SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


(X)                  QUARTERLY REPORT PURSUANT TO SECTION 13
                OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 1998

                                       OR

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


Commission file number:  0-17695
                         -------

                           HEALTHCARE PROPERTIES, L.P.
                           ---------------------------
             (Exact name of Registrant as specified in its charter)



                      DELAWARE                                  62-1317327
                      --------                                  ----------
           (State or other jurisdiction of                   (I.R.S. Employer
            incorporation or oganization)                 Identification Number)



              14160 Dallas Parkway, Suite 300, Dallas, Texas 75240
                     (Address of principal executive office)


                                 (972) 770-5600
              (Registrant's telephone number, including area code)


     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 at least the past 90 days.     YES x    NO
                                                          ----     ----





<PAGE>



PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements
           --------------------
<TABLE>
<CAPTION>
<S>                                                            <C>                      <C>

                              HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
                                    (A Delaware Limited Partnership)

                                       CONSOLIDATED BALANCE SHEETS
                                       ---------------------------

                                                              September 30, 1998         December 31, 1997
                                                              ------------------         -----------------
                                                                  (Unaudited)
                                                                  -----------

                                                                       ASSETS
                                                                       ------

Cash and cash equivalents                                       $  11,627,412           $  10,722,118

Accounts receivable, less allowance for doubtful
     accounts of $346,042 in 1998 and $301,042 in 1997                997,623                 800,029

Prepaid Expenses and other                                             15,771                  50,221

Property and improvements, net                                     19,925,570              20,823,913

Deferred charges, less accumulated amortization
     of $953,011 in 1998 and $876,760 in 1997                         335,883                 405,572
                                                              ---------------         ---------------

                                                                 $ 32,902,259            $ 32,801,853
                                                              ===============         ===============

                                        LIABILITIES AND PARTNERSHIP EQUITY

Accounts payable and accrued expenses                          $      685,487          $      818,252

Operating facility accounts payable                                    81,743                 114,211

Mortgage loans payable                                              6,257,974               6,677,431
                                                               --------------           -------------

                                                                    7,025,204               7,609,894
                                                               --------------           -------------
Partnership equity:
     Limited partners (4,148,325 and 4,172,457 units
         outstanding in 1998 and 1997, respectively)               25,970,261              25,156,971
     Repurchased limited partner units                               (144,791)                       0
     General partner                                                   51,585                  34,988
                                                             ----------------        ----------------
                                                                   25,877,055              25,191,959
                                                             ----------------        ----------------

                                                                 $ 32,902,259            $ 32,801,853
                                                             ================        ================

                                         See notes to financial statements

</TABLE>



                                                 -2-

<PAGE>


<TABLE>
<CAPTION>
<S>                                                             <C>                     <C> 

                                   HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
                                         (A Delaware Limited Partnership)

                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                       -------------------------------------
                                                    (Unaudited)

                                                              Three months ended        Three months ended
                                                              September 30, 1998        September 30, 1997
                                                              ------------------        ------------------
Revenues:
     Rental                                                     $   1,073,421           $   1,056,067
     Net patient services                                           1,140,126               1,173,806
                                                               --------------          --------------
                                                                    2,213,547               2,229,873
                                                               --------------          --------------

Expenses:
     Facility operating expenses                                    1,098,010               1,106,318
     Depreciation                                                     327,397                 340,960
     Lease default expenses                                                 0                       0
     Administrative and other                                         432,667                 378,649
     Bad debts                                                         15,000                  15,000
                                                               --------------          --------------
                                                                    1,873,074               1,840,927
                                                               --------------          --------------
         Income from operations                                       340,473                 388,946
                                                               --------------          --------------

Other income (expenses):
     Interest income                                                  145,045                  92,821
     Interest expenses                                               (157,860)               (168,828)
     Amortization                                                     (26,384)                (26,913)
                                                              ---------------          --------------
                                                                      (39,199)               (102,920)
                                                              ---------------          --------------

         Net income                                           $       301,274          $      286,026
                                                              ===============          ==============

NET INCOME PER LIMITED
     PARTNERSHIP UNIT                                         $           .07          $          .07
                                                              ===============          ===============

WEIGHTED AVERAGE
     NUMBER OF UNITS                                                4,148,325               4,172,457
                                                              ===============          ==============

</TABLE>

                                       See notes to financial statements

                                       -3-

<PAGE>

<TABLE>
<CAPTION>
<S>                                                            <C>                      <C> 
                                  HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
                                         (A Delaware Limited Partnership)

                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                       ------------------------------------- 
                                                   (Unaudited)

                                                              Nine months ended          Nine months ended
                                                              September 30, 1998        September 30, 1997
                                                              ------------------        ------------------

Revenues:
     Rental                                                     $   3,204,391           $   3,214,040
     Net patient services                                           3,289,007               3,669,101
                                                               --------------          --------------
                                                                    6,493,398               6,883,141
                                                               --------------          --------------

Expenses:
     Facility operating expenses                                    3,353,655               3,362,862
     Depreciation                                                     979,340               1,022,880
     Lease default expenses                                                 0                  14,687
     Administrative and other                                       1,110,710               1,208,760
     Bad debts                                                         45,000                  43,061
                                                               --------------          --------------
                                                                    5,488,705               5,652,250
                                                               --------------          --------------
         Income from operations                                     1,004,693               1,230,891
                                                               --------------          --------------

Other income (expenses):
     Interest income                                                  385,194                 256,456
     Interest expenses                                               (481,250)               (512,651)
     Amortization                                                     (78,750)                (80,614)
                                                               --------------          --------------
                                                                     (174,806)               (336,809)
                                                               --------------          --------------

         Net income                                            $      829,887          $      894,082
                                                               ==============          ==============

NET INCOME PER LIMITED
     PARTNERSHIP UNIT                                          $          .20          $          .21
                                                               ==============          ==============

WEIGHTED AVERAGE
     NUMBER OF UNITS                                                4,153,602               4,172,457
                                                               ==============          ==============




</TABLE>




                                         See notes to financial statements




                                       -5-

<PAGE>

<TABLE>
<CAPTION>
<S>                                           <C>                <C>             <C>                <C>  


                                   HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
                                         (A Delaware Limited Partnership)

                                   CONSOLIDATED STATEMENTS OF PARTNERSHIP EQUITY


                                                                                   Repurchased
                                                  Limited           General          Limited
                                                 Partners          Partners       Partner Units           Total

Allocation of Net Income                               98%               2%                                 100%
                                                       ===               ==                                 ====

EQUITY at
     December 31, 1997                        $ 25,156,971       $   34,988      $          0       $ 25,191,959

Net Income                                         813,290           16,597                --            829,887

Repurchased Limited Partner Units                       --               --         (144,791)          (144,791)
                                              ------------       ----------      ------------       ------------

EQUITY at
     September 30, 1998-Unaudited             $ 25,970,261       $   51,585      $  (144,791)       $ 25,877,055
                                              ============       ==========      ============       ============


</TABLE>

















                                         See notes to financial statements




                                       -6-

<PAGE>

<TABLE>
<CAPTION>
<S>                                                              <C>                     <C> 


                                   HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
                                         (A Delaware Limited Partnership)

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       -------------------------------------
                                                    (Unaudited)

                                                              Nine months ended          Nine months ended
                                                              September 30, 1998        September 30, 1997
                                                              ------------------        ------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income                                                  $    829,887            $    894,082
     Adjustments to reconcile net income to
         net cash provided by operating activities:
              Bad debts                                                45,000                  43,061
              Depreciation and amortization                         1,058,090               1,103,494
              Changes in assets and liabilities:
                  Accounts receivable                                (242,594)                (14,129)
                  Prepaid expenses                                     34,450                  23,693
                  Accounts payable &
                    accrued expenses                                 (165,233)               (432,217)
                                                               --------------          --------------

                      NET CASH PROVIDED BY
                      OPERATING ACTIVITIES                          1,559,600               1,617,984
                                                               --------------          --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and improvement                            (80,997)                (62,399)
                                                               --------------          --------------

                      NET CASH USED IN
                      INVESTING ACTIVITIES                            (80,997)                (62,399)
                                                               --------------          --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments on mortgage loans payable                              (419,457)               (384,961)
     Distributions                                                          0                (325,000)
     Repurchased limited partner units                               (144,791)                      0
     Increase in deferred charges                                      (9,061)                 (1,234)
                                                               --------------          --------------

                      NET CASH USED IN
                      FINANCING ACTIVITIES                           (573,309)               (711,195)
                                                               --------------          --------------

NET INCREASE IN CASH
AND CASH EQUIVALENTS                                                  905,294                 844,390

CASH AND CASH EQUIVALENTS
     Beginning of Period                                           10,722,118               8,995,455
                                                               --------------          --------------

CASH AND CASH EQUIVALENTS
     End of Period                                             $   11,627,412          $    9,839,845
                                                               ==============          ==============
CASH PAID FOR INTEREST                                         $      481,250          $      512,651
                                                               ==============          ==============

                                         See notes to financial statements
</TABLE>




                                                 -7-

<PAGE>


                  HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
                        (A Delaware Limited Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           September 30, 1998 AND 1997
                                   (Unaudited)

A.       ACCOUNTING POLICIES
         -------------------

         The accompanying  unaudited condensed 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
(consisting  of  normal  recurring  accruals)  considered  necessary  have  been
included.  Operating results are not necessarily  indicative of the results that
may be expected for the year ending December 31, 1998. The financial  statements
should be read in conjunction with the consolidated financial statements and the
footnotes  thereto  included in Registrant's  annual report on Form 10-K for the
year ended December 31, 1997.

B.      TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
        -------------------------------------------------------------------
        PARTNER
        -------

         Personnel  working at the  Cambridge  facility  and certain home office
personnel  who perform  services  for the  Registrant  are  employees of Capital
Senior  Living,  Inc.  (CSL),  which was until June 10,  1998,  an  affiliate of
Capital Realty Group Senior Housing, Inc. ("CRGSH"),  the General Partner of the
Registrant.  The Registrant  reimburses CSL for the salaries,  related benefits,
and overhead  reimbursements  of such personnel as reflected in the accompanying
financial  statements.  Reimbursements  and fees  paid to  CRGSH  and CSL are as
follows:

<TABLE>
<CAPTION>
<S>                                                  <C>                         <C> 

                                                  Nine months ended           Nine months ended
                                                  September 30, 1998          September 30, 1997


Salary and benefit reimbursements                    $2,291,860                  $2,380,491

Administrative reimbursements                           104,635                     171,401

Asset management fees                                   413,475                     345,967

Property management fees                                229,881                     251,725

General partner management fees                          64,884                      68,101
                                                     ----------                  ----------

                                                     $3,104,735                  $3,217,685
                                                     ==========                  ==========

</TABLE>

Currently,  Capital  Senior Living  Properties,  Inc.,  formerly an affiliate of
CRGSH, holds approximately 56% of the  outstanding units of the Registrant.  The

                                        9




<PAGE>



Registrant  is  included in the  consolidated  financial  statements  of Capital
Senior Living  Properties,  Inc. and its parent  company,  Capital Senior Living
Corporation,  a public  company  that files  with the  Securities  and  Exchange
Commission.

On June 10, 1998,  the sole owner of the General  Partner,  Capital Realty Group
Corporation,  sold  all of its  shares  of  CRGSH  common  stock  to  Retirement
Associates,  Inc.  ("Associates")  for  $855,000.  The  source of the funds is a
Promissory  Note for $855,000 with a five year term and bearing an interest rate
of 10% per annum. The interest will accrue on the Promissory Note and be payable
at the maturity of the Promissory Note.  Associates is the maker of the Note and
Capital  Realty  Group  Corporation  is the payee.  Mr.  Robert  Lankford is the
President of Associates  and has brokered real estate with Capital  Realty Group
Corporation and its affiliates.



                                       10




<PAGE>




C.       VALUATION OF RENTAL PROPERTY
         ----------------------------

         Generally  accepted  accounting  principles require that the Registrant
evaluate  whether an event or circumstance has occurred that would indicate that
the  estimated   undiscounted  future  cash  flows  of  its  properties,   taken
individually, will be less than the respective net book value of the properties.
If such a shortfall  exists and is material,  then a write-down to fair value is
recorded.  The Registrant performs such evaluations on an on-going basis. During
the nine months ended September 30, 1998, based on the  Registrant's  evaluation
of the properties, the Registrant did not record any impairment.

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

Liquidity and Capital Resources
-------------------------------

         Registrant  commenced an offering to the public on August 31, 1987,  of
depository  units  representing  beneficial  assignments of limited  partnership
interests  ("Units").  On October 14,  1987,  Registrant  commenced  operations,
having previously accepted  subscriptions for more than the specified minimum of
120,000  Units.  As of August 30, 1989, the offering was closed except for Units
for sale to existing  investors  under the terms of a distribution  reinvestment
plan.  As  of  September  30,  1995,   Registrant  had  sold  Units  aggregating
approximately  $43.4  million.   Due  to  the  suspension  of  the  distribution
reinvestment  plan,  Registrant  does not anticipate  any  additional  inflow of
investment.

         All of the net proceeds of the offering were originally  invested in 12
properties  or used for  working  capital  reserves.  The  Registrant  partially
financed the acquisition of eight of its original  properties with  non-recourse
debt. Four properties were initially unleveraged. As of September 30, 1998, four
of the  original  twelve  properties  had either been sold or deeded back to the
lender,  leaving the Registrant  with four  properties  secured by debt and four
properties unleveraged.  With the exception of the Cambridge facility,  which is
operated  by the  Registrant  and  consequently  not  leased  to a  third  party
operator, the initial term of the seven properties with long-term net leases are
due to expire in the years 2000 and 2001.

         Potential sources of liquidity for Registrant  include current holdings
of cash and cash  equivalents,  collection  of  outstanding  receivables  and/or
revenue  participation  related  to various  leased  facilities,  collection  on
defaulted  rent and/or  damage  settlements  related to leases in  default,  new
mortgage  financing on one or more of Registrant's  unencumbered  assets,  and a
potential sale of one or more of the Registrant's assets.

         As of September  30,  1998,  Registrant  had cash and cash  equivalents
aggregating $11,627,412.  The cash and cash equivalents will be used for working
capital and emergency reserves.

         Registrant's  general  policy is to maintain  sufficient  cash and cash
equivalents  to address  disruptions  of its lease revenues and to have adequate
additional  funds for  investment in existing  assets for  improvements.  To the
extent that Registrant  deems it necessary to take over the operations of any of
its facilities  currently  under long term net lease,  such action would require
additional  investment  in  working  capital  for  operating  reserves,  capital
expenditures and related debt payments. As required by the Partnership Agreement
for Limited Partners to be paid their portion for federal income taxes, $250,000
and  $325,000  in cash  distributions  were  made in June  1993 and  July  1997,
respectively.   Future  cash  distributions  will  be  dependent  upon  improved
operational income and successful  refinancing on certain Registrant  mortgages.
The Units are not publicly traded and  as a result the liquidity of each Limited

                                       11




<PAGE>



Partner's individual  investment is limited. For the nine months ended September
30, 1998,  the  Registrant  has  repurchased  24,132 Units for a total amount of
$144,791.



                                       12




<PAGE>



Results of Operations
---------------------

               Discussion of Nine Months Ending September 30, 1998
               ---------------------------------------------------

         Rental revenues for the nine months ended September 30, 1998, decreased
$9,649  from the  comparable  nine  months  ended  September  30,  1997,  due to
decreased revenue participation from leased facilities. Net patient services for
the nine months ended  September  30,  1998,  decreased  $380,094  from the nine
months ended September 30, 1997, and was primarily due to a 1997 Medicare charge
of $108,423  and  decreased  ancillary  revenues  from the  Cambridge  facility.
Interest income for the nine months ended September 30, 1998 increased  $128,738
from  the  nine  months  ended  September  30,  1997  and was  primarily  due to
increasing cash available for investment.

         Facility  operating  expenses for the nine months ended  September  30,
1998 slightly decreased by $9,207 from the comparable 1997 period.  Depreciation
for the nine  months  ended  September  30,  1998,  decreased  $43,540  from the
comparable  1997 period.  Lease default expense  decreased  $14,687 for the nine
months ended  September 30, 1998 from the comparable 1997 period due to no legal
fees incurred on the resolution of defaulted  leases.  Administrative  expenses,
including  fees to the General  Partner,  decreased  $98,050 for the nine months
ended September 30, 1998 in comparison to 1997 and is primarily due to decreased
administrative  reimbursements.  Bad  debt  expense  for the nine  months  ended
September 30, 1998 slightly  increased  $1,939 from the comparable  1997 period.
Interest  expense and  amortization for the nine months ended September 30, 1998
decreased by $31,401 and $1,864, respectively, from the comparable 1997 period.

         For the three  months  ended  September  30, 1998 as compared  with the
three months ended June 30, 1997, the Partnership's  revenue was impacted by the
same shifts of revenue as discussed  above with the  exception of an increase of
$17,354 in rental revenue for the three months ended September 30, 1998 from the
comparable 1997 period.  Similarly, a comparison of third quarter 1998 operating
expenses  versus  third  quarter 1997  reflects the same  variances as discussed
above with the exception of an increase of $54,018 in  administrative  and other
expenses for the three months ended  September 30, 1998 from the comparable 1997
period.

         Cash and cash  equivalents as of September 30, 1998 increased  $905,294
over the balance at December  31, 1997.  Cash  increased by $60,904 for the nine
months  ending  September  30, 1998 in  comparison  to 1997 is primarily  due to
improved  operating cash flow. Net accounts  receivable of $977,623 at September
30, 1998  reflected an increase of $197,594 over 1997  year-end  balances and is
due to delayed  collection  of Medicaid and Medicare  claims from the  Cambridge
facility.  Accounts  payable,  accrued  expenses,  and facility accounts payable
balances decreased $165,233 at September 30, 1998, from December 31, 1997 and is
primarily due to the decrease in accrued  Medicare  liabilities on the Cambridge
facility.

         The  following  is a brief  discussion  of the  status of  Registrant's
properties:

         Cedarbrook,  Cane Creek,  Crenshaw Creek  and  Sandy Brook  facilities.
Rebound, Inc. (a subsidiary of  HealthSouth Corporation)  leases the Cedarbrook,
Cane Creek, Crenshaw Creek and Sandy Brook properties pursuant to a master lease
with the Registrant.

         Due to low occupancy of the Sandybrook  facility, it was closed in 1994
and at this  time the lessee  has not provided  any information on when it might

                                       13


                                               

<PAGE>



reopen. Rental payments in March and April 1995 were discontinued by HealthSouth
causing an interruption in the master lease. Registrant met with HealthSouth and
those payments were subsequently made in the second quarter of 1995.  Subsequent
to that time period,  all payments have been made on a timely basis. In February
1997,  the  Registrant  was  notified  by  HealthSouth  of  the  closing  of the
Cedarbrook  facility  due to the low  occupancy.  At this time,  the  Registrant
cannot  determine when this facility might reopen.  HealthSouth has continued to
make lease payments on a timely basis.

         Two recourse loans, Cedarbrook and Cane Creek, were due in January 1996
in the aggregate  amount of approximately  $2,400,000.  Both of these notes were
callable by the lenders at any time  between  January 1, 1993 and  November  30,
1995;  however,  the lenders  agreed not to exercise  their call rights prior to
maturity on January 31, 1996 as long as the  Partnership  remained in compliance
with the loan agreements.  One of the lenders agreed to extend the maturity date
of its note to December 1, 2001, pending completion of final loan documents.  On
March 21, 1997,  the other  lender  agreed not to exercise its call rights until
June 30, 1997. The  Partnership is currently  negotiating  the extension of this
note until December 1, 2001. The Partnership continues to make its loan payments
under those two loans.

         Cambridge  facility.  The  lessee of the  Cambridge  facility,  Nursing
Centers of America-Cambridge  ("NCAC"), filed a voluntary petition under Chapter
11 of the Federal  Bankruptcy  Code in February  of 1992.  Registrant  commenced
litigation  against NCAC seeking full payment of future  rentals under the lease
of NCAC.

         On August 1, 1996,  the United  States  Bankruptcy  Court  approved the
transfer of the  operations  of NCA Cambridge  Nursing Home to Cambridge  LLC, a
subsidiary of the Registrant,  thereby  releasing the operations of the facility
from the  jurisdiction  of the United States  Bankruptcy  Court.  A Registrant's
subsidiary now operates this property.

         Trinity Hills, McCurdy, and Hearthstone  facilities.  The Trinity Hills
and  Hearthstone   lessees  are  current  in  their  lease  obligations  to  the
Registrant.  In  addition,  the  Registrant  believes  it likely that two of the
above-stated lessees will pay additional rental amounts to the Registrant during
future years based upon increased revenues at those facilities.  However,  there
can be no assurance of such increased revenue. Two of these facilities appear to
be generating cash flow sufficient to fund their lease obligations,  but Trinity
Hills is, at this time,  not generating  sufficient  cash flow to fund its lease
obligations  from  property  operations.  However,  the lessee at Trinity  Hills
continues to fund the deficits and its lease payments.  Registrant believes that
the lessee of the McCurdy facility is not in compliance with all the obligations
set forth in the lease  between  the  parties.  If such a default is found to be
upheld,  the  Partnership  may have to take  back  operational  control  of this
facility.

Year 2000 Issue

The Year 2000 Issue is the result of computer  programs  being written using two
digits rather than four to define the applicable  year. Any of the  Registrant's
computer  programs or  hardware  that have  date-sensitive  software or embedded
chips may recognize the year 2000 as a date other than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including,  among other things, a temporary  inability to process  transactions,
send invoices, or engage in similar normal business activities.

Based on ongoing  assessments,  the Registrant has developed a program to modify
or replace significant portions of its software and certain hardware,  which are
generally  PC-based  systems,  so that those systems will properly utilize dates
beyond  December 31, 1999.  The  Registrant  expects to  substantially  complete
software  reprogramming  and  software and  hardware  replacement  no later than
December 31, 1998,  with 100%  completion  targeted for September 30, 1999.  The
Registrant  presently  believes that these  modifications  and  replacements  of
existing  software  and  certain  hardware  will  mitigate  the Year 2000 Issue.
However,  if such  modifications and replacements are not completed timely,  the
Year  2000  Issue  could  have  a  material  impact  on  the  operations  of the
Registrant.

The  Registrant  has  assessed its  exposure to  operating  equipment,  and such
exposure is not significant due to the nature of the Registrant's business.

The  Registrant  is not aware of any external  agent with a Year 2000 Issue that
would materially impact the Registrant's  results of operations,  liquidity,  or
capital resources.  However,  the Registrant has no means of determining whether
or ensuring  that  external  agents will be Year 2000 ready.  The  inability  of
external  agents to  complete  their  Year 2000  resolution  process in a timely
fashion could materially impact the Registrant.

Management of the  Registrant  believes it has an effective  program in place to
resolve the Year 2000 Issue in a timely manner.  As noted above,  the Registrant
has completed most but not all necessary phases of its Year 2000 program. In the
event  that  the  Registrant  does  not  complete  the  current  program  or any
additional phases, the Registrant could incur disruptions to its operations.  In
addition,  disruptions in the economy generally  resulting from Year 2000 Issues
could also materially  adversely affect the Registrant.  The Registrant could be
subject to  litigation  for computer  systems  failure.  The amount of potential
liability and lost revenue cannot be reasonably estimated at this time.

The Registrant  currently has no contingency plans in place in the event it does
not  complete  all  phases of its Year 2000  program.  The  Registrant  plans to
evaluate the status of  completion  in early 1999 and  determine  whether such a
plan is necessary.


                                       14




<PAGE>


New Developments
----------------

         An appraisal has been conducted on this  Partnership  and based on this
appraisal,  we believe we are close to optimizing the value of this  Partnership
at  approximately  $24 million.  Based on the appraisal,  as well as the General
Partner's  duty to further the best  interests of the  Partnership,  the General
Partner is  currently  evaluating  options,  which could  include the  potential
merger  of the  assets of the  Partnership.  Such a merger  could  result in the
termination of the Partnership.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

         Not applicable.




                                       15




<PAGE>



         PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

         Registrant  was  previously  engaged  in  litigation  in an  attempt to
recover  damages  from  defaulting  lessees and their  guarantors.  Such actions
involve  claims  against  a  prior  operator  of the  Diablo/Tamarack  facility.
Registrant  settled with the alleged  defaulting  guarantor of this facility for
$60,000  plus 10%  interest - payable in  installments  of $10,000 per year plus
interest over five years.

         On June 17, 1998,  Registrant  filed a lawsuit in Dallas County against
the lessee of the McCurdy facility.  The complaint sought a declaratory judgment
affirming that the lessee of the McCurdy facility ("lessee") cannot exercise its
option to  purchase  the McCurdy  facility  until the end of its term in October
2001. The lessee had threatened to exercise this option immediately  (subject to
a final determination of value). The lessee sought to dismiss this Dallas County
action  based on  jurisdictional  grounds  and this  dismissal  was  granted  on
November 6, 1998.  On November 6, 1998,  the  Registrant  was informed  that the
lessee filed a complaint for declaratory judgment in Evansville, Indiana seeking
to exercise its option to purchase the McCurdy facility.  The Registrant intends
to vigorously challenge this action.

Item 2.  Changes in Securities
         ---------------------

         None.

Item 3.  Defaults Upon Senior Securities
         -------------------------------

         None.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

         None.

Item 5.  Other Information
         -----------------

         None.

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

         None.


                                                       16




<PAGE>


         SIGNATURES

         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.



HEALTHCARE PROPERTIES, L.P.

By:      CAPITAL REALTY GROUP SENIOR HOUSING, INC.
          General Partner



By:      /s/ Robert Lankford
         ----------------------
         Robert Lankford
         President

Date:    November  12, 1998




                                       17