENDMENTS CAN BE ADOPTED, IF NEITHER IS ADOPTED, THE
GENERAL PARTNER WILL CONTINUE TO ACT AS GENERAL PARTNER UNDER THE CURRENT TERMS
OF THE PARTNERSHIP AGREEMENT.

Under either set of Alternative Amendments, the term of the Partnership would
be extended to December 31, 2001. In addition, new fees, commissions and rights
would be authorized for the general partner, and the Limited Partners' rights to
consent to Partnership property sales would be modified or eliminated. Under
the first set of Alternative Amendments, a new general partner would be
substituted for the existing general partner for the new term, while under the
second set of Alternative Amendments the existing general partner would remain
in place. For a summary and a more detailed discussion of the Alternative
Amendments, See "THE ALTERNATIVE AMENDMENTS" below at p. 13 and p. 55.

RISK FACTORS

Adoption of either set of Alternative Amendments as well as the failure to
adopt either set of Alternative Amendments involves certain risks
including but not limited to:

FIRST ALTERNATIVE AMENDMENTS:

- Possible decrease in value of Properties if Partnership term extended.

- No assurance of improved return with New General Partner.

- Possible sales of Properties at low price without consent of the
Limited Partners.

SECOND ALTERNATIVE AMENDMENTS:

- Possible decrease in value of Properties if Partnership term extended.

- No assurance of improved return continuing with General Partner.

- Possible sales of Properties at low price without consent of the
Limited Partners.

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED

- Partnership Properties may be liquidated following December 31, 1999 at
below Acquisition cost

For a more detailed discussion of these and other risk factors see "RISK
FACTORS" below at page 34.

APPRAISAL RIGHTS

The Partnership Agreement does not provide for contractual appraisal rights in
connection with the Alternative Amendments. Therefore, in the event one of the
sets of Alternative Amendments is adopted, Limited Partners who opposed the
adoption of such Alternative Amendments will not have the right to dissent and
demand payment in cash for the fair value of their Units.

CONFLICTS OF INTEREST.

Adoption of either set of Alternative Amendments as well as the failure
to adopt either set of Alternative Amendments presents certain conflicts of
interest for the New General Partner and the General Partner, including:

FIRST ALTERNATIVE AMENDMENTS:

- Timing of sales of Properties by New General Partner to obtain
commissions.

- Timing of sales of Properties by New General Partner to obtain
distribution.

- Willingness of New General Partner to retain brokers.

SECOND ALTERNATIVE AMENDMENTS:

- Timing of sales of Properties by General Partner to obtain
commissions.

- Timing of sales of Properties by General Partner to obtain
distribution.

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED:

- Timing of sales of Properties by General Partner to obtain
commissions.

- Timing of sales of Properties by General Partner to obtain
distribution.

For a more detailed description of these conflicts of interest see "CONFLICTS OF
INTEREST" below at p. 37.

THE ALTERNATIVE AMENDMENTS

The first set of Alternative Amendments (the "First Alternative Amendments")
would:

- Extend the term of the Partnership from its current expiration date of
December 31, 1999 to December 31, 2001;

- Authorize new commissions, payable to the New General Partner or an
Affiliate on the sale or sales of the Properties, and new management
fees for the New General Partner, both to be effective as of the date
the First Alternative Amendments are adopted and the New General
Partner signs the Partnership Agreement;

- Give the New General Partner the exclusive right to sell the
Properties; and

- Modify the Partnership Agreement to require that a majority in interest
of the Limited Partners must consent to a sale or disposition at one
time of 60% or more of the real estate acreage held by the Partnership
as of August 28, 1997 unless in connection with a liquidation of the
Partnership pursuant to the Partnership Agreement or in the event that
the net proceeds of such sale, when distributed in accordance with the
Partnership Agreement, will be sufficient to provide the Limited
Partners with distributions equal to the Acquisition Cost of the assets
sold.

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The second set of Alternative Amendments (the "Second Alternative Amendments")
would:

- Extend the term of the Partnership from its current expiration date of
December 31, 1999 to December 31, 2001, with Southeast Acquisitions,
Inc. remaining as General Partner;

- Authorize new commissions, payable to the General Partner or an
Affiliate on the sale or sales of the Properties, effective as of the
date the Second Alternative Amendments are adopted and new management
fees for the General Partner, effective following December 31, 1999;

- Give the General Partner the exclusive right to sell the Properties; and

- Delete from the Partnership Agreement the requirement that a majority
in interest of the Limited Partners must consent to a sale or
disposition at one time of all or substantially all the assets of the
Partnership unless in connection with a liquidation of the Partnership
under the Partnership Agreement or in the event that the net proceeds
of such sale, when distributed in accordance with the Partnership
Agreement, will be sufficient to provide the Limited Partners with
distributions equal to the Unpaid Cumulative Return plus their Adjusted
Capital Contributions.

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The Partnership will mail this Proxy Statement (this "Proxy Statement") on or
about September 15, 1997.

In order to be adopted, all of the amendments contained in a set of Alternative
Amendments must receive at least 50% of the votes of Units eligible to vote.

In the event both sets of Alternative Amendments receive in excess of 50% of
the votes of Units eligible to vote, the set of Alternative Amendments
receiving the most votes in excess of 50% will be adopted.

In the event of an equal number of votes being cast which are sufficient for the
adoption of both the First Alternative Amendments and the Second Alternative
Amendments, the General Partner will by a random drawing select the set of
Alternative Amendments to be adopted.

If you return a signed proxy card without indicating how you wish to vote on
either the First Alternative Amendments or the Second Alternative Amendments,
your vote will be counted as a vote for both sets of Alternative Amendments.

If neither the First Alternative Amendments nor the Second Alternative
Amendments receives the affirmative vote of a majority in interest of the Units,
the General Partner will continue to act as General Partner of the Partnership
in accordance with the Partnership Agreement.

The Board of Directors of the General Partner hereby solicits your proxy on
behalf of the Partnership for use at the special meeting.

The General Partner recommends that you vote for either one of the sets of
Alternative Amendments. The General Partner believes that the current value of
the Properties is below an amount which would return to the Limited Partners the
Unpaid Cumulative Return plus their Adjusted Capital Contributions. The General
Partner further believes that, based on its discussion with real estate
professionals in the markets where the Properties are located, given more time,
the Properties could appreciate in value and recommends that it is in the best
interests of the Partnership to extend the term of the Partnership by two years
to provide additional time for this to occur. The General Partner is presenting
the Limited Partners with the choice of either selecting a new general partner
or continuing with the General Partner for such period.

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Only Limited Partners of record as of the close of business on September 15,
1997 (the "Record Date") are entitled to notice of, and to vote at, the Special
Meeting. Such Limited Partners may vote at the Special Meeting either in person
or by proxy. Even if you plan to attend the Special Meeting, which will be held
at 301 South Perimeter Park Drive, Suite 100 Nashville, Tennessee, 37211, you
should use the proxy card (the "Proxy Card") accompanying this proxy statement
to instruct the proxy holders concerning how to vote the Units that you hold as
a Limited Partner.

The Partnership has engaged D.F. King & Co., Inc., 77 Water Street, New York, NY
10005, Telephone No. (800) 829-6551; Fax No. (212) 809-8839 (the "Information
Agent") to distribute the attached letter from the General Partner, the attached
notice of the Special Meeting, this Proxy Statement, and the Proxy Card to the
Limited Partners and other interested persons. To request additional copies of
these documents, please contact the Information Agent at the address set forth
above. Whether or not you plan to attend the Special Meeting, it is important
that you return your completed Proxy Card to the Information Agent at the
address set forth above. If you have any questions concerning these proposals,
please call the General Partner at (610) 964-7178.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY ..................................................................................... 13
The Alternative Amendments ......................................................... 13
Risk Factors ....................................................................... 14
Conflicts of Interest .............................................................. 16
Reasons for and Benefits of Each Set of Alternative Amendments ..................... 17
Differences Between the Alternative Amendments ..................................... 19
Comparison of Fees and Commissions Under Each Set of Alternative Amendments ........ 20
Comparison of Plans of New General Partner and General Partner ..................... 22
History of the Partnership ......................................................... 23
The General Partner ................................................................ 24
The New General Partner ............................................................ 27
The Properties ..................................................................... 29
Voting ............................................................................. 31

RISK FACTORS ................................................................................ 34

FIRST ALTERNATIVE AMENDMENTS ............................................................ 34

Risk of Decrease in Value of Properties if Partnership Term Extended ............... 34
No Assurance of Improved Return .................................................... 34
Possible Sales of Properties at Low Price Without Consent of Limited
Partners if Consent Requirements Modified .......................................... 34
Possible Death or Disability of Principal member of New General Partner ............ 35
Minimal Capitalization of New General Partner ...................................... 35
New General Partner's Lack of Experience in Public Real Estate
Partnerships ....................................................................... 35
Limited Cash Reserves .............................................................. 36
New General Partner Not Required to Devote Full Time to Partnership ................ 36
Risk in Plans of New General Partner ...............................................

SECOND ALTERNATIVE AMENDMENTS ........................................................... 36

Risk of Decrease in Value of Properties if Partnership Term Extended ............... 36
No Assurance of Improved Return .................................................... 36
Limited Capitalization of General Partner .......................................... 36
Possible Sales of Properties at Low Price Without Consent of Limited
Partners if Consent Requirements Eliminated ........................................ 37
Risk in Rehabilitation of Ultimate Parent of General Partner ....................... 37
Limited Cash Reserves .............................................................. 37
Risk in Ms. Deborah Dillon Not Acting as Consultant ................................ 37
General Partner Not Required to Devote Full Time to Partnership .................... 37
Risk in Plans of General Partner ................................................... 37

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED ........................................... 37

Risk of Liquidation of Properties at Low Price...................................... 37
Risk in Rehabilitation of Ultimate Parent of General Partner........................ 37
Limited Cash Reserves............................................................... 37
Risk in Ms. Deborah Dillon Not Acting as Consultant................................. 37
General Partner Not Required to Devote Full Time to Partnership..................... 37
Risk in Plans of General Partner ................................................... 37

CONFLICTS OF INTEREST ....................................................................... 37

FIRST ALTERNATIVE AMENDMENTS ............................................................ 37

Timing of Sale to Obtain Commission ................................................ 37
Timing of Sale to Obtain Distribution .............................................. 38
</TABLE>

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<TABLE>
<S> <C>
Broker Participation ............................................................... 38
SECOND ALTERNATIVE AMENDMENTS ........................................................... 38

Timing of Sale to Obtain Commission ................................................ 38
Timing of Sale to Obtain Distribution .............................................. 38
Broker Participation ............................................................... 38

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED............................................ 38

Timing of Sale to Obtain Commission ................................................ 38
Timing of Sale to Obtain Distribution .............................................. 38

HISTORY OF THE PARTNERSHIP .............................................................. 39

Public Offering .................................................................... 39
Purchase of Properties ............................................................. 39
Distributions/Cumulative Annual Return ............................................. 39
Investment Objectives; Marketing ................................................... 43
General Partner's Right to Sell Properties; Reserves ............................... 43
Rights of Limited Partners on Dissolution .......................................... 43

THE GENERAL PARTNER ..................................................................... 44

Background ......................................................................... 44
Directors and Officers ............................................................. 46
Former Management/Consulting Relationship .......................................... 47
Current Management ................................................................ 48
Plans of Current Management if Second Alternative Amendments are Adopted ........... 50
General Partner's Plans if Neither Set of Alternative Amendments is Adopted ........ 50

THE PROPERTIES .......................................................................... 50

1996-1997 Sales .................................................................... 51
Henry County, Georgia .............................................................. 51
Fulton County, Georgia ............................................................. 52
Fort Myers, Florida ................................................................ 54
Columbia, South Carolina ........................................................... 54

THE ALTERNATIVE AMENDMENTS .............................................................. 55

Reasons For and Benefits of Each Set of Alternative Amendments ..................... 55
Benefits of Adopting First Alternative Amendments .................................. 56
Benefits of Adopting Second Alternative Amendments ................................. 57
Differences Between the Alternative Amendments ..................................... 58

FIRST ALTERNATIVE AMENDMENTS ............................................................ 59

Substitution of New General Partner ................................................ 59
Independent Auditor's Report ....................................................... 60
Extension of Partnership Term ...................................................... 63
Authorization of Fees and Commissions for New General Partner ...................... 63
Exclusive Right to Sell the Properties ............................................. 66
Modification of Requirements That Limited Partners Consent to Sale
</TABLE>

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<TABLE>

<S> <C>
of All or Substantially All the Assets of the Partnership .......................... 67

SECOND ALTERNATIVE AMENDMENTS ........................................................... 68

Extension of Partnership Term ...................................................... 68
Authorization of Fees and Commissions for General Partner .......................... 68
Exclusive Right to Sell the Properties ............................................. 70
Elimination of Requirement That Limited Partners Consent to Sale
of All or Substantially All the Assets of the Partnership .......................... 71

FEDERAL TAX CONSEQUENCES; LEGAL OPINION...................................................... 72

ELIGIBLE UNITS .............................................................................. 72

VOTING ...................................................................................... 72

Record Date ........................................................................ 72
Vote Conditioned on Adoption of All Amendments in Either the
First or Second Alternative Amendments ............................................. 72
Required Vote ...................................................................... 72
Equal Number of Votes Cast ......................................................... 72
No Indication of Vote .............................................................. 72
Neither Alternative Amendments Adopted ............................................. 73
Abstentions/Broker Non-Votes ....................................................... 73
Appraisal Rights ................................................................... 73
Proxies ............................................................................ 73
Revocation of Proxies .............................................................. 73
List of Limited Partners ........................................................... 74

INFORMATION AGENT ........................................................................... 74

SOLICITATIONS BY THE GENERAL PARTNER ........................................................ 74

OWNERSHIP OF UNITS .......................................................................... 74

EXPERTS ..................................................................................... 75

AVAILABLE INFORMATION ....................................................................... 75

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ............................................. 75

APPENDIX I: GLOSSARY OF DEFINED TERMS ................................................. 76

EXHIBIT A: PARTNERSHIP AGREEMENT ..................................................... A-1

EXHIBIT B: ALTERNATIVE AMENDMENTS .................................................... B-1
</TABLE>

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<TABLE>
<S> <C>
EXHIBIT C: AGREEMENT BETWEEN SOUTHERN MANAGEMENT GROUP,
R.W. SORENSON AND THE PARTNERSHIP ....................................... C-1

EXHIBIT D: LEGAL OPINION ............................................................. D-1

</TABLE>

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SUMMARY

THE FOLLOWING SUMMARY OF MATERIAL TERMS OF THIS PROXY STATEMENT IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE INFORMATION APPEARING ELSEWHERE IN THIS PROXY
STATEMENT.

THE ALTERNATIVE AMENDMENTS

A special meeting (the "Special Meeting") of the limited partners (the "Limited
Partners") of Southeast Acquisitions III, L.P. (the "Partnership") will be held
at 301 Perimeter Park Drive, Nashville, Tennessee, 37211 on Wednesday, October
28, 1997 at 2:00 p.m., Central Daylight Savings Time, or at any adjournment
thereof, to consider and vote upon two sets of alternative amendments (the
"Alternative Amendments") to the Restated Limited Partnership Agreement of
Southeast Acquisition III, L.P. (the "Partnership Agreement"). ALTHOUGH ONLY ONE
SET OF ALTERNATIVE AMENDMENTS CAN BE ADOPTED, IF NEITHER IS ADOPTED, THE GENERAL
PARTNER WILL CONTINUE TO ACT AS GENERAL PARTNER UNDER THE CURRENT TERMS OF THE
PARTNERSHIP AGREEMENT.

FIRST ALTERNATIVE AMENDMENTS

The first set of Alternative Amendments (the "First Alternative Amendments")
would:

- Extend the term of the Partnership from its current expiration date of
December 31, 1999 to December 31, 2001;

- Authorize new commissions and new management fees for the New General
Partner;

- Give the New General Partner the exclusive right to sell the
Properties; and

- Modify the Partnership Agreement to require that, except in the
liquidation of the Partnership, a majority in interest of Limited
Partners must consent to a sale or disposition at one time of 60% or
more of the real estate acreage held by the Partnership as of
August 28, 1997 unless the sale or disposition returns to the
Limited Partners at least the original Acquisition Cost of the assets
sold or disposed of.

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SECOND ALTERNATIVE AMENDMENTS

The second set of Alternative Amendments (the "Second Alternative Amendments")
would:

- Extend the term of the Partnership from its current expiration date of
December 31, 1999 to December 31, 2001 with Southeast Acquisitions,
Inc. remaining as General Partner;

- Authorize new commissions, payable to the General Partner on the sale
or sales of the Properties, effective as of the date the Second
Alternative Amendments are adopted, and new management fees for the
General Partner, effective following December 31, 1999;

- Give the General Partner the exclusive right to sell the Properties;
and

- Delete from the Partnership Agreement the requirement that, under
certain circumstances, a majority in interest of the Limited Partners
must consent to a sale or disposition at one time of all or
substantially all the assets of the Partnership.

RISK FACTORS

Adoption of either set of Alternative Amendments as well as the failure to adopt
either set of Alternative Amendments involves certain risks including the
following:

FIRST ALTERNATIVE AMENDMENTS

POSSIBLE DECREASE IN VALUE OF THE PROPERTIES IF THE
PARTNERSHIP TERM IS EXTENDED.
Based on 1996 appraisals (See "THE PROPERTIES - Appraisals"
below), the estimated value of the Properties has decreased in value
to below their aggregate Acquisition Cost. It is possible that the
value of the Properties may decline further over the proposed extended
Partnership term.

- NO ASSURANCE OF IMPROVED RETURN.
There is no assurance that the New General Partner will be able to
achieve a better return during the proposed new term. Any return may be
negatively impacted by the cost of any improvements to the Properties,
new fees and any possible continued decline of the Properties' value
during the proposed extended Partnership term.

- POSSIBLE SALES OF PROPERTIES AT LOW PRICE WITHOUT CONSENT OF LIMITED
PARTNERS.

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Under the proposed modification of the Limited Partners' rights to
consent to sales of all or substantially all of the assets of the
Partnership in a single sale, the New General Partner will have no
restrictions on the sale price that it may obtain for parcels of the
Properties amounting to less than 60% of the acreage held by the
Partnership as of September 15, 1997 other than pursuant to its general
fiduciary duties. This could result in sales, without Limited Partners'
consent, at below the most recent appraised value of the Properties.

- POSSIBLE DEATH OR DISABILITY OF PRINCIPAL MEMBER OF NEW GENERAL
PARTNER.
Mr. Sorenson, the individual member of the New General Partner, is
71 years old. He is expected to play a key role in the marketing and
sale of the Properties. In the event of his death or disability, the
Partnership would have to rely on employees and other members of the
New General Partner who individually are not as experienced as Mr.
Sorenson.

- MINIMAL CAPITALIZATION OF THE NEW GENERAL PARTNER.
The New General Partner will have minimal capitalization and may
not have sufficient assets to satisfy any future claims brought against
it.

- NEW GENERAL PARTNER'S LACK OF EXPERIENCE IN PUBLIC REAL ESTATE
PARTNERSHIPS.
Although management of the New General Partner has considerable
experience in real estate matters, including private partnerships, none
has any experience in managing public real estate limited partnerships.

- LIMITED CASH RESERVES
The Partnership's cash reserves are projected to be sufficient
only through December 31, 2000, a year before the expiration of the new
Partnership term, and it is possible that they may be exhausted at an
earlier date. If the reserves are exhausted, the Partnership may have
to dispose of part or all of one or more of the Properties or incur
indebtedness on unfavorable terms.

- NEW GENERAL PARTNER NOT REQUIRED TO DEVOTE FULL TIME TO PARTNERSHIP
The officers and employees of SMG are active in various business
activities other than SMG, and if SMG becomes the New General Partner
these outside activities would continue. Although the Partnership
Agreement allows the general partner and its officers, directors and
employees to have outside business activities, these other activities
will require the officers, directors and employees of SMG to spend time
on those projects which might otherwise be spent on management of the
Partnership which could result in lost opportunities for the
Partnership.

RISK IN PLANS OF NEW GENERAL PARTNER

Although the New General Partner does not presently anticipate
incurring any material extraordinary costs or expenses chargeable to
the Partnership in its plan to market the Properties, it is possible
that a contract for sale of part or all of one or more of the
Properties could require the Partnership's construction of
infrastructure or other improvements. The Partnership would bear the
cost of such improvements. No such contracts are currently
contemplated.

See "RISK FACTORS - First Alternative Amendments" below at p.34.

SECOND ALTERNATIVE AMENDMENTS

- POSSIBLE DECREASE IN VALUE OF THE PROPERTIES IF THE PARTNERSHIP TERM IS
EXTENDED.
Based on 1996 appraisals (See "THE PROPERTIES - Appraisals"
below), the estimated value of the Properties has decreased to below
their aggregate Acquisition Cost. It is possible that the value of
the Properties may decline further over the proposed extended
Partnership term.

- NO ASSURANCE OF IMPROVED RETURN.
There is no assurance that the General Partner will be able to
achieve a better return over the proposed new term. Any return may be
negatively impacted by the cost of any improvements to the Properties,
new fees and any possible continued decline of the Properties' value
over the proposed extended Partnership term.

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- POSSIBLE SALES OF PROPERTY AT A LOW PRICE WITHOUT CONSENT OF LIMITED
PARTNERS.
Eliminating any rights the Limited Partners have to consent to
sales of all or substantially all of the assets of the Partnership
could result in sales of the Properties at below their most recent
appraised value.

- LIMITED CAPITALIZATION OF GENERAL PARTNER
The General Partner has limited capitalization and may not have
sufficient assets to satisfy any future claims brought against it.

- RISK IN REHABILITATION OF ULTIMATE PARENT OF GENERAL PARTNER
The ultimate parent company of the General Partner is in a state
directed Rehabilitation. It is possible that, pursuant to the proposed
Rehabilitation plan, a non affiliated investor would reduce or
reorganize management of the General Partner.

- LIMITED CASH RESERVES

The Partnership's cash reserves are projected to be sufficient
only through December 31, 2000, a year before the expiration of the new
Partnership term, and it is possible that they may be exhausted at an
earlier date. If the reserves are exhausted, the Partnership may have
to dispose of part or all of one or more of the Properties or incur
indebtedness on unfavorable terms.

- RISK IN MS. DEBORAH DILLON NOT ACTING AS CONSULTANT.
Ms. Deborah Dillon, who had been involved with the acquisition and
marketing of the Properties from the inception of the Partnership
through 1996 is no longer providing consulting services for the General
Partner but has agreed to act as a consultant to the New General
Partner.

- GENERAL PARTNER NOT REQUIRED TO DEVOTE FULL TIME TO PARTNERSHIP
Under the Partnership Agreement, the general partner is required
to devote to the Partnership such time as may be necessary for the
proper performance of its duties, but the officers, directors and
employees of the general partner are not required to devote their full
time to the management of the Partnership. The officers of the General
Partner manage properties owned by other partnerships in which
Southeast Acquisitions, Inc. also acts as general partner, perform
duties for the General Partner's ultimate parent, Fidelity Mutual, and
engage in other business activities. Time spent by officers of the
General Partner managing other partnerships, working for Fidelity
Mutual or engaging in other business activities will not be available
for the management of the Partnership, which could result in lost
opportunities for the Partnership.

- RISK IN PLANS OF GENERAL PARTNER
Although the General Partner does not anticipate incurring any
material extraordinary costs or expenses chargeable to the Partnership
in its plan to market the Properties, it is possible that a contract
for sale of part or all of one or more of the Properties could require
the Partnership's construction of infrastructure or other improvements.
The Partnership would bear the cost of such improvements. No such
contracts are currently contemplated.

See "RISK FACTORS - Second Alternative Amendments" below at p. 36.

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED

- RISK OF LIQUIDATION OF PROPERTIES AT LOW PRICE
If the Properties are not sold prior to the end of the Partnership
term on December 31, 1999, it is possible that the Properties would
have to be liquidated at below the Properties' Acquisition Cost.

- RISK IN MS. DEBORAH DILLON NOT ACTING AS CONSULTANT
Ms. Deborah Dillon, who has been involved with the acquisition and
marketing of the Properties from the inception of the Partnership
through 1996 is no longer providing consulting services for the General
Partner.

- GENERAL PARTNER NOT REQUIRED TO DEVOTE FULL TIME TO PARTNERSHIP
Under the Partnership Agreement, the General Partner is required
to devote to the Partnership such time as may be necessary for the
proper performance of its duties, but the officers, directors and
employees of the General Partner are not required to devote their full
time to the management of the Partnership. The officers of the General
Partner manage properties owned by other partnerships in which
Southeast Acquisitions, Inc. also acts as general partner, perform
duties for the General Partner's ultimate parent, Fidelity Mutual, and
engage in other business activities. Time spent by officers of the
General Partner managing other partnerships, working for Fidelity
Mutual or engaging in other business activities will not be available
for the management of the Partnership which could result in lost
opportunities for the Partnership.

See "RISK FACTORS - Neither Set of Alternative Amendments Adopted"
below at p.37.

CONFLICTS OF INTEREST

Each set of Alternative Amendments presents certain conflicts of interest for
the New General Partner and General Partner. The following summarizes the
conflicts of interest inherent in each set of Alternative Amendments.

FIRST ALTERNATIVE AMENDMENTS

- TIMING OF SALE OF PROPERTIES TO OBTAIN COMMISSION

It is possible that the New General Partner would be confronted
with a conflict of interest in a desire to realize a commission upon an
immediate sale of some or all of the Properties rather than holding
them for a more extended period if it were in the best interests of
the Partnership.

- TIMING OF SALE OF PROPERTIES TO OBTAIN DISTRIBUTION

The New General Partner might wish to delay an immediate sale of
some or all of the Properties which might be in the Partnership's best
interests if the sales proceeds at the time would not be sufficient to
result in any distribution to the New General Partner under the
Partnership Agreement.

- BROKER PARTICIPATION
The New General Partner's exclusive agency and participation in
future commissions upon sale of the Properties could also have an
adverse effect on

16
<PAGE> 17
the New General Partner's willingness to retain local brokers and
upon the local brokerage community's willingness to participate in the
sale of the Properties.

See "CONFLICTS OF INTEREST - First Alternative Amendments" below at p. 37.

SECOND ALTERNATIVE AMENDMENTS

- TIMING OF SALE TO OBTAIN COMMISSION

It is possible that the General Partner would be confronted with a
conflict of interest in a desire to realize a commission upon an
immediate sale of some or all of the Properties rather than holding
them for a more extended period if it were in the best interests of the
Partnership.

- TIMING OF SALE TO OBTAIN DISTRIBUTION

The General Partner might wish to delay an immediate sale of some
or all of the Properties if the sales proceeds at the time would not be
sufficient to result in any distribution to the General Partner.

- BROKER PARTICIPATION

The General Partner's exclusive agency and participation in future
commissions upon sale of the Properties could have an adverse effect on
the General Partner's willingness to retain local brokers and upon the
local brokerage community's willingness to participate in the sale of
the Properties.

See "CONFLICTS OF INTEREST - Second Alternative Amendments" below at p. 38.

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED

- TIMING OF SALE TO OBTAIN COMMISSION

It is possible that the General Partner would be confronted with a
conflict of interest in a desire to realize a commission upon an
immediate sale of the Properties rather than holding them for a more
extended period if it were in the best interests of the Partnership.

- TIMING OF SALE TO OBTAIN DISTRIBUTION

The General Partner might wish to delay an immediate sale of the
Properties if the sales proceeds at the time would not be sufficient to
result in any distribution to the General Partner.

See "CONFLICTS OF INTEREST - Neither Set of Alternative Amendments
Adopted" below at p. 38.

REASONS FOR AND BENEFITS OF EACH SET OF ALTERNATIVE AMENDMENTS

As part of its fiduciary responsibility to protect the assets of the Partnership
and further the business objectives of the Partnership, the General Partner is
offering the Limited Partners the opportunity to vote to extend the term of the
Partnership pursuant to either of the two sets of Alternative Amendments.

The General Partner believes that the aggregate current market value of the
Properties is below an amount which would return to the Limited Partners the
Unpaid Cumulative Return plus their Adjusted Capital Contributions. This
assessment is based upon 1996 appraisals (See "THE PROPERTY - Appraisals" below)
and the General Partner's inspection of the Properties and review of the
assumptions and conclusions of the appraisals with local real estate
professionals.

The General Partner further believes that, based on its discussions with real
estate professionals in the markets where the Properties are located, given more
time, the Properties could appreciate in value and recommends that it is in the
best interests of the Partnership to extend the term of the Partnership
by three years to provide additional time for this to occur.

17
<PAGE> 18

The main purpose for and benefit of either set of Alternative Amendments is to
provide the Partnership with such an extended opportunity to improve the price
the Partnership could obtain on the sale of its assets. This could improve the
return on the Limited Partners' investment, as the Partnership's original
business objectives will, in all likelihood, not be met within the existing term
or in a liquidation of the Partnership assets thereafter. There is no assurance
that the return to the Limited Partners will be improved by extending the term.

The General Partner decided to offer the Limited Partners an alternative to the
General Partner continuing for the extended term in part in response to letters
from approximately 20 Limited Partners, most of whom had also been brokers
involved in the original sale of the Units, requesting a new general partner
because of the conclusion of Ms. Deborah Dillon's involvement with the
Partnership (See "THE GENERAL PARTNER - Former Management/Consulting
Relationship" below at p. 47) and concern as to the impact of Fidelity Mutual's
ownership interest in the General Partner (See "THE GENERAL PARTNER --
Background" below at p. 44 and "RISK FACTORS -- SECOND ALTERNATIVE AMENDMENTS --
Risk in Rehabilitation of Ultimate Parent of General Partner" below at p. 37).
No specific amendments were proposed by such Limited Partners and none of such
Limited Partners are affiliated with the General Partner or Ms. Dillon. (See
also "RISK FACTORS - SECOND ALTERNATIVE AMENDMENTS - Risk in Ms. Deborah Dillon
not Acting as Consultant" below at p. 37).

BENEFITS OF ADOPTING FIRST ALTERNATIVE AMENDMENTS

- EXTENDED TIME TO IMPROVE PARTNERSHIP'S REALIZATION OF ITS INVESTMENT
OBJECTIVES.
Under the First Alternative Amendments, the Partnership term would
be extended by 2 years, which would provide the New General Partner
additional time to improve the price the Partnership could obtain on
the sale of its assets so as to improve the return on the Limited
Partners' investment, as the Properties are currently valued at below
their aggregate Acquisition Cost. However, there is no assurance that
purchasers will be found or that the Partnership will be able to
improve the return to the Limited Partners within such extended time
period (See "RISK FACTORS - First Alternative Amendments" below).

- NEW MANAGEMENT.
The New General Partner presents an opportunity to elect new
management with considerable experience in the Southeastern United
States real estate market for those Limited Partners who wish to extend
the term of the Partnership with a general partner unaffiliated with
Fidelity Mutual. For the relationship between Fidelity Mutual and the
General Partner (See "THE GENERAL PARTNER - Background" below).

- ABILITY TO ACT QUICKLY ON PROSPECTIVE SALES.
In the case of the First Alternative Amendments, modifying the
requirement that a majority in interest of the Limited Partners consent
to a sale of all or substantially all the assets of the Partnership is
designed to facilitate potential sales of all or a portion of the
Properties which could be jeopardized as a result of the time and
complexity involved in obtaining Limited Partners' consent to the
transaction.

18
<PAGE> 19

See "THE ALTERNATIVE AMENDMENTS - Benefits of Adopting the First
Alternative Amendments" below at p. 56.

BENEFITS OF ADOPTING SECOND ALTERNATIVE AMENDMENTS

- EXTENDED TIME TO IMPROVE PARTNERSHIP'S REALIZATION OF ITS
INVESTMENT OBJECTIVES.

Under the Second Alternative Amendments, the Partnership term
would be extended by 2 years, which would provide the General Partner
additional time to improve the price the Partnership would obtain on
the sale of its assets so as to improve the return on the Limited
Partners' investment, as the Properties are currently valued at below
their aggregate Acquisition Cost. However, there is no assurance that
purchasers will be found or that the Partnership will be able to
improve the return to the Limited Partners within such extended time
period (See "RISK FACTORS - Second Alternative Amendments" below at p.
36).

- CONTINUITY OF MANAGEMENT
Under the Second Alternative Amendments, the General Partner is
willing to offer the Limited Partners the option of it continuing as
the General Partner for the same extended term as proposed for the New
General Partner and on similar terms and conditions if the Limited
Partners decide they wish to extend the term of the Partnership but
retain current management. In addition, new fees authorized by the
Second Alternative Amendments would not be payable to the General
Partner until after the expiration of the original Partnership term on
December 31, 1999.

- ABILITY TO ACT QUICKLY ON PROSPECTIVE SALES.
In the case of the Second Alternative Amendments, eliminating the
requirement that a majority in interest of the Limited Partners consent
to a sale of all or substantially all the assets of the Partnership is
designed to facilitate potential sales of all or a portion of the
Properties which could be jeopardized as a result of the time and
complexity involved in obtaining Limited Partners' consent to the
transaction.

See "THE ALTERNATIVE AMENDMENTS - Benefits of Adopting the Second
Alternative Amendments" below at p. 57.

DIFFERENCES BETWEEN THE ALTERNATIVE AMENDMENTS
The terms of the First Alternative Amendments and the Second Alternative
Amendments are similar, with three principal exceptions:

19
<PAGE> 20
- DIFFERENT GENERAL PARTNERS
Under the First Alternative Amendments, the New General Partner
would be substituted for the existing General Partner for the new term
of the Partnership Agreement, while under the Second Alternative
Amendments, the General Partner would continue in that capacity for the
new term.

- TIMING OF FEES
Under the First Alternative Amendments, management fees for the
New General Partner would commence as of the adoption of the First
Alternative Amendments, while the Second Alternative Amendments only
permit the current General Partner to begin receiving such fees
following the expiration of the current term of the Partnership
Agreement on December 31, 1999.

- MODIFICATION VERSUS ELIMINATION OF LIMITED PARTNERS' CONSENT
Under the First Alternative Amendments the requirement that a
majority in interest of the Limited Partners consent to a sale of all
or substantially all the assets of the Partnership under certain
circumstances would be modified to only require such consent if 60% or
more of the real estate acreage of the Partnership as of September 15,
1997 is sold at one time at a price which would fail to return to the
Limited Partners the Acquisition Cost of the assets sold, while under
the Second Alternative Amendments, the requirement that Limited
Partners consent to sales of all or substantially all the assets of
the Partnership would be eliminated entirely.

COMPARISON OF FEES AND COMMISSIONS UNDER EACH SET OF ALTERNATIVE AMENDMENTS

The following tables set forth a comparison of the commissions and management
fees to which the General Partner is entitled under the current Partnership
Agreement, the commissions and management fees to which the New General Partner
would be entitled under the First Alternative Amendments and the commissions and
management fees to which the General Partner would be entitled under the Second
Alternative Amendments.

20
<PAGE> 21

COMMISSIONS AND MANAGEMENT FEES PAID TO GENERAL PARTNER UNDER EXISTING
PARTNERSHIP AGREEMENT TERMINATING DECEMBER 31, 1999

<TABLE>
<CAPTION>
YEAR AMOUNT OF COMMISSION TOTAL MANAGEMENT TOTAL
COMMISSION FEE MANAGEMENT
FEE PAID
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1988-1999 Up to 50% of competitive None to date; $24,886.00 $203,493
real estate commission or Depends on /annum
disposition fee not to Sale price not to
exceed 10% of contract of Property exceed
price for Property; not to
General Partner and exceed
Affiliates get no $207,244
compensation if
commission exceeds 6%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
COMMISSIONS AND MANAGEMENT FEES TO BE PAID TO NEW GENERAL PARTNER UNDER
PROPOSED FIRST ALTERNATIVE AMENDMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
YEAR AMOUNT OF COMMISSION TOTAL MANAGEMENT TOTAL
COMMISSION FEE POSSIBLE
MANAGEMENT
FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997 Competitive real estate Depends on $4,647 *
commission or disposition sale price
fee not to exceed 10% of of Property
contract price for Property;

- ---------------------------------------------------------------------------------------------------------------------
1998 Same as 1997 Same $26,500.00/
annum *

- ---------------------------------------------------------------------------------------------------------------------
1999 Same as 1997 Same $26,500.00/
annum *

- ---------------------------------------------------------------------------------------------------------------------
2000 Same as 1997 Same $26,500.00/
annum *
- ---------------------------------------------------------------------------------------------------------------------
2001 Same as 1997 Same $26,500.00/ $110,647 **
annum *
</TABLE>

- - * or pro rata portion of fee if all the Properties are sold before the end
of the year.
- - ** or lesser amount, depending on a pro rata reduction if all the Properties
are sold before the end of the year.

21
<PAGE> 22
COMMISSIONS AND MANAGEMENT FEES PAID TO GENERAL PARTNER UNDER SECOND
ALTERNATIVE AMENDMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
YEAR AMOUNT OF COMMISSION TOTAL MANAGEMENT TOTAL
COMMISSION FEE POSSIBLE
MANAGEMENT
FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997 Competitive real estate Depends on $3,751
commission/disposition sale price of
fee not to exceed 10% of Property
the contract price for
the Property
- -------------------------------------------------------------------------------------------------------------
1998 Same as 1997 Same $0/ annum *
- -------------------------------------------------------------------------------------------------------------
1999 Same as 1997 Same $0/ annum *
- -------------------------------------------------------------------------------------------------------------
2000 Same as 1997 Same $26,500.00/
annum *
- -------------------------------------------------------------------------------------------------------------
2001 Same as 1997 Same $26,500.00/ $56,051.00
annum *
</TABLE>

COMPARISON OF PLANS OF NEW GENERAL PARTNER AND GENERAL PARTNER

The New General Partner and the General Partner have different plans with
respect to the marketing and sale of the Properties.
THE FOLLOWING DESCRIPTION OF THE NEW GENERAL PARTNER'S AND THE GENERAL PARTNER'S
INTENTIONS WITH RESPECT TO MANAGEMENT AND MARKETING THE PROPERTIES REPRESENTS
THEIR CURRENT PLANS WITH RESPECT THERETO. HOWEVER, THERE IS NO ASSURANCE THAT
THESE PLANS WILL BE IMPLEMENTED OR THAT, IF IMPLEMENTED, THEY WILL RESULT IN A
SALE OR SALES OF THE PROPERTIES.

NEW GENERAL PARTNER PLANS IF FIRST ALTERNATIVE AMENDMENTS ARE ADOPTED

Henry County, Georgia. Renewed contacts will be made with developers/owners
in the area to explore partial or total sales. Industrial brokers without a
large presence in Henry

22
<PAGE> 23
County will be interviewed. If they have a good sales record elsewhere, they may
be given exclusive sales contracts. A marketing presentation for discussion with
potential users and distribution by Henry County will be developed. SMG is
familiar with several of the important industrial developers in this and the
Atlanta market who will be contacted regarding potential sales.

Fulton County, Georgia. Since the inception of the Partnership,
approximately $200,000 had been set aside to enable the Partnership to
participate in bringing sewer to this Property. An effort will be made to enter
into an agreement with an entity to share the cost of the sewer. Bids for the
project will be solicited from a minimum of three utility companies following
submission of the already completed sewer design plans to the County to obtain a
precise cost estimate for the project. As the $200,000 was estimated to be only
a portion of the final cost of the project, the project would not proceed
without participation of another entity. In any event, a development analysis
will be conducted to identify the optimum way for the Property to be subdivided
for future sale.

Fort Myers, Florida. The highest return to the investors will most likely
be realized through a joint venture with a local home builder. Therefore,
initial efforts will be focused on evaluating that possibility in a venture
arrangement which will protect the investors' ownership interest in the land.

Columbia, South Carolina. Initial activity would include development
analysis factoring in topography, utility availability, road access, new roads
planned, etc. to determine the optimum ways for a subdivision. The Property has
sewer but no public water system. While a bulk sale may be the best strategy,
this cannot be determined until the foregoing is complete.

The studies and evaluations of the Properties discussed above will be
conducted by personnel in SVC, one of the members of SMG, at no cost to the
Partnership, and no other costs or expenses relating to specific infrastructure
or other improvements to the Properties are anticipated by SMG, other than as
discussed above in connection with the Fulton County Property. However, it is
possible that, as New General Partner, SMG might enter into a contract for sale
of part or all of one or more of the Properties which would require the
construction of infrastructure or other improvements. The Partnership would bear
the cost of such improvements. No such contracts are currently contemplated.

GENERAL PARTNER'S PLANS IF SECOND ALTERNATIVE AMENDMENTS ARE ADOPTED

Henry County, Georgia. The General Partner will continue its plan of marketing
the Property in whole and in part. The General Partner has not made a
determination to revise its marketing plan and there are no contemplated
extraordinary expenses related to this Property.

Fulton County, GA: The General Partner expects to continue to hold the Property
in anticipation of the improving market conditions. Since inception of the
Partnership, approximately $200,000 has been set aside to enable the
Partnership to participate in bringing sewer to this Property. In the event a
third party, either the local municipality or property owners advances the
cause of bringing sewer to the area, the Partnership is prepared to contribute
the funds set aside for the sewer towards the cost to run the sewer lines.
Prior to committing the Partnership's involvement, the General Partner will
analyze the cost and benefit of the Partnership's participation. Other than
costs related to the sewer, there are currently no contemplated extraordinary
expenses related to this Property.

Fort Myers, Florida. The General Partner will continue to monitor market
conditions and communicate with local developers and real estate professionals
to discern the most advantageous time to aggressively pursue purchase offers.
There are no plans to revise the marketing plan of selling the entire Property
in one sale and there are no contemplated extraordinary expenses related to
this Property.

Columbia, South Carolina. The General Partner will monitor the progress of the
South Carolina Department of Transportation and continue its plan of marketing
the Property in whole and in part. The General Partner has not made a
determination to revise its marketing plan and there are no contemplated
extraordinary expenses related to this Property.

The General Partner does not presently anticipate incurring any material
extraordinary costs or expenses chargeable to the Partnership in its plan to
market the Properties. However, it is possible that minor costs could be
incurred to secure the services of land experts in the vicinity of the
Properties to assist in marketing and sales efforts. In addition, a contract for
sale of part or all of one or more of the Properties could require the
Partnership's construction of infrastructure or other improvements. The
Partnership would bear the cost of such improvements. No such contracts are
currently contemplated.

GENERAL PARTNER'S PLANS IF NEITHER SET OF ALTERNATIVE AMENDMENTS IS ADOPTED

If neither sets of Alternative Amendments is adopted, the General Partner will
implement the marketing plan set forth above as if the Second Alternative
Amendments were adopted, and then upon the expiration of the Partnership term on
December 31, 1999 commence a liquidation of the Properties, in accordance with
the Partnership Agreement.

HISTORY OF THE PARTNERSHIP

The Partnership was formed on November 4, 1988, as a Delaware limited
partnership, and it terminates upon disposition of all its property or the
occurrence of certain other events specified in the Partnership Agreement. The
term of the Partnership expires on December 31, 1999, at which time, if the
Partnership is still in existence, it will be dissolved unless the term is
extended.

PURCHASE OF PROPERTIES
Five properties were acquired by the Partnership as described under the
heading "Properties" below. The Partnership currently owns four of the five
Properties originally acquired.

23
<PAGE> 24
INVESTMENT OBJECTIVES

The Partnership's primary business objective has been and continues to be
to try to realize appreciation in the value of the Properties by holding the
Properties for investment and sale to return to the Limited Partners their
capital contributions and a 10% cumulative annual return, although there has
never been any assurance that this will be attained.

The Partnership has been marketing certain of the Properties, where
appropriate in light of market conditions, for a number of years. The General
Partner may sell each of the Properties in a single sale or divide them into
parcels which would be sold separately. The timing and manner of sale has been
and remains within the discretion of the General Partner. (See "HISTORY OF THE
PARTNERSHIP" below)

THE GENERAL PARTNER

The General Partner is an indirect wholly owned subsidiary of The Fidelity
Mutual Life Insurance Company, in Rehabilitation ("Fidelity Mutual"). A number
of the officers and directors of the General Partner are employees of or
consultants to Fidelity Mutual.

24
<PAGE> 25
The following organizational chart shows the relationship between Fidelity
Mutual and the General Partner.

------------------------------------------------------
The Fidelity Mutual Life Insurance Company
(In Rehabilitation)
------------------------------------------------------

owns 100%

-----------------------------
FML Holding Company, Inc.
-----------------------------

owns 100%

-----------------------------
Fidelity Enterprises,
Inc.
-----------------------------

owns 100%

-------------------------------------------------------
Southeast Acquisitions, Inc.
(General Partner of Southeast Acquisitions III, L.P.)
-------------------------------------------------------

On November 6, 1992, Fidelity Mutual's Board of Directors entered into a
voluntary agreement with the Commonwealth of Pennsylvania's Department of
Insurance to place Fidelity Mutual into a state directed Rehabilitation (the
"Rehabilitation"). The General Partner was immediately advised of the
Rehabilitation. The Rehabilitation is still in progress. The Partnership is a
separate entity from Fidelity Mutual, with all of its reserve funds and assets
held in completely segregated accounts. Management of the General Partner has
been kept advised of the status of the Rehabilitation and the potential
consequences that might result from Rehabilitation plans submitted to the court
with jurisdiction over the Rehabilitation.

Fidelity Mutual anticipates that it will file a revised plan of Rehabilitation
(the "Plan") within the next few months under which an outside investor may
acquire a controlling interest in a company which would acquire the assets of
Fidelity Mutual, including the General Partner. (See "THE GENERAL PARTNER -
Background" below at p. 44).

Although it is the present intention of Fidelity Mutual to maintain the current
staffing levels of the General Partner, it is possible that if the Plan is
approved and the sale to a

25
<PAGE> 26
new investor described above is consummated, such new investor, who would
indirectly control the General Partner, would reduce or reorganize the
management of the General Partner during the new Partnership term proposed under
the Second Alternative Amendments.

The following is an unaudited balance sheet of the General Partner.

<TABLE>
<CAPTION>
SOUTHEAST ACQUISITIONS, INC.
UNAUDITED
BALANCE SHEET
JUNE 30, 1997

<S> <C>
ASSETS

Cash $ 791
Mortgage Receivable $ 560,873
Investment in Southeast Acquisitions I, II & III $ 0
-----------
$ 561,664
===========

SHAREHOLDER'S INVESTMENT

Common Stock (Per value $1
authorized 1,000 shares, issued
and outstanding 100 shares) $ 100
Paid-In Capital $1,556,955
Accumulated Deficit $ (995,391)
----------
$ 561,664
==========
</TABLE>

OFFICERS

The officers of the General Partner most directly involved in the management of
the General Partner are:

Arthur W. Mullin. Age 51. Mr. Mullin was elected a Director of the General
Partner in 1993. Mr. Mullin has also served as the President and Treasurer of
the General Partner since 1993. Mr. Mullin, originally retained as a consultant
to Fidelity Mutual in 1993, was appointed Senior Vice President and Director of
Real Estate for Fidelity Mutual the same year and served in that capacity until
1995. Mr. Mullin resumed his consulting relationship with Fidelity Mutual in
1995. Mr. Mullin received a B.S. in Political Science and M.S. in Education from
St. Joseph's University.

26
<PAGE> 27
since 1993. Mr. Kelican is a graduate of Drexel University and holds the
Certified Property Manager (CPM(R)) designation from the Institute of Real
Estate Management of the National Association of Realtors.

Mr. Mullin and Mr. Kelican devote sufficient time to the affairs of the
Partnership as may be required to manage the Partnership's business. The amount
of time each spends on Partnership matters varies, depending on the needs of the
Partnership. Additional information concerning all of the officers of the
General Partner is provided under the heading "THE GENERAL PARTNER - Current
Management" below.

FORMER MANAGEMENT/CONSULTING RELATIONSHIP

Ms. Deborah J. Dillon had been involved with the General Partner from the
Partnership's inception until the end of 1996, first as Vice President, then as
President from 1988 to 1993 and finally as a consultant from 1993 through 1996.
Ms. Dillon was also a director of the General Partner from 1988 to 1993. As an
officer of the General Partner at the time of the acquisition of the Properties
by the Partnership, Ms. Dillon was instrumental in the Partnership's purchase of
the Properties.

Following her resignation as President in 1993, Ms. Dillon acted as the General
Partner's Director of Operations under a performance-based consulting agreement
with the General Partner until the end of 1996. (See "THE GENERAL PARTNER -
Former Management/Consulting Relationship" below at p. 47). Ms. Dillon will not
resume her consultant role to the Partnership if the Second Alternative
Amendments are adopted or if neither set of Alternative Amendments is adopted.
(See also "RISK FACTORS - SECOND ALTERNATIVE AMENDMENTS - Neither Set of
Alternative Amendments adopted" at p. 36 and 37 below).

NEW GENERAL PARTNER

Under the First Alternative Amendments, Southeast Acquisitions, Inc. would be
removed as the General Partner of the Partnership and Southern Management Group
, LLC. ("SMG") would be substituted as the New General Partner,
effective as of the date a majority in interest of the Units votes to approve
the First Alternative Amendments and the New General Partner signs the
Partnership Agreement.

SMG was identified as the proposed New General Partner based on, among other
factors, the experience of its members in real estate transactions and markets
in the Southeastern United States and prior dealing between its members and the
General Partner and its Affiliates. See "THE ALTERNATIVE AMENDMENTS - FIRST
ALTERNATIVE AMENDMENTS - Substitution of New General Partner" below at p. 59-60
for more information on SMG and its management.

SMG is a Tennessee Limited Liability Company whose members are Richard W.
Sorenson, who owns a 51% interest in the company, and Southeast Venture
Corporation, Inc., a Tennessee corporation ("SVC") which owns 49% of SMG.

Mr. Sorenson, age 71, has over 35 years experience in several real estate
disciplines, including land acquisition and development, development of office
buildings, shopping centers, warehouses and medical facilities. All of these
activities occurred in the Southeastern United States.

Mr. Sorenson graduated from the Northwestern University Business School with a
major in real estate.

The other member of the New General Partner is SVC. SVC is a Nashville,
Tennessee-based full service real estate corporation involved in real estate
brokerage, property

27
<PAGE> 28
management and development of office buildings, hospitals, medical buildings and
other medical facilities. SVC was formed in 1992. SVC personnel include civil
engineers, architects and other real estate professionals whose services will be
utilized by SMG in the management and marketing of the Property if SMG is
appointed the New General Partner. A more detailed description of these
professionals' qualifications is provided below. (See "THE ALTERNATIVE
AMENDMENTS - First Alternative Amendments" below).

SMG will devote such time to the affairs of the Partnership as may be required
to manage the Partnership's business although the amount of time may vary,
depending on the needs of the Partnership.

For eleven years, Mr. Sorenson has worked with Deborah Dillon, the former
President of and consultant to the General Partner.

The following is a balance sheet of the New General Partner audited by
Williams, Benator & Libby, LLP.

INDEPENDENT AUDITORS' REPORT
Members
Southeast Management Group, LLC
Nashville, Tennessee

We have audited the accompanying balance sheet of Southern Management Group,
LLC (a development stage enterprise) as of June 12, 1997. This financial
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement 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 balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Southern Management Group, LLC as
of June 12, 1997 in conformity with generally accepted accounting principles.

/s/ Williams, Benator & Libby, LLP.
- ----------------------------------

Atlanta, Georgia
June 13, 1997

SOUTHERN MANAGEMENT GROUP, LLC

(A Development Stage Enterprise)

BALANCE SHEET
June 12, 1997

<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Organization costs $ 1,500
Capitalized legal fees 14,054
---------
$ 15,554
=========

LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES

Accounts payable $ 7,432
Due to members 8,022
---------
TOTAL CURRENT LIABILITIES $ 15,454

MEMBERS' EQUITY - Note B 100
---------
$ 15,554
=========
</TABLE>

See notes to balance sheet.

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<PAGE> 29

NOTES TO BALANCE SHEET
SOUTHERN MANAGEMENT GROUP, LLC
(A Development Stage Enterprise)
June 12, 1997

NOTE A - DESCRIPTION OF SMG AND SIGNIFICANT ACCOUNTING POLICIES

Southern Management Group , LLC ("SMG") is a limited liability company formed
under the laws of the state of Tennessee . SMG plans to become a successor
general partner in certain publicly traded real estate limited partnerships and
manage the operations of those partnerships. At June 12, 1997 SMG was in the
development stage and was in the process of submitting required documentation in
connection with becoming a successor general partner in such partnerships.

The following accounting policies are presented to assist the reader in
understanding SMG's financial statements:

Income Taxes: As a limited liability company, all items of income, loss,
deduction, and credit are passed through to, and taken into account by, SMG's
members in computing their own taxable income.

Capitalized Legal Fees: Capitalized legal fees include organization costs,
which will be amortized on a straight-line basis over sixty months, and legal
fees incurred related to SMG's planned acquisition of successor general partner
interests in the above discussed limited partnerships, which will be included
in SMG's cost of its investment in these limited partnerships.

Estimates: The preparation of a balance sheet in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the balance
sheet. Actual results could differ from those estimates.

NOTE B - MEMBERS' EQUITY

SMG was formed in April 1997. Each member is entitled to a number of votes
equal to his percentage interest in SMG. Each member has identical powers,
preferences and rights. SMG provides limited liability to its members. SMG has
no stated termination date. However, upon the termination of a member's
interest, SMG's continued existence is dependent upon the consent of a majority
in interest of the remaining members.

THE PROPERTIES

PROPERTIES

The Partnership originally acquired five properties, and has sold one in
its entirety. All or portions of four of the remaining properties originally
acquired by the Partnership (individually a "Property" and collectively the
"Properties") are still owned by the Partnership as follows:

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<PAGE> 30
(i) +/- 265 acres in Henry County, Georgia which was acquired
by the Partnership on June 30, 1989 for a total purchase price of $1,234,474;
+/- 234 acres remain unsold.

(ii) +/- 211 acres in South Fulton County, Georgia which was
acquired by the Partnership on June 1, 1989 for $4,939,177; +/- 211 acres remain
unsold.

(iii) +/- 48 acres in Fort Myers, Florida which was acquired
by the Partnership on August 25, 1989 for $1,880,352; +/- 48 acres remain
unsold.

(iv) +/- 51 acres in Columbia, South Carolina which was
acquired by the Partnership on September 15, 1989 for $1,347,787; +/- 43 acres
remain unsold.

1996 AND 1977 SALES

The Partnership sold approximately 6.0 acres of the Henry County, GA
Property in December, 1996 for a gross sale price of $110,000 ($18,333/acre).

The Partnership sold approximately 7 acres of the Columbia, South Carolina
Property in May, 1997 for a gross sale price of $221,960 ($31,000 per acre).

HENRY COUNTY, GEORGIA

RECENT DEVELOPMENTS

The Partnership sold approximately 6.0 acres of this Property in December,
1996. The price paid for this parcel was $18,500 per acre. The sale of an
additional 4 acres of this Property was discussed but was not consummated. The
General Partner was advised that the purchase was contingent upon the
prospective purchaser selling another property, which did not occur.

Earlier in 1997, the Partnership placed all the remaining land in this
Property under agreement once again. The purchase price agreed upon was $10,000
per acre. Unfortunately, the prospective purchaser was unable to reach an
agreement with Norfolk Southern Railroad on the design of a railroad spur line
for the northern portion of the Property. As a result of this obstacle, the
purchaser terminated the sales agreement prior to the expiration of the
inspection period.

A contract for sale of 65 acres of this Property at $8,500 per acre was
executed by the Partnership in August, 1997. It is too early to determine
whether this sale will close.

FULTON COUNTY, GEORGIA

RECENT DEVELOPMENTS

The General Partner received an offer earlier in 1997 from a party
interested in acquiring approximately 6 acres located at the corner of South
Fulton Parkway and Campbellton-Fairburn Road. The General Partner was informed
that the purchaser did not have any immediate plans to develop the Property, but
intended to place the Property in inventory for future use. The General Partner
concluded that the sale of a small portion of the Property at a major
intersection was not in the best interest of the Partnership at that time. The
offer was withdrawn prior to the General Partner communicating its decision not
to proceed with the proposed sale. The same party also submitted an offer to
purchase approximately 7 acres of the Columbia, South Carolina Property, which
was accepted and is discussed in greater detail below.

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<PAGE> 31

FORT MYERS, FLORIDA

RECENT DEVELOPMENTS

The developer of a single family subdivision on Winkler Road north of the
Property is nearly built out of the existing subdivision. The General Partner
has been advised that the same developer has placed approximately 40 acres
between the Property and the existing subdivision under contract. The developer
had delivered an unsolicited offer to the General Partner to purchase the
Property. It is the developer's desire to purchase the Property and take both
properties through the planning and approval process together. The General
Partner has countered the developer's initial offer. The developer is conducting
tests on the suitability of the soil of the adjacent property to determine the
viability of expanding their subdivision. It is still too early to determine
whether or not these negotiations will lead to a sales agreement on the
Property.

COLUMBIA, SOUTH CAROLINA

RECENT DEVELOPMENTS

Early this year, the Partnership placed approximately 7 acres of this
Property under contract for a purchase price of $31,000 per acre. This
transaction closed in May, 1997 and resulted in gross proceeds of $221,960. The
boundary between this parcel and the remaining Partnership land is the center
line of a road proposed by the South Carolina Department of Transportation
("SCDOT").

SCDOT is currently re-designing the interchange of Interstate 26 and Broad
River Road. Preliminary plans delivered to the General Partner indicate that
the road will be redirected between the remaining Property and the parcel sold
in May, 1997. The redesign of the intersection and construction of the new road
may have a positive effect on the value and marketability of the Property in
the future. SCDOT's current expectation is to complete the redesign and
construction by the end of 1999.

VOTING

RECORD DATE. The General Partner has established the close of business on
September 15, 1997, as the Record Date for determining the Limited Partners
entitled to notice of, and to vote at, the Special Meeting and at any
adjournment thereof. On that date, the Partnership had issued an outstanding
12,400 Units. No matters other than the Alternative Amendments and certain
procedural matters may be discussed or voted upon at the Special Meeting.

VOTE CONDITIONED ON ADOPTION OF ALL OF AMENDMENTS IN EITHER THE FIRST OR SECOND
ALTERNATIVE AMENDMENTS. Limited Partners may

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<PAGE> 32

vote in favor of or against or abstain from voting with respect to each
amendment contained in the proposed sets of Alternative Amendments. However, the
adoption of any amendment contained in a set of Alternative Amendment is
conditioned upon the adoption of all of the amendments within that set of
Alternative Amendments. In order to be adopted, all of the amendments contained
in a set of Alternative Amendments must receive at least 50% of the votes of
Units eligible to vote.

REQUIRED VOTE. In the event both sets of Alternative Amendments receive in
excess of 50% of the votes of Units eligible to vote, the set of Alternative
Amendments receiving the most votes in excess of 50% will be adopted.

EQUAL NUMBER OF VOTES CAST. In the event of an equal number of votes being cast
sufficient for the adoption of both sets of Alternative Amendments, the General
Partner will by a random drawing select the set of Alternative Amendments to
be adopted.

NO INDICATION OF VOTE. If a Limited Partner returns a signed proxy card without
indicating how such Limited Partner wishes to vote on either the First
Alternative Amendments or the Second Alternative Amendments, the vote will be
counted as a vote for both sets of Alternative Amendments.

NEITHER ALTERNATIVE AMENDMENTS ADOPTED. If neither the First Alternative
Amendments nor the Second Alternative Amendments receives the affirmative vote
of a majority in interest of the Units, the General Partner will continue to act
as general partner of the Partnership in accordance with the Partnership
Agreement.

VOTING BY PROXY. To vote by proxy, a Limited Partner must complete, sign, date,
and deliver the Proxy Card to the Information Agent before the Special Meeting.
Unless indicated to the contrary on the Proxy Card, the directions given on the
Proxy Card will be for all of the Units that such Limited Partner may vote.

REVOCATION OF A PROXY. A Limited Partner may revoke its proxy at any time prior
to the proxy holder's voting of the Units to which such proxy applies by: (i)
submitting a later dated proxy with a later date to the Information Agent, (ii)
attending the Special Meeting and delivering a written notice of revocation of
the proxy to the representative of the Information Agent present at the Special
Meeting or (iii) delivering a written notice of revocation of the proxy to the
Information Agent at its address either set of set forth herein, to be received
by the Information Agent on or before October 27, 1997.

APPRAISAL RIGHTS. The Partnership Agreement does not provide for contractual
appraisal rights in connection with either set of the Alternative Amendments.
Therefore, in the event one of the sets of Alternative Amendments is adopted,
Limited Partners who oppose such set of Alternative Amendments will not have the
right to dissent and demand payment in cash for the fair value of their Units.

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<PAGE> 33
QUESTIONS. If you have any questions concerning the Alternative Amendments
please call the General Partner at (610) 964-7178.

DELIVERY OF PROXY CARDS. Limited Partners should deliver their Proxy Cards to
the Information Agent at the address set forth below:

D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
TELEPHONE NO. (800) 829-6551
FACSIMILE NO. (212) 809-8839

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<PAGE> 34
RISK FACTORS
Each set of Alternative Amendments as well as the failure to adopt either set
of Alternative Amendments presents risks for the Partnership. The following
outlines the principal risks inherent in the adoption of either set of
Alternative Amendments as well as risks remaining if neither set of Alternative
Amendments is adopted.

FIRST ALTERNATIVE AMENDMENTS

The following risk factors should be considered in connection with the First
Alternative Amendments:

- RISK OF DECREASE IN VALUE OF PROPERTIES IF PARTNERSHIP TERM EXTENDED
If the expiration date of the Partnership Agreement is extended to
December 31, 2001, there can be no assurance that eventual sale or
sales of the Properties will be for higher sales prices than could be
achieved by the General Partner prior to the expiration of the current
term on December 31, 1999 or in the course of the subsequent
dissolution and liquidation of the Partnership assets pursuant to the
Partnership Agreement. The values of the Properties have fluctuated
over the term of the Partnership and may continue to do so (See "THE
PROPERTIES - Appraisals" below). Based on 1996 appraisals, the
estimated value of the Properties has declined to below their
aggregate Acquisition Cost, and it is possible that the value of the
Properties may decline further over the additional two years proposed
for the new Partnership term resulting in a lower return to the
Limited Partners.

- NO ASSURANCE OF IMPROVED RETURN
There is no assurance that the New General Partner, or any
alternative general partner, will be able to realize a better return on
the Properties than the General Partner could achieve within the
current term of the Partnership Agreement or in a liquidation of the
Partnership assets thereafter. Return on the Properties may be
negatively influenced by additional costs and expenses which may be
incurred in improving the Properties for marketing purposes (See "FIRST
ALTERNATIVE AMENDMENTS - Substitution of New General Partner" below),
the approval of additional fees provided for in the First Alternative
Amendments and the possibility that the value of the Properties may
decline further over the new Partnership term (See "RISK FACTORS - Risk
of Decrease in Properties Value if Partnership Term Extended" above).

- POSSIBLE SALES OF PROPERTIES AT LOW PRICE WITHOUT CONSENT OF LIMITED
PARTNERS IF CONSENT REQUIREMENTS MODIFIED

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<PAGE> 35

By adding a definition of "all or substantially all the assets of
the Partnership", to mean 60% of the real property acreage held by the
Partnership as of September 15, 1997, the New General Partner will
have no restrictions on the sales price that it may obtain for parcels
of the Property amounting to less than 60% of the acreage held by the
Partnership as of September 15, 1997 other than general limitations
imposed by its overall fiduciary duty with respect to the Partnership
and its assets. The amendment to this provision could not only result
in a combination of sales of parcels of the Properties which would
fail to return to the Limited Partners the Unpaid Cumulative Return
plus their Adjusted Capital Contributions, but also such sales could
potentially be below their most recent appraised values discussed
below under the heading "THE PROPERTIES - Appraisals". In addition,
even if a sale constituted 60% or more of the assets of the
Partnership, Limited Partners' consent would only be required if such
sale were below the Acquisition Cost of such assets rather than below
an amount which would return to the Limited Partners the Unpaid
Cumulative Return plus their Adjusted Capital Contributions.
<R/>
- POSSIBLE DEATH OR DISABILITY OF PRINCIPAL MEMBER OF NEW GENERAL PARTNER

Mr. Sorenson, the individual managing member of the New General
Partner, is expected to play a key role in the marketing and sale of
the Properties, assisted by the principal officers and key employees of
SVC. Mr. Sorenson is 71 years old. The operating agreement of the New
General Partner provides that in the event of the death or disability
of Mr. Sorenson, SVC will become the managing member of the New General
Partner. In such event, the Limited Partners, if they did not elect to
replace the New General Partner, would have to rely on the officers and
key employees of SVC, who individually are not as experienced as Mr.
Sorenson, to manage the Partnership. (See "FIRST ALTERNATIVE AMENDMENTS
- Substitution of New General Partner" below.)

- MINIMAL CAPITALIZATION OF NEW GENERAL PARTNER
The New General Partner will have minimal capitalization, and
there is no assurance that, in the event claims are brought against the
New General Partner, the New General Partner would have sufficient
assets to satisfy any such claims. (See "FIRST ALTERNATIVE AMENDMENTS -
Substitution of New General Partner" below).

- NEW GENERAL PARTNER'S LACK OF EXPERIENCE IN PUBLIC REAL ESTATE
PARTNERSHIPS
The New General Partner has not previously engaged in business.
Although the personnel who will comprise the management of the New
General Partner have considerable experience in real estate matters,
including

35
<PAGE> 36

private limited partnerships, none has had any experience in acting as
the General Partner of a public real estate limited partnership.
The New General Partner has represented to the General Partner that it
will seek competent counsel to advise it on its obligations as the
general partner of a public limited partnership to minimize the risks
related to its inexperience in this field.

LIMITED CASH RESERVES

The Partnership's cash reserves are currently projected to be
sufficient only through December 31, 2000, a year before the expiration
of the proposed new term of the Partnership. If unforeseen expenses are
incurred or the Partnership goes forward with construction to bring
sewer to the Fulton County Property at a cost greater than is covered
by the funds currently set aside therefor, (See "HISTORY OF THE
PARTNERSHIP -- General Partner's Right to Sell Properties; Reserves"
below at p.43 and "FIRST ALTERNATIVE AMENDMENTS -- Substitution of New
General Partner" below at p.63) the reserves may be depleted at an
earlier date. Unless sales of Properties occur prior to such date and
portions of the proceeds of such sales are reserved, the Partnership
may have to dispose of part or all of one or more of the Properties or
incur indebtedness upon unfavorable terms.

NEW GENERAL PARTNER NOT REQUIRED TO DEVOTE FULL TIME TO PARTNERSHIP

The officers and employees of SMG are active in various business
activities other than SMG, and if SMG becomes the New General Partner
these outside activities would continue. Although the Partnership
Agreement allows the general partner and its officers, directors and
employees to have outside business activities, these other activities
will require the officers, directors and employees of SMG to spend the
time on those projects which might otherwise be spent on management of
the Partnership. If the SMG as New General Partner were not able to
devote adequate time to the Partnership, opportunities for selling the
Properties could be missed, and the amount realized from the sale of
the Properties could be negatively affected. SMG currently anticipates
that, despite their other duties, its management will be able to devote
all the time required to carry out the duties of general partner of the
Partnership and that the risks associated with management's limited
time availability are low.

RISK IN PLANS OF NEW GENERAL PARTNER

SECOND ALTERNATIVE AMENDMENTS

The following risk factors should be considered in connection with the Second
Alternative Amendments.

- RISK OF DECREASE IN VALUE OF PROPERTIES IF PARTNERSHIP TERM EXTENDED
If the expiration date of the Partnership Agreement is extended to
December 31, 2001, there can be no assurance that eventual sale or
sales of the Properties will be for a higher sales price than could be
achieved by the General Partner prior to the expiration of the current
term on December 31, 1999 or in the course of the subsequent
dissolution and liquidation of the Partnership assets pursuant to the
Partnership Agreement. The values of the Properties have fluctuated
over the term of the Partnership and may continue to do so (See "THE
PROPERTIES - Appraisals" below). Based on 1996 appraisals, the
estimated value of the Properties has declined to below their original
aggregate Acquisition Cost, and it is possible that the value of the
Properties may decline further over the additional two years proposed
for the new Partnership term resulting in a lower return to the
Limited Partners.

- NO ASSURANCE OF IMPROVED RETURN
There is no assurance that the General Partner, or any alternative
General Partner, will be able to realize a better return on the
Properties than the General Partner would be able to achieve within the
current term of the Partnership Agreement or in a liquidation of the
Partnership assets thereafter. Return on the Properties may be
negatively influenced by additional costs and expenses which may be
incurred in improving the Properties for marketing purposes (See "THE
GENERAL PARTNER - Current Management" below), the approval of
additional fees provided for in the Second Alternative Amendments and
the possibility that the value of the Properties may decline further
over the new Partnership term (See "RISK FACTORS - Risk of Decrease in
Value of Properties if Partnership Term Extended" above).

- LIMITED CAPITALIZATION OF GENERAL PARTNER
The General Partner has limited capitalization. Although the
General Partner presently intends to maintain its current
capitalization, it has the right to reduce such capitalization. There
is no assurance that, whether or not the General Partner retains its
current capitalization, in the event claims are brought against the
General Partner, the General Partner would have sufficient

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<PAGE> 37

assets to satisfy such claims. (See "THE GENERAL PARTNER - Background"
below).

- POSSIBLE SALES OF PROPERTIES AT LOW PRICE WITHOUT CONSENT OF
LIMITED PARTNERS IF CONSENT REQUIREMENTS ELIMINATED

By eliminating the requirement in the Partnership Agreement that,
under certain circumstances, a majority in interest of the Limited
Partners consent to a sale of all or substantially all of the
Partnership's assets, the General Partner will have no restrictions on
the sales price that it may obtain for all or a portion of the
Properties other than general limitations imposed by its overall
fiduciary duty to the Partnership and its assets. The elimination of
this provision could not only result in a sale or sales which would
fail to return to the Limited Partners the Unpaid Cumulative Return
plus their Adjusted Capital Contributions but also could result in the
sale of the Properties, or parcels thereof, at below their most recent
appraised value discussed below under the heading "THE PROPERTIES -
Appraisals".

- RISK IN REHABILITATION OF ULTIMATE PARENT OF GENERAL PARTNER

The ultimate parent company of the General Partner, Fidelity
Mutual, is in a state directed Rehabilitation. It is possible that,
pursuant to the proposed Rehabilitation plan, a non-affiliated investor
would, through its indirect control of the General Partner, reduce or
reorganize management of the General Partner. As a result, the General
Partner's management might not have the same level of experience or
familiarity with the Properties or be able to dedicate the same amount
of time to managing the Properties as the current management. (See "THE
GENERAL PARTNER - Background" below)

- LIMITED CASH RESERVES

The Partnership's cash reserves are currently projected to be
sufficient only through December 31, 2000, a year before the expiration
of the proposed new term of the Partnership. If unforeseen expenses are
incurred or the Partnership goes forward with construction to bring
sewer to the Fulton County Property at a cost greater than is covered
by the funds currently set aside therefor, (See "HISTORY OF THE
PARTNERSHIP -- General Partner's Right to Sell Properties; Reserves"
below at p 43) the reserves may be depleted at an earlier date. Unless
sales of some or all of one or more of the Properties occur prior to
such date and portions of the proceeds of such sales are reserved, the
Partnership may have to dispose of part or all of one or more of the
Properties or incur indebtedness upon unfavorable terms.

- RISK IN MS. DEBORAH DILLON NOT ACTING AS CONSULTANT.

Ms. Deborah Dillon, who had been involved with acquisition and
marketing of the Properties from the inception of the Partnership
through 1996 is no longer providing consulting services for the General
Partner. The management of the General Partner intends to minimize this
risk by securing the services of other land experts in the vicinity of
the Properties where it considers such services necessary. (See "THE
GENERAL PARTNER - Current Management and Plans of Current Management if
Second Alternative Amendments Adopted" below) (See also "THE GENERAL
PARTNER - Former Management/Consulting Relationship" and "THE
ALTERNATIVE AMENDMENTS - FIRST ALTERNATIVE AMENDMENTS - Substitution of
New General Partner" below).

- GENERAL PARTNER NOT REQUIRED TO DEVOTE FULL TIME TO PARTNERSHIP

Under the Partnership Agreement, the general partner is required
to devote to the Partnership such time as may be necessary for the
proper performance of its duties, but the officers, directors and
employees of the general partner are not required to devote their full
time to management of the Partnership. The officers of the General
Partner manage properties owned by other partnerships in which
Southeast Acquisitions, Inc. also acts as general partner, perform
duties for the General Partner's ultimate parent, Fidelity Mutual, and
engage in other business activities. Time spent by officers of the
General Partner managing other partnerships, working for Fidelity
Mutual or engaging in other business activities will not be available
for the management of the Partnership. If the General Partner were not
able to devote adequate time to the Partnership, opportunities for
selling the Properties could be missed, and the amount realized from
the sale of the Properties could be negatively affected. The General
Partner currently anticipates that, despite their other duties, its
management will be able to devote all the time required to carry out
the duties of general partner of the Partnership and that the risks
associated with management's limited time availability are low. (But
See "RISK FACTORS - SECOND ALTERNATIVE AMENDMENTS - Risk in
Rehabilitation of Ultimate Parent of General Partner" above).

RISK IN PLANS OF GENERAL PARTNER

Although the General Partner does not presently anticipate
incurring any material extraordinary costs or expenses chargeable to
the Partnership in its plan to market the Properties, it is possible
that a contract for sale of part or all of one or more of the
Properties could require the Partnership's construction of
infrastructure or other improvements. The Partnership would bear the
cost of such improvements. No such contracts are currently
contemplated.

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED

The following risk factors should be considered if neither set of
Alternative Amendments is adopted.

RISK OF LIQUIDATION OF PROPERTIES AT LOW PRICE

If neither set of Alternative Amendments is adopted, and the
Properties are not sold prior to the expiration of the Partnership term
on December 31, 1999, the General Partner will liquidate the assets of
the Partnership in accordance with the Partnership Agreement following
the expiration of the Partnership term. Based on the current estimated
value of the Properties (see "THE PROPERTIES - Appraisals" below) it
is possible that the Properties will have to be liquidated below the
Properties' Acquisition Cost.

- RISK IN REHABILITATION OF ULTIMATE PARENT OF GENERAL PARTNER

- LIMITED CASH RESERVES

The Partnership's cash reserves are currently projected to be
sufficient only through December 31, 2000, a year before the expiration
of the proposed new term of the Partnership. If unforeseen expenses are
incurred or the Partnership goes forward with construction to bring
sewer to the Fulton County Property at a cost greater than is covered
by the funds currently set aside therefor, (See "HISTORY OF THE
PARTNERSHIP -- General Partner's Right to Sell Properties; Reserves"
below at p 43) the reserves may be depleted at an earlier date. Unless
sales of some or all of one or more of the Properties occur prior to
such date and portions of the proceeds of such sales are reserved, the
Partnership may have to dispose of part or all of one or more of the
Properties or incur indebtedness upon unfavorable terms.

- RISK IN MS. DEBORAH DILLON NOT ACTING AS CONSULTANT.

- GENERAL PARTNER NOT REQUIRED TO DEVOTE FULL TIME TO PARTNERSHIP

Under the Partnership Agreement, the general partner is required
to devote to the Partnership such time as may be necessary for the
proper performance of its duties, but the officers, directors and
employees of the general partner are not required to devote their full
time to management of the Partnership. The officers and directors of
the General Partner manage properties owned by other partnerships in
which Southeast Acquisitions, Inc. also acts as general partner,
perform duties for the General Partner's ultimate parent, Fidelity
Mutual, and engage in other business activities. Time spent by officers
of the General Partner managing other partnerships, working for
Fidelity Mutual or engaging in other business activities will not be
available for the management of the Partnership. If the General Partner
were not able to devote adequate time to the Partnership, opportunities
for selling the Properties could be missed, and the amount realized
from the sale of the Properties could be negatively affected. The
General Partner currently anticipates that, despite their other duties,
its management will be able to devote all the time required to carry
out the duties of general partner of the Partnership and that the risks
associated with management's limited time availability are low. (But
See "RISK FACTORS - SECOND ALTERNATIVE AMENDMENTS - Risk in
Rehabilitation of Ultimate Parent of General Partner" above).

RISK IN PLANS OF GENERAL PARTNER

CONFLICTS OF INTEREST

Each set of the Alternative Amendments presents certain conflicts of interest
for the New General Partner and General Partner. The following describes the
conflicts of interest inherent in each set of Alternative Amendments.

FIRST ALTERNATIVE AMENDMENTS

- - TIMING OF SALE TO OBTAIN COMMISSION

The New General Partner will be able to receive the maximum 10%
commission to be paid in respect to a sale of all or a portion of the
Properties and will also be able to be the exclusive agent for the sale of
the Properties. It is possible that the New General Partner would be
confronted with a conflict of interest in a desire to realize a commission
upon an immediate sale of one or more of the Properties rather than holding
them for a more extended period if it were in the best interests of the
Partnership.

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<PAGE> 38
- TIMING OF SALE TO OBTAIN DISTRIBUTION
The New General Partner might wish to delay an immediate sale of
one or more of the Properties which might be in the Partnership's best
interests if the sales proceeds at the time would not be sufficient to
result in any distribution to the New General Partner under the
Partnership Agreement.

- BROKER PARTICIPATION
The New General Partner's exclusive agency and participation in
future commissions upon sale of the Properties could also have an
adverse effect on the New General Partner's willingness to retain
local brokers and upon the local brokerage community's willingness to
participate in the sale of the Properties.

No specific procedures are currently in place to address these potential
conflicts. However, in resolving any of the above-mentioned conflicts, if they
arose, the New General Partner would need to be guided by its general fiduciary
responsibility to the Partnership and the Limited Partners to protect the assets
of the Partnership.

SECOND ALTERNATIVE AMENDMENTS

- TIMING OF SALE TO OBTAIN COMMISSION
The General Partner will be able to receive the maximum 10%
commission to be paid in respect to a sale of all or a portion of the
Properties and will also be able to be the exclusive agent for the sale
of the Properties. It is possible that the General Partner would be
confronted with a conflict of interest in a desire to realize a
commission upon an immediate sale of some or all of the Properties
rather than holding them for a more extended period if it were in the
best interests of the Partnership.

- TIMING OF SALE TO OBTAIN DISTRIBUTION
The General Partner might wish to delay an immediate sale of one
or more of the Properties if the sales proceeds at the time would not
be sufficient to result in any distribution to the General Partner.

- BROKER PARTICIPATION
The General Partner's exclusive agency and participation in future
commissions upon sale of the Properties could also have an adverse
effect on the General Partner's willingness to retain local brokers and
upon the local brokerage community's willingness to participate in the
sale of the Properties.

No specific procedures are currently in place to address these potential
conflicts. However, in resolving any of the above-mentioned conflicts, if they
arose, the General Partner would need to be guided by its general fiduciary
responsibility to the Partnership and the Limited Partners to protect the assets
of the Partnership.

NEITHER SET OF ALTERNATIVE AMENDMENTS ADOPTED

TIMING OF SALE TO OBTAIN COMMISSION

Although under the current terms of the Partnership Agreement, the
General Partner is only able to obtain up to 50% of the competitive
real estate commission up to 3% of the contract for a property, it is
possible that the General Partner would be confronted with a conflict
of interest in a desire to realize a commission upon an immediate sale
of the Properties rather than holding it for a more extended period
if it were in the best interests of the Partnership.

TIMING OF SALE TO OBTAIN DISTRIBUTION
The General Partner might wish to delay an immediate sale of the
Property if the sales proceeds at the time would not be sufficient to
result in any distribution to the General Partner.

38
<PAGE> 39
HISTORY OF THE PARTNERSHIP

PUBLIC OFFERING

The Partnership's public offering of 12,400 units of limited partnership
interest (the "Units") commenced on May 2, 1989 and terminated on August 29,
1989. The offering raised $12,373,480 for the Partnership through the sale of
12,400 Units before payment of the expenses of the offering. An affiliate of the
General Partner acquired 313 Units for a purchase price of $286,557 or $915 per
Unit, representing the $1,000 per Unit offering price minus fees which would
have been paid to other affiliates of the General Partner.

PURCHASE OF PROPERTIES

Five properties were acquired by the Partnership (individually a "Property"
and collectively the "Properties") as follows:

(i) +/- 265 acres in Henry County, Georgia which was acquired
by the Partnership on June 30, 1989 for $1,234,474.

(ii) +/- 211 acres in South Fulton County, Georgia which was
acquired by the Partnership on June 1, 1989 for $4,939,177.

(iii) +/- 48 acres in Fort Myers, Florida which was acquired
by the Partnership on August 25, 1989 for $1,888,352.

(iv) +/- 51 acres in Columbia, South Carolina which was
acquired by the Partnership on September 15, 1989 for $1,347,787.

(v) +/- 24 acres in Nashville, Tennessee which was acquired by
the Partnership on June 30, 1989 for $915,827. This Property was sold in its
entirety on July 28, 1995 for $1,440,000.

DISTRIBUTIONS/CUMULATIVE ANNUAL RETURN

As of the date of this Proxy Statement, the Unit holders have received a
cumulative aggregate distribution of $125 per Unit. The only distribution was
made in August, 1995.

39
<PAGE> 40
The following table compares the Adjusted Capital Contributions with the
original investment objective of achieving a Cumulative Annual Return of 10%
per annum.

Southeast Acquisitions III, L.P.
Adjusted Capital Contributions/Cumulative Annual Return

<TABLE>
<CAPTION>
1989 1990 1991
---- ---- ----
<S> <C> <C> <C>
Beg. Adjusted Capital
Contributions $12,373,480 $12,373,480 $12,373,480
Distributions Applied to Capital -- -- --
----------- ----------- -----------
Ending Adjusted Capital
Contributions $12,373,480 $12,373,480 $12,373,480

Beg. Cumulative Preferred Return $ -- $ 617,325 $ 1,854,673
Annual Return (10%) $ 617,325 $ 1,237,348 $ 1,237,348
Distributions Against
Cumulative Return $ -- $ -- $ --
----------- ----------- -----------
End Cumulative Annual Return $ 617,325 $ 1,854,673 $ 3,092,021

Total Capital & Cumulative Return $12,990,805 $14,228,153 $15,465,501
</TABLE>

40
<PAGE> 41

<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----

<S> <C> <C> <C>
Beg. Adjusted Capital
Contributions $12,373,480 $12,373,480 $12,373,480
Distributions Applied to Capital -- -- --
----------- ----------- -----------

Ending Adjusted Capital
Contributions $12,373,480 $12,373,480 $12,373,480

Beg. Cumulative Preferred Return $ 3,092,021 $ 4,329,369 $ 5,566,717
Annual Return (10%) $ 1,237,348 $ 1,237,348 $ 1,237,348
Distributions Against
Cumulative Return $ -- $ -- $ --
----------- ----------- -----------
End Cumulative Annual Return $ 4,329,369 $ 5,566,717 $ 6,804,065

Total Capital & Cumulative Return $16,702,849 $17,940,197 $19,177,545
</TABLE>

41
<PAGE> 42

<TABLE>
<CAPTION>
9/30/95 1995 1996
---- ----

<S> <C> <C> <C>
Beg. Capital
Contributions $12,373,480 $ 12,373,480 $10,823,477
Distributions Applied to Capital -- (1,550,003) --
----------- ------------ -----------

Ending Adjusted Capital
Contributions $12,373,480 $ 10,823,477 $10,823,477

Beg. Cumulative Preferred Return $ 6,804,065 $ 7,732,076 $ 8,002,663
Annual Return (10%) $ 928,011 $ 270,587 $ 1,082,348
Distributions Against
Cumulative Return $ -- $ -- $ --
----------- ------------ -----------
End Cumulative Annual Return $ 7,732,076 $ 8,002,663 $ 9,085,011

Total Capital & Cumulative Return $20,105,556 $ 18,826,140 $19,908,488
</TABLE>

Unaudited
---------
6/30/97

<S> <C>
Beg. Capital
Contributions $ 10,823,477
Distributions Applied to Capital --
-------------

Ending Adjusted Capital
Contributions $ 10,823,477

Beg. Cumulative Preferred Return $ 9,085,011
Annual Return (10%) $ 536,726
Distributions Against
Cumulative Return $ --
-------------
End Cumulative Annual Return $ 9,621,737

Total Capital & Cumulative Return $ 20,445,214
</TABLE>

42
<PAGE> 43
INVESTMENT OBJECTIVES; MARKETING

The Partnership's primary business objective has been and continues to be
to try to realize appreciation in the value of the Properties by holding the
Properties for investment and sale, although there has never been any assurance
that this will be attained.

The Partnership has been marketing certain of the Properties, where
appropriate in light of market conditions, for a number of years.

The Henry County, GA Property has been marketed primarily by the General
Partner's personnel resulting in a few small acreage sales and the entire
Property being placed under contract three (3) times since the Summer of 1994.
The entire Property was placed under contract again in early 1997. However, the
prospective purchaser terminated the contract during its due diligence period
because it was unable to reach an agreement with Norfolk Southern Railroad for
the design of a railroad spur which the prospective purchaser wished to include
in its planned use of the Property.

The Fort Myers, FL Property was marketed for a six (6) month period from
July, 1990 until December, 1990 by Robert S. Barber, Inc., a Fort Myers realtor.
The Property was not re-listed immediately thereafter due to a deteriorating
real estate market. Over the past three (3) years there have been discussions
with residential developers to either joint venture the Property's development
or option the land for a takedown over a number of years.

The Columbia, SC property has not been marketed to date due to weak market
conditions, although two small sales have been consummated. The South Carolina
Department of Transportation is currently in the planning stages of constructing
a new road adjacent to the Partnership's Property. The General Partner has
elected to not actively market this Property until the South Carolina Department
of Transportation finalizes its plans. The new road may have a positive effect
on the value of the remaining land and potentially create a demand for this
property as a retail location.

The Fulton County, GA property has been held off the market due to real
estate market conditions along the South Fulton Parkway. At present there is
lack of demand for the Property as zoned.

The General Partner may sell each Property in a single sale or divide them
into parcels which would be sold separately. The timing and manner of sale has
been and remains within the discretion of the General Partner.

GENERAL PARTNER'S RIGHT TO SELL PROPERTIES; RESERVES

The General Partner has broad powers to manage the business and affairs of
the Partnership and to sell the Properties consistent with its fiduciary duty
under the Partnership Agreement. However, the General Partner may not sell all
or substantially all of the Properties in a single sale without the consent of a
majority in interest of the Limited Partners unless in connection with a
liquidation of the Partnership or in the event that the net proceeds of the sale
will be sufficient to return to the Limited Partners the Adjusted Capital
Contributions plus their Unpaid Cumulative Return.

In the General Partner's opinion, the Partnership's reserves will be
sufficient for an additional three years from December 31, 1997. The basis used
by the General Partner for calculating the sufficiency of the cash reserves is
the Partnership's current reserves divided by the amount of the Partnership's
historical expenses, adjusted for permanent differences, with an allowance for
possible unexpected expenditures.

However, if additional expenses are incurred or if the Partnership goes
forward with construction to bring sewer to the Fulton County Property at a
cost greater than the funds already set aside therefor, the
reserves may be inadequate to cover the Partnership's operating expenses. If the
reserves are exhausted, the Partnership may have to dispose of some of the
Properties or incur indebtedness on unfavorable terms.

RIGHTS OF LIMITED PARTNERS ON DISSOLUTION

On dissolution of the Partnership, the General Partner is required to
liquidate the assets of the Partnership and apply and distribute the proceeds
thereof: (i) to the payment of all debts and liabilities of the Partnership in
accordance with their terms; (ii) to the establishment, for such period as the
General Partner deems reasonably necessary, of such reserves as the General
Partner deems reasonably necessary to provide for contingent and unforeseen
liabilities or obligations of the Partnership; and (iii) to the Partners in
accordance with the Partnership Agreement's priority of distribution provisions.

In a liquidation, the General Partner may sell the Properties at the best
available prices without consent of the Limited Partners even if the net
proceeds of the sale will not be sufficient to return the Limited Partners' the
Adjusted Capital Contributions plus their Unpaid Cumulative Return. However, if
the General Partner determines that an immediate

43
<PAGE> 44
sale of part or all of the Partnership assets would cause undue loss to the
Partners, the General Partner, in order to avoid such loss, may, to the extent
not then prohibited by applicable law, defer liquidation of and withhold from
distribution for a reasonable time any assets of the Partnership except those
necessary to satisfy the Partnership's debts and obligations.

THE GENERAL PARTNER

BACKGROUND

The following organizational chart shows the relationship between Fidelity
Mutual and the General Partner.

------------------------------------------
The Fidelity Mutual Life Insurance
Company
(In Rehabilitation)
------------------------------------------

owns 100%

-----------------------------
FML Holding Company,
Inc.
-----------------------------

owns 100%

-----------------------------
Fidelity
Enterprises, Inc.
-----------------------------

owns 100%

------------------------------------------
Southeast Acquisitions, Inc.
(General Partner of Southeast Acquisitions
III,.L.P.)
------------------------------------------

44
<PAGE> 45

Fidelity Mutual anticipates that it will file a revised Rehabilitation plan (the
"Plan") within the next few months and that the Plan will affect all Fidelity
Mutual's assets, including its ownership of the General Partner. Although the
capital stock of the General Partner will be subject to the Plan, none of the
assets of the Partnership will be subject to the Plan.

Under the Plan, all Fidelity Mutual's assets are to be transferred to a stock
life insurance company Fidelity Mutual currently owns. The Plan envisions that
this company will be 100% owned by another Fidelity Mutual subsidiary. This
subsidiary will sell in excess of 50% of its common stock to a non-affiliated
investor, with the balance of the ownership interest in the company remaining
with the policy holders of Fidelity Mutual. Following the sale of stock, the
investor will have management control over such company. The General Partner
will be an indirect wholly owned subsidiary of the company controlled by the new
investor.

Although it is the present intention of Fidelity Mutual to continue the current
staffing levels of the General Partner, it is possible that, if the Plan is
approved and the sale to a new investor described above is consummated, such new
investor, who would indirectly control the General Partner, might reduce or
reorganize the management of the General Partner during the new Partnership term
proposed under the Second Alternative Amendments.

45
<PAGE> 46
The following is an unaudited balance sheet of the General Partner:

SOUTHEAST ACQUISITIONS, INC.
UNAUDITED
BALANCE SHEET
JUNE 30, 1997

<TABLE>
<CAPTION>
<S> <C>
ASSETS

Cash $ 791
Mortgage Receivable $ 560,873
Investment in Southeast Acquisitions I, II & III 0
-----------
$ 516,664
===========

SHAREHOLDER'S INVESTMENT

Common Stock (Per value $1
authorized 1,000 shares, issued
and outstanding 100 shares) $ 100
Paid-In Capital $ 1,556,955
Accumulated Deficit $ (995,391)
-----------
$ 516,664
===========
</TABLE>

DIRECTORS AND OFFICERS

The directors and officers of the General Partner are:

James W. Kelican, Jr., Age 49. Mr. Kelican was elected a Director of the General
Partner in 1994. He has also served as a Vice President of the General Partner
since 1994. Mr. Kelican has held the position of Senior Vice President, Real
Estate for Fidelity Mutual since 1993. Mr. Kelican is a graduate of Drexel
University and holds the Certified Property Manager (CPM(R)) designation from
the Institute of Real Estate Management of the National Association of Realtors.
Information concerning Mr. Kelican's background in real estate is contained
under the heading "THE GENERAL PARTNER - Current Management" below.

46
<PAGE> 47

William S. Taylor, Age 51. Mr. Taylor was a Director of the General Partner from
1993 to 1994. Mr. Taylor was reelected a Director of the General Partner in
1995. Mr. Taylor was also elected Vice President of the General Partner in 1995.
Mr. Taylor is the Deputy Insurance Commissioner for Liquidations,
Rehabilitations and Special Funds for the Commonwealth of Pennsylvania and has
had an oversight role in the Rehabilitation of Fidelity Mutual. Mr. Taylor has a
B.A. in Economics from Elizabethtown College and an M.A. in Governmental
Administration from the University of Pennsylvania.

Margaret M. Tamasitis, Age 51. Ms. Tamasitis has been the Assistant Secretary of
the General Partner since 1988. Ms. Tamasitis is also a Second Vice President of
Fidelity Mutual in the Controller's office. Ms. Tamasitis received her B.S. in
Accounting from Temple University.

Robert Bixler, Age 54. Mr. Bixler has been the Secretary of the General Partner
since 1988. He also served as General Counsel to the General Partner from 1994
to 1996. He is also Vice President and Associate Counsel of Fidelity Mutual. Mr.
Bixler received his A.B. degree in Economics from Temple University and his J.D.
degree from Temple University Law School.

FORMER MANAGEMENT/CONSULTING RELATIONSHIP

Ms. Deborah J. Dillon had been involved with the General Partner from the
Partnership's inception until the end of 1996, first as Vice President, then as
President from 1988 to 1993 and finally as a consultant from 1993 through 1996.
Ms. Dillon was also a director of the General Partner from 1988 to 1993. As an
officer of the General Partner at the time of the acquisition of the Property by
the Partnership, Ms. Dillon was instrumental in the Partnership's purchase of
the Property.

Following her resignation as President in 1993, which coincided with her
resignation as an officer of Fidelity Mutual shortly after the commencement of
the Rehabilitation, and was prompted by a desire to return to Atlanta, Georgia,
Ms. Dillon acted as the General Partner's Director of Operations under a
performance-based consulting agreement with the General Partner (the "Consulting
Agreement") until the end of 1996. Under the Consulting Agreement Ms. Dillon was
paid a nominal consulting fee and was granted certain rights to participate in
any potential profits of the General Partner. No compensation was earned by or
paid to Ms. Dillon pursuant to the profit sharing provisions of the Consulting
Agreement because total proceeds from property sales during the consulting
period were not sufficient to generate participation by the General Partner in
profits on sales and, therefore, payments to Ms. Dillon.

During her period as a consultant, Ms. Dillon was the principal advisor to the
officers and directors of the General Partner with respect to the management and
operations of the Partnership and marketing of the Property. The Consulting
Agreement expired by its terms on June 30, 1996 and was extended by mutual
consent through December 31, 1996. The Consulting Agreement was not renewed
further principally because Ms. Dillon

47
<PAGE> 48
informed the General Partner that other business commitments had grown to the
point that she did not believe that she could spend the time necessary to
adequately advise on managing the Partnership's assets in the future at the
level of compensation provided for in the Consulting Agreement and that she had
concerns regarding the continuity of the management of the General Partner as
a result of the Rehabilitation. Ms. Dillon has agreed to advise the New General
Partner if the First Alternative Amendments are adopted. (See "FIRST
ALTERNATIVE AMENDMENTS - New General Partner" below.)

CURRENT MANAGEMENT

The current management of the General Partner, led by Mr. Mullin and Mr. Kelican
who are assisted by several other professionals, oversee the management,
marketing and disposition of the Property in addition to all other Partnership
issues. Together the management team has over 75 years experience in working
with all types of real estate, including vacant and developable land. The
officers of the General Partner other than Mr. Mullin and Mr. Kelican are
not actively involved in the marketing, sale or management of the Properties.

Mr. Mullin was a commercial banker for First Pennsylvania Bank from 1973 to
1981. In this capacity, he was involved with land development as the banker to
both a land development subsidiary of a major utility and to a major industrial
developer in the Philadelphia suburbs. Both of these companies held widely
diverse properties in suburban, rural and agrarian areas.

After holding a position as a commercial banker for Meritor Savings Bank from
1981 to 1985, Mr. Mullin also worked briefly for Merrill Lynch Capital Markets
during 1985 and, in that capacity, facilitated a number of evaluations for
corporate clients of their commercial real estate holdings.

Mr. Mullin joined Kaiser Steel Corporation ("Kaiser") in 1986 as its Senior Vice
President and Chief Financial Officer. In that capacity, he evaluated the
development prospects for the thousands of acres that Kaiser owned throughout
Southern California and formulated development plans for certain portions of its
holdings, while selling off other holdings to either users or developers.

Since 1990, Mr. Mullin has been a principal in KMR Management, Inc., a
management consulting firm whose primary focus has been troubled businesses.
Assistance to these businesses has been in a variety of areas, including advice
on redeployment of real estate assets and strategizing with respect to land held
for development.

Since 1993, the most significant client Mr. Mullin has consulted for has been
Fidelity Mutual and its numerous real estate subsidiaries, including the General
Partner. On a combined basis, Fidelity Mutual, either directly or indirectly
through subsidiaries, partnerships or ventures, is involved with thousands of
acres of land in various stages of development. Mr. Mullin has personally been
involved in major decisions involving these properties, which are located in the
Northeast, Southeast and Southwest sections of the United States.

48
<PAGE> 49
Mr. Kelican began his real estate career in the early seventies with Latimer &
Buck, Inc., a Philadelphia commercial real estate mortgage banking firm. He held
several positions, including Assistant Controller and Assistant Vice President,
with responsibility for real estate asset management. During this period he was
involved with a variety of general real estate and land development projects.

From 1980 to 1984, Mr. Kelican worked for Cigna Investments where he was a
Senior Real Estate Asset Manager, and, subsequently, the Director of Mortgage
Administration. His responsibilities extended to selected markets on a
nationwide basis.

In 1984 Mr. Kelican became Senior Vice President of GMAC Realty Advisors,
Inc./Mortgage and Realty Trust, where he was responsible for all aspects of the
company's real estate asset management until July, 1993.

Mr. Kelican was employed by Fidelity Mutual in July, 1993. He became a Vice
President and Director of the General Partner in early 1994. He has been
responsible for land and land development assets owned by Fidelity Mutual either
directly, or indirectly through subsidiaries, partnerships or ventures in the
states of Arizona, Colorado, Connecticut, Florida, Georgia, Pennsylvania,
Tennessee and Texas.

Beginning in mid-1995, in anticipation of the expiration date of Ms. Dillon's
Consulting Agreement in June of 1996, the management of the General Partner has
been considering a range of management alternatives for the Properties. The
General Partner has investigated possible local representation, talked with
firms who might fill the consulting role performed by Ms. Dillon and interviewed
a number of candidates as potential successor General Partners, including
Richard W. Sorenson, a member of the proposed New General Partner who had been
proposed to the Partnership as a possible successor General Partner by Ms.
Dillon. Mr. Sorenson was previously known to management of the General Partner
as a result of his involvement in management, leasing, sales and equity
participation in other real estate investments with the General Partner or its
Affiliates.

During 1996, management of the General Partner commissioned appraisals of the
Properties in an ongoing effort to assess its current market value and the best
ways to market and sell the Properties. The results of the appraisal are
discussed below under the heading "THE PROPERTIES-Appraisals".

Officers of the General Partner most recently inspected the Properties in
October, 1996 and February, 1997 and met with local real estate professionals
regarding the Property. Meetings were held with Grubb & Ellis, King Industrial
Realty, Owen-Faulkner and Associates, The Keenan Company, Walter Taylor Company.

49
<PAGE> 50
The officers of the General Partner other than Mr. Mullin and Mr. Kelican are
not actively involved in the marketing, sale or management of the Property.

THE FOLLOWING DESCRIPTION OF THE GENERAL PARTNER'S INTENTIONS WITH RESPECT TO
MANAGING AND MARKETING THE PROPERTY REPRESENTS ITS CURRENT PLANS WITH RESPECT
THERETO. HOWEVER, THERE IS NO ASSURANCE THAT THESE PLANS WILL BE IMPLEMENTED OR
THAT, IF IMPLEMENTED, THEY WILL RESULT IN A SALE OR SALES OF THE PROPERTY.

GENERAL PARTNER'S PLANS IF SECOND ALTERNATIVE AMENDMENTS ARE ADOPTED

Fulton County, Georgia: The General Partner expects to continue to hold the
Property in anticipation of the improving market conditions. Since inception of
the Partnership, approximately $200,000 has been set aside to enable the
Partnership to participate in bringing sewer to this Property. In the event a
third party, either the local municipality or property owners advances the cause
of bringing sewer to the area, the Partnership is prepared to contribute the
funds set aside for the sewer towards the cost to run the sewer lines. Prior to
committing the Partnership's involvement, the General Partner will analyze the
cost and benefit of the Partnership's participation. Other than costs related to
the sewer, there are currently no contemplated extraordinary expenses related to
this Property.

Fort Myers, Florida: The General Partner will continue to monitor market
conditions and communicate with local developers and real estate professionals
to discern the most advantageous time to aggressively pursue purchase offers.
There are no plans to revise the plans of selling the entire Property in one
sale and there are no contemplated marketing extraordinary expenses related to
this Property.

Columbia, South Carolina: The General Partner will monitor the progress of the
South Carolina Department of Transportation and continue its plan of marketing
the Property in whole and in part. The General Partner has not made a
determination to revise its marketing plan and there are no contemplated
extraordinary expenses related to this Property.

The General Partner does not anticipate incurring any material extraordinary
costs or expenses chargeable to the Partnership in its plan to market the
Properties. However it is possible that minor costs could be incurred to secure
the services of land experts in the vicinity of the Properties to assist in
marketing and sales efforts. In addition, a contract for sale of part or all of
one or more of the Properties could require the Partnership's construction of
infrastructure or other improvements. The Partnership would bear the cost of
such improvements. No such contracts are currently contemplated.

GENERAL PARTNER'S PLANS IF NEITHER SET OF ALTERNATIVE AMENDMENTS IS ADOPTED

THE PROPERTIES

PROPERTIES

The Partnership originally acquired five Properties, one of which has been
sold in its entirety. All or portions of four of the remaining Properties
originally acquired by the Partnership are still owned by the Partnership
(individually a "Property" and collectively the "Properties") as follows:

(i) +/- 265 acres in Henry County, Georgia which was acquired
by the Partnership on June 30, 1989 for a total purchase price of $1,234,474;
+/- 234 acres remain unsold.

(ii) +/- 211 acres in South Fulton County, Georgia which was
acquired by the Partnership on June 1, 1989 for $4,939,177; +/- 211 acres remain
unsold.

50
<PAGE> 51
(iii) +/- 48 acres in Fort Myers, Florida which was acquired
by the Partnership on August 25, 1989 for $1,880,352; +/- 48 acres remain
unsold.

(iv) +/- 51 acres in Columbia, South Carolina which was
acquired by the Partnership September 15, 1989 for $1,347,787; +/- 43 acres
remain unsold.

1996-1997 SALES

The Partnership sold approximately 6.0 acres of the Henry County, GA
Property in December, 1996 for a gross sale price of $110,000 ($18,333/acre).

The Partnership sold approximately 7 acres of the Columbia, South Carolina
Property in May, 1997 for a gross sale price of $221,960 ($31,000 per acre).

HENRY COUNTY, GEORGIA

BACKGROUND

The Henry County Property is located in the southeast sector of the
metropolitan Atlanta area. The Property consists of the northwest and southwest
quadrants of the intersection of Bethlehem Road and US Highway 23, which is in
the southern portion of Henry County (+/- 30 miles southeast of the central
business district in Atlanta and +/- 25 miles southeast of Hartsfield Atlanta
International Airport). The property is bordered to the west by Interstate 75,
offering interstate exposure and visibility (the Property has +/- 1,760 feet of
frontage). However, the closest access to Interstate 75 is +/- 2.5 miles either
to the north or south, in McDonough or Locust Grove.

RECENT DEVELOPMENTS

The Partnership sold approximately 6.0 acres of this Property in December
1996. The price paid for this parcel was $18,500 per acre. The sale of an
additional 4 acres of this Property was discussed but was not consummated. The
General Partner was advised that the purchase was contingent on the prospective
purchaser selling another property, which did not occur.

Earlier in 1997, the Partnership once again placed all the remaining
land in this Property under agreement. The purchase price agreed upon was
$10,000 per acre. Unfortunately, the prospective purchaser was
unable to reach an agreement with Norfolk Southern Railroad on the design of a
railroad spur line for the northern portion of the property. As a result of this
obstacle, the purchaser terminated the sales agreement prior to the expiration
of the inspection period.

A contract for sale of 65 acres of this Property at $8,500 per acre was
executed by the Partnership in August, 1997. It is too early to determine
whether this sale will close.

REAL ESTATE MARKET CONDITIONS

The marketing and ultimate value of the Property is affected by the
prevailing local market conditions. The following perspective of current
market conditions is offered to present basic information about the current
expectations and competing properties in the marketplace.

Based on research conducted by an appraiser, and discussions with local
real estate professionals, the General Partner has learned that there are more
than 800 net acres available for development in existing industrial parks,
served with all utilities and rail, in this subsection of Henry County. There
are an additional 825 gross acres in a nearby park without rail service, but
currently served by all utilities. Neither of these figures includes the
Property held by the Partnership. The predominant use of facilities in the
existing Henry County industrial parks is large regional distribution centers or
manufacturing facilities. The average building size in the existing parks is
300,000 square feet. As of September, 1996, the General Partner was aware of two
proposed speculative buildings to be built in Henry County industrial parks,
totaling 730,000 square feet.

Absorption in two nearby business parks, both close to the I-75 McDonough
exchange, has averaged +/- 43 acres per year since 1989 (+/- 307 acres sold
during that period). One of the nearby parks has closed sales of +/- 180 acres
(at an average price of $42,600 per acre) to either users or developers since
opening in 1992. That park has +/- 208 available, rail-served acres remaining.
Between the two parks, there are +/- 540 available rail served acres.

Another park, near the McDonough interchange on the opposite side of I-77
is served by all utilities, but does not have rail access. There are four
existing facilities in this park and over 800 gross acres available for
development. This developer's preference appears to be constructing speculative
buildings or build-to-suit facilities.

51
<PAGE> 52
There are several factors preventing the Property from competing directly
with the existing business/industrial parks in Henry County. The lack of sewer,
distance to the nearest I-75 interchange, and the topography make the Property a
less attractive alternative to the existing industrial parks for the larger
industrial users.

APPRAISALS & VALUATIONS

The table below details various valuations of the Henry County Property
during the term of the Partnership. The first value is the acquisition cost of
the Property, the second and third values are the conclusion of appraisals
performed on the Property in 1992 and 1996, and last value is the current book
value of the Property, which reflects sales to date of the Property.

<TABLE>
<CAPTION>
ACQUISITION (6/89) APPRAISAL (1992) APPRAISAL (1996) BOOK VALUE (12/96)
------------------ ---------------- ---------------- ------------------

<S> <C> <C> <C>
$1,234,474 (+/- 265 acres) $4,537,500 (+/- 245 acres) $1,700,000 (+/- 238 acres) $1,171,558 (+/- 234 acres)
$4,658/acre $18,520/acre $7,143/acre $5,006/acre
</TABLE>

The General Partner had the Henry County Property appraised in 1996 by
Urban Realty Advisors, Inc. The 1996 appraiser has no affiliation with the
General Partner, the New General Partner or their Affiliates. The Property was
appraised in 1992 by Gottschalk & Associates. To the knowledge of current
management of the General Partner, there was no affiliation between the 1992
appraiser and the General Partner or its Affiliates or the New General Partner
or its Affiliates at the time the 1992 appraisal was performed.

The difference between the 1996 and 1992 appraisals results from the
different assumptions made by the appraisers in their valuations. Urban Realty
Advisors, Inc., the 1996 appraiser, concluded that the Property's current
highest and best use is residential single family land. The 1992 appraiser
assumed that a use for the Property as zoned would materialize.

The 1992 appraiser used the sales comparison (market) approach to value,
which uses sales of comparable land to estimate the value of the Property. The
two other most prevalent methods of valuation, cost and income, are
inappropriate for application to land. As noted above, the 1992 appraiser
assumed that a demand for the Property as zoned would materialize and utilized
sales from existing industrial parks to the north of the Property and adjusted
the values for the Property's access and location.

The 1996 appraiser also used the sales comparison (market) approach to
value the Property. As discussed above, the 1996 appraiser determined the
Property's best use was residential land because of the current market
conditions for industrial land in Henry County. The appraiser used a number of
market factors to support this conclusion: absorption of the current supply of
industrial land; to topography of the Partnership's land; and the lack of
sanitary sewer (larger industrial users would require sanitary sewer). These
factors, and the amount of land available in nearby established parks, in the
appraiser's view, prohibit the Property from effectively competing for large
industrial users.

Although there may be a potential market for small industrial sites, the
General Partner believes the value of the raw land is not substantially
different regardless of the eventual use. The General Partner has met with the
1996 appraiser, reviewed the conclusions of the 1996 appraisal and conducted
interviews with real estate marketing and development professionals in the
Atlanta market. The current industrial real estate market conditions suggest an
extremely protracted development of the Property, if marketed to large
industrial users. The General Partner believes that the 1996 appraisal is a
reasonable approximation of the Property's value.

FULTON COUNTY, GEORGIA

BACKGROUND

The Fulton County, Georgia Property is located in the southern part of
Fulton County (Fulton County encompasses the downtown Atlanta area and extends
beyond the city to the north and south), approximately 16 miles southwest of the
central business district, approximately 10 miles west of Hartsfield-Atlanta
International Airport. The Property consists of the northeast and southeast
quadrants of the intersection of the South Fulton Parkway and
Campbellton-Fairburn Road.

RECENT DEVELOPMENTS

The General Partner received an offer earlier this year from a party
interested in acquiring approximately 6 acres located at the corner of South
Fulton Parkway and Campbellton-Fairburn Road. The General Partner was informed
that the purchaser did not have any immediate plans to develop the Property,
but intended to place the Property in its inventory for future use. The
General Partner concluded that the sale of a small portion of the Property at
a major intersection was not in the best interest of the Partnership at that
time. The offer was withdrawn prior to the General Partner communicating its
decision not

52
<PAGE> 53
to proceed with the proposed sale.

REAL ESTATE MARKET DEVELOPMENTS

The marketing and ultimate value of the Property is affected by the
prevailing local market conditions. The following perspective of the current
market conditions is offered to present basic information about the current
expectations and competing properties in the marketplace.

The Atlanta metropolitan area has experienced strong growth over the past
decade. However, the majority of the growth has been to the north of the city.
Development has been slow in the vicinity of the Property. There has been
virtually no development along the South Fulton Parkway since its construction
in the early 1990's.

Three tracts of land within three miles of the Property have recently been
marketed. Two of the tracts are further southwest on South Fulton Parkway. One
of these tracts is +/- 508 acres and is being offered at $7,000 per acre, the
other tract is +/- 468 acres and is being marketed at $5,800 per acre. Another
+/- 84 acre tract of property about a mile north of the Property on
Campbellton-Fairburn Road is being marketed for $8,500 per acre. All of these
tracts are presently zoned agricultural, which zoning may be converted to allow
other uses.

In order for the Partnership to realize value for the Property commensurate
with its current zoning (commercial, office park, multi-family, etc.), further
residential development in the surrounding area is critical. Numerous Atlanta
real estate professionals have conveyed to the General Partner that local firms
are reluctant to be the first to enter this market.

APPRAISALS & VALUATIONS

The table below details various valuations of the Fulton County Property
during the term of the Partnership. The first value is the acquisition cost of
the Property, the second and third values are the conclusion of appraisals
performed on the Property in 1992 and 1996, and the last value is the current
book value of the Property. The current book value reflects a write-down of
$3,622,126 taken in December 1996 as a provision for loss on land.

<TABLE>
<CAPTION>
ACQUISITION (6/89) APPRAISAL (1992) APPRAISAL (1996) BOOK VALUE (12/96)
------------------ ---------------- ---------------- ------------------

<S> <C> <C> <C>
$4,939,177 (+/- 211 acres) $12,335,000 (+/- 211 acres) $1,350,000 (+/- 211 acres) $1,350,000 (+/- 211 acres)
$23,408/acre $58,460/acre $6,398/acre $6,398/acre
</TABLE>

The General Partner had the Fulton County Property appraised in 1996 by
Urban Realty Advisors, Inc. The 1996 appraiser has no affiliation with the
General Partner, the New General Partner or their Affiliates. The Property was
appraised in 1992 by Gottschalk & Associates. To the knowledge of current
management of the General Partner, there was no affiliation between the 1992
appraiser and the General Partner or its Affiliates or the New General Partner
or its Affiliates at the time the 1992 appraisal was performed.

The reasons for the difference between the 1996 and 1992 appraisals for the
Fulton County Property are similar to reasons for the Henry County Property. The
appraisers again differed in their valuation assumptions for the Property. The
1996 appraiser, Urban Realty Advisors, Inc., concluded that the highest and best
use for this Property was residential land. The 1992 appraiser again assumed
that a demand for the Property as zoned would materialize.

The 1992 appraiser used the sales comparison (market) approach and valued
the Property using sales of similarly zoned Property in the metropolitan area as
comparables. Most of these comparable sales were in areas more densely populated
than the immediate vicinity of the Fulton County Property. The appraiser further
added that the appraisal was based on the presumption that positive market
projections for South Fulton County would come to realization. Unfortunately,
the area surrounding South Fulton Parkway has experienced little or no growth
since SEA III's purchase of the Property.

The 1996 appraiser also used a sales comparison (market) approach to value
the Property. The 1996 appraiser concluded that Property's only immediate use
was residential. The appraiser's basis for this conclusion is that the low
traffic counts and low levels of population in the immediate vicinity are not
sufficient to support commercial, office, and multi-family uses, for which the
Property is zoned. The appraiser determined that the Property was not imminently
ready for development and therefore did not conduct a development analysis for
comparison to the market approach.

The General Partner has met with the 1996 appraiser, reviewed the
conclusions of the 1996 appraisal and conducted interviews with real estate
marketing and development professionals in the Atlanta market. A demand for the
Fulton County Property, as zoned, has not developed over the past seven years
and is not expected to materialize in the near term. The General Partner
believes that the 1996 appraisal is a reasonable approximation of the current
value of the Property.

53
<PAGE> 54
FORT MYERS, FLORIDA

BACKGROUND

The Fort Myers, Florida Property is situated in Lee County, approximately
two miles inland from the Gulf of Mexico. Fort Myers is approximately 125 miles
south of Tampa, Florida and 145 northwest of Miami, Florida. Lee County has
experienced a rapid growth in population, partly a result of migration of
individuals from the northern United States. Fort Myers has also been selected
as the site of a new state university, Gulf Coast University.

The Property is +/- 48 acres of residential property located on the west
side of Winkler Road, approximately 2 miles south of the intersection of Winkler
Road and Summerlin Road. The Property is rectangular in shape, served by all
utilities, relatively level and, for the most part, clear of trees.

RECENT DEVELOPMENTS
The developer of a single family subdivision on Winkler Road north of the
Property is nearly built out of the existing subdivision. The General Partner
has been advised that the same developer has placed approximately 40 acres
between the Property and the existing subdivision under contract. The developer
had delivered an unsolicited offer to the General Partner to purchase the
Property. It is the developer's desire to purchase the Property and take both
properties through the planning and approval process together. The General
Partner has countered the developer's initial offer. The developer is conducting
tests on the suitability of the soil of the adjacent property to determine the
viability of expanding their subdivision. It is still too early to determine
whether or not these negotiations will lead to a sales agreement on the
Property.

REAL ESTATE MARKET CONDITIONS

The marketing and ultimate value of the Property is affected by the prevailing
local market conditions. The following perspective of the current market
conditions is offered to present basic information about the current
expectations and competing properties in the marketplace.

Demand for property in the area surrounding the Property was strong in the
late 1980's and speculative buying had an inflationary effect on land values.
The speculative buying that occurred in the late 1980's may be attributed to
the announcement and construction of Healthpark Florida, a 400 acre mixed use
development that includes medical, commercial, recreational, educational and
residential uses. However, the local real estate market was greatly affected by
the recession in the early 1990's and the expectations for the area surrounding
Healthpark Florida have not yet been fully realized. As a result, there is a
substantial amount of vacant land available in the vicinity, and a number of
similarly zoned properties available for sale on Winkler Road. Activity in the
area is increasing and the planned development of a residential subdivision
further north on Winkler Road is a positive sign.

APPRAISALS & VALUATIONS

The table below details various valuations of the Fort Myers Property
during the term of the Partnership. The first value is the acquisition cost of
the Property, the second and third values are the appraised values of the
Property performed in 1992 and 1996, and last value is the current book value of
the Property. The current book value reflects a write-down of $536,700 taken in
December 1996 as a provision for loss on land. However, the book value also
reflects estimated disposition costs.

<TABLE>
<CAPTION>
ACQUISITION (8/89) APPRAISAL (1992) APPRAISAL (1996) BOOK VALUE (12/96)
------------------ ---------------- ---------------- ------------------
<S> <C> <C> <C>
$1,888,352 (+/- 48 acres) $2,020,000 (+/- 48 acres) $1,395,000 (+/- 48 acres) $1,255,500 (+/- 48 acres)
$39,341/acre $42,083/acre $29,063/acre $26,156/acre
</TABLE>

The General Partner had the Fort Myers Property appraised in 1996 by
Stewart, Stephan & Bowen, Inc. The 1996 appraiser has no affiliation with the
General Partner, the New General Partner or their Affiliates. Stewart, Stephan
& Bowen, Inc. was also the 1992 appraiser. To the knowledge of current
management of the General Partner, there was no affiliation between Stewart,
Stephan & Bowen, Inc. and the General Partner or its Affiliates or the New
General Partner or its Affiliates at the time the 1992 appraisal was performed.

The difference between the 1992 and 1996 appraisals reflects the changing
real estate market conditions for residential land in this area of Fort Myers,
Florida. Both the 1992 and 1996 appraisals used the sales comparison (market)
approach and were supported by comparable sales and listings in the immediate
vicinity of the Property. The General Partner has reviewed the conclusions of
the 1996 appraisal report which was made by Stewart, Stephan & Bowen, Inc. and
believes that the appraisal is a reasonable approximation of the current value
of the Property.

COLUMBIA, SOUTH CAROLINA

BACKGROUND

The Columbia, South Carolina Property is located on the southwest side of
US Highway 176, also known as Broad River Road, in Richland County, northwest of
downtown Columbia, South Carolina. Just a few hundred yards north, Broad River
Road forms an intersection with Interstate 26. Interstate 26 is the primary
route between Columbia and the Greenville/Spartanburg area.

RECENT DEVELOPMENTS
Early this year, the Partnership placed approximately 7 acres of this
Property under contract for a purchase price of $31,000 per acre. This
transaction closed in May, 1997 and resulted in gross proceeds of $221,960. The
boundary between this parcel and the remaining Partnership land is the center
line of a road proposed by the South Carolina Department of Transportation
("SCDOT").

54
<PAGE> 55
REAL ESTATE MARKET CONDITIONS

The marketing and ultimate value of the Property is affected by the prevailing
local market conditions. The following perspective of the current market
conditions is offered to present basic information about the current
expectations and competing properties in the marketplace.

The area surrounding the Property has been primarily known for residential
growth. The push of the growth is coming north from Columbia and east from the
Lake Murray area. The Lake Murray area appears to be changing from primarily a
recreational area to a location for a permanent residence. The number of
households within a five mile radius of the Property increased from 14,563 (1980
census), to 22,354 (1990 census), to 26,191 (1996 estimate), and is projected to
be 28,555 in the year 2001.

A number of residential developers and builders, local and national, are
becoming more active in the area surrounding the Property. Due to its proximity
to the interchange of Interstate 26 and Broad River Road, the Property has
potential as a commercial or retail site. The Property's potential as a
commercial or retail site is dependent on the continuing residential development
of the surrounding area.

APPRAISALS & VALUATIONS

The table below details various valuations of the Columbia, South Carolina
Property over the term of the Partnership. The first value is the acquisition
cost of the Property, the second and third values are the appraised values of
the Property performed in 1992 and 1996, and the last value is the current book
value of the Property. The current book value reflects a write down of $50,560
taken in December, 1996 as a provision for loss on land.

<TABLE>
<CAPTION>
ACQUISITION (9/89) APPRAISAL (1992) APPRAISAL (1996) BOOK VALUE (12/96)
------------------ ---------------- ---------------- ------------------

<S> <C> <C> <C>
$1,347,787(+/- 51 acres) $808,000(+/- 51 acres) $740,000 (+/- 50 acres) $740,000 (+/- 50 acres)
$26,427/acre $15,843/acre $14,800/acre $14,800/acre
</TABLE>

The General Partner had the Columbia Property appraised in 1996 by
Owen-Faulkner & Associates. The 1996 appraiser has no affiliation with the
General Partner, the New General Partner or their Affiliates. The Property was
appraised in 1992 by Southern Appraisal Service, Inc. To the knowledge of
current management of the General Partner, there was no affiliation between the
1992 appraiser and the General Partner or its Affiliates or the New General
Partner or its Affiliates at the time the 1992 appraisal was performed.

The 1992 appraiser used the sales comparison (market) approach to value.
The appraiser also estimated the present value of the Property using a
discounted cash flow analysis to validate the conclusion of the market approach.
The appraiser used a few sales and one listing in close proximity to the
Property for the valuation and cited a general inactivity in the area.

The 1996 appraiser, Owen-Faulkner & Associates also used the sales
comparison (market) approach to estimate the value of the Property. The
appraiser gathered a number of sales of comparable land to determine the value
of the Property.

THE APPRAISED VALUES OF ALL OF THE PROPERTIES DISCUSSED IN THIS SECTION
DO NOT REFLECT THE COSTS, EXPENSES AND COMMISSIONS WHICH WOULD BE INCURRED IN
CONNECTION WITH A SALE OF ANY OF THE PROPERTIES. MOREOVER, APPRAISALS ARE ONLY
AN APPROXIMATION OF CURRENT MARKET VALUE WHICH CAN ONLY BE ESTABLISHED BY AN
ACTUAL SALE.

THE ALTERNATIVE AMENDMENTS

REASONS FOR AND BENEFITS OF EACH SET OF ALTERNATIVE AMENDMENTS

As part of its fiduciary responsibility to protect the assets of the Partnership
and further the business objectives of the Partnership, the General Partner is
offering the Limited

55
<PAGE> 56
Partners the opportunity to vote to extend the term of the Partnership pursuant
to either of the two sets of Alternative Amendments.

The General Partner believes that the aggregate current market value of the
Properties is below an amount which would return to the Limited Partners their
Adjusted Capital Contributions plus their Unpaid Cumulative Return. This
assessment is based upon a recent appraisal (See "THE PROPERTIES - Appraisals"
below) and the General Partner's inspection of the Properties and review of the
assumptions and conclusions of the appraisal with local real estate
professionals.

The General Partner further believes that, based on its discussions with real
estate professionals in the markets where the Properties are located, given more
time, the Properties could appreciate in value and recommends that it is in the
best interests of the Partnership to extend the term of the Partnership by three
years to provide additional time for this to occur.

The main purpose for and benefit of either of the sets of Alternative Amendments
is to provide the Partnership with such an extended opportunity to improve the
price the Partnership could obtain on the sale of its assets. This could improve
the return on the Limited Partners' investment, as the Partnership's original
business objectives will, in all likelihood, not be met within the existing term
or in a liquidation of the Partnership assets thereafter. There is no assurance
that the return to the Limited Partners will be improved by extending the term.

The General Partner decided to offer the Limited Partners an alternative to the
General Partner continuing for the extended term in part in response to letters
from approximately 20 Limited Partners, most of whom had also been brokers
involved in the original sale of the Units, requesting a new general partner
because of the conclusion of Ms. Deborah Dillon's involvement with the
Partnership (See "THE GENERAL PARTNER - Former Management/Consulting
Relationship" above) and concern as to the impact of Fidelity Mutual's ownership
interest in the General Partner (See "THE GENERAL PARTNER -- Background" and
"RISK FACTORS -- SECOND ALTERNATIVE AMENDMENTS -- Risk in Rehabilitation of
Ultimate Partner of General Partner" above). No specific amendments were
proposed by such Limited Partners and none of such Limited Partners are
affiliated with the General Partner or Ms. Dillon (See also "RISK FACTORS --
SECOND ALTERNATIVE AMENDMENTS -- Risk in Ms. Deborah Dillon not Acting as
Consultant" above).

BENEFITS OF ADOPTING FIRST ALTERNATIVE AMENDMENTS

- EXTENDED TIME TO IMPROVE PARTNERSHIP'S REALIZATION OF ITS INVESTMENT
OBJECTIVES.

Under the First Alternative Amendments, the Partnership term
would be extended by 2 years to December 31, 2001, which would provide
the New General Partner additional time to improve the price the
Partnership could obtain on the sale of its assets so as to improve the
return on the Limited Partners' investment. The estimated values of the
Properties has fluctuated over the Partnership term (See "THE
PROPERTIES - Appraisals" above) and are currently valued at below their
aggregate Acquisition Cost. The extended time period would give the New
General Partner the chance to implement its marketing plan to find
prospective purchasers. However, there is no assurance that purchasers
will be found or that the Partnership will be able to improve the
return to the Limited Partners within such extended time period (See
"RISK FACTORS - First Alternative Amendments" above).

56
<PAGE> 57
- NEW MANAGEMENT.

The New General Partner has considerable experience in the
marketplace where the Properties are located. The New General Partner
has no affiliation with Fidelity Mutual, the parent of the General
Partner. The New General Partner presents an opportunity to elect new
management for those Limited Partners who wish to extend the term of
the Partnership but may be concerned about the conclusion of Ms.
Dillon's consulting relationship with the General Partner or the impact
of the Rehabilitation of Fidelity Mutual on the General Partner. For
information on Ms. Dillon's former relationship with the General
Partner see "THE GENERAL PARTNER - Former Management/Consulting
Relationship" above and for the relationship between Fidelity Mutual
and the General Partner See "THE GENERAL PARTNER - Background" above.

- ABILITY TO ACT QUICKLY ON PROSPECTIVE SALES.

In the case of the First Alternative Amendments, modifying the
requirement that a majority in interest of the Limited Partners consent
to a sale of all or substantially all the assets of the Partnership is
designed to facilitate potential sales of all or a portion of the
Properties which could be jeopardized as a result of the time and
complexity involved in obtaining Limited Partners' consent to the
transaction.

In light of the current valuation of the Properties, it is highly
unlikely that any sale of one or more of the Properties will result in
a net sales price which would return to the Limited Partners a
distribution equal to the Unpaid Cumulative Return plus their Adjusted
Capital Contributions. As a result, under the current Partnership
Agreement, the New General Partner would have to obtain the consent to
any sale of the Properties in their entirety or any sale of a portion
of the Properties which, in the judgment of the New General Partner,
would amount to a sale of all or substantially all the assets of the
Partnership.

BENEFITS OF ADOPTING SECOND ALTERNATIVE AMENDMENTS

- EXTENDED TIME TO IMPROVE PARTNERSHIP'S REALIZATION OF ITS INVESTMENT
OBJECTIVES. Under the Second Alternative Amendments, the Partnership
term would be extended by 1 year to December 31, 2001, which would
provide the General Partner additional time to improve the price the
Partnership could obtain on the sale of its assets so as to improve the
return on the Limited Partners' investment. The estimated values of the
Properties have fluctuated over the Partnership term (See "THE
PROPERTIES - Appraisals" below) and is currently valued at below their
aggregate Acquisition Cost. The extended time period would give the
General Partner the chance to continue to market the Properties.
However there is no assurance that purchasers will be found or that the
Partnership will be able to improve the return to the Limited Partners
within such extended

57
<PAGE> 58

time period (See "RISK FACTORS - Second Alternative Amendments" above).

- CONTINUITY OF MANAGEMENT
Under the Second Alternative Amendments, the General Partner is
willing to offer the Limited Partners the option of it continuing as
the General Partner for the same extended term as proposed for the New
General Partner and on similar terms and conditions if the Limited
Partners decide they wish to extend the term of the Partnership but
retain current management. The General Partner is also prepared to
extend its term only upon receipt of additional fees, commission and
rights to sell the Property.

In addition to the benefit of continuity of management, new fees
would not be payable to the General Partner until after the expiration
of the original Partnership term on December 31, 1999.

In light of the current valuation of the Properties, it is highly
unlikely that any sale of one or more of the Properties will result in
a net sales price which would return to the Limited Partners a
distribution equal to the Unpaid Cumulative Return plus their Adjusted
Capital Contributions. As a result, under the current Partnership
Agreement, the General Partner would have to obtain consent to any
sale of the Properties in their entirety or any sale of a portion of
the Properties which, in the judgment of the General Partner, would
amount to a sale of all or substantially all the assets of the
Partnership. There is presently no definition of "all or substantially
all the assets of the Partnership" in the Partnership Agreement.

DIFFERENCES BETWEEN THE ALTERNATIVE AMENDMENTS

The terms of the First Alternative Amendments and the Second Alternative
Amendments are similar, with three principal exceptions:

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<PAGE> 59
- DIFFERENT GENERAL PARTNERS

Under the First Alternative Amendments, the New General Partner
would be substituted for the General Partner for the new term of the
Partnership Agreement, while under the Second Alternative Amendments,
the General Partner would continue in that capacity for the new term.

- TIMING OF FEES

Under the First Alternative Amendments, management fees for the
New General Partner would commence as of the adoption of the First
Alternative Amendments, while the Second Alternative Amendments only
permit the current General Partner to begin receiving such fees
following the expiration of the current term of the Partnership
Agreement.

- MODIFICATION VERSUS ELIMINATION OF LIMITED PARTNERS CONSENT

Under the First Alternative Amendments the requirement that a
majority in interest of the Limited Partners consent to a sale of all
or substantially all the assets of the Partnership under certain
circumstances would be modified to only require such consent if 60
percent or more of the real estate acreage of the Partnership as
of September 15, 1997 is sold at one time at a price which would fail
to return to the Limited Partners the Acquisition Cost of the assets
sold, while under the Second Alternative Amendments, the requirement
that Limited Partners' consent to sales of all or substantially all the
assets of the Partnership would be eliminated entirely.

FIRST ALTERNATIVE AMENDMENTS

SUBSTITUTION OF NEW GENERAL PARTNER

Southeast Acquisitions, Inc. would be removed as the General Partner of the
Partnership and SMG would be substituted as the New General Partner effective
as of the date the First Alternative Amendments are adopted and the New General
Partner signs the Partnership Agreement.

SMG was identified as the proposed New General Partner based on the experience
of its members in real estate transactions, their familiarity with the
marketplace in the Southeastern United States, prior dealings with the General
Partner and its Affiliates and intent to use the advisory services of Ms. Dillon
whose knowledge of the Properties would provide some continuity to management of
the Properties.

59
<PAGE> 60

Although preliminary discussions were held with a number of candidates, the
General Partner has not engaged in a comprehensive search for a new general
partner. An extended search for other potential successor general partners was
not undertaken because of the evident qualifications of SMG, the willingness of
SMG to become a successor general partner, the difficulty an Affiliate of
the General Partner had experienced in attempting to locate a successor general
partner for another limited partnership and the reluctance of other candidates
to assume the risks of becoming general partner of the Partnership.

The following is a balance sheet of the New General Partner audited by
Williams, Benator & Libby, LLP.

INDEPENDENT AUDITORS' REPORT
Members
Southeast Management Group, LLC
Nashville, Tennessee

/s/ Williams, Benator & Libby, LLP.
- ----------------------------------

Atlanta, Georgia
June 13, 1997

SOUTHERN MANAGEMENT GROUP, LLC
(A Development Stage Enterprise)
BALANCE SHEET
June 12, 1997

<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Organization costs $ 1,500
Capitalized legal fees 14,054
---------
$ 15,554
=========

LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES

Accounts payable $ 7,432
Due to members 8,022
---------
TOTAL CURRENT LIABILITIES $ 15,454

MEMBERS' EQUITY - Note B 100
---------
$ 15,554
=========
</TABLE>

See notes to balance sheet.

NOTES TO BALANCE SHEET
SOUTHERN MANAGEMENT GROUP, LLC
(A Development Stage Enterprise)
June 12, 1997

NOTE A - DESCRIPTION OF SMG AND SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies are presented to assist the reader in
understanding SMG's financial statements:

Income Taxes: As a limited liability company, all items of income, loss,
deduction, and credit are passed through to, and taken into account by, SMG's
members in computing their own taxable income.

NOTE B - MEMBERS' EQUITY

SMG is a Tennessee Limited Liability Company whose members are Richard W.
Sorenson, who owns a 51% interest in the company, and Southeast Venture
Corporation, a Tennessee corporation ("SVC") which owns 49% of SMG.

Mr. Sorenson, a resident of Atlanta, Georgia, recently visited Columbia, South
Carolina to inspect the Property. In prior years, he has completed real estate
transactions and developed projects in Columbia and other areas in South
Carolina.

Mr. Sorenson was President of Phoenix Investment Company ("Phoenix"), a publicly
owned, Atlanta based real estate development and investment firm from 1965 to
1970. Concurrent with his employment at Phoenix, he was President of First
Atlanta Realty Fund, a publicly owned real estate investment trust. During his
tenure with the trust, he served as a Trustee of the National Association of
Real Estate Investment Trusts.

Following his departure from Phoenix in 1970, Mr. Sorenson became Vice President
of Cousins Properties in Atlanta, Georgia, where he was responsible for
development of office buildings, shopping centers and apartments until 1971.
Until forming Southeast Venture Companies ("SV") in 1979, Mr. Sorenson was an
independent real estate developer.

Mr. Sorenson was co-founder of SV in 1979. In 1992, substantially all of the
assets of SV were sold to SVC.

Mr. Sorenson is a graduate of the Northwestern University Business School with a
major in real estate.

The other member of the New General Partner is SVC. SVC is a Nashville,
Tennessee-based full service real estate corporation involved in real estate
brokerage, property management and development of office buildings, hospitals,
medical buildings and other medical facilities. SVC was formed in 1992. Its
personnel include civil engineers,

60
<PAGE> 61
architects and other real estate professionals whose services will be utilized
by the New General Partner. The officers and key employees of SVC include the
following:

Paul J. Plummer, Age 47. Mr. Plummer serves as director of project management
services for SVC. Mr. Plummer is responsible for management, team structuring,
cost control and scheduling of large scale projects for SVC including office
buildings, medical centers, commercial office buildings, commercial land
ventures and build-to-suit projects. Before joining SV in 1986, Mr. Plummer
served as a partner and director of design for the Nashville-based architecture
and engineering firm of Gresham, Smith and Partners. In that capacity he was
responsible for the design and planning of over 15 major projects throughout the
United States and Saudi Arabia. Mr. Plummer earned his bachelor of architecture
degree from the University of Kentucky and is a member of the American Institute
of Architects.

Wood S. Caldwell, Age 44. Mr. Caldwell is responsible for all site development
activities on behalf of commercial and health care clients of SVC, including
managing all design consultants, permitting, scheduling, budgeting and
construction management. He contributes to SVC's development team in the areas
of land planning, zoning, permitting, engineering and construction. Before
joining SV in 1985, Mr. Caldwell served as a professional engineer for Gresham,
Smith and Partners. As the prime site design engineer for Gresham, Smith and
Partners, Mr. Caldwell produced and coordinated site development plans for over
50 separate medical facilities in over 40 different communities throughout the
southeast, Mr. Caldwell earned his bachelor of engineering degree from the
Vanderbilt University School of Engineering.

Axson E. West, Age 43. Mr. West serves as vice president of brokerage services
for SVC, specializing in office and industrial leasing, improved property sales
and land disposition for several commercial and residential projects. Mr. West
has sold real estate and real estate securities since 1980 and, since joining SV
in 1988, he has been responsible for the disposition of land encompassing
industrial, office and retail developments. Mr. West is director of the
Nashville Board of Realtors and president elect of the board's commercial
investment division. He received his bachelor of arts degree from Vanderbilt
University and is a Certified Commercial Investment Member, a designation of the
Commercial Investment Real Estate Institute.

Cameron W. Sorenson, Age 35. Mr. Sorenson serves as director of vertical
development for SVC. He is primarily responsible for providing development and
project management for the clients of SVC. Prior to assuming these
responsibilities, Mr. Sorenson was project director for two large scale land
development ventures for SVC. Prior to joining SV in 1987, Mr. Sorenson was with
Trust Company Bank in Atlanta, as an officer in the National Division, managing
a credit portfolio in excess of $150 million. He received his bachelor of
science degree in finance from the MacIntyre School of Business at the
University of Virginia. Cameron Sorenson is the son of Richard W. Sorenson, the
individual, majority member of the New General Partner.

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<PAGE> 62
Neither SMG nor any of its members owns directly or indirectly any Units.

SMG will devote such time to the affairs of the Partnership as may be required
to adequately manage the Properties although the amount of time may vary,
depending on the needs of the Partnership.

For eleven years, Mr. Richard Sorenson has worked with Deborah Dillon, the
former President and consultant of the General Partner. (See "THE GENERAL
PARTNER - Former Management/Consulting Relationship" above).

Ms. Dillon has agreed to advise and consult with the New General Partner
concerning the Properties on a continuing basis for which she will be
compensated by the New General Partner solely from a percentage of real estate
commissions earned by the New General Partner in connection with sales of
Partnership property (See" THE ALTERNATIVE AMENDMENTS - FIRST ALTERNATIVE
AMENDMENTS - Substitution of the General Partner" below at p. 59). Ms. Dillon or
her immediate family members own 70 Units. Ms. Dillon has informed the General
Partner that the 70 Units will be voted in favor of the First Alternative
Amendments. Ms. Dillon does not have an ownership interest in the New General
Partner.

The New General Partner does not have any interest in the General Partner or its
Affiliates and the General Partner has no interest in the New General Partner or
its Affiliates. The General Partner will receive no consideration in the event
the New General Partner is substituted as a successor general partner. The
General Partner and New General Partner do not have any common officers or
directors.

SMG and Mr. Sorenson have entered into an agreement with the Partnership to
substitute SMG as the New General Partner of the Partnership upon adoption of
the First Alternative Amendments. The agreement provides that, following such
approval, SMG will execute the Partnership Agreement, thereby agreeing to be
bound by all the terms and conditions of the Partnership. Under the agreement,
SMG and Mr. Sorenson have agreed to indemnify the Partnership from and against
any costs and expenses incurred by the Partnership in accordance with the
substitution in the event that SMG defaults under the agreement. The Partnership
has also agreed to indemnify Mr. Sorenson against his costs and expenses if the
Partnership defaults under the agreement by refusing to allow SMG to assume the
position of New General Partner if the First Alternative Amendments are adopted.
Under the agreement, SMG has also agreed to be substituted as general partner of
two other limited partnerships in which the General Partner also acts as general
partner, if the limited partners of such partnerships approve such substitution.
SMG's potential substitution as the New General Partner of the Partnership is
not dependent upon its substitution as general partner in any of the other
partnerships.

SMG HAS REPRESENTED TO THE PARTNERSHIP THAT THE FOLLOWING DESCRIPTION OF
ITS INTENTIONS WITH RESPECT TO MANAGING AND MARKETING THE PROPERTIES IF IT IS
APPOINTED THE NEW GENERAL PARTNER REPRESENTS ITS CURRENT PLANS WITH RESPECT
THERETO. HOWEVER, THERE IS NO ASSURANCE THAT ALL OR ANY OF THESE PLANS WILL BE
IMPLEMENTED, OR THAT, IF IMPLEMENTED, THEY WILL RESULT IN A SALE OR SALES OF THE
PROPERTIES.

Henry County, Georgia. Renewed contacts will be made with developers/owners
in the area to explore partial or total sales. Industrial brokers without a
large presence in Henry County will be interviewed. If they have a good sales
record elsewhere, they may be given exclusive sales contracts. A marketing
presentation for discussion with potential users and distribution by Henry
County will be developed. SMG is familiar with several of the important
industrial developers in this and the Atlanta market who will be contacted
regarding potential sales.

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<PAGE> 63

Fulton County, Georgia. Since the inception of the Partnership,
approximately $200,000 had been set aside to enable the Partnership to
participate in bringing sewer to this Property. An effort will be made to enter
into an agreement with another entity to share the cost of the sewer. Bids for
the project will be solicited from a minimum of three utility companies
following submission of the already completed sewer design plans to the County
to obtain a precise cost estimate for the project. As the $200,000 was estimated
to be only a portion of the final cost of the project, the project would not
proceed without participation of another entity. In any event, a development
analysis will be conducted to identify the optimum way for the Property to be
subdivided for future sale.

The studies and evaluations of the Properties discussed above will be
conducted by personnel in SVC, one of the members of the SMG, at no cost to the
Partnership, and no other costs or expenses relating to specific infrastructure
or other improvements to the Properties are anticipated by SMG, other than as
discussed above in connection with the Fulton County Property. However, it is
possible that, as New General Partner, SMG might enter into a contract for sale
of part or all of one or more of the Properties which could require
construction of infrastructure or other improvements. The Partnership would
bear the cost of such improvements. No such contracts are currently
contemplated.

EXTENSION OF PARTNERSHIP TERM

The term of the Partnership would be extended by 2 years from December 31,
1999 to December 31, 2001. This additional period may give the Partnership more
latitude and flexibility to negotiate a favorable sale or sales agreements to
maximize the value of the Properties to the Partnership and improve the return
to the Limited Partners. However, there can be no guarantee that the Partnership
will be able to realize a better return to the Limited Partners during such
extended period than it would during the period prior to the expiration of the
current term or in the course of the subsequent dissolution and liquidation of
the Partnership assets pursuant to the Partnership Agreement. Moreover, there is
also a risk that the Properties will further decrease in value during any such
extended term.

The Partnership currently has a termination date of December 31, 1999. At that
point in time, if the term is not extended, the Partnership will dissolve and
any distributions will be made in accordance with a liquidation. Pursuant to the
Partnership Agreement, all distributions in a liquidation will be made in the
following priority: first to any debts or obligations of the Partnership (there
currently are none); next to a reserve, as determined by the General Partner, to
facilitate the liquidation of all the Partnership's assets; and, finally, to the
partners.

AUTHORIZATION OF FEES AND COMMISSIONS FOR NEW GENERAL PARTNER

As part of the First Alternative Amendments, the Partnership Agreement will
also be amended to provide the following fees and commissions for the New
General Partner:

(i) Management Fees

Under the existing Partnership Agreement, the General Partner was entitled
to receive a management fee pursuant to Section 4.5(b) as follows:

"(b) For the services to be performed by the General Partner in
connection with the management and administration of the Partnership,
the Partnership

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<PAGE> 64
shall pay the General Partner an annual management fee equal to 1/4 of
1% of the cost of the Partnership's properties, commencing on the date
hereof and continuing, with respect to each property, until such time
as the property is sold or improvement of the property commences by the
Partnership. In no event shall this fee, with respect to any property,
exceed a cumulative total of 2% of the original cost of the property.
The management fee shall be paid to the General Partner for such
services on conclusion of each calendar quarter. If the Partnership
does not have sufficient cash to pay the management fee for any quarter
or if the Partnership's reserves are less than 1/2 of 1% of the Limited
Partners' Capital Contributions, such fee shall be accrued (without
interest) as a debt of the Partnership, payable out of Sale or
Financing proceeds after the Limited Partners have received
distributions in a total amount equal to the aggregate amount paid by
them to the Partnership for their Units."

This provision resulted in payments to the General Partner of $24,886 per year
through 1996 for a total of $191,050. The General Partner has not yet received
the maximum fees currently authorized under the Partnership Agreement which
would amount to $207,244. This Amendment would approve additional fees for the
New General Partner at an annual rate comparable to that originally authorized.
The fees would commence as of the date of authorization of the First Alternative
Amendments and the execution by the New General Partner of the Partnership
Agreement and continue through the end of the extended Partnership term.

The effect of the First Alternative Amendments would be that the
Partnership would pay a management fee to the New General Partner of $4,647 in
1997 (assuming approval of the Amendment on October 28, 1997, the date of the
Special Meeting), $26,500 in 1998, $26,500 in 1999, $26,500 in 2000 and $26,500
in 2001; provided that if the Properties were sold in their entirety prior to
December 31, 2001, the Partnership would only pay the New General Partner a pro
rata portion of the applicable annual fee to the date of such sale. Unlike the
current provisions of the Partnership Agreement which defer payment of
management fees if reserves are insufficient and the Limited Partners have not
received distributions equalling the amount they paid for their Units, the new
Management Fees would be payable prior to any such distribution.

(ii) Commissions

The Partnership Agreement currently contains the following restrictions on
the General Partner's right to receive commissions in connection with the sale
of Partnership property, in Section 4.5(c):

"(c) If the General Partner or its Affiliates provide a substantial
amount of the services in the sales effort for the sale of a
Partnership property, they may receive up to one-half of the
competitive real estate commission (that real estate or brokerage
commission paid for the purchase or sale of property which is
reasonable, customary and competitive in light of the size, type and
location of the property), not to exceed 3%, which amount shall not be
paid until the Limited Partners have received distributions equal to
their Capital Contributions plus the Cumulative Return. If the General
Partner or its Affiliates participate with an independent broker on
such sale, the subordination requirement shall apply only to the
commission earned by the General Partner or its Affiliates. The total
compensation paid to all Persons for the sale of a Partnership property
shall be limited to a competitive real estate commission, not to exceed
10% of the contract price for the sale of the property, and if such
compensation to all Persons for the sale of a Partnership property
exceeds 6%, then, notwithstanding the other provisions of this Section
4.5(c), the General Partner and its Affiliates shall not receive any
compensation for such sale and such compensation for such sale shall be
paid only to Persons other than the General Partner and its
Affiliates."

The First Alternative Amendments would delete Section 4.5(c) and also
provide that the total compensation paid to all persons, including the New
General Partner for the sale of Partnership property shall be limited to a
competitive real estate commission or disposition fee not to exceed 10% of the
contract sales price of the Properties. Unlike the current

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<PAGE> 65
provisions of the Partnership Agreement, which defer payment of commissions
until after the Limited Partners have received distributions equal to their
Capital Contributions plus the Cumulative Annual Return, the New General Partner
will be able to realize the commission or disposition fee immediately upon any
such sale.

The following table sets forth the proposed commissions and management
fees to be paid to the New General Partner under the First Alternative
Amendments.

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<PAGE> 66
COMMISSIONS AND MANAGEMENT FEES TO BE PAID TO NEW GENERAL PARTNER UNDER
PROPOSED FIRST ALTERNATIVE AMENDMENT

<TABLE>
<CAPTION>
TOTAL
POSSIBLE
TOTAL MANAGEMENT MANAGEMENT
YEAR AMOUNT OF COMMISSION COMMISSION FEE FEE
- ---- -------------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
1997 Competitive real estate Depends on $4,647 *
commission or disposition sale price
fee not to exceed 10% of Property
of contract price for
Property;
- -----------------------------------------------------------------------------------------------------------

1998 Same as 1997 Same $26,500.00/
annum *
- -----------------------------------------------------------------------------------------------------------

1999 Same as 1997 Same $26,500.00/
annum *
- -----------------------------------------------------------------------------------------------------------

2000 Same as 1997 Same $26,500.00/
annum *

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

2001 Same as 1997 Same $26,500.00/
annum *

- -----------------------------------------------------------------------------------------------------------
$110,647 **
</TABLE>

- - * or pro rata portion of fee if all the Properties are sold before the end of
the year.
- - ** or lesser amount, depending on a pro rata reduction if all the Properties
are sold before the end of the year.

EXCLUSIVE RIGHT TO SELL THE PROPERTIES

The Partnership Agreement currently provides in Section 4.3(g):

"(g) The Partnership shall not give to the General Partner or its Affiliates an
exclusive right to sell or an exclusive employment to sell property for the
Partnership."

The First Alternative Amendments would delete Section 4.3(g) from the
Partnership Agreement and expressly provide that the General Partner or an
Affiliate would have the right to be given an exclusive right to sell or
exclusive employment to sell the Properties.

Section 4.2(a) "AUTHORITY OF GENERAL PARTNER" would be amended to add the
following provision:

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<PAGE> 67
"(xiii) Reserve to itself or an Affiliate or enter into a contract for an
exclusive right to sell or exclusive employment to sell property for the
Partnership."

The foregoing amendments to Sections 4.3(c) and 4.2(a) are designed both as an
incentive to the New General Partner to be substituted as general partner and to
facilitate sales of the Property.

MODIFICATION OF REQUIREMENT THAT LIMITED PARTNERS CONSENT TO SALE OF ALL OR
SUBSTANTIALLY ALL THE ASSETS OF THE PARTNERSHIP

The Partnership Agreement currently provides in Section 4.3(b):

"(b) Without the Consent of a majority in interest of the Limited
Partners, the General Partner shall not have the authority to sell all
or substantially all the assets of the Partnership in a single sale,
except that the General Partner may sell such assets without such
consent (A) in connection with the liquidation of the Partnership under
Section 5.4 or (B) if the net proceeds of such sale, when distributed
in accordance with Section 3.1, will be sufficient to provide the
Limited Partners with distributions equal to the Unpaid Cumulative
Return plus their Adjusted Capital Contributions."

There is presently no definition of "all or substantially all the assets of
the Partnership" in the Partnership Agreement. As a result, there is continuing
uncertainty as to whether a vote of Limited Partners is required for certain
sales of the Properties. This uncertainty can lead to the possible delay, or
even loss of a sale, since the General Partner may be forced to obtain a vote of
Limited Partners in order to resolve the uncertainty. The First Alternative
Amendments would add a definition of "all or substantially all the assets of the
Partnership" to mean 60% or more of the real estate acreage held by the
Partnership as of September 15, 1997.

The effect of adding the definition would be to permit the New General
Partner to sell the Properties in a combination of sales amounting to less than
60% of the acreage of the Partnership as of September 15, 1997, with no
limitation as to price, other than general limitations imposed by its
fiduciary duty to the Partnership and its assets, without obtaining the
consent of a majority in interest of the Limited Partners. The modification
of the Partnership Agreement could not only result in sales of parcels of the
Properties which, if the parcels sold constituted less than 60% of the real
estate acreage held by the Partnership as of September 15, 1997, would fail
to return to the Limited Partners the Unpaid Cumulative Return plus their
Adjusted Capital Contributions, but such sales could also potentially be
below the recent appraised values discussed above under the heading
"THE PROPERTIES".

The additional modification of Section 4.3(b) would delete the phrase
"Unpaid Cumulative Return plus their Adjusted Capital Contributions" and insert
"Acquisition Cost of the assets sold."

"Acquisition Cost" will be defined in the First Alternative Amendments as
"with respect to a Partnership asset, the price originally paid by the
Partnership to acquire the asset, including the value of any mortgages or liens
on the asset assumed by the Partnership at the time of acquisition, excluding
points and prepaid interest."

The effect of adding this definition is that, even if a sale or disposition
of a portion of the Properties constituted 60% or more of the assets of the
Partnership, Limited Partners' consent to the sale or disposition would only be
required if such sale were below an amount which would return to the Limited
Partners the Acquisition Cost of such assets rather than below an amount which
would return to the Limited Partners the Unpaid Cumulative Return plus their
Adjusted Capital Contributions.

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<PAGE> 68
SECOND ALTERNATIVE AMENDMENTS

EXTENSION OF PARTNERSHIP TERM

The term of the Partnership would be extended by 2 years from December 31, 1999
to December 31, 2001. The extended termination date is identical to that
proposed for the New General Partner under the First Alternative Amendments.
This additional period may give the Partnership more latitude and flexibility to
negotiate a favorable sale or sales agreements to maximize the value of the
Properties to the Partnership and improve the return to the Limited Partners.
However, there can be no assurance that the Partnership will be able to realize
a better return to the Limited Partners than could be achieved by the General
Partner during the period prior to the expiration of the current term or in the
course of the subsequent dissolution and liquidation of the Partnership assets
pursuant to the Partnership Agreement. There is also a risk that the Properties
could further decrease in value during any such extended term.

The Partnership currently has a termination date of December 31, 1999. At that
point in time, if the term is not extended, the Partnership will be dissolved,
its assets liquidated and any distributions made in accordance with the
liquidation. Pursuant to the Partnership Agreement, all distributions in a
liquidation will be made in the following priority: first to any debts or
obligations of the Partnership (there currently are none); next to a reserve, as
determined by the General Partner, to facilitate the liquidation of all the
Partnership's assets; and, finally, to the partners.

For the plans of the General Partner with respect to the Property if the Second
Alternative Amendments are adopted See "THE GENERAL PARTNER - Plans of General
Partner if New General Partner Not Approved", above.

AUTHORIZATION OF FEES AND COMMISSIONS FOR GENERAL PARTNER

The Partnership Agreement will also be amended to provide that the General
Partner will be entitled to fees and commissions as described below, commencing
on January 1, 2000. The fee and commission structure is identical to that
proposed for the New General Partner under the First Alternative Amendments,
except that fees may not be earned by the General Partner prior to the
expiration of the current term of the Partnership Agreement on December 31,
1999.

(i) Management Fees

Under the existing Partnership Agreement, the General Partner was entitled
to receive a management fee pursuant to Section 4.5(b) as follows:

"(b) For the services to be performed by the General Partner in
connection with the management and administration of the Partnership,
the Partnership shall pay the General Partner an annual management fee
equal to 1/4 of 1% of the cost of the Partnership's properties,
commencing on the date hereof and continuing, with respect to each
property, until such time as the property is sold or improvement of the
property commences by the Partnership. In no event shall this fee, with
respect to any property, exceed a cumulative total of 2% of the
original cost of the property. The management fee shall be paid

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<PAGE> 69
to the General Partner for such services on conclusion of each calendar
quarter. If the Partnership does not have sufficient cash to pay the
management fee for any quarter or if the Partnership's reserves are
less than 1/2 of 1% of the Limited Partners' Capital Contributions,
such fee shall be accrued (without interest) as a debt of the
Partnership, payable out of Sale or Financing proceeds after the
Limited Partners have received distributions in a total amount equal to
the aggregate amount paid by them to the Partnership for their Units."

This provision resulted in payments to the General Partner of $24,886 per
year through 1996 for a total of $191,050. The General Partner has not received
the maximum fees currently authorized under the Partnership Agreement which
would amount to $207,244. This Amendment would approve additional fees for the
General Partner at an annual rate comparable to that originally authorized. The
fees would commence as of January 1, 2000 and continue through the end of the
extended Partnership term.

The effect of the Second Alternative Amendments would be that the
Partnership would pay an additional management fee to the General Partner of $0
in 1997, $0 in 1998, $0 in 1999, $26,500 in 2000 and $26,500 in 2001; provided
that if the Properties were sold in their entirety prior to December 31, 2001,
the Partnership would only pay the General Partner a pro rata portion of the
applicable annual fee to the date of such sale. Unlike the current provisions of
the Partnership Agreement which defer payment of management fees if reserves are
insufficient and the Limited Partners have not received distributions equalling
the amount they paid for their Units, the new management fees would be payable
prior to any such distribution.

(ii) Commissions

The Partnership Agreement currently contains the following restrictions on
the General Partner's right to receive commissions in connection with the sale
of Partnership property, in Section 4.5(c):

"(c) If the General Partner or its Affiliates provide a substantial
amount of the services in the sales effort for the sale of a
Partnership property, they may receive up to one-half of the
competitive real estate commission (that real estate or brokerage
commission paid for the purchase or sale of property which is
reasonable, customary and competitive in light of the size, type and
location of the property), not to exceed 3%, which amount shall not be
paid until the Limited Partners have received distributions equal to
their Capital Contributions plus the Cumulative Annual Return. If the
General Partner or its Affiliates participate with an independent
broker on such sale, the subordination requirement shall apply only to
the commission earned by the General Partner or its Affiliates. The
total compensation paid to all persons for the sale of a Partnership
property shall be limited to a competitive real estate commission, not
to exceed 10% of the contract price for the sale of the property, and
if such compensation to all Persons for the sale of a Partnership
property exceeds 6%, then, notwithstanding the other provisions of this
Section 4.5(c), the General Partner and its Affiliates shall not
receive any compensation for such sale and such compensation for such
sale shall be paid only to Persons other than the General Partner and
its Affiliates."

The Second Alternative Amendments would delete Sections 4.5(c) from the
Partnership Agreement in its entirety. The Amendments would also provide that
the total compensation paid to all persons, including the General Partner for
the sale of Partnership property shall be limited to a competitive real estate
commission or disposition fee not to exceed 10% of the contract sales price of
the Properties. Unlike the current provisions of the Partnership Agreement,
which defer payment of commissions until after the Limited Partners have
received distributions equal to their Capital Contributions plus the Cumulative
Annual Return, the General Partner will be able to realize the commission or
disposition fee immediately upon any such sale.

69
<PAGE> 70
The following table sets forth the proposed commissions and management
fees to be paid to the General Partners under the Second Alternative
Amendments.

COMMISSIONS AND MANAGEMENT FEES PAID TO GENERAL PARTNER UNDER SECOND
ALTERNATIVE AMENDMENTS

<TABLE>
<CAPTION>
TOTAL
POSSIBLE
TOTAL MANAGEMENT MANAGEMENT
YEAR AMOUNT OF COMMISSION COMMISSION FEE FEE
- ---- -------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1997 Competitive real estate Depends on $3,751/ annum *
commission/ disposition sale price of
fee not to exceed 10% of Property
the contract price for
the Property
- ----------------------------------------------------------------------------------------------------------
1998 Same as 1997 Same $0/ annum *
- ----------------------------------------------------------------------------------------------------------
1999 Same as 1997 Same $0/ annum *
- ----------------------------------------------------------------------------------------------------------
2000 Same as 1997 Same $26,500.00/
annum *
- ----------------------------------------------------------------------------------------------------------
2001 Same as 1997 Same $26,500.00/
annum *
- ----------------------------------------------------------------------------------------------------------
$56,051 **
</TABLE>

- - * or pro rata portion of fee if all the Properties are sold before the end of
the year.
- - ** or lesser amount, depending on a pro rata reduction if all the Properties
are sold before the end of the year.

EXCLUSIVE RIGHT TO SELL THE PROPERTIES

The Partnership Agreement currently provides in Section 4.3(g):

"(g) The Partnership shall not give to the General Partner or its Affiliates
an exclusive right to sell or an exclusive employment to sell property for
the Partnership"

The Second Alternative Amendments would delete Section 4.3(g) from the
Partnership Agreement and expressly provide that the General Partner or an
Affiliate would have the right to be given an exclusive right to sell or
exclusive employment to sell the Properties.
Section 4.2(a) "AUTHORITY OF GENERAL PARTNER" would be amended to add the
following provision:

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<PAGE> 71
"(xiii) Reserve to itself or an Affiliate or enter into a contract for the
exclusive right to sell or exclusive employment to sell property for the
Partnership."

The foregoing amendments to Sections 4.3(g) and 4.2(a) are designed both as an
incentive to the General Partner to continue as general partner and to
facilitate sales of the Properties.

ELIMINATION OF REQUIREMENT THAT LIMITED PARTNERS CONSENT TO SALE OF ALL OR
SUBSTANTIALLY ALL THE ASSETS OF THE PARTNERSHIP

The Partnership Agreement currently provides in Section 4.3(b):

The Second Alternative Amendments would delete this subsection 4.3(b) in
its entirety.

The effect of the deletion would be to permit the General Partner to sell
the Properties in one or more sales without limitation as to price, other than
general limitations imposed by its overall fiduciary duty to the Partnership and
its assets, without obtaining the consent of a majority in interest of the
Limited Partners. The deletion of this provision could not only result in sales
which would fail to return to the Limited Partners the Unpaid Cumulative Return
plus their Adjusted Capital Contributions, but could also result in the sale of
all or a portion of the Properties at below their most recent appraised values
discussed above under the heading "THE PROPERTIES -- Appraisals".

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<PAGE> 72
FEDERAL TAX CONSEQUENCES; LEGAL OPINION

The Partnership has obtained an opinion from legal counsel as of the date of
this Proxy Statement that neither of the Alternative Amendments would cause: (i)
a material adverse effect on the Limited Partners by reason of a termination of
the Partnership for Federal income tax purposes; or (ii) the Partnership to be
treated as an association taxable as a corporation for Federal income tax
purposes. If for some reason such legal counsel cannot restate the contemplated
opinion on the date of the Special Meeting, the General Partner would adjourn
the Special Meeting to a later date or cancel it.

ELIGIBLE UNITS

The presence, in person or by proxy, of Limited Partners holding more than 50%
of the total number of outstanding Units that Limited Partners hold will
constitute a quorum at the Special Meeting. An assignee of Units that the
General Partner has not admitted to the Partnership as a Limited Partner,
however, will be unable to vote at the Special Meeting. Such assignee's Units
will also not be considered outstanding for purposes of determining whether a
quorum exists at the Special Meeting or whether the Limited Partners approve one
of the Alternative Amendments. Additional Units acquired by a Limited Partner
with respect to which the General Partner has not admitted such Limited Partner
to the Partnership will also not be considered outstanding for purposes of the
Special Meeting and the Limited Partner will be unable to vote such Units.

The General Partner has admitted to the Partnership as Limited Partners all
assignees of Units as of the Record Date. As of the Record Date, there were
12,400 Units that Limited Partners held that were eligible to vote at the
Special Meeting.

VOTING

RECORD DATE. The General Partner has established the close of business on
September 15, 1997 as the Record Date for determining the Limited Partners
entitled to notice of, and to vote at, the Special Meeting and at any
adjournment thereof. On that date, the Partnership had issued and outstanding
12,400 Units. No matters other than the Alternative Amendments and certain
procedural matters may be discussed or voted upon at the Special Meeting. For
either of the sets of Alternative Amendments to take effect, the Limited
Partners must vote more than 50% of the total number of outstanding Units in
favor of one of the sets of Alternative Amendments at the Special Meeting.
Limited Partners will possess one vote for each Unit eligible to be voted that
they hold.

VOTE CONDITIONED ON ADOPTION OF ALL OF AMENDMENTS IN EITHER THE FIRST OR SECOND
ALTERNATIVE AMENDMENTS. Limited Partners may vote in favor of or against or
abstain from voting with respect to each of the amendments contained in the
proposed sets of Alternative Amendments. However, the adoption of any amendment
contained in a set of Alternative Amendments is conditioned upon the adoption of
all of the amendments within that set of Alternative Amendments. In order to be
adopted, all of the amendments contained in a set of Alternative Amendments must
receive at least 50% of the votes of Units eligible to vote.

For example, a Limited Partner may vote "FOR" an individual proposal in the
First Alternative Amendments and "AGAINST" the remaining proposals. Because the
adoption of the entire set of amendments is conditional on each individual
proposal receiving more than 50% of the votes of all the Units, it is possible
that the Limited Partner's vote against (or abstention from voting on) such
remaining proposals could have the effect of a vote against ALL of proposals in
the First Alternative Amendments if the proposals which the Limited Partner
votes against do not received the required vote for passage.

REQUIRED VOTE. In the event both sets of Alternative Amendments receive in
excess of 50% of the votes of limited partnership units eligible to vote, the
set of Alternative Amendments receiving the most votes in excess of 50% will be
adopted.

EQUAL NUMBER OF VOTES CAST. In the event of an equal number of votes being cast
sufficient for the adoption of both sets of Alternative Amendments, the General
Partner will by random drawing select the set of Alternative Amendments to be
adopted. In such random drawing, the words "First Alternative Amendments" and
"Second Alternative Amendments" will be written on separate ballots and placed
in separate sealed envelopes in a ballot box. A member of the management of
the General Partner, in the presence of an independent third party, who will be
either counsel to or auditors for the Partnership, will then draw the set of
Alternative Amendments to be adopted.

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<PAGE> 73

IF NEITHER ALTERNATIVE AMENDMENTS ADOPTED. If neither the First Alternative
Amendments nor the Second Alternative Amendments receives the affirmative vote
of a majority in interest of the Units, the General Partner will continue to act
as general partner of the Partnership in accordance with the Partnership
Agreement.

ABSTENTIONS/BROKER NON-VOTES. With respect to each set of the Alternative
Amendments, abstentions and broker non-votes will have the same effect as a vote
against approval because more than 50% of the total number of outstanding
eligible Units must approve one set of Alternative Amendments, rather than just
a majority of those eligible Units present at the Special Meeting.

APPRAISAL RIGHTS. Section 17-212 of the Delaware Revised Uniform Limited
Partnership Act provides that a partnership agreement may provide for
contractual appraisal rights for a partnership interest in a limited partnership
held by any class, group of partners, or partnership interests in connection
with the amendment of a partnership agreement. Dissenters' rights granted to
holders of corporate securities by state statute are not provided to limited
partners under the Delaware Revised Uniform Limited Partnership Act. The
Partnership Agreement does not provide for contractual appraisal rights in
connection with the adoption of either set of Alternative Amendments. Therefore,
in the event one of the sets of Alternative Amendments is adopted, Limited
Partners who oppose the adoption of such set of Alternative Amendments will not
have the right to dissent and demand payment in cash for the fair value of their
Units.

PROXIES. Proxy holders will vote the eligible Units represented by valid proxies
at the Special Meeting in accordance with the directions given on the Proxy Card
and this Proxy Statement concerning voting with respect to each set of
Alternative Amendments. Moreover, the proxy holders intend to vote such Units on
any procedural matters coming before the Special Meeting in accordance with
their best judgment. Unless indicated to the contrary thereon, the directions
given on a Limited Partner's Proxy Card will be for all of such Limited
Partner's eligible Units.

REVOCATION OF PROXIES. A Limited Partner may revoke its proxy at any time prior
to the proxy holder's voting of the Units to which such proxy applies by: (i)
submitting a proxy with a later date to the Information Agent, (ii) attending
the Special Meeting and delivering a written notice of revocation of the proxy
to the representative of the Information Agent present at the Special Meeting,
or (iii) delivering a written notice of revocation of the proxy to the

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<PAGE> 74
Information Agent at the address set forth herein, to be received by the
Information Agent on or before October 27, 1997.

LIST OF LIMITED PARTNERS. Limited Partners may obtain a list of the name and
last known address of each partner in the Partnership by submitting a written
request to Margaret T. Tamasitis, Secretary, Southeast Acquisitions, Inc., 250
King of Prussia Road, Radnor, PA 19087. Requests for lists must be accompanied
by payment of the reasonable costs incurred by the General Partner to reproduce
the list.

INFORMATION AGENT

The Information Agent may also participate in the solicitation of proxies. The
Partnership has retained the Information Agent to distribute the attached letter
from the General Partner, the attached notice of the Special Meeting, this Proxy
Statement, and the Proxy Card (the "Proxy Materials") and to collect and
tabulate completed Proxy Cards. Pursuant to the requirements of the Partnership
Agreement, the Information Agent has mailed these documents by certified mail to
each Limited Partner as of the Record Date at his record mailing address. As a
result, the Information Agent has also distributed the Proxy Materials to
various banks, brokerage firms, and other custodians, nominees, and fiduciaries
that may hold Units on behalf of their beneficial holders (collectively, the
"Nominee Holders"). The Partnership will also reimburse Nominee Holders for the
reasonable expenses that they incur when forwarding the Proxy Materials to the
beneficial owners of the Units. The Partnership will pay the Information Agent a
fee of approximately $3,300 for such services and reimburse it for its
out-of-pocket expenses. The Partnership will also reimburse Nominee Holders for
the reasonable expenses that they incur when forwarding the attached letter from
the General Partner and the Proxy Materials to the beneficial owners of the
Units.

SOLICITATIONS BY THE GENERAL PARTNER

The directors, officers, and employees of the General Partner may solicit
proxies for the Alternative Amendments by mail, personal interview, telephone,
facsimile transmission, or other means. They will receive no additional
compensation therefor.

OWNERSHIP OF UNITS

The following table sets forth certain information regarding the beneficial
ownership of the Units and the capital stock of the General Partner (the "SEA
Shares"), respectively, as of September 15, 1997 by: (i) all persons who are
beneficial owners of 5% or more of the Units or the SEA Shares, respectively,
(ii) all directors and executive officers of the General Partner, and (iii) all
directors and executive officers of the General Partner as a group. The General
Partner does not itself own any Units but does hold a partnership interest as a
general partner. An affiliate of the General Partner owns 313 Units or 2.52% of
the Units which it intends to vote in favor of both sets of Alternative
Amendments. The disclosure that no person is the beneficial owner of 5% or more
of the Units is based upon the Partnership not having received any Schedules 13D
or 13G to the contrary on or before September 15, 1997. Unless stated otherwise,
the persons named below possess sole voting and investment power with respect to
the securities set forth opposite their names.

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<PAGE> 75
<TABLE>
<CAPTION>
UNITS SEA SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------------------ ------ ------- ------ -------
<S> <C> <C> <C> <C>
Fidelity Mutual Life
Insurance Company
Fidelity Enterprises, Inc. 313 2.52% 100 100%
</TABLE>

EXPERTS

The financial statements of the Partnership at December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996 incorporated
herein by reference have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference herein
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing. Representatives of the firm of Ernst & Young LLP are
expected to be present in person or by telephone at the Special Meeting and will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.

AVAILABLE INFORMATION

The Partnership is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements, and other information that the Partnership has filed with the
Commission may be inspected and copied at the public reference facilities that
the Commission maintains at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549 and at the Commission's regional offices located at Room 3190, Northwest
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661 and 7 World
Trade Center, 13th Floor, New York, New York 10048. In addition, such reports,
proxy statements, and other information concerning the Partnership may be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549 at prescribed rates. Additionally, the Partnership's reports, proxy
statements, and other information filed with the Commission may also be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005. They are also available through the Commission's Web site
at http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Partnership hereby incorporates herein by reference the Financial
Information (as hereinafter defined) appearing in: (i) the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1996, Commission File No.
0-18454 (as amended on July 15, 1997) (ii) the Partnership's Quarterly Reports
on Form 10-Q, for the quarters ended March 31, 1997 and June 30, 1997 and (iii)
the Partnership's periodic reports, including amendments, if any, thereto filed
with the Commission under the Exchange Act after the date hereof but on or
before the Special Meeting. The Partnership also hereby incorporates herein by
reference any current reports filed with the Commission after the date hereof
but on or before the Special Meeting. Any statement contained herein or in a
document incorporated by reference herein, however, shall be deemed to be
modified or superseded for the purposes of this Proxy Statement to the extent
that a statement contained in a subsequently dated document that is considered
part of this Proxy Statement is inconsistent therewith. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement. The term "Financial Information"
shall mean any financial statements, supplementary financial information, and
management discussion and analysis of financial condition and results of
operations.

Upon request and without charge, the Partnership will send to any Limited
Partner a copy of any document incorporated herein by reference, excluding any
exhibits to such document. Any such request should be made to the General
Partner at the address or telephone number set forth on the back cover page of
this Proxy Statement. The General Partner will fulfill each such request by
mailing the requested document to the requesting Limited Partner by first class
mail within one business day after receiving the request. Requests should be
made to Margaret T. Tamasitis, Secretary, Southeast Acquisitions, Inc., 250 King
of Prussia Road, Radnor, PA 19087 (610) 964-7234.

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APPENDIX I

GLOSSARY OF DEFINED TERMS

The following terms shall have the meanings specified in this Appendix for the
purpose of the foregoing Proxy Statement.

"Acquisition Cost" means the price originally paid for a Partnership asset,
including the value of any mortgages or liens on the asset assumed by the
Partnership at the time of acquisition, excluding points and prepaid interest.

"Adjusted Capital Contributions" means an amount equal to the Capital
contributions made by the Limited Partners on the purchase of their Units,
reduced by an amount equal to all distributions (other than distributions of
Cash Flow) made to the Limited Partners under 3.1(a)(I) of the Partnership
Agreement, but in no event an amount less than zero.

"Affiliate" (or "Affiliated Person") of a specified Person means (i) and Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the specified Person; (ii) any
Person owning or controlling 10% or more of the outstanding voting securities of
the specified Person; (iii) any officer, director, or partner of the specified
Person; and (iv) if the specified Person is an officer, director or partner, any
company for which such a Person acts in any such capacity.

"Alternative Amendments" means the Alternative Amendments to the Partnership
Agreement of Southeast Acquisitions III L.P.

"Capital Contribution" means the total amount of money (and the initial Gross
Asset Value of any property other than money) contributed to the Partnership
(prior to the deduction of any selling commissions, selling allowances or
selling expenses) by any Partner or all the Partners (or the predecessor
holders of the Interests of any Partner or Partners).

"Cash Flow" means Partnership cash funds provided from operations (including
lease payments on net leases from builders and sellers) without deduction for
depreciation, but after deducting cash funds used to pay all other expenses,
debt payments, capital improvements and replacements.

"Closing Date" means the date on which subscriptions for all 4,225 Units are
accepted by the General Partner, and the subscribers therefor are admitted as
Limited Partners.

"Commission" means The Securities and Exchange Commission.

"Consulting Agreement" means the Consulting Agreement between Deborah J. Dillon,
and the General Partner Southeast Acquisitions, Inc. by which Ms. Dillon agreed
to act as Director of Operations under a performance-based consulting agreement.

"Cumulative Annual Return" means an amount equal to 10% per year simple interest
on the Adjusted Capital Contributions of the Limited Partners, calculated from
the earlier of (i) the end of the calendar quarter in which the Capital
Contributions were made or (ii) the Closing Date.

"Exchange Act" means The Securities and Exchange Act of 1934, as amended.

"Fidelity Mutual" means Fidelity Mutual Life Insurance Company, in
Rehabilitation, which indirectly wholly owns Southeast Acquisitions Inc. as its
subsidiary.

"Financial Information" means any financial statements, supplementary
information, and management discussion and analysis of financial condition and
results of operations.

"First Alternative Amendments" means the set of Alternative Amendments set forth
on pages B-1 through B-3 of Exhibit B to this Proxy Statement.

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<PAGE> 77
"General Partner" means Southeast Acquisitions, Inc., a Delaware corporation.

"Information Agent" means D.F. King & Co., Inc.

"Interest" means the entire ownership interest of a Partner in the Partnership
at any particular time, including the right of such Partner to any and all
benefits to which a Partner may be entitled as provided in this Agreement,
together with the obligations of such Partner to comply with this Agreement.
Reference to a majority or specified percentage in interest of the Limited
Partners means Limited Partners whose combined Units represent over 50% or at
least such specified percentage, respectively, of the Units of all Limited
Partners.

"Kaiser" means Kaiser Steel Corporation

"Limited Partners" means the Limited partners of Southeast Acquisitions III,
L.P.

"New General Partner" means Southern Management Group, LLC, a Tennessee Limited
Liability Company.

"Nominee Holders" means banks, brokerage firms, custodians, nominees, and
fiduciaries that may hold Units on behalf of beneficial owners in Southeast
Acquisitions III, L.P.

"Partner" or "Partners" means any General Partner or Limited Partner.

"Partnership Agreement" means the Restated Limited Partnership Agreement of
Southeast Acquisitions III L.P.

"Partnership" means Southeast Acquisitions III, L.P.

"Person" means any individual, partnership, corporation, trust or other entity.

"Phoenix" means Phoenix Investment Company, a publicly owned Atlanta based real
estate development company and investment firm.

"Property/Properties" means Property/ies acquired by Southeast Acquisitions III,
L.P., in the states of Georgia; Florida; South Carolina and Tennessee, either
referred to individually as "Property" or collectively as the "Properties"

"Proxy Card" means the Attachment to the Proxy Statement distributed to all
Limited Partners of Record for the purpose of instructing proxy-holders how to
vote a Limited Partner's Units if that Partner cannot attend the vote
personally.

"Proxy Materials" means collectively, the notice of the Special Meeting, the
Proxy Statement, and Proxy Card distributed by the Partnership through its
Information Agent.

"Proxy Statement" means materials distributed by the Partnership to all Limited
Partners concerning the vote on the Alternative Amendments.

"Record Date" means September 15, 1997.

"SCDOT" means the South Carolina Department of Transportation.

"SEA Shares" means the beneficial ownership of the public offering of 12, 4050
units of limited partnership interest, and the capital stock of the General
Partner.

"Second Alternative Amendments" means the set of Alternative Amendments set
forth on pages B-4 through B-6 of Exhibit B to this Proxy Statement.

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<PAGE> 78

"SMG" means Southern Management Group, LLC.

"Special Meeting" means the meeting held at 2 p.m. (Central Daylight Savings
Time) on October 28, 1997 to consider and vote upon alternative amendments
to the Partnership Agreement.

"SV" means Southeast Venture Companies.

"SVC" means Southeast Venture Corporation, Inc., a Tennessee corporation which
owns 49% of SMG.

"Units" means the Partnership's public offering of 12,400 units of limited
partnership interest.

"Unpaid Cumulative return" as of any date is an amount equal to the Cumulative
Annual Return as of such a date less the sum of all distributions to the Limited
Partners on or before such date under Section 3.1(a)(ii) of the Restated Limited
Partnership Agreement of Southeast Acquisitions III, L.P. or, if made from Cash
Flow, under Section 3.1(a)(i) of the Restated Limited Partnership Agreement, but
in no event an amount less than zero.

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<PAGE> 79
EXHIBIT A

PARTNERSHIP AGREEMENT

<PAGE> 80

TABLE OF CONTENTS

SECTION TITLE PAGE
- ------- ----- ----
<S> <C>
INTRODUCTION ............................................................ A-1

ARTICLE I ORGANIZATION ............................................. A-1
1.1 Continuation ............................................. A-1
1.2 Name ..................................................... A-1
1.3 Term ..................................................... A-1
1.4 Place of Business ........................................ A-1
1.5 Registered Office and Registered Agent ................... A-1
1.6 Business ................................................. A-1

ARTICLE II PARTNERS AND CAPITAL ..................................... A-1
2.1 General Partner .......................................... A-1
2.2 Units .................................................... A-2
2.3 Capital Contributions of Limited Partners ................ A-2
2.4 Limited Partners ......................................... A-2
2.5 Partnership Capital ...................................... A-2
2.6 Liability of Partners .................................... A-2
2.7 Capital Accounts ......................................... A-2

ARTICLE III DISTRIBUTIONS, PROFITS AND LOSSES ........................ A-3
3.1 Cash Distributions ....................................... A-3
3.2 Profits and Losses ....................................... A-3
3.3 Allocations and Distributions Among Limited Partners ..... A-4
3.4 Other Allocations ........................................ A-4
3.5 Syndication Expenses ..................................... A-5
3.6 Recharacterization of Fees ............................... A-5
3.7 Income Offset ............................................ A-5
3.8 Minimum Gain Chargeback .................................. A-5

ARTICLE IV MANAGEMENT ............................................... A-5
4.1 Exclusive Management Rights of General Partner ........... A-5
4.2 Authority of General Partner ............................. A-5
4.3 Restrictions on Authority of General Partner ............. A-6
4.4 Duties and Obligations of General Partner ................ A-8
4.5 Compensation of General Partner .......................... A-9
4.6 Partnership Expenses ..................................... A-9
4.7 Other Business of Partners ............................... A-10
4.8 Limitation on Responsibility of General Partner;
Indemnification .......................................... A-11

ARTICLE V DISSOLUTION, CONTINUATION AND LIQUIDATION ................ A-12
5.1 Dissolution .............................................. A-12
5.2 Continuation ............................................. A-12
5.3 Valuation of Interest of General Partner ................. A-12
5.4 Liquidation .............................................. A-13

ARTICLE VI TRANSFER OF UNITS ........................................ A-14
6.1 Assignment of Units ...................................... A-14
6.2 Substituted Limited Partners ............................. A-14
6.3 Death, Incompetency or Bankruptcy of Limited Partners .... A-15
6.4 Transfer Fee ............................................. A-15

ARTICLE VII ACCOUNTING AND FISCAL MATTERS ............................ A-15
7.1 Partnership Records ...................................... A-15
7.2 Accounting and Fiscal Year ............................... A-15
7.3 Bank Accounts and Investments ............................ A-15
7.4 Reports .................................................. A-15

ARTICLE VIII MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS ........... A-16
8.1 Meetings ................................................. A-16
8.2 Voting Rights of Limited Partners ........................ A-17

ARTICLE IX MISCELLANEOUS ............................................ A-17
9.1 Appointment of General Partner as Attorney-in-Fact ....... A-17
9.2 Amendments ............................................... A-18
9.3 Security Interest and Right of Setoff .................... A-19
9.4 Ownership by Limited Partner of Interest in General
Partner or Affiliates .................................... A-19
9.5 Parties Bound ............................................ A-19
9.6 Governing Law; Construction .............................. A-19

ARTICLE X DEFINITIONS .............................................. A-19
10.1 Defined Terms ............................................ A-19
</TABLE>

<PAGE> 81

RESTATED LIMITED PARTNERSHIP AGREEMENT
OF SOUTHEAST ACQUISITIONS III, L.P.

This Restated Limited Partnership Agreement is made as of the 1st day of
June 1989, by Southeast Acquisitions, Inc., a Delaware corporation, as general
partner, F M Initial, Inc., as the initial limited partner, and the Persons who
on or after the execution of this Agreement are admitted as limited partners of
the Partnership.

INTRODUCTION

On November 4, 1988, Southeast Acquisitions, Inc., as general partner, and
F M Initial, Inc. ("FMI"), as initial limited partner, formed a Delaware limited
partnership (the "Partnership") named Southeast Acquisitions III, L.P. by the
filing of a certificate of limited partnership in the Office of the Secretary of
State of Delaware. The parties hereto desire to effect the withdrawal of FMI as
initial limited partner of the Partnership, the admission of the purchasers of
the Partnership's Units of limited partnership interest as the limited partners
of the Partnership and the amendment of the agreement among the Partners to read
in its entirety as set forth in Articles I through X hereof. To accomplish this,
it is agreed that:

1. The Persons whose subscriptions for Units have been accepted by the
General Partner and who are reflected in the records of the Partnership as
purchasing Units on the date hereof are hereby admitted as limited partners of
the Partnership.

2. FMI hereby withdraws as a limited partner of the Partnership and is
released from all its obligations to the Partnership as the initial limited
partner. The Partnership shall promptly return FMI's capital contribution as
initial limited partner.

3. The agreement among the Partners of the Partnership is hereby amended
to read in its entirety as set forth in Articles I through X hereof.

ARTICLE I

ORGANIZATION

1.1. CONTINUATION. The Partnership shall continue as a limited partnership
under the Delaware Revised Uniform Limited Partnership Act.

1.2. NAME. The name of the Partnership shall be Southeast Acquisitions
III, L.P., or such other name as may be selected by the General Partner, who
shall give notice of any change to the Limited Partners.

1.3. TERM. The Partnership shall exist for a term ending December 31,
1999, at which time it shall be dissolved, unless sooner dissolved as provided
in this Agreement.

1.4. PLACE OF BUSINESS. The principal place of business of the Partnership
shall be at 250 King of Prussia Road, Radnor, Pennsylvania 19087, or at another
location selected by the General Partner, who shall give notice of any change to
the Limited Partners. The Partnership may have such additional offices or
places of business as the General Partner may determine.

1.5. REGISTERED OFFICE AND REGISTERED AGENT. The Partnership's registered
office in the State of Delaware and its registered agent at such office shall
be determined by the General Partner.

1.6. BUSINESS. The business of the Partnership is to acquire, hold,
maintain, develop, operate, improve, lease, finance, refinance, sell, dispose
of, borrow money in connection with, and to otherwise deal with, real estate,
and to engage in any other activities related or incidental thereto. The
Partnership shall not engage in any other business or activity.

ARTICLE II

PARTNERS AND CAPITAL

2.1. GENERAL PARTNER. The General Partner is Southeast Acquisitions, Inc.,
a Delaware corporation, 250 King of Prussia Road, Radnor, Pennsylvania 19087.
The General Partner has contributed

A-1
<PAGE> 82

$1,000 to the capital of the Partnership. Except as set forth in Section 5.4(e),
the General Partner shall not be required to make any additional contribution to
the capital of the Partnership.

2.2. UNITS. The Partnership is authorized to offer and sell not less than
6,215 and not more than 12,400 Units of limited partnership interest and to
admit as Limited Partners the Persons who contribute cash to the capital of the
Partnership as the purchase price for the Units The Partnership may sell
fractional Units, in which event the payment for (and the rights and other
obligations attributable to) each fractional Unit will be the pro rata portion
of those indicated for a whole Unit.

2.3. CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS. Each Limited Partner shall
make a Capital Contribution of $1,000 as the purchase price for each Unit which
he purchases from the Partnership, except that, as set forth in the Prospectus,
the General Partner and its Affiliates may purchase up to an aggregate of
$1,000,000 of Units for $915 per Unit. The Capital Contributions of the Limited
Partners shall be made in cash. Except as required by the Act, each Unit shall
be fully paid and non-assessable, and no assessments for payments by the Limited
Partners will be made by the General Partner.

2.4. LIMITED PARTNERS. (a) The Limited Partners shall be the Persons
identified from time to time as Limited Partners on the records of the
Partnership and shall be admitted as Limited Partners when their admission is
consented to by the General Partner and reflected in the records of the
Partnership.

(b) Purchasers of Units from the Partnership shall be admitted as Limited
Partners not later than 15 days after the release from impound of their funds to
the Partnership. The General Partner shall determine whether subscriptions will
be accepted or rejected within 30 days of their receipt; if a subscription is
rejected, the subscription funds shall be returned to the subscriber within ten
business days thereafter.

2.5. PARTNERSHIP CAPITAL. No Partner shall be paid interest on any
contribution to the capital of the Partnership. The Partnership shall not redeem
or repurchase any Units. No Partner shall have the right to reduce, withdraw, or
receive any return of, or on, his contribution to the capital of the
Partnership, except as provided in this Agreement. No Partner shall have the
right to bring an action for partition against the Partnership.

2.6. LIABILITY OF PARTNERS. (a) A Limited Partner, as such, shall be
liable only to make his Capital Contribution for his Units and shall not be
required to lend any funds to the Partnership or, after his Capital Contribution
has been paid, to make any further Capital Contribution to the Partnership or to
repay to the Partnership, any Partner or any creditor of the Partnership any
portion of any negative balance of his Capital Account. However, in accordance
with Delaware law, a Limited Partner may, under certain circumstances, be
required to return to the Partnership amounts previously distributed to him. If
any Limited Partner becomes obligated to make any such return, such obligation
shall be the obligation of the Limited Partner and not of the General Partner.

(b) The General Partner shall have no personal liability for the repayment
of the Capital Contribution of any Limited Partner or to repay to the
Partnership any portion or all of any negative balance of its, or any other
Partner's, Capital Account, except as provided in Section 5.4(e).

2.7. CAPITAL ACCOUNTS. (a) A Capital Account shall be established for each
Partner. To each Partner's Capital Account there shall be credited such
Partner's contributions to the capital of the Partnership, such Partner's
distributive share of Profits, and any items in the nature of income or gain
that are specially allocated pursuant to Sections 3.7 and 3.8, and the amount of
any Partnership liabilities that are assumed by such Partner or that are secured
by any Partnership property distributed to such Partner. To each Partner's
Capital Account there shall be debited distributions to such Partner pursuant to
this Agreement, such Partner's distributive share of Losses, any items in the
nature of expenses or losses that are specially allocated pursuant to Section
3.5, and the amount of any liabilities of such Partner that are assumed by the
Partnership or that are secured by any property contributed by such Partner to
the Partnership.

(b) If any Interest in the Partnership is transferred in accordance with
this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred Interest.

(c) The provisions of this Agreement relating to the maintenance of
Capital are intended to comply with Treasury Regulations Section 1.704-1(b),
and shall be interpreted and applied in a manner

A-2
<PAGE> 83

consistent with such Regulation. If the General Partner determines that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed in order to comply with such Regulation, the
General Partner may make such modification, provided that it is not likely to
have a material effect on the distribution to any Partner pursuant to Section
5.4(a) on the liquidation of the Partnership or of a Partner's interest therein.
The General Partner shall adjust the amounts debited or credited to Capital
Accounts with respect to (i) any property contributed to the Partnership or
distributed to the Partners, and (ii) any liabilities that are secured by such
contributed or distributed property or that are assumed by the Partnership or
the General Partner, in the event the General Partner determines such
adjustments are necessary or appropriate pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv). The General Partner also shall make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Treasury Regulations Section 1.704-1(b).

ARTICLE III

DISTRIBUTIONS, PROFITS AND LOSSES

3.1. CASH DISTRIBUTIONS. (a) Subject to Section 3.11(b), cash
distributions shall be made in the following order of priority:

(i) 100% to the Limited Partners (in proportion to their Units)
until the Limited Partners have received aggregate distributions under
this Section 3.1(a)(i) in a total amount equal to the Capital
Contributions made by the Limited Partners on the purchase of their Units;

(ii) 100% to the Limited Partners (in proportion to their Units)
until the Limited Partners have received an amount equal to the Unpaid
Cumulative Return as of the end of such quarter;

(iii) then 70% to the Limited Partners (in proportion to their
Units) and 30% to the General Partner;

(b) Amounts distributed in connection with the liquidation of the
Partnership or a Partner's Interest (within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)) shall be distributed in accordance with the
Partner's positive Capital Account as adjusted for all operations and
transactions preceding such distribution.

(c) Any amounts withheld pursuant to Section 4.2(a)(xii) shall be treated
as amounts distributed to the Partners for all purposes under this Agreement.
Amounts treated as distributed to a Partner pursuant to this Section 3.1(c)
shall reduce the amounts otherwise distributed to such Partner pursuant to this
Agreement.

(d) Notwithstanding Section 3.1(a), the Limited Partners will receive
100% of all distributions from Cash Flow, if any

3.2. PROFITS AND LOSSES. (a) Profits and Losses of the Partnership shall
be determined and allocated for each fiscal year of the Partnership as of the
end of such year. Notwithstanding anything to the contrary in this Section 3.2,
for each fiscal year at least 1% of the Partnership's Profits or Losses, as the
case may be, shall be allocated to the General Partner; and for 1989 Profits or
Losses allocable pursuant to Section 3.2(b) or (c) to the Limited Partners shall
be ratably apportioned to and among each day for the period such items are being
apportioned and the Limited Partners' Profit or Losses for each day shall be
apportioned among the Limited Partners in accordance with their respective
number of Units on such day:

(b) Profits for a fiscal year not arising from a Sale shall be allocated
in the following order of priority:

(i) Profits shall be allocated to each Partner in an amount equal to
the amount of cash distributed to him for that year. If the Profits
available to be so allocated are less than the amount of cash distributed
to all Partners for such year, then such Profits shall be allocated to the
Partners in proportion to their respective shares of such cash.

(ii) Profits shall be allocated to each Partner in an amount equal
to the negative amount, if any, of his Capital Account. If the Profits
available to be so allocated are less than the sum of all Partners'

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<PAGE> 84

negative Capital Accounts, then such Profits shall be allocated to the
Partners in proportion to the negative amounts of their respective Capital
Accounts.

(iii) Any remaining Profits shall be allocated in the same proportions
that cash distributions equal to such remaining Profits would be
distributed pursuant to Section 3.1(a) without regard to Section 3.1(b).

(c) Losses not arising from a Sale shall be allocated 99% to the Limited
Partners (in proportion to their Units) and 1% to the General Partner.

(d) Profits arising from a Sale shall be allocated in the following order
of priority:

(i) Profits shall be allocated to each Partner in an amount equal to
the negative amount, if any, of his Capital Account. If the Profits
available to be so allocated are less than the sum of all Partners'
negative Capital Accounts, then such Profits shall be allocated to the
Partners in proportion to the negative amounts of their respective Capital
Accounts.

(ii) An amount of Profits equal to the excess of (A) the Sale
proceeds that would be distributed to the Partners with respect to such
Sale pursuant to Section 3.1(a) (without regard to Section 3.1(b)) over
(B) the aggregate Capital Accounts (as adjusted to reflect the allocation
of Profits pursuant to Section 3.2(d)(i)) of all Partners shall be
allocated among the Partners in proportion to their respective shares of
such excess.

(iii) Any remaining Profits shall be allocated in the same
proportions that cash distributions equal to such remaining Profits would
be distributed pursuant to Section 3.1(a) without regard to Section
3.1(b).

(e) Losses arising from a Sale shall be allocated in the following order
of priority:

(i) Losses shall be allocated to each Partner in an amount equal to
the positive amount, if any, of his Capital Account. If the Losses
available to be so allocated are less than the sum of all Partners'
positive Capital Accounts, then such Losses shall be allocated to the
Partners in proportion to the positive amounts of their respective Capital
Accounts.

(ii) Any remaining Losses shall be allocated 99% to the Limited
Partners (in proportion to their Units) and 1% to the General Partner.

3.3. ALLOCATIONS AND DISTRIBUTIONS AMONG LIMITED PARTNERS. (a) Except as
provided in Section 3.3(b), Profits and Losses not arising from a Sale allocable
to the Limited Partners shall be allocated, and cash distributions not arising
from a Sale or Financing distributable to the Limited Partners shall be
distributed, to the Persons recognized as the holders of Units as of the last
day of the fiscal period for which such allocation or distribution is to be
made.

(b) Profits or Losses not arising from a Sale for a fiscal year allocable
to any Unit which has been transferred during such year shall be divided and
allocated between the transferor and the transferee based on the number of
quarterly periods that each was recognized as the holder of the Unit, without
regard to whether Partnership operations during particular quarterly periods of
such fiscal year produced Profits or Losses or cash distributions.

(c) Profits or Losses arising from a Sale allocable to the Limited
Partners shall be allocated, and all Sale or Financing proceeds distributable to
the Limited Partners shall be distributed, to the Persons recognized as the
holders of Units as of the date of such Sale or Financing, except that Profits
or Losses which are attributable to, and Sale proceeds which represent, Sale
proceeds not received by the Partnership as cash on a Sale but later received as
a result of an installment or other deferred sale, shall be allocated or
distributed, as the case may be, to the Persons recognized as the holders of
Units as of the date such Sale proceeds are received by the Partnership.

3.4. OTHER ALLOCATIONS. Any allocations not otherwise provided for shall
be divided among the Partners in the same proportions as they share Profits or
Losses, as the case may be, for the period.

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3.5. SYNDICATION EXPENSES. "Syndication Expenses" means all expenditures
classified as syndication expenses pursuant to Treasury Regulations Section
1.709-2(b). Syndication Expenses shall be taken into account under this
Agreement at the time they would be taken into account under the Partnership's
method of accounting if they were deductible expenses. Syndication Expenses
shall be specially allocated to the Limited Partners in proportion to their
Units.

3.6. RECHARACTERIZATION OF FEES. Any fees paid to the General Partner or
any of its Affiliates which are disallowed as deductible expenses by the
Internal Revenue Service shall constitute special allocations of gross income to
the General Partner for income tax purposes.

3.7. INCOME OFFSET. If any Partners unexpectedly receive any adjustments,
allocations, or distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4) or (5) or (6), Profits shall be specially allocated to
each such Partner in an amount and manner sufficient to eliminate the deficit
balances in their Capital Accounts created thereby as quickly as possible. Any
special allocations of items of income or gain pursuant to this Section 3.7
shall be taken into account in computing subsequent allocations of Profits
pursuant to this Article III, so that the net amount of any items so allocated
and the Profits, Losses, and all other items allocated to each Partner pursuant
to this Article III shall, to the extent possible, be equal to the net amount
that would have been allocated to each such Partner pursuant to this Article III
if such unexpected adjustments, allocations or distributions had not occurred.

3.8. MINIMUM GAIN CHARGEBACK. In the event of a net decrease in
Partnership "minimum gain" (within the meaning of Section 1.704-1(b)(4)(iv)(C)
of the Treasury Regulations) during any fiscal year of the Partnership, all
Partners with a deficit Capital Account balance at the end of such year
(excluding from each Partner's deficit Capital Account balance any amount that
such Partner is obligated to restore hereunder) will be allocated, before any
other allocation, Profits for such year (and, if necessary, subsequent taxable
years) in the amount and in the proportions needed to eliminate such deficits as
quickly as possible.

ARTICLE IV

MANAGEMENT

4.1. EXCLUSIVE MANAGEMENT RIGHTS OF GENERAL PARTNER. Subject to this
Agreement and the Act, the General Partner shall have complete authority over
and exclusive control and management of the business and affairs of the
Partnership. The Limited Partners, as such, shall not take part in, or at any
time interfere in any manner with, the management, conduct or control of the
Partnership's business or operations and shall have no right or authority to act
for or bind the Partnership. Except as expressly provided in Sections 5.2 and
8.2, the Limited Partners have no right to remove the General Partner, to compel
the General Partner's withdrawal from the Partnership or to elect other General
Partners.

4.2. AUTHORITY OF GENERAL PARTNER. (a) Subject only to this Agreement and
the Act, in connection with the management of the Partnership, the General
Partner shall have and may exercise all of the rights, powers and privileges of
a general partner of a partnership without limited partners, including without
limitation the right, if, as and when the General Partner may deem necessary or
appropriate for the business of the Partnership, on behalf of, and at the
expense of, the Partnership to:

(i) Acquire, through purchase, lease, exchange or otherwise, or
otherwise make investments in, any real or personal property.

(ii) Operate, maintain, develop, improve, finance, refinance, own,
grant options with respect to, sell, convey, assign, mortgage, exchange or
lease and have constructed any real estate and any personal property.

(iii) Execute any agreements, contracts, documents, certifications
and other instruments, and any deeds, leases, mortgages, mortgage notes,
bills of sale, contracts or other instruments purporting to convey,
exchange or encumber the real or personal property of the Partnership.

(iv) Borrow money and issue evidences of indebtedness and secure the
same by mortgage, pledge or other lien on any properties or other assets
of the Partnership.

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(v) Prepay in whole or in part, refinance, recast, increase, modify
or extend any mortgage affecting the Partnership's property and in
connection therewith execute any extensions, consolidations, modifications
or renewals of mortgages on the property.

(vi) Require in all Partnership obligations that the General Partner
shall not have any personal liability thereon but that the person or
entity contracting with the Partnership is to look solely to the
Partnership and its assets for satisfaction; provided, however, that the
inclusion of such provisions shall not affect the cost of the service or
material being supplied.

(vii) Engage in any kind of activity and perform and carry out
contracts of any kind.

(viii) Deal with, or otherwise engage in business with, any Person
who has dealt with or engaged in business with or may in the future deal
with or engage in business with the General Partner or its Affiliates. No
such dealing or engaging in business may involve any arrangement which
would circumvent any of the provisions of this Agreement, including the
restrictions against dealing with the General Partner or its Affiliates.

(ix) Execute a Dealer Manager Agreement with First Radnor Equities,
Inc. (an Affiliate of the General Partner) pursuant to which said firm
will assist the Partnership in the sale of Units and be paid selling
commissions and allowances therefor and be indemnified against certain
liabilities.

(x) Establish, maintain, increase, decrease and eliminate reserves
for working capital and contingent liabilities and to pay taxes,
insurance, debt service, repairs, replacements, renewals or other
obligations, costs or expenses.

(xi) Make and revoke any election permitted to the Partnership by
any taxing authority in such manner as the General Partner, in its sole
discretion, may decide.

(xii) Withhold income taxes as required by, and otherwise comply
with and take actions necessary as a result of, the Code or any state or
other tax law requiring withholding.

(b) Any Person dealing with the Partnership or the General Partner may
rely on a certificate signed by the General Partner as to (i) the identity of
any General Partner or Limited Partner; (ii) the existence or non-existence of
any facts which constitute a condition precedent to acts by the General Partner
or in any other manner germane to the affairs of the Partnership; (iii) the
Persons who are authorized to execute and deliver any instrument or document for
the Partnership; or (iv) any act or failure to act by the Partnership or as to
any other matter involving the Partnership or any Partner.

4.3. RESTRICTIONS ON AUTHORITY OF GENERAL PARTNER. (a) Without the Consent
of all the Limited Partners the General Partner shall not have the authority to
(i) do any act in contravention of this Agreement or the Act; (ii) possess
Partnership property, or assign its rights in specific Partnership property, for
other than a Partnership purpose; (iii) admit a Person as a General or Limited
Partner, except as provided in this Agreement; (iv) knowingly perform any act
that would subject any Limited Partner to liability as a general partner in any
jurisdiction; or (v) alter the business of the Partnership as set forth in
Section 1.6 or cause the Partnership to purchase any real estate other than as
provided in the Prospectus.

(b) Without the Consent of a majority in interest of the Limited Partners,
the General Partner shall not have the authority to sell all or substantially
all the assets of the Partnership in a single sale, except that the General
Partner may sell such assets without such consent (A) in connection with the
liquidation of the Partnership under Section 5.4 or (B) if the net proceeds of
such sale, when distributed in accordance with Section 3.1, will be sufficient
to provide the Limited Partners with distributions equal to the Unpaid
Cumulative Return plus their Adjusted Capital Contributions.

(c) The Partnership shall not purchase or lease property in which the
General Partner or its Affiliates have an interest except as set forth under
"The Properties" in the Prospectus.

(d) The Partnership shall not sell or lease property to the General
Partner or its Affiliates.

(e) The Partnership shall not acquire property from a real estate program
in which the General Partner or its Affiliates have an interest.

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(f) The Partnership shall not acquire property in exchange for Units.

(g) The Partnership shall not give the General Partner or its Affiliates
an exclusive right to sell or exclusive employment to sell property for the
Partnership.

(h) The Partnership shall not pay, directly or indirectly, a commission or
fee (except as permitted under this Agreement) to the General Partner or its
Affiliates in connection with the reinvestment or distribution of the proceeds
of the resale, exchange, or refinancing of the Partnership's properties.

(i) No rebates or give-ups may be received by the General Partner or its
Affiliates, nor may the General Partner or its Affiliates participate in any
reciprocal business arrangements which would circumvent any of the provisions of
this Agreement, including the restrictions against dealing with the General
Partner or its Affiliates.

(j) The General Partner and its Affiliates shall not directly or
indirectly pay or award any commissions or other compensation to any Person
engaged by a potential Limited Partner for investment advice as an inducement to
such adviser to advise the purchase of Units; however, this Section 4.3(j) shall
not prohibit the normal sales commissions and allowances payable to a registered
broker-dealer or other properly licensed Person for selling Units.

(k) The funds of the Partnership shall not be commingled with the funds of
any other Person.

(1) The Partnership shall not invest in real estate limited partnerships,
general partnerships or joint ventures.

(m) The Partnership shall not make loans to the General Partner or its
Affiliates.

(n) Neither the General Partner nor its Affiliates shall lend money to the
Partnership if interest rates and other financing charges and fees in connection
with such loan are in excess of the amount which would be charged by unrelated
lending institutions on comparable loans for the same purpose (in the locality
of the property if the loan is made in connection with a particular property) or
make loans with a prepayment charge or penalty which are secured by either a
first or junior or all-inclusive or wraparound trust deed, mortgage or
encumbrance except to the extent that such prepayment charge or penalty is
attributable to an underlying encumbrance.

(o) Neither the General Partner nor its Affiliates shall provide Financing
to the Partnership. For purposes of this Section 4.3(o), "Financing" is
indebtedness encumbering Partnership properties or incurred by the Partnership,
the principal amount of which is scheduled to be paid over a period of not less
than 48 months, and not more than 50 percent of the principal amount of which is
scheduled to be paid during the first 24 months.

(p) Neither the General Partner nor its Affiliates shall enter into an
agreement or contract with the Partnership for the General Partner or its
Affiliates to develop or construct improvements on the Partnership's properties.

(q) Cash Flow from operations and Sale or Financing proceeds shall not be
used to acquire real property.

(r) Other than as authorized in this Agreement or the Prospectus, the
General Partner shall not enter into any agreement, contract or arrangement on
behalf of the Partnership providing for compensation to the General Partner or
its Affiliates for performing services or selling or leasing goods to the
Partnership.

(s) The General Partner shall not voluntarily withdraw, retire or resign
as general partner of the Partnership, or assign, transfer or otherwise dispose
of all or any part of its general partner interest (and no assignee or
transferee of all or any part of the general partner interest of a General
Partner shall have any right to become a General Partner) unless:

(i) the General Partner obtains the Consent of a majority in
interest of the Limited Partners;

(ii) in the case of withdrawal, retirement or resignation, if the
General Partner is the only general partner of the Partnership, the
General Partner provides an additional or successor general partner

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who is approved by the Consent of a majority in interest of the Limited
Partners and who agrees in writing to be bound by this Agreement; and

(iii) the Partnership receives an opinion of independent counsel to
the effect that such withdrawal, retirement, resignation, assignment,
transfer or other disposition would not subject the Partnership to federal
income taxation as an association taxable as a corporation rather than as
a partnership and would not have a material adverse effect on the Limited
Partners by reason of a termination of the Partnership for federal income
tax purposes.

(t) In connection with the borrowing of money, recourse for the payment of
which is limited solely to property of the Partnership, no lender shall be
granted or acquire, at any time as a result of making such a loan, any direct or
indirect interest in the profits, capital or property of the Partnership other
than as a secured creditor.

(u) The General Partner and its Affiliates shall not provide insurance
brokerage services in connection with obtaining insurance on the Partnerships
property.

(v) Following the Final Closing the total amount of indebtedness incurred
by the Partnership shall at no time exceed the sum of 85% of the aggregate
Purchase Price of all properties which have not been refinanced, and 85% of the
aggregate fair market value of all refinanced properties, as determined by the
lender as of the date of refinancing. For purposes of this Section 4.3(v) only,
"indebtedness" shall include the principal of any loan together with any
interest that may be deferred pursuant to the terms of the loan agreement which
exceeds 5% per annum of the principal balance of such indebtedness (excluding
contingent participations in income and/or appreciation in the value of the
Partnership property); and shall exclude any indebtedness incurred by the
Partnership for necessary working capital.

4.4. DUTIES AND OBLIGATIONS OF GENERAL PARTNER. (a) The General Partner
shall devote to the Partnership such time as may be necessary for the proper
performance of its duties hereunder, but the officers, directors and employees
of the General Partner shall not be required to devote their full time to the
performance of such duties.

(b) The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in the General Partner's possession or control. The General Partner shall not
employ, or permit another to employ, such funds or assets in any manner except
for the exclusive benefit of the Partnership. The Limited Partners may not
contract away the fiduciary duty owed to them by the General Partner under the
common law.

(c) The General Partner shall commit at least 85% of the Limited Partners'
Capital Contributions toward Investment in Property. If the total amount of
Front-End Fees must be reduced in order to enable the Partnership to commit this
percentage of the Limited Partners' Capital Contributions to Investment in
Property, the General Partner shall, and shall cause its Affiliates or other
Persons to, reimburse the Partnership for such amount of Front-End Fees received
by them as is necessary to enable the Partnership to meet such requirement.

(d) The General Partner shall establish initial reserves (for normal
repairs, replacements and contingencies) out of the Limited Partners' Capital
Contributions in an amount not less than 3% of the gross proceeds from the sale
of the Units and thereafter shall maintain reserves in such amounts as it deems
appropriate from time to time.

(e) The General Partner shall use its best efforts to maintain at all
times a net worth at a level sufficient to enable the Partnership either to
avoid having the corporate characteristic of limited liability for federal
income tax purposes or to avoid being treated as an association taxable as a
corporation for federal income tax purposes.

(f) The General Partner shall take all action which may be necessary or
appropriate for the continuation of the Partnership's valid existence as a
limited partnership under the Act.

(g) The General Partner shall prepare or have prepared and shall file on
or before the due date (or any extension thereof) any federal, state or local
tax returns required to be filed by the Partnership. The General Partner shall
cause the Partnership to pay any taxes payable by the Partnership.

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(h) The General Partner shall be the "tax matters partner" under the Code
and shall manage administrative tax proceedings conducted at the Partnership
level by the Internal Revenue Service with respect to Partnership matters.
However, any Partner shall have the right to participate in such administrative
proceedings relating to the determination of partnership items at the
Partnership level. Expenses of such administrative proceedings undertaken by the
tax matters partner will be paid by the Partnership subject to any requirements
of Section 4.8. Each Limited Partner who elects to participate in such
proceedings will be responsible for any expenses incurred by him in connection
with such participation. The cost of any resulting audits or adjustments of a
Limited Partner's tax return, will be borne solely by the affected Limited
Partner.

(i) The General Partner shall use its best efforts to obtain and keep in
force during the term hereof such public liability insurance in favor of the
Partnership with such insurers and in such amounts as the General Partner deems
advisable, but in amounts not less (and with deductible amounts not greater)
than those customarily maintained with respect to properties comparable to the
Partnership's property.

(j) The General Partner shall use its best efforts to assure that the
Partnership will not be deemed an investment company as such term is defined in
the Investment Company Act of 1940.

4.5. COMPENSATION OF GENERAL PARTNER. (a) Subject to Section 4.4(c), the
Partnership shall pay to the General Partner in compensation for services
rendered in evaluating, selecting and acquiring the Partnership's properties, an
Acquisition Fee equal to 2.84% of the Limited Partners' Capital Contributions.
Such fee shall be paid at each closing of the sale of Units.

(b) For the services to be performed by the General Partner in connection
with the management and administration of the Partnership, the Partnership shall
pay the General Partner an annual management fee equal to 1/4 of 1 % of the cost
of the Partnership's properties, commencing on the date hereof and continuing,
with respect to each property, until such time as the property is sold or
improvement of the property commences by the Partnership. In no event shall this
fee, with respect to any property, exceed a cumulative total of 2% of the
original cost of the property. The management fee shall be paid to the General
Partner for such services on conclusion of each calendar quarter. If the
Partnership does not have sufficient cash to pay the management fee for any
quarter or if the Partnership's reserves are less than 1/2 of 1% of the Limited
Partners' Capital Contributions, such fee shall be accrued (without interest) as
a debt of the Partnership, payable out of Sale or Financing proceeds after the
Limited Partners have received distributions in a total amount equal to the
aggregate amount paid by them to the Partnership for their Units.

(c) If the General Partner or its Affiliates provide a substantial amount
of the services in the sales effort for the sale of a Partnership property, they
may receive up to one-half of the competitive real estate commission (that real
estate or brokerage commission paid for the purchase or sale of property which
is reasonable, customary and competitive in light of the size, type and location
of the property), not to exceed 3%, which amount shall not be paid until the
Limited Partners have received distributions equal to their Capital
Contributions plus the Cumulative Return. If the General Partner or its
Affiliates participate with an independent broker on such sale, the
subordination requirement shall apply only to the commission earned by the
General Partner or its Affiliates. The total compensation paid to all Persons
for the sale of a Partnership property shall be limited to a competitive real
estate commission, not to exceed 10% of the contract price for the sale of the
property, and if such compensation to all Persons for the sale of a Partnership
property exceeds 6%, then, notwithstanding the other provisions of this Section
4.5(c), the General Partner and its Affiliates shall not receive any
compensation for such sale and such compensation for such sale shall be paid
only to Persons other than the General Partner and its Affiliates.

(d) For services rendered in connection with the organization of the
Partnership, the General Partner shall receive an Organization Fee equal to 0.4%
of the gross proceeds to the Partnership from the sale of the Units. Such fee
shall be paid at each closing of the sale of Units.

4.6. PARTNERSHIP EXPENSES. (a) The General Partner or its Affiliates shall
bear, and shall pay or reimburse the Partnership for, all Organization and
Offering Expenses in excess of 12.16% of the gross proceeds to the Partnership
from the sale of the Units. Subject to Section 4.4(c), the Partnership shall

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bear, and shall pay or reimburse the General Partner or its Affiliates for, the
actual cost of all other Organization and Offering Expenses.

(b) All expenses of the Partnership shall be billed directly to and paid
by the Partnership. In addition to reimbursement under Section 4.6(a), the
General Partner and its Affiliates shall be reimbursed for the actual cost of
goods and materials used for or by the Partnership and obtained from entities
unaffiliated with the General Partner; and the General Partner and its
Affiliates shall be reimbursed for their services necessary to the prudent
operation of the Partnership, provided that the reimbursement for such services
shall be at the lower of the General Partner's (or its Affiliate's) actual cost
or the amount the Partnership would be required to pay to independent parties
for comparable administrative services in the same geographic location. No
reimbursement shall be permitted for services for which the General Partner or
its Affiliates are entitled to compensation by way of a separate fee. The
following shall be excluded from allowable reimbursements under this Section
4.6(b): (A) rent or depreciation, utilities, capital equipment and other similar
administrative items of the General Partner or its Affiliates, and (B) salaries,
fringe benefits, travel expenses and other similar administrative items incurred
by or allocated to any Controlling Persons of the General Partner or its
Affiliates. Subject to (and only in accordance with) the foregoing, the
Partnership shall pay (or reimburse the General Partner and its Affiliates for)
the actual cost of all expenses related to the administration and operation of
the Partnership, including without limitation:

(i) all costs of personnel involved in the business of the
Partnership;

(ii) all taxes and assessments applicable to the Partnership;

(iii) legal, appraisal, audit, accounting and other professional
fees;

(iv) printing and other expenses incurred in connection with the
issuance, distribution, transfer, registration and recording of documents
evidencing ownership of Units;

(v) fees and expenses paid to independent contractors, mortgage
bankers, brokers, leasing agents, consultants, insurance brokers and other
agents;

(vi) expenses of organizing, revising, amending, converting,
modifying or terminating the Partnership;

(vii) costs incurred in selling or financing the Partnership's
property, including the cost of preparation and dissemination of the
informational material and documentation relating to potential sale,
financing or other disposition of the property;

(viii) costs incurred in connection with any actual or threatened
litigation in which the Partnership is involved or proceedings conducted
by any regulatory agency, including legal and accounting fees incurred in
connection therewith;

(ix) costs of any computer equipment or services used for or by the
Partnership;

(x) costs of any accounting, statistical or bookkeeping services or
equipment necessary for the maintenance of the books and records of the
Partnership;

(xi) costs of investor communications and relations and regulatory
and tax reports; and

(xii) such other related expenses as are necessary to the prudent
operation of the Partnership.

(c) In the Partnership's annual report to the Limited Partners, there
shall be provided a breakdown of reimbursements made to the General Partner and
its Affiliates.

(d) If the Partnership does not have sufficient cash to make such
reimbursement at any time, or, even if it does, such reimbursement may be
accrued as a debt of the Partnership payable out of future available cash, if
the General Partner determines that such action is in the best interests of the
Partnership.

4.7. OTHER BUSINESS OF PARTNERS. Any Partner may engage independently or
with others in other business ventures of every nature and description,
including, without limitation, the rendering of advice or services of any kind
to others and the making or management of other investments, including invest-

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ments in real estate. Nothing in this Agreement shall be deemed to prohibit the
General Partner or any Affiliate of the General Partner from dealing, or
otherwise engaging in business with, Persons transacting business with the
Partnership or from providing services relating to the purchase, sale,
financing, management, development or operation of real property and receiving
compensation therefor, not involving any rebate or reciprocal arrangement which
would have the effect of circumventing any restriction set forth herein on
dealing with the General Partner or any Affiliate of the General Partner.
Neither the Partnership nor any Partner shall have any right by virtue of this
Agreement or the partnership relationship created hereby in or to such other
ventures or activities or to the income or proceeds derived therefrom, even if
competitive with the business of the Partnership.

4.8. LIMITATION ON RESPONSIBILITY OF GENERAL PARTNER; INDEMNIFICATION. (a)
The General Partner and its Affiliates shall have no liability to the
Partnership or to any Partner for any loss suffered by the Partnership which
arises out of any action or inaction of the General Partner or its Affiliates if
the General Partner, in good faith, determined that such course of conduct was
in the best interest of the Partnership and such course of conduct did not
constitute negligence or misconduct of the General Partner or its Affiliates and
such liability or loss was not the result of negligence or misconduct by the
General Partner or its Affiliates. The General Partner and its Affiliates shall
be indemnified by the Partnership against any losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained by them in
connection with the Partnership, provided that the same were not the result of
negligence or misconduct on the part of the General Partner or its Affiliates,
and provided further that for such indemnification to be made, the General
Partner must have made a good faith determination that the course of conduct
involved was in the best interests of the Partnership. Such indemnification
shall be made from the assets of the Partnership and no Partner shall be
personally liable therefor.

(b) Notwithstanding the above, the General Partner and its Affiliates and
any Person acting as a broker-dealer shall not be indemnified for any losses,
liabilities or expenses arising from or out of an alleged violation of federal
or state securities laws unless (i) there has been a successful adjudication on
the merits of each count involving alleged securities law violations as to the
particular indemnitee and the court approves indemnification of litigation
costs, or (ii) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee and the court
has approved indemnification of litigation costs or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of settlement and related costs should be made.
In any claim for indemnification for federal or state securities law violations,
the party seeking indemnification shall place before the court the position of
the Securities and Exchange Commission, the Massachusetts Securities Division,
the Pennsylvania Securities Commission and other applicable state securities
commissions in which securities of the Partnership were offered or sold with
respect to the issue of indemnification for securities law violations.

(c) The Partnership shall not incur the cost of that portion of any
insurance which insures the General Partner or its Affiliates for any liability
as to which the General Partner or its Affiliates are prohibited from being
indemnified under this Section 4.8; provided, however, that nothing contained
herein shall preclude the Partnership from purchasing and paying for such types
of insurance, including extended coverage liability and casualty and workers'
compensation, as would be customary for any person owning comparable assets and
engaged in a similar business, or from naming the General Partner and its
Affiliates as additional insured parties thereunder, provided that such addition
does not add to the premiums payable by the Partnership. Nothing contained
herein shall constitute a waiver by any Limited Partner of any right which he
may have against any party under federal or state securities laws.

(d) The provision of advances from Partnership funds to the General
Partner and its Affiliates or legal expenses and other costs incurred as a
result of any legal action initiated against the General Partner by a Limited
Partner of the Partnership is prohibited. The provision of advances from
Partnership funds to the General Partner and its Affiliates for legal expenses
and other costs incurred as a result of a legal action is permissible if the
following three conditions are satisfied: (i) the legal action relates to the
performance of duties or services by the General Partner or its Affiliates on
behalf of the Partnership; and (ii) the legal action is initiated by a third
party who is not a Limited Partner of the Partnership; and (iii) the General
Partner or its Affiliates undertake to repay the advanced funds to the
Partnership in cases in

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which they would not be entitled to indemnification under this Section 4.8 and
such undertaking is secured by a full recourse note from the recipient of the
advance.

(e) Notwithstanding the definition of "Affiliate" in Article X, for the
purposes of this Section 4.8, the term "Affiliates" shall mean any Person
performing services on behalf of the Partnership within the scope of the General
Partner's authority who (i) directly or indirectly controls, is controlled by,
or is under common control with the General Partner; or (ii) owns or controls
10% or more of the outstanding voting securities of the General Partner or (iii)
is an officer or director or partner or trustee of the General Partner or (iv)
if the General Partner is an officer, director, partner or trustee, is any
company for which the General Partner acts in any such capacity.

ARTICLE V

DISSOLUTION, CONTINUATION AND LIQUIDATION

5.1. DISSOLUTION. The Partnership shall be dissolved on the happening of
any of the following events:

(a) the Termination of the General Partner, unless the business of the
Partnership is continued under Section 5.2;

(b) the sale or other disposition of all or substantially all the
Partnership's property and the collection or other disposition of any purchase
money obligations received by the Partnership in connection with the disposition
of the property;

(d) the Consent of a majority in interest of the Limited Partners pursuant
to Section 8.2 that the Partnership should be dissolved.

5.2. CONTINUATION. (a) On the Termination of a General Partner, if there
are one or more remaining General Partners, such remaining General Partner or
General Partners shall have the right to, and shall, continue the business of
the Partnership. If there is no remaining General Partner, the Limited Partners
(subject to Sections 5.2(b) and 5.3) (i) may elect, by the Consent of a majority
in interest of the Limited Partners, within 90 days thereafter, to reconstitute
the Partnership and continue its business in accordance with this Agreement by
selecting one or more new General Partners who agree in writing to be bound by
this Agreement, and all Limited Partners, as such, shall be bound by such
action, or (ii) may continue the business of the Partnership pursuant to Section
17-801 of the Act.

(b) The rights to continue the business of the Partnership provided in
this Section 5.2 shall be subject to prior receipt by the Partnership of an
opinion of counsel to the Partnership that such continuation would not result in
the Partnership's being classified for federal income tax purposes as an
association taxable as a corporation rather than as a partnership and would not
result in the termination of the Partnership for federal income tax purposes.

(c) Each of the Limited Partners by the execution of this Agreement hereby
Consents to any continuation or reconstitution of the Partnership and the
admission of any Person as a successor or additional General Partner, to which
there has at the time been express Consent of a majority in interest of the
Limited Partners pursuant to this Agreement. On receipt of the Consent of a
majority in interest of the Limited Partners to such continuation,
reconstitution or admission, such continuation, reconstitution or admission
shall, without any further Consent or approval of the Limited Partners, be an
act of all the Limited Partners.

5.3. VALUATION OF INTEREST OF GENERAL PARTNER. (a) In the event of the
Termination of a General Partner (other than a Termination in compliance with
Section 4.3(s)), if the business of the Partnership is continued under Section
5.2, the Partnership shall pay to such Terminated General Partner and its
Affiliates all amounts then accrued and owing to them, and shall pay the
Terminated General Partner, in consideration of the termination of its general
partner Interest, an amount (the "Price") equal to the then fair market value of
such general partner Interest determined by agreement of the Terminated General

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Partner and the Partnership or, if they cannot agree within 45 days, by
arbitration in accordance with the then current rules of the American
Arbitration Association. The expense of arbitration shall be borne equally by
the Terminated General Partner and the Partnership.

(b) Payment of the Price shall be made by delivery to the Terminated
General Partner of a promissory note, such delivery to be as soon as practicable
after determination of the Price. If the Termination is voluntary, the note
shall be a non-interest bearing unsecured promissory note payable, if at all,
from distributions which the Terminated General Partner otherwise would have
received under this Agreement if it had not voluntarily terminated. If the
Termination is involuntary, the note shall be an interest bearing promissory
note which shall become due in five equal annual installments of principal, the
first of which shall become due one year after such determination; the unpaid
portion of such principal shall bear simple interest from the date of such
determination at a floating rate of interest equal to the prime rate of The
Philadelphia National Bank, and such interest shall become due annually in
addition to each such annual installment of principal; however, the amounts
which have so become due shall be paid, as a debt of the Partnership, only from
Cash Flow or Sale or Financing proceeds not otherwise retained by the
Partnership for Partnership purposes.

(c) The Partnership shall make such special allocations of Profits and
Losses as are appropriate to enable it to make any payments to be made under
this Section 5.3.

5.4. LIQUIDATION. (a) On dissolution of the Partnership, absent any
continuation under Section 5.2, the General Partner shall liquidate the assets
of the Partnership and apply, or distribute, the net proceeds thereof in the
following order of priority:

(i) to the payment of all debts and liabilities of the Partnership
in accordance with their terms;

(ii) to the establishment, for such period as the General Partner
deems reasonably necessary, of such reserves as the General Partner deems
reasonably necessary to provide for contingent and unforeseen liabilities
or obligations of the Partnership;

(iii) to satisfy any obligations incurred under Section 5.3 in
accordance with their terms and to the Partners in accordance with Section
3.1.

(b) Notwithstanding the foregoing, if the General Partner determines that
an immediate sale of part or all of the Partnership assets would cause undue
loss to the Partners, the General Partner, in order to avoid such loss, may, to
the extent not then prohibited by applicable law, defer liquidation of and
withhold from distribution for a reasonable time any assets of the Partnership
except those necessary to satisfy the Partnership's debts and obligations.

(d) The debts and liabilities of the Partnership shall not include
liabilities or obligations of the Partnership to Partners for distributions or
on account of their contributions or in respect to profits (or other
compensation by way of income) or capital.

(e) If on dissolution and termination of the Partnership the General
Partner's Capital Account is less than zero, the General Partner shall
contribute to the capital of the Partnership an amount equal to (and shall in no
event be obligated to contribute more than) any negative amount of its Capital
Account existing after the distributions and allocations required by Article III
and this Section 5.4. Any amount so contributed by the General Partner shall be
distributed to the Limited Partners in proportion to the then positive balances
in their Capital Accounts.

(f) Any capital contribution by the General Partner pursuant to Section
5.4(e) and any liquidating distribution pursuant to Section 5.4(a)(iii) or
5.4(e) shall be made no later than the later of (i) the end of the taxable year
during which such liquidation occurs or (ii) 90 days after the date of such
liquidation.

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ARTICLE VI

TRANSFER OF UNITS

6.1. ASSIGNMENT OF UNITS. (a) No Limited Partner may transfer or assign
his Units or any interest therein except as permitted in this Article VI. Any
act in violation of this Article VI shall be null and void and shall not be
recognized by the Partnership.

(b) A Limited Partner may transfer or assign part or all of his Units if,
and only if:

(i) the assignor and the assignee execute, acknowledge and deliver
to the Partnership such instruments of transfer and assignment and other
documents as may be required by the General Partner;

(ii) either (A) at least five Units are being assigned and, if any
Units are retained by the assignor, at least five Units are retained by
the assignor or (B) the Units being assigned represent the entire limited
partnership Interest of the assignor (except that the General Partner, in
its discretion, may waive this requirement for transfers by gift,
inheritance or family dissolution or transfers to Affiliates of the
transferor);

(iii) the assignee agrees in writing not to assign such Units other
than in accordance with this Article VI;

(iv) such assignment complies with any applicable state and federal
securities laws (including applicable investment suitability standards);

(v) such assignment does not result in the termination of the
Partnership for federal income tax purposes and does not result in the
Partnership being classified as an association taxable as a corporation
for federal income tax purposes;

(vi) the assignment is effective as of the first day of an
appropriate calendar quarter, but no later than the last day of the
calendar month following the receipt of notice of assignment and required
documentation.

(c) An assignee, if he does not become a Substituted Limited Partner
pursuant to Section 6.2, shall have no rights of a Limited Partner as a result
of the assignment, but shall only be entitled to receive his share of
distributions, Profits and Losses under Article III, Section 5.4(a)(iii) and
Section 5.4(e) to which the assignor would otherwise be entitled.

(d) Any Limited Partner who assigns all his Units shall cease to be a
Limited Partner of the Partnership, except that unless and until a Substituted
Limited Partner is admitted in his stead, such assigning Limited Partner shall
retain the statutory rights of an assignor of a limited partnership interest
under the Act.

(e) No transfer or assignment of any Unit shall be made if it would result
in the Partnership being treated as an association taxable as a corporation for
tax purposes or as a publicly traded partnership. The General Partner, in its
sole discretion, may, on behalf of the Partnership, impose any restrictions on
transfers or assignments of Units as it deems appropriate to give effect to the
preceding sentence. Any restriction on the transfer or assignment of a Unit will
be supported at the time of the transfer or assignment by an opinion of counsel,
where in counsel's opinion such restriction is necessary to preserve the federal
income tax status of the Partnership. In connection therewith, the General
Partner shall be permitted to amend this Agreement without the consent of the
Limited Partners. The General Partner shall not list the Units on any
established securities market.

(f) There shall be no restrictions on the assignment of Units except as
provided in this Article VI.

6.2. SUBSTITUTED LIMITED PARTNERS. (a) No assignee of Units shall have the
right to become a Substituted Limited Partner in place of his assignor unless
all of the following conditions are first satisfied:

(i) the written instrument of assignment (or another writing) sets
forth the intention of the assignor that the assignee succeed to the
assignor's Interest represented by such Units as a Substituted Limited
Partner in his place;

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(ii) the assignor and assignee execute, acknowledge and deliver such
instruments as the General Partner may deem necessary or desirable to
effect such substitution, including the written acceptance and adoption by
the assignee of this Agreement; and

(iii) the written consent of the General Partner to such
substitution is obtained, the granting or denial of which shall be within
the absolute discretion of the General Partner.

(b) The Partnership's records shall be amended to reflect the substitution
of Limited Partners at least once in each calendar quarter.

6.3. DEATH, INCOMPETENCY OR BANKRUPTCY OF LIMITED PARTNERS. If a Limited
Partner dies, his executor, administrator or trustee, or, if he is adjudicated
incompetent or insane, his committee, guardian or conservator, or, if he becomes
bankrupt, the trustee or receiver of his estate, shall have all the rights of a
Limited Partner for the purpose of settling or managing his estate and such
power as the decedent, incompetent or bankrupt possessed to assign his Units and
to join with the assignee thereof in satisfying conditions precedent to such
assignee becoming a Substituted Limited Partner.

6.4. TRANSFER FEE. On any assignment of Units or any substitution of an
assignee as a Limited Partner, the Partnership may charge a transfer fee (not to
exceed the lesser of actual costs or $150) to cover all reasonable out-of-pocket
expenses connected therewith.

ARTICLE VIII

ACCOUNTING AND FISCAL MATTERS

7.1. PARTNERSHIP RECORDS. The records of the Partnership shall be maintained
at the principal office of the Partnership. Every Limited Partner or his duly
authorized representative shall at any reasonable time have access to the
records of the Partnership and may inspect and copy any of them. A list of the
names, addresses and ownership interests of all of the Limited Partners shall be
maintained as part of the records of the Partnership and shall be mailed or made
available, on written request therefor, to any Limited Partner or his duly
authorized representative, on his payment of the reasonable costs of
reproduction and mailing.

7.2. ACCOUNTING AND FISCAL YEAR. The books of the Partnership shall be
kept on the accrual basis. The fiscal year of the Partnership shall end December
31 in each year.

7.3. BANK ACCOUNTS AND INVESTMENTS. The bank accounts of the Partnership
shall be maintained in such banking institutions as the General Partner may
determine, and withdrawals shall be made on such signature or signatures as the
General Partner may determine. Funds not needed in the operation of the
Partnership may be invested in United States government securities, certificates
of deposit of United States banks with assets of at least $100,000,000,
commercial paper rated A or better by Moody's Investors Service, Inc., and money
market funds having assets in excess of $100,000,000.

7.4. REPORTS. (a) Within 60 days after the end of each of the first three
calendar quarters of each calendar year, the General Partner shall send to the
Limited Partners a report containing (i) a balance sheet as of the end of such
quarter, a profit and loss statement for such quarter and a cash flow statement
for such quarter, all of which may be unaudited, and (ii) other pertinent
information regarding the Partnership and its activities during such quarter.

(b) Within 75 days after the end of each calendar year, the General
Partner shall send to each Person who was a Limited Partner during such year all
Partnership information necessary for the preparation of such Limited Partner's
federal income tax return.

(c) Within 120 days after the end of each calendar year, the General
Partner shall send to the Limited Partners an annual report containing (i) a
balance sheet as of the end of such year and statements of income, partners'
equity and changes in financial position (or any replacement statement required
by generally accepted accounting principles) for such year, all of which shall
be prepared in accordance with generally accepted accounting principles and be
accompanied by an auditor's report of the Partnership's independent public
accountants, (ii) a cash flow statement for such year (which need not be
audited), (iii) a report of the activities of the Partnership during such year,
(iv) information (which need not

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be audited) setting forth the distributions made to the Limited Partners for
such year, separately identifying distributions from (A) cash flow from
operations during the period, (B) cash flow from operations during a prior
period which had been held as reserves, (C) proceeds from disposition of
property and investments, (D) lease payments on net leases with builders and
sellers, and (E) reserves from the gross proceeds of the offering of the Units,
(v) a breakdown of the costs reimbursed to the General Partner and its
Affiliates under Section 4.6(b), which shall be verified by independent public
accountants in accordance with generally accepted auditing standards (the cost
of such verification to be so reimbursable only to the extent that such
reimbursement, when added to the reimbursement for services, does not exceed the
competitive rate for such services), and (vi) a detailed statement of any
transactions with the General Partner or its Affiliates, and of fees,
commissions, compensation and other benefits paid or accrued to the General
Partner or its Affiliates for such year, showing the amount paid or accrued to
each recipient and the services performed.

(d) The General Partner shall provide to the Limited Partners the
financial statements required by Form 10-K under the Securities Exchange Act of
1934 for the first full fiscal year of operations of the Partnership.

(e) The Partnership will provide the Limited Partners with a report of the
value of each Unit at the end of each year. Such report may be based on a
valuation provided by the General Partner or an Affiliate of the General
Partner.

(f) The information required to be provided in the various reports
pursuant to this Section 7.4 may be sent earlier than or separately from any of
the other information required pursuant to this Section 7.4, and the information
required to be contained in any of the reports pursuant to this Section 7.4 may
be contained in more than one report.

(g) If the Securities and Exchange Commission or the North American
Securities Administrators Association, Inc. promulgates rules which allow a
reduction in reporting requirements, the Partnership may cease preparing and
filing certain of the aforementioned reports in compliance with such rules if
the General Partner determines such action to be in the best interests of the
Partnership.

(h) On request of the official or agency administering the securities law
of a state in which the Partnership has sold Units, the General Partner shall
submit to such official or agency any report or statement required to be
distributed to Limited Partners pursuant to this Section 7.4.

ARTICLE VIII

MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS

8.1. MEETINGS. (a) Meetings of the Limited Partners may be called by the
General Partner for any purpose and shall be called by the General Partner for
any matters for which the Limited Partners may vote as set forth in Section 8.2
on receipt of a written request therefor signed by Limited Partners holding more
than 10% of the outstanding Units. Such request shall state the purpose of the
proposed meeting and the matters proposed to be acted on. In addition, the
General Partner may submit any matter to the Limited Partners for a vote by
written Consent without a meeting.

(b) Upon receipt of a written request either in person or by certified
mail stating the purpose(s) of the meeting, the General Partner shall provide
all Limited Partners within ten days after receipt or said request, written
notice (either in person or by certified mail) of a meeting and the purpose of
such meeting to be held on a date not less than fifteen nor more than sixty days
after receipt of said request, at a time and place convenient to the Limited
Partners. Notice of any other meeting shall be delivered personally or sent by
certified or first class mail not less than 15 days and not more than 60 days
before the date of the meeting. Notices of meetings shall be delivered or sent
to each Limited Partner at his record mailing address. Any such notice shall be
in writing, shall state the place, date, time and purpose of the meeting, shall
indicate that it is being issued by or at the request of the Partner or Partners
calling or requesting the meeting and shall include a detailed statement of the
action proposed, including a verbatim statement of the wording of any resolution
proposed for adoption by the Limited Partners and of any proposed amendment to
this Agreement. If a meeting is adjourned to another time or place, and if any
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the adjournment of time or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting. The presence in person or by
proxy of the holders of a majority of the Units shall constitute a quorum at all
meetings of the Limited Partners. If there is no such quorum, holders of a
majority of the Units of Limited Partners so present or represented may adjourn
the meeting from time to time without further notice until a quorum has been
obtained. No notice of the time, place or purpose of any meeting of Limited
Partners need be given to any Limited Partner who attends in person or is
present by proxy (except when a Limited Partner attends a meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business on the ground that the meeting is not lawfully called or
convened), or to any Limited Partner entitled to such notice who, in a writing
executed and filed with the records of the meeting, either before or after the
time thereof, waives such notice.

(c) For the purpose of determining the Limited Partners entitled to notice
of and to vote at any meeting of the Partnership or any adjournment thereof, the
General Partner may fix, in advance, a date as the record date for such
determination. Such date shall be not more than 50 days nor less than ten days
before any such meeting.

(d) Each Limited Partner may authorize any Person or Persons to act for
him by proxy or written consent in all matters in which a Limited Partner is
entitled to participate, whether by waiving notice of any meeting, or voting or
participating at a meeting. Every proxy or written consent must be signed by the
Limited Partner or his attorney-in-fact. No proxy or written consent shall be
valid after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy or written consent. Every proxy or written consent shall
be revocable at the pleasure of the Limited Partner executing it unless
otherwise provided therein. Every proxy or written consent shall specify a
choice between approval and disapproval of each matter to be acted on at the
meeting.

(e) Meetings of the Limited Partners shall be held at the principal office
of the Partnership or at another place, convenient to the Limited Partners,
selected by the General Partner. At each meeting of Limited Partners, the
General Partner shall appoint such officers and adopt such rules for the conduct
of the meeting as the General Partner deems appropriate.

8.2. VOTING RIGHTS OF LIMITED PARTNERS. After termination of the offering
of the Units, Limited Partners holding a majority of the outstanding Units,
without the necessity for concurrence by the General Partner, may vote to:

(a) amend this Agreement, subject to Section 9.2(b); provided that any
such amendment (i) shall not in any manner allow the Limited Partners to take
part in the control of the Partnership's business and (ii) shall not, without
the Consent of the General Partner, alter the rights, powers or duties of the
General Partner as set forth in Article IV, the interest of the General Partner
in Profits, Losses, or distributions, or any of the provisions of Sections 5.3
and 5.4(e).

(b) dissolve the Partnership.

(c) subject to Section 5.3, remove the General Partner and elect a new
General Partner, although for purposes of this Section 8.2(c), the General
Partner holding limited partnership interests may not participate in the vote on
removal or election of a new General Partner.

(d) subject to Section 4.3(b), approve or disapprove a sale of all or
substantially all of the assets of the Partnership.

ARTICLE IX

MISCELLANEOUS

9.1. APPOINTMENT OF GENERAL PARTNER AS ATTORNEY-IN-FACT. (a) Each Limited
Partner, including each Substituted Limited Partner, by his execution or
acceptance of this Agreement, irrevocably constitutes and appoints the General
Partner his true and lawful attorney-in-fact with full power and authority in
his name, place and stead to execute, acknowledge, deliver, swear to, file and
record at appropriate

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public offices such documents as may be necessary or appropriate to carry out
this Agreement, including but not limited to:

(i) all certificates and other instruments (including counterparts
of this Agreement), and any amendment thereof, which General Partner deems
appropriate to form, qualify or continue the Partnership as a limited
partnership (or a partnership in which the Limited Partners will have
limited liability comparable to that provided by the Act) in the
jurisdictions in which the Partnership may conduct business or in which
such formation, qualification or continuation is, in the opinion of the
General Partner, necessary or desirable to protect the limited liability
of the Limited Partners;

(ii) all amendments to this Agreement adopted in accordance with the
terms hereof and all instruments which the General Partner deems
appropriate to reflect a change or modification of the Partnership in
accordance with this Agreement;

(iii) all conveyances and other instruments which the General
Partner deems appropriate to reflect the dissolution and termination of
the Partnership in accordance with this Agreement; and

(iv) all statements or other instruments which the General Partner
deems necessary or appropriate to comply with or minimize tax withholding
obligations under the law of any state.

(b) The appointment by all Limited Partners of the General Partner as
attorney-in-fact shall be deemed to be a power coupled with an interest, in
recognition of the fact that each of the Partners under this Agreement will be
relying on the power of the General Partner to act as contemplated by this
Agreement in any filing and other action by it on behalf of the Partnership, and
shall survive the bankruptcy, death, adjudication of incompetence or insanity,
or dissolution of any Person hereby giving such power and the transfer or
assignment of all or any part of the Units of such Person; provided, however,
that in the event of the transfer by a Limited Partner of all his Units, the
power of attorney of a transferor Limited Partner shall survive such transfer
only until such time as the transferee has been admitted to the Partnership as a
Substituted Limited Partner and all required documents and instruments have been
duly executed, filed and recorded to effect such substitution.

9.2. AMENDMENTS. (a) Each Limited Partner and Substituted Limited Partner
on his admission to the Partnership as contemplated hereby and reflection in the
records of the Partnership as a Limited Partner shall be deemed to have adopted,
and to have agreed to be bound by all the provisions of, this Agreement and to
have authorized the General Partner to execute (should the General Partner deem
it advisable) a counterpart of this Agreement on his behalf.

(b) In addition to the amendments otherwise authorized herein, amendments
may be made to this Agreement from time to time by the General Partner with the
Consent of a majority in interest of the Limited Partners; provided, however,
that without the Consent of the Partners to be adversely affected by the
amendment, this Agreement may not be amended so as to (i) convert a Limited
Partner's Interest into a general partner's interest; (ii) modify the limited
liability of a Limited Partner; or (iii) alter the interest of a Partner in
Profits, Losses, or distributions.

(c) In addition to the amendments otherwise authorized herein, amendments
may be made to this Agreement from time to time by the General Partner, without
the consent of any of the Limited Partners, (i) to add to the representations,
duties or obligations of the General Partner or surrender any right or power
granted to the General Partner herein, for the benefit of the Limited Partners;
(ii) to cure any ambiguity, to correct or supplement any provision herein which
may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Agreement
which will not be inconsistent with the provisions of this Agreement; (iii) to
delete or add any provision of this Agreement required to be so deleted or added
by the staff of the Securities and Exchange Commission or other federal agency
or by a state securities commissioner or similar official, which addition or
deletion is deemed by such Commission, agency, commissioner or official to be
for the benefit or protection of the Limited Partners; (iv) to take such action
as may be necessary (if any) to cause the assets of the Partnership not to come
within the definition of plan assets under the Employee Retirement Income
Security Act of 1974; (v) to give effect to any action permitted pursuant to
Section 6.1(e); and (vi) to make technical changes to the Partnership's tax
allocation provisions to conform such

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provisions to the requirements of the Code and the Treasury Regulations;
provided, however, that no amendment shall be adopted pursuant to this Section
9.2(c) unless, in the opinion of the General Partner, the adoption thereof (A)
is for the benefit of or not adverse to the interests of the Limited Partners;
(B) is consistent with Section 4.3; (C) does not affect distributions or the
allocation of Profits or Losses (except as otherwise provided herein) among the
Limited Partners or between the Limited Partners as a class and the General
Partner; and (D) does not affect the limited liability of the Limited Partners
or the status of the Partnership as a partnership for federal income tax
purposes.

(d) In making any amendments, there shall be prepared and filed for
recordation by the General Partner such documents and certificates as are
required to be prepared and filed under the Act and under the laws of the other
jurisdictions under the laws of which the Partnership is then formed or
qualified.

9.3. SECURITY INTEREST AND RIGHT OF SETOFF. As security for any
withholding tax or other liability or obligation to which the Partnership may be
subject as a result of any act or status of any Limited Partner or to which the
Partnership becomes subject with respect to the interest of any Limited Partner,
the Partnership shall have (and each Limited Partner hereby grants to the
Partnership) a security interest in all distributions distributable to such
Limited Partner to the extent of the amount of such withholding tax or other
liability or obligation. The Partnership shall have a right of setoff against
any such distributions in the amount of such withholding tax or other liability
or obligation.

9.4. OWNERSHIP BY LIMITED PARTNER OF INTEREST IN GENERAL PARTNER OR
AFFILIATES. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate of
the General Partner if such ownership by itself or in conjunction with the stock
or other interest owned by other Limited Partners would, in the opinion of
counsel for the Partnership, jeopardize the classification of the Partnership as
a partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners and prospective
Limited Partners as is required to establish compliance with this Section 9.4.

9.5. PARTIES BOUND. Except as otherwise expressly provided in this
Agreement, all provisions of this Agreement shall bind, benefit, and be
enforceable by or against, the heirs, executors, administrators, personal
representatives, successors and permitted assigns of the parties hereto. None of
the provisions of this Agreement shall be for the benefit of or enforceable by
any creditor of the Partnership or any creditor (other than the Partnership) of
any Partner.

9.6. GOVERNING LAW; CONSTRUCTION. This Agreement and the rights and
obligations of the Partners shall be governed by and construed and enforced in
accordance with the laws of Delaware applicable to contracts made and to be
performed therein, without application of the principles of conflict of laws of
such state. Captions in this Agreement have been inserted only as a matter of
convenience and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. The invalidity of any portion
of this Agreement shall not affect the validity of the remainder. As required by
the context, the use of the singular shall be construed to include the plural
and vice versa, and the use of any gender shall be construed to include all
genders.

ARTICLE X

DEFINITIONS

10.1. DEFINED TERMS. The following terms shall have the meanings specified
in this Article X unless the context otherwise requires.

"Acquisition Expenses" means expenses, including, but not limited to,
legal fees and expenses, travel and communications expenses, costs of
appraisals, nonrefundable option payments on property not acquired, accounting
fees and expenses, title insurance and miscellaneous expenses related to
selection and acquisition of properties, whether or not acquired.

"Acquisition Fees" means the total of all fees and commissions paid by
any party in connection with the purchase or development of property by the
Partnership, except a Development Fee paid to a Person not affiliated with the
General Partner in connection with the actual development of a project after
acquisition of the land by the Partnership. Included in the computation of such
fees or commissions shall be any

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real estate commission, selection fee, Development Fee, nonrecurring management
fee or any other fee of a similar nature, however designated.

"Act" means the Delaware Revised Uniform Limited Partnership Act.

"Adjusted Capital Contributions" means an amount equal to the Capital
Contributions made by the Limited Partners on the purchase of their Units,
reduced by an amount equal to all distributions (other than distributions of
Cash Flow) made to the Limited Partners under Section 3.1(a)(i), but in no
event less than zero.

"Affiliate" or "Affiliated Person" of a specified Person means (i) any
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the specified Person, (ii)
any Person owning or controlling 10% or more of the outstanding voting
securities of the specified Person, (iii) any officer, director or partner of
the specified Person, and (iv) if the specified Person is an officer, director
or partner, any company for which such Person acts in any such capacity

"Agreement" means this Restated Limited Partnership Agreement, as
originally executed and as amended from time to time, as the context requires.
Words such as "herein," "hereof," "hereto," "hereby" and "hereunder," when used
with reference to this Agreement, refer to this Agreement as a whole.

"Capital Account" of any Partner means the capital account of such Partner
that is established on the books of the Partnership and adjusted pursuant to
Section 2.7.

"Capital Contribution" means the gross amount of investment in the
Partnership by a Limited Partner or all Limited Partners, as the case may be (or
the predecessor holders of the Units of any Partner or Partners).

"Cash Available for Distribution" means Cash Flow less amounts set aside
for restoration or creation of reserves.

"Cash Flow" means Partnership cash funds provided from operations
(including lease payments on net leases from builders and sellers) without
deduction for depreciation, but after deducting cash funds used to pay all other
expenses, debt payments, capital improvements and replacements.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute. Any reference herein to a particular provision
of the Code shall mean, where appropriate, the corresponding provision in any
successor statute.

"Consent" means either (i) the consent given by vote at a meeting called
and held in accordance with Section 8.1, or (ii) a written consent given
pursuant to this Agreement or (iii) the act of granting such consent, as the
context may require.

"Construction Fee" means a fee for acting as general contractor to
construct improvements on the Partnership's property either initially or at a
later date.

"Controlling Person" means any Person, whatever his or her title,
performing functions for the General Partner or its Affiliates similar to those
of chairman or member of the board of directors or executive management (such as
the president, vice president or senior vice president, corporate secretary or
treasurer), senior management (such as the vice president of an operating
division who reports directly to executive management), or any Person holding a
5% or more equity interest in the General Partner or its Affiliates or having
the power to direct or cause the direction of the General Partner or its
Affiliates, whether through the ownership of voting securities, by contract, or
otherwise.

"Cumulative Return" means an amount equal to 10% per year simple interest
on the Adjusted Capital Contributions of the Limited Partners, calculated from
the earlier of (i) the end of the calendar quarter in which the Capital
Contributions were made or (ii) the Closing Date.

"Development Fee" means a fee for the packaging of the Partnership's
property, including negotiating and approving plans and undertaking to assist in
obtaining zoning and necessary variances and necessary financing for the
specific property, either initially or at a later date.

"Final Closing" means the last time at which subscribers for Units are
admitted as Limited Partners.

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<PAGE> 101
"Financing" (except for purposes of Section 4.3(o)) means any mortgage
financing, refinancing or borrowing secured by the Partnership's property

"Front-End Fees" means fees and expenses paid by any Person for any
services rendered during the Partnership's organizational or acquisition phase,
including Organization and Offering Expenses, Acquisition Fees, Acquisition
Expenses and any other similar fees, however designated.

"General Partner" means Southeast Acquisitions, Inc., a Delaware
corporation, and, as herein provided, any additional General Partner or any
successor to any General Partner.

"Initial Closing" means the first time at which subscribers for Units are
admitted as Limited Partners.

"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including the Partner's interest in Profits,
Losses, distributions and capital and the right of such Partner to any and all
benefits to which a Partner may be entitled as provided in this Agreement,
together with the obligations of such Partner to comply with this Agreement.
Reference to a majority in interest of the Limited Partners means Limited
Partners whose combined Units represent over 50% of the Units of all Limited
Partners.

"Investment in Property" means the amount of Limited Partners' Capital
Contributions actually paid or allocated to the purchase, development,
construction or improvement of properties acquired by the Partnership (including
the purchase of properties, working capital reserves allocable thereto (not in
excess of 5%), and other cash payments such as interest and taxes, but excluding
Front-End Fees).

"Limited Partners" means the Persons admitted to the Partnership pursuant
to Sections 2.2, 2.4 and 6.2.

"Notification" or "Notice" means a writing, containing the information
required by this Agreement to be communicated to any Person, sent by registered,
certified or regular mail to such Person at his last known mailing address;
however, any written communication containing such information sent to such
Person and actually received by such Person shall constitute Notification or
Notice for all purposes of this Agreement.

"Organization and Offering Expenses" means all expenses incurred by the
Partnership in connection with the formation of the Partnership, the
registration and qualification of the Units under federal and state securities
laws and the offering and sale of the Units, including advertising expenses and
selling commissions and selling allowances paid in connection with the sale of
the Units.

"Partner" means any General Partner or Limited Partner.

"Person" means any individual, partnership, corporation, trust or other
entity.

"Profits" or "Losses" means, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a), and for this purpose,
all items of income, gain, loss, deduction or credit required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in such taxable
income or loss, with the following adjustments:

(a) Any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses shall be
added to such taxable income or loss;

(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses, shall be subtracted from such taxable
income or loss;

(c) Notwithstanding any other provisions of this Agreement, any items
which are specially allocated pursuant to Sections 3.5, 3.7 or 3.8 shall not be
taken into account in computing Profits or Losses.

"Prospectus" means the Partnership's prospectus contained in the
Registration Statement filed with the Securities and Exchange Commission for the
registration of the Units under the Securities Act of 1933, in the final form in
which such Prospectus is filed with such Commission and as thereafter supple-

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<PAGE> 102
mented pursuant to Rule 424 under such act. Any reference herein to "date of the
Prospectus" shall be deemed to refer to the date of the Prospectus in the form
filed pursuant to Rule 424 of such act.

"Purchase Price" means the price paid on the purchase or sale of a
particular property, including the amount of Acquisition Fees and all liens and
mortgages on the property, but excluding points and prepaid interest.

"Sale" means any Partnership transaction (other than the receipt of
Capital Contributions) not in the ordinary course of its business, including,
without limitation, sales, exchanges or other dispositions of real or personal
property, condemnations, recoveries of damage awards and insurance proceeds
(other than business or rental interruption insurance proceeds), but excluding
any Financing.

"Sale or Financing proceeds," "Sale proceeds" or "Financing proceeds"
mean all cash receipts arising from a Sale or Financing, as the context
requires, less (i) the amount necessary for the payment of all debts and
obligations related to the particular Sale or Financing; (ii) the amount of cash
paid or to be paid in connection with such Sale or Financing (which shall
include, with regard to damage recoveries or insurance or condemnation proceeds,
cash paid or to be paid in connection with repairs, replacements or renewals, in
the discretion of the General Partner, relating to the damage to or partial
condemnation of the affected property); and (iii) the amount considered
appropriate by the General Partner to pay taxes, insurance, debt service,
repairs, replacements or renewals, or other costs or expenses of the Partnership
(including costs of improvements or additions in connection with the
Partnership's property) or to provide reserves.

"Sponsor" means any Person directly or indirectly instrumental in
organizing, wholly or in part, a program or any Person who will manage or
participate in the management of a program, and any Affiliate of any such
Person, but does not include a Person whose only relation with the program is as
that of an independent property manager, whose only compensation is as such.
"Sponsor" does not include wholly independent third parties such as attorneys,
accountants, and underwriters whose only compensation is for professional
services rendered in connection with the offering of syndicate interests.

"Substituted Limited Partner" means any Person admitted to the Partnership
as a Limited Partner pursuant to Section 6.2.

"Termination" of a General Partner means the occurrence as to such General
Partner of an event of withdrawal as defined in paragraphs (1), (2), (3), (6),
(7), (8), (9) and (10) of Section 17-402 of the Act (and the events referred to
in paragraphs (4) and (5) of Section 17-402 shall not constitute such an event
of withdrawal). Such Partner is referred to as a "Terminated" Partner.

"Treasury Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

"Unit" means the interest of a Limited Partner attributable to a Capital
Contribution of $1,000.

"Unpaid Cumulative Return" as of any date means an amount equal to the
Cumulative Return as of such date less the sum of all distributions to the
Limited Partners on or before such date under Section 3.1(a)(ii) or, if made
from Cash Flow, under Section 3.1(a)(i), but in no event less than zero.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

GENERAL PARTNER:
Southeast Acquisitions, Inc.

By: /s/ John P. Boyle
------------------------

INITIAL LIMITED PARTNER:
F M Initial, Inc.

By: /s/ Anthony R. Baldron
------------------------

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<PAGE> 103
EXHIBIT B

ALTERNATIVE AMENDMENTS

<PAGE> 104
FIRST ALTERNATIVE AMENDMENTS
SEA III

FIRST AMENDMENT TO
RESTATED LIMITED PARTNERSHIP AGREEMENT OF
SOUTHEAST ACQUISITIONS III, L.P.

This FIRST AMENDMENT (this "Amendment"), dated as of October 28, 1997
is to the Restated Limited Partnership Agreement (the "Partnership Agreement")
of Southeast Acquisitions III, L.P. (the "Partnership"), dated June 1, 1989, by
and between SOUTHEAST ACQUISITIONS, INC., a Delaware corporation, as general
partner (the "General Partner") and the Persons admitted as limited partners
pursuant to the Partnership Agreement.

WHEREAS, a special meeting (the "Meeting") of the Limited Partners was
duly held on October 28, 1997; and

WHEREAS, at the Meeting a majority in interest of the Limited Partners
have voted to adopt the following Amendments to the Partnership Agreement.

NOW, THEREFORE, the Amendments are adopted and are effective as of
October 28, 1997.

1. Southeast Acquisitions, Inc. is hereby removed as the General
Partner of the Partnership, and Southern Management Group, LLC a Tennessee
Limited Liability Company is substituted therefor as successor General Partner
of the Partnership. On and after the date of this Amendment, except as the
context may otherwise require, all references to the General Partner in the
Partnership Agreement shall mean Southern Management Group, LLC.

2. Section 1.3 is amended in its entirety to read as follows:

"1.3. TERM. The Partnership shall exist for a term ending
December 31, 2001, at which time it shall be dissolved, unless
sooner dissolved or terminated as provided in this Agreement
(the "Term")."

3. Section 1.4 is hereby amended in its entirety to read as
follows:

"1.4. PLACE OF BUSINESS. The principal place of business of
the Partnership shall be at 301 South Perimeter Park Drive,
Suite 115, Nashville, TN 37211, or at another location selected
by the General Partner, who shall give notice of any change to
the Limited Partners. The Partnership may have such additional
offices or places of business as the General Partner may
determine."

4. The first sentence of Section 2.1 is amended in its entirety to
read as follows:

B-1
<PAGE> 105

"2.1. GENERAL PARTNER. The General Partner is Southern
Management Group, LLC a Tennessee Limited Liability Company,
301 South Perimeter Park Drive, Suite 115, Nashville,
Tennessee".

5. Section 4.2(a) is amended by adding at the end of the section
the following:

"(xiii) Reserve to itself or an Affiliate or enter into a
contract for an exclusive right to sell or exclusive employment
to sell property for the Partnership."

6. Section 4.3(b) is hereby amended in its entirety to read as
follows:

"(b) Without the consent of a majority in interest of the
Limited Partners, the General Partner shall not have the
authority to:

(i) sell or otherwise dispose of at one time all or
substantially all the assets of the Partnership, except
that the General Partner may sell such assets without
such consent (A) in connection with the liquidation of
the Partnership under Section 6.3 or (B) if the net
proceeds of such sale, when distributed in accordance
with Section 3.1, will be sufficient to provide the
Limited Partners with distributions equal to the
Acquisition Cost of the assets sold."

7. Section 4.3(g) is deleted in its entirety and clauses 4.3(h)
through (t) are hereby renumbered 4.3(g) through (s) respectively.

8. Section 4.5(b) is amended in its entirety to read as follows:

"(b) For the services and activities to be performed by the
General Partner in connection with the administration and
management of the Partnership from October 28, 1997 to the end
of the Term, the General Partner shall receive a management fee
of $26,500 per year (prorated for a portion of a year) during
the Term of the Partnership. The management fee shall be paid to
the General Partner for such services on conclusion of each
calendar quarter. If the Partnership does not have sufficient
cash to pay the management fee for any quarter, such fee shall
be accrued (without interest) as a debt of the Partnership,
payable out of Sale or Financing proceeds prior to any Partner
receiving their distributions in accordance with this
Agreement."

9. Section 4.5(c) shall be amended in its entirety to read as
follows:

"(c) The General Partner or its Affiliates may receive the
entire competitive real estate commission or disposition fee (that real estate
or brokerage commission or disposition fee paid for the purchase or sale of
property which is reasonable, customary and competitive in light of the size,
type and location of the property) with respect to sales of Partnership property
following October 28, 1997, which are not under contract as of such date. The
total compensation paid to all Persons for the sale of Partnership property
shall be limited to a competitive real estate commission or disposition fee not
to exceed 10% of the contract price for the sale of the property. The commission
or disposition fee shall be paid upon sale of the property prior to any
distribution to the Partners in accordance with this Agreement; provided that
the amount of any such commission or disposition fee

B-2
<PAGE> 106
paid to the General Partner shall reduce any distribution to which
it would otherwise be entitled pursuant to this Agreement."

10. Section 11.1 is amended by adding the following definition as the
first definition in the Section:

"Acquisition Cost" with respect to a Partnership asset means the
price originally paid by the Partnership to acquire the asset,
including the value of any mortgages or liens on the asset assumed
by the Partnership at the time of acquisition, excluding points and
prepaid interest."

and by adding the following definition following the definition of
"Agreement":

"all or substantially all the assets of the Partnership" means 60%
or more of the real estate acreage held by the Partnership as of
September 15, 1997."

11. Except as amended hereby, the Partnership Agreement shall remain
in full force and effect.

12. Terms not defined herein which are defined in the Partnership
Agreement shall have the same meanings herein.

13. This Amendment and the rights and obligations of the Partners
hereunder shall be governed by and construed and enforced in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed therein, without application of the principles of conflicts of laws
of such state.

IN WITNESS WHEREOF, this Amendment has been executed by the parties
set forth below as of the date first above written.

GENERAL PARTNER SOUTHEAST ACQUISITIONS, INC.

By ___________________________
Name:
Title:

SUCCESSOR GENERAL PARTNER SOUTHERN MANAGEMENT GROUP, LLC

BY ___________________________
Name:
Title:

LIMITED PARTNERS LIMITED PARTNERS

By ___________________________
Name:
Title:

B-3
<PAGE> 107
SECOND ALTERNATIVE AMENDMENTS
SEA III

FIRST AMENDMENT TO
RESTATED LIMITED PARTNERSHIP AGREEMENT OF
SOUTHEAST ACQUISITIONS III, L.P.

This FIRST AMENDMENT (this "Amendment"), dated as of October 28, 1997 is
to the Restated Limited Partnership Agreement (the "Partnership Agreement") of
Southeast Acquisitions III, L.P. (the "Partnership"), dated June 1, 1989, by and
between SOUTHEAST ACQUISITIONS, INC., a Delaware corporation, as general partner
(the "General Partner") and the Persons admitted as limited partners pursuant to
the Partnership Agreement.

WHEREAS, a special meeting (the "Meeting") of the Limited Partners was duly
held on October 28, 1997; and

WHEREAS, at the Meeting a majority in interest of the Limited Partners have
voted to adopt the following Amendments to the Partnership Agreement.

NOW, THEREFORE, the Amendments are adopted and are effective as of
October 28, 1997.

1. Section 1.3 is amended in its entirety to read as follows:

"1.3. TERM. The Partnership shall exist for a term ending December 31,
2001, at which time it shall be dissolved, unless sooner dissolved or
terminated as provided in this Agreement (the "Term")."

2. Section 4.2(a) is amended by adding at the end of the section the
following:

"(xiii) Reserve to itself or an Affiliate or enter into a contract for
an exclusive right to sell or exclusive employment to sell property for
the Partnership."

3. Section 4.3(b) is hereby deleted in its entirety and Sections 4.3(c)
through (f) are renumbered 4.3(b) through (e) respectively.

4. Section 4.3(g) is deleted in its entirety and Sections 4.3(h) through
(t) are hereby renumbered 4.3(f) through (r) respectively.

5. Section 4.5(b) is amended in its entirety, effective as of January 1,
2000, to read as follows:

B-4
<PAGE> 108
"(a) For the services and activities to be performed by the General
Partner in connection with the administration and management of the
Partnership from January 1, 2000 to the end of the Term, the General
Partner shall receive a management fee of $26,500 per year (prorated
for a portion of a year) during the Term of the Partnership. The
management fee shall be paid to the General Partner for such services
on conclusion of each calendar quarter. If the Partnership does not
have sufficient cash to pay the management fee for any quarter, such
fee shall be accrued (without interest) as a debt of the Partnership,
payable out of Sale or Financing proceeds prior to any Partner
receiving his distributions in accordance with the Agreement."

6. Section 4.5(c) is amended in its entirety as follows:

"(d) The General Partner or its Affiliates may receive the entire
competitive real estate commission or disposition fee (that real estate
or brokerage commission or disposition fee paid for the purchase or
sale of property which is reasonable, customary and competitive in
light of the size, type and location of the property) with respect to
sales of Partnership property following October 28, 1997 which are not
under contract as of such date. The total compensation paid to all
Persons for the sale of Partnership property shall be limited to a
competitive real estate commission or disposition fee not to exceed 10%
of the contract price for the sale of the property. The commission or
disposition fee shall be paid upon sale of the property prior to any
distribution to the Partners in accordance with this Agreement;
provided that the amount of any such commission or disposition fee paid
to the General Partner shall reduce any distribution to which it would
otherwise be entitled pursuant to this Agreement."

7. Except as amended hereby, the Partnership Agreement shall remain in
full force and effect.

8. Terms not defined herein which are defined in the Partnership
Agreement shall have the same meanings herein.

9. This Amendment and the rights and obligations of the Partners
hereunder shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed
therein, without application of the principles of conflicts of laws of such
state.

B-5

<PAGE> 109
IN WITNESS WHEREOF, this Amendment has been executed by the parties set
forth below as of the date first above written.

GENERAL PARTNER SOUTHEAST ACQUISITIONS, INC.

By
------------------------------------
Name:
Title:

LIMITED PARTNERS LIMITED PARTNERS

By
------------------------------------
Name:
Title:

B-6

<PAGE> 110
EXHIBIT C

AGREEMENT BETWEEN SOUTHERN

MANAGEMENT GROUP,

R. W. SORENSON AND THE PARTNERSHIP.

<PAGE> 111
AMENDED AND RESTATED
SUBSTITUTION AGREEMENT

THIS AMENDED AND RESTATED SUBSTITUTION AGREEMENT is made as of this 1st
day of July 1997, by and between SOUTHERN MANAGEMENT GROUP, LLC, a Tennessee
Limited Liability Company ("SMG"), Richard W. Sorenson, individually
("Sorenson"), SOUTHEAST ACQUISITIONS I, L.P. ("SEA I"), SOUTHEAST ACQUISITIONS
II, L.P. ("SEA II"), and SOUTHEAST ACQUISITIONS III, L.P. ("SEA III")
(collectively the "SEA Partnerships" and individually a "Partnership") by
SOUTHEAST ACQUISITIONS, INC. as General Partner of the SEA Partnerships (the
"General Partner").

RECITALS

WHEREAS, under an agreement dated April 1, 1997 by and between SMG,
Sorenson, SEA I, SEA II, SEA III and the General Partner (the "Original
Agreement") SMG agreed to be substituted as the new General Partner and assume
all the attendant responsibilities and obligations of the General Partner of
such of the SEA Partnerships as approve the substitution.

WHEREAS, certain modifications to the Original Agreement are required
as a result of revised voting procedures and an extension of the dates for the
subsitution; and

WHEREAS, each of the SEA Partnerships will incur certain costs and
expenses in connection with the substitution of a new General Partner including,
without limitation, those relating to the solicitation of proxies; and

WHEREAS, SMG and Sorenson are willing to indemnify the SEA Partnerships
against such costs and expenses upon a default by SMG or Sorenson under this
Agreement; and

WHEREAS, each of the SEA Partnerships is willing to indemnify Sorenson and
SMG against their costs and expenses relating to the substitution with respect
to its respective Partnership, if such Partnership defaults under this
Agreement.

NOW, THEREFORE, upon the premises set forth herein, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, the parties hereto hereby agree to amend and
restate the Original Agreement as follows:

Section 1. Substitution of New General Partner.

(a) If a majority in interest of the Unit holders of SEA I adopt the
First Alternative Amendments to the Partnership Agreement for SEA I, attached
hereto and made a part hereof (with such changes as shall be approved by all
parties hereto and filed with the Proxy Statement relating thereto to be mailed
on or about September 15, 1997 (the "SEA I Proxy")) at the

C-1
<PAGE> 112

special Meeting of Limited Partners to be held on or about October 29, 1997 (or
such other date to which the Special Meeting may be reasonably postponed), SMG
agrees to be substituted as the new General Partner of SEA I.

(b) If the Unit holders of SEA II adopt the First Alternative Amendments
to the Partnership Agreement for SEA II, attached hereto and made a part hereof
(with such changes as shall be approved by all parties hereto and filed with the
Proxy Statement relating thereto to be mailed on or about August 28, 1997
(the "SEA II Proxy")) at the Special Meeting of Limited Partners to be held on
or about October 28, 1997 (or such other date to which the Special Meeting may
be reasonably postponed), SMG agrees to be substituted as the new General
Partner of SEA II.

(c) If the Unit holders of SEA III adopt the First Alternative Amendments
to the Partnership Agreement for SEA III, attached hereto and made a part hereof
(with such changes as shall be approved by all parties hereto and filed with the
Proxy Statement relating thereto to be mailed on or about August 28, 1997
(the "SEA III Proxy")) at the Special Meeting of Limited Partners to be held on
or about October 28, 1997 (or such other date to which the Special Meeting may
be reasonably postponed), SMG agrees to be substituted as the new General
Partner of SEA III.

Section 2. Execution of Partnership Agreements.

Following each approval as set forth in Section 1(a) through (c) above,
SMG will execute the relevant Partnership Agreement, as amended by the First
Alternative Amendments, as attached to the respective Proxy Statements as
Exhibits A and B thereto, thereby agreeing to be bound by all the terms and
conditions of such Partnership Agreement, as amended.

Section 3. Transfer of General Partner Interest

Upon execution of a Partnership Agreement by SMG in accordance with
Section 2, the General Partner agrees to transfer to SMG all of its interest as
General Partner of such Partnership. The General Partner represents that it has
the right to transfer such interest and that following such transfer and the
satisfaction of all the conditions to SMG being substituted as a General
Partner set forth in the relevant Partnership Agreement, SMG will be a duly
appointed General Partner of such Partnership with all rights and obligations of
the General Partner of such Partnership.

Section 4. Transfer of Books and Records.

No later than ten (10) business days after the execution of a Partnership
Agreement by SMG in accordance with Section 2, the General Partner will deliver
to SMG all of the books and records in its possession of each of the
Partnerships which has approved the substitution of SMG as the new General
Partner, along with a transmittal letter listing such such books and records
being delivered; provided that the General Partner shall have the right to
retain a copy of all such books and records. The General Partner agrees to
cooperate with SMG in the orderly

C-2
<PAGE> 113

transition of management and operation of such of the Partnerships as approve of
the substitution of SMG as the new General Partner, including, without
limitation, making officers, employees and agents of the General Partner
available to SMG at reasonable times and for reasonable periods at their
offices in Radnor, Pennsylvania and providing reasonable assistance to SMG in
its preparation and filing of third quarter financial reports for such
Partnerships.

Section 5. Representations and Warranties

SMG and Sorenson jointly and severally represent to the SEA
Partnerships and the General Partner that all of the information provided by
them or their affiliates to the General Partner or the SEA Partnerships and all
statements appearing in the SEA I Proxy, the SEA II Proxy and the SEA III Proxy
(individually a "Proxy Statement" and collectively the "Proxy Statements") based
on such information and in the light of the circumstances under which they were
made are not and, at the time the Proxy Statements are filed, will not be false
or misleading with respect to any material fact, or omit, or at the time the
Proxy Statements are filed, will omit to state any material fact necessary in
order to make the statements therein not false or misleading. SMG and Sorenson
also undertake to provide to the Partnerships and the General Partner with any
information necessary to correct any such statement in the Proxy Statements
which becomes false or misleading prior to the Special Meetings referred to in
such Proxy Statements.

Each of the Partnerships represents to SMG and Sorenson that all
statements appearing in the Proxy Statement relating to such Partnership, other
than statements based on materials or information provided by SMG, Sorenson or
their affiliates, in the light of the circumstances under which they were made
are not, and at the time such Proxy Statement is filed, will not be false or
misleading with respect to any material fact, or omit or, at the time such Proxy
Statement is filed, will omit to state any material fact necessary in order to
make the statements therein not false or misleading. Each of the Partnerships
undertakes to correct any such statement in the Proxy Statement relating to such
Partnership which becomes false or misleading prior to the Special Meeting
referred to in such Proxy Statement.

Section 6. Indemnity.

SMG and Sorenson, as the principal member of SMG, jointly and severally,
agree to indemnify the Partnerships from and against any and all claims,
liabilities, costs and expenses (including legal expenses) incurred by the
Partnerships in connection with the proposed substitution of SMG as the new
General Partner, including, without limitation, the costs and expenses relating
to solicitation of proxies in connection with the substitution of SMG for the
existing General Partner in the event that Sorenson or SMG defaults under any
provision of this Agreement.

Each of the Partnerships hereby severally agrees to indemnify SMG and
Sorenson from and against any and all claims, liabilities, costs and expenses
(including legal expenses) incurred by SMG and Sorenson in connection with (i)
the proposed substitution of SMG as the new

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<PAGE> 114

General Partner of such Partnership, including, without limitation, the costs
and expenses relating to solicitation of proxies to substitute SMG for the
existing General Partner, in the event that such Partnership defaults under any
provision of this Agreement; and (ii) actions of such Partnership prior to the
admission of SMG as the new General Partner, including, without limitation, any
liabilities or obligations of such Partnership that arose prior to the admission
of SMG as the new General Partner.

The General Partner hereby agrees to indemnify SMG and Sorenson from and
against any and all claims, liabilities, costs and expenses (including legal
expenses) incurred by SMG and Sorenson in connection with actions by the
General Partner prior to the admission of SMG as the new General Partner of a
Partnership, including without limitation, any liabilities or obligations of the
General Partner that arose prior to the admission of SMG as the New General
Partner of a Partnership.

Section 7. Miscellaneous.

(a) This Agreement and the rights and obligations of the parties hereto
shall be governed by and construed and enforced in accordance with the laws of
the Commonwealth of Pennsylvania applicable to contracts made and to be
performed therein. The invalidity of any portion of this Agreement shall not
affect the validity of the remainder. As required by the context, the use of the
singular shall be construed to include the plural and vice versa, and the use of
any gender shall be construed to include all genders.

(b) This Agreement constitutes the entire agreement of the parties hereto,
regarding the subject matter hereof, and all prior agreements, understandings,
representations and statements, oral or written, are hereby merged herein. In
the event of a conflict between the terms of this Agreement and any prior
written agreements, the terms of this Agreement shall prevail. This Agreement
may only be amended or modified by an instrument in writing, signed by the party
intending to be bound thereby.

(c) The Original Agreement is deemed to be amended and restated in its
entirety by this Agreement as of the date first set forth above.

(d) This Agreement may be executed in counterparts, all of which taken
together, shall constitute one and the same document.

C-4
<PAGE> 115
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

SOUTHERN MANAGEMENT GROUP, LLC

By: /s/ RICHARD W. SORENSON
-----------------------------
Name: Richard W. Sorenson
Title: Member

RICHARD W. SORENSON
individually

/s/ RICHARD W. SORENSON
-----------------------------

SOUTHEAST ACQUISITIONS I, L.P.
by: SOUTHEAST ACQUISITIONS, INC.,
General Partner

By: /s/ ARTHUR W. MULLIN
-----------------------------

Name: Arthur W. Mullin
Title: President

SOUTHEAST ACQUISITIONS II, L.P.
by: SOUTHEAST ACQUISITIONS, INC.,
General Partner

By: /s/ ARTHUR W. MULLIN
-----------------------------

Name: Arthur W. Mullin
Title: President

C-5
<PAGE> 116
SOUTHEAST ACQUISITIONS III, L.P.
by: SOUTHEAST ACQUISITIONS, INC.,
General Partner

By: /s/ Arthur W. Mullin
-----------------------------

Name: Arthur W. Mullin
Title: President

C-6

<PAGE> 117
EXHIBIT D

LEGAL OPINION
<PAGE> 118

EXHIBIT D

OPINION OF COUNSEL

OBERMAYER REBMANN MAXWELL & HIPPEL LLP
ONE PENN CENTER - 19TH FLOOR
1617 JFK BLVD.
PHILADELPHIA, PA 19103
September 15, 1997

SOUTHEAST ACQUISITIONS III, L.P.
250 King of Prussia Road
Radnor, PA 19087

RE: EFFECT OF PROPOSED PARTNERSHIP AGREEMENT AMENDMENTS ON THE
FEDERAL INCOME TAX STATUS OF THE PARTNERSHIP

Ladies and Gentlemen:

Southeast Acquisitions III, L.P. (the "Partnership") was formed as a
limited partnership under Delaware law on November 4, 1988 and is presently
existing as a Delaware limited partnership pursuant to a Restated Limited
Partnership Agreement dated as of June 1, 1989 (the "Partnership Agreement").
You have asked for our opinion as to whether or not the amendments which are
proposed to be made to the Partnership Agreement as described in the Proxy
Statement referred to below (the "Alternative Amendments") would either (1)
adversely affect the classification of the Partnership as a partnership for
federal income tax purposes, or (2) cause a "termination" of the Partnership
for federal income tax purposes.

The sole general partner of the Partnership at the present time is
Southeast Acquisitions, Inc. (the "Existing General Partner"). Under cover of
letter dated September 15, 1997, the Existing General Partner delivered to the
limited partners of the Partnership (the "Limited Partners") a Proxy Statement
dated September 15, 1997 (the "Proxy Statement") soliciting Limited Partner
consent to one of two alternative sets of amendments to the Partnership
Agreement. Under the first alternative set of amendments, Southern Management
Group, LLC (the "Proposed New General Partner") would be substituted in place
of the Existing General Partner as the sole general partner of the Partnership,
and new commissions and management fees would be authorized for the Proposed
New General Partner. Under the second alternative set of amendments, which
would not involve a change in general partner of the Partnership, new
commissions and management fees would be authorized for the Existing General
Partner. In addition, under each alternative set of amendments, the stated term
of the Partnership would be extended from December 31, 1999 to December 31,
2001, and there would be a modification of the requirement that a majority in
interest of the Limited Partners consent to a sale or disposition at one time
of all or substantially all the assets of the Partnership under certain
circumstances.

D-1
<PAGE> 119

The interest of the Existing General Partner in the capital of the
Partnership is less than 50 percent of the total interest in Partnership
capital, and the interest of the Existing General Partner in the profits of the
Partnership is less than 50 percent of the total interest in Partnership
profits.

In rendering our opinion, we have examined (i) a copy of the Partnership
Agreement, (ii) a copy of the Proxy Statement, and (iii) such legal authorities
as we have deemed to be relevant in allowing us to form our opinion, including
United States Treasury Regulation Sections 301.7701-2, 301.7701-2, and
301.7701-3, as amended by Treasury Decision 8697 (the "Entity Regulations"), and
Treasury Regulation 1.708-1, as amended by Treasury Decision 6175 (the
"Termination Regulations"). The Entity Regulations were published in the Federal
Register on December 18, 1996, and are generally effective as of January 1,
1997. The Termination Regulations were published in the Federal Register on May
8, 1997.

The General Partner has represented to us, and we assume to be the case,
that (a) the Partnership Agreement is the partnership agreement under which the
Partnership currently exists, (b) the Partnership has filed all of its federal
income tax returns as a partnership, (c) the Partnership has otherwise been
treated by its partners as a partnership for federal income tax purposes (and
not as an association taxable as a corporation) throughout the existence of the
Partnership, (d) neither the Partnership nor any partner thereof was notified in
writing on or before May 8, 1996 that the Partnership's classification as a
partnership for federal income tax purposes was under examination by the
Internal Revenue Service, and (e) any transfer of the Existing General Partner's
interest in the Partnership by reason of the Alternative Amendments, when
combined with any other changes in ownership of interests in the Partnership
during the 12-month period ending on the date of such transfer, will not result
in a sale or exchange of 50 percent or more of the total interest in Partnership
capital and profits.

In our opinion, under current law, based on the facts and assumptions
set forth above, the adoption of either set of Alternative Amendments (1) would
not adversely affect the classification of the Partnership as a partnership for
federal income tax purposes (and not as an association taxable as a
corporation), and (2) would not cause a "termination" of the Partnership for
federal income tax purposes.

/s/ OBERMAYER REBMANN MAXWELL & HIPPEL LLP

D-2
<PAGE> 120
The date of this Proxy Statement is set forth in the lower right hand corner of
this back cover page. Under no circumstances shall the information contained in
this Proxy Statement be considered unchanged as of any date subsequent to the
date hereof except with respect to information incorporated by reference herein
pursuant to a subsequently dated document.

Summary Table of Contents
Summary................................. 13
Risk Factors............................ 34
Conflicts of Interest................... 37
History of the Partnership.............. 39
The General Partner..................... 44
The Properties.......................... 50
The Alternative Amendments.............. 55
Federal Tax Consequences; Legal
Opinion................................ 72
Eligible Units.......................... 72
Voting.................................. 72
Information Agent....................... 74
Solicitation by the General Partner..... 74
Ownership of Units...................... 74
Experts................................. 75
Available Information................... 75
Incorporation of Certain Documents
by Reference.......................... 75
Appendix: Glossary of Defined Terms..... 76
Exhibit A: Partnership Agreement........ A-1
Exhibit B: Alternative Amendments....... B-1

Exhibit C: Agreement between
Southern Management Group,
R.W. Sorenson and the Partnership..... C-1

Exhibit D: Legal Opinion................ D-1

SOUTHEAST ACQUISITIONS III, L.P.

General Partner:
Southeast Acquisitions, Inc.
250 King of Prussia Road
Radnor, Pennsylvania 19087
Telephone No. (610) 964-7178
Facsimile No. (610) 964-7269

Information Agent:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Telephone No. (800) 829-6551
Facsimile No. (212) 809-8839

Proxy Statement

September 15, 1997

<PAGE> 121
PROXY PROXY

SOUTHEAST ACQUISITIONS III, L.P.
250 KING OF PRUSSIA ROAD
RADNOR, PENNSYLVANIA 19087
TELEPHONE (610) 964-7178

THIS PROXY IS SOLICITED BY THE GENERAL PARTNER ON BEHALF OF THE PARTNERSHIP

The undersigned hereby appoints Arthur W. Mullin and James W. Kelican,
Jr. as Proxyholders, each with full power of substitution and resubstitution,
and hereby authorizes either of them to represent and vote, as designated
below, all of the Units of the Partnership that the undersigned held as a
Limited Partner on August 28, 1997 the Record Date at the Special Meeting
to be held on October 28, 1997, and any adjournment thereof. Capitalized term
used but not defined in this Proxy Card have the meanings given to them in the
Partnership's Proxy Statement for the Special Meeting.

YOU MAY VOTE IN FAVOR OF OR AGAINST OR ABSTAIN FROM VOTING WITH RESPECT TO EACH
AMENDMENT CONTAINED IN EACH SET OF ALTERNATIVE AMENDMENTS. HOWEVER, THE ADOPTION
OF ANY AMENDMENT CONTAINED IN A SET OF ALTERNATIVE AMENDMENTS IS CONDITIONED
UPON THE ADOPTION OF ALL OF THE AMENDMENTS WITHIN THAT SET OF ALTERNATIVE
AMENDMENTS.

IN ORDER TO BE ADOPTED, ALL OF THE AMENDMENTS CONTAINED IN A SET OF ALTERNATIVE
AMENDMENTS MUST RECEIVE AT LEAST 50% OF THE VOTES OF LIMITED PARTNERSHIP UNITS
ELIGIBLE TO VOTE.

IN THE EVENT BOTH SETS OF ALTERNATIVE AMENDMENTS RECEIVE IN EXCESS OF 50% OF THE
VOTES OF LIMITED PARTNERSHIP UNITS ELIGIBLE TO VOTE, THE SET OF ALTERNATIVE
AMENDMENTS RECEIVING THE MOST VOTES IN EXCESS OF 50% WILL BE ADOPTED.

IN THE EVENT OF AN EQUAL NUMBER OF VOTES BEING CAST WHICH ARE SUFFICIENT FOR THE
ADOPTION OF BOTH THE FIRST ALTERNATIVE AMENDMENTS AND THE SECOND ALTERNATIVE
AMENDMENTS, THE GENERAL PARTNER WILL DETERMINE A METHOD OF RANDOM SELECTION AND
SELECT THE SET OF ALTERNATIVE AMENDMENTS TO BE ADOPTED PURSUANT THERETO.

IF NEITHER THE FIRST ALTERNATIVE AMENDMENTS NOR THE SECOND ALTERNATIVE
AMENDMENTS RECEIVE THE AFFIRMATIVE VOTE OF A MAJORITY IN INTEREST OF THE UNITS,
THE GENERAL PARTNER WILL CONTINUE TO ACT AS GENERAL PARTNER OF THE PARTNERSHIP
IN ACCORDANCE WITH THE PARTNERSHIP AMENDMENT.

1. PROPOSAL TO APPROVE FIRST ALTERNATIVE AMENDMENTS

(please select a, b, c or vote on individual amendments under d)

a. / / FOR approval of all of the First Alternative Amendments

b. / / AGAINST approval of all of the First Alternative
Amendments

c. / / ABSTAIN from voting for approval of all of the First
Alternative Amendments

d. As follows as to the individual amendments in the First
Alternative Amendments: PLEASE NOTE THAT NONE OF THE
FOLLOWING AMENDMENTS CAN BE ADOPTED ON ITS OWN. THE ADOPTION
OF ANY AMENDMENT SET FORTH IN THIS SECTION (d) IS
CONDITIONED UPON ADOPTION OF ALL OF THE OTHER AMENDMENTS
IN THIS SECTION (d)

i. As to the amendment extending the terms of the
Partnership to December 31, 2001:

/ / FOR
/ / AGAINST
/ / ABSTAIN

ii. As to the substitution of Southern Management Group,
LLC as the New General Partner of the Partnership:

/ / FOR
/ / AGAINST
/ / ABSTAIN

iii. As to the authorization of new commissions and
management fees payable to the New General Partner,
both effective October 28, 1997:
/ / FOR
/ / AGAINST
/ / ABSTAIN

iv. As to the proposal to give the New General Partner the
exclusive right to sell the Properties:

/ / FOR
/ / AGAINST
/ / ABSTAIN

v. As to the proposal to amend the Partnership Agreement to
provide that a majority in interest of the Limited
Partners must consent to the transfer at one time of 60%
or more of the real estate acreage held by the
Partnership as of September 15, 1997 unless (i) in
connection with the liquidation of the Partnership, or
(ii) where the proceeds of the transfer, when
distributed in accordance with the Partnership
Agreement, will be sufficient to provide the Limited
Partners with distributions equal to the Acquisition
Cost of the real property sold.

/ / FOR
/ / AGAINST
/ / ABSTAIN

2. PROPOSAL TO APPROVE SECOND ALTERNATIVE AMENDMENTS

(please select a, b, c or vote on individual amendments under d)

a. / / FOR approval of all of the Second Alternative Amendments

b. / / AGAINST approval of all of the Second Alternative
Amendments

c. / / ABSTAIN from voting for approval of all of the Second
Alternative Amendments

d. As follows as to the individual amendments in the Second
Alternative Amendments: PLEASE NOTE THAT NONE OF THE
FOLLOWING AMENDMENTS CAN BE ADOPTED ON ITS OWN. THE ADOPTION
OF ANY AMENDMENT SET FORTH IN THIS SECTION (d) IS
CONDITIONED UPON ADOPTION OF ALL OF THE OTHER AMENDMENTS
IN THIS SECTION (d)

i. As to the amendment extending the term of the
Partnership to December 31, 2001 (with Southeast
Acquisitions, Inc. remaining as General Partner):
/ / FOR
/ / AGAINST
/ / ABSTAIN

ii. As to the amendment authorizing new commissions payable
to the General Partner or an Affiliate on the sale of
the Property after October 28, 1997 and new
management fees for the General Partner, following
December 31, 1999:
/ / FOR
/ / AGAINST
/ / ABSTAIN

iii. As to the proposal to give the New General Partner the
exclusive right to sell the Properties:

/ / FOR
/ / AGAINST
/ / ABSTAIN

iv. As to the amendment to delete from the Partnership the
requirement that a majority only in interest of the
Limited Partners must consent to a sale or disposition
at one time of all or substantially all the assets of
the Partnership unless in connection with a liquidation
of the Partnership under the Partnership Agreement or in
the event that the net proceeds of such sale, when
distributed in accordance with the Partnership
Agreement, would be sufficient to provide the Limited
Partners with distributions equal with Unpaid Cumulative
Return plus their Adjusted Capital Contributions:

/ / FOR
/ / AGAINST
/ / ABSTAIN

3. The Proxyholders are also authorized to vote upon procedural
matters coming before the Special Meeting in accordance
with their best judgment.

<PAGE> 122

THE PROXYHOLDERS WILL VOTE THE UNDERSIGNED'S UNITS IN THE MANNER DIRECTED
HEREON. IF YOU RETURN A SIGNED PROXY CARD WITHOUT INDICATING
HOW YOU WISH TO VOTE ON EITHER OF THE ALTERNATIVE AMENDMENTS, YOUR VOTE WILL BE
COUNTED AS A VOTE FOR BOTH SETS OF ALTERNATIVE AMENDMENTS.

Please sign and date below. When Units are held by joint tenants, both
joint tenants should sign. When signing as administrator, attorney-in-fact,
executor, fiduciary, guardian, officer, trustee, or other person acting in a
representative capacity, please give your full title. If a corporation, an
authorized officer should sign in the name of the corporation. If a
partnership, a general partner should sign in the name of the partnership.

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

PLEASE MARK, SIGN, DATE, ----------------------------------------
AND RETURN THIS PROXY Signature
PROMPTLY USING THE
ENCLOSED ENVELOPE. ----------------------------------------

Dated: , 1997
-----------
----------------------------------------