<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
                                    ---------

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


     For the quarter ended September 30, 1997 Commission file number 0-13693


                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES
                                ----------------
               (Exact name of registrant as specified in charter)



         Massachusetts                                              13-6850434
         -------------                                              ----------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)



3111 Paces Mill Road, Suite A-200, Atlanta, GA                           30339
----------------------------------------------                           -----
(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code:              (770) 984-9500

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___






    Shares of Beneficial Interest outstanding at October 10, 1997: 1,080,512
<PAGE>



                                   VININGS INVESTMENT PROPERTIES TRUST
                                             AND SUBSIDIARIES

                                      INDEX OF FINANCIAL INFORMATION
                                      ------------------------------


PART I   FINANCIAL INFORMATION                                              PAGE

Item 1   Financial Statements
------   --------------------

         Consolidated Balance Sheets at September 30, 1997 (unaudited)
         and December 31, 1996                                                3

         Consolidated Statements of Operations (unaudited) for the
         three and nine months ended September 30, 1997 and 1996              4

         Consolidated Statements of Shareholders' Equity for the
         year ended December 31, 1996 and the nine months
         ended September 30, 1997 (unaudited)                                 5

         Consolidated Statements of Cash Flows (unaudited)
         for the nine months ended September 30, 1997 and 1996                6

         Notes to Consolidated Financial Statements                           7

Item 2   Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                 13

PART II  OTHER INFORMATION/SIGNATURE

Item 6   Exhibits and Reports on Form 8-K                                    17

         Signature                                                           18

<PAGE>
<TABLE>

<CAPTION>
                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
                                   -----------


                                                             September 30,    December 31,
                                                                 1997            1996
                                                             ------------    -------------
<S>                                                          <C>              <C>
ASSETS
------

Real estate assets:
    Land .................................................   $  1,470,500    $  1,470,500
    Buildings and improvements ...........................      9,302,060       9,218,263
    Furniture, fixtures & equipment ......................        808,036         783,691
      Less:  accumulated depreciation ....................       (930,713)       (613,918)
                                                             ------------    ------------
         Net real estate assets ..........................     10,649,883      10,858,536


Cash and cash equivalents ................................        194,971         171,736
Cash escrows .............................................        256,053         192,611
Receivables and other assets .............................        106,542          86,002
Deferred financing costs, less accumulated amortization
    of $46,733 and $19,502 at September 30, 1997
    and December 31, 1996, respectively ..................        177,694         204,925
Deferred leasing costs, less accumulated amortization of
    $35,514 and $28,470 at September 30, 1997 and
    December 31, 1996, respectively ......................         32,649           5,659
                                                             ------------    ------------

Total Assets .............................................   $ 11,417,792    $ 11,519,469
                                                             ============    ============


LIABILITIES AND SHAREHOLDERS' EQUITY

Mortgage note payable ....................................   $  7,333,112    $  7,371,676
Line of credit ...........................................      1,568,104       1,568,104
Accounts payable and accrued liabilities .................        413,724         347,141
                                                             ------------    ------------

       Total Liabilities .................................      9,314,940       9,286,921
                                                             ------------    ------------

Contingencies (Note 11)

Shareholders' Equity:
    Shares of beneficial interest, without par value,
      unlimited shares authorized, 1,080,512 and 1,080,528
      shares issued and outstanding at September 30, 1997
      and December 31, 1996, respectively ................     18,731,682      18,731,763

    Cumulative earnings ..................................     37,749,699      37,879,314

    Cumulative distributions .............................    (54,378,529)    (54,378,529)
                                                             ------------    ------------

       Total Shareholders' Equity ........................      2,102,852       2,232,548
                                                             ------------    ------------

Total Liabilities and Shareholders' Equity ...............   $ 11,417,792    $ 11,519,469
                                                             ============    ============

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

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
                                   -----------


                                                      For the three months          For the nine months
                                                      ended September 30,           ended September 30,
                                                   --------------------------    -------------------------

                                                      1997            1996           1997           1996
                                                   -----------    -----------    -----------    ------------
<S>                                              <C>              <C>             <C>             <C>
REVENUES

     Rental revenues ...........................   $   613,118    $   583,776    $ 1,765,491    $   896,256
     Other property revenues ...................        21,679         29,135         64,751         46,277
     Interest income ...........................           939            399          1,903         92,302
     Other income ..............................          --             --             --          141,229
                                                   -----------    -----------    -----------    -----------
                                                       635,736        613,310      1,832,145      1,176,064
                                                   -----------    -----------    -----------    -----------

EXPENSES

     Property operating and maintenance ........       247,440        230,857        759,954        332,403
     Depreciation and amortization .............       108,436        100,945        323,839        141,845
     Amortization of deferred financing costs ..         7,726          9,751         27,231          9,751
     Interest expense ..........................       200,280        200,945        600,196        208,370
     General and administrative ................        90,479        146,905        250,540        734,547
     Investment advisor's fees .................          --             --             --          333,461
                                                   -----------    -----------    -----------    -----------
                                                       654,361        689,403      1,961,760      1,760,377
                                                   -----------    -----------    -----------    -----------

      Loss before loss on real estate
        investments ............................       (18,625)       (76,093)      (129,615)      (584,313)
                                                   -----------    -----------    -----------    -----------

LOSS ON REAL ESTATE INVESTMENTS

     Loss on real estate investments ...........          --             --             --          (26,800)
                                                   -----------    -----------    -----------    -----------

     Net Loss ..................................   $   (18,625)   $   (76,093)   $  (129,615)   $  (611,113)
                                                   ===========    ===========    ===========    ===========

EARNINGS PER SHARE

     Loss before loss on real estate investments   $     (0.02)   $     (0.07)   $     (0.12)   $     (0.54)
     Loss on real estate investments ...........          --             --             --            (0.03)
                                                   -----------    -----------    -----------    -----------

     Net loss ..................................   $     (0.02)   $     (0.07)   $     (0.12)   $     (0.57)
                                                   ===========    ===========    ===========    ===========

WEIGHTED AVERAGE SHARES OUTSTANDING ............     1,080,513      1,080,580      1,080,516      1,080,610
                                                   ===========    ===========    ===========    ===========

   The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  For the year ended December 31, 1996 and the
                      nine months ended September 30, 1997
                                   (unaudited)
                                   -----------



                                              Shares of                                          Total
                                             beneficial     Cummulative      Cummulative     shareholders'
                                              interest       earnings       distributions       equity
                                          -------------    -------------   --------------  ---------------
<S>                                        <C>             <C>             <C>             <C>
BALANCE AT DECEMBER 31, 1995 ...........   $ 36,973,249    $ 38,689,392    $(54,378,529)   $ 21,284,112

Net Loss ...............................           --          (810,078)           --          (810,078)

Retirement of Shares ...................           (536)           --              --              (536)

Distributions to shareholders
     ($16.88 per share return of capital
     for federal income tax purposes) ..    (18,240,950)           --              --       (18,240,950)
                                           ------------    ------------    ------------    ------------

BALANCE AT DECEMBER 31, 1996 ...........     18,731,763      37,879,314     (54,378,529)      2,232,548

Net Loss ...............................           --          (129,615)           --          (129,615)

Retirement of Shares ...................            (81)           --              --               (81)
                                           ------------    ------------    ------------    ------------

BALANCE AT SEPTEMBER 30, 1997 ..........   $ 18,731,682    $ 37,749,699    $(54,378,529)   $  2,102,852
                                           ============    ============    ============    ============

   The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>


                                VININGS INVESTMENT PROPERTIES TRUST
                                         AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                               -------------------------------------

                                                                  For the nine months
                                                                  ended September 30,
                                                             -----------------------------
                                                                  1997            1996
                                                             -------------   -------------
<S>                                                          <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss .................................................   $   (129,615)   $   (611,113)

Adjustments to reconcile net loss to net cash provided by
   (used in) operating activities:

        Depreciation and amortization ....................        323,839         141,845
        Amortization of deferred financing costs .........         27,231           9,751
        Loss on real estate investments ..................           --            26,800
        Changes in assets and liabilities:
          Cash escrows ...................................        (63,442)       (268,236)
          Receivables and other assets ...................        (20,540)        122,978
          Capitalized leasing costs ......................        (34,034)         (5,639)
          Accounts payable, accrued liabilities and ......         66,583        (177,003)
            due to affiliate .............................           --              --

        Total adjustments ................................        299,637        (149,504)
                                                             ------------    ------------

Net cash provided by (used in) operating activities ......        170,022        (760,617)
                                                             ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of The Thicket Apartments .......................           --        (8,660,900)
The Thicket capital expenditures .........................        (82,250)         (5,347)
Peachtree capital expenditures ...........................        (25,892)         (9,077)
Sales proceeds from real estate investments ..............           --           673,200
                                                             ------------    ------------

Net cash used in investing activities ....................       (108,142)     (8,002,124)
                                                             ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from mortgage note payable and line of credit           --         8,960,104
Deferred financing costs .................................           --          (224,426)
Principal repayments on mortgage payable .................        (38,564)         (8,039)
Purchase of retired shares ...............................            (81)           (465)
Distributions to shareholders ............................           --       (18,240,950)
                                                             ------------    ------------

Net cash used in financing activities ....................        (38,645)     (9,513,776)
                                                             ------------    ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .....         23,235     (18,276,517)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .........        171,736      18,470,031
                                                             ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD ...............   $    194,971    $    193,514
                                                             ============    ============
 
  The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>




                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997
                                   (unaudited)
                                   -----------

NOTE 1 - FORMATION AND ORGANIZATION

         Vinings  Investment  Properties  Trust  ("Vinings"  or the "Trust") was
         organized  on  December 7, 1984 under the laws of the  Commonwealth  of
         Massachusetts as a twenty-year finite-life real estate investment trust
         ("REIT")  under  the  Internal  Revenue  Code  of  1986.   Vinings  was
         originally  organized for the purpose of making real estate investments
         consisting  primarily of mortgage loans and was to liquidate at the end
         of approximately ten years in accordance with its Declaration of Trust,
         provided, however, that the Trustees would have the absolute discretion
         to  determine  in good faith such  termination  date as would be in the
         best interests of the shareholders. On January 3, 1996, the final asset
         to  be  liquidated  was  sold  and  final  liquidating  dividends  were
         declared.

         On  January  31,  1996,  Vinings  Investment  Properties,   Inc.  ("the
         Purchaser")  commenced a tender offer for a minimum of a majority and a
         maximum  of 85% of the  issued  and  outstanding  shares of  beneficial
         interest,  without par value, of the Trust (the "Shares") at a purchase
         price of $0.47 per share ($3.76 per share adjusted for the Share Split,
         as hereinafter  defined) (the "Tender Offer"). The Tender Offer expired
         in accordance  with its terms on February 28, 1996,  and, in connection
         therewith,  the  Purchaser  accepted an aggregate  of 6,337,279  Shares
         (792,159 Shares adjusted for the Share Split, as hereinafter  defined),
         representing approximately 73.3% of the outstanding Shares, for a total
         acquisition  price of $2,978,521.  The remaining assets of Vinings were
         Peachtree  Business  Center and  approximately  $163,000  in cash.  The
         purpose of the Tender Offer was for the Purchaser to acquire control of
         Vinings  and to  rebuild  the  Trust's  assets  by  expanding  into the
         multifamily  property  markets.  In connection with the consummation of
         the  Tender  Offer,  all of the  Trustees  and  officers  of the  Trust
         resigned and were replaced with designees of the Purchaser. The name of
         the  Trust  was  changed  from  Mellon  Participating  Mortgage  Trust,
         Commercial  Properties Series 85/10 to Vinings.  In addition,  prior to
         the Tender Offer, the Trust was an externally advised REIT for which it
         paid advisory fees to an unrelated  third party (the  "Advisor").  Upon
         consummation of the Tender Offer, the relationship with the Advisor was
         terminated and Vinings became self-administered.

         On June 11, 1996, Vinings Investment  Properties,  L.P. (the "Operating
         Partnership"),  a Delaware limited partnership,  was organized. Vinings
         is the sole general  partner and a 98% limited partner in the Operating
         Partnership.  Through  its  ownership  of  Vinings  Holdings,  Inc.,  a
         Delaware corporation and wholly-owned subsidiary of the Trust, which is
         also a limited partner in the Operating Partnership, Vinings was a 100%
         economic  owner of the  Operating  Partnership  at September  30, 1997.
         (This structure is commonly referred to as an umbrella partnership REIT
         or "UPREIT.")

         Vinings currently owns The Thicket Apartments  ("Thicket"),  a 254-unit
         apartment  complex  located  in  Atlanta,   Georgia,   through  Thicket
         Apartments,   L.P.,  a  Delaware  limited  partnership,  of  which  the
         Operating  Partnership is a 99% limited  partner and Thicket  Holdings,
         Inc., a Delaware corporation and wholly-owned subsidiary of Vinings, is
         the sole general partner.  Vinings also owns Peachtree  Business Center
         ("Peachtree"),   an  approximately  75,000  square  foot,  single-story
         business  park located in Atlanta,  Georgia,  through its  wholly-owned
         subsidiary,  PBC Acquisition,  Inc. 
<PAGE>
         On July 1, 1996,  Vinings  effected a 1-for-8 reverse share split
         (the "Share Split") of its 8,645,000  outstanding Shares.  Pursuant to
         the Share Split,  shareholders  who tendered their Shares received one
         Share  for  every  eight  Shares  owned.  Vinings  has  purchased  and
         continues to purchase any fractional  Shares  resulting from the Share
         Split at a cost of $5.50 per Share.  As of September 30, 1997, a total
         of 113  fractional  Shares had been  repurchased  and retired  leaving
         1,080,512 Shares outstanding. All share and per share data included in
         the  accompanying  financial  statements  and notes  thereto have been
         restated to reflect the Share Split.

NOTE 2 - BASIS OF PRESENTATION

         The consolidated  financial statements have been prepared in accordance
         with generally  accepted  accounting  principles for interim  financial
         information  and with the  instructions  to Form 10-Q and Article 10 of
         Regulation S-X. Accordingly, they do not include all of the information
         and footnotes required by generally accepted accounting  principles for
         complete  financial  statements.  In the  opinion  of  management,  all
         adjustments necessary (consisting only of normal recurring adjustments)
         for a fair presentation  have been included.  Operating results for the
         nine  month  period  ended  September  30,  1997  are  not  necessarily
         indicative  of the  results  that may be  expected  for the year ending
         December 31, 1997.

         The   accompanying   consolidated   financial   statements  of  Vinings
         Investment  Properties  Trust  include  the  consolidated  accounts  of
         Vinings   Investment   Properties  Trust  and  its  subsidiaries.   All
         significant intercompany balances and transactions have been eliminated
         in consolidation.  The term "Vinings" or the "Trust" hereinafter refers
         to Vinings Investment Properties Trust and its subsidiaries,  including
         the Operating Partnership.

         These financial  statements should be read in conjunction with Vinings'
         audited   consolidated   financial  statements  and  footnotes  thereto
         included  in  Vinings'  Annual  Report on Form 10-K for the year  ended
         December 31, 1996, as amended.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Income Taxes
         ------------

         Vinings  has elected to be taxed as a REIT under the  Internal  Revenue
         Code of 1986,  as  amended  (the  "Code").  As a result,  Vinings  will
         generally not be subject to federal income  taxation on that portion of
         its income that qualifies as REIT taxable income to the extent the REIT
         distributes at least 95% of its taxable income to its  shareholders and
         satisfies  certain other  requirements.  Accordingly,  no provision for
         federal income taxes has been included in the accompanying consolidated
         financial statements.

         Cash and Cash Equivalents
         -------------------------

         Vinings  considers  all highly  liquid  investments  purchased  with an
         original maturity of three months or less to be cash equivalents.

         Cash Escrows
         ------------

         Cash escrows consist of real estate tax, insurance, replacement reserve
         and repair  escrows held by the  mortgagee.  These funds are restricted
         accounts  and  released  solely  for the  purpose  for which  they were
         established.

         Use of Estimates
         ----------------

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires  management  to make certain
         estimates and  assumptions  that affect the reported  amounts of assets
         and liabilities, the 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.
<PAGE>
         Real Estate Assets
         ------------------

         Real estate assets are stated at depreciated cost. Ordinary repairs and
         maintenance   are  expensed  as  incurred.   Major   improvements   and
         replacements  are  capitalized  and  depreciated  over their  estimated
         useful  lives when they extend the useful  life,  increase  capacity or
         improve efficiency of the related asset.  Depreciation is computed on a
         straight-line  basis over the useful  lives of the real  estate  assets
         (buildings  and  improvements,  5-40  years;  furniture,  fixtures  and
         equipment, 5 years; and tenant improvements, generally over the life of
         the related lease).

         Revenue Recognition
         -------------------

         All leases are  classified  as  operating  leases and rental  income is
         recognized   when  earned   which   materially   approximates   revenue
         recognition on a straight-line basis.

         Deferred Financing Costs and Amortization
         -----------------------------------------

         Deferred  financing  costs  include  fees and costs  incurred to obtain
         financing  and are  capitalized  and  amortized  over  the  term of the
         related debt.

         Earnings (Loss) Per Share
         -------------------------

         Earnings  (loss) per share is computed  based on the  weighted  average
         number of shares  outstanding  during the period. All references in the
         accompanying financial statements and notes to the financial statements
         to the weighted  average number of shares  outstanding  and to earnings
         (loss) per share have been restated to reflect the Share Split.

         Recent Accounting Pronouncements
         --------------------------------

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement of Financial  Accounting  Standards  No. 128,  "Earnings  per
         Share"  ("SFAS  128"),  which  supersedes  the  current   authoritative
         literature  and related  interpretations  for  earnings per share under
         Accounting  Principles  Board  Opinion  No.  15.  SFAS 128 will have no
         immediate  financial statement impact on Vinings since it currently has
         a simple  capital  structure and earnings per share will continue to be
         computed by dividing net income (loss) by the weighted  average  number
         of common shares  outstanding during the reporting period. For entities
         with   complex   capital   structures,   SFAS  128  will  require  dual
         presentation of basic and diluted earnings per share.  SFAS 128 becomes
         effective for financial  statements for both interim and annual periods
         ending after December 15, 1997.  Earlier  application is not permitted.
         Vinings  will adopt SFAS 128 during its  quarter and fiscal year ending
         December 31, 1997.

         Reclassification
         ----------------

         Certain 1996 financial  statement  amounts have been  reclassified  to
         conform with the current year presentation.

NOTE 4 - REAL ESTATE ASSETS

         The Thicket Apartments
         ----------------------

         On June 28,  1996,  Vinings  acquired  Thicket for a purchase  price of
         $8,650,000.  The  acquisition  was  financed by a mortgage  loan on the
         property in the amount of $7,392,000 and borrowings  from Vinings' line
         of credit.

<PAGE>

         Peachtree Business Center
         -------------------------

         The Trust acquired  Peachtree  through a deed-in-lieu of foreclosure on
         April 12, 1990.  Peachtree was recorded at $1,700,000,  its fair market
         value,  which  was  less  than  the book  value  of  Vinings'  mortgage
         investment at the date of foreclosure.  Subsequent to the  acquisition,
         approximately $1,087,000 of improvements have been capitalized.

NOTE 5 - REAL ESTATE INVESTMENTS

         Hawthorne Note
         --------------

         On March 30, 1995,  Vinings  sold  Hawthorne  Research and  Development
         Complex for $5,095,000 of which  $3,500,000 was paid at closing and the
         balance of $1,595,000 was payable  pursuant to a non-recourse  purchase
         money  note  (the  "Hawthorne  Note")  which was  subordinate  to first
         mortgage liens totaling $10,360,000.

         In connection with the  liquidation of assets,  Vinings entered into an
         agreement  with the first  mortgage  lien holder to sell the  Hawthorne
         Note for  $700,000.  At December  31,  1995,  the Trust  established  a
         valuation  allowance of $895,000 to reflect its net realizable value of
         $700,000.  On  January  3,  1996,  Vinings  closed  on the  sale of the
         Hawthorne Note and recorded commissions and fees for a loss on the sale
         of $26,800.

NOTE 6 - NOTES PAYABLE

         Mortgage Note Payable
         ---------------------

         At September 30, 1997, Vinings had a 9.04% mortgage note payable in the
         original  principal  amount of $7,392,000,  which is secured by Thicket
         and which  matures on July 1, 2003.  Principal and interest are payable
         in  monthly  installments  of  $59,691.  At  September  30,  1997,  the
         outstanding  principal balance was $7,333,112.  Scheduled maturities of
         the mortgage note payable as of September 30, 1997, are as follows:

                             1997                 $   13,443
                             1998                     56,909
                             1999                     62,272
                             2000                     68,140
                             2001                     74,562
                             Thereafter            7,057,786
                                                  ==========
                             Total                $7,333,112
                                                  ==========

         Line of Credit
         --------------

         Vinings renewed its one year line of credit in the amount of $2,000,000
         on June 28,  1997,  which bears  interest at the bank's base rate which
         approximates  prime. At September 30, 1997, the interest rate was 8.50%
         and the outstanding balance was $1,568,104. Interest is payable monthly
         with the entire  principal  balance due on June 28,  1998.  The line of
         credit is secured by Peachtree.

NOTE 7 - RELATED PARTY TRANSACTIONS

         During 1996,  Vinings entered into a management  agreement with Vinings
         Properties, Inc. for property management services for Thicket for a fee
         equal to five percent of gross revenues plus a fee for data  processing
         which,  for the nine months ended  September 30, 1997,  totaled $69,300
         and $11,430, respectively.  Vinings Properties, Inc. is an affiliate of
         certain officers and trustees of the Trust.
<PAGE>
         In  addition,  as a  commitment  to the  rebuilding  of the Trust,  The
         Vinings Group, Inc., the parent corporation of Vinings Properties, Inc.
         (collectively,  "The Vinings Group"),  has provided  numerous  services
         relating to administration, acquisition, and capital and asset advisory
         services at little or no cost to the Trust. Vinings does not anticipate
         that these  services will  continue to be provided free of charge,  and
         certain  costs paid on  Vinings'  behalf  have been  reimbursed  to The
         Vinings  Group.  Vinings has  reimbursed The Vinings Group for investor
         relation  services  for the sole  benefit  of the Trust  which  totaled
         $33,750 for the nine months ended  September 30, 1997.  The officers of
         the  Trust  did not  receive  compensation  from the  Trust  for  their
         services through the third quarter of 1997.

         During   1997,   Vinings   paid  a  total  of  $21,000  to   Northshore
         Communications,  Inc., a company  affiliated  with one of the Trustees,
         for the design and production of Vinings' 1996 annual report.

         On April 1, 1997, the Operating  Partnership  entered into an agreement
         with  Windrush   Partners,   Ltd.   ("Windrush")  to  acquire  Windrush
         Apartments,  a 202-unit  apartment  community in metropolitan  Atlanta,
         Georgia,  for a total  acquisition  price of  $7,555,000.  The  general
         partner  of  Windrush  is an  affiliate  of the  officers  and  certain
         Trustees of Vinings.  The  transaction is a contribution of property in
         exchange for units in the Operating  Partnership  and is subject to the
         approval of the limited  partners of Windrush and the assumption of the
         existing mortgage loan, which are both in process.

         Vinings received limited partner approval for the Windrush  transaction
         and the  assumption  of the  mortgage  note is in the  final  stages of
         approval  with  the  lender.   In  connection  with  Vinings'  proposed
         acquisition  of  Windrush  Apartments,  MFI  Realty,  Inc.,  an  entity
         affiliated with the officers and certain  trustees of Vinings,  will be
         paid a  financial  advisor  fee of  $75,550  upon  the  closing  of the
         acquisition.

NOTE 8 - ADVISORY AGREEMENT

         Prior to the consummation of the Tender Offer,  Vinings had engaged the
         Advisor  to  provide  investment  advisory  services  and  act  as  the
         administrator  of Trust  operations.  The  agreement  with the Advisor,
         which was terminated upon  consummation  of the Tender Offer,  provided
         for the payment of administrative, asset management and other servicing
         fees to the Advisor for services  rendered in administering the Trust's
         operations.  The  Advisor  earned  administrative,   asset  management,
         special services, and mortgage servicing fees aggregating $333,461, for
         the nine months ended September 30, 1996.

NOTE 9 - DISTRIBUTIONS

         Vinings  paid cash  dividends  of  $16,857,750  ($15.60  per share) and
         $1,383,200  ($1.28 per share) on February  2, 1996,  and March 8, 1996,
         respectively.  The  entire  $18,240,950  was a return  of  capital  for
         federal income tax purposes.



<PAGE>

NOTE 10 - LEASING ACTIVITY

         The following is a schedule of future minimum rents due under operating
         leases that have  initial or  remaining  noncancellable  lease terms in
         excess of one year as of September 30, 1997, at Peachtree:

                             1997           $   146,421
                             1998               583,466
                             1999               540,930
                             2000               403,665
                             2001               318,864
                             Thereafter         132,860
                                           ============
                             Total          $ 2,126,206
                                           ============

         One tenant  generated 59% of  Peachtree's  revenues for the nine months
         ended  September  30,  1997.  The same tenant  accounts  for 70% of the
         future  minimum  lease  payments.  While this  tenant's  lease does not
         expire until May 31,  2002,  it contains a 90-day  cancellation  clause
         which management is currently negotiating to extend to one year.

NOTE 11 - CONTINGENCIES

         Vinings is, from time to time,  subject to various claims that arise in
         the ordinary course of business. These matters are generally covered by
         insurance.  While the  resolution of these matters  cannot be predicted
         with  certainty,  management  believes  that the final  outcome of such
         matters  would not have a  material  adverse  effect  on the  financial
         position or results of operations of Vinings.

NOTE 12 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

         Based on interest rates and other  pertinent  information  available to
         management  as of  September  30,  1997,  Vinings  estimates  that  the
         carrying value of cash and cash equivalents, the mortgage note payable,
         the line of credit, and other liabilities approximate their fair values
         when compared to instruments of similar type, terms and maturity.

         Disclosure  about  fair  value  of  financial  instruments  is based on
         pertinent information available to management as of September 30, 1997.
         Although   management   is  not  aware  of  any   factors   that  would
         significantly  affect its estimated  fair value  amounts,  such amounts
         have not been comprehensively  revalued for purposes of these financial
         statements since September 30, 1997.

NOTE 13 - SUBSEQUENT EVENTS

         On July 14, 1997, the Operating  Partnership  entered into an agreement
         with Stratford Oaks Partnership,  Ltd., a Florida limited  partnership,
         to  acquire  Stratford  Oaks  Apartments   ("Stratford"),   a  165-unit
         apartment  community in Sarasota,  Florida. On October 30, 1997 Vinings
         announced  that  following its due  diligence  review it was not in the
         best interests of the Trust or its  shareholders to go forward with the
         Stratford transaction.


<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

OVERVIEW

Vinings Investment  Properties Trust ("Vinings" or the "Trust") was organized on
December  7,  1984  under the laws of the  Commonwealth  of  Massachusetts  as a
twenty-year finite-life real estate investment trust ("REIT") under the Internal
Revenue Code of 1986. Vinings was originally organized for the purpose of making
real  estate  investments  consisting  primarily  of  mortgage  loans and was to
liquidate  at the  end  of  approximately  ten  years  in  accordance  with  its
Declaration  of Trust,  provided,  however,  that the  Trustees  would  have the
absolute discretion to determine in good faith such termination date as would be
in the best interests of the  shareholders.  On January 3, 1996, the final asset
to be liquidated was sold and final liquidating dividends were declared.

On January 31, 1996,  Vinings  Investment  Properties,  Inc.  ("the  Purchaser")
commenced a tender offer for a minimum of a majority and a maximum of 85% of the
issued and outstanding shares of beneficial interest,  without par value, of the
Trust (the  "Shares")  at a purchase  price of $0.47 per share  ($3.76 per share
adjusted for the Share Split, as hereinafter  defined) (the "Tender Offer"). The
Tender Offer expired in accordance  with its terms on February 28, 1996, and, in
connection  therewith,  the Purchaser  accepted an aggregate of 6,337,279 Shares
(792,159  Shares  adjusted  for  the  Share  Split,  as  hereinafter   defined),
representing  approximately  73.3%  of  the  outstanding  Shares,  for  a  total
acquisition price of $2,978,521.  The remaining assets of Vinings were Peachtree
Business Center ("Peachtree") and approximately $163,000 in cash. The purpose of
the Tender  Offer was for the  Purchaser  to acquire  control of Vinings  and to
rebuild the Trust's assets by expanding into the multifamily  property  markets.
In connection with the consummation of the Tender Offer, all of the Trustees and
officers  of  the  Trust  resigned  and  were  replaced  with  designees  of the
Purchaser.  The name of the Trust was changed from Mellon Participating Mortgage
Trust, Commercial Properties Series 85/10 to Vinings. In addition,  prior to the
Tender  Offer,  the  Trust  was an  externally  advised  REIT for  which it paid
advisory fees to an unrelated third party (the "Advisor").  Upon consummation of
the Tender Offer, the  relationship  with the Advisor was terminated and Vinings
became self-administered.

The purpose of the Tender Offer was for Management to acquire control of Vinings
and to rebuild its assets by expanding into the multifamily  real estate markets
through the acquisition of garden style apartment  communities  which are leased
to  middle-income  residents.  Management  believes that these  investments will
provide attractive sources of income to Vinings which will not only increase net
income and provide cash  available for future  distributions,  but will increase
the value of the Trust's real estate portfolio as well.

On  June  11,  1996,  Vinings  Investment   Properties,   L.P.  (the  "Operating
Partnership"),  a Delaware limited  partnership,  was organized.  Vinings is the
sole general  partner and a 98% limited  partner in the  Operating  Partnership.
Through its  ownership of Vinings  Holdings,  Inc., a Delaware  corporation  and
wholly-owned  subsidiary  of the Trust,  which is also a limited  partner in the
Operating  Partnership,  Vinings  was a 100%  economic  owner  of the  Operating
Partnership at September 30, 1997. (This structure is commonly referred to as an
umbrella partnership REIT or "UPREIT.")

Management  believes that  conducting  its business and  operations  through the
Operating  Partnership  will have certain  strategic  advantages  over  Vinings'
previous  structure,  which  allowed  investment  in Vinings  only  through  the
purchase  of Shares of the  Trust.  In  particular,  the  Operating  Partnership
structure   will  provide   Vinings  with   greater   flexibility,   in  certain
circumstances, in facilitating future acquisitions by permitting the issuance of
partnership  units on a tax advantaged basis to owners of real estate properties
who contribute such properties to the Operating Partnership.  The overall effect
of this structure,  Management believes,  will be an enhanced ability of Vinings
to access the real estate and capital markets.

<PAGE>

On July 1, 1996,  Vinings  effected a 1-for-8  reverse  share  split (the "Share
Split")  of its  8,645,000  outstanding  Shares.  Pursuant  to the Share  Split,
shareholders who tendered their Shares received one Share for every eight Shares
owned.  Vinings has purchased and continues to purchase any fractional Shares at
a cost of $5.50 per Share.  As of September 30, 1997, a total of 113  fractional
Shares had been repurchased and retired leaving 1,080,512 Shares outstanding.

As a result of the Tender Offer,  much of Management's  efforts during 1996 were
focused  on  Vinings'   organizational   structure   and   preparing  the  Trust
strategically for future  acquisitions.  The Thicket Apartments  ("Thicket"),  a
254-unit apartment community in Atlanta, Georgia, was acquired on June 28, 1996.
Currently, Vinings is under contract to acquire a 202-unit community in Atlanta,
Georgia.

The following  discussion and analysis of the financial condition and results of
operations  should be read in  conjunction  with the  accompanying  consolidated
financial statements of Vinings and the notes thereto.

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Vinings' actual results could differ materially from those set forth in
the  forward-looking  statements.  Certain  factors  that  might  cause  such  a
difference  include  the  following:   the  inability  of  Vinings  to  identify
properties  within  existing   multifamily   property   portfolios  of  entities
affiliated with management  which will have a strategic fit with the Trust,  the
inability of Vinings to identify  unaffiliated  properties for acquisition,  the
less than  satisfactory  performance  of any property which might be acquired by
the Trust, the inability to access the capital markets in order to fund Vinings'
present growth and expansion  strategy,  the cyclical  nature of the real estate
market generally and locally in Georgia and the surrounding southeastern states,
the national  economic  climate,  the local economic  climate in Georgia and the
surrounding  southeastern  states,  and the local  real  estate  conditions  and
competition in Georgia and the surrounding  southeastern states. There can be no
assurance  that,  as a result of the  foregoing  factors,  Vinings'  growth  and
expansion  strategy will be  successful  or that the business and  operations of
Vinings will not be adversely affected thereby.


RESULTS OF OPERATIONS

Vinings' net loss for the three months and the nine months ended  September  30,
1997 decreased $57,468 and $481,498, respectively from the same periods in 1996.
Total  revenues for the three months and nine months  ended  September  30, 1997
increased  $22,426 and  $656,081,  respectively  as compared to the same periods
ended September 30, 1996. Total expenses  decreased $35,042 for the three months
and increased  $201,383 for the nine months ended September 30, 1997 as compared
to the same periods in the previous year.

Rental and Other  property  revenues  increased  $21,886,  from $612,911 for the
three  months ended  September  30,1996 to $634,797 for the same period in 1997,
and  $887,709  from  $942,533 for the nine months  ended  September  30, 1996 to
$1,830,242  for the same period in 1997.  These  increases are due to the income
generated from Thicket which was not in Vinings'  portfolio during the first and
second quarters of 1996.

Interest income  increased by $540 for the three months ended September 30, 1997
from the same period in 1996.  However,  for the nine months ended September 30,
1997 interest income decreased $90,399 as compared to 1996 due to the large cash
balances earning interest at the beginning of 1996.  Approximately $18.5 million
was held in cash  equivalents  at January 1, 1996,  of which $18.24  million was
paid in dividends  during  February and March 1996.  Cash balances at January 1,
1997 were substantially less.

Other income decreased by $141,229 for the nine months ended September 30, 1997.
This decrease was due to the non-recurring  proceeds from the termination of the
receivership for the Hall Street Property received in February 1996.

<PAGE>

Property  operating and maintenance  expense  increased by $16,583 for the three
months ended September 30, 1997 and $427,551 for the nine months ended September
30, 1997 as compared to the same  periods in 1996.  This  increase  was directly
attributable to the acquisition of Thicket on June 28, 1996.  Property operating
and maintenance expense from Peachtree remained fairly constant.

Depreciation  and  amortization  increased  by $7,491 for the three months ended
September 30, 1997 and $181,994 for the nine months ended  September 30, 1997 as
compared to the same periods in 1996. This increase is also  attributable to the
acquisition of Thicket.  Depreciation and amortization  from Peachtree  remained
fairly constant.

Amortization of deferred  financing costs decreased  $2,025 for the three months
ended  September 30, 1997 as loan costs  associated with the line of credit were
fully amortized at June 30, 1997. Deferred financing costs increased $17,480 for
the nine months ended  September 30, 1997 which was all related to the financing
of Thicket.  Interest  expense  remained  constant  for the three  months  ended
September 30, 1997 as compared to the same period in 1996. However, for the nine
months ended  September 30, 1997,  interest  increased by $391,826  which is all
related  to the  mortgage  payable  and the line of  credit,  both  incurred  in
connection with the acquisition of Thicket.

General and  administrative  expense  decreased $56,426 for the three months and
$484,007 for the nine months ended  September 30, 1997.  These expenses  include
legal,   accounting  and  other  professional  fees,  directors'  and  officers'
insurance,  shareholder  expenses,  trustee fees and expenses,  annual reporting
costs and other miscellaneous general and administrative  expenses. The decrease
from 1996 to 1997 was mostly attributable to the following:  a decrease in legal
and professional  fees of $39,427 for the three months and $374,808 for the nine
months;  an increase in trustee fees and expenses of $6,310 for the three months
and a decrease  of $33,298 for the nine  months;  a decrease in proxy and annual
reporting costs of $15,648 for the three months and $46,163 for the nine months;
a decrease in filing fees and state franchise tax of $4,002 for the three months
and  $28,211  for the nine  months;  and a decrease  in  directors'  & officers'
insurance of $20,777 for the three months and $42,250 for the nine months. These
decreases  were offset by increases  in travel and  abandoned  project  costs of
$16,891 for the three months and $20,571 for the nine months ended September 30,
1997 and by an increase in shareholder and investor relations expense of $19,062
for the nine months ended  September  30,  1997.  All of these costs and savings
were a direct result of the Tender Offer  occurring in the first quarter of 1996
and  the  subsequent  change  in  Vinings'  focus  to  the  expansion  into  the
multifamily property markets.

There have been no  investment  advisor's  fees paid  during 1997 as compared to
$333,461 for the nine months ended September 30, 1996.  During the first quarter
of 1996,  the prior  Advisor was paid various fees for asset  management,  asset
liquidation  and the  successful  completion  of the  Tender  Offer.  Since  the
consummation of the Tender Offer,  Vinings has not incurred investment advisor's
fees.


LIQUIDITY AND CAPITAL RESOURCES

Operating  activities  of Vinings  provided  net cash of  $170,022  for the nine
months  ended  September  30,  1997 as  compared  to net cash used in  operating
activities of $760,617 for the same period in 1996. This is due to the fact that
Vinings'  previous  management  was in the  process of  liquidating  the Trust's
assets and Peachtree was the only revenue  producing asset held during the first
quarter of 1996. In addition, the Tender Offer occurred during the first quarter
of 1996 from which Vinings incurred a number of nonrecurring expenses.  With the
acquisition  of Thicket on June 28,  1996,  Vinings  has begun to  increase  its
operating  cash  flow,  reflecting  nine  months of  operations  during  1997 as
compared to three months during 1996.

Vinings used cash in investing  activities  for the nine months ended  September
30, 1997 by incurring  $82,250 in capital  expenditures  with respect to Thicket
and  $25,892  with  respect  to  Peachtree  as  compared  to $5,347  in  capital
expenditures  with respect to Thicket and $9,077 with  respect to Peachtree  for
the same period in 1996.  In addition,  for the nine months ended  September 30,
1996,  $673,200 in sale proceeds was generated from the liquidating  sale of the
Hawthorne Note on January 3, 1996 and $8,660,900 was used to purchase Thicket on
June 28, 1996.

<PAGE>

The cash used to purchase  Thicket was generated  from net proceeds  provided by
the Thicket mortgage note payable and line of credit totaling $8,960,104 for the
nine months ended September 30, 1996.  These proceeds also provided cash to fund
$224,426 in deferred  financing  costs for the nine months ended  September  30,
1996. Net cash was used in financing activities for the third quarter of 1997 to
make  principal  repayments of $38,564 on the Thicket  mortgage note payable and
was used to retire Shares of the Trust.  Distributions  to  shareholders  in the
first  quarter of 1996 totaled  $18,240,950  as a result of the  liquidation  of
investments.  No  distributions  to shareholders  have been made during the nine
months ended September 30, 1997.

Total net cash increased by $23,235 for the nine months ended September 30, 1997
as compared to net cash used of $18,276,517 for the same period in 1996.

The cash held by  Vinings  plus the cash flow from  Peachtree  and  Thicket  are
expected to provide  sources of liquidity  to meet  Vinings'  current  operating
obligations.  Vinings  also has a secured  line of credit  totaling  $2,000,000,
which  bears  interest  at the bank's  base rate which  approximates  prime.  At
September  30, 1997 the interest rate was 8.5% and the  outstanding  balance was
$1,568,104.  The remaining  balance of $431,896 may be drawn for working capital
needs or for acquisition  funding.  The line of credit, which was originally due
June 1997, was renewed and now expires on June 28, 1998. In addition, management
intends to seek new capital sources, both public and private, as well as explore
financing  alternatives  so as to allow  Vinings  to expand  and grow its income
producing investments.


RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"), which
supersedes the current authoritative  literature and related interpretations for
earnings per share under  Accounting  Principles  Board Opinion No. 15. SFAS 128
will have no immediate  financial statement impact on Vinings since it currently
has a simple  capital  structure  and  earnings  per share will  continue  to be
computed by dividing net income (loss) by the weighted  average number of common
shares  outstanding  during the  reporting  period.  For  entities  with complex
capital structures, SFAS 128 will require dual presentation of basic and diluted
earnings per share. SFAS 128 becomes effective for financial statements for both
interim and annual periods ending after December 15, 1997.  Earlier  application
is not permitted. Vinings will adopt SFAS 128 during its quarter and fiscal year
ending December 31, 1997.


IMPACT OF INFLATION

Substantially  all of the  residential  leases at Thicket are for periods of one
year or less which will enable Vinings to seek  increased  rents upon renewal of
existing  leases or upon  commencement  of new leases.  Although there can be no
assurance that rental increases may be obtained,  the short term nature of these
leases  generally serves to reduce the risk to Vinings of the adverse effects of
inflation.

Substantially all of the tenant leases at Peachtree have remaining terms of five
years or less and  contain  clauses  which  require  the  tenants  to pay  their
prorated share of operating  expenses,  including common area maintenance,  real
estate taxes,  and insurance.  This serves to reduce the risk of increased costs
and operating expenses resulting from inflation.  In addition,  Vinings may seek
increased base rents upon renewal of existing leases or upon commencement of new
leases in order to offset any adverse effects of inflation.  However,  there can
be no assurance that rental increases may be obtained.

<PAGE>

                                     PART II

                                OTHER INFORMATION
                                -----------------


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

         (a)      Exhibits

                  27 - Financial Data Schedule

         (b)      Reports on Form 8-K

                  No  reports  on Form 8-K  were  filed  during  the  nine  
                  months  ended September 30, 1997.



<PAGE>



                                    SIGNATURE
                                    ---------


Pursuant  to the  requirements  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.

                                             Vinings Investment Properties Trust



                                             By: /s/ Stephanie A. Reed
                                             ------------------------
                                                 Stephanie A. Reed
                                                 Vice President and Treasurer


Dated:   October 14, 1997