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

                                  Form 10-QSB/A

(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, 2000

[ ]  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.)

                    7800 Cooper Road, Cincinnati, Ohio 45242
                    (Address of principal executive offices)

                                 (513) 936-3408
                           (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 3,822,683 units of
limited partnership interest ("Operating Partnership Units" or "Units").

<PAGE>

                                EXPLANATORY NOTE

As a result of certain adjustments in connection with the consolidated financial
statements for the year ended December 31, 2000 of Baron Capital Properties,
L.P. (the "Registrant," the "Partnership" or the "Operating Partnership"),
management determined to restate its Forms 10-QSB and 10-QSB/A for the quarter
ended June 30, 2000 as previously filed on December 22, 2000 and March 1, 2001,
respectively. The amounts contained in the financial statements included in this
Form 10-QSB/A reflect these changes. See NOTE 1 to the consolidated financial
statements under "Basis of Presentation" for a more detailed explanation as to
the restatement. Certain subsequent events are also reflected in this Form
10-QSB/A.


                         PART I - FINANCIAL INFORMATION


Item 1.       Financial Statements

              See following pages.


                                       2
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                       PAGE
                                                                       ----

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

   Balance Sheets                                                       F-2

   Statements of Operations                                             F-3

   Statement of Partners' Capital                                       F-4

   Statements of Cash Flows                                             F-5

   Notes to Financial Statements                                     F-6 -- F-17


                                      F-1
<PAGE>

                                  BARON CAPITAL PROPERTIES, L.P.

                              CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                    June 30,       December 31,
                                                                                      2000             1999
                                                                                   ------------    -----------
                                                                                   (Unaudited)
                                                                                    RESTATED
                                                                                   ------------
                                              ASSETS
<S>                                                                                <C>             <C>
Rental Apartments:
  Land                                                                             $  6,632,871    $ 1,178,693
  Depreciable property                                                               29,536,314      6,189,095
                                                                                   ------------    -----------
                                                                                     36,169,185      7,367,788
  Less accumulated depreciation                                                      (1,794,404)    (1,453,177)
                                                                                   ------------    -----------
                                                                                     34,374,781      5,914,611

Investment In Partnerships                                                              510,696        930,970

Cash and Cash Equivalents                                                               124,166         27,552
Restricted Cash                                                                         762,969         52,089
Reimbursed Expenses Receivable, Affiliates                                            1,338,564         36,997
Other Receivables                                                                       113,797          3,724
Due from Baron Capital Trust                                                            305,997        296,010
Advances to Affiliates                                                                6,342,520          5,141
Other Property and Equipment                                                            281,220        134,981
Other Assets                                                                            892,820        188,692
                                                                                   ------------    -----------
                                                                                   $ 45,047,529    $ 7,590,767
                                                                                   ============    ===========


                                LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
  Mortgages payable                                                                $ 25,203,107    $ 4,278,117
  Accounts payable and accrued liabilities                                            2,291,097      1,078,353
  Note payable                                                                          190,000        100,000
  Notes payable, affiliates                                                           3,778,779         50,000
  Capital lease obligation                                                               40,775         42,369
  Security deposits                                                                     227,066         40,308
                                                                                   ------------    -----------
      Total liabilities                                                              31,730,824      5,589,147
                                                                                   ------------    -----------

Partners' Capital:
  General Partner; issued and outstanding, 39,488 and 18,962 as of
       June 30, 2000 and December 31, 1999 respectively,
       partnership units                                                                (40,444)       (33,362)
  Limited Partners; issued and outstanding, 3,909,347 and 1,877,246 as
       of June 30, 2000 and December 31, 1999 respectively,
       partnership units of which 757,746 are subject to escrow restrictions         13,357,149      2,034,982
                                                                                   ------------    -----------
       Total partners' capital                                                       13,316,705      2,001,620
                                                                                   ------------    -----------
                                                                                   $ 45,047,529    $ 7,590,767
                                                                                   ============    ===========
</TABLE>

            See notes to consolidated condensed financial statements.


                                      F-2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                            Six            Six           Three          Three
                                                           Months         Months        Months          Months
                                                           Ended          Ended          Ended          Ended
                                                          June 30,       June 30,      June 30,        June 30,
                                                            2000           1999          2000           1999
                                                        -----------    -----------    -----------    -----------
                                                          RESTATED                     RESTATED
<S>                                                     <C>            <C>            <C>            <C>
Revenue:
  Property:
     Rental                                             $ 1,744,759    $   512,133    $ 1,477,091    $   254,783
     Equity in net loss of unconsolidated partnership       (78,994)       (29,093)       (41,154)       (25,667)
  Interest and other income                                 368,134         79,140        342,939         38,104
                                                        -----------    -----------    -----------    -----------
                                                          2,033,899        562,180      1,778,876        267,220
                                                        -----------    -----------    -----------    -----------

Real Estate Expenses:
  Depreciation                                              341,227         72,907        306,264         36,454
  Amortization                                               57,981           --           52,119           --
  Interest                                                  555,515        144,491        470,056         71,305
  Repairs and maintenance                                   280,564         37,726        107,251         20,250
  Personnel                                                 265,376         57,471        262,266         28,431
  Property Taxes                                            147,818         41,276        127,914         20,680
  Property Insurance                                         38,030         10,718         32,670          3,512
  Utilities                                                 144,154         29,601        130,780         18,050
  Other                                                      61,901        131,570        204,076        122,356
                                                        -----------    -----------    -----------    -----------
                                                          1,892,566        525,760      1,693,396        321,038
                                                        -----------    -----------    -----------    -----------

Administrative Expenses:
  Personnel, including officers' compensation               535,461        369,372        375,843         96,711
  Professional services                                     249,539        244,663         88,419         33,169
  Other                                                     173,025         68,068        213,024         25,120
                                                        -----------    -----------    -----------    -----------
                                                            958,025        682,103        677,286        155,000
                                                        -----------    -----------    -----------    -----------

     Total expenses                                       2,850,591      1,207,863      2,370,682        476,038
                                                        -----------    -----------    -----------    -----------


Net Loss                                                $  (816,692)   $  (645,683)   $  (591,806)   $  (208,818)
                                                        ===========    ===========    ===========    ===========

Net Loss per Unit Basic and Diluted                     $     (0.29)   $     (0.36)   $     (0.16)   $     (0.11)
                                                        ===========    ===========    ===========    ===========

Weighted Average Number of Units Outstanding              2,841,809      1,787,878      3,789,877      1,836,939
                                                        ===========    ===========    ===========    ===========
</TABLE>

            See notes to consolidated condensed financial statements.


                                      F-3
<PAGE>

                         BARON CAPITAL PROPERTIES, L. P.

             CONSOLIDATED CONDENSED STATEMENTS OF PARTNERS' CAPITAL
                                    RESTATED

<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

  Capital Contributions - Trust                     273         --         26,990        230,118         230,118
  Exchange offering contributions                24,742         --      2,449,525     11,793,159      11,793,159
  Initial limited partners reduction             (4,489)                 (444,414)
  Credit for estimated fair value of services
     performed by officer                          --          1,085         --          107,415         108,500
  Net loss                                         --         (8,167)        --         (808,525)       (816,692)
                                                -------    ---------    ---------   ------------    ------------

Partners' Capital, June 30, 2000 (Unaudited)     39,488    $ (32,277)   3,909,347   $ 14,165,674    $ 14,133,397
                                                =======    =========    =========   ============    ============
</TABLE>


            See notes to consolidated condensed financial statements.


                                      F-4
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                    UNAUDITED
<TABLE>
<CAPTION>
                                                                Six Months Ended
                                                              June 30,     June 30,
                                                               2000         1999
                                                            ---------    -----------
                                                            RESTATED
                                                            ---------
<S>                                                         <C>          <C>
Cash Flows from Operating Activities:
   Net loss                                                 $(816,692)   $  (645,683)
   Adjustments to reconcile net loss to net cash
           used in operating activities:
         Provision for officer's compensation                 108,500           --
         Depreciation                                         341,227         94,721
         Amortization of loan costs                            57,981
         Equity in net loss of unconsolidated partnership      78,994         29,093
         (Increase) Decrease in operating assets:
            Other receivables                                  (2,885)        35,801
            Reimbursed administrative expenses receivable        --           38,476
            Other assets                                      (70,543)       (51,102)
         Increase (Decrease) in operating liabilities:
            Accounts payable and accrued liabilities          118,826        236,672
            Security deposits                                   3,512           (840)
                                                            ---------    -----------
               Net cash used in operating activities         (181,080)      (262,862)
                                                            ---------    -----------

Cash Flows from Investing Activities:
   Additions to rental apartments                             (78,205)          --
   Investment in partnerships                                    --         (885,000)
   Cash distributions from partnerships                         6,082         27,000
   Purchases of other property and equipment                   (4,979)        (1,514)
   Increase in Restricted Cash                                (48,610)      (113,166)
                                                            ---------    -----------
               Net cash used in investing activities         (125,712)      (972,680)
                                                            ---------    -----------

Cash Flows from Financing Activities:
   Partners' capital contributions                            230,118      1,074,000
   Distributions paid                                            --          (65,000)
   Proceeds from mortgage financing                              --          273,499
   Proceeds from note payable                                  90,000           --
   Payments on notes payable                                                (275,000)
   Payments on notes payable affiliates                       (90,644)          --
   Payments on mortgages payable                              (99,242)       (22,141)
   Payments on capital lease obligation                        (1,594)          --
   Increase in advances to/from affiliates, net               274,768        249,914
   Other                                                         --           20,000
                                                            ---------    -----------
               Net cash provided by financing activities      403,406      1,255,272
                                                            ---------    -----------

Net Increase in Cash and Cash Equivalents                      96,614         19,730

Cash and Cash Equivalents, Beginning                           27,552         77,724
                                                            ---------    -----------

Cash and Cash Equivalents, Ending                           $ 124,166    $    97,454
                                                            =========    ===========

Supplemental Disclosure of Cash Flow Information:
    Cash paid for mortgage and other interest               $ 555,515    $   144,491
                                                            =========    ===========
</TABLE>


            See notes to consolidated condensed financial statements.


                                      F-5
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation

         The consolidated balance sheet as of June 30, 2000, the consolidated
         statements of operations for the six and three months ended June 30,
         2000 and 1999, the statement of partners' capital for the six months
         ended June 30, 2000, and the consolidated statements of cash flows for
         the six months ended June 30, 2000 and 1999 have been prepared by the
         management of Baron Capital Properties, L.P. (the "Operating
         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, 2000 and for the period presented, have been
         made. The results of operations for the three and six months ended June
         30, 2000 are not necessarily indicative of the operating results for
         the full year.

         As a result of certain adjustments in connection with the Operating
         Partnership's consolidated financial statements for the year ended
         December 31, 2000, management determined to restate its Forms 10-QSB
         and 10-QSB/A for the quarter ended June 30, 2000 as previously filed on
         December 22, 2000 and March 1, 2001, respectively. The Operating
         Partnership included in its original June 30, 2000 financial statements
         a provision for property impairment of $8,356,638, which was a result
         of writing off the excess of the recorded value of the Exchange
         Partnerships acquired in the Exchange Offering over the estimated
         current value of the Exchange Partnerships. The provision for property
         impairment was a result of calculating the recorded value at the date
         of the exchange (April 1, 2000) with incomplete information. As a
         result, adjustments were made to the recorded value based on
         information not previously available to the Operating Partnership. Had
         the Operating Partnership been aware of this information at the time of
         filing the June 30, 2000 Forms 10-QSB and 10-QSB/A, the provision for
         property impairment of $8,356,638 would not have been recorded. Instead
         an adjustment of $11,005,924 would have been recorded to the
         consolidated balance sheet as an adjustment to the recorded amounts of
         land, depreciable property, advances to affiliates and partners'
         capital to reflect the estimated fair value of such assets. The amounts
         contained in the financial statements included in this Form 10-QSB/A
         reflect those changes. Certain subsequent events are also reflected
         herein.

         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 Partnership's financial statements and notes thereto included
         in the Partnership's December 31, 1999 Form 10-KSB.

         Organization

         Baron Capital Properties, L.P. (the "Partnership" or the "Operating
         Partnership"), a Delaware limited partnership, is the operating
         partnership of Baron Capital Trust (the "Trust"). Together with the
         Trust, the Operating 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 Operating Partnership, with the Trust, intends
         to acquire, own, operate, manage


                                      F-6
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Organization (Continued)

         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 Trust, as General Partner of the Partnership, is authorized to
         cause the Partnership to issue additional units of limited partnership
         interests ("Units") 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 unit holders into an
         equivalent number of common shares of beneficial interest ("Common
         Shares") in 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.

         As described below, in exchange for a cash capital contribution in
         1998, each of the founders, Gregory K. McGrath and Robert S. Geiger
         (the "Original Investors"), has been issued 378,873 Units, all of which
         have been deposited into an institutional escrow account for six to
         nine years, subject to earlier release under certain conditions.

         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

         The accompanying consolidated financial statements have been prepared
         in conformity with generally accepted accounting principles which
         assume that the Partnership will continue on a going concern basis,
         including the realization of assets and liquidation of liabilities in
         the ordinary course of business. For the six months ended June 30, 2000
         and the year ended December 31, 1999 the Partnership incurred net
         losses of $816,692 and $2,641,250 and negative cash flows from
         operations of $181,080 and $555,711. The auditors' report for the year
         ended December 31, 1999 was qualified to express substantial doubt as
         to the Partnership's ability to continue as a going concern.

         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 consolidated condensed financial
         statements for the first six months ended June 30, 2001 included in the
         Operating Partnership's quarterly report on Form 10-QSB for the
         three-month period ended June 30, 2001, the Operating Partnership
         generated Funds From Operations (Funds from Operations is a measure of
         profitability in the REIT industry measuring net income less
         depreciation, amortization, and other non-operating expenses and/or
         income) of approximately $407,000 versus negative Funds From Operations
         of approximately $417,000 for the six months ended June 30, 2000.


                                      F-7
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.  LIQUIDITY AND PROFITABILITY CONSIDERATIONS (Continued)

         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 sufficient 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 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 it 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. 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. The cash was used to reduce accounts payable
            owed by the Operating Partnership to Exchange Offering professionals
            for their services in connection with the offering, advance funds
            for a second round of refinancings, and establish an escrow account
            for expected major repairs to its Riverwalk property. All three
            refinanced properties were refinanced at interest rates lower than
            the interest rate on their old loan. Subsequent to June 30, 2001,
            the Operating Partnership refinanced three additional properties,
            which resulted in cash proceeds of approximately $1,408,000.

         o  In April 2001, 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.
            Management of the Operating Partnership determined to sell the
            property based on its lack of performance and its need for
            substantial and frequent cash infusions. The sale price was
            approximately $3,900,000 and resulted in a loss of $210,854.
            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 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.


                                      F-8
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.  LIQUIDITY AND PROFITABILITY CONSIDERATIONS (Continued)

         As a result of the re-financing of the three properties in the second
         quarter of 2001 as discussed above, the Operating Partnership had
         approximately $265,000 in available cash.

         Management believes that the actions presently being taken by the
         Operating Partnership, including the cash realized upon refinancing the
         three additional properties as described above and its cash on hand,
         provide the opportunity for the Operating Partnership to improve
         liquidity and profitability.

NOTE 3.  RECENT ACCOUNTING PRONOUNCEMENTS

         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.

         In June 1998, the FASB issued SFAS 133, Accounting for Derivative
         Instruments and Hedging Activities, which has been deferred by SFAS
         137, Accounting for Derivative Instruments and Hedging Activities -
         Deferral of the Effective Date of FASB Statement No. 133, and amended
         by the issuance in June 2000 of SFAS 138, Accounting for Certain
         Derivative Instruments and Certain Hedging Activities, an amendment of
         FASB Statement No. 133. SFAS 133 requires that every derivative
         instrument be recorded on the balance sheet as an asset or liability
         measured at its fair value and that changes in the fair value of
         derivative instruments be recognized currently in earnings unless
         specific hedge accounting criteria are met. SFAS 133 is effective for
         fiscal years beginning after June 15, 2000.

         Historically, the Operating Partnership has not entered into
         derivatives contracts to hedge existing risks or for speculative
         purposes. Accordingly, the Operating Partnership does not expect
         adoption of the new standard on January 1, 2001 to affect its financial
         statements.

NOTE 4.  EXCHANGE OFFERING

          On April 7, 2000, pursuant to a registration statement on Form S-4,
          the Operating Partnership completed 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 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. Prior to the completion of the Exchange Offering, the
          Exchange Partnerships were managed by corporate general partners (the
          "Corporate General Partners"), which were controlled by Gregory K.
          McGrath, who is a founder and former Chief Executive Officer of the
          Trust, a


                                      F-9
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4.  EXCHANGE OFFERING (Continued)

         founder and principal unit holder of the Operating Partnership, and the
         Chief Executive, sole stockholder and director of the Managing
         Shareholder of the Trust.

         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
         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
         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.

         The Exchange Offering expired on April 7, 2000. Under the terms of the
         Exchange Offering, Exchange Limited Partners in a particular Exchange
         Partnership were entitled to participate in the offering only if
         limited partners holding at least 90% of the units of limited
         partnership interest in that partnership affirmatively elected to
         accept the offering. Exchange Limited Partners holding approximately
         97.4% of the outstanding units of limited partnership in such
         partnerships accepted the offering, and each of the Exchange
         Partnerships exceeded the 90% requirement. As a result, following the
         completion of the Exchange Offering, the limited partnership interests
         of nine Exchange Partnerships were owned entirely by the Operating
         Partnership (in the case of nine Exchange Partnership in which all
         Exchange Limited Partners accepted the offering) and substantially all
         of the limited partnership interests in the other 14 Exchange
         Partnerships were owned by the Operating Partnership, with the
         remaining limited partnership interests being retained by Exchange
         Limited Partners who elected not to accept the offering or failed to
         respond to the offering.

         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. The results of operations of the Exchange
         Partnerships are included in the consolidated financial statements as
         of April 1, 2000.

         The following unaudited pro forma summary presents consolidated
         financial information as if the Exchange Partnerships had been acquired
         effective January 1, 1999. 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 necessarily
         reflect the actual results that would have occurred nor is it
         necessarily indicative of future results of operations of the combined
         partnerships.


                                      F-10
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4.  EXCHANGE OFFERING (Continued)

                                             Six Months     Six Months
                                               Ended          Ended
                                           June 30, 2000  June 30, 1999
                                           -------------  -------------

         Total revenues                     $ 3,640,000    $ 2,921,000
         Cost and expenses                    4,390,000      4,523,000
                                            -----------    -----------
         Net loss                           $  (750,000)   $(1,602,000)
                                            ===========    ===========

         Weighted average number of units     2,841,809      1,787,878
                                            ===========    ===========

         Net loss per unit                  $     (0.26)   $     (0.90)
                                            ===========    ===========

NOTE 5.  COMMITMENTS AND CONTINGENCIES

         Contract 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 two
         luxury residential apartment properties in the development stage upon
         the completion of construction. The three development companies are
         controlled by one of the founders of the Trust and the Operating
         Partnership and the former Chief Executive Officer of the Trust. One of
         the residential 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 even if it were interested in doing so 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 former
         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 August 1, 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 6.75%) 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 agreements, 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


                                      F-11
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  COMMITMENTS AND CONTINGENCIES (Continued)

         Contract to Purchase Additional Properties (Continued)

         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 the former Chief Executive Officer, KeyBank agreed to
         forego further action for at least 60 days while the parties attempt to
         reach an arrangement. The extension expired in November 2000 and,
         according to the former Chief Executive Officer, 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 BankOne loan
         described below).

         In December 2000, 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 first mortgage loan. Earlier, Bank
         One 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 of the two loans will be
         available or will be available on commercially reasonable terms, that
         BankOne will not seek to enforce its right to accelerate the first
         mortgage loan and begin foreclosure proceedings against the Burgundy
         Hills Property in respect of the first mortgage loan or elect to
         require the Trust to buy out its position on the entire outstanding
         amount of the first mortgage loan, or that BankOne will not seek to
         enforce its right under the other loan to take over control of the
         Borrower.

Officers' Compensation

         Gregory K. McGrath, a founder of the Trust and the Operating
         Partnership, formerly served as Chief Executive Officer of the Trust.
         He agreed to serve as Chief Executive Officer of the Trust for the
         initial year of operations in exchange for compensation in the form of
         Common Shares or Units in an amount not to exceed 25,000 Common Shares
         or Units, as applicable, to be determined by the Executive Compensation
         Committee of the Board of the Trust based upon his performance, in
         addition to benefits and eligibility for participation in any option
         plan and bonus incentive compensation plan which may be implemented by
         the Operating Partnership. During 1998 and 1999 and the first and
         second quarters of 2000 no Common Shares of the Trust or Units of the
         Operating Partnership were issued to Mr. McGrath as compensation.
         However, in order to reflect all appropriate administrative expenses of
         the Operating Partnership, a provision of $108,500 has been made in the
         accompanying financial statements for the estimated fair value of the
         services rendered by Mr. McGrath as the Chief Executive Officer for the
         first two quarters of 2000. This amount has been charged to the
         compensation expense, with a corresponding credit to partners' capital.
         These estimates of the fair value of such services were determined by
         management based upon an analysis of compensation paid to chief
         executive officers of a number of comparable real estate investment
         trusts. Compensation and benefits for the Chief Executive Officer are
         determined annually by the Executive Compensation Committee of the
         Board of the


                                      F-12
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  COMMITMENTS AND CONTINGENCIES (Continued)

         Officers' Compensation (Continued)

         Trust. Effective December 31, 2000, no compensation expense will be
         charged for the services provided by the former Chief Executive
         Officer, as these services are minimal to the Operating Partnership's
         operations. In May 2001, Robert L. Astorino replaced Mr. McGrath as the
         Chief Executive Officer.

         Robert S. Geiger, the other founder of the Trust and Operating
         Partnership, formerly served as the Chief Operating Officer of the
         Trust and the Operating Partnership. His initial annual salary was set
         at $100,000, in addition to benefits, and eligibility for participation
         in any Common Share option plan and bonus incentive compensation plan
         implemented by the Trust. Mr. Geiger's employment has been terminated
         and since August 1, 2000 he has received no compensation.

         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 Operating 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 former
         Chief Executive Officer of the Trust), the former Chief Executive
         Officer of the Trust, and Alexandria Development, L.P., a Delaware
         limited partnership controlled by the former Chief Executive Officer of
         which the Operating 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-13
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6.  RELATED PARTY TRANSACTIONS

         Accrued Interest Receivable, Affiliates

         Certain of the Exchange Partnerships acquired by the Operating
         Partnership in the Exchange Offering hold subordinated notes, lines of
         credits, and advances due from/to limited partnerships controlled by
         Gregory K. McGrath, the Trust's former Chief Executive Officer. These
         debt instruments have varying interest rates and the interest is
         accrued and/or paid on a monthly basis. As of June 30, 2000, the
         Operating Partnership was due $6,342,520 from affiliates with
         $1,338,564 of accrued interest. The Operating Partnership also owes
         $3,778,779 to affiliates including accrued interest as of June 30,
         2000.

NOTE 7.  PARTNERS' CAPITAL

         Partners' Capital Contributions

         During the six months ended June 30, 2000, the Operating Partnership
         issued 26,990 Units of limited partner interest to the Trust at $8.53
         per unit based upon net proceeds of $230,118.

         In addition, the Operating Partnership issued to the Trust 25,015
         general partner Units during the six months ended June 30, 2000 as an
         allocation to adjust the general partner interest to 1% of the total
         outstanding Units. This issuance has been treated as an allocation of
         the capital contributions by the Trust, and no value has been ascribed
         to these general partner Units for accounting purposes.

         Exchange Offering

         The Operating Partnership filed a registration statement on Form S-4
         with the Securities and Exchange Commission (the "Commission") covering
         up to 2,500,000 units of limited partnership interest ("Units") to be
         registered under the Act.

         These units were offered in the Exchange Offering in exchange for units
         of limited partnership interest in 23 limited partnerships (the
         "Exchange Partnerships"), which directly or indirectly owned equity
         and/or mortgage interests in one or more residential apartment
         properties. The Exchange Partnerships were managed by corporate general
         partners who are affiliated with one of the founders of the Trust and
         the Operating Partnership, who is also the former Chief Executive
         Officer of the Trust and the sole stockholder and director of the
         Managing Shareholder of the Trust. The registration statement was
         declared effective on November 9, 1999, and the Exchange Offering
         commenced shortly thereafter.

         The number of Units offered in exchange for the limited partnership
         interests in the Exchange Partnerships was based on appraisals prepared
         by qualified and licensed independent appraisal firms for each
         underlying residential apartment property. For purposes of the Exchange
         Offering, each Unit was arbitrarily assigned an initial value of
         $10.00, which corresponds to the offering price of each Trust Common
         Share that was being offered to the public pursuant to the Cash
         Offering. The value of each Unit and Common Share outstanding was
         substantially identical since Unit holders (other than the Trust),
         including recipients of Units in the Exchange Offering,


                                      F-14
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  PARTNERS' CAPITAL (Continued)

         Exchange Offering (Continued)

         are entitled to exchange all or a portion of their Units at any time
         and from time to time for an equivalent number of Trust Common Shares,
         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 shares in the Trust, subject to the Trust's
         right to cash out any holder of Units who requests an exchange and
         subject to certain other exceptions. To facilitate such exchanges of
         Units into Common Shares, 2,500,000 Common Shares (in addition to the
         2,500,000 Common Shares offered by the Trust in the Cash Offering) have
         been registered with the Commission.

         By virtue of the completion of the Exchange Offering, the Operating
         Partnership acquired equity and/or subordinated mortgage interests in
         26 properties (the "Exchange Properties") that were directly or
         indirectly owned by the 23 Exchange Partnerships. (As described above
         in "NOTE 2 - Liquidity and Profitability Considerations," the Operating
         Partnership sold one of the Exchange Properties in April 2001.) The
         Operating Partnership acquired interests in a particular property
         and/or mortgages by acquiring from limited partners their units of
         limited partnership interest in the respective Exchange Partnership.
         Each of the Exchange Partnerships currently controlled by the Operating
         Partnership directly or indirectly owns equity and/or mortgage
         interests in one or more properties. Certain of such Exchange
         Partnerships directly or indirectly own equity interests in 15
         properties, which consist of an aggregate of 868 residential units
         (comprised of studio, one, two, three and four bedroom units). Certain
         of such Exchange Partnerships directly or indirectly own mortgage
         interests in 10 properties, which consist of an aggregate of 813
         existing residential units (studio and one and two bedroom units) and
         168 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. See Note 4 regarding
         the completion of the Exchange Offering on April 7, 2000.

         Operating Partnership Limited Partnership Units

         In connection with the formation of the Trust and the Operating
         Partnership, the founders, Gregory K. McGrath and Robert S. Geiger,
         each subscribed for 601,080 limited partnership units of the Operating
         Partnership (a total of 1,202,160 units). In consideration for the
         units subscribed for by them, they made a $100,000 capital contribution
         to the Operating Partnership. The number of units subscribed for by
         them represented 19% of the maximum Common Shares that would have been
         outstanding after completion of the Cash Offering and the Exchange
         Offering assuming that the Trust had sold all Common Shares offered in
         the Cash Offering and that the Operating Partnership had issued the
         maximum number of Units (2,500,000) offered in the Exchange Offering,
         calculated on a fully diluted basis assuming all then outstanding units
         (other than those acquired by the Trust) had been exchanged into an
         equivalent number of Common Shares.

         The subscription agreement entered into by the founders provided that
         if, as of May 31, 2000, the number of units subscribed for by them
         represented a percentage greater than 19% of the then outstanding
         Common Shares calculated on a fully diluted basis, each founder would
         be required to return any excess Units to the Operating Partnership for
         cancellation. Therefore, as of May 31,


                                      F-15
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  PARTNERS' CAPITAL (Continued)

         Operating Partnership Limited Partnership Units (Continued)

         2000, an adjustment, reducing the number of Units held in escrow by
         444,414, was made to accurately reflect the number of Units held by the
         founders. The founders have deposited Units subscribed for by them into
         a security escrow account for six to nine years, subject to earlier
         release under certain conditions.

         The fair value of the Units issued to the founders amounted to
         $100,000, based upon a determination made by the Independent Trustees
         of the Trust as of the date of subscription for these Units (February
         3, 1998). The determination of the fair value took into consideration
         that at the time of the subscription for the Units, the Trust and the
         Operating Partnership were development stage companies, with no cash or
         other significant tangible assets, operating history or revenue and no
         certainty of successful offerings or future operations; the founders
         had at risk their initial capital contributions plus certain additional
         unreimbursed advances to cover certain offering and operating expenses;
         the founders have significant experience and developed know-how
         critical to the success of the Trust and the Operating Partnership; and
         the founders' Units are subject to significant transfer restrictions.
         The Operating Partnership has accounted for the Units as being issued
         and outstanding, but subject to escrow restrictions, in the
         accompanying consolidated financial statements, and has included the
         Units as outstanding in determining the weighted average partnership
         units outstanding for purposes of calculating net loss per partnership
         unit in the accompanying consolidated financial statements. Because the
         release of the Units from escrow is not dependent upon the achievement
         of any specified level of profits, the release of the Units from escrow
         is not considered to be compensatory and, accordingly, no accounting
         measurement will be given to the release of the Units from escrow.

         Under the subscription agreement, the founders agreed to waive future
         administrative fees for managing Exchange Partnerships which
         participated in the Exchange Offering, agreed to assign to the
         Operating Partnership the right to receive all residual economic rights
         attributable to the general partner interests in Exchange Partnerships;
         and, in order to permit management of the Exchange Properties by the
         Operating Partnership, caused the Exchange Partnerships to cancel the
         partnerships' prior property management agreements and agreed to forego
         the right to have a property management firm controlled by the founders
         assume the property management role in respect of properties in which
         the Trust or the Operating Partnership invest.

         Following the Exchange Offering, the Operating Partnership controlled
         the Exchange Partnerships by virtue of its ownership of substantially
         all of the limited partnership interests therein, which provided the
         Operating Partnership the ability to remove the general partner under
         the provisions of the limited partnership agreements pertaining to each
         Exchange Partnership that authorize limited partners holding over 50%
         of total partnership interest to remove the general partner.

         Since holders of Units (other than the Trust) may elect to exchange
         these for Common Shares in the Trust on a one for one basis, the
         founders would be entitled to exchange their limited partnership units
         for a net amount of 757,746 Common Shares.


                                      F-16
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8.  NET LOSS PER 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 both the three and six months ended June 30, 2000 and
         1999.

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

                                                           Weighted
                                                           Average       Loss
                                             Net Loss       Units      Per Unit
                                            ----------    ---------     -------
          Three Months Ended June 30, 2000  ($591,806)    3,789,877     ($0.16)
          Three Months Ended June 30, 1999  ($208,818)    1,836,939     ($0.11)
          Six Months Ended June 30, 2000    ($816,692)    2,841,809     ($.29)
          Six Months Ended June 30, 1999    ($645,683)    1,787,878     ($0.36)
                                            ----------    ---------     -------

NOTE 9.  SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
         AND FINANCING ACTIVITIES

         In April 2000, in connection with the completion of the Exchange
         Offering, the Operating Partnership acquired indirect equity interests
         in 13 rental properties and subordinated mortgage interests in 10
         additional properties through the acquisition of substantially all
         partnership interests in the Exchange Partnerships, which own land and
         depreciable property, accrued interest, advances, other assets,
         mortgages and notes payable, as follows:

          Land and Depreciable Property                          $28,723,196
          Mortgage Notes Receivable, Affiliates                    3,292,677
          Receivables and Accrued Interest, Affiliates             3,262,522
          Other Assets                                               848,813
                                                                 -----------

          Total Assets                                            36,127,208
                                                                 -----------

          Mortgage Payable                                        19,766,015
          Notes Payable and Accrued Interest                       2,320,586
          Payables and Accrued Interest, Affiliates                1,435,548
          Accounts Payable                                           644,266
          Security Deposits                                          167,634
                                                                 -----------

          Total Liabilities                                       24,334,049
                                                                 -----------

          Partners' Capital                                      $11,793,159
                                                                 ===========


                                      F-17
<PAGE>

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 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, pursuant to a
          registration statement on Form SB-2, the Trust commenced a public
          offering ("Cash Offering") of 2,500,000 common shares of beneficial
          interest ("Trust Common Shares" or "Common Shares") at an offering
          price of $10.00 per share (maximum proceeds of


                                       3
<PAGE>

          $25,000,000). In the Cash Offering, which expired on May 31, 2000, the
          Trust sold 702,076 Common Shares, for total cash proceeds of
          $7,020,763. The Trust contributed to the Operating Partnership the net
          cash proceeds from the issuance of Common Shares in the Cash Offering
          ($5,467,858) in exchange for an equivalent number of units of limited
          partnership interest in the Operating Partnership ("Operating
          Partnership Units" or "Units").

          As of August 1, 2001, the Trust owned 825,528 Operating Partnership
          Units, representing approximately 21.6% of the then outstanding Units.
          Such Units are comprised of the Units acquired by the Trust 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 in this section.

          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 former Chief Executive Officer of the Trust, a founder
          and principal unitholder of the Operating Partnership, and sole
          director of Baron Advisors, Inc., a Delaware corporation that serves
          as the Managing Shareholder of the Trust), including certain of the
          Exchange Partnerships which participated in the Exchange Offering and
          which are now managed by the Trust. On February 7, 2001, the
          Independent Trustees of the Trust and the Managing Shareholder agreed
          to terminate the Trust Management Agreement effective December 31,
          2000.

          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 August 1,
          2001, 112 of the 168 residential units (approximately 67%) had been
          completed and were in the rent-up stage. Of the completed units, 93
          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 former 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.


                                       4
<PAGE>

          The Alexandria Partnership guaranteed WaKul, Inc.'s lease payments
          under the leasing agreement.

          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 Trust determined to write off the Trust's 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 even if
          it were interested in doing so 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 Mr. McGrath,
          its former 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 August 1, 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 6.75%) 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 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.


                                       5
<PAGE>

          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, 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 first mortgage loan (and the
          BankOne loan described below).

          In December 2000, BankOne acquired KeyBank's position in the Burgundy
          Hills first mortgage loan. The BankOne loan is subject to the same
          terms and conditions as that of the original KeyBank loan. Earlier,
          BankOne had 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, BankOne 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 of the two loans will be
          available or will be available on commercially reasonable terms, that
          BankOne will not seek to enforce its right to accelerate the first
          mortgage loan and begin foreclosure proceedings against the Burgundy
          Hills Property in respect of the first mortgage loan or elect to
          require the Trust to buy out its position on the entire outstanding
          amount of the first mortgage loan, or that BankOne will not seek to
          enforce its right under the other loan 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 2,449,525 registered 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 26 residential apartment properties (the "Exchange
          Properties") located in the southeast and mid-west United States. (See
          NOTE 4 "Exchange Offering" in the accompanying notes to the
          consolidated condensed financial statements included in this Report.)

          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.


                                       6
<PAGE>

          Prior to the completion of the Exchange Offering, the Exchange
          Partnerships were managed by corporate general partners (the
          "Corporate General Partners"), which were controlled by Mr. McGrath.

          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
          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
          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 2001, 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.
          Management of the Trust determined to sell the property based on its
          lack of performance and its need for substantial and frequent cash
          infusions. (See Note 2 "Liquidity and Profitability Considerations
          -Subsequent Transactions" in the accompanying notes to the
          consolidated condensed financial statements.)

          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 June 30, 2000 Compared to December
          31, 1999

          Due to the completion of the Exchange Offering the balance sheet for
          the Operating Partnership reflects large increases in assets,
          liabilities and partners' capital. During the six months ended June
          30, 2000, total assets increased to $45.0 million while liabilities
          increased to $31.7 million. As described above the Exchange Offering
          increased the number of properties in which the Operating Partnership
          indirectly


                                       7
<PAGE>

          owned an equity and/or mortgage interest by adding 26 Exchange
          Properties. The Operating Partnership now has rental apartment assets
          of approximately $36.2 million, which are subject to $25.2 million in
          first mortgage debt.

          Partners' capital increased to $13.3 million due to the issuance in
          the Exchange Offering of 2,449,525 Units with an exchange value of
          $11.8 million less a net loss of $816,692 for the six months ended
          June 30, 2000.

          Operations for the Six Months Ended June 30, 2000 Compared to Six
          Months Ended June 30, 1999

          Revenues, real estate expenses and administrative expenses all
          increased substantially for the six months ended June 30, 2000 in
          comparison to the six months ended June 30, 1999 due to the completion
          of the Exchange Offering mentioned above and the addition of the 26
          Exchange Properties and their related operating costs.

          Liquidity and Capital Resources

          Net cash used in operating activities in the six months ended June 30,
          2000 was $181,080 compared to $262,862 in the six months ended June
          30, 1999. The decrease in cash used for operating activities was
          mainly due to an increase in depreciation for the six months ended
          June 30, 2000 over the six months ended June 30, 1999.

          Net cash used in investing activities in the six months ended June 30,
          2000 was $125,712 compared to net cash used in investing activities of
          $972,680 in the six months ended June 30, 1999. The decrease in cash
          for 2000 was due primarily to a decrease in investments in
          partnerships.

          Net cash provided by financing activities for the six months ended
          June 30, 2000 was $403,406 compared to $1,255,272 for the six months
          ended June 30, 1999. The decrease in cash was due to a decrease in
          partners' capital contributions with the expiration of the Cash
          Offering in May 2000.

          The Operating Partnership paid $555,515 towards mortgage and other
          interest during the six months ended June 30, 2000 compared to
          $144,491 in the six months ended June 30, 1999 due to the addition of
          the Exchange Properties and increase in mortgage debt.

          Since inception, the Trust has contributed to the Operating
          Partnership net cash proceeds of $5,467,858 from the issuance of
          Common Shares in the Cash Offering in exchange for a number of Units
          in the Operating Partnership equivalent to the number of Common Shares
          sold in the Cash Offering. Approximately $230,000 of such amount was
          contributed in the first six months of 2000. The Trust is the sole
          general partner of the Operating Partnership and, as of August 1,
          2001, owned 825,528


                                       8
<PAGE>

          Operating Partnership Units, representing approximately 21.6% of the
          then outstanding Units.

          Because of the net loss of $2,641,250 incurred by the Operating
          Partnership in the period ended December 31, 1999, and the $975,305 in
          accounts payable owed to professionals in connection with the Exchange
          Offering as of December 31, 1999, and its limited liquid resources as
          of December 31, 1999, the Operating Partnership's independent auditors
          qualified their auditors' report to reflect a going concern
          contingency.

          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. The
          Trust is negotiating with the firms which are owed accounts payable in
          order to extend payment terms and, where possible, reduce the amounts
          due. Distributions will be made by the Operating Partnership as cash
          flow allows, but will be negatively impacted until the open accounts
          payable are reduced. Management does not anticipate that the Operating
          Partnership will make distributions to its unit holders for the next
          several quarters.

          The Trust and the Operating Partnership intend to use securities of
          the Trust and the Operating Partnership (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 Trust and the Operating Partnership 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 Trust and the Operating
          Partnership 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


                                       9
<PAGE>

          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 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 that will or are reasonably likely to affect the
          short-term and long-term liquidity and current and future prospects of
          the Trust and the Operating Partnership 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
          Trust and the Operating Partnership 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
          Trust or the Operating Partnership 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
          Trust and the Operating Partnership 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.

          As part of the ongoing operations of the 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 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 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 its Common Shares on a recognized securities exchange.
          Additional size would also give the Operating Partnership the
          operating margin necessary to support its valuable management team
          that is believed necessary for its long-term growth.

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


                                       10
<PAGE>

          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 consolidated condensed financial
          statements for the first six months ended June 30, 2001 included in
          the Operating Partnership's quarterly report on Form 10-QSB for the
          three-month period ended June 30, 2001, the Operating Partnership
          generated Funds From Operations (Funds from Operations is a measure of
          profitability in the REIT industry measuring net income less
          depreciation, amortization, and other non-operating expenses and/or
          income) of approximately $407,000 versus negative Funds From
          Operations of approximately $417,000 for the six months ended June 30,
          2000.

          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 sufficient 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
               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. During the first quarter of 2001, the
               Operating Partnership refinanced three of its properties,
               generating $1,632,000 of cash for the Operating Partnership. The
               cash was used to reduce amounts owed by the Operating Partnership
               to Exchange Offering professionals for their services in
               connection with the offering, advance funds for a second round of
               refinancings, and establish an escrow account for expected major
               repairs to the Operating Partnership's Riverwalk property. All
               three refinanced properties were refinanced at interest rates
               lower than the interest rate on their old loan. Subsequent to
               June 30, 2001, the Operating Partnership refinanced three
               additional properties, which resulted in cash proceeds of
               approximately $1,408,000.


                                       11
<PAGE>

          o    In April 2001, 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. Management of the Operating Partnership
               determined to sell the property based on its lack of performance
               and its need for substantial and frequent cash infusions. The
               sale price was approximately $3,900,000 and resulted in a loss of
               $210,854. 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 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.

               As a result of the re-financing of the three properties in the
               second quarter of 2001 as discussed above, the Operating
               Partnership had approximately $265,000 in available cash.

               Management believes that the actions presently being taken by the
               Operating Partnership, including the cash realized upon
               refinancing the three additional properties as described above
               and its cash on hand, provide the opportunity for the Operating
               Partnership to improve liquidity and profitability.


                                       12
<PAGE>

                           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.


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)).

            27           Financial Data Schedule


                                       13
<PAGE>

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


     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 27, 2001

                                     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


                                       14