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 September 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  [X]    No [ ]

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.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)


                          INDEX TO FINANCIAL STATEMENTS


                                                                         PAGE
                                                                         ----

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

   Balance Sheets                                                        F-2

   Statements of Operations                                              F-3

   Statement of Partners' Capital                                        F-4

   Statements of Cash Flows                                              F-5

   Notes to Financial Statements                                    F-6-F-14


                                      F-1
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.
                           Consolidated Balance Sheets
                    September 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
                                                                           September 30,   December 31,
                                                                               2000            1999
                                                                           ------------    -----------
                                                                            (Unaudited)
<S>                                                                        <C>             <C>
Assets:

  Land                                                                     $  7,695,392    $ 1,178,693
  Depreciable property                                                       31,873,043      6,189,095
                                                                           ------------    -----------
                                                                             39,568,435      7,367,788
  Less accumulated depreciation                                              (6,612,304)    (1,453,177)
                                                                           ------------    -----------
                                                                             32,956,131      5,914,611

Investment In Partnerships                                                    4,275,810        930,970

Cash and Cash Equivalents                                                       191,880         27,552
Restricted Cash                                                                 864,959         52,089
Interest Receivable                                                           1,325,169         36,997
Other Receivables                                                                79,103          3,724
Due from Baron Capital Trust                                                    296,010        296,010
Advances to Affiliates                                                        6,730,936          5,141
Other Property and Equipment                                                    272,720        134,981
Other Assets                                                                    748,733        188,692
                                                                           ------------    -----------
                                                                           $ 47,741,450    $ 7,590,767
                                                                           ============    ===========


Liabilities:

  Mortgages payable                                                        $ 25,117,572    $ 4,278,117
  Accounts payable and accrued liabilities                                    2,213,352      1,078,353
  Note payable                                                                  115,000        100,000
  Notes payable, affiliates                                                   3,813,313         50,000
  Capital lease obligation                                                       40,775         42,369
  Security deposits                                                             195,462         40,308
                                                                           ------------    -----------
      Total liabilities                                                      31,495,474      5,589,147

Minority Partners                                                               536,900              0

Partners' Capital:
  General Partner: issued and outstanding, 39,488 and 18,962 as of             (127,527)       (33,362)
       September 30, 2000 and December 31, 1999 respectively,
       partnership units
  Limited Partners: issued and outstanding, 3,909,347 and 1,877,246          15,836,603      2,034,982
       partnership units as of September 30, 2000 and December 31, 1999
       respectively, of which 757,746 are subject to escrow restrictions
                                                                           ------------    -----------
       Total Partners' Capital                                               15,709,076      2,001,620
                                                                           ------------    -----------
                                                                           $ 47,741,450    $ 7,590,767
                                                                           ============    ===========
</TABLE>


                        See notes to financial statements


                                      F-2
<PAGE>

                   BARON CAPITAL PROPERTIES, L.P.
                      Consolidated Statements of Operations
  For the Three and Nine Months Ended September 30, 2000 and September 30, 1999

<TABLE>
<CAPTION>
                                                               Nine                Nine               Three              Three
                                                              Months              Months             Months             Months
                                                               Ended              Ended               Ended              Ended
                                                           September 30,      September 30,      September 30,      September 30,
                                                               2000                1999               2000               1999
                                                               ----                ----               ----               ----
                                                            (unaudited)        (unaudited)         (unaudited)        (unaudited)
<S>                                                         <C>                  <C>              <C>                  <C>
Revenue:
  Rental                                                    $3,155,896           $871,001         $1,411,137           $280,496
  Equity in net loss of unconsolidated partnership            (113,915)                 -            (34,921)            29,093
  Interest and other income                                    634,476                               266,342                  -
                                                          ----------------------------------------------------------------------
                                                             3,676,457            871,001          1,642,558            309,589

Real Estate Expenses:
  Depreciation                                                 550,985            107,361            231,768             34,454
  Interest                                                   1,045,039            230,534            489,524             86,043
  Repairs and maintenance                                      502,951             61,092            222,387             23,365
  Personnel                                                    442,644             89,576            177,268             32,105
  Property Taxes                                               274,838             61,484            127,020             20,208
  Property Insurance                                            68,504             15,418             30,474              4,700
  Utilities                                                    283,151             50,621            138,997             21,020
  Other                                                        308,226            143,948             98,475             12,378
                                                          ----------------------------------------------------------------------
                                                             3,476,338            760,034          1,515,913            234,273

Administrative Expenses:
  Personnel, including officers' compensation                  691,864            642,633            156,403            143,215
  Professional services                                        284,056            253,208             34,517             80,188
  Other                                                        352,234             27,575            179,210              3,242
                                                          ----------------------------------------------------------------------
                                                             1,328,154            923,416            370,130            226,645

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

     Total expenses                                         13,161,130          1,683,450          1,886,043            460,918
                                                          ----------------------------------------------------------------------


Net Loss                                                   ($9,484,673)         ($812,449)         ($243,485)         ($151,329)
                                                          ======================================================================

Net Loss per Unit Basic and Diluted                             ($2.95)            ($0.45)            ($0.07)            ($0.08)
                                                                =======            =======            =======            =======
Weighted Average Number Partnership Units Outstanding        3,216,538          1,793,060          3,404,600          1,819,187
</TABLE>


                        See notes to financial statements


                                      F-3
<PAGE>

                   Consolidated Statement of Partners' Capital
                  For the Nine Months Ended September 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                                                 -          (95,805)               -        (9,388,868)       (9,484,673)
  Credit for estimated fair value of services
     performed by officer                                  -            1,640                -           161,288           162,928
  Exchange Units issued                               24,742                -        2,449,525        22,799,083        22,799,083
  Adjustment- Original Investors' escrowed units      (4,489)               -         (444,414)                -                 -
                                                      -----------------------------------------------------------------------------


Partners' Capital, September 30, 2000 (Unaudited)     39,488        ($127,527)       3,909,347       $15,836,603       $15,709,076
                                                      =============================================================================
</TABLE>


                        See notes to financial statements

                                      F-4
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                      Consolidated Statements of Cash Flows
              For the Nine Months Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                                   Nine months ended September 30,
                                                                         2000           1999
                                                                         ----           ----
                                                                     (Unaudited)    (Unaudited)
<S>                                                                  <C>            <C>
Cash Flows from Operating Activities:
   Net loss                                                          ($9,484,673)   ($  812,449)
   Adjustments to reconcile net loss to net cash
           used by operating activities:
         Provision for officer's compensation                            162,928           --
         Depreciation and Amortization                                   550,985        116,384
         Equity in net loss of unconsolidated partnership                113,915           --
         Recognition of Provision for Impairment                       8,356,638           --
         (Increase) Decrease in operating assets:
            Other receivables                                             37,579         12,195
            Accrued Interest Receivable                                   13,394        (36,216)
            Other assets                                                  (9,450)       (39,295)
         Increase (Decrease) in operating liabilities:
            Accounts payable and accrued liabilities                    (147,501)        95,449
            Lease Obligations                                               --          (20,325)
            Security deposits                                            (28,092)         3,560
                                                                     --------------------------
               Net cash used by operating activities                    (434,277)      (680,697)

Cash Flows from Investing Activities:
   Investment in partnerships                                              1,203       (820,121)
   Cash distributions from partnerships                                  557,471           --
   Purchases of other property and equipment                             (17,697)         6,311
   Increase in Restricted Cash                                          (101,990)       (27,018)
   Advances to affiliates                                                (13,479)        10,750
                                                                     --------------------------
               Net cash provided by (used in) investing activities       425,508       (830,078)

Cash Flows from Financing Activities:
   Partners' capital contributions                                       230,118      1,845,666
   Distributions paid                                                       --         (269,947)
   Proceeds from mortgage financing                                         --          236,273
   Proceeds from notes payable affiliates                                 34,534       (256,000)
   Proceeds from note payable                                             15,000           --
   Payments on mortgages payable                                        (101,575)          --
   Payments on capital lease obligation                                   (4,980)          --
   Other                                                                    --             --
                                                                     --------------------------
               Net cash provided by financing activities                 173,097      1,555,992

Net Increase in Cash and Cash Equivalents                                164,328         45,217

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

Cash and Cash Equivalents, Ending                                    $   191,880    $   122,941
                                                                     ==========================

Supplemental Disclosure of Cash Flow Information:
    Cash paid for mortgage and other interest                        $ 1,045,039    $   230,534
                                                                     ==========================
</TABLE>


                        See notes to financial statements


                                      F-5
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Basis of Presentation

        The   consolidated   balance  sheet  as  of  September  30,  2000,   the
        consolidated  statements  of  operations  for the nine and three  months
        ended  September 30, 2000 and 1999,  the statement of partners'  capital
        for the nine months  ended  September  30,  2000,  and the  consolidated
        statements  of cash flows for the nine months ended  September  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 September
        30, 2000 and for the period  presented,  have been made.  The results of
        operations  for the three and nine months ended  September  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
        partnership  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, acquires, owns, operates,  manages and
        improves residential  apartment properties for long-term ownership,  and
        thereby seeks 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.

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

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


                                      F-6
<PAGE>



                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)

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 nine months ended  September  30, 2000 and the
        year ended  December  31, 1999 the  Partnership  incurred  net losses of
        $9,484,673  and  $2,641,250  and negative cash flows from  operations of
        $434,277 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  subordinated
                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 to give it the
                economies  of scale and the size  required for the Trust to list
                its Common Shares on a recognized securities exchange..

        o       The  Partnership  will also  negotiate  with the firms which 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,

                                      F-7
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)

        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.

NOTE 4. COMMITMENTS AND CONTINGENCIES

        Officers' Compensation

        Gregory K. McGrath, a founder of the Trust and the Operating Partnership
        and the President, sole shareholder and sole director of Baron Advisors,
        Inc.,  a trustee  of the Board of the Trust,  serves as Chief  Executive
        Officer of the Trust. He agreed to serve as Chief  Executive  Officer of
        the  Trust  for  its  initial  year  of   operations   in  exchange  for
        compensation  in the form of Common  Shares or Units in an amount not to
        exceed 25,000 Common Shares or Units, as applicable, to be determined by
        the  Executive  Compensation  Committee  of the Board of the Trust based
        upon his  performance,  in  addition  to benefits  and  eligibility  for
        participation in any option plan and bonus incentive  compensation  plan
        which may be implemented by the  Partnership.  During 1998, 1999 and the
        first three  quarters of 2000, no Common Shares of the Trust or Units of
        the Partnership were issued to Mr. McGrath as compensation.  However, in
        order  to  reflect  all  appropriate   administrative  expenses  of  the
        Partnership,  a provision of $162,928 has been made in the  accompanying
        financial  statements  for the  estimated  fair  value  of the  services
        rendered by Mr. McGrath as Chief  Executive  Officer for the first three
        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.

        Robert  S.  Geiger,  the  other  founder  of  the  Trust  and  Operating
        Partnership,  serves  as the  Chief  Operating  Officer  of  the  Trust,
        Operating Partnership and Baron Advisors, Inc. His initial annual


                                       F-8
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)

        salary was set at $100,000, in addition to benefits, and eligibility for
        participation  in any  common  share  option  plan and  bonus  incentive
        compensation plan implemented by the Operating Partnership. Since August
        1, 2000, Mr. Geiger has received no compensation.

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
        September 30, 2000 and December 31, 1999 was $296,010.

        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 September 30,
        2000, the Partnership was due $1,304,729 on these notes.

NOTE 6. PARTNERS' CAPITAL

        Partners' Capital Contributions

        During  the  nine  months  ended   September  30,  2000,  the  Operating
        Partnership issued 26,990 Units of limited  partnership  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 nine months ended  September  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


                                       F-9
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)

        the Operating Partnership,  and the President, sole stockholder and sole
        director of Baron Advisors, Inc., which serves as a trustee on the Board
        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  Partnerships  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.

        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,  Mr.  McGrath  and Mr.  Geiger  (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
        (2,500,000)  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

                                      F-10
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)

        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,  was made 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 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 nine months ended September 30, 2000.



                                      F-11
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)

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 nine months  ended  September  30,
        2000 and 1999.

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

<TABLE>
<CAPTION>
                                                                           Weighted
                                                                           Average          Loss
                                                         Net Loss           Units         Per Unit
                                                         --------           -----         --------
<S>                                                      <C>              <C>             <C>
        Three Months Ended September 30, 2000            ($243,485)       3,404,600       ($0.07)
        Three Months Ended September 30, 1999            ($151,329)       1,819,187       ($0.08)
        Nine Months Ended September 30, 2000           ($9,484,673)       3,216,538       ($2.95)
        Nine Months Ended September 30, 1999             ($812,449)       1,793,060       ($0.45)
</TABLE>


NOTE 8. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

        The unaudited pro forma condensed consolidated  statements of operations
        for the nine months ended September 30, 2000 have been prepared assuming
        that the  Exchange  Offering had been fully  subscribed  and occurred on
        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.

       Unaudited Pro Forma Condensed Consolidated Statements of Operations
                            For the Nine Months ended
                               September 30, 2000

<TABLE>
<CAPTION>
                                             Statement of Operations         Pro Forma
                                            as of September 30, 2000        Adjustments             Pro Forma
                                            ------------------------        -----------             ---------
        <S>                                         <C>                     <C>                    <C>
        Total Revenues                              $3,676,000              $1,486,000(1)          $5,162,000
        Cost and Expenses                           $4,804,000              $1,350,000(2)          $6,154,000
        Non-Recurring Expense                        8,357,000            ($8,357,000)(3)
                                            ------------------------------------------------------------------

        Net Income (loss)                          ($9,485,000)                                     ($992,000)
        Weighted Average Number of
        Partnership Units                            3,216,538                                      3,216,538

        Net Loss Per Unit                               ($2.95)                                        ($0.31)
</TABLE>



                                      F-12
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)


        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 Partnership
        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 Partnership 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 September 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:

           Land and Depreciable Property               $32,474,270
           Accrued Interest - Affiliate                  1,338,564
           Advances to Affiliates                        6,843,286
           Other Assets                                    736,604
                                                       -----------
           Total Assets                                $41,392,724


                                      F-13
<PAGE>


                         BARON CAPITL PROPERTIES, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (Cont'd)


                  Mortgages Payable                    $19,725,536
                  Notes Payable - Affiliate              3,639,638
                                                       -----------
                  Total Liabilities                    $23,365,174
                                                       ===========
                  Equity                               $18,027,550
                                                       ===========

                                      F-14
<PAGE>

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

        The  following  discussion  should  be  read  in  conjunction  with  the
        Condensed Consolidated Financial Statements of Baron Capital Properties,
        L.P. (the  "Registrant"  or the "Operating  Partnership")  and the Notes
        thereto. (See ITEM 1 - FINANCIAL STATEMENTS.)

        Forward-looking Statements

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

        Results of Operations

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

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

        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


                                       3
<PAGE>

        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 contributed to
        the Operating  Partnership the net cash proceeds  ($5,467,858)  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 February 12, 2001, the Trust owned
        702,076 Operating Partnership Units, representing approximately 18.0% 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;  Riverwalk  Apartments  (50 two  bedroom  units
        located in New Smyrna,  Florida) in September  1998;  and 13  properties
        acquired  as part of the  Exchange  Offering  in April  2000  (discussed
        below). In July 1998 the Operating  Partnership also acquired a minority
        limited partnership interest in 13 real estate limited partnerships then
        managed  by  affiliates  of Gregory  K.  McGrath  (a  founder  and Chief
        Executive  Officer of the Trust,  a founder and principal  unitholder of
        the Operating Partnership,  and the President, sole shareholder and sole
        director of Baron Advisors, Inc., which serves as a trustee of the Board
        of the Trust),  including  certain of the  Exchange  Partnerships  which
        participated  in the Exchange  Offering and which are now managed by the
        Trust.

        During 1998 and 1999, the Operating Partnership also 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 (the  "Alexandria  Property")
        under construction in Alexandria, Kentucky. As of February 12, 2001, 112
        of the 168 residential units  (approximately 67%) had been completed and
        were in the rent-up stage. Of the completed  units,  109 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,
        Florida 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  February  12,  2001  of
        approximately  $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  apartment properties
        has been sold to a third party with the Trust's  consent.  The remaining
        property is  scheduled  to have a total of 396 units,  comprised of one,
        two

                                       4
<PAGE>


        and three  bedroom/one or two bathroom  apartments.  Construction of the
        property (the "Burgundy Hills Property"),  located in Florence, Kentucky
        (part of the Cincinnati  metropolitan area), is expected to be completed
        by the end of the first quarter of 2004.  The Trust has a right of first
        negotiation to purchase the property from the  development  company upon
        completion  and a right of first refusal to purchase the property on the
        same terms offered by a third party.  The purchase  price is expected to
        be  approximately  $30,000,000.  It is  contemplated  that a significant
        portion of that amount would be covered by first mortgage financing.  At
        the current time the Trust does not have adequate  resources to close on
        the transaction 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 a maximum of
        approximately  $6,000,000)  of  long-term  construction  first  mortgage
        financing provided by KeyBank National  Association  ("KeyBank").  As of
        February 12, 2001, approximately $5,300,000 of the construction 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  8.5%) 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  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
        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 (and the Bank
        One loan described below). It anticipates  completion of the refinancing
        in the first quarter of 2001.

        Bank  One  has  provided  additional   institutional  financing  in  the
        principal amount of $1,576,000 to the Borrower. The loan is secured by a
        security  interest in  partnership  interests in the Borrower.  Due to a
        default in payment of interest due,  Bank One has been  assigned  rental
        payments and has taken over day-to-day management of the property.  This
        loan is expected  to be paid off with the  proposed  new first  mortgage
        financing  referenced above.  There can be no assurance that refinancing
        will be

                                       5
<PAGE>

        available or will be available on commercially  reasonable  terms,  that
        KeyBank  will not seek to enforce its right to  accelerate  the loan and
        begin foreclosure  proceedings  against the Burgundy Hills Property,  or
        that BankOne will not seek to enforce its rights to take over control of
        the Borrower.

        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 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  Partnerships  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

                                       6
<PAGE>


        (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 September 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 nine months ended September 30, 2000,
        total assets increased to $47.7 million while  liabilities  increased to
        $31.5 million.  As mentioned above the Exchange  Offering  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 $39.5
        million, which are subject to $25.1 million in first mortgage debt.

        Partners'  capital increased to $15.7 million due to the issuance in the
        Exchange  Offering of more than 2,449,525 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 nine months ended  September 30, 2000
        of $9.5 million.

        Operations for the Nine Months Ended September 30, 2000 Compared to Nine
        Months Ended September 30, 1999

        Revenues, real estate expenses and administrative expenses all increased
        substantially for the nine months ended September 30, 2000 in comparison
        to the nine months ended September 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.


                                       7
<PAGE>

        Liquidity and Capital Resources

        Net cash used in operating activities in the nine months ended September
        30, 2000 was ($434,277)  compared to ($680,697) in the nine months ended
        September 30, 1999.  The change is primarily due to the  recognition  of
        increases in certain liabilities and decreases in certain assets.

        Net cash  provided by  investing  activities  in the nine  months  ended
        September  30, 2000 was $425,508  compared to net cash used in investing
        activities of  ($830,078)  in the nine months ended  September 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 nine months  ended
        September  30, 2000 was $173,097  compared to $1,555,992  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.

        The Operating  Partnership  paid $1,045,039  towards  mortgage and other
        interest  during the nine months ended  September  30, 2000  compared to
        $230,534 in the nine months ended September 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 Units in the  Operating  Partnership.
        Approximately  $230,000 of such amount was contributed in the first nine
        months of 2000.  The Trust is the sole general  partner of the Operating
        Partnership  and, as of  February  12,  2001,  owned  702,076  Operating
        Partnership  Units,   representing   approximately  18.0%  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 provide
        the critical mass  necessary  for  profitable  operations.  The Trust is
        negotiating  with the firms which are owed accounts  payable in order to
        extend  payment  terms and,  where  possible,  reduce the  amounts  due.
        Distributions  will be made by the  Operating  Partnership  as cash flow
        allows, but will be negatively  impacted until the open accounts payable
        are  reduced.   Management   does  not  anticipate  that  the  Operating
        Partnership  will make  distributions  to its unit  holders for the next
        several quarters.

                                       8
<PAGE>

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

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

        The target metropolitan markets and sub-markets have benefited in recent
        periods from demographic  trends  (including  population and job growth)
        which  increase  the  demand  for  residential  apartment  units,  while
        financing constraints (specifically, reduced availability of development
        capital) have limited new  construction  to levels  significantly  below
        construction  activity in prior  years.  Consequently,  rental rates for
        residential  apartment  units have  increased at or above the  inflation
        rate for the last two years and are  expected to continue to  experience
        such  increases for the next 18 months based on market  statistics  made
        available  to  management  of the  Operating  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.


                                       9
<PAGE>

        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  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.

                                       10
<PAGE>

        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. 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.


                                       11
<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.


                                       12
<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.

February 27, 2001

                                  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