1996-12-31_10K_0001047469-97-001971

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0001047469-97-001971.txt : 19971030
0001047469-97-001971.hdr.sgml : 19971030
ACCESSION NUMBER: 0001047469-97-001971
CONFORMED SUBMISSION TYPE: 10-K/A
PUBLIC DOCUMENT COUNT: 15
CONFORMED PERIOD OF REPORT: 19961231
FILED AS OF DATE: 19971029
SROS: NASD

FILER:

COMPANY DATA:
COMPANY CONFORMED NAME: NHP INC
CENTRAL INDEX KEY: 0000946358
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531]
IRS NUMBER: 521445137
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231

FILING VALUES:
FORM TYPE: 10-K/A
SEC ACT:
SEC FILE NUMBER: 000-26572
FILM NUMBER: 97702655

BUSINESS ADDRESS:
STREET 1: 8065 LEESBURG PIKE
STREET 2: STE 400
CITY: VIENNA
STATE: VA
ZIP: 22182
BUSINESS PHONE: 2023476247

MAIL ADDRESS:
STREET 1: 1225 EYE ST NW
CITY: WASHINGTON
STATE: DC
ZIP: 20005

10-K/A
1
FORM 10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
Amendment No. 2
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 1996

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to
Commission file number 000-26572

NHP INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware 52-1445137
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

8065 Leesburg Pike, Suite 400, Vienna, Virginia 22182-2738
Address of principal executive offices Zip Code

Registrant’s telephone number, including area code (703) 394-2400

Securities registered pursuant to Section 12(b) of the Act: None

Title of Each Class Name of Each Exchange
on which Registered

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /

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

The aggregate market value of the voting stock held by nonaffiliates of
the registrant was $131,665,608 at March 7, 1996, calculated in accordance
with the Securities and Exchange Commission rules as to beneficial ownership.

12,652,439 shares of the registrant’s common stock were outstanding at
March 7, 1996.

DOCUMENTS INCORPORATED BY REFERENCE: None

Item 8. NHP INCORPORATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(RESTATED)

INDEX

Page
NHP Incorporated

Report of Independent Public Accountants ………………………….. F-1
Index of 1994 Auditors’ Reports ………………………………….. F-2
Consolidated Statements of Operations for the Years Ended December 31,
1996, 1995 and 1994 (as restated for 1996 and 1995) ……………….. F-12
Consolidated Balance Sheets as of December 31, 1996 and 1995 (both as
restated) ……………………………………………………. F-13
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996, 1995 and 1994 (as restated for 1996 and 1995)………………… F-14
Consolidated Statements of Shareholders’ Equity (Deficit) for the Years
Ended December 31, 1996, 1995 and 1994 (as restated for 1996 and 1995).. F-16
Notes to Consolidated Financial Statements………………………….. F-17

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of NHP Incorporated:

We have audited the accompanying consolidated balance sheets of NHP
Incorporated (formerly NHP, Inc.), a Delaware corporation, and subsidiaries
(the “Company”) as of December 31, 1996 and 1995, (both as restated–See Note 2
and Note 5) and the related consolidated statements of operations,
shareholders’ equity (deficit) and cash flows for each of the three years in
the period ended December 31, 1996 (as restated for 1996 and 1995–See Note 2
and Note 5). These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. We did not audit
the 1994 financial statements of certain real estate partnerships whose
operating results are included in “income (loss) from discontinued real
estate operations, net of income taxes,” in the accompanying 1994
consolidated financial statements. The net losses of these real estate
partnerships ($1,706,000) represent 10% of 1994 net income. The financial
statements of these real estate partnerships were audited by other auditors
whose reports have been furnished to us and our opinion, insofar as it
relates to the amounts (including the 1994 gross revenues disclosed in Note
2) included in the consolidated financial statements for these real estate
partnerships, is based solely on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of NHP Incorporated and subsidiaries
as of December 31, 1996 and 1995, and the results of their operations and cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.

/s/ Arthur Andersen LLP
Washington, D.C.,
April 23, 1997 (except with respect to the matters
discussed in Note 5 and “Discontinued Real Estate Operations”
in Note 2 as to which the dates are October 3, 1997 and
October 21, 1997, respectively)

F-1

INDEX OF 1994 AUDITORS’ REPORTS

* Anders, Minkler & Diehl, LLP
Caroline Associates I
Columbus Square Associates I
Columbus Square Associates II
Pershing Waterman Phase I
PW III Associates
PW IV Associates
PW V Associates
PW VI Associates
Savoy Court Associates
Wigar, Ltd.

Arthur Andersen LLP
NHP Incorporated

* Dauby O’Connor & Zaleski, LLC
Brookview Apartments Company Limited
Clover Ridge East Limited Partnership
Colony Apartments Company Limited
East Hampton Limited Partnership
Edgewood II Associates
Fairburn & Gordon Associates, Phase I
Fairburn & Gordon Associates, Phase II
Laing Village
Oakland City/West End Associates, Ltd.
Orangeburg Manor
Parkways Associates
Pleasant Valley Apartments, Ltd.
Sandy Springs Associates, Ltd.
The Oak Park Partnership
The Rogers Park Partnership
Tiffany Rehab Associates
Village Green Apartments Company Limited
Vineville Towers Associates, Ltd.
Westgate Apartments

* Deloitte & Touche LLP
107-145 West 135th Street Associates
Algonquin Tower Limited Partnership
All Hallows Associates
Allentown Towne House Limited Partnership
Anglers Manor Associates
Antioch Apartments, Ltd.
Arvada House
Audobon Park Associates
Baldwin Oaks Elderly, Ltd.
Baldwin Towers Associates
Basswood Manor Limited Partnership
Bayview Hunters Point Apartments
Bensalem Gardens Associates
Berkley Limited Partnership
Bloomsburg Elderly Associates
Boynton Beach Limited Partnership
Briarwood Apartments

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-2

INDEX OF 1994 AUDITORS’ REPORTS

Brightwood Manor Associates
Brinton Manor No. 1 Associates
Brinton Towers Associates
Brookside Apartments Associates
Buena Vista Apartments, Ltd.
Cabell Associates of Lakeview
California Square Limited Partnership
California Square II Limited Partnership
Campbell Heights Associates
Canterbury Gardens Associates
Capital Park Limited Partnership
Caroline Arms Limited Partnership
Center Square Associates
Central Village Associates
Chapel NDP
Cheek Road Limited Partnership
Cheyenne Village Apartments, Ltd.
Clay Courts Associates
College Heights
College Park Apartments
College Park Associates
Community Developers of High Point
Congress Park Associates II
Copperwood Limited
Copperwood II Limited
Cottonwood Apartments
Cumberland Court Associates
Cypress Gardens, Limited
Darby Townhouses Associates
Darbytown Development Associates
Delcar-S, Ltd.
Delcar-T, Ltd.
DIP Limited Partnership
DIP Limited Partnership – II
DIP Limited Partnership – III
Discovery Limited Partnership
Doral Gardens Associates
Duquesne Associates No. 1
Eastman Associates
Edmond Estates Limited Partnership
Elden Limited Partnership
Elm Creek Limited Partnership
Esbro Limited Partnership
Fairmeadows Limited Partnership
Fairmont #1 Limited Partnership
Fairmont #2 Limited Partnership
Fairview Homes Associates
Fairwood Associates
Federal Square Village

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-3

INDEX OF 1994 AUDITORS’ REPORTS

Field Associates
Forest Green Limited Partnership
Forest Park Elderly Associates
Forrester Gardens, Ltd.
Fort Carson Associates
Foxwood Manor Associates
Franklin Chapel Hill Associates
Franklin Eagle Rock Associates
Franklin Northwoods Associates
Franklin Park Limited Partnership
Franklin Pheasant Ridge Associates
Franklin Ridgewood Associates
Franklin Woods Associates
Friendset Housing Company
Frio Housing, Ltd.
G. W. Carver Limited
Galion Limited Partnership
Garfield Hill Associates
Gateway Village Associates
Gladys Hampton Houses Associates
Golden Apartments I
Golden Apartments II
Grandview Apartments
Greater Mount Calvary Terrace, Ltd.
Greater Richmond Community Development Corp. I and Associates
Greater Richmond Community Development Corp. II and Associates
Green Mountain Manor Limited Partnership
Griffith Limited Partnership
Gulfway Limited Partnership
H.R.H. Properties, Ltd.
Hamilton Gardens, Ltd.
Hamilton Heights Associates
Harold House Limited Partnership
Hatillo Housing Associates
Hickory Ridge Associates, Ltd.
Hillcrest Green Apartments, Ltd.
Hillside Village Associates
Hilltop Apartments Associates
Hilltop Limited Partnership
Hopkins Renaissance Associates
Hudson Terrace Associates
Hurbell II Limited Partnership
Indian Valley I Limited Partnership
Indian Valley II Limited Partnership
Indian Valley III Limited Partnership
Ingram Square Apartments, Ltd.
Jamestown Village Associates
Jersey Park Associates
JFK Associates
Johnston Square Associates

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-4

INDEX OF 1994 AUDITORS’ REPORTS

JVL Limited
JVL 16 Associates
JVL 18 Associates
JVL 19 Associates
Kennedy Homes Limited Partnership
Kenneth Arms Apartments
Key Parkway West Associates
Kimberly Associates Limited Partnership
Knollcrest Apartments
La Salle Apartments
La Vista Associates
Lafayette Manor Associates
Lafayette Towne Elderly, Ltd.
Lafayette Towne Family, Ltd.
Lake Forest Apartments
Langenheim Associates
Las Americas Housing Associates
Lassen Associates
Laurel Gardens
Lewisburg Associates
Lewisburg Elderly Associates
Leyden Limited Partnership
Lincmar Associates
Lincoln Park Associates
Lock Haven Elderly Associates
Lock Haven Gardens Associates
Loring Towers Apartments Limited Partnership
M & P Development Company
Madison Hill Limited Partnership
Manzanita Arms Apartments
Maple Hill Associates
Maple Park East Limited Partnership
Maple Park West Limited Partnership
Mayfair Manor Limited Partnership
Meadowood Apartments – Phase I (Meadowood Associates)
Meadowood Apartments – Phase II (Meadowood Associates)
Meadowood Associates III, Ltd.
Meadows Apartments Limited Partnership
Meadows East Apartments Limited Partnership
Menlo Limited Partnership
Merced Commons I
Merced Commons II
Mill Street Associates
Miramar Housing Associates
Montblanc Garden Apartments Associates
Montblanc Housing Associates
Morrisania Towers Housing Company
Moss Gardens Ltd.
Murphy Blair Associates III
New Lake Village Apartments

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-5

INDEX OF 1994 AUDITORS’ REPORTS

New West 111th Street Housing Company
New West 111th Street Two Associates
Newton Hill Limited Partnership
Northgate Village Limited Partnership
Northlake Terrace Associates
Northwest Terrace Associates
Oakland Village Townhouse Associates
Ocala Place, Ltd.
Olde Rivertowne Venture
One Lytle Place
One West Conway Associates
Orange Village Associates
Overbrook Park, Ltd.
Palm House Limited Partnership
Park Avenue West I Limited Partnership
Park Avenue West II Limited Partnership
Park Creek Limited Partnership
Pavillion Associates
Place One Limited Partnership
Portland Plaza Partnership
Portner Place Associates
Post Street Associates
Pride Gardens Limited Partnership
Pueblo Apartments Associates, Ltd.
Rancho Arms Apartments
Retirement Manor Associates
RI-15 Limited Partnership
Richlieu Associates
River Front Apartments Limited Partnership
River Woods Associates
Riverview II Associates
Rockwell Limited Partnership
Rolling Meadows Of Ada, Ltd.
Royal Towers Limited Partnership
Ruffin Road Associates
Rutherford Park Townhouses Associates
San Jose Limited Partnership
San Juan Apartments
San Juan Del Centro Limited Partnership
Sencit Towne House Limited Partnership
Sherman Terrace Associates
Shoreview Apartments
Site 10 Community Alliance Associates
Sleepy Hollow Apartments
SNI Development Company
Southmont Apartments
Southridge Apartments Limited Partnership
Southward Limited Partnership
Spring Meadow Limited Partnership
Springfield Limited Partnership

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-6

INDEX OF 1994 AUDITORS’ REPORTS

Spruce Limited Partnership
Stafford Apartments
Stock Island Limited Partnership
Storey Manor Associates
Strawbridge Square Associates Limited Partnership
Summersong Townhouses Limited Partnership
Sunrise Associates
Sunset Plaza Apartments
Susquehanna View Limited Partnership
Timberlake Apartments Limited Partnership
Timuquana Park Associates
Tinker Creek Limited Partnership
Town North
Treeslope Apartments Associates
Trinity Apartments
Trinity Hills Village Apartments
Trinity Towers – 14th Street Associates, Ltd.
Tumast Associates
United Handicap Federation Apartment Associates
United House Associates
United Housing Partners – Carbondale, Ltd.
United Redevelopment Associates
University Plaza Associates
Vantage 78
Verdes Del Oriente
Villa De Guadalupe Associates
Village Circle Apartments, Ltd.
Village Green Limited Partnership
Village Park II
Vistas De San Juan Associates
Waico Apartments Associates
Waico Phase II Associates
Walden Oaks Associates
Walmsley Terrace Associates
Walnut Hills Associates, Ltd.
Wash-West Properties
Washington Manor Limited Partnership
Waterman Limited Partnership
Waters Towers Associates
West Oak Village Limited Partnership
Whitefield Place, Ltd.
Woodmark Limited Partnership
Yadkin Associates

* Edwards Leap & Sauer
Buffalo Village Associates
Genessee Gardens Associates
Ida Tower

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-7

INDEX OF 1994 AUDITORS’ REPORTS

* George A. Hieronymus & Company, LLC
Athen Arms Associates
Colonial Terrace I Associates
Colonial Terrace II Associates

* Goldenberg Rosenthal Friedlander, LLP
Baisley Park Associates
Brunswick Village Limited Partnership
Churchview Gardens Limited Partnership
Harris Gardens Limited Partnership
Hawksworth Limited Partnership
Hollows Associates
Kimberton Apartments Associates
Washington Northgate Limited Partnership
Washington Westgate Limited Partnership
Windsor Apartments Associates

* Hansen, Hunter & Kibbee, P.C.
Haines Associates Limited Partnership
King-Bell Associates
Monmouth Associates Limited Partnership
Pendleton Riverside Apartments, Oreg., Ltd.
Penn Hall Associates Limited Partnership
Rodeo Drive Limited Partnership
South Mountain Terrace, Ltd.
Woodland Apartments, Oreg., Ltd.

* J.H. Cohn, LLP
Marlboro Greens Limited Partnership

* J.A. Plumer & Co., P.A.
630 East Lincoln Avenue Associates
Aspen Stratford Apartments Company B
Aspen Stratford Apartments Company C
Benjamin Banneker Plaza Associates
Brightwood Limited Partnership
Cambridge Heights Apartments, Ltd.
Carter Associates Limited Partnership
Cherry Estates
Christopher Court Housing Company
Concord House Associates
Duke Manor Associates
Elderly Housing Associates Ltd. Partnership
Forest Apartments Associates
Gate Manor Apartments, Ltd.
Greenfield Apartments Limited Partnership
Greenfield North Apartments Limited Partnership
Haili Associates
Houston Aristocrat Apartments, Ltd.
Kapuna Associates

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-8

INDEX OF 1994 AUDITORS’ REPORTS

Kinloch Urban East Housing
Koolau Housing Associates
Lakeview Arms Associates
Lee-Hy Manor Associates Limited Partnership
Locust Park Associates
Loring Towers Associates
Mahoning Associates
Milliken Apartments Company
Monument Street Limited Partnership
Neighborhoods of the Universities Lock Street Apartments Company
Oak Hollow South Associates
Orchard Mews Associates
Oxford Place Associates
Pittsfield Neighborhood Associates
Prince Street Towers Limited Partnership
Sencit-Lebanon Company
St. Nicholas Associates
Tamarac Pines, Ltd.
Tamarac Pines II, Ltd.
Taunton Green Associates
Taunton II Associates
Tompkins Terrace Associates
Waipahu Associates
Washington Chinatown Associates
Woodcrest Apartments, Ltd.
Worchester Episcopal Housing Company

* Marks Shron & Company, LLP
Two Bridges Associates

* Reznick Fedder & Silverman
Beautiful Village Associates Redevelopment Company
Branchwood Towers Limited Partnership
Citrus Park Associates, Ltd.
Community Circle II Limited
Copperstone Limited Partnership
Diakonia Associates Limited Partnership
Easton Terrace I Associates
Easton Terrace II Associates
Eastridge Apartments
Emory Grove Associates Limited Partnership
First Alexandria Associates
Flatbush NSA Associates
Franklin Square School Associates
Gates Mill I Limited Partnership
Grosvenor House Associates Limited Partnership
Harris Park Limited Partnership
Hollybush Gardens I
Hollybush Gardens II
Intown West Associates Limited Partnership

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-9

INDEX OF 1994 AUDITORS’ REPORTS

Lake Avenue Associates
Lake Crossing Limited Partnership
Lakehaven Associates One
Lakehaven Associates Two
Linden Court Associates
Loudoun House Limited Partnership
Monaco Arms Associates I
Monaco Arms Associates II
Muske Limited Partnership
Natick Associates
Oakcrest Terrace Apartments
Oakwood Limited Partnership
Parkview Associates
Queenstown Apartments Limited Partnership
Rancho Townhouse Associates
Ruscombe Gardens Limited Partnership
Sencit-Jacksonville Company LTD
Sheffield Associates
Snap IV Limited Partnership
Tara Bridge Limited Partnership
Twin Towers Associates
Tyee Associates Limited Partnership
Urbanization Maria Lopez Housing Company
Westminster Associates
Wollaston Manor Associates
Woodside Village Limited Partnership

* Russell Thompson Butler & Houston
Chesterfield Housing Associates
Community Developers Of Princeville
Crosland Housing Associates
Eastcourt Village Partners
Eustis Apartments, Ltd.
Grove Park Villas, Ltd.
Hemingway Housing Associates
Highlands Village II
Housing Assistance of Mt. Dora, Ltd.
Housing Assistance of Orange City, Ltd.
Housing Assistance of Sebring, Ltd.
Housing Assistance of Vero Beach, Ltd.
Hurbell I Limited Partnership
Hurbell IV Limited Partnership
Lakeview Villas, Ltd.
Mccoll Housing Associates
Miami Elderly Associates
Orange City Villas II, Ltd.
Parkview Apartments, Ltd.
Parkview Arms Associates I
Parkview Arms Associates II
Registry Square, Ltd.

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-10

INDEX OF 1994 AUDITORS’ REPORTS

South Hiawassee Village, Ltd.
St. George Villas
The Meadows Apartments
Townview Towers I Partnership, Ltd.
Twin Gables Associates
United Housing Partners Cuthbert, Ltd.
United Housing Partners Elmwood, Ltd.
United Housing Partners Morristown, Ltd.
United Housing Partners Welch, Ltd.
VOA-Nicollet Towers Associates
Woodside Villas of Arcadia, Ltd.

– ——————–
* Incorporated by reference from Exhibit 99 to the Registration Statement on
Form S-1 (File No. 33-93110) of NHP Incorporated.

F-11

NHP INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of these consolidated statements.

F-12

NHP INCORPORATED
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

The accompanying notes are an integral part of these consolidated statements.

F-13

NHP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

The accompanying notes are an integral part of these consolidated statements.

F-14

NHP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)

The accompanying notes are an integral part of these consolidated statements.

F-15

NHP INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (RESTATED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)

The accompanying notes are an integral part of these consolidated statements.

F-16

NHP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) NATURE OF BUSINESS AND ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of NHP
Incorporated and its wholly-owned subsidiaries (the “Company”). On August 18,
1995, the Company sold those of its subsidiaries which held all of the
Company’s direct and indirect interests in property-owning partnerships,
along with its captive insurance subsidiary and certain other related assets
(collectively referred to as the “Real Estate Companies”) to the two
controlling shareholders of the Company, Demeter Holdings Corporation
(“Demeter”) and Capricorn Investors, L.P. (“Capricorn”), and J. Roderick
Heller, III, the Chairman, President and Chief Executive Officer of the
Company (“Mr. Heller”). The consolidated financial statements include the
accounts of the Real Estate Companies through August 18, 1995, presented as
discontinued operations in accordance with generally accepted accounting
principles (“GAAP”). The Company continues to provide services to the Real
Estate Companies and, therefore, intercompany revenues and expenses between
the Company and the Real Estate Companies have not been eliminated from the
Company’s revenues and expenses in the consolidated financial statements for
the periods prior to August 18, 1995. All other material intercompany
accounts and transactions have been eliminated in consolidation.

As of April 1, 1996, NHP Incorporated closed the acquisition of all of
the outstanding capital stock of WMF Holdings, Ltd., which was subsequently
renamed NHP Financial Services, Ltd., for consideration of approximately $21
million in the form of $16.8 million in cash and 210,000 shares of the
Company’s common stock. NHP Financial Services, Ltd. is the owner of
Washington Mortgage Financial Group, Ltd. (“Washington Mortgage Financial”)
of Fairfax County, Virginia, one of the nation’s leading multifamily mortgage
originators and servicers (collectively, “NHP Financial Services”). Included
in Washington Mortgage Financial is WMF/Huntoon, Paige Associates Limited
(“WMF/Huntoon, Paige”), a leading FHA mortgage originator and servicer
located in Edison, New Jersey.

On April 19, 1997, the Company’s Board of Directors approved a plan to
spin-off NHP Financial Services (the Company’s former Financial Services
business segment) to the Company’s current shareholders. Accordingly, the
accompanying financial statements have been restated to reflect NHP Financial
Services as discontinued operations in accordance with GAAP. Previously reported
revenue related to the Financial Services business segment of $24.8 million is
now included in net income from discontinued operations. For further discussion,
see Note 2.

NATURE OF BUSINESS

The Company’s continuing operations provide a broad array of real estate
services nationwide including property management and asset management as well
as related services including equity investments, purchasing, risk management
and home health care.

The Company provides a full range of property management and related
services to owners of multifamily rental housing properties, primarily
properties owned by partnerships in which the Real Estate Companies have an
ownership interest. The properties served by the Company are located in
urban, suburban and rural areas throughout various regions of the United
States other than the Northwest region. This reduces the impact of local
economic cycles on the overall operations of the Company. The Company
provides services to both “conventional” (market rate) and “affordable”
properties. Affordable properties receive some form of Federal and/or state
assistance and are generally restricted to low or moderate income tenants.

Approximately 64% of the properties and 44% of the units managed by the
Company as of December 31, 1996 are affordable properties and units. A
substantial portion of the affordable properties were built or acquired by
the owners with the assistance of programs administered by the United States
Department of Housing and Urban Development (“HUD”) that provide mortgage
insurance, favorable financing terms, or rental assistance payments to the

F-17

owners. As a condition to the receipt of assistance under these and other HUD
programs, the properties must comply with various HUD requirements including
limiting rents on these properties to amounts approved by HUD.

For the past several years, various proposals have been advanced by HUD,
the Congress and others proposing the restructuring of Section 8 of the
United States Housing Act of 1937 (“Section 8”). These proposals generally
seek to lower subsidized rents to market levels and to lower required debt
service costs as needed to ensure financial viability at the reduced rents,
but vary greatly as to how that result is to be achieved. Some proposals
include a phase-out of project-based subsidies on a property-by-property
basis upon expiration of a property’s Housing Assistance Payments Contract
(“HAP Contract”), with a conversion to a tenant-based subsidy. Under a
tenant-based system, rent vouchers would be issued to qualified tenants who
then could elect to reside at a property of their choice, provided the tenant
has the financial ability to pay the difference between the selected
property’s monthly rent and the value of the voucher, which would be
established based on HUD’s regulated fair market rent for that geographic
area.

Congress has not yet accepted any of these restructuring proposals and
instead has elected to renew expiring Section 8 HAP Contracts for one year
terms, generally at existing rents. While the Company does not believe that
the proposed changes would result in a significant number of tenants
relocating from properties managed by the Company, there can be no assurance
that the proposed changes would not significantly affect the Company’s
management portfolio. Furthermore, there can be no assurance that changes in
federal subsidies will not be more restrictive than those currently proposed
or that other changes in policy will not occur. Any such changes could have
an adverse effect on the Company’s property management revenues.

DEPENDENCE ON THE REAL ESTATE COMPANIES FOR PROPERTY SERVICES REVENUES

The Company is, and will continue to be, substantially dependent on
revenue from services provided to properties controlled by the Real Estate
Companies. Approximately 67% of the Company’s property management revenue in
1996 was derived from fees for services provided to properties controlled by
the Real Estate Companies. Pursuant to the agreements with the Real Estate
Companies discussed in Note 13, the Real Estate Companies are required for a
period of at least 25 years, subject to certain conditions, to cause the
Company to be selected to provide services to each of the properties the Real
Estate Companies control and properties they may control in the future.

ACCOUNTING ESTIMATES

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

PROPERTY SERVICES – REVENUE AND EXPENSES

The Company recognizes property management, Buyers Access-Registered
Trademark-, tax credit investment and insurance advisory fee revenues as
services are rendered and the revenue is earned. Administrative and reporting
fees are earned for providing administrative services to certain partnerships
in which the Real Estate Companies have ownership interest. These fees are
payable only to the extent distributable cash flow of the partnerships, as
defined, is available. The Company accrues these fees as services are
rendered and establishes a reserve equal to the amount of accrued fees that
are not assured of being paid. Prepayments received on service contracts are
deferred and recognized as revenue when the related services are performed.
Revenues from Preferred Home Health are recognized as services are performed.
Property management services revenue includes direct management fees, central
accounting fees, computer fees and asset management fees as well as various
other fees earned in conjunction with the management of properties. Buyers
Access-Registered Trademark- revenue, tax credit investment revenue, revenues
from Preferred Home Health and insurance advisory fee revenue are included in
other revenue on the Consolidated Statement of Operations.

Personnel hired to provide operating and management services to the
individual properties which the Company manages are employees of the Company
(“On-site Employees”). All payroll costs, including payroll taxes and
benefits, relating to On-site Employees are reimbursable to the Company by
the individual properties. These costs,

F-18

which totaled $124.1, $113.1, and $93.6 million for the years ended December
31, 1996, 1995 and 1994, respectively, have been reflected as operating
expenses, and the related reimbursements have been included in operating
revenue as part of on-site personnel, general and administrative cost
reimbursements. The Company accrues as a liability amounts charged to the
individual properties for On-site Employee benefits (health insurance and
401(k) Plan employer contributions) which have not yet been paid to third
party providers of services. All other employees of the Company are
classified as “Off-site Employees.”

The Company also provides asset management, finance, accounting and tax
services to the Real Estate Companies on a cost reimbursable basis. The costs
charged back to the Real Estate Companies have been reflected as operating
expenses and the related reimbursements have been included in operating
revenue as part of on-site personnel, general and administrative cost
reimbursements in the accompanying consolidated financial statements and
amounted to $3.1, $4.1 and $4.6 million for the years ended December 31,
1996, 1995 and 1994, respectively.

INCOME TAXES

The benefit (provision) for income taxes includes Federal and state
income taxes currently payable and those deferred or prepaid because of
temporary differences between financial statement and tax bases of assets and
liabilities. The net deferred tax asset relates primarily to net operating
loss carryforwards (“NOLs”) recognized by the Company subsequent to the sale
of the Real Estate Companies. For further discussion see Note 9.

NET INCOME PER SHARE

Net income per share is computed using the weighted average number of
common shares and equivalents outstanding during each period. Common share
equivalents are attributable primarily to outstanding stock options. The
weighted average shares and equivalents used in the per share calculations
were 12,729,636, 9,644,745, and 8,094,733 for the years ended December 31,
1996, 1995 and 1994, respectively. As there is not a material difference
(less than 3%) between net income per share and fully-diluted net income per
share, only net income per share is presented.

In February 1995, the Company’s Board of Directors declared a 25 for 1
split of the Company’s common stock. All share and per share amounts have
been restated to reflect the stock split.

On August 18, 1995, the Company completed an initial public offering
(“IPO”) of 4.3 million shares of common stock and received net proceeds of
approximately $52.0 million. The net proceeds were used in their entirety to
repay certain of the Company’s outstanding debt (see Note 8).

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with initial
maturities of 90 days or less to be cash equivalents.

RECEIVABLES

Receivables, which are substantially all from related parties, are stated
net of an allowance for doubtful accounts of $2.5 and $1.6 million at
December 31, 1996 and 1995, respectively.

PURCHASED MANAGEMENT CONTRACTS

The cost of acquiring the rights to manage multifamily real estate
properties is capitalized and amortized over the shorter of 15 years or the
estimated life of the management contracts which include projected renewals.
Purchased management contracts are being amortized over terms ranging from 1
to 15 years. The Company periodically reevaluates its assumptions regarding
projected renewals for the purpose of determining the need to adjust the
estimated life of management contracts. Purchased management contracts are
stated net of accumulated amortization of $11.9 and $8.4 million at December
31, 1996 and 1995, respectively.

F-19

GOODWILL

Goodwill represents the excess of the cost of acquired businesses over
the fair value of their tangible and identified intangible assets. Goodwill
was recorded in conjunction with the Goldberg acquisition described in Note 4.
Goodwill is being amortized on a straight-line basis over 10 years. The
Company reviews the carrying value of goodwill for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable. Goodwill is stated net of accumulated amortization of $0.3
million at December 31, 1996.

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

Property and equipment is carried at cost, net of accumulated
depreciation, and includes all major renewals and betterments. Maintenance,
repairs and minor replacements are expensed as incurred. Depreciation expense
is computed on the straight-line basis over the estimated useful lives of the
related assets, or the lesser of useful life or lease term for leasehold
improvements. The lives used for calculating depreciation vary from 5 to 7
years.

Computer software purchased from or developed by outside vendors is
capitalized and is carried at cost net of accumulated amortization.
Amortization expense is computed on a straight-line basis over the shorter of
the estimated useful life of the software or five years.

OTHER ASSETS

Other assets includes notes receivable, deferred acquisition costs,
deferred financing costs and other non-current assets.

NOTES RECEIVABLE – In conjunction with the 1996 Goldberg Acquisition
discussed in Note 4, the Company purchased two notes receivable. The two
notes bear interest at 9% and 9.75% and are due from the project limited
partnerships of two Florida rental retirement communities to the extent the
properties have net cash flow available for payment. The 9% note was recorded
at its face value of $5.1 million, which approximates fair value. The 9.75%
note has a face value of $7.4 million and was recorded at its estimated fair
value of $3.3 million, net of a discount of $4.1 million. The discount is
being amortized into interest income over 15 years using a method that
approximates the effective interest method. The net balance as of December
31, 1996, on these notes receivable, including approximately $0.5 million of
which is considered current and is included in other current assets on the
Consolidated Balance Sheet, was $8.4 million. The Company recognized $0.4
million of interest income on these notes in 1996.

DEFERRED FINANCING COSTS – Certain costs of obtaining the financing
arrangements described in Note 8 have been deferred and are being amortized
to interest expense over the remaining term of the related debt. In 1995, the
Company recorded as an extraordinary item the write off of deferred financing
costs related to the Company’s previous credit facility (see Note 16).
Deferred financing costs, net of accumulated amortization, were $0.4 and $0.6
million as of December 31, 1996 and 1995, respectively.

DEFERRED ACQUISITION COSTS – Certain costs related to the investigation,
pursuit and negotiation of potential acquisitions are deferred until the
acquisition is consummated or until the Company determines that it will no
longer pursue a particular acquisition. Deferred costs associated with a
completed acquisition are considered part of the acquisition price and are
allocated, along with the costs incurred at closing, to the asset or assets
acquired. Costs associated with potential acquisitions that are determined to
no longer be viable are expensed in the period of the determination. Deferred
acquisition costs were $0.7 and $2.6 million at December 31, 1996 and 1995,
respectively.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the
current year presentation.

F-20

NEW ACCOUNTING STANDARD

The Company adopted SFAS No. 121, “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the
disclosure provisions of SFAS No. 123, “Accounting for Stock-Based
Compensation,” on January 1, 1996. These statements did not have an effect on
the Company’s financial position or results of operations. See Note 11 for
further discussion of SFAS No. 123.

In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, “Earnings Per Share,” which will change the reporting of earnings
per share effective in the fourth quarter of 1997. Basic earnings per share
will not include stock options as common stock equivalents and will be higher
than previously reported primary earnings per share. Diluted earnings per
share will equal previously reported primary earnings per share under the
Company’s current capital structure.

(2) DISCONTINUED OPERATIONS

NHP FINANCIAL SERVICES

On April 19, 1997, the Company’s Board of Directors approved a plan to
distribute shares of NHP Financial Services (formerly the Company’s Financial
Services business segment) to the Company’s existing shareholders pursuant to
the terms of a Rights Agreement approved by the Board of Directors on that
date. Pursuant to the Rights Agreement, the Company will issue to its
stockholders rights to receive a distribution of one-third of a share of NHP
Financial Services for each right at the earlier of the time of the AIMCO
merger discussed in Note 3, or on December 1, 1997, if the AIMCO merger has
not occurred by that date. NHP Financial Services is also expected to issue
shares constituting approximately 11.5% of its common equity in a private
transaction on or shortly after the distribution to the Company’s
stockholders. The Company has received a commitment, subject to certain
conditions, to purchase 546,498 shares of NHP Financial Services for an
aggregate purchase price of $5 million on or shortly after the distribution,
which is equivalent to $9.15 per share. The distribution is conditioned on
the consent of lenders under the Company’s credit agreement. As a result of
the distribution, each holder of shares of the Company’s common stock at the
time of the AIMCO merger will receive shares in NHP Financial Services in
addition to the merger consideration described in Note 3. The Company
anticipates that the rights will be distributed approximately May 9 to
stockholders of record of the Company on May 2, 1997.

Following the distribution of shares of NHP Financial Services, NHP
Incorporated and NHP Financial Services will operate independently and
neither will have any stock ownership in the other. In conjunction with the
distribution of shares of NHP Financial Services, NHP Incorporated and NHP
Financial Services will enter into a separation agreement that will govern
their ongoing relationship. The separation agreement will provide, in part,
for NHP Financial Services to assume all liabilities relating to the business
and operations of NHP Financial Services prior to distribution (except for
the costs of the distribution) and to indemnify NHP Incorporated for such
liabilities and all expenses and costs and losses related thereto, all on
terms reasonably acceptable to AIMCO. In addition, the separation agreement
will also provide for the settlement, at or prior to the distribution of
shares, of any intercompany amounts owed by NHP Financial Services to NHP
Incorporated through retention by NHP Financial Services of Excess Free Cash
flow, as defined by the AIMCO merger agreement, generated by NHP Incorporated
during 1997, through the date of the AIMCO merger, and/or repayment of the
remaining amounts by NHP Financial Services. The intercompany balance due
from NHP Financial Services to NHP Incorporated, of approximately $9 million
as of April 1997, relates primarily to advances to NHP Financial Services
related to the Proctor and Askew acquisitions, which are discussed further in
Notes 4 and 17, respectively, and intercompany cash tax allocations.

The operating results of NHP Financial Services for the nine-month period
since acquisition are summarized below (in thousands):

April 1 – December 31,
1996
———————-
Gross Revenue $24,848
——-
——-
Income before taxes $ 2,299
Provision for income taxes (1,144)
——-

Net income $ 1,155
——-
——-
Net income per share $ .09
——-
——-

The assets and liabilities of NHP Financial Services as of December 31,
1996, are summarized below (in thousands):

1996
——-
Current assets $51,060
Noncurrent assets 34,304
——-
Total assets $85,364
——-
——-

Current liabilities $52,254
Noncurrent liabilities 9,710
——-
Total liabilities 61,964
——-

Net assets of discontinued operations $23,400
——-
——-

DISCONTINUED REAL ESTATE OPERATIONS

On June 14, 1994, the Company’s Board of Directors approved a plan (the
“Plan”) to dispose of the Company’s real estate operations immediately prior
to an IPO of the Company’s common stock. On August 18, 1995, the Company
completed its IPO and sold the Real Estate Companies. In consideration for
the sale of the Real Estate Companies, Demeter, Capricorn and Mr. Heller
canceled $9.1 million of indebtedness owed to them by the Company. The 1995
financial statements of a partnership accounted for by The Real Estate
Companies using the equity method have been restated to expense in 1995 the
cost of acquiring the management contracts related to certain multifamily
properties. The acquisition cost was originally capitalized by the
partnership and amortized over a 70-month period. The Company’s 1995
financial statements have been restated to reflect the Company’s share of the
partnership’s restated loss. The effect of the restatement was to increase
the loss from discontinued operations, net of income taxes of $1.2 million,
by $1.8 million in the accompanying 1995 consolidated statement of
operations. The restatement also had the effect of increasing the net
liabilities of the Real Estate Companies as of the date of the sale which
resulted in the Company receiving an additional net gain on sale of $1.8
million. The net liabilities of the Real Estate Companies as of the date of
the sale were $6.4 million (restated) and transaction costs related to the
sale, including taxes of $2.3 million, were $4.8 million, which resulted in
the Company recording a net gain on the sale of the Real Estate Companies of
$10.7 million (restated). The gain was recorded as a direct adjustment to
additional paid-in capital.

The Real Estate Companies’ operations consist primarily of the ownership
of general and limited partnership interests (generally 1% to 5%) in
approximately 700 affordable and conventional multifamily housing properties
located in 38 states, the District of Columbia and Puerto Rico. The Real
Estate Companies also own majority interests in several real estate
partnerships (primarily multifamily housing properties), interests in joint
ventures (primarily land and single family housing developments) and a
“captive” insurance company which are consolidated with the accounts of the
Real Estate Companies for financial reporting purposes.

In addition to managing the majority of the properties for which the Real
Estate Companies act as general partner, the Company provides asset
management, finance, accounting and tax services to the Real Estate Companies
on a cost-reimbursable basis. For further discussion of transactions with the
Real Estate Companies, see Note 13.

F-21

The operating results of the discontinued real estate operations are
summarized below (in thousands):

Year Ended December 31,
———————————-
(Restated)
1996 1995 1994
—- —- —-
Gross revenues — $23,874 $35,121
Net income (loss) before
extraordinary item, net of minority
interest and net of an income tax
benefit of $2,515 for 1995 and $0
for 1994 — $(3,771) $ 7,490

The net income (loss) before extraordinary item includes $1.0 and $12.0
million for the years ended December 31, 1995 and 1994, respectively, of
gains resulting from sales and foreclosures of properties owned by real
estate partnerships for which the Real Estate Companies act as general
partner.

(3) CHANGE IN CONTROL AND MERGER AGREEMENT

On April 21, 1997, the Company announced that it had entered into a
definitive Merger Agreement pursuant to which the Company will be acquired by
Apartment Investment and Management Company (“AIMCO”), a real estate
investment trust whose shares are traded on the New York Stock Exchange
(AIV-NYSE). Upon completion of the merger, each of the Company’s stockholders
will receive for each share of Company common stock, at the stockholder’s
election, either (i) a combination of .37383 shares of AIMCO common stock and
$10.00 cash per share of Company common stock, or (ii) .74766 shares of AIMCO
common stock. The merger is conditioned on the approval of the Company’s
stockholders and AIMCO stockholders, the completion of the transactions
between AIMCO and the majority stockholders of the Company described below,
and customary state and federal regulatory and other approvals.

AIMCO has separately entered into a Stock Purchase Agreement with Demeter
and Capricorn, who together hold a majority of the outstanding shares of the
Company’s common stock. Pursuant to the Stock Purchase Agreement, AIMCO will
acquire all of the Company’s common stock currently held by Demeter and
Capricorn. AIMCO will pay Demeter $20 in cash per share for 50% of the
Company shares held directly and indirectly by Demeter. For the remainder of
Demeter’s shares and Capricorn’s shares, AIMCO will pay .74766 shares of
AIMCO common stock per share of Company common stock. The closing under the
Stock Purchase Agreement is expected to occur in May 1997. Upon completion of
AIMCO’s purchase of shares held by Demeter and Capricorn, AIMCO will hold a
majority of the issued and outstanding shares of the Company’s common stock.
The merger will, however, require approval by two-thirds vote of all shares
of Company common stock held by persons other than AIMCO. Stockholder
meetings to approve the merger are expected to be held in late summer.

The Company has also been informed that AIMCO is negotiating a definitive
agreement with Demeter and Capricorn to acquire interests in certain real
estate properties owned or controlled by the Real Estate Companies, which are
controlled by Demeter and Capricorn, most of which properties are managed by
the Company pursuant to a long-term property management contract. Both the
Company’s and AIMCO’s obligations to complete the merger are conditioned on
signing the definitive agreement relating to the sale of real estate
interests and the management agreement remaining in effect. As consideration
for AIMCO’s executing the Merger Agreement, the Company has waived, effective
May 3, 1997, its right of first refusal to purchase the real estate being
sold to AIMCO, subject to the condition that a definitive real estate
agreement be signed by AIMCO and Demeter by May 31 on terms substantially in
accordance with those described to the Company’s Board of Directors.

(4) ACQUISITIONS AND NEW BUSINESS

CONTINUING OPERATIONS

GOLDBERG ACQUISITION

As of July 12, 1996, the Company, directly and through subsidiaries,
acquired the long-term management rights and certain notes receivable from
two Florida rental retirement communities as well as all of the outstanding
stock of Preferred Home Health, Inc. (the “Goldberg Acquisition”). In
addition, the Real Estate Companies acquired certain other notes receivable
from one of the properties and subsequently acquired all of the issued and
outstanding stock of the corporate general partners of the limited
partnership owners of the two properties. The Company and the Real Estate
Companies acquired these assets from affiliates of the Stephen A. Goldberg
Company of Washington, D.C. and certain other individuals. The cost of the
Company’s portion of the acquisition, including transaction costs, was
approximately $16.3 million in cash and $4.0 million in long-term notes. The
purchase price was funded through additional borrowings under the Company’s
revolving credit facility. The transaction was accounted for under the
purchase method of accounting. All assets acquired were recorded at their
estimated fair value. The excess of the purchase price over the fair value of
the net assets acquired was approximately $6.2 million and has been recorded
as goodwill. Preferred Home Health, Inc. is a provider of home health care
services to residents of multifamily rental retirement communities.

F-22

GUILFORD

The Real Estate Companies completed the Guilford Acquisition in January
1996, by which the Real Estate Companies acquired the general partnership
interests and certain limited partnership interests in partnerships that own
14 properties containing 2,995 units. In conjunction with this acquisition by
the Real Estate Companies, the Company paid the Real Estate Companies $2.6
million ($1.5 million of which was paid in December 1995) to enter into
property management contracts with each property for a period of four to five
years, commencing in December 1995.

SOUTHPORT

In December 1995, the Real Estate Companies entered into a binding
agreement to acquire from Southport Financial Corporation the general partner
interests in partnerships that own 14 properties containing 2,140 units. The
Company began managing 12 of these properties containing 1,857 units in
November 1995 and began managing the remaining two properties containing 283
units in early 1996. The Company acquired the right to manage all 14 of the
Southport properties for $4.0 million, approximately $3.0 million of which
will be paid in various quarterly installments through the year 2000. The
Company manages the Southport properties pursuant to long-term contracts
terminable only for cause, and will have a right of first refusal with
respect to the sale of any of these properties or the Real Estate Companies’
general partnership interests in partnerships owning these properties.

RESCORP

On October 31, 1995, the Company acquired from Rescorp Realty, Inc. and
transferred to the Real Estate Companies the stock of entities owning the
general partnership interests in 11 properties. The Company manages these
properties pursuant to long-term contracts terminable only for cause, and has
a right of first refusal with respect to the sale of any of these properties
or the Real Estate Companies’ general partnership interests in partnerships
owning these properties. The Company also entered into short-term property
management contracts with respect to four other properties, which are owned
by unaffiliated owners. The 15 properties have an aggregate of 2,578 units.
The Company paid Rescorp approximately $2.4 million in connection with the
acquisition, and transferred the general partnership interests to the Real
Estate Companies in exchange for the Real Estate Companies assuming the cost
and responsibilities of the general partner.

HALL

In February 1995, the Company and the Real Estate Companies substantially
completed the Hall Acquisition. In the Hall Acquisition, the Company and the
Real Estate Companies acquired, for $12.5 million (of which $4.0 million was
allocated to management rights), a 50% common equity interest in a joint
venture which, in turn, owns an interest in a portfolio of 32 apartment
properties containing 8,028 units and the associated property management
rights. Each property is owned by a limited partnership, the managing general
partner of which is an affiliate of the Real Estate Companies. As managing
general partner, each of these affiliates has entered into a management
contract with the Company having a term coinciding with the term of the
current financing of the properties, or approximately 5.75 years.

CONGRESS

On December 31, 1994, the Company and the Real Estate Companies entered
into a binding agreement to purchase for $6.7 million from Congress Realty
Companies the general partner interests, property management rights and
rights to certain receivables related to a 13-property portfolio containing
4,301 units. The acquisition was accounted for as a 1994 transaction using
the purchase method of accounting. Substantially all of the purchase price
was paid in January 1995.

See also Note 17 for discussion of 1997 acquisitions.

F-23

DISCONTINUED OPERATIONS

NHP FINANCIAL SERVICES

As previously discussed, as of April 1, 1996, NHP Incorporated acquired
NHP Financial Services, for consideration of approximately $21 million in the
form of $16.8 million in cash and 210,000 shares of the Company’s common
stock. The transaction has been accounted for under the purchase method of
accounting. All assets acquired were recorded at their estimated fair value
which resulted in recording an identifiable intangible asset of approximately
$19.1 million related to acquired servicing rights. The excess of the
purchase price over the fair value of the net assets acquired was
approximately $5.0 million and has been recorded as goodwill. The goodwill is
being amortized over seven years. The acquired servicing rights are being
amortized over periods up to seven years. All purchase price allocations have
been recorded by NHP Financial Services and are included in the net assets of
discontinued operations on the Consolidated Balance Sheet.

At closing, the 210,000 shares of the Company’s common stock were placed
in an escrow account as security for the satisfaction of claims by the
Company under the stock purchase agreement against the former owner of NHP
Financial Services (the “Seller”). Claims will be paid, subject in certain
instances to a deductible, from the escrow by returning the number of shares
to the Company equal to the value of the claim, as determined by the then
current market value of the Company’s common stock. 105,000 shares were
released to the Seller on April 1, 1997. One-half of the shares remaining in
the escrow will be released to the Seller on April 1, 1998, with the remaining
shares to be released to the Seller on April 1, 1999.

PROCTOR & ASSOCIATES

As of December 31, 1996, Washington Mortgage Financial acquired
Detroit-based Proctor & Associates (“Proctor”), the 37th largest commercial
mortgage banking firm in the nation, according to June 30, 1996, data
published by the Mortgage Banking Association, for $3.7 million. Included in
the transaction is Proctor’s $1.1 billion loan servicing portfolio of
multifamily, retail, and office building mortgages, as well as the firm’s
fifteen active correspondent relationships with life insurance companies.
Proctor originated nearly $180 million in commercial mortgage loans in 1996.
The purchase has been accounted for under the purchase method of accounting
by Washington Mortgage Financial. All assets acquired were recorded at their
estimated fair value. The excess of the purchase price over the fair value of
the net assets acquired was $3.1 million and has been recorded as goodwill by
Washington Mortgage Financial and is included in net assets of discontinued
operations on the Consolidated Balance Sheet.

AMERICAN CAPITAL RESOURCE, INC.

On May 13, 1996, WMF/Huntoon Paige, a subsidiary of Washington Mortgage
Financial, completed the purchase of a portion of the loan production
pipeline, as well as certain other assets, of American Capital Resource, Inc.
(“ACR”) for approximately $2.2 million plus potential future payments based
on realization of the pipeline through August 1997. The acquisition has been
accounted for under the purchase method of accounting. In addition, during
1996 WMF/Huntoon Paige also purchased the servicing rights to various loans
from ACR for a total of $2.0 million.

(5) INVESTMENT IN REAL ESTATE HELD FOR SALE

TRANSACTION AND ACCOUNTING

On May 16, 1996, the Company acquired 12 multifamily properties containing
2,905 apartment units, including the right to manage the units on a long-term
basis, from affiliates of Great Atlantic Management, Inc. for a purchase
price (including transaction costs) of approximately 86.8 million (the “Great
Atlantic Acquisition”), in the form of approximately $71.2 million in
third-party nonrecourse debt and $15.6 million in cash. The Company made this
acquisition with the intention of selling the real estate ownership interests
to third-party investors while retaining the management rights to the
properties. Accordingly, the Company has reported on the Consolidated Balance
Sheet its ownership interests in the Great Atlantic properties as an
investment in real estate held for sale, which is reported at the lower of
carrying value or fair value less estimated costs to sell. Previously, the
investment in real estate was presented on the Consolidated Balance Sheet net
of the associated debt, as discussed further below. The consolidated
financial statements have been restated to separately report the real estate
related debt as a liability. 1996 earnings from these properties since the
date of acquisition, excluding depreciation, was $0.1 million. The
recognition of the Company’s pro rata share of these earnings increased the
Company’s investment. This increase was offset by the establishment of a
valuation allowance to reduce the recorded investment to the lower of
carrying value or fair value less estimated cost to sell which resulted in no
net income being recognized related to these properties.

DESCRIPTION OF REAL ESTATE RELATED DEBT

The Company owns all of the limited and general partnership interests in
the limited partnerships that in turn own the local partnerships (the
partnerships that own and are responsible for the operations of the real
estate). Eleven of the twelve local partnerships participate in joint
financing, which was executed simultaneously with the acquisition. This
financing consisted of three separate but related loans: (1) a senior
mortgage loan; (2) a junior mortgage loan; and (3) a partnership loan, all of
which are nonrecourse to the Company. The junior mortgage loan was paid in
full on December 31, 1996. The remaining loans are discussed below.

SENIOR MORTGAGE LOAN consists of eleven separate notes with an original
face value totaling $55.3 million. The outstanding balance as of December 31,
1996, is $51.0 million. Interest is payable monthly at a rate of 8.53% per
annum. There are no required principal payments until the loans mature on May
31, 2001. Principal may not be repaid prior to May 31, 1998, without the
consent of the lender.

THE PARTNERSHIP LOAN is evidenced by a single note, maturing June 3,
2001. The borrowers are the eleven limited partnerships which own the
majority limited partner interests in the local partnerships, which in turn
own the real estate. The note allocates the principal among the limited
partnerships, but each is jointly and severally liable for the indebtedness.
The partnership loan includes two tiers, totaling $15.9 million. The first
tier partnership loan amount is $9.9 million. Interest at a rate of 8.53% per
annum is payable monthly. There are no required principal payments until the
loan matures. Principal may not be prepaid until May 31, 1998, and then only
if the second tier of the partnership loan has been retired. The second tier
partnership loan amount is $6.0 million. The interest rate is the amount that
would give the lender a pre-tax rate of return of 16%. Interest is paid at a
rate of 12.588%. The difference is recorded by the partnerships as a deferred
payable. There are no required principal payments until May 31, 1998.
Thereafter, monthly principal payments are required in an amount equal to the
lesser of 35% of monthly cash flow or $41,666. Any shortfall is deferred. In
subsequent months, if 35% of monthly cash flow is greater than $41,666, the
excess is applied to reduce prior deferred amounts. Principal prepayments are
permitted prior to May 31, 1998, by paying a prepayment premium of 3% of the
amount prepaid.

Concurrent with the closing of the loan, the local partnerships entered
into a guaranty agreement making them jointly and severally liable for the
senior mortgage notes payable. Under the terms of this contract, each of the
senior note mortgagors unconditionally guarantee the full and prompt payment
of all amounts due under the senior mortgage loans. Under a related
contribution agreement, the guarantors have agreed to allow funds from the
cash collateral account to be used to satisfy any shortfall of an affiliate
partnership. A separate guaranty agreement was entered into by the limited
partnerships related to the partnerhip loan, with similar terms.

The liability of the local partnerships under the senior mortgage note
and the guaranty, and the liability of the limited partnerships under the
partnership note and guaranty, is limited to the underlying value of the real
estate collateral plus amounts deposited with the lender. The partnerships
are also required to make monthly escrow deposites with the lender.

The twelfth property has a separate mortgage note payable with a
remaining balance as of December 31, 1996, of $4.3 million. The mortgage note
payable is secured by a deed of trust on the real estate. The note bears
interest at a rate of 7.95%. Principal and interest payments are payable by
the local partnership in equal monthly installments of $35,794 to June 2016.
Principal amounts due on the mortgage payable are $0.1 million per year for
the years 1997 through 2001 and $3.7 million thereafter. The liability of the
local partnership under the mortgage note is limited to the underlying value
of the real estate collateral plus other amounts deposited with the lender.

F-24

(6) PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

Property, equipment and capitalized software consist of the following
(in thousands):
December 31,
———————
1996 1995
—- —-
Property and equipment $ 6,315 $ 3,393
Leasehold improvements 2,347 268
Capitalized software 4,112 1,642
——- ——–
12,774 5,303
Less accumulated depreciation and amortization 2,359 1,780
——- ——–
$10,415 $ 3,523
——- ——–
——- ——–

(7) ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

December 31,
——————–
1996 1995
——- ——-
Accrued personnel and payroll costs $ 8,839 $ 7,990
Other 2,613 2,011
——- ——-
$11,452 $10,001
——- ——-
——- ——-

(8) LONG-TERM DEBT

Long-term debt consists of the following (in thousands):
December 31,
————————
1996 1995
——- ——-
Lines of credit:
$75 million Credit Facility $57,000 $23,000
Notes payable – Goldberg 4,000 —
Notes payable – Southport (net of unamortized
discount of $364 and $42 in 1996 and 1995,
respectively) 2,184 195
Note payable to Oxford 143 495
——- ——-
63,327 23,690
Less current portion (720) (412)
——- ——-
Long-term debt $62,607 $23,278
——- ——-
——- ——-

CREDIT FACILITY – CONTINUING OPERATIONS

In August 1995, the Company entered into a $75.0 million, three-year
unsecured revolving credit facility (the “Credit Facility”) with a group of
banks. At the end of two years, the Company may extend the Credit Facility
(as a revolving facility) for a fourth year or may convert it at the end of
the second year to a two-year term loan with equal quarterly installments
based on a five year amortization schedule and the remaining balance
(approximately 60%) due at the end of the two-year term. Availability under
the Credit Facility is subject to the Company’s compliance with

F-25

various financial ratios, operating covenants and other customary conditions.
The Credit Facility restricts the payment of dividends by the Company unless
the Company’s ratio of income from continuing operations before interest,
income taxes, depreciation and amortization (“EBITDA”) to interest expense is
greater than 3 to 1. In 1996, interest on the Credit Facility was equal to
175 basis points over the London Interbank Offered Rate (“LIBOR”) in effect
from time to time. In 1996, the Credit Facility also required the payment of
a commitment fee of 37.5 basis points per annum on the unused portion of the
Credit Facility. During 1996, the Credit Facility required that any other
borrowings be subordinated to the Credit Facility except up to $10 million of
borrowings made in connection with the acquisition of assets that will result
in additional management rights for the Company, Washington Mortgage
Financial’s Warehouse Line (described below), and any indebtedness of
Washington Mortgage Financial incurred in the acquisition of mortgage loans
or mortgage servicing rights. As of December 31, 1996, the Company had
outstanding $6.2 million of additional unsubordinated borrowings from third
parties. The Credit Facility limits the amount of loans or other advances by
the Company to the Real Estate Companies to a total of $10 million. At
December 31, 1996, $40 thousand was due directly from the Real Estate
Companies. In February 1997, the terms of the Credit Facility were amended.
See Note 17 for discussion of the changes in significant terms.

At December 31, 1996, the Company classified all borrowings under the
Credit Facility due within one year as long-term. The Company has both the
intent and the ability, through the Credit Facility, to refinance these
amounts on a long-term basis.

LONG-TERM DEBT AND LINES OF CREDIT- DISCONTINUED OPERATIONS

The following is a discussion of the long-term debt and lines of credit
related to NHP Financial Services (formerly the Company’s Financial Services
business segment). Any amounts outstanding as of December 31, 1996, related
to these items are included in the net assets of discontinued operations on
the Consolidated Balance Sheet.

During the third quarter of 1996, Washington Mortgage Financial renegotiated
the terms of its existing warehouse line of credit (the “Warehouse Line”), which
is used for the purpose of originating loans. The Warehouse Line was increased
from $80 million to $150 million. The interest rate on the Warehouse Line was 1
to 1 1/2 percent during 1996 to the extent compensating balances are maintained
or LIBOR plus 1 to 1 1/2 percent for amounts borrowed in excess of compensating
balances. The Warehouse Line is secured by mortgage loans held for sale and is
repaid upon sale of the mortgage loans. The Warehouse Line expires in August
1997, at which time the Company expects to extend it or replace it with a
similar line of credit. As of December 31, 1996, Washington Mortgage Financial
had drawn $39.9 million on the Warehouse Line.

Washington Mortgage Financial has an additional warehouse agreement
providing $15 million of revolving credit at 1 1/2 to 1 5/8 percent to the
extent compensating balances are maintained and the prime rate for amounts
borrowed in excess of compensating balances. As of December 31, 1996,
Washington Mortgage Financial had no amounts outstanding under this line of
credit. Interest is payable monthly. This warehouse line of credit is secured
by mortgage loans held for sale and is paid upon sale of the mortgage loans.

Washington Mortgage Financial has a separate line of credit which was used
exclusively for acquisition of mortgage servicing rights (the “Servicing
Acquisition Line”). The interest rate on the Servicing Acquisition Line in
1996 was 3 to 3 1/2 percent to the extent compensating balances are
maintained or LIBOR plus 3 to 3 1/2 percent for amounts borrowed in excess of
compensating balances. In October 1996, the Servicing Acquisition Line was
converted to a term loan which is to be repaid in quarterly installments,
based on a 10-year amortization schedule, with the remaining balance due in
June 2001. The Servicing Acquisition Line is collateralized by servicing
rights relating to loans with an approximate unpaid principal balance of $1.1
billion. The original commitment amount of the Servicing Acquisition Line was
$10 million and as of December 31, 1996, Washington Mortgage Financial had
drawn $6.2 million on this line. Because this line has been converted to a
term loan, Washington Mortgage Financial cannot borrow any additional amounts
under this line.

Washington Mortgage Financial also has a revolving credit agreement
providing $10 million of revolving credit to be used for servicing
acquisitions or working capital advances (the “Working Capital Line”).
Interest on the Working Capital Line is 3 1/2 percent to the extent
compensating balances are maintained or LIBOR plus 3 1/2

F-26

percent for amounts borrowed in excess of compensating balances. The Working
Capital Line is renewable annually through June 2001 and requires monthly
interest payments. Any principal balance outstanding at June 2001 would be
converted to a term loan due in quarterly installments through June 2006. The
Working Capital Line is collateralized by the same assets as the Servicing
Acquisition Line. As of December 31, 1996, Washington Mortgage Financial had
no amounts outstanding under the Working Capital Line.

Washington Mortgage Financial has an additional unsecured line of credit
agreement available for working capital purposes providing for $0.5 million
of revolving credit. The interest rate on this line of credit is the prime
rate and all borrowings must be paid off annually with interest payments due
monthly. At December 31, 1996, Washington Mortgage Financial had no amounts
outstanding under this line of credit.

NOTES PAYABLE – GOLDBERG

As a portion of the consideration in the Goldberg Acquisition, the Company
issued various notes payable totaling $4.0 million. The notes bear interest
at 9.5% per annum and require quarterly interest payments with the principal
due at maturity, July 12, 2006.

NOTES PAYABLE – SOUTHPORT

In conjunction with the Real Estate Companies’ purchase from Southport
Financial Corporation of the general partner interests in partnerships that
own 14 properties containing 2,140 units, the Company completed its
acquisition of the management rights for these properties. As consideration
for the acquisition of the management rights, the Company issued various
non-interest bearing notes in 1996 and 1995 with a total face value of $3.0
million which are due in various quarterly installments through the year
2000. These notes were recorded at $2.5 million, net of an unamortized
discount of $0.5 million based on an imputed interest rate of 9.5%.

REPAYMENTS OF DEBT

Upon the completion of the IPO in August of 1995, the Company drew $20.0
million on the Credit Facility and used those funds together with the net
proceeds of the IPO as follows: (i) $54.7 million was used to repay in full
the Company’s indebtedness under its previous credit facility, which was
simultaneously terminated by the Company; (ii) $7.0 million was used to repay
a note to a former institutional shareholder of the Company; and (iii) $5.5
million was used to repay indebtedness to Demeter, Capricorn, and Mr. Heller.
The remaining proceeds were added to the Company’s working capital.

In consideration for the sale of the Real Estate Companies in August of
1995, Demeter, Capricorn and Mr. Heller canceled $9.1 million of
indebtedness owed to them by the Company (for further discussion, see Notes 2
and 13).

F-27

OTHER

The following table provides more detail on interest rates (including
commitment fees) and borrowings made under the Company’s various credit
agreements (dollar amounts in thousands):
Year Ended December 31,
————————–
1996 1995 1994
—- —- —-
Continuing Operations:
$75 million Credit Facility (a):
Weighted average interest rate at
period-end 7.61% 8.40% 6.42%
Maximum month-end borrowings during
the period $57,000 $58,466 $57,126
Average borrowings during the period $43,917 $41,457 $54,454
Weighted average interest rate, during
the period 7.70% 9.03% 6.47%

Discontinued Operations:
$150 million Warehouse Line:
Weighted average interest rate at
period-end 1.00% — —
Maximum month-end borrowings during
the period $52,885 — —
Average borrowings during the period $43,327 — —
Weighted average interest rate,
during the period 1.17% — —

$10 million Servicing Acquisition Line:
Weighted average interest rate at
period-end 3.00% — —
Maximum month-end borrowings during
the period $ 9,960 — —
Average borrowings during the period $ 8,884 — —
Weighted average interest rate, during
the period 3.17% — —

$15 million Warehouse Line:
Weighted average interest rate at
period-end 1.50% — —
Maximum month-end borrowings during the
period $ 7,100 — —
Average borrowings during the period $ 3,765 — —
Weighted average interest rate, during
the period 1.50% — —

(a) Includes the Company’s $75 million Credit Facility and/or any prior
credit agreements in 1995 and 1994.

Aggregate annual maturities of long-term debt for the Company’s
continuing operations as of December 31, 1996, are $0.7, $0.6, $57.7 and $0.3
million for the years 1997 through 2000, respectively. For the purposes of
calculating aggregate maturities, the Credit Facility is assumed to be
extended for a fourth year but the Company has not yet determined what option
it will choose under the terms of the Credit Facility. Aggregate annual
maturities of long-term debt for the Company’s discontinued operations as of
December 31, 1996, which excludes the Warehouse Line, are $1.0 million per
year for the years 1997 through 2000 and $2.2 million for the year 2001.

(9) INCOME TAXES

The Company files a consolidated Federal income tax return, and in certain
states, consolidated state income tax returns. As of December 31, 1994, the
Company had net operating loss carryforwards (NOLs) of approximately $140
million which were attributable primarily to partnership losses related to the
Real Estate Companies. In connection with the sale of the Real Estate Companies
(discontinued operations), the Company utilized approximately $60 million of its
NOLs, and the remaining NOLs were allocated between the Company and the Real
Estate Companies. At December 31, 1996, the Company estimates that it has
remaining approximately $55 million of gross unused NOLs for Federal tax
purposes which expire in varying amounts between 2004 and 2008. Realization of
the NOLs is dependent on generating sufficient taxable income prior to the
expiration of the NOLs. Although realization is not assured, management believes
it is more likely than not that all of the deferred tax asset related to the
NOLs will be realized. Therefore, upon the sale of the Real Estate Companies in
the third quarter of 1995, the Company reduced its valuation allowance as those
entities historically generated operating losses, while continuing operations
have historically generated operating income.

F-28

The amount of deferred tax asset considered realizable, however, could
be reduced in the near term if estimates of future taxable income during the
carryforward period are reduced. Furthermore, if the Internal Revenue Service
were to determine that the consideration received by the Company in the sale
of the Real Estate Companies was less than the fair market value of the
assets transferred or that other valuations of assets made in connection with
the sale were inaccurate, the amount of the net operating loss carryforwards
available to the Company could be reduced, thus increasing the Company’s
future federal income tax liability. The ability of the Company to utilize
NOLs may also be limited in the future if an “ownership change” within the
meaning of Section 382 of the Internal Revenue Code of 1986, as amended, were
deemed to occur. Such an ownership change may be deemed to occur, for
example, if the Company engages in certain transactions involving the
issuance of shares of common stock, including the issuance of a sufficient
number of shares of common stock in connection with an acquisition or
otherwise. If an ownership change were to occur, Section 382 would impose an
annual limit on the ability of the Company to utilize NOLs. The amount of
NOLs is, in any event, subject to uncertainty until such time as they are
used to offset income as their validity is not reviewed by the Internal
Revenue Service until such time as they are utilized. The sale of Company
stock, discused in Note 3, by Demeter and Capricorn to AIMCO, if completed,
would trigger the Section 382 limitations.

The Company expects to recognize capital gain for federal income tax
purposes as a result of the distribution of the rights combined with the
later distribution of shares of NHP Financial Services, discussed in Note 2.
The amount of gain recognized by the Company will be the excess of the fair
market value of NHP Financial Services on the date of the distribution of the
rights, over the Company’s tax basis in NHP Financial Services. The Company
expects to have regular federal NOLs available in sufficient amount to offset
the gain under the regular federal income tax, but does not expect to have
sufficient alternative minimum tax NOLs available to offset the gain under
the alternative minimum tax.

The following table summarizes the consolidated tax effect related to
the Company’s deferred tax assets and liabilities (in thousands):

December 31,
—————
1996 1995
——- ——-
Deferred tax assets:
Net operating loss carryforwards $19,737 $26,904
Tax credit carryforwards 1,116 572
Vacation and incentives 470 32
Other temporary differences between book and tax 1,236 349
——- ——-
Total deferred tax assets 22,559 27,857
Valuation allowance for deferred tax assets (7,547) (5,020)
——- ——-
Deferred tax assets 15,012 22,837
Deferred tax liabilities:
Amortization of purchased management contracts 476 847
Management fees receivable 567 1,623
Other temporary differences between book and tax 171 —
——- ——-
Total deferred tax liabilities 1,214 2,470
——- ——-
Net deferred tax asset $13,798 $20,367
——- ——-
——- ——-

The Company did not record a tax provision during the first and second
quarter of 1995, therefore, a year-to-date tax provision was recorded in the
third quarter of 1995. A reconciliation of income tax expense computed at the
statutory Federal and state rates to the provision (benefit) for income taxes
included in the Consolidated Statements of Operations is as follows (in
thousands):

F-29

In conjunction with the preparation and filing of the Company’s 1995
Federal tax return in late 1996, the Company identified certain items which
increased the Company’s deferred tax asset due primarily to differences
between estimates of items made at the time of the sale of the Real Estate
Companies and actual amounts reported in the Company’s tax return. Also as
part of this analysis, the Company updated its evaluation of all of its
deferred tax assets to determine if, in accordance with SFAS 109, the
realization of these assets was more likely than not. Accordingly, the
Company recorded an increase in the valuation allowance to offset the
increase in the deferred tax asset.

Prior to 1995, a valuation allowance equal to the net deferred tax asset
was established due to the uncertainty, on a consolidated basis, surrounding
the Company’s ability to generate sufficient taxable income in future years
to utilize the NOLs. The net change in the valuation allowance in 1994,
reduced the annual provision for income taxes to zero. The components of the
benefit (provision) for income taxes for 1996 and 1995 is summarized as
follows (in thousands):

(10) SHAREHOLDERS’ EQUITY

AUTHORIZED STOCK

The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, $.01 par value, of which 12,586,629 shares were issued and
outstanding as of December 31, 1996.

TREASURY STOCK

In February 1993, effective as of December 31, 1992, the Company entered
into a Stock Purchase Agreement (the “Stock Agreement”) with The NHP
Foundation (the “Foundation”), a non-profit organization formed to provide
assisted housing to low-income families. The Stock Agreement provided for
reimbursement to the Company for services provided to the Foundation via
redemption of shares, at approximately $10.56 per share, of the Company’s
common stock held by the Foundation. In 1994, the Foundation exchanged 46,500
shares in satisfaction of $0.5 million due the Company for services rendered
to the Foundation in 1994. In an unrelated transaction in 1994, the Company
purchased 30,000 shares at a price of $12 per share, from a member of
management upon his resignation from the Company. All shares were retired by
the Company, as received.

On January 27, 1995, 331,950 shares of Company stock owned by the
Foundation were purchased by other current Company shareholders.
Additionally, on May 1, 1995, 31,250 shares of Company stock were repurchased
from the Foundation at a price of $12 per share, effectively terminating the
Stock Agreement.

During the third quarter of 1996, 2,046 shares of the Company’s common
stock were received by the Company in partial payment for the exercise of
certain options and were recorded as treasury stock. The shares were
subsequently retired in the fourth quarter of 1996.

AUTHORIZATION OF REPURCHASE OF SHARES

On January 7, 1997, the Company’s Board of Directors approved the
repurchase of up to 750,000 shares of the Company’s common stock over a
period extending through June of 1998. The Company will acquire shares from
time to time, depending on market conditions and subject to regulatory and
legal restrictions. The Company expects to finance the stock repurchases
through a combination of internally generated cash flows and its credit
facility.

F-30

(11) STOCK OPTION PLANS

The Company has elected to follow Accounting Principles Board Opinion No.
25 “Accounting for Stock Issued to Employees” (“APB 25”) and related
Interpretations in accounting for its employee stock options. In accordance
with APB 25, because the exercise price of the Company’s employee stock
options equals the market price of the underlying stock on the date of grant,
no compensation expense is recognized.

The Company has a non-qualified stock option plan (the “1990 Plan”) under
which options to purchase shares of the Company’s common stock have been
granted to key employees. Options were granted at the fair market value of
the shares on the date of grant and become exercisable cumulatively over a
five-year period beginning one year after date of grant. As of December 31,
1996 and 1995, 310,000 and 405,000 options, respectively, were outstanding
under the 1990 Plan. No further options may be granted under the 1990 Plan.

On February 8, 1995, the Company’s Board of Directors extended the
exercise period of the options granted under the 1990 Plan from five to ten
years. This resulted in a new measurement date for the options, and in the
first quarter of 1995, compensation expense of $0.5 million was recognized by
the Company, of which $0.1 million was allocated to the Real Estate
Companies. Additionally, on March 3, 1995, as part of a severance agreement,
the Company agreed to extend a departing employee’s time to exercise his 1990
Plan options through February 28, 1997. Related compensation expense of $0.1
million was recorded in the first quarter of 1995. The corresponding credit
for both of these transactions was to additional paid-in capital.

On February 8, 1995, the Company’s Board of Directors approved the 1995
Stock Option Plan (the “1995 Plan”). The 1995 Plan is a qualified stock
option plan under which a maximum of 1,200,000 options to purchase shares of
the Company’s common stock may be granted to employees. In May 1996, the
Company’s Board of Director’s approved an amendment to the 1995 Plan, which
was subsequently approved by the stockholders of the Company in July 1996,
that increased the maximum number of options which can be granted under the
plan from 800,000 to 1,200,000. In February 1997, the Company’s Board of
Directors approved an amendment to the 1995 Plan which allows for all options
issued under the 1995 Plan to become vested upon a change in control of the
Company. Any options granted under the 1995 Plan must have an exercise price
equal to the fair market value as of date of grant, become exercisable
cumulatively over a five-year period beginning one year after date of grant,
and must be exercised within ten years of the date of grant. As of December
31, 1996 and 1995, 386,250 and 228,750 options, respectively, remain
available to be granted under the 1995 Plan.

Effective with the consummation of the IPO, the Company granted Mr.
Heller non-qualified performance vesting options to purchase 120,000 shares
of common stock at $16.00. The options will vest in 10 years but are subject
to accelerated vesting under certain circumstances, including a change in
control of the Company.

Effective May 1, 1996, the Company granted non-qualified performance
vesting options to purchase up to 120,000 shares of common stock at $19.43
(fair market value at award date) to an executive vice president of the
Company. The options vest only if certain performance criteria are met and
expire April 30, 2001.

In conjunction with the distribution of shares of NHP Financial Services
to the Company’s existing shareholders discussed in Note 2, all of the issued
and outstanding options to acquire Company common stock will be converted
into an option to receive the same number of shares of Company common stock
and an option to receive the number of shares of NHP Financial Services’
common stock the options holder would have been entitled to receive in the
distribution, if the option had been exercised immediately prior to the
distribution. In addition, the exercise price of the options will be adjusted
pro rata based on the assumed value at the date of the distribution of NHP
Financial Services shares.

The following table summarizes option activity for the years ended
December 31, 1996, 1995 and 1994.
1996 1995 1994
——– ——– ——–
Number of Shares Under Stock Options:
Outstanding at the beginning of year 1,096,250 443,750 537,500
Granted 492,500 711,250 —
Exercised (114,000) — (32,500)
Forfeited (130,000) (58,750) (61,250)
——— ——— ——-
Outstanding at the end of year 1,344,750 1,096,250 443,750
——— ——— ——-
——— ——— ——-
Stock options exercisable at the end of
the year 418,250 420,000 341,250
——— ——— ——-
——— ——— ——-
Weighted-average fair value of options
granted during the year $ 7.73 $ 5.38 N/A
——— ———
——— ———

F-31

The following table summarizes information about fixed-price stock
options outstanding at December 31, 1996:

Weighted average option exercise price information for the years
1996 and 1995 is as follows:

1996 1995
——– ——–
Outstanding at the beginning of year $ 12.43 $ 10.56
Granted $ 18.72 $ 13.51
Exercised $ 10.97 —
Forfeited $ 13.00 $ 11.39
Outstanding at the end of year $ 14.80 $ 12.43

The Company has adopted the disclosure-only provisions of SFAS 123,
“Accounting for Stock Based Compensation.” Accordingly no compensation
expense cost has been recognized for the employee stock option plans. Had
compensation cost for the Company’s employee stock option plans been
determined based on the fair value at the grant date for awards in 1995 and
1996 consistent with the provisions of SFAS No. 123, the Company’s net income
and net income per common share would have been reduced to the pro forma
amounts indicated below (dollars in thousands, except per share amounts):

(Restated)
1996 1995
——– ——–
Net income – as reported $11,620
$27,442
Net income – pro forma $11,033 $27,247
Net income per common share – as
reported $ .91 $ 2.85
Net income per common share –
pro forma $ .87 $ 2.83

The effects of applying SFAS No. 123 in this pro forma disclosure are
not indicative of future amounts. SFAS No. 123 does not apply to awards prior
to 1995, and additional awards in future years are anticipated. For purposes
of this pro forma disclosure, fair value of each option grant is estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1995 and 1996:
dividend yield 0.0%, expected volatility of 30.0%, risk-free interest rate of
6.33% and expected lives of 5 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of

F-32

highly subjective assumptions including the expected stock price volatility.
Because the Company’s employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management’s opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

(12) EMPLOYEE BENEFIT PLANS

Substantially all of Property Services’ full-time off-site and on-site
employees with at least one year of continuous service are eligible to
participate in a 401(k), defined contribution retirement plan. The Company
also has a non-qualified supplemental executive retirement savings plan which
permits certain employees to defer salary that they would otherwise be
prohibited from deferring under the 401(k) plan due to IRS restrictions.
Under these plans, the employees may contribute up to 15% of their gross
compensation up to the maximum allowable by the Internal Revenue Code, to
various investment alternatives including, beginning in 1996, the Company’s
common stock. The Company will match 50 percent of each employee’s
contribution up to 6 percent of the employee’s gross compensation. The plans
also allow the Company to make discretionary contributions. Company matching
contributions to the 401(k) plan vest as contributed. Company discretionary
contributions to the 401(k) plan vest 20 percent after the first year of
employment and an additional 20 percent in each subsequent year until fully
vested in the fifth year. In addition to the vesting provisions for the
401(k) plan, the executive retirement savings plan generally requires that a
participant not compete with the Company for a two-year period following
separation from the Company in order to vest in Company contributions. Total
net expense related to the Company’s contributions to these plans, after
reimbursement from the partnerships for on-site employees, was $0.9, $0.8 and
$0.7 million for the years ended December 31, 1996, 1995 and 1994,
respectively. Approximately 19,100 shares of the Company’s common stock was
held by the plans as of December 31, 1996.

(13) RELATED PARTY TRANSACTIONS

During 1994, the Company borrowed $3.9 million from certain shareholders
to purchase general partnership interests in properties which the Company
already managed. As of December 31, 1994, a total of $11.0 million was due to
shareholders, excluding accrued interest of $1.4 million. These notes were
due on demand, but only after repayment of all borrowings under the then
existing credit agreement, and had an interest rate of 13%. As discussed in
Note 8, a portion of the proceeds from the IPO along with amounts drawn on
the Credit Facility was used to repay $5.5 million of the shareholder notes,
including $2.4 million of interest. In addition, in consideration for the
sale of the Real Estate Companies in August 1995, certain shareholders
(Demeter, Capricorn and Mr. Heller) canceled $9.1 million of the Company’s
shareholder notes.

One of the Company’s directors is counsel to a law firm which provides
legal services to the Company. Amounts paid for legal services provided for
the Company by this firm were $0.1, $0.9 and $0.2 million, during the years
ended December 31, 1996, 1995 and 1994, respectively.

In November 1995, the Company issued 1,500 shares of stock to each of
the members of the Board of Directors other than Mr. Heller (total of 9,000
shares) as a portion of their 1995 and 1996 annual compensation.

In connection with the sale of the Real Estate Companies, the Company
and the Real Estate Companies entered into agreements (the “Intercompany
Agreements”) which govern their ongoing relationship. Significant aspects of
the Intercompany Agreements include provisions whereby (i) the Company will
be selected to provide property management and related services for
properties in which the Real Estate Companies have a controlling interest,
subject to certain conditions, for an initial period of 25 years; (ii) upon
the disposal by the Real Estate Companies of properties or interests in
properties which the Company managed on August 18, 1995, the Real Estate
Companies will make a payment of up to 200%, subject to certain conditions,
of the annual fees the Company receives with respect to the property; (iii)
the Company will provide to the Real Estate Companies, at cost, certain
administrative services and advice regarding acquisition, financing, asset
restructuring, disposition and similar activities relating to investment in
multifamily properties, terminable on short notice by either party; (iv) the
Real Estate Companies and their equity holders have granted the Company a
right of first refusal with respect to any transactions resulting in a change
of control of the Real Estate Companies, as defined; (v) the Real Estate
Companies have indemnified the Company against

F-33

any loss directly or indirectly caused by, relating to, based upon, arising
out of, or incurred in connection with the Company’s ownership (as opposed to
management) of properties prior to, on and after August 18, 1995; (vi) the
Real Estate Companies will limit the Company’s liability, by an agreed-upon
formula, for taxes arising from the sale of the Real Estate Companies. The
Intercompany Agreements may only be amended with the approval of the Real
Estate Companies and the Company. A majority of the members of the Board of
Directors of the Company having no interest in the Real Estate Companies must
approve such amendments if they involve a conflict of interest with directors
having an interest in the Real Estate Companies. In addition, the Board of
Directors has created a Conflicts Committee, consisting of directors who have
no direct or indirect financial interest in and are not affiliated with
entities having an interest in the Real Estate Companies, which monitors
dealings between the Company and the Real Estate Companies which may present
a conflict of interest.

Going forward, the Company will participate in additional acquisitions
with the Real Estate Companies primarily in the form of identifying and
negotiating acquisitions and providing other asset acquisition services to
the Real Estate Companies, acquiring rights to manage the properties through
the Intercompany Agreements or other arrangements, and paying that portion of
the acquisition costs allocable to the management rights. See Notes 4 and 17
for further discussion of acquisitions.

The Company was due directly from the Real Estate Companies $40 thousand
and $2.1 million as of December 31, 1996 and 1995, respectively. These
amounts are included in receivables on the Consolidated Balance Sheet.

(14) COMMITMENTS AND CONTINGENCIES

CONTINUING OPERATIONS

GUARANTEES

As of December 31, 1996, the Company was committed to performance
guarantees, loan guarantees and other guarantees totaling $8.3 million, which
relate primarily to transactions consummated by the Real Estate Companies
prior to their sale in August 1995. As discussed in Note 13 above, the Real
Estate Companies have indemnified the Company for any costs which might be
incurred by the Company related to these guarantees. In the opinion of
management, future calls, if any, on these guarantees are not expected to
have a material adverse effect on the Company’s financial position or results
of operations. Demeter, Capricorn and Mr. Heller have agreed to provide a
line of credit to the Real Estate Companies in an aggregate amount of $5.5
million. The line of credit is available through August 1998 and is to be
used to satisfy the Real Estate Companies’ indemnification obligations, if
any, to the Company.

LITIGATION

In the normal course of business, the Company is a party to various
legal actions and claims. In the opinion of management, based on advice of
counsel, the resolution of these actions and claims is not expected to have a
material adverse effect on the Company’s financial position or results of
operations.

LEASES

The Company leases office space and equipment under noncancellable
operating leases. Most office leases provide for the pass-through of
increased operating expenses. In December 1995, the Company entered into a
six-year lease agreement for new office space in Vienna, Virginia. The
Company relocated its Washington, D.C. and Reston, Virginia offices to the
new Vienna location during the second quarter of 1996. The Company has sublet
its Reston facilities for the remainder of its lease, which expires in July
1998, at approximately its obligation under the prime lease. Net rent
expense, substantially all of which is minimum rentals under operating
leases, was $2.0, $1.8 and $2.1 million in 1996, 1995 and 1994, respectively.
1996 rent expense is stated net of sub-lease income. Future minimum rental
commitments, net of sub-lease income, under existing operating leases having
an initial or remaining noncancellable lease terms in excess of one year at
December 31, 1996, are as follows (in thousands):

F-34

Lease Commitments
1997 $ 2,714
1998 2,527
1999 2,478
2000 2,574
2001 2,594
Thereafter 1,342
——–
Total $ 14,229
——–
——–

DISCONTINUED OPERATIONS

FANNIE MAE DUS PROGRAM

NHP Financial Services bears the Level I risk of loss associated with
the loans it services under the Fannie Mae Delegated Underwriting and
Servicing (“DUS”) multifamily loan origination program. The Level I risk of
loss requires NHP Financial Services to bear a portion of the losses on
mortgages it originates under the program that does not exceed 20% of the
original balance of the loans. The unpaid principal balance of the Fannie Mae
DUS loan servicing portfolio was approximately at $776 million at December
31, 1996. The DUS loans are secured by first liens on the underlying
multifamily properties and are concentrated primarily in Texas, Nevada,
Arizona, Ohio and New York. No loans are delinquent as of December 31, 1996.
NHP Financial Services has provided a reserve for losses of $4.4 million
as of December 31, 1996, which is included in net asset of discontinued
operations on the Consolidated Balance Sheet. This reserve represents
management’s estimate of losses which may be incurred on loans underwritten
to date that are currently being serviced.

Under the DUS program, NHP Financial Services has established a $4.2
million irrevocable letter of credit on Fannie Mae’s behalf to cover any loan
losses at December 31, 1996.

LOAN COMMITMENTS

At December 31, 1996, the NHP Financial Services had mandatory delivery
commitments in the amount of approximately $41.2 million to cover its
origination commitments and loans held for sale.

OTHER

In connection with the construction loan portfolio, NHP Financial
Services makes certain advances to borrowers. On FHA insured construction
loans, the NHP Financial Services advances construction funds pending
security holder purchases. Such advances amounted to approximately $4.2
million at December 31, 1996. NHP Financial Services is obligated to advance
another $258 million on construction loans administered at December 31, 1996.

In addition, NHP Financial Services makes voluntary advances under
certain of its servicing agreements pending receipt from the mortgagors and
the Department of Housing and Urban Development (“HUD”) on applicable
subsidized loans. Such advances amounted to approximately $2.0 million at
December 31, 1996 and are included in net assets of discontinued operations
on the Consolidated Balance Sheet.

Related escrow funds, which represent borrowers’ insurance, taxes and
replacement reserves, of approximately $228 million at December 31, 1996, are
on deposit in escrow bank accounts and are not included in the accompanying
Consolidated Balance Sheet. NHP Financial Services carries blanket bond
coverage of $5 million and errors and omissions coverage in the amount of $10
million.

F-35

WAIVER OF FREDDIE MAC NON-COMPLIANCE

As of December 31, 1996, Washington Mortgage Financial was not in
compliance with a tangible net worth standard required by Freddie Mac for
continued servicing and future origination of loans held by Freddie Mac.
Washington Mortgage Financial’s non-compliance with this standard results
from the accounting treatment of servicing rights in connection with its
acquisition by the Company and Freddie Mac’s policy with respect to
recognition of servicing rights as a tangible asset, and does not reflect any
deterioration in the operating results or financial condition of Washington
Mortgage Financial. On March 26, 1997, Freddie Mac advised Washington Mortgage
Financial that Washington Mortgage Financial has financial strengths not
recognized in the tangible net worth calculation, and that Freddie Mac did
not consider Washington Mortgage Financial to be out of compliance as of
December 31, 1996, and effective for the remainder of 1997.

(15) FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company’s financial instruments are as
follows (in thousands):

The estimated fair value of the financial instruments has been determined
based on pertinent information available to management at December 31, 1996.
The basic assumptions used and the estimates disclosed represent management’s
best judgment of appropriate valuation methods. In certain cases, fair values
are not subject to precise quantification or verification and may change as
economic and market factors, and management’s evaluation of those factors,
change. Although management uses its best judgment in estimating the fair
value of these financial instruments, there are inherent limitations in any
estimation technique. Therefore, these fair value estimates are not
necessarily indicative of the amounts that the corporation would realize in a
market transaction. The following methods and assumptions were used to
estimate the fair value of each class of financial instruments for which it
is practicable to estimate the value.

The carrying amount of cash and cash equivalents, receivables, on-site
cost reimbursement receivable, accounts payable and accrued expenses, and
accrued on-site salaries and benefits approximates fair value because of the
short-term maturity of these instruments.

The fair value of notes receivable are estimated by discounting estimated
future cash flows using current rates at which similar loans would be made to
borrowers with similar credit ratings.

The fair value of the Credit Facility approximates carrying value because
the interest rate on this debt changes with market interest rates.

F-36

The fair value of other notes payable and the Real Estate related debt
approximates carrying value as these notes either have a stated interest rate
comparable to a current market interest rate for similar obligations, or, if
non-interest bearing, have been recorded at a discount based on a current
market interest rate for similar obligations.

The fair value of financial guarantees is based on the estimated cost to
settle the obligations.

(16) NON-RECURRING EXPENSES AND EXTRAORDINARY ITEMS

NON-RECURRING EXPENSES

In 1993, the Company initiated a systems project to replace its three
current computer systems with a single system based on a client-server
technology. In December 1994, the Company concluded that the conceptual
design of the new system was flawed and expensed all costs associated with
the project, totaling $1.8 million, as a non-recurring expense. Subsequently,
in June 1995, the Company received a net cash payment of $0.4 million from
two of the parties participating in the project which has been reflected as a
reduction of non-recurring expenses in the accompanying financial statements.

In February 1995, as discussed in Note 11, the Company extended the
exercise term of options granted under the Company’s 1990 Stock Option Plan
and granted a terminating employee the right to exercise his options for up
to two years after his departure. As a result of these actions, non-recurring
compensation expense of $0.5 million was recognized in the first quarter of
1995.

EXTRAORDINARY ITEMS

In connection with the repayment of the Company’s credit facility in the
third quarter of 1995, the Company expensed the remaining $0.7 million of
deferred financing costs related to the Company’s previous credit facility.
This charge was recorded net of a $0.3 million income tax benefit and
classified as an extraordinary item in the Consolidated Statement of
Operations.

F-37

(17) SUBSEQUENT EVENTS

1997 ACQUISITIONS

In November 1996, the Company and Property Resources Corporation (“PRC”)
signed an agreement to enter into three separate joint ventures (the “PRC
Acquisition”). The Company purchased a 15% interest in NHP/PRC Management
Company, LLC (“NHPPRC”), a limited liability property management company,
from PRC. NHPPRC is the management agent for a portfolio of 19 HUD subsidized
properties containing 2,426 apartments in New York City and will subcontract
the management of these properties to the Company. Because the Company has
voting control over this entity, the results of NHPPRC will be consolidated
with those of the Company and PRC’s interest will be accounted for as a
minority interest.

The Company and PRC also formed Aptek Management Co. LLC which will
provide property management services for third party-owned condominiums,
cooperatives, public housing, university and hospital housing in the New York
metropolitan region. In addition, the Company and PRC formed Aptek
Maintenance Services, LLC, which will provide maintenance services for
Company-managed properties and third-party-owned properties where
competitive, initially in New York. Both Aptek Management Co. LLC and Aptek
Maintenance Services, LLC are owned equally by PRC and the Company but PRC
will control and oversee their operations. These two joint ventures will be
accounted for under the equity method of accounting.

The PRC Acquisition closed in escrow in late 1996 but did not receive HUD
2530 approval until January 1997. Therefore, for financial accounting
purposes, the transaction will be accounted for as a 1997 acquisition. Total
consideration paid by the Company to PRC was approximately $1.4 million,
including a commitment to issue approximately 31,000 shares of the Company’s
common stock in five years, or the cash equivalent of its then current market
value. As part of the transaction, PRC has the right to require the Company,
at any time, upon 30 days’ notice through January 2002, to purchase the
remaining 85% interest of NHPPRC for $3.8 million. In conjunction with the
transaction, the Company lent $4.2 million to PRC under a promissory note.
The note has a rate of 7% and requires PRC to make quarterly interest
payments with the principal amount due in January 2002.

In January 1997, the Company acquired all of the outstanding shares of
Broad Street Management, Inc. (“Broad Street”), a Columbus, Ohio-based
property management company for approximately $1.8 million. Broad Street, as
a wholly owned subsidiary, will continue to manage a portfolio of 17
apartment communities aggregating 1,942 units, located in Columbus, Ohio,
Louisville, Kentucky and Augusta, Georgia. The acquisition will be accounted
for under the purchase method of accounting.

On April 16, 1997, Washington Mortgage Financial completed the
acquisition of certain assets from Askew Investment Company for $4.6 million.
The acquisition will be accounted for under the purchase method of accounting.

AMENDMENT TO CREDIT FACILITY

In February 1997, the terms of the Company’s $75 million Credit Facility
were amended. The significant changes in the agreement include the allowance
of up to $100 million in additional senior unsecured term debt, an increase
in the amount of unsubordinated borrowing allowed in connection with
acquisitions from $10 million to $25 million, and a reduction in the Credit
Facility’s overall pricing. The interest rate has been reduced from The First
National Bank of Boston’s base rate or LIBOR plus 175 basis points to a
sliding scale rate which ranges from LIBOR

F-38

plus 75 basis points to LIBOR plus 125 basis points, depending on the
Company’s ratio of debt to EBITDA. In addition, the commitment fee on the
unused portion of the Credit Facility may be reduced from 37.5 basis points
per annum to 25 basis points per annum, also depending on the ratio of debt
to EBITDA.

(18) QUARTERLY FINANCIAL AND OPERATING DATA (UNAUDITED)

The following table sets forth certain unaudited quarterly financial and
operating data for the years ended December 31, 1996 and 1995. The Company
believes that the following selected quarterly information includes all
adjustments necessary for a fair presentation, in accordance with generally
accepted accounting principles (dollars in thousands except per share
amounts).

– —————-

F-39

(a) The Company has never paid dividends and does not intend to pay dividends
in the foreseeable future. Any payment of future dividends and the
amounts thereof will be dependent upon the Company’s earnings, financial
and other requirements, including contractual obligations.
(b) The Company completed its initial public offering on August 18, 1995. Stock
prices shown are only for periods subsequent to that date.

F-40

Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K

(a) 3 Exhibits

Exhibit 23.1 – Consent of Arthur Andersen LLP dated October 27, 1997.
Exhibit 23.2 – Consent of Deloitte & Touche LLP dated October 27, 1997.
Exhibit 23.3 – Consent of Anders, Minkler & Diehl LLP dated
October 27, 1997.
Exhibit 23.4 – Consent of Dauby O’Connor & Zaleski, LLC dated
October 27, 1997
Exhibit 23.5 – Consent of Edwards Leap & Sauer dated October 27, 1997.
Exhibit 23.6 – Consent of George A. Hieronymous & Company, LLC dated
October 27, 1997.
Exhibit 23.7 – Consent of Goldenberg Rosenthal Friedlander, LLP dated
October 27, 1997.
Exhibit 23.8 – Consent of Hansen, Hunter & Kibbee, P.C. dated
October 27, 1997.
Exhibit 23.9 – Consent of J. H. Cohn LLP dated October 27, 1997.
Exhibit 23.10 – Consent of J. A. Plumer & Co., P.A. dated
October 27, 1997.
Exhibit 23.11 – Consent of Marks Shron & Company, LLP dated
October 27, 1997.
Exhibit 23.12 – Consent of Reznick Fedder & Silverman dated
October 27, 1997.
Exhibit 23.13 – Consent of Russell Thompson Butler & Houston dated
October 27, 1997.
Exhibit 27 – Amended Financial Data Schedule

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

NHP INCORPORATED
(Registrant)

By: /s/ Ann Torre Grant
Ann Torre Grant
Executive Vice President,
Chief Financial Officer
and Treasurer (Authorized Officer
and Principal Financial Officer)

Dated October 27, 1997

3

EX-23.1
2
CONSENT OF ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our report included in this Amended Annual Report on Form 10-K/A, into NHP’s
Registration Statement on Form S-8 (No. 333-11933), NHP’s Registration
Statement on Form S-8 (No. 333-11863), NHP’s Registration Statement on Form
S-8 (No. 333-11917), NHP’s Registration Statement on Form S-8 (No.
333-11857), and NHP’s Registration Statement on Form S-8 (No. 333-08137), all
previously filed.

/s/ Arthur Andersen LLP

Washington, D.C.
October 27, 1997

EX-23.2
3
CONSENT OF DELOITTE & TOUCHE LLP

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in this Amendment No. 2 on
Form 10-K/A by NHP Incorporated (NHP) of our reports on the financial
statements of certain Partnerships for the year ended December 31, 1994,
which reports are dated as shown in the following Appendices (Items 1
through 5), and as indicated below (Items 6 through 16):

1) Appendix A-94

2) Appendix B-94 (each of which expresses an unqualified opinion and includes
an explanatory paragraph relating to the Partnership’s ability to continue
as a going concern)

3) Appendix C-94 (each of which expresses a qualified opinion as a result of
cumulative unpaid distributions recorded according to HUD guidelines which
is not in accordance with generally accepted accounting principles)

4) Appendix D-94 (each of which expresses an unqualified opinion and includes
an explanatory paragraph relating to the change in 1993 of the
Partnership’s method of computing depreciation)

5) Appendix E-94 (each of which expresses an unqualified opinion and includes
an explanatory paragraph relating to the expiration of a Housing Assistance
Payment Contract)

6) Franklin Northwoods Associates, A Limited Partnership, dated March 3, 1995
(which expresses an unqualified opinion and includes an explanatory
paragraph noting that the mortgage lender has the option to require full
payment of all amounts outstanding after December 1, 1994)

7) Franklin Woods Associates, A Limited Partnership, dated March 14, 1995
(which expresses an unqualified opinion and includes an explanatory
paragraph noting that the mortgage note payable and related accrued
interest are due June 30, 1997)

8) Green Mountain Manor Limited Partnership, dated February 17, 1995 (which
expresses an unqualified opinion and includes explanatory paragraphs
relating to the expiration of a Housing Assistance Payment Contract and a
deferred acquisition note and related accrued interest which is due on
February 17, 1996)

Page 1 of 3

9) Hilltop Apartment Associates, A Limited Partnership, dated February 13,
1995 (which expresses an unqualified opinion and includes explanatory
paragraphs relating to the change in 1993 of the Partnership’s method of
computing depreciation and the Partnership’s revised estimate in 1993 of
interest due on loans from one of its partners)

10) Leyden Limited Partnership, dated February 8, 1995 (which expresses an
unqualified opinion and includes explanatory paragraphs relating to the
Partnership’s ability to continue as a going concern and the correction of
the Partnership’s method of computing accrued interest on a deferred
acquisition note)

11) Madison Hill Limited Partnership, dated March 1, 1995 (which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
transfer of substantially all of its assets, liabilities and its deed in
lieu of foreclosure, during February 1995, in return for $50,000)

12) Montblanc Garden Apartments Associates, A Limited Partnership, dated March
17, 1995 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to a disputed outstanding mortgage principal
balance)

13) Pavilion Associates, A Limited Partnership, dated January 19, 1995 (which
expresses an unqualified opinion and includes an explanatory paragraph
relating to a deferred acquisition note and related accrued interest, and
real estate notes payable which are due February 16, 1996)

14) Spring Meadow Limited Partnership, dated February 13, 1995 (which expresses
an unqualified opinion and includes explanatory paragraphs relating to the
Partnership’s ability to continue as a going concern and the correction of
the Partnership’s method of computing accrued interest on a deferred
acquisition note and the correction of an error relating to Partnership
cash reflected in the financial statements)

15) Spruce Limited Partnership, dated February 6, 1995 (which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
correction of the Partnership’s method of computing accrued interest on a
deferred acquisition note for the years 1992 and prior and the correction
of an error relating to Partnership cash reflected in the financial
statements)

16) Waterman Limited Partnership, dated January 13, 1995 (which expresses a
qualified opinion as a result of cumulative unpaid distributions recorded
according to HUD guidelines which is not in accordance with generally
accepted accounting principles, and includes an explanatory paragraph
regarding a deferred acquisition note and related accrued interest which
is due on April 18, 1996)

Page 2 of 3

We further consent to the incorporation by reference of such reports into
NHP’s Registration Statements on Form S-8 (No. 333-11933, No. 333-11863,
No. 333-11917, No. 333-11857 and No. 333-08137), insofar as such reports relate
to the financial statements of the Partnerships (identified in Items 1
through 16 above) for the year ended December 31, 1994, all filed with the
Securities and Exchange Commission.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
McLean, Virginia

October 27, 1997

Page 3 of 3

Appendix A-94
————-

Partnership Report Date
– ———– ———–

107-145 West 135th Street Associates February 9, 1995
Algonquin Tower Limited Partnership February 9, 1995
All Hallows Associates January 26, 1995
Allentown Towne House Limited Partnership January 26, 1995
Anglers Manor Associates February 2, 1995
Antioch Apartments, Ltd. January 11, 1995
Arvada House Associates February 2, 1995
Audobon Park Associates January 12, 1995
Baldwin Oaks Elderly, Ltd. February 6, 1995
Baldwin Towers Associates February 10, 1995
Basswood Manor Limited Partnership January 25, 1995
Bayview Hunters Point Apartments January 26, 1995
Bensalem Gardens Associates February 3, 1995
Berkley Limited Partnership February 14, 1995
Bloomsburg Elderly Associates February 1, 1995
Briarwood Apartments January 19, 1995
Brinton Manor No. 1 Associates January 21, 1995
Brinton Towers Associates January 24, 1995
Brookside Apartments Associates February 1, 1995
Buena Vista Apartments, Ltd. January 16, 1995
Cabell Associates of Lakeview January 21, 1995
California Square Limited Partnership January 30, 1995
California Square II Limited Partnership January 30, 1995
Campbell Heights Associates February 2, 1995
Canterbury Gardens Associates February 1, 1995
Capital Park Limited Partnership January 19, 1995
Center Square Associates January 25, 1995
Chapel NDP January 30, 1995
Cheyenne Village Apartments, Ltd. February 3, 1995
College Heights January 19, 1995
College Park Apartments February 8, 1995
College Park Associates January 27, 1995
Community Developers of High Point January 30, 1995
Congress Park Associates II February 9, 1995
Copperwood Limited January 31, 1995
Copperwood II Limited January 25, 1995
Cypress Gardens, Limited January 20, 1995
Darby Townhouses Associates January 18, 1995
Darbytown Development Associates January 11, 1995
Delcar – S, Ltd. January 9, 1995
Delcar – T, Ltd. January 20, 1995
DIP Limited Partnership January 20, 1995
DIP Limited Partnership – II February 3, 1995
DIP Limited Partnership III February 15, 1995

Page 1

Appendix A-94
————-

Partnership Report Date
– ———– ———–

Discovery Limited Partnership February 7, 1995
Doral Gardens Associates February 1, 1995
Duquesne Associates No. 1 January 16, 1995
Edmond Estates Limited Partnership January 21, 1995
Elden Limited Partnership January 30, 1995
Esbro Limited Partnership January 12, 1995
Fairmont #1 Limited Partnership February 3, 1995
Fairmont #2 Limited Partnership February 6, 1995
Fairwood Associates February 6, 1995
Federal Square Village January 18, 1995
Field Associates January 21, 1995
Forest Green Limited Partnership January 16, 1995
Forest Park Elderly Associates January 13, 1995
Forrester Gardens, Ltd. January 12, 1995
Fort Carson Associates January 12, 1995
Foxwood Manor Associates January 11, 1995
Franklin Chapel Hill Associates February 23, 1995
Franklin Park Limited Partnership February 9, 1995
Friendset Housing Company January 17, 1995
Frio Housing, Ltd. February 2, 1995
G.W. Carver Limited January 26, 1995
Galion Limited Partnership January 30, 1995
Garfield Hill Associates January 17, 1995
Gateway Village Associates January 18, 1995
Gladys Hampton Houses Associates February 6, 1995
Golden Apartments I February 6, 1995
Golden Apartments II March 1, 1995
Grandview Apartments January 11, 1995
Greater Mount Calvary Terrace, Ltd. January 18, 1995
Greater Richmond Community Development
Corp. I and Associates February 14, 1995
Greater Richmond Community Development
Corp. II and Associates February 13, 1995
Griffith Limited Partnership January 11, 1995
Gulfway Limited Partnership January 13, 1995
H.R.H. Properties, Ltd. February 3, 1995
Hamilton Heights Associates January 26, 1995
Harold House Limited Partnership January 14, 1995
Hatillo Housing Associates March 17, 1995
Hickory Ridge Associates, Ltd. January 19, 1995
Hillcrest Green Apartments, Ltd. January 10, 1995
Hillside Village Associates February 9, 1995
Hilltop Limited Partnership January 17, 1995
Hopkins Renaissance Associates February 1, 1995

Page 2

Appendix A-94
————-

Partnership Report Date
– ———– ———–

Hudson Terrace Associates January 26, 1995
Hurbell II Limited Partnership January 13, 1995
Indian Valley I Limited Partnership January 30, 1995
Indian Valley II Limited Partnership January 30, 1995
Indian Valley III Limited Partnership January 30, 1995
Ingram Square Apartments, Ltd. January 26, 1995
Jamestown Village Associates January 12, 1995
Jersey Park Associates January 20, 1995
JFK Associates January 26, 1995
Johnston Square Associates January 17, 1995
JVL 16 Associates January 16, 1995
Kennedy Homes Limited Partnership January 17, 1995
Key Parkway West Associates January 30, 1995
Kimberly Associates Limited Partnership January 10, 1995
La Salle Apartments January 17, 1995
La Vista Associates February 9, 1995
Lafayette Manor Associates February 15, 1995
Lafayette Towne Elderly, Ltd. February 3, 1995
Lafayette Towne Family, Ltd. February 3, 1995
Lake Forest Apartments January 20, 1995
Las Americas Housing Associates March 17, 1995
Lassen Associates January 31, 1995
Laurel Gardens February 1, 1995
Lewisburg Associates January 26, 1995
Lewisburg Elderly Associates January 19, 1995
Lincmar Associates January 31, 1995
Lincoln Park Associates February 3, 1995
Lock Haven Elderly Associates February 7, 1995
Lock Haven Gardens Associates January 30, 1995
Loring Towers Apartments Limited Partnership January 12, 1995
M & P Development Company January 13, 1995
Maple Park East Limited Partnership January 17, 1995
Maple Park West Limited Partnership January 10, 1995
Mayfair Manor Limited Partnership January 16, 1995
Meadowood Apartments – Phase I (Meadowood
Associates, Ltd.) January 17, 1995
Meadowood Apartments – Phase II (Meadowood
Associates, Ltd.) January 12, 1995
Meadows Apartments Limited Partnership January 23, 1995
Meadows East Apartments Limited Partnership January 17, 1995
Menlo Limited Partnership January 13, 1995
Merced Commons II February 7, 1995
Mill Street Associates February 3, 1995
Miramar Housing Associates March 17, 1995

Page 3

Appendix A-94
————-

Partnership Report Date
– ———– ———–

Montblanc Housing Associates March 17, 1995
Morrisania Towers Housing Company January 25, 1995
Moss Gardens Ltd. February 1, 1995
Murphy Blair Associates III February 1, 1995
New Lake Village Apartments January 20, 1995
New West 111th Street Housing Company February 3, 1995
Newton Hill Limited Partnership January 30, 1995
Northgate Village Limited Partnership January 16, 1995
Northlake Terrace Associates February 8, 1995
Northwest Terrace Associates February 8, 1995
Oakland Village Townhouse Associates February 8, 1995
Ocala Place, Ltd. February 7, 1995
One Lytle Place February 2, 1995
One West Conway Associates February 22, 1995
Orange Village Associates February 8, 1995
Palm House Limited Partnership January 30, 1995
Park Avenue West I Limited Partnership January 30, 1995
Park Avenue West II Limited Partnership January 30, 1995
Park Creek Limited Partnership January 11, 1995
Place One Limited Partnership February 11, 1995
Portland Plaza Partnership February 7, 1995
Portner Place Associates February 15, 1995
Post Street Associates January 25, 1995
Pride Gardens Limited Partnership January 20, 1995
Pueblo Apartments Associates, Ltd. January 20, 1995
RI-15 Limited Partnership February 3, 1995
River Front Apartments Limited Partnership January 11, 1995
River Woods Associates February 13, 1995
Riverview II Associates January 27, 1995
Rockwell Limited Partnership January 13, 1995
Rolling Meadows Of Ada, Ltd. January 10, 1995
Ruffin Road Associates February 6, 1995
Rutherford Park Townhouses Associates February 8, 1995
San Jose Limited Partnership January 12, 1995
San Juan Del Centro Limited Partnership January 17, 1995
Sencit Towne House Limited Partnership January 25, 1995
Shoreview Apartments February 8, 1995
Site 10 Community Alliance Associates February 7, 1995
Sleepy Hollow Apartments January 26, 1995
SNI Development Company January 24, 1995
Southmont Apartments January 31, 1995
Southward Limited Partnership January 13, 1995
Stafford Apartments January 27, 1995
Stock Island Limited Partnership January 18, 1995

Page 4

Appendix A-94
————-

Partnership Report Date
– ———– ———–

Storey Manor Associates February 3, 1995
Strawbridge Square Associates Limited Partnership February 6, 1995
Summersong Townhouses Limited Partnership January 26, 1995
Sunrise Associates February 10, 1995
Sunset Plaza Apartments January 20, 1995
Susquehanna View Limited Partnership January 16, 1995
Timberlake Apartments Limited Partnership January 19, 1995
Timuquana Park Associates January 18, 1995
Tinker Creek Limited Partnership January 10, 1995
Town North January 18, 1995
Treeslope Apartments Associates January 26, 1995
Trinity Towers – 14th Street Associates, Ltd. March 7, 1995
United Handicap Federation Apartment Associates February 13, 1995
United House Associates February 9, 1995
United Housing Partners – Carbondale, Ltd. February 8, 1995
United Redevelopment Associates January 26, 1995
University Plaza Associates February 9, 1995
Vantage 78 March 7, 1995
Villa De Guadalupe Associates January 16, 1995
Village Circle Apartments, Ltd. January 31, 1995
Village Green Limited Partnership January 20, 1995
Vistas De San Juan Associates February 13, 1995
Waico Apartments Associates January 17, 1995
Waico Phase II Associates February 1, 1995
Walden Oaks Associates January 31, 1995
Walmsley Terrace Associates January 18, 1995
Walnut Hills Associates, Ltd. January 13, 1995
Wash-West Properties January 31, 1995
Waters Towers Associates January 12, 1995
West Oak Village Limited Partnership January 27, 1995
Whitefield Place, Ltd. January 26, 1995
Woodmark Limited Partnership January 30, 1995
Yadkin Associates January 13, 1995

Page 5

Appendix B-94
————-

Partnership Report Date
– ———– ———–

Boynton Beach Limited Partnership March 17, 1995
Central Village Associates February 10, 1995
Cheek Road Limited Partnership February 7, 1995
Clay Courts Associates January 12, 1995
Eastman Associates January 24, 1995
Elm Creek Limited Partnership February 7, 1995
Fairmeadows Limited Partnership January 12, 1995
Fairview Homes Associates January 27, 1995
Franklin Eagle Rock Associates February 28, 1995
Franklin Pheasant Ridge Associates March 1, 1995
Franklin Ridgewood Associates February 24, 1995
Hamilton Gardens, Ltd. February 13, 1995
JVL Limited January 14, 1995
JVL 18 Associates February 3, 1995
JVL 19 Associates January 27, 1995
Langenheim Associates February 1, 1995
Meadowood Associates III, Ltd. January 15, 1995
New West 111th Street Two Associates January 25, 1995
Olde Rivertown Venture February 2, 1995
Retirement Manor Associates February 17, 1995
Royal Towers Limited Partnership January 12, 1995
Southridge Apartments Limited Partnership January 10, 1995
Springfield Limited Partnership January 13, 1995
Trinity Apartments January 13, 1995
Village Park II February 3, 1995

Appendix C-94
————-

Partnership Report Date
– ———– ———–

Cottonwood Apartments January 11, 1995
Kenneth Arms Apartments January 9, 1995
Knollcrest Apartments January 21, 1995
Manzanita Arms Apartments January 11, 1995
Overbrook Park, Ltd. January 23, 1995
Rancho Arms Apartments January 17, 1995
San Juan Apartments January 24, 1995
Trinity Hills Village Apartments January 13, 1995
Tumast Associates February 8, 1995
Verdes Del Oriente February 1, 1995

Appendix D-94
————-

Partnership Report Date
– ———– ———–

Cumberland Court Associates February 9, 1995
Maple Hill Associates February 15, 1995
Merced Commons I February 1, 1995

Appendix E-94
————-

Partnership Report Date
– ———– ———–

Brightwood Manor Associates January 26, 1995
Caroline Arms Limited Partnership January 18, 1995
Richlieu Associates February 11, 1995
Sherman Terrace Associates January 13, 1995
Washington Manor Limited Partnership January 26, 1995

EX-23.3
4
CONSENT OF ANDERS, MINKLER & DIEHL LLP

Consent of Anders, Minkler & Diehl LLP

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated February 3, 6, 9, 11, 14, 15 and 20,
1995 with respect to the audits of these Partnerships:

Pershing Waterman Phase I (DB I) Caroline Associates I
PW III Associates (DB II) Columbus Square Associates I
PW IV Associates (DB III) Columbus Square Associates II
PW V Associates (DB IV) Savoy Court Associates
PW VI Associates (DB V) Wigar, Ltd. (Winter Garden)

for the year ended December 31, 1994, and the incorporation by reference of
such reports into NHP’s Registration Statement on Form S-8 (No. 333-11933),
NHP’s Registration Statement on Form S-8 (No. 333-11863), NHP’s Registration
Statement on Form S-8 (No. 333-11917), NHP’s Registration Statement on Form
S-8 (No. 333-11857), and NHP’s Registration Statement on Form S-8 (No.
333-08137).

/s/ Anders, Minkler & Diehl LLP

St. Louis, Missouri
October 27, 1997

EX-23.4
5
CONSENT OF DAUBY O’CONNOR & ZALESKI LLP

DAUBY O’CONNOR & ZALESKI
A LIMITED LIABILITY COMPANY
Certified Public Accountants

Consent Letter for Independent Auditors

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated as referred to in Schedule I with
respect to the audits referred to on Schedule I for the year ended December
31, 1994, and the incorporation by reference of such reports into NHP’s
Registration Statement on Form S-8 (No. 333-11933). NHP’s Registration
Statement on Form S-8 (No. 333-11863), NHP’s Registration Statement on Form
S-8 (No. 333-11917), NHP’s Registration Statement on Form S-8 (No.
333-11857), and NHP’s Registration Statement on Form S-8 (No. 333-08137).

/s/ Dauby O’Connor & Zaleski, LLC

October 27, 1997 Dauby O’Connor & Zaleski, LLC
Indianapolis, Indiana Certified Public Accountants

SCHEDULE I
AUDITS FOR THE YEAR ENDED DECEMBER 31, 1994

REPORT DATE PARTNERSHIP NAME
– ———– —————-

January 7, 1995 Brookview Apartments Company Limited
March 13, 1995 Clover Ridge East Limited Partnership
January 7, 1995 Colony Apartments Company Limited
January 25, 1995 East Hampton Limited Partnership
January 25, 1995 Edgewood II Associates
January 20, 1995 Fairburn & Gordon Associates, Phase I
January 20, 1995 Fairburn & Gordon Associates, Phase II
January 30, 1995 Laing Village
January 25, 1995 Oakland City/West End Associates, Ltd.
January 30, 1995 Orangeburg Manor
February 6, 1995, except for Note 8
which is dated June 9, 1995 Parkways Associates
January 25, 1995 Pleasant Valley Apartments, Ltd.
January 25, 1995 Sandy Springs Associates, Ltd.
February 8, 1995 The Oak Park Partnership
February 6, 1995, except for Note 8
which is dated June 9, 1995 The Rogers Park Partnership
February 8, 1995 Tiffany Rehab Associates
January 20, 1995 Village Green Apartments Company Limited
January 25, 1995 Vineville Towers Associates, Ltd.
January 20, 1995 Westgate Apartments

EX-23.5
6
CONSENT OF EDWARDS LEAP & SAUER

Exhibit 23.5

[LETTERHEAD]
Consent of Edwards Leap & Sauer

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated February 3, February 15, and March
15, 1995, with respect to the audits of IDA Tower, Genesee Gardens
Associates, and Buffalo Village Associates, respectively, for the year ended
December 31, 1994, and the incorporation by reference of such reports into
NHP’s Registration Statement on Form S-8 (No. 333-11933), NHP’s Registration
Statement on Form S-8 (No. 333-11863), NHP’s Registration Statement on Form
S-8 (333-11917), NHP’s Registration Statement on Form S-8 (333-11857), and
NHP’s Registration Statement on Form S-8 (333-08137).

/s/ Edwards Leap & Sauer
– —————————-
Edwards Leap & Sauer
Hollidaysburg, Pennsylvania
October 27, 1997

EX-23.6
7
CONSENT OF GEORGE A. HIERONYMOUS & CO.

[LETTERHEAD]

Consent of George A. Hieronymus and Company, L.L.C.

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated as shown in Exhibit A with respect to
the audit of those entities as shown in Exhibit A for the year ended December
31, 1994, and the incorporation by reference of such report into NHP’s
Registration Statement on Form S-8 (No. 333-11933), NHP’s Registration
Statement on Form S-8 (No. 333-11863), NHP’s Registration Statement of Form
S-8 (333-11917), NHP’s Registration Statement on Form S-8 (333-11857), and
NHP’s Registration Statement on Form S-8 (333-08137).

/s/ George A. Hieronymus and Company L.L.C.
– ——————————————–
George A. Hieronymus and Company, L.L.C.
Mobile, Alabama
October 27, 1997

E X H I B I T A

Real Estate Partnership Report Date
– ———————– ———–

Athens Arms Associates January 27, 1995

Colonial Terrace I Associates January 27, 1995

Colonial Terrace II Associates January 27, 1995

EX-23.7
8
CONSENT OF GOLDBERG, ROSENTHAL & FRIENDLANDER, LLP

CONSENT OF GOLDENBERG ROSENTHAL FRIEDLANDER, LLP

We consent to the incorporation by reference in this Amended Annual
Report on Form 10-K/A, filed with the Securities and Exchange Commission by
NHP Incorporated (NHP) of our reports with respect to the audits of
Partnerships listed below for the year ended December 31, 1994, and the
incorporation by reference of such reports into NHP’s Registration Statement
on Form S-8, (No. 333-11933), NHP’s Registration Statement on Form S-8 (No.
333-11863), NHP’s Registration Statement on Form S-8 (333-11917), NHP’s
Registration Statement on Form S-8 (333-11857) and NHP’s Registration
Statement on Form S-8 (333-08137).

Name of Partnership — 1994 Date of Report
– ————————— ————–

Baisley Park Associates (A Limited Partnership) Februay 3, 1995
Brunswick Village Limited Partnership January 23, 1995
Churchview Gardens Limited Partnership January 23, 1995
Harris Gardens Limited Partnership January 23, 1995
Hawksworth Limited Partnership January 21, 1995
Hollows Associates (A Limited Partnership) February 3, 1995
Kimberton Apartments Associates (A Limited Partnership) January 18, 1995
Washington Northgate Limited Partnership February 3, 1995
Washington Westgate Limited Partnership January 28, 1995
Windsor Apartments Associates (A Limited Partnership) January 18, 1995

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, PA
October 27, 1997

EX-23.8
9
CONSENT OF HANSEN HUNTER & KIBBEE PC

HANSEN, HUNTER & KIBBEE, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
10260 S.W. Greenburg Road
Telephone Suite 1150 Facsimile
(503) 244-2134 Portland, Oregon 97223 (503) 244-9754

CONSENT OF HANSEN, HUNTER & KIBBEE, P.C.

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated, January 19, 1995, January 13, 1995,
January 19, 1995, January 13, 1995, January 19, 1995, January 11, 1995,
January 14, 1995, and January 13, 1995 with respect to the audits of Haines
Associates Limited Partnership, King-Bell Associates, Monmouth Associates
Limited Partnership, Pendleton Riverside Apartments Oreg., Ltd., Penn Hall
Associates, Rodeo Drive Limited Partnership, South Mountain Terrace, Ltd.,
and Woodland Apartments, Oreg., Ltd. for the year ended December 31, 1994,
and the incorporation by reference of such reports into NHP’s Registration
Statement on Form S-8 (No. 333-11933), NHP’s Registration Statement on Form
S-8 (No. 333-11863), NHP’s Registration Statement on Form S-8 (333-11917),
NHP’s Registration Statement on Form S-8 (333-11857), and NHP’s Registration
Statement on Form S-8 (333-08137).

/s/ Hansen, Hunter & Kibbee, P.C.

Portland, Oregon
October 27, 1997

EX-23.9
10
CONSENT OF J.H. COHN LLP

CONSENT OF J. H. COHN LLP

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, which is being filed with the Securities and Exchange Commission
by NHP Incorporated (“NHP”), of our report dated April 26, 1995 with respect
to our audit of the financial statements of Marlboro Greens Limited
Partnership for the years ended December 31, 1994 and 1993, and the
incorporation by reference of such report into NHP’s Registration Statement
on Form S-8 (No. 333-11933), NHP’s Registration Statement on Form S-8 (No.
333-11863), NHP’s Registration Statement on Form S-8 (No. 333-11917), NHP’s
Registration Statement on Form S-8 (No. 333-11857) and NHP’s Registration
Statement on Form S-8 (No. 333-08137).

/s/ J. H. Cohn LLP

J. H. COHN LLP

Roseland, New Jersey
October 27, 1997

EX-23.10
11
CONSENT OF J.A. PLUMER & CO., PA

INDEPENDENT AUDITOR’S CONSENT

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports with respect to the audits of the
partnerships listed below for the year ended December 31, 1994, and the
incorporation by reference of such reports into NHP’s Registration Statement
on Form S-8 (No. 333-11933), NHP’s Registration Statement on Form S-8 (No.
333-11863), NHP’s Registration Statement on Form S-8 (No. 333-11917), NHP’s
Registration Statement on Form S-8 (No. 333-11857), and NHP’s Registration
Statement on Form S-8 (No. 333-08137).

Partnership ———– 630 East Lincoln Avenue Associates Aspen Stratford Apartments Company B Aspen Stratford Apartments Company C Benjamin Banneker Plaza Associates Brightwood Limited Partnership Cambridge Heights Apartments, Ltd. Carter Associates Limited Partnership Cherry Estates Christopher Court Housing Company Concord Houses Associates Duke Manor Associates Elderly Housing Associates Forest Apartments Associates Gate Manor Apartments, Ltd. Greenfield Apartments Greenfield North Apartments Haili Associates Houston Aristocrat Apartments, Ltd. Kapuna Associates Kinloch Urban East Housing Koolau Housing Associates Lakeview Arms Associates Lee-Hy Manor Associates Locust Park Associates Loring Towers Associates Mahoning Associates Milliken Apartments Company Monument Street Limited Partnership Neighborhoods of the Oak Hollow South Associates Orchard Mews Associates Oxford Place Associates Pittsfield Neighborhood Associates Prince Street Towers Sencit-Lebanon Company St. Nicholas Associates Tamarac Pines, Ltd. Tamarac Pines II, Ltd. Taunton Green Associates Taunton II Associates Tompkins Terrace Associates Waipahu Associates Washington Chinatown Associates Woodcrest Apartments, Ltd. Worcester Episcopal Housing Company Date of
Auditor’s Report
—————-

January 24, 1995
January 31, 1995
February 1, 1995
January 31, 1995
January 10, 1995
February 15, 1995
March 4, 1995
January 18, 1995
January 27, 1995
March 7, 1995
February 14, 1995
Ltd. Partnership January 25, 1995
February 16, 1995
January 30, 1995
Limited Partnership January 27, 1995
Limited Partnership January 23, 1995
February 6, 1995
January 24, 1995
February 6, 1995
February 10, 1995
February 6, 1995
February 2, 1995
Limited Partnership February 8, 1995
February 1, 1995
March 3, 1995
January 31, 1995
February 1, 1995
February 8, 1995
Universities Lock Street Apartments Company February 3, 1995
February 21, 1995
February 15, 1995
February 8, 1995
March 9, 1995
Limited Partnership February 6, 1995
January 20, 1995
February 20, 1995
February 18, 1995
February 9, 1995
March 1, 1995
February 24, 1995
February 23, 1995
February 6, 1995
February 15, 1995
January 16, 1995
February 23, 1995

/s/ J. A. Plumer & Co., P.A.

J. A. PLUMER & CO., P.A.
Bethesda, Maryland
October 27, 1997

EX-23.11
12
CONSENT OF MARKS SHRON & COMPANY

CONSENT OF MARKS SHRON & COMPANY, LLP

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated January 19, 1995 and January 25, 1996
with respect to the audits of Two Bridges Associates for the years ended
December 31, 1994 and 1995, and the incorporation by reference of such report
into NHP’s Registration Statement on Form S-8 (No. 333-11933), NHP’s
Registration Statement on Form S-8 (No. 333-11863), NHP’s Registration
Statement on Form S-8 (333-11917), NHP’s Registration Statement on Form S-8
(333-11857) and NHP’s Registration Statement on Form S-8 (No.333-08137).

/s/ Marks Shron & Company, LLP

Marks Shron & Company, LLP

Great Neck, New York
October 27, 1997

EX-23.12
13
CONSENT OF REZNICK FEDDER & SILVERMAN

CONSENT OF REZNICK FEDDER & SILVERMAN

_____________________________

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities Exchange Commission by NHP
Incorporated (NHP) of our reports dated as per the attached schedule with
respect to the audits of the partnerships per the attached schedule for the
year ended December 31, 1994, and the incorporation by reference of such
reports into NHP’s Registration Statement on Form S-8 (No. 333-11933), NHP’s
Registration Statement on Form S-8 (333-11863), NHP’s Registration Statement
on Form S-8 (333-11917), NHP’s Registration Statement on Form S-8
(333-11857), and NHP’s Registration Statement on Form S-8 (333-08137).

REZNICK FEDDER & SILVERMAN

/s/ Reznick Fedder & Silverman

Bethesda, Maryland
October 27, 1997

ATTACHMENT

SCHEDULE OF PARTNERSHIPS

PARTNERSHIP NAME DATED
– —————- —–

Beautiful Village Associates Redevelopment Company February 8, 1995
Branchwood Towers Limited Partnership February 7, 1995
Citrus Park Associates, Ltd. January 31, 1995
Community Circle II Limited January 26, 1995
Copperstone Limited Partnership January 19, 1995
Diakonia Associates Limited Partnership January 31, 1995
Easton Terrace I Associates January 24, 1995
Easton Terrace II Associates February 9, 1995
Eastridge Apartments January 13, 1995
Emory Grove Associates Limited Partnership February 6, 1995
First Alexandria Associates January 20, 1995
Flatbush NSA Associates January 30, 1995
Franklin Square School Associates January 12, 1995
Gates Mill I Limited Partnership February 1, 1995
Grosvenor House Associates Limited Partnership February 10, 1995
Harris Park Limited Partnership February 8, 1995
Hollybush Gardens I January 27, 1995
Hollybush Gardens II January 27, 1995
Intown West Associates Limited Partnership January 27, 1995
Lake Avenue Associates February 6, 1995
Lake Crossing Limited Partnership January 11, 1995
Lakehaven Associates One January 25, 1995
Lakehaven Associates Two January 20, 1995
Linden Court Associates January 30, 1995
Loudoun House Limited Partnership February 13, 1995
Monaco Arms Associates I January 30, 1995
Monaco Arms Associates II January 25, 1995
Muske Limited Partnership February 3, 1995
Natick Associates January 31, 1995
Oakcrest Terrace Apartments February 8, 1995
Oakwood Limited Partnership February 3, 1995
Parkview Associates January 20, 1995
Queenstown Apartments Limited Partnership February 9, 1995
Rancho Townhouse Associates February 3, 1995
Ruscombe Gardens Limited Partnership January 30, 1995
Sencit – Jacksonville Company LTD January 14, 1995
Sheffield Associates February 8, 1995
Snap IV Limited Partnership January 31, 1995
Tara Bridge Limited Partnership January 20, 1995
Twin Towers Associates February 10, 1995
Tyee Associates Limited Partnership January 13, 1995
Urbanization Maria Lopez Housing Company February 3, 1995
Westminster Associates January 31, 1995
Wollaston Manor Associates January 25, 1995
Woodside Village Limited Partnership January 13, 1995

EX-23.13
14
CONSENT OF RUSSELL, THOMPSON, BUTLER & HOUSTON

[Logo] RUSSELL – THOMPSON – BUTLER & HOUSTON
CERTIFIED PUBLIC ACCOUNTANTS

LOUIS G. RUSSELL, CPA
MICHAEL C. THOMPSON, CPA
JAMES D. BUTLER, CPA
ROBERT J. HOUSTON, CPA

CONSENT OF RUSSELL, THOMPSON, BUTLER & HOUSTON

We consent to the incorporation by reference in this Amended Annual Report on
Form 10-K/A, filed with the Securities and Exchange Commission by NHP
Incorporated (NHP) of our reports dated as shown in Exhibit A with respect to
the audit of those entities as shown in Exhibit A for the year ended December
31, 1994, and the incorporation by reference of such report into NHP’s
Registration Statement on Form S-8 (No. 333-11933), NHP’s Registration
Statement on Form S-8 (No. 333-11863), NHP’s Registration Statement on Form
S-8 (333-11917), NHP’s Registration Statement on Form S-8 (333-11857), and
NHP’s Registration Statement on Form S-8 (333-08137).

/s/ Russell, Thompson, Butler & Houston

Mobile, Alabama
October 27, 1997

E X H I B I T A

Real Estate Partnership Report Date
– ———————– ———–

Housing Assistance of Mt. Dora, Ltd. January 7, 1995
Housing Assistance of Orange City, Ltd. January 7, 1995
Housing Assistance of Sebring, Ltd. January 7, 1995
Housing Assistance of Vero Beach, Ltd. January 7, 1995
Lakeview Villas, Ltd. January 7, 1995
Orange City Villas II, Ltd. January 7, 1995
Woodside Villas of Arcadia, Ltd. January 7, 1995
Grove Park Villas, Ltd. January 7, 1995
Highlands Village II January 7, 1995
Eustis Apartments, Ltd. January 7, 1995
South Hiawassee Village, Ltd. January 7, 1995
Parkview Arms Associates I January 13, 1995
Parkview Arms Associates II January 13, 1995
Twin Gables Associates January 13, 1995
Miami Elderly Associates January 13, 1995
Crosland Housing Associates January 19, 1995
Parkview Apartments, Ltd. January 19, 1995
Chesterfield Housing Associates January 19, 1995
Hemingway Housing Associates January 19, 1995
McColl Housing Associates January 19, 1995
The Meadows Apartments January 19, 1995
St. George Villas January 19, 1995
Hurbell I Limited Partnership (Holly Oak) January 21, 1995
Hurbell IV Limited Partnership (Talladega Downs) January 21, 1995
Eastcourt Village Partners January 25, 1995
United Housing Partners Cuthbert, Ltd. January 27, 1995
United Housing Partners Elmwood, Ltd. January 27, 1995
United Housing Partners Morristown, Ltd. January 27, 1995
United Housing Partners Welch, Ltd. January 27, 1995
Townview Towers I Partnership, Ltd. January 27, 1995
VOA-Nicollet Towers Associates January 28, 1995
Community Developers of Princeville January 30, 1995
Registry Square, Ltd. February 23, 1995

EX-27
15
FINANCIAL DATA SCHEDULE

5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RESTATED
AUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996, AND THE RELATED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS THEN ENDED, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

1,000

12-MOS
DEC-31-1996
JAN-01-1996
DEC-31-1996
4,779
0
17,798
2,528
0
31,577
12,774
2,359
218,141
23,335
133,759
0
0
126
55,887
218,141
0
194,979
0
174,302
0
0
3,982
17,442
6,977
10,465
1,155
0
0
11,620
0.91
0.91

~~—–END PRIVACY-ENHANCED MESSAGE—–~~

dillonreadandco.com

Dillon Read & Co. Inc. & The Aristocracy of Stock Profits

1996-12-31_10K_0001047469-97-001971