Item 7. Financial Statements

SHELTER PROPERTIES V

LIST OF FINANCIAL STATEMENTS

                                                           /s/ ERNST & YOUNG LLP


Greenville, South Carolina
February 15, 2002

Assets
   Cash and cash equivalents                                                $  6,401
   Receivables and deposits                                                      580
   Restricted escrows                                                            819
   Other assets                                                                1,487
   Investment properties (Notes C and F):
      Land                                                    $  4,054
      Buildings and related personal property                   79,929
                                                                83,983
      Less accumulated depreciation                            (50,111)       33,872
                                                                            $ 43,159

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                          $ 418
   Tenant security deposit liabilities                                           285
   Accrued property taxes                                                        285
   Other liabilities                                                             598
   Mortgage notes payable (Note C)                                            47,884

Partners' Deficit
   General partners                                           $   (335)
   Limited partners (52,538 units
      issued and outstanding)                                   (5,976)       (6,311)
                                                                            $ 43,159

            See Accompanying Notes to Consolidated Financial Statements

                                                      Years Ended December 31,
                                                          2001         2000
Revenues:
 Rental income                                            $13,238     $13,532
 Other income                                               1,406       1,210
 Casualty gain (Note G)                                       256       1,662
 Gain on sale of property (Note B)                          5,968          --
      Total revenues                                       20,868      16,404

Expenses:
 Operating                                                  5,843       5,514
 General and administrative                                   617         606
 Depreciation                                               2,971       2,940
 Interest                                                   3,216       3,002

 Property taxes                                               920         794
      Total expenses                                       13,567      12,856

Income before extraordinary item                            7,301       3,548
Extraordinary loss on early extinguishment
 extinguishment of debt                                      (201)       (230)

      Net income (Note D)                                $  7,100    $  3,318

Net income allocated to general
   partners (1%)                                         $     71    $     33
Net income allocated to limited
   partners (99%)                                           7,029       3,285

                                                         $  7,100    $  3,318
Per limited partnership unit:

Income before extraordinary item                         $ 137.58    $  66.86

Extraordinary loss on early
 extinguishment of debt                                     (3.79)      (4.33)

Net income                                               $ 133.79    $  62.53

Distributions per limited
  partnership unit                                       $ 179.87    $ 221.25

See Accompanying Notes to Consolidated Financial Statements

                                        Limited
                                       Partnership    General     Limited
                                          Units       Partners   Partners     Total

Original capital contributions           52,538        $   2      $52,538   $52,540

Partners' (deficit) capital
   at December 31, 1999                  52,538        $(339)     $ 4,784   $ 4,445

Distributions to partners                    --          (30)     (11,624)  (11,654)

Net income for the year
   ended December 31, 2000                   --           33        3,285     3,318

Partners' deficit
   at December 31, 2000                  52,538         (336)      (3,555)   (3,891)

Distributions to partners                    --          (70)      (9,450)   (9,520)


Net income for the year
   ended December 31, 2001                   --           71        7,029     7,100

Partners' deficit
   at December 31, 2001                  52,538       $ (335)     $(5,976)  $(6,311)

            See Accompanying Notes to Consolidated Financial Statements

                                                                 Years Ended
                                                                 December 31,
                                                             2001           2000

Cash flows from operating activities:
  Net income                                               $  7,100      $  3,318
  Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation                                               2,971         2,940
   Amortization of discounts and loan costs                     104           193
   Gain on sale of property                                  (5,968)           --
   Extraordinary loss on early extinguishment of debt           201           230
   Casualty gain                                               (256)       (1,662)
   Change in accounts:
      Receivables and deposits                                  535          (206)
      Other assets                                               16           (20)
      Accounts payable                                         (267)         (840)
      Tenant security deposit liabilities                         4             7
      Accrued property taxes                                     25          (151)
      Other liabilities                                           2          (368)
         Net cash provided by operating activities            4,467         3,441
Cash flows from investing activities:
   Sales proceeds received, net                               6,176            --
   Property improvements and replacements                    (6,071)       (2,972)
   Net withdrawals from (deposits to)
     restricted escrows                                       1,960        (2,128)
   Settlement for defective property improvements               153            --
   Insurance proceeds received                                  323         4,324
         Net cash provided by (used in)
         investing activities                                 2,541          (776)
Cash flows from financing activities:
   Payments on mortgage notes payable                          (865)         (671)
   Loan costs paid                                           (1,016)         (276)
   Prepayment penalty                                            --          (120)
   Proceeds from mortgage notes payable                      24,592         7,020
   Repayment of mortgage notes payable                      (16,342)       (3,272)
   Partners' distributions                                   (9,520)      (11,654)
   Advance from affiliate                                       253            --
   Repayment of advance from affiliate                         (253)           --
         Net cash used in financing activities               (3,151)       (8,973)
Net increase (decrease) in cash and cash
   equivalents                                                3,857        (6,308)
Cash and cash equivalents at beginning of the period          2,544         8,852
Cash and cash equivalents at end of the period            $   6,401     $   2,544
Supplemental disclosure of cash flow information:
  Cash paid for interest                                  $   3,268     $   2,847
Supplemental disclosure of non-cash activity:
  Property improvements and replacements
  in accounts payable                                     $     287     $     221
  Receivable for defective property
  improvements                                            $      --     $     153

At December  31,  1999,  approximately  $145,000 of  property  improvements  and
replacements were included in accounts payable.

            See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES V

Notes to Consolidated Financial Statements

Note A - Organization and Significant Accounting Policies

Organization: Shelter Properties V (the "Partnership" or "Registrant") was organized as a limited partnership under the laws of the State of South Carolina on August 21, 1981. The general partner responsible for management of the Partnership's business is Shelter Realty V Corporation, a South Carolina corporation (the "Corporate General Partner"). The Corporate General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The other general partner is AIMCO Properties, L.P., an affiliate of the Corporate General Partner and AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2023 unless terminated prior to such date. The Partnership commenced operations on July 19, 1983, and completed its acquisition of apartment properties on January 18, 1984. The Partnership operates seven apartment properties located in the South and Southeast.

Principles of Consolidation: The financial statements include all the accounts of the Partnership and its two 99.99% owned partnerships. The corporate general partner of the consolidated partnerships is Shelter Realty V Corporation. Shelter Realty V Corporation may be removed as the general partner of the consolidated partnerships by the Registrant; therefore, the consolidated partnerships are controlled and consolidated by the Registrant. All significant interpartnership balances have been eliminated.

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

Allocation of Cash Distributions: Cash distributions by the Partnership are allocated between general and limited partners in accordance with the provisions of the Partnership Agreement. The Partnership Agreement defines net cash from operations as revenue received less operating expenses paid, adjusted for certain specified items which primarily include mortgage payments on debt, property improvements and replacements not previously reserved, and the effects of other adjustments to reserves including reserve amounts deemed necessary by the Corporate General Partner. In the following notes to the consolidated financial statements, whenever "net cash from operations" is used, it has the aforementioned meaning. The following is a reconciliation of the subtotal in the accompanying consolidated statements of cash flows captioned "net cash provided by operating activities" to "net cash from operations", as defined in the Partnership Agreement. However, "net cash from operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity.

Reconciliation of Cash Flows:

                                                       Years Ended
                                                       December 31,
                                                   2001            2000
                                                      (in thousands)
Net cash provided by operating
   activities                                  $ 4,467         $ 3,441
  Property improvements and
   replacements                                 (6,071)         (2,972)
  Payments on mortgage notes payable              (865)           (671)
  Changes in reserves for net
     operating liabilities                        (315)          1,578
  Changes in restricted escrows, net             1,960          (2,128)
  Releases from operating reserves                 824           1,514

     Net cash from operations                  $    --         $   762

For the years ended December 31, 2001 and 2000, the Corporate General Partner released previously reserved funds of approximately $824,000 and $1,514,000, respectively.

The Partnership Agreement provides that 99% of distributions of net cash from operations are allocated to the limited partners until they receive net cash from operations for such fiscal year equal to 7% of their adjusted capital values (as defined in the Partnership Agreement), at which point the general partners will be allocated all net cash from operations until they have received distributions equal to 10% of the aggregate net cash from operations distributed to partners for such fiscal year. Thereafter, the general partners will be allocated 10% of any distributions of remaining net cash from operations for such fiscal year.

All distributions of distributable net proceeds (as defined in the Partnership Agreement) from property dispositions and refinancings will be allocated to the limited partners until each limited partner has received an amount equal to a cumulative 7% per annum return of the average of the limited partners' adjusted capital value, less any prior distributions of net cash from operations and distributable net proceeds, and has also received an amount equal to the limited partners' adjusted capital value. Thereafter, the general partners receive 1% of the selling prices of properties sold where they acted as a broker, after which the limited partners will be allocated 85% of any remaining distributions of distributable net proceeds and the general partners will receive 15%.

Undistributed Net Proceeds from Sales and Refinancings: At December 31, 2000, all proceeds from prior sales and refinancings had been distributed. At December 31, 2001, the Partnership had undistributed net proceeds of approximately $2,479,000 from the sale of land from Tar River Estates Apartments and approximately $4,935,000 from the financing obtained on Tar River Estates Apartments in December 2001.

Allocation of Profits, Gains, and Losses: Profits, gains and losses of the Partnership are allocated between general and limited partners in accordance with the provisions of the Partnership Agreement.

For any fiscal year, to the extent that profits, not including gains from property dispositions, do not exceed distributions of net cash from operations, such profits are allocated in the same manner as such distributions. In any fiscal year in which profits, not including gains from property dispositions, exceed distributions of net cash from operations, such excess is treated on a cumulative basis as if it constituted an equivalent amount of distributable net proceeds and is allocated together with, and in the same manner as, that portion of gain described in the second sentence of the following paragraph.

Any gain from property dispositions attributable to the excess, if any, of the indebtedness relating to a property immediately prior to the disposition of such property over the Partnership's adjusted basis in the property shall be allocated to each partner having a negative capital account balance, to the extent of such negative balance. The balance of any gain shall be treated on a cumulative basis as if it constituted an equivalent amount of distributable net proceeds and shall be allocated to the general partners to the extent that general partners would have received distributable net proceeds in connection therewith; the balance shall be allocated to the limited partners. However, the interest of the general partners will be equal to at least 1% of each gain at all times during the existence of the Partnership. Accordingly, net income as shown in the consolidated statement of operations and changes in partners' (deficit) capital for 2001 was allocated 99% to the limited partners and 1% to the general partners. Net income per limited partnership unit was computed by dividing the net income allocated to the limited partners by 52,538 units outstanding.

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

Other Reserves: The Corporate General Partner may designate a portion of cash generated from operations as "other reserves" in determining net cash from operations. The Corporate General Partner designated as other reserves an amount equal to the net liabilities related to the operations of apartment properties during the current fiscal year that are expected to require the use of cash during the next fiscal year. The changes in other reserves during the years ended December 31, 2001 and 2000 were an increase of approximately $315,000 and a decrease of approximately $1,578,000, respectively. The amounts were determined by considering changes in the balances of receivables and deposits, other assets, accounts payable, tenant security deposit liabilities, accrued taxes and other liabilities. At this time, the Corporate General Partner expects to continue to adjust other reserves based on the net change in the aforementioned account balances.

Cash and Cash Equivalents: Includes cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances included approximately $6,072,000 at December 31, 2001 that is maintained by an affiliated management company on behalf of affiliated entities in cash concentration accounts.

Completion Reserve: In conjunction with the 2001 refinancing of the mortgage notes encumbering Woodland Village Apartments, Lake Johnson Mews Apartments, and the new financing of the mortgage at Tar River Estates Apartments, deposits were made with the mortgage company to establish and maintain Completion Reserve Accounts which are designated for necessary repairs and replacements at the properties. As of December 31, 2001, the repairs had been completed at Woodland Village Apartments and Lake Johnson Mews Apartments, and reserves of approximately $150,000 and $251,000, respectively, should be returned to the Partnership in 2002. At December 31, 2001, the reserves totaled approximately $524,000.

Capital Improvements Reserve: During 2001, the Partnership received a settlement for defective siding materials which was used in a construction project at Lexington Green Apartments completed during 1988. A reserve account was established in 2001 with the mortgage lender pending the completion of renovations to replace the defective materials at the property. All work has been completed and is currently awaiting inspection at which time the mortgage lender will release the funds. At December 31, 2001, the balance in this reserve was approximately $246,000, including interest.

Escrows for Taxes and Insurance: Escrows for all of the properties are held by the Partnership. All escrowed funds are designated for the payment of real estate taxes. As required by the new loan at Woodland Village Apartments, escrows totaling approximately $356,000 are maintained in a separate bank account by the property and are included in receivables and deposits.

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

Loan Costs: Loan costs of approximately $1,433,000, less accumulated amortization of approximately $75,000, are included in other assets and are being amortized on a straight-line basis over the life of the related loans. In connection with the 1999 refinancing of Foxfire Apartments and Old Salem Apartments and the 2000 refinancing of Lexington Green Apartments, additional loan costs of approximately $174,000 and $14,000, respectively, were capitalized during the year ended December 31, 2001. In connection with the 2001 refinancing of the mortgages at Woodland Village Apartments, Lake Johnson Mews Apartments, Millhopper Village Apartments, and the new financing obtained at Tar River Estates Apartments, additional loan costs of approximately $828,000 were capitalized during the year ended December 31, 2001.

Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments.

Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. In addition, the Corporate General Partner's policy is to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged against rental income as incurred.

Investment Properties: Investment properties consist of seven apartment complexes and are stated at cost. Acquisition fees are capitalized as a cost of real estate. In accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Costs of apartment properties that have been permanently impaired have been written down to appraised value. The Corporate General Partner relies on the annual appraisals performed by the outside appraisers for the estimated value of the Partnership's properties. There are three recognized approaches or techniques available to the appraiser. When applicable, these approaches are used to process the data considered significant to each to arrive at separate value indications. In all instances the experience of the appraiser, coupled with his objective judgment, plays a major role in arriving at the conclusions of the indicated value for which the final estimate of value is made. The three approaches commonly known are the cost approach, the sales comparison approach, and the income approach. The cost approach is often not considered to be reliable due to the lack of land sales and the significant amount of depreciation and, therefore, is often not presented. Upon receipt of the appraisals, any property which is stated on the books of the Partnership above the estimated value given in the appraisal, is written down to the estimated value given by the appraiser. The appraiser assumes a stabilized occupancy at the time of the appraisal and, therefore, any impairment of value is considered to be permanent by the Corporate General Partner. No adjustments for impairment of value were recorded in the years ended December 31, 2001 or 2000. See "Recent Accounting Pronouncements" below.

Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also established standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. The Corporate General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented.

Advertising: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $139,000 and $156,000 for the years ended December 31, 2001 and 2000, respectively, were charged to operating expense as incurred.

Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 provides accounting guidance for financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Corporate General Partner does not anticipate that its adoption will have a material effect on the financial position or results of operations of the Partnership.

Note B - Disposition of Property

On October 17, 2001, the Partnership sold a portion of the land from Tar River Estates Apartments to the city of Greenville, North Carolina, for net proceeds of approximately $6,176,000 after a reduction for FEMA funds previously received. The Partnership realized a gain of approximately $5,968,000 as a result of the sale. The Partnership used approximately $4,342,000 of the net proceeds to repay the mortgages encumbering the property. In addition, the Partnership recorded an extraordinary loss on early extinguishment of debt of approximately $89,000 as a result of the write-off of unamortized loan costs and mortgage discounts.

                                Principal     Monthly                           Principal
                               Balance At     Payment     Stated                 Balance
                              December 31,   Including   Interest  Maturity      Due At
Property                          2001        Interest     Rate      Date       Maturity
                                   (in thousands)                            (in thousands)

Foxfire Apartments
 1st mortgage                   $ 6,861       $ 59        7.79%    11/01/19       $ --

Old Salem Apartments
 1st mortgage                     9,711          85       8.02%    12/01/19           --

Woodland Village Apartments
 1st mortgage                     8,004          63       7.11%    09/01/21           --

Lake Johnson Mews Apartments
 1st mortgage                     7,051          57       7.43%    07/01/21           --

The      Lexington      Green
Apartments
 1st mortgage                     6,871          55       7.22%    01/01/21           --

Millhopper Village Apartments
 1st mortgage                     4,186          34       7.43%    07/01/21           --

Tar River Estates Apartments
 1st mortgage                     5,200          41       7.23%    01/01/22           --

Total                           $47,884       $ 394                               $ --

On December 28, 2001, the Partnership obtained new financing on Tar River Estates Apartments. Gross proceeds from the new financing were approximately $5,200,000. The new note requires monthly principal and interest payments at a fixed rate of 7.23% and matures January 1, 2022, at which time it will be fully amortized. The old debt of approximately $4,342,000 carried a fixed interest rate of 7.60% and was repaid with proceeds from the condemnation and sale of a portion of the land to the city of Greenville, North Carolina, as discussed in Note B. Total capitalized loan costs for the new mortgage were approximately $146,000 at December 31, 2001.

On August 31, 2001, the Partnership refinanced the mortgage note at Woodland Village Apartments. Gross proceeds from the refinancing were $8,050,000 of which approximately $4,950,000 was used to repay the existing mortgage note. The new note requires monthly principal and interest payments at a fixed rate of 7.11% and matures September 1, 2021, at which time the loan will be fully amortized. The old debt carried a fixed interest rate of 7.33%. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $38,000, due to the write-off of unamortized loan costs. Total capitalized loan costs for the new mortgage were approximately $279,000 at December 31, 2001.

On June 28, 2001, the Partnership refinanced the mortgage notes encumbering Lake Johnson Mews Apartments and Millhopper Village Apartments. The refinancings replaced indebtedness of approximately $4,350,000 at Lake Johnson Mews Apartments and $2,700,000 at Millhopper Village Apartments with new mortgages in the amounts of $7,117,000 and $4,225,000, respectively. The new mortgages both carry a stated interest rate of 7.43% as compared to 7.33% on the previous loans. Payments of principal and interest on the new mortgage loans are due monthly until the loans mature on July 1, 2021, at which time they will be fully amortized. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $38,000 at Lake Johnson Mews Apartments and approximately $36,000 at Millhopper Village Apartments due to the write-off of unamortized loan costs. Total capitalized loan costs for the new mortgages were approximately $232,000 for Lake Johnson Mews Apartments and approximately $171,000 for Millhopper Village Apartments at December 31, 2001.

On December 15, 2000, the Partnership refinanced the mortgage notes at The Lexington Green Apartments. Gross proceeds from refinancing were $7,020,000 of which approximately $3,272,000 was used to pay off the existing first and second mortgage notes. The new note requires monthly principal and interest payments at a fixed interest rate of 7.22% and matures January 1, 2021, at which time it will be fully amortized. The old debt carried fixed interest rates of 7.60% with maturities of November 15, 2002. Total capitalized loan costs for the new mortgage were approximately $195,000 for the year ended December 31, 2000. Additional loan costs of approximately $14,000 were capitalized during the year ended December 31, 2001.

The mortgage notes payable are non-recourse and are secured by a pledge of the respective apartment properties and by pledge of revenues from the respective apartment properties. Certain of the notes require prepayment penalties if repaid prior to maturity and prohibit resale of the properties subject to existing indebtedness.

Scheduled principal payments of mortgage notes payable subsequent to December 31, 2001 are as follows (in thousands):

     2002     $  1,176
     2003        1,277
     2004        1,377
     2005        1,484
     2006        1,599
Thereafter 40,971

$ 47,884

Note D - Income Taxes

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

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

                                        2001          2000

Net income as reported                 $ 7,100       $ 3,318
Add (deduct):
     Depreciation differences           1,734         1,538
     Change in prepaid rental              45           (19)
     Gain from casualty and sale       (1,358)       (2,789)
     Other                                (21)          662
     Change in other
       liabilities                         --           (15)
Federal taxable income                $ 7,500       $ 2,695

Federal taxable income per
     limited partnership unit         $139.46       $ 50.78

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

Net liabilities as reported              $  (6,311)
Land and buildings                            (979)
Accumulated depreciation                   (20,020)
Syndication fees                             6,747
Other                                          705

Net liabilities - tax basis               $(19,858)

                                                     2001          2000
Property management fees (included in
  operating expenses)                                $ 745        $ 721
Reimbursement for services of affiliates
 (included in operating, general and
 administrative expenses and investment
 properties)                                         1,804          529
Loan costs (included in other assets)                  416           70

During the years ended December 31, 2001 and 2000, affiliates of the Corporate General Partner were entitled to receive 5% of gross receipts from all of the Partnership's properties for providing property management services. The Partnership paid to such affiliates approximately $745,000 and $721,000 for the years ended December 31, 2001 and 2000, respectively.

Affiliates of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $1,804,000 and $529,000 for the years ended December 31, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the Corporate General Partner of approximately $1,365,000 and $119,000 for the years ended December 31, 2001 and 2000, respectively. The construction management service fees are calculated based on a percentage of current and certain prior year additions to investment properties and are being depreciated over 15 years.

For services provided in connection with the refinancing of six of the Partnership's investment properties between 1999 and 2001 and the new financing obtained on Tar River Estates Apartments, the Corporate General Partner was paid approximately $416,000 and $70,000 during the years ended December 31, 2001 and 2000, respectively. These costs were capitalized and are included in other assets on the consolidated balance sheet.

During the year ended December 31, 2001, an affiliate of the Corporate General Partner advanced the Registrant approximately $253,000 to fund repairs related to the casualty at Tar River Estates Apartments in September 1999. This advance bore interest at the prime rate plus 2%. Total interest expense related to this advance was approximately $3,000. The Partnership repaid this advance in July 2001 with a portion of the refinancing proceeds from Lake Johnson Mews Apartments and Millhopper Village Apartments.

Beginning in 2001, the Partnership began insuring its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Corporate General Partner. During the year ended December 31, 2001, the Partnership paid AIMCO and its affiliates approximately $135,000 for insurance coverage and fees associated with policy claims administration.

In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 36,924 limited partnership units in the Partnership representing 70.28% of the outstanding units as of December 31, 2001. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 70.28% of the outstanding units, AIMCO is in a position to control all such voting decisions with respect to the Partnership. When voting on matters, AIMCO would in all likelihood vote the units it acquired in a manner favorable to the interest of the Corporate General Partner because of its affiliation with the Corporate General Partner.

                                                     Initial Cost
                                                    To Partnership
                                                    (in thousands)

                                                           Buildings        Cost
                                                          and Related   Capitalized
                                                           Personal    Subsequent to
           Description            Encumbrances    Land     Property     Acquisition
                                  (in thousands)                      (in thousands)
Foxfire Apartments                   $ 6,861     $ 830      $ 9,122       $ 1,545
Old Salem Apartments                   9,711        654      12,664         4,692
Woodland Village Apartments            8,004        605       9,135         4,045
Lake Johnson Mews Apartments           7,051        338       6,725         1,903
The Lexington Green Apartments         6,871      1,102       6,620         3,231
Millhopper Village Apartments          4,186        239       4,305         1,598
Tar River Estates Apartments           5,200        474       9,985         4,171
Totals                               $47,884    $ 4,242     $58,556       $21,185

                           Gross Amount At Which
                                  Carried
                            At December 31, 2001
                               (in thousands)

                                 Buildings
                                    And
                                   Related                       Date of           Depreciable
                                  Personal          Accumulated Construc-   Date        Life-
       Description         Land   Property   Total  Depreciation  tion    Acquired    Years
                                                   (in thousands)
Foxfire Apartments
Atlanta, Georgia          $   830  $10,667  $11,497  $ 7,428   1969-1971  07/19/83   5-29

Old Salem Apartments
Charlottesville, Virginia     654   17,356   18,010   11,430   1969-1971  08/25/83   5-28

Woodland Village
Apartments
Columbia, South Carolina      605   13,180   13,785    8,201      1974    09/01/83   5-30

Lake Johnson Mews
Apartments
Raleigh, North Carolina       338    8,628    8,966    5,561   1972-1973  09/30/83   5-30

The Lexington Green
 Apartments
Sarasota, Florida           1,102    9,851   10,953    6,115   1973-1982  10/31/83   5-34

Millhopper Village
Apartments
Gainesville, Florida          239    5,903    6,142    3,981   1970-1976  11/22/83   5-29

Tar River Estates
Apartments
Greenville, North             286   14,344   14,630    7,395   1969-1972  01/18/84   5-30
Carolina

                          $ 4,054  $79,929  $83,983  $50,111
         Totals

Reconciliation of "Investment Properties and Accumulated Depreciation":

                                                            Years Ended
                                                           December 31,
                                                       2001            2000
                                                          (in thousands)
Real Estate
Balance at beginning of year                        $78,239         $76,281
    Property improvements                             6,137           3,048
    Sale of property                                   (208)             --
    Disposals of property                              (185)         (1,090)
Balance at end of year                              $83,983         $78,239

Accumulated Depreciation

Balance at beginning of year                        $47,206         $44,317
    Additions charged to expense                      2,971           2,940
    Disposals of property                               (66)            (51)
Balance at end of year                              $50,111         $47,206

The aggregate cost of the real estate for Federal income tax purposes at December 31, 2001 and 2000 is approximately $83,004,000 and $88,744,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2001 and 2000 is approximately $70,131,000 and $74,973,000, respectively.

Note G - Casualty Events

In September 2001, Lexington Green Apartments was damaged by a tropical storm. There was extensive damage to two units in addition to 36 units with minor damage. The property incurred damages of approximately $69,000 as a result of the storm. As of December 31, 2001, insurance proceeds of approximately $52,000 have been received to cover the damage to the property. These proceeds are held on deposit with the mortgage lender. After writing off the undepreciated costs of the damaged units, the Partnership recognized a casualty gain of approximately $33,000 during the year ended December 31, 2001.

In August 2001, there was a fire at Foxfire Apartments which damaged ten units. The property incurred damages of approximately $259,000 and lost rents of approximately $22,000 as a result of the fire. As of December 31, 2001, insurance proceeds of approximately $22,000 have been received to cover lost rents and are included in rental income and approximately $202,000 to cover damage to the property. After writing off the undepreciated cost of the damaged units, the Partnership recognized a casualty gain of approximately $102,000 for the year ended December 31, 2001.

In September 1999, Tar River Estates Apartments was damaged by severe flooding which affected certain areas of North Carolina. It is estimated that the property has incurred approximately $6,323,000 in damages as a result of this flooding. As of December 31, 2001, insurance proceeds of approximately $5,316,000 have been received to cover lost rents and damage to the property, resulting in a casualty gain of approximately $1,662,000 for the year ended December 31, 2000. In addition, the Partnership negotiated an agreement with the city of Greenville, North Carolina, whereby a portion of the land was condemned and sold to the city (see Note B - Disposition of Property). Therefore, the apartment units previously located on this land were not reconstructed. The remaining damaged units have been completely reconstructed. As part of the reconstruction process, the Partnership capitalized the portion of the interest expense associated with the assets under reconstruction. For the year ended December 31, 2001, approximately $114,000 of interest had been capitalized.

In July 1999, Woodland Village Apartments experienced a fire, which resulted in the destruction of eight apartment units. The property incurred damages of approximately $448,000 and estimated lost rents of approximately $36,000. Insurance proceeds of approximately $332,000 were received during the year ended December 31, 1999 to cover the damages and lost rents and are included in rental income, resulting in a casualty gain in 1999 of $210,000. The repairs were completed and an additional gain of approximately $121,000 was recorded during the year ended December 31, 2001 as a result of receiving additional insurance proceeds.

Note H - Distributions

During the year ended December 31, 2001, the Partnership distributed approximately $9,520,000 to the partners (approximately $9,450,000 to the limited partners, or $179.87 per limited partnership unit), of which approximately $1,623,000 (approximately $1,607,000 to the limited partners, or $30.59 per limited partnership unit) was from operations, approximately $6,302,000 was paid to the limited partners ($119.95 per limited partnership unit) from proceeds from the refinancings of Lake Johnson Mews Apartments, Millhopper Village Apartments, and Woodland Village Apartments, and approximately $1,541,000 was paid to the limited partners ($29.33 per limited partnership unit) from proceeds from the sale of a portion of the land at Tar River Estates Apartments. In connection with the transfer of funds from the majority-owned sub-tier limited partnership to the Partnership, approximately $54,000 was distributed to the general partner of the majority-owned sub-tier limited partnership. During the year ended December 31, 2000, cash distributions of approximately $11,654,000 were paid ($11,624,000 of which was paid to the limited partners, or $221.25 per limited partnership unit). Of this amount, approximately $9,285,000 was paid to the limited partners ($176.73 per limited partnership unit) from refinancing proceeds and approximately $2,369,000 (approximately $2,339,000 to the limited partners, or $44.52 per limited partnership unit) was paid from operations.

Note I - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging, among other things, the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999.

Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Corporate General Partner and its affiliates filed a demurrer to the third amended complaint. On May 14, 2001, the Court heard the demurrer to the third amended complaint. On July 10, 2001, the Court issued an order sustaining defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed a fourth amended class and derivative action complaint. On September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the Corporate General Partner and affiliated defendants filed a demurrer to the fourth amended complaint, which was heard on December 11, 2001. On February 2, 2002, the Court served its order granting in part the demurrer. The Court has dismissed without leave to amend certain of the plaintiffs' claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a putative class comprised of all non-affiliated persons who own or have owned units in the partnerships. The Corporate General Partner and affiliated defendants oppose the motion and a hearing has been scheduled for April 29, 2002. The Court has set the matter for trial in January 2003.

During the third quarter of 2001, a complaint (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed a first amended complaint. The first amended complaint in the Heller action is brought as a purported derivative action, and asserts claims for among other things breach of fiduciary duty; unfair competition; conversion, unjust enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the Heller action with the Nuanes action and stated that the Heller action was filed in order to preserve the derivative claims that were dismissed without leave to amend in the Nuanes action by the Court order dated July 10, 2001. On October 5, 2001, the Corporate General Partner and affiliated defendants moved to strike the first amended complaint in its entirety for violating the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer in the Nuanes action, or alternatively, to strike certain portions of the complaint based on the statute of limitations. Other defendants in the action demurred to the fourth amended complaint, and, alternatively, moved to strike the complaint. On December 11, 2001, the court heard argument on the motions and took the matters under submission. On February 4, 2002, the Court served notice of its order granting defendants' motion to strike the Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.

The Corporate General Partner does not anticipate that any costs, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations.

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