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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-Q

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

                      For the Quarter Ended March 31, 1998
                                       OR

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

                For The Transition Period From  __________ to __________

                        Commission File Number 333-11243

                          CAPITA PREFERRED FUNDING L.P.

         A DELAWARE                      I.R.S. EMPLOYER IDENTIFICATION
    LIMITED PARTNERSHIP                          No. 22-3467161

                          c/o AT&T Capital Corporation
               44 Whippany Road, Morristown, New Jersey 07962-1983
                          Telephone Number 973-397-3000

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

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT PURSUANT TO GENERAL INSTRUCTION I(2).

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]



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                         PART I - FINANCIAL INFORMATION


ITEM 1. Financial statements.


                          CAPITA PREFERRED FUNDING L.P.
                              STATEMENTS OF INCOME
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  For the three months
                                                     ended March 31,

                                                   1998          1997
                                                   ----          ----
<S>                                               <C>           <C>   
REVENUES-Interest Income                          $5,362        $5,358
                                                  ------        ------

Net income                                        $5,362        $5,358
                                                  ======        ======
</TABLE>


The accompanying notes are an integral part of these Financial Statements.




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                         CAPITA PREFERRED FUNDING L.P.
                                 BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                          March 31,
                                                            1998         December 31,
                                                         (unaudited)         1997
                                                         -----------     ------------
<S>                                                      <C>              <C>
ASSETS:
  Debentures receivable from Affiliates                   $240,146         $240,146
  Other assets                                               2,434            2,434
                                                          --------         --------
Total Assets                                               242,580          242,580
                                                          ========         ========

PARTNERS' CAPITAL:
    General Partner's Interest                              36,394           36,394
    Limited Partner's Interest                             206,186          206,186
                                                          --------         --------
Total Partners' Capital                                   $242,580         $242,580
                                                          ========         ========
</TABLE>


The accompanying notes are an integral part of these Financial Statements.




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                          CAPITA PREFERRED FUNDING L.P.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      For the three months
                                                         ended March 31,

                                                       1998         1997
                                                       ----         ----
<S>                                                  <C>          <C>    
Cash Flow from Operating Activities:

Net Income                                           $ 5,362      $ 5,358
                                                     -------      -------
Net Cash provided from Operating Activities            5,362        5,358
                                                     -------      -------

Cash Flow from Financing Activities:

Distribution to Limited Partner                       (4,670)      (4,670)
Distribution to General Partner                         (692)        (688)
                                                     -------      -------
Net Cash provided by Financing
 activities                                           (5,362)      (5,358)
                                                     -------      -------

Net change in cash and cash equivalents                    0            0
Cash and cash equivalents at beginning
 of period                                                 0            0
                                                     -------      -------
Cash and cash equivalents at end
 of period                                           $     0      $     0
                                                     =======      =======
</TABLE>


The accompanying notes are an integral part of these Financial Statements.




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                          CAPITA PREFERRED FUNDING L.P.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1.   Basis of Presentation

     The accompanying unaudited financial statements have been prepared by
Capita Preferred Funding L.P. (the "Partnership") pursuant to the rules and
regulations of the Securities and Exchange Commission and, in the opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the results of operations, financial
position and cash flows for each period shown. The results for interim periods
are not necessarily indicative of financial results for the full year. These
unaudited financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1997.

2.   1998 Sale of AT&T Capital

     On January 12, 1998, all of AT&T Capital Corporation's (the "General
Partner")outstanding shares of common stock were purchased by Newcourt Credit
Group Inc., an Ontario corporation ("Newcourt") in a transaction accounted for
under the purchase method of accounting. The General Partner currently is an
indirect wholly-owned subsidiary of Newcourt.




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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS. (Dollars in thousands)

Results of Operations and Changes in Cash Flows

     On March 31, 1998 and March 31, 1997, Capita Preferred Funding L.P. (the
"Partnership") made its scheduled quarterly cash distributions of $4,670 (annual
rate of 9.06%) to Capita Preferred Trust, the Partnership's limited partner. On
those same dates, the Partnership received its scheduled debenture interest
income payments (annual rate of 8.88%) from AT&T Capital Corporation (the
"General Partner") and two wholly-owned subsidiaries of the General Partner
aggregating $5,331. During the first quarter of 1998 and 1997, the Partnership
earned interest income of approximately $30 and $27, respectively, on short-term
investments. The Partnership distributes the excess of the interest income on
debentures and short-term investments over cash distributions to the General
Partner. For the first quarter of 1998 and 1997, the Partnership distributed
$692 and $688, respectively, to the General Partner.




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                                     PART II

                          CAPITA PREFERRED FUNDING L.P.
                           PART II - OTHER INFORMATION

Item 6. Exhibits and reports on Form 8-K.

        a)  Exhibits:
              Exhibit Number
                27      Financial Data Schedule

        b)  Current Reports on Form 8-K:

              None





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                                  SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                               CAPITA PREFERRED FUNDING L.P.

                                          By: AT&T Capital Corporation
                                              General Partner



                                              DANIEL A. JAUERNIG
                                              -----------------------------
                                          By: Daniel A. Jauernig
                                              Group President and
                                              Chief Financial Officer
                                              of AT&T Capital Corporation



May 13, 1998




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                                  EXHIBIT INDEX

EXHIBITS

  Exhibit
  Number             Description

  27.                Financial Data Schedule






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