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



                                    FORM 10-Q

(Mark One)

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

         For the quarterly period ended     June 30, 1999

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

         For the transition period from                 to

                         Commission file number 1-10641


                           MILESTONE PROPERTIES, INC.
             (Exact name of registrant as specified in its charter)


                       Delaware
(State or other jurisdiction of incorporation or organization)

150 E. Palmetto Park Rd. 4th Floor, Boca Raton, FL          33432
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code    (561) 394 - 9533
                                                  --------------------

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report


     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

         As of August 12,  1999,  4,943,633  shares of the  Registrant's  Common
Stock,  par value  $.01 per share,  were  outstanding  and 16,423  shares of the
Registrant's $.78 Convertible Series A Preferred Stock were outstanding.


<PAGE>


Part I: Financial Information
Item 1. Financial Statements

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 June 30, 1999 (Unaudited) and December 31, 1998

<TABLE>
<CAPTION>
                                                                         June 30, 1999           December 31, 1998
                                                                         -------------           -----------------
ASSETS
Current Assets:
<S>                                                                     <C>                    <C>
    Cash and cash equivalents                                           $   6,679,325          $     11,826,301
    Restricted cash                                                           222,000                   222,000
    Reserved cash for settlement                                            1,759,218                         0
    Loans receivable                                                        1,408,194                 1,444,442
    Accounts receivable                                                       675,944                   812,555
    Accrued interest receivable                                             2,049,084                 5,185,432
    Due from related party                                                    781,187                   837,400
    Prepaid expenses and other                                                975,088                 1,231,663
                                                                       ---------------                ----------
         Total current assets                                              14,550,040                21,559,793

    Property, improvements and equipment, net                              21,343,571                21,517,884
    Wraparound notes, net                                                  30,677,857                39,529,787
    Deferred income tax asset, net                                          2,793,820                 2,994,070
    Investment in affiliate                                                   457,469                         0
    Investments in preferred stock                                                  0                   445,500
    Management contract rights, net                                           155,732                   193,600
    Goodwill and other, net                                                   671,930                   681,562
                                                                       ---------------                  -------

         Total assets                                                    $   70,650,419          $   86,922,196
                                                                         ===============         ==============

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
    Accounts payable and accrued expenses                               $   1,164,753          $      2,436,964
    Accrued litigation payable                                              2,502,636                 9,692,454
    Accrued interest payable                                                  311,414                   306,846
    Master lease payable                                                    3,341,537                 8,962,828
    Current portion of mortgages and notes payable                          4,847,135                 5,782,950
    Income taxes payable                                                    2,763,071                 2,836,496
                                                                       --------------                 ---------
         Total current liabilities                                         14,930,546                30,018,538

    Mortgages and notes payable                                              41,281,936              42,194,179
                                                                             ----------              ----------

         Total liabilities                                                   56,212,482              72,212,717
                                                                             ----------              ----------

Commitments and Contingencies
Stockholders' equity:
   Common stock ($.01 par value, 10,000,000 shares authorized,  4,943,633 issued
     and outstanding at June 30, 1999 and
     December 31, 1998; 692,591 shares in treasury)                             49,436                  49,436
   Preferred stock (Series A $.01 par value, $10 liquidation
     preference, 10,000,000 shares authorized, 16,423 and
     2,999,707 shares issued and outstanding at June 30, 1999
     and December 31, 1998, respectively)                                          164                  29,997
   Additional paid in surplus                                               45,527,013              45,497,180
   Accumulated deficit                                                     (27,698,258)            (27,426,716)
   Shares held in treasury - at cost                                        (3,440,418)             (3,440,418)
                                                                            -----------         ---------------
     Total stockholders' equity                                               14,437,937            14,709,479
                                                                              ----------        --------------

     Total liabilities and stockholders' equity                           $ 70,650,419             $ 86,922,196
                                                                       ===============          ===============
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements

                                        2

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF REVENUES AND EXPENSES
                                   (Unaudited)
                For the Three Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                                      June 30, 1999             June 30, 1998
                                                                      -------------             -------------

REVENUES
<S>                                                                  <C>                       <C>
   Rent                                                              $   1,947,369             $   2,598,415
   Interest income                                                       1,234,337                 2,227,375
   Revenue from management company operations                              159,218                    99,203
   Tenant reimbursements                                                   257,896                   276,218
   Management and reimbursement income                                      21,381                    26,935
   Percentage rent                                                         123,249                   201,759
   Gain on sale of real estate and real estate related assets            1,273,793                         0
                                                                         ---------           ---------------

       Total revenues                                                    5,017,243                 5,429,905
                                                                         ---------                 ---------

EXPENSES
   Master lease expense                                                  1,668,342                 3,445,833
   Interest expense                                                        919,272                 1,581,007
   Depreciation and amortization                                           191,126                   197,948
   Salaries, general and administrative                                    882,406                   588,632
   Property expenses                                                       492,594                   548,846
   Expenses for management company operations                              267,469                   294,431
   Professional fees                                                       148,153                   308,294
                                                                      ------------                ----------

       Total expenses                                                    4,569,362                 6,964,991
                                                                       ------------                ----------

Income (loss) before income taxes                                          447,881                (1,535,086)

Provision (benefit) for income taxes                                       486,366                  (498,584)
                                                                      ------------                  ---------

Net loss attributable to common stockholders                         $     (38,485)           $   (1,036,502)
                                                                        ===========            ==============

Loss per common share, basic and diluted                         $           (0.01)          $         (0.25)
                                                                    ===============           ===============

Weighted average common shares outstanding                               4,250,992                 4,225,727
                                                                       ============              ===========
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements


                                        3

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF REVENUES AND EXPENSES
                                   (Unaudited)
                 For the Six Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                                      June 30, 1999             June 30, 1998
                                                                      -------------             -------------

REVENUES
<S>                                                                  <C>                       <C>
   Rent                                                              $   3,989,466             $   5,344,220
   Interest income                                                       2,741,371                 4,467,931
   Revenue from management company operations                              328,898                   295,045
   Tenant reimbursements                                                   535,450                   533,602
   Management and reimbursement income                                      40,823                    55,986
   Percentage rent                                                         178,446                   311,007
   Gain on sale of real estate and real estate related assets            1,273,793                    81,890
                                                                         ---------               -----------

       Total revenues                                                    9,088,247                11,089,681
                                                                         ---------                ----------

EXPENSES
   Master lease expense                                                  3,623,396                 6,891,666
   Interest expense                                                      1,989,245                 3,100,605
   Depreciation and amortization                                           382,921                   406,021
   Salaries, general and administrative                                  1,435,042                 1,164,960
   Property expenses                                                       942,364                   992,512
   Expenses for management company operations                              444,399                   562,696
   Professional fees                                                       342,172                   527,639
                                                                         ---------                ----------

       Total expenses                                                    9,159,539                13,646,099
                                                                         ----------               -----------

Loss before income taxes                                                   (71,292)               (2,556,418)

Provision (benefit) for income taxes                                       200,250                  (985,622)
                                                                      -------------                 ---------

Net loss attributable to common stockholders                        $     (271,542)           $   (1,570,796)
                                                                       ============            ==============

Loss per common share, basic and diluted                         $           (0.06)          $         (0.37)
                                                                    ===============           ===============

Weighted average common shares outstanding                               4,250,992                 4,219,548
                                                                       ===========               ===========
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements


                                        4

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (Unaudited)
                     For the Six Months Ended June 30, 1999
<TABLE>
<CAPTION>


                                                      Common Stock              Preferred Stock             Treasury Stock
                                                 Shares        Cost         Shares          Cost      Shares          Cost
============================================== =========== ===========  ==============  =========== ===========  ==============
<S>                                               <C>        <C>              <C>         <C>          <C>        <C>
Balance, January 1, 1999                          4,943,633  $   49,436       2,999,707   $   29,997   (692,591)  $  (3,440,418)
Cancellation of Series A Preferred Stock                                      2,983,284     (29,833)
Net loss for the six  months ended June 30, 1999
Balance, June 30, 1999                            4,943,633    $ 49,436          16,423        $ 164   (692,591)   $ (3,440,418)
                                                =========== ===========  ==============  =========== ===========  ==============


                                                    Additional
                                                      paid in       Accumulated     Stockholders'
                                                      surplus         deficit          equity
===============================================   =============== ===============  ===============
<S>                                                  <C>          <C>                 <C>
Balance, January 1, 1999                             $ 45,497,180 $  (27,426,716)     $ 14,709,479
Cancellation of Series A Preferred Stock                   29,833                                0
Net loss for the six  months ended June 30, 1999                        (271,542)        (271,542)
Balance, June 30, 1999                               $ 45,527,013  $ (27,698,258)     $ 14,437,937
                                                  =============== ===============  ===============

</TABLE>

           See Accompanying Notes to Consolidated Financial Statements


                                        5

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                 For the Six Months Ended June 30, 1999 and 1998


<TABLE>
<CAPTION>

                                                                            June 30, 1999             June 30, 1998
                                                                            -------------             -------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                         <C>                       <C>
   Net loss                                                                 $   (271,542)             $ (1,570,796)
   Adjustments to reconcile net loss to net cash used in
        operating activities:
   Depreciation and amortization                                                 382,921                   406,021
   Deferred taxes                                                                200,250                (1,055,702)
   Gain on sale of real estate and real estate related assets                 (1,273,793)                  (81,890)
   Changes in operating assets and liabilities
         Decrease in accounts receivable                                         136,611                   368,105
         Decrease (increase) in due from related party                            56,213                   (93,592)
         Decrease in accrued interest receivable                               3,136,348                 4,685,570
         Decrease (increase) in prepaid expenses and other                       198,813                  (925,335)
         Decrease in accounts payable and accrued expenses                    (1,345,636)                 (918,678)
         Decrease in accrued litigation payable                               (7,189,818)                        0
         Increase (decrease) in accrued interest payable                           4,568                   (17,097)
         Decrease in master lease payable                                     (5,621,291)               (6,726,243)
                                                                            -------------               -----------


         Net cash used in operating activities                               (11,586,356)               (5,929,637)
                                                                             ------------               -----------

CASH FLOW FROM INVESTING ACTIVITIES
   Principal repayments on loans receivable                                       36,248                    33,470
   Principal repayments on wraparound notes                                    3,782,763                 5,025,520
   Investment in wraparound notes                                                      0                    25,410
   Investment in affiliate                                                      (457,469)                        0
   Purchase of building and land                                                       0                (3,650,000)
   Purchase of leasehold improvements                                           (243,021)                 (227,631)
   Proceeds from realization of real estate related assets, net                6,482,635                    75,000
   Proceeds from redemption of investments in preferred stock                    445,500                   891,000
                                                                            -------------                  -------

         Net cash provided by investing activities                            10,046,656                 2,172,769
                                                                             ------------              ------------

CASH FLOW FROM FINANCING ACTIVITIES
   Proceeds from mortgages and notes payable                                   1,750,000                 6,497,746
   Principal payments on mortgages and notes payable                          (3,598,058)               (3,310,795)
   Amounts in restricted cash                                                 (1,759,218)                          0
                                                                             ------------              --------------

         Net cash (used in) provided by financing activities                  (3,607,276)                3,186,951
                                                                             ------------                ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                     (5,146,976)                 (569,917)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                11,826,301                13,435,237
                                                                             -----------                ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $  6,679,325            $   12,865,320
                                                                             ===========             =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

         Cash paid during the period for interest                           $  1,984,677             $   3,117,702
                                                                             ===========              ============


         Cash paid during the period for income taxes                     $       73,425           $        70,080
                                                                           =============            ==============

</TABLE>

           See Accompanying Notes to Consolidated Financial Statements

                                        6

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

The accompanying consolidated financial statements of Milestone Properties, Inc.
("Milestone") and its wholly owned  subsidiaries  (collectively,  Milestone with
its  subsidiaries  is the  "Company")  have been  prepared  in  accordance  with
generally accepted accounting  principles for interim financial  information and
with  the   instructions  to  Form  10-Q  and  Rule  10-01  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 for a fair presentation have been included.  The
financial  statements as of and for the periods ended June 30, 1999 and 1998 are
unaudited.  The  results of  operations  for the interim  periods  shown in this
report  are not  necessarily  indicative  of the  results  of  operations  to be
expected for the fiscal year. Certain information for 1998 has been reclassified
to  conform  to the 1999  presentation.  These  consolidated  interim  financial
statements  should be read in conjunction with the annual  financial  statements
and footnotes  included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.

The  Company  is  engaged  in  the  business  of  owning,  acquiring,  managing,
developing  and  investing  in  commercial  real estate and real estate  related
assets.  The  Company is  primarily  engaged  in the  ownership,  operation  and
management of interests in commercial real estate  properties,  currently (as of
the date of this filing)  consisting of (i) 10 properties owned in fee (the "Fee
Properties"),  (ii) the ownership of wraparound notes (the  "Wraparound  Notes")
and wraparound  mortgages (the  "Wraparound  Mortgages"  and,  together with the
Wraparound  Notes,  the "Wrap  Debt")  which are secured by 22  commercial  real
properties (the "Underlying  Properties" and,  together with the Fee Properties,
the "Properties")  and (iii) the operation and management of the Properties.  At
June 30, 1999,  the Company  possessed  interests in 33  commercial  real estate
properties  consisting of (i) 10 properties  owned in fee and (ii) the ownership
of wraparound  notes and  wraparound  mortgages  secured by 23  commercial  real
properties.  At June 30, 1998, the Company possessed  interests in 33 commercial
real  properties  consisting  of (i) 6  properties  owned  in fee and  (ii)  the
ownership of wraparound notes and wraparound  mortgages secured by 27 commercial
real properties.

1.       Acquisition and Disposition of Real Estate Related Assets

On April 6, 1999, a wraparound note held by the Company on a 125,803 square foot
shopping center property  located in Pascagoula,  Mississippi  (the  "Pascagoula
Property"),  was paid as a result of the sale of the Pascagoula  Property by its
owner,  an affiliate of the Company (the  partnership  that owned the Pascagoula
Property),  to an unrelated  third  party.  In  connection  with the sale of the
Pascagoula Property,  the Company, as the master lessee on a master lease on the
Pascagoula  Property,  canceled such master lease. As a result of the payment of
the  wraparound  note, the Company  realized net cash proceeds of  approximately
$2,178,000  and a book gain of  approximately  $885,000 in the second quarter of
1999.



                                                         7

<PAGE>



On April 27, 1999, a wraparound note held by the Company on a 52,700 square foot
shopping  center  property  located in Baton Rouge,  Louisiana (the "Baton Rouge
Property"),  was paid as a result of the sale of the Baton Rouge Property by its
owner, an affiliate of the Company (the  partnership  that owned the Baton Rouge
Property), to an unrelated third party. In connection with the sale of the Baton
Rouge Property, the Company, as the master lessee on a master lease on the Baton
Rouge Property,  canceled such master lease.  Of the gross proceeds,  $1,896,208
was used to satisfy the underlying mortgage debt on the Baton Rouge Property. As
a result of the  payment  of the  wraparound  note and the  satisfaction  of the
underlying   mortgage   debt,   the  Company   realized  net  cash  proceeds  of
approximately $2,045,000 and a book gain of approximately $389,000 in the second
quarter of 1999.

On July 30, 1999, a wraparound  note held by the Company on a 31,170 square foot
single  tenant  commercial  building  located  in  Franklin,  Pennsylvania  (the
"Franklin Property"),  was paid as a result of the sale of the Franklin Property
by its owner,  an  affiliate  of the  Company  (the  partnership  that owned the
Franklin Property),  to an unrelated third party. In connection with the sale of
the Franklin  Property,  the Company,  as the master lessee on a master lease on
the  Franklin  Property,  canceled  such master  lease.  Of the gross  proceeds,
$1,348,000  was used to defease  the  underlying  bond debt.  As a result of the
payment of the  wraparound  note,  the  Company  realized  net cash  proceeds of
approximately   $896,000  and  will  recognize  a  book  gain  of  approximately
$1,544,000 in the third quarter of 1999.

2.       Income Taxes

The Company is required by Statement of Financial  Accounting  Standards  (SFAS)
No. 109 to record a deferred tax asset or liability for the basis of an asset or
liability that is temporarily different for financial reporting purposes and tax
reporting  purposes.  Income taxes for interim  periods are  generally  computed
using the  effective  tax rate  estimated to be  applicable  for the full fiscal
year.   The  interim  tax   provision  is  adjusted  for  specific   significant
transactions  which affect  deferred tax assets or liabilities as recorded under
SFAS 109.  During the second quarter of 1999,  the wraparound  notes held by the
Company on the Pascagoula and Baton Rouge Properties were satisfied. Relating to
such wraparound  notes, the Company had previously  recorded deferred tax assets
which were realized through the provision for income taxes in the second quarter
of 1999.  The Company did not realize any such  deferred tax asset in the second
quarter of 1998.

3.       Legal Proceedings

As previously reported, during 1996 Milestone,  certain past and present members
of its Board of Directors and executive officers, and Concord Assets Group, Inc.
("Concord"),  a New York  Corporation,  were named as  defendants in a purported
class action and  derivative  lawsuit (the "Winston  Actions")  commenced in the
Court of  Chancery  of the State of  Delaware  (the  "Delaware  Court").  In the
Winston Actions, the plaintiff,  a Series A Preferred Stockholder  purporting to
bring the action on behalf of himself, all other Series A Preferred Stockholders
and  derivatively  on behalf  of  Milestone,  alleged  that in  connection  with
Milestone's  acquisition in October 1995 of certain wraparound notes, wraparound
mortgages  and fee  properties  from certain  affiliates  of Concord and certain
related  transactions  (collectively,  the  "Transactions"),  Milestone  and its
directors  engaged in  self-dealing,  violated  federal  securities  laws and an
injunction  against such violations and breached their  fiduciary  duties to the
Series A Preferred Stockholders. The plaintiff claimed, among other

                                                         8

<PAGE>



things,  that,  as a  result  of the  Transactions,  Milestone  would  not  have
sufficient  funds to pay dividends on the Series A Preferred  Stock and that the
properties  which  were not  transferred  to Union  Properties  Investors,  Inc.
("UPI"), a then wholly-owned  Delaware subsidiary of Milestone,  in the Transfer
were grossly inferior to the properties that were transferred to UPI.

On August 5, 1998,  the counsel for the named  plaintiff in the Winston  Actions
and the counsel for the defendants  entered into a Stipulation  and Agreement of
Settlement (the "Winston Settlement  Agreement") which memorialized the terms of
a settlement (the "Winston  Settlement") of the Winston Actions.  On January 28,
1999,  the Delaware  Court  approved  the Winston  Settlement  Agreement,  which
approval became final effective as of the close of business on March 5, 1999. At
such time,  (i) the shares of Series A  Preferred  Stock  owned by each Series A
Preferred  Stockholder who was eligible to participate in the Winston Settlement
and who did not properly opt out of the Winston  Settlement and who owned shares
of Series A  Preferred  Stock as of the close of  business on March 5, 1999 were
canceled and represented  only the right of such Series A Preferred  Stockholder
to receive $3.00 in cash from the Company in exchange for each such share;  (ii)
the holders of shares of the Series A Preferred  Stock between  October 23, 1995
and the close of  business  on March 5,  1999,  other  than  Series A  Preferred
Stockholders who properly opted out of the Winston  Settlement  Agreement or who
were precluded from  participating in the Winston  Settlement,  released any and
all claims they may have had against the Company and the other named  defendants
in connection with the Transactions;  (iii) Milestone's  stockholders other than
Series A Preferred  Stockholders who were eligible to participate in the Winston
Settlement  and who properly  opted out of the Winston  Settlement  released all
derivative  claims in  connection  with the  Transactions;  and (iv) the Winston
Actions were  dismissed.  In connection  with the Winston  Actions,  the Company
retained  counsel  for all of the  defendants  (including,  without  limitation,
Leonard S.  Mandor,  Robert A.  Mandor,  Harvey  Jacobson,  Gregory  McMahon and
Geoffrey  Aaronson  (each of whom is a director  and/or officer of the Company))
and assumed  responsibility  for the payment of all legal fees  incurred by such
persons in  connection  with the  Winston  Actions  and the  Winston  Settlement
(subject to the insurance coverage litigation described below).

The foregoing  description of the Winston  Settlement and the Winston Settlement
Agreement is  qualified  in its entirety by reference to the Winston  Settlement
Agreement,  a copy of which was filed by the  Company  with the  Securities  and
Exchange  Commission (the  "Commission")  on August 14, 1998 as Exhibit 10.01 to
the Company's  Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1998.

The  Company   maintains  a  directors   and  officers   insurance  and  company
reimbursement  policy (the  "National  Policy")  issued by  National  Union Fire
Insurance Company of Pittsburgh,  PA ("National  Union") with a $2,000,000 limit
and an excess directors and officers liability and company  reimbursement policy
(the "Stonewall  Policy") issued by Stonewall  Surplus Lines Insurance  Company,
now known as American  Dynasty  Surplus Lines Insurance  Company  ("Stonewall"),
with a $2,000,000  limit.  The Company  believes that the amounts that it has to
pay  pursuant  to the  Winston  Settlement  and in  connection  with the Winston
Actions  are  covered  losses  under  both the  National  Union  Policy  and the
Stonewall  Policy.  In addition,  the Company  believes  that the legal fees and
other  expenses  incurred by the Company and the other  defendants in connection
with the Winston Actions are also covered losses under the National Union Policy
and the Stonewall Policy.  In connection with a previous proposed  settlement of
the Winston Actions which was never

                                                         9

<PAGE>



consummated,  National  Union and  Stonewall  both refused to contribute to such
proposed  settlement,  asserting that such proposed settlement did not encompass
any covered loss (as defined in the National  Policy and the  Stonewall  Policy,
respectively).  On January  29,  1998,  the  Company  commenced a lawsuit in the
United  States  District  Court for the  Southern  District of New York  against
National  Union and Stonewall in  connection  with such refusal to contribute to
such proposed settlement. In the complaint, the plaintiffs alleged that National
Union and Stonewall  wrongfully failed to contribute to the proposed  settlement
and sought  reimbursement  from National Union and Stonewall up to the limits of
their  respective  policies.  National  Union and  Stonewall  both  answered the
complaint and denied liability. As a result of the termination of the previously
proposed settlement,  the Company on one hand, and Stonewall and National Union,
on the other hand,  agreed to dismiss  such action  without  prejudice  and such
action was dismissed on May 29, 1998 by the United States District Court for the
Southern  District  of New  York.  The  Company  gave  both  National  Union and
Stonewall notice of the Winston Settlement and provided each of them with a copy
of the Winston  Settlement  Agreement  on August 12,  1998.  National  Union and
Stonewall reviewed the Winston Settlement  Agreement and separately informed the
Company  that their  basic  position,  denying  coverage,  had not  changed.  On
February 12, 1999, the Company  commenced a lawsuit in the Circuit Court for the
Fifteenth  Judicial  Circuit in and for Palm Beach County,  Florida against both
National Union and Stonewall  alleging,  among other things, that National Union
and Stonewall have  wrongfully  refused to contribute to the Winston  Settlement
and seeking  reimbursement from National Union and Stonewall up to the limits of
their respective  policies.  The initial complaint in the new lawsuit was served
on each of National  Union and  Stonewall  on February 12, 1999 and on March 17,
1999 the Company filed an amended complaint,  which,  among other things,  added
certain of the other  defendants to the Winston Actions as plaintiffs.  On April
12, 1999,  National Union served a motion to dismiss the amended complaint or to
strike  part  thereof  and a motion to recuse  the  Company's  Florida  counsel.
National  Union has since  agreed to withdraw its motion to dismiss and to serve
its answer to the amended  complaint  by June 1, 1999.  The motion to recuse the
Company's Florida Counsel was denied; however, the plaintiffs and the defendants
have agreed that Geoffrey Aaronson, a partner with the Company's Florida counsel
and a director of the Company, may not personally act as counsel for the Company
in the proceedings as he may be called as a witness in the proceedings. On April
12,  1999,  Stonewall  served its  answer to the  amended  complaint  and denied
liability.  On July 12,  1999,  National  Union  served  its first  request  for
production and  interrogatories  to which the Company must respond before August
26, 1999. In connection with this action,  the Company has retained  counsel for
all of the  plaintiffs  and is  assuming  responsibility  for the payment of all
legal fees  incurred by such persons in  connection  with this  action.  At this
time, the Company is not in a position to render an opinion as to the outcome of
this action.

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

General

This  Quarterly  Report on Form 10-Q for the interim  period ended June 30, 1999
filed by Milestone contains or incorporates by reference certain 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 and Milestone  intends that
such forward-looking  statements be subject to the safe harbors created thereby.
Such forward-looking statements involve risks and uncertainties and include, but
are not

                                                        10

<PAGE>



limited to, statements  regarding future events and Milestone's plans, goals and
objectives. Such statements are generally accompanied by words such as "intend,"
"anticipate,"  "believe,"  "estimate,"  "expect" or similar  terms.  Milestone's
actual results may differ  materially from such  statements.  Factors that could
cause  or  contribute  to such  differences  include,  without  limitation,  the
following:  (i) its plans, strategies,  objectives,  expectations and intentions
are subject to change at any time at its discretion;  (ii) general  economic and
business conditions, which may, among other things, affect the demand for retail
space or retails goods,  the availability  and  creditworthiness  of prospective
tenants,  rental terms and the terms and availability of financing,  are subject
to change at any time;  (iii) adverse changes in real estate markets  including,
among other things,  competition with other  companies;  (iv) adverse changes in
the properties  Milestone  owns which could require the  expenditure of funds to
fix  or  maintain  such  properties;  (v)  the  general  risks  of  real  estate
development  and  acquisitions,  such as changes in  demographics,  construction
delays, cost overruns,  work stoppages and slowdowns,  the cost and availability
of  skilled  labor  and  weather  conditions;   (vi)  governmental  actions  and
initiatives,  such as seizures of property,  condemnation  and  construction  of
alternative  roadways;  (vii)  environmental  and safety conditions and hazards;
(viii) the adequacy of Year 2000 compliance  measures;  and (ix) other risks and
uncertainties  indicated  from  time to time in  Milestone's  filings  with  the
Securities and Exchange  Commission and in the documents  incorporated herein by
reference.  Although  Milestone  believes that the  assumptions  underlying  its
forward-looking  statements are reasonable,  any of the assumptions  could prove
inaccurate and, therefore, Milestone cannot make any assurances that the results
contemplated in such forward-looking  statements will be realized. The inclusion
of such  forward-looking  information should not be regarded as a representation
by Milestone or any other person that the future events,  plans or  expectations
contemplated by Milestone will be achieved. Furthermore, past performance is not
necessarily an indicator of future performance.




The  Company  is  engaged  in  the  business  of  owning,  acquiring,  managing,
developing  and  investing  in  commercial  real estate and real estate  related
assets.  The  Company is  primarily  engaged  in the  ownership,  operation  and
management of interests in commercial real estate  properties,  currently (as of
the date of this filing)  consisting of (i) 10 properties owned in fee (the "Fee
Properties"),  (ii) the ownership of wraparound notes (the  "Wraparound  Notes")
and wraparound  mortgages (the  "Wraparound  Mortgages"  and,  together with the
Wraparound  Notes,  the "Wrap  Debt")  which are secured by 22  commercial  real
properties (the "Underlying  Properties" and,  together with the Fee Properties,
the "Properties")  and (iii) the operation and management of the Properties.  At
June 30, 1999,  the Company  possessed  interests in 33  commercial  real estate
properties  consisting of (i) 10 Fee  Properties and (ii) Wrap Debt interests in
23 Underlying  Properties.  At June 30, 1998, the Company possessed interests in
33 commercial real  properties  consisting of (i) 6 Fee Properties and (ii) Wrap
Debt interests in 27 Underlying Properties.


Impact of Year 2000

The Year 2000 problem  arises from the  historic use of only two digits  (rather
than four) for the  designation of a year in date  information  within  computer
programs. If not corrected,  any of the Company's equipment or software programs
that perform time sensitive  calculations may incorrectly identify the year 2000
and beyond or not function after December 31, 1999. This could result in

                                                        11

<PAGE>



miscalculations  or a major failure of certain systems.  The Company may also be
vulnerable to the Year 2000 problems of its tenants,  financial  institutions or
other service  vendors and/or other  companies  with which it conducts  business
(e.g., utility companies, etc).

Early in calendar  year 1998,  the Company  developed  and initiated a Year 2000
compliance program, including information systems modifications, in an effort to
ensure  that its  business  is not  interrupted  by the Year 2000  problem.  The
Company's Year 2000 compliance program is broken into the following components:

Renovating   internal  systems  and  applications  and  ensuring  compliance  of
peripheral third party systems.  The Company's internal systems and applications
include  the  accounting  system,  the lease  asset  management  system  and the
operating  system (AS 400).  As a result of the  Company's  commitment to ensure
that its systems are year 2000 compliant,  management decided to replace the old
AS400  with a new  AS400.  The  Company  anticipates  that the new AS400 will be
installed by the beginning of September 1999. The Company uses a number of third
party package systems to supplement its internally developed programs. From time
to time, the Company updates the accounting system and the operating system with
upgrades it receives from the software manufacturers. The software manufacturers
have  informed  the  Company  that they will  continue  to provide  all  updates
necessary  for  such  systems  to  be  Year  2000   compliant.   These  software
manufacturers  have  provided  all such  upgrades  to the  Company.  The Company
anticipates  that  it  will be able  to  implement  all  upgrades  by the end of
September 1999. The lease asset management  system is currently being updated to
be Year 2000  compliant by the Company using  in-house  technology.  The Company
anticipates  that this  upgrade to the lease  asset  management  system  will be
completed by the end of September 1999.



Ensuring Year 2000 compliance by external  companies that conduct  business with
the Company. The Company has contacted all of its major tenants which remit rent
and other payments to the Company and financial  institutions  which process the
rental and other  payments  from  major  tenants  on behalf of the  Company,  to
inquire about their Year 2000 compliance. The Company has not received responses
from all those  contacted,  but those who have  responded have not indicated any
problems at this time. For those  financial  institutions  that process  payroll
electronically  by  debiting  the  Company's  bank  account  and  crediting  the
employees' bank accounts, the Company will be conducting tests to determine Year
2000 compliance.  These tests are expected to be completed by September 1999. If
such financial institutions are not Year 2000 compliant by December 31, 1999, it
is possible that  employees  will not receive direct deposit pay, or the correct
amount  of such  pay,  or that  the  Company's  bank  accounts  will be  debited
incorrect amounts of money.

Implementing  standards and  conducting  testing in an effort to ensure that the
Company's existing and future systems are Year 2000 compliant.  All new systems,
whether hardware or software,  are tested before  implementation in an effort to
ensure Year 2000 compliance.

The Company  believes  that the total cost of its Year 2000  compliance  program
will not exceed  $50,000.  The new AS400 will be leased over the next 5 years at
an annual lease rate of $7,500. To date, the Company has incurred  approximately
$13,000 of such  expenses  which  includes  hardware and software  purchases and
upgrades. The Company does not anticipate that the costs of any

                                                        12

<PAGE>



required  modifications  to its  information  technology or embedded  technology
systems will have a material adverse effect on its financial  position,  results
of operations or liquidity,  although there can be no assurances  that this will
be the case.

Although the Company believes that it will have its own systems  compliant prior
to September 1999,  there can be no assurances that it will be able to do so nor
can there be any assurances that, even if the Company  completes timely its Year
2000 compliance program,  the systems,  when actually  implemented in full, will
work  properly  independently  or in  conjunction  with the systems of any third
parties. In addition,  the Company would continue to bear the risk of a material
adverse affect, if any, if its third party systems do not appropriately  address
their own Year 2000 compliance  issues.  The Company's  current estimates of the
impact of the Year 2000 problem on its operations  and financial  results do not
include  costs and time  that may be  incurred  as a result of other  companies'
failure to become Year 2000  compliant on a timely  basis,  which costs could be
material.  There can be no assurance that such other companies will achieve Year
2000  compliance or that any  conversions  by such companies to become Year 2000
compliant will be compatible with the Company's  computer and operating systems.
The inability of the Company or any of its material third parties to become Year
2000  compliant in a timely manner could have a material  adverse  effect on the
Company's financial condition or results of operations.

In the event that the Company or material  third parties fail to complete  their
Year 2000 compliance programs successfully and on time, the Company's ability to
operate its business,  service  tenants,  bill,  collect its revenue in a timely
manner,  pay  debts  and  communicate  generally  could be  adversely  affected.
Although there can be no assurance that the conversion of the Company's  systems
will be successful or that the Company's key third-party relationships will have
successful conversion programs, management does not expect that any such failure
would have a  material  adverse  effect on the  financial  position,  results of
operations or liquidity of the Company, although there can be no assurances that
this will be the case.

The Company has day-to-day  operational  contingency plans, and management is in
the process of updating these plans for possible Year 2000 specific  operational
requirements.  If the Company's major tenants,  financial  institutions or third
party  systems  are  not  Year  2000  compliant,  it may  have  to  arrange  for
alternative  sources of services in the fall of 1999 in preparation for the Year
2000.  The Company  does not have any other  contingency  plans with  respect to
other  problems  that could  arise in its  business as a result of the Year 2000
problem.  Any of these  could have a material  adverse  effect on the  Company's
financial condition or results of operations.

Recent Developments

On March 29,  1999,  an  agreement  (the "SGSC  Agreement")  which was in effect
between  the Company and  certain of its  affiliates,  on one hand,  and Societe
Generale  Securities  Corporation  ("SGSC") on the other hand, was terminated by
the  Company  and such  affiliates,  via  written  notice.  The Company and such
affiliates  had retained SGSC to act as financial  advisor in connection  with a
transaction  involving the sale of a number of shopping center  properties owned
by such affiliates and two retail  properties owned by the Company.  Pursuant to
the terms of the SGSC  Agreement,  upon certain  dispositions  of the properties
covered by the SGSC Agreement  prior to March 29, 2000 to persons or entities to
whom SGSC had shown such properties, the Company and or such affiliates would be
obligated to pay SGSC a fee based on the sale price of such properties.


                                                        13

<PAGE>



The Winston  Settlement  became  effective  at the close of business on March 5,
1999. At such time,  pursuant to the terms of the Winston Settlement  Agreement,
Milestone  canceled and retired  2,983,284  shares of Series A Preferred  Stock,
representing more than 99% of the then outstanding  shares of Series A Preferred
Stock. In connection with the Winston Settlement,  on March 18, 1999,  Milestone
transferred approximately $9,000,000 to a court appointed trustee to be held for
the benefit of the plaintiffs  and to be exchanged for their canceled  shares in
accordance with the Winston Settlement Agreement. See Part II-Other Information,
Item 1. Legal  Proceedings  for a  description  of the  Winston  Settlement  and
Liquidity  and Capital  Resources  within this section for a  discussion  of the
costs associated with the Winston Settlement.

On February 12, 1999,  the Company  served a complaint  against each of National
Union Fire  Insurance  Company of  Pittsburgh,  PA and  Stonewall  Surplus  Line
Insurance Company, now known as American Dynasty Surplus Line Insurance Company,
wherein the Company alleged that National Union and Stonewall  wrongfully failed
to contribute to the Winston  Settlement and sought  reimbursement from National
Union and Stonewall up to the limits of their respective policies. See Part II -
Other  Information,  Item 1. Legal  Proceedings for a description of the lawsuit
against National Union and Stonewall.

Results of Operations

Three Months Ended June 30, 1999 compared to Three Months Ended June 30, 1998

For the three months ended June 30, 1999,  the Company  recognized a net loss of
$38,485,  or $0.01 per share of common stock,  on total  revenues of $5,017,243.
For the three months ended June 30, 1998,  the Company  recognized a net loss of
$1,036,502, or $0.25 per share of common stock, on total revenues of $5,429,905.

Total  revenues  for the three months  ended June 30, 1999 were  $5,017,243,  as
compared to  $5,429,905  for the three months ended June 30, 1998, a decrease of
$412,662, or 8%, due to the following:

Rent decreased  $651,046,  or 25%, to $1,947,369 for the three months ended June
30, 1999 as compared to  $2,598,415  for the three  months  ended June 30, 1998.
This decrease is primarily due to property sales in 1998.

Interest income  decreased  $993,038,  or 45% to $1,234,337 for the three months
ended June 30, 1999 compared to $2,227,375 the three months ended June 30, 1998.
This  decrease is primarily  due to property  sales in 1998 by the owners of the
underlying  properties  which caused the Company to receive final payment during
1998 on wraparound notes held by the Company.

Gain on sale of real estate and real estate related assets of $1,273,793 for the
three  months ended June 30, 1999 as compared to no gain or loss on sale of real
estate and real estate related assets for the same period in 1998. This increase
is due to the property sales of Pascagoula and Baton Rouge.



                                                        14

<PAGE>



Total  operating  expenses  for the  three  months  ended  June  30,  1999  were
$4,569,362,  as compared to $6,964,991 for the three months ended June 30, 1998,
a decrease of  $2,395,629,  or 34%, due  primarily to a decrease in master lease
expense of approximately  $1,777,000  resulting from a decrease in the number of
properties  leased  by the  Company  as a  result  of the  sale  of  some of the
underlying properties by their owners during 1998.

Interest  expense  for the three  months  ended June 30,  1999 was  $919,272,  a
decrease of $661,735,  or 42%, from  $1,581,007  for the three months ended June
30,  1998.  Such  decrease is due to a reduction in the  underlying  debt of the
Company resulting from property sales in 1998.


Six Months Ended June 30, 1999 compared to Six Months Ended June 30, 1998

For the six months  ended June 30,  1999,  the Company  recognized a net loss of
$271,542,  or $0.06 per share of common stock,  on total revenues of $9,088,247.
For the six months  ended June 30,  1998,  the Company  recognized a net loss of
$1,570,796,   or  $0.37  per  share  of  common  stock,  on  total  revenues  of
$11,089,681.

Total  revenues  for the six months  ended  June 30,  1999 were  $9,088,247,  as
compared to  $11,089,681  for the six months  ended June 30, 1998, a decrease of
$2,001,434, or 18%, due to the following:

Rent  decreased  $1,354,754,  or 25% to $3,989,466 for the six months ended June
30, 1999 as compared to $5,344,220 for the six months ended June 30, 1998.  This
decrease is primarily due to property sales in 1998.

Interest income  decreased  $1,726,560,  or 39% to $2,741,371 for the six months
ended June 30, 1999  compared to  $4,467,931  for the six months  ended June 30,
1998.  This decrease is primarily due to property sales in 1998 by the owners of
the  underlying  properties  which caused the Company to receive  final  payment
during 1998 on wraparound notes held by the Company.

Gain on sale of real estate and real estate related assets of $1,273,793 for the
six months ended June 30, 1999 compared to $81,890 for the six months ended June
30,  1998.  The increase is due to the property  sales of  Pascagoula  and Baton
Rouge.

Total operating expenses for the six months ended June 30, 1999 were $9,159,539,
as compared to $13,646,099 for the six months ended June 30, 1998, a decrease of
$4,486,560,  or 33%,  due  primarily  to a decrease in master  lease  expense of
approximately  $3,268,000  resulting from a decrease in the number of properties
leased  by the  Company  as a  result  of the  sale of  some  of the  underlying
properties by their owners during 1998.

Interest  expense  for the six months  ended  June 30,  1999 was  $1,989,245,  a
decrease of  $1,111,360,  or 36%, from  $3,100,605 for the six months ended June
30,  1998.  Such  decrease is due to a reduction in the  underlying  debt of the
Company resulting from property sales in 1998.



                                                        15

<PAGE>



Cash Flows

For the six months ended June 30,  1999,  the Company had a decrease in cash and
cash  equivalents  of  $5,146,976,  as  compared  to a decrease in cash and cash
equivalents  of $569,917  for the six months  ended June 30,  1998.  For the six
months ended June 30, 1999, cash used in operating  activities was  $11,586,356,
cash provided by investing activities was $10,046,656 and cash used in financing
activities  was  $3,607,276.  The  decrease  in cash  and  cash  equivalents  is
primarily due to the payment of approximately  $8,949,000 of cash to the bank as
exchange agent in connection  with the  cancellation of Series A Preferred Stock
in  accordance  with  the  Winston  Settlement  Agreement.  See  Part II - Other
Information,  Item 1. Legal Proceedings for a description of the Winston Actions
and the Winston Settlement.

Liquidity and Capital Resources

The  Company,  as the  holder of 44,550  shares of Kranzco  Series C  Redeemable
Preferred  Shares of Kranzco  Realty Trust,  a Maryland  real estate  investment
trust  ("Kranzco")  as of January 1, 1999,  received from the redemption of such
shares,  in one  installment  on January 29, 1999,  an aggregate  amount of cash
equal to  approximately  $445,500,  plus interest at the rate of 8% per annum on
the  applicable  outstanding  balance of such shares.  Such  redemption  payment
liquidated  the  Company's  holdings of Kranzco  Series C  Redeemable  Preferred
Shares.

The Underlying Debt on the Property  located in Quincy,  Illinois,  (the "Quincy
Property") came due in July 1998. The mortgagee  holding the Underlying Debt did
not  demand  payment  while  the  Partnership,  that  owns the  Quincy  Property
attempted  to sell the Quincy  Property.  Although  the  Underlying  Debt on the
Quincy Property has not been satisfied,  regular monthly debt payments have been
made by the Company through March 1999. On March 1, 1999, the mortgagee  holding
the  Underlying  Debt sent a demand  letter  seeking to collect the  outstanding
balance of the Underlying Debt of  approximately  $2,883,000.  At this time, the
Partnership  that owns the Quincy Property expects to convey ownership and title
of the property to the mortgagee.  If conveyance  occurs, the Company expects to
record a book gain of approximately $1,660,000 but no cash proceeds.

On May 28, 1999, the Company  successfully  completed the refinancing of the Fee
Property  located in Zanesville,  Ohio,  (the  "Zanesville  Property").  The new
Zanesville  Property  first  mortgage is for  $1,750,000 and bears interest at a
rate of 8.16% per annum.  Such first  mortgage  requires  monthly  principal and
interest  payments of $13,693 based on a 25 year amortization  schedule,  with a
balloon  payment of  approximately  $1,453,100  due June 1, 2009. In conjunction
with such  refinancing,  the Company  satisfied the prior first  mortgage with a
payment of $810,000.

The Company  repurchased  222,200  options to purchase  shares of the  Company's
common  stock,  par value $.01 per share from certain  executives of the Company
for approximately $650,000,  representing the excess of the current market price
of the Common Stock over the exercise price of the options.

Currently,  the Company has invested  approximately  $595,000 in a joint venture
partnership  with  an  unrelated  third  party,  which  has  contracted  for the
acquisition  of three land  parcels in the south  Florida  area.  As of June 30,
1999, all such investment is at risk.

                                                        16

<PAGE>



The  Company's  existing  borrowings  and  the  encumbrances  on the  properties
securing  those  borrowings  may inhibit,  or result in  increased  costs to the
Company in  connection  with,  its ability to incur future  indebtedness  and/or
raise substantial equity capital in the marketplace.

The Company has invested available funds in secure, short-term, interest bearing
investments.  The Company believes that its levels of working capital, liquidity
and funds from operations are sufficient to support present  operations and make
any additional payments which may be required by the Winston Settlement.

As a result of, and in connection  with, the settlement of the Winston  Actions,
the Company has disbursed  approximately  $7.8 million,  which amount includes a
portion of the  settlement  consideration  to Series A  Preferred  Stockholders,
defendants's  attorneys fees, court and Commission  filing fees,  printing costs
and  other  expenses.  The  Company  expects  to  disburse  additional  cash  of
approximately $2.5 million,  including payments of the settlement  consideration
to Series A Preferred Stockholders and fees of the plaintiff's lawyers. Although
the expected  expenditures of such funds represents a substantial  amount of the
Company's cash reserves, the Company believes that it would have sufficient cash
to continue operating in the ordinary course of business. The Company,  however,
is  considering  whether  to, and ways it could,  raise cash to make  additional
investments  in suitable real estate  properties.  If the Company  determines to
raise additional  funds, it may decide to do so through a public or private sale
of debt or equity securities, by selling or realizing on assets (including,  but
not limited to, sales of its properties and interest in the Wrap Debt),  through
a rights offering, through corporate borrowings, or by other means.

Other  than  described  herein,  management  is not aware of any  other  trends,
events,  commitments or  uncertainties  that will, or are likely to,  materially
impact the Company's liquidity.



Item 3.        Quantitative and Qualitative Disclosure about Market Risk.

At June 30,  1999,  the  Company was not  invested in any market risk  sensitive
instruments held for either trading purposes or for purposes other than trading.
Also, the Company does not have any variable or adjustable rate mortgages on any
of its  properties.  As a result,  the Company is not  subject to interest  rate
risk,  foreign  currency  exchange  rate risk,  commodity  price risk,  or other
relevant market risks, such as equity price risk.


                                                        17

<PAGE>



                                            PART II - OTHER INFORMATION

Item 1.        Legal Proceedings

As previously reported, during 1996 Milestone,  certain past and present members
of its Board of  Directors  and  executive  officers,  and Concord were named as
defendants in the Winston Actions which were commenced in the Delaware Court. In
the Winston Actions, the plaintiff,  a Series A Preferred Stockholder purporting
to bring  the  action  on  behalf  of  himself,  all  other  Series A  Preferred
Stockholders and derivatively on behalf of Milestone, alleged that in connection
with  Milestone's  acquisition  in  October  1995 of certain  wraparound  notes,
wraparound  mortgages and fee properties from certain  affiliates of Concord and
certain   related   transactions,   Milestone  and  its  directors   engaged  in
self-dealing,  violated federal  securities laws and an injunction  against such
violations  and  breached  their  fiduciary  duties  to the  Series A  Preferred
Stockholders.  The plaintiff claimed,  among other things,  that, as a result of
the Transactions,  Milestone would not have sufficient funds to pay dividends on
the Series A Preferred Stock and that the properties  which were not transferred
to UPI in the  Transfer  were  grossly  inferior  to the  properties  that  were
transferred to UPI.

On August 5, 1998,  the counsel for the named  plaintiff in the Winston  Actions
and the counsel for the defendants entered into the Winston Settlement Agreement
which memorialized the terms of the Winston Settlement. On January 28, 1999, the
Delaware Court approved the Winston Settlement Agreement,  which approval became
final  effective as of the close of business on March 5, 1999. At such time, (i)
the  shares  of  Series  A  Preferred  Stock  owned by each  Series A  Preferred
Stockholder  who was eligible to participate  in the Winston  Settlement and who
did not  properly  opt out of the  Winston  Settlement  and who owned  shares of
Series A  Preferred  Stock as of the  close of  business  on March 5,  1999 were
canceled and represented  only the right of such Series A Preferred  Stockholder
to receive $3.00 in cash from the Company in exchange for each such share;  (ii)
the holders of shares of the Series A Preferred  Stock between  October 23, 1995
and the close of  business  on March 5,  1999,  other  than  Series A  Preferred
Stockholders who properly opted out of the Winston  Settlement  Agreement or who
were precluded from  participating in the Winston  Settlement,  released any and
all claims they may have had against the Company and the other named  defendants
in connection with the Transactions;  (iii) Milestone's  stockholders other than
Series A Preferred  Stockholders who were eligible to participate in the Winston
Settlement  and who properly  opted out of the Winston  Settlement  released all
derivative  claims in  connection  with the  Transactions;  and (iv) the Winston
Actions were  dismissed.  In connection  with the Winston  Actions,  the Company
retained  counsel  for all of the  defendants  (including,  without  limitation,
Leonard S.  Mandor,  Robert A.  Mandor,  Harvey  Jacobson,  Gregory  McMahon and
Geoffrey  Aaronson  (each of whom is a director  and/or officer of the Company))
and assumed  responsibility  for the payment of all legal fees  incurred by such
persons in  connection  with the  Winston  Actions  and the  Winston  Settlement
(subject to the insurance coverage litigation described below).



                                                        18

<PAGE>



The foregoing  description of the Winston  Settlement and the Winston Settlement
Agreement is  qualified  in its entirety by reference to the Winston  Settlement
Agreement,  a copy of which  was filed by the  Company  with the  Commission  on
August 14, 1998 as Exhibit 10.01 to the Company's  Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1998.

The  Company   maintains  a  directors   and  officers   insurance  and  company
reimbursement  policy  issued by National  Union with a $2,000,000  limit and an
excess directors and officers liability and company  reimbursement policy issued
by Stonewall with a $2,000,000 limit. The Company believes that the amounts that
it has to pay  pursuant to the Winston  Settlement  and in  connection  with the
Winston  Actions are covered losses under both the National Union Policy and the
Stonewall  Policy.  In addition,  the Company  believes  that the legal fees and
other  expenses  incurred by the Company and the other  defendants in connection
with the Winston Actions are also covered losses under the National Union Policy
and the Stonewall Policy.  In connection with a previous proposed  settlement of
the Winston  Actions which was never  consummated,  National Union and Stonewall
both refused to  contribute  to such proposed  settlement,  asserting  that such
proposed  settlement  did not  encompass  any  covered  loss (as  defined in the
National Policy and the Stonewall  Policy,  respectively).  On January 29, 1998,
the Company  commenced  a lawsuit in the United  States  District  Court for the
Southern District of New York against National Union and Stonewall in connection
with such refusal to contribute to such proposed  settlement.  In the complaint,
the plaintiffs  alleged that National Union and Stonewall  wrongfully  failed to
contribute to the proposed  settlement  and sought  reimbursement  from National
Union and  Stonewall  up to the limits of their  respective  policies.  National
Union and  Stonewall  both answered the  complaint  and denied  liability.  As a
result of the termination of the previously proposed settlement,  the Company on
one hand, and Stonewall and National Union, on the other hand, agreed to dismiss
such action  without  prejudice and such action was dismissed on May 29, 1998 by
the United  States  District  Court for the Southern  District of New York.  The
Company gave both National Union and Stonewall notice of the Winston  Settlement
and  provided  each of them with a copy of the Winston  Settlement  Agreement on
August 12, 1998.  National Union and Stonewall  reviewed the Winston  Settlement
Agreement and separately informed the Company that their basic position, denying
coverage, had not changed. On February 12, 1999, the Company commenced a lawsuit
in the Circuit  Court for the Fifteenth  Judicial  Circuit in and for Palm Beach
County, Florida against both National Union and Stonewall alleging,  among other
things,  that National Union and Stonewall have wrongfully refused to contribute
to the Winston  Settlement  and seeking  reimbursement  from National  Union and
Stonewall up to the limits of their respective  policies.  The initial complaint
in the new  lawsuit  was  served  on each of  National  Union and  Stonewall  on
February 12, 1999 and on March 17, 1999 the Company filed an amended  complaint,
which, among other things,  added certain of the other defendants to the Winston
Actions as  plaintiffs.  On April 12,  1999,  National  Union served a motion to
dismiss the amended complaint or to strike part thereof,  and a motion to recuse
the Company's  Florida counsel.  National Union has since agreed to withdraw its
motion to dismiss  and to serve its answer to the amended  complaint  by June 1,
1999. The motion to recuse the Company's  Florida  Counsel was denied;  however,
the plaintiffs and the defendants have agreed that Geoffrey Aaronson,  a partner
with the  Company's  Florida  counsel  and a director  of the  Company,  may not
personally act as counsel for the Company in the proceedings as he may be called
as a witness in the proceedings.  On April 12, 1999, Stonewall served its answer
to the amended complaint and denied liability.  On July 12, 1999, National Union
served its first request for production and interrogatories to which the Company
must respond before August 26, 1999. In connection with this action, the Company
has retained counsel for all of the plaintiffs and is assuming

                                                        19

<PAGE>



responsibility  for the payment of all legal fees  incurred  by such  persons in
connection  with this action.  At this time, the Company is not in a position to
render an opinion as to the outcome of this action.

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

On May 28,  1999,  the  Company  held its Annual  Meeting of  Stockholders  (the
"Meeting").  In connection with the Meeting,  the Company solicited proxies from
its  stockholders  pursuant to Regulation 14 of the  Securities  Exchange Act of
1934.

At the Meeting,  the Company's common stockholders  elected Robert A. Mandor and
Harvey  Jacobson  as Class II  directors  and  Leonard  S.  Mandor  as Class III
director. The Company's preferred stock holders elected Harvey Shore and Gregory
McMahon as Class III directors.

In addition,  the Company's common stockholders (i) approved the adoption of the
Company's 1999 Stock Incentive Plan, (ii) approved an amendment to the Company's
Certificate  of  Incorporation  to  reduce  the  authorized  number of shares of
capital stock and preferred stock of the Company, (iii) approved an amendment to
the Company's  Certificate  of  Incorporation  to amend the  procedures  for the
submission  by a  holder  of the  Company's  common  stock of a  proposal  to be
considered  at an annual  meeting of the  stockholders,  and (iv)  ratified  the
selection  by the  Board of  Directors  of  Ahearn,  Jasco +  Company,  P.A.  as
independent  certified  public  accountants  of the  Company for the year ending
December 31, 1999.

The  following  tables  summarize  the votes cast at the  meeting on the matters
brought before the shareholders:

1.       Election of Class II Directors by common stockholders.

            Nominee                 Votes           Votes
              Name                    For            Withheld
     Robert A. Mandor           3,765,255           28,854
     Harvey Jacobson            3,764,429           30,680


2. Election of Class III Directors by common stockholders.

         Nominee                 Votes           Votes
           Name                    For            Withheld
  Leonard S. Mandor          3,758,868           36,241


         Election of Class III Directors by preferred stockholders.

            Nominee                 Votes           Votes
              Name                    For            Withheld
     Gregory McMahon                 14,310             0
     Harvey Shore                    14,310             0


                                   20

<PAGE>



3. Approval of the Company's 1999 Stock Incentive Plan.

                                       Votes                    Votes Against,
                                         For                   Abstentions and
                                                              Broker Non-Votes
                                    3,398,491                         396,618


4.       Approval of the amendment to the Company's Certificate of Incorporation
         to  reduce  the  authorized  number  of  shares  of  capital  stock and
         preferred stock of the Company.

                                      Votes                     Votes Against,
                                        For                    Abstentions and
                                                              Broker Non-Votes
                                    3,408,677                         386,432


5.       Approval of the amendment to the Company's Certificate of Incorporation
         to amend the procedures for the submission by a holder of the Company's
         common stock of a proposal to be considered at an annual meeting of the
         stockholders.

                                    Votes                   Votes Against,
                                      For                  Abstentions and
                                                          Broker Non-Votes
                                   3,404,154                        390,955


6.       Ratification of Ahearn, Jasco + Company,  P.A. as independent certified
         public  accountants  of the Company for the year  ending  December  31,
         1999.

                                    Votes                   Votes Against,
                                     For                   Abstentions and
                                                          Broker Non-Votes
                                  3,768,316                        26,793


                                                        21

<PAGE>



Item 5.        Other Information

Milestone's  Board of Directors  determined  not to declare any dividends on the
Series A Preferred Stock during the years ended December 31, 1996, 1997 and 1998
and during the six months ended June 30,  1999.  The last  dividend  declared by
Milestone was for the quarter  ended  December 31, 1995 and was paid on February
15, 1996 at $0.195 per share of Series A Preferred Stock.

After September 30, 1995,  holders of the Series A Preferred Stock have not been
entitled to receive dividends on a cumulative basis. Pursuant to the Certificate
of  Designations  of the Series A  Preferred  Stock,  after  such date,  no cash
dividend may be paid on the Common Stock unless full  dividends of $0.195 on all
outstanding  shares of Series A Preferred  Stock for the then current  quarterly
dividend  period are declared and either paid or sufficient sums for the payment
thereof  are  set  apart.  As  a  result  of  Milestone's  Board  of  Directors'
determination  not to declare a dividend  for the quarter  ended June 30,  1997,
which was the sixth consecutive quarter for which no dividend was declared,  the
number  of  persons  entitled  to serve as  directors  on  Milestone's  Board of
Directors  has been  increased by one, and the holders of the Series A Preferred
Stock, who are otherwise entitled to elect one member of the Board of Directors,
became  entitled to elect a second member of the Board of Directors to fill such
newly created  directorship.  At the annual meeting of  stockholders  on May 28,
1999, the Series A Preferred  Stockholders  elected Harvey Shore to the Board of
Directors to fill such newly created directorship. Any decision as to the future
payment of dividends on the Series A Preferred  Stock will depend on the results
of operations and the financial  condition of the Company and such other factors
as Milestone's Board of Directors,  in its discretion,  deems relevant. See Part
I-Financial  Information,  Item  2.  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operation, Liquidity and Capital Resources.




                                                        22

<PAGE>



Item 6.        Exhibits and Reports on Form 8-K

         (a)       The following exhibits are included herein:

                   27        Financial  Data  Schedule  Article 5  included  for
                             Electronic Data  Gathering,  Analysis and Retrieval
                             (EDGAR)  purposes  only.  This  Schedule   contains
                             summary  financial  information  extracted from the
                             consolidated   balance   sheets  and   consolidated
                             statements  of revenues and expenses of the Company
                             as of and for the six month  period  ended June 30,
                             1999, and is qualified in its entirety by reference
                             to such financial statements.

         (b)       Reports on Form 8-K:  None.






                                                        23

<PAGE>


                                                    SIGNATURES

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


                              MILESTONE PROPERTIES, INC.
                              (Registrant)



Date:    August 13, 1999      By    /s/ Robert A. Mandor
                                    --------------------------------------------
                                    Robert A. Mandor
                                    President and Chief Financial Officer



Date:    August 13, 1999      By    /s/ Patrick S. Kirse
                                    --------------------------------------------
                                    Patrick S. Kirse
                                    Vice President of Accounting
                                    (Principal Accounting Officer)