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

                                   Form 10-QSB

        (Mark One)

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

                  For the quarterly period ended June 30, 2001


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

        For the transition period ended  ______________to________________


                        Commission file number 333-55753


                         Baron Capital Properties, L.P.

        (Exact name of small business issuer as specified in its charter)


                Delaware                               31-1584691

       (State or other jurisdiction                   (IRS Employer
    of incorporation or organization)               Identification No.)

                    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>


                         PART I - FINANCIAL INFORMATION

Item 1.       Financial Statements

              See following pages.



                                       2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                               June 30,       December 31,
                                                                                 2001             2000
                                                                             ------------     ------------
                                                                             (Unaudited)
                                       ASSETS
<S>                                                                          <C>              <C>
Rental Apartments:
   Land                                                                      $  5,643,600     $  5,643,600
   Rental property held for sale                                                       --        3,635,000
   Depreciable property                                                        26,198,532       26,091,407
                                                                             ------------     ------------
                                                                               31,842,132       35,370,007
   Less accumulated depreciation                                                2,800,238        2,304,148
                                                                             ------------     ------------
                                                                               29,041,894       33,065,859

Cash                                                                              265,755           20,823
Restricted Cash                                                                   551,947          359,894
Receivables from Affiliates                                                     7,689,891        6,927,109
Other Property and Equipment                                                       92,136          105,960
Other Assets                                                                      805,555          903,287
                                                                             ------------     ------------
                                                                             $ 38,447,178     $ 41,382,932
                                                                             ============     ============

                         LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
   Mortgages payable                                                         $ 22,866,367     $ 23,540,172
   Accounts payable and accrued liabilities                                     1,167,121        1,670,453
   Notes payable                                                                1,975,027        2,482,499
   Payables to Affiliates                                                         772,145        2,237,761
   Security deposits                                                              200,475          208,406
                                                                             ------------     ------------
         Total liabilities                                                     26,981,135       30,139,291
                                                                             ------------     ------------

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

Partners' Capital:
   General partner; issued and outstanding, 43,977 partnership units              (58,951)         (61,175)
   Limited partners; issued and outstanding, 3,795,435 partnership units,
      of which 757,746 units are subject to escrow restrictions                11,524,994       11,304,816
                                                                             ------------     ------------
         Total partners' capital                                               11,466,043       11,243,641
                                                                             ------------     ------------
                                                                             $ 38,447,178     $ 41,382,932
                                                                             ============     ============
</TABLE>


           See notes to consolidated condensed financial statements.

                                      F-1
<PAGE>

                         Baron Capital Properties, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               Six Months        Six Months     Three Months     Three Months
                                                                 Ended              Ended          Ended             Ended
                                                                June 30,          June 30,        June 30,         June 30,
                                                                  2001              2000            2001             2000
                                                               ----------        ----------     ------------     ------------
                                                                                  RESTATED                         RESTATED
                                                                                  --------                         --------
<S>                                                           <C>              <C>              <C>              <C>
Revenues:
   Property:
      Rental                                                  $ 2,944,995      $ 1,744,759      $ 1,375,513      $ 1,477,091
      Equity in net income of unconsolidated partnerships              --          (78,994)              --          (41,154)
   Interest and other income                                      670,734          368,134          413,170          342,939
                                                              -----------      -----------      -----------      -----------
                                                                3,615,729        2,033,899        1,788,683        1,778,876
                                                              -----------      -----------      -----------      -----------

Real Estate Expenses:
   Depreciation                                                   496,091          341,227          188,812          306,264
   Amortization of loan costs                                      39,086           57,981           20,882           52,119
   Interest                                                     1,015,302          555,515          469,937          470,056
   Repairs and maintenance                                        402,739          280,564          237,359          107,251
   Personnel                                                      426,997          265,376          218,790          262,266
   Property taxes                                                 263,833          147,818          149,397          127,914
   Property insurance                                              65,555           38,030           35,400           32,670
   Utilities                                                      288,181          144,154          134,722          130,780
   Other                                                          126,510           61,901           97,062          204,076
                                                              -----------      -----------      -----------      -----------
                                                                3,124,294        1,892,566        1,552,361        1,693,396
                                                              -----------      -----------      -----------      -----------

Administrative Expenses:
   Personnel, including officer's compensation                    304,528          535,461          149,238          375,843
   Professional services                                           68,945          249,539            3,487           88,419
   Other                                                          245,910          173,025          139,938          213,024
                                                              -----------      -----------      -----------      -----------
                                                                  619,383          958,025          292,663          677,286
                                                              -----------      -----------      -----------      -----------

Loss Before Other Expenses and Extraordinary Item                (127,948)        (816,692)         (56,341)        (591,806)
                                                              -----------      -----------      -----------      -----------

Other Expenses:
   Prepayment Penalties                                           534,075               --               --               --
   Write-Off of Loan Costs on Refinanced Loans                    148,230               --               --               --
   Loss on Investment Held for Sale                               210,854               --          210,854               --
                                                              -----------      -----------      -----------      -----------
                                                                  893,159               --          210,854               --
                                                              -----------      -----------      -----------      -----------

Loss Before Extraordinary Item                                 (1,021,107)        (816,692)        (267,195)        (591,806)
                                                              -----------      -----------      -----------      -----------

Extraordinary Item - Extinguishment of Debt
   Affiliates                                                   1,132,009               --        1,132,009               --
   Former Chief Executive Officer                                 111,500               --          111,500               --
                                                              -----------      -----------      -----------      -----------
                                                                1,243,509               --        1,243,509               --
                                                              -----------      -----------      -----------      -----------

Net Income (Loss)                                             $   222,402      $  (816,692)     $   976,314      $  (591,806)
                                                              ===========      ===========      ===========      ===========

Income (Loss) per Partnership Unit:

   Before Extraordinary Item                                  $     (0.26)     $     (0.29)     $     (0.06)     $     (0.16)
                                                              ===========      ===========      ===========      ===========

   Extraordinary Item                                         $      0.32      $        --      $      0.32      $        --
                                                              ===========      ===========      ===========      ===========

   Net Income (Loss)                                          $      0.06      $     (0.29)     $      0.26      $     (0.16)
                                                              ===========      ===========      ===========      ===========

Weighted Average Number of Units Outstanding                    3,828,714        2,841,809        3,827,414        3,789,877
                                                              ===========      ===========      ===========      ===========
</TABLE>


           See notes to consolidated condensed financial statements.

                                      F-2
<PAGE>



                         BARON CAPITAL PROPERTIES, L.P.

             CONSOLIDATED CONDENSED STATEMENTS OF PARTNERS' CAPITAL

<TABLE>
<CAPTION>

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

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

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

   Net loss (Unaudited)                                    --           2,224               --           220,178           222,402
                                                       ------     -----------      -----------      ------------      ------------

Partners' Capital, June 30, 2001 (Unaudited)           43,977     $   (58,951)       3,795,435      $ 11,524,994      $ 11,466,043
                                                       ======     ===========      ===========      ============      ============
</TABLE>

           See notes to consolidated condensed financial statements.

                                      F-3
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                    Six Months Ended June 30,
                                                                                   --------------------------
                                                                                       2001            2000
                                                                                   -----------      ---------
                                                                                                     RESTATED
<S>                                                                                <C>              <C>
Cash Flows from Operating Activities:
   Net income (loss)                                                               $   222,402      $(816,692)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Credit for estimated fair value of services performed by officer                      --        108,500
      Extinguishment of debt                                                        (1,379,254)            --
      Depreciation                                                                     479,684        341,227
      Loss on sale of asset held for investment                                        210,854             --
      Amortization of loan costs                                                        39,086         57,981
      Write off of Loan Costs at Refinance                                             148,230             --
      Equity in net loss of unconsolidated partnership                                      --         78,994
      Changes in operating assets and liabilities:
      Increase in operating assets:
         Other Receivables                                                                  --         (2,885)
         Other assets                                                                  (89,584)       (70,543)
       Increase (decrease) in operating liabilities:
         Accounts payable and accrued liabilities                                     (480,526)       117,232
         Security deposits                                                              (7,931)         3,512
                                                                                   -----------      ---------
            Net cash used in operating activities                                     (857,039)      (182,674)
                                                                                   -----------      ---------

Cash Flows from Investing Activities:
   Proceeds from sale of investment held for sale, net                               3,424,146             --
   Additions to rental apartments                                                      (72,195)       (78,205)
   Purchases of other property and equipment                                            (4,700)        (4,979)
   Investments in Partnerships                                                              --          6,082
   Increase in restricted cash                                                        (192,053)       (48,610)
                                                                                   -----------      ---------
            Net cash provided by (used in) investing activities                      3,155,198       (125,712)
                                                                                   -----------      ---------

Cash Flows from Financing Activities:
   Proceeds from mortgage refinancings                                               6,500,000             --
   Partners' capital contributions                                                          --        230,118
   Proceeds from notes payable                                                              --         90,000
   Payment on notes payable                                                           (507,472)
   Payment on notes payable, affiliates                                                     --        (90,644)
   Payments on mortgages payable                                                    (7,173,805)       (99,242)
   Increase (decrease) in loans payable to affiliates, net                            (871,950)       274,768
                                                                                   -----------      ---------
            Net cash (used in) provided by financing activities                     (2,053,227)       405,000
                                                                                   -----------      ---------

Net Increase in Cash                                                                   244,932         96,614

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

Cash, Ending                                                                       $   265,755      $ 124,166
                                                                                   ===========      =========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                       $ 1,128,241      $ 555,515
                                                                                   ===========      =========
</TABLE>

           See notes to consolidated condensed financial statements.

                                      F-4
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation

          The  unaudited  consolidated  condensed  balance  sheet as of June 30,
          2001, and the related unaudited  consolidated  condensed statements of
          operations  and cash flows for the six months  ended June 30, 2001 and
          2000  (as  restated),   and  the  unaudited   consolidated   condensed
          statements of partners' capital for the six months ended June 30, 2001
          have been prepared by the  Partnership.  In the opinion of management,
          all adjustments (which include  reclassifications and normal recurring
          adjustments)  necessary  to  present  fairly the  financial  position,
          results  of  operations  and cash  flows at June 30,  2001 and for the
          period  presented,  have been made.  The results of operations for the
          six months ended June 30, 2001 are not  necessarily  indicative of the
          operating results for the full year.

          As  a  result  of  certain   adjustments   in   connection   with  the
          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 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  Partnership.  Had the
          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
          herein reflect those changes.

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


                                      F-5
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Organization

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

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

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

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

NOTE 2.  LIQUIDITY AND PROFITABILITY CONSIDERATIONS

          During the years ended  December  31, 2000 and 1999,  the  Partnership
          experienced  certain cash flow  problems  and has,  from time to time,
          experienced  difficulties  meeting  obligations  as they  became  due.
          However,  as  reflected  in the  accompanying  consolidated  condensed
          financial statements, during the first six months ended June 30, 2001,
          the 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.

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


                                      F-6
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

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

          o    The Partnership has identified  certain of its properties,  which
               are performing  well and have loans,  which are small relative to
               the value of the  property,  given their  excellent  performance.
               Three  properties  were  refinanced  in the first quarter of 2001
               (see Note 6),  generating  sufficient cash for the Partnership to
               enter  into  negotiations  with  all  of  the  Exchange  Offering
               professionals  owed payment for services  performed in connection
               with the offering,  and still have a small amount in reserve. All
               three of these properties were refinanced at interest rates lower
               than  the  interest  rate  on  the  loan.  The   Partnership  has
               identified  three  additional  properties,  which it believes can
               support higher debt levels and provide cash for general corporate
               purposes. Subsequent to June 30, 2001, the Partnership refinanced
               these  three  properties,  which  resulted  in cash  proceeds  of
               approximately $1,408,000 (see Note 10).

          o    The  Partnership  entered  into a contract for sale of one of its
               properties  that,  in the  past,  has  required  substantial  and
               frequent  cash  infusions.  The sale  closed on April  30,  2001.
               Additional   properties   are  being   evaluated   for  potential
               disposition (see Note 5).

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

          o    As a result of the  re-financing  of the three  properties in the
               second  quarter  of 2001 as  discussed  above and in Note 10, the
               Partnership had approximately $265,000 in available cash.

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


                                      F-7
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 3. EXCHANGE OFFERING

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

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

          For financial statement  presentation purposes, it is assumed that the
          Units of limited  partnership  interest in the  Partnership  issued to
          Exchange Limited Partners in the Exchange Offering have been issued as
          Common  Shares of the Trust,  since the unit  holders  (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,
          so long as the exchange would not cause the exchanging party to own in
          excess of 5% of the then  outstanding  Common  Shares,  subject to the
          Trust's right to cash out any unit holder who requests an exchange and
          subject to certain other exceptions.

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

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                        June 30,
                                                               ---------------------------
                                                                   2001            2000
                                                               -----------     -----------
          <S>                                                  <C>             <C>
          Total Revenues                                       $ 3,600,000     $ 3,640,000
          Cost and Expenses                                      3,700,000       4,390,000
                                                               -----------     -----------
          Loss before Other Expenses and Extraordinary Item       (100,000)       (750,000)
          Other Expenses                                          (900,000)             --
                                                               -----------     -----------
          Loss Before Extraordinary Item                        (1,000,000)       (750,000)
          Extraordinary Item- Extinguishment of Debt             1,200,000              --
                                                               -----------     -----------
          Net Income (Loss)                                    $   200,000     $  (750,000)
                                                               ===========     ===========

          Income (Loss) Per Partnership Unit:
          Before Extraordinary Items                           $     (0.26)    $     (0.26)
                                                               ===========     ===========
          Extraordinary Item                                   $      0.32     $     (0.00)
                                                               ===========     ===========
          Net Income (Loss)                                    $      0.06     $     (0.26)
                                                               ===========     ===========

          Weighted Average Number of Partnership Units           3,828,714       2,841,809
                                                               ===========     ===========
</TABLE>


                                      F-8
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS

          In July 2001,  the  Securities  and Exchange  Commission  (SEC) issued
          Staff  Accounting  Bulletin  No. 102,  "Selected  Loan Loss  Allowance
          Methodology  and  Documentation  Issues" (SAB 102). SAB 102 summarizes
          certain  of the SEC's  views on the  development,  documentation,  and
          application  of a  systematic  methodology  as required  by  Financial
          Reporting Release No. 28 for determining allowances for loan and lease
          losses in accordance with generally  accepted  accounting  principles.
          SAB 102 is effective as of the issuance date. The Partnership believes
          that it is in compliance with the guidelines set forth in SAB 102.

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

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

          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
          Partnership  has not  entered  into  derivatives  contracts  to  hedge
          existing risks or for speculative purposes.  Accordingly, the adoption
          of the new  standard on January 1, 2001 did not have any effect on the
          Partnerships' financial statements.


NOTE 5. SALE OF PROPERTY

          On December 7, 2000, the Independent Trustees of the Trust accepted an
          offer to sell  Glen Lake  Arms  Apartments  (Glen  Lake),  a  144-unit
          apartment   building   located   in  St.   Petersburg,   Florida   for
          approximately $3,900,000.  The decision to sell Glen Lake was based on
          the property's lack of performance and its continuing need for cash to
          operate.  On April 30, 2001, the  Partnership  consummated the sale of
          Glen Lake resulting in a loss on the sale of $210,854.


                                      F-9
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 5. SALE OF PROPERTY (Continued)

          The results of operations of Glen Lake for the four months ended April
          30, 2001 were as follows:

          Rental and other income                    $328,816
          Expenses                                    294,300
                                                     --------
             Excess of Income over Expenses          $ 34,516
                                                     ========

NOTE 6.  MORTGAGE REFINANCING

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

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

          The Partnership received approximately $1,632,000 in proceeds from the
          refinancing   of  the  first   mortgages.   In  connection   with  the
          refinancings,  the Partnership paid a one-time  prepayment  penalty of
          approximately $534,000, which is included under other expenses for the
          six-month period ended June 30, 2001.

NOTE 7. COMMITMENTS AND CONTINGENCIES

          Contracts to Purchase Additional Properties

          In September 1998, the Trust entered into an agreement with three real
          estate development companies (Brentwood at Southgate, Ltd., Burlington
          Residential,  Ltd. and The Shoppes at Burlington, Ltd.) to acquire, at
          the Trust's option, two luxury residential apartment properties in the
          development  stage  upon the  completion  of  construction.  The three
          development  companies are  controlled by one of the Trust's  founders
          and former Chief Executive Officer.  One of the residential  apartment
          properties  has been sold to a third party with the  Trust's  consent.
          The remaining residential 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.


                                      F-10
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 7. COMMITMENTS AND CONTINGENCIES

          Contracts to Purchase Additional Properties (Continued)

          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 a bank  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 the bank'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,  the bank  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 the bank
          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.  The bank
          indicated  that it was  exercising  its right to accelerate  the loan.
          According to the former Chief  Executive  Officer,  the bank 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 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 bank  loan  (and the loan from
          another bank described below).

          In December  2000,  another bank  acquired the first  mortgage  bank'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,  such bank 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,  the bank 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
          the bank 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 the bank will not seek to
          enforce  its right  under the other  loan to take over  control of the
          Borrower.


                                      F-11
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 7. COMMITMENTS AND CONTINGENCIES (Continued)

          Officers' Compensation

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

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

          Pending Litigation

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

          In early May 2001,  MarCap  Corporation  filed an action in the United
          States  District Court for the Northern  District of Illinois  against
          Wakul,  Inc. (a  telecommunications  company  controlled by the 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 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-12
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 8. RELATED PARTY TRANSACTIONS

          Loans from Executive Officers

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


NOTE 9. EXTINGUISHMENT  OF INDEBTEDNESS  TO FORMER CHIEF EXECUTIVE  OFFICER AND
        AFFILIATES

          In connection with the sale of Glen Lake property described in Note 5,
          the Partnership extinguished  approximately $1,132,000 of payables due
          to  affiliates  and  $111,500  due to the  Partnership's  former Chief
          Executive  Officer.  These  liabilities  were owed by Florida  Capital
          Income Fund IV, Ltd. (Glen Lake) (one of the Exchange Partnerships) to
          affiliates,  which are owned or controlled by Gregory K. McGrath,  the
          Trust's former Chief Executive Officer.  These amounts are reported as
          an  extraordinary  item  in the  accompanying  consolidated  condensed
          statement of operations.

          The   Partnership   also  wrote  off  accrued   interest   payable  of
          approximately  $113,000  relating to the extinguished  payables due to
          related parties and approximately  $23,000 of accounts payable.  These
          amounts  were  recorded as  reductions  to interest  expense and other
          administrative  expenses in the  accompanying  consolidated  condensed
          statement of operations.

NOTE 10. SUBSEQUENT EVENTS

          On July 31, 2001, the  Partnership  refinanced the first  mortgages on
          three  rental  properties.  The  information  pertaining  to  the  new
          mortgages is as follows:

<TABLE>
<CAPTION>
                                                    Interest       Term        Maturity           Monthly
          Property                   Mortgage         Rate       (Years)         Date            Payments
          --------                   --------       --------     -------       --------          --------
          <S>                       <C>               <C>           <C>      <C>                  <C>
          Curiosity Creek           $1,960,000        7.26%         30       July 31, 2011        $13,384
          Crystal Court I           $1,595,000        7.26%         30       July 31, 2011        $10,892
          Blossom Corners II        $1,860,000        7.26%         30       July 31, 2011        $12,701
</TABLE>

          The Partnership received approximately $1,408,000 in proceeds from the
          refinancing   of  the  first   mortgages.   In  connection   with  the
          refinancings,  the Partnership paid a one-time  prepayment  penalty of
          approximately $293,000.


                                      F-13
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                   (Continued)

NOTE 11. NET INCOME (LOSS) PER PARTNERSHIP UNIT

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

          Basic net income (loss) per unit equals net income  (loss)  divided by
          the  weighted   average  units   outstanding   during  the  year.  The
          computation  of  diluted  net  income  (loss)  per unit that  includes
          dilutive limited  partnership unit equivalents in the weighted average
          units  outstanding has not been presented,  as it is anti-dilutive for
          the six and three months ended June 30, 2001 and 2000.

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

<TABLE>
<CAPTION>
                                                                          Net            Weighted       Income(Loss)
                                                                     Income(Loss)     Average Units       Per Unit
                                                                     ------------     -------------     ------------
          <S>                                                         <C>               <C>                <C>
          For the six months ended June 30:
             2001                                                     $ 222,402         3,828,714          $ 0.06
                                                                      =========         =========          =====
             2000                                                     $(816,692)        2,841,809          $(0.29)
                                                                      =========         =========          ======
          For the three months ended June 30:
             2001                                                     $ 976,314         3,827,414          $ 0.26
                                                                      =========         =========           =====
             2000                                                     $(591,806)        3,789,877          $(0.16)
                                                                      =========         =========          =======
</TABLE>

NOTE 12. 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-14
<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  Baron  Capital
          Properties, L.P. (the "Registrant" or the "Operating Partnership") and
          the Notes thereto. (See ITEM 1 - FINANCIAL STATEMENTS.)

          Forward-looking Statements

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

          Results of Operations

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

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

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


                                        3
<PAGE>

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

          As of 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.  Since such Units comprise substantially all of
          the  assets  of the  Trust,  the  operating  results  of the Trust are
          primarily  dependent  upon  the  operating  results  of the  Operating
          Partnership.

          The  Operating   Partnership  has  acquired   substantially   all  the
          beneficial interests in 16 residential apartment properties, including
          the  Heatherwood I Apartments (67 studio,  one bedroom and two bedroom
          units  located in Kissimmee,  Florida) in June 1998;  Crystal Court II
          Apartments  (80 studio,  one bedroom and two bedroom  units located in
          Lakeland,  Florida) in July 1998; Riverwalk Apartments (50 two bedroom
          units  located in New  Smyrna,  Florida)  in  September  1998;  and 13
          properties  acquired  as part of the  Exchange  Offering in April 2000
          (discussed  below).  In July,  1998  the  Operating  Partnership  also
          acquired a minority  limited  partnership  interest  in 13 real estate
          limited  partnerships then managed by affiliates of Gregory K. McGrath
          (a founder and former Chief Executive  Officer of the Trust, a founder
          and  principal  unitholder  of  the  Operating  Partnership,  and  the
          President, sole shareholder and sole director of Baron Advisors, Inc.,
          a Delaware  corporation that serves as the Managing  Shareholder and a
          trustee of the Board of the Trust),  including certain of the Exchange
          Partnerships which participated in the Exchange Offering and which are
          now managed by the Trust. 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
          were occupied at August 1, 2001.

          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,


                                       4
<PAGE>

          seeking  repayment of  approximately  $407,000 of  indebtedness  (plus
          unspecified  interest,  attorney's fees and collection  costs) under a
          telecommunication   equipment  leasing   agreement.   Certain  of  the
          equipment was installed at the  Alexandria  Property.  The  Alexandria
          Partnership  guaranteed WaKul, Inc.'s lease payments under the leasing
          agreement.

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

          In September 1998, the Trust entered into an agreement with three real
          estate development companies (Brentwood at Southgate, Ltd., Burlington
          Residential,  Ltd. and The Shoppes at Burlington, Ltd.) to acquire, at
          the Trust's option, 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  residential 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


                                       5
<PAGE>

          in the  financial  conditions  of the Borrower and the Trust,  and the
          Trust's failure to meet certain  tangible net worth tests set forth in
          the loan  agreements.  KeyBank  indicated  that it was  exercising its
          right to accelerate the loan. According to Mr. McGrath, KeyBank agreed
          to  forego  further  action  for at least 60 days  while  the  parties
          attempted to reach an arrangement.  The extension  expired in November
          2000 and,  according to Mr. McGrath,  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 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 Operating Partnership Units in
          exchange  for   substantially   all   outstanding   units  of  limited
          partnership  interest owned by individual limited partners  ("Exchange
          Limited   Partners")  in  23  limited   partnerships   (the  "Exchange
          Partnerships"). The Exchange Partnerships directly or indirectly owned
          equity  and/or  debt  interests  in  one  or  more  of 26  residential
          apartment  properties  (the  "Exchange  Properties")  located  in  the
          southeast and mid-west United States.  (See Note 3 "Exchange Offering"
          in  the  accompanying  notes  to  consolidated   condensed   financial
          statements.)

          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


                                       6
<PAGE>

          cash out any holder of Units who  requests an exchange  and subject to
          certain other exceptions.

          Following  the  completion  of the  Exchange  Offering,  the  Exchange
          Partnerships  continued to own the same property  interests they owned
          prior to the offering;  substantially  all of the limited  partnership
          interests in the 23 Exchange  Partnerships were owned by the Operating
          Partnership;  Mr. McGrath, for nominal  consideration,  assigned to an
          affiliate of the Trust all of the equity stock in 18 of the  corporate
          general  partners of the  Exchange  Partnerships  ("Corporate  General
          Partners")  and granted to the Board of the Trust a  management  proxy
          coupled  with an  interest  to vote the shares of the  remaining  five
          Corporate General  Partners;  the Corporate General Partner of each of
          the Exchange Partnerships assigned to the Operating Partnership all of
          its economic 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 5 "Sale of Property" 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,  21
          properties  are located in  Florida,  two  properties  in Ohio and one
          property each in Georgia and Indiana.

          Consolidated  Balance  Sheet as of June 30, 2001  Compared to December
          31, 2000

          During the six months  ended June 30,  2001,  total  assets  decreased
          approximately   $2.9  million  to  $38.4  million  while   liabilities
          decreased approximately $3.2 million to $26.9 million. The decrease in
          assets  was  mainly  due to the  sale of the  Glen  Lake  property  as
          described  in  Note  5  of  the   consolidated   condensed   financial
          statements.  The  decrease in  liabilities  was  primarily  due to the
          payoff  of the  first  mortgage  on the  sale of Glen  Lake  and  debt
          extinguishment of approximately $1.5 million as described in Note 9 of
          the consolidated condensed financial statements.


                                       7
<PAGE>

          Partners'  capital increased  approximately  $222,000 to $11.4 million
          due  to net  income  for  the  six  months  ended  June  30,  2001  of
          approximately $222,000.

          Operations  for the Six Months  Ended June 30,  2001  Compared  to Six
          Months Ended June 30, 2000

          Revenues:

          Revenues  increased by  approximately  $1.6 million for the six months
          ended June 30, 2001 to  approximately  $3.6  million  compared to $2.0
          million  for the six months  ended June 30,  2000.  This  increase  is
          attributable  to a full six months of  operations  with the  completed
          Exchange  Offering for the six months ended June 30, 2001  compared to
          only three months of operations for the six months ended June 30, 2000
          as the  Exchange  Offering  was  completed  in April 1,  2000.  Rental
          revenues  decreased  by  approximately  $100,000  for the three months
          ended June 30, 2001  compared to the three  months ended June 30, 2001
          due to the sale of the Glen Lake apartment on April 2001.

          Real Estate Expenses:

          Real estate expenses  increased by approximately  $1.2 million for the
          six months  ended June 30, 2001  compared to the six months ended June
          30,  2000.  This  increase  is  attributable  to a full six  months of
          operations  with the  completed  Exchange  Offering for the six months
          ended June 30, 2001  compared to only three months of  operations  for
          the six  months  ended  June 30,  2000 as the  Exchange  Offering  was
          completed in April 1, 2000.  Total real estate  expenses for the three
          months ended June 30, 2001 compared to the three months ended June 30,
          2000 remain consistent;  however,  there were increases in repairs and
          maintenance  for  repairs  to the  Exchange  Properties  and  interest
          expense  due to the  refinanced  properties  offset  by  decreases  in
          depreciation  mainly  due to the sale of Glen Lake and a  decrease  to
          other expenses.

          Administrative Expenses:

          Administrative   expenses  decreased  by  approximately  $340,000  and
          $380,000   for  the  six  and  three   months  ended  June  30,  2001,
          respectively,  compared  to the six and three  months  ended  June 30,
          2001, due to the fact that effective December 31, 2000 no compensation
          expense has been charged for the services provided by the former Chief
          Executive  Officer as these services are minimal to the  Partnership's
          operations.  Also,  during  2000,  the  Partnership  entered  into  an
          arrangement  with two  outside  businesses  to allow  officers  of the
          Partnership  to work  for  those  businesses.  The  salaries  of those
          officers  needing to be funded by the Partnership were reduced because
          of the income they received from the outside businesses.

          Other  Expenses:

          Other  Expenses  for the six months  ended June 30,  2001 of  $893,159
          related to the refinancing of three properties  completed in the first
          quarter of 2001 and the loss on the sale of Glen  Lake.  There were no
          Other Expenses in 2000.


                                       8
<PAGE>


          Extraordinary Item- Extinguishment of Debt:

          In connection  with the sale of Glen Lake  property,  the  Partnership
          extinguished  approximately  $1,132,000  of payables due to affiliates
          and $111,500 due to the Partnership's  former Chief Executive Officer.
          These  liabilities  were owed by Florida  Capital Income Fund IV, Ltd.
          (Glen Lake) (one of the Exchange  Partnerships)  to affiliates,  which
          are owned or  controlled  by Gregory K.  McGrath,  the Trust's  former
          Chief Executive Officer.

          Liquidity and Capital Resources

          Net cash used in  operating  activities  for the six months ended June
          30, 2001 was  $857,039  compared to $182,674  for the six months ended
          June 30, 2000.  The increase in cash used by operating  activities was
          primarily  due to the  extinguishment  of debt and payoff of  accounts
          payables  offset by charges on the loss of Glen Lake and the write off
          of loan costs at refinancing.

          Net cash  provided by  investing  activities  for the six months ended
          June 30, 2001 was $3,155,198 compared to cash used of $125,712 for the
          six months ended June 30, 2000.  The increase in cash provided for the
          six months ended June 30, 2001 was due  primarily to proceeds from the
          sale of the Glen Lake property.

          Net cash used in  financing  activities  for the six months ended June
          30, 2001 was $2,053,227  compared to cash provided of $405,000 for the
          six months  ended June 30,  2000.  Cash used in  financing  activities
          increased  mainly due to the payoff of the Glen Lake first mortgage as
          well as notes  payable  paid off with the  proceeds  of the Glen  Lake
          sale.

          During the years ended  December  31, 2000 and 1999,  the  Partnership
          experienced  certain cash flow  problems  and has,  from time to time,
          experienced  difficulties  meeting  obligations  as they  became  due.
          However,  as  reflected  in the  accompanying  consolidated  condensed
          financial statements, during the first six months ended June 30, 2001,
          the 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.

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


                                       9
<PAGE>

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

          o    The Partnership has identified  certain of its properties,  which
               are performing  well and have loans,  which are small relative to
               the value of the  property,  given their  excellent  performance.
               Three  properties  were  refinanced in the first quarter of 2001,
               generating  sufficient  cash for the  Partnership  to enter  into
               negotiations with all of the Exchange Offering professionals owed
               payments for services  performed in connection with the offering,
               and  still  have a small  amount in  reserve.  All three of these
               properties  were  refinanced  at  interest  rates  lower than the
               interest rate on the loan. The Partnership  has identified  three
               additional properties,  which it believes can support higher debt
               levels  and  provide   cash  for  general   corporate   purposes.
               Subsequent to June 30, 2000,  the  Partnership  refinanced  these
               three   properties,   which   resulted   in  cash   proceeds   of
               approximately $1,408,000 (see Note 10).

          o    The  Partnership  entered  into a contract for sale of one of its
               properties  that,  in the  past,  has  required  substantial  and
               frequent  cash  infusions.  The sale  closed on April  30,  2001.
               Additional   properties   are  being   evaluated   for  potential
               disposition (see Note 5).

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


                                       10
<PAGE>

          o    As a result of the  re-financing  of the three  properties in the
               second quarter of 2001 as discussed  above,  the  Partnership had
               approximately $211,000 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  previously mentioned and its cash on
          hand, provide the opportunity for the Operating Partnership to improve
          liquidity and profitability.

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

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

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

          The target  metropolitan  markets and  sub-markets  have  benefited in
          recent periods from demographic  trends (including  population and job
          growth) which  increase the demand for  residential  apartment  units,
          while financing  constraints  (specifically,  reduced  availability of
          development   capital)  have  limited  new   construction   to  levels
          significantly   below   construction    activity   in   prior   years.
          Consequently,  rental  rates  for  residential  apartment  units  have
          increased  at or above the  inflation  rate for the last


                                       11
<PAGE>

          two years and are expected to continue to  experience  such  increases
          for the next 18 months based on market  statistics  made  available to
          management of the Operating  Partnership in terms of occupancy  rates,
          supply,  demographic  factors,  job  growth  rates and  recent  rental
          trends.  Expense levels also influence  operating results,  and rental
          expenses  (other than real  estate  taxes) for  residential  apartment
          properties  have  generally  increased  at  approximately  the rate of
          inflation for the past three years and are expected to increase at the
          rate of inflation  for the next 18 months.  Changes in interest  rates
          are not expected to materially impact operations, because the majority
          of the real estate  mortgages have fixed interest  rates, as do all of
          the inter-company loans.

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

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

          Subject to the  foregoing  discussion,  management  believes  that the
          Operating  Partnership and the Trust have the ability to satisfy their
          cash requirements for the foreseeable future.  However,  management of
          the Operating  Partnership believes that it will be necessary to raise
          additional  capital during the next 12 months to make acquisitions and
          to meet management's revenue and cash flow goals.

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


                                       12
<PAGE>

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

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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


Item 2. Changes in Securities and Use of Proceeds

          Not Applicable

Item 3. Defaults upon Senior Securities

          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).


                                       13
<PAGE>


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

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


     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 14, 2001

                                 BARON CAPITAL PROPERTIES, L.P.

                                 By:      Baron Capital Trust, General Partner

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

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


                                       14