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, 2000


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


        For the transition period ended ______________to________________



                        Commission file number 333-55753



                         Baron Capital Properties, L.P.

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



            Delaware                                     31-1584691

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

                    7826 Cooper Road, Cincinnati, Ohio 45242

                    (Address of principal executive offices)

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

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

         Yes  [_]    No [X]

As of the date of this Report, the Registrant has outstanding 3,909,347 units of
limited partnership interest ("Operating Partnership Units").




<PAGE>


                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements

        See following pages



                                       2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                         INDEX TO FINANCIAL STATEMENTS



                                                                         PAGE
                                                                         ----

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Balance Sheets                                                           F-2

Statements of Operations                                                 F-3

Statement of Partners' Capital                                           F-4

Statement of Cash Flows                                                  F-5

Notes to Financial Statement                                          F-6 - F-15




                                      F-1
<PAGE>
                         BARON CAPITAL PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEETS
                                  June 30, 2000


                                     ASSETS
                                                      June 30,      December 31,
                                                        2000           1999
                                                        ----           ----
Assets:                                              (Unaudited)
Rental Apartments:
  Land                                              $  7,318,862   $  1,178,693
  Depreciable property                                32,249,572      6,189,095
                                                    ------------   ------------
                                                      39,568,434      7,367,788
  Less accumulated depreciation                       (6,414,750)    (1,453,177)
                                                    ------------   ------------
                                                      33,153,684      5,914,611

Investment In Partnerships                             4,277,247        930,970

Cash and Cash Equivalents                                124,166         27,552
Restricted Cash                                          762,969         52,089
Accrued Interest Receivable, Affiliate                 1,338,564         36,997
Other Receivables                                        113,798          3,724
Due from Baron Capital Trust                             305,998        296,010
Advances to Affiliates                                 6,230,192          5,141
Other Property and Equipment                             281,221        134,981
Other Assets                                             802,953        188,692
                                                    ------------   ------------
                                                    $ 47,390,789   $  7,590,767
                                                    ============   ============


                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
  Mortgages payable                                   25,203,107      4,278,117
  Accounts payable and accrued liabilities             1,909,297      1,078,353
  Note payable                                           190,000        100,000
  Notes payable, affiliates                            3,778,779         50,000
  Capital lease obligation                                40,775         42,369
  Security deposits                                      227,067         40,308
                                                    ------------   ------------
      Total liabilities                               31,349,026      5,589,147
                                                    ------------   ------------


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

Minority Partners                                        536,900             --
                                                    ------------   ------------

Partners' Capital:
  General Partner; issued and outstanding, 39,488 and 18,962 as of June 30, 2000
       and December 31, 1999 respectively,
       partnership units                                (129,590)       (33,362)
  Limited Partners; issued and outstanding,
       3,909,347 and 1,877,246 as
       of June 30, 2000 and December 31, 1999
       respectively, partnership units of which
       757,746 are subject to escrow restrictions     15,634,453      2,034,982
                                                    ------------   ------------
       Total partners' capital                        15,504,863      2,001,620
                                                    ------------   ------------
                                                    $ 47,390,789   $  7,590,767
                                                    ============   ============


                 See notes to consolidated financial statements.


                                      F-2
<PAGE>
                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and
       Six Months Ended June 30, 2000 and June 30, 1999

<TABLE>
<CAPTION>
                                                                     Six               Six              Three             Three
                                                                   Months            Months             Months            Months
                                                                    Ended             Ended             Ended             Ended
                                                                  June 30,          June 30,           June 30,          June 30,
                                                                    2000              1999              2000              1999
                                                                    ----              ----              ----              ----
                                                                 (unaudited)       (unaudited)       (unaudited)       (unaudited)
<S>                                                              <C>               <C>               <C>               <C>
Revenue:
  Property:
     Rental                                                      $  1,744,414      $    512,133      $  1,477,091      $    254,783
     Equity in net loss of unconsolidated partnership                 (78,994)          (29,093)          (41,154)          (25,667)
  Interest and other income                                           368,479            79,140           342,939            38,104
                                                                 ------------      ------------      ------------      ------------
                                                                    2,033,899           562,180         1,778,876           267,220
                                                                 ------------      ------------      ------------      ------------

Real Estate Expenses:
  Depreciation                                                        319,217            72,907           278,392            36,454
  Interest                                                            660,580           144,491           575,121            71,305
  Repairs and maintenance                                             237,806            37,726           211,997            20,250
  Personnel                                                           440,451            57,471           423,779            28,431
  Property Taxes                                                      151,027            41,276           131,123            20,680
  Property Insurance                                                   38,030            10,718            32,670             3,512
  Utilities                                                           185,657            29,601           172,283            18,050
  Other                                                               209,751           131,570           203,891           122,356
                                                                 ------------      ------------      ------------      ------------
                                                                    2,242,519           525,760         2,029,256           321,038
                                                                 ------------      ------------      ------------      ------------

Administrative Expenses:
  Personnel, including officers' compensation                         535,461           369,372           375,843            96,711
  Professional services                                               249,539           244,663            88,419            33,169
  Other                                                               283,950            68,068           306,446            25,120
                                                                 ------------      ------------      ------------      ------------
                                                                    1,068,950           682,103           770,708           155,000
                                                                 ------------      ------------      ------------      ------------

Provision for Property Impairment                                   8,356,638                --         8,356,638                --
                                                                 ------------      ------------      ------------      ------------

     Total expenses                                                11,668,107         1,207,863        11,156,602           476,038
                                                                 ------------      ------------      ------------      ------------


Net Loss                                                         $ (9,634,208)     $   (645,683)     $ (9,377,726)     $   (208,818)
                                                                 ============      ============      ============      ============

Net Loss per Unit Basic and Diluted                              $      (3.39)     $      (0.36)     $      (2.47)     $      (0.11)
                                                                 ============      ============      ============      ============

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


                 See notes to consolidated financial statements.


                                      F-3
<PAGE>

                         BARON CAPITAL PROPERTIES, L. P.

                                  CONSOLIDATED
                         STATEMENTS OF PARTNERS' CAPITAL
                     For the Six Months Ended June 30, 2000


<TABLE>
<CAPTION>
                                                                 General Partner               Limited Partners
                                                                 ---------------               ----------------
                                                           Units           Amount          Units           Amount          Total
                                                       ------------    ------------    ------------    ------------    ------------

<S>                                                          <C>       <C>                <C>          <C>             <C>
Partners' Capital, December 31, 1999                         18,962    $    (33,362)      1,877,246    $  2,034,982    $  2,001,620

Capital Contributions - Trust                                   273          26,990         230,118         230,118
  Net loss                                                       --         (97,315)             --      (9,536,893)     (9,634,208)
  Credit for estimated fair value of services
     performed by officer                                        --           1,087              --         107,163         108,250
  Exchange Units issued net, (see Note 6,
   Exchange Offering)                                        24,742              --       2,449,525      22,799,083      22,799,083
  Adjustment officer escrow                                  (4,489)             --        (444,414)             --              --
                                                       ------------    ------------    ------------    ------------    ------------


Partners' Capital, June 30, 2000 (Unaudited)                 39,488    $   (129,590)      3,909,347    $ 15,634,453    $ 15,504,863
                                                       ============    ============    ============    ============    ============

</TABLE>

                See notes to consolidated financial statements.

                                      F-4



<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the Six Months Ended June 30, 2000

<TABLE>
<CAPTION>

                                                                                                       Six Months Ended June 30,
                                                                                                     2000                   1999
                                                                                                 -----------            -----------
                                                                                                 (Unaudited)            (Unaudited)
<S>                                                                                              <C>                    <C>
Cash Flows from Operating Activities:
   Net loss                                                                                      $(9,634,208)           $  (645,683)
   Adjustments to reconcile net loss to net cash
           used by operating activities:
         Provision for officer's compensation                                                        108,250                     --
         Depreciation                                                                                319,217                 94,721
         Equity in net loss of unconsolidated partnership                                             78,994                 29,093
         Recognition of Provision for Impairment                                                   8,356,638
         (Increase) Decrease in operating assets:
            Other receivables                                                                       (110,074)                35,801
            Reimbursed administrative expenses receivable                                             36,997                 38,476
            Other assets                                                                             122,343                (51,102)
         Increase (Decrease) in operating liabilities:
            Accounts payable and accrued liabilities                                                  94,341                236,672
            Security deposits                                                                        186,758                   (840)
                                                                                                 -----------            -----------
               Net cash used by operating activities                                                (440,744)              (262,862)
                                                                                                 -----------            -----------

Cash Flows from Investing Activities:
   Investment in partnerships                                                                          9,318               (885,000)
   Cash distributions from partnerships                                                              357,260                 27,000
   Purchases of other property and equipment                                                        (146,240)                (1,514)
   Increase in Restricted Cash                                                                       (40,664)              (113,166)
   Advances to affiliates                                                                             27,109                249,914
                                                                                                 -----------            -----------
               Net cash provided by (used in) investing activities                                   206,783               (722,766)
                                                                                                 -----------            -----------

Cash Flows from Financing Activities:
   Partners' capital contributions                                                                   230,118              1,074,000
   Distributions paid                                                                                     --                (65,000)
   Proceeds from mortgage financing                                                                       --                273,499
   Proceeds from notes payable affiliates                                                             89,141               (275,000)
   Proceeds from note payable                                                                         90,000                     --
   Payments on mortgages payable                                                                     (77,090)               (22,141)
   Payments on capital lease obligation                                                               (1,594)                    --
   Other                                                                                                  --                 20,000
                                                                                                 -----------            -----------
               Net cash provided by financing activities                                             330,575              1,005,358
                                                                                                 -----------            -----------

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

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

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

Supplemental Disclosure of Cash Flow Information:
    Cash paid for mortgage and other interest                                                    $   660,580            $   144,491
                                                                                                 ===========            ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-5


<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 2000


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Basis of Presentation

        The consolidated balance sheet as of June 30, 2000, the consolidated
        statements of operations for the six and three months ended June 30,
        2000 and 1999, the statement of partners' capital for the six months
        ended June 30, 2000, and the consolidated statements of cash flows for
        the six months ended June 30, 2000 and 1999 have been prepared by the
        Partnership's management. In the opinion of management, all adjustments
        (which include reclassifications and normal recurring adjustments)
        necessary to present fairly the financial position, results of
        operations and cash flows at June 30, 2000 and for the period presented,
        have been made. The results of operations for the three and six months
        ended June 30, 2000 are not necessarily indicative of the operating
        results for the full year.

        Certain information and footnote disclosures normally included in the
        financial statements prepared in accordance with generally accepted
        accounting principles have been condensed or omitted. It is suggested
        that these consolidated financial statements be read in conjunction with
        the Partnership's financial statements and notes thereto included in the
        Partnership's December 31, 1999 Form 10-KSB.

         Organization

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

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





                                      F-6
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


        As described below, in exchange for a cash capital contribution and
        other consideration paid to the Partnership in 1998, the founders,
        Gregory K. McGrath and Robert S. Geiger (the "Original Investors"), were
        issued an amount of Units which are exchangeable (subject to certain
        escrow restrictions) for a total of 19% of the Common Shares of the
        Trust (up to 1,202,160 Common Shares) outstanding after the completion
        of the Partnership's Exchange Offering described further below and the
        cash public offering completed by the Trust in May 2000, on a fully
        diluted basis assuming that all then outstanding Units (other than those
        owned by the Trust) have been exchanged into an equivalent number of
        Common Shares.

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

NOTE 2. BASIS OF PRESENTATION

        The accompanying consolidated financial statements have been prepared in
        conformity with generally accepted accounting principles which assume
        that the Partnership will continue on a going concern basis, including
        the realization of assets and liquidation of liabilities in the ordinary
        course of business. For six months ended June 30, 2000 and the year
        ended December 31, 1999 the Partnership incurred net losses of
        $9,634,208 and $2,641,250 and negative cash flows from operations of
        $440,744 and $555,711. The auditors' report for the year ended December
        31, 1999 was qualified to express substantial doubt as to the
        Partnership's ability to continue as a going concern.

        Management's plans to continue its operations and become profitable
        encompass the following:

        o       The Trust plans to attempt to raise capital through additional
                public or private offerings of Common Shares and/or Operating
                Partnership Units within the next 12 months.

        o       The Partnership intends to continue to acquire rental properties
                with proceeds from any future public or private offering of
                Common Shares and/or Partnership Units. The operating results of
                the Trust and the Operating Partnership will depend primarily
                upon income from the residential apartment properties in which
                they directly or indirectly acquire an equity or Subordinate
                Mortgage Interest. Operating results in respect of equity
                interests will be substantially influenced by the demand and
                supply of residential apartment units in their primary market
                and sub-markets, and operating expense levels. Operating results
                in respect of mortgage and other debt interests will depend upon
                interest income, including, in certain cases, participation
                interest, whose payment will depend upon the operating
                performance, sale or refinancing of the underlying properties.
                The operating results of the Trust and Operating Partnership
                will also depend upon the pace and price at which they can
                acquire and improve additional property interests.

        o       The Partnership intends to review its entire portfolio of
                properties to determine the potential for restructuring and
                refinancing various first mortgage loans and to evaluate certain
                properties for possible sale due to recent performance that
                negatively impacts overall operating results. The Partnership
                will also explore possible business combinations with other
                apartment owners to facilitate continued growth.




                                      F-7
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


        o       The Partnership will also negotiate with the firms who are owed
                accounts payable for services performed in connection with the
                Exchange Offering in order to extend payment terms and, where
                possible, to reduce the amounts due.

        See Note 6 regarding the completion of the Exchange Offering on April 7,
        2000 under which the Trust, through the Operating Partnership, acquired
        additional interests in residential apartment properties.

        In view of these matters, realization of a major portion of the assets
        in the accompanying consolidated balance sheet is dependent upon the
        continued operations of the Partnership, which in turn is dependent upon
        the Partnership's ability to meet its capital and financing
        requirements, and the success of its future operations. Management
        believes that the actions presently being taken by the Partnership
        provide the opportunity for the Partnership to continue as a going
        concern. However, there can be no assurance that management will be
        successful in the implementation of its plans to raise adequate amounts
        of capital or that future operations will become profitable. The
        accompanying consolidated financial statements do not include any
        adjustments that might result from the outcome of this uncertainty.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

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

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



                                      F-8
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4. COMMITMENTS AND CONTINGENCIES

        Officers' Compensation

          A founder of the Trust and the Partnership serves as Chief Executive
          Officer of the Trust and President of the managing shareholder of the
          Trust. He agreed to serve as Chief Executive Officer of the Trust for
          the first year in exchange for compensation in the form of Common
          Shares or Units in an amount not to exceed 25,000 Common Shares or
          Units, as applicable, to be determined by the Executive Compensation
          Committee of the Board of the Trust based upon his performance, in
          addition to benefits and eligibility for participation in any option
          plan and bonus incentive compensation plan which may be implemented by
          the Partnership. During 1999, and the first and second quarters of
          2000 no shares of the Trust or units of the Partnership were issued to
          the Chief Executive Officer as compensation. However, in order to
          reflect all appropriate administrative expenses of the Partnership, a
          provision of $108,250 has been made in the accompanying financial
          statements for the estimated fair value of the services rendered by
          the Chief Executive Officer for the first two quarters of 2000. This
          amount has been charged to the compensation expense, with a
          corresponding credit to partners' capital. These estimates of the fair
          value of such services were determined by management based upon an
          analysis of compensation paid to chief executive officers of a number
          of comparable real estate investment trusts. Compensation and benefits
          for the Chief Executive Officer are determined annually by the
          Executive Compensation Committee of the Board of the Trust.

          The other founder of the Trust and Partnership serves as the Chief
          Operating Officer of the Trust, the Partnership and the managing
          shareholder of the Trust. His initial annual salary has been set at
          $100,000, in addition to benefits, and eligibility for participation
          in any common share option plan and bonus incentive compensation plan,
          which may be implemented by the Partnership.

NOTE 5. RELATED PARTY TRANSACTIONS

        Intercompany Line

          The Partnership has an intercompany line with the Trust, its general
          partner. The intercompany loan is due on demand and is non-interest
          bearing. The balance outstanding on the intercompany line as of June
          30, 2000 was $305,998 and $296,010 as of December 31, 1999.

        Accrued Interest Receivable, Affiliates

          Certain of the Exchange Partnerships acquired by the Operating
          Partnership in the Exchange Offering hold subordinated notes due from
          limited partnerships controlled by Mr. McGrath. See "Note 6. Partners'
          Capital." These debt instruments have varying interest rates and the
          interest is accrued and/or paid on a monthly basis. As of June 30,
          2000 the Operating Partnership was due $1,338,564 on these notes.


                                      F-9
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 6. PARTNERS' CAPITAL

        Partners' Capital Contributions

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

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

        Exchange Offering

          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
          (with an initial assigned value of $24,495,249) 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 own equity and/or debt interests in one or more of 26
          residential apartment properties located in the southeast and mid-west
          United States. Prior to the completion of the Exchange Offering, the
          Exchange Partnerships were managed by corporate general partners (the
          "Corporate General Partners"), which were controlled by Gregory K.
          McGrath, who is the Chief Executive Officer of the Trust, a principal
          unitholder of the Operating Partnership, and the President, sole
          stockholder and sole director of the Managing Shareholder of the
          Trust.

          Following the completion of the Exchange Offering, the Exchange
          Partnerships continue to own the same property interests they owned
          prior to the offering; substantially all of the limited partnership
          interests in the 23 Exchange Partnership are owned by the Operating
          Partnership; Mr. McGrath, for nominal consideration, assigned to the
          Trust all of the equity stock in 18 of the Corporate General Partners
          and granted to the Board of the Trust a management proxy coupled with
          an interest to vote the shares of the remaining five Corporate General
          Partners; the Corporate General Partner of each of the Exchange
          Partnerships has assigned to the Operating Partnership all of its
          economic interest in the Exchange Partnerships and; Mr. McGrath has
          caused each Corporate General Partner to waive its right to receive
          from its Exchange Partnership any ongoing fees, effective upon
          completion of the Exchange Offering. As a result of the foregoing, the
          Operating Partnership (and indirectly the Trust) own substantially all
          of the economic interest represented by the equity and debt interests
          owned by the Exchange Partnerships and control management of such
          partnerships.


                                      F-10
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


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

      Operating Partnership Limited Partnership Units

        In connection with the formation of the Trust and the Operating
        Partnership, their two founders (the "Original Investors") each
        subscribed for 601,080 Units of limited partnership interest in the
        Operating Partnership (a total of 1,202,160 Units). In consideration for
        the Units subscribed for by them, the Original Investors made a $100,000
        capital contribution to the Operating Partnership. The number of Units
        subscribed for by the Original Investors represented 19% of the maximum
        Common Shares that would have been outstanding following the completion
        of the Cash Offering and the Exchange Offering, assuming that the Trust
        had sold all Common Shares offered in the Cash Offering and that the
        Operating Partnership had issued the maximum number of Units (2,500,000)
        offered in the Exchange Offering, calculated on a fully diluted basis
        assuming all then outstanding Units (other than those acquired by the
        Trust) had been exchanged into an equivalent number of Common Shares.
        The Original Investors deposited the Units subscribed for by them into a
        security escrow account for six to nine years, subject to earlier
        release under certain conditions.

        The subscription agreement entered into by the Original Investors
        provided that if, as of May 31, 2000, the number of Units subscribed for
        by the Original Investors represents a percentage greater than 19% of
        the then outstanding Common Shares, calculated on a fully diluted basis,
        each of the Original Investors would be required to return any excess
        Units to the Operating Partnership for cancellation. Therefore, as of
        May 31, 2000, an adjustment, reducing the number of Units held in escrow
        by 444,414, is necessary to accurately reflect the number of Units held
        by the Original Investors.

        The fair value of the Units issued to the Original Investors amounted to
        $100,000, based upon a determination made by the Independent Trustees of
        the Trust as of the date of subscription for these Units (February 3,
        1998). The determination of the fair value took into consideration that
        at the time of the subscription for the Units, the Trust and the
        Operating Partnership were development stage companies, with no cash or
        other significant tangible assets, operating history or revenue and no
        certainty of successful offerings or future operations; the founders had
        at risk their initial capital contributions plus certain additional
        unreimbursed advances to cover certain offering and operating expenses;
        the founders have significant experience and developed know-how critical
        to the success of the Trust and the Operating Partnership; and the
        founders' Units are


                                      F-11
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


        subject to significant transfer restrictions. The Operating Partnership
        has accounted for the Units as being issued and outstanding, but subject
        to escrow restrictions, in the accompanying consolidated financial
        statements, and has included the Units as outstanding in determining the
        weighted average shares outstanding for purposes of calculating net loss
        per partnership unit in the accompanying consolidated financial
        statements. Because the release of the Units from escrow is not
        dependent upon the achievement of any specified level of profits, the
        release of the Units from escrow is not considered to be compensatory
        and, accordingly, no accounting measurement will be given to the release
        of the Units from escrow.

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

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

      Distributions

        There were no distributions in the six months ended June 30, 2000.

NOTE 7. NET LOSS PER UNIT

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

        Basic net loss per unit equals net loss divided by the weighted average
        units outstanding during the year. The computation of diluted net loss
        per unit that includes dilutive limited partnership unit equivalents in
        the weighted average units outstanding has not been presented, as it is
        anti-dilutive for both the three and six months ended June 30, 2000 and
        1999.

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


                                      F-12
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


                                                           Weighted
                                                            Average       Loss
                                              Net Loss       Units      Per Unit
                                              --------     ---------    --------

        Three Months Ended June 30, 2000    $(9,377,726)   3,789,877     $(2.47)

        Three Months Ended June 30, 1999      $(208,818)   1,836,939     $(0.11)

        Six Months Ended June 30, 2000      $(9,634,208)   2,841,809     $(3.39)

        Six Months Ended June 30, 1999        $(645,683)   1,787,878     $(0.36)

NOTE 8. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

        The unaudited pro forma condensed consolidated statements of operation
        have been prepared assuming that the Exchange Offering had been fully
        subscribed as of January 1, 2000.

        The pro forma information is not necessarily indicative of what the
        Operating Partnership's results of operations would have been assuming
        the completion of the described transaction at the beginning of the
        period indicated, nor does it purport to project the Operating
        Partnership's results of operations for any future period.

<TABLE>
<CAPTION>
                                                           Unaudited Pro Forma
                                                          Condensed Consolidated
                                                         Statements of Operations
                                                         For the Six Months ended
                                                               June 30, 2000

                                        Statement of
                                        Operations as            Pro Forma
                                      of June 30, 2000           Adjustments         Pro Forma
                                      ----------------           -----------         ---------
<S>                                           <C>              <C>                   <C>
        Total Revenues                         $2,034,000       $1,486,000(1)         $3,520,000

        Cost and Expenses                       3,311,000        1,350,000(2)          4,661,000

        Non-Recurring Expense                   8,357,000       (8,357,000)(3)

        Net Income (loss)                     ($9,634,000)                           ($1,141,000)

        Weighted Average Number of
        Partnership Units                       2,841,809                              2,841,809

        Net Loss Per Unit                         ($3.39)                                ($0.40)
</TABLE>



                                      F-13
<PAGE>



                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


      Pro Forma Adjustments

        The unaudited pro forma condensed consolidated financial statements
        represent the acquisition of the Exchange Partnerships, which will be
        accounted for under the purchase method of accounting. The Trust has
        estimated the adjustments necessary to allocate the aggregate purchase
        price over the recorded book value of these partnerships. Such
        allocations are subject to final determination based upon valuations
        provided by the Trust and other valuations of fair value as if the
        acquisitions were effective January 1, 2000. Therefore, the allocations
        reflected in the unaudited pro forma condensed consolidated financial
        statements may differ from amounts ultimately determined. Differences
        between the amounts included herein and the final allocations are not
        expected to have a material effect on the unaudited pro forma financial
        statements.

        Pro forma depreciation for the period ended June 30, 2000 is based upon
        assets at fair value at January 1, 2000; primarily based upon 30-year
        asset lives.

        Summary pro forma adjustments to present comparative per share data
        assume that the Exchange Offering had been consummated January 1, 2000
        (assumes Units outstanding for entire period). The escrowed Units owned
        by the Original Investors are not included in the pro forma computation
        of basic loss per share because there is no assurance that the Units
        will be released from escrow and their inclusion would be antidilutive.

        The pro forma adjustments detailed above are as follows:

        1)   The Exchange Partnerships provide an additional $1.4 million in
             revenue if assumed to have been included from January 1, 2000.

        2)   The Exchange Partnerships incur an additional $1.35 million in
             expenses if assumed to have been included from January 1, 2000.

        3)   A one-time Provision for Property Impairment of $8.4 million was
             recognized at the end of the second quarter to account for the
             excess of the exchanged value over the estimated equity value of
             the Exchange Partnerships.

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

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


                                      F-14
<PAGE>



                         BARON CAPITAL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


              Land and Depreciable Property                   $32,474,270
              Accrued Interest - Affiliate                      1,338,564
              Advances to Affiliates                            6,048,286
              Other Assets                                        736,604
                                                              -----------
              Total Assets                                    $40,597,724


             Mortgages Payable                                $19,725,536
             Notes Payable - Affiliate                          3,639,638
                                                              -----------
             Total Liabilities                                $23,365,174
                                                              ===========
             Equity                                           $17,232,550
                                                              ===========




                                      F-15
<PAGE>

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

        The following discussion should be read in conjunction with the
        Consolidated Financial Statements of Baron Capital Properties, L.P. (the
        "Registrant" 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. The Trust is managed
        by Baron Advisors, Inc., a Delaware corporation (the "Managing
        Shareholder").

                                       3
<PAGE>

        In May 1998, pursuant to a registration statement on Form SB-2, the
        Trust commenced a public offering of 2,500,000 common shares of
        beneficial interest ("Trust Common Shares" or "Common Shares") at an
        offering price of $10.00 per share (maximum proceeds of $25,000,000)
        ("Cash Offering"). In the Cash Offering, which expired on May 31, 2000,
        the Trust sold 702,076 Common Shares, for total cash proceeds of
        $7,020,763. The Trust has contributed to the Operating Partnership the
        net cash proceeds from the issuance of Common Shares in exchange for an
        equivalent number of units of limited partnership interest in the
        Operating Partnership ("Operating Partnership Units" or "Units"). As of
        December 15, 2000, the Trust also owned 546,786 Operating Partnership
        Units, representing approximately 14.0% of the then outstanding Units.

        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; and Riverwalk Apartments (50 two bedroom units
        located in New Smyrna, Florida) and 13 properties acquired as part of
        the Exchange Offering (discussed below). In July 1998 the Operating
        Partnership also acquired a minority limited partnership interest in 13
        real estate limited partnerships then managed by affiliates of Gregory
        K. McGrath (a founder and Chief Executive Officer of the Trust and
        founder of the Operating Partnership), including certain of the Exchange
        Partnerships which participated in the Exchange Offering and which are
        now managed by the Trust.

        During 1998 and 1999, the Trust acquired a total of 40% of the limited
        partnership interests in Alexandria Development, L.P. (the "Alexandria
        Partnership"), which owns Alexandria Apartments, a 168-unit residential
        apartment property under construction in Alexandria, Kentucky. As of
        June 30, 2000, 112 of the 168 residential units (approximately 67%) had
        been completed and were in the rent-up stage. Of the completed units,
        107 units have been rented. In September 2000, the Alexandria
        Partnership entered into an agreement to sell the Alexandria Property in
        exchange for $510,000 cash, record title to 20 acres of undeveloped
        property located in Vero Beach, and the assumption by the contemplated
        purchaser of the existing first mortgage loan secured by a first
        mortgage on the Alexandria Property with a principal balance as of
        October 31, 2000 of $8,650,000. If the sale, which is subject to certain
        closing conditions, is completed, the Operating Partnership will receive
        40% of the net proceeds and other consideration payable to the
        Alexandria Partnership.

        In September 1998, the Trust entered into an agreement with three real
        estate development companies (Brentwood at Southgate, Ltd., Burlington
        Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire two
        luxury residential apartment properties in the development stage upon
        the completion of construction. The three development companies are
        controlled by Mr. McGrath. One of the residential properties has been
        sold to a third party with the Trust's consent. The remaining property
        is scheduled to have a total of 396 units, comprised of one, two and
        three

                                       4
<PAGE>

        bedroom/one or two bathroom apartments. Construction of the property
        (the "Burgundy Hills Property"), located in Florence, Kentucky (part of
        the Cincinnati metropolitan area), is expected to be completed by the
        end of the first quarter of 2004. The Trust has a right of first
        negotiation to purchase the property from the development company upon
        completion and a right of first refusal to purchase the property on the
        same terms offered by a third party. The purchase price is expected to
        be approximately $30,000,000. It is contemplated that a significant
        portion of that amount would be covered by first mortgage financing. At
        the current time the Trust does not have adequate resources to close on
        the transaction and it is uncertain whether the Trust will have adequate
        resources to complete the transaction upon completion of construction.

        In connection with the transaction, the Trust (along with its Chief
        Executive Officer) agreed to co-guarantee up to 35% (or approximately
        $6,000,000) of existing long-term construction financing provided by
        KeyBank National Association ("KeyBank") in respect of the Burgundy
        Hills Property. As of December 15, 2000, approximately $5,300,000 of the
        loan had been drawn down, resulting in outstanding guarantees of
        approximately $1,900,000. The interest rate on the construction loan is
        KeyBank's prime rate (currently 9.25%) or the LIBOR rate plus 2%. The
        Trust also agreed that, if the loan is not repaid prior to the
        expiration of the guarantee, it would either buy out the bank's position
        on the entire amount of the construction loan or arrange for a third
        party to do so.

        In September 2000, the Trust received notice from counsel to KeyBank
        that Burlington Residential, Ltd. ("Borrower"), the owner and developer
        of the Burgundy Hills Property, had defaulted on its loan for failure to
        pay current interest due and meet certain equity requirements and
        covenants under the loan agreement, adverse changes in the financial
        conditions of the Borrower and the Trust, and the Trust's failure to
        meet certain tangible net worth tests set forth in the loan agreements.
        KeyBank has 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 negotiating a new long-term construction
        facility with another institutional lender to replace the KeyBank loan.
        The Borrower anticipates completion of the refinancing in the first
        quarter of 2001.

        In addition, in April 2000, pursuant to a registration statement on Form
        S-4, the Operating Partnership completed an exchange offering (the
        "Exchange Offering") under which it acquired additional interests in
        residential apartment properties. In the Exchange Offering, the
        Operating Partnership issued 2,449,525 registered Units (with an initial
        assigned value of $24,495,249) 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

                                       5
<PAGE>

        Exchange Partnerships directly or indirectly own equity and/or debt
        interests in one or more of 26 residential apartment properties (the
        "Exchange Properties") located in the southeast and mid-west United
        States.

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

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

        Following the completion of the Exchange Offering, the Exchange
        Partnerships continue to own the same property interests they owned
        prior to the offering; substantially all of the limited partnership
        interests in the 23 Exchange Partnership are owned by the Operating
        Partnership; Mr. McGrath, for nominal consideration, assigned to the
        Trust all of the equity stock in 18 of the Corporate General Partners
        and granted to the Board of the Trust a management proxy coupled with an
        interest to vote the shares of the remaining five Corporate General
        Partners; the Corporate General Partner of each of the Exchange
        Partnerships assigned to the Operating Partnership all of its economic
        interest in the partnership; and Mr. McGrath caused each Corporate
        General Partner to waive its right to receive from its Exchange
        Partnership any ongoing fees, effective upon completion of the exchange.
        As a result of the foregoing, the Operating Partnership (and indirectly
        the Trust) own substantially all of the economic interest represented by
        the equity and debt interests owned by the Exchange Partnerships and
        control management of such partnerships.

        Certain of the Exchange Partnerships own direct or indirect equity
        interests in 16 Exchange Properties which consist of an aggregate of
        1,012 residential units (comprised of studio and one, two, three and
        four-bedroom units). Certain of the Exchange Partnerships 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, 21 properties are located in Florida, three
        properties in Ohio and one property each in Georgia and Indiana.

        Consolidated Balance Sheet as of June 30, 2000 Compared to December 31,
        1999

        Due to the completion of the Exchange Offering the balance sheet for the
        Operating Partnership reflects large increases in assets, liabilities
        and partners' capital. During the six months ended June 30, 2000, total
        assets increased to $47.4 million while liabilities increased to $31.3
        million. As mentioned above the Exchange Offering

                                       6
<PAGE>

        increased the number of properties in which the Operating Partnership
        indirectly owns an equity and/or mortgage interest by adding 26 Exchange
        Properties. The Operating Partnership now has rental apartment assets in
        excess of $39.6 million, which are subject to $25.2 million in first
        mortgage debt.

        Partners' capital increased to $15.5 million due to the issuance in the
        Exchange Offering of more than 2.4 million Units with an initial
        assigned value of $24.5 million reduced by a one-time write off charge
        of $1.7 million (which represents any unamortized loan costs recorded on
        the Exchange Partnerships books that were in place at the time of the
        Exchange Offering from the syndication of the prior partnership
        structure) and a net loss for the six months ended June 30, 2000 of $9.6
        million.

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

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

        The Operating Partnership recognized a one-time charge of $8.4 million
        to operations as a Provision for Property Impairment. This provision is
        the result of writing off the excess of the exchanged value of the
        Exchange Partnerships over the estimated equity value of the Exchange
        Properties. The equity value is calculated by reducing the appraised
        value of the Exchange Properties by any mortgages or interest payables
        due on the Exchange Properties.

        Liquidity and Capital Resources

        Net cash used in operating activities in the six months ended June 30,
        2000 was ($440,744) compared to ($262,862) in the six months ended June
        30, 1999. The change is due to the recognition of additional net loss
        over the six months ended June 30, 1999 offset by increases in certain
        liabilities and decreases in certain assets.

        Net cash provided by investing activities in the six months ended June
        30, 2000 was $206,783 compared to net cash used in investing activities
        of ($722,766) in the six months ended June 30, 1999. The increase in
        cash for 2000 was due primarily to an increase in cash distributions
        from the Exchange Partnerships and a decrease in investments in
        partnerships.

        Net cash provided by financing activities for the six months ended June
        30, 2000 was $330,575 compared to $1,005,358 for 1999. The decrease in
        cash was due to a decrease in partners' capital contributions with the
        expiration of the Cash Offering in May, 2000.


                                       7
<PAGE>

        The Operating Partnership paid $660,580 towards mortgage and other
        interest during the six months ended June 30, 2000 compared to $144,491
        in the six months ended June 30, 1999 due to the addition of the
        Exchange Properties and increase in mortgage debt.

        Since inception, the Trust has contributed to the Operating Partnership
        net cash proceeds of $5,467,858 from the issuance of Common Shares in
        the Cash Offering in exchange for an equivalent number of Units in the
        Operating Partnership. Approximately $230,000 of such amount was
        contributed in the first six months of 2000. The Trust is the sole
        general partner of the Operating Partnership and, as of December 15,
        2000, owned 546,786 Operating Partnership Units, representing
        approximately 14.0% of the then outstanding Units.

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

        The completion in April 2000 of the Exchange Offering described above
        has completed the first effort, in the opinion of management, to
        provided the critical mass necessary for profitable operations. The
        Trust is negotiating with the firms who are owed accounts payable in
        order to extend payment terms and, where possible, reduce the amounts
        due. Distributions will be made by the Operating Partnership as cash
        flow allows, but will be negatively impacted until the open accounts
        payable are reduced. Management does not anticipate that the Operating
        Partnership will make distributions to its unit holders for the next
        several quarters.

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

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

                                       8
<PAGE>

        Partnership will also depend upon the pace and price at which they can
        acquire and improve additional property interests.

        The target metropolitan markets and sub-markets have benefited in recent
        periods from demographic trends (including population and job growth)
        which increase the demand for residential apartment units, while
        financing constraints (specifically, reduced availability of development
        capital) have limited new construction to levels significantly below
        construction activity in prior years. Consequently, rental rates for
        residential apartment units have increased at or above the inflation
        rate for the last two years and are expected to continue to experience
        such increases for the next 18 months based on market statistics made
        available to management of the Operating Partnership in terms of
        occupancy rates, supply, demographic factors, job growth rates and
        recent rental trends. Expense levels also influence operating results,
        and rental expenses (other than real estate taxes) for residential
        apartment properties have generally increased at approximately the rate
        of inflation for the past three years and are expected to increase at
        the rate of inflation for the next 18 months. Changes in interest rates
        are not expected to materially impact operations, because the majority
        of the real estate mortgages have fixed interest rates, as do all of the
        inter-company loans.

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

        Generally, there are no seasonal aspects of the operations of the Trust
        or the Operating Partnership that might have a material effect on their
        financial conditions or results of operation. However, for the last 36
        months, one 60-unit student housing property owned by one of the
        Exchange Partnerships involved in the Exchange Offering has had an
        average occupancy rate of 88% for nine months of the year and 61% for
        the remaining three months of the year.

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

        As part of the ongoing operations of the Operating Partnership,
        management is reviewing the entire portfolio of properties to determine
        the potential for restructuring

                                       9
<PAGE>

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

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

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

        Year 2000

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

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<PAGE>

                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

              The Registrant is a claimant in the Georgia Pacific class action
              lawsuit. It is not a party to any other legal proceeding.


Item 2.       Changes in Securities and Use of Proceeds


              Not Applicable

Item 3.       Defaults upon Senior Securities

              None

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

              None

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

              (a)

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

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

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

                        27     Financial Data Schedule


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

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<PAGE>


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

December 20, 2000

                             BARON CAPITAL PROPERTIES, L.P.

                             By: Baron Capital Trust, General Partner

                             By: /s/  Gregory K. McGrath
                                 ------------------------------------
                                      Gregory K. McGrath
                                      Chief Executive Officer

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




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