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

                                   Form 10-QSB


(Mark One)

  [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2001


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

        For the transition period ended ______________to________________


                        Commission file number 333-55753


                         Baron Capital Properties, L.P.
        (Exact name of small business issuer as specified in its charter)


                      Delaware                             31-1584691
            (State or other jurisdiction                 (IRS Employer
          of incorporation or organization)           Identification No.)

                    7826 Cooper Road, Cincinnati, Ohio 45242

                    (Address of principal executive offices)

                                 (513) 984-5001
                           (Issuer's telephone number)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

         Yes [X]   No [ ]

As of the date of this Report, the Registrant has outstanding 3,787,012 units of
limited partnership interest ("Operating Partnership Units").

<PAGE>


                         PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements

          See following pages.



                                       2
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                      March 31,           December 31,
                                                                                        2001                  2000
                                                                                        ----                  ----
                                                                                    (Unaudited)
<S>                                                                                 <C>                   <C>
                                     ASSETS
Rental Apartments:
   Land                                                                             $  5,643,600          $  5,643,600
   Rental property held for sale                                                       3,609,931             3,635,000
   Depreciable property                                                               26,091,407            26,091,407
                                                                                    ------------          ------------
                                                                                      35,344,938            35,370,007
   Less accumulated depreciation                                                       2,578,322             2,304,148
                                                                                    ------------          ------------
                                                                                      32,766,616            33,065,859

Cash                                                                                     489,369                20,823
Restricted Cash                                                                          423,042               359,894
Receivables from Affiliates                                                            7,364,378             6,927,109
Other Property and Equipment                                                              97,460               105,960
Other Assets                                                                             802,358               903,287
                                                                                    ------------          ------------
                                                                                    $ 41,943,223          $ 41,382,932
                                                                                    ============          ============

                        LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
   Mortgages payable                                                                $ 25,796,222          $ 23,540,172
   Accounts payable and accrued liabilities                                            1,269,334             1,670,453
   Notes payable                                                                       2,086,473             2,482,499
   Payables to affiliates                                                              2,087,089             2,237,761
   Security deposits                                                                     214,376               208,406
                                                                                    ------------          ------------
         Total liabilities                                                            31,453,494            30,139,291
                                                                                    ------------          ------------

Commitments, Contingencies, Subsequent Events and Other Matters                               --                    --

Partners' Capital:
   General partner; issued and outstanding, 43,977 partnership units                     (68,714)              (61,175)
   Limited partners; issued and outstanding, 3,795,435 partnership units,
      of which 757,746 units are subject to escrow restrictions                       10,558,443            11,304,816
                                                                                    ------------          ------------
         Total partners' capital                                                      10,489,729            11,243,641
                                                                                    ------------          ------------
                                                                                    $ 41,943,223          $ 41,382,932
                                                                                    ============          ============
</TABLE>

           See notes to consolidated condensed financial statements.


                                      F-1
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                March 31,
                                                                         2001              2000
                                                                         ----              ----
<S>                                                                  <C>               <C>
Revenues:
   Property:
      Rental                                                         $ 1,569,482       $   267,668
      Equity in net loss of unconsolidated partnerships                       --           (37,840)
   Interest and other income                                             251,866            25,540
                                                                     -----------       -----------
                                                                       1,821,348           255,368
                                                                     -----------       -----------
Real Estate Expenses:
   Depreciation                                                          299,244            40,825
   Amortization of loan costs                                             18,205                --
   Interest                                                              522,692            85,459
   Repairs and maintenance                                               165,380            25,809
   Personnel                                                             208,207             3,110
   Property taxes                                                        140,977            19,904
   Property insurance                                                     30,155             5,360
   Utilities                                                             153,459            13,374
   Other                                                                  27,291             5,675
                                                                     -----------       -----------
                                                                       1,565,610           199,516
                                                                     -----------       -----------
Administrative Expenses:
   Personnel, including officer's compensation                           155,290           159,618
   Professional services                                                  66,083           161,120
   Other                                                                 105,972           (40,000)
                                                                     -----------       -----------
                                                                         327,345           280,738
                                                                     -----------       -----------

Net Loss Before Other Expenses                                           (71,607)         (224,886)

Other Expenses:
   Prepayment penalties                                                  534,075                --
   Write-off of loan costs on refinanced loans                           148,230                --
                                                                     -----------       -----------
                                                                         682,305                --
                                                                     -----------       -----------

Net Loss                                                             $  (753,912)      $  (224,886)
                                                                     ===========       ===========

Net Loss Per Partnership Unit                                        $     (0.20)      $     (0.12)
                                                                     ===========       ===========
</TABLE>

           See notes to consolidated condensed financial statements.

                                      F-2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

             CONSOLIDATED CONDENSED STATEMENTS OF PARTNERS' CAPITAL


<TABLE>
<CAPTION>
                                                                     General Partner          Limited Partners
                                                                     ---------------          ----------------
                                                                      Units    Amount        Units         Amount          Total
                                                                      -----    ------        -----         ------          -----
<S>                                                                  <C>      <C>          <C>         <C>             <C>
Partners' Capital, December 31, 1999                                 18,962   $(33,362)    1,877,246   $  2,034,982    $  2,001,620

Year Ended December 31, 2000:
   Capital contributions - Trust                                        272         --        26,990        230,118         230,118
   Exchange offering contributions                                   24,743         --     2,449,525     11,793,159      11,793,159
   Initial limited partners reduction                                    --         --      (444,414)            --              --
   Conversion of operating partnership units to common shares            --         --      (113,912)            --              --
   Net loss                                                              --    (29,983)           --     (2,968,273)     (2,998,256)
   Credit for estimated fair value of services performed by officer      --      2,170            --        214,830         217,000
                                                                     ------   --------    ----------   ------------    ------------

Partners' Capital, December 31, 2000                                 43,977    (61,175)    3,795,435     11,304,816      11,243,641

For the Three Months Ended March 31, 2001:
   Net loss (unaudited)                                                  --     (7,539)           --       (746,373)       (753,912)
                                                                     ------   --------    ----------   ------------    ------------

Partners' Capital, March 31, 2001 (Unaudited)                        43,977   $(68,714)    3,795,435   $ 10,558,443    $ 10,489,729
                                                                     ======   ========    ==========   ============    ============
</TABLE>

           See notes to consolidated condensed financial statements.


                                      F-3
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                Three Months Ended
                                                                                                     March 31,
                                                                                               2001             2000
                                                                                               ----             ----
<S>                                                                                        <C>              <C>
Cash Flows from Operating Activities:
   Net loss                                                                                $  (753,912)     $  (224,886)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Credit for estimated fair value of services performed by officer                              --           54,250
      Depreciation                                                                             307,743           40,825
      Amortization of loan costs                                                                18,205               --
      Write-off of loan costs on refinanced loans                                              148,230               --
      Equity in net loss of unconsolidated partnership                                              --           37,840
      Changes in operating assets and liabilities:
      Decrease in operating assets:
         Reimbursed administrative expenses receivable                                              --           13,439
         Other assets                                                                          132,106            4,486
       Increase (decrease) in operating liabilities:
         Accounts payable and accrued liabilities                                             (401,119)         (47,011)
         Security deposits                                                                       5,970            2,758
                                                                                           -----------      -----------
            Net cash used in operating activities                                             (542,777)        (118,299)
                                                                                           -----------      -----------

Cash Flows from Investing Activities:
   Purchases of other property and equipment                                                        --           (7,935)
   Increase in restricted cash                                                                 (63,148)         (28,697)
                                                                                           -----------      -----------
            Net cash used in investing activities                                              (63,148)         (36,632)
                                                                                           -----------      -----------

Cash Flows from Financing Activities:
   Partners' capital contributions                                                                  --          162,800
   Proceeds from mortgage refinancing                                                        2,166,237               --
   Proceeds from notes payable, affiliates                                                          --            2,000
   Payment on notes payable                                                                   (396,026)              --
   Payments on mortgages payable                                                              (107,799)         (14,637)
   Increase (decrease) in loans payable to affiliates, net                                    (587,941)          25,066
                                                                                           -----------      -----------
            Net cash provided by financing activities                                        1,074,471          175,229
                                                                                           -----------      -----------

Net Increase in Cash                                                                           468,546           20,298

Cash, Beginning                                                                                 20,823           27,552
                                                                                           -----------      -----------

Cash, Ending                                                                               $   489,369      $    47,850
                                                                                           ===========      ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                               $   522,692      $    85,459
                                                                                           ===========      ===========
</TABLE>

           See notes to consolidated condensed financial statements.


                                      F-4
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Basis of Presentation

               The unaudited  consolidated  condensed  balance sheet as of March
               31,  2001,   unaudited   consolidated   condensed  statements  of
               operations  for the three  months  ended March 31, 2001 and 2000,
               the unaudited consolidated condensed statements of cash flows for
               the three months ended March 31, 2001 and 2000, and the unaudited
               consolidated  condensed  statements of partners'  capital for the
               three  months  ended  March 31,  2001 have been  prepared  by the
               Partnership. In the opinion of management, all adjustments (which
               include   reclassifications  and  normal  recurring  adjustments)
               necessary to present  fairly the financial  position,  results of
               operations  and cash  flows at March 31,  2001 and for the period
               presented,  have been made.  The  results of  operations  for the
               three months ended March 31, 2001 are not necessarily  indicative
               of the operating results for the full year.

               Certain information and footnote disclosures normally included in
               the financial  statements  prepared in accordance  with generally
               accepted accounting principles have been condensed or omitted. It
               is suggested that these consolidated financial statements be read
               in  conjunction  with  the  Operating   Partnership's   financial
               statements  and notes  thereto  included in its December 31, 2000
               10-KSB.

          Organization

               Baron  Capital   Properties,   L.P.  (the  "Partnership"  or  the
               "Operating Partnership"),  a Delaware limited partnership, is the
               operating partner of Baron Capital Trust (the "Trust").  Together
               with the Trust, the Partnership constitutes a real estate company
               which has been organized to indirectly  acquire equity  interests
               in  existing  residential  apartment  properties  located  in the
               United States and to provide or acquire debt financing secured by
               mortgages on such types of  property.  The  Partnership  with the
               Trust  intends to  acquire,  own,  operate,  manage  and  improve
               residential  apartment  properties for long-term  ownership,  and
               thereby  seek to maximize  current and  long-term  income and the
               value of its assets.

               In  its  completed  exchange  offering,  the  Partnership  issued
               2,449,492  units of limited  partnership  interest  ("Units")  in
               exchange  for  limited  partnership  interests  owned by  limited
               partners in real estate limited  partnerships  which owned direct
               or indirect  equity or debt  interests in  residential  apartment
               properties.  Holders of Units have the right,  exercisable at any
               time  following  the  offering,  to exchange  all or a portion of
               their  Units  into an  equivalent  number  of  Common  Shares  of
               beneficial interest in the Trust.

               The Trust, as General Partner of the  Partnership,  is authorized
               to cause the Partnership to issue additional limited  partnership
               interests in the  Partnership  for any purpose of the Partnership
               at any time to such persons and on such terms and  conditions  as
               may  be  determined  by  the  Trust  in  its  sole  and  absolute
               discretion.  Since Units are  exchangeable by Unitholders into an
               equivalent  number of Common  Shares of the  Trust,  the  maximum
               number of Units that may be issued by the  Partnership is limited
               to the  number  of  authorized  shares  of the  Trust,  which  is
               25,000,000,  less shares issued by the Trust directly,  excluding
               Common Shares issued in exchanges of Units for Common Shares.


                                      F-5
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Organization (Continued)

               The  Partnership  commenced  operations  on February 3, 1998,  at
               which time it received  an initial  limited  partnership  capital
               contribution.


NOTE 2.   LIQUIDITY AND PROFITABILITY CONSIDERATIONS

          During the years ended  December  31, 2000 and 1999,  the  Partnership
          experienced  certain cash flow  problems  and has,  from time to time,
          experienced  difficulties  meeting  obligations  as they  became  due.
          However,  as  reflected  in the  accompanying  consolidated  condensed
          financial   statements,   during  the  first  quarter  of  2001,   the
          Partnership generated a net profit of approximately  $246,000,  before
          depreciation,  amortization  and other  expenses  versus a prior  year
          first quarter loss of approximately $266,000.

          During the first quarter of 2001,  management  refinanced three of its
          properties,  which  generated  $1,632,000 of cash to the  Partnership.
          This cash was used to reduce accounts payable owed by the Partnership,
          advance  funds for a second round of  refinancings,  and  establish an
          escrow  for  expected   major  repairs  to  its  Riverwalk   property.
          Management's plans to continue  improving  liquidity and profitability
          encompass the following four strategies:

            o  increase  property cash  collections  through  implementation  of
               utility billings, rent increases and property enhancements;

            o  refinance selected well performing assets;

            o  dispose of assets which do not generate  cash to cover  operating
               costs or whose geographic location creates excessive burden; and

            o  reduce corporate overhead.

          In implementing these strategies, management has adopted the following
          action plans:

            o  In many  locations,  the market  for  apartments  has  started to
               include  re-billing  of  property  water  costs to  tenants.  The
               Partnership has initiated billing of tenants for their water used
               at several  locations and intends to continue  implementation  of
               the  strategy  at other  properties  as the markets  permit.  The
               Partnership   has  also  started  a  program  of  enhancing   the
               aesthetics of the  properties,  which is allowing the Partnership
               to increase rents while still improving occupancy.

               The  Partnership has identified  certain of its properties  which
               are  performing  well and have loans which are small  relative to
               the value of the  property,  given their  excellent  performance.
               Three  properties  were  refinanced  in the first quarter of 2001
               (see Note 6),  generating  sufficient cash for the Partnership to
               enter  into  negotiations  with  all  of  its  Exchange  Offering
               professionals,  and still  have a small  amount in  reserve.  All
               three of these properties were refinanced at interest rates lower
               than the interest rate on their old


                                      F-6
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2.   LIQUIDITY AND PROFITABILITY CONSIDERATIONS (Continued)

               loan. The Partnership has identified four additional  properties,
               which it believes can support higher debt levels and provide cash
               for general corporate purposes.  As a result, the Partnership has
               proposals  on these four  properties  that,  if  accepted  by the
               Partnership,  would  result  in cash  proceeds  of  approximately
               $1,500,000.

            o  The  Partnership  entered  into a contract for sale of one of its
               properties  that,  in the  past,  has  required  substantial  and
               frequent  cash  infusions.  The sale  closed on April  30,  2001.
               Additional   properties   are  being   evaluated   for  potential
               disposition.

            o  During 2000,  the  Partnership  terminated the services of one of
               its executive  officers and entered into an arrangement  with two
               outside  businesses to allow officers of the  Partnership to work
               for those  businesses.  The salaries of those officers needing to
               be funded by the  Partnership  were reduced because of the income
               they received from the outside businesses.

            o  For the three  months  ending  March 31,  2001,  the  Partnership
               generated  positive  cash  flow from  operations  in an amount in
               excess of budget. As a result of this and the re-financing of the
               3 properties discussed in Note 6, on or about March 31, 2001, the
               Partnership had approximately $490,000 in available cash.

          Management  believes  that the  actions  presently  being taken by the
          Partnership,  including the cash to be realized upon  refinancing  the
          four properties previously mentioned and its cash on hand, provide the
          opportunity   for   the   Partnership   to   improve   liquidity   and
          profitability.


NOTE 3.   EXCHANGE OFFERING

          On April 7, 2000,  pursuant to a  registration  statement on Form S-4,
          the  Partnership  completed  the  Exchange  Offering  under  which  it
          acquired additional interests in residential apartment properties.  In
          the Exchange  Offering,  the Partnership  issued 2,449,492  registered
          Partnership  Units in exchange for substantially all outstanding units
          of limited  partnership  interest owned by individual limited partners
          ("Exchange  Limited   Partners")  in  23  limited   partnerships  (the
          "Exchange  Partnerships"),  which directly or indirectly  owned equity
          and/or  debt  interests  in one or  more of 26  residential  apartment
          properties located in the southeast and mid-west United States.

          The acquisition of the Exchange  Partnerships  was accounted for under
          the purchase  method of accounting,  effective as of April 1, 2000 for
          accounting  purposes.  The cost of acquisition  approximated  the fair
          value of the net assets  acquired  (principally  the  appraised  value
          determined  by  management  based on  actual  1998  appraisals  of the
          underlying  residential apartment properties less related liabilities)
          which amounted to $11,793,159.  Therefore, no goodwill was recorded in
          this transaction.

          For financial statement  presentation purposes, it is assumed that the
          Units of limited  partnership  interest in the  Partnership  issued to
          Exchange Limited Partners in the Exchange Offering have


                                      F-7
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3.   EXCHANGE OFFERING (Continued)

          been issued as Common Shares of the Trust,  since the unit holders are
          entitled to  exchange  all or a portion of their Units at any time and
          from time to time for an equivalent  number of Common Shares,  so long
          as the exchange would not cause the exchanging  party to own in excess
          of 5% of the then  outstanding  Common Shares,  subject to the Trust's
          right to cash out any unit holder who requests an exchange and subject
          to certain other exceptions.

          The  following  unaudited  pro  forma  summary  presents  consolidated
          financial  information  as  if  the  Exchange  Partnerships  had  been
          acquired  effective  January 1, 2000.  The pro forma  amounts  include
          adjustments  for  depreciation  as a result of the  adjustment to fair
          value of the residential  apartment properties and interest associated
          with  the  related  mortgages.  The pro  forma  information  does  not
          necessary  reflect the actual  results that would have occurred nor is
          it  necessarily  indicative  of future  results of  operations  of the
          combined partnerships.

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                            March 31
                                                                            --------
                                                                      2001             2000
                                                                      ----             ----
<S>                                                               <C>              <C>
            Total revenues                                        $1,821,000       $1,406,000
            Cost and expenses                                      2,575,000        1,516,000
                                                                  ----------       ----------
            Net loss                                               $(754,000)       $(110,000)
                                                                  ----------       ----------
            Weighted average number of Partnership units           3,795,435        3,907,965
                                                                  ==========       ==========
            Net loss per Partnership unit                              $(.20)           $(.03)
                                                                       =====            =====
</TABLE>

NOTE 4.   RECENT ACCOUNTING PRONOUNCEMENTS

          In September  2000,  Statement of Financial  Accounting  Standards No.
          140,  Accounting  for Transfers and Servicing of Financial  Assets and
          Extinguishments  of  Liabilities  (SFAS  140)  was  issued.  SFAS  140
          provides   accounting  and  reporting   standards  for  transfers  and
          servicing of financial assets and extinguishments of liabilities. SFAS
          140 is effective for  recognition and  reclassification  of collateral
          and  for  disclosures  relating  to  securitization  transactions  and
          collateral  for fiscal  years  ending  after  December 15, 2000 and is
          effective  for  transfers  and  servicing  of  financial   assets  and
          extinguishments  of  liabilities  occurring  after March 31, 2001. The
          Partnership  anticipates that the adoption of SFAS 140 will not have a
          material effect on its financial position or results of operations.

          In December 1999, the Securities and Exchange  Commission (SEC) issued
          Staff Accounting  Bulletin No. 101, "Revenue  Recognition in Financial
          Statements"  (SAB 101). SAB 101 summarizes  certain of the SEC's views
          in  applying  generally  accepted  accounting  principles  to  revenue
          recognition  in financial  statements.  SAB 101 is  effective  for the
          fourth  quarter of fiscal years  beginning  after  December  1999. The
          Partnership  believes that it is in compliance with the guidelines set
          forth in SAB 101.


                                      F-8
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4.   RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

          In June 1999, the Financial Accounting Standards Board issued SFAS No.
          137,  "Accounting for Derivative  Instruments and Hedging Activities -
          Deferred of the  Effective  Date of SFAS No. 133 an  Amendment of SFAS
          No. 133",  which deferred the effective date to all fiscal quarters of
          all fiscal  years  beginning  after June 15, 2000.  Historically,  the
          Partnership  has not  entered  into  derivatives  contracts  to  hedge
          existing risks or for speculative purposes.  Accordingly, the adoption
          of the new  standard on January 1, 2001 did not have any effect on the
          Partnerships' financial statements.


NOTE 5.   RENTAL APARTMENT HELD FOR SALE

          On December 7, 2000, the Independent Trustees of the Trust accepted an
          offer to sell  Glen  Lake  Arms  Apartments  (Glen  Lake),  a 144 unit
          apartment building located in St. Petersburg,  Florida for $3,900,000.
          The  decision  to sell Glen Lake was based on the  property's  lack of
          performance and its continuing need for cash to operate.  On April 30,
          2001, the Partnership consummated the sale of Glen Lake resulting in a
          gain of $68,070.

          The  results of  operations  of Glen Lake for the three  months  ended
          March 31, 2001 were as follows:

            Rental and other income                    $275,000
            Expenses                                    188,000
                                                       --------
               Net Income                              $ 87,000
                                                       ========


NOTE 6.   MORTGAGE REFINANCING

          On February 5, 2001, the Partnership refinanced the first mortgages on
          three  rental  properties.  The  new  information  pertaining  to  the
          mortgages is as follows:

<TABLE>
<CAPTION>
                                                   Interest       Term           Maturity           Monthly
            Property                Mortgage         Rate        (Years)           Date            Payments
            --------                --------         ----        -------           ----            --------
<S>                                <C>               <C>           <C>       <C>                    <C>
            Pineview               $2,700,000        7.51%         25        February 5, 2011       $19,970
            Heatherwood            $1,900,000        7.51%         30        February 5, 2011       $13,298
            Eagle Lake             $1,900,000        7.51%         25        February 5, 2011       $14,053
</TABLE>

          The Partnership received approximately $2,200,000 in proceeds from the
          refinancing   of  the  first   mortgages.   In  connection   with  the
          refinancings,  the Partnership paid a one-time  prepayment  penalty of
          approximately $534,000, which is included under other expenses for the
          three month period ended March 31, 2001.


                                      F-9
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7.   COMMITMENTS AND CONTINGENCIES

          Officers' Compensation

               Prior  to  January  1,  2001,  a  founder  of the  Trust  and the
               Partnership  had  agreed to serve as Chief  Executive  Officer in
               exchange for  compensation  in the form of Trust common shares or
               Operating  Partnership  units in an amount  not to exceed  25,000
               common shares or units,  as  applicable,  to be determined by the
               Executive Compensation  Committee based upon his performance.  As
               of  December  31,  2000,  no Trust  common  shares  or  Operating
               Partnership  units had been issued to the Chief Executive Officer
               as  compensation.  However,  in order to reflect all  appropriate
               administrative  expenses  of  the  Partnership,  a  provision  of
               $217,000 was made in the financial  statements  for the estimated
               fair  value  of the  services  rendered  by the  Chief  Executive
               Officer for 2000.  Effective  December 31, 2000, no  compensation
               expense  will be charged for the  services  provided by the Chief
               Executive   Officer  as  these   services   are  minimal  to  the
               Partnership's operations.

               On August 28, 2000, the Trust entered into employment  agreements
               with the President and Chief Operating Officer (COO) and with the
               Chief Financial  Officer (CFO) through  December 31, 2001.  Under
               the terms of the  agreement,  the Trust  through the  Partnership
               will pay the COO and the CFO  $175,000  and  $110,000  per annum,
               respectively.  In  addition,  the COO and  the CFO  will  receive
               $90,000  and  $60,000,  respectively  if they  are  involuntarily
               terminated for any reason other than gross misconduct.

          Pending Litigation

               The  Partnership  is a party to various legal  actions  resulting
               from  its  operating   activities.   These  actions  are  routine
               litigation and administrative proceedings arising in the ordinary
               course  of  business,  some of which  are  covered  by  liability
               insurance,  and none of which  are  expected  to have a  material
               adverse effect on the consolidated financial condition or results
               of operations of the Partnership taken as a whole.

               In early  May  2001,  MarCap  Corporation  filed an action in the
               United  States  District  Court  for  the  Northern  District  of
               Illinois  against  Wakul,  Inc.  (a  telecommunications   company
               controlled  by the Chief  Executive  Officer of the  Trust),  the
               Chief Executive Officer of the Trust, and Alexandria Development,
               L.P.,  a Delaware  limited  partnership  controlled  by the Chief
               Executive  Officer of which the  Partnership  owns a 40%  limited
               partnership interest (the "Alexandria Partnership"),  among other
               parties,   seeking   repayment  of   approximately   $407,000  of
               indebtedness  (plus  unspecified  interest,  attorney's  fees and
               collection  costs) under a  telecommunication  equipment  leasing
               agreement.   Certain  of  the  equipment  was  installed  at  the
               Alexandria  Apartments property, a residential apartment property
               under  construction that is owned by the Alexandria  Partnership.
               The  Alexandria   Partnership   guaranteed  Wakul,  Inc.'s  lease
               payments under the leasing agreement.


                                      F-10
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 8.   RELATED PARTY TRANSACTIONS

          In connection  with the  refinancings  described in Note 6, two of the
          executive  officers of the  Partnership  loaned  $49,250  each, to the
          Partnership.  These  funds  were  used for the  deposits  required  to
          initiate processing of the new mortgages. Since there was no guarantee
          that the mortgages  would be granted,  and thus no guarantee  that the
          loans  would be  repaid  in a timely  manner,  the  loans  called  for
          interest  to be paid equal to ten  percent  (10%) of the amount of the
          loan plus eighteen percent (18%) per annum. The two executive officers
          received approximately $6,800 each as interest on their loans.


NOTE 9.   NET LOSS PER PARTNERSHIP UNIT

          The Partnership computes per unit data in accordance with Statement of
          Financial  Accounting  Standards  No. 128 (SFAS  128),  "Earnings  Per
          Share".  SFAS 128  requires  dual  presentation  of basic and  diluted
          earnings per share on the face of the income statement.

          Basic  net loss per unit  equals  net  loss  divided  by the  weighted
          average units outstanding  during the year. The computation of diluted
          net loss per unit that  includes  dilutive  limited  partnership  unit
          equivalents  in the weighted  average units  outstanding  has not been
          presented, as it is anti-dilutive for the three months ended March 31,
          2001 and 2000.

          The  components  used in  calculating  basic  net loss per unit are as
          follows:

<TABLE>
<CAPTION>
                                                                              Weighted           Loss
                                                             Net Loss       Average Units      Per Unit
                                                             --------       -------------      --------
<S>                                                         <C>               <C>               <C>
            For the three months ended March 31:
               2001                                         $(753,912)        3,795,435         $(.20)
                                                            =========         =========         =====
               2000                                         $(224,886)        1,902,854         $(.12)
                                                            =========         =========         =====
</TABLE>


                                      F-11
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Continued)


Item 2.   Management's Discussion and Analysis or Plan of Operation

          The  following  discussion  should  be read in  conjunction  with  the
          Condensed   Consolidated   Financial   Statements   of  Baron  Capital
          Properties, L.P. (the "Registrant" or the "Operating Partnership") and
          the Notes thereto. (See ITEM 1 - FINANCIAL STATEMENTS.)

          Forward-looking Statements

          This  Management's  Discussion  and Analysis or Plan of Operation  and
          other  sections  of  this  Report  contain   certain   forward-looking
          statements within the meaning of the Securities  Litigation Reform Act
          of  1995  that  are  based  on  current  expectations,  estimates  and
          projections about the Registrant's business,  management's beliefs and
          assumptions   made   by   management.   Words   such   as   "expects",
          "anticipates",  "intends", "plans", "believes",  "seeks", "estimates",
          and variations of such words and similar  expressions  are intended to
          identify such  forward-looking  statements.  These  statements are not
          guarantees  of  future   performance   and  involve   certain   risks,
          uncertainties   and   assumptions   that  are  difficult  to  predict.
          Therefore, actual outcomes and results may differ materially from what
          is expressed or forecasted in such  forward-looking  statements due to
          numerous  factors,  including,  but not limited to those  discussed in
          this Management's Discussion and Analysis or Plan of Operation section
          of this Report,  as well as those  discussed  elsewhere in this Report
          and  from  time to  time  in the  Registrant's  other  Securities  and
          Exchange Commission filings and reports. In addition,  such statements
          could be  affected  by general  domestic  and  international  economic
          conditions.  The forward-looking  statements  contained in this Report
          speak only as of the date on which they are made,  and the  Registrant
          does not  undertake  any  obligation  to  update  any  forward-looking
          statement to reflect  events or  circumstances  after the date of this
          Report.

          Results of Operations

          The Operating  Partnership  commenced  operations in the first half of
          1998. The Operating Partnership and its affiliate, Baron Capital Trust
          (the "Trust"),  a Delaware  business  trust,  constitute an affiliated
          real  estate  company  which  has been  organized  to  acquire  equity
          interests in residential  apartment  properties  located in the United
          States  and/or to provide or acquire  mortgage  loans  secured by such
          types of  property.  The  Operating  Partnership  conducts  all of the
          Trust's  real  estate  operations  and  holds all  direct or  indirect
          property interests acquired.

          The Trust is the sole general  partner of the  Operating  Partnership,
          and,  in such  capacity,  the Trust  controls  the  activities  of the
          Operating  Partnership.  The Trust has  elected  to be taxed as a real
          estate investment trust for federal income tax purposes.

          As described below in this Report, in May 1998, the Trust commenced an
          offering  (the "Cash  Offering")  of up to 2,500,000  common shares of
          beneficial interest ("Common Shares") in the Trust at a purchase price
          of $10.00 per share (maximum


                                       3
<PAGE>

          proceeds of $25,000,000).  In the Cash Offering,  which expired on May
          31,  2000,  the Trust sold  702,076  Common  Shares  for an  aggregate
          purchase price of $7,020,763.

          The Trust  contributed  the net cash  proceeds  from the  issuance  of
          Common  Shares  in the Cash  Offering  ($5,467,858)  to the  Operating
          Partnership in exchange for an equivalent  number of units ("Units" or
          "Operating  Partnership Units") of limited partnership interest in the
          Operating  Partnership.  As of May 15, 2001,  the Trust owned  702,076
          Operating Partnership Units,  representing  approximately 18.5% of the
          then outstanding Units. Since such Units comprise substantially all of
          the  assets  of the  Trust,  the  operating  results  of the Trust are
          primarily  dependent  upon  the  operating  results  of the  Operating
          Partnership.

          The  Operating   Partnership  has  acquired   substantially   all  the
          beneficial interests in 16 residential apartment properties, including
          the  Heatherwood I Apartments (67 studio,  one bedroom and two bedroom
          units  located in Kissimmee,  Florida) in June 1998;  Crystal Court II
          Apartments  (80 studio,  one bedroom and two bedroom  units located in
          Lakeland,  Florida) in July 1998; Riverwalk Apartments (50 two bedroom
          units  located in New  Smyrna,  Florida)  in  September  1998;  and 13
          properties  acquired  as part of the  Exchange  Offering in April 2000
          (discussed  below).  In  July,1998  the  Operating   Partnership  also
          acquired a minority  limited  partnership  interest  in 13 real estate
          limited  partnerships then managed by affiliates of Gregory K. McGrath
          (a founder  and Chief  Executive  Officer of the Trust,  a founder and
          principal unitholder of the Operating Partnership,  and the President,
          sole shareholder and sole director of Baron Advisors, Inc., a Delaware
          corporation  that serves as the Managing  Shareholder and a trustee of
          the  Board  of  the  Trust),   including   certain  of  the   Exchange
          Partnerships which participated in the Exchange Offering and which are
          now managed by the Trust.

          During 1998 and 1999,  the Operating  Partnership  acquired a total of
          40% of the limited  partnership  interests in Alexandria  Development,
          L.P. (the "Alexandria  Partnership"),  a Delaware limited  partnership
          controlled by Mr. McGrath. The Alexandria  Partnership owns Alexandria
          Apartments, a 168-unit residential apartment property (the "Alexandria
          Property") under construction in Alexandria,  Kentucky.  As of May 15,
          2001, 112 of the 168 residential  units  (approximately  67%) had been
          completed and were in the rent-up stage. Of the completed  units,  109
          units have been rented.

          In early May 2001,  MarCap  Corporation  filed an action in the United
          States  District Court for the Northern  District of Illinois  against
          Wakul,  Inc. (a  telecommunications  company  controlled by Gregory K.
          McGrath,  the Chief Executive Officer of the Trust), Mr. McGrath,  and
          the Alexandria Partnership,  among other parties, seeking repayment of
          approximately  $407,000 of indebtedness  (plus  unspecified  interest,
          attorney's  fees  and  collection  costs)  under  a  telecommunication
          equipment leasing agreement. Certain of the equipment was installed at
          the Alexandria Property.  The Alexandria Partnership guaranteed Wakul,
          Inc.'s lease payments under the leasing agreement.


                                       4
<PAGE>

          Due to  recurring  losses  incurred  by  the  Alexandria  Property,  a
          partners' deficiency and a recent appraisal that valued the Alexandria
          Property at an amount less than the  liabilities  owed,  management of
          the Operating  Partnership  determined to write off its  investment in
          the Alexandria  Property,  resulting in a charge to operations in 2000
          of approximately $355,000.

          In September 1998, the Trust entered into an agreement with three real
          estate development companies (Brentwood at Southgate, Ltd., Burlington
          Residential,  Ltd. and The Shoppes at Burlington, Ltd.) to acquire two
          luxury residential  apartment properties in the development stage upon
          the completion of construction.  The three  development  companies are
          controlled by Mr. McGrath. One of the residential apartment properties
          has been sold to a third party with the Trust's consent. The remaining
          property is scheduled to have a total of 396 units,  comprised of one,
          two and three bedroom/one or two bathroom apartments.  Construction of
          the property (the  "Burgundy  Hills  Property"),  located in Florence,
          Kentucky (part of the Cincinnati metropolitan area), is expected to be
          completed  by the end of the first  quarter  of 2004.  The Trust has a
          right  of  first   negotiation  to  purchase  the  property  from  the
          development  company upon  completion  and a right of first refusal to
          purchase the property on the same terms offered by a third party.  The
          purchase  price is expected  to be  approximately  $30,000,000.  It is
          contemplated  that a  significant  portion  of that  amount  would  be
          covered by first  mortgage  financing.  At the current  time the Trust
          does not have adequate resources to close on the transaction and it is
          uncertain  whether the Trust will have adequate  resources to complete
          the transaction upon completion of construction.

          In connection  with the  transaction,  the Trust (along with its Chief
          Executive  Officer)  agreed to  co-guarantee  long-term first mortgage
          construction   financing  provided  by  KeyBank  National  Association
          ("KeyBank") to Burlington Residential, Ltd. ("Borrower"), the owner of
          the  Burgundy  Hills  Property.  As of  May  15,  2001,  approximately
          $6,478,000 of the construction  loan had been drawn down. The interest
          rate on the construction loan is KeyBank's prime rate (currently 8.5%)
          or the LIBOR rate plus 2%. The Trust also agreed that, if the Borrower
          failed to comply with the  repayment and other  obligations  under the
          loan documents,  KeyBank would require the Trust to buy out the bank's
          position on the entire amount of the construction loan.

          In September  2000, the Trust received  notice from counsel to KeyBank
          that the Borrower had defaulted on its loan for failure to pay current
          interest due and meet certain equity  requirements and covenants under
          the loan agreement, adverse changes in the financial conditions of the
          Borrower  and the  Trust,  and the  Trust's  failure  to meet  certain
          tangible  net worth  tests set forth in the loan  agreements.  KeyBank
          indicated  that it was  exercising  its right to accelerate  the loan.
          According to Mr. McGrath,  KeyBank agreed to forego further action for
          at least 60 days while the parties  attempted to reach an arrangement.
          The extension expired in November 2000


                                       5
<PAGE>

          and,  according  to Mr.  McGrath,  is  currently  being  extended on a
          month-to-month  basis. The Borrower paid down the outstanding  accrued
          interest and a portion of the principal and is currently seeking a new
          long-term  construction  facility with another institutional lender to
          replace the KeyBank loan (and the Bank One loan described below).

          Bank  One  has  provided  additional  institutional  financing  in the
          principal amount of $1,576,000 to the Borrower. The loan is secured by
          a security interest in partnership interests in the Borrower. Due to a
          default in payment of interest due, Bank One has been assigned  rental
          payments and has taken over  day-to-day  management  of the  property.
          This  loan is  expected  to be paid off with the  proposed  new  first
          mortgage  financing  referenced above.  There can be no assurance that
          refinancing  will be available  or will be  available on  commercially
          reasonable  terms,  that KeyBank will not seek to enforce its right to
          accelerate  the loan and begin  foreclosure  proceedings  against  the
          Burgundy  Hills  Property  or elect to  require  the  Trust to buy out
          KeyBank's   position   on  the  entire   outstanding   amount  of  the
          construction  loan, or that BankOne will not seek to enforce its right
          to take over control of the Borrower.

          In April 2000,  pursuant to a registration  statement on Form S-4, the
          Operating  Partnership  completed an exchange  offering (the "Exchange
          Offering") under which it acquired additional interests in residential
          apartment  properties.   In  the  Exchange  Offering,   the  Operating
          Partnership issued 2,449,492  registered  Operating  Partnership Units
          (with an  initial  assigned  value of  $24,494,920)  in  exchange  for
          substantially  all outstanding units of limited  partnership  interest
          owned by individual limited partners  ("Exchange Limited Partners") in
          23 limited  partnerships (the "Exchange  Partnerships").  The Exchange
          Partnerships directly or indirectly owned equity and/or debt interests
          in one or more of 26 residential  apartment  properties (the "Exchange
          Properties") located in the southeast and mid-west United States.

          Holders of  Operating  Partnership  Units  (other  than the Trust) are
          entitled to  exchange  all or a portion of their Units at any time and
          from time to time for an  equivalent  number  of Common  Shares of the
          Trust, so long as the exchange would not cause the exchanging party to
          own (taking  into  account  certain  ownership  attribution  rules) in
          excess of 5% of the then  outstanding  Common  Shares,  subject to the
          Trust's right to cash out any holder of Units who requests an exchange
          and subject to certain other exceptions.

          Following  the  completion  of the  Exchange  Offering,  the  Exchange
          Partnerships  continued to own the same property  interests they owned
          prior to the offering;  substantially  all of the limited  partnership
          interests in the 23 Exchange  Partnership  were owned by the Operating
          Partnership;  Mr. McGrath, for nominal consideration,  assigned to the
          Trust all of the equity stock in 18 of the corporate  general partners
          of  the  Exchange  Partnerships  ("Corporate  General  Partners")  and
          granted to the Board of the Trust a management  proxy  coupled with an
          interest to vote the shares of the remaining  five  Corporate  General
          Partners;  the  Corporate  General  Partner  of each  of the  Exchange
          Partnerships assigned to the Operating Partnership all of its economic


                                       6
<PAGE>

          interest in the  partnership;  and Mr.  McGrath  caused each Corporate
          General  Partner  to waive  its  right to  receive  from its  Exchange
          Partnership  any  ongoing  fees,  effective  upon  completion  of  the
          exchange. As a result of the foregoing, the Operating Partnership (and
          indirectly the Trust) owned substantially all of the economic interest
          represented  by the equity and debt  interests  owned by the  Exchange
          Partnerships and controlled management of such partnerships.

          In April 2000, the Operating  Partnership  sold its equity interest in
          one of the  Exchange  Properties,  Glen Lakes  Apartments,  a 144-unit
          residential apartment property located in St. Petersburg, Florida, for
          $3,900,000.  Management  of the Trust  determined to sell the property
          based on its lack of  performance  and its  need for  substantial  and
          frequent cash infusions.

          Certain  of the  Exchange  Partnerships  currently  controlled  by the
          Operating  Partnership own direct or indirect  equity  interests in 15
          Exchange  Properties  which consist of an aggregate of 868 residential
          units  (comprised  of studio  and one,  two,  three  and  four-bedroom
          units).  Certain  of  the  Exchange  Partnerships  controlled  by  the
          Operating  Partnership own direct or indirect mortgage interests in 10
          Exchange  Properties,  which  consist of an  aggregate of 813 existing
          residential  units (studio and one and two bedroom) and 168 units (two
          and three bedroom) under  development.  Of the Exchange  Properties in
          which the  Operating  Partnership  continues  to own an  interest,  20
          properties  are located in Florida,  three  properties in Ohio and one
          property each in Georgia and Indiana.

          Consolidated  Balance  Sheet as of March 31, 2001 Compared to December
          31, 2000

          During the three months ended March 31, 2001,  total assets  increased
          to $42.0 million while  liabilities  increased to $31.5  million.  The
          Operating  Partnership  now has rental  apartment  assets in excess of
          $32.8  million,  which are subject to $25.8 million in first  mortgage
          debt.

          Partners' capital decreased to $10.5 million due to a net loss for the
          three months ended March 31, 2001 of approximately $754,000.

          Operations for the Three Months Ended March 31, 2001 Compared to Three
          Months Ended March 31, 2000

          Revenues  increased by $1,565,980  from $255,368 for the quarter ended
          March 31, 2000 to  $1,821,348  for the quarter  ended March 31,  2001.
          Real  Estate  Expenses  for  the  properties  owned  by the  Operating
          Partnership  increased  by  $1,366,094  from  $199,516 for the quarter
          ended March 31,  2000 to  $1,565,610  for the quarter  ended March 31,
          2001.  The  increases  in  Revenues  and  Real  Estate  Expenses  were
          principally  due to the  completion  of the Exchange  Offering and the
          addition of the 26 Exchange  Properties  and their  related  operating
          revenue and costs.  Administrative  expenses  increased  $46,607  from
          $280,738  for the quarter  ended  March 31,  2000 to $327,345  for the
          quarter  ended March 31, 2001.  Other  non-recurring  expenses for the


                                       7
<PAGE>

          quarter ended March 31, 2001 were $682,305.  These expenses related to
          the  refinancing of three  properties  completed in the first quarter.
          The Operating  Partnership's  Net Loss for the quarter ended March 31,
          2001 was $753,912 compared to $224,886 for the quarter ended March 31,
          2000.

          In the  financial  statements  included in its Form  10-QSB  quarterly
          report  for the  second  quarter of 2000,  the  Operating  Partnership
          accounted  for a one-time  charge of $8.4 million to  operations  as a
          provision for property impairment to reflect a write-off of the excess
          amount of the exchanged  value of the Exchange  Partnerships  over the
          estimated  equity  value  of the  Exchange  Properties.  Upon  further
          review,  the  Operating  Partnership's  independent  accountants  have
          determined  that the  write-off  should have been  accounted  for as a
          direct reduction from its retained  earnings rather than as an expense
          deduction.  The Operating Partnership will promptly file amendments to
          its  second  and third  quarter  2000 Form  10-KSB  quarterly  reports
          (including  restatement of the financial  statements included therein)
          to reflect the change in accounting treatment.  The restatement of the
          Operating  Partnership's financial statements for the second and third
          quarters of 2000 will not have any effect on its retained  earnings or
          partners' capital.

          Liquidity and Capital Resources

          Net cash used by operating  activities in the three months ended March
          31, 2001 was  $542,777  compared to $118,299 in the three months ended
          March 31,  2000.  A number of items,  including  a decrease in certain
          liabilities (primarily accounts payable), contributed to the increased
          use of cash by operating activities.

          Net cash used by investing  activities in the three months ended March
          31, 2001 was $63,148  compared  to $36,632 in the three  months  ended
          March 31, 2000.  The  decrease in cash for the first  quarter 2001 was
          due  primarily  to  an  increase  in  restricted   cash  held  by  the
          partnerships for escrows and security deposits.

          Net cash  provided by financing  activities  in the three months ended
          March 31,  2001 was  $1,074,471  compared  to  $175,229  for the three
          months ended March 31, 2000. The increase in cash was  principally due
          to the proceeds from the refinancing of three properties.

          During the years  ended  December  31,  2000 and 1999,  the  Operating
          Partnership  experienced certain cash flow problems and has, from time
          to time,  experienced  difficulties meeting obligations as they became
          due. However, as reflected in the accompanying  consolidated condensed
          financial statements,  during the first quarter of 2001, the Operating
          Partnership  generated  a profit  of  approximately  $246,000,  before
          depreciation,  amortization  and other  expenses,  compared to a prior
          year first quarter loss of approximately $266,000.

          During the first quarter of 2001, the Operating Partnership refinanced
          three of its  properties,  which  generated  $1,632,000 of cash to the
          Operating  Partnership.  This cash was used to reduce accounts payable
          owed by the Operating Partnership, advance funds for a second round of
          refinancings,  and  establish an escrow for expected  major repairs to
          its Riverwalk property.

          Management's plans to continue  improving  liquidity and profitability
          encompass the following four strategies:

          o    increase  property cash  collections  through  implementation  of
               utility billings, rent increases and property enhancements;

          o    refinance selected well performing assets;

          o    dispose of assets which do not generate  cash to cover  operating
               costs or whose geographic location creates excessive burden; and


                                       8
<PAGE>

          o    reduce corporate overhead.

          In implementing these strategies, management has adopted the following
          action plans:

          o    In many locations, the market for apartments has begun to include
               re-billing  of property  water costs to  tenants.  The  Operating
               Partnership has initiated billing of tenants for their water used
               at several  locations and intends to continue  implementation  of
               the  strategy  at other  properties  as the markets  permit.  The
               Operating Partnership has also started a program of enhancing the
               aesthetics  of the  properties  which is allowing  the  Operating
               Partnership to increase rents while still improving occupancy.

          o    The  Operating   Partnership   has  identified   certain  of  its
               properties  which are  performing  well and have loans  which are
               small  relative  to  the  value  of  the  property,  given  their
               excellent  performance.  Three  properties were refinanced in the
               first  quarter  of  2001,  generating  sufficient  cash  for  the
               Operating  Partnership to enter into negotiations with all of the
               professionals  owed for services performed in connection with the
               Exchange Offering,  and still have a small amount in reserve. All
               three of these properties were refinanced at interest rates lower
               than  the  interest  rate  on  their  old  loan.   The  Operating
               Partnership has identified four  additional  properties  which it
               believes  can support  higher  debt  levels and provide  cash for
               general   corporate   purposes.   As  a  result,   the  Operating
               Partnership  has  refinancing  proposals on these four properties
               that, if accepted by the Operating  Partnership,  would result in
               cash proceeds of approximately $1,500,000.

          o    In the second quarter of 2001, the Operating Partnership sold one
               of its properties  (Glen Lakes  Apartments)  that in the past has
               required  substantial  and frequent  cash  infusions.  Additional
               properties are being evaluated for potential disposition.

          o    During 2000, the Operating Partnership terminated the services of
               one of its  executive  officers and entered  into an  arrangement
               with two outside  businesses  to allow  officers of the Trust and
               the  Operating  Partnership  to work for  those  businesses.  The
               salaries of those officers  needing to be funded by the Operating
               Partnership were reduced because of the income they received from
               the outside businesses.

          o    For the  three  months  ending  March  31,  2001,  the  Operating
               Partnership  generated  positive cash flow from  operations in an
               amount in excess of  budget.  As a result of  operations  and the
               refinancing of three properties, at March 31, 2001, the Operating
               Partnership had approximately $490,000 in available cash.

          Management  believes  that the  actions  presently  being taken by the
          Operating  Partnership,   including  the  cash  to  be  realized  upon
          refinancing the four properties


                                       9
<PAGE>

          previously mentioned and its cash on hand, provide the opportunity for
          the Operating Partnership to improve liquidity and profitability.

          The completion in April 2000 of the Exchange Offering  described above
          has  completed  the first  effort,  in the opinion of  management,  to
          provide the critical mass  necessary  for  profitable  operations.  As
          described above, the Operating Partnership has entered into agreements
          with certain  professional  firms  involved in the  Exchange  Offering
          which are owed for their  services,  and  continues to negotiate  with
          other such firms, to receive  extended payment terms and reductions of
          the amounts due,  where  possible.  Distributions  will be made by the
          Operating  Partnership and the Trust as cash flow allows,  but will be
          negatively   impacted  as  the  open  accounts  payable  are  reduced.
          Management does not anticipate  that the Operating  Partnership or the
          Trust will make  distributions  to its  unitholders  or  shareholders,
          respectively, for the next several quarters.

          The Operating  Partnership  and the Trust intend to use  securities of
          the Operating  Partnership and the Trust  (including  Units and Common
          Shares), proceeds from future sales of such securities,  and available
          operating  cash flow and  financing  from  other  sources  to  acquire
          interests in additional  residential apartment properties or interests
          in other  partnerships  substantially  all of whose assets  consist of
          residential  apartment property  interests,  and payment of applicable
          fees and expenses.

          The operating results of the Operating  Partnership and the Trust will
          depend primarily upon income from the residential apartment properties
          in which they directly or indirectly  own or acquire an equity or debt
          interest.  Operating  results in respect of equity  interests  will be
          substantially  influenced by the demand for and supply of  residential
          apartment units in their primary market and sub-markets, and operating
          expense  levels.  Operating  results in respect of mortgage  and other
          debt interests will depend upon interest income, including, in certain
          cases,  participation  interest,  whose  payment  will depend upon the
          operating   performance,   sale  or   refinancing  of  the  underlying
          properties. The operating results of the Operating Partnership and the
          Trust  will  also  depend  upon the pace and  price at which  they can
          acquire and improve additional property interests.

          The target  metropolitan  markets and  sub-markets  have  benefited in
          recent periods from demographic  trends (including  population and job
          growth) which  increase the demand for  residential  apartment  units,
          while financing  constraints  (specifically,  reduced  availability of
          development   capital)  have  limited  new   construction   to  levels
          significantly   below   construction    activity   in   prior   years.
          Consequently,  rental  rates  for  residential  apartment  units  have
          increased  at or above the  inflation  rate for the last two years and
          are expected to continue to experience  such increases for the next 18
          months based on market  statistics made available to management of the
          Operating Partnership in terms of occupancy rates, supply, demographic
          factors,  job growth rates and recent rental  trends.  Expense  levels
          also influence operating results, and rental expenses (other than real
          estate taxes) for residential apartment properties have


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<PAGE>

          generally  increased at  approximately  the rate of inflation  for the
          past three years and are expected to increase at the rate of inflation
          for the next 18 months.  Changes in interest rates are not expected to
          materially impact operations,  because the majority of the real estate
          mortgages have fixed interest  rates,  as do all of the  inter-company
          loans.

          The  Operating  Partnership  believes  that  known  trends,  events or
          uncertainties  which  will or are  reasonably  likely  to  affect  the
          short-term and long-term liquidity and current and future prospects of
          the Operating Partnership and the Trust include the performance of the
          economy and the building of new  apartment  communities.  Although the
          Operating  Partnership  cannot  reliably  predict the effects of these
          trends,  events and  uncertainties on the property  investments of the
          Operating Partnership and the Trust as a whole, some of the reasonably
          anticipated  effects might include  downward  pressure on rental rates
          and occupancy levels.

          Generally,  there are no  seasonal  aspects of the  operations  of the
          Operating  Partnership or the Trust that might have a material  effect
          on their financial  conditions or results of operation.  However,  for
          the last 36 months,  one 60-unit student housing property owned by one
          of the Exchange Partnerships involved in the Exchange Offering has had
          an average  occupancy  rate of 55% for nine months of the year and 30%
          for the remaining three months of the year.

          Subject to the  foregoing  discussion,  management  believes  that the
          Operating  Partnership and the Trust have the ability to satisfy their
          cash requirements for the foreseeable future.  However,  management of
          the Operating  Partnership believes that it will be necessary to raise
          additional  capital during the next 12 months to make acquisitions and
          to meet  management's  revenue  and cash  flow  goals.  The  Operating
          Partnership  and the Trust intend to investigate  making an additional
          public or private  offering of Units and/or  Common  Shares during the
          next 12 months.

          As part of the Operating Partnership's ongoing operations,  management
          is reviewing  the entire  portfolio  of  properties  to determine  the
          potential for  restructuring  or  refinancing  various first  mortgage
          loans.   Additionally,   properties   whose  recent   performance  has
          materially negatively impacted the Operating  Partnership's  operating
          results  are being  evaluated  for  possible  sale.  Certain  of these
          properties  have been listed for sale.  The Operating  Partnership  is
          also in  discussions  with other  apartment  owners,  and is exploring
          business  combinations  that will bring it  economies of scale and the
          size it needs for listing the Trust's  Common  Shares on a  recognized
          securities  exchange.  Additional  size would also give the  Operating
          Partnership  and the Trust the operating  margin  necessary to support
          its  valuable  management  team  that is  believed  necessary  for its
          long-term growth.

          The Operating  Partnership  and the Trust expect no material change in
          the number of employees over the next 12 months.


                                       11
<PAGE>

          In an effort to increase profitability,  the Operating Partnership has
          also entered into agreements with WaKuL, Inc. (formerly Rapid Transmit
          Technology, Inc.), a provider of integrated communications services to
          owners,  property  managers  and  residents of  residential  apartment
          properties,   including  discounted  local  and  long  distance  phone
          service,  digital  cable TV,  high speed  Internet  access,  monitored
          security systems, utility sub-metering and various property management
          services.  WaKuL will provide these services at no capital cost to the
          Operating   Partnership,   and  has  entered  into   revenue   sharing
          relationships with the Trust.  (WaKuL is an affiliate of the Operating
          Partnership  by virtue of the  overlapping  management  and  ownership
          capacities  in the  Operating  Partnership,  the  Trust  and  WaKuL of
          Gregory K. McGrath, a founder of the Operating Partnership,  the Trust
          and WaKul.) The WaKuL  services are expected to provide the  Operating
          Partnership's  properties with a significant  marketing advantage over
          its competitors,  and to provide significant rental and other revenues
          that the properties otherwise would not have generated.

          Year 2000

          The computer  systems of the Operating  Partnership and the Trust have
          been tested for year 2000  problems and they believe that such systems
          are year 2000 compatible. The Operating Partnership and the Trust have
          not  experienced  any  material  year  2000  problems  so  far.  It is
          possible,   however,  that  the  computer  systems  of  the  Operating
          Partnership  and the Trust and  certain  computer  systems or software
          products of their  suppliers  could  experience year 2000 problems and
          that such problems could adversely  affect them. With respect to their
          own computer  systems,  the Operating  Partnership  and the Trust have
          upgraded  their  principal  operating  computer  software  to the most
          recent  available  revision  sold by their  software  supplier,  which
          software the supplier has represented to be year 2000  compliant.  The
          Operating  Partnership  and the Trust  believe  that such upgrade will
          solve  any year  2000  problems  that  could  affect  their  operating
          software.  The  failure to identify  and solve all year 2000  problems
          affecting their business could have an adverse effect on the business,
          financial  condition  and  results  of  operations  of  the  Operating
          Partnership and the Trust.


PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

          The Operating  Partnership is a claimant in the Georgia  Pacific class
          action lawsuit.  It is also a party to various legal actions resulting
          from its operating  activities.  These actions are routine  litigation
          and  administrative  proceedings  arising  in the  ordinary  course of
          business,  some of which are covered by liability insurance,  and none
          of  which  are  expected  to have a  material  adverse  effect  on the
          consolidated  financial  condition  or  results of  operations  of the
          Operating Partnership taken as a whole.


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<PAGE>

Item 2.   Changes in Securities and Use of Proceeds


          Not Applicable

Item 3.   Defaults upon Senior Securities

          None

Item 4.   Submission of Matters to a Vote of Security Holders

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a)

          Exhibit
          Number           Description
          ------           -----------

              3.1   Certificate   of  Limited   Partnership  of  the  Registrant
                    (incorporated herein by reference to Exhibit 3.1 to the Form
                    S-4 Registration  Statement of the Registrant filed with the
                    Securities and Exchange Commission on June 2, 1998).

              3.2   Agreement   of   Limited   Partnership   of  Baron   Capital
                    Properties,  L.P.  dated  as of May 15,  1998  (incorporated
                    herein by reference  to Exhibit  10.6 to Amendment  No. 3 to
                    the Form SB-2 Registration  Statement of Baron Capital Trust
                    filed with the Securities and Exchange Commission on May 15,
                    1998 (Registration No. 333-35063)).

          (b)  The  Registrant  did not file  any  Current  Reports  on Form 8-K
               during the quarter for which this Report is filed.


                                       13
<PAGE>

     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

May 24, 2001

                                      BARON CAPITAL PROPERTIES, L.P.

                                      By:  Baron Capital Trust, General Partner

                                      By:  /s/ Robert L. Astorino
                                           ------------------------------
                                           Robert L. Astorino
                                           President

                                      By:  /s/ Mark L. Wilson
                                           ------------------------------
                                           Mark L. Wilson
                                           Chief Financial Officer


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