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, 1997
                              
                                or

             Transition Report Pursuant to Section 13 or 15(d)
             of the Securities Exchange Act of 1934

             For the Transition period from ______  to ______
                              
                              
                  Commission File Number: 33-6678
                              
                              
                UNION SQUARE HOTEL PARTNERS, L.P.
      Exact Name of Registrant as Specified in its Charter


          Delaware
State or Other Jurisdiction of                 13-3389008
Incorporation or Organization        I.R.S. Employer Identification No.


3 World Financial Center, 29th Floor,
New York, NY    Attn: Andre Anderson             10285
Address of Principal Executive Offices         Zip Code

                       (212) 526-3237
     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 the past 90 days.  Yes    X    No ____
                              
                              
                              
                              
Balance Sheets                               At June 30,       At December 31,
                                                   1997                  1996
Assets
Property held for disposition              $         --       $    96,076,204
Cash and cash equivalents                    12,985,831             5,291,387
Replacement reserve receivable                       --             1,283,862
Rent receivable                                      --               520,710
Deferred charges, net of accumulated
 amortization of $4,307,099 in 1996                  --               724,108
   Total Assets                            $ 12,985,831       $   103,896,271

Liabilities and Partners' Capital (Deficit)
Liabilities:
 Accounts payable and accrued expenses     $  2,470,845       $        72,765
 Due to affiliates                               10,372                11,798
 Mortgage loan payable                               --            70,000,000
Accrued interest                                     --            13,537,078
 Deferred interest                                   --             9,672,070
 Notes and loans - affiliates                        --            57,585,170
 Loan payable - Hyatt                                --             3,882,006
   Total Liabilities                          2,481,217           154,760,887
Partners' Capital (Deficit):
General Partner                                      --            (1,191,866)
Limited Partners                             10,504,614           (49,672,750)
   Total Partners' Capital (Deficit)         10,504,614           (50,864,616)
 Total Liabilities and Partners'
  Capital (Deficit)                         $12,985,831          $103,896,271




Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1997  General         Limited
                                        Partner        Partners          Total

Balance at December 31, 1996       $ (1,191,866)   $(49,672,750) $ (50,864,616)
Net income                            1,191,866      60,177,364     61,369,230
Balance at June 30, 1997           $         --    $ 10,504,614  $  10,504,614




Statements of Operations
                                  Three months                 Six months
                                  ended June 30,              ended June 30,
                                1997            1996        1997          1996
Income
Rental income:
 Operating income           $     --    $  2,992,652  $ 1,610,033  $ 4,748,417
 Replacement escrow, net          --         357,982       70,044      667,743
Interest income              171,537          42,766      269,647       78,512
Miscellaneous income             290             710        1,432        1,075
  Total Income               171,827       3,394,110    1,951,156    5,495,747
Expenses
Interest expense                  --       3,429,328    1,793,914    6,843,928
Depreciation and amortization     --       1,332,687           --    2,658,590
General and administrative   218,404          43,171      311,079       77,836
  Total Expenses             218,404       4,805,186    2,104,993    9,580,354
Loss from operations         (46,577)     (1,411,076)    (153,837)  (4,084,607)
Gain on sale of property          --              --   31,866,564           --
Income (Loss) before
 extraordinary items         (46,577)     (1,411,076)  31,712,727   (4,084,607)
Extraordinary Items
Gain (Loss) on forgiveness
 of indebtedness          (2,200,000)             --   29,656,503           --
  Net Income (Loss)      $(2,246,577)    $(1,411,076) $61,369,230  $(4,084,607)
Net Income (Loss) Allocated:
To the General Partner   $  (127,512)    $   (14,111) $ 1,191,866  $   (40,846)
To the Limited Partners   (2,119,064)     (1,396,965)  60,177,364   (4,043,761)
                         $(2,246,577)    $(1,411,076) $61,369,230  $(4,084,607)
Per limited partnership
unit (7,174,100 outstanding)
Loss from operations          $  --           $ (.19)     $  (.02)      $ (.56)
Gain on sale of property         --               --         4.40           --
Extraordinary gain (loss)
on forgiveness of indebtedness (.29)              --         4.01           --
                              $(.29)          $ (.19)     $  8.39       $ (.56)




Statements of Cash Flows
For the six months ended June 30,                       1997             1996
Cash Flows From Operating Activities:
Net income (loss)                               $ 61,369,230    $  (4,084,607)
Adjustments to reconcile net income (loss)
to net cash provided by (used for) operating
activities:
  Depreciation and amortization                           --        2,658,590
  Rental income from replacement escrow              (70,044)        (667,743)
  Gain on sale of property                       (31,866,564)              --
  Extraordinary gain on forgiveness
   of indebtedness                               (29,656,503)              --
  Increase in deferred interest on notes
   and loans - affiliates                            912,341        2,367,959
  Increase in accrued interest on loan
   payable - Hyatt                                    44,244               --
  Increase (decrease) in cash arising from
  changes in operating assets and liabilities:
     Rent receivable                                 520,710         (860,472)
     Accounts payable and accrued expenses           198,080           (6,396)
     Due to affiliates                                (1,426)           2,020
     Accrued and deferred interest                (2,889,689)       1,973,607
Net cash provided by (used for) operating
 activities                                       (1,439,621)       1,382,958
Cash Flows From Investing Activities:
Proceeds from sale of property                   126,900,000               --
Closing costs                                     (2,079,648)              --
Proceeds from replacement reserve receivable       1,236,494          379,900
Additions to real estate                                  --         (379,900)
Net cash provided by investing activities        126,056,846               --
Cash Flows From Financing Activities:
Principal payments on mortgage loan payable      (70,000,000)              --
Payments on accrued interest                      (6,793,437)              --
Payments on deferred interest                    (10,129,344)              --
Payments on notes and loans - affiliates         (30,000,000)              --
Net cash used for financing activities          (116,922,781)              --
Net increase in cash and cash equivalents          7,694,444        1,382,958
Cash and cash equivalents, beginning of period     5,291,387        3,378,174
Cash and cash equivalents, end of period         $12,985,831       $4,761,132

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest          $3,727,016       $2,502,362

Supplemental Disclosure of Non-Cash Financing Activities: In connection with
the sale of the hotel on February 21, 1997, the $3,926,250 loan payable to
Hyatt was  assumed by the buyer, thereby releasing the Partnership from its
loan obligation.  Settlement costs totaling $2,200,000 were accrued through
accounts payable and accrued expenses in 1997.



Notes to the Financial Statements

The unaudited interim financial statements should be read in
conjunction with the Partnership's annual 1996 audited
financial statements within Form 10-K.

The unaudited interim financial statements include all normal
and reoccurring adjustments which are, in the opinion of
management, necessary to present a fair statement of financial
position as of June 30, 1997, the results of operations for the
three and six months ended June 30, 1997 and 1996, cash flows
for the six months ended June 30, 1997 and 1996, and the
statement of partners' capital (deficit) for the six months
ended June 30, 1997.  Results of operations for the periods are
not necessarily indicative of the results to be expected for
the full year.

Certain prior year amounts have been reclassified in order to
conform to the current year's presentation.

The following significant events have occurred subsequent to
fiscal year 1996, which require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5):

Sale of Hotel

On February 21, 1997, the Partnership sold the Grand Hyatt San
Francisco (the "Hotel") to Grand Hyatt SF General Partnership
("GH"), an affiliate of California Hyatt Corporation, for
$126,900,000 in cash and the assumption of approximately $3.9
million of nonrecourse debt owed to an affiliate of GH
(collectively, the "Transaction").  After payment in full of
the Partnership's first mortgage note and $30,000,000 in full
satisfaction of the Partnership's obligations to Capital
Growth, the Partnership received certain net proceeds from the
sale in the amount of $6,911,149.  These proceeds were
deposited into a restricted bank account pursuant to an
agreement (the "Non-Distribution Agreement") between the
Partnership and Capital Growth Mortgage Investors, L.P.
("Capital Growth").  The Transaction resulted in a gain on sale
of $31,866,564, which is reflected in the Partnership's
statements of operations for the six months ended June 30,
1997.

In connection with the Transaction, the Partnership and Capital
Growth entered into an Allocation and Release Agreement (the
"Allocation Agreement") whereby Capital Growth agreed to accept
the aforementioned $30,000,000 in repayment of all of the
Partnership's obligations to Capital Growth (including
unsecured debt obligations totaling $4,706,884 as of February
21, 1997 and the obligation to reimburse Capital Growth for
certain costs). The remaining second mortgage debt obligation
totaling $12,852,548 as of February 21, 1997 was forgiven.

In addition, as a condition to the effectiveness of the
Allocation Agreement, certain affiliates of the General
Partner, other than Capital Growth, entered into a Consent and
Release Agreement (the "Consent Agreement"), pursuant to which
they agreed to fully release the Partnership from the
Partnership's unsecured indebtedness to them in the aggregate
amount of $14,334,757 as of February 21, 1997.

On January 24, 1997, prior to consummation of the sale, certain
litigation was commenced in the Court of Chancery of the State
of Delaware by a limited partner of Capital Growth against the
Partnership, its General Partner, the general partner of
Capital Growth and an affiliate of the General Partner,
challenging the Allocation Agreement (the "Cal Kan
Litigation").  The parties to the Cal Kan Litigation have
executed a settlement agreement (the "Proposed Settlement")
that is subject to court approval.  Under the terms of the
Proposed Settlement, the Partnership will contribute $2.2
million to a $2.4 million settlement fund for the benefit of
Capital Growth and certain of its unitholders.  This amount was
recognized as a reduction to the gain on forgiveness of debt
previously reflected in the statement of operations for the
three months ended March 31, 1997.

As a result of the Allocation Agreement, the Consent Agreement
and the Proposed Settlement, the Partnership recognized an
extraordinary gain on forgiveness of debt in the amount of
$29,656,503, net of deferred charges of $37,686, which is
reflected in the statements of operations for the six months
ended June 30, 1997.

The General Partner desires to dissolve the Partnership in 1997
and to make one or more liquidating distributions in accordance
with the terms of the Partnership's limited partnership
agreement.  Any such distributions will be made only after
satisfaction of all debts, liabilities and obligations of the
Partnership (excluding the amount of the secured and unsecured
debt obligations forgiven), payment of other expenses of the
Transaction, the dissolution and liquidation of the
Partnership, settlement of the Cal Kan litigation discussed in
Part II, Item 1, and the establishment of any reserves for
contingencies that the General Partner deems necessary.




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

Liquidity and Capital Resources

The Partnership's liquidity and capital resources were
substantially impacted by the sale of the Hotel on
February 21, 1997.  The Partnership received certain net
proceeds from the sale in the amount of $6,911,149, which were
deposited in the Blocked Account as described in Part II Item
I. Additionally, the Partnership was reimbursed for actual and
accrued costs relating to the sale in the amount of $1,794,116.
The Transaction resulted in a gain on sale of $31,866,564, and
a gain on forgiveness of indebtedness of $29,656,503.  Pursuant
to the Transaction, the Partnership utilized a portion of the
sale proceeds to repay in full the first deed of trust note
held by Bank of Nova Scotia, which indebtedness was
approximately $86,900,000 as of February 21, 1997.
Additionally, $30,000,000 was paid to Capital Growth Mortgage
Investors, L.P. ("Capital Growth"), the holder of, among other
indebtedness, a second deed of trust note secured by the Hotel.

The General Partner desires to dissolve the Partnership in 1997
and to make one or more liquidating distributions in accordance
with the terms of the Partnership's limited partnership
agreement.  Any such distributions will be made only after
satisfaction of all debts, liabilities and obligations of the
Partnership, including the Cal Kan Litigation, as described in
Part II Item I (but excluding the amount of the secured and
unsecured debt obligations forgiven as described in the Notes
to the Financial Statements contained herein), payment of other
expenses of the Transaction and of the dissolution and
liquidation of the Partnership, and the establishment of any
reserves for contingencies that the General Partner deems
necessary.

On January 24, 1997, Cal Kan, Inc., a limited partner of
Capital Growth, filed a purported derivative and class action
complaint in the Court of Chancery in the State of Delaware
against the Partnership, the General Partner, an affiliate of
the General Partner and the general partner of Capital Growth
(the "Cal Kan Litigation").  Capital Growth is also a nominal
defendant in the action.  A detailed description of the Cal Kan
Litigation is included in Part II Item I "Legal Proceedings"
contained herein.

Currently, no assurance can be made that the Cal Kan Litigation
or any other claim which may arise will be resolved in a timely
manner or without significant additional expense to the
Partnership.  In light of the Cal Kan Litigation, the
Partnership will not make a liquidating distribution within 120
days of the completion of the sale of the Hotel as had been
stated in the Proxy.  The General Partner does not currently
expect to make any liquidating distribution prior to a final
resolution of the Cal Kan Litigation, although it reserves the
right to do so.  In addition, any expense to the Partnership of
obtaining such a resolution (including without limitation the
costs of defending the matter and any other claim which may
arise, and the amount, if any, of any damages or settlement
payments to be borne by the Partnership) would reduce the
amount of net cash proceeds otherwise available for
distribution.

Results of Operations

For the three-month period ended June 30, 1997, the Partnership
incurred a net loss of $2,246,577, compared to a net loss of
$1,411,076 for the three-month period ended June 30, 1996.  The
change is primarily attributable to settlement costs related to
the Cal Kan Litigation (as discussed in Part II Item I), which
reduced the gain on forgiveness of indebtedness by $2,200,000.
For the six-month period ended June 30, 1997, the Partnership
generated net income of $61,369,230, compared to a net loss of
$4,084,607 for the six-month period ended June 30, 1996.  The
net income in 1997 is primarily attributable to the gain on
sale of the Hotel of $31,866,564 and the gain on forgiveness of
indebtedness of $29,656,503 recognized as a result of the sale
of the Hotel on February 21, 1997.

For the three- and six-month periods ended June 30, 1997,
rental income included operating income of $0 and $1,610,033,
respectively, compared to $2,992,652 and $4,748,417,
respectively, for the same periods in 1996.  The decreases for
the 1997 periods primarily are due to the sale of the Hotel on
February 21, 1997, when operations on behalf of the Partnership
ceased.  Interest income for the three- and six-month periods
ended June 30, 1997 was $171,537 and $269,647, respectively,
compared with $42,766 and $78,512, respectively, for the same
periods in 1996.  The increases in 1997 are due primarily to
higher average cash balances being maintained by the
Partnership. Total expenses were $218,404 and $2,104,993,
respectively, for the three- and six-month periods ended June
30, 1997, compared to $4,805,186 and $9,580,354, respectively,
for the three- and sixmonth periods ended June 30, 1996.  The
decreases are due primarily to lower interest expense and lower
depreciation and amortization due to the sale of the Hotel on
February 21, 1997, when operations on behalf of the Partnership
ceased, which were partially offset by increases in general and
administrative expenses.  General and administrative expenses
for the three- and six-month periods ended June 30, 1997 were
$218,404 and $311,079, respectively, compared to $43,171 and
$77,836, respectively, for the same periods in 1996.  The
increases are due primarily to the final payment of San
Francisco business taxes for 1997, 1996 and 1994, an increase
in administrative costs relating to the preparation and mailing
of the Proxy and an increase in legal fees, the latter two
being associated with the sale of the Hotel. In addition,
during the first half of 1997, certain expenses incurred by an
unaffiliated third party service provider in servicing the
Partnership, which were voluntarily absorbed by affiliates of
the General Partner in prior periods, were reimbursable to the
General Partner and its affiliates.




Part II   Other Information

Item 1    Legal Proceedings.

On January 24, 1997, Cal Kan, Inc. ("Cal Kan"), a
limited partner of Capital Growth, filed a purported
derivative and class action complaint (the "Cal Kan
Litigation") in the Court of Chancery in the State of
Delaware against the Partnership, the General
Partner, an affiliate of the General Partner ("GP
Affiliate") and the general partner of Capital
Growth. Capital Growth is also a nominal defendant in
the action.  The complaint alleges that (a) the
Allocation and Release Agreement between the
Partnership and Capital Growth (the "Allocation
Agreement") constitutes (i) a waste of Capital
Growth's assets, serving no valid business purpose of
Capital Growth, (ii) a fraudulent conveyance
by the Partnership and (iii) a violation of the
Partnership Agreement and of the Capital Growth
partnership agreement; (b) in connection with the sale
of the Hotel, the General Partner, Capital Growth's
general partner and the GP Affiliate each breached
various fiduciary duties alleged to be owed to the
plaintiffs, including by usurping opportunities that
should have been available to Capital Growth; and (c)
the defendants' actions relating to the foregoing
constituted a conspiracy among such parties.  The
plaintiffs sought injunctive relief to prevent the
Partnership from distributing to its unitholders and the
General Partner any cash proceeds from the sale of the
Hotel, and instead sought to have a receiver appointed
following the sale to effect an application of such cash
proceeds to the second deed of trust note in a greater
amount than was agreed to in the Allocation Agreement.
No request was made to enjoin the consummation of the
Transaction.  The plaintiffs also requested that the
court award unspecified damages and litigation expenses.

In order not to delay or otherwise impair the sale of
the Hotel, and pursuant to a demand by Cal Kan, on
February 21, 1997, the Partnership and Capital Growth
entered into a Non-Distribution and Security Agreement
and other related agreements (collectively, the "Non
Distribution Agreement").  Pursuant to the Non-
Distribution Agreement, the Partnership deposited
certain net sales proceeds from the Transaction, in the
amount of $6,911,149, which otherwise would have been
available to the Partnership under the Allocation
Agreement, in a restricted bank account (the "Blocked
Account") with a nationally-recognized commercial bank.
The initial terms of the Non-Distribution Agreement
generally prohibited the release of funds from the
Blocked Account until April 21, 1997, and allowed
Capital Growth a security interest in the Blocked
Account to secure certain of the Partnership's
obligations to Capital Growth under the Non-Distribution
Agreement, and certain obligations which could be
determined by the Cal Kan Litigation. The funds in the
Blocked Account were to be released to the Partnership,
free from Capital Growth's security interest, on April
22, 1997, unless the Blocked Account was extended by
agreement between the Partnership and Capital Growth, or
by court order.  On April 18, 1997, the Blocked Account
was extended to June 24, 1997 pending completion of a
trial, as discussed below.  A preliminary injunction
hearing was originally scheduled for April 21, 1997, to
determine whether the Partnership should be prohibited
from making distributions to its unitholders pending
resolution of the Cal Kan Litigation.  However, the
parties to the lawsuit agreed to forego the preliminary
injunction hearing based on the setting of a trial date
allowing for completion of a trial on the merits before
June 30, 1997, and based on the Partnership's agreement
not to make distributions to its unitholders before that
date.  The trial date was set for June 9 and
10, 1997.  At such time, the parties to the Cal Kan Litigation
executed a settlement agreement (the "Proposed Settlement") that
remains subject to Court approval.  On June 25, 1997, all funds in
the Blocked Account were wired to the Partnership operating
account.  Under the terms of the Proposed Settlement,
the Partnership and the GP Affiliate will create a
settlement fund in the amount of $2.4 million (the
"Settlement Fund") for the benefit of Capital Growth and
certain of its unitholders.  The Partnership has agreed
to contribute $2.2 million to the Settlement Fund and
the GP Affiliate has agreed to contribute $200,000.
After settling the Partnership's remaining liabilities
and establishing a reserve for contingencies, the
General Partner currently estimates that approximately
$10.5 million ($1.46 per unit) would be available for
distribution if the Proposed Settlement is approved by
the Court.  This anticipated distribution is within the
range ($9 million to $12 million) previously estimated
by the General Partner and discussed in the proxy
materials dated January 10, 1997 (the "Proxy").  The
Court has ordered a hearing for September 3, 1997 to
determine, among other things, whether the Proposed
Settlement is fair, reasonable, adequate and in the best
interests of Capital Growth and its unitholders.  If the
Court approves the Proposed Settlement, the parties will
jointly move for the entry of an Order and Final
Judgment which will provide for:  (i) final approval of
the Proposed Settlement; (ii) consummation of the
Proposed Settlement in accordance with the terms of a
Stipulation of Settlement; and (iii) dismissal of the
Cal Kan Litigation.  The Order and Final Judgment will
further provide that the Partnership and others will be
released and discharged from any and all claims that Cal
Kan, Capital Growth, its unitholders or GP Affiliate
asserted or could have asserted in the Cal Kan
Litigation.

Due to a 30-day appeal period following the
entry of a court order and final judgment,
anticipated to occur on or about September 3, 1997,
the General Partner estimates that the effective date
of the Proposed Settlement, if approved, will occur in
October 1997.  While it is the General Partner's desire
to dissolve the Partnership in 1997 and to make one or
more liquidating distributions in accordance with the terms
of the Partnership Agreement, the General Partner not intend
to make any liquidating distribution prior to a final
resolution of the Cal Kan Litigation.
          
No assurance can be made that the Cal Kan Litigation or
any other claim which may arise will be resolved in a
timely manner or without significant additional expense
to the Partnership.  In light of the Cal Kan Litigation,
the Partnership will not make a liquidating distribution
within 120 days of the completion of the sale of the
Hotel as had been stated in the Proxy.  The General
Partner does not currently expect to make any
liquidating distribution prior to a final resolution of
the Cal Kan Litigation, although it reserves the right
to do so.  In addition, any expense to the Partnership
of obtaining such a resolution (including without
limitation the costs of defending the matter and any
other claim which may arise, and the amount, if any, of
any damages or settlement payments to be borne by the
Partnership) would reduce the amount of net cash
proceeds otherwise available for distribution.



          
Items 2-5 Not applicable.

Item 6    Exhibits and reports on Form 8-K.

          (a)  Exhibits -

            (27) Financial Data Schedule

          (b)  Reports on Form 8-K - No reports on Form 8-K
               were filed during the quarter ended June 30, 1997.




                           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.


                         UNION SQUARE HOTEL PARTNERS, L.P.
                    BY:  UNION SQUARE/GP CORP.
                         General Partner



Date:  August 14, 1997   BY:    /s/ Jeffrey C. Carter
                                President, Director and
                                Chief Financial Officer