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

                                  Form 10-QSB
(Mark One)
   |X|            QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended June 30, 2003

   |_|            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT

                For the transition period ended  ______________to_____________

                      Commission file number 333-35063-01

                         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.)

               3570 U.S. Highway 98 North, Lakeland, Florida 33809

                    (Address of principal executive offices)

                                 (863) 853-2882
                           (Issuer's telephone number)

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

Yes |_| No |X|

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

      See following pages.


                                       2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                           (Unaudited)
                                                                             June 30,      December 31,
                                                                               2003            2002
                                                                               ----            ----
                                      ASSETS
<S>                                                                        <C>             <C>
Rental Properties:
   Land                                                                    $  4,986,900    $  4,986,900
   Rental property held for sale (Note 4)                                            --       1,533,503
   Buildings and improvements                                                24,451,373      24,353,960
                                                                           ------------    ------------
                                                                             29,438,273      30,874,363
   Less accumulated depreciation                                              4,743,441       4,279,172
                                                                           ------------    ------------
                                                                             24,694,832      26,595,191

Cash and cash equivalents                                                       848,121       1,018,137
Restricted cash                                                                 494,928         242,169
Receivables from affiliates                                                   5,428,300       5,418,909
Other property and equipment, net                                                22,559          45,277
Other assets                                                                    625,127         662,520
                                                                           ------------    ------------
                                                                           $ 32,113,867    $ 33,982,203
                                                                           ============    ============

                         LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
   Mortgages payable                                                       $ 19,592,232    $ 19,753,903
   Mortgages payable - rental property held for sale (Note 4)                        --       1,486,736
   Accounts payable and accrued liabilities                                     555,070         260,696
   Notes payable                                                                632,806         613,080
   Payables to affiliates (Note 5)                                            2,437,311       2,384,894
   Security deposits                                                            199,650         197,168
                                                                           ------------    ------------
         Total liabilities                                                   23,417,069      24,696,477
                                                                           ------------    ------------

   Minority interest in consolidated partnerships                               356,601         342,405

Commitments and contingencies (Note 2)

Partners' Capital:
   General partner; issued and outstanding, 33,047 partnership units            (84,305)        (78,274)

   Limited partners; issued and outstanding, 3,271,636 partnership units      8,424,502       9,021,595
                                                                           ------------    ------------
         Total partners' capital                                              8,340,197       8,943,321
                                                                           ------------    ------------
                                                                           $ 32,113,867    $ 33,982,203
                                                                           ============    ============
</TABLE>

See notes to consolidated financial statements.


                                      F-1

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended            Six Months Ended
                                                  June 30,       June 30,       June 30,       June 30,
                                                    2003           2002           2003           2002
                                                    ----           ----           ----           ----
<S>                                              <C>            <C>            <C>            <C>
Revenues:
   Rentals                                       $ 1,212,116    $ 1,358,445    $ 2,476,956    $ 2,720,915
   Interest and other income                         220,020        229,321        434,427        519,795
                                                 -----------    -----------    -----------    -----------
        Total Revenues                             1,432,136      1,587,766      2,911,383      3,240,710
                                                 -----------    -----------    -----------    -----------

Real Estate Expenses:
   Depreciation                                      274,997        210,235        545,794        474,063
   Amortization of loan costs                         22,009         23,408         47,833         46,817
   Interest                                          462,047        507,160        919,933        971,267
   Repairs and maintenance                            85,662        226,092        176,488        450,676
   Personnel                                         186,020        194,869        351,859        373,712
   Property taxes                                    106,972        115,962        220,172        230,742
   Property insurance                                 37,433         39,284         78,086         78,569
   Utilities                                          89,089        105,986        188,638        209,416
   Other                                              77,985         71,662        158,021        171,344
                                                 -----------    -----------    -----------    -----------
       Total Real Estate Expenses                  1,342,214      1,494,658      2,686,824      3,006,606
                                                 -----------    -----------    -----------    -----------

Administrative Expenses:
   Personnel, including officers' compensation        65,968         76,965        148,972        201,555
   Professional services                              93,059        126,208        164,108        172,778
   Other                                             103,984        147,446        214,330        280,848
                                                 -----------    -----------    -----------    -----------
       Total Administrative Expenses                 263,011        350,619        527,410        655,181
                                                 -----------    -----------    -----------    -----------


Other (Income) Expenses:
   Provision for (recovery of) loan losses            43,785        129,501        150,457         94,379
   Loss on sale of property                           69,526             --         69,526             --
                                                 -----------    -----------    -----------    -----------
       Total Other (Income) Expenses                 113,311        129,501        219,983         94,379
                                                 -----------    -----------    -----------    -----------

   Minority interests of limited partners              9,203            638         14,196          1,276
                                                 -----------    -----------    -----------    -----------
Net Loss                                         $  (295,603)   $  (387,650)   $  (537,030)   $  (516,732)
                                                 ===========    ===========    ===========    ===========

Basic Loss Per Partnership Unit                  $     (0.09)   $     (0.10)   $     (0.16)   $     (0.13)
                                                 ===========    ===========    ===========    ===========

Weighted Average Number of Units Outstanding       3,304,683      4,021,242      3,304,683      4,060,512
                                                 ===========    ===========    ===========    ===========
</TABLE>

See notes to consolidated financial statements.


                                      F-2

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         For the Six Months Ended
                                                                                 June 30,
                                                                           2003           2002
                                                                           ----           ----
<S>                                                                     <C>            <C>
Cash Flows from Operating Activities:
   Net Loss                                                             $  (537,030)   $  (516,732)
   Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
         Depreciation                                                       568,956        501,979
         Provision for (recovery of) loan losses                            150,457         94,379
         Amortization of loan costs                                          47,833         46,817
         Loss on disposal of assets                                          69,526             --
         Minority interests of limited partners                              14,196          1,276
         Changes in operating assets and liabilities:
            (Increase) decrease in operating assets:
               Other assets                                                 (20,270)      (209,775)
            Increase (decrease) in operating liabilities:
               Accounts payable and accrued liabilities                     294,374        (29,455)
               Security deposits                                             13,568         24,403
                                                                        -----------    -----------
                  Net cash provided by (used in) operating activities       601,610        (87,108)
                                                                        -----------    -----------

Cash Flows from Investing Activities:
   Proceeds from sale of rental property held for sale                      994,459             --
   Additions to rental properties                                           (97,412)            --
   Purchases of other property and equipment                                   (444)         7,285
   (Advances to) collections from affiliates                               (159,848)       (66,492)
   Increase in restricted cash                                             (252,759)      (268,529)
                                                                        -----------    -----------
                  Net cash provided by (used in) investing activities       483,996       (327,736)
                                                                        -----------    -----------

Cash Flows from Financing Activities:
   Distributions paid to general and limited partners                       (66,094)            --
   Payments on mortgages payable                                         (1,261,671)      (179,060)
   Proceeds from notes payable                                               19,726         42,771
   Increase in payables to affiliates, net                                   52,417         98,244
                                                                        -----------    -----------
                  Net cash provided by (used in) financing activities    (1,255,622)       (38,045)
                                                                        -----------    -----------

Net Increase (Decrease) in Cash and Cash Equivalents                       (170,016)      (452,889)

Cash and Cash Equivalents, Beginning                                      1,018,137      1,426,375
                                                                        -----------    -----------

Cash and Cash Equivalents, Ending                                       $   848,121    $   973,486
                                                                        ===========    ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for interest                                               $   835,204    $   844,584
                                                                        ===========    ===========
</TABLE>

See notes to consolidated financial statements.


                                      F-3


<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      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"), a Delaware business
      trust. The Trust owns all of the outstanding capital stock of Barcap
      Realty Services Group, Inc., a Delaware corporation that is the Trust's
      Taxable REIT Subsidiary ("Barcap"). (The Partnership, the Trust and Barcap
      are referred to hereinafter collectively as the "Company".) Together they
      constitute an affiliated real estate company whose business purpose is to
      acquire, own, operate, manage and improve equity and debt interests in
      residential apartment properties located in the United States for
      long-term ownership, and thereby to seek to maximize current and long-term
      income and the value of its assets. As the Partnership's general partner,
      the Trust controls the activities of the Partnership. The Partnership
      conducts all of the Trust's real estate operations and holds title to all
      property interests acquired. As of June 30, 2003, Barcap managed
      residential apartment properties totaling 1,499 units for third party
      owners, and shared personnel and space with the Partnership.

      The Trust also owns the largest limited partnership interest in the
      Partnership. As of June 30, 2003, the Trust owned a total of 981,107 units
      of limited partnership interest ("Units") in the Partnership (or
      approximately 29.7% of the then outstanding Units). Holders of Units
      (other than the Trust) are entitled to exchange all or a portion of their
      Units at any time and from time to time on a one-for-one basis 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.
      Since the Units held by the Trust comprise substantially all of its
      assets, the operating results of the Trust are primarily dependent upon
      the operating results of the Partnership. The Trust, which like the
      Partnership is an SEC reporting company, has elected to be taxed as a real
      estate investment trust (REIT) for federal income tax purposes.

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

      The accompanying consolidated financial statements include the accounts of
      the Partnership and 20 controlled limited partnerships that at June 30,
      2003 had a direct or indirect equity and/or debt interest in 26 apartment
      communities.

      All significant intercompany transactions and balances have been
      eliminated in consolidation.

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


                                      F-4
<PAGE>

      As of June 30, 2003, the Partnership (through ownership of all or
      substantially all of the equity interests in single purpose limited
      partnerships) owned equity interests in 16 properties or phases of
      properties, consisting of 933 residential apartment units (comprised of
      studio, one, two and three bedroom units). In addition, the Partnership
      indirectly owned subordinated mortgage and other debt interests in 11
      properties or phases of properties consisting of 650 existing residential
      apartment units (studio and one and two bedroom units). Twenty-three
      properties or phases of properties are located in Florida and three
      properties are located in Ohio. In April 2003, the Partnership sold a
      property located in Anderson, Indiana consisting of 72 units (see NOTE 4.
      SALE OF RENTAL PROPERTY HELD FOR SALE), which had been identified and
      accounted for as an asset held for sale prior to the Partnership's
      adoption of Financial Accounting Standards Board (FASB) Statement of
      Financial Accounting Standards ("SFAS") No. 144.

      Basis of Presentation

      The unaudited consolidated balance sheet as of June 30, 2003, and the
      related unaudited consolidated statements of operations for the three and
      six months ended June 30, 2003 and 2002, and the unaudited consolidated
      statements of cash flows for the six months ended June 30, 2003 and 2002
      have been prepared by the Partnership. In the opinion of management, all
      adjustments (which include reclassifications and normal recurring
      adjustments) necessary to present fairly the financial position, results
      of operations and cash flows at June 30, 2003 and for the periods
      presented, have been made. The results of operations for the three and six
      months ended June 30, 2003 are not necessarily indicative of the operating
      results for the full year.

      Certain information and footnote disclosures normally included in the
      consolidated financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America 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 its December 31, 2002 Annual
      Report on Form 10-KSB.

      Certain reclassifications have been made to the three and six month
      periods ended June 30, 2002 condensed financial statements in order to
      conform to the 2003 presentation.

      Receivables from Affiliates

      Receivables from affiliates are comprised mainly of second mortgages, and
      accrued interest thereon, whose timing and ultimate repayment is subject
      to the performance of the underlying property. Also included are other
      receivables comprised of notes, lines of credit and advances receivable.

      Second mortgages receivable are recorded at cost, less the related
      allowance for impairment, if any, of such notes receivable. The
      Partnership accounts for such notes under the provisions of Statement of
      Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors
      for Impairment of a Loan", as amended by SFAS No. 118, "Accounting by
      Creditors for Impairment of a Loan - Income Recognition and Disclosure".
      Management, considering current information and events regarding the
      borrowers' ability to repay their obligations, considers a note to be
      impaired when it is probable that the Partnership will be unable to
      collect all amounts due according to the contractual terms of the note.
      When a loan is considered to be impaired, the amount of impairment is
      measured based upon the estimated liquidation value of the note's
      collateral reduced by expected selling costs and other notes secured by
      the same collateral. Loan impairment charges and subsequent recoveries are
      recorded as provision for (recovery of) loan losses in the consolidated
      statements of operations.


                                      F-5
<PAGE>

      Rental Properties and Depreciation

      Rental properties include residential apartment properties, which are
      stated at cost less accumulated depreciation. Ordinary repairs and
      maintenance are expensed as incurred; replacements having an estimated
      useful life of at least one year and improvements are capitalized and
      depreciated over their estimated useful lives.

      Depreciation is computed on a straight-line basis over the estimated
      useful lives of the properties as follows:

                                                 Estimated Useful Lives (Years)
                                                 ------------------------------

         Buildings                                              30
         Leasehold improvements                                 10 or less
         Furniture and fixtures                                 7
         Computer equipment and software                        3-5

      On January 1, 2002, the Partnership adopted Statement of Financial
      Accounting Standards No. 144, "Accounting for the Impairment or Disposal
      of Long-Lived Assets" ("SFAS 144"). SFAS 144 provides guidance on the
      accounting for long-lived assets to be disposed of and broadens the scope
      of discontinued operations. There was no effect on the Partnership's
      consolidated financial statements as a result of adopting SFAS 144.

      The Partnership's properties have operations and cash flows that can be
      clearly distinguished from the rest of the Partnership. Property
      dispositions which are newly initiated after January 1, 2002 will be
      reported in discontinued operations provided the operations from such
      properties are eliminated from the ongoing operations of the Partnership
      and the Partnership will not have any continuing involvement after
      disposition.

      Management evaluates its investment properties annually to assess whether
      any impairment indicators are present. If any such investment property is
      considered impaired, a loss is provided to reduce the carrying value of
      the property to its estimated fair value.

      Recent Accounting Pronouncements

      In January 2003, the Financial Accounting Standards Board (FASB) issued
      Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN
      46"). FIN 46 addresses consolidation by business enterprises of variable
      interest entities that do not effectively disperse risk among parties
      involved. FIN 46 requires an enterprise to consolidate the operations of a
      variable interest entity if the enterprise absorbs a majority of the
      variable interest entity's expected losses, receives a majority of its
      expected residual returns, or both. The Partnership is evaluating the
      potential impact of implementing and adopting FIN 46.

NOTE 2. COMMITMENTS AND CONTINGENCIES

      Contracts to Purchase Additional Properties

      In 1998, former management caused the Trust to co-guarantee (together with
      Gregory K. McGrath, a founder and the former Chief Executive Officer of
      the Partnership and the Trust) a first mortgage construction loan secured
      by a residential apartment property referred to as Burgundy Hills
      Apartments under development in Florence, Kentucky (Cincinnati
      metropolitan area) (the "Burgundy Hills Property"). Assuming that the
      Borrower (defined below) completed the property development as originally
      planned and that certain other specified conditions were fulfilled, the
      Borrower would have been able to borrow up to a maximum principal amount
      of $19 million under the terms of the first mortgage loan. The Trust, as
      guarantor, may have a


                                      F-6
<PAGE>

      contingent liability for the full outstanding amount of the loan, which as
      of October 1, 2001 was $6,478,000 (the latest verified information
      available).

      Burlington Residential, Ltd., the owner of the Burgundy Hills Property
      development (the "Borrower"), defaulted on the first mortgage loan and a
      separate subordinated mezzanine loan secured by all equity interests in
      the Borrower. The owner of the mezzanine loan filed a legal action to levy
      on the security interest, was awarded control of all equity interests in
      the Borrower and rental payments from the property, and took over
      day-to-day management and development of the property. It also later
      acquired the first mortgage loan from the original lender.

      According to its counsel, the current owner of the loans, Burgundy-Boone,
      LLC, an Illinois limited liability company, and its construction partner,
      Wallick Management Company (a construction and property management firm in
      Central Ohio), intend to complete construction of all or a portion of the
      Burgundy Hills Property development and then sell it. They appear to have
      completed construction on the last building in the first phase of the
      development and have listed the property for sale.

      Given the facts that Burgundy-Boone, LLC enforced its security interest
      and was awarded control of all equity interests in the Borrower and that
      Burgundy-Boone, LLC also owns the first mortgage loan and the mezzanine
      loan, management and legal counsel believe that it is not probable that
      the Trust's guaranty (described above) is still enforceable. However, due
      to the uncertainty as to the status of the first mortgage loan and
      mezzanine loan and as to the actions and intentions of Burgundy-Boone,
      LLC, and due to the Trust's inability to verify all information it has
      received from other parties, the Trust's exposure on the guaranty remains
      uncertain.

      Mortgages Payable

      The Partnership (through ownership of all or substantially all of the
      equity interests in single-purpose limited partnerships) owns equity
      interests in 16 residential apartment properties. Each property has a
      mortgage obligation that is secured by such property. The Partnership
      believes that its subsidiary partnerships are in substantial compliance
      with the repayment and other terms of the mortgage loans, although several
      of the loans may be deemed to be in technical default due to the failure
      of the partnerships to notify their lenders of a change in the managing
      agent of the underlying properties and the failure to obtain the prior
      approval of the lenders to the assignment by Mr. McGrath to the Trust of
      the equity interests in the corporate general partners of certain
      partnerships acquired by the Partnership, in which case the lenders may be
      deemed entitled to accelerate the payment of the loans. Management and its
      legal counsel believe the probability of payment acceleration because of
      such technical matters is remote.

      In addition, certain subordinated loans receivable and/or payable by
      partnerships controlled by the Partnership may be deemed to violate
      covenants in respect of related first mortgage loans. Although the
      Partnership believes that steps it is taking will minimize this risk, its
      property investments could be materially affected if one or more first
      mortgage lenders determine to exercise their rights to accelerate payment
      of such loans due to such violations.

      Pending Litigation

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

      In July 2003, the Trust was dismissed from an action, Net Knowledge
      Technologies LLC d/b/a NK Soft.com Corporation v. Rapid Transmit
      Technologies, Inc. a/k/a Wakul, Inc. and Baron Capital V, Inc. f/k/a Baron
      Capital Trust, brought in the District Court of Dallas County, Texas in
      September 2002. In the action, the plaintiff, a website development
      service company, had alleged that the Trust was obligated to pay for
      services performed by the plaintiff for Wakul, Inc. (controlled by Mr.
      McGrath) to assist Wakul, Inc. in the development of an Internet system to
      be provided to the Trust and other companies engaged in the business of
      owning and managing multi-family apartment properties. The Trust was
      dismissed from the action without prejudice on


                                      F-7
<PAGE>

      the grounds that plaintiff failed to present evidence that the Trust was a
      party to the transaction, that the Trust is a successor to or an affiliate
      of Wakul, Inc. and liable for its obligations, or that the Trust performed
      any actions in or directed at Texas that might subject it to the
      jurisdiction of Texas courts. The plaintiff has the right to appeal the
      decision or to file suit against the Trust in Florida or any other state
      where it can prove minimum contacts with the forum state.

NOTE 3. NET LOSS PER PARTNERSHIP UNIT

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

      Basic net loss per unit equals net loss divided by the weighted average
      units outstanding during the period. 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 the three and six months ended June 30, 2003 and 2002.

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

<TABLE>
<CAPTION>
                                                                      Weighted          Loss
                                                      Net Loss      Average Units     Per Unit
                                                      --------      -------------     --------
<S>                                                 <C>                <C>           <C>
            For the three months ended June 30:
              2003                                  $  (295,603)       3,304,683     $  (0.09)
                                                    ===========      ===========     ========
              2002                                  $  (387,650)       4,021,242     $  (0.10)
                                                    ===========      ===========     ========

            For the six months ended June 30:
              2003                                  $  (537,030)       3,304,683     $  (0.16)
                                                    ===========      ===========     ========
              2002                                  $  (516,732)       4,060,512     $  (0.13)
                                                    ===========      ===========     ========
</TABLE>

NOTE 4. SALE OF RENTAL PROPERTY HELD FOR SALE

      On April 25, 2003, the Operating Partnership sold its equity interest in
      Steeplechase Apartments, a 72-unit residential apartment property located
      in Anderson, Indiana. The decision to sell Steeplechase was based on the
      property's lack of performance and its continuing need for cash to
      operate.

      The purchase price received from the sale of the property, net of closing
      costs and other adjustments was approximately $994,000. Various other
      assets and liabilities related to the property were also settled at
      closing. The Operating Partnership settled the remaining mortgage balance
      due of approximately $1,487,000 for $1,100,000 in cash, with the mortgage
      lender forgiving the difference.

      The sale resulted in a net loss of $69,526. In its 2002 Annual Report on
      Form 10-KSB, the Operating Partnership had disclosed as a subsequent event
      a gain on the sale of approximately $80,000, which did not include closing
      costs and final adjustments for property taxes and prepaid expenses. The
      Operating Partnership has determined that the previously reported gain was
      in error, and that the loss realized on the sale of Steeplechase should
      have been recorded as an impairment loss in 2002. The error resulted in an
      understatement of net loss for 2002 by $69,526. The Partnership does not
      believe that this error is material to 2002 operations nor will it be
      material to 2003 operations. If the impairment loss had been recorded in
      2002, net loss for the three and six months ended June 30, 2003 would have
      been $226,077 and $467,504 respectively.


                                      F-8
<PAGE>

      The results of operations of Steeplechase for the three and six months
      ended June 30, 2003 were as follows:


                                     Three Months       Six Months
                                         Ended             Ended
                                     June 30, 2003     June 30, 2003
                                     -------------     -------------

         Rental and other income     $      19,229     $      91,300
         Expenses                           29,962           116,644
                                     -------------     -------------

         Net Loss                    $     (10,733)    $     (25,344)
                                     =============     =============

NOTE 5. SUBSEQUENT EVENTS

      Sigma Renaissance Corporation ("Sigma Renaissance"), a Michigan
      corporation controlled by Jerome S. Rydell, a member of the Board of
      Trustees of the Trust, controls certain real estate investment
      partnerships that as of June 30, 2003 were owed a total of approximately
      $2,437,000 (comprised of approximately $1,651,000 of principal and
      $786,000 of accrued unpaid interest) on second mortgage loans made to
      certain limited partnerships controlled by the Operating Partnership. Such
      amounts are included as payables to affiliates in the accompanying
      consolidated balance sheets. Affiliates of Sigma Renaissance originally
      sponsored two of the creditor partnerships. Affiliates of Gregory K.
      McGrath, a founder and the former Chief Executive Officer of the Trust and
      the Operating Partnership, originally sponsored the other creditor
      partnerships. In September 2001, Mr. McGrath caused his affiliates to
      assign all their general partnership interests in such partnerships to
      Sigma Renaissance. The limited partners in all the creditor partnerships
      retained their original limited partnership interests in such
      partnerships. The loans are currently in default, and, by letter dated
      October 14, 2003, Sigma Renaissance, on behalf of the creditor
      partnerships, notified the Trust's counsel that they were exercising their
      rights to accelerate payment of the entire principal amount of the loans
      and accrued and unpaid interest thereon. Subsequently, Sigma Renaissance,
      on behalf of the creditor partnerships, agreed to forebear from exercising
      such rights through November 2003 to allow Sigma Renaissance, the Trust,
      the Operating Partnership, the creditor partnerships and the debtor
      partnerships to attempt to negotiate terms and conditions of a mutually
      acceptable restructuring of the loans.

      Certain additional transactions involving the Trust, the Operating
      Partnership, limited partnerships controlled by the Operating Partnership,
      and affiliates of Sigma Renaissance are described in Items 9-12 of Part
      III of the Trust's 2002 Annual Report on Form 10-KSB filed with the
      Securities and Exchange Commission.

      By letter dated October 17, 2003, the State of Florida Financial Services
      Commission, Office of Financial Regulation, Bureau of Securities (the
      "Florida Commission"), requested that the Trust provide to it copies of
      certain records in its possession relating to: (i) the forensic audit
      prepared on behalf of the Trust as to certain transactions involving
      Gregory K. McGrath and Robert S. Geiger, the founders and former executive
      officers of the Trust and the Operating Partnership, during their tenure
      as management; (ii) expense accounts and other accounts controlled by Mr.
      McGrath and Mr. Geiger during their tenure as management; (iii) minutes of
      the Audit Committee of the Trust's Board of Trustees; (iv) the due
      diligence analysis conducted by Sigma Financial Corporation ("Sigma") and
      Mr. Rydell, a principal of Sigma, in connection with Sigma's underwriting
      of the Trust and the limited partnerships acquired by the Operating
      Partnership in connection with its exchange offering completed in April
      2000; and (v) communications to, from and between Mr. McGrath and Mr.
      Rydell concerning the Trust or the Operating Partnership. The Trust
      intends to cooperate fully with the Florida Commission's document request.


                                      F-9

<PAGE>

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

      The following discussion should be read in conjunction with the
      Consolidated Financial Statements of Baron Capital Properties, L.P. (the
      "Registrant", the "Operating Partnership" or the "Partnership") and 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 Operating
      Partnership's and the Trust'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 the 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 Operating
      Partnership'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 apply only as of the date on which
      they are made, and the Operating Partnership does not undertake any
      obligation to update any forward-looking statement to reflect events or
      circumstances after the date of this Report. If the Operating Partnership
      does update one or more forward-looking statements, investors and others
      should not conclude that the Operating Partnership will make additional
      updates with respect thereto or with respect to other forward-looking
      statements.

      Critical Accounting Policies and Estimates

      The preparation of the Operating Partnership's financial statements
      requires that management make certain estimates that impact the balance of
      assets and liabilities at a financial statement date and the reported
      amount of income and expenses during a financial reporting period. These
      accounting estimates are based upon management's judgments and are
      considered to be critical because of their significance to the financial
      statements and the possibility that future events may differ from those
      judgments, or that the use of different assumptions could result in
      materially different estimates. Management reviews these estimates on a
      periodic basis to ensure reasonableness. However, the amounts ultimately
      realized could differ from such estimates.

      The Operating Partnership's long-lived assets, primarily interests in real
      estate held for investment, are carried at cost unless circumstances
      indicate that the carrying value of the


                                       3
<PAGE>

      assets may not be recoverable. Management reviews long-lived assets for
      impairment whenever events or changes in circumstances indicate such an
      evaluation is warranted. The review involves a number of assumptions and
      estimates used in determining whether impairment exists. Depending on the
      asset, management uses varying methods such as: (i) estimating future cash
      flows, (ii) determining resale values by market, or (iii) applying a
      capitalization rate to net operating income using prevailing rates in a
      given market. These methods of determining fair value can fluctuate up or
      down significantly as a result of a number of factors including changes in
      the general economy of those markets in which the Operating Partnership
      operates and demand for residential apartment unit rentals. If management
      determines that impairment exists due to the inability to recover an
      asset's carrying value, a provision for loss is recorded to the extent
      that the carrying value exceeds estimated fair value. Management
      determined that no adjustments were required to carrying values during the
      three months ended June 30, 2003.

      Operating Results

      Background Information

      Baron Capital Properties, L.P. (the "Registrant", the "Operating
      Partnership" or the "Partnership"), a Delaware limited partnership, and
      its general partner, Baron Capital Trust (the "Trust"), a Delaware
      business trust, began operations in 1998. (The Operating Partnership, the
      Trust and Barcap Realty Services Group, Inc., a Delaware corporation that
      is the Trust's Taxable REIT Subsidiary ("Barcap"), are referred to
      hereinafter collectively as the "Company".) Together they constitute an
      affiliated real estate company whose business purpose is to acquire, own,
      operate, manage and improve equity and debt interests in residential
      apartment properties located in the United States for long-term ownership,
      and thereby to seek to maximize current and long-term income and the value
      of its assets. As the Operating Partnership's general partner, the Trust
      controls the activities of the Operating Partnership. The Operating
      Partnership conducts all of the Trust's real estate operations and holds
      title to all property interests acquired. As of October 1, 2003, Barcap
      manages residential apartment properties totaling 1,577 units for third
      party owners, and shares personnel and space with the Operating
      Partnership.

      The Trust also owns the largest limited partnership interest in the
      Operating Partnership. As of October 1, 2003, the Trust owned 983,327
      units of limited partnership interest ("Units") in the Operating
      Partnership (or approximately 29.8% of the then outstanding Units).
      Limited partners of the Operating Partnership (other than the Trust) hold
      Units that are convertible by them into common shares of beneficial
      interest in the Trust ("Trust Shares") on a one-for-one basis, subject to
      certain limitations. Since the Units held by the Trust comprise
      substantially all of its assets, the operating results of the Trust are
      primarily dependent upon the operating results of the Operating
      Partnership. The Trust, which like the Operating Partnership is an SEC
      reporting company, has elected to be taxed as a real estate investment
      trust (REIT) for federal income tax purposes.

      As of June 30, 2003, the Operating Partnership (through ownership of all
      or substantially all of the equity interests in single purpose limited
      partnerships) owned equity interests in


                                       4
<PAGE>

      16 properties or phases of properties, consisting of 933 residential
      apartment units (comprised of studio, one, two and three bedroom units).
      In addition, the Operating Partnership indirectly owned subordinated
      mortgage and other debt interests in 11 properties or phases of properties
      consisting of 650 existing residential apartment units (studio and one and
      two bedroom units). Twenty-three properties or phases of properties are
      located in Florida and three properties are located in Ohio. In April
      2003, the Operating Partnership sold a property located in Indiana
      consisting of 72 units (see NOTE 4. SALE OF RENTAL PROPERTY HELD FOR SALE
      in the financial statements accompanying this Report). This property had
      been identified and accounted for as an asset held for sale prior to the
      adoption of Statement of Financial Accounting Standards (SFAS) No. 144.

      Initiatives of New Management

      In the second half of 2000, the Board of Trustees of the Trust replaced
      former management. Since that time, the new management team appointed by
      the Board of Trustees has reviewed operations and implemented several
      initiatives to improve the operating results of the Operating
      Partnership's properties.

      For the six months ended June 30, 2003, the Company has achieved positive
      operating cash flow, but has not met the financial targets of its 12-month
      operating plan proposed by management and adopted by the Board of
      Trustees. The shortfall in financial results continues to be driven
      primarily by weak results in Florida tourism and service sectors, which
      are the Company's principal markets. Although the situation has shown
      modest improvement since the first quarter, the Company does not envision
      a recovery through the balance of this year.

      Management has continued to implement several cost saving measures,
      following the consolidation of its principal offices to Lakeland, Florida
      and the sale of certain of its properties, including initiation of
      refinancing other properties and continued reduction of overhead.

      As part of the Company's ongoing operations, management identified three
      properties whose performance negatively impacted operating results and
      recommended the immediate disposition of these properties. Accordingly, in
      April 2001, the Operating Partnership sold its interests in the Glen Lake
      property, a 144-unit residential apartment property located in St.
      Petersburg, Florida; in September 2002, it sold its interests in the
      Stadium Club property, a 223-unit student apartment property located in
      Statesboro, Georgia; and in April 2003, it sold its interests in the
      Steeplechase Apartments property, a 72-unit residential apartment property
      located in Anderson, Indiana. The Operating Partnership sold the
      properties because the revenue from their operations did not cover
      operating expenses and they required substantial and frequent cash
      infusions. (See the Operating Partnership's 2002 Annual Report on Form
      10-KSB previously filed with the Securities and Exchange Commission and
      NOTE 4. SALE OF RENTAL PROPERTY HELD FOR SALE in the financial statements
      accompanying this Report.)


                                       5
<PAGE>

      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 the possible listing of Trust Shares on a recognized
      securities exchange. Additional size is also desirable to give the
      Operating Partnership and the Trust the operating margin necessary to
      support the professional management team necessary for ensuring an optimum
      level of performance and to cover the Company's expenses associated with
      being a public company, including legal, accounting and filing fees.

      The Operating Partnership has implemented the billing of tenants for their
      water usage at all locations where management believes such billing is
      possible. Barcap, the Trust's Taxable REIT Subsidiary, which reimburses
      the Operating Partnership for some of their shared administrative
      expenses, also has implemented an administrative fee on all third party
      property owners benefiting from the water billing program. Management
      anticipates completing an overhaul of the administrative billing software
      shortly, which also could yield modest cost reductions.

      As a result of the proven success of the Company's field management team
      and the Company's investment in residential apartment-oriented accounting
      software, Barcap has been successful in attracting and retaining a variety
      of fee management business from six outside property owners that
      controlled 1,499 apartment units at the end of the second quarter of 2003,
      and the growth of the outside management business remains an objective for
      the rest of 2003.

      During the second quarter of 2003, Barcap added two properties consisting
      of 128 apartment units, and has added one property consisting of 78 units
      so far in the third quarter. One fee management arrangement with a
      third-party property consisting of 96 units was lost during the second
      quarter of 2003, due to the foreclosure on the owner of the property.

      In October 2002, the Trustees of the Trust, together with management,
      adopted a strategy for the year ahead that includes:

      o     sustaining the level of financial performance achieved in 2002,

      o     building a climate of trust with Trust shareholders and Operating
            Partnership unit holders, and

      o     evaluating the current asset base to determine opportunities for
            additional value through property modernization.

      The Company's Chief Executive Officer, under the direction of the Board of
      Trustees, also has held discussions with other companies in the real
      estate business concerning opportunities to consolidate operations,
      improve profitability, and take advantage of the Trust's public company
      status. These discussions are exploratory in nature and are at a
      preliminary stage.

      Management believes that the actions presently being taken provide the
      long-term opportunity to improve the Company's profitability and
      liquidity. Consistent with the


                                       6
<PAGE>

      philosophy of the Company's Chief Executive Officer, a series of informal
      communications to registered Trust shareholders and Operating Partnership
      unit holders was begun in late 2000. The favorable response generated by
      these communications has resulted in management organizing a regular
      quarterly informal communication beginning in the second quarter of 2002
      that has continued to the present.

      Operations for the Three Months Ended June 30, 2003 Compared to the Three
      Months Ended June 30, 2002

      Rental revenues decreased by $146,329 from $1,358,445 for the three months
      ended June 30, 2002 to $1,212,116 for the three months ended June 30,
      2003. The decrease in rental revenues was the result of the sale of the
      Stadium Club property in September 2002, the sale of the Steeplechase
      property in April 2003 and the general downturn in the U.S. economy, which
      has translated into a softer apartment rental market. Interest and other
      income decreased by $9,301 from $229,321 for the three months ended June
      30, 2002 to $220,020 for the three months ended June 30, 2003. The
      decrease was primarily due to a substantial decrease in interest rates.
      Real Estate Expenses for the properties owned by the Partnership decreased
      by $152,444 from $1,494,658 for the three months ended June 30, 2002 to
      $1,342,214 for the three months ended June 30, 2003. The reduction in Real
      Estate Expenses was principally due to reduced repairs and maintenance
      following completion of the repairs at the Dolphin Cove (formerly named
      Riverwalk), Crystal Court and Laurel Oaks properties in the second quarter
      of 2002 and to elimination of the Stadium Club and Steeplechase property
      expenses upon the sales of the properties, partially offset by an increase
      in depreciation expense in the three months ended June 30, 2003.
      Administrative Expenses decreased by $87,608 from $350,619 for the three
      months ended June 30, 2002 to $263,011 for the three months ended June 30,
      2003, primarily due to lower compensation for officers and other personnel
      and professional services in the three months ended June 30, 2003. Other
      Expenses for the three months ended June 30, 2003 decreased by $16,190,
      from $129,501 for the three months ended June 30, 2002 to $113,311 for the
      three months ended June 30, 2003. The decrease in expense is the result of
      a $85,716 indecrease in the provision for loan losses on mortgage notes
      receivable, partially offset by the loss on sale of the Steeplechase
      property. The Partnership's Net Loss for the three months ended June 30,
      2003 was $295,603 compared to a Net Loss of $387,650 for the three months
      ended June 30, 2002. The difference of $92,047 is primarily attributable
      to lower Real Estate and Administrative Expenses, partially offset by
      lower revenues in the three months ended June 30, 2003.

      Operations for the Six Months Ended June 30, 2003 Compared to the Six
      Months Ended June 30, 2002

      Rental revenues decreased by $243,959 from $2,720,915 for the six months
      ended June 30, 2002 to $2,476,956 for the six months ended June 30, 2003.
      The decrease in rental revenues was the result of the sale of the Stadium
      Club property in September 2002, the sale of the Steeplechase property in
      April 2003 and the general downturn in the U.S. economy, which has
      translated into a softer apartment rental market. Interest and other
      income decreased by $85,368 from $519,795 for the six months ended June
      30, 2002 to $434,427 for the six months ended June 30, 2003. The decrease
      was primarily due to a


                                       7
<PAGE>

      substantial decrease in interest rates. Real Estate Expenses for the
      properties owned by the Partnership decreased by $319,782 from $3,006,606
      for the six months ended June 30, 2002 to $2,686,824 for the six months
      ended June 30, 2003. The reduction in Real Estate Expenses was principally
      due to reduced repairs and maintenance following completion of the repairs
      at the Dolphin Cove (formerly named Riverwalk), Crystal Court and Laurel
      Oaks properties in the second quarter of 2002 and to elimination of the
      Stadium Club and Steeplechase property expenses upon the sale of the
      properties, partially offset by an increase in depreciation expense in the
      six months ended June 30, 2003. Administrative Expenses decreased by
      $127,771 from $655,181 for the six months ended June 30, 2002 to $527,410
      for the six months ended June 30, 2003, primarily due to lower
      compensation for officers and other personnel in the six months ended June
      30, 2003. Other Expenses for the six months ended June 30, 2003 increased
      by $125,604, from $94,379 for the six months ended June 30, 2002 to
      $219,983 for the six months ended June 30, 2003. The increase in expense
      is the result of an increase in the provision for loan losses on mortgage
      notes receivable and the loss on sale of the Steeplechase property
      compared to the lower loan losses in the prior year's six-month period.
      The Partnership's Net Loss for the six months ended June 30, 2003 was
      $537,030 compared to a Net Loss of $516,732 for the six months ended June
      30, 2002. The difference of $20,298 is primarily attributable to lower
      revenues and to the increase in Other Expenses, partially offset by the
      reduction of Real Estate Expenses and Administrative Expenses in the six
      months ended June 30, 2003.

      Liquidity and Capital Resources

      Net Cash Provided by Operating Activities increased by $688,718 from
      $87,108 cash used in the six months ended June 30, 2002 to $601,610 cash
      provided in the six months ended June 30, 2003. The increase in Net Cash
      Provided by Operating Activities was principally due to the increase in
      accounts payable and accrued liabilities and a smaller increase in other
      assets. Net Cash Provided by Investing Activities increased $811,732 from
      $327,736 cash used in the six months ended June 30, 2002 to $483,996 cash
      provided in the six months ended June 30, 2003. The increase was
      principally due to the sale of the Steeplechase property, partially offset
      by improvements to rental apartments of $97,412 compared to no
      improvements to rental apartments in the prior year's six-month period,
      and an increase of $93,356 in advances to affiliates in the six months
      ended June 30, 2003. Net Cash Used in Financing Activities increased by
      $1,217,577 from $38,045 cash used in the six months ended June 30, 2002 to
      $1,255,622 cash used in the six months ended June 30, 2003. The increase
      was primarily due to settlement of the mortgage on the Steeplechase
      property, along with a much smaller increase in payables to affiliates,
      net and the distribution to general and limited partners paid during the
      three months ended June 30, 2003.

      Management believes that the Operating Partnership and the Trust have the
      ability to satisfy their cash requirements for the existing properties for
      the foreseeable future. However, management also believes that it will be
      necessary to raise additional capital during the next 12 months to provide
      funds for acquisitions that will be needed to achieve an efficient size,
      which will meet management's revenue and cash flow goals. The


                                       8
<PAGE>

      Operating Partnership is presently negotiating the refinancing of first
      mortgages on several properties for which prepayment penalties and other
      restrictions have recently expired or will soon expire. These refinancings
      will significantly reduce interest rates and debt service costs for the
      affected properties, but are not expected to provide any additional cash
      proceeds from the loans to the Operating Partnership. Refinancing of two
      properties is expected to close during the fourth quarter of 2003.
      Refinancing of an additional four properties is expected to close by the
      end of the first quarter of 2004.

      See the first paragraph under NOTE 5. SUBSEQUENT EVENTS in the financial
      statements accompanying this Report for a description of certain
      non-performing second mortgage loans payable by limited partnerships
      controlled by the Operating Partnership to limited partnerships affiliated
      with Jerome S. Rydell, a Trustee of the Trust.

      Other Developments

      Contingent Liabilities

      In 1998, former management caused the Trust to co-guarantee (together with
      Gregory K. McGrath, a founder and the former Chief Executive Officer of
      the Partnership and the Trust) a first mortgage construction loan secured
      by a residential apartment property referred to as Burgundy Hills
      Apartments under development in Florence, Kentucky (Cincinnati
      metropolitan area). The Trust, as guarantor, may have a contingent
      liability for the full outstanding amount of the loan, which as of October
      1, 2001 was $6,478,000 (the latest verified information available).

      Burlington Residential, Ltd., the owner of the Burgundy Hills Apartments
      project (the "Borrower"), defaulted on the first mortgage loan and a
      separate subordinated mezzanine loan secured by all equity interests in
      the Borrower. The owner of the mezzanine loan filed a legal action to levy
      on the security interest, was awarded control of all equity interests in
      the Borrower and rental payments from the property, and took over
      day-to-day management and development of the property. It also later
      acquired the first mortgage loan from the original lender.

      According to its counsel, the current owner of the loans, Burgundy-Boone,
      LLC, an Illinois limited liability company, and its construction partner,
      Wallick Management Company (a construction and property management firm in
      Central Ohio), intend to complete construction of the Burgundy Hills
      Apartments project and then sell it. They appear to have completed
      construction on the last building in the first phase of the development
      and have listed the property for sale.

      Given the facts that Burgundy-Boone, LLC enforced its security interest
      and was awarded control of all equity interests in the Borrower and that
      Burgundy-Boone, LLC also owns the first mortgage loan and the mezzanine
      loan, management and legal counsel believe that it is not probable that
      the Trust's guaranty (described above) is still enforceable. However, due
      to the uncertainty as to the status of the first mortgage loan and
      mezzanine loan and as to the actions and intentions of Burgundy-Boone,
      LLC, and due to the Trust's inability to verify all information it has
      received from other parties, the Trust's exposure on the guaranty remains
      uncertain.


                                       9
<PAGE>

      Unresolved Issues with Founders and Former Management

      In February 2002, the Board of Trustees of the Trust received the
      preliminary findings of a report prepared by an independent auditing firm
      in which the firm opined that certain transactions of the Trust and the
      Operating Partnership (including the Alexandria and Dolphin Cove (formerly
      named Riverwalk) property investments) entered into by former management
      involved improper conduct. The Board has used the preliminary findings for
      discussions with former management of the Trust concerning the
      transactions and to investigate the rights and obligations of the Trust
      and the Operating Partnership in connection therewith.

      In the second and third quarter of 2002, the Trust and the Operating
      Partnership entered into separate settlement agreements with Gregory K.
      McGrath and Robert S. Geiger, the founders and former Chief Executive
      Officer and Chief Operating Officer of the Trust and the Operating
      Partnership, respectively. Pursuant to the agreements, each of them
      forfeited all 378,873 Operating Partnership Units he acquired and
      deposited into escrow in connection with the formation of the Trust and
      the Operating Partnership, in exchange for a limited release from
      liability in connection with the acquisition and operation of the
      Alexandria and Dolphin Cove properties (and, in the case of Mr. McGrath,
      from an additional immaterial liability). The terms of the settlement
      agreements are subject to confidentiality agreements, but management
      believes the terms to be of substantial benefit to the Company. As a
      result of the agreements, neither Mr. McGrath nor Mr. Geiger has any
      further interest in either the Trust or the Operating Partnership. In
      addition, because the settlements reduced the number of Units outstanding
      by a total of 757,746 Units, current holders of Units realized favorable
      accretion of net book value per unit on a pro rata basis. In connection
      with the settlements, the Operating Partnership reversed $243,339 of
      accrued liabilities payable to affiliates of Mr. McGrath which were
      forgiven by the terms of the settlement agreements.

      In light of the foregoing, the Company has reviewed its accounting records
      to ascertain whether certain expenses charged by Mr. McGrath and Mr.
      Geiger to the Company during their tenure were incurred by them other than
      in connection with the performance of their duties to the Company and thus
      improperly reimbursed. Management has determined that some expenses were
      improperly reimbursed and negotiated a confidential settlement agreement
      with Wakul, Inc. in October 2002 for repayment of payroll and benefits
      shared between the Company and McGrath-controlled entities. To date, all
      agreed payments have been made. The Company continues to review other
      transactions to determine whether former management was involved in any
      other improper conduct. If the Company determines that any expenses were
      improperly reimbursed or that former management involved the Company in
      additional improper conduct, the Company will seek repayment or
      restitution from the respective party.

      See the third paragraph under NOTE 5. SUBSEQUENT EVENTS in the financial
      statements accompanying this Report for a description of the recent
      request by the State of Florida Financial Services Commission, Office of
      Financial Regulation, Bureau of Securities, for copies of certain records
      in the Company's possession relating to prior management.

      Economic Concerns

      Four developments over the past two years are believed to have had a
      material impact on the performance of the Trust and the Operating
      Partnership.


                                       10
<PAGE>

      First and foremost is the substantial decrease in home mortgage interest
      rates, which has made home buying more affordable for a larger segment of
      the population, including many of the Company's traditional renters. New
      renters, especially in the Florida market, which has experienced a
      preponderance of new immigrants over the past 10 years, have a tendency to
      be more transient and less creditworthy. Occupancies and collections have
      been impacted for the last 21 months, and although they have improved
      recently, management does not anticipate any significant further
      improvement in the near term.

      The second development is the increasing lack of confidence of investors
      in the public securities markets due to recent well-publicized events at
      Enron Corp., Arthur Andersen, Adelphia Communications, Global Crossing,
      Tyco, and WorldCom Inc. This development will continue to hamper, for the
      foreseeable future, companies' access to the public markets and financial
      institutions for capital, which the Company seeks to enable it to grow.

      The third development is the increased aging of the Company's asset base,
      which has the potential to become functionally obsolete when compared to
      newer amenity-rich competitive apartment properties.

      The fourth development is increasing competition in the housing markets
      where the Company has traditionally enjoyed strong market share,
      particularly in the Company's operations in the metropolitan Florida
      markets. The greater competitive forces are due to the general
      overbuilding of certain tax-financed competitive apartment properties and
      strong sales of single-family homes driven by current low interest rates
      that have reached 45-year lows and are expected to remain at relatively
      low levels for the foreseeable future.

      An overriding concern arises out of the horrible events of September 11,
      2001 and the related military actions in Afghanistan and Iraq. While
      management continues to believe it is still too early to understand how
      deeply these events will impact the confidence of Americans and their way
      of life, they are likely to result in a more cash conscientious consumer,
      which could result in downward pressure on rental rates and less tourism
      in Florida, which will reduce the number of potential customers for the
      Company's properties in Florida.

Item 3. Controls and Procedures

      The Partnership maintains disclosure controls and procedures that are
      designed to ensure: (1) that information required to be disclosed by it in
      the reports it files or submits under the Securities Exchange Act of 1934,
      as amended (the "Exchange Act"), is recorded, processed, summarized, and
      reported within the time periods specified in the Securities and Exchange
      Commission's ("SEC") rules and regulations, and (2) that this information
      is accumulated and communicated to the Partnership's management, including
      its Chief Executive Officer and Vice President-Accounting (principal
      accounting and financial officer), as appropriate, to allow timely
      decisions regarding required disclosure. In designing and evaluating the
      disclosure controls and procedures, management recognizes


                                       11
<PAGE>

      that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired
      control objectives, and management necessarily was required to apply its
      judgment in evaluating the cost/benefit relationship of possible controls
      and procedures.

      Under the supervision and review of the Partnership's Chief Executive
      Officer and Vice President-Accounting, the Partnership conducted an
      evaluation of the effectiveness of its disclosure controls and procedures
      as of June 30, 2003. Based on that evaluation, its Chief Executive Officer
      and Vice President-Accounting concluded that its disclosure controls and
      procedures are effective in alerting them in a timely manner to material
      information regarding the Partnership (including its consolidated
      subsidiaries) that is required to be included in its periodic reports to
      the SEC.

      In addition, there have been no significant changes in the Partnership's
      disclosure controls and procedures that could significantly affect those
      controls since its most recent evaluation. Also, there has been no
      significant change in the Partnership's internal control over financial
      reporting that has materially affected, or is reasonably likely to
      materially affect, the Partnership's internal control over financial
      reporting other than implementation of additional controls to segregate
      responsibilities related to expenditures of cash, following the departure
      of the Company's former Chief Financial Officer. These additional controls
      were implemented subsequent to June 30, 2003. The Partnership cannot
      assure, however, that its system of disclosure controls and procedures and
      internal control over financial reporting will always achieve its stated
      goals under all future conditions, no matter how remote.


                                       12
<PAGE>

                          PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

      See "NOTE 2. COMMITMENTS AND CONTINGENCIES - Pending Litigation" in the
      financial statements filed herewith (see ITEM 1 - FINANCIAL STATEMENTS)
      for a discussion of the Trust's dismissal from a legal action in July
      2003.

      See NOTE 5. SUBSEQUENT EVENTS in the financial statements accompanying
      this Report for a description of: (1) certain non-performing second
      mortgage loans payable by limited partnerships controlled by the Operating
      Partnership to limited partnerships affiliated with Jerome S. Rydell, a
      Trustee of the Trust, and (2) the recent request by the State of Florida
      Financial Services Commission, Office of Financial Regulation, Bureau of
      Securities, for copies of certain records in the Company's possession
      relating to prior management.

Item 2. Changes in Securities

      Not Applicable.

Item 3. Defaults upon Senior Securities

      There were no defaults upon senior securities of the Operating Partnership
      in the first or second quarter of 2003 that remain uncured as of June 30,
      2003.

      See "Other Developments" under Item 2 of Part I of this Report for a
      discussion of a contingent liability of the Trust relating to Burgundy
      Hills Apartments.

      See NOTE 5. SUBSEQUENT EVENTS in the financial statements accompanying
      this Report for a description of certain non-performing second
      mortgage loans payable by limited partnerships controlled by the Operating
      Partnership to limited partnerships affiliated with Jerome S. Rydell, a
      Trustee of the Trust.

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   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).


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<PAGE>

      Exhibit          Description
      -------          -----------

        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)).

        20*            Annual Report under Section 13 or 15 (d) of the
                       Securities Exchange Act of 1934 for the fiscal year ended
                       December 31, 2002 on Form 10-KSB of the Registrant
                       (incorporated herein by reference to such Annual Report
                       filed with the Securities and Exchange Commission on May
                       29, 2003 (Registration No. 333-35063-01)).

        31.1           Rule 13a-14(a)/15d-14(a) Certification.

        31.2           Rule 13a-14(a)/15d-14(a) Certification.

        32.1           Certification pursuant to Rule 13a-14(b)/15d-14(b) and 18
                       U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
                       the Sarbanes-Oxley Act of 2002.

        32.2           Certification pursuant to Rule 13a-14(b)/15d-14(b) and 18
                       U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
                       the Sarbanes-Oxley Act of 2002.

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

*     Previously filed.

(b)   Reports on Form 8-K:

      The Partnership filed a Form 8-K with the Securities and Exchange
      Commission ("SEC") on April 18, 2003, reporting that the Partnership was
      unable to file its Annual Report on Form 10-KSB for the year ended
      December 31, 2002 by April 15, 2003, due to: (1) restatements to the prior
      years' financial statements concerning the elimination of certain
      inter-company indebtedness owed to the Partnership by its affiliate, Baron
      Capital Trust, and reclassification in such financial statements of
      interests in consolidated partnerships as minority interests, rather than
      as part of the Partnership's equity and (2) the resignation in March 2003
      of Mark L. Wilson, who had served as the Partnership's Chief Financial
      Officer since November 1998.


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<PAGE>

                                   SIGNATURES

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.

November 5, 2003

                                       BARON CAPITAL PROPERTIES, L.P.

                                       By: Baron Capital Trust, General Partner


                                       By: /s/  Robert L. Astorino
                                           -----------------------------------
                                           Robert L. Astorino
                                           Chief Executive Officer


                                       By:  /s/  J. Stephen Miller
                                           ------------------------------------
                                           J. Stephen Miller
                                           Vice President-Accounting


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