FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
    For the fiscal year ended December 31, 1998. Commission File No. 2-77330
------------------------------------------------------------------------------

                       PROPERTY RESOURCES EQUITY TRUST
            (Exact Name of Registrant as Specified in its Charter)

California                                   94-3959770
-----------------------------------------------------------------------------
(State or other jurisdiction or              (I.R.S. Employer Identification
incorporation or organization)               number)

P.O. Box 7777, San Mateo, CA 94403-7777      (650) 312-5824
-----------------------------------------------------------------------------
(Address of principal and executive          Registrant's telephone number,
Office)                                      including Area Code


Securities registered pursuant to Section 12(b) of Act: None


Securities registered pursuant to Section 12(g) of the Act:

          Title of each class

          Common Stock Series A
          --------------------------------------

Indicate  by check  mark  whether  the  registrant  (1) has filed all  reports
required to be filed by Section 12 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           

Indicate by check mark if  disclosure of  delinquent  filers  pursuant to Item
405 of Regulation S-K (Sec.  229.405 of this chapter) is not contained herein,
and  will  not be  contained,  to  the  best  of  registrant's  knowledge,  in
definitive proxy or information statements  incorporated by referenced in Part
III of this Form 10-K or any amendment to this Form 10-K.    X   

At March 29,1999,  1,089,472shares  of the registrant's  Series A common stock
were  held by  non-affiliates  of the  registrant.  No market  for the  shares
currently exists and therefore a market value cannot be determined.
Indicate the number of shares  outstanding of each of the issuer's  classes of
common stock at December 31, 1998:  1,090,052  shares of Series A common stock
and 1,000 shares of Series B common stock.

Documents Incorporated by Reference - None



PART 1
Item 1. BUSINESS

PROPERTY  RESOURCES  EQUITY TRUST (the  "Company") is a corporation  formed on
February  20, 1985 under the laws of the State of  California.  The Company is
a real estate investment trust ("REIT").

The Company's  investment  program included  providing its stockholders with a
professionally  managed diversified  portfolio of income producing equity real
estate investments in strategic  markets,  which represented the potential for
current   cash  flow  and  for   capital   appreciation.   The  Company  is  a
self-liquidating  REIT with a finite  life and is  currently in its liquidation
phase.  As of  December  31,  1998,  the  Company  had  sold  all of its
properties.

Item 2. PROPERTIES

The Company has no  properties  at December 31, 1998,  and is currently in the
process of liqiodation.  Continental  Property  Management  Co.  ("CPMC"),  an
affiliate  of the  Advisor,  performed  the  leasing  and  management  related
services for the properties.

Acquisitions and sales of the Company's properties were as follows:

-------------------------------------------------------------------------------
PROPERTY                             DATE ACQUIRED          DATE SOLD
-------------------------------------------------------------------------------
Graham Court Business Park           August 1986            March 1997
Agora Office Building                September 1986         April 1996
Good Guys Plaza                      July 1988              October 1998
-------------------------------------------------------------------------------

Item 3. LEGAL PROCEEDINGS

There are no material legal proceedings pending to which the Company is a
party or which any of its properties is the subject, required to be reported
hereunder.  From time to time, the Company may be a party to ordinary routine
litigation incidental to its business.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On January 26, 1999, a Special  Meeting of  shareholders  of the Company
was held to approve the dissolution,  termination and liquidation of the
Company  as  described  in  the  proposed   Plan  of   Dissolution   and
Liquidation.  A copy of the Plan is  attached  as Exhibit A to the Proxy
Statement dated December 18, 1999 and as Exhibit 2. to this Form 10-K.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
No public trading market presently  exists for the shares of the Company.  Due
to the expenses  involved and the expected  liquidation of the Company,  it is
not anticipated that shares of the Company will be listed on a stock exchange.

The Company has one class of common stock in two series,  designated  Series A
and Series B (the "Common  Stock").  As of December 31, 1998,  the Company had
1,090,052 Series A common shares  outstanding and 1,000 Series B common shares
outstanding,  and there were  approximately  1,069  Series A  Stockholders  of
record.  The Common  Stock  votes  together as one class with each share being
entitled  to one vote.  The Series B shares are owned by  Property  Resources,
Inc., the Advisor.  No distributions  have been declared or paid to the Series
B shareholder.  The following  table reflects the  distributions  declared per
share of Series A common stock during 1998 and 1997.


-------------------------------------------------------------------------------
QUARTER ENDED                                               1998         1997
-------------------------------------------------------------------------------

December 31                                                  -          $0.06
September 30                                               $0.06        $0.06
June 30                                                    $0.80        $2.38
March 31                                                   $0.06        $0.09
-------------------------------------------------------------------------------

The  Company  paid  dividend   distributions  to  stockholders   quarterly  on
approximately  the  last  day of  March,  June,  September  and  December.  In
December 1998 the  distribution  was not paid and a  liquidating  distribution
was made in  February  1999.  100% of the 1998  and  approximately  89% of the
1997  dividend  represented  a  return  of  capital  for  Federal  income  tax
purposes.  Return of capital  distributions are tax free to the stockholder to
the extent such distributions do not exceed a stockholders' adjusted basis.

 Item 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------
<S>                                <C>        <C>         <C>        <C>        <C> 
(Dollars in thousands              1998       1997        1996       1995       1994
except per share amounts)
-------------------------------------------------------------------------------------

Total revenues                     $647       $873      $1,158     $1,138     $1,165
Gain on sale of rental             $187       $368         $86          -          -
property
Net income (loss)                  $273       $481        $449       $231     $ (47)
Per share:
   Net income (loss)               $.25       $.44        $.41       $.21    $ (.04)
   Dividends declared and          $.92      $2.59        $.36       $.28       $.30
paid
Number of shares of
  common stock outstanding        1,091      1,091       1,091      1,091      1,091

Balance sheet data:
   Total assets                  $2,522     $6,085      $8,374     $8,350     $8,396
   Note payable                       -     $2,827      $2,750     $2,750     $2,750
   Stockholders' equity          $2,504     $3,234      $5,565     $5,512     $5,568

Other Data:
  Funds From Operations            $217       $289        $609       $476       $446
    Cashflows
         Operating                 $287       $163        $500       $530       $482
         Investing               $5,583     $2,272         $52     $ (31)        $27
         Financing            $ (3,830)  $ (2,746)     $ (392)    $ (305)    $ (331)

Total rentable square
  footage at the end of               -     33,968      82,328    105,886    105,886
  period:
Number of properties at end
  of period                           -          1           2          3          3
</TABLE>


Item 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND 
RESULTS OF OPERATIONS 

INTRODUCTION

Management's  discussion  and analysis of financial  condition  and results of
operations  should be read in  conjunction  with the financial  statements and
notes thereto.

COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997

Net income for the year ended  December 31,  1998,  decreased  $208,000  (43%)
over the prior year.  The main factor  affecting  the results for the year was
the sales of the Good Guys Plaza in October  1998,  and Graham Court  Business
Park in March 1997, ("the property sales"),  which gave rise to gains on sale,
but which also reduced rental revenues and operating expenses in 1998.

Total revenues for the year ended December 31, 1998,  decreased $226,000 (26%)
as compared to the prior year.  The decrease is  principally  attributable  to
the property  sales.  Rental  revenues and occupancy rates related to the Good
Guys Plaza in the period  prior to its sale  remained  relatively  stable from
the previous year.

Total expenses for the year ended  December 31, 1998 decreased  $199,000 (26%)
as compared  to the prior year.  Decreases  in  property  operating  costs and
depreciation  charges  were related to the property  sales.  Interest  expense
decreased  $78,000 (29%) as a result of the  repayment of the  Company's  note
payable in 1998.

The  Company  recorded a gain on sale of  $187,000  in 1998 on the sale of the
Good Guys Plaza,  which compares to a gain on sale of $368,000 recorded on the
sale of the Graham Court Building in 1997.

COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996

Net income for the year ended December 31, 1997,  increased  $32,000 (7%) over
the prior  year.  The main factor  affecting  the results for the year was the
sale of Graham Court in March,  1997, which gave rise to a large gain on sale,
but which also reduced rental revenues and operating expenses in 1997.

Total revenues for the year ended December 31, 1997,  decreased $285,000 (25%)
as  compared  to  the  year  ended   December  31,   1996.   The  decrease  is
attributable  to the sale of  properties  in  March,1997  and in April,  1996.
Rental  revenues and  occupancy  rates  related to the Good Guys Plaza in 1997
remained stable from the previous year.

Total expenses for the year ended December 31, 1997 decreased  $35,000 (4%) as
compared  to the  prior  year.  Decreases  in  property  operating  costs  and
depreciation  charges  were  related  to the sale of  Graham  Court,  but were
partly  offset  by  an  increase  in  interest   expense.   Interest   expense
increased  $78,000 (41%) as a result of the  expiration of the loan secured on
Good  Guys  Plaza in March  1997.  A new loan  was  negotiated  in March  1997
which  carries  a  fixed  interest  rate of  8.8%,  compared  to the  previous
variable rate.

A gain on sale of $368,000 was  recorded in 1997 on the sale of Graham  Court,
which compares to a gain on sale of $86,000  recorded on the sale of the Agora
Office Building in 1996.

RELATED PARTY EXPENSES

The Company has an agreement  with the Advisor to  administer  the  day-to-day
operations  of the  Company.  For each of the years ended  December  31, 1998,
1997  and  1996,   the  Company   recorded   $10,000,   $38,000  and  $21,000,
respectively,  of advisory fee expense to the Advisor in  accordance  with the
Advisory  Agreement.  Also for the years ended  December  31,  1998,  1997 and
1996, and in accordance with the Advisory  Agreement,  the Company  reimbursed
the  Advisor  or  affiliates  of the  Advisor  $12,000,  $24,000  and  $23,000
respectively,  for accounting and data  processing,  and $19,000,  $18,000 and
$13,000, respectively, for stockholder services expenses.

The  Company's  properties  were managed by  Continental  Property  Management
Co.,  ("CPMC"),  an  affiliate  of the  Advisor.  For each of the years  ended
December 31, 1998, 1997 and 1996, the Company  recorded  $21,000,  $28,000 and
$35,000,   respectively,  of  property  management  fee  expense  to  CPMC  in
accordance with the property management  agreement.  Also for the years ending
December  31,  1998,  1997 and 1996,  and in  accordance  with the  management
agreement,  the  Company  paid CPMC  leasing  commissions  of $0,  $5,000  and
$31,000, respectively.

The  Company's  by-laws  require  the  Advisor  to refund to the  Company  the
amount,  if any, by which the operating  expenses as defined  (generally  such
expenses pertain to general and administrative  expenses as distinguished from
property  operating  expenses)  during any calendar year exceed the greater of
(a) 2% of the  Average  Invested  Assets or (b) 25% of Net  Income  (excluding
gain  from  the  sale of the  Company's  properties)  unless  the  Independent
Directors  conclude  that a higher level of expenses is justified as set forth
in the by-laws.  Furthermore,  in no event will Operating  Expenses  exceed 2%
of the total  assets  under  management  less cash,  cash items and  unsecured
indebtedness.  For the year  ended  December  31,  1998,  the  Company  was in
compliance with these limitations.

The Company's Board of Directors (including all of its Independent  Directors)
have determined,  after review,  that the compensation paid to the Advisor and
to CPMC referenced above is fair and reasonable to the Company.

IMPACT OF INFLATION

The  Company's  policy  of  negotiating  leases  which  incorporate  operating
expense "pass-through"  provisions was intended to protect the Company against
increased operating costs resulting from inflation.

YEAR 2000


The  Company's  management  does not expect any material  impact to arise from
the year 2000 issue as it is  probable  that the  Company  will be  liquidated
before 2000.

LIQUIDITY AND CAPITAL RESOURCES

At  December  31,  1998,  cash  and  cash  equivalents   totaled   $2,501,000.
Management  believes  that the  Company's  current  sources of capital will be
adequate to successfully liquidate the Company.

The Company's  principal sources of capital for the acquisition and renovation
of property  and for working  capital  reserves  have been  proceeds  from the
initial  offering of its common stock,  funds from operations after payment of
dividends and issuance of debt.

FUNDS FROM OPERATIONS

Funds from  operations for each of the years ended December 31, 1998, 1997 and
1996 were as follows.

In thousands                                             1998  1997  1996
---------------------------------------------------------------------------
Net Income                                               273    481   449
Add Depreciation and amortization                        131    176   246
Less Gains on Sale of Property                          (187)  (368)  (86)

---------------------------------------------------------------------------
Funds from Operations                                    $217  $289  $609
===========================================================================

The primary  differences between the periods reflect the changes in net income
as discussed under "Results of Operations".

As defined by the National Association of Real Estate Investment Trusts,
Funds from operations, ("FFO")  is net income (computed in accordance with
GAAP), excluding gains and losses from debt restructuring and sales of
property plus depreciation and amortization and after adjustment for
unconsolidated joint ventures.  The measure of FFO as reported by the Company
may not be comparable to similarly titled measures of other funds that follow
different definitions.

The Company believes that FFO is helpful in understanding a property
portfolio. This is because such calculation reflects income from operating
activities and the properties' ability to support general operating expenses
and interest expense before the impact of certain activities such as
depreciation and gains and losses from property sales. However, it does not
measure whether income is sufficient to fund all of the Company's cash needs
including principal amortization, capital improvements and distributions to
stockholders.  FFO should not be considered an alternative to net income, or
any other generally accepted accounting principles ("GAAP") measurement of
performance, as an indicator of the Company's operating performance or as a
measure of liquidity.

DISTRIBUTIONS

Distributions  are paid  quarterly at the discretion of the Board of Directors
and depend on the  Company's  earnings,  cash flow,  financial  condition  and
other  relevant  factors.  During the years ended  December 31, 1998 and 1997,
the Company  declared  distributions  totaling  $1,003,000 and $2,823,000,  or
$0.92  and  $2.59  per  share  each  year,  respectively.   The  distributions
represented 462% and 977% of the Company's FFO in 1998 and 1997, respectively.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

                                                                       PAGE

Report of Independent Accountants                                        9

Balance Sheets as of December 31, 1998 and 1997                         10

Statements of Income for the Years                                      11
   Ended December 31, 1998, 1997 and 1996

Statements of Stockholders' Equity for the                              12
   Years Ended December 31, 1998, 1997 and 1996

Statements of Cash Flows for the Years                                  13
   Ended December 31, 1998, 1997 and 1996

Notes to Financial Statements                                      14 - 17

Schedule III - Real Estate and Accumulated                              18
   Depreciation

All other schedules for which  provision is made in the applicable  accounting
regulations of the  Securities and Exchange  Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.


R E P O R T  O F  I N D E P E N D E N T  A C C O U N T A N T S


To the Board of Directors and Stockholders of
Property Resources Equity Trust

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Property
Resources Equity Trust at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting
principles.  In addition, in our opinion, the financial statement schedule
listed in the accompanying index presents fairly, in all material respects,
the information set forth therein when read in conjunction with the related
financial statements.  These financial statements and the financial statement
schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.  We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed above.

As  described  in  Note  10 to  the  financial  statements,  the  stockholders
approved a plan of  dissolution  and  liquidation. As a result, im subsequent
periods the Company  will  change  its  basis  of  accounting from a going 
concern basis to a liquidation basis.


PricewaterhouseCoopers LLP
San Francisco, California
January 18,  1999,  except for Note 10, as to which the date is  February  16,
1999



B A L A N C E  S H E E T S

PROPERTY RESOURCES EQUITY TRUST
IN THOUSANDS (EXCEPT PER SHARE AMOUNTS)
------------------------------------------------------------------------------
As of December 31, 1998 and 1997                             1998    1997
------------------------------------------------------------------------------

ASSETS

Real estate:
  Land                                                          -  $1,702
  Buildings and improvements                                    -   4,132
  Tenant improvements                                           -     157
------------------------------------------------------------------------------
                                                                -   5,991
  Less: accumulated depreciation                                -   1,409
------------------------------------------------------------------------------
Real estate, net                                                -   4,582

Cash and cash equivalents                                  $2,501     461
Deferred rent receivable                                        -      57
Note receivable                                                 -     717
Other assets, net                                              21     268
------------------------------------------------------------------------------
          Total assets                                     $2,522  $6,085
==============================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Note payable                                                    -  $2,827
Deposits and other liabilities                                $18      24
------------------------------------------------------------------------------
          Total liabilities                                    18   2,851
------------------------------------------------------------------------------

Stockholders' equity:
  Common stock, Series A, without par value, stated
    value $10 per share; 10,000 shares authorized;
    1,090 shares issued and outstanding
    at December 31, 1998 and 1997                           9,384   9,384

  Common stock, Series B, without par value,
    stated value $10 per share; one thousand shares
    authorized,  issued and outstanding                        10      10

 Accumulated distributions in excess of net income        (6,890) (6,160)
------------------------------------------------------------------------------
          Total stockholders' equity                        2,504   3,234
------------------------------------------------------------------------------
          Total liabilities and stockholders' equity       $2,522  $6,085
==============================================================================


  The accompanying notes are an integral part of these financial statements.



S T A T E M E N T S  O F  I N C O M E

PROPERTY RESOURCES EQUITY TRUST
IN THOUSANDS, EXCEPT PER SHARE DATA
---------------------------------------------------------------------
For the years ended December 31,
1998, 1997 and 1996                        1998      1997       1996

---------------------------------------------------------------------
Revenues:
  Rent                                     $581      $748     $1,076
  Interest                                   51        81         74
  Dividends                                  15        44          8
---------------------------------------------------------------------
Total revenues                              647       873      1,158
---------------------------------------------------------------------

Expenses:
  Interest                                  191       269        191
  Depreciation and amortization             131       176        246
  Property operating                        100       146        209
  Related party                              62       108         92
  General and administrative and             77        61         57
other
---------------------------------------------------------------------
Total expenses                              561       760        795
---------------------------------------------------------------------

Income before gain on sale of rental         86       113        363
property

Gain on sale of rental property             187       368         86
---------------------------------------------------------------------
Net income                                 $273      $481       $449
=====================================================================

Unrealized gain on mortgage-backed            -        11         (4)
Securities
---------------------------------------------------------------------
Total comprehensive income                 $273      $492       $445
=====================================================================

Net income per share, based on the
  weighted average shares
  outstanding of common stock of           $.25      $.44       $.41
  1,091 in all periods
=====================================================================

Distributions declared per share of
  Series A common stock                    $.92     $2.59       $.36
=====================================================================

  The accompanying notes are an integral part of these financial statements.


S T A T E M E N T S  O F  S T O C K H O L D E R S'  E Q U I T Y

PROPERTY RESOURCES EQUITY TRUST
IN THOUSANDS, EXCEPT NUMBER OF SHARES
As of and for the years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
 
                                                                                                    Accumulated
                                                   Common Stock                     Other          distributions
                                          Series A              Series B         Comprehensive     in excess of
                                    Shares     Amount      Shares       Amount    Income/(loss)      net income          Total
---------------------------------------------------------------------------------------------------------------------------------

Balance,
<S>                             <C>            <C>           <C>           <C>               <C>           <C>          <C>   
  January 1, 1996               1,090,067      $9,384        1,000         $10               $(7)          $(3,875)     $5,512
Redemption of
  Series A common
  stock                               (3)           -            -           -                 -                 -           -
Unrealized loss on
  mortgage-backed
  securities                                                                                  (4)                           (4)
Net income                              -           -            -           -                 -               449         449
Cash distributions on
  common stock                          -           -            -           -                 -              (392)       (392)
---------------------------------------------------------------------------------------------------------------------------------

Balance,
  December 31, 1996             1,090,064       9,384        1,000          10               (11)           (3,818)      5,565
Redemption of
  Series A common
  stock                               (12)          -            -           -                 -                 -           -
Unrealized gain on
  mortgage-backed
  securities                                                                                  11                            11
Net income                              -           -            -           -                 -               481         481
Cash distributions on
  common stock                          -           -            -           -                 -            (2,823)     (2,823)
---------------------------------------------------------------------------------------------------------------------------------

Balance,
  December 31, 1997             1,090,052       9,384        1,000          10                 -            (6,160)      3,234
Net income                                                                                                     273         273
Cash distributions on
  common stock                                                                                              (1,003)     (1,003)
---------------------------------------------------------------------------------------------------------------------------------

Balance,
  December 31, 1998             1,090,052      $9,384        1,000         $10                $-           $(6,890)     $2,504
=================================================================================================================================
</TABLE>

  The accompanying notes are an integral part of these financial statements.


S T A T E M E N T S  O F  C A S H  F L O W S

PROPERTY RESOURCES EQUITY TRUST
IN THOUSANDS
-------------------------------------------------------------------------------
For the years ended December 31, 1998, 1997 and 1996     1998    1997     1996
-------------------------------------------------------------------------------

Net income                                               $273    $481     $449

 Adjustments to reconcile net income to net
 cash provided by operating activities:
   Depreciation and amortization                          131     195      248
   Gain on sale of assets                                (187)   (360)    (86)
   (Increase) decrease in deferred rent receivable        (15)     20      (6)
   (Increase) decrease in other assets                    103    (138)    (76)
   (Decrease) increase in deposits and other              (18)    (35)    (29)
liabilities
-------------------------------------------------------------------------------
Net cash provided by operating activities                 287     163      500
-------------------------------------------------------------------------------

   Net proceeds from sale of rental  property           4,876   2,093       60
   Leasing commissions paid                                (7)    (10)    (35)
   Principal received on note receivable                  717      19       14
   Disposition of mortgage-backed securities                -     175       21
   Improvements to rental property                         (3)     (5)     (8)
-------------------------------------------------------------------------------
Net cash provided by investing activities               5,583   2,272       52
-------------------------------------------------------------------------------

    Origination of borrowings under note payable            -   2,850        -
    Repayment of note payable                          (2,827) (2,773)       -
    Distributions paid                                 (1,003) (2,823)   (392)
-------------------------------------------------------------------------------
Net cash used in financing activities                  (3,830) (2,746)   (392)
-------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents        2,040    (311)     160
Cash and cash equivalents, beginning of year              461     772      612
===============================================================================
Cash and cash equivalents, end of year                 $2,501    $461     $772
===============================================================================

  Supplemental  cash  flow  and  non-cash  activity  - See  notes 4 & 9 to the
financial statements.


 The accompanying notes are an integral part of these financial statements.


N O T E S  T O  F I N A N C I A L  S T A T E M E N T S

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES


ORGANIZATION AND BUSINESS ACTIVITY
Property  Resources  Equity Trust (the "Company") is a California  corporation
formed on February 20, 1985 for the purpose of  investing in  income-producing
real  property.  The Company is a real estate  investment  trust  ("REIT") and
has  qualified  as a  REIT  from  inception.  Property  Resources,  Inc.  (the
"Advisor") manages the Company's day-to-day operations,  under the terms of an
agreement that is renewable annually.

Acquisitions and sales of the Company's properties were as follows:

-------------------------------------------------------------------------------
PROPERTY                             DATE ACQUIRED          DATE SOLD
-------------------------------------------------------------------------------
Graham Court Business Park           August 1986            March 1997
Agora Office Building                September 1986         April 1996
Good Guys Plaza                      July 1988              October 1998
-------------------------------------------------------------------------------

There is no public  market for the  Company's  common stock and shares are not
freely transferable.

BASIS OF PRESENTATION
The preparation of financial  statements in conformity with generally accepted
accounting  principles  requires  management to make estimates and assumptions
that affect the reported  amounts of assets and  liabilities and disclosure of
contingent assets and liabilities at the date of the financial  statements and
the reported  amounts of revenues and expenses  during the  reporting  period.
Actual results could differ from those estimates.

During 1998,  the Company  completed  the sale of the remaining  property.  As
discussed  in Note 10, on January 26,  1999,  the  shareholders  approved  the
plan of dissolution and liquidation of the Company.

REAL ESTATE
Rental  property  is stated at cost and  depreciated  using the  straight-line
method  over  estimated  useful  live  of 30 to 35  years  for  buildings  and
improvements  and the  life of the  related  lease  for  tenant  improvements.
Significant  improvements  and  betterments are  capitalized.  Maintenance and
repairs are charged to expense when incurred.

Pursuant  to  the  Company's  historical   investment   objectives,   property
purchased  has been held for  extended  periods.  During  the  holding  period
management  periodically,  but at least  annually,  evaluated  whether  rental
property has suffered an impairment in value.  Such  assessments  included the
consideration  of the Company's  ability and intent to hold a property as well
as an  evaluation  of that  property's  future  rental  potential  through the
holding period.  Generally,  management's  analysis was performed  utilizing a
sum of future cash flows  methodology  that compared the property's  operating
cash flows and residual value to the net carrying amount.

CASH AND CASH EQUIVALENTS
Cash and cash  equivalents  include cash on hand,  demand deposits with banks,
debt  instruments  with original  maturities of three months or less and money
market funds,  which are readily  convertible into cash. Due to the relatively
short-term nature of these  instruments,  the carrying value approximates fair
value.

MORTGAGE-BACKED SECURITIES
Mortgage-backed   securities   held  by  the   Company   are   classified   as
available-for-sale  and are carried at fair value.  The  resulting  unrealized
gains and losses are reported as a separate component of stockholders'  equity
until  realized.  Realized  gains and losses are  recognized  on the  specific
identification method and are included in earnings.

OTHER ASSETS
Other assets include  deferred lease  commissions,  which are amortized  using
the straight-line method over the terms of the related leases.

RENTAL REVENUES
Rental  revenues  are  recorded  using the  straight-line  method  to  reflect
scheduled  rent  increases  and free rent periods over the related lease term.
As a result,  a deferred rent  receivable  is created when rental  receivables
are less than the amount earned using the straight-line  method or when rental
income is recognized during free rent periods of a lease.

INCOME TAXES
The Company is a real estate  investment  trust  ("REIT"),  having  elected to
qualify as a REIT under the  applicable  provisions  of the  Internal  Revenue
Code since 1989.  Under the Internal  Revenue Code and applicable state income
tax law, a qualified  REIT is not subject to income tax if at least 95% of its
taxable  income is currently  distributed to its  stockholders  and other REIT
tests are met. The Company is in  compliance  with these  tests.  Accordingly,
no provision is made for income taxes in these financial statements.

COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting  Comprehensive
Income" ("FAS 130")  establishes  the  disclosure  requirements  for reporting
comprehensive  income in an entity's annual and interim financial  statements.
The Company had no  accumulated  other  comprehensive  income at December  31,
1998 or December 31, 1997. The Company has fully  implemented the requirements
of FAS 130 in these financial statements.

SEGMENT INFORMATION
The Company has adopted Statement of Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information", ("FAS
131"), which establishes new requirements for reporting segment information.
The Company has determined that it had only one reportable segment under FAS
131.

NOTE 2 - MORTGAGE-BACKED SECURITIES, AVAILABLE FOR SALE

The Company did not hold any mortgage  backed  securities,  available for sale
at December 31, 1998 or December 31, 1997.

During  1997,  proceeds  of $175,000  were  received in respect of the sale of
mortgage-backed  securities  with a cost of $184,000,  realizing a loss on the
sale of investments of $9,000.

NOTE 3 - NOTE RECEIVABLE

The Company  collected all amounts due on the note  receivable on its maturity
date in April,  1998.  This  note was  created  in April,  1996 when the Agora
Office  Building was sold to an  unaffiliated  third  party.  The terms of the
sale included the $750,000 note receivable owed by the buyer to the Company.

NOTE 4 - NOTE PAYABLE

During 1998 the Company paid in full a note payable  following the sale of the
Good Guys Plaza  Shopping  Center in October  1998.  The amount  paid on final
redemption  of the loan was  $2,803,000  and was financed by the sale proceeds
of the related property.

For the years ended December 31, 1998,  1997 and 1996,  interest paid on notes
was $195,000, $264,000, and $183,000, respectively.

NOTE 5 - COMMON STOCK

Series A and  Series B  common  stock  have  the  same  voting,  dividend  and
distribution  rights.  All  dividends  are declared at the  discretion  of the
Board of  Directors of the Company.  To date,  the Board of Directors  has not
declared  any  dividends  on  Series B common  stock.  The  Advisor  holds 580
shares of Series A common stock and 1,000 shares of Series B common stock.

NOTE 6 - DISTRIBUTIONS

The   allocations   of  cash   distributions   per   share   for   individual
stockholders'  income tax purposes,  as reported on Internal  Revenue Service
Form 1099-DIV,  for the years ended December 31, 1998,  1997 and 1996 were as
follows:

               Ordinary  Return of  Capital    Total
   Year Paid     Income    Capital     Gain     Paid
-----------------------------------------------------
        1998          -       $.92        -     $.92
        1997       $.13      $2.28     $.18    $2.59
        1996          -       $.36        -     $.36

NOTE 7 - RELATED PARTY TRANSACTIONS

The Company has an agreement  with the Advisor to  administer  the  day-to-day
operations  of the  Company  for  which  it  pays a fee.  On  July  16,  1993,
Franklin/Templeton  Investor  Services,  Inc.,  an  affiliate  of the Advisor,
assumed  responsibility as the Company's  transfer agent and registrar for the
Company's Series A common stock.

The Company  entered into an agreement with  Continental  Property  Management
Co.  ("CPMC"),  an  affiliate  of the  Advisor,  to  manage  the  leasing  and
management  related  services  for the  properties.  Under  the  terms of this
agreement,  CPMC was paid  management,  leasing and  construction  supervision
fees.

The agreements  between the Company and the Advisor,  or affiliates,  provided
for certain types of  compensation  for services  rendered for the years ended
December 31, 1998, 1997 and 1996:

DOLLARS IN THOUSANDS                                   1998      1997       1996
--------------------------------------------------------------------------------
Related party expenses:
   Management advisory fees                             $10       $38        $21
   Reimbursement for accounting and data
processing                                               12        24         23
      expenses
   Property management fee                               21        28         35
   Stockholder services fees                             19        18         13
================================================================================
  Total related party expense                           $62      $108        $92
================================================================================

Leasing commissions, capitalized and amortized
   over the term of the related lease                    $-        $5        $31
================================================================================

At December 31, 1997,  cash  equivalents  included $3,000 invested in Franklin
Money Fund and $416,000  invested in Franklin  Institutional  Fiduciary Trust,
both of which are managed by an affiliate of the Advisor.
At December 31,  1998,  the Company  held no such  investments.  For the years
ended  December  31,  1998,  1997 and  1996,  related  dividends  earned  were
$15,000, $44,000 and $8,000, respectively.

NOTE 8 - RENTAL INCOME

At December 31, 1998 the Company has sold all of its  properties and thus will
not  receive  further  rental  income.   The  Company's   rental  income  from
commercial   property   was   received    principally   from   tenants   under
non-cancelable  operating  leases. 

NOTE 9 - SALE OF REAL ESTATE

On October 21, 1998, the company sold the Good Guys Plaza  Shopping  Center to
an unrelated  third party for  $5,108,000,  resulting in net cash  proceeds to
the Company of $4,876,000.  The Company  recognized a gain of $187,000 on this
transaction.

NOTE 10 - SUBSEQUENT EVENT

At a special meeting of shareholders, held on January 26, 1999, the
dissolution, termination and liquidation of the Company was approved by a
majority of the Company's outstanding shares, after being approved by the
Board of Directors.  An initial liquidating distribution of $2.10 per share
was made on February 16, 1999 and a final distribution is expected in June
1999.   Management does not expect that the costs related to the ultimate
liquidation of the Company will be material to the financial statements.


SCHEDULE  III  -  R  E  A  L E S T A T E  A N D  A C C U M U L A T E D  
D E P R E C I A T I O N

The Company held no real estate at December 31, 1998.

RECONCILIATION OF REAL ESTATE

In thousands                           1998     1997    1996
---------------------------------------------------------------

Balance at beginning of period          $5,991  $8,449  $9,536
Disposition                            (5,994)  (2,463) (1,095)
Additions during year:
  Improvements to rental property            3       5       8
===============================================================
Balance at end of period                   $ -  $5,991  $8,449
===============================================================

RECONCILIATION OF ACCUMULATED DEPRECIATION

In thousands                           1998     1997    1996
---------------------------------------------------------------

Balance at beginning of period          $1,409  $1,995  $2,145
Disposition                            (1,518)    (740)   (371)
Depreciation expense for the period        119     154     221
---------------------------------------------------------------
Balance at end of period                   $ -  $1,409  $1,995
===============================================================

Item 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 10.  DIRECTORS  AND  EXECUTIVE  OFFICERS OF THE GENERAL  PARTNER AND THE 
ADVISOR   


The officers and directors of the Company are as follows:

NAME                        POSITION
David P. Goss               Chief Executive Officer, President and a
                            Director
David W. Walters            Independent Director
James A. Niles              Independent Director
Richard S. Barone           Secretary
Martin L. Flanagan          Vice President - Finance and Chief
                            Financial Officer
David N. Popelka            Vice President - Asset Management

David Goss,  Richard S. Barone,  Martin L.  Flanagan and David N. Popelka also
served as directors or officers of the Advisor.

DAVID P. GOSS (51)
Mr. Goss is Chief  Executive  Officer,  President  and Director of the Company
(1987 to date).  He is also Chief  Executive  Officer,  President and Director
of the Advisor,  Franklin  Properties,  Inc., Franklin Real Estate Income Fund
(1988 to date),  Franklin  Select Real  Estate  Income Fund (1989 to date) and
Franklin  Advantage  Real Estate  Income  Fund (1990 to date).  Mr. Goss has a
B.A.  degree from the University of California,  Berkeley,  and a J.D.  degree
from the New York University School of Law.

DAVID W. WALTERS (52)
Mr. Walters is an  Independent  Director of the Company (1986 to date) and has
been  a  practicing   attorney  since  1974,   specializing   in  real  estate
acquisitions,  finance,  securities  and  taxation.  From  1974 to  1976,  Mr.
Walters was with the California  State  Department of  Corporations  where, as
Corporations   Counsel,   he  was  responsible  for  the   administration   of
California's  Real Estate Securities  Qualification  Rules. From 1976 to 1978,
Mr.  Walters  was a member  of the Bank of  America's  legal  staff,  where he
specialized  in commercial  and consumer  lending  problems.  Since 1978,  Mr.
Walters has been in private  practice.  Mr.  Walters  graduated  from Stanford
University where he received a B.S. degree.  He also received a M.B.A.  degree
from  the  University  of  California  at  Berkeley,  a J.D.  degree  from the
University of San Francisco and a Masters  degree in Taxation from Golden Gate
University.

JAMES A. NILES (53)
Mr. Niles is an Independent  Director of the Company (1985 to date), and is an
independent  consultant.  Mr. Niles  attended the  University  of  California,
Davis,  where he received a B.S,  M.S. and Ph.D.  in  Agricultural  Economics.
Mr.  Niles was a faculty  member at the  University  of  Florida  from 1973 to
1978,  and an Associate  Professor at the  Institute  of  Agribusiness  at the
University  of Santa  Clara  from  1978 to  1986.  Mr.  Niles is the  owner of
Creekside Investment located in Los Gatos, California.

RICHARD S. BARONE (48)
Mr.  Barone is Secretary of the Company (1988 to date).  He is also  Secretary
of the Advisor,  Franklin  Properties,  Inc., Franklin Real Estate Income Fund
(1988 to date),  Franklin  Select Real  Estate  Income Fund (1989 to date) and
Franklin  Advantage Real Estate Income Fund (1990 to date).  He is also Senior
Vice President - Legal of the Advisor and Franklin  Properties,  Inc. (1988 to
date) and  Corporate  Counsel  of  Franklin  Resources,  Inc.  (1988 to date).
Previously,  Mr.  Barone was employed by the Robert A. McNeil  Corporation  as
Corporate  Counsel  from 1982 until June,  1987,  during  which period he also
held the  positions  of Vice  President - Legal  (1984 to 1987) and  Secretary
(1986 to 1987).  Prior to 1982, he was in a private law practice in San Mateo,
California.  Mr.  Barone  received a B.A.  degree and a J.D.  degree  from the
University of San Francisco.  He is a member of the State Bar of California.

MARTIN L. FLANAGAN (38)
Mr.  Flanagan is Vice President - Finance and Chief  Financial  Officer of the
Company,  the Advisor  and  Franklin  Properties,  Inc. He is also Senior Vice
President,  Chief Financial Officer and Treasurer of Franklin Resources, Inc.;
Senior Vice President and Treasurer of Franklin/Templeton  Distributors, Inc.,
Franklin  Advisers,  Inc., and Franklin  Institutional  Services  Corporation;
Treasurer of Franklin  Management,  Inc., and Franklin  Trust Company;  Senior
Vice  President of  Franklin/Templeton  Investor  Services,  Inc. and Franklin
Agency,  Inc.;  a Director  of  Templeton/National  Bank of Greece  Management
(Luxembourg),   Templeton   Investment   Management   (Singapore),   Templeton
Investment   Management  (Hong  Kong),   Templeton  Funds  Investment  Annuity
Company,  Templeton  Funds Trust Company,  Templeton Funds  Management,  Inc.,
Templeton  Holding  Ltd.,   Templeton/Franklin   Investment  Services,   Inc.,
Templeton  Life  Assurance  Ltd.,  Templeton  Quantitative   Advisors,   Inc.,
Templeton Emerging Markets, Templeton Management (Luxembourg),  Templeton Unit
Trust Managers,  Ltd., and Templeton Investment Management,  Ltd. (Edinburgh);
Executive Vice President,  Chief Operating Officer and a Director of Templeton
Worldwide,  Inc. and Templeton  International,  Inc.; Executive Vice President
and a Director of T.G.H.  Holdings,  Ltd.;  Chairman of the Board of Templeton
Global  Strategic  Services,  Inc.;  General  Manager of  Templeton  Financial
Advisory  Services,  S.A.;  Managing  Director of Templeton Global  Investors,
Ltd.;  President and Chief Executive  Officer of Templeton  Global  Investors;
and  Executive  Vice  President  and a  Director  of  Templeton,  Galbraith  &
Hansberger,  Ltd. and Templeton  Investment  Counsel,  Inc. From 1982 to 1983,
he was an auditor  for Arthur  Andersen &  Company.  Mr.  Flanagan  received a
B.A.  degree from  Southern  Methodist  University  and is a Certified  Public
Accountant  and a Chartered  Financial  Analyst.  He is  currently a member of
the American  Institute of Certified Public  Accountants and the International
Society of Financial Analysts.

DAVID N. POPELKA (46)
David  Popelka is Vice  President - Asset  Management  of the Company and Vice
President  for the  Advisor,  Property  Resources,  Inc.  Prior to joining the
General  Partner,  Mr. Popelka was Vice  President - Portfolio  Management for
the Glenborough  Management Company in Redwood City,  California.  Mr. Popelka
is a graduate of Illinois  State  University  and received a Masters degree in
Business  Administration  from the University of Washington Graduate School of
Business.  He has  been a  guest  lecturer  on  real  estate  investments  and
finance  at Golden  Gate  University.  Mr.  Popelka  is a real  estate  broker
licensed by the State of California.

Item 11. EXECUTIVE COMPENSATION

No direct  compensation has been paid by the Company to directors and officers
of the  Company  or the  Company's  advisor,  Property  Resources,  Inc.  (the
"Advisor")  except  that  the  Independent  Directors  received  approximately
$9,000 for attending  meetings  during the year ended  December 31, 1998.  The
Company has no annuity,  pension or retirement  plans or any existing plans or
arrangement  under which  payments  have or would in the future be made to any
director or officer.  The Company pays certain fees to and reimburses  certain
expenses of the Advisor as described in Item 13.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

No person or group of persons  is known by the  Company  to  beneficially  own
more than 5% of the  outstanding  common  stock.  As of December 31, 1998,  no
directors or officers of the Company owned any shares of the Company.

The  Company is  unaware of any  arrangement  which may at a  subsequent  date
result in a change in control of the Company.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has entered into an agreement  with the Advisor to administer  the
day-to-day  operations  of the  Company.  Under  the  terms of the  agreement,
which is  renewable  annually,  the Advisor  will receive a fee equal to 5% of
the total amount  distributed to the  Stockholders.  The fee is not payable in
regard to distributions  from the sale or refinancing of property.  Management
advisory  fees for 1998 amounted to $10,000.  The agreement  also provides for
the following compensation and payments to the Advisor and its affiliates:

      Reimbursement  of  certain   administrative   costs  and  expenses
      incurred on behalf of the Company of $12,000 in 1998.

      Acquisition  and  investment  advisory  fees not to  exceed in the
      aggregate,  13% of  offering  proceeds  for  services  rendered in
      connection  with the  investigation,  selection or  acquisition of
      property.  No such fees were paid in 1998.

      Subordinated  sales  commissions  of 5% of the gross selling price
      of Company property.  No commissions were paid in 1998.

      Subordinated  disposition fee of 15% of net proceeds,  as defined,
      from the sale or  refinancing  of Company  property.  No such fees
      were paid in 1998.

      Subordinated  commissions  and fees  are  payable  to the  Advisor
      provided the stockholders have received  cumulative  distributions
      equal to their  original  equity  plus an 8% per annum  cumulative
      return.  No such  commissions  or fees were paid to the Advisor in
      1998.

      An  affiliate  of the  Advisor is  entitled  to  receive  fees for
      property  management  and  other  property  related  services.  In
      1998,  the  affiliate  was paid  $21,000 for  property  management
      services and $0 for leasing services.

      An  affiliate  of the Advisor is entitled to receive  underwriting
      commissions on shares sold to  stockholders,  net of payments made
      to unaffiliated  broker-dealers.  No such commissions were paid in
      1998.

      An affiliate  of the Advisor is entitled to receive a  stockholder
      services  fee for  providing  services as the  Company's  transfer
      agent and registrar and for  providing  other related  stockholder
      services.  The  affiliate  was  paid  $19,000  in 1998  for  these
      services.

On July 16, 1993,  Franklin/Templeton Investor Services, Inc., an affiliate of
the  Advisor,  assumed  responsibility  as the  Company's  transfer  agent and
registrar for the Company's  Series A common stock.  At December 31, 1998, and
1997, cash equivalents  included $0 and $3,000 invested in Franklin Money Fund
and $0 and $416,000 invested in Institutional  Fiduciary Trust,  respectively.
Both are managed by an affiliate of the Advisor.  For the year ended  December
31, 1998, dividends earned on these investments amounted to $15,000.

David P. Goss,  Richard S. Barone and David N. Popelka who are officers of the
Company, are also officers of the Advisor.

Item 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   1. The financial  statements  and  schedules of the Company  included in
         Item 8 of the report are listed on the index on page 8.

      2.  The  supplemental   financial  statement  schedule  of  the  Company
         included in Item 8 of this report is listed on the index on page 8.

      3.  Exhibits

            (2.)    Plan of  Dissolution and  Liquidation  (also  see  Form 8-K
                    filed  on  February 1, 1999 and  dated  January  26,  1999
                    providing  details  of  the   approval   of  the  Plan  of
                    Dissolution and Liquidation)
            (3.1)   Articles of Incorporation *
            (3.2)   Bylaws *
            (10.1)  Material Contracts - Advisory Agreement *
            (10.2)  Material Contracts - Property Management Agreement
            (11.)   Statement  regarding computation of earnings per share. See
                    the Statement of Income  included  in  the   Financial
                    Statements.


            *Documents  were  filed in the  Company's  Form S-11  Registration
            Statement,  dated July 16, 1985 (Registration No. 2-96589) and are
            incorporated herein by reference.

 (b)  Reports on Form 8-K.

      On November 23, 1998 the Company filed form 8-KA.  This filing  provided
      proforma  financial  information  relating  to the sale of the Good Guys
      Plaza Shopping Center which occurred in October 1998.


SIGNATURE


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.


                               PROPERTY RESOURCES EQUITY TRUST
                               (Registrant)


Date:                        By: S/DAVID P. GOSS                 
                                   David P. Goss
                                   Chief Executive Officer



Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  this
report  has been  signed  below by the  following  persons  on  behalf  of the
registrant, and in the capacities and on the dates indicated.



SIGNATURE                   TITLE                 DATE



                            Chief Executive
                            Officer
----------------------------                      -------------------
David P. Goss


                            Director1
----------------------------                      -------------------
David W. Walters


                            Director1
----------------------------                      -------------------
James A. Niles




1 Independent Director




                                  EXHIBIT 2.
                      PLAN OF DISSOLUTION AND LIQUIDATION

      This  Plan of  Dissolution  and  Liquidation  (this  "Plan")  is for the
purpose of effecting  the  dissolution  and complete  liquidation  of Property
Resources Equity Trust (the "Company").

      1.    APPROVAL OF THIS PLAN. In accordance  with Section  1900(a) of the
California   Corporations   Code,   this  Plan  shall  be   submitted  to  the
shareholders   of  the  Company  for  approval  at  the  Special   Meeting  of
Shareholders  to be held for that  purpose.  This Plan shall become  effective
upon the approval of the holders of a majority of the outstanding  shares (the
"Effective Date")

      2.    CESSATION  OF  BUSINESS.  Following  approval  of this  Plan,  the
Company shall not engage in any further  business  activities,  except for the
purpose of completing work in process,  disposing of its assets, providing for
satisfaction  of its  obligations,  adjusting  and winding up its business and
affairs,  and  distributing the proceeds from the disposition of its assets in
accordance  with this Plan. The Board of Directors (the  "Directors")  then in
office shall continue in office solely for that purpose.

      3.    CONTINUING   EMPLOYEES.   For  the   purpose  of   effecting   the
liquidation of the Company's assets, the Company shall retain,  subject to the
pleasure of the  Directors,  such employees as the Directors deem desirable to
supervise the liquidation.

      4.    EXPENSES OF  LIQUIDATION.  The  Directors  may  provide,  from the
assets of the  Company,  reasonable  funds for payment of the  expenses of the
dissolution  and liquidation of the Company,  including  filing fees and other
expenses  relating to the holding of the Special  Meeting of  Shareholders  to
consider this Plan and other  documentation  required in connection  with this
Plan,   continuation  of  employees   engaged  in  the  liquidation   process,
accounting and attorneys'  fees and expenses,  and other  reasonable  fees and
expenses incurred in connection with the liquidation process.

      5.    PAYMENT  OF  LEGALLY   ENFORCEABLE   CLAIMS.   The  Company  shall
satisfy,  or provide for the satisfaction of, all legally  enforceable  claims
and obligations of the Company in an orderly manner.

      6.    PROVISION   FOR   CONTINUED   INDEMNIFICATION   OF  DIRECTORS  AND
OFFICERS.  The  Company  shall  reserve  sufficient  assets  (or  obtain  such
insurance) as shall be necessary to provide for continued  indemnification  of
the Directors,  officers and agents of the Company to the full extent provided
by the  articles of  incorporation  and bylaws of the  Company,  any  existing
indemnification  agreements  between the Company and any of such persons,  and
applicable law.

      7.    DISTRIBUTION  TO  SHAREHOLDERS.  After  satisfaction of all of the
Company's   legally   enforceable   obligations,   remaining  assets  will  be
distributed  to the  shareholders  of the  Company  in  accordance  with their
respective shareholdings.

      8.    TERMINATION  OF REIT  STATUS.  In the course of  liquidation,  the
Board of  Directors,  acting in its  discretion,  shall have the  authority to
terminate  the  Company's  election  to be taxed as a real  estate  investment
trust  under  Sections  856-860  of the  Internal  Revenue  Code of  1986,  as
amended,  if it determines  that such action would be in the best interests of
the shareholders.

      9.    LIQUIDATING  TRUST.  If the  Company  is  unable  to  satisfy  its
legally  enforceable  obligations  within 12 months of the Effective Date, the
Board of Directors  may cause the Company to create a  liquidating  trust (the
"Liquidating   Trust")  and  to   distribute   beneficial   interests  in  the
Liquidating  Trust to the  shareholders  as part of the  liquidation  process.
The  Liquidating  Trust shall be constituted  pursuant to a liquidating  trust
agreement  in such  form as the  Board  of  Directors  may  approve,  it being
intended that the transfer and  assignment to the  Liquidating  Trust pursuant
hereto  and the  distribution  to  shareholders  of the  beneficial  interests
therein shall constitute a part of the final  liquidating  distribution by the
Company  to the  shareholders  of their pro rata  interests  in the  remaining
amount of cash and other  property  held by or for the account of the Company.
From and after the date of the Company's  transfer of cash and property to the
Liquidating  Trust, the Company shall have no interest of any character in and
to any  such  cash  and  property  and all of such  cash  and  property  shall
thereafter  be held by the  Liquidating  Trust  solely for the  benefit of and
ultimate  distribution of the shareholders,  subject to any unsatisfied debts,
liabilities and expenses.

      10.   AUTHORIZATION.  The  Board of  Directors  of the  Company,  or the
trustees of the  Liquidating  Trust,  and such  officers of the Company as the
Board of  Directors  may  direct,  are  hereby  authorized  to  interpret  the
provisions  of this Plan and are hereby  authorized  and directed to take such
further  actions,  to  execute  such  agreements,  conveyances,   assignments,
transfers,  certificates  and other  documents,  as may in their  judgment  be
necessary or desirable  in order to wind up  expeditiously  the affairs of the
Company and complete the liquidation thereof,  including,  without limitation,
(i) the execution of any contracts,  deeds,  assignments or other  instruments
necessary or appropriate to sell or otherwise  dispose of any and all property
of the Company,  whether real or personal,  tangible or  intangible,  (ii) the
appointment  of other persons to carry out any aspect of this Plan,  (iii) the
temporary  investment  of funds in such medium as the Board of  Directors  may
deem  appropriate,  and (iv) the modification of this Plan as may be necessary
to implement  this Plan.  The death,  resignation  or other  disability of any
Director  or officer of the  Company  shall not  impair the  authority  of the
surviving  or  remaining  Directors or officers of the Company (or any persons
appointed as substitutes  therefor) to exercise any of the powers provided for
in  this  Plan.  Upon  such  death,  resignation  or  other  disability,   the
surviving or remaining  Directors shall have the authority to fill the vacancy
or  vacancies  so created,  but the failure to fill such  vacancy or vacancies
shall not impair the  authority of the  surviving  or  remaining  Directors or
officers to exercise any of the powers provided for in this Plan.

      11.   TERMINATION  OF THIS PLAN.  The Board of Directors may, by vote of
the majority of the Directors  then in office,  terminate this Plan and revoke
the dissolution of the Company,  whether or not a vote of the shareholders has
previously occurred.