CAPITAL MORTGAGE PLUS L P
General - -------  Capital Mortgage Plus L.P. (the  "Registrant") is a limited  partnership  formed under the laws of the State of Delaware on November 23,  1988.  The sole general partner of the Registrant is CIP Associates,  Inc., a Delaware  corporation (the "General Partner").  The General Partner manages and controls the affairs of the Registrant.  On  November  17,  2003,  CharterMac  acquired  CharterMac  Capital (formerly known as Related Capital Company), which is the indirect parent of RCC Manager  LLC,  the sole  shareholder  of the  General  Partner.  Pursuant to the acquisition,  CharterMac acquired controlling  interests in the General Partner. This acquisition did not affect the Registrant or its day-to-day operations. See Item 10, Directors and Executive Officers of the Registrant, below.  Investment Objectives - ---------------------  The  Registrant's  principal  investment  objectives  are to: (i)  preserve  and protect the Registrant's  capital;  (ii) provide quarterly cash distributions of adjusted cash from operations;  and (iii) provide additional  distributions from additional  interest arising from  participations in the annual cash flow of the developments  and/or the sale or refinancing  of a development.  There can be no assurance that all of the objectives can be achieved.  The  Registrant  originated  federally  insured and  co-insured  first  mortgage construction  and  permanent  loans   ("Mortgages")   to  finance   multi-family residential  rental  properties   ("Developments"   and  each  a  "Development") developed by unaffiliated entities. All base interest and initially at least 90% in the  aggregate  of the  principal of the  Mortgages  in which the  Registrant invests are insured or  coinsured  by the U.S.  Department  of Housing and Urban Development ("HUD") and Related Mortgage  Corporation ("RMC"). The remaining 10% of the  Registrant's  portfolio is comprised of uninsured  non-interest  bearing equity  loans  ("Equity  Loans")  secured  by the  assignment  of  the  debtor's interests  in the  Development  made  directly  to the  same  developers  as the Mortgages  for,  among  other  purposes,   defrayal  of  certain  specific  cash requirements  of the  Developments.  The  Registrant  made five Mortgages in the aggregate amount of $26,158,190 and five Equity Loans in the aggregate amount of $3,062,135 in connection with five Developments.  The Registrant is a closed-end Company that made its last mortgage investment in March 1993 and does not expect to make any  additional  investments.  As of December 31, 2005,  the  Registrant continued  to hold two of its  original  five  investments  with the other three investments having been previously repaid as follows:                                                                                  Original                                                     Date of                  Mortgage Loan  Equity Loan            Project               Location         Investments  Date Repaid      Amount         Amount - --------------------------  -------------------  ------------  -----------  --------------  ------------       Mortenson Manor Apartments  Ames, Iowa              8/31/90      10/31/02    $  4,974,090    $   577,885 Holly Ridge II Apartments   Gresham, Oregon         3/16/93      12/29/04       5,310,100        684,400 Willow Trace Apartments     Tuscaloosa, Alabama     6/18/93      12/16/98       4,420,000        680,000                                                                              ------------    -----------                                                                              $ 14,704,190    $ 1,942,285                                                                              ============    ===========    As permitted by the certain  Subordinated  Promissory Note dated August 23, 1991 (the  "Subordinated  Note"), on November 30, 2005, RMC called for the prepayment of the  Subordinated  Note on May 31, 2006 from Fieldcrest III Apartments,  Ltd. ("Fieldcrest") at an estimated fair market value of $5,000,000.  Windemere Apartments ("Windemere") is currently in negotiations to refinance its Mortgage  and Equity  Loan  through an  affiliate  of the  General  Partner.  No documents  have been drawn up, and there is no  guarantee  that the  refinancing will occur. The Registrant  currently  estimates that the refinancing could take place in April 2006. As of December 31, 2005,  Windemere had a Mortgage  balance of  approximately  $7,432,000  and  an  Equity  Loan  balance  of  approximately $737,000.  The  Registrant is engaged  solely in the business of investing in Mortgages and Equity Loans;  therefore,  presentation of industry  segment  information is not applicable.  For detailed  financial  information  pertaining to the Registrant,  see Item 8, Financial Statements and Supplementary Data, below.                                         2   Investments - -----------  The  following  table lists the  Registrant's  Mortgages  and Equity Loans as of February 28, 2006.                                                            Original                                                          Mortgage      Interest Rate                                              Date of       Loan         on Mortgage    Equity Loan      Final                 Occu- Project                       Location      Investment   Amount(2)        Loan (1)        Amount     Endorsement     Term(4)  pancy - -------------------------  ---------------  ----------  -----------   --------------   -----------   -----------   ---------  -----          Windemere Apartments (3)   Wichita, Kansas  9/28/1990   $ 8,110,300   9.62% - 10.70%   $   736,550      7/92        40 years   98% Fieldcrest III Apartments  Dothan, Alabama  8/27/1991     3,343,700   8.75% - 10.11%       383,300     11/92        40 years   97%                                                         -----------                    -----------                                                          $11,454,000                    $ 1,119,850                                                         ===========                    ===========    (1) The minimum  interest rate shown above includes  interest  payable under the first mortgage note plus additional  interest payable pursuant to the terms of a Limited Operating Guaranty agreement for Fieldcrest and the Additional  Interest Guaranty agreements for Windemere.  (2) The Windemere Mortgage is co-insured by HUD and RMC. The Fieldcrest Mortgage is fully  insured by HUD. As of February  28, 2006,  all loan amounts  under the Mortgages have been disbursed.  (3) Default interest payments in the aggregate amount of approximately  $833,000 for the years ended  December  31, 1999  through  2005 and $130,000 for the year ended  December 31, 1996 have not been received and as a result,  the Registrant established  an  allowance  for  uncollectability  for a portion  of the  unpaid default interest  payments which equals  approximately  $963,000 and $843,000 at December 31, 2005 and 2004, respectively.  (4) All  Mortgages  and Equity Loans have call  provisions  effective  ten years following  final  endorsement and a grace period.  The  Registrant,  in order to enforce such provisions,  would be required to terminate the mortgage  insurance contract with Federal Housing Administration (and/or the coinsurer) with respect to each of the Mortgages not later than the accelerated  payment date. Since the exercise of such option would be at the Registrant's discretion, it is generally expected to be exercised  when the Registrant  determines  that (i) the value of the  Development  has  increased by an amount which would  justify  accelerating payment in full and assuming the risks of foreclosure if the mortgagor failed to make the accelerated  payment or (ii) if the Registrant  determines it is in the best interest of the investors.  The  following  is  the  interest  income  from  Mortgages  as a  percentage  of Registrant's total revenues for the prior three fiscal years.                                 2005             2004             2003                          -------------   -------------    -------------     Windemere                     71%              28%              49% Fieldcrest                    27               11               19 Holly Ridge*                   0               40               31  (*) Repaid in full on December 29, 2004    Repayment of Mortgage Loans - ---------------------------  Holly Ridge II Apartments ("Holly Ridge") - ----------------------------------------- On December 29, 2004, HR II  Associates,  the owner of Holly Ridge,  prepaid the outstanding  Mortgage and Equity Loan in full.  The Mortgage and the Equity Loan were secured by a mortgage on the Holly Ridge property and partnership interests in HR II Associates. The outstanding debt repaid early to the Registrant totaled $6,421,915,  including the $5,034,666  outstanding balance of the Mortgage Loan, the $684,400 Equity Loan and $702,849 of additional interest due pursuant to the loan documents.  The proceeds from the  repayment of the Holly Ridge  Mortgage and Equity Loan on December 29, 2004 were included as part of the regular  quarterly  distributions which  aggregated  approximately  $6,834,000  and  $71,000  made to the  limited partners or BACs holders and the General Partner, respectively, during the three months ended March 31, 2005.                                         3   Competition - -----------  The  Registrant's  business is affected  by  competition  to the extent that the underlying  Developments  from which its borrowers derive interest and principal payments  may  be  subject  to  competition  from  neighboring  properties.   In particular,  the receipt of additional  interest and the repayment of the Equity Loans,   neither  of  which  is  insured  or   guaranteed   by   government   or quasi-government  agencies,  are dependent upon the economic  performance of the underlying  Developments  which  could  be  adversely  affected  by  competitive conditions.  Employees - ---------  The Registrant does not directly  employ anyone.  All services are performed for the Registrant by its General Partner and that entity's affiliates.  The General Partner receives compensation in connection with such activities as set forth in Items 11 and 13. In addition,  the Registrant reimburses the General Partner and certain  of  its  affiliates  for  expenses  incurred  in  connection  with  the performance by their employees of services for the Registrant in accordance with the Partnership Agreement.
Management is not aware of any trends or events,  commitments  or  uncertainties that will impact  liquidity  in a material  way.  Management  believes  the only impact would be from laws that have not yet been adopted.  All base interest and the  principal  of the  Registrant's  investments  in  Mortgages  are insured or co-insured  by HUD and  additionally  one  Mortgage  is  coinsured  by a private mortgage  lender  (which  is  affiliated  with  the  non-executive  Chairman  of CharterMac,  the parent of the General Partner). The Registrant's investments in uninsured  non-interest bearing Equity Loans (which represent  approximately 10% of the  Registrant's  portfolio  when  originated)  are secured by a  Registrant interest  in  the  two  properties.  Due  to  the  prepayment  of  three  of the Registrant's  original  investments in Mortgages and Equity Loans, the portfolio is not  diversified by location  around the United States.  Thus, the Registrant may not be protected against a general downturn in the national economy.
Not applicable
The Registrant does not own or lease any property.
There are no  material  legal  proceedings  pending  against  or  involving  the Registrant.
No  matters  were  submitted  to a vote of  security  holders  during the fourth quarter of the fiscal year covered by this report  through the  solicitation  of proxies or otherwise.                                         PART II
As of December 31, 2005,  the Registrant  had issued and  outstanding  1,836,660 limited partnership  interests  ("Limited  Partnership  Interests").  All of the issued and outstanding  Limited  Partnership  Interests are issued to Related FI BUC$  Associates,  Inc.  (the  "Assignor  Limited  Partner"),  which has  issued Beneficial  Assignment  Certificates  ("BACs").  Each BAC  represents all of the economic and virtually all of the material  ownership  rights  attributable to a Limited Partnership  Interest held by the Assignor Limited Partner.  BACs may be converted  into  Limited  Partnership  Interests  at no cost to the holder,  but Limited  Partnership  Interests  are not  convertible  back into BACs.  There is currently  no  established  public  trading  market  for  BACs  and  it  is  not anticipated  that BACs will be listed for trading on any securities  exchange or included for quotation on the Nasdaq National Market.  The Registrant has 3,351  registered  holders of an aggregate of 1,836,660 BACs, as of March 3, 2006.                                         4   All of the Registrant's general partnership interests, representing an aggregate capital contribution of $1,000, are held by the General Partner.  There are no material legal restrictions upon the Registrant's present or future ability  to  make  distributions  in  accordance  with  the  provisions  of  the Registrant's Amended and Restated Agreement of Limited Partnership.  Distribution Information - ------------------------  Accrued cash  distributions per BAC made to the limited partners or BACs holders for the following  quarters in 2005, 2004 and 2003, which are paid in subsequent quarters, were as follows:                   1st Quarter  2nd Quarter  3rd Quarter   4th Quarter      Total                -----------  -----------  -----------   -----------   -----------       2005           $    .0891   $    .0901   $    .0911    $    .0911    $     .3614 2004                .1271        .1285        .1299        3.7206         4.1061 2003                .1271        .1285        .1299         .1299          .5154    Quarterly  distributions  are generally  made 45 days following the close of the calendar quarter.  A total of $15,817,194 was  distributed to the limited  partners or BACs holders during the years 2005,  2004 and 2003.  The  Registrant  utilized  the  original working capital reserve, in the aggregate amount of $477,532,  for distributions from 1989  through  1991,  which was  considered  to be a return of capital.  An additional  working capital reserve of approximately  $2,800,000 was established from uninvested offering proceeds,  a portion of which was applied to pay a part of the 2005, 2004 and 2003 distributions (which was considered to be a return of capital).  Approximately  $6,667,000,  $0 and  $6,594,000  paid  to the  limited partners or BACs holders in each of the years ended December 31, 2005,  2004 and 2003,  respectively,  represented  a return of capital.  A total of $186,120 was distributed to the General Partner during 2005, 2004 and 2003.  The 2004 fourth quarter  distribution,  which was paid on February 14, 2005, was funded primarily by the Holly Ridge repayment  proceeds,  $3.63 per BAC of which is considered to be a return of capital.  The Registrant does not have an equity compensation plan.  The  Registrant has not sold  securities  within the past three years which were not registered under the Securities Act of 1933.  The Registrant has not  repurchased  any securities in the fourth quarter of the fiscal year ended December 31, 2005.                                         5
The  information  set  forth  below  presents  selected  financial  data  of the Registrant.  Additional  financial  information  is set  forth  in  the  audited financial statements and footnotes thereto contained in Item 8 hereof.                                                                Year Ended December 31,                                     -------------------------------------------------------------------------  OPERATIONS                             2005           2004            2003           2002           2001 - --------------------------------    -----------    -----------    -----------    ------------   ------------       Interest income - mortgage loans    $   974,516    $ 2,018,754    $  1,469,540   $  2,490,705   $  1,944,183 Temporary investments                    21,390          6,337          13,230         26,244         36,909 Other income                              3,900        544,507           2,782        451,800          3,302                                     -----------    -----------    -----------    ------------   ------------  Total revenues                          999,806      2,569,598       1,485,552      2,968,749      1,984,394                                     -----------    -----------    -----------    ------------   ------------  Operating expenses                      322,978        378,142         362,056        506,531        482,697  Provision for bad debts                 119,604         83,788         141,748        146,388        262,062                                     -----------    -----------    -----------    ------------   ------------  Total expenses                          442,582        461,930         503,804        652,919        744,759                                     -----------    -----------    -----------    ------------   ------------  Net income                          $   557,224    $ 2,107,668    $    981,748   $  2,315,830   $  1,239,635                                     ===========    ===========    ============   ============   ============  Net income per BAC                  $      0.30    $      1.12    $       0.52   $       1.24   $       0.66                                     ===========    ===========    ============   ============   ============                                                                      December 31,                                     -------------------------------------------------------------------------  FINANCIAL POSITION                     2005           2004            2003           2002           2001 - --------------------------------    -----------    -----------    -----------    ------------   ------------       Total assets                        $11,531,146    $18,275,802    $ 17,130,807   $ 23,814,436   $ 23,159,100                                     ===========    ===========    ============   ============   ============  CASH DISTRIBUTIONS - --------------------------------  Net income per BAC                  $      0.36    $      4.11*   $       0.52   $       4.38** $       0.88                                     ===========    ===========    ============   ============   ============    (*) Includes $3.63 of Holly Ridge  repayment  proceeds which was  distributed on February 14, 2005 (**) Includes $3.59 of Mortenson  repayment  proceeds  which was  distributed on February 14, 2003                                         6
Capital Resources and Liquidity - -------------------------------  Sources of Registrant  funds  included  interest  earned on (1)  investments  in Mortgages  and Equity  Loans  (see also Item 1,  Business)  and (2) the  working capital reserve.  During  the year ended  December  31,  2005,  cash and cash  equivalents  of the Registrant  decreased by approximately  $1,558,000 due to distributions  paid to partners  and BACs  holders of  approximately  $7,411,000  which  exceeded  cash provided by operating  activities of  approximately  $711,000 and collections of principal on mortgage loans of approximately $5,142,000.  As permitted by the certain  Subordinated  Promissory Note dated August 23, 1991 (the  "Subordinated  Note"), on November 30, 2005, RMC called for the prepayment of the  Subordinated  Note on May 31, 2006 from Fieldcrest III Apartments,  Ltd. ("Fieldcrest")  at an estimated fair market value of  $5,000,000.  The potential repayment of the remaining  loans would result in the  distribution  of proceeds and that there would be no additional activity in the fund. Any repayment on the equity loan would result in a gain as it has been fully reserved.  Windemere Apartments ("Windemere") is currently in negotiations to refinance its Mortgage  and Equity  Loan  through an  affiliate  of the  General  Partner.  No documents  have been drawn up, and there is no  guarantee  that the  refinancing will occur. The Registrant  currently  estimates that the refinancing could take place in April 2006. As of December 31, 2005,  Windemere had a Mortgage  balance of  approximately  $7,432,000  and  an  Equity  Loan  balance  of  approximately $737,000.  The potential  repayment of the  remaining  loans would result in the distribution  of proceeds and that there would be no additional  activity in the fund.  Any  repayment on the default  interest on Windemere  and the equity loan would result in a gain as they have been fully reserved.  Subject to the future performance of the Registrant's investments and results of operations,  the General Partner  anticipates that there will be sufficient cash from operations generated to cover anticipated  expenses in 2006.  Distributions depend on earnings and are reduced upon repayment.  On December 29, 2004, HR II  Associates,  the owner of Holly Ridge,  prepaid the outstanding  Mortgage Loan and Equity Loan in full.  The Mortgage and the Equity Loan were  secured by a mortgage on the Holly  Ridge  property  and  partnership interests  in HR II  Associates.  The  outstanding  debt  repaid  early  to  the Registrant totaled $6,421,915,  including the $5,034,666  outstanding balance of the Mortgage,  the $684,400 Equity Loan and $702,849 of additional  interest due pursuant to the loan documents.  The repayment  proceeds were included in a cash distribution  and were  considered  a return of  capital  made  during the first quarter of 2005 of $6,667,076 ($3.63 per BAC) to the BACs holders and $67,344 to the General Partner.  Regular  quarterly  cash  distributions,   which  on  an  annual  basis  totaled approximately $663,000 and $947,000 (other than the distribution of Mortgage and Equity  Loans  repayment  proceeds),  were made to the limited  partners or BACs holders  during the years ended December 31, 2005 and 2004,  respectively.  Such distributions were made from adjusted cash flow from operations and, to a lesser extent,  from working  capital  reserves  which is  considered to be a return of capital.  Approximately  $14,000  and  $19,000  was  distributed  to the General Partner in each of the years ended December 31, 2005 and 2004, respectively.  Management is not aware of any trends or events,  commitments  or  uncertainties that will impact  liquidity  in a material  way.  Management  believes  the only impact would be from laws that have not yet been adopted.  All base interest and the  principal  of the  Registrant's  investments  in  Mortgages  are insured or co-insured  by HUD and  additionally  one  Mortgage  is  coinsured  by a private mortgage  lender  (which  is  affiliated  with  the  non-executive  Chairman  of CharterMac,  the parent of the General Partner). The Registrant's investments in uninsured  non-interest bearing Equity Loans (which represent  approximately 10% of the  Registrant's  portfolio  when  originated)  are secured by a  Registrant interest in two properties.  Due to the prepayment of three of the  Registrant's original  investments  in  Mortgages  and Equity  Loans,  the  portfolio  is not diversified by location  around the United States.  Thus, the Registrant may not be protected against a general downturn in the national economy.  Inflation - ---------  In the last three fiscal years, there has been no material impact from inflation or changing prices on revenues or on income from continuing operations.  Off Balance Sheet Arrangements - ------------------------------  The Registrant does not have any off-balance sheet arrangements.  Contractual Obligations - -----------------------  The  Registrant  does  not  have  long-term  debt  obligations,   capital  lease obligations,   operating  lease  obligations,   purchase  obligations  or  other long-term liabilities reflected on the Registrant's balance sheet under GAAP.                                         7   Critical Accounting Policies - ----------------------------  The financial  statements are prepared in accordance with accounting  principles generally  accepted  in  the  United  States  of  America,  which  requires  the Registrant to make certain  estimates and assumptions.  A summary of significant accounting policies is disclosed in Note 2 to the financial statements which are included  in the  Registrant's  annual  report on Form  10-K for the year  ended December  31, 2005.  The  following  section is a summary of certain  aspects of those accounting  policies that may require  subjective or complex judgments and are most important to the portrayal of the Registrant's  financial condition and results of operations.  The Registrant  believes that there is a low probability that the use of different  estimates or  assumptions  in making these  judgments would result in materially  different  amounts  being  reported in the financial statements.  o    Interest income on the Mortgages  consists of contingent and non-contingent      interest as defined in the  mortgage  notes and other  additional  interest      agreements.  Non-contingent interest consists of base and default interest,      which  is  recognized  as  earned.  Contingent  interest  is  based  on the      underlying property's cash flows and is recognized when received.  o    If  the  interest   receivable  exceeds  the  estimated  value  derived  by      management,  the  Registrant  adjusts the allowance  account to reflect its      estimated fair value.  o    The Equity  Loans  entitle the  Registrant  to an equity  participation  of      approximately  35% of any proceeds  from sale or  refinancing.  Because the      participation  percentage  is less than 50%,  the  Registrant  accounts for      these Equity Loans as loans and not as equity  investments in the borrower.      The  Equity  Loans  were  considered  to be  premiums  paid to  obtain  the      Mortgages and were amortized over an estimated life. Effective December 31,      2004, the Equity Loans are fully  amortized.  The  Registrant  believes the      resulting  zero net book  value  properly  states the net loan  value.  The      Registrant  believes  recovery of such loans is contingent  and recovery is      likely  only in the  event  of sale or  refinancing  occurs.  Although  the      Registrant  can call its loan,  it cannot  control  the amount of  proceeds      available  for  repayment.   Accordingly,   the  Registrant  believes  such      collections should be reflected as gains when they occur.  Results of Operations - ---------------------  2005 vs. 2004 - -------------  Results of operations for the years ended December 31, 2005 and 2004,  consisted primarily of interest  income of $975,000 and $2,019,000,  respectively,  earned from  investments  in  Mortgages,  which was lower in 2005 due to  non-recurring interest  earned  as a result  of the  Holly  Ridge  Mortgage  and  Equity  Loan repayment in 2004.  Interest income from temporary investments  increased  approximately $15,000 for the  year  ended  December  31,  2005 as  compared  to  2004,  primarily  due to non-recurring  interest  earned  on the  proceeds  from the sale of Holly  Ridge during  the first two months of 2005 until such  proceeds  were  distributed  to partners in February 2005.  Other income  decreased  approximately  $541,000 for the year ended December 31, 2005 as compared to 2004,  primarily due to the gain realized from the repayment of the Holly Ridge Mortgage and Equity Loan in 2004.  General and administrative expenses increased approximately $18,000 for the year ended December 31, 2005 as compared to 2004, primarily due to an underaccrual of accounting fees in 2004 and an increase in legal costs in 2005.  Amortization  expenses  decreased  approximately  $72,000  for  the  year  ended December  31, 2005 as compared to 2004,  primarily  due to the  repayment of the Holly Ridge Mortgage and Equity Loan on December 29, 2004.  A provision for bad debts of approximately  $120,000 and $84,000 was charged for the years ended December 2005 and 2004, respectively,  representing the 2005 and 2004 guaranteed interest due from Windemere, which is not expected to be paid.  2004 vs. 2003  Results of operations for the years ended December 31, 2004 and 2003,  consisted primarily of interest income of $2,019,000 and $1,470,000,  respectively, earned from  investments  in Mortgages,  which was higher in 2004 due to  non-recurring interest earned as a result of the sale of Holly Ridge.  Interest income from temporary  investments  decreased  approximately $7,000 for the year ended December 31, 2004 as compared to 2003,  primarily due to proceeds from the sale of Mortenson House Apartments earning interest in 2003.  Other income  increased  approximately  $542,000 for the year ended December 31, 2004 as compared to 2003,  primarily due to the gain realized from the repayment of the Holly Ridge Mortgage Loan and Equity Loan in 2004.  General and  administrative-related  parties increased approximately $42,000 for the year ended December 31, 2004 as compared to 2003, primarily due to increased expense  reimbursements  due to the  General  Partner for asset  monitoring  and overhead.                                         8   Amortization  expenses  decreased  approximately  $27,000  for  the  year  ended December  31,  2004 as  compared  to 2003,  due to the  Fieldcrest  Equity  Loan becoming fully amortized in 2003.  A provision for bad debts of approximately  $84,000 and $142,000 was charged for the years ended  December  2004 and 2003,  respectively,  representing  the 2003 guaranteed  interest  due from  Holly  Ridge  and the  2004 and 2003  guaranteed interest due from Windemere.
The Registrant does not have any market risk sensitive instruments.                                         9
(a) 1.  Financial Statements                                                              Page         --------------------                                                              -----                    Report of Independent Registered Public Accounting Firm                            11          Statements of Financial Condition as of December 31, 2005 and 2004                 12          Statements of Income for the years ended December 31, 2005, 2004 and 2003          13          Statements of Changes in Partners' Capital (Deficit) for the years ended            December 31, 2005, 2004 and 2003                                                14          Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003      15          Notes to Financial Statements                                                      16                                          10                Report of Independent Registered Public Accounting Firm     To the Partners of Capital Mortgage Plus L.P.    We have audited the  accompanying  statements of financial  condition of Capital Mortgage Plus, L.P. (a Delaware Limited Partnership) as of December 31, 2005 and 2004  and the  related  statements  of  income,  changes  in  partners'  capital (deficit) and cash flows for the years ended  December 31, 2005,  2004 and 2003. These financial  statements are the  responsibility of the General Partner.  Our responsibility  is to express an opinion on these financial  statements based on our audits.  We conducted our audits in accordance  with the standards of the Public  Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material  misstatement.  The  Partnership  has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included  consideration of internal  control  over  financial  reporting  as a basis  for  designing  audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over  financial  reporting.  Accordingly,  we express no such opinion.  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 the  General Partner, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.  In our opinion,  the financial  statements  referred to above present fairly, in all material respects,  the financial position of Capital Mortgage Plus, L.P. as of December  31, 2005 and 2004,  and the results of its  operations,  changes in partners'  capital (deficit) and its cash flows for the years ended December 31, 2005, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America.    /s/ REZNICK GROUP, P.C. Bethesda, Maryland March 14, 2006                                          11                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                         STATEMENTS OF FINANCIAL CONDITION                                        ASSETS                                                                                               December 31,                                                                                     ----------------------------                                                                                        2005              2004                                                                                     ------------    ------------    Investments in mortgage loans (Note 3)                                              $ 10,541,743    $ 10,648,744 Loan origination costs (net of accumulated amortization of $148,196 and $138,292)        325,334         335,238                                                                                     ------------    ------------                                                                                       10,867,077      10,983,982  Cash and cash equivalents                                                                591,905       2,150,170 Accrued interest receivable (net of allowance of $963,033 and $843,429)                   72,164          72,895 Other assets                                                                                   -       5,068,755                                                                                     ------------    ------------  Total assets                                                                        $ 11,531,146    $ 18,275,802                                                                                     ============    ============                      LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)   Liabilities   Accounts payable and other liabilities                                            $     36,349    $     27,008   Due to general partner and affiliates (Note 4)                                         119,183          19,750                                                                                     ------------    ------------  Total liabilities                                                                        155,532          46,758                                                                                     ------------    ------------  Partners' capital (deficit):   Limited Partners (1,836,660 BACs issued and outstanding) (Note 1)                   11,637,299      18,421,004   General Partner                                                                       (261,685)       (191,960)                                                                                     ------------    ------------  Total partners' capital (deficit)                                                     11,375,614      18,229,044                                                                                     ------------    ------------  Total Liabilities and Partners' Capital (Deficit)                                   $ 11,531,146    $ 18,275,802                                                                                     ============    ============                     See accompanying notes to financial statements.                                         12                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                               STATEMENTS OF INCOME                                                               Years Ended December 31,                                                       ------------------------------------                                                          2005         2004         2003                                                       ----------   ----------   ----------     Revenues:  Interest income:    Mortgage loans (Note 3)                            $  974,516   $2,018,754   $1,469,540    Temporary investments                                  21,390        6,337       13,230 Other income                                               3,900      544,507        2,782                                                       ----------   ----------   ----------  Total revenues                                           999,806    2,569,598    1,485,552                                                       ----------   ----------   ----------  Expenses:  General and administrative                                94,200       76,338       74,785 General and administrative-related parties (Note 4)      228,778      230,191      188,234 Provision for bad debts                                  119,604       83,788      141,748 Amortization                                                   -       71,613       99,037                                                       ----------   ----------   ----------  Total expenses                                           442,582      461,930      503,804                                                       ----------   ----------   ----------  Net income                                            $  557,224   $2,107,668   $  981,748                                                       ==========   ==========   ==========  Net income - limited partners                         $  546,080   $2,065,515   $  962,113                                                       ==========   ==========   ==========  Number of BACs outstanding                             1,836,660    1,836,660    1,836,660                                                       ==========   ==========   ==========  Net income per BAC                                    $     0.30   $     1.12   $     0.52                                                       ==========   ==========   ==========                     See accompanying notes to financial statements.                                         13                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)               STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)               FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 and 2003                                                                           Limited          General                                                          Total          Partners         Partner                                                       ------------    ------------    ------------      Partner's capital (deficit) - January 1, 2003         $ 23,732,288    $ 23,880,785    $   (148,497) Net income                                                 981,748         962,113          19,635 Distributions                                           (7,626,493)     (7,540,565)        (85,928)                                                       ------------    ------------    ------------  Partner's capital (deficit) - December 31, 2003         17,087,543      17,302,333        (214,790) Net income                                               2,107,668       2,065,515          42,153 Distributions                                             (966,167)       (946,844)        (19,323)                                                       ------------    ------------    ------------  Partner's capital (deficit) - December 31, 2004         18,229,044      18,421,004        (191,960) Net income                                                 557,224         546,080          11,144 Distributions                                           (7,410,654)     (7,329,785)        (80,869)                                                       ------------    ------------    ------------  Partner's capital (deficit) - December 31, 2005       $ 11,375,614    $ 11,637,299    $   (261,685)                                                       ============    ============    ============                     See accompanying notes to financial statements.                                         14                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                             STATEMENTS OF CASH FLOWS                                                                                Years Ended December 31,                                                                     -----------------------------------------                                                                         2005           2004           2003                                                                     -----------    -----------    -----------     Cash flows from operating activities: Net income                                                          $   557,224    $ 2,107,668    $   981,748                                                                     -----------    -----------    -----------  Adjustments to reconcile net income to net cash provided by   operating activities: Provision for bad debts                                                 119,604         83,788        141,748 Gain on recovery of amortized portion of equity loans                         0       (672,518)             0 Loss on unamortized portion of loan costs on prepaid equity loans             0        133,460              0 Amortization                                                              9,904         71,613         99,037 Amortization of interest rate buydown                                         0              0           (982) Changes in operating assets and liabilities: (Increase) decrease in accrued interest receivable                     (118,873)        37,142       (182,489) Decrease (increase) in other assets                                      34,089        (34,038)       406,229 Increase (decrease) in accounts payable and other liabilities             9,341          1,995           (727) Increase (decrease) in due to general partner and affiliates             99,433          1,500        (38,157)                                                                     -----------    -----------    ----------- Total adjustments                                                       153,498       (377,058)       424,659                                                                     -----------    -----------    -----------  Net cash provided by operating activities                               710,722      1,730,610      1,406,407                                                                     -----------    -----------    -----------  Cash flows from investing activities: Receipt of principal on mortgage loans                                5,141,667        139,597        122,800 Receipt of principal on equity loan                                           0        684,400              0                                                                     -----------    -----------    -----------  Net cash provided by investing activities                             5,141,667        823,997        122,800                                                                     -----------    -----------    -----------  Cash flows from financing activities: Distributions to partners                                            (7,410,654)      (966,167)    (7,626,493)                                                                     -----------    -----------    -----------  Net cash used in financing activities                                (7,410,654)      (966,167)    (7,626,493)                                                                     -----------    -----------    -----------  Net (decrease) increase in cash and cash equivalents                 (1,558,265)     1,588,440     (6,097,286)  Cash and cash equivalents at beginning of year                        2,150,170        561,730      6,659,016                                                                     -----------    -----------    -----------  Cash and cash equivalents at end of year                            $   591,905    $ 2,150,170    $   561,730                                                                     ===========    ===========    ===========   Significant noncash investing and financing activities: Other assets include receivable of principal on mortgage loans   resulting from prepayment of mortgage loan                        $         -    $ 5,034,666   $          -                                                                     ===========    ===========    ===========                     See accompanying notes to financial statements.                                         15                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                           NOTES TO FINANCIAL STATEMENTS                         DECEMBER 31, 2005, 2004 and 2003   NOTE 1 - General  Capital Mortgage Plus L.P., a Delaware limited  partnership (the  "Partnership") commenced  a public  offering  (the  "Offering")  on May 10,  1989 of  5,000,000 Beneficial Assignment Certificates ("BACs") representing  assignments of limited partnership  interests  valued at $20 per BAC  totaling  $100,000,000.  The BACs represent an assignment of all of the economic and all of the material ownership rights attributable to the limited partnership interests in the Partnership. The BACs holders have virtually the same rights and, for all practical purposes, are limited partners of the Partnership.  Pursuant to the Offering, the Partnership received $36,733,200 of gross proceeds from the BACs holders  representing  the issuance of 1,836,660  BACs.  The final closing of the Offering occurred on May 23, 1991 and no further issuance of BACs is anticipated.  The  Partnership  was  organized  on November 23, 1988 and will  continue  until December  31,  2041  unless  terminated  sooner  under  the  provisions  of  its partnership agreement.  The general  partner of the  Partnership  is CIP  Associates,  Inc.,  a Delaware corporation (the "General Partner").  On November 17, 2003,  CharterMac acquired CharterMac  Capital  (formerly known as Related Capital  Company),  which is the indirect parent of RCC Manager LLC, the sole shareholder of the General Partner. Pursuant to the acquisition,  CharterMac acquired  controlling  interests in the General  Partner.  This  acquisition  did  not  affect  the  Registrant  or  its day-to-day operations.  Related FI BUC$ Associates, Inc. is the Assignor Limited Partner of the Registrant.  The  Partnership  was  formed  to  invest  in  insured  or  guaranteed  mortgage investments.  The  Partnership has invested in first mortgage  construction  and permanent  loans  ("Mortgages")  to  finance   multifamily   residential  rental properties  ("Developments")  developed by unaffiliated  entities. A substantial portion of the Mortgages provides  additional  interest based on the annual cash flow from the  Developments  and the  proceeds  of  prepayments,  sales or other dispositions.  All base  interest and initially at least 90% of the principal of the  Mortgages is insured or coinsured by U.S.  Department  of Housing and Urban Development  ("HUD") and a private mortgage lender (which is an affiliate of the General  Partner).  The Partnership has also invested in uninsured  equity loans ("Equity  Loans")  made  directly to  developers  of  developments  on which the Partnership holds a Mortgage.  Net income and distributions from operations of the Partnership are allocated 2% to the  General  Partner  and 98% to the  limited  partners,  until the  limited partners have received an 11% per annum non-cumulative  non-compounded return on their adjusted contributions as defined in the Amended and Restated Agreement of Limited Partnership.  Thereafter, net income and distributions will be allocated 90% to the limited  partners and 10% to the General  Partner.  Distributions  of disposition  proceeds  are  allocated  1% to the General  Partner and 99% to the limited  partners until each limited partner has received an amount equal to its original   contribution   plus  an  amount  which,   when  added  to  all  prior distributions  equals a 7% per  annum  cumulative  non-compounded  return on its adjusted  contribution;  then 2% and 98% of  disposition  proceeds,  until  each limited  partner  has  received  an  amount  which,  when  added  to  all  prior distributions  equals an 11% per annum cumulative  non-compounded  return on its adjusted contribution;  and thereafter 10% to the General Partner and 90% to the limited partners.  The accrued cash distributions per BAC were approximately $0.36, $4.11 and $0.52 for 2005,  2004 and 2003. The 2005, 2004 and 2003  distributions  were made from adjusted cash flow from  operations  (and, in particular,  of the fourth quarter 2004  distributions  which were paid on February 14, 2005 from the  repayment of the Holly Ridge loan,  $3.63 per BAC was  considered  to be a return of capital) and to a lesser extent were supplemented  from working capital  reserves,  which was considered to be a return of capital.  NOTE 2 - Accounting Policies  a)  Basis of Accounting  The books and records of the  Partnership are maintained on the accrual basis of accounting in accordance with accounting  principles  generally  accepted in the United States of America ("GAAP").  The  preparation  of financial  statements in conformity  with GAAP requires the General  Partner to make  estimates  and  assumptions  that affect the  reported amounts of assets and  liabilities  and the disclosure of contingent  assets and liabilities  at the date of the  financial  statements  as well as the  reported amounts of  revenues  and  expenses  during the  reporting  period.  Significant estimates  are  made  when   accounting  for  the  allowance  for  the  interest receivable. Actual results could differ from those estimates.                                         16                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                     NOTES TO FINANCIAL STATEMENTS - CONTINUED                         DECEMBER 31, 2005, 2004 and 2003   Loan origination costs, net of related loan fees, are deferred and recognized as a component of interest  income over  contractual  payment  terms of the related mortgage loans.  The  Equity  Loans  entitle  the  Registrant  to  an  equity   participation  of approximately  35% of  any  proceeds  from  sale  or  refinancing.  Because  the participation  percentage  is less than 50%, the  Registrant  accounts for these Equity Loans as loans and not as equity investments in the borrower.  The Equity Loans were  considered  to be  premiums  paid to obtain the  Mortgages  and were amortized over an estimated life.  Effective December 31, 2004, the Equity Loans are fully amortized.  The Registrant  believes the resulting zero net book value properly  states the net loan value.  The Registrant  believes  recovery of such loans  is  contingent  and  recovery  is  likely  only in the  event  of sale or refinancing occurs. Although the Registrant can call its loan, it cannot control the amount of proceeds  available for  repayment.  Accordingly,  the  Registrant believes  such  collections  should be reflected  as gains when they occur.  The Registrant does not believe that the variable interest component  represented by the Equity Loan  participation  rights  cause the  Registrant  to be the primary beneficiary of the borrowers. Accordingly, none of the borrowers are required to be consolidated under FASB  Interpretation No. 46 (R) "Consolidation of Variable Interest  Entities,"  ("FIN 46 (R)").  Further,  the combination of the Mortgage Loan and the Equity Loan are not  considered  to  increase  the  variability  of expected losses or residual returns since the Mortgage Loans are insured by HUD.  b)  Cash and Cash Equivalents Cash and cash equivalents  include temporary  investments with original maturity dates of less than 3 months when  acquired  and are carried at cost plus accrued interest, which approximates market value.  c)  Income Taxes The  Partnership  is not  required to provide  for, or pay,  any federal  income taxes.  Income tax attributes  that arise from its operation are passed directly to the individual  partners.  The  Partnership may be subject to state and local taxes in jurisdictions in which it operates.  d)  Revenue Recognition Interest income on the Mortgages loans consists of contingent and non-contingent interest  as  defined  in the  mortgage  notes  and  other  additional  interest agreements. Non-contingent interest consists of base and default interest, which are  recognized  as  earned.  Contingent  interest  is based  on the  underlying Development's  cash flows and is recognized  when received.  The Registrant does not accrue interest income on nonperforming loans. All of the existing loans are considered performing loans.                                           17                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                     NOTES TO FINANCIAL STATEMENTS - CONTINUED                         DECEMBER 31, 2005, 2004 and 2003   Note 3 - Investments in Mortgage Loans  Information relating to investments in Mortgages and Equity Loans as of December 31, 2005 and 2004 is as follows:                                                                                     Amounts Advanced                                               -----------------------------------------------------------------------------                           No. of                Final                                Total      Investments    Investments                        Apartment   Date of    Maturity                Equity       Amounts     in Loans at    in Loans at Property/Location        Units    Investment    Date     Mortgages     Loans      Advanced    12/31/2005(E)   12/31/2004(E) - ---------------------  ---------  ----------  --------  -----------  ----------  -----------  -------------  --------------           Windemere Apts./         204        9/1990     9/2030   $ 8,110,300  $  736,550  $ 8,846,850   $  7,432,335   $ 7,510,967 Wichita, KS  Fieldcrest III Apts./    112        8/1991     8/2031     3,343,700     383,300    3,727,000      3,109,408     3,137,777 Dothan, AL                                                          -----------  ----------  -----------   ------------   -----------  Total                                                   $11,454,000  $1,119,850  $12,573,850   $ 10,541,743   $10,648,744                                                         ===========  ==========  ===========   ============   ===========                             Interest Earned by the Partnership during 2005                        ----------------------------------------------------                          Non-contingent              Contingent                        ------------------  --------------------------------                          Base    Default   Annual     Cash flow                        Interest  Interest   Yield   Participation   Total                         Amount/   Amount/  Amount/      Amount/    Interest Property/Location       Rate(A)   Rate(B)  Rate(C)     Rate(D)      Earned - ---------------------  --------  --------  -------  -------------  --------        Windemere Apts./       $584,685  $119,604  $     0    $      0     $704,289 Wichita, KS               7.95%     1.60%    1.08%      30.00%  Fieldcrest III Apts./   270,227         0        0           0      270,227 Dothan, AL                8.68%        0%    1.36%      30.00%                         --------  --------  -------    --------     --------  Total                  $854,912  $119,604  $     0    $      0     $974,516                        ========  ========  =======    ========     ========                               CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                     NOTES TO FINANCIAL STATEMENTS - CONTINUED                         DECEMBER 31, 2005, 2004 and 2003   (A)  Base interest on the Mortgages is that amount that is insured/co-insured by      HUD and is being shown net of service fee.  (B)  Default  Interest is the minimum  amount due over the base rate, and is not      contingent  upon  cash  flow.  This  interest  is  secured  by  partnership      interests in the borrower.  (C)  Annual  Yield is the amount over the default  rate and is  contingent  upon      cash flow of the Development.  (D)  Cash Flow  Participation is the percent of cash flow due to the Partnership      after payment of the Annual Yield and is contingent upon cash flow.  (E)  The  Investments  in  Loans  amount  reflects  the  unpaid  balance  of the      Mortgages  in  the  amounts  of   $10,541,743  at  December  31,  2005  and      $10,648,744 at December 31, 2004.                                                    2005              2004                                             ------------     ------------     Investment in loans January 1,             $ 10,648,744     $ 15,891,923                                             ------------     ------------   Deductions:  Amortization of Equity Loans                          -          (57,033)  Collection of principal-Mortgages                         -Windemere               (78,633)         (72,592)                         -Fieldcrest              (28,368)         (26,000)                         -Holly Ridge                   -       (5,075,672)   Collection of principal-Equity Loan                         -Holly Ridge*                  -          (11,882)                                             ------------     ------------                                                 (107,001)      (5,243,179)                                             ------------     ------------   Investment in loans December 31,           $ 10,541,743     $ 10,648,744                                             ============     ============    *  This is the  unamortized  portion of the Equity  Loan and the  balance of the    $684,400 repaid is included in other income on the Statements of Income.  The Windemere Apartments ("Windemere") Mortgage is co-insured by HUD and Related Mortgage   Corporation   ("RMC"),   a  company  which  is  affiliated  with  the non-executive  Chairman of CharterMac,  the parent of the General  Partner.  The Fieldcrest III Apartments,  Ltd.  ("Fieldcrest") Mortgage is insured by HUD. The Holly Ridge II Apartments ("Holly Ridge") Mortgage was insured by HUD.  In addition to the interest rate payable during the  post-construction  periods, the  Partnership  will be  entitled  to  payment  of 30% of cash  flow,  if any, remaining  after payment of the permanent loan interest and accrued  interest if any, and certain amounts from sales or refinancing proceeds.  The Equity Loans are  non-interest  bearing and are secured by the assignment of the  owner/developers'  interests in the Developments.  The Equity Loans are not insured  by HUD or any  other  party  and,  for  financial  statement  reporting purposes, were considered to be premiums paid to obtain the Mortgages. Effective December 31, 2004, the Equity Loans are fully amortized. The Registrant believes the  resulting  zero net book  value  properly  states the net loan  value.  The Registrant  believes recovery of such loans is contingent and recovery is likely only in the event of sale or  refinancing  occurs.  Although the  Registrant can call its loan, it cannot control the amount of proceeds available for repayment. Accordingly,  the Registrant  believes such  collections  should be reflected as gains when they occur.  At December 31, 2005, all of the loans due to the  Partnership  are current with respect  to  their  Federal  Housing  Authority  ("FHA")  Mortgage  obligations. Windemere  has not paid its default  interest of an aggregate  of  approximately $120,000, $124,000, $124,000, $125,000, $88,000, $126,000, $127,000 and $129,000 for the years ended December 31, 2005,  2004,  2003,  2002, 2001, 2000, 1999 and 1996.  As a result,  an allowance for  uncollectability  relating to the default interest  amounted to  approximately  $963,000 and $843,000 at December 31, 2005 and 2004,  respectively.  The allowance has been  reflected in the provision for bad debts on the statement of income.                                         19                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                     NOTES TO FINANCIAL STATEMENTS - CONTINUED                         DECEMBER 31, 2005, 2004 and 2003   As permitted by the certain  Subordinated  Promissory Note dated August 23, 1991 (the  "Subordinated  Note"), on November 30, 2005, RMC called for the prepayment of the  Subordinated  Note on May 31, 2006 from  Fieldcrest at an estimated fair market value of $5,000,000.  Windemere is currently in negotiations to refinance its Mortgage and Equity Loan through an affiliate of the General  Partner.  No documents  have been drawn up, and there is no  guarantee  that the  refinancing  will occur.  The  Partnership currently  estimates that the refinancing  could take place in April 2006. As of December 31, 2005, Windemere had a Mortgage balance of approximately  $7,432,000 and an Equity Loan balance of  approximately  $737,000.  Effective  December 31, 2004,  the  Equity  Loan has a net book  value of $0.  The  Registrant  believes recovery of such loan is contingent  and recovery is likely only in the event of sale or  refinancing.  Although  the  Registrant  can call its  loan,  it cannot control  the  amount of  proceeds  available  for  repayment.  Accordingly,  the Registrant  believes  such  collections  should be  reflected as gains when they occur.  Recovery of the Equity Loan is  subordinate  to the default  interest of $963,033 which has been fully reserved.   NOTE 4 - Related Parties  The costs  incurred to related  parties for the years ended  December  31, 2005, 2004 and 2003 were as follows:                                                        2005       2004       2003                                                    --------   --------   --------     Partnership management fees (a)                    $ 65,895   $ 97,287   $ 97,287 Expense reimbursement (b)                           162,883    132,904     90,947                                                    --------   --------   --------  Total general and administrative-related parties   $228,778   $230,191   $188,234                                                    ========   ========   ========    (a) A  Partnership  management  fee for managing the affairs of the  Partnership equal to .5% per annum of  invested  assets is  payable  out of cash flow to the General  Partner.  During the years  ended  December  31,  2005,  2004 and 2003, payments of approximately $50,000, $97,000 and $122,000 were made, respectively. At December 31, 2005 and 2004, the General  Partner and its affiliates  were due approximately $16,000 and $0, respectively, for these fees.  (b) The General Partner and its affiliates  perform services for the Partnership which  include,  but are not limited to:  accounting  and financial  management, registrar,  transfer  and  assignment  functions,  asset  management,   investor communications,  printing services and other administrative services. The amount of  reimbursement  from the  Partnership  is  limited by the  provisions  of the Partnership  Agreement.  An  affiliate  of the General  Partner  performs  asset monitoring services for the Partnership. These asset monitoring services include site visits and  evaluations of the  performance of the properties  securing the loans.  During the years ended  December  31, 2005,  2004 and 2003,  payments of approximately $79,000,  $152,000 and $104,000 were made, respectively,  relating to these costs.  As of December 31, 2005 and 2004,  the General  Partner and its affiliates were due approximately $103,000 and $20,000, respectively.  RMC is a  co-insurer  on the  Windemere  Mortgage in which the  Partnership  has invested.  RMC is entitled to a mortgage  insurance premium which is paid by the mortgagor.  RMC is also the  servicer  for both  Windemere  and  Fieldcrest  and receives a fee for its services.   NOTE 5 - Concentration of Credit Risk  The  Partnership  maintains  its cash in several  banks which are insured by the Federal Deposit Insurance  Corporation  (FDIC) for a balance up to $100,000.  At times during 2005, the account balance exceeded the FDIC limit.  Management is not aware of any trends or events,  commitments  or  uncertainties that will impact  liquidity  in a material  way.  Management  believes  the only impact would be from laws that have not yet been adopted.  All base interest and the  principal  of the  Registrant's  investments  in  Mortgages  are insured or co-insured  by HUD and  additionally  one  Mortgage  is  coinsured  by a private mortgage  lender  (which  is  affiliated  with  the  non-executive  Chairman  of CharterMac,  the parent of the General Partner). The Registrant's investments in uninsured  non-interest bearing Equity Loans (which represent  approximately 10% of the  Registrant's  portfolio  when  originated)  are secured by a  Registrant interest  in  the  two  properties.  Due  to  the  prepayment  of  three  of the Registrant's  original  investments in Mortgages and Equity Loans, the portfolio is not  diversified by location around the United States (see Note 3). Thus, the Registrant  may not be  protected  against a general  downturn  in the  national economy.                                         20                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                     NOTES TO FINANCIAL STATEMENTS - CONTINUED                         DECEMBER 31, 2005, 2004 and 2003   NOTE 6 - Fair Value of Financial Instruments  Financial Accounting Standards Board Statement of Financial Accounting Standards No. 107,  "Disclosures  about Fair Value of  Financial  Instruments"  ("SFAS No. 107"),  requires  that the  estimated  fair value of financial  instruments,  as defined by SFAS No.  107, be  disclosed.  Financial  instruments  are defined as cash, evidence of an ownership interest in an entity or a contract which creates obligations and rights to exchange cash and/or other financial instruments. SFAS No. 107 also requires  disclosures  of the methods and  significant  assumptions used to estimate the fair value of financial instruments.  Considerable  judgment is required in interpreting data to develop the estimates of fair value.  Accordingly,  the estimates presented herein are not necessarily indicative of the amounts that the Partnership could realize in a current market exchange.   The  use  of  different   market   assumptions   and/or   estimation methodologies may have a material effect on the estimated fair value amounts.  The following  methods/assumptions  were used to estimate the fair value of each class of financial instrument:  Cash and Cash Equivalents - ------------------------- Fair  value  is  determined  to be the  carrying  value  because  each  class of financial  instrument  matures  in three  months or less and does not  represent unanticipated credit concerns.  Investments in Loans - -------------------- At December 31, 2005,  the estimated  carrying value of the Mortgages and Equity Loans  approximated  fair value.  The estimated fair values at December 31, 2005 were based on internal valuations of the two Developments  collateralizing these Mortgages.  Fair value estimates are made at a specific point in time,  based on relevant market information and information about the financial instrument which sets  forth the terms of a loan.  This  estimate  is  subjective  in nature  and involves   uncertainties  and  matters  of  significant  judgment.   Changes  in assumptions could significantly affect estimates.  Due to the  property-specific nature of the loans and the lack of a ready  market for such  investments,  this fair  value  estimate  does not  necessarily  represent  the  amount  which  the Partnership could realize upon a current sale of its investments.   NOTE 7 - Quarterly Financial Information (Unaudited)                          First Quarter    Second Quarter    Third Quarter    Fourth Quarter                        -------------    --------------    -------------    --------------  Fiscal Year 2005 - ------------------       Total Revenue            $   261,509       $   248,896      $   249,383       $   240,018 Net income                   163,161           112,135          153,386           128,542 Net income per BAC              0.09              0.06             0.08              0.07    Fiscal Year 2004 - ------------------       Total Revenue            $   367,281       $   367,858      $   367,643        $1,466,816 Net income                   245,430           243,790          227,207         1,391,241 Net income per BAC               .13               .13              .12               .74    The  Registrant  has  not  disposed  of any  segments  of  business  and has not experienced any  extraordinary,  unusual or infrequently  occurring items within the two most recent fiscal  years,  other than the repayment of the Mortgage and Equity Loan with respect to Holly Ridge.                                         21                              CAPITAL MORTGAGE PLUS L.P.                              (a limited partnership)                     NOTES TO FINANCIAL STATEMENTS - CONTINUED                         DECEMBER 31, 2005, 2004 and 2003   NOTE 8 - Taxable Income  A reconciliation of the financial  statement net income of the Registrant to net income as shown on the tax returns for the years ended  December 31, 2005,  2004 and 2003 is as follows:                                                            Years Ended December 31,                                                 -------------------------------------------                                                    2005            2004            2003                                                 -----------    ------------    ------------      Net income per financial statements            $   557,224    $  2,107,668    $    981,748  Bad debt expense                                   119,604          83,788         141,748  Amortization expense                                     0          57,033          83,475  Reverse prior years' amortization recovered   at prepayment of Holly Ridge Loan                       0        (672,517)              0  Prepaid expense                                          0               0         (24,323)                                                 -----------    ------------    ------------    Tax return net income                         $   676,828    $  1,575,972    $  1,182,648                                                 ===========    ============    ============    The  differences  in the assets and  liabilities of the Registrant for financial reporting  purposes  and tax  reporting  purposes as of December 31, 2005 are as follows:                                                    Financial         Tax                                                  Reporting      Reporting       Difference                                                 -----------    ------------    ------------      Assets                                         $11,531,146    $ 13,626,656    $  2,095,510   Liabilities                                    $   155,532    $    309,710    $    154,178    NOTE 9 - Subsequent Event  On February  14,  2006,  distributions  of $167,237  and $3,413 were paid to BAC holders  and the General  Partner,  respectively,  representing  the 2005 fourth quarter distributions.                                         22
None
EVALUATION  OF  DISCLOSURE  CONTROLS  AND  PROCEDURES.   The  Principal          Executive  Officer and Principal  Financial  Officer of CIP Associates,          Inc.,  the  general  partner  of  the  Registrant,  has  evaluated  the          effectiveness  of the Registrant's  disclosure  controls and procedures          (as such term is defined in Rules  13a-15(e)  and  15d-15(e)  under the          Securities  Exchange Act of 1934, as amended (the "Exchange  Act")), as          of the  end of the  period  covered  by  this  report.  Based  on  such          evaluation,  such  officer has  concluded  that,  as of the end of such          period,  the  Registrant's   disclosure  controls  and  procedures  are          effective.           INTERNAL  CONTROL  OVER  FINANCIAL  REPORTING.  There have not been any          changes in the Registrant's  internal control over financial  reporting          during  the  fiscal  year  to  which  this  report  relates  that  have          materially affected, or are reasonably likely to materially affect, the          Registrant's internal control over financial reporting.
Boesky Resignation          ------------------          On November 8, 2005,  CharterMac  announced that Stuart J. Boesky would          step down as Chief  Executive  Officer and trustee of  CharterMac,  the          indirect  parent  of RCC  Manager  LLC,  the  sole  shareholder  of CIP          Associates, Inc. (the "General Partner"). Upon his stepping down, which          was  effective on November 15, 2005, he also resigned from his position          as Senior Vice  President.  Mr.  Boesky will stay on as a consultant to          CharterMac for the next year in order to ensure a smooth transition.           Tender Offer Response          ---------------------          The Registrant  responded to an unsolicited  tender offer and expressed          no opinion with respect to whether or not BACs  holders  should  tender          their Units as more fully discussed in the  Registrant's  press release          dated  November  18,  2005,  which is included as Exhibit  99.1 to this          Report on Form 10-K.           Transfer Procedures          -------------------          As was previously disclosed,  the Registrant has been the subject of at          least two ongoing  tender offers by persons not  affiliated  with it or          its general  partner,  each such tender offer seeking to purchase up to          4.9% of the  outstanding  units of the  Registrant.  See "Tender  Offer          Response" above.           Those  tender  offers,   as  well  as  other  transfer   requests  made          independently of the tender offers, implicate the Registrant's policies          and  procedures  concerning  transfers  generally  and tender offers in          particular,  which were adopted by the Registrant pursuant to the terms          of its Partnership Agreement, to ensure compliance with applicable law,          avoid adverse tax  consequences  for the  Registrant and its investors,          and preserve the Registrant's advantageous tax status.           In prior years, the Registrant relied on the 5% safe harbor established          by  Internal  Revenue  Service  ("IRS")   regulations  to  avoid  being          characterized  as a  "publicly-traded  partnership"  that is taxed as a          corporation.  The 5% safe  harbor,  however,  expired  and is no longer          available as of December  31, 2005.  Accordingly,  the  Registrant  now          relies on a 2% safe harbor  established  by another IRS  regulation  to          avoid being  characterized as a  "publicly-traded  partnership" that is          taxed as a corporation.           A brief summary of certain of the Registrant's key policies,  practices          and  requirements  with  respect to transfers  and tender  offers is as          follows:           o     No transfer (whether for  substitution,  assignment or otherwise)                is effective or binding on the Registrant  unless and until it is                approved by the General Partner.           o     No transfer will be approved unless the transferor and transferee                submit complete and properly  executed forms of the  Registrant's                own transfer documentation.  The Registrant does not accept forms                of transfer  documentation other than its own and does not accept                signatures  made  by  power  of  attorney  in  lieu  of  original                signatures by each of the transferors and transferees.           o     The Registrant will not approve  transfers that in the cumulative                aggregate for any tax year exceed the IRS 2% safe harbor,  unless                a financially  responsible person provides the Registrant and its                partners with (i) an indemnity (in form and substance in all ways                acceptable to the General Partner) for all liability  (including,                without limitation, any adverse tax consequences) arising from or                relating to exceeding the 2% safe harbor and (ii) a legal opinion                (in form and  substance  in all ways  acceptable  to the  General                Partner)  that there will be no adverse tax  consequences  to the                Registrant and its partners from exceeding the 2% safe harbor.                                         23            o     In order to avoid the undesirable situation of one or more tender                offers  consuming the entire safe harbor  limitation early in the                tax year and leaving the Registrant's remaining investors with no                liquidity  opportunity  for  the  rest  of  that  tax  year,  the                Registrant  restricts the cumulative aggregate total of transfers                made  pursuant  to all tender  offers to 1.5% of its  outstanding                units in each tax year, unless a financially  responsible  person                conducting  such tender  offer  provides the  Registrant  with an                acceptable  indemnity  and legal  opinion  of the type  described                above. At the end of each tax year, the General  Partner,  in its                discretion,  may allow the  cumulative  total number of transfers                (including  those by tender  offer)  to reach the 2% safe  harbor                limit.           o     The  Registrant  requires that all tender offers for its units be                conducted  in  accordance  with  all  applicable  law  including,                without limitation, the federal securities laws.           The  foregoing  is  solely  a  summary  of the  Registrant's  policies,          requirements and practices with respect to transfers and tender offers.          More  complete  information,  including  a  copy  of  the  Registrant's          transfer documentation package, may be obtained from the Registrant.                                       PART III
The Registrant has no directors or executive officers.  The Registrant's affairs are  managed and  controlled  by the General  Partner.  The General  Partner was organized in Delaware in November 1988.  The executive  officers and director of the General Partner have held their positions as indicated below.  On November 17, 2003,  CharterMac acquired CharterMac Capital (formerly known as Related Capital Company) ("CharterMac Capital"), which is the indirect parent of RCC Manager LLC, the sole  shareholder of the General  Partner.  Pursuant to the acquisition,  CharterMac acquired controlling  interests in the General Partner. This  acquisition did not affect the Registrant or its day-to-day  operations as the  General  Partner's  management  team  remained  unchanged.  Alan P.  Hirmes replaced  Stephen M. Ross as Director of CIP Associates Inc.  effective April 1, 2004 as a  result  of  this  acquisition.  Certain  information  concerning  the director and executive officers of the General Partner is set forth below.  The Registrant, the General Partner and its director and executive officers, and any BACs  holder  holding  more than ten  percent of the  Registrant's  BACs are required  to report  their  initial  ownership  of such BACs and any  subsequent changes in that ownership to the Securities and Exchange  Commission on Forms 3, 4 and 5. Such  executive  officers,  directors  (and ten  percent  holders)  are required  by  Securities  and  Exchange  Commission  regulators  to furnish  the Registrant  with copies of all Forms 3, 4 or 5 they file.  The Registrant is not aware of any BACs holders who own more than ten percent of the BACs.  During the most recent fiscal year, all of these filing  requirements were satisfied by the officers and director of the General  Partner on a timely basis. In making these disclosures,  the Registrant has relied solely on written representations of the General Partner's  director and executive officers or copies of the reports they have filed with the Securities and Exchange  Commission  during and with respect to its most recent fiscal year.  CIP Associates Inc.     Name                             Position                 Position Held Since    -----------------         ------------------------      ---------------------     Alan P. Hirmes            Director and President                1988    Brenda Abuaf              Executive Vice President              2005    Marc Schnitzer            Vice President                        1988    Glenn F. Hopps            Treasurer                             1998    Teresa Wicelinski         Secretary                             1998   ALAN P.  HIRMES,  51, the Director and  President  of the General  Partner.  Mr. Hirmes has been a Certified  Public  Accountant in New York since 1978. Prior to joining  CharterMac Capital in October 1983, Mr. Hirmes was employed by Weiner & Co.,  certified  public  accountants.  Mr.  Hirmes  is  also  the  President  of CharterMac Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts degree.  Mr.  Hirmes also serves on the Board of Trustees of  CharterMac and American Mortgage Acceptance Company ("AMAC").  BRENDA  ABUAF,  50,  Executive  Vice  President  and  Co-Department  Head of the Corporate Communications Department. Ms. Abuaf joined CharterMac Capital in 1980 and graduated  from the University of Stony Brook with a Bachelor of Arts Degree in Social Science.                                         24   MARC D. SCHNITZER, 45, joined CharterMac Capital in January 1988 after receiving his Master of Business  Administration  degree  from The  Wharton  School of The University of Pennsylvania  in December 1987.  From 1983 to 1986, Mr.  Schnitzer was a  Financial  Analyst  with The First  Boston  Corporation  in New York,  an international  investment  banking firm.  Mr.  Schnitzer  received a Bachelor of Science degree, summa cum laude, in Business Administration,  from the School of Management at Boston  University in May 1983.  Mr.  Schnitzer also serves on the Board of Trustees of CharterMac.  GLENN F. HOPPS, 43, joined  CharterMac  Capital in December,  1990, and prior to that date was  employed  by Marks  Shron & Company  and  Weissbarth,  Altman and Michaelson,  certified  public  accountants.  Mr. Hopps  graduated from New York State University at Albany with a Bachelor of Science Degree in Accounting.  TERESA WICELINSKI,  40 joined CharterMac Capital in June 1992, and prior to that date was employed by Friedman, Alprin & Green, certified public accountants. Ms. Wicelinski  graduated  from Pace  University  with a Bachelor  of Arts Degree in Accounting.  There  are  no  family  relationships  between  the  foregoing  director  and/or executive officers.  The parent of the General Partner of the Registrant,  CharterMac,  has adopted a Code of Ethics that applies to the  Principal  Executive  Officer and  Principal Financial  Officer of  CharterMac  and its  subsidiaries,  including the General Partner.  CharterMac's  Code of Ethics  will be provided  without  charge to any person who requests it. Such  request  should be directed to Investor  Services, CharterMac, 625 Madison Avenue, New York, NY 10022.
The  Registrant  has no officers or directors.  The  Registrant  does not pay or accrue  any fees,  salaries  or other  forms of  compensation  to  directors  or officers of the General  Partner for their  services.  The  director and certain officers of the General  Partner receive  compensation  from the General Partner and its affiliates for services performed for various affiliated  entities which may include  services  performed for the Registrant.  Such  compensation  may be based in part on the performance of the Registrant; however, the General Partner believes  that any  compensation  attributable  to  services  performed  for the Registrant  is  immaterial.  See also Note  4-Related  Parties,  in Notes to the Financial Statements, included in Item 8 above.
As of March 3, 2006, no person was known by the  Registrant to be the beneficial owner of more than five  percent of the  Limited  Partnership  Interests  and/or BACs; and neither the General Partner nor any director or officer of the General Partner owns any Limited Partnership Interests or BACs.  There are no securities authorized for issuance under equity compensation plans.
The  Registrant  has and will  continue to have certain  relationships  with the General  Partner  and  its  affiliates,  as  discussed  in  Item  11,  Executive Compensation.  However, there have been no direct financial transactions between the Registrant and the director and/or officers of the General Partner. See Note 4-Related  Parties,  in Notes to the  Financial  Statements,  included in Item 8 above.
Audit Fees - ---------- The  aggregate  fees  billed by Reznick  Group and their  respective  affiliates (collectively,  "Reznick") for professional  services  rendered for the audit of our annual  financial  statements for the years ended December 31, 2005 and 2004 and for the reviews of the  financial  statements  included in the  Registrant's Quarterly  Reports on Form 10-Q were  $28,000 and $28,000,  respectively.  There were no other audit related fees for the years ended December 31, 2005 and 2004.  Audit - Related Fees - -------------------- None  Tax Fees - -------- The  aggregate  fees  billed  by  Weiser  LLP and  their  respective  affiliates (collectively,  "Weiser") for professional services rendered for the preparation of our annual tax returns were $8,700 for both years ended December 31, 2005 and 2004. There were no other tax related fees for the years ended December 31, 2005 and 2004.                                         25   All Other Fees - -------------- None  The Registrant  has no directors or executive  officers and  accordingly  has no audit committee and no audit committee financial expert. The Registrant is not a listed issuer as defined in Regulation  10A-3  promulgated  under the Securities Exchange Act of 1934.                                         26                                        PART IV
Sequential                                                                                             Page                                                                                          -----------           (10K)   Equity Loan dated March 16, 1993, with respect to Holly Ridge Apartments         in Gresham, Oregon, in the principal amount of $684,000 (incorporated by         reference to Exhibit 10(b) in the  Registrant's  Current  Report on Form         8-K dated March 16, 1993)  (10L)   Subordinated  Promissory  Note,  dated March 16,  1993,  with respect to         Holly Ridge Apartments in Gresham,  Oregon (incorporated by reference to         Exhibit 10(c) in the Registrant's Current Report on Form 8-K dated March         16, 1993)  31.1    Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)*                          31  32.1    Certification  Pursuant to Rule  13a-14(b) or Rule 15d-14(b) and Section         1350 of Title 18 of the United States Code (18 U.S.C. 1350)*                         32  (99.1)   Press Release dated November 18, 2005 regarding unsolicited tender offer*           33    *  Filed herewith                                          28                                      SIGNATURES    Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange Act of 1934,  the  registrant  has duly  caused  this report to be signed on its behalf by the undersigned, thereunto duly authorized.                               CAPITAL MORTGAGE PLUS L.P.                                   (Registrant)                                        By:  CIP ASSOCIATES, INC.                                          General Partner    Date: March 28, 2006                     By:  /s/ Alan P. Hirmes       --------------                          ------------------                                               Alan P. Hirmes                                               President (Principal Executive and                                               Financial Officer)                                         29   Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:        Signature                       Title                            Date - ------------------  -----------------------------------------    --------------                      President (Principal Executive and /s/ Alan P. Hirmes  Financial Officer and Director) of - ------------------  CIP Associates, Inc. (the General Partner Alan P. Hirmes      of the Registrant)                           March 28, 2006                                                                  --------------    /s/ Glenn F. Hopps  Treasurer (Principal Accounting Officer) - ------------------  of CIP Associates, Inc. (the General Glenn F. Hopps      Partner of the Registrant)                   March 28, 2006                                                                  --------------                                          30                                                                       Exhibit 31.1                             CERTIFICATION PURSUANT TO RULE                            13a-14(a) OR RULE 15d-14(a)    I, Alan P. Hirmes,  Principal  Executive Officer and Principal Financial Officer of CIP Associates, Inc., (the "General Partner"), the general partner of Capital Mortgage Plus L.P. (the "Partnership"), hereby certify that:       1.  I have  reviewed  this annual report on Form 10-K for the period ending          December 31, 2005 of the Partnership;       2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue          statement of a material fact or omit to state a material fact necessary          to make the statements made, in light of the circumstances  under which          such  statements  were made, not misleading  with respect to the period          covered by this report;       3.  Based on my knowledge,  the financial  statements,  and other financial          information  included in this  report,  fairly  present in all material          respects the financial condition,  results of operations and cash flows          of the  Partnership  as of,  and for,  the  periods  presented  in this          report;       4.  I am responsible for establishing and maintaining  disclosure  controls          and  procedures  (as  defined  in  Exchange  Act  Rules  13a-15(e)  and          15d-15(e)) and internal control over financial reporting (as defined in          Exchange Act Rues  13a-15(f) and  15d-15(f))  for the  Partnership  and          have:           a) designed such  disclosure  controls and  procedures,  or caused such          disclosure controls and procedures to be designed under my supervision,          to  ensure  that  material  information  relating  to  the  Partnership          including its consolidated subsidiaries,  is made known to me by others          within  those  entities,  particularly  during the period in which this          report is being prepared;           b) designed such internal control over financial  reporting,  or caused          such internal control over financial  reporting to be designed under my          supervision,  to provide reasonable assurance regarding the reliability          of financial reporting and the preparation of financial  statements for          external  purposes in accordance  with  generally  accepted  accounting          principles;           c) evaluated the effectiveness of the Partnership's disclosure controls          and procedures  and presented in this report my  conclusions  about the          effectiveness  of the disclosure  controls and procedures as of the end          of the period covered by this report based on such evaluation; and           d)  disclosed in this report any change in the  Partnership's  internal          control over financial reporting that occurred during the Partnership's          fourth fiscal  quarter that has materially  affected,  or is reasonably          likely to materially  affect,  the Partnership's  internal control over          financial reporting; and       5.  I have  disclosed,  based  on my most  recent  evaluation  of  internal          control over financial reporting,  to the Partnership's auditors and to          the board of directors of the General Partner:           a) all significant  deficiencies and material  weaknesses in the design          or operation of internal  control over  financial  reporting  which are          reasonably  likely to  adversely  affect the  Partnership's  ability to          record, process, summarize and report financial information; and           b) any fraud,  whether or not  material,  that  involves  management or          other  employees  who  have a  significant  role  in the  Partnership's          internal control over financial reporting.              Date: March 28, 2006                 --------------                                              By:  /s/ Alan P. Hirmes                                                  ------------------                                                  Alan P. Hirmes                                                  Principal Executive Officer and                                                  Principal Financial Officer                                           31                                                                      Exhibit 32.1                                CERTIFICATION PURSUANT TO                       RULE 13a-14(b) OR RULE 15d-14(b) AND                                   SECTION 1350                         OF TITLE 18 OF THE UNITED STATES                               CODE (18 U.S.C. 1350)    In  connection  with the  Annual  Report of  Capital  Mortgage  Plus  L.P.  (the "Partnership")  on Form 10-K for the period  ending  December  31, 2005 as filed with the Securities and Exchange  Commission on the date hereof (the  "Report"), I, Alan P. Hirmes,  Principal  Executive Officer and Principal Financial Officer of CIP  Associates,  Inc.,  the  general  partner of the  Partnership,  certify, pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:       (1) The Report fully  complies  with the  requirements  of section  13(a) or 15(d) of the Securities Exchange Act of 1934; and       (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.   A signed  original of this  written  statement  required by Section 906 has been provided  to the  Partnership  and  will  be  retained  by the  Partnership  and furnished to the Securities and Exchange Commission or its staff upon request.    By:  /s/ Alan P. Hirmes      ------------------      Alan P. Hirmes      Principal Executive Officer and      Principal Financial Officer      March 28, 2006                                         32                                                                        Exhibit 99.1                              CAPITAL MORTGAGE PLUS L.P.                             RESPONDS TO TENDER OFFER                             ------------------------   New York,  New York,  November  18,  2005 --  Capital  Mortgage  Plus L.P.  (the "Partnership")  responded  today as follows to an unsolicited  tender offer (the "Offer") by Everest  Properties II, LLC (the "Offeror") to purchase up to 89,996 of  the  Partnership's   beneficial   acceptance   certificates   ("BACs"),   or approximately  4.9% of the  Partnership's  total outstanding BACs, at a price of $4.50 per BAC, less certain  reductions  to that purchase  price as described in the  Offeror's  written  tender  offer  materials  dated  October  21, 2005 (the "Offering Materials").  The Offeror is not affiliated with the Partnership or its general  partner.  The Offeror did not provide the Partnership with a copy of the Offering Materials at or prior to the time it  commenced  the Offer.  The  Partnership  learned of the Offer only after certain BACs holders contacted the Partnership to inquire about the  Offer  and the  Partnership  thereafter  obtained  a copy  of the  Offering Materials.  The  Partnership  expresses no opinion and is neutral with respect to whether or not BACs  holders  should  tender  their BACs in response  to the Offer.  As the Partnership has previously  disclosed to its BACs holders, the Partnership is in the process of liquidating its portfolio of investments in real estate mortgages and currently holds only two such remaining investments. It is uncertain at this time how much money,  if any, will be realized by the  Partnership  and its BACs holders from the liquidation of its remaining investments. While there can be no assurances  about how much money such  contemplated  sales will realize and when such sales will occur, the general partner of the Partnership currently believes that the  aggregate  amount that may be  distributed  to BACs  holders from such sales may  materially  exceed the net purchase price of the Offer and that it is possible that such sales of the Partnership's two remaining  investments and the resulting  distributions to BACs holders could occur within the next six to nine months.  Although  there  is  the  risk  that  the  actual  liquidation  of  the Partnership's  two remaining  investments might take longer than nine months and might  result in  distributions  to BACs  holders that are less than the Offer's price,  BACs  holders  might  obtain  more money by  holding  their BACs than by selling them to the Offeror.  Accordingly,  BACs holders should  consider,  with their own financial  advisors,  whether or not the Offer and its purchase  price are attractive or unattractive to them from an economic point of view.  In addition, BACs holders may also wish to consider the following:  First, the Partnership,  on or about November 14, 2005, mailed to BACs holders a quarterly  distribution  of $.09 per BAC.  According  to the terms of the Offer, this  distribution  will  reduce the price of the Offer to $4.41 per BAC,  which price  is  also  subject  to  other  reductions  as  described  in the  Offering Materials.  Second,  the Offer raises certain  questions  about its potential  impact on the Partnership's  tax status for federal  income tax purposes.  The  Partnership is currently  treated,  and has since its inception been treated,  as a partnership and a  pass-through  entity for federal income tax purposes -- a tax status that is  desirable  and  beneficial  to  the  Partnership  and  its  investors.  That beneficial  tax status might be lost,  and the  Partnership  might be taxed as a corporation,  if it were deemed to be a "publicly traded partnership" within the meaning of the Internal Revenue Code and certain regulations  promulgated by the Internal  Revenue  Service.  It is  uncertain  whether  or  not  the  Offer,  if consummated,  might  cause  the  Partnership  to be  deemed a  "publicly  traded partnership" since the Offer could result in a transfer of more than two percent of the  interests in the  Partnership  during the year,  which might prevent the Partnership from relying on an Internal Revenue Service "safe harbor" protecting against publicly traded partnership treatment. Accordingly, the Partnership will only permit BACs to be transferred  pursuant to the Offer if the General Partner determines,  in its sole discretion,  either that the cumulative total number of transfers in any tax year  (including  transfers  prior to the Offer,  transfers pursuant to the Offer and any amount  reserved for future  transfers  outside of the  Offer)  falls  within  the safe  harbor or that the  Offeror  has  provided sufficient  assurances and protection to the Partnership,  its partners and BACs holders to allow the transfers  notwithstanding  the potential  violation of the two percent  limitation  safe harbor.  In order to address these  concerns,  the Offeror  must  provide the  Partnership  with (i) an opinion of counsel that the Offer will not result in the Partnership  being deemed to be a "publicly  traded partnership"  for federal income tax purposes and (ii) an agreement to indemnify the  Partnership,  its  general  partner  and its BACs  holders  for any loss or liability relating to any adverse tax consequences  arising from the Offer. This legal opinion and indemnity  must be in a form and content  satisfactory  to the Partnership and its counsel.  Third, the Agreement of Transfer and proposed  transfer  documentation  included with  the  Offering   Materials   are   inconsistent   with  the   Partnership's long-established  practices,  procedures  and  documentation  necessary for BACs holders to transfer their units Accordingly, the Offeror's Agreement of Transfer and proposed transfer  documentation will not be accepted by the Partnership and BACs will not be transferred based on the Offeror's proposed documentation.  The Offeror  and any BACs  holder  wishing  to sell  his,  her or its BACs must each                                         33   complete the Partnership's  standard transfer and subscription  documentation in accordance with the Partnership's standard practices and procedures. Among other things,   each  selling  BACs  holder  must   individually   sign  each  of  the Partnership's  required  transfer  documents.   Pursuant  to  the  Partnership's well-established  practices and procedures, the Partnership does not accept, and will not accept in connection  with the Offer,  signatures by persons other than the selling unit holder who purport to act based on a power of attorney executed by the unit holder.  Persons who wish to sell their units to the Offeror  should contact the Partnership and request its standard transfer documentation.  Fourth, the Offer does not afford tendering BACs holders withdrawal or proration rights and states that BACs will be  purchased on a  "first-received,  first-buy basis." The Partnership  believes that such terms are highly coercive and unfair to unit holders and may be in violation of the federal securities laws.                                         * * *   Each BACs holder  should  consult with his, her or its own  investment,  tax and legal  advisors  in  deciding  whether or not to tender  BACs in response to the Offer.  As a precaution to make sure that any tendering  BACs holder is aware of the disclosures  contained in this press release,  the Partnership will require, as a condition to processing  transfer  requests,  each tendering BACs holder to sign a  written  statement  acknowledging  that  he,  she or it is  aware of and understands the disclosures  contained in this press release and that he, she or it wishes to proceed with the sale of their BACs to the Offeror anyway.  Certain  statements  in  this  press  release  may  constitute   forward-looking statements  within the meaning of the "safe  harbor"  provisions  of the Private Securities  Litigation  Reform  Act of  1995.  These  statements  are  based  on management's  current  expectations  and  beliefs and are subject to a number of factors and  uncertainties  that could cause actual results to differ materially from  those  described  in  the  forward-looking  statements.  These  risks  and uncertainties are detailed in Capital Mortgage Plus L.P.'s Annual Report on Form 10-K for the period ended  December 31, 2004,  and in its other filings with the Securities and Exchange Commission.  Such forward-looking  statements speak only as of the date of this  press  release.  Capital  Mortgage  Plus L.P.  expressly disclaims  any  obligation  or  undertaking  to release  publicly any updates or revisions  to any  forward-looking  statements  contained  herein to reflect any change  in the  Partnership's  expectations  with  regard  thereto  or change in events, conditions, or circumstances on which any such statement is based.                                         # # #                                          34    -----END PRIVACY-ENHANCED MESSAGE-----