UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

         (MARK ONE)

         [X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

         [  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE TRANSITION PERIOD FROM ______ TO ______


                        COMMISSION FILE NUMBER 333-55753
                            ------------------------

                         BARON CAPITAL PROPERTIES, L.P.
           (Name of Small Business Issuer as Specified in its Charter)

                    Delaware                            31-1584691
       (State or Other Jurisdiction of                (I.R.S. Employer
        Incorporation or Organization)                Identification No.)


                           3570 U.S. HIGHWAY 98 NORTH
                             LAKELAND, FLORIDA 33809
           (Address of Principal Executive Offices including Zip Code)

                                 (863) 853-2882
                (Issuer's Telephone Number, including Area Code)

                            ------------------------
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:   NONE

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:   NONE

Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. _X_

The Issuer's revenues for its most recent fiscal year were $7,181,005.

As of March 1, 2002 the aggregate market value of voting and non-voting equity
limited partnership units held by non-affiliates (based on total units
outstanding reduced by the number of units of limited partnership held by
trustees, officers, and other affiliates) of the Registrant was $33,571,410.
Since the Registrant's units of limited partnership interest ("Units" or
"Operating Partnership Units") are not actively traded and are not traded on an
exchange, for purposes of this Report only, the 3,357,141 Units held by
non-affiliates on

<PAGE>

such date have been valued based on the $10.00 per Unit assigned value of the
Units issued to offerees in the Exchange Offering completed April 7, 2000
(described below in this Report).


      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Yes______         No_______


                                       2

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                            FORM 10-KSB ANNUAL REPORT

                       FISCAL YEAR ENDED DECEMBER 31, 2001

                                                                            PAGE
PART I:
Item 1   Description of Business..........................................    4
Item 2   Description of Properties........................................    9
Item 3   Legal Proceedings................................................   53
Item 4   Submission of Matters to a Vote of Unitholders...................   53

PART II:
Item 5   Market for Common Equity and Related Unitholder Matters..........   53
Item 6   Management's Discussion and Analysis or Plan of Operation........   53
Item 7   Financial Statements.............................................   60
Item 8   Changes In and Disagreements with Accountants on
         Accounting and Financial Disclosure..............................   61

PART III:
Item 9   Trustees, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act................   61
Item 10  Executive Compensation...........................................   63
Item 11  Security Ownership of Certain Beneficial Owners and Management...   63
Item 12  Certain Relationships and Related Transactions...................   65
Item 13  Exhibits and Reports on Form 8-K.................................   66


                                       3
<PAGE>


                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

General

     Baron Capital Properties, L.P., a Delaware limited partnership (the
"Operating Partnership"), was formed on January 8, 1998. The Operating
Partnership and its affiliate, Baron Capital Trust (the "Trust"), a Delaware
business, constitute an affiliated real estate company which has been organized
to acquire equity interests in residential apartment properties located in the
United States and/or to provide or acquire mortgage loans secured by such types
of property.

     In May 1998, pursuant to a registration statement on Form SB-2, the Trust
commenced a public offering of 2,500,000 common shares of beneficial interest
("Trust Common Shares" or "Common Shares") at an offering price of $10.00 per
share ("Cash Offering"). The Cash Offering terminated on May 31, 2000. The Trust
contributed to the Operating Partnership the net cash proceeds ($5,467,858) from
the sale of 702,076 Common Shares in the Cash Offering in exchange for an
equivalent number of units of limited partnership interest in the Operating
Partnership ("Operating Partnership Units" or "Units"). As of March 1, 2002, the
Trust had issued to the public 963,346 Common Shares.

     The Trust, together with the Operating Partnership, was formed to acquire,
own, operate, manage and improve residential apartment property interests for
long-term ownership, and thereby to seek to maximize current and long-term
income and the value of its assets. To this end, in 1998 and 1999, the Operating
Partnership used a portion of the net proceeds from the Cash Offering to acquire
indirect ownership of three residential apartment properties and a minority
interest in several other residential apartment properties. In addition, in
April 2000, pursuant to a registration statement on Form S-4, the Operating
Partnership completed an exchange offering (the "Exchange Offering") to acquire
equity interests in 23 real estate partnerships, which directly or indirectly
owned equity and/or debt interests in 25 residential apartment properties and
one condominium apartment property located in the southeast and mid-west United
States. (See "Brief Description of Properties - Acquired Properties" and "-
Exchange Offering" and ITEM 2 - DESCRIPTION OF PROPERTIES below).

     The Trust is the sole general partner of the Operating Partnership and, as
of March 1, 2002, owned 963,346 Operating Partnership Units, representing
approximately 24% of the then outstanding Units. Such Units are comprised of the
Units acquired by the Trust with the net proceeds of the Cash Offering and the
Units that holders of Units have elected to exchange into Common Shares in the
manner described below in this section.

     The Operating Partnership will make pro rata distributions to its
Unitholders of net income, if any, generated from investments in property
interests as cash flow allows. The Trust has elected to operate as a real estate
investment trust ("REIT") for federal income tax purposes, provided, however,
that if its Board of Trustees of the Trust determines, with the affirmative vote
of a majority in interest of Shareholders entitled to vote on such matter
approving the Board's determination, that it is no longer in the best interests
of the Trust to continue to qualify as a REIT, the Board may revoke or otherwise
terminate the Trust's REIT election pursuant to applicable federal tax law.

     The Operating Partnership conducts all of the Trust's real estate
operations and holds all direct or indirect property interests acquired. The
Operating Partnership owns record title to properties or owns limited
partnership interests or other equity interests in limited partnerships and
other entities that own direct or indirect interests in properties. The Trust is
the sole general partner of the Operating Partnership, and, in such capacity,
the Trust controls the activities of the Operating Partnership. The operations
of the Trust are carried on through the Operating Partnership (and any other
subsidiaries the Trust may have in the future), among other reasons, in order to
(i) enhance the ability of the Trust to qualify and maintain its status as a
REIT for federal income tax purposes, and (ii) enable the Trust to indirectly
acquire interests in residential apartment properties in exchange transactions,
such as the Exchange Offering, that involve the exchange of Operating
Partnership Units for limited partnership interests in limited partnerships
which directly or indirectly own such property interests, and thereby provide
the opportunity for deferral until a later date of any tax liabilities that
sellers of partnership interests otherwise would incur if they received cash or
Trust Common Shares in connection therewith. The Operating Partnership is
responsible for, and pays when due, its share of all administrative and
operating expenses of properties in which it acquires an interest.

     Senior management of the Trust has discretion in day to day management and
control of the affairs of the Trust and the Operating Partnership, subject to
(i) general supervision and review by the Independent Trustees and other members
of the Board of


                                       4
<PAGE>

Trustees of the Trust and (ii) prior approval authority of a majority of the
Board and/or of a majority of the Independent Trustees in respect of certain
actions of the Trust and the Operating Partnership. The Declaration of the Trust
requires that a majority of the Board of Trustees of the Trust be comprised of
Independent Trustees. Two of the three current members of the Board of Trustees
are Independent Trustees.

     Effective April 1, 2002, the executive offices of the Operating Partnership
and the Trust will be moved to 3570 U.S. Highway 98 North, Lakeland, Florida
33809. The main telephone number at the Lakeland offices is (863) 853-2882.

Brief Description of Properties

     Through the Operating Partnership, the Trust has invested in indirect
equity or debt interests in residential apartment properties (and in one case, a
condominium apartment property). As of December 31, 2001, the Operating
Partnership had an indirect equity interest in 19 residential apartment
properties (consisting of an aggregate of 1,177 existing apartment units and 56
apartment units under development) and an indirect debt interest in nine
residential apartment properties and one condominium apartment property
(consisting of an aggregate of 590 residential apartment units and 152
condominium apartment units under development). Of such properties, the
Operating Partnership acquired indirect ownership of three apartment properties,
a 40% interest in another property, and small minority equity interests in
several other residential apartment properties with the net proceeds of its Cash
Offering (individually an "Acquired Property" and collectively, the "Acquired
Properties") (see "- Acquired Properties" below), and it acquired the other
property interests in connection with the Exchange Offering described below
under "- Exchange Offering."

     Acquired Properties

     The Operating Partnership acquired significant ownership interests in four
Acquired Properties, consisting of an aggregate of 309 existing apartment units
with the net proceeds of the Cash Offering. The Operating Partnership is the
sole beneficial owner of three of the Acquired Properties, which were
constructed during the 1980's and are comprised of one-story garden style
apartment buildings of modular construction.

     The fourth property, in which the Operating Partnership indirectly owns a
40% interest, is still under construction. As of March 31, 2002, 112 units of
that property had been completed and 72 of such units have been rented. An
additional 56 units are planned. As described further below under ITEM 2 -
DESCRIPTION OF PROPERTIES, due to a first mortgage loan default and another
default, recurring losses, a partners' deficiency and a recent appraisal that
valued the property at an amount less than the total liabilities owed,
management of the Operating Partnership determined in 2000 to reduce to zero on
its records the carrying value of the property.

     The Acquired Properties are located in urban and suburban and secondary
markets in Florida and Kentucky. During 2001, the average economic occupancy of
the Acquired Properties was approximately 91.3% and the average monthly rent
collected per occupied unit was approximately $469.

     The table below indicates the geographic locations of the Acquired
Properties in which the Operating Partnership had an ownership interest at
December 31, 2001:

                                       No. of
                                      Acquired         Existing
         Sites          States       Properties          Units
        ------          -----        ----------         ------
        Florida           3              3                197
        Kentucky          1              1                112
                        -----          -----             -----
        Total             4              4                309
                        =====          =====             =====

     Exchange Offering

     In April 2000, pursuant to a registration statement on Form S-4, the
Operating Partnership completed an exchange offering (the "Exchange Offering")
under which it acquired additional interests in residential apartment properties
(and in one case, a condominium apartment property). In the Exchange Offering,
the Operating Partnership issued 2,449,492 registered Operating


                                       5
<PAGE>

Partnership Units in exchange for substantially all outstanding units of limited
partnership interest owned by individual limited partners ("Exchange Limited
Partners") in 23 limited partnerships (the "Exchange Partnerships"), which
directly or indirectly owned equity and/or debt interests in one or more of 25
residential apartment properties and one condominium apartment property (the
"Exchange Properties") located in the southeast and mid-west United States.
Prior to the completion of the Exchange Offering, the Exchange Partnerships were
managed by corporate general partners (the "Corporate General Partners") which
were controlled by Gregory K. McGrath, who is a founder and former Chief
Executive Officer of the Trust and the Operating Partnership and a principal
unitholder of the Operating Partnership.

     The Exchange Offering expired on April 7, 2000. Under the terms of the
Exchange Offering, Exchange Limited Partners in a particular Exchange
Partnership were entitled to participate in the offering only if limited
partners holding at least 90% of the units of limited partnership interest in
that partnership affirmatively elected to accept the offering. Exchange Limited
Partners holding approximately 97.4% of the outstanding units of limited
partnership interest in such partnerships accepted the offering, and each of the
Exchange Partnerships exceeded the 90% requirement. As a result, following the
completion of the Exchange Offering, the limited partnership interests of nine
Exchange Partnerships were owned entirely by the Operating Partnership (in the
case of nine Exchange Partnerships in which all Exchange Limited Partners
accepted the offering) and substantially all of the limited partnership
interests in the other 14 Exchange Partnerships were owned by the Operating
Partnership, with the remaining limited partnership interests being retained by
Exchange Limited Partners who elected not to accept the offering or failed to
respond to the offering.

     The number of Operating Partnership Units offered in exchange for the
limited partnership interests in the Exchange Partnerships was based on
appraisals prepared by qualified and licensed independent appraisal firms for
each underlying apartment property. For purposes of the Exchange Offering, each
Operating Partnership Unit was arbitrarily assigned an initial value of $10.00,
which corresponds to the offering price of each Trust Common Share offered to
the public pursuant to the Cash Offering. The value of each Unit and Common
Share outstanding is substantially identical since Unit holders, including
recipients of Units in the Exchange Offering, are entitled to exchange all or a
portion of their Units at any time and from time to time for an equivalent
number of Common Shares, so long as the exchange would not cause the exchanging
party to own (taking into account certain ownership attribution rules) in excess
of 5% of the then outstanding Common Shares, subject to the Trust's right to
cash out any holder of Units who requests an exchange and subject to certain
other exceptions. To facilitate such exchanges of Units into Common Shares,
2,500,000 Common Shares (in addition to the 2,500,000 Common Shares that were
offered by the Trust in the Cash Offering) have been registered under the Act.
As of March 1, 2002, holders of 136,367 Units have elected to exchange their
Units for an equivalent number of Common Shares.

     Following the completion of the Exchange Offering, (i) the Exchange
Partnerships continued to own the same property interests they owned prior to
the offering, (ii) substantially all of the limited partnership interests in the
23 Exchange Partnership were owned by the Operating Partnership, (iii) Mr.
McGrath, for nominal consideration, assigned to the Trust all of the equity
stock in 18 of the Corporate General Partners and granted to the Board of the
Trust a management proxy coupled with an interest to vote the shares of the
remaining five Corporate General Partners; (iv) the Corporate General Partner of
each of the Exchange Partnerships assigned to the Operating Partnership all of
its economic interest in the partnership; and (v) Mr. McGrath caused each
Corporate General Partner to waive its right to receive from its Exchange
Partnership any ongoing fees, effective upon completion of the exchange. As a
result of the foregoing, the Operating Partnership owned substantially all of
the economic interest represented by the equity and debt interests owned by the
Exchange Partnerships and the Trust controlled management of such partnerships
and the property interests they owned.

     Listed below is the name of each of the Exchange Partnerships and a
breakdown of the results of the Exchange Offering for each of them. Exchange
Limited Partners that elected not to accept the Exchange Offering or failed to
respond to the offering retained their respective original limited partnership
interests in their particular Exchange Partnerships on substantially the same
terms and conditions as their original investments. The percentages shown in the
third column indicate the percentage partnership interest acquired by the
Operating Partnership in each of the Exchange Partnerships in connection with
the Exchange Offering.


                                       6
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Percentage
                                                                            Percentage of      No. of Units            of
                                                        No. of Units      Outstanding Units    Declining the      Outstanding
                                                       Accepting the          Accepting      Exchange Offering       Units
Name of Exchange Partnership                         Exchange Offering                                             Declining
------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>                 <C>               <C>
Baron Strategic Investment Fund, Ltd.                      2,250.00             93.75%              30.00             1.25%
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund II, Ltd.                   1,600.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund IV, Ltd.                   2,000.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund V, Ltd.                    2,340.00             97.50%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund VI, Ltd.                   2,310.00             96.65%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund VIII, Ltd.                 2,400.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund IX, Ltd.                   2,364.00             98.50%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund X, Ltd.                    2,350.00             97.62%              50.00             2.08%
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Vulture Fund I, Ltd.                       1,800.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Brevard Mortgage Program, Ltd.                               575.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Central Florida Income Appreciation Fund, Ltd.             2,069.99             98.57%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund, Ltd.                          1,534.00             95.04%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund II, Ltd.                       1,890.00             94.50%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund III, Ltd.                      1,484.00             92.75%             116.00             7.25%
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund IV, Ltd.                       3,520.00             96.70%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Income Advantage Fund I, Ltd.                        925.00             98.40%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Income Appreciation Fund I, Ltd.                     190.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Income Growth Fund V, Ltd.                         2,210.00             96.09%              90.00             3.91%
------------------------------------------------------------------------------------------------------------------------------
Florida Opportunity Income Partners, Ltd.                    800.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
GSU Stadium Student Apartments, Ltd.                       1,862.10            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Lamplight Court of Bellefontaine Apartments, Ltd.            700.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Midwest Income Growth Fund VI, Ltd.                          560.00             93.33%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Realty Opportunity Income Fund VIII, Ltd.                    904.00             95.76%               5.00              .53%
------------------------------------------------------------------------------------------------------------------------------
           Total                                          38,638.09             97.40%             291.00             0.73%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     In April 2001, the Operating Partnership caused one of the Exchange
Partnerships, Florida Capital Income Fund IV, Ltd., to sell its record title
interest in one of the Exchange Properties, Glen Lakes Apartments, a 144-unit
residential apartment property located in St. Petersburg, Florida. Management of
the Trust determined to sell the property based on its lack of performance and
its need for substantial and frequent cash infusions. (See Note 5 "Sale of
Property" in the accompanying notes to the consolidated condensed financial
statements.)

     Certain of the Exchange Partnerships in which the Operating Partnership
holds an interest directly or indirectly own equity interests in 15 Exchange
Properties which consist of an aggregate of 868 residential apartment units
(comprised of studio, one, two, three and four-bedroom units). Certain of the
Exchange Partnerships in which the Operating Partnership holds an interest
directly or indirectly own subordinated mortgage and other debt interests in 10
Exchange Properties, which consist of an aggregate of 590 existing residential
apartment units (studio and one and two bedroom units) and 152 condominium
apartment units (two and three bedroom units) under development. Of the Exchange
Properties in which the Operating Partnership continues to own an interest, 20
properties are located in Florida, three properties in Ohio and one property
each in Georgia and Indiana. The Exchange Properties are described in further
detail under ITEM 2 - DESCRIPTION OF PROPERTIES below.

Competition

     The apartment industry is highly competitive and fragmented with numerous
owners and developers competing with the Operating Partnership and the Trust on
a national, regional and local basis. Competition for residents of apartment
communities is subject to the conditions and pricing of individual units, local
market conditions, the location of the apartment community and other


                                        7
<PAGE>

factors. In addition, other forms of housing, including manufactured housing
communities and single-family homes provide alternatives to potential residents.

     The current portfolio of the Operating Partnership and the Trust is
generally diversified across metropolitan areas throughout Florida, Georgia,
Indiana, Kentucky and Ohio. The properties of the Trust and the Operating
Partnership tend to be located in urban, suburban and secondary markets, where
they compete locally with other apartment communities.

Americans with Disabilities Act

     Properties in which the Operating Partnership and the Trust invests must
comply with Title III of the Americans with Disabilities Act (the "ADA") to the
extent that such properties are public accommodations and/or commercial
facilities as defined by the ADA. Compliance with the ADA requirements could
require removal of structural barriers to handicapped access in certain public
areas of the properties where such removal is readily achievable. The ADA does
not, however, consider residential properties, such as residential apartment
properties, to be public accommodations or commercial facilities, except to the
extent portions of such facilities, such as the leasing office, are open to the
public. The Operating Partnership believes that the properties of the Operating
Partnership and the Trust comply with all present requirements under the ADA and
applicable state laws. Noncompliance could result in imposition of fines or an
award of damages to private litigants. If required to make material additional
changes, the results of operations of the Operating Partnership and the Trust
could be adversely affected.

Environmental

     The Operating Partnership and the Trust are subject to Federal, state, and
local environmental laws and regulations that apply to the development of real
property, including construction activities, the ownership of real property, and
the operation of multifamily apartment communities. Such laws and regulations
could affect the property interests acquired by the Operating Partnership and
the Trust and to be acquired by them in the future and/or operate to reduce the
number and attractiveness of investment opportunities available to them

     The Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601, et seq. ("CERCLA"), and applicable state Superfund laws subject
the owner of real property to claims or liability for the costs of removal or
remediation of hazardous substances that are disposed of on real property in
amounts that require removal or remediation. Liability under CERCLA and
applicable state Superfund laws can be imposed on the owner of real property or
the operator of a facility without regard to fault or even knowledge of the
disposal of hazardous substances on the property or at the facility. The
presence of hazardous substances in amounts requiring response action or the
failure to undertake remediation where it is necessary may adversely affect an
owner's ability to sell real estate or borrow money using such real estate as
collateral. In addition to claims for cleanup costs, the presence of hazardous
substances on a property could result in a claim by a private party for personal
injury or a claim by an adjacent property owner for property damage.

     The Operating Partnership and the Trust, where required, intends to retain
a qualified environmental consultant to conduct an environmental investigation
of each property that they consider for investment. If there is any indication
of contamination, sampling of the property will be performed by the
environmental consultant. The environmental investigation report will be
reviewed by the Operating Partnership, the Trust and counsel prior to purchase
of an interest in any property.

     The effect upon the Operating Partnership and the Trust of the application
of the foregoing laws and regulations cannot be predicted. Such laws and
regulations have not had a material effect on the financial condition of the
Operating Partnership and the Trust and their respective results of operations
to date. The Operating Partnership is not aware of any environmental condition
on any properties of the Operating Partnership or the Trust which is likely to
have a material adverse effect on its financial condition and results of
operations.

Employees

     The Trust and the Operating Partnership currently employ a total of 39
full-time employees.


                                       8
<PAGE>

ITEM 2.   DESCRIPTION OF PROPERTIES

     Description of Properties

     Effective April 1, 2002, the Trust and the Operating Partnership will move
their executive and administrative offices, financial operations and a portion
of property operations to approximately 2,800 square feet of office space
located at 3570 U.S. Highway 98 North, Lakeland, Florida 33809. The space was
leased in March 2002 from Grove Associates (Indianapolis, Indiana), an unrelated
party, for a term of three years at a monthly rent of $2,800 (subject to common
area maintenance adjustments). The Lakeland office telephone number is (863)
853-2882. The Trust and the Operating Partnership will retain their prior office
space located at 7800 Cooper Road, Cincinnati, Ohio 45242 through June 2002, and
maintain a staff member at the office through such date. The Cincinnati office
telephone number is (513) 984-3408.

     The Operating Partnership has invested in indirect equity or debt interests
in residential apartment properties. As of December 31, 2001, the Operating
Partnership had an indirect equity interest in 19 residential apartment
properties (consisting of an aggregate of 1,177 existing apartment units and 56
apartment units under development) and an indirect debt interest in nine
residential apartment properties and one condominium apartment property
(consisting of an aggregate of 590 existing residential apartment units and 152
condominium apartment units under development). Of such properties, the
Operating Partnership acquired indirect ownership of three residential apartment
properties, a 40% equity interest in another residential apartment property, and
small minority equity interests in other properties described below under "- The
Acquired Properties") with the net proceeds of the Trust's Cash Offering, and it
acquired the other property interests in connection with its Exchange Offering
described below under "- Exchange Offering."

The Acquired Properties

     Set forth below is a description of the Operating Partnership's acquisition
between June 1998 and June 1999 of beneficial ownership of 67-unit, 80-unit and
50-unit residential apartment properties located in Orlando, Lakeland and New
Smyrna Beach, Florida, respectively; a 40% limited partnership interest in a
168-unit residential apartment property under development in Alexandria,
Kentucky, of which 112 are completed and 72 are rented; and a minority limited
partnership interest in 13 real estate partnerships (less than 4% in each case)
which own direct or indirect equity or debt interests in residential apartment
properties, including 10 of the Exchange Partnerships that participated in the
Exchange Offering and are now controlled and managed by the Operating
Partnership. The 13 limited partnerships were formerly affiliated with Gregory
K. McGrath, a founder and former Chief Executive Officer of the Trust and the
Operating Partnership and a principal unitholder of the Operating Partnership.
In September 2001, the remaining limited partnership interests and the entire
general partnership interest in the three limited partnerships that are not
Exchange Partnerships were assigned to Sigma Renaissance Corporation, which is
controlled by Jerome S. Rydell, a member of the Board of Trustees of the Trust.
By acquiring general and limited partnership interests in entities that own
record title rather than direct record title when acquiring property interests,
the Operating Partnership avoids certain costs, such as first mortgage
assumption fees and recordation of title costs. The Operating Partnership's
investments in the Acquired Properties were made using net proceeds of the
Trust's Cash Offering. Also described below is a purchase agreement entered into
by the Trust under which the Trust, subject to certain conditions, received an
option to acquire two residential apartment properties (totaling 652 units)
under development in Burlington and Louisville, Kentucky upon completion of
construction. One of the properties has been sold by its owner, with the consent
of the Trust.

     Heatherwood Apartments

     In June 1998, the Operating Partnership acquired the entire limited
partnership interest in Heatherwood Kissimmee, Ltd., a Florida limited
partnership (the "Heatherwood Partnership") which owns fee simple title to a
67-unit residential apartment property referred to as the Heatherwood Apartments
- Phase I (the "Heatherwood Property") located at 1005 Airport Road in
Kissimmee, Florida 32741. In November 1997 an affiliate of the Operating
Partnership, Baron Capital XLV, Inc., acquired the general partnership interest
in the Heatherwood Partnership. Set forth below is certain information
describing the property, first mortgage financing to which the property is
subject and the acquisition by the Operating Partnership of beneficial ownership
of the property.

     The Heatherwood Property, completed in 1981, consists of 17 studio/one
bathroom units, 45 one bedroom/one bathroom units, and five two bedroom/one
bathroom units. The property is situated on approximately 2.26 acres and has
approximately 35,136 square feet of rentable area. The average unit size of the
studio, one bedroom and two bedroom units is approximately 288, 576 and 864
square feet, respectively. The average monthly rental rate as of December 31,
2001 for each type of unit was approximately $427,


                                       9
<PAGE>

$542 and $678, respectively, or $1.49, $.94 and $.79 per square foot,
respectively. The average monthly occupancy rates for 1997, 1998, 1999, 2000 and
2001 were approximately 97%, 94%, 96%, 98%, and 94%, respectively. The average
annual rental rate per unit for each of the last five years has been $5,820
(1997), $6,060 (1998), $5,555 (1999), $6,377 (2000), and $6,250 (2001).

     The Operating Partnership acquired the entire limited partnership interest
in the Heatherwood Partnership from an unaffiliated third party, Rylex Capital,
L.L.C., a Florida limited liability company, for a purchase price of $830,000.
The purchase price was based on an independent appraisal of the market value of
the property plus the value of any additional assets, less all liabilities, and
was approved by the Board of the Trust. The Heatherwood Property is subject to
first mortgage financing with a principal balance as of December 31, 2001 of
approximately $1,887,000. The mortgage is held by GMAC Commercial Mortgage Corp.
The first mortgage loan matures in February 2011. Assuming no prepayments of
principal, the balance that will be due at maturity is approximately $1,083,553.
The monthly debt service payments are $13,298, or an annual amount of $159,576.
The loan bears a fixed interest rate of 7.51% and amortizes on a 30-year basis.
The loan is prepayable after the third year of the note's term or the second
year following securitization, subject to defeasance provisions.

     There is no lease, option, or contract to purchase or sell the Heatherwood
Property. A renovation program has been in place since the date of acquisition.
This program includes both interior and exterior improvements at a cost of
approximately $2,500 per unit. The costs have been paid from maintenance
reserves established and maintained by the property on a monthly basis. The
property is in Florida and, as such, subject to the competitive nature of the
state. The demand for units is high between October and April and much lower for
the other months. This situation overrides any other competitive factor. The
Heatherwood Property is not located in an overbuilt area and demand is adequate.
The Heatherwood Property is adequately covered by insurance.

     The Heatherwood Property is a residential community; there is no tenant who
occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Heatherwood Property, with the
exception of any home businesses being conducted from units. The property leases
units for periods of no longer than one year. The federal tax depreciation basis
as of June 30, 2001 is $1,458,344. Depreciation is taken on a straight-line
basis over 30 years. The Heatherwood Property is taxed at 200 mills per $10,000
valuation, and the 2001 taxes due March 31, 2002 were $27,601. Estimated taxes
on proposed improvements are not material.

     Crystal Court Apartments

     In July 1998, the Operating Partnership acquired the entire limited
partnership interest in Crystal Court Apartments II, Ltd., a Florida limited
partnership (the "Crystal Court Partnership") which owns fee simple title to an
80-unit residential apartment property referred to as Crystal Court Apartments -
Phase II (the "Crystal Court Property") located in Lakeland, Florida. On January
15, 1986 an affiliate of the Operating Partnership, Baron Capital LIX, Inc.,
acquired the general partnership interest in the Crystal Court Partnership. Set
forth below is certain information describing the property, first mortgage
financing to which the property is subject and the acquisition by the Operating
Partnership of beneficial ownership of the property.

     The Crystal Court Property, completed in 1986, consists of 20 studio/one
bathroom units, 54 one bedroom/one bathroom units, and six two bedroom/one
bathroom units. The property is situated on approximately 6.8 acres and has
approximately 42,048 square feet of rentable area. The average unit size of the
studio, one bedroom and two bedroom units is approximately 288, 576 and 864
square feet, respectively. The average monthly rental rate as of December 31,
2001 for each type of unit is approximately $362, $399 and $543, respectively,
or $1.26, $.70 and $.63 per square foot, respectively. The average monthly
occupancy rates for 1997, 1998, 1999, 2000 and 2001 were approximately 95%, 91%,
95%, 95%, and 95%, respectively. The average annual rental rate per unit for the
Crystal Court Property for each of the last five years has been $4,632 (1997),
$4,812 (1998), $4,433 (1999), $4,686 (2000), and $4,750 (2001).

     The Operating Partnership acquired the entire limited partnership interest
in the Crystal Court Partnership from an unaffiliated third party, Rylex
Capital, L.L.C., a Florida limited liability company, for a purchase price of
approximately $704,000. The purchase price was based on an independent appraisal
of the market value of the property plus the value of any additional assets,
less all liabilities, and was approved by the Board of the Trust. The Crystal
Court Property is subject to first mortgage financing with a principal balance
as of December 31, 2001 of approximately $1,430,662. The mortgage is held by
GMAC Commercial Mortgage Corp. The first mortgage loan matures in October 2004.
Assuming no prepayments of principal, the balance that will be due at maturity
is approximately $1,366,490. The monthly debt service payments are $10,446, or
an annual amount of $125,355. The loan bears a fixed interest rate of 7.5% and
amortizes on a 30-year basis. The loan is prepayable with a prepayment fee equal
to 1% of the then outstanding principal balance.


                                       10
<PAGE>

     There is no lease, option, or contract to purchase or to sell the Crystal
Court Property. A renovation program has been in place since the original
acquisition. This program includes both interior and exterior improvements at a
cost of approximately $2,000 per unit. The costs have been paid from maintenance
reserves established and maintained by the property on a monthly basis. The
property is in Florida and, as such, subject to the competitive nature of the
state. The demand for units is high between October and April and much lower for
the other months. This situation overrides any other competitive factor. The
Crystal Court Property is not located in an overbuilt area and demand is
adequate. The Crystal Court Property is adequately covered by insurance.

     The Crystal Court Property is a residential community; there is no tenant
who occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Crystal Court Property, with the
exception of any home businesses being conducted from units. The property leases
units for periods of no longer than one year. The federal tax depreciation basis
as of June 30, 2001 is $1,496,450. Depreciation is taken on a straight-line
basis over 30 years. The Crystal Court Property is taxed at 21.4 mills per
$1,000 valuation, and the 2001 taxes due March 31, 2002 were $25,633. Estimated
taxes on proposed improvements are not material.

     Riverwalk Apartments

     In September 1998, the Operating Partnership acquired the entire limited
partnership interest in Riverwalk Enterprises, Ltd., a Florida limited
partnership ("Riverwalk"), which owns fee simple title to a 50-unit residential
apartment property located at 47 Jacaranda Cay Court, New Smyrna Beach, Florida
32169 (the "Riverwalk Property"). Simultaneously, an affiliate of the Operating
Partnership, Riverwalk, LC, a Florida limited liability company, acquired the
general partnership interest in Riverwalk. The Trust is the manager of
Riverwalk, LC. The Operating Partnership owns 99% of the membership interests in
Riverwalk, LC. The remaining 1% membership interest is held by the Trust.

     The Riverwalk Property, completed in 1986, consists of 50 two bedroom
units. Forty-five units have two bathrooms and five have one bathroom. The
property is located directly on the intracoastal waterway and was originally
built for condominium sale. The Operating Partnership will operate the property
as a rental community for the indefinite future. Occupancy data for the year
1997 for the Riverwalk Property is unavailable. The occupancy rates in 1998,
1999, 2000 and 2001 were 98%, 96%, 99% and 92%, respectively. As of December 31,
2001, the property was 88% occupied. The average monthly rental rate as of
December 31, 2001 was approximately $566 for a one bath unit and $612 for a two
bath unit. The property has 51,024 square feet of rentable space, or
approximately 1,020 square feet on average per unit. The current rent per square
foot is approximately $.59. The average annual rental rates for 1999, 2000 and
2001 were approximately $7,123, $7,272 and $7,241 per unit, respectively.

     The Operating Partnership acquired the Riverwalk limited partnership
interests from 12 unaffiliated individuals, and Riverwalk, LC acquired the
Riverwalk general partnership interest from Riverwalk Enterprises, Inc. for a
total purchase price of approximately $655,000. None of the principals of
Riverwalk Enterprises is affiliated with the Trust or the Operating Partnership.
The purchase price was based on an independent appraisal of the property less
all liabilities, and was approved by the Board of the Trust. The sale was
subject to a first mortgage of approximately $1,330,000, held by TMG Life
Insurance Company. The principal balance of the mortgage as of December 31, 2001
was approximately $1,522,164. The mortgage matures in November 2004 and has a
current interest rate of 8.77%. Assuming no prepayments of principal, the
balance that will be due at maturity is approximately $1,411,716. The monthly
debt service payments are $14,072, or an annual amount of $168,860. Prepayment
is permitted at any time, subject however to a yield maintenance termination fee
calculated in accordance with the terms of the loan.

     There is no lease, option, or contract to purchase or to sell the Riverwalk
Property. A renovation program has been in place since the original acquisition.
This program includes both interior and exterior improvements at a cost of
approximately $500 per unit to date. The cost will increase per unit as more
renovations are completed. The costs have been paid from maintenance reserves
established and maintained by the property on a monthly basis. The property is
in Florida and, as such, subject to the competitive nature of the state. The
demand for units is high between October and April and much lower for the other
months. This situation overrides any other competitive factor. The Riverwalk
Property is not located in an overbuilt area and demand is adequate. The
Riverwalk Property is adequately covered by insurance.

     The Riverwalk Property is a residential community; there is no tenant who
occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Riverwalk Property, with the
exception of any home businesses being conducted from units. The property leases
units for periods of no longer than one year. The federal tax depreciation basis
as of June 30, 2001 is $1,459,408. Depreciation is taken on a straight-line
basis over 30 years. The Riverwalk Property is taxed


                                       11
<PAGE>

at 24.95 mills per $1,000 valuation and the 2001 taxes due March 31, 2002 were
$35,709. Estimated taxes on proposed improvements are not material.

     The total cost of the acquisition to the Operating Partnership was
approximately $655,000, which includes costs of the transaction, including a
$200,000 commission paid to Prime One Realty Inc. An affiliate of Mr. McGrath
received one-half of the commission from Prime One Realty Inc. The Operating
Partnership borrowed $575,000 from I. Stanley Levine, Trustee, of Miami,
Florida, in order to complete the acquisition. The Levine loan has been repaid
in full.

     Alexandria Property

     During 1998 and 1999, the Operating Partnership acquired a 40% limited
partnership interest in Alexandria Development, L.P. (the "Alexandria
Partnership"), a Delaware limited partnership which owns Alexandria Apartments,
a 168-unit residential apartment property (the "Alexandria Property") under
development in Alexandria, Kentucky. The aggregate purchase price was
$1,285,000, and the Operating Partnership received an option to acquire the
remaining limited partnership interests at the same price per percentage
interest (for an additional option exercise price of approximately $1,950,000).
The purchase price was based on an independent appraisal of the property less
all liabilities, and was approved by the Board of the Trust. During 2000, the
Operating Partnership purchased no additional units and the option expired in
October 2000.

     An affiliate of Mr. McGrath sold the 40% limited partnership interest in
the Alexandria Partnership to the Operating Partnership, and a separate
affiliate of Mr. McGrath formerly served as the managing general partner of the
Alexandria Partnership. In September 2001, Mr. McGrath's affiliate assigned the
remaining 60% limited partnership interest in the Alexandria Partnership to
Sigma Renaissance Corporation (which is controlled by Jerome S. Rydell, a member
of the Board of Trustees of the Trust), and Sigma Renaissance Corporation became
the managing general partner of the Alexandria Partnership. During the
construction stage of the apartment property, the Operating Partnership's
limited partnership interest in the Alexandria Partnership is entitled to an
annual 12% preferential return which is senior to the other limited partnership
interests and the general partner's nominal 1% interest.

     As of December 31, 2001, 112 of the 168 planned residential units
(approximately 67%) had been completed and were in the rent-up stage. Of the
completed units, 72 units have been rented as of November 30, 2001 at an average
annual rental rate of $697. The average monthly occupancy rates for 1998, 1999,
2000 and 2001 were 14%, 26%, 61%, and 55%, respectively, based on all 168 units
scheduled to be developed.

     In early May 2001, MarCap Corporation filed an action in the United States
District Court for the Northern District of Illinois against WaKul, Inc. (a
telecommunications company controlled by Gregory K. McGrath, the former Chief
Executive Officer of the Trust), Mr. McGrath, and the Alexandria Partnership,
among other parties, seeking repayment of approximately $407,000 of indebtedness
(plus unspecified interest, attorney's fees and collection costs) under a
telecommunication equipment leasing agreement. Certain of the equipment was
installed at the Alexandria Property. The Alexandria Partnership guaranteed
WaKul, Inc.'s lease payments under the leasing agreement.

     The Alexandria Property is subject to first mortgage construction financing
with a principal balance as of December 31, 2001 of approximately $8,525,000.
The first mortgage is held by Fifth Third Bank. The construction loan has a
current interest rate of 9.0%. The monthly debt service payments are
approximately $65,000, or an annual amount of $780,000. Prepayment is permitted
at any time, subject however to a yield maintenance termination fee calculated
in accordance with the terms of the loan. Upon completion of construction, the
construction loan is expected to be refinanced by long-term first mortgage
financing.

     The Alexandria Partnership defaulted on the first mortgage construction
loan when it matured in December 2000, and the lender has exercised its right to
accelerate payment of the loan. In December 2001, a Kentucky court appointed a
receiver to manage the property. The construction contractor is owed
approximately $890,000 for construction costs, penalties and interest. Sigma
Renaissance Corporation, acting as the managing general partner of the
Alexandria Partnership, recently caused the partnership to file for bankruptcy
protection, and it is currently negotiating with Fifth Third Bank and the
construction contractor to address the defaults.

     In 2000, the Operating Partnership reduced to zero on its records the value
of its investment in the Alexandria Partnership due to the defaults on
indebtedness, recurring losses incurred by the Alexandria Property, a partners'
deficiency, and an updated appraisal that valued the property at an amount less
than the total liabilities owed.


                                       12
<PAGE>

     The Alexandria Property is a new development, and there is no renovation
program in place. The property has technological advantages over its competition
in the area and is looking to maximize these advantages in the future.
Alexandria is not in an over-developed location. The Alexandria Property is
adequately covered by insurance. The Alexandria Property is a residential
community; there is no tenant who occupies 10% or more of the rentable square
footage. There is no business, occupation or profession taking place on the
Alexandria Property, with the exception of any home businesses being conducted
from units. The property leases units for periods of no longer than one year.
The property is still in construction and as such there are no assets to
depreciate on the partnership books.

     Acquisition of Limited Partnership Interests

     In July 1998, the Operating Partnership also was admitted as a minority
limited partner in 13 real estate limited partnerships, including 10 of the
Exchange Partnerships that participated in the Exchange Offering and are now
controlled and managed by the Operating Partnership. The 13 limited partnerships
were formerly affiliated with Gregory K. McGrath, a founder and former Chief
Executive Officer of the Trust and the Operating Partnership and a principal
unitholder of the Operating Partnership. In September 2001, the remaining
limited partnership interests and the entire general partnership interest in the
three limited partnerships that are not Exchange Partnerships were assigned to
Sigma Renaissance Corporation, which is controlled by Jerome S. Rydell, a member
of the Board of Trustees of the Trust.

     The Operating Partnership acquired the interests in consideration of a
capital contribution ranging from approximately $2,900 to $83,300 in each such
partnership. The aggregate contribution made by the Operating Partnership was
approximately $341,000. The percentage interest acquired by the Operating
Partnership (less than 4% in each case) was calculated at fair market value. In
each instance, the Operating Partnership agreed that its right to receive
distributions from cash flow or from a capital event would be subordinate to the
right of the existing limited partners to receive any preferred return described
in the partnership agreement of the respective partnership. In addition, the
Operating Partnership agreed with the Exchange Partnerships that the acquisition
would not affect the valuation of the limited partnership interests for purposes
of the Exchange Offering. These various partnerships have been accounted for on
the cost method since their respective ownership interests represent less than
20% of the equity ownership therein. In addition, the partnerships will
periodically assess the realizable value of these investments in order to
ascertain whether there has been any impairment in their recorded value.

     Contract to Acquire Two Additional Properties

     The following description of the Trust's involvement in the Burgundy Hills
Property represents an update of information previously disclosed in periodic
reports (Form 10-QSB quarterly reports and Form 10-KSB annual reports) of the
Trust and the Operating Partnership previously filed with the Securities and
Exchange Commission.

     In September 1998, the Trust entered into an agreement with three real
estate development companies (Brentwood at Southgate, Ltd., Burlington
Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire, at the
Trust's option, two luxury residential apartment properties in the development
stage upon the completion of construction. The three development companies were
previously controlled by Gregory K. McGrath, a founder and former Chief
Executive Officer of the Trust and the Operating Partnership and a principal
holder of Operating Partnership Units. In September 2001, Mr. McGrath assigned
all of the outstanding partnership interests in the three partnerships to Sigma
Renaissance Corporation, a Michigan corporation controlled by Jerome S. Rydell,
a member of the Board of Trustees of the Trust. One of the residential apartment
properties has been sold to a third party with the Trust's consent. The
remaining residential property (the "Burgundy Hills Property"), located in
Florence, Kentucky (part of the Cincinnati metropolitan area), is scheduled to
have a total of 396 units, comprised of one, two and three bedroom/one or two
bathroom apartments. Due to events described below, the anticipated date of
completion of construction of the Burgundy Hills Property is uncertain.

     In connection with the transaction, the Trust obtained a right of first
negotiation to purchase the Burgundy Hills Property from its owner, Burlington
Residential, Ltd., upon completion and a right of first refusal to purchase the
property on the same terms offered by a third party. The purchase price is
expected to be approximately $30,000,000. It is contemplated that a significant
portion of that amount would be covered by first mortgage financing. At the
current time the Trust does not have adequate resources to close on the
transaction even if it were interested in doing so and if construction were
completed and it is uncertain whether the Trust will have adequate resources to
complete the transaction upon completion of construction. In addition, as
described below, because the owner of the first mortgage on the property has
assumed control of the management of the Borrower and the development of the
property, the exercisability of the Trust's purchase rights is currently
uncertain.


                                       13
<PAGE>

     In connection with the transaction, the Trust (along with Mr. McGrath)
agreed to co-guarantee long-term first mortgage construction financing provided
by KeyBank National Association ("KeyBank") to Burlington Residential, Ltd.
("Borrower"), the owner of the Burgundy Hills Property. As of December 31, 2001,
approximately $6,478,000 of the first mortgage loan had been drawn down. The
interest rate on the first mortgage loan is KeyBank's prime rate (currently
4.75%) or the LIBOR rate plus 2%. The Trust also agreed that, if the Borrower
failed to comply with the repayment and other obligations under the loan
documents, KeyBank could require the Trust to buy out the bank's position on the
entire amount of the construction loan.

     In September 2000, the Trust received notice from counsel to KeyBank that
the Borrower had defaulted on its loan for failure to pay current interest due
and meet certain equity requirements and covenants under the loan agreement,
adverse changes in the financial conditions of the Borrower and the Trust, and
the Trust's failure to meet certain tangible net worth tests set forth in the
loan agreements. KeyBank indicated that it was exercising its right to
accelerate the loan. According to Mr. McGrath, KeyBank agreed to forego further
action for at least 60 days while the parties attempted to reach an arrangement.
The extension expired in November 2000 and, according to Mr. McGrath, is
currently being extended on a month-to-month basis. The Borrower paid down the
outstanding accrued interest and a portion of the principal and intends to seek
a new long-term construction facility with another institutional lender to
replace the first mortgage loan (and the other subordinated financing described
below). There can be no assurance that such financing will be available on
satisfactory terms.

     In December 2000, an affiliate of BankOne acquired KeyBank's position in
the Burgundy Hills first mortgage loan. The loan is subject to the same terms
and conditions as that of the original KeyBank loan. Earlier, the BankOne
affiliate had provided additional institutional financing in the principal
amount of $1,576,000 to the Borrower. That loan is secured by a security
interest in partnership interests in the Borrower. Due to a default in payment
of interest due, the BankOne affiliate has been assigned rental payments from
the Burgundy Hills Property and taken over day-to-day management of the
property. It is intended that this loan would be paid off with the proposed new
first mortgage financing referenced above.

     The BankOne affiliate recently sold the two loans to Burgundy-Boone, LLC,
an Illinois limited liability company, according to the latter's counsel. As a
result, Burgundy-Boone, LLC has assumed control of management of the Borrower
and of the development of the Burgundy Hills Property.

     The Trust, as guarantor of the first mortgage loan, currently has a
contingent liability for its full outstanding amount. According to counsel for
Burgundy-Boone, LLC, as of November 2001, principal and interest payments on the
first mortgage loan are current. However, there can be no assurance that the
first mortgage loan will not again go into default, in which event
Burgundy-Boone, LLC might attempt to begin foreclosure proceedings against the
Burgundy Hills Property in respect of the first mortgage loan.

     Century Construction Inc., the general contractor which performed
construction services on the Burgundy Hills Property, recently filed an action
against the Borrower and Mr. McGrath to enforce a mechanic's lien on the
property in the amount of approximately $1,300,000. The contractor also named
KeyBank and the BankOne affiliate in the action, seeking damages against them on
allegations of lender's liability.

The Exchange Properties

     In the Exchange Offering, the Operating Partnership issued its registered
units of limited partnership interest ("Units") in exchange for substantially
all limited partnership interests owned by individual limited partners
(collectively, the "Exchange Limited Partners" and individually an "Exchange
Limited Partner") in 23 limited partnerships (collectively referred to herein as
the "Exchange Partnerships" and individually as an "Exchange Partnership") which
directly or indirectly owned equity and/or subordinated mortgage or other debt
interests in 25 residential apartment properties and one condominium apartment
property (collectively referred herein as the "Exchange Properties" and
individually an "Exchange Property"). In April 2001, the Operating Partnership
sold its equity interest in one of the properties, Glen Lakes Apartments, a
144-unit residential apartment property located in St. Petersburg, Florida.
Management of the Trust determined to sell the property based on its lack of
performance and its need for substantial and frequent cash infusions. (See Note
5 "Sale of Property" in the accompanying notes to the consolidated condensed
financial statements.)

     The actual limited partnership interest percentage currently owned by the
Operating Partnership in each of the 22 Exchange Partnerships in which it
currently owns an interest is set forth in the table above under ITEM 1.
DESCRIPTION OF PROPERTIES - Brief Description of Properties - Exchange Offering.


                                       14
<PAGE>

     Certain of the Exchange Partnerships in which the Operating Partnership
holds an interest directly or indirectly own equity interests in 15 Exchange
Properties which consist of an aggregate of 868 residential apartment units
(comprised of studio, one, two, three and four-bedroom units). Certain of the
Exchange Partnerships in which the Operating Partnership holds an interest
directly or indirectly own subordinated mortgage and other debt interests in 10
Exchange Properties, which consist of an aggregate of 590 existing residential
apartment units (studio and one and two bedroom units) and 152 condominium
apartment units (two and three bedroom units) under development. Of the Exchange
Properties in which the Operating Partnership continues to own an interest, 20
properties are located in Florida, three properties in Ohio and one property
each in Georgia and Indiana.

     The sole asset of each of 12 Exchange Partnerships in which the Operating
Partnership holds an interest (individually, an "Exchange Equity Partnership"
and collectively, the "Exchange Equity Partnerships") is record title to a
residential apartment property or the entire limited partnership or other equity
interest in a limited partnership or other entity which owns record title to a
property. The sole asset of each of six Exchange Partnerships (individually, an
"Exchange Mortgage Partnership" and collectively, the "Exchange Mortgage
Partnerships") are the entire or an undivided subordinated mortgage interest
(and in one case, unsecured debt interests) in one or more residential apartment
properties (and in one case, a condominium apartment property). Each of the
remaining four Exchange Partnerships (individually, an "Exchange Hybrid
Partnership" and collectively, the "Exchange Hybrid Partnerships") own a
combination of (i) all or a portion of the direct or indirect equity interest in
one or more properties and (ii) an undivided subordinated mortgage interest in
one or more properties (and in one case, unsecured debt interests).

     Certain information relating to the 22 Exchange Properties and mortgage
indebtedness secured thereby is summarized in the tables set forth below.


                                       15
<PAGE>

                              Property Information
                            Equity Property Interests

The table set forth below summarizes certain information relating to each of the
15 properties in which Exchange Equity Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering directly or indirectly own an
equity interest, including (i) the name of the respective partnership, (ii) the
name and location of each property, (iii) the year each property was completed,
(iv) the number of units, acreage, rentable area, average unit size and average
rental rate per unit and per square feet of rentable area as of December 31,
2001, and (v) physical occupancy of each property as of December 31, 2001.

<TABLE>
<CAPTION>

                          Name of
                        Residential
                         Apartment                                                                     Approx.
                     Property (and type                    Year                           Approx.   Rentable Area
Partnership             of interest)     Location        Completed      No. of Units       Acres      (Sq. Ft.)*
-----------             ------------     --------        ---------      ------------       -----      ---------

Exchange Equity
Partnerships:
-------------

<S>                    <C>               <C>                <C>        <C>            <C>   <C>         <C>
Baron Strategic        Steeplechase      Anderson,          1977       Total          72    3.20        47,280
Investment Fund II,    Apartments (1)    Indiana                        1 BR          12
Ltd.                                                                    2 BR          60

Central Florida        Laurel Oaks       Deland,            1986       Total          56    6.21        45,216
Income Appreciation    Apartments (1)    Florida                        1 BR          11
Fund, Ltd.                                                              2 BR          45

Florida Capital        Eagle Lake        Port Orange,       1987       Total          77    4.68        45,504
Income Fund, Ltd.      Apartments (1)    Florida                        1 BR          73
                                                                        2 BR           4

Florida Capital        Forest Glen       Daytona            1985       Total          52    6.85        62,692
Income Fund II, Ltd.   Apartments        Beach,                         2 BR          28
                      (Phase I) (2)      Florida                        3 BR          24

Florida Capital        Bridge Point      Jacksonville,      1986       Total          48    3.39        27,360
Income Fund III, Ltd.  Apartments        Florida                       Studio          6
                      (Phase II) (1)                                  1 BR          37
                                                                        2 BR           5

Florida Income         Forest Glen       Daytona            1985       Total          26    6.85        29,931
Advantage Fund I,      Apartments        Beach,                         2 BR          19
Ltd.                  (Phase III) (2)    Florida                        3 BR           7

Florida Income         Forest Glen       Daytona            1985       Total           8    6.85         9,166
Appreciation Fund I,   Apartments        Beach,                         2 BR           6
Ltd.                  (Phase IV) (2)     Florida                        3 BR           2

Florida Income         Blossom Corners   Orlando,           1980       Total          70    3.67        39,300
Growth Fund V, Ltd.    Apartments        Florida                       Studio         15
                      (Phase I) (1)                                   1 BR          49
                                                                        2 BR           6

<CAPTION>

                                                   12/31/2001             Physical
                                                 Average Rental           Occupancy
                           Avg. Unit Size          Rates/Month              as of
Partnership                   (Sq. Ft.)      (Per Unit) (Per Sq. Ft.)     12/31/2001
-----------                   ---------      ------------------------     ----------

Exchange Equity
Partnerships:
-------------

<S>                        <C>         <C>       <C>         <C>             <C>
Baron Strategic            Avg.        657       $408        $.56            88.9%
Investment Fund II,        1 BR        550
Ltd.                       2 BR        678

Central Florida            Avg.        807       $548        $.65            94.6%
Income Appreciation        1 BR        576
Fund, Ltd.                 2 BR        864

Florida Capital            Avg.        591       $487        $.81            97.4%
Income Fund, Ltd.          1 BR        576
                           2 BR        864

Florida Capital            Avg.      1,205       $690        $.54            94.2%
Income Fund II, Ltd.       2 BR      1,075
                           3 BR      1,358

Florida Capital            Avg.        570       $480        $.81            95.8%
Income Fund III, Ltd.     Studio       288
                           1 BR        576
                           2 BR        864

Florida Income             Avg.      1,151       $675        $.50            84.6%
Advantage Fund I,          2 BR      1,075
Ltd.                       3 BR      1,358

Florida Income             Avg.      1,146       $679        $.60            100.0%
Appreciation Fund I,       2 BR      1,075
Ltd.                       3 BR      1,358

Florida Income             Avg.        561       $508        $.82            90.0%
Growth Fund V, Ltd.       Studio       300
                           1 BR        600
                           2 BR        900
</TABLE>


                                       16
<PAGE>

<TABLE>
<CAPTION>

                          Name of
                        Residential
                         Apartment                                                                      Approx.
                     Property (and type                    Year                           Approx.    Rentable Area
Partnership             of interest)     Location        Completed       No. of Units      Acres       (Sq. Ft.)*
-----------             ------------     --------        ---------       ------------      -----       ---------

Exchange Equity
Partnerships:
-------------

<S>                    <C>               <C>                <C>        <C>            <C>   <C>         <C>
Florida Opportunity    Camellia Court    Daytona            1982       Total          60    5.15        34,848
Income Partners, Ltd.  Apartments (1)    Beach,                         1 BR          59
                                         Florida                        2 BR           1

GSU Stadium Student    Stadium Club      Statesboro,        1987       Total          60    3.50        50,736
Apartments, Ltd.       Apartments (1)    Georgia                       Studio          2
                                                                        3 BR           3
                                                                        4 BR          55

Midwest Income         Brookwood Way     Mansfield,         1974       Total          66    3.92        38,016
Growth Fund VI, Ltd.   Apartments (1)    Ohio                          Studio          3
                                                                        1 BR          60
                                                                        2 BR           3

Realty Opportunity     Forest Glen       Daytona            1985       Total          30    6.85        34,231
Income Fund VIII,      Apartments        Beach,                         2 BR          23
Ltd.                   (Phase II) (2)    Florida                        3 BR           7

Exchange Hybrid
Partnerships:
Baron Strategic        Pineview          Orlando,           1988       Total          91    4.38        46,656
Investment Fund VI,    Apartments (3)    Florida                       Studio         26
Ltd.                                                                    1 BR          59
                                                                        2 BR           6

Baron Strategic        Crystal Court     Lakeland,          1982       Total          72     4.5        43,776
Investment Fund IX,    Phase I (4)       Florida                        1 BR          64
Ltd.                                                                    2 BR           8

Baron Strategic        Crystal Court     Lakeland,          1982       Total          72     4.5        43,776
Investment Fund X,     Phase I (5)       Florida                        1 BR          64
Ltd.                                                                    2 BR           8

                       Pineview          Orlando,           1988       Total          91    4.38        46,656
                       Apartments (6)    Florida                       Studio         26
                                                                        1 BR          59
                                                                        2 BR           6

Lamplight Court of     Lamplight         Bellefontaine,     1973       Total          80    6.00        46,944
Bellefontaine          Apartments (7)    Ohio                          Studio         12
Apartments, Ltd.                                                        1BR           53
                                                                        2 BR          15
                                                                                --------  -------    ----------
                       TOTAL
                       PROPERTIES**:                                                868    55.45       601,656
----------------------                                                          ========  =======    ==========

<CAPTION>

                                                   12/31/2001              Physical
                                                 Average Rental           Occupancy
                            Avg. Unit Size         Rates/Month               as of
Partnership                   (Sq. Ft.)      (Per Unit) (Per Sq. Ft.)     12/31/2001
-----------                   ---------      ------------------------     ----------

Exchange Equity
Partnerships:
-------------

<S>                        <C>         <C>       <C>         <C>             <C>
Florida Opportunity        Avg.        581       $457        $.78            98.3%
Income Partners, Ltd.      1 BR        576
                           2 BR        864

GSU Stadium Student        Avg.        860       $200        $.52            57.4%
Apartments, Ltd.          Studio       288
                           3 BR        880
                           4 BR        880

Midwest Income             Avg.        576       $372        $.64            98.5%
Growth Fund VI, Ltd.      Studio       288
                           1 BR        576
                           2 BR        864

Realty Opportunity         Avg.      1,141       $679        $.55            93.3%
Income Fund VIII,          2 BR      1,075
Ltd.                       3 BR      1,358

Exchange Hybrid
Partnerships:
Baron Strategic            Avg.        513       $516        $.91            90.1%
Investment Fund VI,       Studio       288
Ltd.                       1 BR        576
                           2 BR        864

Baron Strategic            Avg.        608       $416        $.68            98.6%
Investment Fund IX,        1 BR        576
Ltd.                       2 BR        864

Baron Strategic            Avg.        608       $416        $.68            98.6%
Investment Fund X,         1 BR        576
Ltd.                       2 BR        864

                           Avg.        513       $516        $.91            90.1%
                          Studio       288
                           1 BR        576
                           2 BR        864

Lamplight Court of         Avg.        587       $390        $.63            95.0%
Bellefontaine             Studio       288
Apartments, Ltd.           1 BR        576
                           2 BR        864
                                   -------     ------     -------        --------

                                       673       $469        $.69            91.3%
----------------------             =======     ======     =======        ========
</TABLE>

*    Includes only residential apartment units and excludes common areas.

**   Properties  in which  more  than one  partnership  has an  interest  are
     counted only once.


                                       17
<PAGE>

(1)  Partnership owns the entire limited partnership interest in a limited
     partnership which holds fee simple title to the property.

(2)  Partnership owns beneficial interest in an unrecorded land trust which
     holds fee simple title to the property.

(3)  Partnership owns (i) a 57.29% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(4)  Partnership owns (i) a 44.96% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(5)  Partnership owns (i) a 47.59% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (i) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(6)  Partnership owns (i) a 41.71% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(7)  Partnership owns (i) a 31.7% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) a debt
     interest in the property described below in "Mortgage Information -
     Mortgage Properties" table.


                                       18
<PAGE>


                              Property Information
                             Debt Property Interests

The table set forth below summarizes certain information relating to each of the
10 properties in which Exchange Mortgage Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering own a mortgage interest,
including (i) the name of the respective partnership, (ii) the name and location
of each property, (iii) the year each property was completed, (iv) the number of
units, acreage, rentable area, average unit size and average rental rate per
unit and per square feet of rentable area as of December 31, 2001, and (v)
physical occupancy of each property as of December 31, 2001.

<TABLE>
<CAPTION>

                   Name of Residential                                                               Approx.
                    Apartment Property                                                              Rentable
                        (and type                             Year                         Approx.    Area
Partnership            of interest)       Location         Completed     No. of Units      Acres    (Sq. Ft.)*
-----------            ------------       --------         ---------     ------------      -----    ---------

Exchange Mortgage
Partnerships:
------------

<S>                   <C>                 <C>               <C>        <C>          <C>    <C>       <C>
Baron Strategic       Blossom Corners     Orlando,           1981       Total        68    3.51       38,100
Investment Fund,      Apartments          Florida                       Studio       16
Ltd.                  (Phase II) (1)                                     1 BR        45
                                                                         2 BR         7

                      Villas at Lake      Cincinnati,      Est. 4th     Total       164    20.2      217,300
                      Sycamore            Ohio              quarter      2 BR
                      (condominiums) (1)                     2003        3 BR

Baron Strategic       Country Square      Tampa, Florida     1981       Total        73    4.56       40,032
Investment Fund IV,   Apartments                                        Studio       14
Ltd.                  (Phase I) (1)                                      1 BR        52
                                                                         2 BR         7

Baron Strategic       Candlewood          Tampa, Florida     1984       Total        33    2.75       17,568
Investment Fund V,    Apartments                                        Studio        6
Ltd.                  (Phase II) (1)                                     1 BR        26
                                                                         2 BR         1

                      Curiosity Creek     Tampa, Florida     1982       Total        81    4.51       43,776
                      Apartments (1)                                   Studio       16
                                                                         1 BR        59
                                                                         2 BR         6

Baron Strategic       Heatherwood         Kissimmee,         1982       Total        41    2.26       22,176
Investment Fund       Apartments          Florida                       Studio       10
VIII, Ltd.            (Phase II) (2)                                   1 BR/1B       26
                                                                       2 BR/1B        4
                                                                       2 BR/2B        1

<CAPTION>

                                               12/31/2001             Physical
                                             Average Rental           Occupancy
                       Avg. Unit Size          Rates/Month              as of
Partnership              (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)    12/31/2001
-----------              ---------       ------------------------    ----------

Exchange Mortgage
Partnerships:
------------

<S>                   <C>         <C>       <C>         <C>             <C>
Baron Strategic        Avg.        557      $520        $.78            85.1%
Investment Fund,      Studio       300
Ltd.                   1 BR        600
                       2 BR        864

                       Avg.      1,325      N/A          N/A             N/A
                       2 BR
                       3 BR

Baron Strategic        Avg.        548      $482        $.84            95.9%
Investment Fund IV,   Studio       288
Ltd.                   1 BR        576
                       2 BR        864

Baron Strategic        Avg.        532      $457        $.52            60.6%
Investment Fund V,    Studio       288
Ltd.                   1 BR        576
                       2 BR        864

                       Avg.        540      $464        $.82            95.1%
                      Studio       288
                       1 BR        576
                       2 BR        864

Baron Strategic        Avg.        541      $528        $.93            92.9%
Investment Fund       Studio       288
VIII, Ltd.            1 BR/1B      576
                      2 BR/1B      864
                      2 BR/2B      864
</TABLE>


                                       19
<PAGE>

<TABLE>
<CAPTION>
                         Name of
                       Residential
                        Apartment                                                                     Approx.
                         Property                                                                    Rentable
                        (and type                             Year                         Approx.     Area
Partnership            of interest)       Location         Completed     No. of Units      Acres    (Sq. Ft.)*
-----------            ------------       --------         ---------     ------------      -----    ---------

<S>                   <C>                 <C>                <C>        <C>          <C>   <C>        <C>
Baron Strategic       Longwood            Cocoa, Florida     1981       Total        59    4.00       36,288
Investment Fund       Apartments                                         1 BR        51
VIII, Ltd. (cont'd)   (Phase I) (1)                                      2 BR         8

                      Villas at Lake      Cincinnati,      Est. 4th     Total       164    20.2      217,300
                      Sycamore            Ohio              quarter      2 BR
                      (condominiums) (1)                     2003        3 BR

Baron Strategic       Curiosity Creek     Tampa, Florida     1982       Total        81    4.51       43,776
Vulture Fund I, Ltd.  Apartments (1)                                    Studio       16
                                                                         1 BR        59
                                                                         2 BR         6
Brevard Mortgage      Meadowdale          Melbourne,         1984       Total        64    4.81       39,168
Program, Ltd.         Apartments  (1)     Florida                        1 BR        56
                                                                         2 BR         8

Exchange Hybrid
Partnerships
------------

Baron Strategic       Candlewood          Tampa, Florida     1988       Total        33    2.75       17,568
Investment Fund VI,   Apartments                                        Studio        6
Ltd.                  (Phase II) (3)                                     1 BR        26
                                                                         2 BR         1
                      Country Square                         1981       Total        73    4.56       40,032
                      Apartments          Tampa, Florida                Studio       14
                      (Phase I) (3)                                      1 BR        52
                                                                         2 BR         7

                      Garden Terrace      Tampa, Florida     1983       Total        91    6.00       54,720
                      Apartments                                        Studio        8
                      (Phase III) (3)                                    1 BR        67
                                                                         2 BR        16

Baron Strategic       Candlewood          Tampa, Florida     1984       Total        33    2.75       17,568
Investment Fund IX,   Apartments                                        Studio        6
Ltd.                  (Phase II) (3)                                     1 BR        26
                                                                         2 BR         1

                      Garden Terrace      Tampa, Florida     1983       Total        91    6.00       54,720
                      Apartments                                        Studio        8
                      (Phase III) (3)                                    1 BR        67
                                                                         2 BR        16

<CAPTION>

                                              12/31/2001             Physical
                                            Average Rental           Occupancy
                      Avg. Unit Size          Rates/Month              as of
Partnership             (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)    12/31/2001
-----------             ---------       ------------------------    ----------

<S>                    <C>         <C>      <C>         <C>             <C>
Baron Strategic        Avg.        615      $453        $.72            96.7%
Investment Fund        1 BR        576
VIII, Ltd. (cont'd)    2 BR        864

                       Avg.      1,325      N/A          N/A             N/A
                       2 BR
                       3 BR

Baron Strategic        Avg.        540      $464        $.82            95.1%
Vulture Fund I, Ltd.  Studio       288
                       1 BR        576
                       2 BR        864
Brevard Mortgage       Avg.        612      $396        $.65           100.0%
Program, Ltd.          1 BR        576
                       2 BR        864

Exchange Hybrid
Partnerships
------------

Baron Strategic        Avg.        532      $457        $.52            60.6%
Investment Fund VI,   Studio       288
Ltd.                   1 BR        576
                       2 BR        864
                       Avg.        548      $482        $.84            95.9%
                      Studio       288
                       1 BR        576
                       2 BR        864

                       Avg.        601      $407        $.68            86.7%
                      Studio       288
                       1 BR        576
                       2 BR        864

Baron Strategic        Avg.        532      $457        $.52            60.6%
Investment Fund IX,   Studio       288
Ltd.                   1 BR        576
                       2 BR        864

                       Avg.        601      $407        $.68            86.7%
                      Studio       288
                       1 BR        576
                       2 BR        864


</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>
                         Name of
                       Residential
                        Apartment                                                                     Approx.
                         Property                                                                    Rentable
                        (and type                             Year                         Approx.     Area
Partnership            of interest)       Location         Completed     No. of Units      Acres    (Sq. Ft.)*
-----------            ------------       --------         ---------     ------------      -----    ---------

<S>                   <C>                 <C>              <C>         <C>          <C>    <C>       <C>
Baron Strategic       Villas at Lake      Cincinnati,      Est. 4th     Total       164    20.2      217,300
Investment Fund IX,   Sycamore            Ohio              quarter
Ltd. (cont'd)         (condominiums) (3)                     2003

Baron Strategic       Garden Terrace      Tampa, Florida     1983       Total        91    6.00       54,720
Investment Fund X,    Apartments                                        Studio        8
Ltd.                  (Phase III) (3)                                   1 BR        67
                                                                         2 BR        16

                      Heatherwood         Kissimmee,         1982       Total        41    2.26       22,176
                      Apartments          Florida                       Studio       10
                      (Phase II) (2)                                    1 BR        26
                                                                       2 BR/1B        4
                                                                       2 BR/2B        1

Lamplight Court of    Lamplight           Bellefontaine,     1973       Total        80    6.00       46,944
Bellefontaine         Apartments (4)      Ohio                          Studio       12
Apartments, Ltd.                                                         1 BR        53
                                                                         2 BR        15

                                                                                 ------  -------    --------
                      TOTAL
                      PROPERTIES**(5):                                              590    38.40     338,772
---------------------                                                            ======  =======    ========

<CAPTION>

                                                 12/31/2001             Physical
                                               Average Rental          Occupancy
                         Avg. Unit Size          Rates/Month             as of
Partnership                 (Sq. Ft.)      (Per Unit) (Per Sq. Ft.)    12/31/2001
-----------                 ---------       ------------------------   ----------

<S>                     <C>         <C>       <C>         <C>             <C>
Baron Strategic          Avg.      1,325      N/A          N/A             N/A
Investment Fund IX,
Ltd. (cont'd)

Baron Strategic          Avg.        601      $407        $.68            86.7%
Investment Fund X,      Studio       288
Ltd.                     1 BR        576
                         2 BR        864

                         Avg.        541      $528        $.93            92.9%
                        Studio       288
                         1 BR        576
                        2 BR/1B      864
                        2 BR/2B      864

Lamplight Court of       Avg.        587      $390        $.63            95.0%
Bellefontaine           Studio       288
Apartments, Ltd.         1 BR        576
                         2 BR        864

                                  ------  --------      ------       ---------

                                     569      $449        $.73            91.3%
---------------------             ======  ========      ======       =========
</TABLE>

*    Includes only apartment units and excludes common areas.

**   Properties in which more than one partnership has an interest are counted
     only once.

1.   The Partnership's sole real estate assets consist of an undivided second
     mortgage interest in the property or properties described in this table.
     The second mortgage interests are described below at "Mortgage
     Information-Mortgage Properties."

2.   The Partnership owns an undivided second mortgage interest in the property
     and unsecured indebtedness associated therewith. The indebtedness is
     described below at "Mortgage Information-Mortgage Properties."

3.   The Partnership owns (i) an undivided second mortgage interest in the
     property or properties described in this table and (ii) a direct or
     indirect equity interest in one or more properties. The second mortgage
     interests are described below at "Mortgage Information-Mortgage Properties"
     and the equity interest is described above at "Property Information-Equity
     Property Interests."

4.   The Partnership owns (i) an undivided second mortgage interest in the
     property described in this table and (ii) an undivided limited partnership
     interest in the limited partnership which owns fee simple title to the
     property. The second mortgage interest is described below at "Mortgage
     Information-Mortgage Properties," and the equity interest is described
     above at "Property Information-Equity Property Interests."

5.   Does not include information for Lake Sycamore, which is under development.


                                       21
<PAGE>

                              Mortgage Information
                            Equity Property Interests

The table below sets forth certain information relating to the first mortgage
(and in one case, second mortgage) indebtedness secured by or associated with
the 15 properties in which Exchange Equity Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering directly or indirectly own an
equity interest, including (i) name of partnership, (ii) name and location of
the properties, (iii) principal balances as of December 31, 2001, (iv) interest
rates, (v) annual and monthly debt service, (vi) amortization term, (vii)
maturity dates, (viii) balances due on maturity, and (ix) name of lending
institution.

<TABLE>
<CAPTION>
                                                   12/31/2001                     Annual
                                                    Principal       Interest       Debt
Partnership        Property        Location          Balance          Rate       Payment
-----------        --------        --------          -------          ----       -------

Exchange
Equity
Partnerships:
------------

<S>                <C>             <C>               <C>            <C>            <C>
Baron Strategic    Steeplechase    Anderson,         $1,466,379     to 10/1/02     $115,872
Investment Fund    Apartments      Indiana                               6.5%;
II, Ltd.                                                              on/after
                                                                       10/1/02
                                                                          7.5%

Central Florida    Laurel Oaks     Deland,           $1,543,086          6.54%     $121,863
Income             Apartments      Florida
Appreciation
Fund, Ltd.

Florida Capital    Eagle Lake      Port Orange,      $1,878,945          7.51%     $168,636
Income Fund, Ltd.  Apartments      Florida

Florida Capital    Forest Glen     Daytona           $1,719,744          7.01%     $125,696
Income Fund II,    Apartments      Beach,
Ltd.               (Phase I)       Florida

Florida Capital    Bridge Point    Jacksonville,       $864,087          9.52%      $77,183
Income Fund III,   Apartments      Florida
Ltd.               (Phase II)

Florida Income     Forest Glen     Daytona             $859,874          7.01%      $71,649
Advantage          III             Beach, FL
Fund I, Ltd.

Florida Income     Forest Glen     Daytona             $264,567          7.01%      $19,337
Appreciation       Apartments      Beach,
Fund I, Ltd.       (Phase IV)      Florida

Florida Income     Blossom         Orlando,            $978,296          9.04%     $106,084
Growth Fund V,     Corners         Florida
Ltd.               Apartments
                   (Phase I)

<CAPTION>

                                                               Balance
                     Monthly     Amortization     Maturity      Due on
Partnership          Payment         Term           Date       Maturity      Lender
-----------          -------         ----           ----       --------      ------

Exchange
Equity
Partnerships:
------------

<S>                   <C>           <C>             <C>        <C>           <C>
Baron Strategic        $9,656       30 years        10/06      $1,349,275    Crown Bank
Investment Fund
II, Ltd.



Central Florida       $10,155       30 years        12/28          $0        Prudential Mortgage
Income                                                                       Capital
Appreciation
Fund, Ltd.

Florida Capital       $14,053       25 years        02/11      $1,515,037    GMAC
Income Fund, Ltd.

Florida Capital       $10,475       30 years         3/05      $1,641,716    Prudential Mortgage
Income Fund II,                                                              Capital
Ltd.

Florida Capital        $6,431       25 years         7/06        $625,327    Huntington Mortgage
Income Fund III,                                                             Co.
Ltd.

Florida Income         $5,971       30 years         3/05        $817,310    Prudential Mortgage
Advantage                                                                    Capital
Fund I, Ltd.

Florida Income         $1,611       30 years         3/05        $251,112    Prudential Mortgage
Appreciation                                                                 Capital
Fund I, Ltd.

Florida Income         $8,840       25 years        11/06        $882,430    Column Financial, Inc.
Growth Fund V,
Ltd.
</TABLE>


                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                    12/31/2001                     Annual
                                                     Principal         Interest     Debt
Partnership        Property        Location           Balance            Rate      Payment
-----------        --------        --------           -------            ----      -------

Exchange
Equity
Partnerships:
------------

<S>                <C>             <C>               <C>                 <C>       <C>
Florida            Camellia        Daytona           $1,024,882          9.04%     $111,132
Opportunity        Court           Beach,
Income Partners,   Apartments      Florida
Ltd.

GSU Stadium        Stadium Club    Statesboro,       $1,641,887          7.87%     $160,346
Student            Apartments      Georgia
Apartments, Ltd.

Midwest Income     Brookwood Way   Mansfield,        $1,003,084          9.04%     $108,612
Growth Fund VI,    Apartments      Ohio
Ltd.

Realty             Forest Glen     Daytona             $992,145          7.01%      $72,517
Opportunity        Apartments      Beach,
Income Fund        (Phase II)      Florida
VIII, Ltd.

Exchange Hybrid
Partnerships:

Baron Strategic    Pineview        Orlando,          $2,668,392          7.51%     $232,440
Investment Fund    Apartments      Florida
VI, Ltd.

Baron Strategic    Crystal Court   Lakeland,         $1,590,638          7.26%     $130,698
Investment Fund    Apartments      Florida
IX, Ltd.           (Phase I)

Baron Strategic    Crystal Court   Lakeland,         $1,590,638          7.26%     $130,698
Investment Fund    Apartments      Florida
X, Ltd.            (Phase I)

                   Pineview        Orlando,          $2,668,392          7.51%     $232,440
                   Apartments      Florida

<CAPTION>

                                                             Balance
                  Monthly     Amortization     Maturity       Due on
Partnership       Payment         Term           Date        Maturity     Lender
-----------       -------         ----           ----        --------     ------

Exchange
Equity
Partnerships:
------------

<S>                <C>           <C>             <C>         <C>          <C>
Florida            $9,261        30 years        11/06       $913,346     Column Financial, Inc.
Opportunity
Income Partners,
Ltd.

GSU Stadium        $13,362       30 years        10/05      $1,520,599    GMAC
Student
Apartments, Ltd.

Midwest Income      $9,051       25 years        12/06        $890,263    Mellon Bank
Growth Fund VI,
Ltd.

Realty              $6,043       30 years         3/05        $943,051    Prudential Mortgage
Opportunity                                                               Capital
Income Fund
VIII, Ltd.

Exchange Hybrid
Partnerships:

Baron Strategic    $19,370       30 years        02/11      $2,152,948    GMAC
Investment Fund
VI, Ltd.

Baron Strategic    $10,891       30 years        07/11      $1,248,304    GMAC
Investment Fund
IX, Ltd.

Baron Strategic    $10,891       30 years        07/11      $1,248,304    GMAC
Investment Fund
X, Ltd.

                   $19,370       30 years        02/11      $2,152,948    GMAC
</TABLE>


                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                    12/31/2001                 Annual
                                                     Principal     Interest     Debt
Partnership        Property        Location           Balance        Rate      Payment
-----------        --------        --------           -------        ----      -------

Exchange
Equity
Partnerships:
------------

<S>                <C>             <C>               <C>             <C>     <C>
Lamplight Court    Lamplight       Bellefontaine     $1,304,396      9.04%      $135,660
of Bellefontaine   Court           Ohio
Apts., Ltd.

                                                  -------------              -----------
                   TOTAL
                   PROPERTIES:                      $19,800,402              $ 1,757,725

                                                  =============              ===========

<CAPTION>

                                                             Balance
                  Monthly     Amortization     Maturity       Due on
Partnership       Payment         Term           Date        Maturity         Lender
-----------       -------         ----           ----        --------         ------

Exchange
Equity
Partnerships:
------------

<S>                <C>           <C>             <C>        <C>               <C>
Lamplight Court    $11,305       25 years        11/06       $1,158,349       Column Financial
of Bellefontaine
Apts., Ltd.

                  ---------                                 -----------

                   $146,475                                 $15,909,067

                  =========                                 ===========
</TABLE>


                                       24
<PAGE>

                              Mortgage Information
                               Mortgage Properties

     The table below sets forth certain information relating to the second
mortgage loans (and in one case, other debt interests) owned by each of the six
Exchange Mortgage Partnerships and the four Exchange Hybrid Partnerships
substantially all of whose limited partnership interests the Operating
Partnership acquired in the Exchange Offering, including (i) the name of the
lending Exchange Partnership, (ii) the name, location and number of units of the
underlying residential apartment property (and in one case, condominium
apartment property) securing the first and second mortgages, (iii) the name of
the debtor, (iv) the original principal amount of the second mortgage loan(s)
held by the Exchange Partnership and the principal balance as of December 31,
2001 and due at maturity, (v) the undivided interests of other Exchange
Partnerships in the second mortgage loans or the principal balance as of
December 31, 2001 of other second mortgage loans secured by the property and
owned by other Exchange Partnerships, (vi) the second mortgage loan interest
rate, maturity date, annual and monthly interest payable and participation
features, if any, and (vii) the principal balance of the institutional first
mortgage loan secured by the property as of December 31, 2001 and the terms
thereof.

     Additional information relating to the underlying residential apartment
property (and in one case, condominium apartment property) securing each second
mortgage loan described and the first mortgage loan with a senior position ahead
of the second mortgage loan is set forth above at "Property Information - Debt
Property Interests." The debtors of substantially all of the second mortgage
loans and other loans provided or acquired by the Exchange Mortgage Partnerships
and the Exchange Hybrid Partnerships are limited partnerships that own fee
simple title to the property which secures such mortgage loans. Sigma
Renaissance Corporation, a Michigan corporation controlled by Jerome S. Rydell,
a member of the Board of Trustees of the Trust, controls the corporate general
partners (and in some cases the limited partnership interests) of the debtor
partnerships. Affiliates of Mr. McGrath, a founder and former Chief Executive
Officer of the Trust and the Operating Partnership, originally controlled the
corporate general partners (and in certain cases the limited partnership
interests) of each of the debtor partnerships. In September 2001, Mr. McGrath's
affiliates assigned their general partnership interests (and limited partnership
interests, as the case may be) in the debtor partnerships to Sigma Renaissance
Corporation. Each second mortgage note described is non-recourse beyond the
property and/or other assets owned by the debtors.


                                       25
<PAGE>

                         EXCHANGE MORTGAGE PARTNERSHIPS

                      Baron Strategic Investment Fund, Ltd.

This Exchange Partnership owns (i) three unrecorded second mortgage loans
secured by the Blossom Corners Property-Phase II and (ii) an unrecorded second
mortgage loan secured by the Lake Sycamore Property, which is under development.
The interest of the Exchange Partnership in the second mortgage loans, terms of
the first mortgage loan secured by the property, and other information are
described below.

--------------------------------------------------------------------------------
1.  Blossom Corners Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of units
and location):                         Blossom Corners Apartments - Phase II (68
                                       units) Orlando, Florida
--------------------------------------------------------------------------------
Debtor:                                Blossom Corners Apartments II, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loans:                     $977,645
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $78,388 (3,561)
--------------------------------------------------------------------------------
Balance due at maturity:               $78,388
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 6% as to $78,388
amortization provisions:               of principal (plus non-cumulative
                                       participation interest at the rate of 3%
                                       on the unpaid principal balance to the
                                       extent of any available cash flow during
                                       the year and additional non-cumulative
                                       participation interest equal to 30% of
                                       any remaining available cash flow during
                                       the year). The loan requires payments of
                                       interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         4/2002
--------------------------------------------------------------------------------
Annual interest payable:               $4,703 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $391
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $978,297; the loan matures 11/2006, has
first mortgage loan secured by         a balance due at maturity of $869,558,
property and other terms:              bears interest at a fixed annual rate of
                                       9.04%, has annual and monthly debt
                                       service requirements of $106,084 and
                                       $8,840, respectively, amortizes on a
                                       25-year basis, and is prepayable subject
                                       to a prepayment penalty equal to 1% of
                                       amount prepaid prior to third
                                       anniversary of loan.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans consisted of an unrecorded second
                                       mortgage note with a principal balance
                                       of $622,103, an unsecured promissory
                                       note with a principal balance of
                                       $68,861, an unsecured demand note with a
                                       principal balance of $130,270 and
                                       advances of $29,732. On 12/15/98, the
                                       debtor restated and amended the $622,103
                                       second mortgage note and the $68,861
                                       unsecured promissory note and made a new
                                       promissory note in favor of the Exchange
                                       Partnership in the original principal
                                       amount of $160,002 (to consolidate the
                                       $130,270 demand note and advances of
                                       $29,732). The debtor and the Exchange
                                       Partnership also entered into a mortgage
                                       modification agreement. Pursuant to the
                                       arrangement, the Exchange Partnership
                                       agreed to set the maturity date on the
                                       unsecured notes at the same maturity
                                       date as the second mortgage note, in
                                       exchange for the debtor's agreement to
                                       secure its repayment obligations on the
                                       unsecured notes with a second mortgage
                                       on the property.
--------------------------------------------------------------------------------


                                       26
<PAGE>

                 Baron Strategic Investment Fund, Ltd. (cont'd)

--------------------------------------------------------------------------------
2.  Lake Sycamore Second Mortgage Loan:
--------------------------------------------------------------------------------

Condominium apartment property
securing mortgages (number of Units    Villas at Lake Sycamore (164 townhomes
and location):                         under development), Cincinnati, Ohio (12
                                       of 26 units in Phase I built and sold;
                                       Phase II is 20 acres of undeveloped
                                       land)
--------------------------------------------------------------------------------
Debtor:                                Sycamore Real Estate Development, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loan:                      $230,000
--------------------------------------------------------------------------------
12/31/2001 principal balance of
Exchange Partnership's 100%
interest in loan (accrued unpaid
interest):                             $230,000  ($96,333)
--------------------------------------------------------------------------------
Balance due at maturity:               $230,000
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest ):            $320,500  ($108,209)
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only
                                       until maturity.
--------------------------------------------------------------------------------
Maturity date:                         12/2003
--------------------------------------------------------------------------------
Annual interest payable:               $27,600
--------------------------------------------------------------------------------
Monthly interest payable:              $2,300
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,041,506; bears interest at an annual
first mortgage loan secured by         adjustable rate equal to lender's prime
property and other terms:              rate plus 1% (currently 8.75%), has
                                       current annual and monthly debt service
                                       requirements of $89,369 and $7,447,
                                       respectively, requires payments of
                                       interest only until maturity and is
                                       prepayable without penalty. Interest has
                                       been paid through 10/2001. The debtor
                                       defaulted on the loan upon its maturity
                                       in 11/2001. The lender has refused to
                                       accept the debtor's 11/2001 interest
                                       payment and has accelerated the loan.
                                       Sigma Renaissance Corporation
                                       (controlled by Jerome S. Rydell, a
                                       member of the Board of Trustees of the
                                       Trust) has been assigned all the general
                                       partnership interests (and in certain
                                       cases, limited partnership interests) in
                                       the debtor by Gregory K. McGrath (a
                                       founder and former Chief Executive
                                       Officer of the Trust and the Operating
                                       Partnership) and his affiliate. Sigma
                                       Renaissance Corporation is in the
                                       process of negotiating with the lender
                                       to bring the loan current.
--------------------------------------------------------------------------------
Other matters:                         Two other Exchange Partnerships, Baron
                                       Strategic Investment Fund VIII, Ltd. and
                                       Baron Strategic Investment Fund IX,
                                       Ltd., own separate second mortgage notes
                                       secured by the property with the same
                                       terms except that as of 12/31/2001 they
                                       had outstanding principal balances of
                                       $77,000 and $243,500 (with accrued
                                       unpaid interest in the amounts of
                                       $28,049 and $80,160), respectively. The
                                       lending parties have agreed to share the
                                       benefits of the second mortgage on a
                                       pari passu basis.
--------------------------------------------------------------------------------


                                       27
<PAGE>

                    Baron Strategic Investment Fund IV, Ltd.

This Exchange Partnership owns two unrecorded second mortgage loans secured by
the Country Square Property-Phase I described below. The Exchange Partnership's
interest in the second mortgage loans, terms of the first mortgage loan secured
by the property, and other information are described below.

--------------------------------------------------------------------------------
Country Square Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Country Square Apartments - Phase I
                                       (73 units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Country Square Apartments, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100% interest
in loans:                              $1,378,237
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $1,378,237  ($512,210)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,378,237
--------------------------------------------------------------------------------
Second mortgage loan interests         In 3/97, the Exchange Partnership
of another Exchange Partnership:       received a of loan with a current
                                       principal balance $259,639 (with accrued
                                       unpaid interest of $154,196) from Baron
                                       Strategic Investment Fund VI, Ltd.
                                       ("Baron Fund VI"). The Exchange
                                       Partnership, in turn, lent the loan
                                       proceeds to the debtor as part of the
                                       Country Square Second Mortgage Loans.
                                       The loan from Baron Fund VI bears
                                       interest at the rate of 15%, payable
                                       monthly, matures in 9/2002 and is
                                       secured by the Exchange Partnership's
                                       interest in two second mortgage notes
                                       and a second mortgage.
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         4/2008
--------------------------------------------------------------------------------
Annual interest payable:               $165,388
--------------------------------------------------------------------------------
Monthly interest payable:              $13,782
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,539,080; the loan matures in 3/2008,
first mortgage loan secured by         has a balance due at maturity of
property and other terms:              $1,385,953, bears interest at a fixed
                                       annual rate of 7.41%, has annual and
                                       monthly debt service requirements of
                                       $133,068 and $11,089, respectively,
                                       amortizes on a 30-year basis and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield
                                       maintenance until the sixth month prior
                                       to maturity, when it can be prepaid at
                                       par.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans consisted of a second mortgage
                                       note with a principal balance of
                                       $1,192,987 and an unsecured demand note
                                       with a principal balance of $179,250. On
                                       12/15/98, the debtor restated and
                                       amended the notes and the debtor and the
                                       Exchange Partnership entered into a
                                       mortgage modification agreement.
                                       Pursuant to the arrangement, the
                                       Exchange Partnership agreed to set the
                                       maturity date on the demand note at the
                                       same maturity date as the second
                                       mortgage note, in exchange for the
                                       debtor's agreement to secure its
                                       repayment obligation on the demand note
                                       with a second mortgage on the Country
                                       Square Property.
--------------------------------------------------------------------------------


                                       28
<PAGE>

                     Baron Strategic Investment Fund V, Ltd.

The Exchange Partnership owns (i) an unrecorded second mortgage loan secured by
the Candlewood Property-Phase II, (ii) an undivided interest in three unrecorded
second mortgage loans and a 100% interest in an unrecorded second mortgage loan
secured by the Curiosity Creek Property and (iii) four unrecorded second
mortgage loans secured by the Sunrise Property-Phase I. The interest of the
Exchange Partnership and other Exchange Partnerships in the second mortgage
loans, terms of the first mortgage loans secured by the properties, and other
information are described below.

--------------------------------------------------------------------------------
1.  Candlewood Second Mortgage Loan:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of units
and location):                         Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $21,000
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $21,000  ($4,800)
--------------------------------------------------------------------------------
Balance due at maturity:               $21,000
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):             $143,500  ($52,430)
--------------------------------------------------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund VI, Ltd.
Exchange Partnerships in Property:     ("Baron Fund VI") and Baron Strategic
                                       Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2001 principal balance, and
                                       balance due at maturity in respect of
                                       Baron Fund VI's and Baron Fund IX's
                                       second mortgage loans are $68,000
                                       (accrued unpaid interest of $24,549) and
                                       $75,500 (accrued unpaid interest of
                                       $27,881), respectively; the annual (and
                                       monthly) payments due them are $8,160
                                       ($680) and $9,060 ($755), respectively.
                                       The other terms relating to Baron Fund
                                       VI's and Baron Fund IX's second mortgage
                                       loans are the same as stated herein in
                                       respect of the Exchange Partnership's
                                       loan.
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         3/2003
--------------------------------------------------------------------------------
Annual interest payable:               $2,520
--------------------------------------------------------------------------------
Monthly interest payable:              $210
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $545,651 ($69,843); the loan matures in
first mortgage loan secured by         2/2003, has a balance due at maturity of
property (12.8% of amount)             $533,678, bears interest at a fixed
and other terms:                       annual rate of 7.79%, payable quarterly,
                                       has annual and monthly debt service
                                       requirements of $56,153 and $4,679,
                                       respectively, amortizes on a 25-year
                                       basis and is prepayable without penalty.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $21,000. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which
                                       the debtor agreed to secure its
                                       repayment obligation on the note with a
                                       second mortgage on the Candlewood
                                       Property. At the same time, the debtor
                                       agreed to secure the loans in favor of
                                       Baron Fund VI and Baron Fund IX with
                                       separate second mortgages on the
                                       property. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgages on a pari passu basis.
--------------------------------------------------------------------------------


                                       29
<PAGE>

                Baron Strategic Investment Fund V, Ltd. (cont'd)
--------------------------------------------------------------------------------

2.  Curiosity Creek Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of units
and location):                         Curiosity Creek Apartments (81 units)
                                       Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Curiosity Creek Apartments, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's
undivided 26.3% interest in
three loans and a 100% interest
in one loan:                           $474,536
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $350,336  ($54,396)
--------------------------------------------------------------------------------
Balance due at maturity:               $350,336
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 73.7% in three loans and a
100% interest in one loan (accrued
unpaid interest):                      $1,243,847  ($118,578)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Vulture Fund I, Ltd.
Partnerships in second mortgage        ("Baron Vulture Fund") owns the
loans:                                 remaining undivided 73.7% interest in
                                       three second mortgage loans and a 100%
                                       interest in one second mortgage loan
                                       secured by the Curiosity Creek Property
                                       ("Curiosity Creek Second Mortgage
                                       Loans"). The aggregate original
                                       principal balance in respect of Baron
                                       Vulture Fund's interest in the loans was
                                       $1,229,575; the aggregate 12/31/2001
                                       principal balance and aggregate balance
                                       due at maturity is $904,692 (accrued
                                       unpaid interest of $118,578); the
                                       aggregate annual and monthly payments
                                       due it are $75,636 and $6,303,
                                       respectively. The other terms relating
                                       to Baron Vulture Fund's interest in the
                                       loans are the same as stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $212,145 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal
                                       to the extent of available cash flow,
                                       plus additional non-cumulative
                                       participation interest equal to 30% of
                                       any remaining available cash flow), (ii)
                                       adjustable interest rate of prime plus
                                       1% (currently 5.75%) as to $108,858 of
                                       principal, and (iii) fixed interest rate
                                       of 12.5% as to $29,333 of principal. The
                                       loans require payments of interest only
                                       until maturity.
--------------------------------------------------------------------------------
Maturity date:                         4/2007
--------------------------------------------------------------------------------
Annual interest payable:               $27,558 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $2,297
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,954,245 ($513,966); the loan matures
first mortgage loan secured by         in 5/2008, has a balance due at maturity
property (26.3% of amount)             of $1,122,800, bears interest at the
and other terms:                       fixed annual rate of 7.26%, has annual
                                       and monthly debt service requirements of
                                       $160,607 and $13,384, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield
                                       maintenance until the sixth month prior
                                       to maturity, when it may be prepaid at
                                       par.
--------------------------------------------------------------------------------


                                       30
<PAGE>


                Baron Strategic Investment Fund V, Ltd. (cont'd)

--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Curiosity Creek
                                       Second Mortgage Loans consisted of a
                                       second mortgage note with a principal
                                       balance of $807,560, two unsecured
                                       demand notes with a an aggregate
                                       principal balance of $830,360 and
                                       advances in the amount of $66,171. On
                                       12/15/98, the debtor, the Exchange
                                       Partnership and Baron Vulture Fund
                                       entered into a mortgage modification
                                       agreement pursuant to which the Exchange
                                       Partnership and Baron Vulture Fund
                                       agreed to set the maturity date on the
                                       demand notes and the advances at the
                                       same maturity date as the second
                                       mortgage note, in exchange for the
                                       debtor's agreement to secure its
                                       repayment obligations on the unsecured
                                       notes and advances with a second
                                       mortgage on the Curiosity Creek
                                       Property.
--------------------------------------------------------------------------------

3.  Sunrise Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                             Sunrise Apartments - Phase I (60 units)
                                       Titusville, Florida
--------------------------------------------------------------------------------
Debtor:                                Sunrise Apartments I, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $1,036,450
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $1,020,913  ($42,050)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,020,913
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $335,000 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal
                                       to the extent of available cash flow
                                       plus additional non-cumulative
                                       participation interest equal to 20% of
                                       any remaining available cash flow), (ii)
                                       fixed interest rate of 4% as to $621,515
                                       of principal, (iii) fixed interest rate
                                       of 12% as to $62,931 of principal, and
                                       (iv) fixed interest rate of 8.75% as to
                                       $1,467 of principal. The loans require
                                       payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         10/2007
--------------------------------------------------------------------------------
Annual interest payable:               $53,072 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $4,422
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance           $994,218; the loan matures in 1/2005,
of first mortgage loan                 has a balance due at maturity of
secured by property and                $932,217, bears interest at a fixed
other terms:                           annual rate of 7.5%, has annual and
                                       monthly debt service requirements of
                                       $174,020 and $14,502, respectively,
                                       amortizes on a 30-year basis, and is
                                       payable after the fourth anniversary of
                                       the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans secured by the Sunrise Property
                                       (the "Sunrise Second Mortgage Loans")
                                       consisted of a second mortgage note with
                                       a principal balance of $335,000, two
                                       unsecured demand notes with an aggregate
                                       principal balance of $622,982 and
                                       advances in the amount of $73,819. On
                                       12/15/98, the debtor restated and
                                       amended the second mortgage note and the
                                       demand notes and created a new
                                       promissory note in favor of the Exchange
                                       Partnership in the original principal
                                       amount of $16,000 (to cover prior
                                       advances). The debtor and the
                                       Partnership also entered into a mortgage
                                       modification agreement. Pursuant to the
                                       arrangement, the Exchange Partnership
                                       agreed to set the maturity date on the
                                       demand notes and the advances at the
                                       same maturity date as the second
                                       mortgage note, in exchange for the
                                       debtor's agreement to secure its
                                       repayment obligations on the unsecured
                                       notes and advances with a second
                                       mortgage on the Sunrise Property.
--------------------------------------------------------------------------------


                                       31
<PAGE>

                   Baron Strategic Investment Fund VIII, Ltd.

The Exchange Partnership owns (i) an undivided interest in an unrecorded second
mortgage loan secured by the Heatherwood Property-Phase II, and three unsecured
loans associated with such property, (ii) three unrecorded second mortgage loans
secured by the Longwood Property-Phase I and (iii) an unrecorded second mortgage
loan secured by the Lake Sycamore Property (under development). The interest of
the Exchange Partnership and other Exchange Partnerships in the second mortgage
loans, terms of the first mortgage loans secured by each property, and other
information are described below.

--------------------------------------------------------------------------------
1.  Heatherwood Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                           Heatherwood Apartments - Phase II (41
                                     units) Kissimmee, Florida
--------------------------------------------------------------------------------
Debtor:                              Heatherwood Apartments II, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided
58% interest in loans:               $206,260
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):           $111,213  ($0)
--------------------------------------------------------------------------------
Balance due at maturity:             $111,213
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 42% in loans (accrued
unpaid interest):                    $181,149  ($24,224)
--------------------------------------------------------------------------------
Interests of other Exchange          Baron Strategic Investment Fund X, Ltd.
Partnership in second mortgage       ("Baron Fund X") owns the remaining
loans:                               undivided 42% interest in the second
                                     mortgage loans secured by the
                                     Heatherwood Property and in the
                                     unsecured loans associated with the
                                     property ("Heatherwood Loans"). The
                                     aggregate original principal balance,
                                     aggregate 12/31/2001 principal balance,
                                     and aggregate balance due at maturity in
                                     respect of Baron Fund X's interest in
                                     the Heatherwood Loans is $181,148
                                     (accrued unpaid interest of $24,224);
                                     the aggregate annual (and monthly)
                                     payments due it are $13,616 ($1,135).
                                     The other terms relating to Baron Fund
                                     X's interest in the Heatherwood Loans
                                     are the same as stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                Fixed interest rate of 6% as to $111,213
amortization provisions:             of principal (plus non-cumulative
                                     participation interest at the rate of 3%
                                     on the unpaid principal to the extent of
                                     available cash flow plus additional
                                     non-cumulative participation interest
                                     equal to 30% of any remaining available
                                     cash flow). The loans require payments
                                     of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                       10/2004
--------------------------------------------------------------------------------
Annual interest payable:             $6,996 (plus any participation interest
                                     payable)
--------------------------------------------------------------------------------
Monthly interest payable:            $583
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance         $680,644 ($394,773); the loan matures in
first mortgage loan secured          of 11/2004, has a balance due at
by property (58% of amount)          maturity of $655,856, bears interest at
and other terms:                     a fixed annual rate of 7.75%, has annual
                                     and monthly debt service requirements of
                                     $61,038 and $5,087, respectively,
                                     amortizes on a 30-year basis, and is
                                     prepayable after the fourth anniversary
                                     of the loan, subject to yield
                                     maintenance until the sixth month prior
                                     to maturity, when it can be prepaid at
                                     par.
--------------------------------------------------------------------------------


                                       32
<PAGE>

               Baron Strategic Investment Fund VIII, Ltd. (cont'd)
--------------------------------------------------------------------------------

2.  Longwood Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                           Longwood Apartments - Phase I (59 units)
                                     Cocoa, Florida
--------------------------------------------------------------------------------
Debtor:                              Longwood Apartments I, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                   $969,268
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest ):          $969,268  ($138,404)
--------------------------------------------------------------------------------
Balance due at maturity:             $969,268
--------------------------------------------------------------------------------
Mortgage interest and                (i) Fixed interest rate of 6% as to
amortization provisions:             $368,558 of principal (plus
                                     non-cumulative participation interest at
                                     the rate of 3% on the unpaid principal
                                     to the extent of available cash flow
                                     plus additional non-cumulative
                                     participation interest equal to 30% of
                                     any remaining available cash flow), (ii)
                                     adjustable interest rate of 1% over
                                     prime rate (currently 5.75%) as to
                                     $526,465 of principal, and (iii) fixed
                                     interest rate of 12% as to $74,245 of
                                     principal. The loans require payments of
                                     interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                       10/2007
--------------------------------------------------------------------------------
Annual interest payable:             $63,807 (plus any participation interest
                                     payable)
--------------------------------------------------------------------------------
Monthly interest payable:            $5,317
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance         $994,118; the loan matures in 11/2004,
of first mortgage loan secured       has a balance due at maturity of
by property and other terms:         $1,204,545, bears interest at a fixed
                                     annual rate of 7.75%, has annual and
                                     monthly debt service requirements of
                                     $89,150 and $7,429, respectively,
                                     amortizes on a 30-year basis, and is
                                     prepayable after the fourth anniversary
                                     of the loan, subject to yield
                                     maintenance until the sixth month prior
                                     to maturity, when it can be prepaid at
                                     par.
--------------------------------------------------------------------------------
Other matters:                       Prior to 12/15/98, the Longwood Second
                                     Mortgage Loans consisted of a second
                                     mortgage note with a principal balance
                                     of $368,558, an unsecured demand note
                                     with a principal balance of $526,465,
                                     and advances of $74,245. On 12/15/98,
                                     the debtor restated and amended the
                                     second mortgage note and the demand note
                                     and created a new promissory note in the
                                     original principal amount of $74,245 (to
                                     cover prior advances). The debtor and
                                     the Exchange Partnership also entered
                                     into a mortgage modification agreement.
                                     Pursuant to the arrangement, the
                                     Exchange Partnership agreed to set the
                                     maturity date on the demand note and the
                                     advances at the same maturity date as
                                     the second mortgage note, in exchange
                                     for the debtor's agreement to secure its
                                     repayment obligations on the demand note
                                     and advances with a second mortgage on
                                     the Longwood Property.
--------------------------------------------------------------------------------


                                       33
<PAGE>

               Baron Strategic Investment Fund VIII, Ltd. (cont'd)

--------------------------------------------------------------------------------
3.  Lake Sycamore Second Mortgage Loan:
--------------------------------------------------------------------------------

Condominium apartment property
securing mortgages (number of
units and location):                 Villas at Lake Sycamore (164 townhomes
                                     under development) Cincinnati, Ohio (12 of
                                     26 units in Phase I built and sold; Phase
                                     II is 20 acres of undeveloped land)
--------------------------------------------------------------------------------
Debtor:                              Sycamore Real Estate Development, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                    $98,000
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):           $77,000  ($28,049)
--------------------------------------------------------------------------------
Balance due at maturity:             $77,000
--------------------------------------------------------------------------------
12/31/2001 aggregate
principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):           $473,500  ($176,493)
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:             Fixed interest rate of 12%; requires
                                     quarterly payments of interest only until
                                     maturity.
--------------------------------------------------------------------------------
Maturity date:                       12/2003
--------------------------------------------------------------------------------
Annual interest payable:             $9,240
--------------------------------------------------------------------------------
Monthly interest payable:            $770
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty
--------------------------------------------------------------------------------
12/31/2001 principal balance         $1,041,506; bears interest at an annual
of first mortgage loan secured       adjustable rate equal to lender's prime
by property and other terms:         rate plus 1% (currently 8.75%), has
                                     current annual and monthly debt service
                                     requirements of $89,369 and $7,447,
                                     respectively, requires payments of
                                     interest only until maturity and is
                                     prepayable without penalty. Interest has
                                     been paid through 10/2001. The debtor
                                     defaulted on the loan upon its maturity
                                     in 11/2001. The lender has refused to
                                     accept the debtor's 11/2001 interest
                                     payment and has accelerated the loan.
                                     Sigma Renaissance Corporation
                                     (controlled by Jerome S. Rydell, a
                                     member of the Board of Trustees of the
                                     Trust) has been assigned all the general
                                     partnership interests (and in certain
                                     cases, limited partnership interests) in
                                     the debtor by Gregory K. McGrath (a
                                     founder and former Chief Executive
                                     Officer of the Trust and the Operating
                                     Partnership) and his affiliate. Sigma
                                     Renaissance Corporation is in the
                                     process of negotiating with the lender
                                     to bring the loan current.
--------------------------------------------------------------------------------
Other matters:                       Two other Exchange Partnerships, Baron
                                     Strategic Investment Fund, Ltd. and Baron
                                     Strategic Investment Fund IX, Ltd., own
                                     separate second mortgage notes secured by
                                     the property with the same terms except
                                     that as of 12/31/2001 they had
                                     outstanding principal balances of
                                     $230,000 and $243,500 (and accrued unpaid
                                     interest of $96,333 and $80,160),
                                     respectively. The lending parties have
                                     agreed to share the benefits of the
                                     second mortgage on a pari passu basis.
--------------------------------------------------------------------------------


                                       34
<PAGE>

                      Baron Strategic Vulture Fund I, Ltd.

The Exchange Partnership owns an undivided interest in three unrecorded second
mortgage loans and a 100% interest in one second mortgage loan secured by the
Curiosity Creek Property described below. The interest of the Exchange
Partnership and a separate Exchange Partnership in the second mortgage loans,
terms of the first mortgage loan secured by the property, and other information
are described below.

--------------------------------------------------------------------------------
Curiosity Creek Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                 Curiosity Creek Apartments  (81 units)
                                     Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                              Curiosity Creek Apartments, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's
undivided 73.7% interest in
three loans and 100% interest
in one loan:                         $1,243,847
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):           $1,243,847  ($118,578)
--------------------------------------------------------------------------------
Balance due at maturity:             $1,243,847
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 26.3% in three loans
and 100% interest in one loan
(accrued unpaid interest):           $350,336 ($54,396)
--------------------------------------------------------------------------------
Interests of other Exchange          Baron Strategic Investment Fund V, Ltd.
Partnership in second mortgage       ("Baron Fund V") owns the remaining
loans:                               undivided 26.3% interest in three second
                                     mortgage loans and a 100% interest in one
                                     second mortgage loan secured by the
                                     Curiosity Creek Property ("Curiosity
                                     Creek Second Mortgage Loans"). The
                                     aggregate original principal balance in
                                     respect of Baron Fund V's interest in the
                                     Curiosity Creek Second Mortgage Loans was
                                     $474,536; the aggregate 12/31/2001
                                     principal balance and aggregate balance
                                     due at maturity is $350,336 (accrued
                                     unpaid interest of $54,396); the
                                     aggregate annual and monthly payments due
                                     it are $27,558 and $2,297, respectively.
                                     The other terms relating to Baron Fund
                                     V's interest in the Curiosity Creek
                                     Second Mortgage Loans are the same as
                                     stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                (i) Fixed interest rate of 6% as to
amortization provisions:             $595,333 of principal (plus
                                     non-cumulative participation interest at
                                     the rate of 3% on the unpaid principal to
                                     the extent of available cash flow plus
                                     additional non-cumulative participation
                                     interest equal to 30% of any remaining
                                     available cash flow), (ii) adjustable
                                     interest rate of prime plus 1% (currently
                                     8.75%) as to $305,407 of principal, (iii)
                                     fixed interest rate of 12.5% as to
                                     $306,675 of principal, and (iv) fixed
                                     interest rate of 12% as to $36,431 of
                                     principal. The loans require payments of
                                     interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                       4/2007
--------------------------------------------------------------------------------
Annual interest payable:             $75,636 (plus any participation interest
                                     payable)
--------------------------------------------------------------------------------
Monthly interest payable:            $6,303
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of      $1,954,245 ($1,440,278); the loan matures
first mortgage loan secured by       in 5/2008, has a balance due at maturity
property (73.7% of amount)           of $1,692,068, bears interest at the
and other terms:                     fixed annual rate of 7.26%, has annual
                                     and monthly debt service requirements of
                                     $160,607 and $13,384, respectively,
                                     amortizes on a 30-year basis, and is
                                     prepayable after the fourth anniversary
                                     of the loan subject to defeasance
                                     provisions in the mortgage note.
--------------------------------------------------------------------------------


                                       35
<PAGE>

                  Baron Strategic Vulture Fund I, Ltd. (cont'd)

--------------------------------------------------------------------------------
Other matters:                       Prior to 12/15/98, the Curiosity Creek
                                     Second Mortgage Loans consisted of a
                                     second mortgage note with a principal
                                     balance of $807,560, two unsecured demand
                                     notes with an aggregate principal balance
                                     of $830,360 and advances in the amount of
                                     $66,171. On 12/15/98, the debtor, the
                                     Exchange Partnership and Baron Fund V
                                     entered into a mortgage modification
                                     agreement pursuant to which the Exchange
                                     Partnership and Baron Fund V agreed to
                                     set the maturity date on the demand notes
                                     and the advances at the same maturity
                                     date as the second mortgage note, in
                                     exchange for the debtor's agreement to
                                     secure its repayment obligations on the
                                     unsecured notes and advances with a
                                     second mortgage on the Curiosity Creek
                                     Property.
--------------------------------------------------------------------------------


                                       36
<PAGE>

                         Brevard Mortgage Program, Ltd.

The Exchange Partnership owns three unrecorded second mortgage loans secured by
the Meadowdale Property described below. The Exchange Partnership's interest in
the Second Mortgage Loans, terms of the first mortgage loan secured by the
property, and other information are described below.

--------------------------------------------------------------------------------
Meadowdale Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Meadowdale Apartments (64 units)
                                       Melbourne, Florida
--------------------------------------------------------------------------------
Debtor:                                Florida Opportunity Income Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $1,048,861
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $1,048,861  ($272,185)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,048,861
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $752,747 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal to
                                       the extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 20% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of 1% over prime rate
                                       (currently 5.75%) as to $271,923 of
                                       principal and (iii) fixed rate of 12% as
                                       to $24,191 of principal.
--------------------------------------------------------------------------------
Maturity date:                         10/2007
--------------------------------------------------------------------------------
Annual interest payable:               $65,732 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $5,478
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance           $975,000; the loan matures in 11/2006,
of first mortgage loan secured by      has a balance due at maturity of
property and other terms:              $809,175, bears interest at an initial
                                       rate of 7.25% increasing by .125% each
                                       year for five years, has annual and
                                       monthly debt service requirements of
                                       $97,200 and $8,100 in year 1,
                                       respectively and amortizes on a 16-year
                                       basis.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans consisted of a second mortgage note
                                       with a principal balance of $752,747, an
                                       unsecured demand note with a principal
                                       balance of $271,923 and advances of
                                       $24,191. On 12/15/98, the debtor restated
                                       and amended the second mortgage note and
                                       the demand note and created a new
                                       promissory note in favor of the Exchange
                                       Partnership in the original principal
                                       amount of $24,191 (to cover the prior
                                       advances). The debtor and the Exchange
                                       Partnership also entered into a mortgage
                                       modification agreement. Pursuant to the
                                       arrangement, the Exchange Partnership
                                       agreed to set the maturity date on the
                                       demand note and the advances at the same
                                       maturity date as the second mortgage
                                       note, in exchange for the debtor's
                                       agreement to secure its repayment
                                       obligations on the demand note and the
                                       advances with a second mortgage on the
                                       Meadowdale Property.
--------------------------------------------------------------------------------


                                       37
<PAGE>

                          EXCHANGE HYBRID PARTNERSHIPS

                    Baron Strategic Investment Fund VI, Ltd.

The Exchange Partnership owns (1) a 57.29% limited partnership interest in a
limited partnership which holds fee simple title to the Pineview Property, (2)
an unrecorded second mortgage loan secured by the Candlewood Property-Phase II,
(3) an undivided interest in two recorded second mortgage loans secured by the
Garden Terrace Property-Phase III, and (4) a note receivable from another
Exchange Partnership which is secured by two unrecorded second mortgage notes
and a second mortgage on the Country Square Property-Phase I. Information
concerning the Pineview Property and the first mortgage indebtedness secured by
it is included above in the tables entitled "Property Information - Equity
Property Interests" and "Mortgage Information - Equity Property Interests." The
interest of the Exchange Partnership and other Exchange Partnerships in the
second mortgage loans, the note payable to the Exchange Partnership from another
Exchange Partnership, terms of the respective first mortgage loan and the
Exchange Partnership's second mortgage loans secured by the three properties
described below, and other information are described below.

--------------------------------------------------------------------------------
1.  Candlewood Second Mortgage Loan:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of
units and location):                   Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's interest in
loan:                                  $68,000
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $68,000  ($24,549)
--------------------------------------------------------------------------------
Balance due at maturity:               $68,000
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other second mortgage loans
secured by the property and
owned by other Exchange
Partnerships (accrued unpaid
interest):                             $96,500 ($32,681)
--------------------------------------------------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund V, Ltd.
Exchange Partnerships in the           ("Baron Fund V") and Baron Strategic
Property:                              Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2001 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       V's and Baron Fund IX's loans are $21,000
                                       (accrued unpaid interest of $4,800) and
                                       $75,500 (accrued unpaid interest of
                                       $27,881), respectively; the annual (and
                                       monthly) payments due them are $2,540
                                       ($211) and $9,060 ($755), respectively.
                                       The other terms relating to Baron Fund
                                       V's and Baron Fund IX's loans are the
                                       same as stated herein in respect of the
                                       Exchange Partnership's loan.
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 12%; requires
Amortization provisions:               payments of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         3/2003
--------------------------------------------------------------------------------
Annual interest payable:               $8,160
--------------------------------------------------------------------------------
Monthly interest payable:              $680
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $545,651 ($225,354); the loan matures in
first mortgage loan secured by         2/2003, has a balance due at maturity of
property (41.3% of amount)             $533,678, bears interest at a fixed
and other terms:                       annual rate of 7.79%, payable quarterly,
                                       has annual and monthly debt service
                                       requirements of $56,153 and $4,679,
                                       respectively, amortizes on a 25-year
                                       basis and is prepayable without penalty.
--------------------------------------------------------------------------------


                                       38
<PAGE>

                Baron Strategic Investment Fund VI, Ltd. (cont'd)

--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $68,000. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund V
                                       and Baron Fund IX with separate mortgages
                                       on the property. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgages on a pari passu basis.
--------------------------------------------------------------------------------

2.  Garden Terrace Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
Securing mortgages (number of
units and location):                   Garden Terrace Apartments - Phase III
                                       (91 units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided 20%
interest in loan:                      $248,353
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $248,353  ($19,283)
--------------------------------------------------------------------------------
Balance due at maturity:               $248,353
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnerships'
undivided 80% in loan (accrued
unpaid interest):                      $993,414  ($102,309)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund IX, Ltd.
Partnerships in second mortgage        ("Baron Fund IX") and Baron Strategic
loans:                                 Investment Fund X, Ltd. ("Baron Fund X")
                                       own the remaining undivided 80% interest
                                       in the second mortgage loans secured by
                                       the Garden Terrace Property ("Garden
                                       Terrace Second Mortgage Loans"). The
                                       original principal balance, 12/31/2001
                                       principal balance, and balance due at
                                       maturity in respect of Baron Fund IX's
                                       and Baron Fund X's interest in the Garden
                                       Terrace Second Mortgage Loans are
                                       $310,442 (accrued unpaid interest of
                                       $24,342) and $682,972 (accrued unpaid
                                       interest of $77,967), respectively; the
                                       annual (and monthly) payments due them
                                       are $27,940 ($2,328) and $61,467
                                       ($5,122), respectively. The other terms
                                       relating to Baron Fund IX's and Baron
                                       Fund X's interest in the Garden Terrace
                                       Second Mortgage Loans are the same as
                                       stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $147,000 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable to
                                       holders of note only after payment of
                                       interest due on the note referred to in
                                       (ii) below) and (ii) fixed interest rate
                                       of 9% as to $101,353 of principal,
                                       payable only from excess cash flow after
                                       payment of 2% minimum interest and 7%
                                       participation interest due on the note
                                       referred to in (i) above. The loans
                                       require payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         1/2007
--------------------------------------------------------------------------------
Annual interest payable:               $22,353 (plus any additional
                                       participation interest)
--------------------------------------------------------------------------------
Monthly interest payable:              $1,863
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $914,509 ($182,901); the loan matures in
first mortgage loan secured by         5/2005, has a balance due at maturity of
property (20% of amount)               $822,063, bears interest at the fixed
and other terms:                       annual rate of 8.31%, has annual and
                                       monthly debt and service requirements of
                                       $96,047 and $8,004, respectively
                                       amortizes on a 25-year basis may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
--------------------------------------------------------------------------------


                                       39
<PAGE>

                Baron Strategic Investment Fund VI, Ltd. (cont'd)
--------------------------------------------------------------------------------

3.  Note Payable by Baron Strategic Investment
     Fund IV, Ltd. ("Baron Fund IV"):
--------------------------------------------------------------------------------

12/31/2001 principal balance
owed to Exchange Partnership
collateralized by security
interest in Baron Fund IV's
second mortgage on Country
Square Property - Phase I- see
above under table for "Baron
Strategic Investment Fund IV,
Ltd.") (accrued unpaid interest
payable to Exchange
Partnership):                          $259,639  ($154,196)
--------------------------------------------------------------------------------

12/31/2001 principal balance of
Baron Fund IV's second mortgage
loans secured by property (accrued
unpaid interest ):                     $1,192,987  ($424,054)
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,539,080; the loan matures in 3/2008,
first mortgage loan                    has a balance due at maturity of
secured by property:                   $1,385,953, bears interest at a fixed
                                       annual rate of 7.41%, has annual and
                                       monthly debt service requirements of
                                       $133,068 and $11,089, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
--------------------------------------------------------------------------------
Other matters:                         In 3/97, the Exchange Partnership
                                       provided a loan with a current principal
                                       balance of $259,639 to another Exchange
                                       Partnership, Baron Strategic Investment
                                       Fund IV, Ltd. ("Baron Fund IV"). Baron
                                       Fund IV, in turn, lent the loan proceeds
                                       to the borrower as part of the Country
                                       Square Second Mortgage Loans. The loan
                                       from Baron Fund VI to Baron Fund IV bears
                                       interest at the annual rate of 15%,
                                       payable monthly, matures in 9/2002 and is
                                       secured by Baron Fund IV's interest in
                                       the second mortgage note and second
                                       mortgage.
--------------------------------------------------------------------------------


                                       40
<PAGE>

                    Baron Strategic Investment Fund IX, Ltd.

The Partnership owns (i) a 44.96% limited partnership interest in a limited
partnership which holds fee simple title to the Crystal Court Property-Phase I,
(ii) an undivided interest in an unrecorded second mortgage loan secured by the
Candlewood Property, (iii) an undivided interest in two recorded second mortgage
loans secured by the Garden Terrace Property-Phase III, and (iv) an unrecorded
second mortgage loan secured by the Lake Sycamore Property (under development).
Information concerning the Crystal Court Property and the first mortgage
indebtedness secured by it is included above in the tables entitled "Property
Information - Equity Property Interests" and "Mortgage Information - Equity
Property Interests." The interest of the Exchange Partnership and other Exchange
Partnerships in the respective second mortgage loans, terms of the respective
first mortgage loan secured by the Candlewood Property, the Garden Terrace
Property and the Lake Sycamore Property, and other information are described
below.

--------------------------------------------------------------------------------
1. Candlewood Second Mortgage Loan:

--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loan:                      $75,500
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $75,500  ($27,881)
--------------------------------------------------------------------------------
Balance due at maturity:               $75,500
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):             $89,000  ($29,349)
--------------------------------------------------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund V, Ltd.
Exchange Partnerships in               ("Baron Fund V") and Baron Strategic
Property:                              Investment Fund VI, Ltd. ("Baron Fund
                                       VI") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2001 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       V's and Baron Fund VI's loans are $21,000
                                       (accrued unpaid interest of $4,800) and
                                       $68,000 (accrued unpaid interest of
                                       $24,549), respectively; the annual (and
                                       monthly) payments due them are $2,520
                                       ($210) and $8,160 ($680), respectively.
                                       The other terms relating to Baron Fund
                                       V's and Baron Fund VI's loans are the
                                       same as stated herein in respect of the
                                       Exchange Partnership's loan.
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 12%; requires
Amortization provisions:               payments of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         3/2003
--------------------------------------------------------------------------------
Annual interest payable:               $9,060
--------------------------------------------------------------------------------
Monthly interest payable:              $755
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $545,651 ($250,454); the loan matures in
first mortgage loan secured by         2/2003, has a balance due at maturity of
property (45.9% of amount)             $533,678, bears interest at a fixed
and other items:                       annual rate of 7.79%, payable quarterly,
                                       has annual and monthly debt service
                                       requirements of $56,153 and $4,679,
                                       respectively, amortizes on a 25-year
                                       basis and is prepayable without penalty.
--------------------------------------------------------------------------------


                                       41
<PAGE>

                Baron Strategic Investment Fund IX, Ltd. (cont'd)

--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $75,500. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund V
                                       and Baron Fund VI with separate second
                                       mortgages on the property. The lending
                                       parties have agreed to share the benefits
                                       of the second mortgages on a pari passu
                                       basis.
--------------------------------------------------------------------------------

2.  Garden Terrace Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of
units and location):                   Garden Terrace Apartments - Phase III (91
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided 25%
interest in loans:                     $310,442
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $310,442  ($24,342)
--------------------------------------------------------------------------------
Balance due at maturity:               $310,442
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnerships'
undivided 75% interest in loans
(accrued unpaid interest):             $931,325  ($97,250)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VI, Ltd.
Partnerships in second mortgage        ("Baron Fund VI") and Baron Strategic
loans:                                 Investment Fund X, Ltd. ("Baron Fund X")
                                       own the remaining undivided 75% interest
                                       in the second mortgage loans secured by
                                       the Garden Terrace Property ("Garden
                                       Terrace Second Mortgage Loans"). The
                                       original principal balance, 12/31/2001
                                       principal balance, and balance due at
                                       maturity in respect of Baron Fund VI's
                                       and Baron Fund X's interest in the Garden
                                       Terrace Second Mortgage Loans is $248,353
                                       (accrued unpaid interest of $19,283) and
                                       $682,972 (accrued unpaid interest of
                                       $77,967), respectively, the annual (and
                                       monthly) payments due them are $22,353
                                       ($1,863) and $61,467 ($5,122),
                                       respectively. The other terms relating to
                                       Baron Fund VI's and Baron Fund X's
                                       interest in the Garden Terrace Second
                                       Mortgage Loan are the same as stated
                                       herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $183,750 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable to
                                       holders of note only after payment of
                                       interest on the note referred to in (ii)
                                       below) and (ii) fixed interest rate of 9%
                                       as to $126,692 of principal, payable only
                                       from excess cash flow after payment of 2%
                                       minimum interest and 7% participation
                                       interest due on the note referred to in
                                       (i) above. The loan requires payments of
                                       interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         1/2007
--------------------------------------------------------------------------------
Annual interest payable:               $27,940 (plus any additional
                                       participation interest)
--------------------------------------------------------------------------------
Monthly interest payable:              $2,328
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $914,509 ($228,627); the loan matures in
first mortgage loan secured by         5/2005, has a balance due at maturity of
property (25% of amount) and           $822,063, bears interest at the fixed
other terms:                           annual rate of 8.31%, has annual and
                                       monthly debt service requirements of
                                       $96,047 and $8,004, respectively,
                                       amortizes on a 25-year basis and may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
--------------------------------------------------------------------------------


                                       42
<PAGE>

                Baron Strategic Investment Fund IX, Ltd. (cont'd)
--------------------------------------------------------------------------------

3.  Lake Sycamore Second Mortgage Loan:
--------------------------------------------------------------------------------
Condominium apartment
property securing mortgages
(number of
units and location):                   Villas at Lake Sycamore (164 townhomes
                                       under development) Cincinnati, Ohio (12
                                       of 26 units in Phase I built and sold;
                                       Phase II is 20 acres of undeveloped land)
--------------------------------------------------------------------------------
Debtor:                                Sycamore Real Estate Development, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $243,500
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $243,500  ($80,160)

--------------------------------------------------------------------------------
Balance due at maturity:               $243,500
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):             $307,000  ($124,382)
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         12/2003
--------------------------------------------------------------------------------
Annual interest payable:               $29,220
--------------------------------------------------------------------------------
Monthly interest payable:              $2,435
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,041,506; bears interest at the annual
first mortgage loan secured by         adjustable rate equal to lender's prime
property and other items:              rate plus 1% (currently 8.75%), has
                                       current annual and monthly debt service
                                       requirements of $89,369 and $7,447,
                                       respectively, requires payments of
                                       interest only until maturity and is
                                       prepayable without penalty. Interest has
                                       been paid through 10/2001. The debtor
                                       defaulted on the loan upon its maturity
                                       in 11/2001. The lender has refused to
                                       accept the debtor's 11/2001 interest
                                       payment and has accelerated the loan.
                                       Sigma Renaissance Corporation (controlled
                                       by Jerome S. Rydell, a member of the
                                       Board of Trustees of the Trust) has been
                                       assigned all the general partnership
                                       interests (and in certain cases, limited
                                       partnership interests) in the debtor by
                                       Gregory K. McGrath (a founder and former
                                       Chief Executive Officer of the Trust and
                                       the Operating Partnership) and his
                                       affiliate. Sigma Renaissance Corporation
                                       is in the process of negotiating with the
                                       lender to bring the loan current.
--------------------------------------------------------------------------------
Other matters:                         Two other Exchange Partnerships, Baron
                                       Strategic Investment Fund, Ltd. and Baron
                                       Strategic Investment Fund VIII, Ltd., own
                                       separate second mortgage notes secured by
                                       the property with the same terms except
                                       that as of 12/31/2001 they had principal
                                       balances of $230,000 and $77,000 (accrued
                                       unpaid interest of $96,333 and $28,049),
                                       respectively. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgage on a pari passu basis.
--------------------------------------------------------------------------------


                                       43
<PAGE>

                     Baron Strategic Investment Fund X, Ltd.

The Partnership owns (1) a 47.59% limited partnership interest in a limited
partnership which holds fee simple title to the Crystal Court Property-Phase I,
(2) a 41.71% limited partnership interest in a limited partnership which holds
fee simple title to the Pineview Property, (3) an undivided interest in an
unrecorded second mortgage loan secured by the Heatherwood Property-Phase II and
in three unsecured loans associated with such property, and (4) an undivided
interest in two recorded second mortgage loans secured by the Garden Terrace
Property-Phase III. Information concerning the Crystal Court Property and the
Pineview Property and the first mortgage indebtedness secured respectively by
them is included above in the tables entitled "Property Information - Equity
Property Interests" and "Mortgage Information - Equity Property Interests." The
interest of the Exchange Partnership and other Exchange Partnerships in the
respective second mortgage loans, terms of the respective first mortgage loans
secured by the Heatherwood Property and the Garden Terrace Property, and other
information are described below.

--------------------------------------------------------------------------------
1.  Heatherwood Second Mortgage Loans:

--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                             Heatherwood Apartments - Phase II (41
                                       units) Kissimmee, Florida
--------------------------------------------------------------------------------
Debtor:                                Heatherwood Apartments II, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided
42% interest in loans:                 $181,148
--------------------------------------------------------------------------------
12/31/2001  principal balance
(accrued unpaid interest):             $181,148  ($24,224)
--------------------------------------------------------------------------------
Balance due at maturity:               $181,148
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 58% in loans (accrued
unpaid interest):
                                       $111,213  ($0)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VIII,
Partnership in second                  Ltd. ("Baron Fund VIII") owns the
mortgage loans:                        remaining undivided 58% interest in the
                                       second mortgage loans secured by the
                                       Heatherwood Property and in the unsecured
                                       loans associated with the property
                                       ("Heatherwood Loans"). The aggregate
                                       original principal balance in respect of
                                       Baron Fund VIII's interest in the
                                       Heatherwood Loans was $206,260; the
                                       aggregate 12/31/2001 principal balance
                                       and aggregate balance due at maturity is
                                       $111,213 (accrued unpaid interest of $0);
                                       the aggregate annual (and monthly)
                                       payments due it are $6,996 ($583). The
                                       other terms relating to Baron Fund VIII's
                                       interest in the Heatherwood Loans are the
                                       same as stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $136,500 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal to
                                       the extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 30% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of 1% over prime rate
                                       (currently 8.75%) as to $732 of
                                       principal, and (iii) fixed interest rate
                                       of 12% as to $43,917 of principal. The
                                       loans require payments of interest only
                                       until maturity.
--------------------------------------------------------------------------------
Maturity date:                         10/2004
--------------------------------------------------------------------------------
Annual interest payable:               $13,616 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $1,135
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------


                                       44
<PAGE>

                Baron Strategic Investment Fund X, Ltd. (cont'd)

--------------------------------------------------------------------------------
12/31/2001 principal balance           $680,644 ($285,870); the loan matures in
of first mortgage loan                 11/2004, has a balance due at maturity of
secured by property (42% of            $655,856, bears interest at a fixed
amount) and other terms:               annual rate of 7.75%, has annual and
                                       monthly debt service and requirements of
                                       $61,038 and $5,087, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
--------------------------------------------------------------------------------
Other matters:                         The Heatherwood Loans consist of a second
                                       mortgage note secured by the Heatherwood
                                       Property with a principal balance
                                       $285,680 and unsecured loans in the
                                       aggregate principal amount of $6,361.
--------------------------------------------------------------------------------

2.  Garden Terrace Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                             Garden Terrace Apartments - Phase III
                                       (91 units) Orlando, Florida
--------------------------------------------------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided
55% interest in loan:                  $682,972
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $682,972  ($77,967)
--------------------------------------------------------------------------------
Balance due at maturity:               $682,972
--------------------------------------------------------------------------------
12/31/2001 principal balance
of other Exchange
Partnerships' undivided 45% in
loan (accrued unpaid interest):
                                       $558,795  ($43,625)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VI, Ltd.
Partnerships in second mortgage        ("Baron Fund VI") and Baron Strategic
loans:                                 Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own the remaining undivided 45%
                                       interest in the second mortgage loans
                                       secured by the Garden Terrace Property
                                       ("Garden Terrace Second Mortgage Loans").
                                       The original principal balance,
                                       12/31/2001 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       VI's and Baron Fund IX's interest in the
                                       Garden Terrace Second Mortgage Loans is
                                       $248,353 (accrued unpaid interest of
                                       $19,283) and $310,442, (accrued unpaid
                                       interest of $24,342), respectively; the
                                       annual (and monthly) payments due them
                                       are $22,353 ($1,863) and $27,940
                                       ($2,328), respectively. The other terms
                                       relating to Baron Fund VI's and Baron
                                       Fund IX's interest in the Garden Terrace
                                       Second Mortgage Loans are the same as
                                       stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $404,250 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable to
                                       holders of note only after payment of
                                       interest due on the note referred to in
                                       (ii) below) and (ii) fixed interest rate
                                       of 9% as to $278,722 of principal,
                                       payable only from excess cash flow after
                                       payment of 2% minimum interest and 7%
                                       participation interest due on the note
                                       referred to in (i) above. The loans
                                       require payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         1/2007
--------------------------------------------------------------------------------
Annual interest payable:               $61,467 (plus any additional
                                       participation interest)
--------------------------------------------------------------------------------
Monthly interest payable:              $5,122
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------


                                       45
<PAGE>

                Baron Strategic Investment Fund X, Ltd. (cont'd)

--------------------------------------------------------------------------------
12/31/2001 principal balance           $914,509 ($502,979); the loan matures in
first mortgage loan                    5/05, of has a balance due at maturity of
secured by property (55% of            $822,063, bears interest at the fixed
amount) and other items:               annual rate of 8.31%, has annual and
                                       monthly debt service requirements of
                                       $96,047 and $8,004, respectively,
                                       amortizes on a 25-year basis and may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
--------------------------------------------------------------------------------
Other matters:                         The Exchange Partnership paid a note (the
                                       "Note") with a current principal balance
                                       of $400,000 to the seller in connection
                                       with its acquisition of an undivided 75%
                                       interest in the Garden Terrace Second
                                       Mortgage Loans. The partnership in turn
                                       sold an undivided 20% interest (and
                                       retained a 55% interest) in the loans.
                                       The Note bears an annual interest rate of
                                       10%, has a maturity date of 1/1/2007 and
                                       is secured by a collateral assignment of
                                       the partnership's interest in the loans
                                       and a second mortgage on the property.
--------------------------------------------------------------------------------


                                       46
<PAGE>

                Lamplight Court of Bellefontaine Apartments, Ltd.

The Exchange Partnership owns (1) a 31.7% limited partnership interest in a
limited partnership which holds fee simple title to the Lamplight Property and
(2) two unrecorded second mortgage loans secured by the Lamplight Property.
Additional information concerning the Lamplight Property and the first mortgage
indebtedness secured by it is included above in the tables entitled "Property
Information - Equity Property Interests" and "Mortgage Information - Equity
Property Interests." The interest of the Exchange Partnership in the second
mortgage loans and other information are described below.

--------------------------------------------------------------------------------
Lamplight Court Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Lamplight Court Apartments (80 units)
                                       Bellefontaine, Ohio
--------------------------------------------------------------------------------
Debtor:                                Independence Village, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $678,302
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $678,302  ($270,533)
--------------------------------------------------------------------------------
Balance due at maturity:               $678,302
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Adjustable interest rate of 1% over
amortization provisions:               prime rate (currently 5.75%) as to
                                       $585,000 of principal, and (ii) fixed
                                       interest rate of 12% as to $93,302 of
                                       principal. The loans require payments of
                                       interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         12/2006
--------------------------------------------------------------------------------
Annual interest payable:               $44,834
--------------------------------------------------------------------------------
Monthly interest payable:              $3,736
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,304,396; the loan matures in 11/2006,
first mortgage loan secured by         has a balance due at maturity of
property and other terms:              $1,158,349, bears interest at a fixed
                                       annual rate of 9.04%, has annual and
                                       monthly debt service requirements of
                                       $141,445 and $11,787, respectively,
                                       amortizes on a 25-year basis, and is
                                       prepayable after the fifth anniversary of
                                       the loan, provided that in the sixth and
                                       seventh years prepayment requires a fee
                                       equal to the greater of 1% of the prepaid
                                       amount or yield maintenance.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Lamplight Court
                                       Second Mortgage Loans consisted of a
                                       second mortgage note with a principal
                                       balance of $585,000 and an unsecured
                                       demand note with a principal balance of
                                       $93,302. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       mortgage modification agreement under
                                       which the Exchange Partnership agreed to
                                       set the maturity date on the demand note
                                       at 12/2006, the same maturity date as the
                                       second mortgage note, in exchange for the
                                       agreement of the debtor to secure its
                                       repayment obligations on the demand note
                                       with a second mortgage on the Lamplight
                                       Court Property.
--------------------------------------------------------------------------------

                                       47
<PAGE>

Investment Objectives and Policies

     General

     The Trust and the Operating Partnership have been organized to acquire
equity interests in residential apartment properties located in the United
States and/or to provide or acquire mortgage loans secured by such types of
property. Such investments are expected to consist primarily of: (i) the direct
and indirect acquisition, ownership, operation, management, improvement and
disposition of equity interests in such types of properties and/or (ii) mortgage
loans which the Trust and the Operating Partnership provide or acquire which are
secured by mortgages on such types of properties. The Trust seeks to: (1)
generate current cash flow for distribution to Shareholders and Unitholders from
rental payments from the rental of residential apartment units which the Trust
and the Operating Partnership may acquire and/or principal and interest payments
in respect of mortgage loans which the Trust and the Operating Partnership may
provide or acquire and (2), where applicable, provide the opportunity for
capital appreciation of residential apartment properties. The Trust and the
Operating Partnership will make pro rata distributions to their Shareholders and
Limited Partners of net income, if any, generated from investments in property
interests as cash flow allows. Properties in which the Trust and the Operating
Partnership acquire an interest are expected to use the straight-line method of
depreciation over 30 years.

     The Trust and the Operating Partnership intend to acquire, own, operate,
manage, and improve residential apartment property interests for long-term
ownership, and thereby to seek to maximize current and long-term income and the
value of its assets. The strategy of the Trust and the Operating Partnership is
to pursue acquisitions of interests in properties that (i) are available at
prices below estimated replacement cost; (ii) may provide attractive returns
with significant potential growth in cash flow from property operations; (iii)
are strategically located, of high quality and competitive in their respective
markets; (iv) have been under-managed or are otherwise capable of improved
performance through intensive management and leasing that will result in
increased occupancy and rental revenues, and (v) provide anticipated total
returns that will increase distributions by the Trust and the Operating
Partnership and their overall market value. The Trust will make investments in
properties indirectly through the Operating Partnership in which it will hold
all of its real estate assets and conduct all real estate operations. Unless the
context otherwise requires, the term "Trust" as used below in this item
collectively refers to Baron Capital Trust and the Operating Partnership.

     The primary business objective of the Trust is to make distributions to
Shareholders and Unitholders and to increase the value of the Trust's portfolio
of properties in which it acquires an interest. The Trust intends to achieve
these objectives by:

     (i) Acquiring interests in residential apartment properties located in the
United States that are available at prices below estimated replacement cost and
capable of enhanced performance, both in terms of cash flow and investment
value, through application of the Trust's management ability and strategic
capital improvements;

     (ii) Acquiring mortgage loans, including subordinated mortgage loans
secured by mortgages on existing residential apartment properties located in the
United States;

     (iii) Increasing cash flow of the Trust's property interests through active
leasing, rent increases, improvement in tenant retention, expense controls,
effective property management, and regular maintenance and periodic renovations,
including additions to amenities;

     (iv) Managing operating expenses through the use of affiliated leasing,
marketing, financing, accounting, legal, and data processing functions; and

     (v) Emphasizing capital improvements to enhance the Trust's competitive
advantages in its markets.

     The Trust and the Operating Partnership intend to provide or acquire
subordinated mortgage loans which provide for the payment of a fixed or
adjustable rate of interest plus, in certain cases, participation interest that
is payable out of available cash flow remaining after the payment of operating
expenses and debt service requirements and/or out of net proceeds from the sale
or refinancing of such property remaining after the payment of transaction
expenses and indebtedness secured by such property. The repayment of such loans
would be secured by a subordinated mortgage on the underlying property.
Subordinated mortgages securing loans to be provided or acquired by the Trust or
the Operating Partnership may or may not be recorded. None of the subordinated
mortgage interests acquired by the Operating Partnership as of the date of this
Report have been recorded due to restrictions contained in the underlying first
mortgage loan documents. (See "- Trust Policies with Respect to Certain
Activities - Investment Policies" below). The Trust will not provide or acquire
mortgage loans in respect of any property where the amount invested by the Trust
or


                                       48
<PAGE>

the Operating Partnership plus the amount of any existing indebtedness in
respect of such property exceeds 80% of the property's estimated replacement
cost new unless substantial justification exists.

     The Exchange Partnerships, substantially all of whose equity interest the
Operating Partnership acquired in the Exchange Offering, collectively manage the
properties in which they have an interest and share property management
expenses. Other properties in which the Operating Partnership acquires an
interest will be similarly managed.

     The Trust intends to utilize one or more sources of capital for future
acquisitions and capital improvements, which may include undistributed cash
flow, borrowings, issuance of debt or equity securities and other bank and/or
institutional borrowings. The Trust intends to investigate making an additional
public or private offering of Common Shares and/or Units within the next
12-month period if the Board of the Trust determines that suitable property
acquisition opportunities that meet its investment criteria are available to the
Trust at attractive prices and such an offering would fulfill its cost of funds
requirements. There can be no assurance, however, that the Trust will be able to
obtain capital for any such acquisitions or improvements on terms favorable to
the Trust.

     The Trust qualified as a REIT for federal income tax purposes beginning
with its taxable year ending December 31, 1998.

     Trust Policies with Respect to Certain Activities

     The following is a discussion of the Trust's policies with respect to
investments, dispositions, financings, and conflicts of interest. These policies
have been determined by the Board of Trustees of the Trust and under the
Declaration of Trust may be amended or revised from time to time at the
discretion of the Board with approval of a majority in interest of the
Shareholders entitled to vote on such matters. Section 1.9 of the Declaration of
Trust for the Trust contains certain additional limitations on the Trust's
activities.

     At all times, the Trust intends to make investments and conduct its
operations in such a manner as to be consistent with the requirements of the
Code for the Trust to qualify as a REIT unless, because of changing
circumstances or changes in the Internal Revenue Code of 1986, as amended (the
"Code") (or in Treasury Regulations), the Board of Trustees of the Trust, with
the consent of a majority of the Shareholders entitled to vote on such matter
approving the Board's determination, determines that it is no longer in the best
interests of the Trust to qualify as a REIT. No assurance can be given that the
Trust's objectives will be attained.

     Investment Policies

     The Trust's investment objective is to provide quarterly cash distributions
and achieve long-term appreciation through increases in cash flows and the value
of its property interests. The Trust intends to pursue these objectives by
directly or indirectly acquiring equity interests in residential apartment
properties located in the United States and/or providing or acquiring mortgage
loans and other real estate interests related to such types of properties
consistent with its qualification as a REIT. The Trust may invest in first
mortgage loans or subordinated mortgage loans and participating or convertible
mortgages if it concludes that it may benefit from the cash flow or any
appreciation in the value of the subject property. Such mortgages are similar to
equity participation. The Trust may also retain a purchase money mortgage for a
portion of the sale price in connection with the disposition of properties from
time to time.

     Subject to the percentage of ownership limitations and gross income tests
necessary for REIT qualification, the Trust also may invest in securities of
entities engaged in real estate activities or securities of other issuers,
including for the purpose of exercising control over such entities. The Trust
may acquire all or substantially all of the securities or assets of other REITs
or similar entities where such investments would be consistent with the Trust's
investment policies.

     The Trust will not make an equity investment in respect of any property
where the amount invested by it plus the amount of any existing indebtedness or
refinancing indebtedness in respect of such property exceeds the appraised value
of the property. In addition, the Trust will not provide or acquire debt
financing in respect of any property where the amount invested by the Trust plus
the amount of any existing indebtedness in respect of such property exceeds 80%
of the property's estimated replacement cost new as determined by the Board of
Trustees unless substantial justification exists. Repayment of any mortgage
loans provided or acquired by the Trust would typically be secured by a mortgage
on the land, apartment units, and other improvements financed by the Trust and
be non-recourse to the borrower beyond the underlying property and/or other
assets of the borrower. It is expected that in most cases where it will provide
or acquire a loan, the Trust will provide or acquire a subordinated mortgage
loan that is subordinate to a large-


                                       49
<PAGE>

scale first mortgage loan provided by a lending institution. In certain cases,
mortgage loans provided or acquired by the Trust may be in the form of first
mortgage loans.

     Subordinated mortgages securing subordinated mortgage loans provided or
acquired by the Trust may or may not be recorded. None of the subordinated
mortgage interests acquired as of the date of this Report have been recorded due
to restrictions contained in first mortgage loan documents. If any subordinated
mortgage in favor of the Trust is not recorded, the Trust's security interest in
the mortgage would be unperfected and, until the subordinated mortgage is
recorded, the Trust would be pari passu (i.e., on an equal basis) with all other
unsecured creditors of the borrower, provided, however, the security instruments
that will be entered into in connection with mortgage loans to be provided or
acquired by the Trust will typically restrict the borrower's ability to enter
into a subsequent loan arrangement with third parties which would be senior to
or pari passu with (i.e., equal to) the mortgage held by the Trust. Non-payment
of any subordinated mortgage loan that may be provided or acquired by the Trust
may constitute an event of default by the borrower under the underlying senior
mortgage loan, and such senior mortgage loan may have to be repaid by the
borrower before Shareholders in the Trust will receive any return on their
investment.

     The Board of the Trust has adopted a policy, described below at " -
Conflict of Interest Policies," designed to eliminate or minimize potential
conflicts of interest which may arise in respect of any residential apartment
property investment opportunity which an Independent Trustee, any other member
of the Board, any member of senior management, or any of their respective
affiliates may wish to pursue for his own account and which might be suitable
for the Trust and the Operating Partnership.

     The Trust will obtain and maintain insurance coverage on property in which
it acquires an equity interest (and, prior to providing or acquiring any
mortgage loan in respect of a property, will be listed as an additional insured
or loss payee in respect of such property), protecting against casualty loss up
to replacement cost (with a deductible per loss ranging between $1,000 and
$5,000 except in the case of flood and hurricane damage where the deductible
ranges between 1% to 2% per loss), and against public liability in an amount
that is reasonable taking into account the market value of the property at the
time insurance is obtained. There can be no assurance, however, that the Trust's
property interest would not sustain losses in excess of its applicable insurance
coverage, and it could sustain losses as a result of risks which are
uninsurable. There are certain types of losses (generally of a catastrophic
nature, such as earthquakes, floods and wars) which may be either uninsurable or
not economically insurable.

     Pending the commitment of Trust and Operating Partnership funds for
business purposes, for distributions to Shareholders and Unitholders or for
application of reserve funds to their purposes, the Board of Trustees has full
authority and discretion to make short-term investments in: (i) obligations of
banks or savings and loan associations that either have assets in excess of $5
billion or are insured in their entirety by the United States government or its
agencies and (ii) obligations of or guaranteed by the United States government
or its agencies. Such short-term investments would be expected to earn rates of
return which are lower than those earned in respect of properties in which the
Trust may invest.

     The Trust intends to make investments in such a manner that it will not be
treated as an investment company under the Investment Company Act of 1940.

     Disposition Policies

     The Board of Trustees of the Trust will periodically review the portfolio
of assets which the Trust acquires. Disposition decisions relating to a
particular property will be made based on (but not limited to) the following
factors: (i) potential to continue to increase cash flow and value; (ii) the
sale price; (iii) strategic fit of the property with the rest of the Trust's
portfolio; (iv) potential for, or the existence of, any environmental or
regulatory problems; (v) alternative uses of capital; and (vi) maintaining
qualification as a REIT. Any decision to dispose of a property will be made by
the Board of Trustees. The prohibitions in the Code and related regulations on a
REIT holding property for sale may affect the Trust's ability to sell properties
without adversely affecting distributions to Shareholders and Unitholders.

     In April 2001, the Trust completed the sale of one property (Glen Lakes
Apartments) whose performance has had a materially adverse effect on the
operating results of the Company. The Trust is currently investigating the
disposition of two additional under-performing properties. There can be no
assurance that the Company will be able to dispose of the properties on terms
and conditions that are attractive to the Company or that the Company will be
able to dispose of the properties at all.


                                       50
<PAGE>

     Financing Policies

     The Trust will have the right to borrow funds, and use the Trust's
available assets as security for any such loan, if the Trust's cash requirements
exceed its available cash. Under the Declaration of the Trust, the aggregate
borrowings of the Trust in relation to its net assets may not exceed 300%,
except where the Trust determines that a higher level of borrowing is
appropriate. It is expected that each property in which the Trust invests will
secure a first mortgage loan. The principal balance of any such first mortgage
loan typically would represent a substantial percentage of the Trust's basis in
any property in which the Trust owns an equity interest.

     To the extent that the Board of Trustees desires that the Trust obtain
additional capital, the Trust may raise such capital through additional public
and private equity offerings, debt financing, retention of cash flow (subject to
satisfying the Trust's distribution requirements under the REIT rules) or a
combination of these methods. The Trust may determine to issue securities senior
to the Common Shares, including Preferred Shares and debt securities (either of
which may be convertible into Common Shares or be accompanied by warrants to
purchase Common Shares). The Trust may also finance acquisitions of properties
or interests in properties through the exchange of properties, the issuance of
Shares, or the issuance of Units of limited partnership interest in the
Operating Partnership and any other partnerships the Trust may form or acquire
an equity interest in to conduct all or a portion of its real estate operations.

     The proceeds from any borrowings by the Trust may be used to pay
distributions, to provide working capital, to purchase additional interests in
the Operating Partnership, to refinance existing indebtedness or to finance
acquisitions or capital improvements of new properties.

     Conflict of Interest Policies

     The Trust has adopted certain policies designed to eliminate or minimize
potential conflicts of interest, as described below. However, there can be no
assurance that these policies always will be successful in eliminating the
influences of such conflicts, and if they are not successful, decisions could be
made that might fail to reflect the interests of all Shareholders and
Unitholders.

     Senior management of the Trust has discretion in day to day management and
control of the affairs of the Trust and the Operating Partnership, subject to
(i) general supervision and review by the Independent Trustees and the other
members of the Board of Trustees of the Trust and (ii) prior approval authority
of a majority of the Board and/or of a majority of the Independent Trustees in
respect of certain actions of the Trust and the Operating Partnership. The
Declaration of the Trust requires that a majority of the Board of the Trust be
comprised of Independent Trustees. Two of the three current members of the Board
of Trustees are Independent Trustees.

     Actions of the Trust and the Operating Partnership requiring approval of
the Board and/or the Independent Trustees include, without limitation, the
payment of compensation to members of senior management, Independent Trustees,
any other members of the Board of Trustees or any of their respective affiliates
in amounts in excess of certain specified limits for services performed for the
Trust, and the acquisition of properties from, or the sale of properties to, any
such parties. For example, the Trust may not purchase property from a member of
senior management, a Trustee, any other member of the Board of Trustees or any
of their respective affiliates unless a majority of the members of the Board
and, in addition, a majority of the Independent Trustees who have no other
interest in the particular proposed transaction (beyond their role on the Board
or as Independent Trustees) review the proposed transaction and determine that
it is fair and reasonable to the Trust and that the purchase price to the Trust
for such property is no greater than the cost of the property to such proposed
seller, or if the purchase price to the Trust is in excess of such cost, that
substantial justification for such excess exists and such excess is reasonable,
provided, however, in no event may the purchase price for the property exceed
its then current appraised value.

     The Board of Trustees has adopted a policy designed to eliminate or
minimize potential conflicts of interests which may arise in respect of
investment opportunities suitable for the Trust and the Operating Partnership
which may be presented to members of senior management, an Independent Trustee,
any other member of the Board, or any of their respective affiliates. Under the
policy, such parties may pursue for their own account a residential apartment
property investment opportunity which may be suitable for the Trust and the
Operating Partnership (i.e., in accordance with the purposes for which they were
organized) only upon fulfillment of the following conditions. First, the
requesting party or parties must deliver to the Board of the Trust, at least 60
days prior to the consummation of any such transaction, a written investment
proposal identifying the parties to be involved in such transaction, specifying
in reasonable detail the proposed terms and conditions of the particular
investment opportunity intended to be pursued and


                                       51
<PAGE>

granting the Trust and the Operating Partnership a right of first refusal,
exercisable within 30 days following the delivery of such proposal, to
participate in the proposed transaction in the place of the requesting party or
parties, on the terms and conditions specified in the written proposal.

     In addition, the requesting party or parties either (i) must receive
written notice from a majority of the disinterested members of the Board (i.e.,
those persons who have no other interest in any such transaction beyond their
role on the Board), or an authorized representative acting on their behalf,
which specifies that the Trust and the Operating Partnership have determined not
to participate in the proposed transaction or (ii) must have not received from
the disinterested members of the Board, or an authorized representative acting
on their behalf, written notice, within 30 days following the receipt of such
written proposal, which notifies the requesting party or parties that the Trust
or the Operating Partnership elect to exercise their right of first refusal to
participate in the proposed transaction on the terms and conditions specified in
the written proposal. The Board of Trustees and the Independent Trustees are
responsible for overseeing the conflicts policy under the circumstances
described above to insure that it is applied fairly to the Trust. However, there
can be no assurance that the policies of the Trust and the Operating Partnership
will always be successful in eliminating or minimizing the influence of such
conflicts, and, if they are not successful, decisions could be made that might
fail to reflect fully the interests of all Shareholders and Unitholders.

Property Description

     The Acquired Properties and the Exchange Properties in which the Operating
Partnership currently owns an interest are primarily garden style, one and
two-story residential apartment dwellings which range in size from eight units
to 164 units. The Trust believes that the Acquired Properties and the Exchange
Properties generally occupy strategic locations in growing sub-markets. The
average unit size for properties is 640 square feet, with 25% of the units
having two or more bedrooms. A majority of the units have washer/dryer
connections and walk-in closets. Certain of the properties have improved their
attractiveness by investing in extensive landscaping and rehabilitating certain
units. Other features included in certain properties are swimming pools,
playgrounds, volleyball courts, fitness centers and community rooms.

     Each of the Acquired Properties and Exchange Properties is a residential
apartment property and in one case, a condominium apartment property; there is
no tenant who occupies 10% or more of the rentable square footage. There is no
business, occupation or profession taking place on the properties, with the
exception of any home businesses being conducted from units. Other information
concerning the Acquired Properties and the Exchange Properties is set forth
above in this item.

     The Operating Partnership does not intend to acquire an interest in any
property which requires major maintenance unless (i) sufficient amounts have
been reserved to complete such maintenance and, in connection with the
acquisition, the Operating Partnership will receive the benefit of such reserves
or (ii) the acquisition price for the property interest reflects the cost of
required major maintenance items and the Operating Partnership has the ability
to fund such maintenance from its resources. The Operating Partnership intends
to review each of the properties in which it acquires an interest to determine
the costs and benefits of undertaking any capital improvements which may
increase the property's profitability. The Operating Partnership does not intend
to undertake any capital improvement in respect of a property unless the
investment is projected to result in a rate of return of 20% or more on the
investment.

Lease Agreements

     The Operating Partnership and the Exchange Partnerships use a variety of
lease forms to comply with applicable state and local laws and customs. At some
properties, leases provided or recommended by state or local apartment
associations are used. At other properties, a standard company lease is used and
modified if necessary to comply with local law or custom. The term of a lease
varies with local market conditions; however, one-year leases are most common.
Generally, the leases provide that unless the parties agree in writing to a
renewal, the tenancy will convert at the end of a lease term to a month-to-month
tenancy, subject to the terms and conditions of the lease, unless either party
gives the other party at least 30 days' prior notice of termination. All leases
are terminable by the Operating Partnership or the respective Exchange
Partnership for nonpayment of rent, violation of property rules and regulations,
or other specified defaults.

Competition

     In general, there are numerous other residential apartment properties
located in close proximity to each of the Acquired Properties and the Exchange
Properties. The number of units available in any target metropolitan market
could have a material effect


                                       52
<PAGE>

on a property's capacity to rent units and on the rents charged. In addition, in
many of the Trust's proposed sub-markets, institutional investors and owners and
developers of residential apartment properties compete for the acquisition and
leasing of properties. Many of these persons have substantial resources and
experience.

Insurance

     The Trust believes that all of the Acquired Properties and the Exchange
Properties are adequately insured; however, an uninsured loss could result in
loss of capital investment and anticipated profits.

ITEM 3.  LEGAL PROCEEDINGS

     The Operating Partnership and the Trust were named as defendant in two
separate actions alleging discriminatory firing at Blossom Corners Apartments.
The Operating Partnership believes the charges to be without merit and has
engaged counsel for defense. Any exposure over $150,000 is covered by employment
practices insurance. The Operating Partnership is a party to various other legal
actions resulting from its operating activities. These actions are routine
litigation and administrative proceedings arising in the ordinary course of
business, some which are covered by liability insurance, and none of which are
expected to have a material adverse effect on the consolidated financial
condition or results of operations of the Operating Partnership taken as a
whole.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF UNITHOLDERS

     None.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED UNITHOLDER MATTERS

Market Information

     There is no established public trading market for the Operating Partnership
Units.

Unitholders

     As of March 1, 2002, there were approximately 829 holders of record of
units of limited partnership interest in the Operating Partnership, its only
class of common equity.

Distributions

     The Operating Partnership has not declared any distributions on its
outstanding Units to date. In 1998 and 1999, the Trust declared and paid $72,159
and $270,348, respectively, of distributions on its outstanding Common Shares,
representing a return of capital. The Trust has not made a distribution since
September 1999 due to significant open accounts payable relating to the Cash
Offering and the Exchange Offering. Such accounts payable have been paid. The
Operating Partnership's ability to make future distributions will be determined
by the net cash flow it has available to make distributions. The Trust and the
Operating Partnership will make pro rata distributions to their Shareholders and
Limited Partners of net income, if any, generated from investments in property
interests as cash flow allows. See "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION."

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following discussion should be read in conjunction with the Operating
Partnership's Consolidated Financial Statements and Notes thereto. (See ITEM 7 -
FINANCIAL STATEMENTS).


                                       53
<PAGE>

Forward-looking Statements

     This Management's Discussion and Analysis or Plan of Operation and other
sections of this Report contain certain forward-looking statements within the
meaning of the Securities Litigation Reform Act of 1995 that are based on
current expectations, estimates and projections about the Operating
Partnership's business, management's beliefs and assumptions made by management.
Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", and variations of such words and similar expressions are intended
to identify such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
that are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements due to numerous factors, including, but not limited to those
discussed in Management's Discussion and Analysis or Plan of Operation, as well
as those discussed elsewhere in this Report and from time to time in the
Operating Partnership's other Securities and Exchange Commission filings and
reports. In addition, such statements could be affected by general domestic and
international economic conditions. The forward-looking statements contained in
this report speak only as of the date on which they are made, and the Operating
Partnership does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this Report. If
the Operating Partnership does update one or more forward-looking statements,
investors and others should not conclude that the Operating Partnership will
make additional updates with respect thereto or with respect to other
forward-looking statements.

Results of Operations

     The Operating Partnership commenced operations in the first half of 1998.
The Operating Partnership and its affiliate, Baron Capital Trust (the "Trust"),
a Delaware business trust, constitute an affiliated real estate company which
has been organized to acquire equity interests in residential apartment
properties located in the United States and/or to provide or acquire mortgage
loans secured by such types of property. The Operating Partnership conducts all
of the Trust's real estate operations and holds all direct or indirect property
interests acquired.

     The Trust is the sole general partner of the Operating Partnership, and, in
such capacity, the Trust controls the activities of the Operating Partnership.
The Trust has elected to be taxed as a real estate investment trust for federal
income tax purposes.

     As described elsewhere in this Report, in May 1998, the Trust commenced an
offering (the "Cash Offering") of up to 2,500,000 common shares of beneficial
interest ("Common Shares") in the Trust at a purchase price of $10.00 per share
(maximum proceeds of $25,000,000). In the Cash Offering, which expired on May
31, 2000, the Trust sold 702,076 Common Shares for an aggregate purchase price
of $7,020,763.

     The Trust contributed the net cash proceeds from the sale of Common Shares
in the Cash Offering ($5,467,858) to the Operating Partnership in exchange for
an equivalent number of units ("Units" or "Operating Partnership Units") of
limited partnership interest in the Operating Partnership. As of December 31,
2001, the Trust owned 963,346 Operating Partnership Units, representing
approximately 24% of the then outstanding Units. Such Units are comprised of the
Units acquired by the Trust from the Operating Partnership with the net proceeds
of the Cash Offering and the Units that holders of Units have elected to
exchange into Common Shares in the manner described below. Since the Units held
by the Trust comprise substantially all of its assets, the operating results of
the Trust are primarily dependent upon the operating results of the Operating
Partnership.

     Through the Operating Partnership, the Trust has acquired all or
substantially all the beneficial interests in 16 residential apartment
properties, including the Heatherwood I Apartments (67 studio, one bedroom and
two bedroom units located in Kissimmee, Florida) in June 1998; Crystal Court II
Apartments (80 studio, one bedroom and two bedroom units located in Lakeland,
Florida) in July 1998; Riverwalk Apartments (50 two bedroom units located in New
Smyrna, Florida) in September 1998; and 13 properties acquired as part of the
Exchange Offering in April 2000 (described below). In the Exchange Offering, the
Operating Partnership also acquired subordinated mortgage and other debt
interests in 10 properties.

     In July 1998 the Operating Partnership also acquired a small minority
limited partnership interest in 13 real estate limited partnerships then managed
by affiliates of Gregory K. McGrath (a founder and former Chief Executive
Officer of the Trust and the Operating Partnership and a principal holder of
Operating Partnership Units), including certain of the Exchange Partnerships
which participated in the Exchange Offering and are now controlled and managed
by the Trust.


                                       54
<PAGE>

     During 1998 and 1999, the Operating Partnership also acquired a 40% limited
partnership interest in Alexandria Development, L.P. (the "Alexandria
Partnership"), a Delaware limited partnership which owns Alexandria Apartments,
a 168-unit residential apartment property (the "Alexandria Property") under
development in Alexandria, Kentucky. As of December 31, 2001, 112 of the 168
planned residential units (approximately 67%) had been completed and were in the
rent-up stage. Of the completed units, 72 units had been rented as of November
30, 2001. The aggregate purchase price of the Operating Partnership's interest
was $1,285,000, and it received an option to acquire the remaining limited
partnership interests at the same price per percentage interest (for an
additional option exercise price of approximately $1,950,000). The purchase
price was based on an independent appraisal of the property less all
liabilities, and was approved by the Board of the Trust. During 2000, the
Operating Partnership purchased no additional units and the option expired in
October 2000.

     An affiliate of Mr. McGrath previously controlled the Alexandria
Partnership. It sold the 40% limited partnership interest in the Alexandria
Partnership to the Operating Partnership. In September 2001, Mr. McGrath's
affiliate assigned the remaining 60% limited partnership interest in the
Alexandria Partnership to Sigma Renaissance Corporation (a Michigan corporation
controlled by Jerome S. Rydell, a member of the Board of Trustees of the Trust),
which also became the managing general partner of the Alexandria Partnership.

     In early May 2001, MarCap Corporation filed an action in the United States
District Court for the Northern District of Illinois against WaKul, Inc. (a
telecommunications company controlled by Mr. McGrath), Mr. McGrath, and the
Alexandria Partnership, among other parties, seeking repayment of approximately
$407,000 of indebtedness (plus unspecified interest, attorney's fees and
collection costs) under a telecommunication equipment leasing agreement. Certain
of the equipment was installed at the Alexandria Property. The Alexandria
Partnership guaranteed WaKul, Inc.'s lease payments under the leasing agreement.

     The Alexandria Property is subject to first mortgage construction financing
with a principal balance as of December 31, 2001 of approximately $8,525,000.
The first mortgage is held by Fifth Third Bank. The Alexandria Partnership
defaulted on the first mortgage construction loan when it matured in December
2000, and the lender has exercised its right to accelerate payment of the loan.
In December 2001, a Kentucky court appointed a receiver to manage the property.
The construction contractor is also owed approximately $890,000 for construction
costs, penalties and interest. Sigma Renaissance Corporation, acting as the
managing general partner of the Alexandria Partnership, recently caused the
partnership to file for bankruptcy protection, and it is currently negotiating
with Fifth Third Bank and the construction contractor to address the defaults.

     In 2000, the Operating Partnership reduced to zero on its records the value
of its investment in the Alexandria Partnership due to the defaults on
indebtedness, recurring losses incurred by the Alexandria Property, a partners'
deficiency, and an updated appraisal that valued the property at an amount less
than the total liabilities owed.

     In September 1998, the Trust entered into an agreement with three real
estate development companies (Brentwood at Southgate, Ltd., Burlington
Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire, at the
Trust's option, two luxury residential apartment properties in the development
stage upon the completion of construction. The three development companies were
previously controlled by Mr. McGrath. In September 2001, Mr. McGrath assigned
all of the outstanding partnership interests in the three partnerships to Sigma
Renaissance Corporation. One of the residential apartment properties has been
sold to a third party with the Trust's consent. The remaining residential
property (the "Burgundy Hills Property"), located in Florence, Kentucky (part of
the Cincinnati metropolitan area), is scheduled to have a total of 396 units,
comprised of one, two and three bedroom/one or two bathroom apartments. Due to
events described below, the anticipated date of completion of construction of
the Burgundy Hills Property is uncertain.

     In connection with the transaction, the Trust obtained a right of first
negotiation to purchase the Burgundy Hills Property from its owner, Burlington
Residential, Ltd., upon completion and a right of first refusal to purchase the
property on the same terms offered by a third party. The purchase price is
expected to be approximately $30,000,000. It is contemplated that a significant
portion of that amount would be covered by first mortgage financing. At the
current time the Trust does not have adequate resources to close on the
transaction even if it were interested in doing so and if construction were
completed and it is uncertain whether the Trust will have adequate resources to
complete the transaction upon completion of construction. In addition, as
described below, because the owner of the first mortgage on the property has
assumed control of the management of the Borrower and the development of the
property, the exercisability of the Trust's purchase rights is currently
uncertain.

                                       55
<PAGE>

     In connection with the transaction, the Trust (along with Mr. McGrath)
agreed to co-guarantee long-term first mortgage construction financing provided
by KeyBank National Association ("KeyBank") to Burlington Residential, Ltd.
("Borrower"), the owner of the Burgundy Hills Property. As of December 31, 2001,
approximately $6,478,000 of the first mortgage loan had been drawn down. The
interest rate on the first mortgage loan is KeyBank's prime rate (currently
4.75%) or the LIBOR rate plus 2%. The Trust also agreed that, if the Borrower
failed to comply with the repayment and other obligations under the loan
documents, KeyBank could require the Trust to buy out the bank's position on the
entire amount of the construction loan.

     In September 2000, the Trust received notice from counsel to KeyBank that
the Borrower had defaulted on its loan for failure to pay current interest due
and meet certain equity requirements and covenants under the loan agreement,
adverse changes in the financial conditions of the Borrower and the Trust, and
the Trust's failure to meet certain tangible net worth tests set forth in the
loan agreements. KeyBank indicated that it was exercising its right to
accelerate the loan. According to Mr. McGrath, KeyBank agreed to forego further
action for at least 60 days while the parties attempted to reach an arrangement.
The extension expired in November 2000 and, according to Mr. McGrath, is
currently being extended on a month-to-month basis. The Borrower paid down the
outstanding accrued interest and a portion of the principal and intends to seek
a new long-term construction facility with another institutional lender to
replace the first mortgage loan (and the other subordinated financing described
below).

     In December 2000, an affiliate of BankOne acquired KeyBank's position in
the Burgundy Hills first mortgage loan. The loan is subject to the same terms
and conditions as that of the original KeyBank loan. Earlier, the BankOne
affiliate had provided additional institutional financing in the principal
amount of $1,576,000 to the Borrower. That loan is secured by a security
interest in partnership interests in the Borrower. Due to a default in payment
of interest due, the BankOne affiliate was assigned rental payments from the
Burgundy Hills Property and took over day-to-day management of the property. It
is intended that this loan would be paid off with the proposed new first
mortgage financing referenced above.

     The BankOne affiliate recently sold the two loans to Burgundy-Boone, LLC,
an Illinois limited liability company, according to the latter's counsel. As a
result, Burgundy-Boone, LLC has assumed control of management of the Borrower
and of the development of the Burgundy Hills Property.

     The Trust, as guarantor of the first mortgage loan, currently has a
contingent liability for its full outstanding amount. According to counsel for
Burgundy-Boone, LLC, as of November 2001, principal and interest payments on the
first mortgage loan are current. However, there can be no assurance that the
first mortgage loan will not again go into default, in which event
Burgundy-Boone, LLC might attempt to begin foreclosure proceedings against the
Burgundy Hills Property in respect of the first mortgage loan.

     Century Construction Inc., the general contractor which performed
construction services on the Burgundy Hills Property, recently filed an action
against the Borrower and Mr. McGrath in Kentucky state court to enforce a
mechanic's lien on the property in the amount of approximately $1,300,000. The
contractor also named KeyBank and the BankOne affiliate in the action, seeking
damages against them on allegations of lender's liability.

     In April 2000, pursuant to a registration statement on Form S-4, the
Operating Partnership completed its Exchange Offering under which it acquired
additional interests in residential apartment properties and one condominium
apartment property. In the Exchange Offering, the Operating Partnership issued
2,449,492 registered Operating Partnership Units in exchange for substantially
all outstanding units of limited partnership interest owned by individual
limited partners ("Exchange Limited Partners") in 23 limited partnerships (the
"Exchange Partnerships"). The Exchange Partnerships directly or indirectly owned
equity and/or debt interests in one or more of 25 residential apartment
properties and one condominium apartment property (the "Exchange Properties")
located in the southeast and mid-west United States.

     Holders of Operating Partnership Units (other than the Trust) are entitled
to exchange all or a portion of their Units at any time and from time to time
for an equivalent number of Common Shares of the Trust, so long as the exchange
would not cause the exchanging party to own (taking into account certain
ownership attribution rules) in excess of 5% of the then outstanding Common
Shares, subject to the Trust's right to cash out any holder of Units who
requests an exchange and subject to certain other exceptions.

     Following the completion of the Exchange Offering, the Exchange
Partnerships continued to own the same property interests they owned prior to
the offering; substantially all of the limited partnership interests in the 23
Exchange Partnership were owned by the Operating Partnership; Mr. McGrath, for
nominal consideration, assigned to the Trust all of the equity stock in 18 of
the corporate general partners of the Exchange Partnerships ("Corporate General
Partners") and granted to the Board of the Trust a management proxy coupled with
an interest to vote the shares of the remaining five Corporate General Partners;
the Corporate General Partner of


                                       56
<PAGE>

each of the Exchange Partnerships assigned to the Operating Partnership all of
its economic interest in the partnership; and Mr. McGrath caused each Corporate
General Partner to waive its right to receive from its Exchange Partnership any
ongoing fees, effective upon completion of the exchange. As a result of the
foregoing, the Operating Partnership owned substantially all of the economic
interest represented by the equity and debt interests owned by the Exchange
Partnerships and controlled management of such partnerships.

     In April 2001, the Operating Partnership sold its equity interest in one of
the Exchange Properties, Glen Lake Apartments, a 144-unit residential apartment
property located in St. Petersburg, Florida. Management of the Trust determined
to sell the property based on its lack of performance and its need for
substantial and frequent cash infusions. (See Note 5 "Sale of Property" in the
accompanying notes to the consolidated condensed financial statements.)

     Certain of the Exchange Partnerships in which the Operating Partnership
holds an interest own direct or indirect equity interests in 15 Exchange
Properties which consist of an aggregate of 868 residential apartment units
(comprised of studio, one, two, three and four-bedroom units). Certain of the
Exchange Partnerships in which the Operating Partnership holds an interest
directly or indirectly own subordinated mortgage and other debt interests in 10
Exchange Properties, which consist of an aggregate of 590 existing residential
apartment units (studio and one and two bedroom units) and 152 condominium
apartment units (two and three bedroom units) under development. Of the Exchange
Properties in which the Operating Partnership continues to own an interest, 20
properties are located in Florida, three properties in Ohio and one property
each in Georgia and Indiana. The property interests acquired by the Operating
Partnership are described in further detail at ITEM 2 - DESCRIPTION OF
PROPERTIES.

     The table below summarizes the results of operations of the Operating
Partnership for the years ended December 31, 2001 and 2000.

<TABLE>
<CAPTION>

                                                                    2001                    2000
                                                                    ----                    ----

<S>                                                           <C>                       <C>
         Revenues                                             $   7,181,005             $  5,358,608
         Real Estate Expenses                                 $   6,272,677             $  5,629,952
                                                              -------------             ------------
         Property Income (Loss)                               $     908,328             $   (271,344)
         Administrative Expenses/Other Expenses               $   2,799,640             $  2,726,912
                                                              -------------             ------------
         Loss Before Extraordinary Items                      $  (2,091,312)            $ (2,998,256)
         Extraordinary Item - Extinguishment of Debt          $   1,483,974                       --
                                                              -------------              ------------
         Net Loss                                             $    (607,338)            $ (2,998,256)
</TABLE>

Operations for the Fiscal Year Ended December 31, 2001 Compared to the Fiscal
Year Ended December 31, 2000

     Revenues increased by $1,822,397 from $5,358,608 for the year ended
December 31, 2000 to $7,181,005 for the year ended December 31, 2001. Real
Estate Expenses for the properties owned by the Operating Partnership increased
from $5,629,952 for the year ended December 31, 2000 to $6,272,677 for the year
ended December 31, 2001. The increases in Revenues and Real Estate Expenses were
principally due to the recognition of a full year's expenses in 2001 versus the
nine months expenses from the date of the completion of the Exchange Offering in
2000. Administrative Expenses increased by $346,945 from $1,322,298 for the year
ended December 31, 2000 to $1,669,243 for the year ended December 31, 2001
primarily due to a write-off of related party advances. Other (Income) Expenses
for the year ended December 31, 2001 were $1,330,397. These expenses were
primarily the result of a write-off of to related party receivables and cost
associated with refinancing activities which were partially offset by recovery
of previously recognized loan losses. The Operating Partnership also recognized
extraordinary income from the extinguishment of debt in connection with the sale
of the Glen Lake property and other extinguishments totaling $1,483,974. The
Operating Partnership's Net Loss before extraordinary items for the year ended
December 31, 2001 was $2,091,312 compared to $2,998,256 for the year ended
December 31, 2000.The Operating Partnership's Net Loss for the year ended
December 31, 2001 was $607,338 compared to $2,998,256 for the year ended
December 31, 2000.

Liquidity and Capital Resources

     Net Cash Provided by/Used in Operating Activities decreased by $1,003,830
from $230,266 cash provided in the year ended December 31, 2000 to $773,564 cash
used in the year ended December 31, 2001. The decrease in Net Cash Provided by
Operating Activities was principally due to an increase in other assets and a
substantial pay-down of accounts payable coupled with non-cash


                                       57
<PAGE>

adjustments for recovery of previously recognized loan losses and
extinguishments of debt. Net Cash Provided by Investing Activities increased
$2,957,885 from $181,333 cash used for the year ended December 31, 2000 to
$2,776,552 cash provided for the year ended December 31, 2001. The increase was
principally due to proceeds from the sale of the Glen Lake property net of
expenditures for property improvements. Cash Flow Used in Financing Activities
decreased by $541,774 from $55,662 cash used in the year ended December 31, 2000
to $597,436 cash used in the year ended December 31, 2001. The decrease was
principally due to payments of mortgages payable and notes payable after the
four loan refinancings.

     During 1999 and 2000, the Operating Partnership experienced certain cash
flow problems and has, from time to time, experienced difficulties meeting
obligations as they became due. However, as reflected in the accompanying
consolidated condensed financial statements, during 2001, the Operating
Partnership generated Funds From Operations (Funds from Operations is a measure
of profitability in the REIT industry, which is measured as net income less
depreciation, amortization, and other non-operating expenses and/or income) of
approximately $452,401 versus negative Funds From Operations of approximately
$477,668 during 2000.

     During the first three quarters of 2001, the Operating Partnership
refinanced four of its properties, which generated $1,875,000 of cash to the
Operating Partnership. This cash was used to reduce accounts payable owed by the
Operating Partnership, advance funds for a second round of refinancing, and
establish an escrow for expected major repairs to its Riverwalk property.
Additionally, two underlying assets of certain Exchange Partnerships were
refinanced in the third quarter generating $1,165,000 in cash. This cash was
used to pay down mortgage notes receivables of the Exchange Partnerships that
hold debt interests in properties.

     Management's plans to continue improving liquidity and profitability
encompass the following four strategies:

     o    Increase property cash collections through implementation of utility
          billings, rent increases and property enhancements;

     o    Refinance selected well performing assets;

     o    Dispose of assets which do not generate cash sufficient to cover
          operating costs or whose geographic location creates excessive burden;
          and

     o    Reduce corporate overhead.

     In implementing these strategies, management has adopted the following
action plans:

     o    In many locations, the market for apartments has started to include
          re-billing of property water costs to tenants. The Operating
          Partnership has initiated billing of tenants for their water used at
          several locations and intends to continue implementation of the
          strategy at other properties as the markets permit.

     o    In the second quarter of 2001, the Operating Partnership sold one of
          its properties (Glen Lake Apartments) that, in the past, required
          substantial and frequent cash infusions. Additional properties are
          being evaluated for potential disposition.

     o    The Operating Partnership has identified certain of its properties,
          which are performing well and have loans which are small relative to
          the value of the properties, given their excellent performance. Four
          properties were refinanced in the first three quarters of 2001,
          generating sufficient cash for the Operating Partnership to pay
          accounts payable, including those owed to professionals for services
          performed in connection with the Exchange Offering, and still have an
          amount in reserve. All four of these properties were refinanced at
          interest rates lower than the prior interest rate on the loans. The
          Operating Partnership received cash proceeds of approximately
          $1,875,000 as a result of refinancing these four properties.

     As a result of the re-financing of the four properties discussed above and
the refinancing of two underlying assets on certain Exchange Partnerships in
2001, the Trust had approximately $1,426,375 in available cash at December 31,
2001.

     Management believes that the actions presently being taken by the Operating
Partnership and the Trust, including the cash realized upon refinancing
properties as described above and its cash on hand, provide the opportunity for
the Operating Partnership and the Trust to improve liquidity and profitability.
The completion in April 2000 of the Exchange Offering has, in the opinion of
management, provided the critical mass necessary for profitable operations. The
Operating Partnership and the Trust will make distributions to their Unitholders
and Shareholders of net income, if any, generated from investments in property
interests as cash flow allows.

     The Operating Partnership and the Trust intend to use their securities
(including Common Shares and Units), proceeds from future sales of such
securities, and available operating cash flow and financing from other sources
to acquire interests in additional


                                       58
<PAGE>

residential apartment properties or interests in other partnerships
substantially all of whose assets consist of residential apartment property
interests, and payment of applicable fees and expenses.

     The operating results of the Operating Partnership and the Trust will
depend primarily upon income from the residential apartment properties in which
they directly or indirectly own or acquire an equity or debt interest. Operating
results in respect of equity interests will be substantially influenced by the
demand for and supply of residential apartment units in their primary market and
sub-markets, and operating expense levels. Operating results in respect of
mortgage and other debt interests will depend upon interest income, including,
in certain cases, participation interest, whose payment will depend upon the
operating performance, sale or refinancing of the underlying properties. The
operating results of the Operating Partnership and the Trust will also depend
upon the pace and price at which they can acquire and improve additional
property interests.

     The target metropolitan markets and sub-markets have benefited in recent
periods from demographic trends (including population and job growth) which
increase the demand for residential apartment units, while financing constraints
(specifically, reduced availability of development capital) have limited new
construction to levels significantly below construction activity in prior years.
Consequently, rental rates for residential apartment units have increased at or
above the inflation rate for the last two years. Expense levels also influence
operating results, and rental expenses (other than real estate taxes) for
residential apartment properties have generally increased at approximately the
rate of inflation for the past three years. Changes in interest rates are not
expected to materially impact operations, because the majority of the real
estate mortgages have fixed interest rates, as do all of the inter-company
loans.

     The Operating Partnership believes that known trends, events or
uncertainties which will or are reasonably likely to affect the short-term and
long-term liquidity and current and future prospects of the Operating
Partnership and the Trust include the performance of the economy and the
building of new apartment communities. Although the Operating Partnership cannot
reliably predict the effects of these trends, events and uncertainties on the
property investments of the Operating Partnership and the Trust as a whole, some
of the reasonably anticipated effects might include downward pressure on rental
rates and occupancy levels.

     Two recent developments could have a material impact on the performance of
the Operating Partnership. First is the general downturn in the U.S. economy due
in large part to the collapse of the technological sector. This translated into
a significantly softer 2001 summer apartment rental market, particularly in
Florida. Occupancies and collections have been negatively impacted for the last
nine months, and management does not anticipate any improvement in the near
term. The second development arises out of the horrible events of September 11,
2001. While management believes it is still too early to understand how deeply
this event will impact the confidence of Americans and their way of life, it is
likely to result in a more cash conscientious consumer, which could result in
downward pressure on rental rates.

     Generally, there are no seasonal aspects of the operations of the Operating
Partnership or the Trust that might have a material effect on their financial
conditions or results of operation. However, for the last 36 months, one 60-unit
student housing property owned by one of the Exchange Partnerships involved in
the Exchange Offering has had an average occupancy rate of 55% for nine months
of the year and 30% for the remaining three months of the year.

     Subject to the foregoing discussion, management believes that the Operating
Partnership and the Trust have the ability to satisfy their cash requirements
for the foreseeable future. However, management of the Operating Partnership
believes that it will be necessary to raise additional capital during the next
12 months to make acquisitions and to meet management's revenue and cash flow
goals.

     As part of the Operating Partnership's ongoing operations, management is
reviewing the entire portfolio of properties to determine the potential for
restructuring or refinancing various first mortgage loans. Additionally,
properties whose recent performance has materially negatively impacted the
Operating Partnership's operating results are being evaluated for possible sale.
Certain of these properties have been listed for sale. The Trust is also in
discussions with other apartment owners, and is exploring business combinations
that will bring it economies of scale and the size it needs for listing of its
Common Shares on a recognized securities exchange. Additional size would also
give the Operating Partnership and the Trust the operating margin necessary to
support their valuable management team that is believed necessary for their
long-term growth.


                                       59
<PAGE>

     The Trust and the Operating Partnership expect no material change in the
number of employees over the next 12 months.

     In February 2002, the Board of Trustees of the Trust received the
preliminary findings of a report prepared by an independent auditing firm in
which the firm opined that certain transactions of the Trust and the Operating
Partnership (including the Alexandria and Riverwalk property investments)
entered into by prior management involved improper conduct. The Board will use
the preliminary findings for discussions with the former Managing Shareholder of
the Trust concerning the transactions and to investigate the rights and
obligations of the Trust and the Operating Partnership in connection therewith.
The ultimate results of the preliminary findings and discussions will be
reported at such time as they become definitive.


ITEM 7. FINANCIAL STATEMENTS

     Set forth below.


                                       60
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000




<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                          INDEX TO FINANCIAL STATEMENTS


                                                                      PAGE

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    F-1

CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheet                                                      F-2

   Statements of Operations                                           F-3

   Statements of Partners' Capital                                    F-4

   Statements of Cash Flows                                           F-5

   Notes to Financial Statements                                    F-6 - F-28


<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Baron Capital Properties, L.P.
Cincinnati, Ohio

We have audited the accompanying consolidated balance sheet of Baron Capital
Properties, L.P. (the "Partnership") as of December 31, 2001, and the related
consolidated statements of operations, partners' capital and cash flows for the
years ended December 31, 2001 and 2000. These consolidated financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Baron
Capital Properties, L.P. as of December 31, 2001, and the consolidated results
of their operations and their cash flows for the years ended December 31, 2001
and 2000, in conformity with accounting principles generally accepted in the
United States.

                            RACHLIN COHEN & HOLTZ LLP

Miami, Florida
February 14, 2002


                                       F-1


<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001


                                     ASSETS
Rental Apartments:
   Land                                                            $  4,986,900
   Rental property held for sale                                      3,171,564
   Depreciable property                                              23,968,683
                                                                   ------------
                                                                     32,127,147
   Less accumulated depreciation                                      3,228,396
                                                                   ------------
                                                                     28,898,751

Cash and Cash Equivalents                                             1,426,375
Restricted Cash                                                         330,279
Receivables from Affiliates                                           6,430,940
Other Property and Equipment                                            106,321
Other Assets                                                            875,673
                                                                   ------------
                                                                   $ 38,068,339
                                                                   ============

                         LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
   Mortgages payable                                               $ 23,161,025
   Accounts payable and accrued liabilities                             948,224
   Notes payable                                                      1,852,136
   Payables to affiliates                                             1,173,240
   Security deposits                                                    221,911
                                                                   ------------
         Total liabilities                                           27,356,536
                                                                   ------------

Partners' Capital:
   General partner; issued and outstanding,
   39,488 partnership units                                             (67,248)
   Limited partners; issued and outstanding,
   4,059,217 partnership units,
      of which 757,746 units are subject to escrow restrictions      10,779,051
                                                                   ------------
         Total partners' capital                                     10,711,803
                                                                   ------------
                                                                   $ 38,068,339
                                                                   ============

                See notes to consolidated financial statements.


                                      F-2
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  Year Ended
                                                                  December 31,
                                                                  ------------
                                                                2001           2000
                                                            -----------    -----------
<S>                                                         <C>            <C>
Revenues:
   Property:
      Rental                                                $ 5,738,562    $ 4,707,842
      Equity in net income of unconsolidated partnerships            --       (229,064)
   Interest and other income                                  1,442,443        879,830
                                                            -----------    -----------
                                                              7,181,005      5,358,608
                                                            -----------    -----------

Real Estate Expenses:
   Depreciation                                               1,105,507        953,754
   Amortization of loan costs                                   107,809        162,220
   Interest                                                   1,919,811      1,901,100
   Repairs and maintenance                                      662,951        632,283
   Personnel                                                    821,950        680,146
   Property taxes                                               499,139        456,781
   Property insurance                                           143,301        101,707
   Utilities                                                    528,623        421,681
   Other                                                        483,585        320,280
                                                            -----------    -----------
                                                              6,272,677      5,629,952
                                                            -----------    -----------

Administrative Expenses:
   Personnel, including officer's compensation                  643,305        721,626
   Professional services                                        238,165        308,232
   Other                                                        787,773        292,440
                                                            -----------    -----------
                                                              1,669,243      1,322,298
                                                            -----------    -----------

Loss Before Other Expenses and Extraordinary Item              (760,915)    (1,593,642)
                                                            -----------    -----------

Other (Income) Expenses:
   Write-off of related party notes receivable                1,093,124             --
   Income from loan discount repayment                         (400,881)            --
   Impairment on investments                                     65,130        354,544
   Provision (recovery) for loan losses                        (641,601)       235,599
   Mortgage prepayment penalties                                827,013             --
   Write-off of loan costs on refinanced loans                  176,769             --
   Loss on investment held for sale                             210,843        814,471
                                                            -----------    -----------
                                                              1,330,397      1,404,614
                                                            -----------    -----------

Loss Before Extraordinary Item                               (2,091,312)    (2,998,256)
                                                            -----------    -----------

Extraordinary Items - Extinguishment of Debt:
   Non-affiliates                                               104,719             --
   Affiliates                                                 1,267,755             --
   Former chief executive officer                               111,500             --
                                                            -----------    -----------
                                                              1,483,974             --
                                                            -----------    -----------

Net Loss                                                    $  (607,338)   $(2,998,256)
                                                            ===========    ===========

Loss Per Partnership Unit Before Extraordinary Item         $     (0.51)   $     (0.88)
Extraordinary Item- Extinguishment of Debt                         0.36             --
                                                            -----------    -----------

Net Loss Per Partnership Unit                               $     (0.15)   $     (0.88)
                                                            ===========    ===========

Weighted Average Number of Units Outstanding                  4,080,006      3,421,746
                                                            ===========    ===========
</TABLE>


                See notes to consolidated financial statements.

                                      F-3


<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL


<TABLE>
<CAPTION>
                                                      General Partner           Limited Partners
                                                      ---------------           ----------------
                                                    Units       Amount        Units         Amount           Total
                                                    -----       ------        -----         ------           -----

<S>                                                 <C>       <C>          <C>          <C>             <C>
Partners' Capital, December 31, 1999                18,962    $(33,362)    1,877,246    $  2,034,982    $  2,001,620

Year Ended December 31, 2000:
   Capital contributions - Trust                       270          --        26,990         230,118         230,118
   Exchange offering contributions                  24,685          --     2,449,492      11,793,159      11,793,159
   Initial limited partners reduction               (4,429)         --      (444,414)             --              --
   Units issued per broker/dealer agreement on
        Exchange Offering                               --          --       124,903              --              --
   Net loss                                             --     (29,983)           --      (2,968,273)     (2,998,256)
   Credit for estimated fair value of services
        performed by officer                            --       2,170            --         214,830         217,000
                                                   -------    --------    ----------    ------------    ------------

Partners' Capital, December 31, 2000                39,488     (61,175)    4,034,217      11,304,816      11,243,641

Year Ended December 31, 2001:
   Units issued - settlement of debt                    --          --        25,000          75,500          75,500
   Net income                                           --      (6,073)           --        (601,265)       (607,338)
                                                   -------    --------    ----------    ------------    ------------

Partners' Capital, December 31, 2001                39,488    $(67,248)    4,059,217    $ 10,779,051    $ 10,711,803
                                                   =======    ========    ==========    ============    ============
</TABLE>

                See notes to consolidated financial statements.


                                      F-4

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                     Year Ended
                                                                                                     December 31,
                                                                                                     ------------
                                                                                                 2001           2000
                                                                                             -----------    -----------
<S>                                                                                          <C>            <C>
Cash Flows from Operating Activities:
   Net loss                                                                                  $  (607,338)   $(2,998,256)
   Adjustments to reconcile net loss to net cash and
      cash equivalents (used in) provided by operating activities:
         Impairment of investments                                                                65,130        354,544
         Provision (recovery) for loan losses                                                   (641,601)       235,599
         Credit for estimated fair value of services performed by officer                             --        217,000
         Extinguishment of debt                                                               (1,483,974)            --
         Depreciation                                                                          1,143,826        987,754
         Write-off of related party notes receivable                                           1,093,124             --
         Loss on sale of asset held for investment                                               210,854        814,471
         Amortization of loan costs                                                              107,809        162,220
         Write-off of loan costs on refinanced mortgages                                         176,769             --
         Equity in net loss of unconsolidated partnership                                             --        229,064
         Changes in operating assets and liabilities:
            (Increase) decrease in operating assets:
               Reimbursed administrative expense receivable                                           --         36,997
               Other assets                                                                     (256,964)       142,656
            Increase (decrease) in operating liabilities:
               Accounts payable and accrued liabilities                                         (594,703)      (241,835)
               Security deposits                                                                  13,505            464
               Accrued interest payable, affiliates                                                   --        289,588
                                                                                             -----------    -----------
                  Net cash and cash equivalents (used in) provided by operating activities      (773,564)       230,266
                                                                                             -----------    -----------

Cash Flows from Investing Activities:
   Proceeds from sale of investment held for sale, net                                         3,424,146             --
   Additions to rental apartments                                                               (638,529)      (196,277)
   Cash distributions from partnerships                                                               --          6,082
   Purchases of other property and equipment                                                     (38,680)        (4,979)
   Increase in restricted cash                                                                    29,615         13,841
                                                                                             -----------    -----------
                  Net cash and cash equivalents provided by (used in) investing activities     2,776,552       (181,333)
                                                                                             -----------    -----------

Cash Flows from Financing Activities:
   Proceeds from mortgage refinancings                                                         8,095,000             --
   Payments on mortgages payable                                                              (8,474,147)      (503,960)
   Partners' capital contributions                                                                    --        230,118
   Payment on notes payable                                                                     (554,862)      (100,000)
   Increase in loans payable to affiliates, net                                                  336,573        318,180
                                                                                             -----------    -----------
                  Net cash and cash equivalents used in financing activities                    (597,436)       (55,662)
                                                                                             -----------    -----------

Net Increase (Decrease) in Cash and Cash Equivalents                                           1,405,552         (6,729)

Cash and Cash Equivalents, Beginning                                                              20,823         27,552
                                                                                             -----------    -----------

Cash and Cash Equivalents, Ending                                                            $ 1,426,375    $    20,823
                                                                                             ===========    ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                                 $ 1,847,309    $ 1,783,426
                                                                                             ===========    ===========
</TABLE>

                See notes to consolidated financial statements.


                                      F-5

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization

          Baron Capital Properties, L.P. (the "Partnership"), a Delaware limited
          partnership, is the operating partner of Baron Capital Trust (the
          "Trust"). Together with the Trust, the Partnership constitutes a real
          estate company which has been organized to indirectly acquire equity
          interests in existing residential apartment properties located in the
          United States and to provide or acquire debt financing secured by
          mortgages on such types of property. The Partnership with the Trust
          intends to acquire, own, operate, manage and improve residential
          apartment properties for long-term ownership, and thereby seek to
          maximize current and long-term income and the value of its assets.

          In its completed exchange offering, the Partnership issued 2,449,492
          units of limited partnership interest ("Units") in exchange for
          limited partnership interests owned by limited partners in real estate
          limited partnerships which owned direct or indirect equity or debt
          interests in residential apartment properties. Holders of Units have
          the right, exercisable at any time following the offering, to exchange
          all or a portion of their units into an equivalent number of Common
          Shares of beneficial interest in the Trust (see Note 16).

          The Trust, as General Partner of the Partnership, is authorized to
          cause the Partnership to issue additional limited partnership
          interests in the Partnership for any purpose of the Partnership at any
          time to such persons and on such terms and conditions as may be
          determined by the Trust in its sole and absolute discretion. Since
          Units are exchangeable by Unitholders into an equivalent number of
          Common Shares of the Trust, the maximum number of Units that may be
          issued by the Partnership is limited to the number of authorized
          shares of the Trust, which is 25,000,000, less shares issued by the
          Trust directly, excluding Common Shares issued in exchanges of Units
          for Common Shares.

          The Partnership commenced operations on February 3, 1998, at which
          time it received an initial limited partnership capital contribution.

     Basis of Presentation

          The accompanying consolidated financial statements include the
          accounts of the Partnership and 25 controlled limited partnerships
          that at December 31, 2001 had an indirect equity and/or debt interest
          in 27 apartment communities. Interest in 22 of the 25 limited
          partnerships was acquired as a result of the exchange offering that
          was consummated April 7, 2000 (see Note 2).

          All significant intercompany transactions and balances have been
          eliminated in consolidation.

          The provisions of the limited partnership agreements of the limited
          partnerships described above provide, among other things, that limited
          partners holding over 50% of the total partnership interest have the
          right to remove the general partner. Inasmuch as the Partnership


                                       F-6

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Basis of Presentation (Continued)

          owns from 91% to 99% of the partnership interest in the above limited
          partnerships, the Partnership believes that the substance of these
          partnership arrangements is that the Partnership is in control and,
          accordingly, has consolidated the financial statements of these
          limited partnerships in the accompanying consolidated financial
          statements.

          The minority interest of unitholders in the Partnership represents the
          757,746 limited partnership units owned by the Original Investors of
          the Partnership (see Note 16), and is stated at the amount of the
          capital contribution by them to the Partnership ($100,000), reduced by
          their proportionate share of the net loss of the Partnership limited
          to the $100,000 contribution. For 2000, the entire balance of the
          proportionate share of the net loss of the Partnership of $577,000 was
          charged to the majority unitholders. For 2001, the Limited Partner's
          proportionate share of the net income was allocated to them. As of
          December 31, 2001, 757,746 Partnership limited partnership units
          issued to the Original Investors are subject to escrow restrictions
          and 757,746 units are convertible into common shares of the Trust,
          respectively (see Note 16).

     Concentrations of Credit Risk

          Financial instruments that potentially subject the Partnership to
          concentrations of credit risk are comprised of cash and receivables.

     Cash

               At various times during the year the Partnership had deposits in
               financial institutions in excess of the federally insured limits.
               The Partnership maintains its cash with high quality financial
               institutions, which the Partnership believes limits these risks.

     Receivables from Affiliates

               Mortgage notes receivable are comprised mainly of second
               mortgages whose ultimate repayment is subject to the performance
               of the underlying property and timing of repayments. Other
               receivables are comprised of notes, lines of credit and advances
               receivable (see Note 8). The Partnership establishes an allowance
               for loan losses when it believes the principal balance and
               accrued interest will not be recovered.

     Real Estate Rental Properties and Depreciation

               Real estate rental properties are stated at cost less accumulated
               depreciation. Ordinary repairs and maintenance are expensed as
               incurred; replacements having an estimated useful life of at
               least one year and improvements are capitalized and depreciated
               over their estimated useful lives.


                                      F-7

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Real Estate Rental Properties and Depreciation (Continued)

          Depreciation is computed on a  straight-line  basis over the estimated
          useful  lives of the  properties  as follows:

                                                         Estimated  Useful Lives
                                                                  (Years)

          Building                                                  30
          Leasehold improvements                                    10
          Furniture and fixtures                                     7
          Computer equipment and software                           3-5

          Losses in carrying values of investment assets are provided by
          management when the losses become apparent and the investment asset is
          considered impaired in accordance with Statement of Financial
          Accounting Standards No. 121, "Accounting for the Impairment of
          Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
          Management evaluates its investment properties annually to assess
          whether any impairment indications are present. If any investment
          asset is considered impaired, a loss is provided to reduce the
          carrying value of the property to its estimated fair value.

     Revenue Recognition

          Apartment units are leased under operating leases with terms of
          generally one year or less. Rental income is recognized when due from
          tenants.

     Cash and Cash Equivalents

          For purposes of the statement of cash flows, the Partnership considers
          all investments purchased with an original maturity of three months or
          less to be cash equivalents.

     Restricted Cash

          Restricted cash includes capital replacement reserves, and tax and
          insurance impound accounts held by lenders.

     Investments in Partnership

          The Partnership accounts for its investments in limited partnerships
          in which it is deemed not to have the controlling interest, but has
          more than a minor limited partnership interest, utilizing the equity
          method of accounting. The Partnership's investments in Alexandria
          Development, L.P., which represent a 40% interest at December 31,
          2001, is accounted for using the equity method (see Note 7).


                                      F-8
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Mortgage Notes Receivable - Affiliate

          Mortgage notes receivable are recorded at cost, less the related
          allowance for impairment, if any, of such notes receivable. The
          Partnership accounts for such notes under the provisions of Statement
          of Financial Accounting Standards No. 114, "Accounting by Creditors
          for Impairment of a Loan", as amended by Statement of Financial
          Accounting Standards No. 118, "Accounting by Creditors for Impairment
          of a Loan - Income Recognition and Disclosure". Management,
          considering current information and events regarding the borrowers'
          ability to repay their obligations, considers a note to be impaired
          when it is probable that the Partnership will be unable to collect all
          amounts due accordingly to the contractual terms of the note. When a
          loan is considered to be impaired, the amount of impairment is
          measured based upon (a) the present value of expected future cash
          flows discounted at the note's effective interest rate; and (b) the
          liquidation value of the note's collateral reduced by expected selling
          costs and other notes secured by the same collateral. Cash receipts on
          impaired notes receivable are applied to reduce the principal amount
          of such receivables until the principal has been recovered, and are
          recognized as interest income thereafter.

     Loan Costs

          The Partnership has capitalized those costs incurred with obtaining
          financing on the investment properties. Such costs (included with
          other assets) are being amortized over the term of the financing.

     Use of Estimates

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

     Reclassifications

          Certain items included in the 2000 consolidated financial statements
          have been reclassified to conform to the 2001 presentation.

     Income Taxes

          The Partnership is treated as a limited partnership for federal income
          tax purposes and as such does not incur income taxes. Instead, its
          earnings and losses are included in the personal returns of the
          partners and taxed depending on their personal tax situations. The
          consolidated financial statements do not reflect a provision for
          income taxes.


                                      F-9
<PAGE>



                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Fair Value of Financial Instruments

          The respective carrying value of certain on-balance-sheet financial
          instruments approximated their fair value. These instruments include
          cash, receivables, accounts payable and accrued liabilities. Fair
          values were assumed to approximate carrying values for these financial
          instruments since they are short-term in nature and their carrying
          amounts approximate fair values or they are receivable or payable on
          demand.

          The fair value of debt instruments has been estimated by using
          discounted cash flow models incorporating discount rates based on
          current market interest rates for similar types of instruments. At
          December 31, 2001, the differences between estimated fair value and
          the carrying value of debt instruments were not material.

     Recent Accounting Pronouncements

          In August 2001, Financial Accounting Standards Board (the FASB) issued
          Statement of Financial Accounting Standards No. 144, "Accounting for
          the Impairment or Disposal of Long-Lived Assets" (SFAS 144), which
          addresses financial accounting and reporting for the impairment or
          disposal of long-lived assets. SFAS 144 supersedes Statement No. 121,
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets to Be Disposed Of", and the accounting and reporting provisions
          of APB Opinion No. 30, "Reporting the Results of Operations -
          Reporting the Effects of Disposal of a Segment of a Business, and
          Extraordinary, Unusual and Infrequently Occurring Events and
          Transactions", for the disposal of a segment of a business. SFAS 144
          retains the requirement in Opinion No. 30 to report separately
          discontinued operations and extends that reporting to a component of
          an entity that either has been disposed of or is classified as held
          for sale. The Partnership is required and plans to adopt the
          provisions of SFAS 144 for the quarter ending March 31, 2002. The
          Partnership has not determined the impact that SFAS 144 will have on
          its financial statements.

          In June 2001, the FASB issued Statement of Financial Accounting
          Standards (SFAS) No. 143, "Accounting for Asset Retirement
          Obligations". SFAS 143 requires entities to record the fair value of a
          liability for an asset retirement obligation in the period in which it
          is incurred. The statement requires that the amount recorded as a
          liability be capitalized by increasing the carrying amount of the
          related long-lived asset. Subsequent to initial measurement, the
          liability is accreted to the ultimate amount anticipated to be paid,
          and is also adjusted for revisions to the timing or amount of
          estimated cash flows. The capitalized cost is depreciated over the
          useful life of the related asset. Upon settlement of the liability, an
          entity either settles the obligation for its recorded amount or incurs
          a gain or loss upon settlement. SFAS 143 will be effective for the
          Partnership's financial statements beginning January 1, 2002. The
          Partnership believes that the adoption of this statement will not have
          a significant impact on the results of operations or financial
          position of the Partnership.

          In July 2001, the FASB issued SFAS No. 141, "Business Combinations",
          and SFAS No. 142, "Goodwill and Other Intangible Assets" which replace
          Accounting Principles Board Opinion


                                      F-10
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Recent Accounting Pronouncements (Continued)

          Nos. 16, "Business Combinations" and 17, "Intangible Assets",
          respectively. SFAS No. 141 requires that the purchase method of
          accounting be used for all business combinations initiated after June
          30, 2001, and that the use of the pooling-of-interests method be
          prohibited. SFAS No. 142 changes the accounting for goodwill from an
          amortization method to an impairment-only method. Amortization of
          goodwill, including goodwill recorded in past business combinations,
          will cease upon adoption of SFAS No. 142, which the Partnership will
          be required to adopt on January 1, 2002. After December 31, 2001,
          goodwill can only be written down upon impairment discovered during
          annual tests for fair value, or discovered during tests taken when
          certain triggering events occur. The Partnership believes that the
          adoption of this statement will not have a significant impact on the
          results of operations or financial position of the Partnership.

          In September 2000, Statement of Financial Accounting Standards No.
          140, "Accounting for Transfers and Servicing of Financial Assets and
          Extinguishments of Liabilities" (SFAS 140) was issued. SFAS 140
          provides accounting and reporting standards for transfers and
          servicing of financial assets and extinguishments of liabilities. SFAS
          140 is effective for recognition and reclassification of collateral
          and for disclosures relating to securitization transactions and
          collateral for fiscal years ending after December 15, 2000 and is
          effective for transfers and servicing of financial assets and
          extinguishments of liabilities occurring after March 31, 2001. The
          adoption of SFAS 140 did not have a material effect on the financial
          position or results of operations of the Partnership.

          In June 1999, the Financial Accounting Standards Board issued SFAS No.
          137, "Accounting for Derivative Instruments and Hedging Activities -
          Deferred of the Effective Date of SFAS No. 133 an Amendment of SFAS
          No. 133", which deferred the effective date to all fiscal quarters of
          all fiscal years beginning after June 15, 2000. Historically, the
          Partnership has not entered into derivatives contracts to hedge
          existing risks or for speculative purposes. Adoption of the new
          standard on January 1, 2001 had no effect on the financial statements
          of the Partnership.


NOTE 2.  EXCHANGE OFFERING

     On April 7, 2000, pursuant to a registration statement on Form S-4, the
     Partnership completed the Exchange Offering under which it acquired
     additional interests in residential apartment properties and one
     condominium apartment property. In the Exchange Offering, the Partnership
     issued 2,449,492 registered Partnership Units in exchange for substantially
     all outstanding units of limited partnership interest owned by individual
     limited partners ("Exchange Limited Partners") in 23 limited partnerships
     (the "Exchange Partnerships"), which directly or indirectly owned equity
     and/or debt interests in one or more of 25 residential apartment properties
     and one condominium apartment property located in the southeast and
     mid-west United States. Prior to the completion of the Exchange Offering,
     the Exchange Partnerships were managed by corporate general partners (the
     "Corporate General Partners"), which were controlled by Gregory K.


                                      F-11

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2.  EXCHANGE OFFERING (Continued)

     McGrath, who is a founder and former Chief Executive Officer of the Trust
     and the Partnership and a principal unit holder of the Partnership.

     Following the completion of the Exchange Offering, the Exchange
     Partnerships continued to own the same property interests they owned prior
     to the offering; substantially all of the limited partnership interests in
     the 23 Exchange Partnership were owned by the Partnership; Mr. McGrath, for
     nominal consideration, assigned to the Trust all of the equity stock in 18
     of the Corporate General Partners and granted to the Board of the Trust a
     management proxy coupled with an interest to vote the shares of the
     remaining five Corporate General Partners; the Corporate General Partner of
     each of the Exchange Partnerships assigned to the Partnership all of its
     economic interest in the partnership; and Mr. McGrath caused each Corporate
     General Partner to waive its right to receive from its Exchange Partnership
     any ongoing fees, effective upon completion of the exchange. As a result of
     the foregoing, the Partnership owned substantially all of the economic
     interest represented by the equity and debt interests owned by the Exchange
     Partnerships and controlled management of such partnerships.

     The Exchange Offering expired on April 7, 2000. Under the terms of the
     Exchange Offering, Exchange Limited Partners in a particular Exchange
     Partnership were entitled to participate in the offering only if limited
     partners holding at least 90% of the units of limited partnership interest
     in that partnership affirmatively elected to accept the offering. Exchange
     Limited Partners holding approximately 97.4% of the outstanding units of
     limited partnership in such partnerships accepted the offering, and each of
     the Exchange Partnerships exceeded the 90% requirement. As a result,
     following the completion of the Exchange Offering, the limited partnership
     interests of nine Exchange Partnerships were owned entirely by the
     Partnership (in the case of nine Exchange Partnership in which all Exchange
     Limited Partners accepted the offering) and substantially all of the
     limited partnership interests in the other 14 Exchange Partnerships were
     owned by the Operating Partnership, with the remaining limited partnership
     interests being retained by Exchange Limited Partners who elected not to
     accept the offering or failed to respond to the offering.

     The acquisition of the Exchange Partnerships was accounted for under the
     purchase method of accounting, effective as of April 1, 2000 for accounting
     purposes. The cost of acquisition approximated the fair value of the net
     assets acquired (principally the appraised value determined by management
     based on actual 1998 appraisals of the underlying residential apartment
     properties less related liabilities), which amounted to $11,793,159.
     Therefore, no goodwill was recorded in this transaction. The results of
     operations of the Exchange Partnerships for the year ended December 31,
     2000 are included in the consolidated financial statements as of April 1,
     2000.

     In April 2001, the Partnership caused one of the Exchange Partnerships to
     sell its record title interest in one of the Exchange Properties, Glen Lake
     Apartments, a 144-unit residential apartment property located in St.
     Petersburg, Florida. Management of the Trust determined to sell the
     property based on its lack of performance and its need for substantial and
     frequent cash infusions.


                                      F-12

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2.  EXCHANGE OFFERING (Continued)

     For financial statement presentation purposes, it is assumed that the Units
     of limited partnership interest in the Partnership issued to Exchange
     Limited Partners in the Exchange Offering have been issued as Common Shares
     of the Trust, since the unit holders are entitled to exchange all or a
     portion of their Units at any time and from time to time for an equivalent
     number of Common Shares, so long as the exchange would not cause the
     exchanging party to own in excess of 5% of the then outstanding Common
     Shares, subject to the Trust's right to cash out any unit holder who
     requests an exchange and subject to certain other exceptions.

     The following unaudited pro forma summary presents consolidated financial
     information as if the Exchange Partnerships had been acquired effective
     January 1, 2000. The pro forma amounts include adjustments for depreciation
     as a result of the adjustment to fair value of the residential apartment
     properties and interest associated with the related mortgages. The pro
     forma information does not necessary reflect the actual results that would
     have occurred nor is it necessarily indicative of future results of
     operations of the combined partnerships. No pro forma information is
     presented for 2001 since the consolidated financial information of the
     Exchange Partnerships is included in the consolidated statement of
     operations for 2001.

                                                              2000
                                                              ----

          Total revenues                                  $ 6,764,000
          Cost and expenses                                 9,872,000
                                                          -----------
          Net loss                                        $(3,108,000)
                                                          ===========

          Weighted average number of partnership units      3,374,563
                                                          ===========

          Net loss per partnership units                  $      (.92)
                                                          ===========

NOTE 3.  AGREEMENT OF LIMITED PARTNERSHIP

     The following is a summary of the significant provisions of the Agreement
     of Limited Partnership ("the Agreement") made and entered in 1998.

Term

          The Partnership will continue through December 31, 2098, unless sooner
          terminated by law or under certain provisions of the Agreement.

General Partner

          A number of Partnership units held by the General Partner equal to 1%
          of the outstanding Partnership units shall at all times be deemed to
          be General Partner units and shall constitute the General Partnership
          interest and the remaining Partnership units held by the General
          Partner shall be deemed to be Limited Partner units and shall
          constitute a portion of the Limited Partnership Interest.


                                      F-13

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3.  AGREEMENT OF LIMITED PARTNERSHIP (Continued)

General Partner (Continued)

             The General Partner has been allocated 270 General Partner units as
             of December 31, 2001 to adjust the General Partnership  interest to
             1% of the total outstanding Partnership units.

     Distributions

          Cash Distributions

               The General Partner shall distribute not less frequently than
               quarterly an amount equal to 100% of distributable cash generated
               by the Partnership during such quarter to the Partners who are
               Partners on the Partnership Record Date with respect to such
               quarter first, with respect to any class of partnership interest,
               and thereafter, in accordance with their respective percentage
               interest on such Partnership Record Date.

     Allocation of Income and Loss

          Allocations of all items of income, gain, expense, loss, deduction and
          credit recognized by the Partnership for federal income tax purposes
          will be made as follows:

          Income

               After giving effect to the special allocations set forth in the
               Partnership Agreement, net income shall be allocated first, to
               the general partner to the extent that, on a cumulative basis,
               net losses previously allocated to the general partner exceed net
               income previously allocated to the general partner, and
               thereafter, to the partners in accordance with their respective
               percentage interests.

          Losses

               After giving effect to certain allocations set forth in the
               Partnership Agreement, net losses shall be allocated to the
               Partners in accordance with their respective percentage interest;
               provided, however, that net losses shall not be allocated to any
               limited partner to the extent that such allocation would cause
               such limited partner to have an adjusted capital account deficit
               at the end of such taxable year. All net losses in excess of the
               limitations set forth in the preceding sentence shall be
               allocated to the general partner.

          Dissolution

               The Partnership will be dissolved upon (a) the expiration of the
               term of the Agreement; (b) withdrawal of the general partner,
               unless, within 90 days after the withdrawal a majority interest
               of all the remaining partners agree in writing to continue the
               business of the Partnership and to the appointment, effective as
               of the date of withdrawal, of a substitute general partner; (c)
               the election to dissolve the Partnership made by the general
               partner with


                                      F-14

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3.  AGREEMENT OF LIMITED PARTNERSHIP (Continued)

     Dissolution (Continued)

          the consent of a majority of the percentage interest of the limited
          partners; (d) entry of judicial dissolution of the Partnership
          pursuant to the provisions of the Delaware Revised Uniform Limited
          Partnership Act (the "Act"); (e) the sale or disposition of all or
          substantially all of the Partnership's property; (f) the merger or
          other combination of the Partnership with or into another entity; (g)
          bankruptcy or insolvency of general partner; and (h) the occurrence of
          any other event which, by law, would require the Partnership to be
          dissolved.

     Winding Up

          Upon the dissolution of the Partnership, the general partner will take
          full account of the Partnership's assets and liabilities, and the
          assets will be liquidated as promptly as is consistent with obtaining
          fair value of the assets, and the proceeds will be applied and
          distributed (a) first, to the payment and discharge of all of the
          Partnership's debts and liabilities to creditors, other than partners;
          (b) then, any loans owed by the Partnership to the partners shall be
          paid in proportion thereto; and (c) finally, to the limited partners
          and the general partner in proportion to their respective capital
          accounts, after giving effect to all contributions, distributions, and
          allocations for all periods.

NOTE 4.  RENTAL APARTMENTS

          In 1998, the Partnership, in three separate transactions, acquired the
          entire limited partnership interest in three Florida limited
          partnerships each owning a residential apartment property in Florida
          representing an aggregate of 197 units. The aggregate consideration
          paid by the Partnership was approximately $2,234,000.

          In April 2000, pursuant to a registration statement on Form S-4, the
          Partnership completed an exchange offering (the Exchange Offering)
          under which it acquired additional interests in residential apartment
          properties and one condominium apartment property (see Note 3). In the
          Exchange Offering, the Partnership issued 2,449,492 registered
          Partnership Units in exchange for substantially all outstanding units
          of limited partnership interest owned by individual limited partners
          in 23 limited partnerships which directly or indirectly owned equity
          and/or debt interests in one or more of 25 residential apartment
          properties and one condominium apartment property (containing an
          aggregate of 1,602 units) located in the southeast and mid-west United
          States. As noted in Notes 2 and 6, in April 2001, the Partnership sold
          one of the properties, representing 144 units.

NOTE 5.  RENTAL APARTMENTS HELD FOR SALE

          During 2001, the Trust decided to sell two residential apartment
          properties -Stadium Club Apartments, a 60-unit apartment building
          located in Florida, and Steeplechase Apartments, a 72-unit apartment
          building located in Indiana. The decision to sell these properties was
          based on the


                                      F-15
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 5.  RENTAL APARTMENTS HELD FOR SALE (Continued)

          properties' lack of performance and their continuing need for cash to
          operate. The Partnership expects to sell these properties in 2002. The
          properties were adjusted to their estimated realizable value at
          December 31, 2001 resulting in a write-down of $65,130.

          Property                                        Carrying Amount
          --------                                        ---------------

          Stadium Club Apartments                           $1,642,000
          Steeplechase Apartments                            1,529,564
                                                            ----------
             Total                                          $3,171,564
                                                            ==========

          The results of operations of these properties for the year ended
          December 31, 2001 were as follows:

                                          Stadium Club     Steeplechase
                                          ------------     ------------

          Revenue                          $ 298,995        $ 302,095
          Expenses                           516,937          423,238
                                           ---------        ---------
             Net loss                      $(217,942)       $(121,142)
                                           =========        =========

NOTE 6.  SALE OF PROPERTY

          On December 7, 2000, the Independent Trustees of the Trust accepted an
          offer to sell Glen Lake Arms Apartments (Glen Lake), a 144-unit
          apartment building located in St. Petersburg, Florida for
          approximately $3,900,000. The decision to sell Glen Lake was based on
          the property's lack of performance and its continuing need for cash to
          operate. On April 30, 2001, the Partnership consummated the sale of
          Glen Lake resulting in a loss on the sale of $210,843.

          The results of operations of Glen Lake for the four months ended April
          30, 2001 were as follows:

          Rental and other income                             $328,816
          Expenses                                             294,300
                                                              --------
             Excess of income over expenses                   $ 34,516
                                                              ========

NOTE 7.  INVESTMENTS IN PARTNERSHIPS

          On October 14, 1998, the Partnership acquired an approximate 12%
          limited partnership interest in Alexandria Development, L.P. (the
          "Alexandria Partnership"), a Delaware limited partnership, which is
          the owner and developer of a 168-unit residential apartment property
          under construction in Alexandria, Kentucky ("Alexandria Property"). An
          affiliate of the Partnership sold the partnership interest in the
          Alexandria Property to the Partnership and also formerly served as the
          managing general partner of the Alexandria Property. As of December
          31, 2001, the Partnership owned twenty-six (26) units out of a total
          of sixty-five (65) units of limited partnership interest (40%).


                                      F-16
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7.  INVESTMENTS IN PARTNERSHIPS (Continued)

          Due to recurring losses incurred by the Alexandria Property, a
          partners' deficiency, and an updated appraisal that valued the
          Alexandria Property at an amount less than the liabilities owed,
          management decided to write off the Partnership's investment in
          Alexandria, resulting in a charge to operations of approximately
          $355,000 in 2000.

          The equity in net loss in Alexandria was approximately $229,000 for
          2000.

          The Alexandria Partnership defaulted on its first mortgage
          construction loan when it matured in December 2000, and the lender has
          exercised its right to accelerate payment of the loan. In December
          2001, a Kentucky court appointed a receiver to manage the property.
          The construction contractor is owed approximately $890,000 for
          construction costs, penalties and interest. Sigma Renaissance
          Corporation (an entity controlled by a Trustee of the Trust that now
          controls and manages the property) recently filed for bankruptcy
          protection on behalf of the Alexandria Partnership, and is currently
          negotiating with the lender and the construction contractor to address
          the defaults.

NOTE 8.  RECEIVABLES FROM/TO AFFILIATE

     Mortgage Notes Receivable

          As of December 31, 2001, the Partnership held discounted mortgage
          notes, including accrued interest, with a carrying value of
          $3,079,053, net of allowance for loan losses of approximately
          $1,940,000. The total face value plus accrued interest on these notes
          amounted to $7,304,505 at December 31, 2001. The notes accrue interest
          at interest rates ranging from 6% to 12% and are generally paid
          currently to the extent of available cash flows. As of December 31,
          2001, accrued interest relating to these mortgage notes receivables
          amounted to $1,471,277. The notes mature at various dates through
          April 20, 2008. The notes are secured by unrecorded liens upon certain
          real and personal property and are subordinated to first mortgages,
          which in the aggregate amounted to approximately $11,500,000 at
          December 31, 2001.

          The changes in the allowance for loan losses during 2001 and 2000 was
          as follows:

                                                     2001          2000
                                                 -----------    ----------

          Beginning balance                      $ 2,580,000    $2,344,400
          Provision (recovery) for loan losses      (640,000)      235,600
                                                 -----------    ----------
             Ending balance                      $ 1,940,000    $2,580,000
                                                 ===========    ==========

          During 2001, first mortgages of properties underlying certain
          partnerships were refinanced with a portion of the proceeds remitted
          to the Partnership to pay down subordinated notes. As a result of the
          reduction in these subordinated notes, the Partnership recognized a
          recovery against the loan loss reserve of $640,000.


                                      F-17
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 8.  RECEIVABLES FROM/TO AFFILIATE (Continued)

     Lines of Credit

          The Partnership extends lines of credit to affiliates and is liable
          under lines of credit extended to the Exchange Properties from
          affiliates. All amounts accrue interest at 10% per annum and are due
          on demand. The balance due from affiliates under lines of credit was
          $724,498, with accrued interest of $376,078, as of December 31, 2001.
          Amounts due to affiliates under the lines of credit were $225,366,
          with accrued interest of $31,366, as of December 31, 2001.

     Advances To/From

          From time to time, the Partnership advances funds to and receives
          advances from affiliates. These transactions are generally less than
          $20,000, non-interest bearing and are due on demand. Advances due from
          affiliates totaled $132,400 as of December 31, 2001. Advances due to
          affiliates totaled $916,508 as of December 31, 2001.

     Line of Credit- Trust

          The Partnership has extended a line of credit to the Trust, its
          general partner. The credit line is due on demand and is non-interest
          bearing. The balance owed the Partnership on the credit line was
          $647,010 as of December 31, 2001.

     Summary of Receivables/Payables - Affiliates:

<TABLE>
<CAPTION>
                                                           Receivables     Payables
                                                           -----------     --------

          <S>                                               <C>          <C>
          Mortgage notes receivable plus accrued interest   $4,550,953   $       --
          Lines of credit                                    1,747,587      257,032
          Advances                                             132,400      916,508
                                                            ----------   ----------
             Total                                          $6,430,940   $1,173,540
                                                            ==========   ==========
</TABLE>

NOTE 9.  OTHER PROPERTY AND EQUIPMENT

          Furniture and equipment                             $122,941
          Computer equipment and software                       77,266
          Leasehold improvements                                20,813
                                                              --------
                                                               221,020
          Less accumulated depreciation                        114,699
                                                              --------
                                                              $106,321

          Depreciation expense for other property and equipment for the years
          ended December 31, 2001 and 2000 was $38,319 and $34,001,
          respectively, and is included in other administration expenses in the
          consolidated statement of operations.


                                      F-18
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 10. MORTGAGES PAYABLE

          In 1998, the Partnership acquired interest in three limited
          partnerships each owning a residential apartment property. In
          connection with the Exchange Offering completed April 7, 2000, the
          Partnership acquired 16 partnerships that directly owned interests in
          15 residential properties. Each property had a mortgage that is
          secured by such property. Total mortgage loans on these 18 properties
          amount to $23,161,025 at December 31, 2001. The mortgage loans bear
          interest at rates ranging from 6.5% to 9.5% and mature on various
          dates through December 2028. On February 5 and July 31, 2001, the
          Partnership refinanced the first mortgages on four rental properties
          (see Note 11).

          The aggregate maturities of mortgages payable for each of the five
          years subsequent to December 31, 2001 are as follows:

                                     Principal     Interest         Total
          Year ending December 31:
          2002                     $   289,285   $1,606,649   $ 1,895,934
          2003                         310,649    1,585,284     1,895,933
          2004                         333,612    1,562,322     1,895,934
          2005                       9,041,030    1,411,247    10,452,276
          2006                       7,046,044      756,050     7,802,094
          2007 and thereafter        6,140,406    1,672,240     7,812,646
                                   -----------   ----------   -----------
          Total                    $23,161,025   $8,593,791   $31,754,816
                                   ===========   ==========   ===========

NOTE 11. MORTGAGE REFINANCING

          On February 5 and July 31, 2001, the Partnership refinanced the first
          mortgages on four rental properties. The new information pertaining to
          the mortgages is as follows:

<TABLE>
<CAPTION>
                                         Interest    Term       Maturity       Monthly
          Property            Mortgage     Rate    (Years)        Date        Payments
          --------            --------     ----    -------        ----        --------

          <S>               <C>            <C>       <C>    <C>                <C>
          Pineview          $2,700,000     7.51%     25     February 5, 2011   $19,970
          Heatherwood        1,900,000     7.51      30     February 5, 2011    13,298
          Eagle Lake         1,900,000     7.51      25     February 5, 2011    14,053
          Crystal Court I    1,595,000     7.26      30        July 30, 2011    10,892
</TABLE>

          The Partnership received approximately $1,875,000 in proceeds from the
          refinancing of the first mortgages. In connection with the
          refinancings, the Partnership paid one-time prepayment penalties of
          approximately $827,000, which is included in other expenses in the
          accompanying consolidated statement of operations.


                                      F-19

<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 12. NOTES PAYABLE

          The Partnership has unsecured notes payable to three entities
          (controlled by a Trustee of the Trust) with annual interest rates
          ranging from 10% to 10.4% and is due on demand. As of December 31,
          2001, the principal balance outstanding on these notes was $1,441,108,
          with accrued interest of $292,201 and accrued maturity premium payment
          of $118,827, totaling $1,852,136.


NOTE 13. EXTINGUISHMENT OF INDEBTEDNESS TO FORMER CHIEF EXECUTIVE
         OFFICER AND AFFILIATES

          In connection with the sale of the Glen Lake property described in
          Note 5, the Partnership extinguished approximately $1,268,000 of
          payables due to affiliates and $111,500 due to the Partnership's
          former Chief Executive Officer. These liabilities were owed by Florida
          Capital Income Fund IV, Ltd. (former owner of the Glen Lake property)
          (one of the Exchange Partnerships) to certain affiliates, which were
          owned or controlled by Gregory K. McGrath, the Trust's former Chief
          Executive Officer. These amounts are reported as an extraordinary item
          in the accompanying consolidated statement of operations for 2001.

          The Partnership also wrote off accrued interest payable of
          approximately $113,000 relating to the extinguished payables due to
          related parties and approximately $23,000 of accounts payable. These
          amounts were recorded as reductions to interest expense and other
          administrative expenses in the accompanying consolidated statement of
          operations for 2001.

          During 2001, the Partnership entered into a settlement with parties
          who provided legal counsel during the Exchange Offering. This
          settlement resulted in the extinguishment of approximately $105,000 in
          obligations that were previously included in accounts payable. This
          amount is recorded as a reduction of professional services in the
          accompanying consolidated statement of operations for 2001.


NOTE 14. COMMITMENTS AND CONTINGENCIES

     Contracts to Purchase Additional Properties

     In September 1998, the Trust entered into an agreement with three real
     estate development companies (Brentwood at Southgate, Ltd., Burlington
     Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire two
     luxury residential apartment properties in the development stage upon the
     completion of construction. The three development companies were previously
     controlled by Gregory K. McGrath, a founder and the former Chief Executive
     Officer of the Trust. In September 2001, Mr. McGrath assigned all of the
     outstanding partnership interests in the three partnerships to Sigma
     Renaissance Corporation, a Michigan corporation controlled by Jerome S.
     Rydell, a member of the Board of Trustees of the Trust. One of the
     residential apartment properties has been sold to a third party with the
     Trust's consent. The remaining residential property is scheduled to have a
     total of 396 units,


                                      F-20
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)

     Contracts to Purchase Additional Properties (Continued)

          comprised of one, two and three bedroom/one or two bathroom
          apartments. Construction of the property (the "Burgundy Hills
          Property"), located in Florence, Kentucky (part of the Cincinnati
          metropolitan area), is expected to be completed by the end of the
          first quarter of 2004.

          In connection with the transaction, the Trust obtained a right of
          first negotiation to purchase the property from the Borrower upon
          completion and a right of first refusal to purchase the property on
          the same terms offered by a third party. The purchase price is
          expected to be approximately $30,000,000. It is contemplated that a
          significant portion of that amount would be covered by first mortgage
          financing. At the current time the Trust does not have adequate
          resources to close on the transaction even if it were interested in
          doing so and it is uncertain whether the Trust will have adequate
          resources to complete the transaction upon completion of construction.
          In addition, as described below, because the owner of the first
          mortgage on the property has assumed control of the management of the
          Borrower and the development of the property, the exercisability of
          the Trust's rights is currently uncertain.

          In connection with the transaction, the Trust (along with Mr. McGrath,
          its former Chief Executive Officer) agreed to co-guarantee long-term
          first mortgage construction financing provided by KeyBank National
          Association ("KeyBank") to Burlington Residential, Ltd. ("Borrower"),
          the owner of the Burgundy Hills Property. As of February 14, 2002,
          approximately $6,478,000 of the first mortgage loan had been drawn
          down. The interest rate on the first mortgage loan is KeyBank's prime
          rate (currently 4.75%) or the LIBOR rate plus 2%. The Trust also
          agreed that, if the Borrower failed to comply with the repayment and
          other obligations under the loan documents, KeyBank could require the
          Trust to buy out the bank's position on the entire amount of the loan.

          In September 2000, the Trust received notice from counsel to KeyBank
          that the Borrower had defaulted on its loan for failure to pay current
          interest due and meet certain equity requirements and covenants under
          the loan agreement, adverse changes in the financial conditions of the
          Borrower and the Trust, and the Trust's failure to meet certain
          tangible net worth tests set forth in the loan agreements. KeyBank
          indicated that it was exercising its right to accelerate the loan.
          According to Mr. McGrath, KeyBank agreed to forego further action for
          at least 60 days while the parties attempted to reach an arrangement.
          The extension expired in November 2000 and, according to Mr. McGrath,
          has been extended on a month-to-month basis. The Borrower paid down
          the outstanding accrued interest and a portion of the principal and
          intends to seek a new long-term construction facility with another
          institutional lender to replace the first mortgage loan (and the
          BankOne affiliate loan described below). There can be no assurance
          that such financing will be available on satisfactory terms.

          In December 2000, an affiliate of BankOne acquired KeyBank's position
          in the Burgundy Hills first mortgage loan. The loan is subject to the
          same terms and conditions as that of the original KeyBank loan.
          Earlier, the BankOne affiliate had provided additional institutional
          financing in the principal amount of $1,576,000 to the Borrower. That
          loan is secured by a security interest in partnership interests in the
          Borrower. Due to a default in payment of


                                      F-21

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)

     Contracts to Purchase Additional Properties (Continued)

          interest due, the BankOne affiliate was assigned rental payments from
          the Burgundy Hills Property and took over day-to-day management of the
          property.

          The BankOne affiliate recently sold the two loans to Burgundy-Boone,
          LLC, an Illinois limited liability company, according to the latter's
          counsel. As a result, Burgundy-Boone, LLC has assumed control of
          management of the Borrower and of the development of the Burgundy
          Hills Property.

          The Trust, as guarantor of the first mortgage loan, currently has a
          contingent liability for its full outstanding amount. According to
          counsel for Burgundy-Boone, LLC, as of November 2001, principal and
          interest payments on the first mortgage loan are current. However,
          there can be no assurance that the first mortgage loan will not again
          go into default, in which event Burgundy-Boone, LLC might attempt to
          begin foreclosure proceedings against the Burgundy Hills Property in
          respect of the first mortgage loan.

          Century Construction Inc., the general contractor which performed
          construction services on the Burgundy Hills Property, recently filed
          an action against the Borrower and Mr. McGrath to enforce a mechanic's
          lien on the property in the amount of approximately $1,300,000. The
          contractor also named KeyBank and the BankOne affiliate in the action,
          seeking damages against them on allegations of lender's liability.

     Officers' Compensation

          Prior to January 1, 2001, a founder of the Trust and the Partnership
          had agreed to serve as Chief Executive Officer in exchange for
          compensation in the form of Trust common shares or Operating
          Partnership units in an amount not to exceed 25,000 common shares or
          units, as applicable, to be determined by the Executive Compensation
          Committee based upon his performance. As of December 31, 2000, no
          Trust common shares or Operating Partnership units had been issued to
          the former Chief Executive Officer as compensation. However, in order
          to reflect all appropriate administrative expenses of the Partnership,
          a provision of $217,000 was made in the financial statements for the
          estimated fair value of the services rendered by the former Chief
          Executive Officer for 2000. Effective December 31, 2000, no
          compensation expense was charged for the services provided by the
          former Chief Executive Officer, as these services were minimal to the
          Partnership's operations.

          On August 28, 2000, the Trust entered into employment agreements with
          the President and Chief Executive Officer (CEO) and with the Chief
          Financial Officer (CFO) through December 31, 2001. Under the terms of
          the agreement, the Trust through the Partnership paid the CEO and the
          CFO $173,356 and $111,382, respectively, for their services in 2001.
          In addition, the CEO and the CFO received $60,000 and $40,000,
          respectively, as an incentive to remain in the employment of the Trust
          through the term of the agreement. Since January 1, 2002, they have
          served in such capacities without employment agreements.


                                      F-22

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. COMMITMENTS AND CONTINGENCIES (Continued)

     Operating Leases

          During 2001, the Partnership executed an operating lease for its
          office facilities. The lease, which expires on June 30, 2002, requires
          monthly payments of $1,100. The Partnership has the option to renew
          this lease on a month-to-month basis for 24 four months commencing at
          the expiration of the initial lease term. All of the terms and
          conditions of the lease shall apply during the renewal term except
          that the monthly rent shall be $1,400 per month for the first 12
          renewed months and $1,470 per month for the second 12 renewed months.
          Minimum future lease payments through June 30, 2002 are $6,600.

          Rent expense was approximately $35,000 and $42,500 for 2001 and 2000,
          respectively.

     Pending Litigation

          The Partnership is a party to various legal actions resulting from its
          operating activities. These actions are routine litigation and
          administrative proceedings arising in the ordinary course of business,
          some of which are covered by liability insurance, and none of which
          are expected to have a material adverse effect on the consolidated
          financial condition or results of operations of the Partnership taken
          as a whole.

NOTE 15. RELATED PARTY TRANSACTIONS

     Reimbursed Administrative Expenses

          During 2000, the Partnership shared certain administrative expenses
          with a number of other partnerships that are related to the
          Partnership by means of a common person who is the sole stockholder
          and officer of the general partner of these partnerships and was a
          former officer of the general partner of the Partnership. These
          administrative expenses were allocated as described below, and the
          allocated expenses were reimbursed to the Partnership by these other
          partnerships. The allocation of the costs was determined based upon an
          analysis of those administrative costs directly associated with or
          reasonably allocated to the activities of each entity. Personnel costs
          were allocated based upon estimates of the time devoted by individual
          employees to each entity's activities on a monthly basis. Other
          administrative costs were allocated on a direct basis to the extent
          practicable, and the balance on a pro rata basis. In the opinion of
          management, the method used to allocate costs to all of the entities
          was considered to be reasonable under the circumstances.

          During 2000, the Partnership was reimbursed approximately $370,000 for
          administrative expenses, which have been presented as reductions of
          the specific related category of administrative expenses in the
          accompanying consolidated financial statements.


                                      F-23

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 16. PARTNERS' CAPITAL

     Partners' Capital Contributions

          During 2000, 26,990 units of limited partner interest were issued to
          the Trust in exchange for net proceeds of $230,118 from the sale of
          common shares in the Trust's Cash Offering, which expired in May 2000.
          In addition, the Partnership issued to the Trust 270 general partner
          units during 2000, as an allocation to adjust the general partner
          interest to 1% of the total outstanding Partnership units (see Note
          4). This issuance has been treated as an allocation of the capital
          contributions by the Trust, and no value has been ascribed to these
          general partner units for accounting purposes. During 2001, the
          Partnership issued 25,000 units of limited partnership interest valued
          at $75,500 to settle amounts owed to a vendor.

     Exchange Offering

          The Partnership filed a registration statement on Form S-4 with the
          Securities and Exchange Commission (the "Commission") covering up to
          2,500,000 units of limited partnership interest ("Units") to be
          registered under the Act ("Exchange Offering").

          Of these units, 2,449,492 units were offered in exchange for units of
          limited partnership interest in 23 limited partnerships (the "Exchange
          Partnerships"), which directly or indirectly owned equity and/or
          mortgage interests in one or more residential apartment properties and
          one condominium apartment property. Prior to the completion of the
          Exchange Offering, the Exchange Partnerships were managed by corporate
          general partners who were affiliated with one of the founders of the
          Partnership and the former Chief Executive Officer of the Trust and
          the Partnership. The registration statement was declared effective on
          November 9, 1999, and the Exchange Offering commenced shortly
          thereafter.

          The number of Units offered in exchange for the limited partnership
          interests in the Exchange Partnerships was based on appraisals
          prepared by qualified and licensed independent appraisal firms for
          each underlying residential apartment property. For purposes of the
          Exchange Offering, each Unit was arbitrarily assigned an initial value
          of $10, which corresponds to the offering price of each Trust Common
          Share that was being offered to the public pursuant to the Cash
          Offering. The value of each Unit and Common Share outstanding was
          substantially identical since Unit holders, including recipients of
          Units in the Exchange Offering, are entitled to exchange all or a
          portion of their Units at any time and from time to time for an
          equivalent number of Trust Common Shares, so long as the exchange
          would not cause the exchanging party to own (taking into account
          certain ownership attribution rules) in excess of 5% of the then
          outstanding shares in the Trust, subject to the Trust's right to cash
          out any holder of Units who requests an exchange and subject to
          certain other exceptions. To facilitate such exchanges of Units into
          Common Shares, 2,500,000 Common Shares (in addition to the 2,500,000
          Common Shares offered by the Trust in the Cash Offering) have been
          registered with the Commission.

          By virtue of the completion of the Exchange Offering, the Partnership
          acquired equity and/or subordinated mortgage interests in 26
          properties (the "Exchange Properties") directly or indirectly owned by
          the 23 Exchange Partnerships. The Partnership acquired interests in a


                                      F-24

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 16. PARTNERS' CAPITAL (Continued)

     Exchange Offering (Continued)

          particular property and/or mortgages by acquiring from limited
          partners their units of limited partnership interest in the respective
          Exchange Partnership. Each of the Exchange Partnerships directly or
          indirectly owned equity and/or mortgage interests in one or more
          properties. As discussed in Notes 2 and 6, the Partnership sold one of
          the properties. Certain of the Exchange Partnerships in which the
          Partnership owns an interest, directly or indirectly own equity
          interests in 15 properties, which consist of an aggregate of 868
          residential units (comprised of studio, one, two, three and four
          bedroom units). Certain of the Exchange Partnerships in which the
          Partnership owns an interest, directly or indirectly own mortgage and
          other debt interests in 10 properties, which consist of an aggregate
          of 590 existing residential apartment units (studio and one and two
          bedroom units) and 152 condominium apartment units (two and three
          bedroom units) under development. Of the Exchange Properties in which
          the Partnership owns an interest, 20 properties are located in
          Florida, three properties in Ohio and one property each in Georgia and
          Indiana. See Note 2 regarding the completion of the Exchange Offering
          on April 7, 2000.

     Partnership Limited Partnership Units

          In connection with the formation of the Trust and the Partnership, the
          Original Investors, Gregory K. McGrath and Robert S. Geiger, each
          subscribed for 601,080 limited partnership units of the Partnership (a
          total of 1,202,160 units). In consideration for the Units subscribed
          for by them, the Original Investors made a $100,000 capital
          contribution to the Partnership. The number of Units subscribed for
          represented 19% of the maximum Common Shares that would have been
          outstanding after completion of the Cash Offering and the Exchange
          Offering assuming that the Trust had sold all Common Shares offered in
          the Cash Offering and that the Partnership had issued the maximum
          number of Units (2,500,000) offered in the Exchange Offering,
          calculated on a fully diluted basis assuming all then outstanding
          Units (other than those acquired by the Trust) had been exchanged into
          an equivalent number of Common Shares. The subscription agreement
          entered into by the Original Investors provided that if, as of May 31,
          2000, the number of Units subscribed for by the Original Investors
          represented a percentage greater than 19% of the then outstanding
          Common Shares calculated on a fully diluted basis, each Original
          Investor would be required to return any excess Units to the
          Partnership for cancellation.

          Therefore, as of May 31, 2000, an adjustment, reducing the number of
          Units held in escrow by 444,414, was made to accurately reflect the
          number of Units held by the Original Investors. The Original Investors
          have deposited Units subscribed for by them into a security escrow
          account for six to nine years, subject to earlier release under
          certain conditions.

          The fair value of the units issued to the Original Investors amounted
          to $100,000, based upon a determination made by the Independent
          Trustees of the Trust as of the date of subscription for these Units
          (February 3, 1998). The determination of the fair value took into
          consideration that at the time of the subscription for the Units, the
          Trust and the Partnership were development stage companies, with no
          cash or other significant tangible assets,


                                      F-25

<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 16. PARTNERS' CAPITAL (Continued)

     Partnership Limited Partnership Units (Continued)

          operating history or revenue and no certainty of successful offerings
          or future operations; the founders had at risk their initial capital
          contributions plus certain additional unreimbursed advances to cover
          certain offering and operating expenses; the founders have significant
          experience and developed know-how critical to the success of the Trust
          and the Partnership; and the founders' Units are subject to
          significant transfer restrictions. The Partnership has accounted for
          the Units as being issued and outstanding, but subject to escrow
          restrictions, in the accompanying consolidated financial statements,
          and has included the Units as outstanding in determining the weighted
          average shares outstanding for purposes of calculating net loss per
          share on an as-converted basis. Because the release of the Units from
          escrow is not dependent upon the achievement of any specified level of
          profits, the release of the Units from escrow is not considered to be
          compensatory and, accordingly, no accounting measurement will be given
          to the release of the Units from escrow.

          Under the subscription agreement, the Original Investors agreed to
          waive future administrative fees for managing Exchange Partnerships
          which participated in the Exchange Offering; agreed to assign to the
          Partnership the right to receive all residual economic rights
          attributable to the general partner interests in Exchange
          Partnerships; and, in order to permit management of the Exchange
          Properties by the Partnership, caused the Exchange Partnerships to
          cancel the prior property management agreements and agreed to forego
          the right to have a property management firm controlled by the
          Original Investors assume the property management role in respect of
          properties in which the Trust or the Partnership invest.

          Following the Exchange Offering, the Partnership controls the Exchange
          Partnerships by virtue of its ownership of substantially all of the
          limited partnership interests therein, which provides the Partnership
          the ability to remove the general partner under the provisions of the
          limited partnership agreements pertaining to each Exchange Partnership
          that authorize limited partners holding over 50% of total partnership
          interest to remove the general partner.

          Since holders of Units may elect to exchange these for Common Shares
          in the Trust on a one for one basis, the Original Investors would be
          entitled to exchange their limited partnership units for a net amount
          of 757,746 Common Shares.

NOTE 17. NET LOSS PER PARTNERSHIP UNIT

          The Partnership computes per unit data in accordance with Statement of
          Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per
          Share". SFAS 128 requires dual presentation of basic and diluted
          earnings per share on the face of the income statement.

          Basic net loss per unit equals net loss divided by the weighted
          average units outstanding during the year. The computation of diluted
          net loss per unit that includes dilutive limited partnership unit
          equivalents in the weighted average units outstanding has not been
          presented, as it is anti-dilutive in 2001 and 2000.


                                      F-27
<PAGE>


                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 17. NET LOSS PER PARTNERSHIP UNIT (Continued)

          The components used in calculating basic net loss per unit are as
          follows:

                                                   Weighted       Loss
                                  Net Loss      Average Units   Per Unit

          2001                  $  (607,338)      4,080,006      $(.15)
                                ===========       =========      ====

          2000                  $(2,998,256)      3,421,746      $(.88)
                                ===========       =========      ====

NOTE 18. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
         ACTIVITIES

          In April 2000, in connection with the completion of the Exchange
          Offering, the Partnership acquired indirect equity interests in 16
          rental properties and subordinated mortgage interests in 10 additional
          properties through the acquisition of substantially all partnership
          interests in the Exchange Partnerships which own land and depreciable
          property, accrued interest, advances, other assets, mortgages and
          notes payable, as follows:

          Land and depreciable property                    $28,723,196
          Mortgage notes receivable, affiliates              3,292,677
          Receivables and accrued interest, affiliates       3,262,522
          Other assets                                         848,813
                                                           -----------
             Total assets                                   36,127,208
                                                           -----------

          Mortgage payable                                  19,766,015
          Notes payable and accrued interest                 2,320,586
          Payables and accrued interest, affiliates          1,435,548
          Accounts payable                                     644,266
          Security deposits                                    167,634
                                                           -----------
             Total liabilities                              24,334,049
                                                           -----------
                Equity                                     $11,793,159
                                                           ===========

          During 2001, the Partnership issued 25,000 units of limited
          partnership interest valued at $75,500 to settle amounts owed to a
          vendor.


NOTE 19. SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

          At December 31, 2001, the Operating Partnership had notes receivable
          due from an affiliated partnership amounting to $795,000, plus accrued
          interest of $298,125. During the fourth quarter of 2001, the
          affiliated partnership assigned its interest in the partnership to
          another entity controlled by a Trustee of the Trust. Based on the
          assignee's financial condition, the Operating Partnership's Management
          has determined that collectibility of these notes is remote.


                                      F-27
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 19. SIGNIFICANT FOURTH QUARTER ADJUSTMENTS (Continued)

          Accordingly, the Operating Partnerships wrote off the entire notes
          receivable balance plus accrued interest in the fourth quarter of
          2001.

NOTE 20. SUBSEQUENT EVENT

          In February 2002, the Board of Trustees of the Trust received the
          preliminary findings of a report prepared by an independent auditing
          firm in which the firm opined that certain transactions of the Trust
          and the Operating Partnership (including the Alexandria and Riverwalk
          property investments) entered into by prior management involved
          improper conduct. The Board will use the preliminary findings for
          discussions with the former Managing Shareholder of the Trust
          concerning the transactions and to investigate the rights and
          obligations of the Trust and the Operating Partnership in connection
          therewith. The ultimate results of the preliminary findings and
          discussions will be reported at such time as they become definitive.


                                      F-28

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
        ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.


                                  PART III

ITEM 9. TRUSTEES, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
        PERSONS' COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     The names of the persons that serve as members of the Board of Trustees and
executive officers of the Trust and the Operating Partnership and their
respective ages and positions are set forth below. Each of the Trustees other
than Mr. Rydell has served since 1998; Mr. Rydell has served since 2001. The
term of each Trustee is one year. There is no limitation on the number of terms
a Trustee may serve.

<TABLE>
<CAPTION>
Name                                Age                       Position
----                                ---                       --------
<S>                                 <C>                       <C>
James H. Bownas                     54                        Independent Trustee - Trust
Peter M. Dickson                    52                        Independent Trustee - Trust
Jerome S. Rydell                    56                        Trustee - Trust
Robert L. Astorino                  55                        Chief Executive Officer - Trust and Operating Partnership
Mark L. Wilson                      55                        Chief Financial Officer - Trust and Operating Partnership
</TABLE>

     The senior management of the Trust has discretion in day to day management
and control of the affairs of the Trust and the Operating Partnership, subject
to (i) general supervision and review by the Independent Trustees and the other
members of the Board of Trustees of the Trust and (ii) prior approval authority
of a majority of the Board and/or of a majority of the Independent Trustees in
respect of certain actions of the Trust and the Operating Partnership. The
Declaration of the Trust requires that a majority of the Board of the Trust be
comprised of Independent Trustees. Two of the three current members of the Board
are Independent Trustees. The term as Trustee of each of the current Trustees
expires in May 2002, and each of them has been nominated by the Trust for
re-election at the annual meeting of Shareholders scheduled on May 29, 2002.

     The management of the Trust has substantial prior experience in and
knowledge of the residential apartment property and single-family housing market
and its financing and experience in the management of investment programs and in
directing their operations.

     James H. Bownas, an Independent Trustee on the Board of Trustees of the
Trust, has been a principal in Gamble Hartshorn Johnson Co. LPA, a Columbus,
Ohio law firm with a general practice since November 1996. Mr. Bownas's practice
is concentrated in securities, real estate, taxation, corporate and estate
planning. Between January 1996 and November 1996, Mr. Bownas managed his own
legal practice. Between 1989 and January 1996, Mr. Bownas served as General
Counsel, Vice President and Secretary of Lexford, Inc. ("Lexford") (formerly
Cardinal Realty Services, Inc. and before that Cardinal Industries, Inc.), a
publicly traded company headquartered in Reynoldsburg, Ohio which has sponsored
numerous real estate investment limited partnerships. At Lexford, Mr. Bownas
developed significant experience in the syndication of real estate investment
limited partnerships, negotiated the resolution of over $2 billion of creditors'
claims in connection with the bankruptcy reorganization of Cardinal Industries,
Inc., and coordinated the transition of Cardinal Industries, Inc. from a
bankruptcy creditor to a successful publicly traded company. Since 1995, Lexford
has engaged in several arms-length transactions (none of which represented a
material portion of Lexford's assets, liabilities, revenues or expenditures)
with affiliates of Baron Advisors, Inc., the former Managing Shareholder of the
Trust, pursuant to which multi-family real estate was sold to, purchased from
and managed by and for such entities. Mr. Bownas's term as an Independent
Trustee expires in May 2002, and he has been nominated by the Trust for
re-election at the annual meeting of Shareholders scheduled for May 29, 2002.

     Peter M. Dickson, an Independent Trustee on the Board of Trustees of the
Trust, has been managing director of the Guardian Management Company Limited, a
global financial services corporation based in Bermuda, since January 1991. In
addition, since 1994 Mr. Dickson has served as a director to Grosvenor Trust
Company Limited, another Bermuda-based financial services corporation. Between
1985 and 1990, Mr. Dickson served as the Executive Vice President of Finance for
The Wraxall Group, Bermuda. Between


                                       61
<PAGE>

1979 and 1985, Mr. Dickson held several positions with Peat, Marwick. Mr.
Dickson's term as an Independent Trustee expires in May 2002, and he has been
nominated by the Trust for re-election at the annual meeting of Shareholders
scheduled for May 29, 2002.

     Jerome S. Rydell, a Trustee on the Board of Trustees of the Trust, is
President, sole director and sole beneficial owner of Sigma Financial
Corporation ("Sigma"), a NASD registered broker-dealer that acted as the
underwriter of the Trust's public Cash Offering that ended in May 2000 and
participated in the Operating Partnership's Exchange Offering, pursuant to which
limited partners of certain limited partnerships formerly managed by affiliates
of Mr. McGrath were offered the right to exchange their limited partnership
interests in such partnerships in exchange for units of limited partnership
interest in the Operating Partnership. Mr. Rydell is also President, sole
director and sole beneficial owner of Sigma Planning Corporation, a registered
investment advisor and a subsidiary of Sigma. Sigma was formed in 1983 and
currently is licensed in 48 states. Its main office is located in Ann Arbor,
Michigan and its 48-member staff supports more than 500 registered
representatives. Both Sigma and Sigma Planning Corporation are registered with
the Securities and Exchange Commission.

     Sigma is also participating in the private offering of units of limited
partnership interest in Baron Lakeside Construction Fund, L.P. ("Baron
Lakeside") and Baron SABH Construction Fund, L.P. ("Baron SABH"). The two
partnerships, sponsored and formerly managed by affiliates of Mr. McGrath (and
now managed by Sigma Renaissance Corporation ("Sigma Renaissance"), of which Mr.
Rydell is a principal), are attempting to raise a total of $4,150,000. In
September 2001, Mr. McGrath assigned all of the outstanding interests in the two
partnerships and their corporate general partners to Sigma Renaissance. The net
proceeds of these offerings will be used to make loans to owner/developers of
residential condominium and apartment development properties to enable them to
pay down first mortgage indebtedness secured by such properties and to cover
outstanding payables owed to general contractors and other vendors of the
projects, construction completion expenses, interest payments prior to repayment
of the loans, working capital, and/or certain administrative expenses. The
owner/developers of the properties to be developed were formerly controlled and
managed by affiliates of Mr. McGrath. In September 2001, Mr. McGrath assigned
all of the outstanding interests in the affiliates to Sigma Renaissance. Sigma
Renaissance will have significant authority in respect of the funding of
construction completion requests from owner/developers; the sale of properties
to be developed; the management of entities which will be involved in the
transactions contemplated in the two offerings; and distributions to limited
partners of Baron Lakeside and Baron SABH.

     Mr. Rydell and other affiliates have also sponsored a number of securities
offerings in both real estate and radio stations. In addition, other affiliated
companies currently manage real estate assets comprised of 1,500 residential
sites and $22 million of land contracts and mortgages in the metropolitan
Detroit area. See also "ITEM 12 - CERTAIN RELATIONS AND RELATED TRANSACTIONS"
below. Mr. Rydell's term as an Independent Trustee expires in May 2002, and he
has been nominated by the Trust for re-election at the annual meeting of
Shareholders scheduled for May 29, 2002.

     Robert L. Astorino has served as Chief Executive Officer of the Trust since
May 2001 and as Chief Executive Officer of the Operating Partnership since May
1998. Between August 2000 and May 2001, he served as Chief Operating Officer of
the Trust. From February 1998 through May 1998, he served as President -
Property of Strategic Management Inc., a real estate management company
affiliated with Mr. McGrath. From 1992 through January 1998, he served as
President of The Housing Partnership, Inc., a Louisville, Kentucky-based real
estate investment and consulting company. Between 1991 and 1992, Mr. Astorino
served as Assistant Vice President, Real Estate Operations at Great Western Bank
in Beverly Hills, California, where his responsibilities included the operation
and sale of residential and commercial real estate obtained in foreclosure. Mr.
Astorino also serves as a manager of Sigma Renaissance (see "ITEM 12 - CERTAIN
RELATIONS AND RELATED TRANSACTIONS" below).

     Mark L. Wilson was elected Chief Financial Officer of the Trust and the
Operating Partnership in November 1998. Between March 1998 and September 2001,
Mr. Wilson also served as Chief Financial Officer for WaKuL, Inc., a provider of
integrated communications services to owners, property managers and residents of
residential apartment properties. WaKul, Inc. is controlled by Mr. McGrath.
Between 1989 and 1997, Mr. Wilson served as Vice President of Baron Real Estate
Services, Inc., an affiliate of Mr. McGrath. Mr. Wilson was responsible for
financial control, accounting and tax functions for that company in addition to
financial control and accounting for all of the properties which it managed. In
addition, from 1992 through his resignation in March 1996, Mr. Wilson served as
President of The Baron Companies, a registered securities broker-dealer which
was the dealer manager of certain private offerings of limited partnerships
affiliated with Mr. McGrath.

     The Corporate Trustee of the Trust is Barcap Realty Services Group, Inc.
("Barcap"), a Delaware corporation originally formed in July 1997 under the name
Baron Capital Properties, Inc. It is a wholly owned subsidiary of the Trust. The
primary duty of the Corporate Trustee is to operate an office in the State of
Delaware as Delaware law requires that at least one of the trustees of a
Delaware business trust (such as the Trust) have an office in Delaware. Barcap,
as Corporate Trustee of the Trust, will act only at the


                                       62
<PAGE>

direction of the Board of Trustees of the Trust, and will not take independent
discretionary action on behalf of the Trust. The Corporate Trustee will not be
compensated for its services, but will be reimbursed only for its reasonable
out-of-pocket expenses in serving in such capacity which are approved in advance
by the Board of Trustees. Such expenses are expected to be limited to those
incurred in connection with the operation of its Delaware office. Barcap may in
the future serve as a trustee of other similar entities that may be organized by
the Trust or the Operating Partnership, and will also act as a Taxable REIT
Subsidiary of the Trust, transacting all non-REIT related transactions for the
Trust. The Chief Executive Officer and sole director of Barcap is Robert L.
Astorino. The principal Delaware office of Barcap is at 1105 North Market
Street, Suite 1300, Wilmington, Delaware 19899.

Section 16(a) of the Exchange Act Beneficial Ownership Reporting Compliance

     No reports were required to be filed in the most recent fiscal year
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
since the Trust's Common Shares are not registered under the act.


ITEM 10. EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>

                                            Annual Compensation

                                                                                       Long Term               All Other
Name and Principal Position               Year         Salary          Bonus         Compensation            Compensation
---------------------------               ----         ------          -----         ------------            ------------
<S>                                       <C>         <C>             <C>                                      <C>    <C>
Robert L. Astorino, Chief Executive       2001        $173,356        $60,000               --                 $7,385 1/
Officer - Trust and Operating
Partnership

Mark L. Wilson, Chief Financial           2001        $111,382        $40,000               --                 $6,575 2/
Officer - Trust and Operating
Partnership
         1/ Company car allowance   2/ Company Car
</TABLE>

     Each Independent Trustee is entitled to be paid an annual fee of $6,000 for
serving in such capacity. In August 2000, the Trust entered into employment
agreements with Mr. Astorino, to serve as President and Chief Operating Officer
of the Trust, and Mr. Wilson, to serve as its Chief Financial Officer, through
December 31, 2001. Under the terms of the agreements, the Trust, through the
Operating Partnership, have paid Mr. Astorino $173,356 and Mr. Wilson $111,382
per annum to serve in such capacities. In addition, Mr. Astorino and Mr. Wilson
received $60,000 and $40,000, respectively, as an incentive payment to remain in
the employment of the Trust through the term of the agreements. Since January 1,
2002, Mr. Astorino and Mr. Wilson have served as the Chief Executive Officer and
the Chief Financial Officer, respectively, of the Trust and the Operating
Partnership without employment agreements.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership of Units in the Operating Partnership by (i) the Trust, (ii) each
Trustee of the Trust, (iii) the Chief Executive Officer and each other executive
officer of the Operating Partnership and the Trust, (iv) the Trust, the Trustees
of the Trust, all executive officers of the Trust and the Operating Partnership
as a group, and (v) to the Operating Partnership's knowledge, by any person
owning beneficially more than 5% of the outstanding Units, in each case at
December 31, 2001. Except as otherwise noted, each person named in the table has
sole voting and investment power with respect to all Operating Partnership Units
shown as beneficially owned by such person.


                                       63
<PAGE>
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
       Name, Position and Address of                      Amount and Nature
             Beneficial Owner                          Of Beneficial Ownership                            Percentage
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                                           <C>
Baron Capital Trust, the sole general                         963,346                                       23.8%
partner and a limited partner of the
Operating Partnership   1/
-----------------------------------------------------------------------------------------------------------------------------------
James H. Bownas                                                   --                                          --
Independent Trustee - Trust
1 East Livingston Avenue
Columbus, Ohio  43215
-----------------------------------------------------------------------------------------------------------------------------------
Peter M. Dickson                                                  --                                          --
Independent Trustee - Trust
33 Church Street
Hamilton, Bermuda  HM 12
-----------------------------------------------------------------------------------------------------------------------------------
Jerome S. Rydell                                                    -- 2/                                     -- 2/
Trustee - Trust
c/o Sigma Financial Corporation
4261 Park Road
Ann Arbor, MI 48103
-----------------------------------------------------------------------------------------------------------------------------------
Gregory K. McGrath                                            378,873 3/                                     9.3%
Principal Unitholder
1340 Clay Street, Suite 3000
Cincinnati, Ohio  45210
-----------------------------------------------------------------------------------------------------------------------------------
Robert S. Geiger                                              378,873 3/                                     9.3%
Principal Unitholder      4/
-----------------------------------------------------------------------------------------------------------------------------------
Robert L. Astorino                                            100,000 3/                                     2.5%
Chief Executive Officer-Trust and Operating
Partnership   1/
-----------------------------------------------------------------------------------------------------------------------------------
Mark L. Wilson                                                     --                                         --
Chief Financial Officer-Trust and Operating
Partnership   1/
-----------------------------------------------------------------------------------------------------------------------------------
The Trust, Trustees, and all executive                      1,721,092                                       42.4%
officers of the Trust and Operating
Partnership, as a group (8)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     1/ The address of Baron Capital Trust and Messrs. Astorino and Wilson is
c/o Baron Capital Trust, 3570 U.S. Highway 98 North, Lakeland, Florida 33809.

     2/ Mr. Rydell does not beneficially own any Operating Partnership Units. He
is the beneficial owner of 97,450 Common Shares of the Trust by virtue of his
ownership of Sigma Financial Corporation ("Sigma"), which earned such shares as
commissions in connection with the Exchange Offering. See ITEM 12 - CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS below. Sigma has allocated a portion of
the Common Shares to its registered representatives who earned such shares for
assisting the Operating Partnership in the Exchange Offering. As a result of
such allocation, Sigma actually beneficially owns less than 5% of the
outstanding Common Shares.

     3/ Mr. McGrath and Mr. Geiger, the co-founders and former officers of the
Trust and the Operating Partnership, each own 378,873 Operating Partnership
Units which are exchangeable into an equivalent number of Common Shares of the
Trust. Their Units have been deposited into an institutional escrow account. The
escrowed Units (and/or Common Shares to the extent they exchange Units for
Common Shares) are to be released in equal amounts on the sixth, seventh, eighth


                                       64
<PAGE>

and ninth anniversary dates of the effectiveness of the Cash Offering, or
earlier if certain financial goals are achieved by the Trust. Under the
Declaration of Trust, no other Shareholder or Unitholder may hold more than 5%
of the beneficial interest in the Trust. Mr. Astorino holds a 10-year warrant
(which expires in February 2009) to acquire up to 100,000 Operating Partnership
Units from Mr. McGrath at a nominal exercise price per unit. (For the purposes
of this Report, the ownership percentage indicated above for Mr. Astorino
assumes that he has exercised the warrant in full.)

     4/ Mr. Geiger's current address is unknown.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     From 1998 through 2001, the Operating Partnership directly or indirectly
entered into several transactions described below in which the amount exceeded
$60,000 and in which an executive officer or Trustee of the Trust or the
Operating Partnership had an interest.

     1. The Trust contributed $3,858,240 (1998), $1,379,500 (1999), and $230,118
(2000) of the net proceeds from the Cash Offering to the Operating Partnership
in exchange for 702,076 Operating Partnership Units. The Trust and the Operating
Partnership were co-founded by Gregory K. McGrath and Robert S. Geiger, and they
formerly served as the Chief Executive Officer of the Trust and the Operating
Partnership and the Chief Operating Officer of the Operating Partnership,
respectively. They each own individually Operating Partnership Units as
described above in "ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."

     2. The Operating Partnership acquired limited partnership interests in
Alexandria Development, L.P. from an affiliate of Mr. McGrath. See "ITEM 2 -
DESCRIPTION OF PROPERTIES - Description of Properties - Acquired Properties -
Alexandria Property."

     3. In connection with the formation of the Trust and the Operating
Partnership, Mr. McGrath and Mr. Geiger, the founders of the Trust and the
Operating Partnership, subscribed for 1,202,160 Units in the Operating
Partnership in exchange for a cash payment of $100,000. On May 31, 2000 (the
termination date of the Cash Offering), pursuant to an agreement among Mr.
McGrath, Mr. Geiger, the Trust and the Operating Partnership, each of Mr.
McGrath and Mr. Geiger returned to the Operating Partnership all but 378,873
Units, representing 9.5% of the then outstanding Common Shares, calculated on a
fully diluted basis assuming that all then outstanding Units (other than those
acquired by the Trust) had been exchanged into an equivalent number of Common
Shares. All outstanding Units, including those owned by Mr. McGrath and Mr.
Geiger, are exchangeable into an equivalent number of Common Shares. See "ITEM
11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."

     4. As described in "ITEM 1 - DESCRIPTION OF BUSINESS - Brief Description of
Properties - Exchange Offering," effective April 7, 2000, the Operating
Partnership acquired equity and debt interests in residential apartment
properties and one condominium apartment property in connection with the
completion of an Exchange Offering made to individual limited partners of 23
limited partnerships in which Mr. McGrath either directly or indirectly held a
beneficial interest.

     5. Described above under "ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION - Results of Operations" are certain transactions involving
Mr. McGrath, certain of his affiliates, and the Trust relating to the Burgundy
Hills Property.

     6. Described below are certain transactions involving Jerome S. Rydell (a
Trustee of the Trust), and the Trust, the Operating Partnership, and affiliates
of Mr. McGrath. Mr. Rydell is the President, sole director and sole beneficial
owner of Sigma Financial Corporation ("Sigma"), a registered securities
broker-dealer. Sigma served as the underwriter in the sale of the Trust's Common
Shares in its best-efforts public Cash Offering that ended in May 2000. Sigma
earned approximately $560,000 in commissions for sales it completed in the
offering. In addition, Sigma also earned five-year warrants (which expire in May
2003) to acquire 59,676 Common Shares at an exercise price of $13.00 per share.
Sigma allocated a portion of the cash commissions and warrants to its registered
representatives.

     Sigma also participated in the Exchange Offering completed in April 2000 by
the Operating Partnership. In exchange for its services during the offering,
Sigma earned 97,450 Common Shares, a portion of which it allocated to its
registered representatives.


                                       65
<PAGE>

Sigma has also participated as a broker-dealer in numerous private offerings by
investment programs (including the Exchange Partnerships acquired by the
Operating Partnership in the Exchange Offering and WaKul, Inc.) sponsored and
managed by Mr. McGrath or his affiliates. Sigma, Mr. Rydell and certain of
Sigma's registered representatives are owed more than $100,000 by those programs
for outstanding commissions, offering fees, reimbursable expenses, and advances.

     Sigma also sponsored and manages certain real estate investment programs
that as of December 31, 2001 are owed a total of approximately $1,852,136 for
loans made to certain Exchange Partnerships controlled by the Operating
Partnership.

     Sigma is also participating in the private offering sale of units of
limited partnership interest in Baron Lakeside Construction Fund, L.P. ("Baron
Lakeside") and Baron SABH Construction Fund, L.P. ("Baron SABH"). The two
partnerships, sponsored and formerly managed by affiliates of Mr. McGrath (and
now managed by Sigma Renaissance Corporation ("Sigma Renaissance"), or which Mr.
Rydell is a principal), are attempting to raise a total of $4,150,000. In
September 2001, Mr. McGrath assigned all of the outstanding interests in the two
partnerships and their corporate general partners to Sigma Renaissance. The net
proceeds of these offerings will be used to make loans to owner/developers of
residential condominium and apartment development properties to enable them to
pay down first mortgage indebtedness secured by such properties and to cover
outstanding payables owed to general contractors and other vendors of the
projects, construction completion expenses, interest payments prior to repayment
of the loans, working capital, and/or certain administrative expenses. The
owner/developers of the properties to be developed were formerly controlled and
managed by affiliates of Mr. McGrath. In September 2001, Mr. McGrath assigned
all of the outstanding interests in the affiliates to Sigma Renaissance.

     Following their completion, the development properties will be listed for
sale, and the new development loans and prior development loans made by other
investment limited partnerships sponsored and formerly managed by affiliates of
Mr. McGrath (and now managed by Sigma Renaissance) to owner/developers formerly
controlled by McGrath will be repaid out of the net proceeds from any such sales
and sales of certain interests formerly beneficially owned by Mr. McGrath in
other properties.

     Sigma Renaissance will have significant authority in respect of the funding
of construction completion requests from owner/developers; the sale of
properties to be developed; the management of entities involved in the
transactions contemplated in the two offerings; and distributions to limited
partners of Baron Lakeside and Baron SABH. In exchange for a construction fee,
Sigma Renaissance will also supervise construction and serve as the onsite
construction manager for the completion of development and construction on the
unfinished development properties to be completed with the proceeds of the new
development loans. Mr. Rydell and Robert L. Astorino, the Chief Executive
Officer of the Trust and the Operating Partnership, serve as managers of Sigma
Renaissance.

     The roles of Mr. Rydell, Sigma and Sigma Renaissance in the Baron Lakeside
and Baron SABH transactions are designed (i) to mitigate conflicts of interest
which affect Mr. McGrath due to his role as a former affiliate of Baron
Lakeside, Baron SABH, owner/developers which borrow development funds and prior
borrower and lender partnerships sponsored by Mr. McGrath and (ii) to provide
for repayment of the new and prior development loans prior to the distribution
of any net profits or any other payments to Mr. McGrath or any affiliates
beneficially owned entirely by him attributable to the development properties.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     Documents filed as part of this report:

     (a) Exhibits are either attached as part of this Report or incorporated by
reference herein.


                                       66
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Exhibit Number           Description
-----------------------------------------------------------------------------------------------------------------------------
<S>   <C>                <C>
      3.1*               Certificate of Limited Partnership of the Registrant (incorporated herein by reference to Exhibit
                         3.1 to the Form S-4 Registration Statement of the Registrant filed with the Securities and Exchange
                         Commission on June 2, 1998).
-----------------------------------------------------------------------------------------------------------------------------
      3.2*               Agreement of Limited Partnership of Baron Capital Properties, L.P. dated as of May 15, 1998
                         (incorporated herein by reference to Exhibit 10.6 to Amendment No. 3 to the Form SB-2 Registration
                         Statement of Baron Capital Trust filed with the Securities and Exchange Commission on May 15, 1998
                         (Registration No. 333-35063)).
-----------------------------------------------------------------------------------------------------------------------------
      4.1*               Form of Unit Certificate (incorporated herein by reference to Exhibit 4.1 to the Form S-4
                         Registration Statement of the Registrant filed with the Securities and Exchange Commission on June
                         2, 1998).
-----------------------------------------------------------------------------------------------------------------------------
      10.2*              Amended and Restated Declaration of Trust for the Registrant made as of August 11, 1998
                         (incorporated herein by reference to Exhibit 10.2 to Amendment No. 1 to the Form S-4 Registration
                         Statement of the Registrant filed with the Securities and Exchange Commission on September 22, 1998).
-----------------------------------------------------------------------------------------------------------------------------
      10.3*              Form of Indemnification Agreement among the Registrant, Baron Capital Trust (its General Partner),
                         officers of the Registrant and trustees, officers and members of the Board of Baron Capital Trust
                         and such other persons as Baron Capital Trust may designate (included in Section 7.7 of the
                         Agreement of Limited Partnership of the Registrant referenced above in Exhibit 3.2)
-----------------------------------------------------------------------------------------------------------------------------
      10.4*              Amended and Restated Security Escrow Agreement dated as of May 15, 1998 among Gregory K. McGrath,
                         Robert S. Geiger, Baron Capital Trust and American Stock and Transfer Company (incorporated herein
                         by reference to Exhibit 10.4 to Amendment No. 2 to the Form S-4 Registration Statement of Registrant
                         filed with the Securities and Exchange Commission on January 29, 1999).
-----------------------------------------------------------------------------------------------------------------------------
      10.5*              Founders' Subscription Agreement (incorporated herein by reference to Exhibit 10.5 to Amendment No.
                         2 to the Form S-4 Registration Statement of Registrant filed with the Securities and Exchange
                         Commission on January 29, 1999).
-----------------------------------------------------------------------------------------------------------------------------
      10.6*              First Amendment to Amended and Restated Security Escrow Agreement, dated April 30, 1999
                         (incorporated herein by reference to Exhibit 10.6 to Amendment No. 4 to the Form S-4 Registration
                         Statement of Registrant filed with the Securities and Exchange Commission on June 2, 1999).
-----------------------------------------------------------------------------------------------------------------------------
      10.7*              Amendment to Founders' Subscription Agreement, dated April 30, 1999 (incorporated herein by
                         reference to Exhibit 10.7 to Amendment No. 4 to the Form S-4 Registration Statement of Registrant
                         filed with the Securities and Exchange Commission on June 2, 1999)
-----------------------------------------------------------------------------------------------------------------------------
      21**               Subsidiaries of the Registrant
-----------------------------------------------------------------------------------------------------------------------------
      23**               Consent of Rachlin Cohen & Holtz, Independent Certified Public Accountants
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

-----------------------
*        Previously filed.
**       Filed herewith.

     (b) Reports on Form 8-K:

          No reports on Form 8-K were filed during the quarter ended December
          31, 2001.


                                       67
<PAGE>

                                   SIGNATURES

     In accordance with 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.

                                          BARON CAPITAL PROPERTIES, L.P.

March 29, 2002                      By:   Baron Capital Trust, General Partner
                                    By:   s/ Robert L. Astorino
                                          ------------------------------------
                                             Robert L. Astorino,
                                             Chief Executive Officer

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

Signatures                        Title                          Date

/s/ Robert L. Astorino   Chief Executive Officer                 March 29, 2002
----------------------   (Principal Executive Officer)
Robert L. Astorino

/s/ Mark L. Wilson       Chief Financial Officer                 March 29, 2002
----------------------   (Principal Financial and Accounting
Mark L. Wilson           Officer)



                                       68