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 June 30, 2002

|_|         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.)

               3570 U.S. Highway 98 North, Lakeland, Florida 33809
                    (Address of principal executive offices)

                                 (863) 853-2882
                           (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 3,683,556 units of
limited partnership interest ("Operating Partnership Units" or "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>
                                                                                June 30,        December 31,
                                                                                  2002              2001
                                                                                  ----              ----
                                                                               (Unaudited)
<S>                                                                           <C>               <C>
                                      ASSETS
Rental Apartments:
   Land                                                                       $  4,986,900      $  4,986,900
   Rental property held for sale                                                 3,171,564         3,171,564
   Depreciable property                                                         23,968,683        23,968,683
                                                                              ------------      ------------
                                                                                32,127,147        32,127,147
   Less accumulated depreciation                                                 3,702,458         3,228,396
                                                                              ------------      ------------
                                                                                28,424,689        28,898,751

Cash and Cash Equivalents                                                          973,486         1,426,375
Restricted Cash                                                                    598,809           330,279
Receivables from Affiliates                                                      6,564,275         6,430,940
Other Property and Equipment                                                        99,036           106,321
Other Assets                                                                       810,917           875,673
                                                                              ------------      ------------
                                                                              $ 37,471,212      $ 38,068,339
                                                                              ============      ============

                        LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
   Mortgages payable                                                          $ 19,896,301      $ 20,049,005
   Mortgages payable - rental property held for sale                             3,085,666         3,112,020
   Accounts payable and accrued liabilities                                        915,841           948,224
   Notes payable                                                                 1,982,159         1,852,136
   Payables to affiliates                                                        1,117,740         1,173,240
   Security deposits                                                               246,314           221,911
                                                                              ------------      ------------
         Total liabilities                                                      27,244,021        27,356,536
                                                                              ------------      ------------

Partners' Capital:
   General partner; issued and outstanding, 37,208 partnership units               (72,415)          (67,248)
   Limited partners; issued and outstanding, 3,683,556 partnership units,
     of which 378,873 units are subject to escrow restrictions                  10,299,606        10,779,051
                                                                              ------------      ------------
       Total partners' capital                                                  10,227,191        10,711,803
                                                                              ------------      ------------
                                                                              $ 37,471,212      $ 38,068,339
                                                                              ============      ============
</TABLE>

           See notes to consolidated condensed financial statements.


                                      F-1

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 Six Months Ended                 Three Months Ended
                                                                     June 30,                          June 30,
                                                               2002             2001             2002             2001
                                                               ----             ----             ----             ----
<S>                                                        <C>              <C>              <C>              <C>
Revenues:
   Property:
   Rental                                                  $ 2,720,915      $ 2,944,995      $ 1,358,445      $ 1,375,513
   Interest and other income                                   765,336          670,734          366,128          413,170
                                                           -----------      -----------      -----------      -----------
                                                             3,486,251        3,615,729        1,724,573        1,788,683
                                                           -----------      -----------      -----------      -----------

Real Estate Expenses:
   Depreciation                                                474,063          496,091          210,235          188,812
   Amortization of loan costs                                   46,817           39,086           23,408           20,882
   Interest                                                    971,267        1,015,302          507,160          469,937
   Repairs and maintenance                                     450,676          402,739          226,092          237,359
   Personnel                                                   373,712          426,997          194,869          218,790
   Property taxes                                              230,742          263,833          115,962          149,397
   Property insurance                                           78,569           65,555           39,284           35,400
   Utilities                                                   209,416          288,181          105,986          134,722
   Other                                                       171,344          126,510           71,662           97,062
                                                           -----------      -----------      -----------      -----------
                                                             3,006,606        3,124,294        1,494,658        1,552,361
                                                           -----------      -----------      -----------      -----------

Administrative Expenses:
   Personnel, including officer's compensation                 201,555          304,528           76,965          149,238
   Professional services                                       172,778           68,945          126,208            3,487
   Other                                                       527,665          245,910          284,891          139,938
                                                           -----------      -----------      -----------      -----------
                                                               901,998          619,383          488,064          292,663
                                                           -----------      -----------      -----------      -----------

Loss Before Other Expenses and Extraordinary Item             (422,353)        (127,948)        (258,149)         (56,341)
                                                           -----------      -----------      -----------      -----------

Other Expenses:
   Provision for loan losses                                    94,379               --          129,501               --
   Mortgage prepayment penalties                                    --          534,075               --               --
   Write-off of loan costs on refinanced loans                      --          148,230               --               --
   Loss on investment held for sale                                 --          210,854               --          210,854
                                                           -----------      -----------      -----------      -----------
                                                                94,379          893,159          129,501          210,854
                                                           -----------      -----------      -----------      -----------

Loss Before Extraordinary Item                                (516,732)      (1,021,107)        (387,650)        (267,195)
                                                           -----------      -----------      -----------      -----------

Extraordinary Items - Extinguishment of Debt:
   Affiliates                                                       --        1,132,009               --        1,132,009
   Former chief executive officer                                   --          111,500               --          111,500
                                                           -----------      -----------      -----------      -----------
                                                                    --        1,243,509               --        1,243,509
                                                           -----------      -----------      -----------      -----------

Net Income (Loss)                                          $  (516,732)     $   222,402      $  (387,650)     $   976,314
                                                           ===========      ===========      ===========      ===========

Income (loss) Per Partnership Unit- Basic and Diluted:
   Before Extraordinary Item                               $     (0.13)     $     (0.26)     $     (0.10)     $     (0.26)
   Extraordinary Item - Extinguishment of Debt                      --             0.32               --             0.32
                                                           -----------      -----------      -----------      -----------

Net Income (Loss) Per Partnership Unit                     $     (0.13)     $      0.06      $     (0.10)     $      0.26
                                                           ===========      ===========      ===========      ===========

Weighted Average Number of Units Outstanding                 4,060,512        3,828,714        4,021,242        3,827,414
                                                           ===========      ===========      ===========      ===========
</TABLE>

           See notes to consolidated condensed financial statements.


                                      F-2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                     Six Months Ending
                                                                                                          June 30,
                                                                                                  2002             2001
                                                                                                  ----             ----
<S>                                                                                            <C>              <C>
Cash Flows from Operating Activities:
   Net (loss) income                                                                           $  (516,732)     $   222,402
   Adjustments to reconcile net loss to net cash and
      cash equivalents provided by (used in) operating activities:
         Extinguishment of debt                                                                         --       (1,379,254)
         Depreciation                                                                              474,063          479,684
         Loss on sale of asset held for investment                                                      --          210,854
         Amortization of loan costs                                                                 46,817           39,086
         Provision for loan losses                                                                  94,379               --
         Write-off of loan costs on refinanced mortgages                                                --          148,230
         Changes in operating assets and liabilities:
            Increase in operating assets:
               Other assets                                                                       (209,775)         (89,584)
            Increase (decrease) in operating liabilities:
               Accounts payable and accrued liabilities                                               (263)        (480,526)
               Accrued interest on notes and affiliate payable                                      98,244               --
               Security deposits                                                                    24,403           (7,931)
                                                                                               -----------      -----------
                  Net cash and cash equivalents provided by (used in) operating activities          11,136         (857,039)
                                                                                               -----------      -----------

Cash Flows from Investing Activities:
   Proceeds from sale of investment held for sale, net                                                  --        3,424,146
   Additions to rental apartments                                                                       --          (72,195)
   Purchases of other property and equipment                                                         7,285           (4,700)
   (Increase) Decrease in restricted cash                                                         (268,529)        (192,053)
                                                                                               -----------      -----------
                  Net cash and cash equivalents (used in) provided by investing activities        (261,244)       3,155,198
                                                                                               -----------      -----------

Cash Flows from Financing Activities:
   Proceeds from mortgage refinancings                                                                  --        6,500,000
   Payments on mortgages payable                                                                  (179,060)      (7,173,805)
   Proceeds from (payments on) notes payable                                                        42,771         (507,472)
   Increase in loans payable to affiliates, net                                                    (66,492)        (871,950)
                                                                                               -----------      -----------
                  Net cash and cash equivalents used in financing activities                      (202,781)      (2,053,227)
                                                                                               -----------      -----------

Net (Decrease) Increase in Cash and Cash Equivalents                                              (452,889)         244,932

Cash and Cash Equivalents, Beginning                                                             1,426,375           20,823
                                                                                               -----------      -----------

Cash and Cash Equivalents, Ending                                                              $   973,486      $   265,755
                                                                                               ===========      ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                                   $   971,267      $ 1,128,241
                                                                                               ===========      ===========

Non-Cash Investing and Financing Activities:
   Units issued to settle debt                                                                 $    32,120      $        --
                                                                                               ===========      ===========
</TABLE>

           See notes to consolidated condensed financial statements.


                                      F-3
<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 June 30,
            2002, and the related unaudited consolidated condensed statements of
            operations for the three and six months ended June 30, 2002 and
            2001, and the unaudited consolidated condensed statements of cash
            flows for the six months ended June 30, 2002 and 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 June 30, 2002 and for the
            periods presented, have been made. The results of operations for the
            three and six months ended June 30, 2002 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 accounting
            principles generally accepted in the United States have been
            condensed or omitted. It is suggested that these consolidated
            financial statements be read in conjunction with the Partnership's
            financial statements and notes thereto included in its December 31,
            2001 Annual Report on Form 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.

            The accompanying consolidated financial statements include the
            accounts of the Partnership and 25 controlled limited partnerships
            that at June 30, 2002 had an indirect equity and/or debt interest in
            27 apartment communities.

            All significant intercompany transactions and balances have been
            eliminated in consolidation.

            Holders of units of limited partnership interest ("Units") (other
            than the Trust) have the right 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-4
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Organization (Continued)

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

NOTE 2. ADOPTION OF ACCOUNTING PRONOUNCEMENTS

            In August 2001, the FASB issued Statement No. 144, "Accounting for
            the Impairment or Disposal of Long-Lived Assets" (SFAS 144), which
            addresses financial accounting and reporting for the impairment or
            disposal of long-lived assets. SFAS 144 supersedes Statement No.
            121, "Accounting for the Impairment of Long-Lived Assets and for
            Long-Lived Assets to Be Disposed Of", and the accounting and
            reporting provisions of APB Opinion No. 30, "Reporting the Results
            of Operations - Reporting the Effects of Disposal of a Segment of a
            Business, and Extraordinary, Unusual and Infrequently Occurring
            Events and Transactions", for the disposal of a segment of a
            business. SFAS 144 retains the requirement in Opinion No. 30 to
            report separately discontinued operations and extends that reporting
            to a component of an entity that either has been disposed of or is
            classified as held for sale. The Partnership adopted the provisions
            of SFAS 144 in the first quarter ending March 31, 2002. The adoption
            of SFAS 144 did not have a material effect on the financial position
            or results of operations of the Partnership.

            In July 2001, the FASB issued SFAS No. 141, "Business Combinations",
            and SFAS No. 142, "Goodwill and Other Intangible Assets" which
            replace Accounting Principles Board Opinion Nos. 16, "Business
            Combinations" and 17, "Intangible Assets", respectively. SFAS No.
            141 requires that the purchase method of accounting be used for all
            business combinations initiated after June 30, 2001, and that the
            use of the pooling-of-interests method be prohibited. SFAS No. 142
            changes the accounting for goodwill from an amortization method to
            an impairment-only method. Amortization of goodwill, including
            goodwill recorded in past business combinations, will cease upon
            adoption of SFAS No. 142. The Partnership adopted SFAS 141 and 142
            on January 1, 2002. After December 31, 2001, goodwill can only be
            written down upon impairment discovered during annual tests for fair
            value, or discovered during tests taken when certain triggering
            events occur. The adoption of SFAS 141 and 142 did not have a
            material effect on the financial position or results of operations
            of the Partnership.

NOTE 3. MORTGAGE PAYABLE - RENTAL PROPERTY HELD FOR SALE

            In April 2002, the Partnership ceased funding one of the
            partnerships whose limited partnership units it acquired as part of
            the April 2000 Exchange Offering. The partnership owns the Stadium
            Club Apartments. Since that time, the partnership has been unable to
            generate sufficient cash flow to make the required mortgage payments
            and therefore the April, May, June and July payments are currently
            outstanding. The partnership is currently negotiating with the first
            mortgage lender, and also has a potential purchaser for the Stadium
            Club Apartments. The mortgage is non-recourse with regard to the
            Partnership and the Trust. Both the property's carrying value and
            related first mortgage loan balance at June 30, 2002 is $1,642,000
            and is included in "Rental property held for sale" and "Mortgages
            payable - rental property held for sale", respectively, in the
            accompanying consolidated condensed financial statements.


                                      F-5
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 4. COMMITMENTS AND CONTINGENCIES

      Contracts to Purchase Additional Properties

            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, at the Trust's option, two luxury residential apartment
            properties in the development stage upon the completion of
            construction. The three development companies were previously
            controlled by Gregory K. McGrath, a founder and the former Chief
            Executive Officer of the Trust and the Operating Partnership. In
            September 2001, Mr. McGrath assigned all of the outstanding
            partnership interests in the three partnerships to Sigma Pool
            Management, Inc., a Michigan corporation controlled by Jerome S.
            Rydell, a member of the Board of Trustees of the Trust. One of the
            residential apartment properties has been sold to a third party with
            the Trust's consent. The remaining residential property (the
            "Burgundy Hills Property"), located in Florence, Kentucky (part of
            the Cincinnati metropolitan area), is scheduled to have a total of
            396 units, comprised of one, two and three bedroom/one or two
            bathroom apartments. Due to events described below, the anticipated
            date of completion of construction of the Burgundy Hills Property,
            and whether it will ever be completed as planned, are uncertain.

            In connection with the transaction, the Trust obtained a right of
            first negotiation to purchase the Burgundy Hills Property from its
            owner, Burlington Residential, Ltd., upon completion and a right of
            first refusal to purchase the property on the same terms offered by
            any interested 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 even if it were interested in doing so and
            if construction were completed and it is uncertain whether the Trust
            will have adequate resources to complete the transaction upon
            completion of construction. In addition, as described below, because
            the owner of the first mortgage on the property has assumed control
            of the management of the Borrower and the development of the
            property, the exercisability of the Trust's rights is currently
            uncertain.

            In connection with the transaction, the Trust (along with Mr.
            McGrath) 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 June 30, 2002, approximately
            $6,478,000 of the first mortgage loan had been drawn down. The
            interest rate on the first mortgage loan is KeyBank's prime rate
            (currently 4.75%) 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 could require the
            Trust to buy out the bank's position on the entire amount of the
            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


                                      F-6
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 4. COMMITMENTS AND CONTINGENCIES

      Contract to Purchase Additional Properties (Continued)

            for at least 60 days while the parties attempted to reach an
            arrangement. The extension expired in November 2000 and, according
            to Mr. McGrath, has been extended on a month-to- month basis. The
            Borrower paid down the outstanding accrued interest and a portion of
            the principal and, subject to the rights of the owner of the first
            mortgage loan and the mezzanine loan described below, it intends to
            seek a new long-term construction facility with another
            institutional lender to replace the first mortgage loan and the
            mezzanine loan.

            In December 2000, an affiliate of BankOne acquired KeyBank's
            position in the Burgundy Hills first mortgage loan. The loan is
            subject to the same terms and conditions as that of the original
            KeyBank loan. Earlier, the BankOne affiliate had provided mezzanine
            financing (subordinated to the first mortgage loan) in the principal
            amount of $1,576,000 to the Borrower. That loan is secured by a
            security interest in partnership interests in the Borrower. When the
            Borrower defaulted on its interest payment obligations on the loan,
            the BankOne affiliate filed a legal action to levy on the security
            interest and was awarded control of all of the equity interests in
            the Borrower and rental payments from the Burgundy Hills property
            and took over day-to-day management of the property.

            The BankOne affiliate recently sold the first mortgage loan and
            mezzanine loan to Burgundy-Boone, LLC, an Illinois limited liability
            company, according to the latter's counsel. As a result,
            Burgundy-Boone, LLC has assumed control of management of the
            Borrower and of the development of the Burgundy Hills Property.
            According to its counsel, Burgundy-Boone, LLC and its construction
            partner, Wallick Management Company (a construction and property
            management firm in Central Ohio), intend to complete construction of
            the Burgundy Hills project and then sell it. They appear to have
            completed construction on the last building in the first phase of
            the development.

            The Trust, as guarantor of the first mortgage loan, currently has a
            contingent liability for its full outstanding amount. Due to the
            uncertainty as to the status of the first mortgage loan and
            mezzanine loan and as to the actions and intentions of
            Burgundy-Boone, LLC, and due to the Trust's inability to verify all
            information it has received from other parties, the Trust's exposure
            on the guaranty is currently uncertain.

            According to its principal, in December 2001, Century Construction
            Inc., the general contractor which performed construction services
            on the Burgundy Hills Property and had held a mechanic's lien on the
            property in the amount of approximately $1,300,000, settled its
            claims with Burgundy-Boone, LLC, acting on behalf of the Borrower.

      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.


                                      F-7
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 5. NET INCOME (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 income (loss) per unit equals net income (loss) divided by
            the weighted average units outstanding during the period. The
            computation of diluted net income (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, 2002 and 2001.

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

<TABLE>
<CAPTION>
                                                                                 Net
                                                      Net                       Income
                                                     Income        Weighted     (Loss)
                                                     (Loss)     Average Units  Per Unit
                                                     ------     -------------  --------
<S>                                                <C>            <C>           <C>
          For the three months ended June 30:
            2002                                   $(387,650)     4,021,242     $(0.10)
                                                   =========      =========     ======
            2001                                   $ 976,314      3,827,414     $ 0.26
                                                   =========      =========     ======

          For the six months ended June 30:
            2002                                   $(516,732)     4,060,512     $(0.13)
                                                   =========      =========     ======
            2001                                   $ 222,402      3,828,714     $ 0.06
                                                   =========      =========     ======
</TABLE>

NOTE 6. SETTLEMENT AGREEMENT

            In May 2002, the Trust and the Partnership entered into a settlement
            agreement with Gregory K. McGrath, a founder and former Chief
            Executive Officer of the Trust and the Partnership. Pursuant to the
            agreement, Mr. McGrath forfeited all 378,873 Partnership Units he
            received in connection with the formation of the Trust and the
            Partnership, in exchange for a limited release from liability in
            connection with the acquisition and operation of the Alexandria and
            Riverwalk properties and from certain other liabilities. As a result
            of the agreement, the number of Partnership Units subject to escrow
            restrictions was reduced by 378,873 Units and Mr. McGrath has no
            further interest in the Trust or the Partnership.


                                      F-8

<PAGE>

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

      The following discussion should be read in conjunction with the
      Consolidated Financial Statements of Baron Capital Properties, L.P. (the
      "Registrant", the "Operating Partnership" or the "Partnership") and 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 Operating
      Partnership's and the Trust'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 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 Operating Partnership'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 Operating
      Partnership does not undertake any obligation to update any
      forward-looking statement to reflect events or circumstances after the
      date of this Report. If the Operating Partnership does update one or more
      forward-looking statements, investors and others should not conclude that
      the Operating Partnership will make additional updates with respect
      thereto or with respect to other forward-looking statements.

      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 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.


                                       3
<PAGE>

      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 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 sale 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 June 30, 2002, the Trust owned 978,767 Operating Partnership Units,
      representing approximately 24% of the then outstanding Units. Such Units
      are comprised of the Units acquired by the Trust from the Operating
      Partnership with the net proceeds of the Cash Offering and the Units that
      holders of Units have elected to exchange into Common Shares in the manner
      described below. Since the Units held by the Trust comprise substantially
      all of its assets, the operating results of the Trust are primarily
      dependent upon the operating results of the Operating Partnership.

      The Operating Partnership has acquired all or substantially all the
      beneficial interests in 16 residential apartment properties, including the
      Heatherwood Apartments Phase I (67 studio, one bedroom and two bedroom
      units located in Kissimmee, Florida) in June 1998; Crystal Court
      Apartments Phase II (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 (described below).
      In the Exchange Offering, the Operating Partnership also acquired
      subordinated mortgage and other debt interests in 10 properties.

      In July 1998, the Operating Partnership also acquired a small minority
      limited partnership interest in 13 real estate limited partnerships then
      managed by affiliates of Gregory K. McGrath (a founder and former Chief
      Executive Officer of the Trust and the Operating Partnership), including
      certain of the Exchange Partnerships which participated in the Exchange
      Offering and are now controlled and managed by the Trust.

      During 1998 and 1999, the Operating Partnership also acquired a 40%
      limited partnership interest in Alexandria Development, L.P. (the
      "Alexandria Partnership"), a Delaware limited partnership which owns
      Alexandria Apartments, a 168-unit residential apartment property (the
      "Alexandria Property") under development in Alexandria, Kentucky. As of
      December 31, 2001, 112 of the 168 planned residential units (approximately
      67%) had been completed and were in the rent-up stage. Of the completed
      units, 72 units had been rented as of April 30, 2002, the last date for
      which the Operating Partnership has information. The aggregate purchase
      price of the Operating Partnership's interest was $1,285,000, and it
      received an option to acquire the remaining limited partnership interests
      at the same price per percentage interest


                                       4
<PAGE>

      (for an additional option exercise price of approximately $1,950,000). The
      purchase price was based on an independent appraisal of the property less
      all liabilities, and was approved by the Board of Trustees of the Trust.
      During 2000, the Operating Partnership purchased no additional units and
      the option expired in October 2000.

      An affiliate of Mr. McGrath previously controlled the Alexandria
      Partnership. It sold the 40% limited partnership interest in the
      Alexandria Partnership to the Operating Partnership. In September 2001,
      Mr. McGrath's affiliate assigned the remaining 60% limited partnership
      interest in the Alexandria Partnership to Sigma Pool Management, Inc. (a
      Michigan corporation controlled by Jerome S. Rydell, a member of the Board
      of Trustees of the Trust), which also became the managing general partner
      of the Alexandria Partnership.

      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 Mr. McGrath), 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. The telecommunication
      equipment installed on the property is not essential to the operation of
      the property.

      The Alexandria Property is subject to first mortgage construction
      financing with a principal balance as of December 31, 2001 of
      approximately $8,525,000. The first mortgage is held by Fifth Third Bank.
      The Alexandria Partnership defaulted on the first mortgage construction
      loan when it matured in December 2000, and the lender has exercised its
      right to accelerate payment of the loan. In December 2001, a Kentucky
      court appointed a receiver to manage the property. The construction
      contractor is also owed approximately $890,000 for construction costs,
      penalties and interest. Sigma Pool Management, Inc., acting as the
      managing general partner of the Alexandria Partnership, recently caused
      the partnership to file for bankruptcy protection. The lender, however,
      was successful in lifting the automatic stay in the bankruptcy proceeding.
      As a result, it is currently anticipated that the bankruptcy proceeding
      will be dismissed and that the lender will begin foreclosure proceedings
      on the property.

      In 2000, the Operating Partnership reduced to zero on its records the
      value of its investment in the Alexandria Partnership due to the defaults
      on indebtedness, recurring losses incurred by the Alexandria Property, a
      partners' deficiency, and an updated appraisal that valued the property at
      an amount less than the total liabilities owed.

      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, at the
      Trust's option, two luxury


                                       5
<PAGE>

      residential apartment properties in the development stage upon the
      completion of construction. The three development companies were
      previously controlled by Mr. McGrath. In September 2001, Mr. McGrath
      assigned all of the outstanding partnership interests in the three
      partnerships to Sigma Pool Management, Inc. One of the residential
      apartment properties has been sold to a third party with the Trust's
      consent. The remaining residential property (the "Burgundy Hills
      Property"), located in Florence, Kentucky (in the Cincinnati metropolitan
      area), is scheduled to have a total of 396 units, comprised of one, two
      and three bedroom/one or two bathroom apartments. Due to events described
      below, the anticipated date of completion of construction of the Burgundy
      Hills Property, and whether it will ever be completed as planned, are
      uncertain.

      In connection with the transaction, the Trust obtained a right of first
      negotiation to purchase the Burgundy Hills Property from its owner,
      Burlington Residential, Ltd., upon completion and a right of first refusal
      to purchase the property on the same terms offered by any interested 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 even if it were interested
      in doing so and if construction were completed and it is uncertain whether
      the Trust will have adequate resources to complete the transaction upon
      completion of construction. In addition, as described below, because the
      owner of the first mortgage on the property has assumed control of the
      management of the Borrower and the development of the property, the
      exercisability of the Trust's purchase rights is currently uncertain.

      In connection with the transaction, the Trust (along with Mr. McGrath)
      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 June 30, 2002, approximately $6,478,000 of the first mortgage loan
      had been drawn down. The interest rate on the first mortgage loan is
      KeyBank's prime rate (currently 4.75%) 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 could
      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 and, according to Mr. McGrath, has been extended on a
      month-to-month basis. The Borrower paid down the outstanding accrued
      interest and a portion of the principal


                                       6
<PAGE>

      and, subject to the rights of the owner of the first mortgage loan and the
      mezzanine loan described below, intends to seek a new long-term
      construction facility with another institutional lender to replace the
      first mortgage loan and the mezzanine loan.

      In December 2000, an affiliate of BankOne acquired KeyBank's position in
      the Burgundy Hills first mortgage loan. The loan is subject to the same
      terms and conditions as that of the original KeyBank loan. Earlier, the
      BankOne affiliate had provided mezzanine financing (subordinated to the
      first mortgage loan) in the principal amount of $1,576,000 to the
      Borrower. That loan is secured by a security interest in all partnership
      interests in the Borrower. When the Borrower defaulted on its interest
      payment obligations on the loan, the BankOne affiliate filed a legal
      action to levy on the security interest and was awarded control of all of
      the equity interests in the Borrower and rental payments from the Burgundy
      Hills Property and took over day-to-day management of the property.

      The BankOne affiliate recently sold the first mortgage loan and mezzanine
      loan to Burgundy-Boone, LLC, an Illinois limited liability company,
      according to the latter's counsel. As a result, Burgundy-Boone, LLC has
      assumed control of management of the Borrower and of the development of
      the Burgundy Hills Property. According to its counsel, Burgundy-Boone, LLC
      and its construction partner, Wallick Management Company (a construction
      and property management firm in Central Ohio), intend to complete
      construction of the Burgundy Hills project and then sell it. They appear
      to have completed construction on the last building in the first phase of
      the development.

      The Trust, as guarantor of the first mortgage loan, currently has a
      contingent liability for its full outstanding amount. Due to the
      uncertainty as to the status of the first mortgage loan and mezzanine loan
      and as to the actions and intentions of Burgundy-Boone, LLC, and due to
      the Trust's inability to verify all information it has received from other
      parties, the Trust's exposure on the guaranty is currently uncertain.

      According to its principal, in December 2001 Century Construction Inc.,
      the general contractor which performed construction services on the
      Burgundy Hills Property and had held a mechanic's lien on the property in
      the amount of approximately $1,300,000, settled its claims with
      Burgundy-Boone, LLC, acting on behalf 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 and one condominium apartment property. In the
      Exchange Offering, the Operating Partnership issued 2,449,492 registered
      Operating 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"). The Exchange Partnerships directly or indirectly owned
      equity and/or debt interests in one or more of 25 residential apartment
      properties and


                                       7
<PAGE>

      one condominium apartment property (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 Partnerships were owned by the Operating Partnership; Mr.
      McGrath, for nominal consideration, assigned to the Trust all of the
      equity stock in 23 of the corporate general partners of the Exchange
      Partnerships ("Corporate General Partners"); the Corporate General Partner
      of each of the Exchange Partnerships assigned to the Operating Partnership
      all of its economic 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 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 2001, the Operating Partnership sold its equity interest in one
      of the Exchange Properties, Glen Lake Apartments, a 144-unit residential
      apartment property located in St. Petersburg, Florida. Management of the
      Trust determined to sell the property based on its lack of performance and
      its need for substantial and frequent cash infusions.

      In April 2002, the Operating Partnership ceased funding one of the
      Exchange Partnerships whose limited partnership units it acquired as part
      of the Exchange Offering. The Exchange Partnership owns Stadium Club
      Apartments. Since that time, the Exchange Partnership has been unable to
      generate sufficient cash flow to make the required mortgage payments and
      therefore the April, May, June and July 2002 payments are currently
      outstanding. The Exchange Partnership is currently negotiating with the
      first mortgage lender, and also has a potential purchaser for the Stadium
      Club Apartments. The mortgage is non-recourse with regard to the Operating
      Partnership and the Trust. Both the property's carrying value and related
      first mortgage loan balance at June 30, 2002 is $1,642,000 and is included
      in "Rental property held for sale" and "Mortgages payable - rental
      property held for sale", respectively, in the accompanying consolidated
      condensed financial statements.


                                       8
<PAGE>

      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 apartment
      units (comprised of studio, one, two, three and four-bedroom units).
      Certain of the Exchange Partnerships currently controlled by the Operating
      Partnership own direct or indirect subordinated mortgage and other debt
      interests in 10 Exchange Properties, which consist of an aggregate of 590
      existing residential apartment units (studio and one and two bedroom
      units) and 152 condominium apartment units (two and three bedroom units)
      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.

      Operations for the Six Months Ended June 30, 2002 Compared to the Six
      Months Ended June 30, 2001

      Revenues decreased by $129,478 from $3,615,729 for the six months ended
      June 30, 2001 to $3,486,251 for the six months ended June 30, 2002. The
      decrease in revenues is the result of the general downturn in the U.S.
      economy, which has translated into a softer apartment rental market, the
      sale of the Glen Lakes property in April 2001 and a decrease in interest
      income caused by a reduction of cash available for investment and interest
      rates. Real Estate Expenses for the properties owned by the Partnership
      decreased from $3,124,294 for the six months ended June 30, 2001 to
      $3,006,606 for the six months ended June 30, 2002. The reduction in Real
      Estate Expenses was principally due to a reduction in interest expense
      resulting from the refinancing activity in 2001 and a reduction in
      personnel expenses in 2002. Administrative Expenses increased by $282,615
      from $619,383 for the six months ended June 30, 2001 to $901,998 for the
      six months ended June 30, 2002, primarily due to expenses associated with
      the settlement of a property lawsuit, expenses relating to the relocation
      of the corporate offices, and an increase in directors and officers
      insurance. Other Expenses for the six months ended June 30, 2002 was
      $94,379. This expense is the result of an adjustment in the provision for
      loan losses on mortgage notes receivable. The Partnership's Net Loss for
      the six months ended June 30, 2002 was $516,732 compared to Net Income of
      $222,402 for the six months ended June 30, 2001.

      Operations for the Three Months Ended June 30, 2002 Compared to the Three
      Months Ended June 30, 2001

      Revenues decreased by $64,110 from $1,788,683 for the three months ended
      June 30, 2001 to $1,724,573 for the three months ended June 30, 2002. The
      decrease in revenues is the result of the general downturn in the U.S.
      economy, which has translated into a softer apartment rental market, the
      sale of the Glen Lakes property in April 2001 and a decrease in interest
      income caused by a reduction of cash available for investment and interest
      rates. Real Estate Expenses for the properties owned by the Partnership
      decreased from $1,552,361 for the three months ended June 30, 2001 to
      $1,494,658 for the three months ended June 30, 2002. The reduction in Real
      Estate


                                       9
<PAGE>

      Expenses was principally due to decreases in various operating expenses
      which were partially offset by adjustments to depreciation expense.
      Administrative Expenses increased by $195,401 from $292,663 for the three
      months ended June 30, 2001 to $488,064 for the six months ended June 30,
      2002, primarily due to expenses associated with the settlement of a
      property lawsuit, expenses relating to the relocation of the corporate
      offices, and an increase in directors and officers insurance. Other
      Expenses for the three months ended June 30, 2002 was $129,501. This
      expense is the result of an adjustment in the provision for loan losses on
      mortgage notes receivable. The Partnership's Net Loss for the three months
      ended June 30, 2002 was $387,650 compared to Net Income of $976,314 for
      the three months ended June 30, 2001.

      Liquidity and Capital Resources

      Net Cash Used in Operating Activities decreased by $868,175 from $857,039
      cash used in the six months ended June 30, 2001 to $11,136 cash provided
      in the six months ended June 30, 2002. The decrease in Net Cash Used in
      Operating Activities was principally due to the recognition of
      extinguishment of debt associated with the Glen Lakes sale in 2001. Net
      Cash Used in Investing Activities decreased $3,416,442 from $3,155,198
      cash provided for the six months ended June 30, 2001 to $261,244 cash used
      for the six months ended June 30, 2002. The decrease was principally due
      to the recognition of cash proceeds associated with the sale of Glen Lakes
      in 2001. Net Cash Used in Financing Activities decreased by $1,850,446
      from $2,053,227 cash used in the six months ended June 30, 2001 to
      $202,781 cash used in the six months ended June 30, 2002. The cash
      proceeds of the refinancings in the first half of 2001 provided
      substantial cash from Financing Activities, allowing for the repayment of
      significant mortgage obligations and notes payable. There was no such
      activity in the first half of 2002, resulting in the decrease in cash
      used.

      During the first six months of 2002, the Partnership generated Funds From
      Operations (Funds from Operations is a measure of profitability in the
      REIT industry, which is measured as net income less depreciation,
      amortization, and other non-operating expenses and/or income) of
      approximately $100,000 versus Funds From Operations of approximately
      $760,000 during the first six months of 2001. The 2001 Funds From
      Operations were positively impacted by the sale of the Glen Lakes
      property. There were no such sales in 2002.

      In September 2000, following a change in executive leadership of the
      Operating Partnership and the Trust (collectively, the "Company"),
      management offered a plan to reduce negative cash flow and increase
      profitability. That plan encompassed six strategies and was successfully
      executed over the next nine months. In implementing these strategies,
      management undertook the following actions:

      o     In many locations, the market for apartments has started to include
            re-billing of property water costs to tenants. The Operating
            Partnership has initiated billing of


                                       10
<PAGE>

            tenants for their water used at several locations and intends to
            continue implementation of the strategy at other properties as the
            markets permit.

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

      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 properties, given their excellent performance. Four
            properties were refinanced in the first three quarters of 2001,
            generating sufficient cash for the Operating Partnership to pay
            accounts payable, including those owed to professionals for services
            performed in connection with the Exchange Offering, and still have
            an amount in reserve. All four of these properties were refinanced
            at interest rates lower than the prior interest rate on the loans.
            The Operating Partnership received cash proceeds of approximately
            $1,875,000 as a result of refinancing these four properties.

      In December 2001, management proposed a 12-month operating plan for the
      year 2002 which, when implemented, would optimize cash from operations,
      reposition certain assets in the inventory of the Company, consolidate the
      Company's operations in central Florida, and reorganize corporate staffing
      along a more efficient structural line. That plan was adopted by the Board
      of Trustees of the Trust and has been effectively and successfully carried
      out during the first two quarters of 2002. Financial targets identified in
      the plan have been achieved through the second quarter of 2002. Management
      believes that these actions presently being taken by the Operating
      Partnership and the Trust provide the long-term opportunity to improve
      their profitability and liquidity.

      The Trust and the Operating Partnership intend to use their securities
      (including Common Shares and Units), 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 from 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


                                       11
<PAGE>

      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 initially benefited 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. Expense levels also influence operating results, and rental
      expenses (other than real estate taxes) for residential apartment
      properties have generally held at approximately the rate of inflation for
      the past three years. 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 and the Trust believe that known trends, events
      or uncertainties which will or are reasonably likely to affect their
      short-term and long-term liquidity and current and future prospects
      include the performance of the economy and the building of new apartment
      communities. Although the Operating Partnership and the Trust cannot
      reliably predict the effects of these trends, events and uncertainties on
      their property investments as a whole, some of the reasonably anticipated
      effects might include downward pressure on rental rates and occupancy
      levels.

      Three recent developments could have a material impact on the performance
      of the Trust and the Operating Partnership. First is the general downturn
      in the U.S. economy due in large part to the collapse of the technological
      sector. This translated into a significantly softer 2001 summer apartment
      rental market, particularly in Florida. Occupancies and collections have
      been negatively impacted for the last 12 months, and management does not
      anticipate any improvement in the near term. The second development is the
      increasing lack of confidence of investors in the public securities
      markets due to recent well-publicized events at Enron Corp., Arthur
      Andersen, Adelphia Communications, Global Crossing, Tyco International,
      ltd., and WorldCom Inc. This development will hamper, for the foreseeable
      future, companies' access to the public markets and financial institutions
      for capital. The third development arises out of the horrible events of
      September 11, 2001. While management believes it is still too early to
      understand how deeply this event will impact the confidence of Americans
      and their way of life, it is likely to result in a more cash conscientious
      consumer, which could result in downward pressure on rental rates.

      Consistent with the philosophy of the new Chief Executive Officer of the
      Trust and the Operating Partnership, a series of informal communications
      to registered Shareholders of the Trust and Unit holders of the Operating
      Partnership was begun in late 2000. The favorable response generated by
      these communications has resulted in management organizing a regular
      quarterly informal communication beginning in the second quarter of 2002.


                                       12
<PAGE>

      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 controlled by the
      Operating Partnership 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 Trust
      believes that it will be necessary to raise additional capital during the
      next 12 months to make acquisitions necessary to increase the Trust's size
      and cash flow, and position it for possible public listing.

      As part of the ongoing operations of the Trust and Operating Partnership,
      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 materially
      negatively impacts their operating results are being evaluated for
      possible sale. Certain properties have already been listed for sale. The
      Trust 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 of its Common Shares on a recognized securities
      exchange. Additional size is desirable to give the Operating Partnership
      and the Trust the operating margin necessary to support the professional
      management team necessary for ensuring an optimum level of performance.

      The Trust and the Operating Partnership expect no material change in the
      number of employees over the next 12 months now that the consolidation of
      their corporate offices in Florida has been accomplished.

      In February 2002, the Board of Trustees of the Trust received the
      preliminary findings of a report prepared by an independent auditing firm
      in which the firm opined that certain transactions of the Trust and the
      Operating Partnership (including the Alexandria and Riverwalk property
      investments) entered into by prior management involved improper conduct.
      The Board has used the preliminary findings for discussions with former
      management of the Trust concerning the transactions and to investigate the
      rights and obligations of the Trust and the Operating Partnership in
      connection therewith. In May 2002, the Trust and the Operating Partnership
      entered into a settlement agreement with Gregory K. McGrath, a founder and
      former Chief Executive Officer of the Trust and the Operating Partnership.
      Pursuant to the agreement, Mr. McGrath forfeited all 378,873 Operating
      Partnership Units he received in connection with the formation of the
      Trust and the Operating Partnership, in exchange for a limited release
      from liability in connection with the acquisition and operation of the
      Alexandria and Riverwalk properties and


                                       13
<PAGE>

      from certain other liabilities. As a result of the agreement, Mr. McGrath
      has no further interest in the Trust or the Operating Partnership.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

      During the second quarter of 2002, the Trust obtained a judgment against
      several companies affiliated with Gregory K. McGrath, one of the founders
      of the Trust and the Operating Partnership and their respective former
      Chief Executive Officer. The judgment was for approximately $50,000 and
      has been placed with a collections attorney for satisfaction.

      The Operating 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 Operating Partnership taken as a
      whole.

Item 2. Changes in Securities and Use of Proceeds

      Not Applicable.

Item 3. Defaults upon Senior Securities

      There were no defaults upon senior securities of the Operating Partnership
      in the second quarter of 2002.

      In April 2002, the Operating Partnership ceased funding one of the
      Exchange Partnerships whose limited partnership units it acquired as part
      of the Exchange Offering. The Exchange Partnership owns Stadium Club
      Apartments. Since that time, the Exchange Partnership has been unable to
      generate sufficient cash flow to make the required mortgage payments and
      therefore the April, May, June and July 2002 payments are currently
      outstanding. The Exchange Partnership is currently negotiating with the
      first mortgage lender, and also has a potential purchaser for the Stadium
      Club Apartments. The mortgage is non-recourse with regard to the Operating
      Partnership and the Trust. Both the property's carrying value and related
      first mortgage loan balance at June 30, 2002 is $1,642,000 and is included
      in "Rental property held for sale" and "Mortgages payable - rental
      property held for sale", respectively, in the accompanying consolidated
      condensed financial statements.

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

      None.


                                       14
<PAGE>

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 second quarter of 2002.

      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.

August 2, 2002

                                        BARON CAPITAL PROPERTIES, L.P.

                                        By: Baron Capital Trust, General Partner

                                        By: /s/ Robert L. Astorino
                                            ------------------------------------
                                            Robert L. Astorino
                                            Chief Executive Officer


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


                                       15