SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934


For the quarterly period ended:

                              SEPTEMBER 30, 1998

                                    OR

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


For the transition period from _________________ to __________________.
                        Commission File Number 33-22805


MASTER REALTY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

          Delaware                         48-1056392
          (State of jurisdiction of        (I.R.S. Employer
          incorporation or organization)   Identification No.)

          712 Broadway, Suite 700
          Kansas City, Missouri 64105
          (Address of principal offices)  (Zip Code)

     Registrant's telephone number, including area code:(816) 474-9333


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 for the preceding 12 months (or 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 September 30, 1998, the Registrant had 46,350 shares of preferred
stock and 1,175,775 shares of common stock outstanding.  The aggregate book
value of all shares of the Registrant, based on the September 30, 1998
unaudited financial statements was $14,587,877.










                      MASTER REALTY PROPERTIES, INC.
                         SEPTEMBER 30, 1998 FORM 10Q
                                INDEX




Part I: Financial Statements

     Financial Statements*

A.  Balance Sheets as of September 30, 1998 and December 31, 1997

B.  Statement of Operations for the three months Ended 
    September 30, 1998 and 1997                                           

C.  Statement of Operations for the Nine months Ended
    September 30, 1998 and 1997.

D.  Statement of Changes in Shareholders' Equity for the 
    Nine months ended September 30, 1998 and 1997                        

E.  Statement of Cash Flows for the Nine months ended 
    September 30, 1998 and 1997                                           


Notes to Unaudited Financial Statements                            

Management's Discussion and Analysis of 
Financial Condition and Results of Operations                        

Signatures                                                           

* All financial statements, except the balance 
sheet as of December 31, are unaudited


                      MASTER REALTY PROPERTIES, INC.
                           AND SUBSIDIARIES

                       CONSOLIDATED BALANCE SHEETS

                    September 30, 1998 and December 31, 1997


                                           September 30,      December 31,
                                              1998             1997

                                A S S E T S

CASH                                         $ 903,185     $  2,348,692

RESTRICTED CASH                                309,184          294,866

MORTGAGE NOTES RECEIVABLE, 
net of allowance for loan losses             1,296,164        2,829,615

NOTE RECEIVABLE                                197,556          193,460

PROPERTY HELD FOR INVESTMENT                 1,000,000        1,000,000

INVESTMENT IN REAL ESTATE PARTNERSHIPS         233,514          188,938

ACCOUNTS RECEIVABLE                          1,176,695        1,155,214

INDUSTRIAL REVENUE BONDS                             0          276,452

PROPERTY AND EQUIPMENT, 
at cost less accumulated depreciation       43,642,760       37,638,765

OTHER ASSETS                                 1,306,916        1,267,660
                                           -----------      -----------

                    TOTAL ASSETS           $50,065,974      $47,193,662
                                           ===========      ===========

                           MASTER REALTY PROPERTIES, INC.
                                 AND SUBSIDIARIES

                      CONSOLIDATED BALANCE SHEETS (Continued)

                      September 30, 1998 and December 31, 1997

                                           September 30,   December 31,
                                              1998             1997

                           L I A B I L I T I E S

NOTES PAYABLE                              $ 34,040,020    $  30,842,693

OTHER LIABILITIES                               919,054        2,037,553

                                           ------------    -------------

          TOTAL LIABILITIES                $ 34,959,074    $  32,880,246
                                           ============    =============

MINORITY INTEREST IN SUBSIDIARIES               519,023          515,960

COMMITMENTS AND CONTINGENCIES (Note 16)


                  S T O C K H O L D E R S'   E Q U I T Y

CAPITAL CONTRIBUTED
     Convertible preferred stock, par 
     value $.01, liquidation preference 
     up to 5% of the Company's net assets.          464           24,916

     Common stock, par value $.01, 
     authorized 45,000,000 shares                11,758          291,814

     Additional paid-in capital              41,769,651        40,926,229
                                            -----------       -----------

          TOTAL CAPITAL CONTRIBUTED          41,781,873        41,242,959

RETAINED DEFICIT                            (27,178,660)      (27,430,167)

TREASURY STOCK, 67,990 shares of common 
     stock, and 475 shares of preferred 
     stock                                      (15,336)         (15,336)
                                            ------------       ----------

          TOTAL STOCKHOLDERS' EQUITY         14,587,877        13,797,456
                                            ------------       ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $50,065,974       $ 47,193,662

                           MASTER REALTY PROPERTIES, INC.
                                AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF OPERATIONS

                    Three Months Ended September 30, 1998, and 1997

                                               1998            1997

REVENUES
     Rental income                         $    930,809     $   739,206
     Hotel Income                               630,000         556,071
     Interest and fees on mortgage loans         42,041          33,077
     Other income (loss)                          3,935           9,182
                                           ------------     -----------

          TOTAL REVENUES                   $  1,606,785     $ 1,337,356
                                           ============     ===========

EXPENSES
     Loan Servicing Fees                   $      7,372           8,714
     Rental expenses                            457,278         365,687
     General and administrative expenses         41,889         108,033
     Legal and accounting                        31,869          32,510
     Payroll and employee benefits              122,645         118,783
     Depreciation and amortization              516,049         303,247
     Interest expense                           661,894         496,265
     Provision for loan losses (recoveries)      24,218        (736,131)
                                            -----------     ------------

          TOTAL EXPENSES                   $ 1,863,214      $   697,108
                                            -----------     -----------

MINORITY INTEREST IN LOSS (INCOME) OF
CONSOLIDATED SUBSIDIARIES                      (59,629)         303,247
                                            -----------     -----------
          NET INCOME                       $  (196,800)     $  (640,428)
                                           ===========      ============

BASIC EARNINGS PER SHARE                       (0.1610)         (0.5240)

DILUTED EARNINGS PER SHARE                      (0.1437)        (0.4676)
                           MASTER REALTY PROPERTIES, INC.
                                AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF OPERATIONS

                    Nine Months Ended September 30, 1998, and 1997

                                               1998            1997

REVENUES
     Rental income                         $  2,664,716     $ 2,092,086
     Hotel Income                             2,022,000       1,697,489
     Interest and fees on mortgage loans        148,370          73,278
     Other income (loss)                         26,599          54,314
     Gain on sale of assets                      81,884
                                           ------------     -----------

          TOTAL REVENUES                   $  4,943,569     $ 3,917,167
                                           ============     ===========

EXPENSES
     Loan Servicing Fees                   $     24,993          26,707
     Rental expenses                          1,345,062       1,020,593
     General and administrative expenses        293,527         475,852
     Legal and accounting                       190,664         185,903
     Payroll and employee benefits              399,371         365,581
     Depreciation and amortization            1,255,719         969,865
     Interest expense                         1,927,210       1,688,248
     Provision for loan losses (recoveries)    (691,840)     (1,060,384)
                                            -----------     ------------

          TOTAL EXPENSES                   $ 4,744,716      $ 3,672,365
                                            -----------     -----------

MINORITY INTEREST IN LOSS (INCOME) OF
CONSOLIDATED SUBSIDIARIES                      (52,644)          6,112
                                            -----------     -----------
          NET INCOME                       $   251,507      $  238,690
                                           ===========      ============

BASIC EARNINGS PER SHARE                        0.2058         0.2171

DILUTED EARNINGS PER SHARE                      0.1836          .1743

                        MASTER REALTY PROPERTIES, INC.
                            AND SUBSIDIARIES
                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                   Three Months Ended September 30, 1998 and 1997

                                   PREFERRED   PREFERRED    COMMON    COMMON
                                     STOCK       STOCK       STOCK     STOCK
                                    SHARES      AMOUNT      SHARES    AMOUNT

Balances, December 31, 1996      2,491,622     24,916   15,554,669  155,546
Debenture Conversion to Stock                            6,273,500   62,735
Net Income for the Period
Treasury Stock
                                 ---------    -------   ----------  -------
Balances, September 30, 1997     2,491,622     24,916   21,828,169  218,281
                                 =========    =======   ==========  =======

Balances, December 31, 1997      2,491,622     24,916   29,181,486  291,814

Debenture Conversion to Stock                              959,067    9,591
Unsecured Director's Fees
converted to stock                                         229,738    2,827
Pension Plan Stock Conversion                              863,095    8,631
Stock Bonus                                              2,147,362   21,474
Reverse Stock Split             (2,445,272)   (24,452) (32,257,973)(322,579)
Net income for the period
                                ----------    -------   ----------  -------
Balances, June 30, 1998             46,350        464    1,175,775   11,758
                                ==========    =======   ==========  =======

                           CAPITAL IN                            TOTAL
                         EXCESS OF PAR  UNDISTRIBUTED TREASURY SHAREHOLDER'S
                             VALUE     EARNINGS (DEF)   STOCK     EQUITY

Balances, Dec. 31, 1996   38,587,104   (28,937,294)              9,830,272
Debenture Conversion 
   to Stock                1,342,549                             1,405,284
Net Income for the Period                  238,690                 238,690
Treasury Stock               (15,336)                              (15,336)
                           ----------  ------------   --------- -----------
Balances, Sept 30 1997    39,914,317   (28,698,604)             11,458,910
                          ==========   ===========    ========= ===========

Balances, Dec. 31, 1997   40,926,229   (27,430,167)    (15,336) 13,797,456

Debenture Conversion 
   to Stock                  227,641                               237,232
Unsecured Director's Fees
converted to stock            16,173                                19,000
Pension Plan Stock Conversion 49,369                                58,000
Stock Bonus                  459,535                               481,009
Reverse Stock Split           90,704                              (256,327)
Net Income for the Period                  251,507                 251,507
                           ----------  ------------   --------- ----------
Balances, Sept 30 1998    41,769,651   (27,178,660)    (15,336)  14,587,877
                          ==========   ===========    ========= ===========

                      MASTER REALTY PROPERTIES, INC.
                           AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                Nine Months Ended September 30, 1998 and 1997


                                                     1998             1997

CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                            $   251,507    $  238,690
     Adjustments to reconcile net income 
         to net cash provided by (used in) 
         operating activities
         Minority interest                              3,063        (6,112)
               Interest receivable                                    5,425
               Accounts receivable                    (21,481)    1,316,500)
               Prepaid Expenses                                      (3,002)
               Other assets, net                      (39,256)    1,398,144
               Increase (decrease) in 
                  operating liabilities
               Other liabilities                    (479,407)       (13,361)
               Prepetition liabilities                (12,690)      ( 3,069)
               Interest payable                       147,277       (62,461)
                                                 ------------     ----------
NET CASH PROVIDED BY (USED IN) 
     OPERATING ACTIVITIES                            (150,987)      237,754
                                                 ------------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Decrease mortgage notes receivable            1,529,355        112,319
     Decrease in real estate partnerships            (44,576)    (1,090,360)
     Decrease in industrial revenue bonds            276,452
     Increase in fixed assets                     (6,003,995)      (493,999)
                                                 ------------     ----------


NET CASH USED IN INVESTING ACTIVITIES           $  (4,242,764)  $(1,472,040)

CASH FLOW FROM FINANCING ACTIVITIES
     Decrease in equity due to 
        reverse stock split                          (328,549)
     Increase in notes payable                  $   3,291,111    $ (397,217)
                                                 ------------     ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES       $   2,962,562     $(397,217)
                                                 ------------     ----------

NET INCREASE (DECREASE) IN CASH                    (1,431,189)   (1,631,503)

CASH, BEGINNING OF PERIOD                           2,643,558     3,855,754

CASH, END OF PERIOD                              $  1,212,369    $2,224,251

(1)  Restricted cash and escrows

The Company entered into a Cash Management, Collateral and Security Agreement
(Cash Collateral Agreement), on December 19, 1997, as part of the First
Mortgage Note and Mezzanine Note transactions.  As a result, all cash
received from the operations of the collateral pledged for the First Mortgage
Note, after December 19, 1997, is deposited into a central operating account.   
A monthly sweep of this account is used to fund, in priority, certain
reserves and sub-accounts created pursuant to the Cash Collateral Agreement. 
All remaining funds, if any, are paid to the Company.  The following reserves
were established under this agreement.

                                       September 30, 1998   December 31, 1997

Debt service reserve                       $151,181             $146,000
Capital expenditure reserve                 119,362               91,035
Impound costs sub-account                    38,641               57,831
                                           --------             --------
Total restricted cash and escrows          $309,184             $294,866
                                           ========             ========

Debt service reserve - This account was created to fund the First Mortgage
Note debt service to the extent necessary.  Withdrawals from this account
occur only when there are insufficient funds in the central operating account
to fully fund the First Mortgage Note debt service.

Capital expenditure reserve - This account was created to fund the payment of
replacement expenditures, furniture, fixtures and equipment replacement
expenditures and leasing expenditures.  Funding is provided in monthly
deposits from the central operating account.  Withdrawals may be made from
this account for approved expenditures.

Impound costs sub-account - This account was established to pay impound
costs.  These impound costs are defined as all taxes of the First Mortgage
Note borrowers and insurance (if insurance not otherwise provided for by the
Company) for the pledged collateral of the First Mortgage Note.  Funding is
provided in monthly deposits from the central operating account.  Withdrawals
may be made from this account for approved costs.

The Cash Collateral Agreement is secured by a pledge of the central operating
account and all income derived from the investment of that account.  The
First Mortgage Note and Mezzanine Note are also cross-collateralized and
cross-defaulted with the Cash Collateral Agreement.

(2)  Mortgage notes receivable

                                         September 30, 1998 December 31, 1997

Mortgage notes receivable, 
   partially-earning                       $2,988,746           $6,521,108
Allowance for losses                       (1,692,582)          (3,691,493)
                                           ----------            ---------
Net mortgage notes receivable              $1,296,164           $2,829,615
                                           ==========           ==========


Mortgage notes receivable are collateralized by real estate, assignment of
rents, certain future earnings of borrowers, other borrower assets, investor
notes and borrower personal guarantees.  The collateralized real estate is
located at various geographical locations, with a concentration in a downtown
area of Kansas City, Missouri.  A substantial portion of the Company's
debtors' ability to honor their contracts is dependent upon the real estate
economy.  Effective February 1, 1998, the Company converted its partially-
earning mortgage note receivable with a net carrying value of $1,748,633 into
a partnership investment (see Note 13).

Due to the uncertainty of future collections and possible foreclosures, it is
not practicable to estimate the scheduled maturities of mortgage notes
receivable over the next five years and thereafter.

(3)  Property held for investment

                                        September 30, 1998  December 31, 1997

Non-earning, land in New Mexico            $1,000,000           $1,000,000
                                           ==========           ==========

The carrying amount of the land in New Mexico is based on an estimate of
value established at the time the contractual right to the property was
acquired in foreclosure on collateral for a note receivable.  The estimate
was based on prior appraisals, studies of the development possibilities for
the property, and local economic conditions.  The land is in a remote part of
New Mexico and access to the property is limited.  There is limited real
estate sales activity in this region to determine the likelihood of realizing
the carrying value of this investment.  Because of these factors, it is
possible that the estimate of the realizable value of this land may change
materially.

(4)  Investment in real estate partnerships

Investment in real estate partnerships consists of the following:

                                                              Ownership %
                                           Ownership              at
                                            Interest        9/30/98 12/31/97

OPP IX, Limited Partnership                 Limited          25.12%   24.9%
OPP X, Limited Partnership                  Limited            2.3%    2.3%
Historic Suites of America - KC             Limited           19.8%   19.8%

The Company acquired an additional 10 limited partnership units in OPP IX on
January 7, 1998.


(5)  Accounts receivable - related party

Amounts due from Embassy Hotel Management, Inc. are in connection with the
leases and funds advanced for operations of the following hotel properties:

                                       September 30, 1998   December 31, 1997

Ramada Inn - Phoenix, Arizona            $  287,955         $  353,085
Ramada Inn - Euless, Texas                  420,035            525,755
Historic Suites - Kansas City, Missouri      90,398            114,479
Holiday Inn - Wichita, Kansas               348,825            118,824
                                           --------           --------
Total                                   $ 1,142,213         $1,112,143
                                         ==========         ==========

(6)  Industrial revenue bonds

As disclosed in Note 12 the Company is contingently liable as a guarantor on
Industrial Revenue Bonds (Soho Office Center Project) Series 1996 between the
Land Clearance for Redevelopment Authority of Kansas City (the Issuer) and
Soho Office Center, L.P. (the Borrower).  The Company owned the bonds, which
totaled $2,655,000 as part of a note receivable, and distributed $2,345,000
in 1996, and $33,548 in 1997 in satisfaction of certain notes payable
obligations. The Company sold all of its remaining bonds in April 1998 at
their face value however, the closing on $91,743 of the bonds was delayed into 
the third quarter of 1998.

(7)  Property and equipment

                                        September 30, 1998  December 31, 1997
Cost
   Land and land improvements              $ 7,208,108          $ 6,880,699
   Building and building improvements       36,973,880           30,750,746
   Furniture and equipment                   3,193,120            2,840,758
                                           -----------          -----------
Total Cost                                 $47,375,108          $40,472,203
   Accumulated depreciation                 (3,732,348)          (2,833,438)
                                           -----------          -----------
Net property, plant and equipment          $43,642,760          $37,638,765
                                           ===========          ===========

Expenditures for maintenance, repairs and improvements which do not
materially extend the useful life of the asset are expenses.  The aggregate
depreciation charged to operations for the period ended September 30, 1998 and
1997 was $1,081,323 and $353,775, respectively.

(8)  Notes payable

                                       September 30, 1998   December 31, 1997

Salomon Brothers mortgage note            $19,489,126          $19,675,000
Salomon Brothers Mezzanine note             1,190,000              930,000
Midland Bank mortgage note                  7,249,997             7,249,997
Hillcrest Bank                              3,568,783
Convertible subordinated debentures         1,461,616             1,646,534
Unsecured alternative treatment note          833,121               994,430
Unsecured non-interest bearing note payable   128,333               174,406
Real estate tax notes                          98,860               147,890
Hotel van loan                                 20,184                24,436
                                          -----------            ----------
Total notes payable                       $34,040,020           $30,842,693

Salomon Brothers mortgage note - Mortgage note payable (First Mortgage Note)
of December 19, 1997 with monthly principal and interest payments of $145,397
based on an interest rate of 7.5% and a 25-year amortization period.  The
initial payment of accrued interest only through January 31, 1997 was paid on
February 1, 1998.  The outstanding principal and interest are due at maturity
on January 1, 2008.  The nonrecourse First Mortgage Note is collateralized by
commercial, residential and hotel properties in Kansas City, Missouri, a
hotel in Phoenix, Arizona and a hotel in Euless, Texas.  This note is also
cross-collateralized and cross-defaulted with the Mezzanine Note and the Cash
Collateral Agreement.

Salomon Brothers Mezzanine note - Mortgage note payable (Mezzanine Note) of
December 19, 1997 with interest payable monthly based upon the one-month
London Interbank Offered Rate (LIBOR) plus 4.95%.  The Company received an 
additional $260,000 advance on this note in May, 1998.  The interest rate at
September 30, 1998 was 10.59% with the initial payment due February 1, 1998. 
Monthly principal payments begin in January 1999 based upon a monthly
calculation using the outstanding principal balance, the interest rate from
the preceding month and a 48-month amortization period less the months
elapsed since January 1, 1999.  The outstanding principal and interest are
due at maturity on January 1, 2003.  The Mezzanine Note is secured by the
pledge of the Company's general partner interest in New Historic Suites
Partners, L.P. and a full payment guaranty by the Company.  The Mezzanine
Loan Agreement requires that the monthly aggregated Adjusted Property Net
Cash Flow for the properties securing the First Mortgage Note to at least
equal the monthly calculation of the Debt Service Coverage Threshold.  The
Debt Service Coverage Threshold is defined as 1.05 times the sum of the
annual debt service on the First Mortgage Loan plus the debt service payable
on the Mezzanine Loan at an assumed principal and interest constant of 27%. 
This note is cross-collateralized and cross-defaulted with the First Mortgage
Note and the Cash Collateral Agreement.

Midland Bank mortgage note - Mortgage note payable of October 1, 1997 with
interest payable monthly at an initial rate of 7% until April 1, 1999.  The
rate then increases to 8% through March 31, 2001 and to 8.5% from April 1,
2001 until maturity.  Interest only is payable monthly through October 5,
1998.  The interest payments are based on the Deemed Balance (as defined)
determined annually beginning on April 1, 1999.  The initial Deemed Balance
is the face amount of the note.  From November 5, 1998 through October 5,
2000, monthly payments of principal and interest are based on a 30-year
amortization of the outstanding principal balance.  Beginning on November 5,
2000, the monthly principal and interest payments are based on a 25-year
amortization of the outstanding principal balance.  The outstanding principal
and interest are due at maturity on April 1, 2004.  The note is
collateralized by a hotel in Wichita, KS and the Disbursement Account
(required reserve account to fund property improvements).

Hillcrest Bank mortgage note -Mortgage note payable of February, 1998 with
interest and principal payable monthly at an interest rate of 9.25%. 
Principal is amortized based on a twenty year amortization.  All unpaid
principal and interest is due in February, 2000.  The Company has guaranteed
payment under this note.  The note may be renewed for an additional year.

Convertible subordinated debentures - Convertible Subordinated Debentures
issued January 1994.  The securities were issued in the initial aggregate
principal amount of $9,127,752, and bear interest at the rate of 6% per
annum.  Interest accrues semiannually on January 1 and July 1 of each year. 
The securities mature December 2003.  At any time prior to maturity, the
securities are convertible into shares of common stock of the Company, unless
the securities are called for redemption.  The number of shares issuable upon
conversion is based on the Company's book value of $.224/share as of the
December 31, 1993 financial statements. Related accrued interest expense is
not subject to conversion to common stock and the liability is eliminated
upon conversion of the debenture principal.  Accrued interest eliminated upon
conversion of debentures during the periods ended September 30, 1998 and 1997
amounted to $48,275 and $109,547, respectively.  The securities are
subordinate and junior in right of payment to all senior indebtedness of the
Company (which includes all collateralized debt of the Company).  Senior
Indebtedness is to be paid in full before holders of the Subordinated
Debentures are to be paid any principal or interest.

Unsecured note - 9% unsecured note payable to previous participants in the 
alternative treatment plan, with interest only payable quarterly until maturity 
in August, 2000.

Unsecured non-interest bearing note payable - Note due September 2000,
payable in an installment of $75,000 on January 31, 1996 and 60 monthly
payments of $7,333 with the remaining unpaid principal due at maturity. 
Interest has been imputed at a rate of 9%.

Real estate tax note - Unsecured note payable consisting of an agreement with
the taxing authorities for delinquent real estate taxes on a foreclosed
property with interest imputed at 9% and monthly payments of $3,220.30 until
maturity on August 15, 2002.  On March 31, 1998 the Company sold a property
which was the subject of an unsecured real estate tax note.  This note was
paid off as part of the closing of this sale.

Hotel van loan - 9.25% note payable, collateralized by a vehicle, payable in
monthly installments of $646 until maturity in September 2001.


(9)  Other liabilities

Other liabilities consist of the following:

                                       September 30, 1998   December 31, 1997

Interest payable                           $  147,277           $   -     
Accounts payable                               55,825              169,550
Accrued bonus pool                            198,380            1,324,113
Due to affiliates                                -                 367,707
Other liabilities                             517,572              176,183
                                           ----------           ----------
                                           $  919,054           $2,037,553
                                           ==========           ==========

At September 30, 1998 and December 31, 1997, other liabilities includes the
accrued bonus pool liability. The Company's bonus pool became effective June
15, 1994 to provide additional compensation to Company employees.  Bonus pool
expense charged to operations for the period September 30, 1997, was $178,000.

(10) Common and Preferred Stock and Paid in Capital.

The Company completed both a twenty five hundred (2,500) to (1) reverse stock 
split effective April 30, 1998 and a seventy five (75) for (1) forward stock 
split effective June 30,1998.  Both of these stock splits were approved by the 
stockholders of the Company.

(11)  Treasury stock

During the year ended December 31, 1996, the Company acquired 67,990 shares
of preferred stock and 475 shares of common stock.  These shares were
obtained under a provision in the Company's Plan of Reorganization which
allowed  holders of convertible debentures over 65 years old to convert their
debentures into alternative treatment debt. Since no value was assigned to
the treasury stock, management has used $.224 per share as the cost of the
treasury stock acquired.

(12)  Business segment information

Description of the types of activities for reportable segments - The Company
has three reportable segments:  hotel leasing, residential/mixed use
properties, and assets held for restructure.  The hotel leasing segment
realizes rent income on Hotel properties leased to operators.  The
residential/mixed use properties segment realizes income from residential and
commercial real estate properties.  The assets held for restructure are
assets recovered as collateral on notes receivable for which the Company has
no long-term objective of owning and operating.

Revenue from segments below the quantitative thresholds are reported as all
other.  Those activities are predominantly non-recurring gains and losses. 
The assets in all other are predominantly administrative assets, intangible
assets, and assets held for long-term capital appreciation.

Measurement of segment profit or loss and segment assets - The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies. The Company does not have intersegment sales
and transfers.

Factors management used to identify the enterprise's reportable segments -
The Company's reportable segments are strategic business units that are in
distinct markets consistent with the Company's long-range strategic business
plan.  They are managed separately because each business requires different
management practices.

The following table illustrates information concerning segment profit or loss
and segment assets:

                                   Residential/    Assets
                         Hotel      Mixed Use       For       All
Period ended 6-30-98    Leasing    Properties   Restructure  Other   Total

Revenues from 
   external customers $2,022,000  $2,477,460   $199,050  $ 43,395 $4,741,905
Interest revenue           9,727       1,158    114,712    46,827    172,424
                       ---------   ---------    --------  -------- ---------
Total revenues        $2,031,727  $2,478,618  $ 313,762  $ 90,222 $4,914,329

Percentage of segment
   revenues to total       41%         51%          6%         2 %      100%
Interest expense       1,015,636     679,956      8,572   223,046  1,927,210
Depreciation and
   amortization          961,992     144,668     18,813   130,247  1,255,720
Segment profit (loss)     15,120     419,354    146,214  (329,181)   251,507
Percentage of segment
   profit (loss) to total  6%         166%          58%    (130%)      100%

Other significant non-
   cash items:
   Convertible sub-
     ordinated debentures
     converted to
     common stock           -           -             -   237,232    237,232

September 30, 1998

Segment assets        28,374,212  16,758,413  2,183,798 2,749,551 50,065,974
Percentage of segment
   assets to total         57%        33%         4%        6%         100%
Expenditures for
   segment assets        499,518   5,481,541      19,418     3,518  6,003,995

In addition to the above measures for business segments, the Company monitors
Funds from Operations (FFO) as defined by National Association of Real Estate
Investment Trusts (NAREIT).  Real Estate Investment Trusts use FFO as a
standard measure of operating performance.  FFO is defined by NAREIT as net
income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures.  The calculation of FFO for
the Company for each operating segment is as follows:

                                   Residential/    Assets
                         Hotel      Mixed Use       For       All
Period ended 6-30-98    Leasing    Properties   Restructure  Other   Total

Net income            $  15,120   $ 419,354   $146,214  $(329,181)  $251,507
Add minority interest    52,644        -           -          -       52,644
Add partnership
   investment loss                                          9,249      9,249
                       ---------   ---------    --------   -------- ---------
Income before 
   minority interest  $  67,764   $419,354    $146,214  $(319,932)  $313,400

Add: Depreciation and
   amortization of 
   real estate assets   961,992    144,668      18,813       -     1,125,473

Less: Gain on sales
   of assets              -           -           -       (81,884)   (81,884)
                      ---------   ---------   --------   -------- ---------
Funds from operations$1,029,756   $564,022    $165,027  $(401,816)$1,356,989
                       =========  ========    ========  ========= ==========

(13)  Commitments and contingencies

Guaranty:

The Company is contingently liable as a guarantor on Industrial Revenue Bonds
(IRB's) (Soho Office Center Project) Series 1996 between the Land Clearance
for Redevelopment Authority of Kansas City (the Issuer) and Soho Office
Center, L.P. (the borrower) in the amount of $2,655,000.  The Series 1996
bonds were reissued to pay amounts due to the Company on Series 1984 Bonds. 
The Company entered into the Guarantor Agreement to effectuate the
transaction whereby these funds would be available to the Company.  The
Company has pledged collateral to secure the guaranty.  The collateral
consists of the Company's Deed of Trust and Security Agreement executed by
the borrower in favor of the Company on the Series 1984 Bonds, and assignment
on a ratable basis of General Partnership Interest of River Market Venture,
Inc. (a wholly owned subsidiary of the Company) in River Market Venture I,
L.P.

Minimum rents:

The Company receives income on commercial and residential properties under
noncancelable operating lease agreements expiring through 2001 in connection
with its rental operations.  Future minimum rental payments under these
leases as of December 31, 1997 are as follows:


Years Ended December 31
   1998                                                $1,391,344
   1999                                                   380,903
   2000                                                   150,984
   2001                                                    50,610
   2002                                                    40,204
   Thereafter                                              37,225
                                                       ----------

Total                                                  $2,051,270
                                                       ==========

(14)  Acquisitions

On February 1, 1998, the Company acquired a 90% managing general partnership
interest in Soho West III, L.P. by converting its note receivable from the
partnership and contributing an additional real estate asset to an ownership 
interest. The Company is to receive all of the partnership's distributions
until certain returns to the Company have been attained.  The Company attributes
no value to the minority interest in this partnership.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (dollars in thousands, unless otherwise stated):

Background:

     The following discussion compares historical results of operation for
the period ended September 30, 1998 and 1997.  The discussion should be read in
conjunction with the financial statements and notes thereto included
elsewhere in this report.

The Company:

    The Company is a public real estate investment trust that is primarily
engaged in the acquisition, development and operation of mixed use
apartment/commercial properties and the acquisition and development of hotel
properties.  The Company operates these leases either directly or through
subsidiaries or partnerships.

Results of Operations:

     Period Ended September 30,1998 Compared with Period Ended September 30, 
1997

Rental Properties:

     Revenue from rental properties increased by $572,630 for the Nine
months ended September 30, 1997 to September 30, 1998.  This increase was due
to the increases in rental rates in all of the Properties,  reduction in 
vacancies, and the purchase of a mixed-use property in February, 1998.

     Rental expenses increased from $1,060,384 at September 30, 1997 to 
$1,345,062 at September 30, 1998.  This increase of $284,678 was due to the 
addition of an additional mixed-use property in February, 1998.

Hotel Properties:

     Revenues from hotel lease income increased from $1,697,489 at June 30,
1997 to $2,022,000 for September 30, 1998.  This increase was due to the 
acquisition of an additional hotel property in October, 1997.

Other Revenues and Expenses:

     The Company continued to receive interest income on its remaining real
estate loans and cash deposits.  The amount received was $148,370 and $73,278 
for September 30, 1998 and September 30, 1997, respectively.

     The Company disposed of a rental property on March 31, 1998 at a gain of
$81,884.

     The Company had a $182,370 decrease in general and administrative
expenses for the Nine months ended September 30, 1998 compared to September 30, 
1997. 
This decrease was mostly attributable to a decrease in the Company's bonus
pool for employees from September 30, 1997 to September 30, 1998.

     Interest expense increased by $238,962 from $1,688,248 at September 30, 
1997 to $1,927,210 at September 30, 1998.  This net increase was due to the 
refinancing of the Company's assets, the decline in interest attributed to 
debentures and the additional expense attributable to the mixed-use property 
acquired in February, 1998.

     The Company has continued to recover losses previously reserved related
to the Company's former loan portfolio and assets.  The recovery for September 
30, 1998 was $691,840 compared to $1,060,384 for September 30, 1997.

Liquidity and Capital Resources:

     The Company had deficits in cash flow from both the operating and
investing activities which represented the payment of Company liabilities and
the acquisition of additional real estate assets.

     The Company had an increase in cash flows from financing activities
related to the debt financing of the acquisition of additional real estate
assets.

Funds from Operations:

     FFO is defined by the National Association of Real Estate Investment
Trusts ("NAREIT") as net income (loss) (computed in accordance with generally
accepted accounting principles) excluding gains (or losses) from debt
restructuring and sales of property, and distributions in excess of earnings
allocated to Minority Interest, plus depreciation/amortization of assets
unique to the real estate industry.  Depreciation/amortization of assets not
unique to the industry, such as amortization of deferred financing costs and
non-real estate assets, is not added back.  FFO does not represent cash flow
from operating activities in accordance with generally accepted accounting
principles (which, unlike FFO, generally reflects all cash effects of
transactions and other events in the determination of net income) and should
not be considered an alternative to net income as an indication of the
Company's performance or to cash flow as a measure of liquidity or ability to
make distributions.  The Company considers FFO a meaningful, additional
measure of operating performance because it primarily excludes the assumption
that the value of real estate assets diminishes predictably over time, and
because industry analysts have accepted it as a performance measure. 
Comparison of the Company's presentation of FFO, using the NAREIT definition,
to similarly title measures for other REITs may not necessarily be meaningful
due to possible differences in the application of the NAREIT definition used
by such REITs.

     The following reflects the FFO of the Company for the periods ended
June, 1998 and 1997.

                                     September 30, 1998    September 30, 1997

Net income (loss)                          $251,507        $ 244,802
Add partnership loss                          9,249
Add minority interest                        52,644           (6,112)
                                           ---------        ---------
Income before minority interest            $313,400        $ 238,690
Add depreciation and amortization
   of real estate assets                  1,125,473          678,253
Gain on sale of assets                      (81,884)         (61,613)
                                           ---------        ---------
Funds from operations                    $1,356,989        $ 855,330
                                           ========         ========


                                 SIGNATURES

     Pursuant to the requirements to the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: _____________ 1998, 

MASTER REALTY PROPERTIES, INC.


By:  /S/ John J. Bennett, Chairman
     (Principal Executive Officer)

By:  /S/ Thomas H. Trabon, Executive Vice President
     and Chief Financial Officer