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

                                   ----------

                                    FORM 10-K
(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

                For the fiscal year ended      December 31, 1997
                                          -----------------------------

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

        For the transition period from _______________ to _______________

                      Commission file number      1-10660
                                             ----------------------------

                        Berkshire Realty Company, Inc.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


          Delaware                                            04-3086485
--------------------------------------------------------------------------------
(State or other jurisdiction of                             (IRS Employer
incorporation or organization)                             Identification No.)

470 Atlantic Avenue, Boston, Massachusetts                       02210
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code         (617) 423-2233
                                                          --------------------

Securities registered pursuant to Section 12(b) of the Act:

   Title                                   Name of Exchange on which Registered
   -----                                   ------------------------------------
Common Stock                                        New York Stock Exchange
$.01 par value
Warrants to purchase common stock                   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.        Yes  [X]        No  [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K     [ ].

Aggregate market value of voting securities held by non-affiliates of the
registrant was approximately $411,289,000 as of March 2, 1998.

As of March 2, 1998 there were 36,656,925 shares of the registrant's common
stock outstanding.

Documents incorporated by reference: See Item 14 herein. The exhibit index is
located on pages 31 - 42. The total number of pages in this document is 123.


<PAGE>

                                     PART I

ITEM 1.  BUSINESS

Organization

     Berkshire Realty Company, Inc. and Subsidiaries (the "Company") was formed
on April 26, 1990 and commenced operations on June 27, 1991, as an equity real
estate investment trust ("REIT"). The Company's several wholly-owned qualifying
REIT subsidiaries have been formed in connection with multifamily asset
acquisitions and financings.

     On June 4, 1991 at a special meeting, the Unitholders of Krupp Cash
Plus-III Limited Partnership and Krupp Cash Plus-IV Limited Partnership
(collectively the "Participating Cash Plus Partnerships") voted in favor of and
agreed to participate in an exchange (the "Exchange") with the Company. On June
27, 1991, the Company, a Delaware corporation, exchanged 25,097,923 shares of
its common stock ("Shares") for the assets, subject to the liabilities, of the
Participating Cash Plus Partnerships. The Participating Cash Plus Partnerships
then distributed the Shares received in the Exchange to their respective
investors and the Participating Cash Plus Partnerships were then dissolved.

     In 1995, the Company was restructured as an umbrella partnership real
estate investment trust ("UPREIT"). On May 1, 1995, the Company's assets,
subject to its liabilities, were transferred to a newly formed subsidiary
("Operating Partnership") of which the Company, in its capacity as the Special
Limited Partner and through its ownership of Berkshire Apartments, Inc. as the
general partner, holds 83.46% of the Operating Partnership interests as of
December 31, 1997. Upon transfer of its net assets, the Company was issued
25,392,452 units of the Operating Partnership ("Units") which was equal to the
number of Shares outstanding on May 1, 1995.

     In connection with the organization of the Operating Partnership, on May 1,
1995 an affiliate of Berkshire Realty Advisors Limited Partnership ("Advisor"),
contributed $5,000 and River Oaks Apartments, subject to mortgage debt of $5.4
million, at a valuation of $10.5 million which was approved by the independent
members of the Board of Directors. The seller received 534,975 Units in the
Operating Partnership ("Minority Interest") in exchange for its interest in the
property. Under the agreement, the Company may not sell River Oaks Apartments
until May 1, 1998. The contribution was accounted for using the purchase method.
The River Oaks is a 17-story, 136-unit, multifamily complex located in the River
Oaks area of Houston, Texas.

     On March 1, 1996 the Company acquired, via contribution, certain assets of
an entity affiliated with a director which provided advisory and development
services to the Company, in exchange for 1.3 million Units of the Operating
Partnership (the "Advisor Transaction"). The transaction was valued at $13
million (based on a $10.00 per share price) and has been recorded as the
acquisition of a workforce and other intangible assets. Additional Units, up to
a total of $7.2 million, may be issued during a six-year period if certain share
price benchmarks are achieved. During 1997, the $11.00 and $12.00 share price
benchmarks were achieved and an additional 209,091 Units were issued at a value
of $2.4 million. (See Note C to the Consolidated Financial Statements). The
Advisor Transaction enabled the Company to eliminate fees previously incurred
for asset management, acquisition and disposition functions. The Company
outsources with an affiliate of a director for office administration, investor
records, computer systems support, and legal services.

     On February 26, 1997, the Board of Directors, acting on the recommendation
of a special committee comprised solely of outside directors, approved the
acquisition of the workforce and other assets of the multifamily property
manager affiliated with certain officers and directors which provided
multifamily property management services to the Company (the "Property
Manager"). The Property Manager was contributed on February 28, 1997 in exchange
for 1.7 million

                                       -2-

<PAGE>

Units with a value of approximately $17.6 million (the "Property Manager
Transaction").

     At the time of the contribution, the Property Manager managed 57 apartment
communities, including the Company's 35 assets, and employed approximately 85
professionals, excluding site employees. As a result of this transaction, the
Company no longer pays management fees and reimbursements for the management
operations of its multifamily portfolio. In addition, the Company receives
management fees and reimbursements associated with 22 third-party management
contracts acquired. Those contracts are primarily with partnerships affiliated
with certain directors and officers of the Company.

     The value of the transaction was allocated to intangible assets associated
with third-party management contracts and the workforce acquired. The Company
recorded intangible assets of $4.4 million based on discounted cash flows from
third-party property management contracts and $13.2 million based on the value
of intangible assets associated with the workforce acquired. (See Note D to the
Consolidated Financial Statements).

     The Company has an infinite life, however the Company's Certificate of
Incorporation, as amended, requires the Company's Board of Directors (the
"Board") to prepare and submit a Plan of Liquidation to the shareholders on or
before December 31, 1998. The Plan of Liquidation would become effective if
approved by shareholders holding a majority of the shares then outstanding. The
Company is operating under the assumption it will remain a going concern
indefinitely.

Company Purpose

     The purpose of the Company is to create value for shareholders through
skillful acquisition, renovation, rehabilitation, development and operation of
apartment communities. Providing residents a high quality living experience
through superior service-driven management is imperative to the Company's
success.

Business Strategy

     The Company's primary objective is to maximize shareholder value through
increases in distributable cash flow per share and appreciation in the value of
its common stock. The Company seeks to grow by acquiring and developing luxury,
middle and moderate income apartment communities in selected targeted markets.
In particular, the Company seeks opportunities to add value through renovation
and major rehabilitation projects across a broad spectrum of apartment
communities. The Company's presence in 14 metropolitan areas located in Florida,
Texas and the Mid-Atlantic and Southeast regions of the United States gives its
portfolio geographic diversity while providing the Company with a competitive
advantage in identifying and competing for acquisition and development
opportunities in its target markets. The Company believes its management
infrastructure allows it to grow in both its existing markets and in selected
new markets without incurring substantial additional costs. The Company also
seeks to maximize profitability by increasing occupancies and rents while
decreasing operating costs by implementing the strategies described below.

Growth Strategy - Regional Partner

     The Company believes that local expertise is important to the success of
its business. The Company, therefore, seeks to acquire the assets and operations
of skilled and proven apartment owners and developers and to establish such
companies as regional divisions of the Company, thereby enhancing the Company's
ability to acquire, develop and manage apartment communities in such regions.
This strategy offers private apartment owners and developers the opportunity to
contribute their direct ownership interests in such assets to the Company in
exchange for Units on a tax-deferred basis, and to have significant involvement
in the future management of the Company as the head of a regional division,

                                       -3-

<PAGE>

responsible for acquisition, development and asset management activities within
such regions. These mergers should permit the Company to grow by combining each
regional division's acquisition and development skills with the Company's access
to capital and management expertise. The Company expects to realize economies of
scale through the integration of the property management operations of the
acquired portfolio into the Company's management infrastructure. Each regional
division is expected to be headed by a regional president who has operated a
successful apartment company in such region and has demonstrated the ability to
acquire, develop and operate assets which fit the Company's criteria. The
commitment of each regional president to the Company will be assured by virtue
of such person's significant investment in the Company as a result of having
contributed such person's portfolio for equity in the Company or the Operating
Partnership.

Financing Strategy

     The Company has a policy to maintain leverage at or below 50% of the
reasonably estimated value of its assets. The Company believes that based upon
both its internally-generated estimated values and upon estimated values
calculated using valuation parameters consistent with the Company's credit
facilities, the Company is in compliance with such debt policy. The Company
believes that its access to capital through its credit facilities, sources of
private equity and debt financing, and utilization of Units as currency, as well
as its access to the public capital markets provide it with capital to fund its
acquisition, development and capital expenditure requirements as well as provide
a competitive advantage over certain competitive bidders who have less access to
capital.

Other Matters

     The performance of the Company's real estate investments is subject to some
seasonal fluctuations resulting from changes in utility consumption and seasonal
maintenance expenditures. Future performance of the Company may be impacted by
unpredictable factors which include general and local economic and real estate
market conditions, variable interest rates, environmental concerns, energy
costs, government regulations and federal and state income tax laws. The
requirements for compliance with federal, state and local regulations to date
have not had an adverse effect on the Company's operations, and no adverse
effects are anticipated in the future.

     The Company's strategic decision to divest of its retail portfolio over
time and reinvest the proceeds into multifamily assets has necessitated the
recognition of impairment losses on the Company's retail assets in accordance
with Statement of Financial Accounting Standards Opinion No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". The Company's share of provisions for losses recorded on its wholly-owned
and joint venture owned retail assets totaled $7.2 million and $12.0 million for
the years ended December 31, 1997 and 1996, respectively. The provisions for
losses represent the difference between carrying value and estimated fair value
less costs to sell. During 1997, the Company sold two wholly-owned retail assets
and one of its joint venture investments. Subsequent to December 31, 1997, the
Company's remaining retail assets were sold, including the remaining joint
venture investment.

Employees

     At December 31, 1997, the Company had 956 employees.


                                       -4-

<PAGE>

ITEM 2.  PROPERTY

     As of December 31, 1997, the Company had investments in 68 properties in
eight states consisting of 65 apartment communities having in the aggregate
18,773 units and three retail centers with a total of 639,829 square feet of
leasable space. One of the retail centers is owned through a joint venture with
a limited partnership whose general partner is an affiliate of a director of the
Company. Subsequent to December 31, 1997, the three retail centers were sold. In
addition, the Company owns two development projects located in Greenville, South
Carolina totaling 296 units and Atlanta, Georgia totaling 444 units, and two
parcels of land for future development located in Greenville, South Carolina.
The Company has contracted to acquire three development properties from the
Questar Partner as a result of the transaction described in Note E to the
Consolidated Financial Statements. The Company also entered into a Development
Acquisition Agreement with an affiliate of the Questar Partner which granted the
Company an exclusive right to acquire all apartment projects developed in the
Mid-Atlantic Region by affiliates of the Questar Partner which meet the
Company's acquisition and development criteria. Schedule III and Notes E, F and
G to the Consolidated Financial Statements included in Appendix A to this report
contain additional detailed information with respect to individual assets.

     Some of the Company's apartment communities and retail centers have been
pledged as collateral for various debt incurred by the Company. (See Notes K, L
and M to the Consolidated Financial Statements included in Appendix A).

     The following table summarizes the Company's multifamily properties at
December 31, 1997 and also sets forth the aggregate number of apartment units by
geographic region. The table does not reflect the value of the Company's
investments.

                                       Multifamily
                                 ------------------------
     Region                      Properties         Units
     ------                      ----------         -----

     Mid-Atlantic                    26             6,074
     Texas                           16             5,662
     Southeast                       15             4,917
     Florida                          8             2,120
                                     --            ------

                                     65            18,773
                                     ==            ======

     The following table provides a more detailed description of the individual
properties in which the Company has an interest at December 31, 1997. The
occupancy rates presented below are based on physical occupancy, without
reference to whether leases in effect are at, below, or above market rates and
without reference to lease-up incentives or concessions.


                                       -5-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                            1997
                                                                                                          Average         Average
                                                                                        Average Unit      Monthly        Physical
                                                                 Year         Total        Size        Rental Rates     Occupancy
       Multifamily                        Location             Acquired       Units      (sq. ft.)       (dollars)       (percent)
----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                            <C>         <C>         <C>             <C>           <C>
Mid-Atlantic Region

Arborview                         Belcamp, MD                    1997          288       1,023             753             81
Berkshire Towers (2)              Silver Spring, MD              1996        1,119         873             835             94
Calvert's Walk                    Belair, MD                     1997          276         896             737             95
The Channel                       Glen Burnie, MD                1997          120         952             695             98
Courtleigh                        Baltimore, MD                  1997          280       1,050             669             91
The Cove                          Glen Burnie, MD                1997          181         971             689             98
Coventry                          Baltimore, MD                  1997          122       1,050             643             87
Diamond Ridge                     Baltimore, MD                  1997           92         912             723             87
The Estates                       Pikesville, MD                 1997          208         883             785             95
Fairway Ridge                     Baltimore, MD                  1997          274         999             556             86
Harper's Mill                     Millersville, MD               1997          144         968             751             98
Hazelcrest                        Baltimore, MD                  1997           48         917             483             94
Heraldry Square                   Baltimore, MD                  1997          270       1,052             631             93
Hilltop                           Baltimore, MD                  1997           50         787             477             96
Jamestowne                        Baltimore, MD                  1997          335         958             517             91
Kingswood I                       Baltimore, MD                  1997          203       1,051             609             91
Kingswood II                      Baltimore, MD                  1997          203       1,051             609             87
The Lighthouse                    Glen Burnie, MD                1997          168       1,027             724             98
Liriope                           Belcamp, MD                    1997           84       1,038             815             90
Ridgeview Chase                   Westminster, MD                1997          204         916             776             92
Rolling Wind                      Baltimore, MD                  1997          280       1,062             899             87
Stratton Meadows                  Baltimore, MD                  1997          268       1,053             701             93
Warren Park                       Baltimore, MD                  1997          200         723             546             96
Westchester West                  Silver Spring, MD              1997          345       1,003             720             99
Williston                         Baltimore, MD                  1997           98       1,043             543             90
Southpointe at Massapequa (2)     Massapequa, NY                 1993          214         987           1,182            100
                                                             ---------------=-------------------------------------------------
          Total  Units                                                       6,074
                                                             -----------------------------------------------------------------

Texas Region

Benchmark (2)                     Irving, TX                     1996          250         845             592             97
Golf Side (2)                     Haltom City, TX                1996          402         781             458             93
Hunters Glen (2)                  Plano, TX                      1996          276         943             645             94
Huntington Brook                  Dallas, TX                     1997          320         828             606             93
Huntington Lakes                  Dallas, TX                     1997          405         786             650             95
Huntington Ridge                  Irving, TX                     1997          232         833             630             98
Indigo on Forest (2)              Dallas, TX                     1994        1,217         789             586             94
Kings Crossing (2)                Kingwood, TX                   1994          404         838             614             96
Kingwood Lakes (2)                Kingwood, TX                   1994          390         940             614             96
Pleasant Woods (2)                Dallas, TX                     1996          208         887             566             95
Prescott Place (2)                Mesquite, TX                   1996          318         762             514             95
Prescott Place II (2)             Mesquite, TX                   1996          336         712             509             95
Providence (2)                    Dallas, TX                     1996          244         794             510             93
River Oaks (2)                    Houston, TX                    1995          136       1,520           1,977             93
Summer Place                      Addison, TX                    1997          212         832             590             88
Sweetwater Ranch                  Richardson, TX                 1997          312         889             800             96
                                                             -----------------------------------------------------------------
          Total Units                                                        5,662
                                                             -----------------------------------------------------------------


                                      -6-
<PAGE>

                                                                                                                            1997
                                                                                                          Average         Average
                                                                                        Average Unit      Monthly        Physical
                                                                 Year         Total        Size        Rental Rates     Occupancy
       Multifamily                        Location             Acquired       Units      (sq. ft.)       (dollars)       (percent)
--------------------------------- -------------------------- -------------- ---------- --------------- --------------- -----------

Southeast Region

Brookfield Trace (2) (3)          Mauldin, SC                    1995          300           1,013          696             94
Brookwood Valley (2)              Mauldin, SC                    1995          226             970          621             92
Huntington Downs (2)              Greenville, SC                 1988          502             964          602             92
The Oaks (2)                      Mauldin, SC                    1990          176             956          645             93
Roper Mountain (2)                Greenville, SC                 1988          248             797          520             92
Stoneledge (2)                    Greenville, SC                 1988          320             794          535             93
Cumberland Cove (2)               Raleigh, NC                    1991          552           1,090          755             96
East Lake (2)                     Charlotte, NC                  1993          214           1,200          665             93
The Timbers (2)                   Charlotte, NC                  1993          343             753          582             94
Arbors at Breckenridge (2)        Duluth, GA                     1993          514           1,025          757             92
The Avalon on Abernathy (2)       Atlanta, GA                    1992          240           1,356          897             96
Huntington Chase (2)              Norcross, GA                   1993          467             746          672             92
British Woods (2)                 Nashville, TN                  1995          264           1,082          656             94
Highland Ridge (2)                Madison, TN                    1995          280           1,050          541             93
Windover (2)                      Knoxville,  TN                 1995          271           1,013          599             93
                                                             -------------- ------- --------------- ------------ --------------
          Total Units                                                        4,917
                                                             -------------- ------- --------------- ------------ --------------

Florida

Altamonte Bay Club (2)            Altamonte Springs, FL          1993          224           1,043          628             97
The Lakes at Jacaranda (2)        Plantation, FL                 1990          340             918          841             94
Newport (2)                       Tampa, FL                      1993          320             721          530             95
Park Colony (2)                   Hollywood, FL                  1994          316             764          773             91
Plantation Colony (2)             Plantation, FL                 1993          256           1,009          763             95
Berkshire West (2)                Winter Garden, FL              1997          200             843          629             97
Sun Chase (2)                     Bradenton, FL                  1997          168             802          600             96
Woodland Meadows (2)              Tamarac, FL                    1992          296             900          686             95
                                                             -------------- ------- --------------- ------------ --------------
          Total Units                                                        2,120
                                                             -------------- ------- --------------- ------------ --------------

     Total Residential Portfolio                                            18,773
                                                             -------------- ------- --------------- ------------ --------------
</TABLE>


                                      -7-
<PAGE>

<TABLE>
<CAPTION>
                                                                            Year                         1997 Year End
                Retail                            Location                Acquired      Square Feet      Occupancy (%)
--------------------------------------- ------------------------------ -------------- ---------------- -------------------
<S>                                        <C>                             <C>                <C>              <C>
College Plaza (4)                            Fort Myers, Florida           1987                83,962          91
Tara Crossing (4)                            Jonesboro, Georgia            1987               235,181          89
Spring Valley Marketplace (1) (4)          Spring Valley, New York         1988               320,686          95
                                                                       -------------- ---------------- -------------------
      Total Retail Portfolio                                                                  639,829
                                                                       -------------- ---------------- -------------------
</TABLE>


(1)      The Company holds a 50.1% joint venture interest in this property.
(2)      These properties are pledged as collateral for outstanding debt. See
         Notes K, L and M to the Consolidated Financial Statements included in
         Appendix A to this report.
(3)      The Company completed a 96-unit expansion of this apartment community
         in February, 1997. The additional units were included in the totals
         from the date of completion.
(4)       These properties were sold subsequent to December 31, 1997.

ITEM 3.  LEGAL PROCEEDINGS

         There are no material pending legal proceedings to which the Company is
         a party or to which its properties are subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
         fourth quarter of the fiscal year covered by the Annual Report on Form
         10-K.


                                       -8-
<PAGE>
                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS

     The Company's common stock is traded on the New York Stock Exchange
("NYSE") under the symbol BRI. The high and low prices of the Company's common
stock based on a composite average for each quarter during 1997 and 1996 and
dividends paid for such common stock are:

                                                                 Dividends
          Quarter Ended            High             Low             Paid
          -------------            ----             ---          ---------
          December 31, 1997        12.31            10.88         $.2325
          September 30, 1997       12.38            11.63          .2325
          June 30, 1997            11.25            10.63          .2250
          March 31, 1997           11.75            10.00          .2250
                                                                  ------
                                                                  $.9150
                                                                  ======

          December 31, 1996        10.25            9.38          $.2250
          September 30, 1996       11.00            9.63           .2250
          June 30, 1996            11.00            9.88           .2250
          March 31, 1996           10.38            9.75           .2250
                                                                  ------
                                                                  $.9000
                                                                  ======

     The Company's common stock warrants are traded on the NYSE under the symbol
"BRI/WS". The warrants were admitted to trading on September 7, 1994. Upon
exercise, each stock warrant entitles the holder to the right to acquire one
share of common stock of the Company at an exercise price as of December 31,
1997 of $11.79. For further information see Note U to Notes to the Consolidated
Financial Statement included in Appendix A to this report. The high and low
prices of the Company's warrants based on a composite average for each quarter
during 1997 and 1996 are:

          Quarter Ended                           High            Low
          -------------                           ----            ---
          December 31, 1997                      $ .88           $.50
          September 30, 1997                       .81            .44
          June 30, 1997                            .88            .50
          March 31, 1997                          1.00            .44


          December 31,1996                       $ .56           $.31
          September 30, 1996                       .69            .44
          June 30, 1996                            .75            .56
          March 31, 1996                           .69            .50

     The Company's practice is to review and declare its dividend on a quarterly
basis, and to establish a dividend rate that is supportable by funds from
operations, after considering capital expenditures necessary for the maintenance
of the real estate investments. On February 12, 1998, the Board approved a
dividend of $.2425 per share payable on May 15, 1998 to the shareholders of
record on May 1, 1998. The Company intends to continue making its quarterly
dividend payments.

     As of January 31, 1998 there were approximately 32,500 holders of the
Company's common stock.

ITEM 6.  SELECTED FINANCIAL DATA

     The following table sets forth selected financial information regarding the
Company's financial position. This information should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and Notes thereto.


                                       -9-

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA
                             (Dollars In Thousands,
             Except Number of Apartment Units and Per Share Amounts)

<TABLE>
<CAPTION>
Operating Data:                              1997              1996             1995               1994          1993
--------------                            ---------         ---------        ---------          -------        -------
<S>                                        <C>                <C>              <C>                <C>          <C>
Rental revenue                             $109,974           $89,451          $70,068            $63,222      $44,236
Total revenue                               115,499            93,002           74,441             68,470       50,071
Property operating expenses,
  including property
  management fees                            50,221            42,353           33,347             31,826       21,867
Depreciation and amortization                43,315            30,172           21,984             19,507       14,384
Provision for losses on
  real estate assets (1)                      1,850             7,500              -                  -            -
Interest                                     24,006            20,501           15,618             10,794        3,858
Non-recurring charges (2)(3)(4)                 -                (442)          (1,728)            (2,555)      (1,225)
Income (loss) from operations
  before joint venture income
  (loss), gains on sales of
  assets, gains on payoff of
  mortgage loans, minority
  interest and extraordinary
  items                                     (12,037)          (12,612)          (1,157)               510        5,365
Joint venture income (loss)                  (4,910)           (3,009)           1,407              1,178        1,137
Gains on sales of real
  estate assets                               6,455                58           15,603              4,069          -
Minority interest in
  Operating Partnership                       2,154             1,403             (167)               -            -
Extraordinary items (5)                         (90)             (149)            (901)               -            -
Net income (loss)                            (8,429)          (14,308)          14,786              5,757        6,503
Income allocated to
  preferred shareholders (6)                 (1,659)              -                -                  -            -
Net income (loss) allocated
  to common shareholders                    (10,088)          (14,308)          14,786              5,757        6,503

Per Share Data - Common (basic and diluted):
Net income (loss)                             $(.37)            $(.56)            $.58               $.23         $.26
Dividends paid                                 $.92              $.90             $.89               $.86         $.80
Weighted average common
  shares outstanding                     27,099,522        25,393,147       25,392,621         25,391,478   25,391,426
Preferred shares outstanding              2,737,000               -                -                  -           -

Balance Sheet Data:
Total assets                               $846,420          $569,670         $486,968           $458,207     $412,516
Real estate, excluding
  joint ventures, before
  accumulated depreciation                 $880,652          $585,795         $465,846           $448,058     $373,055
Long-term fixed rate
  obligations                              $362,762          $206,837         $155,201            $88,279          -
Shareholders' equity                       $368,195          $223,654         $260,788           $268,591     $283,027

Other Information:
Apartment units owned, end of year           18,773            12,435            9,433              9,385        7,554
</TABLE>

                                      -10-

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA



(1)    As reflected in Note F to the Consolidated Financial Statements, the
       Company recorded provisions for losses on its wholly-owned retail assets
       of $1,850,000 and $7,500,000 for the years ended December 31, 1997 and
       1996, respectively, which represent the difference between carrying value
       and estimated fair value less estimated costs to sell.

(2)    Non-recurring charges in 1994 and 1993 relate to the settlement of
       litigation. The non-recurring charge in 1994 primarily represents the
       estimated value of the warrants issued and the non-recurring charge in
       1993 was primarily due to the cash settlement payment.

(3)    The non-recurring charge in 1995 is related to costs associated with the
       restructuring of the Company as an umbrella partnership real estate
       investment trust (UPREIT).

(4)    The non-recurring charge in 1996 is related to litigation related to a
       property disposition.

(5)    The extraordinary items in 1997, 1996 and 1995 relate to costs associated
       with the refinancing or retirement of debt.

(6)    On September 25, 1997, the Company sold 2,737,000 shares of Series 1997-A
       Cumulative Preferred Stock. The holders of preferred stock are entitled
       to receive a 9% preferential cumulative dividend, when, as and if
       declared by the Board. See Note U to the Consolidated Financial
       Statements.



                                      -11-

<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

A.     Overview and Organization:

       The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere herein.
Capitalized terms used herein and not otherwise defined have the meanings
ascribed to them in the Notes to the Consolidated Financial Statements.

       The Company is a Real Estate Investment Trust ("REIT") whose operations
consist primarily of the acquisition, renovation, rehabilitation, development
and operation of apartment communities located in the Mid-Atlantic and Southeast
regions of the United States, Florida and Texas. As of December 31, 1997, the
Company owned 65 apartment communities consisting of 18,773 units and also had
investments in three retail centers, one of which was held in a joint venture
investment. The Company has approximately 740 multifamily units under
development and two parcels of land for future development. As a result of the
Questar Transaction, the Company has contracted to acquire three additional
development properties from an affiliate of the Questar Partner. (See Note E to
the Consolidated Financial Statements). The Company also entered into a
Development Acquisition Agreement with an affiliate of the Questar Partner which
grants the Company an exclusive right to acquire all apartment projects
developed in the Mid-Atlantic Region by affiliates of the Questar Partner which
meet the Company's acquisition and development criteria. Subsequent to December
31, 1997, the Company sold its three remaining retail properties. (See Note V to
the Consolidated Financial Statements).

       UPREIT Reorganization:

       The Company reorganized as an Umbrella Partnership ("UPREIT") on May 1,
1995 when the Company contributed substantially all of its assets subject to all
liabilities to BRI OP Limited Partnership ("Operating Partnership"). The
Company, in its capacity as the Special Limited Partner and through its
ownership of Berkshire Apartments, Inc. as General Partner, holds 83.46% of the
Operating Partnership interests as of December 31, 1997. To facilitate the
UPREIT formation, GN Limited Partnership, an affiliate of certain officers and
directors, contributed River Oaks Apartments to the Operating Partnership in
exchange for 534,975 units in the Operating Partnership ("Units"). Units are
redeemable, at any time after one year following their issuance, on a one for
one basis for shares of common stock of the Company or, at the Company's option,
for cash. The purpose of becoming an UPREIT was to allow the Company to offer
Units in the underlying Operating Partnership in exchange for assets from
tax-motivated sellers. Under certain circumstances, the exchange of Units for a
seller's assets will defer the tax liability associated with the sale. This
structure allows the Company to use Units instead of stock or cash to acquire
properties, which provides an advantage over non-UPREIT entities.

       Advisor Transaction:

     Until early 1996, the Company was advised by Berkshire Realty Advisors
("Advisor"), an affiliate of certain directors and officers of the Company. The
Board of Directors determined that it was in the best interest of the
shareholders to become self-advised. Therefore, on February 28, 1996, the Board,
acting on the recommendation of a Special Committee comprised of the Independent
Directors, approved the acquisition, via contribution of the workforce and other
assets of the Advisor, in exchange for 1.3 million Units which were valued at
$13 million (the "Advisor Transaction"). The acquisition price together with
related costs, was recorded as an intangible asset associated with the workforce
acquired. The contribution was completed on March 1, 1996. As of that date, all
charges and expenses associated with the Advisory Services Agreement ceased and
the Company became a self-administered REIT.

       In conjunction with the Advisor Transaction, additional Units, up to a
total

                                      -12-

<PAGE>

of $7.2 million in value, may be issued to the former Advisor during a six year
period if certain share price benchmarks are achieved. As of December 31, 1997,
209,091 additional Units have been issued as a result of achieving the $11.00
and $12.00 share price benchmarks. (See Note C to the Consolidated Financial
Statements for additional details).

     Property Manager Transaction:

     On February 13, 1997, a Special Committee of the Board of Directors
comprised of the Independent Directors approved the acquisition of the workforce
and other assets of an affiliate which provided multifamily property management
services to the Company (the "Property Manager"). The Property Manager was
contributed on February 28, 1997 in exchange for 1.7 million Units or
approximately $17.6 million in consideration as of the pricing date.

     On the date of the transaction, the Property Manager managed 57 apartment
communities, including the Company's 35 assets, and employed approximately 85
professionals, excluding site employees. As a result of this transaction, the
Company no longer pays management fees and reimbursements for the management
operations of its multifamily portfolio. In addition, the Company receives
management fees and reimbursements of certain expenses associated with 22
third-party management contracts primarily with partnerships affiliated with
certain directors and officers of the Company.

     The value of the Units issued has been recorded on the balance sheet as an
intangible asset associated with the acquisition of a workforce and third-party
property management contracts. (See Note D to the Consolidated Financial
Statements for additional details).

     Ownership:

     Executive officers and directors and their affiliates own 2.3% of the
Company and 12.5% of the Operating Partnership as of December 31, 1997. The
Company had an 83.46% ownership in the Operating Partnership as of December 31,
1997.

B.   Results of Operations:

     Acquisition and disposition activity within the portfolio affects the
results of operations from period to period. The following discussion makes
comparisons as to same-store properties, communities sold and acquired during
the periods as well as development activities so as to explain the changes in
the Company's results of operations. The Company defines same-store properties
as those assets that were owned and operated in each of the two most recent
years.

Summary Overview

     1997 to 1996

     The Company reflected a net loss of $8.4 million in 1997 compared to a net
loss of $14.3 million in 1996. A principal factor affecting the Company's
results was provisions for losses of $7.2 million in 1997 and $12.0 million in
1996 recorded on the Company's wholly-owned and joint venture retail assets. The
Company has been in the process of liquidating its retail portfolio over the
past several years. This divestiture strategy has necessitated the valuation
adjustments recorded during 1997 and 1996 which represent the difference between
current market value and carrying value less estimated costs to sell (See Note F
to the Consolidated Financial Statements for additional details).

     The Company also incurred amortization costs related to the Advisor and
Property Manager Transactions of $8.0 million in 1997 and $1.1 million in 1996.
In 1997, additional costs of $2.4 million were incurred as a result of the
issuance of 209,091 Units in connection with the Advisor Transaction (See Note C
and D to the Consolidated Financial Statements for additional details).


                                      -13-

<PAGE>

     1996 to 1995

     The Company reflected a net loss of $14.3 million in 1996 compared to net
income of $14.8 million in the prior year. In 1995, the Company recorded a $15.6
million gain on the sale of properties and the payoff of two mortgage loans. The
sales included seven multifamily properties or 1,717 apartment units. In
contrast, in 1996, the Company recorded $12.0 million in provisions for losses
on its wholly-owned and joint venture retail assets. In 1996, the Company
announced a plan that, over the next several years, it would liquidate its
retail portfolio and reinvest the proceeds into acquisitions or development of
multifamily assets.

Income and Expenses

     Rental income and property operating expenses, including repairs and
maintenance and real estate taxes increased for both periods primarily due to
increased weighted average apartment units in the Company's portfolio. Rental
revenue for the year ended December 31, 1997 increased $20.5 million or 23% over
the prior year and the property operating expenses mentioned above increased
$7.0 million or 19.1% for the same period. The average number of apartment units
increased 26.3% from 1996 to 1997.

     Rental revenue for the year ended December 31, 1996 increased $19.4 million
or 28% over the prior year and property operating expenses increased $6.8
million or 23% for the same period. Average apartment units increased 23.6% from
1995 to 1996. Details of the Company's apartment unit growth are set forth
below:

                                            1997          1996            1995
                                            ----          ----            ----
Weighted Average Apartment Units:
     Total                                13,918        11,022           8,914
     Percent Increase                       26.3%         23.6%            7.1%

Apartment Units:
     Beginning of period                  12,435         9,433           9,385
         Acquired                          6,506         3,153           1,381
         Sold                               (348)         (223)         (1,717)
         Completed developments              180            72             384
                                          ------        ------         -------
     End of period                        18,773        12,435           9,433
                                          ======        ======         =======

     Management fees and reimbursements increased $3.2 million in 1997 due to
revenue generated from third-party management contracts which were acquired in
March, 1997 as a result of the Property Manager Transaction. (See Note D to the
Consolidated Financial Statements for additional details).

     Property management fees paid to an affiliate decreased $3.4 million in
1997 as a result of the Property Manager Transaction.

     Property management operations increased $4.3 million in 1997 as a result
of the Property Manager Transaction. These costs were more than offset by the
decrease in property management fees paid to an affiliate and the increase in
management fees and reimbursements received from third-party management
contracts.

     Depreciation and amortization increased $13.1 million from 1996 to 1997 and
$8.2 million from 1995 to 1996 due to an increased property asset base in both
periods. In addition, amortization of intangible assets associated with the
Advisor Transaction in 1996 and the Property Manager Transaction in 1997
accounted for $6.9 million of the increase from 1996 to 1997 and $1.1 million of
the increase from 1995 to 1996.

     Costs associated with Advisor Transaction of $2.4 million were incurred in
1997 as the Company achieved certain share price benchmarks (See Note C to the
Consolidated Financial Statements) resulting in the issuance of 209,091 Units,
the cost of which was charged to operations in 1997.

                                      -14-

<PAGE>

     General and administrative expenses increased in 1997 compared to 1996 due
to a full year of salary and benefit costs along with administrative and office
expenses associated with the workforce acquired through the Advisor Transaction
in 1997 compared to ten months in 1996. In addition, due to the growth of the
real estate portfolio and the expansion of the investor base, the Company
experienced increased audit, legal and transfer agent expenses in 1997. The
increase in 1996 compared to 1995 was a result of becoming self-administered on
March 1, 1996.

     State and corporate franchise taxes in 1997 were comparable to 1996. State
and corporate franchise taxes in 1996 were higher than in 1995 due to a
reduction for taxes pertaining to 1994 which was reflected in 1995.

     Interest expense increased in each of the last three years because the
Company has largely employed debt capital for acquisitions and development
activities. The following is an analysis of weighted average debt outstanding
and interest rates for each of the years presented (dollars in thousands):

                                   1997            1996             1995
                                   ----            ----             ----
Weighted Average
     Debt Outstanding
        Fixed Rate              $244,597        $185,616        $ 98,115
        Variable Rate             65,368          78,577          89,957
                                --------        --------        --------
              Total             $309,965        $264,193        $188,072
                                ========        ========        ========
Weighted Average
     Interest Rates
        Fixed Rate                  7.74%           7.47%           8.39%
        Variable Rate               6.62%           6.73%           7.49%

     In 1997, average fixed rate debt increased approximately $59 million
primarily due to debt which was assumed in connection with the acquisitions of
apartment communities.

     In 1996, average fixed rate debt increased approximately $88 million
primarily due to debt which was assumed in connection with the acquisitions of
three properties and the conversion of $13.3 million of debt from variable to
fixed interest rates.

     The following represents total debt and weighted average cost of debt
(coupon interest rate plus amortization of financing costs) at December 31, 1997
(dollars in thousands):

                                         Balance                  Weighted
                                       Outstanding              Average Cost
                                       -----------              ------------
         Fixed Rate                      $362,762                  8.04%
         Variable Rate (1)                 18,048                  6.98%
                                         --------
                                         $380,810
                                         ========

(1)     The Company entered into a five-year interest rate swap contract with a
        bank in November 1995. The swap contract is for a $40 million notional
        contract fixing variable rate exposure on that amount at 6.06%.

     Asset management fees were eliminated effective March 1, 1996 in
conjunction with the Advisor Transaction. (See Overview).

     Joint venture net loss was $4.9 million in 1997 compared to net loss of
$3.0 million in 1996. The loss was primarily due to the provisions for losses of
$10.7 million recorded by the joint ventures in 1997 which represent the
difference between carrying value and estimated fair value less costs to sell.
The Company's pro-rata share of this provision is $5.4 million.

     Gain on sales of assets was $6.5 million in 1997 compared to $58,000 in
1996. In 1997, the Company sold one multifamily asset consisting of 348 units
which resulted in a gain of $6.5 million and two retail assets which were sold
at their

                                      -15-

<PAGE>

carrying values. The Company sold two assets in 1996 for a net gain of $58,000.
In 1995, the gains resulted from the sales of seven apartment complexes
consisting of 1,717 units and the early payoff of two mortgages that the Company
had previously purchased at a discount.

     Non-recurring charges of $442,000 recorded in 1996 represent costs
associated with the settlement of litigation on an asset sold in January 1994.
In 1995, non-recurring charges of $1.7 million related to the costs associated
with reorganizing as an UPREIT.

     Extraordinary items for 1997, 1996 and 1995 represents costs associated
with the refinancing or retirement of debt.

C.   Funds from Operations (FFO) (adjusted for Operating Partnership Units)

     Industry analysts generally consider Funds from Operations ("FFO"), to be
an appropriate measure of the performance of an equity REIT because, along with
cash flows from operating activities, financing activities and investing
activities, it provides investors with an understanding of the ability of the
Company to incur and service debt and make capital expenditures. However, FFO
should not be considered by the reader as a substitute to net income as an
indicator of the Company's operating performance or to cash flows as a measure
of liquidity. The Company believes that in order to facilitate a clear
understanding of the operating results of the Company, FFO should be analyzed in
conjunction with net income (loss) as presented in the Consolidated Financial
Statements and information presented elsewhere. FFO is determined in accordance
with a resolution adopted by the Board of Governors of the National Association
of Real Estate Investment Trusts ("NAREIT"), and is defined as net income (loss)
(computed in accordance with generally accepted accounting principles),
excluding gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. The methodology used by the
Company when calculating FFO may differ from that of other equity REIT's and,
therefore, may not be comparable to such other REIT's. In addition, FFO does not
represent amounts available for management's discretionary use for needed
capital replacement or expansion, debt service obligations or other commitments.



                                      -16-

<PAGE>

     FFO per share is calculated using weighted average Shares and Operating
Partnership Units for the periods presented as follows (dollars in thousands,
except for Shares and Units):

                                              Year Ended December 31,
                                            -----------------------------------
                                              1997         1996        1995
                                            --------     --------    ------
     Loss from operations before joint
         venture income (loss),
         gains on sales of assets,
         gains on payoff of mortgage
         loans, minority interest
         and extraordinary items            $(12,037)    $(12,612)    $ (1,157)
     Joint venture net operating income        2,236        3,456        3,486
     Amortization of intangible assets         8,043        1,121          -
     Costs associated with
         Advisor Transaction                   2,400          -            -
     Depreciation                             35,228       29,032       21,974
     Provision for losses on
         real estate investments               1,850        7,500          -
     Non-recurring charges                       -            442        1,728
     Income allocated to
         preferred shareholders               (1,659)         -            -
                                            --------     --------     ------
     Funds from Operations                  $ 36,061     $ 28,939     $ 26,031
                                            ========     ========     ========
     Cash flows provided by (used for):
         Operating activities               $ 38,532     $ 27,505     $ 25,048
         Investing activities               $(96,495)    $(36,393)    $(25,068)
         Financing activities               $ 60,806     $  4,761     $    670
     Weighted Average:
         Shares                           27,099,522   25,393,147   25,392,621
         Units                             5,922,173    2,520,959      359,093
                                          ----------   ----------   ----------
            Total                         33,021,695   27,914,106   25,751,714
                                          ==========   ==========   ==========

Overview

     FFO increased from 1996 to 1997 and from 1995 to 1996 primarily due to
improved operations from the same-store apartment communities in addition to the
factors discussed previously in Results of Operations.

Same-Store Apartment Communities

     The Company defines same-store apartment communities as those assets that
were owned and operated in each of the two most recent years. The Net Operating
Income ("NOI") of the 25 communities aggregating 8,467 units which are
considered same-store is summarized as follows (dollars in thousands):

                                         Year Ended December 31,
                                       ----------------------------
                                        1997       1996      Change
                                       ------    -------     ------
     Revenue                           $66,050   $63,772       3.6%
     Expenses                           26,233    26,559      (1.2)%
                                       -------   -------
     Net Operating Income              $39,817   $37,213       7.0%
                                       =======   =======

     Capital Expenditures(1)           $ 3,069   $ 2,760

     Average occupancy                    94.0%     93.9%

     Average monthly rent
        per unit                          $685      $665

     (1)      Represents capital expenditures of a recurring nature which are
              appropriately capitalizable.


                                      -17-

<PAGE>

     Growth in same-store multifamily revenue was approximately 3.6% for the
twelve months ended December 31, 1997 when compared to the same period ended
December 31, 1996. Rent increases accounted for almost the entire increase.
Occupancy at December 31, 1997 was 95.4% for same-store assets.

Same-Store Retail Properties

     NOI of the three retail properties (one of which is 50.1% held in a joint
venture investment) is summarized as follows (dollars in thousands):

                                  Year Ended December 31,
                             -----------------------------------
                               1997          1996        Change
                               ----          ----        ------
Revenue                      $ 5,787       $ 6,102       (5.2)%
Expenses                       2,452         2,323        5.5%
                             -------       -------
Net Operating Income         $ 3,335       $ 3,779      (11.7)%
                             =======       =======

Average economic
     occupancy                 92.4%         92.8%

     Same-store NOI decreased 11.7% for the twelve months ended December 31,
1997 when compared to the same period ended December 31, 1996. This was due to a
property tax refund received in 1996 as well as a decline in occupancy at Spring
Valley Marketplace in 1997. In addition, Tara Crossing experienced reduced
revenues due to the retenanting of a significant portion of its leasable space
in 1997.

D.   Liquidity and Capital Resources

     The Company's net cash provided by operating activities increased $11.0
million in 1997 and $2.5 million in 1996 primarily due to increased property net
operating income as a result of an increased asset base. Net cash used in
investing activities increased $60.1 million in 1997 and $11.3 million in 1996.
The increase in 1997 was primarily due to increased spending on acquisitions of
real estate assets and apartment community development activity of $61.4
million, offset by increased proceeds from sales of properties and joint
ventures of $27 million. The increase in net cash used in investing activities
in 1996 over 1995 was primarily due to decreased proceeds from the sales of real
estate assets of $43.4 million and increased initial funding of real estate tax
and repair escrows of $5.1 million as required by certain debt agreements
assumed in conjunction with the acquisition of multifamily properties. This was
offset by less spending on acquisitions of real estate assets and community
development activity of $44.2 million in 1996. The Company's net cash provided
by financing activities increased $56 million in 1997 primarily due to net
proceeds received from the Company's preferred and common stock offerings of
$169 million, offset by net payments on the Company's borrowings of $77.8
million. Net cash provided by financing activities increased $4.1 million in
1996 primarily due to net borrowing activity.

     Until 1997, operations, debt financing and sales of assets have been the
sources of liquidity employed by the Company. In 1997, the Company raised
additional capital through a private placement of preferred stock and a public
offering of common stock, the proceeds of which were used to acquire multifamily
properties and to paydown variable rate debt. Operating cash flows are earmarked
for the payment of dividends as well as capital expenditures of a recurring
nature. Debt financing and proceeds from asset sales have been used to finance
the acquisition, renovation, rehabilitation and development of apartment
communities.

     In each of the previous three years, the Company has paid between 84% and
88% of FFO in dividends, retaining the rest for recurring capital expenditures
and working capital. The Company expects to increase both FFO and dividends in
the future but will strive to gradually reduce the payout ratio so as to utilize
some internally generated funds for growth. On February 12, 1998, the Board
approved

                                      -18-

<PAGE>

a dividend of $.2425 per share payable on May 15, 1998 to the shareholders of
record on May 1, 1998.

     The Company has a policy to maintain leverage at or below 50% of reasonably
estimated value of assets. By employing moderate leverage ratios, the Company
can continue to generate sufficient cash flows to operate its business as well
as sustain dividends to shareholders.

     The following table represents the components of debt as of December 31,
1997, and 1996 (dollars in thousands):

                                              December 31,
                             ----------------------------------------------
                                     1997                      1996
                             --------------------     ---------------------
                              Amount      Percent      Amount       Percent
Short-term variable (1)      $ 18,048       4.7%      $ 88,328        29.9%
Long-term fixed               362,762      95.3%       206,837        70.1%
                             --------      -----      --------        -----
                             $380,810       100%      $295,165         100%
                             ========      =====      ========        =====

(1)       The Company entered into a five-year fixed interest rate swap
          agreement with a bank in November, 1995 for a $40 million notional
          contract thereby fixing variable rate exposure on that amount at
          6.06%.

     The Company conservatively manages both interest rate risk and maturity
risk. Through the use of a swap, the Company has hedged interest rate risk on
100% of its outstanding variable rate debt as of December 31, 1997.
Additionally, the Company has spread its maturities on long-term debt and has
weighted average maturities of 15.2 years.

     In addition to the Units originally issued, the Operating Partnership has
granted 8,552,019 Units, of which 7,648,524 Units were issued and 903,495 Units
were deferred as to issuance as of December 31, 1997, and 7,199,661 Units
outstanding at December 31, 1997. As of December 31, 1997, 448,863 Units have
been converted to shares of the Company's common stock and 7,199,661 Units were
outstanding. Approximately 55% of these Units were issued for the acquisition of
29 multifamily communities. Through the use of Units for acquisitions, the
Company has raised approximately $60 million of private equity since becoming an
UPREIT. It is the Company's intention to continue to use Units as a form of
currency to grow the asset base of the Company.

     The Company has also issued Units in connection with the Advisor
Transaction and the Property Manager Transaction.

     Equity capital, whether publicly or privately raised, will be utilized when
the Company identifies the opportunities to invest the proceeds in assets that
would increase shareholder returns. The Company is not currently engaged in a
secondary or preferred stock offering.

     The Company has adequate sources of liquidity to meet its current cash flow
requirements, including dividends and debt service. The Company currently has
sufficient unadvanced commitments under credit facilities to fund ongoing
renovation, rehabilitation and development activities.

E.   Business Conditions/Litigation

     The Company believes that favorable economic conditions exist in
substantially all of its real estate markets. For the Company's same-store
apartment communities, physical occupancy was 95.4% as of December 31, 1997
which generally represents current market occupancies. Occupancies for the total
multifamily portfolio, including recently acquired assets, was 94.9% at December
31, 1997. In addition, the Company has commanded competitive rental rates at its
properties. The Company expects its asset management will produce solid
performance from its real estate assets; however, no assurances can be made in
this regard.

                                       -19-

<PAGE>

     During 1997, the Company, with certain affiliates of a director, began a
computer systems project to significantly upgrade its existing hardware and
software. The Company expects to realize operating efficiencies and also expects
to remedy the programming issues associated with the approach of the millennium.
Testing and conversion of the system was completed in February, 1998. The
Company incurred hardware costs as well as consulting and other expenses related
to infrastructure and facilities enhancements necessary to complete the upgrade
and prepare for the year 2000. The Company's share of the cost of the systems
conversion is estimated to be approximately $650,000 and will be capitalized and
depreciated over five years.

     The Company is also involved in legal actions and claims in the ordinary
course of its business. It is the opinion of management and its legal counsel,
that such litigation and claims should be resolved without material effect on
the Company's financial position.

F.   Forward-Looking Statements

     The Company's Annual Report contains forward-looking statements, estimates
or plans within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). There are a number of factors that
could cause the Company's actual results to differ materially from those
indicated by such forward-looking statements. These factors include the matters
set forth under the caption "Risk Factors" in the Company's Registration
Statement on Form S-3, which was filed with the Securities and Exchange
Commission on December 5, 1997 and which is incorporated herein by reference.
Any statements contained in such filing shall be deemed to be superseded or
modified for purposes of the Annual Report to the extent that a statement
contained herein modifies or supersedes such statement. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.

G.   Recently Issued Accounting Standards

     Financial Accounting Standards Board Statement No. 129 ("FAS 129")
"Disclosure of Information about Capital Structure" is effective for financial
statements issued for periods ending after December 31, 1997. FAS 129
establishes standards for disclosure of information about securities,
liquidation preference of preferred stock and redeemable stock.

     Financial Accounting Standards Board Statement No. 130 ("FAS 130")
"Reporting Comprehensive Income" is effective for fiscal years beginning after
December 31, 1997, although earlier application is permitted. FAS 130
establishes standards for reporting and display of comprehensive income and its
components in financial statements.

     Financial Accounting Standards Board Statement No. 132 ("FAS 132")
"Employers' Capital Disclosures about Pensions and Other Postretirement
Benefits" is effective for fiscal years beginning after December 15, 1997,
although earlier application is encouraged. FAS 132 establishes standards
related to the disclosure requirements for pensions and other postretirement
benefits.

     The Company does not believe that the implementation of FAS 129, FAS 130
or FAS 132 will have a material impact on the Company's financial statements.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       See Appendix A of this report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

      Response:  None


                                      -20-

<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The Company's organizational documents provide that the number of directors
constituting the Board shall be fixed by resolution duly adopted by the Board
and that the Board shall be divided into three classes as nearly equal in number
as possible. The term of the class one directors expires at the annual meeting
of shareholders of the Company to be held in 2000. The term of the class two
directors expires at the annual meeting of shareholders of the Company to be
held in 1998, and the term of the class three directors expires at the annual
meeting of shareholders of the Company to be held in 1999. The directors elected
at each annual meeting will serve for a term of three years and until their
successors are duly elected and qualified, with one class to be elected each
year at the annual meeting of shareholders. Holders of Preferred Stock, voting
as a separate class, are entitled to elect one director to the Board of
Directors. Such director will be a class three director whose term expires in
1999. The Board in nominating future directors will maintain a majority of
independent directors.

     In conjunction with the acquisition of the property management operations
on February 28, 1997, the independent directors named David Marshall Chief
Executive Officer of the Company. Laurence Gerber resigned as Chief Executive
Officer on February 28, 1997 and from the Board on October 8, 1997. In addition,
Ridge Frew was named Executive Vice President of Property Operations and James
Jackson was named Vice President of Human Resources.

     The directors and executive officers of the Company as of December 31, 1997
were as follows:

<TABLE>
<CAPTION>
                                                                          Date Initially
   Name and Age                 Class     Offices Held                       Elected
   ------------                 -----     ------------                    --------------
   <S>                           <C>    <C>                                <C>
   Douglas Krupp (51)            3      Chairman of the Board              February 8, 1996
                                         and Director
   David Marshall (49)           1      President, Chief Executive
                                         Officer and Director              March 1, 1996
   Laurence Gerber (41)          2      Chief Executive Officer
                                         and Director                      April 30, 1990
*  J. Paul Finnegan (73)         1      Director                           October 17, 1990
*  Charles N. Goldberg (56)      3      Director                           October 17, 1990
*  E. Robert Roskind (53)        2      Director                           October 17, 1990
*  David M. deWilde (57)         1      Director                           March 8, 1993
*  Terrance R. Ahern (42)        2      Director                           October 9, 1997
*  Paul D. Kazilionis (40)       3      Director                           October 9, 1997
*  Arthur P. Solomon (58)        2      Director                           October 9, 1997
   Stephen M. Gorn (46)                 President Mid-Atlantic Region      November 14, 1997
   Ridge Frew (49)                      Executive Vice President           February 28, 1997
   Marianne Pritchard (48)              Senior Vice President and
                                         Chief Financial Officer           August 15, 1991
   David Olney (37)                     Senior Vice President              March 1, 1996
   Dennis Suarez (44)                   Senior Vice President              March 1, 1996
   James Jackson (63)                   Vice President                     February 28, 1997
   Kenneth J. Richard (42)              Vice President                     May 13, 1997
   Scott D. Spelfogel (37)              Secretary                          May 7, 1991
</TABLE>

*Independent Directors

     Douglas Krupp co-founded and serves as Chairman and Chief Executive Officer
of The Berkshire Group, an integrated real estate financial services firm
engaged in real estate acquisition and property management, mortgage banking,
health care facility ownership and financial management. Mr. Krupp is a Director
of Harborside Healthcare Corporation, a Trustee of Krupp Government Income Trust
and Krupp Government Income Trust II, and a member of the Board of Trustees at
Brigham & Women's Hospital. He is a graduate of Bryant College where he received

                                      -21-

<PAGE>

an honorary Doctor of Science in Business Administration in 1989 and was elected
trustee in 1990.

     Laurence Gerber was the President and Chief Executive Officer of The
Berkshire Group until September 30, 1997, and was Chief Executive Officer of the
Company until February 28, 1997. Prior to becoming President and Chief Executive
Officer in 1991, Mr. Gerber held various positions with The Berkshire Group
which included overall responsibility at various times for: strategic planning
and product development, real estate acquisitions, corporate finance, mortgage
banking, syndication and marketing. Before joining The Berkshire Group in 1984,
he was a management consultant with Bain & Company, a national consulting firm
headquartered in Boston. Prior to that, he was a senior tax accountant with
Arthur Andersen & Co., an international accounting and consulting firm. Mr.
Gerber has a B.S. degree in Economics from the University of Pennsylvania,
Wharton School and an M.B.A. degree with high distinction from Harvard Business
School. He is a Certified Public Accountant. Mr. Gerber also serves as Director
of Harborside Healthcare Corporation.

     David Marshall was elected President of the Company on March 1, 1996 and
Chief Executive Officer on February 28, 1997. He was previously President of
Berkshire Realty Affiliates, the former advisor to the Company and a member of
The Berkshire Group. Before joining The Berkshire Group in 1986, Mr. Marshall
was President of Resource Savings Association. Prior to that, Mr. Marshall
served as a Vice President of Citicorp Real Estate, Inc. He holds a B.S. degree
from Michigan State University and a M.B.A. degree from the University of
Michigan.

     Terrance R. Ahern is a co-founder and principal of The Townsend Group, an
institutional real estate consulting firm which represents primarily tax-exempt
clients such as public and private pension plans, endowment, foundation and
multi-manager investments. Mr. Ahern is a member of the Board of Directors of
the Pension Real Estate Association (PREA). He was formerly a member of the
Board of Governors of the National Association of Real Estate Investment Trusts
(NAREIT). Prior to founding The Townsend Group, Mr. Ahern was a Vice President
of a New York based real estate investment firm and was engaged in the private
practice of law. Mr. Ahern received a B.A. and J.D. from Cleveland State
University.

     E. Robert Roskind is the Chairman and Co-Chief Executive Officer of
Lexington Corporate Properties, a self-administered REIT, the shares of which
are listed on the NYSE. Mr. Roskind is also the Managing Partner of The LCP
Group, a real estate investment firm based in New York, the predecessor of which
he co-founded in 1974. He currently serves as a trustee of Krupp Government
Income Trust and Krupp Government Income Trust II. He holds a B.A. degree from
the University of Pennsylvania and a J.D. degree from Columbia Law School. He
has been a member of the New York Bar since 1970.

     Arthur P. Solomon is a Managing Director of Lazard Freres & Co. LLC and
head of the firm's Real Estate Group. Previously, Mr. Solomon was a Partner and
head of real estate investment banking at Drexel Burnham Lambert. Before that,
he was Chief Executive Officer of the predecessor of The Berkshire Group during
1983 to 1985 and, from 1982 to 1983, Executive Vice President and Chief
Financial Officer of the Federal National Mortgage Association. Prior to that,
Mr. Solomon was Senior Vice President/Chief Planning Officer for Sears Roebuck &
Company. He also was a tenured faculty member at Massachusetts Institute of
Technology specializing in urban economics, housing and finance, and at the same
time served as the Executive Director of the Harvard-MIT Joint Center for Urban
Studies. He served on the President's Task Force on Domestic and
Intergovernmental Affairs during the Johnson Administration. He holds a B.A.
from Brown University, an M.A. from Trinity College and a Ph.D. in Economics
from Harvard University.

     Charles N. Goldberg is of counsel to the law firm of Broocks, Baker &
Lange, L.L.P. Prior to joining Broocks, Baker & Lange, L.L.P., Mr. Goldberg was
a partner in the law firm of Hirsch & Westheimer from March of 1996 to December
of

                                      -22-

<PAGE>

1997. Prior to Hirsch & Westheimer, he was the Managing Partner of Goldberg
Brown, Attorneys at Law from 1980 to March of 1996. He currently serves as a
Trustee of Krupp Government Income Trust and Krupp Government Income Trust II.
He received a B.B.A. degree and a J.D. degree from the University of Texas. He
is a member of the State Bar of Texas and is admitted to practice before the
U.S. Court of Appeals, Fifth Circuit and U.S. District Court, Southern District
of Texas.

     Paul D. Kazilionis is a managing principal and a co-founder of Westbrook
Partners, L.L.C., an investment advisor to institutional investors. Prior to co-
founding Westbrook, Mr. Kazilionis spent 12 years at Morgan Stanley ultimately
serving as Managing Director of Morgan Stanley Realty and President of the
general partner of the Morgan Stanley Real Estate Fund responsible for Morgan
Stanley principal investing in real estate. Mr. Kazilionis received a B.A.
degree from Colby College in 1979 and a M.B.A. degree from the Amos Tuck School
of Business Administration in 1982.

     David M. deWilde has been a Managing Partner of LAI, an executive search
firm headquartered in New York City, since January 1998. Prior to that he was
Chief Executive Officer of Chartwell Partners International, Inc., an executive
search firm headquartered in San Francisco, which was founded by Mr. deWilde in
1989. Previously, Mr. deWilde was Managing Director of Boyden International,
Inc. Mr. deWilde is currently on the Board of Directors of Silicon Valley
Bancshares. Mr. deWilde was Executive Vice President for Policy and Planning of
the Federal National Mortgage Association from 1981 until 1983. His prior public
service roles included President of the Government National Mortgage
Association, Deputy Commissioner of the Federal Housing Administration and
Deputy Assistant Secretary of the Department of Housing and Urban Development.
Mr. deWilde's private sector background includes investment banking experience
both as Managing Director of Lepercq de Neuflize & Co. from 1977 until 1981, and
with Lehman Brothers, Inc., and legal experience. He holds an A.B. degree from
Dartmouth College, a L.L.B. degree from the University of Virginia and a M.S.
degree in Management from Stanford University. He is a member of the Bars of the
State of New York and Washington, D.C.

     J. Paul Finnegan retired as a partner of Coopers & Lybrand, LLP in 1987.
Since then, he has been engaged in business as a consultant, a director and
arbitrator. Mr. Finnegan holds a B.A. degree from Harvard College, a J.D. degree
from Boston College Law School and an A.S.A. degree from Bentley College. Mr.
Finnegan currently serves as a Trustee of Krupp Government Income Trust and as a
Trustee of Krupp Government Income Trust II. He is also currently a Director at
Scituate Federal Savings Bank. Mr. Finnegan is a Certified Public Accountant and
an attorney.

   Ridge B. Frew is the Executive Vice President and Chief Operating Officer for
the Company and is responsible for the management of the Company's multifamily
property portfolio located primarily in the Mid-Atlantic and Southeast regions
of the United States, Florida and Texas. Prior to that, he was a Divisional Vice
President with Berkshire Property Management. Before joining Berkshire Property
Management, Mr. Frew was President and Chief Executive Officer of McKinley
Properties, responsible for the management and disposition of over 14,000
residential units and five million square feet of commercial space located in 16
states. Prior to that, he served as Vice President of Olind Jenni Properties and
Director of Property Management for Nevada Savings and Loan. Mr. Frew received
his B.A. degree from the University of Nevada.

   Marianne Pritchard is the Executive Vice President and Chief Financial
Officer of the Company. Prior to joining the Company, she was Senior Vice
President and Chief Financial Officer of Berkshire Realty Affiliates, the
advisor and property manager for the Company and several affiliated real estate
investment companies. Prior to that, she was Vice-President and Controller of
Liberty Real Estate Group, a subsidiary of Liberty Mutual Insurance Company from
July 1989 to August 1991. She received her B.B.A. degree in Accounting from the
University of Texas. She is a Certified Public Accountant.

                                      -23-

<PAGE>


   David J. Olney is the Executive Vice President and Chief Investment Officer
with responsibility for all acquisitions, property sales, finance and other
asset management activities for the Company. Previously, he held a similar
position with The Berkshire Group and has held several positions within The
Berkshire Group since 1986. Mr. Olney received a B.S. degree from Bryant College
and a M.B.A. degree from Babson College.

   Dennis Suarez has been Senior Vice President of Development since March 1,
1996. Prior to being elected to this position on March 1, 1996, he served in a
similar position with Berkshire Multifamily Development Corporation, a member of
The Berkshire Group, and was responsible for all development activities. Prior
to that, he was Vice President of Construction for Lane Management, Realty
Construction Corp. He earned Bachelor's degrees in Architecture and Building
Construction from the University of Florida, and a B.A. degree in Interior
Design from Southern College.

     Stephen M. Gorn was elected President of the Mid-Atlantic Region of the
Company on November 14, 1997. He was previously President of The Questar and
Gorn Management Companies and is currently the President of Questar Builders,
Inc. and Questar Properties, Inc., developers, builders, owners and managers of
residential properties. Mr. Gorn has been a managing general partner of more
than 25 real estate partnerships owning various apartment communities and
commercial real estate. He holds a B.A. degree from the University of
Pennsylvania.

   James Jackson has been the Vice President of Human Resources for the Company
since February 28, 1997. Prior to being elected to this position, he held a
similar position with The Berkshire Group since 1987. Prior to that, he held the
positions of Vice President of Human Resources for Helix Technology and GSX
Corporation. He received an A.B. degree from Brown University, a M.S. degree
from Union College, and a J.D. degree from Harvard University. He is admitted to
the bar in Illinois and Massachusetts.

     Kenneth J. Richard is the Senior Vice President of Finance and Accounting
and Chief Accounting Officer for the Company. Prior to his joining the Company,
he was Vice President and Treasurer for The Beacon Companies, a developer, owner
and manager of commercial properties, from 1994 to 1997. Prior to joining The
Beacon Companies, Mr. Richard was Vice President and Chief Financial Officer of
The Codman Company, Inc., a real estate brokerage and management firm in Boston,
from 1991 to 1994. Mr. Richard holds a B.S. degree in Business Administration
from Northeastern University. Mr. Richard is a Certified Public Accountant.

     Scott D. Spelfogel is the Secretary of the Company. He is also the Senior
Vice President and General Counsel to The Berkshire Group. Before joining The
Berkshire Group in November 1988, he was in private practice in Boston. He
received a B.S. degree in Business Administration from Boston University, a J.D.
degree from Syracuse University's College of Law, and a L.L.M. degree in
Taxation from Boston University Law School. He is admitted to the bar in
Massachusetts and New York.

                                      -24-

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

   The following table provides compensation information for the Company's Chief
Executive Officer and the top four Executive Officers whose salary and bonus
exceeded $100,000 for the year ended December 31, 1997.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                   Long-Term
                                                                                                  Compensation
                                          Annual Compensation(1)                                     Awards
                                          ---------------------                                    -----------
                                                                                 Other             Securities
     Name and                                                                    Annual            Underlying
Principal Position                  Year        Salary($)       Bonus($)      Compensation(4)      Options(#)
------------------                  ----        ---------       --------      ---------------      ----------
<S>                                 <C>         <C>             <C>                <C>               <C>
Laurence Gerber (1)                 1997         16,666               0                  0                0
  Chief Executive
  Officer and Director

David Marshall (1)                  1997        325,000         198,120 (3)        104,221 (5)            0
  President, Chief
  Executive Officer
  and Director

Ridge Frew (2)(6)                   1997        152,290          55,500              1,740           60,000
  Executive Vice
  President of Property
  Operations

Marianne Pritchard (6)              1997        160,804          81,000 (4)          1,000           21,000
  Senior Vice President
  and Chief Financial
  Officer

David Olney (6)                     1997        150,000         115,500              2,902           15,000
  Senior Vice President
  of Acquisitions

Dennis Suarez                       1997        153,394          97,400              2,688           10,500
  Senior Vice President
  of Development
</TABLE>

(1)  Mr. Marshall replaced Mr. Gerber as Chief Executive Officer on February 28,
     1997.

(2)  The Annual Compensation amounts for Mr. Frew reflect the period from March
     1, 1997 through December 31, 1997 as Mr. Frew was an employee of the
     Property Manager until the acquisition of the Property Manager on February
     28, 1997.

(3)  Includes $3,120 representing a bonus payment in lieu of payment of term
     life insurance.

(4)  Includes matching contributions made by the Company under its Supplemental
     Executive Retirement Plan and 401(k) Plan.

(5)  Includes $100,000 representing forgiveness of the principal amount of the
     Stock Purchase Loan made to Mr. Marshall on February 28, 1997 and $596
     representing the amount paid for split-dollar life insurance premiums. See
     Note P to the Consolidated Financial Statements for additional details
     related to the Stock Purchase Loan).

(6)  As of January 1, 1998, the following officer's titles were changed to
     reflect their promotions: Marianne Pritchard is Executive Vice President
     and Chief Financial Officer, David Olney is Executive Vice President and
     Chief Investment Officer, and Ridge Frew is Executive Vice President and
     Chief Operating Officer.

     The Company entered into employment agreements with David Marshall,
Laurence Gerber and Marianne Pritchard. Each agreement commenced on March 1,
1996 and continues until December 31, 1998. The agreements provide for an annual
base salary of $100,000 for Mr. Gerber and not less than $325,000 for Mr.
Marshall and $157,000 for Ms. Pritchard. Mr. Gerber's employment as an officer
terminated on February 28, 1997 upon his resignation. Such salaries may be
increased at the

                                      -25-

<PAGE>

sole discretion of the Board of Directors. Bonuses, if any, are also at the sole
discretion of the Board of Directors. If any of the employment agreements are
terminated by the Company other than for cause, the employee is entitled to
receive all accrued but unpaid salary. In addition, certain termination payments
are required. In the case of Mr. Marshall, the Company shall pay severance
compensation in eighteen monthly installments (nine months in the case of Ms.
Pritchard) at the same rate as the base salary in effect at the date of
termination. In the event of termination due to a change of control of ownership
of the Company, Ms. Pritchard's agreement provides for fifteen months of
severance payments at the same rate as the base salary in effect at the date of
the termination.

   The Company entered into employment agreements with Ridge Frew, David Olney
and Dennis Suarez. The agreements with Mr. Frew, Mr. Olney and Mr. Suarez
commenced on March 1, 1997 and continue until December 31, 1998. The agreements
provide for an annual base salary of not less than $185,000 for Mr. Frew, and
$150,000 for both Mr. Olney and Mr. Suarez. Such salaries may be increased at
the sole discretion of the Board of Directors. Bonuses, if any, are also at the
sole discretion of the Board of Directors. If any of the employment agreements
are terminated by the Company other than for cause, the employee is entitled to
receive all accrued but unpaid salary. In addition, certain termination payments
are required. In each case, the Company shall pay severance compensation in nine
monthly installments at the same rate as the base salary in effect at the date
of termination. In the event of termination due to a change of control of
ownership of the Company, each agreement provides for fifteen months of
severance payments at the same rate as the base salary in effect at the date of
the termination.

   The following table provides option information for the Company's Chief
Executive Officer and the top four Executive Officers as of December 31, 1997.
No options have been exercised by the Executive Officers as of December 31,
1997.

                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                    Potential Realized
                                                                                   Value at Expiration
                                                                                     Date at Assumed
                                                                                  Annual Rates of Stock
                                                                                   Price Appreciation(1)
                                        Individual Grants                            (in thousands)
                        ----------------------------------------------------      ----------------------
                                       % of Total
                                        Options
                         Number of     Granted to
                        Securities     Employees
                        Underlying     in Fiscal     Exercise     Expiration
Name                      Options         Year         Price         Date            5%($)       10%($)
----                    ----------     ----------    --------     ----------        ------       ------
<S>                        <C>            <C>          <C>           <C>             <C>         <C>
David Marshall                  0         N/A          N/A            N/A            N/A          N/A
Laurence Gerber (2)             0         N/A          N/A            N/A            N/A          N/A
Ridge Frew                 60,000         11%          11.00         3-01-07          415        1,051
Marianne Pritchard         21,000          4%          11.00         3-01-07          145          368
David Olney                15,000          3%          11.00         3-01-07          104          263
Dennis Suarez              10,500          2%          11.00         3-01-07           73          184
</TABLE>

(1)    Values calculated using 5% and 10% annual rates of appreciation of
       exercise price over the option term less original exercise price.

(2)    Mr. Gerber resigned as Chief Executive Officer as of February 28, 1997.


                                      -26-

<PAGE>

                       AGGREGATED OPTION EXERCISES IN LAST
                      FISCAL YEAR AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
                                                              Number of
                                                              Securities            Value of
                                                              Underlying           Unexercised
                                                              Unexercised          in-the-Money
                                                               Options at           Options at
                                                              Fiscal Year-         Fiscal Year-
                             Shares           Value            End (#)               End ($)
                           Acquired on       Realized        Exercisable/          Exercisable/
Name                       Exercise (#)         ($)          Unexercisable         Unexercisable
----                       ------------      --------        -------------         -------------
<S>                             <C>               <C>         <C>                   <C>
Laurence Gerber (1)             0                 0           200,000/0             450,000/0
David Marshall                  0                 0           200,000/0             450,000/0
Ridge Frew                      0                 0           24,000/36,000         24,000/36,000
Marianne Pritchard              0                 0           40,000/21,000         90,000/21,000
David Olney                     0                 0           40,000/15,000         70,000/15,000
Dennis Suarez                   0                 0           40,000/10,500         70,000/10,500
</TABLE>

(1)  Mr. Gerber resigned as Chief Executive Officer as of February 28, 1997.

     Independent Directors shall be entitled to receive compensation from the
Company for serving as Directors at the rate of $25,000 per year, subject to
increase in future years with the prior approval of the Board of Directors.
During 1997, Directors deWilde, Roskind, Finnegan, and Goldberg, each received
$25,000 for their services. Directors Ahern, Kazilionis and Solomon received
$6,250 for their services as they were elected on October 9, 1997 and therefore,
did not serve a full year on the Board. During 1996, 1995, 1994 and 1993, each
independent director received $25,000 for his services, except for Mr. deWilde,
who was elected during 1993 and received $18,750 during 1993.

   On August 14, 1997, the Shareholders approved the adoption of the Berkshire
Realty Company, Inc. Directors Retainer Fee Plan (the "Fee Plan") which allows
non-employee directors of the Company to elect to receive all or part of their
annual retainer in cash, or in shares of common stock, and to defer payments.
The maximum number of shares of common stock that can be issued pursuant to the
Fee Plan is 40,000. In 1997, all non-employee directors received their annual
retainer fee in cash on a quarterly basis.

   Pursuant to the Berkshire Realty Company Inc. 1996 Stock Option Plan (the
"Original Plan") and continuing under the proposed Berkshire Realty Company,
Inc. Amended and Restated Stock Option Plan (the "Amended Stock Plan"), each
non-employee director receives initial and annual stock option grants in
recognition of their service as a director and if applicable, as the chair or a
member of a committee of the Board.

   On May 13, 1997, Messrs. deWilde, Finnegan, Goldberg and Roskind were granted
stock options in share amounts of 5,000, 6,000, 4,000, and 5,000, respectively.
On November 13, 1997, Messrs. Ahern, Kazilionis and Solomon were granted stock
options in the share amounts of 6,000, 5,000, and 5,000, respectively.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   As of December 31, 1997, no person was known by the Company to be the
beneficial owner of more than five percent (5%) of the Company's outstanding
Shares.

    The following table sets forth certain information with respect to the
beneficial ownership of certain voting securities of the Company by all persons
known by the Company to own beneficially more than 5% of the shares of any class
of the Company's stock, each of the Company's Directors, the named executive
officers and by all Directors and Executive Officers as a group, as of March 2,
1998:

                                      -27-

<PAGE>
<TABLE>
<CAPTION>
TITLE OF CLASS                  NAME OF                       AMOUNT AND NATURE OF             PERCENTAGE
                                BENEFICIAL OWNER(1)           BENEFICIAL INTEREST (2)           OF CLASS(3)
-----------------------------------------------------------------------------------------------------------
<S>                             <C>                              <C>                             <C>
PREFERRED STOCK

Preferred Stock                 Cudd & Co.                       188,552 Shares                   6.9%
Preferred Stock                 Paul D. Kazilionis               2,337,000 Shares (4)(5)         85.4%
Preferred Stock                 Westbrook Berkshire              254,117 Shares                   9.3%
                                Co-Holdings, L.L.C.
Preferred Stock                 Westbrook Berkshire              2,082,883 Shares (5)            76.1%
                                Holdings, L.L.C.
Preferred Stock                 All Directors and
                                 Executive Officers
                                 as a group                      2,337,000 Shares                85.4%

COMMON STOCK

Common Stock                    Terrance Ahern                   0                               (6)
Common Stock                    David M. deWilde                 16,800 Shares (7)               (6)
Common Stock                    Paul Finnegan                    16,000 Shares (8)               (6)
Common Stock                    Ridge Frew                       78,838 Shares (9)               (6)
Common Stock                    Laurence Gerber                  215,000 Shares (10)             (6)
Common Stock                    Charles Goldberg                 14,000 Shares (11)              (6)
Common Stock                    Paul Kazilionis                  0                               (6)
Common Stock                    Douglas Krupp                    5,682,319 Shares (12)           13.6%
Common Stock                    David Marshall                   297,147 Shares (13)             (6)
Common Stock                    David Olney                      90,335 Shares (14)              (6)
Common Stock                    Marianne Pritchard               91,228 Shares (15)              (6)
Common Stock                    E. Robert Roskind                28,000 Shares (16)              (6)
Common Stock                    Arthur Solomon                   0                               (6)
Common Stock                    Dennis Suarez                    46,735 Shares (17)              (6)
Common Stock                    All Directors and
                                 Executive Officers
                                 as a group                      6,769,762 Shares (18)           15.9%
</TABLE>


   (1) The address of each person, except as noted, is c/o Berkshire Realty
Company, Inc., 470 Atlantic Avenue, Boston, Massachusetts 02210.

   (2) Information relating to beneficial ownership is based upon information
furnished by each person (except for Cudd & Co., Westbrook Berkshire Holdings,
L.L.C., and Westbrook Berkshire Co-Holdings, L.L.C) using "beneficial ownership"
concepts set forth in rules of the Securities and Exchange Commission (the
"SEC") under Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Under those rules, a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power" which includes
the power to vote or to direct the voting of such security, or "investment
power," which includes the power to dispose or to direct the disposition of such
security. The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire beneficial ownership (such as by
exercise of options) within 60 days. Under such rules, more than one person may
be deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may disclaim
any beneficial interest. Except as indicated in other notes to this table,
directors and executive officers possessed sole voting and investment power with
respect to all shares of Common Stock referred to in the table. Information with
respect to Cudd & Co., Westbrook Berkshire Holdings, L.L.C. and Westbrook
Berkshire Co-Holdings, L.L.C.is based on the Company's stock ledger records.

   (3) Any Common Stock not outstanding which is subject to options or
conversion privileges which the beneficial owner had the right to exercise as of
March 2, 1998 or within 60 days thereof shall be deemed outstanding for purposes
of computing the percentage of Common Stock owned by such beneficial owner but
shall not be deemed to be outstanding for the purpose of computing the
percentage of outstanding Common Stock owned by any other beneficial owner.
However, for

                                      -28-

<PAGE>

purposes of determining the percentage of Common Stock owned by the Directors
and Executive Officers as a group, any Common Stock not outstanding which is
subject to options or conversion privileges which a member of the group had the
right to exercise as of March 2, 1998 or within 60 days thereafter shall be
deemed outstanding for purposes of computing the percentage of ownership of the
group.

   (4) Mr. Kazilionis is an indirect beneficial owner of the 2,082,883 shares of
Preferred Stock held by Westbrook Berkshire Holdings, L.L.C. and the 254,117
shares of Preferred Stock held by Westbrook Berkshire Co-Holding, L.L.C., by
virtue of being the managing principal of Westbrook Real Estate Partners,
L.L.C., an affiliate of Westbrook Berkshire Holdings, L.L.C. and Westbrook
Berkshire Co-Holdings, L.L.C. Mr. Kazilionis has shared voting and investment
powers for these shares.

   (5) As described above, holders of the Preferred Stock are entitled to vote
on an "as converted basis" together with the holders of the Common Stock,
(collectively, the "Voting Securities"). The following beneficial owners of
Preferred Stock held greater than 5% of the Voting Securities outstanding as of
March 2, 1998: Paul Kazilionis indirectly held 11.5% of the Voting Securities,
and Westbrook Berkshire Holdings, L.L.C. held 10.2% of the Voting Securities.

   (6) The amount owned does not exceed one percent of the Common Stock of the
Company outstanding as of March 2, 1998.

   (7) Mr. deWilde directly owns 2,800 shares of Common Stock. In addition, Mr.
deWilde has the right to acquire 14,000 shares of Common Stock pursuant to
Options.

   (8) Mr. Finnegan directly owns 700 shares of Common Stock.  He disclaims
beneficial ownership of 300 shares of Common Stock owned by his wife.  In
addition, Mr. Finnegan has the right to acquire 15,000 shares of Common Stock
pursuant to Options.

   (9) Mr. Frew directly owns 42,838 shares of Common Stock. In addition, Mr.
Frew has the right to acquire 36,000 shares of Common Stock pursuant to Options.

   (10) Mr. Gerber resigned as the Chief Executive Officer as of February 28,
1997. He directly owns 15,000 shares of Common Stock and he has the right to
acquire 200,000 shares of Common Stock pursuant to Options.

   (11) Mr. Goldberg owns no shares directly. Mr. Goldberg has the right to
acquire 14,000 shares of Common Stock pursuant to Options.

   (12) Mr. Krupp directly owns 10,100 shares of Common Stock and is an indirect
beneficial owner of the 512,203 shares of Common Stock held by Berkshire Realty
Advisors Limited Partnership, the former advisor to the Company, by virtue of
being a director of BRF Corporation, the general partner of Berkshire Realty
Advisors Limited Partnership. Mr. Krupp disclaims beneficial ownership of 15,950
shares of Common Stock owned by various members of his family. Further, Mr.
Krupp, is an indirect beneficial owner of 5,344,066 units ("Operating
Partnership Units") in BRI OP Limited Partnership ("BRI OP"), the operating
partnership of which the Company is a special limited partner. Typically,
holders of Operating Partnership Units acquire conversion rights one year and
ten days from the date of issuance whereupon the Operating Partnership Units are
redeemable on a one-for-one basis for shares of Common Stock or at the Company's
election, for cash. Of the Operating Partnership Units referred to above,
5,144,066 have acquired conversion rights as of March 2, 1998 or will acquire
such rights within 60 days thereafter. In the case where Mr. Krupp is a
beneficial owner (but not a direct owner) of shares, he has shared voting and
investment powers.

   (13) Mr. Marshall directly owns 90,804 shares of Common Stock. He disclaims
beneficial ownership of 6,343 shares of Common Stock owned by various members of
his family. In addition Mr. Marshall has the right to acquire 200,000 shares of
Common Stock pursuant to Options.

   (14) Mr. Olney directly owns 45,335 shares of Common Stock. In addition, Mr.
Olney has the right to acquire 45,000 shares of Common Stock pursuant to
Options.

                                      -29-

<PAGE>

   (15) Ms. Pritchard directly owns 44,228 shares of Common Stock. In addition,
Ms. Pritchard has the right to acquire 47,000 shares of Common Stock pursuant to
Options.

   (16) Mr. Roskind directly owns 15,000 shares of Common Stock. In addition,
Mr. Roskind has the right to acquire 13,000 shares of Common Stock pursuant to
Options.

   (17) Mr. Suarez directly owns 3,235 shares of Common Stock. In addition, Mr.
Suarez has the right to acquire 43,500 shares of Common Stock pursuant to
Options.

   (18) All Directors and Executive Officers as a group directly or indirectly
own 944,196 shares of Common Stock. In addition, all Directors and Officers as a
group have the right to acquire shares of Common Stock pursuant to 681,500
Options. All Directors and Executive Officers as a group, directly or indirectly
own 5,344,066 Operating Partnership Units in BRI OP. Typically, holders of
Operating Partnership Units acquire conversion rights one year and ten days from
the date of issuance whereupon the Operating Partnership Units are redeemable on
a one-for-one basis for shares of Common Stock or at the Company's election, for
cash. 5,144,066 of these Operating Partnership Units have acquired conversion
rights as of March 2, 1998 or will acquire such rights within 60 days
thereafter.

Section 16(a) Beneficial Ownership Reporting Compliance

   Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires Directors and Executive Officers of the Company, and
persons who own more than 10% of the issued and outstanding shares of Common
Stock, to file reports of beneficial ownership with the Securities and Exchange
Commission (the "Commission"). Directors, Executive Officers and greater than
10% stockholders are required by Commission regulation to furnish the Company
copies of all Section 16(a) forms they file.

   Based on a review of the copies of the forms furnished to the Company or
representations by reporting persons, all of the filing requirements applicable
to its Executive Officers, Directors and greater than 10% stockholders were met
for the year ended December 31, 1997 except for the late filing by the Company
of two Form 4 reports with respect to two transactions for David deWilde.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     As described in Item 1 and 7 herein, the Company became self-administered
on March 1, 1996 (see Note C and O to the Notes to the Consolidated Financial
Statements).

     As described in Item 1 and 7, the Company became self-managed on February
28, 1997 (see Note D and O to the Notes to the Consolidated Financial
Statements).

     Berkshire Property Management, an affiliate of the Company, provided
management services for the Company's multifamily properties, until February 28,
1997, and for the Company's retail properties, for the entire fiscal year. For a
summary of amounts paid to related parties for services rendered and for
reimbursements see Note O to the Consolidated Financial Statements included in
Appendix A.

     As a result of the Questar Transaction, as described in Note E to the
Consolidated Financial Statements, the Company was issued a promissory note by
an affiliate of an officer of the Company. The Company also executed a five-year
lease with an affiliate of an officer of the Company. (See Note O to the Notes
to the Consolidated Financial Statements for additional details).

     As described in Note P to the Consolidated Financial Statements, the
Company made a loan to the President of the Company.


                                      -30-

<PAGE>

     Additional information required by Item 402 and 404 of Regulation S-K is
incorporated by reference to the Proxy Statement dated March 31, 1998 filed with
the Securities and Exchange Commission.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a)  1. Financial Statements - see Index to Consolidated Financial
        Statements, Schedules, and Summary Quarterly Financial Information
        included under Item 8, Appendix A, on page F-2 of this report.

     2. Financial Statement Schedule - Consolidated Financial Statement
        Schedule to the Consolidated Financial Statements are included under
        Item 8, Appendix A on pages F-37 through F-52.  Certain other
        schedules are omitted as they are not applicable or not required or
        because the information is provided in the Consolidated Financial
        Statements or the Notes thereto.

     3. Separate Financial Statements - as required by Rule 3-09 of
        Regulation S-X. The separate financial statements and schedule for
        Spring Valley Partnership and Brookwood Village Joint Venture are
        included under Item 8 (Appendix A) on pages F-54 to F-80 of this
        report.

(b) Exhibits:

    Number and Description
    Under Regulation S-K

    The following reflects all applicable Exhibits required under Item 601
    of Regulation S-K:

    2)    Plan of Acquisition, Reorganization, Arrangement, Liquidation or
          Succession.

            (2.1)       BRI River Oaks First Amended and Restated Agreement of
                        Limited Partnership, dated May 1, 1995. [Exhibit 2.1 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (2.2)       BRI Newport First Amended and Restated Agreement of
                        Limited Partnership, dated May 1, 1995. [Exhibit 2.2 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (2.3)       BRI Altamonte First Amended and Restated Agreement of
                        Limited Partnership, dated May 1, 1995. [Exhibit 2.3 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (2.4)       BRI Huntington Chase First Amended and Restated
                        Agreement of Limited Partnership, dated May 1, 1995.
                        [Exhibit 2.4 to Company's Annual Report on Form 10-K for
                        the year ended December 31, 1995 (File No. 1-10660)].*

            (2.5)       BRI Pointe West First Amended and Restated Agreement of
                        Limited Partnership, dated May 1, 1995. [Exhibit 2.5 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (2.6)       BRI Timbers First Amended and Restated Agreement of
                        Limited Partnership, dated May 1, 1995. [Exhibit 2.6 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*


                                      -31-

<PAGE>

            (2.7)       BRI Plantation Colony First Amended and Restated
                        Agreement of Limited Partnership, dated May 1, 1995.
                        [Exhibit 2.7 to Company's Annual Report on Form 10-K for
                        the year ended December 31, 1995 (File No. 1-10660)].*

            (2.8)       BRI Southwest Apartments First Amended and Restated
                        Agreement of Limited Partnership, dated May 1, 1995.
                        [Exhibit 2.8 to Company's Annual Report on Form 10-K for
                        the year ended December 31, 1995 (File No. 1-10660)].*

            (2.9)       BRI Texas Apartments First Amended and Restated
                        Agreement of Limited Partnership, dated May 1, 1995.
                        [Exhibit 2.9 to Company's Annual Report on Form 10-K for
                        the year ended December 31, 1995 (File No. 1-10660)].*

            (2.10)      BRI Park Colony - Woodland First Amended and Restated
                        Agreement of Limited Partnership, dated April 5, 1995.
                        [Exhibit 2.10 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1995 (File No.
                        1-10660)].*

            (2.11)      Amended and Restated Agreement of Limited Partnership of
                        BRI OP Limited Partnership, dated May 1, 1995. [Exhibit
                        2.11 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1995 (File No. 1-10660)].*

            (2.12)      Amendment No. 1 to BRI OP Limited Partnership Agreement
                        among Berkshire Realty Company, Inc. and GN Limited
                        Partnership, dated October 2, 1995. [Exhibit 2.12 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (2.13)      Amendment No. 2 to BRI OP Limited Partnership Agreement
                        among Berkshire Realty Company, Inc. and GN Limited
                        Partnership, dated December 15, 1995. [Exhibit 2.13 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

         (3)  Articles of Incorporation and By-Laws.

            (3.1)       Restated Certificate of Incorporation of the Company
                        [Exhibit 3.1 to the Company's Registration Statement on
                        Form S-4 (File No. 33-37592)].*

            (3.2)       Certificate of Amendment to Restated Certificate of
                        Incorporation of the Company [Exhibit 3.11 to
                        Post-Effective Amendment No. 1 to the Company's
                        Registration Statement on Form S-4 (File No.
                        33-37592)].*

            (3.3)       By-laws of the Company, as amended on February 4, 1993.
                        [Exhibit 3.3 to Company's Annual Report on Form 10-K for
                        the year ended December 31, 1993 (File No. 10-10660)].*

            (3.4)       By-laws of Berkshire Realty Company, Inc., as amended on
                        February 28, 1996. [Exhibit 3.4 to Company's Annual
                        Report on Form 10-K for the year ended December 31, 1995
                        (File No. 1-10660)].*

         (4)      Instruments defining the rights of security holders, including
                  indentures.

            (4.1)       Berkshire Realty Company, Inc. Certificate of Common
                        Stock. [Exhibit 4.1 to Company's Annual Report on Form
                        10-K for the year ended December 31, 1994 (File No.
                        10-10660)].*

         (10)     Material Contracts.

                                      -32-

<PAGE>

            (10.1)      Exchange Agreement dated June 27, 1991 between Berkshire
                        Realty Company, Inc., a Delaware corporation and Krupp
                        Cash Plus-III Limited Partnership and Krupp Cash Plus-IV
                        Limited Partnership, each of which is a Massachusetts
                        limited partnership. [Exhibit 10.6 to Company's Annual
                        Report on Form 10-K for the year ended December 31, 1991
                        (File No. 1- 10660)].*

            (10.2)      Commercial Mortgage Loan and Real Property Purchase
                        Agreement by and between Resolution Trust Corporation as
                        conservator for Great American Federal Savings
                        Association (formerly Great American First Savings Bank)
                        (the "RTC"), and Berkshire Realty Company, Inc., dated
                        October 12, 1992. [Exhibit 10.1 to Company's Report on
                        Form 8-K dated October 14, 1992.(File No. 1-10660)].*

            Property Management Agreements

            (10.3)      Form of Property Management Agreement between the
                        Company, as Owner, and Krupp Realty Company Limited
                        Partnership, now known as Berkshire Realty Enterprises
                        Limited Partnership ("BRE"), as Agent, for Residential
                        Property [Exhibit 10.1 to the Company's Registration
                        Statement on Form S-4 (File No. 33-37592)].*

            (10.4)      Form of Property Management Agreement between the
                        Company, as Owner, and BRE, as Agent, for Commercial
                        Property [Exhibit 10.2 to the Company's Registration
                        Statement on Form S-4 (File No. 33-37592)].*

            Advisory Services Agreement

            (10.5)      Advisory Services Agreement dated October 22, 1990
                        between the Company and Krupp Realty Advisors Limited
                        Partnership, now known as Berkshire Realty Advisors
                        Limited Partnership (the "Advisor") [Exhibit 10.37 to
                        the Company's Registration Statement on Form S-4 (File
                        No. 33-37592)].*

            (10.6)      Amendment No. 1 to Advisory Services Agreement dated
                        December 10, 1990, between the Company and the Advisor
                        [Exhibit 10.40 to Post-Effective Amendment No. 1 to the
                        Company's Registration Statement on Form S-4 (File No.
                        33-37592)].*

            (10.7)      Amendment No. 2 to the Advisory Services Agreement dated
                        January 31, 1991 between the Company and the Advisor.
                        [Exhibit 10.5 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1991 (File No.
                        1-10660)].*

            (10.8)      Amendment No. 3 to the Advisory Services Agreement dated
                        January 31, 1991 between the Company and the Advisor as
                        of May 4, 1994. [Exhibit 10.8 to Company's Annual Report
                        on Form 10-K for the year ended December 31, 1994 (File
                        No. 1-10660)].*

            Credit Agreement

            (10.9)      1992 Credit Agreement among the Company and The First
                        National Bank of Boston, NationsBank of Texas, N.A. and
                        Other Banks which may become parties to this Agreement
                        and The First National Bank of Boston, as Agent dated as
                        of December 30, 1992. [Exhibit 10.2 to Company's Annual
                        Report on form 10K for the year ended December 31, 1993.
                        (File No. 1-10660)].*


                                      -33-

<PAGE>

            (10.10)     Amendment No. 1 to 1992 Credit Agreement among the
                        Company and The First National Bank of Boston and
                        NationsBank of Texas, N.A. as of May 28, 1993. [Exhibit
                        10.10 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1993. (File No. 1-10660)].*

            (10.11)     Amendment No. 2 to 1992 Credit Agreement among the
                        Company and The First National Bank of Boston and
                        NationsBank of Texas, N.A. as of December 1, 1993.
                        [Exhibit 10.11 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1993 (File No.
                        1-10660)].*

            (10.12)     Amendment No. 3 to 1992 Credit Agreement among the
                        Company and The First National Bank of Boston and
                        NationsBank of Texas, N.A. as of January 7, 1994.
                        [Exhibit 10.12 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.13)     Amendment No. 4 to 1992 Credit Agreement among the
                        Company and the First National Bank of Boston and
                        NationsBank of Texas, N.A. as of March 1, 1994. [Exhibit
                        10.13 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1994 (File No. 1-10660)].*

            (10.14)     Amendment No. 5 to 1992 Credit Agreement among the
                        Company and the First National Bank of Boston and
                        NationsBank of Texas, N.A. as of May 1, 1994. [Exhibit
                        10.14 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1994 (File No. 1-10660)].*

            (10.15)     Amendment No. 6 to 1992 Credit Agreement among The
                        Company and the First Nation Bank of Boston and
                        NationsBank of Texas, N.A. as of August 12, 1994.
                        [Exhibit 10.15 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.16)     Amendment No. 7 to 1992 Credit Agreement among The
                        Company and the First Nation Bank of Boston and
                        NationsBank of Texas, N.A. as of August 25, 1994.
                        [Exhibit 10.16 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.17)     Amended 1992 Credit Agreement among Berkshire Realty
                        Company, Inc., BRI OP Limited Partnership and The First
                        National Bank of Boston and NationsBank of Texas, NA as
                        of November 21, 1995. [Exhibit 10.17 to Company's Annual
                        Report on Form 10-K for the year ended December 31, 1995
                        (File No. 1-10660)].*

            (10.18)     Master Credit Facility Agreement by and among BRI OP
                        Limited Partnership, Berkshire Realty Company, Inc., BRI
                        River Oaks Limited Partnership and Washington Mortgage
                        Financial Group, LTD., dated November 17, 1995. [Exhibit
                        10.18 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1995 (File No. 1-10660)].*

            (10.19)     Exhibits to the Master Credit Facility Agreement among
                        BRI OP Limited Partnership, Berkshire Realty Company,
                        Inc., BRI River Oaks Limited Partnership and Washington
                        Mortgage Financial Group, LTD, dated November 17, 1995.
                        [Exhibit 10.19 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1995 (File No.
                        1-10660)].*

            (10.20)     Amendment No. 1 of Amended and Rested 1992 Credit
                        Agreement among the Company and The First National Bank
                        of Boston and

                                      -34-

<PAGE>

                        NationsBank of Texas, N.A. as of March 1, 1996. [Exhibit
                        10.1 to Company's Form 10-Q for the quarter ended
                        September 30, 1996 (File No. 1-10660)].*

            (10.21)     Amendment No. 2 of Amended and Rested 1992 Credit
                        Agreement among the Company and The First National Bank
                        of Boston and NationsBank of Texas, N.A. as of March 1,
                        1996. [Exhibit 10.2 to Company's Form 10-Q for the
                        quarter ended September 30, 1996 (File No. 1-10660)].*

            (10.22)     Amendment No. 3 of Amended and Restated 1992 Credit
                        Agreement among the Company and The First National Bank
                        of Boston and Mellon Bank, N.A. as of June 26, 1996.
                        [Exhibit 10.3 to Company's Form 10-Q for the quarter
                        ended September 30, 1996 (File No. 1-10660)].*

            (10.23)     Amendment No. 4 of Amended and Restated 1992 Credit
                        Agreement among the Company and The First National Bank
                        of Boston and Mellon Bank, N.A. as of July 16, 1996.
                        [Exhibit 10.4 to Company's Form 10-Q for the quarter
                        ended September 30, 1996 (File No. 1-10660)].*

            (10.24)     First Amendment to Master Credit Facility Agreement
                        among BRI OP L.P., BRI River Oaks L.P., BRI Texas
                        Apartments L.P. and Hidden Oaks Partnership and
                        Washington Mortgage Financial Group, LTD and Federal
                        National Mortgage Association as of March, 1996.
                        [Exhibit 10.5 to Company's Form 10-Q for the quarter
                        ended September 30, 1996 (File No. 1-10660)].*

            MORTGAGE NOTES PAYABLE:

            Kidder Peabody Mortgage Capital Corporation

            (10.25)     Master Loan Agreement among BRI Huntington Chase, Inc.,
                        BRI Timbers, Inc., BRI Altamonte, Inc., BRI Newport,
                        Inc. and BRI Point West, Inc., collectively, as
                        Borrowers and Kidder Peabody Mortgage Capital
                        Corporation dated March 31, 1994. [Exhibit 10.17 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1994 (File No. 1-10660)].*

            (10.26)     Mortgage Note among BRI Altamonte, Inc. and Kidder
                        Peabody Mortgage Capital Corporation date March 31,
                        1994. [Exhibit 10.18 to Company's Annual Report on Form
                        10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.27)     Security Deed Note among BRI Huntington Chase, Inc. and
                        Kidder Peabody Mortgage Capital Corporation dated March
                        31, 1994. [Exhibit 10.19 to Company's Annual Report on
                        Form 10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.28)     Mortgage Note among BRI Newport, Inc. and Kidder Peabody
                        Mortgage Capital Corporation dated March 31, 1994.
                        [Exhibit 10.20 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.29)     Mortgage Note among BRI Point West, Inc. and Kidder
                        Peabody Mortgage Capital Corporation dated March 31,
                        1994.[Exhibit 10.21 to Company's Annual Report on Form
                        10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.30)     Deed of Trust among BRI Timbers, Inc. and Kidder Peabody
                        Mortgage Capital Corporation dated March 31, 1994.
                        [Exhibit 10.22 to Company's Annual Report on Form 10-K
                        for the year

                                      -35-

<PAGE>

                        ended December 31, 1994 (File No. 1-10660)].*

            FNMA

            (10.31)     Multi-Family Note Agreement among The Avalon on
                        Abernathy Apartments and Washington Capital DUS, Inc.,
                        dated May 11, 1994. [Exhibit 10.23 to Company's Annual
                        Report on Form 10-K for the year ended December 31, 1994
                        (File No. 1-10660)].*

            (10.32)     Multi-Family Note Agreement among Southpoint at
                        Massepequa Apartments and Washington Capital DUS, Inc.,
                        dated May 11, 1994. [Exhibit 10.24 to Company's Annual
                        Report on Form 10-K for the year ended December 31, 1994
                        (File No. 1-10660)].*

            (10.33)     Multi-Family Note Agreement among Eastlake Village
                        Apartments and Washington Capital DUS, Inc., dated May
                        11, 1994. [Exhibit 10.25 to Company's Annual Report on
                        Form 10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.34)     Multi-Family Note Agreement among Lakes of Jacaranda
                        Apartments and Washington Capital DUS, Inc., dated June
                        22, 1994. [Exhibit 10.26 to Company's Annual Report on
                        Form 10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.35)     Multi-Family Note Agreement among Huntington Downs
                        Apartments and Washington Capital DUS, Inc., dated June
                        22, 1994. [Exhibit 10.27 to Company's Annual Report on
                        Form 10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.36)     Multi-Family Mortgage, Assignment of Rents and Security
                        Agreement among Huntington Downs and Washington Capital
                        DUS, Inc., dated as of June 15, 1994. [Exhibit 10.28 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1994 (File No. 1-10660)].*

            (10.37)     Multi-Family Deed of Trust, Assignment of Rents and
                        Security Agreement among Eastlake Village Apartments,
                        dated as of May 11, 1994. [Exhibit 10.29 to Company's
                        Annual Report on Form 10-K for the year ended December
                        31, 1994 (File No. 1- 10660)].*

            (10.38)     Multi-Family Deed to Secure Debt, Assignment of Rents
                        and Security Agreement among Avalon on Abernathy
                        Apartments and Washington Capital DUS, Inc., dated May
                        11, 1994. [Exhibit 10.30 to Company's Annual Report on
                        Form 10-K for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.39)     Multi-Family Mortgage, Assignment of Rents and Security
                        Agreement among Southpoint at Massepequa Apartments and
                        Washington Capital DUS, Inc., dated May 11, 1994.
                        [Exhibit 10.31 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            (10.40)     Multi-Family Mortgage, Assignment of Rents and Security
                        Agreement among Lakes of Jacaranda Apartments and
                        Washington Capital DUS, Inc., dated May 15, 1994.
                        [Exhibit 10.32 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            Plantation Colony

            (10.41)     Multi-Family Note Agreement among Plantation Colony
                        Business Trust and Washington Capital DUS, Inc., dated
                        June 22, 1994. [Exhibit 10.33 to Company's Annual Report
                        on Form 10-K for the year ended December 31, 1994 (File
                        No. 1-10660)].*

                                      -36-

<PAGE>


            (10.42)     Financing Agreement by and among Florida Housing Finance
                        Agency, Washington Capital DUS, Inc., and Plantation
                        Colony Business Trust, date as of September 1, 1994.
                        [Exhibit 10.34 to Company's Annual Report on Form 10-K
                        for the year ended December 31, 1994 (File No.
                        1-10660)].*

            Park Colony

            (10.43)     Assumption Agreement and consent to sale of project
                        dated July 13, 1994 between Florida Housing Finance
                        Agency and SunBank, National Association and BRI Park
                        Colony, Inc. [Exhibit 10.35 to Company's Annual Report
                        on Form 10-K for the year ended December 31, 1994 (File
                        No. 1-10660)].*

            (10.44)     Multi-Family Mortgage, Assignment of Rents and Security
                        Agreement among Hollywood Associates and Florida Housing
                        Finance Agency, dated December 1, 1985. [Exhibit 10.36
                        to Company's Annual Report on Form 10-K for the year
                        ended December 31, 1994 (File No. 1-10660)].*

            (10.45)     Loan Agreement between Florida Housing Finance Agency
                        and BRI Park Colony - Woodland Limited Partnership dated
                        April 1, 1995. [Exhibit 10.40 to Company's Annual Report
                        on Form 10-K for the year ended December 31, 1995 (File
                        No. 1- 10660)].*

            (10.46)     Reimbursement Agreement among BRI Park Colony - Woodland
                        Limited Partnership and Mellon Bank, N.A., dated April
                        1, 1995. [Exhibit 10.41 to Company's Annual Report on
                        Form 10-K for the year ended December 31, 1995 (File No.
                        1-10660)].*

            (10.47)     First Amendment to Reimbursement Agreement among Park
                        Colony - Woodland Limited Partnership and Mellon Bank,
                        N.A., dated November 1, 1995. [Exhibit 10.42 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (10.48)     First Supplemental to Loan Agreement between Florida
                        Housing Finance Agency and BRI Park Colony - Woodland
                        Limited Partnership dated October 1, 1995. [Exhibit
                        10.43 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1995 (File No. 1-10660)].*

            Kings Crossing

            (10.49)     Promissory Note Agreement among BRI Texas Apartments
                        Limited Partnership and Life Insurance Company of
                        Georgia, dated May 9, 1995. [Exhibit 10.44 to Company's
                        Annual Report on Form 10-K for the year ended December
                        31, 1995 (File No. 1- 10660)].*

            (10.50)     Deed of Trust and Security Agreement among BRI Texas
                        Apartments Limited Partnership and Life Insurance
                        Company of Georgia, dated May 9, 1995. [Exhibit 10.45 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (10.51)     Assignment of Leases and Rents among BRI Texas
                        Apartments Limited Partnership and Life Insurance
                        Company of Georgia, dated May 9, 1995. [Exhibit 10.46 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*



                                      -37-

<PAGE>

            Kingwood Lakes

            (10.52)     Promissory Note Agreement among BRI Texas Apartments
                        Limited Partnership and Security Life of Denver
                        Insurance Company, dated May 9, 1995. [Exhibit 10.47 to
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1995 (File No. 1-10660)].*

            (10.53)     Deed of Trust and Security Agreement among BRI Texas
                        Apartments Limited Partnership and Security Life of
                        Denver Insurance Company, dated May 9, 1995. [Exhibit
                        10.48 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1995 (File No. 1-10660)].*

            (10.54)     Assignment of Leases and Rents among BRI Texas
                        Apartments and Security Life of Denver Insurance
                        Company, dated May 9, 1995. [Exhibit 10.49 to Company's
                        Annual Report on Form 10-K for the year ended December
                        31, 1995 (File No. 1-10660)].*

            Other Debt

            (10.55)     Master Repurchase Agreement; Annex I: Supplemental Terms
                        and Conditions; and Annex II: Names and Addresses; dated
                        January 9, 1992 between the Company, a Delaware
                        corporation and The First Boston Corporation. [Exhibit
                        10.7 to Company's Annual Report on Form 10-K for the
                        year ended December 31, 1991 (File No. 1-10660)].*

            (10.56)     Interest Rate Swap Master Agreement among BRI OP Limited
                        Partnership and The First National Bank of Boston, dated
                        October 31, 1995. [Exhibit 10.51 to Company's Annual
                        Report on Form 10-K for the year ended December 31, 1995
                        (File No. 1-10660)].*

            (10.57)     Schedule to the Interest Rate Swap Master Agreement
                        among BRI OP Limited Partnership and The First National
                        Bank of Boston, dated October 31, 1995. [Exhibit 10.52
                        to Company's Annual Report on Form 10-K for the year
                        ended December 31, 1995 (File No. 1-10660)].*

            Financial Data Schedules

            (27.1)      Financial Data Schedule - December 31, 1997+

            (27.2)      Financial Data Schedule - December 31, 1996+

            (27.3)      Financial Data Schedule - December 31, 1995+

Reports on Form 8-K

   (a)      Exhibits

            10.1        Contribution Agreement by and between Turtle Creek
                        Associates Limited Partnership and BRI OP Limited
                        Partnership, dated April 8, 1996. [Exhibit 10.1 to
                        Company's Report on Form 8-K/A dated July 29, 1996 (File
                        No. 1-10660)].*

            10.2        BRI The Point Agreement of Limited Partnership by and
                        between BRI Texas Apartments Limited Partnership and BRI
                        OP Limited Partnership. [Exhibit 10.2 to Company's
                        Report on Form 8-K/A dated July 29, 1996 (File No.
                        1-10660)].*

            10.3        First Amendment to BRI The Point Limited Partnership
                        Agreement by and between BRI Texas Apartments Limited
                        Partnership and BRI OP Limited Partnership, dated March
                        15, 1996. [Exhibit 10.3 to Company's Report on Form
                        8-K/A dated July 29, 1996 (File No. 1-10660)].*

            10.4        Certificate of Limited Partnership of BRI The Point
                        Limited Partnership dated October 20, 1995. [Exhibit
                        10.4 to Company's Report on Form 8-K/A dated July 29,
                        1996 (File No. 1-10660)].*


                                      -38-

<PAGE>

            10.5        Agreement of Release, Assumption of Deed of Trust Note,
                        Deed of Trust and Regulatory Agreement by and among
                        Turtle Creek Associates Limited Partnership, BRI The
                        Point Limited Partnership and Berkshire Mortgage Finance
                        Corporation, dated March 20, 1996. [Exhibit 10.5 to
                        Company's Report on Form 8-K/A dated July 29, 1996 (File
                        No. 1-10660)].*

            10.6        Deed of Trust by and between Turtle Creek Associates
                        Limited Partnership and Berkshire Mortgage Finance
                        Corporation, dated March 14, 1994. [Exhibit 10.6 to
                        Company's Report on Form 8-K/A dated July 29, 1996 (File
                        No. 1-10660)].*

            10.7        Deed of Trust Note by and between Turtle Creek
                        Associates Limited Partnership and Berkshire Mortgage
                        Finance Corporation, dated March 14, 1994. [Exhibit 10.7
                        to Company's Report on Form 8-K/A dated July 29, 1996
                        (File No. 1-10660)].*

            10.8        Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Third
                        Rolling Road Associates Limited Partnership (Third
                        Rolling Road/Coventry) and Questar Investment
                        Corporation dated as of August 25, 1997.*

            10.9        Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Williston
                        Associates and Questar Investment Corporation dated as
                        of August 25, 1997.*

            10.10       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Ridgeview
                        Chase Associates Limited Partnership and Questar
                        Investment Corporation dated as of August 25, 1997.*

            10.11       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Second
                        Kingswood Common Associates Limited Partnership and
                        Questar Investment Corporation dated as of August 25,
                        1997.*

            10.12       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Frederick
                        Road Associates (Jamestown) and Questar Investment
                        Corporation dated as of August 25, 1997.*

            10.13       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Gorn
                        Properties, Inc. (Hilltop) and Questar Investment
                        Corporation dated as of August 25, 1997.*

            10.14       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Rolling
                        Road Associates (Heraldry Square) and Questar Investment
                        Corporation dated as of August 25, 1997.*

            10.15       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Tremaine
                        Associates Limited Partnership (Henley/Rolling Wind) and
                        Questar Investment Corporation dated as of August 25,
                        1997.*

            10.16       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of
                        Plainfield Associates (Hazelcrest) and Questar
                        Investment Corporation dated as of August 25, 1997.*

            10.17       Contribution Agreement dated as of August 25, 1997 among
                        BRI

                                      -39-

<PAGE>

                        OP Limited Partnership and the partners of Fourth
                        Rolling Road Associates Limited Partnership (Fourth
                        Rolling Road/Courtleigh), 19 West Lexington Street
                        Limited Partnership and Questar Investment Corporation
                        dated as of August 25, 1997.*

            10.18       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Purnell
                        Associates (Fairway Ridge) and Questar Investment
                        Corporation dated as of August 25, 1997.*

            10.19       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Stratton
                        Associates Limited Partnership, Fairbrook Associates
                        Limited Partnership (Fairbrook/Stratton Meadows) and
                        Questar Investment Corporation dated as of August 25,
                        1997.*

            10.20       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Diamond
                        Ridge Associates Limited Partnership and Questar
                        Investment Corporation dated as of August 25, 1997.*

            10.21       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Citadel
                        Associates Limited Partnership, Calvert's Walk
                        Associates Limited Partnership and Questar Investment
                        Corporation dated as of August 25, 1997.*

            10.22       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Caliber
                        Associates Limited Partnership, Arborview Associates
                        Limited Partnership and Questar Investment Corporation
                        dated as of August 25, 1997.*

            10.23       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Estates
                        II Funding Corporation, The Estates Limited Partnership
                        and Questar Investment Corporation dated as of August
                        25, 1997.*

            10.24       Contribution Agreement dated as of August 25, 1997 among
                        BRI OP Limited Partnership and the partners of Warren
                        Park Associates and Questar Investment Corporation dated
                        as of August 25, 1997.*

            10.25       Agreement and Plan of Merger among Berkshire Realty
                        Company, Inc., Questar Property Management Corporation
                        and its Shareholders dated as of August 25, 1997.*

            10.26       Agreement and Plan of Merger among Berkshire Realty
                        Company, Inc., Questar Management Company and its
                        Shareholders dated as of August 25, 1997.*

            10.27       Agreement and Plan of Merger among Berkshire Realty
                        Company, Inc., Kingswood Management Company and its
                        Shareholders dated as of August 25, 1997.*

            10.28       Agreement and Plan of Merger among Berkshire Realty
                        Company, Inc., Vector Property Management Company and
                        its Shareholders dated as of August 25, 1997.*

            10.29       Agreement and Plan of Merger among Berkshire Realty
                        Company, Inc., Gorn Management Company and its
                        Shareholders dated as of August 25, 1997.*

            10.30       Agreement and Plan of Merger among Berkshire Realty
                        Company,

                                      -40-

<PAGE>

                        Inc., Arborview Management Company and its Shareholders
                        dated as of August 25, 1997.*

            10.31       Form of Development Acquisition Agreement among Questar
                        Properties, Inc., Stephen M. Gorn, John B. Colvin and
                        BRI OP Limited Partnership.*

            10.32       Development Contribution Agreement (Avalon 1,3,4) among
                        Stephen Gorn, John B. Colvin and BRI OP Limited
                        Partnership dated as of August 25, 1997.*

            10.33       Development Contribution Agreement (Liriope) among
                        Stephen Gorn, John B. Colvin and BRI OP Limited
                        Partnership dated as of August 25, 1997.*

            10.34       Development Contribution Agreement (Granite Run) among
                        Stephen Gorn, John B. Colvin and BRI OP Limited
                        Partnership dated as of August 25, 1997.*

            10.35       Development Contribution Agreement (Avalon 2) among
                        Stephen Gorn, John B. Colvin and BRI OP Limited
                        Partnership dated as of August 25, 1997.*

            10.36       Form of Registration Rights Agreement among Berkshire
                        Realty Company, Inc. and certain partners of BRI OP
                        Limited Partnership.*

            10.37       Loan Agreement between BRI OP Limited Partnership and
                        GGC, L.L.C. dated as of August 25, 1997.*

            10.38       Consent of Coopers & Lybrand L.L.P. Independent
                        Accountants.*

            10.39       Consent of KPMG Peat Marwick LLP, Independent
                        Accountants.*

            10.40       Bylaws as amended of Berkshire Realty Company, Inc.*

            10.41       Certificate of Designation designating 2,737,000 shares
                        of Preferred Stock of 2,737,000 shares of Series 1997-A
                        Convertible Preferred Stock (par value $0.01 per share)
                        dated September 30, 1997.*

            10.42       Loan Agreement between BRI OP Limited Partnership and
                        GGC, L.L.C, dated as of August 25, 1997.*

            10.43       Stock Purchase Agreement among Berkshire Realty Company,
                        Inc., Westbrook Real Estate Fund II, L.P. and Westbrook
                        Berkshire Holdings, L.L.C. dated as of September 19,
                        1997.*

            10.44       Exchange and Amendment Agreement among Berkshire Realty
                        Company, Inc., Westbrook Berkshire Holdings, L.L.C. and
                        Morgan Stanley Asset Management, Inc., as attorney in
                        fact for certain clients, dated as of September 30,
                        1997.*

            10.45       Registration Rights Agreement between Berkshire Realty
                        Company, Inc. And Westbrook Berkshire Holdings, L.L.C.*

            10.46       Underwriting Agreement between Berkshire Realty Company,
                        Inc. And Lehman Brothers, Inc., as representative of the
                        Co-Managers dated November 4, 1997.*

            10.47       Opinion of Peabody & Brown as to tax matters.*

            10.48       Consent of Coopers & Lybrand LLP.*


                                      -41-

<PAGE>

            10.49       Consent of KPMG Peat Marwick LLP.*

            10.50       Consent of M/PF Research, Inc.*

            10.51       Consent of Peabody & Brown (included in Exhibit 8).*

            *  Incorporated by reference.
            +  Filed herein.

      (b)   Reports on Form 8-K

            Date               Event Reported           Financial Statements
            ----               --------------           --------------------
            October 15, 1997   Changes in Control of                 Yes
                                 Registrant
                               Acquisition of Assets
                               Other Events
            October 15, 1997   Prospectus Supplement                 None
            October 24, 1997   Earnings Release                      Yes

            Reports on Form 8-K/A

            Date               Event Reported           Financial Statements
            ----               --------------           --------------------
            November 5, 1997   Property Acquisition                  None
            November 5, 1997   Prospectus Supplement                 None




                                      -42-

<PAGE>
                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 30th day of
March, 1998.

                         BERKSHIRE REALTY COMPANY, INC.



                                      By: /s/Douglas Krupp
                                          ----------------
                                          Douglas Krupp, Chairman of the Board
                                          and Director of Berkshire Realty
                                          Company, Inc.


Pursuant to 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 indicated, on the 30th day of March, 1998.

Signatures                        Title(s)
----------                        --------

/s/ David Marshall                President, Chief Executive Officer and
----------------------------      Director of Berkshire Realty Company, Inc.
    David Marshall


/s/ Marianne Pritchard            Executive Vice President and Chief Financial
----------------------------      Officer of Berkshire Realty Company, Inc.
    Marianne Pritchard


/s/ J. Paul Finnegan              Director of Berkshire Realty Company, Inc.
---------------------------
    J. Paul Finnegan


/s/ Charles N. Goldberg           Director of Berkshire Realty Company, Inc.
---------------------------
    Charles N. Goldberg


/s/ E. Robert Roskind             Director of Berkshire Realty Company, Inc.
---------------------------
    E. Robert Roskind


/s/ David M. deWilde              Director of Berkshire Realty Company, Inc.
---------------------------
    David M. deWilde


/s/ Terrance R. Ahern             Director of Berkshire Realty Company, Inc.
---------------------------
    Terrance R. Ahern


/s/ Paul D. Kazilionis            Director of Berkshire Realty Company, Inc.
---------------------------
    Paul D. Kazilionis


/s/ Arthur P. Solomon             Director of Berkshire Realty Company, Inc.
---------------------------
    Arthur P. Solomon


                                       -43-
<PAGE>



                                   APPENDIX A

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                                   __________




       CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULES AND SUMMARY QUARTERLY
                              FINANCIAL INFORMATION
                               ITEM 8 of FORM 10-K

             ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                      For the Year Ended December 31, 1997




                                       F-1

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULES AND
                     SUMMARY QUARTERLY FINANCIAL INFORMATION

                                   __________________


Report of Independent Accountants                                           F-3


Consolidated Balance Sheets at December 31, 1997 and 1996                   F-4


Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995                                      F-5 - F-6


Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995                          F-7 - F-8


Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995                                     F-9 - F-11


Notes to Consolidated Financial Statements                          F-12 - F-36

Schedule III - Real Estate and Accumulated Depreciation             F-37 - F-52


Summary Quarterly Financial Information (Unaudited)                        F-53


Separate Financial Statements - Brookwood Village Joint Venture     F-54 - F-67
                              - Spring Valley Marketplace           F-68 - F-80

All other schedules are omitted as they are not applicable or not required, or
the information is provided in the consolidated financial statements or the
notes thereto.

                                       F-2

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders of
Berkshire Realty Company, Inc. and Subsidiaries:


     We have audited the consolidated financial statements and the financial
statement schedule of Berkshire Realty Company, Inc. and Subsidiaries (the
"Company") listed in the index on page F-2 of this Form 10-K. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Company's management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Berkshire
Realty Company, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects,
the information required to be included therein.

     As discussed in Note F to the consolidated financial statements, the
Company has adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", effective January 1, 1996.




                                       COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 16, 1998, except
for Note V, for which the
date is February 27, 1998





                                       F-3

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1997 and 1996
                                     ------
                                     ASSETS

<TABLE>
<CAPTION>
                                                                           1997                    1996
                                                                       ------------            --------
<S>                                                                    <C>                     <C>
Real estate assets: (Note F)
         Multifamily apartment complexes, net of
              accumulated depreciation                                 $715,696,151            $430,936,889
         Retail centers, net of accumulated depreciation                      -                  11,064,630
         Investments in unconsolidated joint ventures
              (Note G)                                                   15,618,657              36,036,723
         Mortgage loan receivable,
            net of purchase discounts (Note H)                            2,323,285               2,268,241
         Land and construction-in-progress                               15,185,969               4,035,820
         Land held for future development                                 5,818,105               2,331,988
         Retail centers held for sale, net of
            accumulated depreciation                                     14,404,782              30,556,482
                                                                       ------------            ------------
              Total real estate assets                                  769,046,949             517,230,773

Cash and cash equivalents                                                 9,859,110               7,015,953
Mortgage-backed securities, net ("MBS") (Note J)                          7,511,789               9,232,956
Notes receivable (Note I)                                                 7,500,000               1,826,000
Escrows                                                                  15,088,587              11,096,213
Deferred charges and other assets                                        14,932,272              10,940,879
Workforce and other intangible assets,
   net of accumulated amortization (Note C and D)                        22,481,224              12,327,039
                                                                       ------------            ------------
                  Total assets                                         $846,419,931            $569,669,813
                                                                       ============            ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Credit agreements (Note K)                                          $ 75,345,000            $136,060,000
   Mortgage notes payable (Note L)                                      305,465,004             149,805,607
   Repurchase agreement (Note M)                                              -                   9,300,000
   Tenant security deposits and prepaid rents                             4,888,022               2,443,716
   Accrued real estate taxes, insurance, other
   liabilities and accounts payable (Note Q)                             17,389,965              11,797,967
                                                                       ------------            ------------
              Total liabilities                                         403,087,991             309,407,290
                                                                       ------------            ------------

Minority interest in Operating
  Partnership (Note N)                                                   75,137,066              36,608,607

Commitments and contingencies (Notes E and Q)                                 -                       -

Shareholders' equity:
     Preferred stock ("Preferred Shares"),
          $0.01 par value; 60,000,000 shares
          authorized, 2,737,000 shares issued (Note U)                       27,370                  -
     Common stock ("Shares"), $0.01 par value;
          140,000,000 Shares authorized and
          36,841,098 and 25,899,865 Shares issued,
          respectively (Note U)                                             368,411                 258,998
     Additional paid-in capital                                         394,838,797             239,446,270
     Accumulated deficit                                                (24,396,629)            (14,308,277)
     Loan receivable - officer (Note P)                                    (900,000)                  -
     Less common stock in treasury at cost
          (506,497 Shares)                                               (1,743,075)             (1,743,075)
                                                                       ------------            ------------
          Total shareholders' equity                                    368,194,874             223,653,916
                                                                       ------------            ------------
          Total liabilities and shareholders' equity                   $846,419,931            $569,669,813
                                                                       ============            ============
</TABLE>

                     The accompanying Notes are an integral
                 part of the Consolidated Financial Statements.

                                       F-4

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              For the Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                                            1997                    1996                     1995
                                                       ------------            -------------              ---------
<S>                                                    <C>                      <C>                      <C>
Revenue:
  Rental                                               $109,973,608             $ 89,450,647             $70,068,230
  Management fees and
    reimbursements (Note D)                               3,157,516                    -                       -
  Interest from mortgage loans and
    notes receivable (Notes H and I)                        608,825                1,876,519               2,162,890
  Interest income from MBS                                  765,196                  942,191               1,154,336
  Other interest income                                     993,917                  732,309               1,055,963
                                                       ------------              -----------             -----------
        Total revenue                                   115,499,062               93,001,666              74,441,419
                                                       ------------             ------------             -----------
Expenses:
  Property operating (Note O)                            25,646,048               21,424,717              17,989,860
  Repairs and maintenance                                 8,064,849                6,647,344               4,920,685
  Real estate taxes                                      10,042,100                8,653,898               7,015,706
  Property management fees to an
    affiliate (Note D)                                      902,931                4,324,843               3,421,107
  Property management operations                          5,564,851                1,302,352                   -
  Depreciation and amortization                          35,272,775               29,050,960              21,983,582
  Amortization of workforce
    acquired (Notes C and D)                              8,042,554                1,120,640                   -
  Costs associated with
    Advisor Transaction (Note C)                          2,400,000                    -                       -
  Provision for losses on real
    estate investments (Note F)                           1,850,000                7,500,000                   -
  General and administrative
    (Notes C and O)                                       5,065,015                3,632,078               1,083,948
  Interest (Notes K, L and M)                            24,005,605               20,500,533              15,618,224
  State and corporate franchise taxes                       334,003                  367,563                  11,993
  Professional fees                                         345,234                  254,000                 259,891
  Non-recurring charges                                       -                      441,783               1,727,768
  Asset management fees to an
    affiliate (Note C)                                        -                      392,636               1,565,546
                                                       ------------             ------------             -----------
        Total expenses                                  127,535,965              105,613,347              75,598,310
                                                       ------------             ------------             -----------

  Loss from operations before
    joint venture income
    (loss), gains on sales of
    assets, gains on payoff of
    mortgage loans, minority
    interest and extraordinary items                    (12,036,903)             (12,611,681)             (1,156,891)
  Joint venture income (loss)                            (4,910,021)              (3,008,587)              1,407,025
  Gains on sales of assets                                6,454,717                   58,263              14,428,338
  Gains on payoff of mortgage loans                           -                        -                   1,175,083
  Minority interest in
    Operating Partnership (Note N)                        2,153,506                1,403,000                (166,587)
                                                       ------------             ------------             -----------
  Income (loss) before
    extraordinary items                                  (8,338,701)             (14,159,005)             15,686,968
  Extraordinary items, net of
    minority interest                                       (90,345)                (149,272)               (900,926)
                                                       ------------             ------------             -----------
  Net income (loss)                                      (8,429,046)             (14,308,277)             14,786,042
  Income allocated to preferred
    shareholders                                         (1,659,306)                   -                       -
                                                       ------------             ------------             -------
  Net income (loss) allocated to
    common shareholders                                $(10,088,352)            $(14,308,277)            $14,786,042
                                                       ============             ============             ===========
</TABLE>

                                    Continued

                                       F-5

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                         1997                       1996                    1995
                                                     ------------               ------------            --------
<S>                                                    <C>                        <C>                   <C>
Earnings per common share (basic and diluted)(Note R):

  Income (loss) before
    extraordinary item                                     $ (.37)                    $ (.56)                 $ .62
                                                           ======                     ======                  =====

  Net income (loss) per
    common share                                           $ (.37)                    $ (.56)                 $ .58
                                                           ======                     ======                  =====

  Weighted average shares                              27,099,522                 25,393,147             25,392,621
                                                       ==========                 ==========             ==========
</TABLE>



                                       F-6

<PAGE>

                     The accompanying Notes are an integral
                 part of the Consolidated Financial Statements.
                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
              For the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                    Series 1997-A Convertible                           Additional     Accumulated
                     Preferred Stock at par     Common Stock at par   Paid-in Capital   Deficit
                     ----------------------     -------------------   ---------------  -----------
                       Shares    Amount         Shares       Amount
                     ---------- --------        ------       ------
<S>                      <C>     <C>            <C>          <C>       <C>              <C>
Balance,
December 31, 1994        -       $  -           25,391,928   $258,984  $270,075,107     $     -

Net income               -          -                 -          -             -         14,786,042

Proceeds from the
  exercise of
  stock warrants         -          -                1,023         10        10,087           -

Dividends                -          -                 -           -      (7,813,496)    (14,786,042)
                   ---------     -------        ----------    --------  ------------    ------------

Balance,
December 31, 1995        -          -           25,392,951    258,994   262,271,698           -

Net loss                 -          -                 -           -            -        (14,308,277)

Proceeds from the
  exercise of
  stock warrants         -          -                  417          4         5,880           -

Stock option
  grants                 -          -                 -           -          22,584           -

Dividends                -          -                 -           -     (22,853,892)          -
                   ---------     -------        ----------   --------   ------------     ---------

Balance,
December 31, 1996        -          -           25,393,368    258,998   239,446,270    (14,308,277)


<CAPTION>
                     Loan
                    Receivable-    Treasury
                     Officer     Stock at cost   Total
                    -----------  -------------   -----
Balance,
December 31, 1994   $    -       $(1,743,075)    $268,591,016

Net income               -              -          14,786,042

Proceeds from the
  exercise of
  stock warrants         -              -              10,097

Dividends                -              -         (22,599,538)
                   - ---------   -----------     ------------

Balance,
December 31, 1995        -        (1,743,075)     260,787,617

Net loss                 -            -           (14,308,277)

Proceeds from the
  exercise of
  stock warrants         -            -                 5,884

Stock option
  grants                 -            -                22,584

Dividends                -            -           (22,853,892)
                   - ---------        ----------- ------------

Balance,
December 31, 1996        -       (1,743,075)      223,653,916
</TABLE>


                                    Continued

                                       F-7

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
              For the Years Ended December 31, 1997, 1996 and 1995
                                   (Continued)

<TABLE>
<CAPTION>
                    Series 1997-A Convertible                             Additional       Accumulated
                     Preferred Stock at par     Common Stock at par     Paid-in Capital      Deficit
                     ----------------------     -------------------     ---------------    -----------
                       Shares    Amount         Shares       Amount
                     ---------- --------        ------       ------
<S>                  <C>         <C>            <C>          <C>          <C>              <C>
Balance,
December 31, 1996        -        -             25,393,368    258,998     239,446,270      (14,308,277)

Net loss                 -        -                 -             -             -           (8,429,046)

Issuance of
  Preferred Shares
  (Note U)           2,737,000   27,370             -             -        65,849,295             -

Preferred dividends                                                                         (1,659,306)

Stock option
  grants (Note P)        -        -                 -             -            22,584             -

Issuance of Common
  Shares (Note U)        -        -             10,490,875    104,909     108,704,101             -

Conversion of Units to
  Common Shares (Note N) -        -                448,863      4,489       4,246,715             -

Stock purchase
  loan, net (Note P)     -        -                 -             -             -                 -

Proceeds from the
  exercise of
  stock warrants         -        -                  1,495         15          17,611             -

Dividends                -        -                 -             -       (23,447,779)            -
                    ---------  -------          ----------      -------- -------------     -----------

Balance,
December 31, 1997   2,737,000  $27,370          36,334,601      $368,411 $394,838,797     $(24,396,629)
                    =========  =======          ==========      ======== ============     ============


<CAPTION>
                            Loan
                         Receivable-    Treasury
                           Officer     Stock at cost   Total
                         -----------  -------------   -----
<S>                       <C>         <C>            <C>
Balance,
December 31, 1996            -        (1,743,075)    223,653,916

Net loss                     -              -         (8,429,046)

Issuance of
  Preferred Shares
  (Note U)                   -              -         65,876,665

Preferred dividends                                   (1,659,306)

Stock option
  grants (Note P)            -              -             22,584

Issuance of Common
  Shares (Note U)            -              -        108,809,010

Conversion of Units to
  Common Shares (Note N)     -              -          4,251,204

Stock purchase
  loan, net (Note P)      (900,000)         -           (900,000)

Proceeds from the
  exercise of
  stock warrants             -              -             17,626

Dividends                    -              -        (23,447,779)
                          ---------   -----------    ------------

Balance,
December 31, 1997        $(900,000)  $(1,743,075)   $368,194,874
                          =========   ===========    ============
</TABLE>

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

                                       F-8

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF
                         CASH FLOWS For the Years Ended
                        December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                     1997                   1996                   1995
                                                ------------            ------------           ------------
<S>                                             <C>                     <C>                    <C>
Operating activities:
    Net income (loss)                           $ (8,429,046)           $(14,308,277)          $ 14,786,042
    Adjustments to reconcile net
       income (loss) to net cash provided
       by operating activities:
          Depreciation and amortization           35,272,775              29,050,960             21,983,582
          Amortization of intangible assets        8,042,554               1,120,640                   -
          Costs associated with Advisor
              Transaction                          2,400,000                    -                      -
          Provision for losses on real
              estate investments                   1,850,000               7,500,000                   -
          Joint venture (income) loss              4,910,021               3,008,587             (1,407,025)
          Distributions received from
              joint venture earnings                    -                       -                 1,407,025
          Gains on sales of assets                (6,454,717)                (58,263)           (15,603,421)
          Non-employee stock options                  22,584                  22,584                   -
          Stock purchase loan forgiveness            100,000                    -                      -
          Amortization of purchase discounts        (144,558)               (511,976)              (535,401)
          Costs associated with the
              refinancing of debt                       -                       -                   253,500
          Minority interest in
              Operating Partnership               (2,153,506)             (1,403,000)               166,587
          Write-off of deferred financing
              costs, net                              24,828                 149,272                647,426
          Amortization of deferred
              financing costs                      1,427,429               1,052,283              1,446,242
          (Increase) decrease in escrows
              and other assets                    (4,242,387)             (2,470,167)             2,550,889
          Increase (decrease) in accrued
              real estate taxes, other
              liabilities and accounts payable     3,461,998               3,952,223               (298,263)
          Increase (decrease) in tenant
              security deposits and
              prepaid rents                        2,444,306                 399,924               (348,768)
                                                ------------            ------------           ------------
                    Net cash provided by
                         operating activities     38,532,281              27,504,790             25,048,415
                                                ------------            ------------           ------------

Investing activities:
    Costs to acquire properties                  (96,589,327)            (37,894,563)           (48,905,137)
    Land acquisition and
       construction-in-progress                  (16,207,482)            (13,512,645)           (18,618,220)
    Proceeds from sales of properties             38,415,017              19,580,079             61,020,687
    Recurring capital expenditures                (4,569,573)             (4,397,131)            (3,166,208)
    Rehabilitation and non-recurring
       capital expenditures                      (15,642,973)            (15,900,996)            (8,389,316)
    Notes receivable                              (7,500,000)                   -                      -
    Distributions from the sale of
       joint venture asset                         7,945,667                    -                      -
    Distributions received from joint
       ventures in excess of earnings              1,481,615               2,644,533              1,491,919
    Contributions to joint venture                (2,150,000)                   -                      -
    Acquisition of mortgage loans                       -                       -               (28,083,544)
    Proceeds from the payoff of
       mortgage loans                                   -                 15,324,802             17,296,112
    Principal collections on MBS                   1,733,674               2,360,929              1,761,562
    Principal collections on mortgage loans        1,903,007               1,039,898                473,976
    Escrows established at acquisition
       of properties                              (4,755,629)             (5,189,961)                49,758
    Cost to acquire workforce and
       intangible assets                            (559,239)               (447,679)                  -
                                                 -----------            ------------           ------------
              Net cash used for
                    investing activities         (96,495,243)            (36,392,734)           (25,068,411)
                                                 -----------            ------------           ------------
                                    Continued

                                       F-9

<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)
              For the Years Ended December 31, 1997, 1996 and 1995


                                                     1997                   1996                    1995
                                                 -----------             -----------            -----------
Financing activities:
    Proceeds from the issuance
      of preferred stock, net of
      discounts and offering costs                65,876,665                    -                      -
    Dividends paid and accrued to
      preferred stockholders                      (1,659,306)                   -                      -
    Proceeds from issuance of
       common stock, net of discounts
      and offering costs                         103,109,010                    -                      -
    Dividends to common shareholders             (23,447,779)            (22,853,892)           (22,599,538)
    Advances under credit agreements              19,400,000              48,970,000             67,140,000
    Payments on credit agreements                (80,115,000)             (8,050,000)           (51,000,000)
    Payment on repurchase agreement               (9,300,000)             (1,650,000)            (1,200,000)
    Proceeds from repurchase agreement                  -                       -                   350,000
    Payment of financing costs                      (501,934)             (1,222,170)            (3,044,443)
    Proceeds from mortgage notes
      payable                                           -                       -                17,800,000
    Principal payments on mortgage notes
       payable                                    (7,760,525)             (8,591,947)            (6,296,501)
    Costs associated with the
       refinancing of debt                              -                       -                  (253,500)
    Proceeds from the exercise of stock
       warrants                                       17,626                   5,884                 10,097
    Distributions to minority interest            (4,812,638)             (1,846,688)              (240,739)
    Contribution from minority interest                 -                       -                     5,000
                                                 -----------             -----------            -----------
          Net cash provided by
               financing activities               60,806,119               4,761,187                670,376
                                                 -----------             -----------            -----------

Net increase (decrease) in cash
  and cash equivalents                             2,843,157              (4,126,757)               650,380

Cash and cash equivalents, beginning
  of year                                          7,015,953              11,142,710             10,492,330
                                                 -----------             -----------            -----------

Cash and cash equivalents, end
  of year                                        $ 9,859,110             $ 7,015,953            $11,142,710
                                                 ===========             ===========            ===========

Supplemental cash flow disclosure:
   Cash paid for interest during year            $24,327,983             $20,143,571            $16,274,850
                                                 ===========             ===========            ===========

   Interest capitalized during year              $   777,159             $   514,258            $   658,480
                                                 ===========             ===========            ===========



                                    Continued

                                      F-10

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)
              For the Years Ended December 31, 1997, 1996 and 1995


Supplemental disclosure of non-cash financing and investing activities:

                                                  1997                    1996                   1995
                                              ------------             ------------           --------

    Property acquisitions                      $(304,798,057)          $(112,964,195)         $ (59,405,137)
    Debt assumed in property
         acquisitions                            165,549,922              53,196,934              5,417,735
    Units issued for property
         acquisitions (Notes E and F)             29,728,045              21,872,698              5,082,265
    Shares issued for property
         acquisitions (Note E)                     4,700,000                       0                      0
    Joint venture distribution
         of property, net                          8,230,763                       0                      0
                                                ------------            ------------           ------------

         Cash to acquire property               $(96,589,327)           $(37,894,563)          $(48,905,137)
                                                ============            ============           =============

    Units issued for intangible
         assets acquired (Notes C and D)        $ 17,637,500            $ 13,000,000           $         -
                                                ============            ============           ============

    Units issued for Advisor
         benchmarks (Note C)                    $  2,400,000            $       -              $         -
                                                ============            ============           ============

    Conversion of Units to Shares               $  4,251,204            $       -              $         -
                                                ============            ============           ============

    Reclassification of construction
         in progress to multifamily
         apartment complexes                    $  1,571,216            $ 10,888,961           $ 22,003,156
                                                ============            ============           ============
</TABLE>


                     The accompanying Notes are an integral
                 part of the Consolidated Financial Statements.

                                      F-11

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A.     Organization

       Berkshire Realty Company, Inc. and Subsidiaries (the "Company") was
       formed on April 26, 1990 by filing a certificate of incorporation in the
       State of Delaware. The Company commenced operations on June 27, 1991, as
       an equity real estate investment trust ("REIT") when the Company
       exchanged 25,097,923 of its shares for the assets, subject to the
       liabilities of two publicly held limited partnerships.

       The Company was restructured to an umbrella partnership real estate
       investment trust ("UPREIT") on May 1, 1995, when the Company's assets,
       subject to liabilities, were transferred to a newly formed subsidiary
       ("Operating Partnership") of which the Company is a Special Limited
       Partner and owns 100% of the stock of Berkshire Apartments, Inc., the
       general partner. Upon transfer of its net assets, the Company was issued
       25,392,452 units of the Operating Partnership ("Units") which was equal
       to the number of shares outstanding on May 1, 1995. The Company incurred
       costs of $1,727,768 as a result of restructuring to an UPREIT which were
       recorded as a non-recurring expense.

       In connection with the organization of the Operating Partnership, on May
       1, 1995, an affiliate of Berkshire Realty Advisors, the Company's former
       Advisor, contributed $5,000 and River Oaks Apartments, subject to
       mortgage debt of $5.4 million at a valuation of $10,500,000. The seller
       received 534,975 Units in the Operating Partnership ("Minority Interest")
       valued at $9.50 per Unit or $5.1 million, in exchange for its interest in
       the property. Under the agreement, the Company may not sell the River
       Oaks Apartments until May 1, 1998. The contribution was accounted for
       using the purchase method. River Oaks is a 17-story, 136-unit,
       multifamily apartment complex located in the River Oaks area of Houston,
       Texas.

       On March 1, 1996, the Company became self-administered when it acquired
       the assembled workforce and other assets of an affiliate of a director of
       the Company, which provided advisory and development services to the
       Company (the "Advisor Transaction"). In exchange for the assets acquired
       the Company issued 1.3 million Units of the Operating Partnership. The
       transaction was valued at $13 million, which together with related costs,
       was recorded as an intangible asset associated with the workforce
       acquired. If certain share price benchmarks are achieved during a
       six-year period, $7.2 million of additional Units may be issued. During
       1997, the $11.00 and $12.00 share price benchmarks were achieved and an
       additional 209,091 Units were issued at a value of $2.4 million. (See
       Note C to the Consolidated Financial Statements).

       Property management services for the Company's multifamily assets were
       performed by an affiliate of certain directors and officers of the
       Company until February 28, 1997 when the Company acquired the established
       workforce and other assets of the affiliated company for 1.7 million
       Units (the "Property Manager" or "Property Manager Transaction"). The
       transaction was valued at $17.6 million (based on a $10.375 share price)
       and was recorded on the balance sheet of the Company as an intangible
       asset associated with the third-party property management contracts and
       the acquisition of a workforce.


                                    Continued

                                      F-12

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

A.     Organization - Continued

       At the time of the acquisition, the Property Manager managed 57 apartment
       communities, including the Company's 35 assets, and employed
       approximately 85 professionals, excluding site employees. As a result of
       this transaction, the Company no longer pays management fees and
       reimbursements for the management operations of its multifamily
       portfolio. In addition, the Company receives management fees and
       reimbursements of certain expenses associated with 22 third-party
       management contracts primarily with partnerships affiliated with certain
       directors and officers of the Company. (See Note D to the Consolidated
       Financial Statements).

       In addition to the three transactions mentioned above, the Company has
       utilized its UPREIT structure to acquire an additional 28 multifamily
       communities since 1995. All UPREIT transactions have increased the
       ownership of the Operating Partnership by minority limited partners to
       16.54% at December 31, 1997 which includes a 12.5% ownership by companies
       affiliated with a director and officers of the Company. The Company
       directly or indirectly owns the remaining 83.46% of the Operating
       Partnership. The Company has several wholly-owned qualifying REIT
       subsidiaries which were formed in connection with the UPREIT transaction
       or for financing purposes and are consolidated in the accompanying
       financial statements.

       The principal business of the Company is the acquisition, renovation,
       rehabilitation, development and operation of multifamily apartment
       communities located in the Mid-Atlantic and Southeast regions of the
       United States and Florida and Texas. As of December 31, 1997, the Company
       owns 65 apartment communities consisting of 18,773 units and also has
       investments in three retail centers, which were sold subsequent to
       December 31, 1997. The Company has approximately 740 multifamily units
       under development and two parcels of land for future development. The
       Company has contracted to acquire three development properties from an
       affiliate of the Questar Partner as a result of the transaction described
       in Note E. The Company also entered into a Development Acquisition
       Agreement with an affiliate of the Questar Partner which granted the
       Company an exclusive right to acquire all apartment projects developed in
       the Mid-Atlantic Region by affiliates of the Questar Partner which meet
       the Company's acquisition and development criteria.

       The Company is authorized to issue up to 140,000,000 shares of common
       stock, $0.01 par value per share ("Shares"). The Company is also
       authorized to issue up to 60,000,000 shares of preferred stock, $0.01 par
       value, which may be issued in multiple classes or series ("Preferred
       Shares"). The Board is authorized to determine the rights, preferences
       and privileges of the preferred stock including the number of shares
       constituting any such series and the designation thereof, without any
       further vote or action by the Shareholders. The Company's outstanding
       shares are publicly traded on the New York Stock Exchange under the
       symbol "BRI". The Company's outstanding common stock warrants are
       publicly traded on the New York Stock Exchange under the symbol "BRI/WS".

       The Company has an infinite life; however the Company's Certificate of
       Incorporation, as amended, requires the Company's Board of Directors (the
       "Board") to prepare and submit a Plan of Liquidation to the Shareholders
       on or before December 31, 1998. The Plan of Liquidation will become
       effective only if approved by shareholders holding a majority of the
       shares then outstanding.

                                    Continued

                                      F-13

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

B.   Significant Accounting Policies

     The Company uses the following accounting policies for financial reporting
     purposes, which may differ in certain respects from those used for federal
     income tax purposes.

     Basis of Presentation

     The accompanying Consolidated Financial Statements include the consolidated
     accounts of the Company, Operating Partnership and the subsidiaries of the
     Operating Partnership.

     All significant intercompany balances have been eliminated in
     consolidation. The Consolidated Financial Statements of the Company have
     been adjusted for the minority interest of unitholders in the Operating
     Partnership.

     Estimates and Assumptions

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amount of assets and liabilities,
     contingent assets and liabilities and revenues and expenses. Actual results
     could differ from those estimates.

     Cash and Cash Equivalents

     The Company includes all short-term investments with maturities of three
     months or less at the date of acquisition in cash and cash equivalents.
     The carrying value of these investments approximated market at December
     31, 1997 and 1996.

     The Company invests its cash primarily in money market funds with
     commercial banks. The Company has not experienced any losses to date on its
     invested cash.

     Escrows

     Escrows include amounts established pursuant to certain debt agreements for
     real estate tax, insurance and capital improvements.

     Real Estate Assets and Depreciation

     Expenditures related to the acquisition, improvement and development of
     real estate assets are capitalized at cost. Upon acquisition of a real
     estate asset, expenditures to remedy deferred maintenance and renovation
     costs are capitalized. Ordinary repairs and maintenance are expensed as
     incurred.

     Depreciation

     Depreciation is computed by using the straight-line method over the
     estimated useful lives of the related assets as follows:

                    Buildings                                    25 years
                    Building improvements                        5 to 25 years
                    Appliances, carpeting and equipment          3 to 8 years


                                    Continued

                                      F-14

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

B.     Significant Accounting Policies - Continued

       Interest Expense and Real Estate Tax Capitalization of Development Assets

       Interest expense and real estate taxes incurred during the construction
       period of assets under development are capitalized until buildings are
       placed in service as evidenced by certificates of occupancy.

       Amortization of Workforce and Other Intangible Assets

       Amortization of the intangible assets acquired related to the Advisor
       Transaction and Property Manager Transaction is calculated using the
       straight-line basis over a period of three to four years.

       Impairment of Long-Lived Assets

       Real estate assets and equipment are stated at depreciated cost. Pursuant
       to Statement of Financial Accounting Standards Opinion No. 121,
       "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
       Assets to be Disposed of", impairment losses are recorded on long-lived
       assets used in operations on a property by property basis, when events
       and circumstances indicate that the assets might be impaired and the
       estimated undiscounted cash flows to be generated by those assets are
       less than the carrying amount of those assets. Upon determination that an
       impairment has occurred, those assets shall be reduced to fair value less
       estimated costs to sell.

       Investments in Unconsolidated Joint Ventures

       Investments in Joint Ventures are accounted for using the equity method
       of accounting as the respective Partnership Agreements require either a
       majority vote (Brookwood) or two thirds majority (Spring Valley) for all
       major decisions regarding the Joint Ventures. As such, the Company does
       not have control of the operation of the underlying assets. Under the
       equity method of accounting, the Company's share of income (loss) of the
       Joint Ventures is included currently in the Company's net income (loss).

       MBS

       MBS are held for long-term investment and therefore are carried at
       amortized cost. Premiums or discounts are amortized over the life of the
       underlying securities using the effective yield method. The Company has
       the intention and ability to hold these to maturity.

       Mortgage Loans

       Discounts on mortgage loans net of acquisition costs are amortized into
       income over the remaining life of the related loans using the effective
       yield method, based on management's estimate of the current facts and
       circumstances and the ultimate ability to collect such loans.

       Rental Revenue

       Residential and commercial leases require the payment of base rent
       monthly in advance. Rental revenues are recorded on the accrual basis.
       Commercial leases generally contain provisions for additional rent based
       on a percentage of tenant sales and other provisions which are also
       recorded on the accrual basis, but are billed in arrears. Minimum rental
       revenue from long-term commercial leases is recognized on a straight-line
       basis over the life of the related lease.

                                    Continued

                                      F-15

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

B.      Significant Accounting Policies - Continued

        Deferred Expenses

        Costs associated with debt financings are capitalized and amortized to
        interest expense over the term of the related agreement using a method
        which approximates the effective interest method. Upon refinancing or
        retirement of debt, any unamortized costs are charged to earnings.

        Interest Rate Swap Agreement

        Swap receipts and payments under interest rate swap agreements
        designated as a hedge are recognized as adjustments to interest expense
        when earned and are reflected as operating activities in the
        Consolidated Statement of Cash Flows. Settlement payments or receipts on
        terminated interest rate swap agreements are deferred and amortized over
        the remaining original period of the swap, as long as the hedged
        borrowing is still outstanding. Settlement payments or receipts on
        terminated interest rate swap agreements are reflected as financing
        activities in the Consolidated Statement of Cash Flows.

        Income Taxes

        The Company has elected to be taxed as a REIT under the Internal Revenue
        Code of 1986, as amended, and believes it will continue to meet all such
        qualifications. Accordingly, the Company will not be subject to federal
        income taxes on amounts distributed to Shareholders provided that it
        distributes annually at least 95% of its REIT taxable income and meets
        certain other requirements for qualifying as a REIT. Therefore, no
        provision for federal income taxes has been recorded in the Consolidated
        Financial Statements. However, the Company is subject to certain state
        income taxes and certain state net worth taxes which have been recorded
        in the Consolidated Statements of Operations.

        Earnings Per Share

        Financial Accounting Standards Board Statement No. 128 ("FAS 128")
        "Earnings Per Share" is effective for financial statements issued for
        periods ending after December 15, 1997, including interim periods. The
        Company has adopted the requirements of this pronouncement for all
        periods presented in its financial statements for the three years ended
        December 31, 1997. FAS 128 specifies the computation, presentation and
        disclosure requirements for net income per share.

        Reclassifications

        Certain prior year balances have been reclassified to conform with
        current year consolidated financial statement presentation.

C.      The Advisor Transaction

        On February 28, 1996, the Board of Directors, acting on the
        recommendation of a Special Committee comprised of the Independent
        Directors, approved the acquisition, via contribution, of the existing
        workforce and other assets of the Advisor in exchange for 1.3 million
        Units which had a value of $13 million. The total acquisition price,
        including professional fees and expenses, has been recorded on the
        Company's balance sheet as intangible assets associated with the
        workforce acquired and is being amortized on a straight-line method over
        a three-year period.

                                    Continued

                                      F-16

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

  C.  The Advisor Transaction - Continued

      The Board's actions were initiated to increase cash flows and to align the
      organization of the Company to be consistent with the structure preferred
      by institutional investors, rating agencies and market analysts.

      Additional Units, up to a total of $7.2 million, may be issued during a
      six-year period if certain share price benchmarks are achieved. The
      benchmarks will be satisfied if the share price of the Company's common
      stock is equal to or greater than the benchmark for any fifteen days
      during any twenty consecutive trading days. There are six share price
      benchmarks beginning at $11.00 and increasing by $1.00 each up to a
      maximum of $16.00. Upon satisfaction of each benchmark, Units equal to
      $1.2 million will be issued. The Company achieved share price benchmarks
      of $11.00 on March 19, 1997 and $12.00 on October 9, 1997 and issued
      109,091 and 100,000 Units, respectively, on those dates. The value of
      additional Units issued during 1997 was $2.4 million and was recorded as
      an expense in the Consolidated Statements of Operations. As of December
      31, 1997, 209,091 additional Units have been issued as a result of
      achieving the share price benchmarks.

      The contribution was completed on March 1, 1996. As of that date, all
      charges and expenses associated with the Advisory Services Agreement
      ceased and the Company became a "self-administered" REIT. The Company
      began incurring general and administrative expenses for its acquired
      management staff including salaries, benefits, and other overhead
      expenses. The Company has outsourced with affiliated companies of a
      director for specific administrative services such as shareholder
      communications, computer systems and support and legal services. (See Note
      O for additional details).

  D.  Property Manager Transaction

      On February 26, 1997, the Board of Directors, acting on the recommendation
      of a Special Committee comprised solely of Independent Directors, approved
      the acquisition of the workforce and other assets of the Property Manager
      which provided multifamily property management services to the Company
      ("Property Manager"). The Property Manager was contributed on February 28,
      1997 in exchange for 1.7 million Units which had a value of approximately
      $17.6 million.

      At the time of the contribution, the Property Manager managed 57 apartment
      communities, including the Company's 35 assets, and employed approximately
      85 professionals, excluding site employees. As a result of this
      transaction, the Company no longer pays management fees and reimbursements
      for the management operations of its multifamily portfolio. In addition,
      the Company receives management fees and reimbursements associated with 22
      third-party management contracts acquired. Those contracts are primarily
      with partnerships affiliated with a director of the Company. Throughout
      1997, the Company engaged an affiliated company to manage its retail
      assets. Subsequent to December 31, 1997, as a result of the sale of the
      Company's remaining retail assets, the management contracts were
      terminated. (See Notes O and V for additional details).

      The Board's actions were initiated to reduce the costs associated with the
      operations of the multifamily portfolio, to generate revenue from
      third-party fee management contracts and to align the organization of the
      Company to be consistent with the structure preferred by institutional
      investors, rating agencies and market analysts.


                                    Continued

                                      F-17

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

  D.  Property Manager Transaction - Continued

      The value of the assets acquired was determined by evaluating the future
      cash flows attributable to the third-party management contracts as well as
      the immediate operating efficiencies obtained through the acquisition of a
      cohesive assembled workforce. Accordingly, the value of the transaction
      was allocated to intangible assets associated with third-party management
      contracts and the workforce acquired. The Company recorded intangible
      assets of $4.4 million based on discounted cash flows from third-party
      property management contracts and $13.2 million based on the value of
      intangible assets associated with the workforce acquired. The acquisition
      price is being amortized on a straight-line method over a three to four
      year period.

  E.  Questar Transaction

      On November 14, 1997, the Company consummated a transaction with the
      Questar Companies ("Questar" or "Questar Partner") whereby it acquired
      eighteen apartment communities (3,699 units) (the "Questar Transaction").
      The Company also contracted to purchase four apartment communities which
      were under development at the time of the transaction. The total purchase
      price of $171.4 million was funded through the assumption of $128.7
      million in debt, the issuance of $19.9 million in Units, $4.7 million in
      common stock and cash of $18.1 million, which was primarily used to pay
      off debt. On the date of the transaction, the Company entered into a
      Development Acquisition Agreement with Questar Builders, Inc. which gives
      the Company the exclusive right to acquire all apartment communities
      developed by Questar Builders, Inc. which meet the Company's acquisition
      and development criteria.

      This acquisition represents the first transaction completed under
      Berkshire's regional partner strategy of merging in the assets and the
      personnel of proven apartment operating companies and then establishing
      them as regional divisions of Berkshire.

      The apartment communities acquired are summarized as follows:

                                                                  Number of
        Property Name                Location                    Apartments
        -------------             ---------------                ----------
        Arborview                   Belcamp, MD                     288
        Calvert's Walk              Belair, MD                      276
        Courtleigh                  Baltimore, MD                   280
        Coventry                    Baltimore, MD                   122
        Diamond Ridge               Baltimore, MD                    92
        The Estates                 Pikesville, MD                  208
        Fairway Ridge               Baltimore, MD                   274
        Hazelcrest                  Baltimore, MD                    48
        Heraldry Square             Baltimore, MD                   270
        Hilltop                     Baltimore, MD                    50
        Jamestowne                  Baltimore, MD                   335
        Kingswood I                 Baltimore, MD                   203
        Kingswood II                Baltimore, MD                   203
        Ridgeview Chase             Westminster, MD                 204
        Rolling Wind                Baltimore, MD                   280
        Stratton Meadows            Baltimore, MD                   268
        Warren Park                 Baltimore, MD                   200
        Williston                   Baltimore, MD                    98
                                                                  -----
                                                                  3,699
                                                                  =====

                                    Continued

                                      F-18

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  F.  Multifamily and Retail Property

      As of December 31, 1997, the Company had investments in 68 properties in
      eight states consisting of 65 multifamily communities having in the
      aggregate 18,773 apartment units and three retail centers, including one
      joint venture, with a total of 639,829 square feet of leasable space.

      The following summarizes the carrying value of the Company's multifamily
      apartment communities, retail centers and property held for sale (dollars
      in thousands):

                                                       December 31,
                                                 ------------------------
                                                   1997            1996
                                                   ----            ----
      Land                                       $108,593        $ 76,525
      Buildings and improvements                  625,748         419,932
      Appliances, carpeting and equipment         125,040          82,971
                                                 --------        --------
      Total multifamily and retail property       859,381         579,428
      Accumulated depreciation and
        valuation provisions                     (129,280)       (106,870)
                                                 --------        --------
                                                 $730,101        $472,558
                                                 ========        ========
      Acquisitions

      On January 1, 1997, the Company acquired Westchester Apartments, a
      345-unit apartment community located in Silver Spring, Maryland, for $16.1
      million. The Company paid cash of $.9 million, assumed debt of
      approximately $11.4 million and issued 388,333 Units with a value of
      approximately $3.8 million. The debt agreement requires monthly principal
      and interest payments based on an interest rate of 8.25% along with
      monthly funding of real estate tax escrows.

      On May 13, 1997, in conjunction with the exchange of Brookwood Village, a
      retail asset held in joint venture, the Company acquired Berkshire West
      Apartments and Sun Chase Apartments for an aggregate value of
      approximately $13.9 million. Berkshire West is a 200-unit garden style
      apartment community located in Winter Garden, Florida, a suburb of
      Orlando. In conjunction with the acquisition of this asset, the Company
      assumed $5.7 million in debt which matures in December, 2003. The debt
      agreement requires monthly principal and interest payments at a rate of
      7.45% along with monthly real estate tax escrow funding. Sun Chase is a
      168-unit garden style apartment community located in Bradenton, Florida.

      In the third quarter of 1997, the Company acquired four multifamily
      apartment communities for approximately $29.5 million. The Company paid
      cash of approximately $1 million, assumed debt of approximately $19.8
      million and issued 582,921 Units and 189,332 Shares with a combined value
      of approximately $8.7 million. The mortgage notes require monthly
      installments of principal and interest and mature at various dates through
      2023. Interest rates on the notes are at 7.5%. The apartment communities
      acquired are summarized as follows:

                              Date of                                   Number
        Property Name       Acquisition             Location           of Units
        -------------       -----------          -----------------     --------
        The Cove               7/22/97           Glen Burnie, MD          181
        The Channel            7/22/97           Glen Burnie, MD          120
        Harper's Mill          7/22/97           Millersville, MD         144
        The Lighthouse         9/22/97           Glen Burnie, MD          168
                                                                          ---
                                                                          613
                                                                          ===

                                    Continued

                                      F-19

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  F.    Multifamily and Retail Property - Continued

        On September 26, 1997, the Company acquired four multifamily apartment
        communities for a cash purchase price of approximately $60.3 million.
        The apartment communities which were acquired are summarized as follows:

                                                                         Number
        Property Name                   Location                        of Units
        -------------                   --------                        --------
        Huntington Lakes                Dallas, TX                         405
        Huntington Brook                Dallas, TX                         320
        Huntington Ridge                Irving, TX                         232
        Sweetwater Ranch                Richardson, TX                     312
                                                                         -----
                                                                         1,269
                                                                         =====

        On September 29, 1997, the Company acquired Summer Place Apartments for
        a cash purchase price of $7 million. Summer Place is a 212-unit
        apartment community located in Addison, Texas.

        Development

        In the first quarter of 1997, the Company completed the construction of
        Berkshires at Brookfield, a 96-unit apartment complex which has been
        combined with Brookfield Trace, an existing apartment community in
        Mauldin (Greenville), South Carolina. The total cost of construction was
        approximately $6.7 million. The values of the 24 apartment units
        completed in 1997 and the 72 apartment units completed in 1996 were
        transferred to multifamily assets on the Consolidated Balance Sheets as
        of December 31, 1997 and 1996, respectively.

        On December 15, 1997, the Company acquired Liriope Apartments, an
        84-unit apartment community located in Belcamp, Maryland, for
        approximately $7.6 million in cash. The property was purchased from an
        affiliate of Questar Builders, Inc. as a result of the Questar
        Transaction. (See Note E for additional details).

        In the fourth quarter of 1996, the Company began construction of Crooked
        Creek Apartments, a 296-unit apartment community in Durham, North
        Carolina. The total cost of the project is currently estimated to be
        approximately $20.2 million. Approximately $8.6 million of construction
        costs had been incurred as of December 31, 1997. The estimated cost to
        complete construction is approximately $11.6 million as of December 31,
        1997.

        In January, 1997, the Company purchased a parcel of land in Greenville,
        South Carolina for approximately $3 million for the development of a
        planned 500-unit apartment community.

        In December, 1997, the Company purchased a 60-acre parcel of land in
        Atlanta, Georgia for approximately $5.8 million for the planned initial
        development of approximately 440 apartment units. Construction is
        expected to begin in the third quarter of 1998.

        The Company also owns two other parcels of land, one located in Dallas,
        Texas, which is under contract for sale, and another located in
        Greenville, South Carolina. Development plans are under consideration
        for this site.


                                    Continued

                                      F-20

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  F.    Multifamily and Retail Property - Continued

        As a result of the Questar Transaction, the Company has contracted to
        acquire three additional properties from Questar Builders, Inc. which
        were in various stages of development as of December 31, 1997. The
        developments are summarized as follows:

                                            Planned   Estimated
                                           Apartment     Total
          Property       Location            Units    Investment
          --------       --------          ---------  ----------
                                                     (in thousands)

           Granite Run   Baltimore, MD          264      $25,500
           Avalon I      Pikesville, MD         258       25,900
           Avalon II     Pikesville, MD         147       15,400
                                                ---      -------

           Total                                669      $66,800
                                                ===      =======

        On November 14, 1997, the Company entered into a Development Acquisition
        Agreement with Questar Builders, Inc. which granted the Company an
        exclusive right to acquire all apartment projects developed in the
        Mid-Atlantic Region by Questar Builders, Inc. which meet the Company's
        acquisition and development criteria.

        Dispositions

        On January 15, 1997, the Company sold Howell Commons Apartments, a
        348-unit apartment community located in Greenville, South Carolina for
        $13.0 million. The property had a depreciated cost basis of
        approximately $6.5 million which, after closing costs, resulted in a
        gain on sale of approximately $6.5 million.

        On March 25, 1997, the Company sold Banks Crossing, a 243,660 square
        foot retail center in Fayetteville, Georgia, for approximately $13.8
        million which was its carrying value.

        On May 13, 1997, as mentioned above, the Company and its joint venture
        partner exchanged Brookwood Village in conjunction with the acquisition
        of Berkshire West and Sun Chase. Brookwood Village Joint Venture
        recognized a loss on the sale of approximately $722,000 of which
        approximately $361,000 was the Company's pro-rata share.

        On August 6, 1997, the Company sold Crossroads Shopping Center, a
        211,186 square foot retail center located in Atlanta, Georgia, for
        approximately $12 million which was its carrying value.

        Impairment of Long-Lived Assets

        The Company's strategic decision to divest of its retail portfolio over
        time and reinvest proceeds into multifamily assets has necessitated the
        recognition of impairment losses on the Company's retail assets in
        accordance with Statement of Financial Accounting Standards Opinion No.
        121, "Accounting for the Impairment of Long-Lived Assets and for
        Long-Lived Assets to be Disposed Of". The Company has reclassified its
        wholly-owned centers to assets held for sale and recorded provisions for
        losses which represent the difference between carrying value and
        estimated fair value less costs to sell. The Company's share of
        provisions for losses recorded in its Consolidated Statements of
        Operations related to its wholly-owned and joint venture owned retail
        assets totaled $7.2 million and $12.0 million for the years ended
        December 31, 1997 and 1996, respectively.

                                    Continued

                                      F-21

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        Impairment of Long-Lived Assets - Continued

        The Company's share of valuation reserves recorded on its Consolidated
        Balance Sheets related to its wholly-owned and joint venture retail
        assets totaled $7.5 million and $12.0 million as of December 31, 1997
        and 1996, respectively. During 1997, and subsequent to year end, the
        Company sold its remaining retail assets, including the remaining joint
        venture investments. (See Note V for additional details).

  G.    Investments in Unconsolidated Joint Ventures

        As of December 31, 1996, the Company had a 50% interest in Brookwood
        Village Joint Venture and a 50.1% interest in Spring Valley Partnership
        (collectively, the "Joint Ventures"). On May 13, 1997, Brookwood Village
        Joint Venture exchanged Brookwood Village for two multifamily properties
        and cash. (See Note F for additional details).




                                    Continued

                                      F-22

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  G.    Investments in Unconsolidated Joint Ventures - Continued

        Condensed combined financial statements for the Joint Ventures are as
        follows:

                        CONDENSED COMBINED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996

                                     ASSETS
                                                    1997              1996
                                               ------------      ---------

        Property at cost                       $ 54,036,202      $114,358,875
        Less accumulated depreciation           (24,936,202)      (40,173,598)
                                               ------------      ------------
        Total real estate assets                 29,100,000        74,185,277
        Other assets                              2,897,655         2,774,699
                                               ------------      ------------
        Total assets                           $ 31,997,655      $ 76,959,976
                                               ============      ============


                        LIABILITIES AND PARTNERS' EQUITY

        Liabilities                               $    711,270   $  4,858,639
                                                  ------------   ------------

        Partners' equity:
          The Company                               15,618,657     36,036,723
          Joint venture partner                     15,667,728     36,064,614
                                                  ------------   ------------
          Total partners' equity                    31,286,385     72,101,337
                                                  ------------   ------------
          Total liabilities and partners' equity  $ 31,997,655   $ 76,959,976
                                                  ============   ============


                   CONDENSED COMBINED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                1997            1996            1995
                                            ------------    ------------    --------
        <S>                                 <C>             <C>             <C>

        Revenue                             $  9,221,901    $ 13,118,356    $ 12,873,159
        Property operating expenses           (4,756,376)     (6,214,033)     (5,912,347)
        Depreciation                          (2,798,220)     (3,925,146)     (4,150,399)
        Provision for loss                   (10,749,529)     (9,000,000)           -
        Loss on sale                            (721,760)           -               -
                                            ------------    ------------    ---------
        Net income (loss)                   $ (9,803,984)   $ (6,020,823)   $  2,810,413
                                            ============    ============    ============

        Allocation of net income (loss):
              The Company                   $ (4,910,021)   $ (3,008,587)   $  1,407,025
              Joint venture partner           (4,893,963)     (3,012,236)      1,403,388
                                            ------------    ------------    ------------
                                            $ (9,803,984)   $ (6,020,823)   $  2,810,413
                                            ============    ============    ============
</TABLE>

      Pursuant to Statement of Financial Accounting Standards Opinion No. 121
      "Accounting for the Improvement of Long-Lived Assets and for Long-Lived
      Assets to be Disposed Of" impairment losses were recognized on the
      Company's joint venture assets. In 1997, Brookwood Village and Spring
      Valley recorded provisions for losses of $1,472,096 and $9,277,433,
      respectively, which represented the difference between carrying value and
      estimated fair value less costs to sell. In 1996, Brookwood Village
      recorded a provision for loss of $9,000,000.


                                    Continued

                                      F-23

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

  H.  Mortgage Loan Receivable

      The Company held a mortgage loan which had a carrying value of
      approximately $2,323,000 and $2,268,000 as of December 31, 1997 and 1996,
      respectively. The mortgage loan is collateralized by a 120-unit apartment
      complex in Palm Bay, Florida and requires monthly principal and interest
      payments of $23,518 based on a 23-year amortization and a 7% interest
      rate. The mortgage loan matures January 27, 2002 when a balloon payment of
      $2,552,673 will be due. The principal balance of the mortgage loan was
      approximately $2,939,000 and $3,016,000 at December 31, 1997 and 1996,
      respectively.

  I.  Notes Receivable

      On November 14, 1997 ("Funding Date"), a promissory note in the amount of
      $7,500,000 was issued by GGC, L.L.C. to the Company as a result of the
      Questar Transaction. The note requires interest payments at an annual rate
      of 11.39% commencing on December 1, 1997, and continuing until the
      outstanding balance is paid in full. A principal payment in the amount of
      $3,750,000, together with all accrued interest and other charges, will be
      due and payable on the third anniversary of the Funding Date. The
      remaining principal balance and accrued interest and other charges will be
      due and payable on the fifth anniversary of the Funding Date. A portion of
      the Units and Shares received by the borrowers as a result of the Questar
      Transaction have been pledged as collateral for the promissory note. At
      December 31, 1996, the Company also held a promissory note which had a
      principal balance of approximately $1,826,000. During the third quarter of
      1997, the outstanding principal balance of the promissory note was paid in
      full.

  J.  Mortgage-Backed Securities (MBS)

      At December 31, 1997, the Company's MBS portfolio had an approximate
      market value of $8,012,000 with unrealized gains of $500,000. The market
      value of the MBS portfolio at December 31, 1996 was approximately
      $9,849,000 with unrealized gains of approximately $616,000. At December
      31, 1997 and 1996, the MBS portfolio's cost basis was $7,511,789 and
      $9,232,956 with a face value of $7,560,583 and $9,294,121, respectively.
      The portfolio consists of Federal Home Loan Mortgage Corporation
      securities with coupon rates ranging from 8.0% to 9.75% per annum maturing
      in the years 2008 through 2021 and a Federal National Mortgage Association
      security with a coupon rate of 9% per annum maturing in 2024. The Company
      has the intention and ability to hold these to maturity.

  K.  Credit Agreements

      At December 31, 1997, the Company had two lines of credit to provide
      funding for future development, acquisitions and general business
      activities. One credit agreement is a master credit facility ("Credit
      Facility") with the Federal National Mortgage Association ("FNMA"). The
      commitment under this interest only Credit Facility, which is
      collateralized by multifamily assets, is for a maximum amount of $100
      million, of which $63,345,000 has a fixed interest rate ("Base") and
      $36,655,000 is a revolving component ("Revolver"), such Revolver expiring
      in November, 2000. The Company can borrow up to the value of the assets
      pledged as collateral.

      As of December 31, 1997 and 1996, the Company has pledged thirteen
      apartment communities as collateral under the Credit Facility which
      provided a borrowing base of $92,310,000 as of those dates. The borrowings
      under the Credit Facility at December 31, 1997 were as follows:


                                    Continued

                                      F-24

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  K.  Credit Agreements - Continued

                              Maturity         Interest
          Borrowings            Date             Rate               Amount
          ----------          --------         --------          -----------
          Base - Fixed        11/20/05            7.00%          $50,000,000
          Base - Fixed        09/20/03            7.54%           13,345,000
                                                                 -----------
                                                                 $63,345,000
                                                                 ===========

      The Company also had a credit agreement ("Credit Agreement") with two
      commercial banks. The commitment of a maximum amount of $49.5 million had
      an interest rate set at 150 basis points over LIBOR. The Company pledged
      multifamily and retail assets as collateral under the Credit Agreement
      which provided a borrowing base of $33,632,500 and $43,750,000 as of
      December 31, 1997 and 1996, respectively. The Company's borrowings under
      the Credit Agreement totaled $12.0 million at December 31, 1997 and had a
      contract interest rate of 7.125%. The Credit Agreement expired on December
      31, 1997. Subsequent to December 31, 1997, the Company obtained and closed
      a commitment for a $130 million unsecured revolving line of credit which
      replaced the Credit Agreement. (See Note V for additional details).

      In November, 1995, the Company entered into a five-year interest rate swap
      contract with a bank as counterparty in order to hedge against variable
      interest rate debt. Pursuant to the swap contract, the Company will pay
      6.06% on a $40 million notional amount and will receive LIBOR (based on 90
      day contracts). The swap arrangement is intended to protect the Company
      from significant interest rate exposure on its revolving facilities. The
      current swap amount will cover anticipated borrowing levels under variable
      rate borrowings in the near term. The Company plans to continually
      reassess its interest rate exposure relative to its debt levels and will
      execute additional interest rate protection as circumstances dictate to
      the extent such protection is available on commercially reasonable terms.

      The weighted average interest rate on the Company's variable rate debt was
      6.62% for the year ended December 31, 1997.

      The following summarizes the Company's Credit Facility and Credit
      Agreement at December 31, 1997 and 1996.

                                         As of December 31,
                        --------------------------------------------------------
                                   1997                         1996
                        -------------------------------------------------------
                        Outstanding     Commitment    Outstanding   Commitment
                        -----------    ------------   -----------  -------------

      Credit Agreement  $12,000,000    $ 49,450,000   $ 43,750,000 $ 49,450,000
      Credit Facility    63,345,000     100,000,000     92,310,000  100,000,000
                        -----------    ------------   ------------ ------------
                        $75,345,000    $149,450,000   $136,060,000 $149,450,000
                        ===========    ============   ============ ============


      Credit Facility and Credit Agreement borrowings averaged $51,651,397,
      $122,168,671 and $74,039,637 during the years ended December 31, 1997,
      1996 and 1995, respectively, and the maximum amount outstanding at any
      month-end during fiscal years 1997, 1996 and 1995 was $144,110,000. The
      weighted average interest rates of these borrowings were 6.84%, 6.87% and
      8.10% during the years ended December 31, 1997, 1996 and 1995,
      respectively.

                                    Continued

                                      F-25

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

  K.  Credit Agreements, Continued

      The Credit Facility and Credit Agreement require the Company to be in
      compliance with certain debt covenants. Two of the more restrictive
      covenants include the requirement to maintain interest coverage ratios of
      2 1/4 to 1 and total liability to total assets of not more than 50%. The
      Company was in compliance with all covenants as of December 31, 1997 and
      1996.

  L.  Mortgage Notes Payable

      The following table sets forth certain information regarding the mortgage
      notes payable at December 31, 1997:

<TABLE>
<CAPTION>
                                                                                          Principal
       Apartment                                          Interest      Maturity           Balance
       Communities               Location                   Rate         Date           As of 12/31/97
       -----------               --------                 --------      --------        --------------
       <S>                       <C>                       <C>           <C>            <C>
       Conventional Fixed Rate

       Altamonte Bay Club         Altamonte Springs, FL    8.34%         4/1/2001       $  4,024,551
       Huntington Chase           Norcross, GA             8.34%         4/1/2001          8,039,668
       Newport                    Tampa, FL                8.34%         4/1/2001          3,650,175
       The Timbers                Charlotte, NC            8.34%         4/1/2001          6,458,001
       Avalon on Abernathy        Atlanta, GA              8.45%         6/1/2001          5,421,483
       East Lake                  Charlotte, NC            8.45%         6/1/2001          2,853,412
       Southpointe                Massapequa, NY           8.45%         6/1/2001          5,041,028
       Huntington Downs           Greenville, SC           8.45%         7/1/2001          8,829,204
       Lakes of Jacaranda         Plantation, FL           8.45%         7/1/2001          7,886,279
       Kings Crossing             Kingwood, TX             8.45%         7/1/2005          8,793,213
       Kingwood Lakes             Kingwood, TX             8.45%         7/1/2005          8,406,698
       Golf Side                  Fort Worth, TX           7.695%       11/1/2005          5,683,295
       Berkshire Towers           Silver Spring, MD        7.625%        4/1/2029         35,107,356
       Westchester West           Silver Spring, MD        8.25%         3/1/2001         11,158,070
       Berkshire West             Winter Garden, FL        7.45%        11/1/2005          5,634,136
       The Cove                   Glen Burnie, MD          7.50%         7/1/2023          6,532,489
       The Channel                Glen Burnie, MD          7.50%         4/1/2018          2,292,430
       The Lighthouse             Glen Burnie, MD          7.50%        12/1/2022          5,276,360
       Harper's Mill              Millersville, MD         7.50%         1/1/2021          3,449,300
       Stratton Meadows           Baltimore, MD            7.54%         2/1/2030         12,412,791
       The Estates                Pikesville, MD           7.43%        11/1/2006         11,578,526
       Arborview                  Belcamp, MD              7.84%         1/1/2034         16,613,595
       Calvert's Walk             Belair, MD               7.59%         4/1/2029         14,227,335
       Rollingwind                Baltimore, MD            7.72%         2/1/2035         18,270,474
       Coventry                   Baltimore, MD            6.52%         4/1/2026          4,424,638
       Courtleigh                 Baltimore, MD            6.37%         7/1/2028         11,806,895
       Fairway Ridge              Baltimore, MD            8.11%        12/1/2006          6,087,586
       Kingswood I                Baltimore, MD            8.04%        11/1/2006          5,922,959
       Kingswood II               Baltimore, MD            8.11%        11/1/2006          5,989,365
       Warren Park                Baltimore, MD            8.04%        11/1/2006          5,054,734
       Hazelcrest                 Baltimore, MD            8.04%        11/1/2006            817,678
       Heraldry Square            Baltimore, MD            8.11%        11/1/2006          7,928,995
       Jamestown                  Baltimore, MD            9.50%        11/1/2004          5,608,842
       Williston                  Baltimore, MD            9.50%        11/1/2004          1,815,923
                                                                                        ------------

                                                                                        $273,097,484
                                                                                        ============
</TABLE>





                                    Continued

                                      F-26

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  L.  Mortgage Notes Payable, Continued

<TABLE>
<CAPTION>
                                                                                           Principal
       Apartment                                        Interest        Maturity             Balance
      Communities                 Location                Rate            Date           as of 12/31/97
      -----------                 --------              --------        --------         --------------
       <S>                        <C>                      <C>          <C>              <C>

       Tax Exempt

       Prescott Place II          Dallas, TX               5.95%(1)     12/5/2003        $  6,048,461
       Plantation Colony          Plantation, FL           7.13%         9/1/2004           9,419,059
       Park Colony and            Hollywood, FL
       Woodland Meadows           Tamarac, FL              6.41%         4/1/2002          16,900,000
                                                                                         ------------

                                                                                         $ 32,367,520
                                                                                         ============
</TABLE>

      (1)  This interest rate is calculated at 70% of the prime rate as
           published by the bank and in effect on June 15 and December 15 to be
           effective for the six months thereafter.

      The aggregate scheduled principal amounts of long-term borrowings due
      during the five years 1998 through 2002 and thereafter are $3,642,260,
      $3,974,260, $4,274,038, $64,514,471, $19,204,346 and $209,855,629,
      respectively.

      In the event of a mortgage prepayment, certain mortgage agreements may
      require a prepayment penalty.

      On September 30, 1997, the Company paid off a mortgage note collateralized
      by Hunters Glen Apartments, a property currently owned by the Company,
      which had a principal balance of $5.5 million on the payoff date. The
      mortgage note had an interest rate of 9% and had a maturity date of March,
      2000. The mortgage note required a prepayment premium and the payoff
      resulted in a loss of $90,345, net of minority interest, which was
      recorded as an extraordinary item in the Consolidated Statement of
      Operations.

  M.  Repurchase Agreement

      On January 9, 1992, the Company negotiated a Master Repurchase Agreement
      with CS First Boston which allowed for short-term borrowings
      collateralized by MBS. The balance outstanding at December 31, 1996 was
      $9,300,000 at an interest rate of 5.70%. On November 14, 1997, the Company
      paid off the then outstanding balance of $8,000,000.

      Master Repurchase Agreement borrowings averaged $7,382,466, $10,201,644
      and $11,534,795 during the years ended December 31, 1997, 1996 and 1995,
      respectively, and the maximum amounts outstanding at any month-end during
      fiscal 1997, 1996 and 1995 were $9,300,000, $10,950,000 and $11,800,000,
      respectively. The weighted average interest rates of these agreements were
      5.66%, 5.85% and 6.24% during the years ended December 31, 1997, 1996 and
      1995, respectively.


                                    Continued

                                      F-27

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  N.    Minority Interest

        Holders of Units generally receive distributions per Unit equal to the
        dividend per Share paid in respect of common stock of the Company.
        Minority interest in the Operating Partnership consists of the following
        at December 31, 1997 and 1996 (dollars in thousands):

                                                     1997            1996
                                                     ----            ----
        Balance, beginning of year                $36,609         $ 5,000
        Value of Units Issued to
              Minority Unitholders:
                 Affiliated Parties                20,038          29,435
                 Unrelated Parties                 29,728           5,438
                 Units Converted to Shares         (4,252)          -
        Distribution to Unitholders                (4,813)         (1,846)
        Minority interest loss allocation          (2,173)         (1,418)
                                                  -------         -------
        Balance, end of year                      $75,137         $36,609
                                                  =======         =======

        At the option of the Company, as specified in the Partnership Agreement,
        Units may be either exchanged for an equal number of Shares of the
        Company's common stock or redeemed for cash.

        There were 7,199,661 and 3,413,778 Units in the Operating Partnership
        outstanding as of December 31, 1997 and 1996, respectively.

  O.    Related Party Transactions

        As a result of the acquisition of the Property Manager as described in
        Note D, effective March 1, 1997, the Company no longer reimburses an
        affiliate for services related to multifamily property operations.
        Throughout 1997, the Company engaged an affiliated company to manage its
        retail assets. Subsequent to December 31, 1997, as a result of the sale
        of the Company's remaining retail assets, the management contracts were
        terminated.

        Prior to March 1, 1997, the Company contracted with an affiliate of
        certain officers and directors for services as management agent to the
        Company's properties. Such agreements provided for property management
        fees payable monthly at the rate of 5% of the gross receipts from
        residential properties and 6% of gross receipts for retail properties
        under management. The affiliate was also entitled to reimbursements for
        certain expenses incurred in connection with the operation of the
        multifamily properties including accounting, computer support, risk
        management, real estate tax services and administration.

        The Company has an agreement with an affiliate of a director whereby the
        affiliate and the Company have contracted to provide certain
        administrative services on each other's behalf. Pursuant to the
        agreement, the affiliate provides services related to computer systems
        support, legal, investor records and office administration and the
        Company provides human resources, insurance and real estate tax support.

        The following is a summary of fees and reimbursements paid or accrued to
        an affiliate for the years ended December 31:

                                              1997         1996        1995
                                              ----         ----        ----
        Cost reimbursements related
           to the operation of the
           Company's properties          $  254,615     $1,666,695  $1,315,960
        Fees and reimbursements for
           administrative services, net  $1,324,263     $  740,273  $  629,270

                                    Continued

                                      F-28

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  O.    Related Party Transactions - Continued

        As a result of the Property Manager Transaction, the Company receives
        property management fees and expense reimbursements associated with the
        third-party management contracts acquired. These contracts are primarily
        with partnerships affiliated with a director of the Company. The Company
        earned approximately $2,763,000 related to affiliated third-party
        management contracts for the year ended December 31, 1997.

        As discussed in Note I, the Company has a promissory note receivable
        with an affiliate of an officer of the Company. The Company recorded
        interest income related to the promissory note receivable of
        approximately $112,000 for the year ended December 31, 1997.

        As a result of the Questar Transaction, the Company executed a five-year
        lease with an affiliate of an officer of the Company for approximately
        6,900 square feet of space at an annual gross rent of approximately
        $140,000. The Company incurred rent expense related to the lease
        agreement of approximately $18,000 for the year ended December 31, 1997.

        As discussed in Note P, the Company granted a stock purchase plan to the
        President of the Company. In accordance with the provisions of the loan,
        $100,000 of the loan principal balance was forgiven during 1997. The
        forgiven amount was recorded as an expense in the Consolidated
        Statements of Operations. The unpaid principal balance of the loan was
        $900,000 as of December 31, 1997.

  P.    Benefit Plans

        Stock Option Plan

        On February 8, 1996 the Board of Directors of the Company adopted the
        1996 Stock Option Plan, (the "Plan"). The Plan provides for grants to
        certain employees, non-employee directors and consultants of the
        Company. Awards are administered by the Compensation Committee which is
        comprised of at least two independent directors appointed by the Board
        of the Directors. There are 1,500,000 shares of common stock authorized
        for non-qualified and incentive stock option grants under the Plan. The
        Plan will continue in effect until all shares of stock subject to
        options have been acquired or until May 1, 2001, whichever is earlier.
        However, unexercised options will continue in effect after the
        termination of the Plan. Options currently granted have a 0-3 year
        vesting period.

        In October 1995, the FASB issued Statement of Financial Accounting
        Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
        Compensation," effective for periods beginning after December 15, 1995.
        SFAS 123 requires that companies either recognize compensation expense
        for grants of stock, stock options, and other equity instruments based
        on fair value, or provide pro-forma disclosure of net income and
        earnings per share, adjusted to reflect the effect of compensation
        expenses, in the notes to the financial statements. The Company adopted
        the disclosure provisions of SFAS 123 in 1997 and 1996 and has applied
        APB Opinion No. 25 and related Interpretations in accounting for the
        Plan. Accordingly, compensation expense of approximately $22,000 was
        recognized for the years ended December 31, 1997 and 1996 for the
        options issued to a consultant of the Company. Had compensation expense
        for the Plan been determined based on the fair value of all the options
        calculated in accordance with SFAS 123, the Company's net loss and
        earnings per share for the years ended December 31, 1997 and 1996 would
        have been adjusted to the pro-forma amounts indicated below (unaudited):

                                    Continued

                                      F-29

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  P.    Benefit Plans - Continued

                                  1997                          1996
                       ----------------------------    -------------------------
                                         Earnings                      Earnings
                          Net Loss      Per Common        Net Loss    Per Common
                         Per Common        Share         Per Common     Share
                       --------------- ------------    -------------  ----------
                          (Basic)        (Basic)          (Basic)      (Basic)

        As Reported    ($10,088,352)       $(.37)      ($14,308,277)      $(.56)
        Pro-Forma*     ($10,340,811)       $(.38)      ($14,745,759)      $(.58)

        * The pro-forma effect of compensation costs determined using the fair
        value based method are not indicative of future amounts.

        The fair value of each option is estimated on the date of grant using
        the Black-Scholes option-pricing model with the following weighted
        average assumptions: for 1997 an expected life of 4.75 years, expected
        volatility of 17.00%, a dividend yield of 8.1% and a risk free interest
        rate of 6.36% and for 1996 an expected life of 3 years, expected
        volatility of 20%, a dividend yield of 9.1% and a risk free interest
        rate of 5.65%.

        A summary of the status of the Plan and changes during the year are
        presented below:

<TABLE>
<CAPTION>
                                                                     Weighted Average
                                                Shares               Exercise Price
                                        ---------------------      ---------------
                                           1997         1996              1997          1996
                                        ---------    ---------          -------       ------
        <S>                             <C>            <C>              <C>            <C>
        Outstanding at beginning
           of the year                    624,000         -             $ 9.90           -
        Granted                           536,300      624,000           10.99         $9.90
        Exercised                            -            -                -             -
        Forfeited/Expired                 (25,800)        -             (10.73)          -
                                        ---------      -------          ------         -----
        Outstanding at end
           of the year                  1,134,500      624,000          $10.38         $9.90
                                        =========      =======          ======         =====
        Options exercisable
           at year-end                    784,000      568,000          $10.15         $9.86
                                        =========      =======          ======         =====

        Weighted average fair value
           of options granted during
           the year                          $.86         $.74
                                             ====         ====
</TABLE>

        The following table summarizes information about options granted for the
        following years:

<TABLE>
<CAPTION>
                                                              Remaining
                 Range of                  Options           Contractual            Weighted Average
             Exercise Prices              Granted                Life                Exercise Price
             ---------------             ---------           -----------             --------------
  <S>         <C>                         <C>                  <C>                      <C>
  1997        $10.75-$11.00               536,300              9.3 years                $10.99
  1996        $ 9.75-$10.25               624,000              8.4 years                $ 9.90
</TABLE>

        Stock Purchase Loan

        On February 28, 1997, the Board of Directors approved a $1 million Stock
        Purchase Loan for the President and Chief Executive Officer of the
        Company. On March 4, 1997, the loan proceeds were used to purchase
        86,956 Shares of the Company's stock at $11.50 per Share.

        The terms of the loan provide for, among other things, an interest rate
        of 7.8% per year payable quarterly and an annual forgiveness feature of
        5% of

                                    Continued

                                      F-30

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  P.  Benefit Plans - Continued

      the original principal so long as the President is employed. Additional
      annual forgiveness of up to another 5% may be granted if certain Company
      performance measures are met. The maximum forgiveness in any one year is
      10%. If the President terminates his employment, the loan is due and
      payable six months from the date of termination. However, in the event of
      a change of control of the Company, as defined, any then outstanding
      principal and interest due shall be forgiven.

      Subsequent to December 31, 1997, the Board of Directors approved three
      additional Stock Purchase Loans, each in the amount of $500,000, for three
      senior executive officers of the Company. The loan proceeds were used to
      purchase 126,984 Shares of the Company's stock. The terms of the loans are
      similar to those of the President's stock purchase loan.

      Employee Retirement Savings Plan

      The Company implemented a defined contribution plan in 1996 pursuant to
      Section 401(k) of the Internal Revenue Code which covers all employees'
      contributions up to a maximum of 3% of each employee's compensation for
      all employees with one year or greater service. Aggregate contributions of
      approximately $489,000 and $195,000 were made for the years ended December
      31, 1997 and 1996, respectively.

  Q.  Commitments and Contingencies

      Litigation

      The Company is involved in legal actions and claims in the ordinary course
      of its business. It is the opinion of management and its legal counsel,
      that such litigation and claims should be resolved without material effect
      on the Company's financial position or results from operations.

      Development

      The estimated cost to complete the development project underway in Durham,
      North Carolina was $11.6 million as of December 31, 1997. The Company has
      a construction loan with two commercial banks to fund the development. The
      commitment of $13,100,000 was collateralized by multifamily and retail
      assets at December 31, 1997. The agreement requires monthly interest
      payments at a variable rate set at 150 basis points over LIBOR (7.47% at
      December 31, 1997). The outstanding principal balance will be due June 30,
      1999. The outstanding balance of $316,786 at December 31, 1997 was
      included in other liabilities. As discussed in Note F, the Company also
      has contracts to acquire three properties from Questar Builders, Inc.
      which were in various stages of development as of December 31, 1997.

      Employment Agreements

      The Company has employment agreements with certain officers which have
      expiration dates which range from December, 1998 to November, 2002. In the
      event any of the employment agreements are terminated, certain termination
      and severance payments are required.


                                    Continued

                                      F-31

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  R.  Earnings Per Share

      In accordance with Financial Accounting Standards Board Statement No. 128,
      "Earnings Per Share", the Company has presented basic and diluted net
      income per share on the Consolidated Statement of Operations. The net
      income and weighted average shares used in the calculations are presented
      below:

<TABLE>
<CAPTION>
                                                  1997             1996            1995
                                              ------------     ------------    --------
      <S>                                     <C>              <C>              <C>
      Earnings per common share (basic):
        Net income (loss) allocated
          to common shareholders
          (Numerator)                         $(10,088,352)    $(14,308,277)    $14,786,042
                                              ============     ============     ===========

        Weighted average shares
          (Denominator)                         27,099,522       25,393,147      25,392,621
                                                ==========       ==========     ===========

      Earnings per common share (diluted):
        Net income (loss) allocated
          to common shareholders
          (Numerator)                         $(10,088,352)    $(14,308,277)    $14,939,930
                                              ============     ============     ===========

        Weighted average shares
          (Denominator)                         27,099,522       25,393,147      25,751,714
                                                ==========       ==========     ===========
</TABLE>

      Options, warrants, preferred stock and Units of 1,134,500, 2,996,800,
      2,737,000 and 7,199,661, respectively, were outstanding at December 31,
      1997. Options, warrants, and Units of 624,000, 2,998,057 and 3,413,778,
      respectively, were outstanding at December 31, 1996. These securities were
      not included in the computation of diluted earnings per share for the
      years ended December 31, 1997 and 1996 because the effects of these
      securities were antidilutive in the computations.

      Warrants and Units of 2,998,474 and 534,975, respectively, were
      outstanding for the year ended December 31, 1995. The Units were included
      in the computation of diluted earnings per share for the year ended
      December 31, 1995 because the effects of these securities were dilutive.
      The reconciliation of basic and diluted income and weighted average shares
      used for the earnings per share calculation for the year ended December
      31, 1995 is presented below:

                                                             1995
                                                         -----------
             Income:
               Net income                                $14,786,042
             Effect of dilutive securities:
               Minority interest in
                 Operating Partnership                       153,888
                                                         -----------
               Net income allocated to
                 common shareholders
                 (Numerator)                             $14,939,930
                                                         ===========

             Shares:
               Weighted average shares                    25,392,621
             Effect of dilutive securities:
               Units                                         359,093
                                                         -----------
               Weighted average shares
                 (Denominator)                            25,751,714
                                                         ===========
               Diluted earnings per share                      $ .58
                                                               =====
                                    Continued

                                      F-32

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  S.    Fair Value of Financial Instruments

        The Company uses the following methods and assumptions to estimate the
        fair value of each class of financial instrument:

        Cash and cash equivalents

        The carrying amount approximates the fair value due to the short
        maturity of those instruments.

        MBS

        The Company estimates the fair value of MBS based on quoted market
        prices. (See Note I).

        Mortgage loans and notes receivable

        The Company estimates the fair value of its mortgage loans using the
        market value of the properties which collateralize such loans, if
        available. Otherwise, fair value is estimated by discounting the future
        cash flows using the current rates at which similar loans would be made
        to borrowers with similar credit ratings and the same remaining
        maturities. Based on this analysis, the Company has determined that the
        fair value of the instruments approximates carrying value. The Company
        estimates the fair value of mortgage loans and notes receivable to be
        approximately $8,060,000 and $4,094,000 at December 31, 1997 and 1996,
        respectively.

        Credit agreements

        At December 31, 1997, the Company had two separate lines of credit in
        place. Due to the relatively short period of time between repricing
        dates on the revolving components, the Company approximates the fair
        value of those borrowings at the current carrying value. The Company
        estimates the value of its interest-only fixed rate Credit Facility held
        with the FNMA by discounting cash flows remaining to maturity using
        comparable treasury interest rates plus current spreads. The Company
        estimates the fair market value of fixed rate debt to be $37,656,000 and
        $61,873,000 at December 31, 1997 and 1996, respectively.

        Repurchase agreements

        The carrying amount of the Company's repurchase agreement at December
        31, 1996 approximated fair value due to the short maturity.

        Interest rate swap agreement

        The fair value of the Company's interest rate swap agreement is
        estimated to be approximately ($156,000) and $150,000, as of December
        31, 1997 and 1996, respectively, which is the amount the Company would
        disburse or receive if the swap was terminated as of those dates.

        Mortgage notes payable

        Mortgage notes payable were valued by discounting cash flows remaining
        to maturity using comparable treasury interest rates plus current
        spreads. Based on this analysis, the Company has determined that the
        fair value of these liabilities approximates carrying value.



                                    Continued

                                      F-33

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  T.    Pro-Forma Results (Unaudited):

        The following unaudited pro-forma operating results for the Company have
        been prepared as if the 1997 and 1996 property acquisitions,
        dispositions and equity offerings had occurred on January 1, 1996.
        Unaudited pro-forma financial information is presented for informational
        purposes only and may not be indicative of what the actual results of
        operations of the Company would have been had the events occurred as of
        January 1, 1996, nor does it purport to represent the results of
        operations for future periods. (Dollars in thousands except per Share
        amounts).

                                              For the Twelve Months Ended
                                             December 31,     December 31,
                                                 1997             1996
                                             -----------      -----------
        Revenue                                $150,147         $144,894
                                               ========         ========
        Expenses including depreciation        $159,848         $161,202
                                               ========         ========
        Net loss                               $(12,670)        $(17,799)
                                               ========         ========
        Net loss per weighted
          average share                           $(.34)           $(.50)
                                                  =====            =====

  U.    Shareholders' Equity

        Preferred Stock

        On September 25, 1997, the Company sold 2,737,000 shares of Series
        1997-A Cumulative Preferred Stock (the "Preferred Shares"), $.01 par
        value, to affiliates of Westbrook Partners, LLC at $25.00 per share.
        Holders of Preferred Shares are entitled to receive, if declared by the
        Board, preferential cumulative quarterly cash dividends, at the greater
        of the rate of 9% per annum or the dividend payable on shares of common
        stock. Each Preferred Share is convertible at the option of the holder
        beginning September 19, 1998 into 2.0756 shares of common stock, based
        on a conversion price of $12.04 per share of common stock, subject to
        certain adjustments as defined in the agreement.

        The terms of the Preferred Shares provide that it will rank prior to any
        other series of preferred stock, prior to common stock and prior to any
        other class or series of capital stock of the Company with respect to
        the payment of dividends, the right to redemption and the distribution
        preference in the event of a change in ownership or the liquidation,
        dissolution or winding up of the Company.

        The amount of cumulative preferred dividends accrued as of December 31,
        1997 was $786,750.

        Common Stock Offering

        On November 10, 1997, the Company completed an offering of ten million
        shares of common stock which provided net cash proceeds of approximately
        $103.1 million. The Company used the proceeds to fund the Questar
        Transaction, to repay variable rate debt and for general corporate
        purposes. The Company filed a Registration Statement and Prospectus on
        October 7, 1997 and a Prospectus Supplement dated November 4, 1997 which
        provided additional details with respect to the offering.


                                    Continued

                                      F-34

<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued


  U.    Shareholders' Equity - Continued

        Dividends to Shareholders

        For federal income tax purposes, the following summarizes the tax
        components
        of dividends paid in 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                           ----------------------------------------------------
                                               1997              1996                1995
                                           -----------      -------------      ----------------
          Per Share:
              <S>                          <C>    <C>        <C>    <C>        <C>       <C>
              Ordinary income              $.21   23.3%      $.44   48.9%      $.36      40.4%
              Non-taxable distributions     .71   76.7%       .46   51.1%       .53      59.6%
                                           ----   -----      ----   -----      ----      -----

                 Total                     $.92    100%      $.90    100%      $.89       100%
                                           ====   =====      ====   =====      ====      =====
</TABLE>

        For federal income tax purposes, the Company is depreciating its
        properties using the Modified Cost Recovery System. Also, non-recurring
        charges associated with the issuance of warrants and recognition of
        effective interest income on mortgage loans (see Note H) are recognized
        for federal tax purposes when realized.

        Warrants

        On June 4, 1991 at a special meeting, the Unitholders of Krupp Cash
        Plus-III Limited Partnership and Krupp Cash Plus-IV Limited Partnership
        (collectively the "Participating Cash Plus Partnerships") voted in favor
        of and agreed to participate in an exchange (the "Exchange") with the
        Company. Subsequently, the Company was named in a consolidated lawsuit
        filed as a class action representing those Unitholders related to the
        Exchange transaction. On August 3, 1994, the court approved a settlement
        which became effective on September 6, 1994.

        The settlement agreement provided that the Company pay to the plaintiff
        class $1.5 million and issue three million stock warrants. Upon
        exercise, each warrant entitles the holder to the right to acquire one
        share of common stock of the Company. The warrants are exercisable for a
        period of four years ending on September 8, 1998. The number of shares
        of common stock issuable upon exercise of a warrant is subject to
        adjustment upon the occurrence of certain events described in the
        warrant agreement. The current exercise price of $11.79 is effective
        through September 8, 1998. As of December 31, 1997, 3,200 shares of
        common stock were issued upon exercise of warrants and 2,996,800
        warrants remained outstanding.

  V.    Subsequent Events

        Subsequent to December 31, 1997, the Company acquired eight multifamily
        apartment complexes totaling 2,760 units for approximately $111.2
        million. The Company paid cash of approximately $10.5 million, issued
        Units with an approximate value of $17.2 million and assumed
        approximately $83.5 million of debt. In addition, the Company has
        contracted to acquire two assets totaling 899 units for approximately
        $17.6 million which are scheduled to close in the first quarter of 1998.

        Subsequent to December 31, 1997, the Company sold Tara Crossing, a
        235,181 square foot retail center located in Jonesboro, Georgia, for
        approximately $9.5 million and College Plaza, a 83,962 square foot
        retail center in Fort Myers, Florida, for approximately $6 million. The
        Company and its joint venture partner also sold Spring Valley
        Marketplace, a 320,686 square foot retail center in Spring Valley, New
        York, for approximately $29.6 million. The Company's share of the gains
        on the sales totaled approximately $1.3 million.



                                      F-35
<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

  V.    Subsequent Events - Continued

        Subsequent to December 31, 1997, the Company obtained and closed a
        commitment for a $130 million unsecured revolving line of credit,
        generally at interest rates at 120 basis points over LIBOR, which
        replaced the Credit Agreement.


                                      F-36
<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

             SCHEDULE III - Real Estate and Accumulated Depreciation

                                December 31, 1997
                                                                  Costs
                                                               Capitalized
                                         Initial Cost         Subsequent to
                                        to Partnership         Acquisition
                                    ----------------------    -------------
                                               Buildings        Buildings
                                                  and             and
         Description                Land      Improvements    Improvements
         -----------                ----      ------------    ------------
  Residential
  -----------
  Altamonte Bay Club
  Altamonte Springs, Florida   $   485,599    $ 4,370,388     $   911,899

  Arbors at Breckenridge
  Duluth, Georgia                3,260,522     23,377,258       1,077,296

  Arborview
  Belcamp, Maryland              1,857,819     16,720,367           2,602

  The Avalon on Abernathy
  Atlanta, Georgia               2,013,424      5,177,377       5,165,865

  Benchmark
  Irving, Texas                  1,589,125      6,493,913        1,292,156

  Berkshires at Brookfield
  Mauldin, South Carolina          620,879      5,944,128          22,482

  Berkshire Towers
  Silver Spring, Maryland        5,441,750     48,975,751       8,441,857

  Berkshire West
  Winter Garden, Florida           865,270      7,787,429         794,397

  British Woods
  Nashville, Tennessee           1,212,396     10,911,569         966,293

  Brookfield Trace
  Mauldin, South Carolina        1,058,227      9,626,293         216,495

  Brookwood Valley
  Mauldin, South Carolina          972,241      8,863,448         627,311

  Calverts Walk
  Belair, Maryland               1,538,897     13,850,073          18,092

  The Channel
  Glen Burnie, Maryland          1,191,251      4,717,731         637,197

  Courtleigh
  Baltimore, Maryland            1,390,708     12,516,376          21,575

  The Cove
  Glen Burnie, Maryland          1,345,305      5,910,923         641,633

  Coventry
  Baltimore, Maryland              600,380      5,403,428           4,823

  Cumberland Cove
  Raleigh, North Carolina        1,840,482     23,538,037       1,477,607

                                      F-37
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                                                  Costs
                                                               Capitalized
                                         Initial Cost         Subsequent to
                                        to Partnership         Acquisition
                                    ----------------------    -------------
                                               Buildings        Buildings
                                                  and             and
         Description                Land      Improvements    Improvements
         -----------                ----      ------------    ------------
  Residential
  -----------
  Diamond Ridge
  Baltimore, Maryland              476,124      4,285,111           2,596

  East Lake Village
  Charlotte, North Carolina        531,629      4,784,665       2,612,471

  The Estates
  Pikesville, Maryland           1,345,118     12,106,065           1,650

  Fairway Ridge
  Baltimore, Maryland              703,599      6,332,391          14,110

  Golfside
  Haltom City, Texas             1,444,530      6,988,219       1,070,982

  Harpers Mill
  Millersville, Maryland         1,225,560      6,842,645         605,007

  Hazelcrest
  Baltimore, Maryland              117,361      1,056,252           2,050

  Heraldry Square
  Baltimore, Maryland              999,268      8,993,412          29,904

  Highland Ridge,
  Nashville, Tennessee             720,695      6,486,261       1,482,031

  Hilltop
  Baltimore, Maryland              132,216      1,189,947             869

  Hunters Glen
  Plano, Texas                   1,465,565      8,655,738       1,654,024

  Huntington Brook
  Dallas, Texas                  2,263,094      9,819,628         229,757

  Huntington Chase
  Norcross, Georgia              1,423,792      7,862,948       2,009,459

  Huntington Downs
  Greenville, South Carolina       791,173      8,091,240       1,613,205

  Huntington Lakes
  Dallas, Texas                  2,781,562     15,315,785         236,182

  Huntington Ridge
  Irving, Texas                  1,517,733      8,057,870          45,825

  Indigo on Forest
  Dallas, Texas                 10,951,649     26,256,230       5,631,199

                                      F-38
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                                                  Costs
                                                               Capitalized
                                         Initial Cost         Subsequent to
                                        to Partnership         Acquisition
                                    ----------------------    -------------
                                               Buildings        Buildings
                                                  and             and
         Description                Land      Improvements    Improvements
         -----------                ----      ------------    ------------
  Residential
  -----------
  Jamestowne
  Baltimore, Maryland              857,913      7,721,211           8,318

  Kings Crossing
  Houston, Texas                 3,614,838      9,295,300       1,337,953

  Kingwood Common I
  Baltimore, Maryland              733,981      6,605,835          11,315

  Kingwood Common II
  Baltimore, Maryland              713,086      6,417,777          10,255

  Kingwood Lake
  Houston, Texas                 3,106,935      9,320,806       1,714,520

  Lakes of Jacaranda
  Plantation, Florida            3,060,000     17,818,748       1,018,242

  The Lighthouse
  Glen Burnie, Maryland          1,085,769      5,542,856         555,837

  Liriope
  Belcamp, Maryland                762,396      6,861,560               0

  Newport
  Tampa, Florida                   486,478      4,378,303       1,501,758

  The Oaks
  Mauldin, South Carolina        1,509,268      6,522,462         430,348

  Park Colony
  Hollywood, Florida             1,888,641     16,997,765       1,359,817

  Plantation Colony
  Plantation, Florida            1,341,571     12,074,143         942,318

  Pleasant Woods
  Dallas, Texas                  1,714,157      4,336,521       1,002,504

  Prescott Place
  Mesquite, Texas                1,227,427      7,508,711         767,966

  Prescott Place II
  Mesquite, Texas                1,509,562      8,988,087         646,977

  Providence
  Dallas, Texas                  1,240,238      5,525,927       1,211,511

  Ridgeview Chase
  Westminster, Maryland          1,218,042     10,962,377           2,274


                                      F-39
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                                                  Costs
                                                               Capitalized
                                         Initial Cost         Subsequent to
                                        to Partnership         Acquisition
                                    ----------------------    -------------
                                               Buildings        Buildings
                                                  and             and
         Description                Land      Improvements    Improvements
         -----------                ----      ------------    ------------
  Residential
  -----------
  River Oaks
  Houston, Texas                 2,464,193      8,249,691       3,290,782

  Rolling Wind
  Baltimore, Maryland            1,983,454     17,851,088           2,150

  Roper Mountain Woods
  Greenville, South Carolina       667,352      6,006,172       1,128,003

  Southpoint at Massapequa
  Massapequa, New York             874,448      7,870,033         839,844

  Stoneledge Plantation
  Greenville, South Carolina       934,388      8,898,048         938,132

  Stratton Meadow
  Baltimore, Maryland            1,475,077     13,275,700          19,640

  Summer Place
  Addison, Texas                 2,196,890      4,855,728         490,247

  Sun Chase
  Bradenton, Florida               530,292      4,772,626         602,577

  Sweetwater Ranch
  Richardson, Texas              3,391,089     17,311,531          30,275

  The Timbers
  Charlotte, North Carolina        965,823      8,692,408         932,302

  Warren Park
  Baltimore, Maryland              729,611      6,566,506           1,968

  Westchester West
  Silver Spring, Maryland        1,637,184     14,734,660       1,297,510

  Williston
  Baltimore, Maryland              274,712      2,472,406             659

  Windover
  Knoxville, Tennessee             890,613      8,015,515       3,150,535

  Woodland Meadows
  Tamarac, Florida                 517,218      4,654,918       3,071,972
                              ------------   ------------     -----------

  Total Residential           $101,777,589   $658,414,315     $67,879,410
                              ------------   ------------     -----------


                                      F-40
<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997


                                                                  Costs
                                                               Capitalized
                                         Initial Cost         Subsequent to
                                        to Partnership         Acquisition
                                    ----------------------    -------------
                                               Buildings        Buildings
                                                  and             and
         Description                Land      Improvements    Improvements
         -----------                ----      ------------    ------------
  Commercial
  -----------
  College Plaza
  Fort Myers, Florida            3,187,958      6,510,079         739,563

  Tara Crossing
  Jonesboro, Georgia             4,097,159     16,045,810         729,557
                               -----------    ------------     -----------

   Total Commercial          $   7,285,117   $ 22,555,889     $ 1,469,120
                               -----------    ------------     -----------


  Developments in progress
  and land held for investment
  or future developments:

  Berkshires at Crooked Creek
  Durham, North Carolina         1,643,820          -           6,965,890

  Berkshires at Deerfield
  Atlanta, Georgia               5,818,105          -                   0

  Garlington Road Land
  Greenville, South Carolina     1,412,952          -             383,857

  Inglesby Land
  Greenville, South Carolina     3,036,570          -             444,914

  Indigo Land
  Dallas, Texas                    863,455          -              434,511
                              ------------    ------------     -----------

   Total Land                 $ 12,774,902    $     -         $ 8,229,172
                              ------------    ------------     -----------

   Grand Total - All
    Real Estate               $121,837,608    $680,970,204    $77,577,702
                              ============    ============     ===========

                                    Continued



                                      F-41
<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997


                                   Gross Amounts Carried at End of Year
                               -------------------------------------------
                                              Buildings
                                                  and
         Description                Land      Improvements        Total
         -----------           ------------   ------------    ------------
  Residential
  -----------

  Altamonte Bay Club
  Altamonte Springs, Florida   $   485,599    $ 5,282,288      $ 5,767,887

  Arbors at Breckenridge
  Duluth, Georgia                3,260,522     24,454,554       27,715,076

  Arborview
  Belcamp, Maryland              1,857,819     16,722,969       18,580,788

  The Avalon on Abernathy
  Atlanta, Georgia               2,013,424     10,343,242       12,356,666

  Benchmark
  Irving, Texas                  1,589,125      7,786,069        9,375,194

  Berkshires at Brookfield
  Mauldin, South Carolina          620,879      5,966,610        6,587,489

  Berkshire Towers
  Silver Spring, Maryland        5,441,750     57,417,608       62,859,358

  Berkshire West
  Winter Garden, Florida           865,270      8,581,826        9,447,096

  British Woods
  Nashville, Tennessee           1,212,396     11,877,862       13,090,258

  Brookfield Trace
  Mauldin, South Carolina        1,058,227      9,842,788       10,901,015

  Brookwood Valley
  Mauldin, South Carolina          972,241      9,490,759       10,463,000

  Calvert's Walk
  Belair, Maryland               1,538,897     13,868,165       15,407,062

  The Channel
  Glen Burnie, Maryland          1,191,251      5,354,928        6,546,179

  Courtleigh
  Baltimore, Maryland            1,390,708     12,537,951       13,928,659

  The Cove
  Glen Burnie, Maryland          1,345,305      6,552,556        7,897,861

  Coventry
  Baltimore, Maryland              600,380      5,408,251        6,008,631

  Cumberland Cove
  Raleigh, North Carolina        1,840,482     25,015,644       26,856,126



                                      F-42
<PAGE>

                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997


                                   Gross Amounts Carried at End of Year
                               -------------------------------------------
                                              Buildings
                                                  and
         Description                Land      Improvements        Total
         -----------           ------------   ------------    ------------
  Residential
  -----------
  Diamond Ridge
  Baltimore, Maryland              476,124      4,287,707        4,763,831

  East Lake Village
  Charlotte, North Carolina        531,629      7,397,136        7,928,765

  The Estates
  Pikesville, Maryland           1,345,118     12,107,715       13,452,833

  Fairway Ridge
  Baltimore, Maryland              703,599      6,346,501        7,050,100

  Golfside
  Haltom City, Texas             1,444,530      8,059,201        9,503,731

  Harpers Mill
  Millersville, Maryland         1,225,560      7,447,652        8,673,212

  Hazelcrest
  Baltimore, Maryland              117,361      1,058,302        1,175,663

  Heraldry Square
  Baltimore, Maryland              999,268      9,023,316       10,022,584

  Highland Ridge
  Nashville, Tennessee             720,695      7,968,292        8,688,987

  Hilltop
  Baltimore, Maryland              132,216      1,190,816        1,323,032

  Hunters Glen
  Plano, Texas                   1,465,565     10,309,762       11,775,327

  Huntington Brook
  Dallas, Texas                  2,263,094     10,049,385       12,312,479

  Huntington Chase
  Norcross, Georgia              1,423,792     19,872,407       21,296,199

  Huntington Downs
  Greenville, South Carolina       791,173     19,704,444       20,495,617

  Huntington Lakes
  Dallas, Texas                  2,781,562     15,551,967       18,333,529

  Huntington Ridge
  Irving, Texas                  1,517,733      8,103,695        9,621,428

  Indigo on Forest
  Dallas, Texas                 10,951,649     31,887,429       42,839,078


                                      F-43
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997


                                   Gross Amounts Carried at End of Year
                               -------------------------------------------
                                              Buildings
                                                  and
         Description                Land      Improvements        Total
         -----------           ------------   ------------    ------------
  Residential
  -----------
  Jamestowne
  Baltimore, Maryland              857,913      7,729,529        8,587,442

  Kings Crossing
  Houston, Texas                 3,614,838     10,633,253       14,248,091

  Kingwood Common I
  Baltimore, Maryland              733,981      6,617,150        7,351,131

  Kingwood Common II
  Baltimore, Maryland              713,086      6,428,032        7,141,118

  Kingwood Lake
  Houston, Texas                 3,106,935     11,035,325       14,142,260

  Lakes of Jacaranda
  Plantation, Florida            3,060,000     18,836,990       21,896,990

  The Lighthouse
  Glen Burnie, Maryland          1,085,769      6,098,693        7,184,462

  Liriope
  Belcamp, Maryland                762,396      6,861,560        7,623,956

  Newport
  Tampa, Florida                   486,478      5,880,063        6,366,541

  The Oaks
  Mauldin, South Carolina        1,509,268      6,952,810        8,462,078

  Park Colony
  Hollywood, Florida             1,888,641     18,357,582       20,246,223

  Plantation Colony
  Plantation, Florida            1,341,571     13,016,461       14,358,032

  Pleasant Woods
  Dallas, Texas                  1,714,157     5,339,025         7,053,182

  Prescott Place
  Mesquite, Texas                1,227,427      8,276,676        9,504,103

  Prescott Place II
  Mesquite, Texas                1,509,562      9,635,064       11,144,626

  Providence
  Dallas, Texas                  1,240,238      6,737,438        7,977,676

  Ridgeview Chase
  Westminster, Maryland          1,218,042     10,964,651       12,182,693


                                      F-44
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                   Gross Amounts Carried at End of Year
                               -------------------------------------------
                                              Buildings
                                                  and
         Description                Land      Improvements        Total
         -----------           ------------   ------------    ------------
  Residential
  -----------
  River Oaks
  Houston, Texas                 2,464,193     11,540,473       14,004,666

  Rolling Wind
  Baltimore, Maryland            1,983,454     17,853,238       19,836,692

  Roper Mountain Woods
  Greenville, South Carolina       667,352      7,134,175        7,801,527

  Southpoint at Massapequa
  Massapequa, New York             874,448      8,709,877        9,584,325

  Stoneledge Plantation
  Greenville, South Carolina       934,388      9,836,180       10,770,568

  Stratton Meadows
  Baltimore, Maryland            1,475,077     13,295,340       14,770,417

  Summer Place
  Addison, Texas                 2,196,890      5,345,975        7,542,865

  Sun Chase
  Bradenton, Florida               530,292      5,375,203        5,905,495

  Sweetwater Ranch
  Richardson, Texas              3,391,089     17,341,806       20,732,895

  The Timbers
  Charlotte, North Carolina        965,823      9,624,710       10,590,533

  Warren Park
  Baltimore, Maryland              729,611      6,568,474        7,298,085

  Westchester West
  Silver Spring, Maryland        1,637,184     16,032,170       17,669,354

  Williston
  Baltimore, Maryland              274,712      2,473,065        2,747,777

  Windover
  Knoxville, Tennessee             890,613     11,166,050       12,056,663

  Woodland Meadows
  Tamarac, Florida                 517,218      7,726,890        8,244,108
                              ------------   ------------     ------------

  Total Residential           $101,777,589   $726,293,725     $828,071,314
                              ------------   ------------     ------------


                                      F-45
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                   Gross Amounts Carried at End of Year
                               -------------------------------------------
                                              Buildings
                                                  and
         Description                Land      Improvements        Total
         -----------           ------------   ------------    ------------
  Commercial
  -----------
  College Plaza
  Fort Myers, Florida            3,187,958      7,249,642       10,437,600

  Tara Crossing
  Jonesboro, Georgia             4,097,159     16,775,367       20,872,526
                               -----------   ------------     ------------

   Total Commercial            $ 7,285,117   $ 24,025,009     $ 31,310,126
                               -----------   ------------     ------------


  Developments in progress
  and land held for investment
  or future developments:
  ----------------------------

  Berkshires at Crooked Creek
  Durham, North Carolina         1,643,820      6,965,890        8,609,709

  Berkshires at Deerfield
  Atlanta, Georgia               5,818,105              0        5,818,105

  Garlington Road Land
  Greenville, South Carolina     1,412,952        383,857        1,796,809

  Inglesby Land
  Greenville, South Carolina     3,036,570        444,914        3,481,484

  Indigo Land
  Dallas, Texas                    863,455        434,511        1,297,967
                              ------------   ------------     ------------

   Total Land                 $ 12,774,902   $  8,229,172     $ 21,004,074
                              ------------   ------------     ------------

   Grand Total - All
    Real Estate               $121,837,608   $758,547,906     $880,385,514
                              ============   ============     ============

                                    Continued


                                      F-46
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                                     Year
                                   Accumulated   Construction       Date
         Description              Depreciation     Completed      Acquired
         -----------              ------------     ---------      --------
  Residential
  -----------
  Altamonte Bay Club
  Altamonte Springs, Florida     $ 1,858,168      1984-1986       10/14/92

  Arbors at Breckenridge
  Duluth, Georgia                  5,475,002      1986-1989/      12/17/93
                                                  1995

  Arborview
  Belcamp, Maryland                  138,681      1992            11/14/97

  The Avalon on Abernathy
  Atlanta, Georgia                 2,861,719      1971            06/02/92

  Benchmark
  Irving, Texas                      820,509      1982            06/27/96

  Berkshires at Brookfield
  Mauldin, South Carolina            402,274      1997            01/31/97

  Berkshire Towers
  Silver Spring, Maryland          6,000,676      1965-1969       05/14/96

  Berkshire West
  Winter Garden, Florida             351,061      1991            05/13/97

  British Woods
  Nashville, Tennessee             1,693,197      1984            11/01/95

  Brookfield Trace
  Mauldin, South Carolina          1,314,295      1995            11/01/95

  Brookwood Valley
  Mauldin, South Carolina          1,752,378      1992            04/13/95

  Calverts Walk
  Belair, Maryland                   117,994      1988            11/14/97

  The Channel
  Glen Burnie, Maryland              170,091      1981            07/22/97

  Courtleigh
  Baltimore, Maryland                106,607      1988            11/14/97

  The Cove
  Glen Burnie, Maryland              201,188      1976            07/22/97

  Coventry
  Baltimore, Maryland                 45,936      1986            11/14/97

  Cumberland Cove
  Raleigh, North Carolina          5,892,011      1985/1995       12/19/91




                                      F-47
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997


                                                     Year
                                   Accumulated   Construction       Date
         Description              Depreciation     Completed      Acquired
         -----------              ------------     ---------      --------
  Residential
  -----------
  Diamond Ridge
  Baltimore, Maryland                 36,101      1991            11/14/97

  East Lake Village
  Charlotte, North Carolina        2,299,308      1972            10/19/93

  The Estates
  Pikesville, Maryland               100,362      1989            11/14/97

  Fairway Ridge
  Baltimore, Maryland                 56,613      1966            11/14/97

  Golfside
  Haltom City, Texas                 858,473      1980/1985       06/06/96

  Harpers Mill
  Millersville, Maryland             224,089      1978            07/22/97

  Hazelcrest
  Baltimore, Maryland                  9,424      1965            11/14/97

  Heraldry Square
  Baltimore, Maryland                 79,536      1974            11/14/97

  Highland Ridge
  Nashville, Tennessee             1,203,141      1972            11/01/95

  Hilltop
  Baltimore, Maryland                 10,388      1965            11/14/97

  Hunters Glen
  Plano, Texas                       978,496      1979            07/30/96

  Huntington Brook
  Dallas, Texas                      171,499      1984            09/26/97

  Huntington Chase
  Norcross, Georgia                4,877,705      1987/1996       07/07/93

  Huntington Downs
  Greenville, South Carolina      10,206,249      1986-1987       01/15/88

  Huntington Lake
  Dallas, Texas                      257,372      1984/1996       09/26/97

  Huntington Ridge
  Irving, Texas                      134,697      1984            09/26/97

  Indigo on Forest
  Dallas, Texas                    8,235,841      1984            08/31/94

  Jamestowne
  Baltimore, Maryland                 68,005      1965            11/14/97

                                      F-48
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997
                                                     Year
                                   Accumulated   Construction       Date
         Description              Depreciation     Completed      Acquired
         -----------              ------------     ---------      --------
  Residential
  -----------
  Kings Crossing
  Houston, Texas                   2,816,747      1983            03/23/93

  Kingwood Common I
  Baltimore, Maryland                 57,282      1976            11/14/97

  Kingwood Common II
  Baltimore, Maryland                 56,183      1979            11/14/97

  Kingwood Lake
  Houston, Texas                   2,934,488      1980            03/23/93

  Lakes of Jacaranda
  Plantation, Florida              7,770,844      1988-1989       03/30/90

  The Lighthouse
  Glen Burnie, Maryland              128,036      1982            09/22/97

  Liriope
  Belcamp, Maryland                   19,412      1997            12/15/97

  Newport
  Tampa, Florida                   2,125,221      1985            10/14/92

  The Oaks
  Mauldin, South Carolina          2,858,493      1989            03/02/90

  Park Colony
  Hollywood, Florida               4,217,049      1987            07/13/94

  Plantation Colony
  Plantation, Florida              3,401,039      1984            12/01/93

  Pleasant Woods
  Dallas, Texas                      609,885      1979            06/06/96

  Prescott Place
  Mesquite, Texas                    884,980      1983            06/06/96

  Prescott Place II
  Mesquite, Texas                    733,993      1984            11/12/96

  Providence
  Dallas, Texas                      754,074      1980            06/26/96

  Ridgeview Chase
  Westminster, Maryland               91,211      1988            11/14/97

  River Oaks
  Houston, Texas                   2,399,362      1966            05/01/95

  Rolling Wind
  Baltimore, Maryland                147,508      1995            11/14/97

                                      F-49
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                                     Year
                                   Accumulated   Construction       Date
         Description              Depreciation     Completed      Acquired
         -----------              ------------     ---------      --------
  Residential
  -----------
  Roper Mountain Woods
  Greenville, South Carolina       3,702,228      1984            01/15/88

  Southpoint at Massapequa
  Massapequa, New York             3,092,403      1969            10/14/92

  Stoneledge Plantation
  Greenville, South Carolina       5,096,653      1986            01/15/88

  Stratton Meadows
  Baltimore, Maryland                111,829      1989            11/14/97

  Summer Place
  Addison, Texas                     119,119      1980            09/26/97

  Sun Chase
  Bradenton, Florida                 234,830      1987            05/13/97

  Sweetwater Ranch
  Richardson, Texas                  282,989      1995            09/26/97

  The Timbers
  Charlotte, North Carolina        3,026,412      1989            03/22/93

  Warren Park
  Baltimore, Maryland                 55,905      1964            11/14/97

  Westchester West
  Silver Spring, Maryland          1,027,244      1970-1972       01/01/97

  Williston
  Baltimore, Maryland                 21,410      1967            11/14/97

  Windover
  Knoxville, Tennessee             1,797,886      1974            11/01/95

  Woodland Meadows
  Tamarac, Florida                 2,791,362      1974            10/14/92
                                ------------

  Total Residential             $112,375,163
                                ------------


                                      F-50
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1997

                                                     Year
                                   Accumulated   Construction       Date
         Description              Depreciation     Completed      Acquired
         -----------              ------------     ---------      --------
  Commercial
  -----------
  College Plaza
  Fort Myers, Florida              5,247,818      1983 & 1985     04/30/87

  Tara Crossing
  Jonesboro, Georgia              11,657,526      1986            06/25/87
                                ------------

   Total Commercial              $16,905,344
                                ------------

  Developments in progress and
  land held for investment or
  future developments:

  Berkshires at Crooked Creek
  Durham, North Carolina               -          N/A             08/25/95

  Berkshires at Deerfield
  Atlanta, Georgia                     -          N/A             12/17/97

  Garlington Road Land
  Greenville, South Carolina           -          N/A             06/10/96

  Inglesby Land
  Greenville, South Carolina           -          N/A             01/10/97

  Indigo Land
  Dallas, Texas                        -          N/A             08/31/94
                                ------------
   Total Land                          -
                                ------------
                                $129,280,507
                                ============

  Notes:       Brookfield Trace was combined with Berkshires at Brookfield
               upon completion of the construction in 1997.

               The depreciable life of a residential property is 3-25 years and
               a commercial property is 3-25 years.

               The aggregate cost of the Company's real estate for federal
               income tax purposes is approximately $684,621,000 million, and
               the aggregate accumulated depreciation for federal income tax
               purposes is approximately $53,970,000 million.



                                                      Continued

                                      F-51
<PAGE>


                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued

                                December 31, 1997


      Reconciliation of Real Estate and Accumulated Depreciation for each of the
      three years ended December 31:

                                         1997           1996           1995
                                     ------------   ------------    -----------

      Real Estate

      Balance, beginning of year     $585,795,316   $465,846,375   $448,057,874

      Acquisition and improvements    341,218,085    146,774,969     89,578,886

      Sales and retirements           (46,627,887)   (26,826,028)   (71,790,385)
                                     ------------   ------------   ------------
      Balance at December 31,        $880,385,514   $585,795,316   $465,846,375
                                     ============   ============   ============


      Accumulated Depreciation


      Balance, beginning of year     $106,869,507   $ 77,641,555   $ 80,863,231

      Depreciation expense             35,228,587     29,032,162     21,976,356

      Provision for losses              1,850,000      7,500,000           -

      Sales and retirements           (14,667,587)    (7,304,210)   (25,198,032)
                                     ------------   ------------   ------------
      Balance at December 31,        $129,280,507   $106,869,507   $ 77,641,555
                                     ============   ============   ============


                                      F-52
<PAGE>


  SUMMARY QUARTERLY FINANCIAL INFORMATION
  (UNAUDITED)


  BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES


  The consolidated results of operations of the Company for the quarters ended
  March 31, June 30, September 30 and December 31, 1997 and 1996 are as follows:

  (Dollars in thousands, except per Share amounts)

<TABLE>
<CAPTION>
                                                              March 31,                                June 30,
                                                   -------------------------------          ------------------------------
                                                      1997                 1996                1997                1996
                                                   ----------           ----------          ----------          ----------

  <S>                                              <C>                  <C>                 <C>                 <C>
  Revenue                                          $   25,403           $   20,429          $   26,685          $   22,161
                                                   ==========           ==========          ==========          ==========

  Income (loss) from operations                        (2,502)                (226)               (745)               (728)
  Joint venture income (loss)                            (351)                 427                (157)                231
  Gains (losses) on sales of
     investments                                        6,433                 -                     71                -
  Minority interest                                      (685)                  (7)                206                  27
  Extraordinary items                                    -                    -                   -                   -
                                                   ----------           ----------          ----------          ----------

  Net income (loss)                                $    2,895           $      194          $     (625)         $     (470)
                                                   ==========           ==========          ==========          ==========

  Income allocated to
     preferred shareholders                              -                    -                   -                   -
                                                   ----------           ----------          ----------          ----------

  Net income (loss) allocated
     to common shareholders                             2,895                  194                (625)               (470)
                                                   ==========           ==========          ==========          ==========

  Net income (loss) per
     weighted average share                        $      .11           $      .01          $     (.02)         $     (.02)
                                                   ==========           ==========          ==========          ==========

  Dividends paid per share                         $    .2250           $    .2250          $    .2250          $    .2250
                                                   ==========           ==========          ==========          ==========

  Weighted average shares
     outstanding                                   25,420,444           25,392,952          25,480,709          25,392,962
                                                   ==========           ==========          ==========          ==========



                                                         September 30,                             December 31,
                                                   -------------------------                -------------------
                                                      1997                 1996                1997                1996
                                                   ----------           ----------          ----------          ----------

  Revenue                                          $   28,416           $   25,334          $   34,995          $   25,078
                                                   ==========           ==========          ==========          ==========

  Income (loss) from operations                        (5,078)              (9,598)             (3,712)             (2,060)
  Joint venture income (loss)                             131                  485              (4,533)             (4,152)
  Gains (losses) on sales of
     investments                                           44                   45                 (93)                 13
  Minority interest                                       852                1,695               1,780                (313)
  Extraordinary items                                     (90)                (149)               -                      2
                                                   ----------           ----------          ----------          ----------

  Net income (loss)                                $   (4,141)          $   (7,522)         $   (6,558)         $   (6,510)
                                                   ==========           ==========          ==========          ==========

  Income allocated to
     preferred shareholders                               (85)                -                 (1,574)               -
                                                   ----------           ----------          ----------          ----------

  Net income (loss) allocated
     to common shareholders                            (4,226)              (7,522)             (8,132)             (6,510)
                                                   ==========           ==========          ==========          ==========

  Net income (loss) per
     weighted average share                        $     (.16)          $     (.30)         $     (.26)         $     (.26)
                                                   ==========           ==========          ==========          ==========

  Dividends paid per share                         $    .2325           $    .2250          $    .2325          $    .2250
                                                   ==========           ==========          ==========          ==========

  Weighted average shares
     outstanding                                   25,738,248           25,393,299          31,704,588          25,393,369
                                                   ==========           ==========          ==========          ==========
</TABLE>


                                      F-53
<PAGE>


                         BROOKWOOD VILLAGE JOINT VENTURE



                        FINANCIAL STATEMENTS AND SCHEDULE
                      For the Year Ended December 31, 1997




                                      F-54

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE




Report of Independent Accountants                                  F-56


Balance Sheets at December 31, 1997 and December 31, 1996          F-57


Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995                                   F-58


Statements of Changes in Partners' Equity for the Years
Ended December 31, 1997, 1996 and 1995                             F-59


Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995                            F-60 - F-61


Notes to Financial Statements                               F-62 - F-65


Schedule III - Real Estate and Accumulated Depreciation     F-66 - F-67


All other schedules are omitted as they are not applicable or not required, or
the information is provided in the financial statements or the notes thereto.


                                      F-55

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Joint Venture Partners of
Brookwood Village Joint Venture:

     We have audited the financial statements and financial statement schedule
of Brookwood Village Joint Venture (the "Joint Venture") listed in the index on
page F-21 of this Form 10-K. These financial statements and financial statement
schedule are the responsibility of the Joint Venture's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly,
in all material respects, the financial position of the Joint Venture as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.

     As discussed in Note C, the Joint Venture's only property was sold on May
13, 1997. As a result of the sale, the Joint Venture was liquidated in 1997.



Boston, Massachusetts                          COOPERS & LYBRAND L.L.P.
January 30, 1998


<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                                 BALANCE SHEETS
                           December 31, 1997 and 1996


                                     ASSETS

                                                        1997           1996
                                                    ------------   --------
Real estate assets:
     Land (Note C)                                  $       -      $ 15,895,139
     Building and improvements (Note C)                     -        44,635,153
     Less accumulated depreciation (Notes C and G)          -       (26,190,274)
                                                    ------------   ------------

         Total real estate assets                           -        34,340,018

Cash (Note C)                                               -           166,919
Other assets (Note C)                                       -           512,031
                                                    ------------   ------------

         Total assets                               $       -      $ 35,018,968
                                                    ============   ============



                                         LIABILITIES AND PARTNERS' EQUITY

Liabilities:
     Accounts payable                               $       -       $     44,762
     Accrued expenses and other liabilities
         (Note D)                                           -            440,067
     Due to affiliates (Note F)                             -              8,351
     Accrued legal settlement (Note A)                      -          4,300,000
                                                    ------------    ------------

         Total liabilities                                  -          4,793,180

Partners' equity (Note E)                                   -         30,225,788
                                                    ------------    ------------

         Total liabilities and Partners' equity     $       -       $ 35,018,968
                                                    ============    ============



                      Theaccompanying notes are an integral
                        part of the financial statements.

                                      F-57

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                            STATEMENTS OF OPERATIONS
              For the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                       1997               1996               1995
                                                   -----------         -----------        -------
<S>                                                <C>                 <C>                <C>
Revenue:
     Rental                                        $ 2,388,205         $ 6,118,192        $ 6,243,206
     Interest income                                    47,741              28,503             50,656
                                                   -----------         -----------        -----------

         Total revenue                               2,435,946           6,146,695          6,293,862
                                                   -----------         -----------        -----------

Expenses:
     Operating (Note F)                                784,889           1,586,415          1,689,116
     Maintenance                                       226,703             631,241            590,110
     Real estate taxes                                 133,320             373,856            335,475
     Management fees (Note F)                          140,197             375,192            376,424
     Depreciation                                      731,909           2,026,131          2,309,755
     Provisions for losses on real
         estate (Note G)                             1,472,096           9,000,000               -
                                                   -----------         -----------        -----------

         Total expenses                              3,489,114          13,992,835          5,300,880
                                                   -----------         -----------        -----------

     Income (loss) before loss on
         sale of property                           (1,053,168)         (7,846,140)           992,982

Loss on sale of property (Note C)                     (721,760)               -                  -
                                                   -----------         -----------        -----------

Net income (loss) (Note H)                         $(1,774,928)        $(7,846,140)       $   992,982
                                                   ===========         ===========        -----------

Allocation of net income (loss):
     (Note E)

     Krupp Cash Plus-II Limited
         Partnership                               $  (887,464)        $(3,923,070)       $   496,491
                                                   ===========         ===========        ===========

     BRI Texas Apartments Limited
         Partnership                               $  (887,464)        $(3,923,070)       $   496,491
                                                   ===========         ===========        -----------
</TABLE>

                      Theaccompanying notes are an integral
                        part of the financial statements.

                                      F-58

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY
              For the Years Ended December 31, 1997, 1996 and 1995

                                              BRI
                            Krupp            Texas
                         Cash Plus-II      Apartments        Total
                            Limited          Limited        Partners'
                          Partnership      Partnership       Equity

Balance at
     December 31, 1994   $21,339,973      $21,339,973      $42,679,946

Net income                   496,491          496,491          992,982

Distributions             (1,425,000)      (1,425,000)      (2,850,000)
                         -----------       ----------      -----------

Balance at
     December 31, 1995    20,411,464       20,411,464       40,822,928

Net loss                  (3,923,070)      (3,923,070)      (7,846,140)

Distributions             (1,375,500)      (1,375,500)      (2,751,000)
                         -----------       ----------      -----------

Balance at
     December 31, 1996    15,112,894       15,112,894       30,225,788

Capital contributions
     (Note A)              2,150,000        2,150,000        4,300,000

Loss on sale of
     property (Note C)      (360,880)        (360,880)        (721,760)

Net loss (Note E)           (526,584)        (526,584)      (1,053,168)

Distributions (Note E)   (16,375,430)     (16,375,430)     (32,750,860)
                         -----------      -----------      -----------

Balance at
     December 31, 1997   $      -         $      -         $      -
                         ===========      ===========      ===========


                      Theaccompanying notes are an integral
                        part of the financial statements.

                                      F-59

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                        STATEMENTS OF CASH FLOWS For the
                  Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                     1997                  1996                  1995
                                                 -----------           -----------           --------
<S>                                              <C>                   <C>                   <C>
Operating activities:
     Net income (loss)                           $(1,774,928)          $(7,846,140)          $   992,982
     Adjustments to reconcile
         net income (loss) to net
         cash provided by operating
         activities:
              Depreciation                           731,909             2,026,131             2,309,755
              Provisions for losses
                  on real estate                   1,472,096             9,000,000                  -
              Loss on sale of
                  property                           721,760                  -                     -
              Changes in assets and
                  liabilities:
                  Decrease in other
                      assets                         512,031               120,550               177,170
                  Increase (decrease)
                      in accounts
                      payable                        (44,762)               30,349               (14,741)
                  Increase (decrease)
                      in due to
                      affiliates                      (8,351)               (4,217)               12,568
                  Increase (decrease)
                      in accrued
                      expenses and
                      other liabilities             (440,067)              108,059              (432,851)
                                                 -----------           -----------           -----------

                      Net cash provided
                           by operating
                           activities              1,169,688             3,434,732             3,044,883
                                                 -----------           -----------           -----------
Investing activities:
     Additions to fixed assets                      (144,803)             (751,474)             (580,348)
     Decrease in accrued legal
         settlement                               (4,300,000)                 -                     -
     Net consideration received
         from sale of property                    31,559,056                  -                     -
                                                 -----------           -----------           --------
                      Net cash provided
                           by (used in)
                           investing
                           activities             27,114,253              (751,474)             (580,348)
                                                 -----------           -----------           -----------

Financing activities:
     Distributions                               (32,750,860)           (2,751,000)           (2,850,000)
     Capital contributions from
         Joint Venture Partners                    4,300,000                  -                     -
                                                 -----------           -----------           --------

                      Net cash used in
                           financing
                           activities            (28,450,860)           (2,751,000)           (2,850,000)
                                                 -----------           -----------           -----------

Net decrease in cash and cash
     equivalents                                    (166,919)              (67,742)             (385,465)

Cash and cash equivalents,
     beginning of year                               166,919               234,661               620,126
                                                 -----------           -----------           -----------

Cash and cash equivalents,
     end of year                                 $      -              $   166,919           $   234,661
                                                 ===========           ===========           ===========

                                                     Continued

                                                       F-60

<PAGE>

                                          BROOKWOOD VILLAGE JOINT VENTURE

                                        STATEMENTS OF CASH FLOWS, Continued For
                               the Years Ended December 31, 1997, 1996 and 1995

Supplemental schedule of noncash investing and financing activities:

                                                     1997                  1996                  1995
                                                 ------------          -----------           -----------
     Adjustment to real estate
         asset basis for release
         of lien (Note A)                        $      -              $ 4,300,000           $      -
                                                 ============          ===========           ===========

     Accrued legal settlement
         (Note A)                                $      -              $(4,300,000)          $      -
                                                 ============          ===========           ===========
</TABLE>

                      Theaccompanying notes are an integral
                        part of the financial statements.

                                      F-61

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                          NOTES TO FINANCIAL STATEMENTS

A.            Organization

              On December 16, 1986, Brookwood Village Joint Venture (the "Joint
              Venture") acquired Brookwood Village Mall and Convenience Center
              ("Brookwood Village"), a retail development located in Birmingham,
              Alabama. Brookwood Village consisted of a covered mall, a covered
              garage and a detached strip shopping center with an aggregate net
              leasable square footage of 474,083. The Joint Venture was 50%
              owned by Krupp Cash Plus-II Limited Partnership and BRI Texas
              Apartments Limited Partnership (the "Joint Venture Partners"),
              both with similar investment objectives. The express purpose of
              entering into the Joint Venture was to purchase, own, manage and
              operate Brookwood Village.

              Under the original purchase and sale agreement entered into by the
              Joint Venture, its affiliates and the seller, the seller retained
              a lien on the premises related to the future sale of the property
              or development of unimproved land at Brookwood Village. The lien
              entitled the seller to receive $5,000,000 of the proceeds from the
              sale of Brookwood Village and potentially additional amounts
              related to expansion and development. The Joint Venture held title
              to Brookwood Village free and clear from all other material liens
              or encumbrances. On January 24, 1997, the previous owner filed
              suit in the Circuit Court of Jefferson County, Alabama against the
              Joint Venture Partners and Brookwood Village Joint Venture, among
              others. In the suit, the plaintiff claimed that the defendants had
              effectively sold Brookwood Village on June 27, 1991, when one of
              the original Joint Venture Partners exchanged its assets for an
              ownership interest in an affiliated real estate investment trust.
              The defendants sought damages of approximately $7,200,000, which
              included the $5,000,000 payment stipulated in the original
              purchase and sale agreement and interest accrued thereon from the
              date of the exchange. On February 28, 1997, the Joint Venture
              Partners paid the discounted amount of $4,300,000 to the previous
              owner to release the lien and settle the lawsuit. The payment was
              funded by capital contributions of $2,150,000 from each of the
              Joint Venture Partners. For financial reporting purposes, the
              settlement payment of $4,300,000 related to the release of the
              previous owner's lien was included in the asset basis of the
              property.

              On May 13, 1997, the Joint Venture Partners exchanged Brookwood
              Village for cash and two multifamily properties. As a result of
              the sale and in accordance with Joint Venture Agreement, the Joint
              Venture Partners liquidated and distributed the remaining assets
              of the Joint Venture and subsequently dissolved the Joint Venture
              in the fourth quarter of 1997 (see Note C for further discussion
              of this matter).

B.            Significant Accounting Policies

              The Joint Venture used the following accounting policies for
              financial reporting purposes, which may differ in certain respects
              from those used for federal income
              tax purposes (see Note H):

                  Cash and Cash Equivalents

                  The Joint Venture included all short-term investments with
                  maturities of three months or less from the date of
                  acquisition in cash and cash equivalents.

                  Rental Revenues

                  Commercial leases require the payment of base rent monthly in
                  advance. Rental revenues were recorded on the accrual basis.
                  Commercial leases generally contain provisions for additional
                  rent based on a percentage of tenant sales and other
                  provisions which are recorded as income when received. Minimum
                  rental revenue from long-term commercial leases was recognized
                  on a straight-line basis over the life of the related lease.

                                    Continued

                                      F-62

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                    NOTES TO FINANCIAL STATEMENTS, Continued


B.            Significant Accounting Policies, Continued

                  Depreciation

                  Depreciation of building and improvements was provided for by
                  the use of the straight-line method over estimated useful
                  lives of 3 to 25 years. Tenant improvements were depreciated
                  over the life of the lease.

                  Impairment of Long-Lived Assets

                  Real estate assets and equipment are stated at depreciated
                  cost. Pursuant to Statement of Financial Accounting Standards
                  Opinion No. 121 "Accounting for the Impairment of Long-Lived
                  Assets and for Long-Lived Assets to be Disposed of",
                  impairment losses are recorded on long-lived assets used in
                  operations on a property by property basis, when events and
                  circumstances indicate that the assets might be impaired and
                  the estimated undiscounted cash flows to be generated by those
                  assets are less than the carrying amount of those assets. Upon
                  determination that an impairment has occurred, those assets
                  shall be reduced to fair value less estimated costs to sell
                  (see Note G).

                  Leasing Commissions

                  Leasing commissions were deferred and amortized over the life
                  of the related lease.

                  Income Taxes

                  The Joint Venture is not liable for federal or state income
                  taxes because Joint Venture income or loss is allocated to the
                  Joint Venture Partners for income tax purposes. In the event
                  the Joint Venture's tax returns are examined by the Internal
                  Revenue Service or state taxing authority and such an
                  examination results in a change in the Joint Venture taxable
                  income or loss, such change will be reported to the Joint
                  Venture Partners.

C.            Disposition of Real Estate Asset and Dissolution of Joint Venture

              Based upon the Joint Venture Partners' assessment of the current
              and future market conditions, the capital improvements necessary
              to remain competitive in its market, its capital resources and the
              differing strategies of the Joint Venture Partners, the Joint
              Venture Partners determined that its was in their best interests,
              and that of their respective investors, to sell Brookwood Village.
              On May 13, 1997, the Joint Venture Partners exchanged Brookwood
              Village with an unaffiliated third party for net consideration
              totaling $32,422,220 less prorations and closing costs of $863,164
              which included two multifamily properties and cash. Each Joint
              Venture Partner was allocated 50% of the net consideration
              received. For financial reporting purposes, the Joint Venture
              realized a loss of $721,760 on the exchange. The loss was
              calculated as the difference between net consideration received
              less net book value of the property and closing costs.

              As a result of the sale of Brookwood Village, the Joint Venture
              Partners liquidated the Joint Venture and distributed its
              remaining assets in the fourth quarter of 1997. In accordance with
              the Joint Venture Agreement, each Joint Venture Partner received
              50% of the remaining net assets of $793,804. Subsequent to the
              final distribution, the Joint Venture was dissolved.

                                    Continued

                                      F-63

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                    NOTES TO FINANCIAL STATEMENTS, Continued


D.            Accrued Expenses and Other Liabilities

              Accrued expenses and other liabilities consisted of the following
              at December 31, 1997 and 1996:
                                                   1997        1996
                                                 --------    ------
                     Accrued real estate taxes   $   -       $ 95,932
                     Tenant security deposits        -         34,890
                     Other accrued expenses          -        211,834
                     Prepaid rent                    -         97,411
                                                 --------    --------
                                                 $   -       $440,067
                                                 ========    ========
E.            Partners' Equity

              Under the terms of the Brookwood Village Joint Venture Agreement,
              profits, losses and distributions are allocated 50% to each Joint
              Venture Partner.

              As of December 31, 1997, the following cumulative Joint Venture
              Partner contributions and allocations have been made since
              inception of the Joint Venture:
<TABLE>
<CAPTION>
                                                                                    BRI
                                                             Krupp                 Texas
                                       Cash Plus-II                              Apartments             Total
                                                            Limited               Limited             Partners'
                                                          Partnership           Partnership             Equity
                      <S>                                 <C>                   <C>                  <C>
                      Capital contributions               $ 25,993,095          $ 25,993,095         $ 51,986,190
                      Net income                               650,362               650,362            1,300,724
                      Loss on sale of
                           property                           (360,880)             (360,880)            (721,760)

                      Distributions:
                           Operations                      (10,503,049)          (10,503,049)         (21,006,098)
                           Capital transaction             (15,779,528)          (15,779,528)         (31,559,056)
                                                          ------------          ------------         ------------
                      Total at
                           December 31, 1997              $       -             $       -            $       -
                                                          ============          ============         ============
</TABLE>

F.            Related Party Transactions

              The Joint Venture paid property management fees to an affiliate of
              the Joint Venture Partners for management services. Pursuant to
              the management agreement, management fees were payable monthly at
              a rate up to 6% of the gross receipts, net of leasing commissions.
              The Joint Venture also reimbursed affiliates of the Joint Venture
              Partners for certain expenses incurred in connection with the
              operation of Brookwood Village including administrative expenses.

              Amounts accrued or paid to affiliates of the Joint Venture
              Partners during the years ended December 31, 1997, 1996 and 1995
              were as follows:

                                        1997       1996      1995
                                     ---------   --------  --------
      Property management fees       $ 140,197   $375,192  $376,424
      Expense reimbursements            28,858    165,611   137,455
                                     ---------   --------  --------
              Charged to operations  $ 169,055   $540,803  $513,879
                                     =========   ========  ========

               Due to affiliates consisted of expense reimbursements of $8,351
               at December 31, 1996.

                                   Continued

                                      F-64

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

                    NOTES TO FINANCIAL STATEMENTS, Continued

G.   Provisions for Losses on Real Estate

     In accordance with Financial Accounting Standard No. 121, "Accounting for
     the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
     Disposed Of", the Joint Venture recorded cumulative valuation provisions
     for losses on its real estate assets of $10,472,096 and $9,000,000 as of
     May 13, 1997, the date Brookwood Village was sold (see Note C), and
     December 31, 1996, respectively, which represent the difference between
     carrying value and estimated fair value less costs to sell.

H. Federal Income Taxes

              The reconciliation of the net income (loss) for each year reported
              in the accompanying Statement of Operations with the net income
              reported in the Joint Venture's 1997, 1996 and 1995 federal income
              tax return follows:

<TABLE>
<CAPTION>
                                                              1997                 1996               1995
                                                          ------------          -----------        -----------
<S>                                                       <C>                   <C>                <C>
         Net income (loss) per Statement
              of Operations                               $ (1,774,928)         $(7,846,140)       $   992,982

              Difference in book to tax
                  depreciation                                 347,845            1,011,716          1,299,910

              Difference in book to tax
                  valuation provisions                       1,472,096            9,000,000               -

              Difference between book and
                  tax loss on sale of
                  property                                 (16,434,937)                -                  -

              Rental adjustment required
                  by Generally Accepted
                  Accounting Principles                         68,336              141,808             63,257

              Difference in book to tax
                  bad debt                                      (4,181)              15,534               -
                                                          ------------          -----------        -----------

         Net income (loss) for federal
              income tax purposes                         $(16,325,769)         $ 2,322,918        $ 2,356,149
                                                          ============          ===========        ===========

     The allocation of the 1997 net loss for federal income tax purposes is as
follows:
                                                             Passive             Portfolio
                                                              Loss                Income               Total

        Krupp Cash Plus-II Limited
              Partnership                                 $ (5,974,042)         $    23,870        $ (5,950,172)

        BRI Texas Apartments Limited
              Partnership                                  (10,399,467)              23,870         (10,375,597)
                                                          ------------          -----------        ------------

                                                          $(16,373,509)         $    47,740        $(16,325,769)
                                                          ============          ===========        ============
</TABLE>

     Passive loss differs due to individual Joint Venture Partner depreciation
     elections.

     The basis of the Joint Venture's assets for financial reporting purposes
     was less than its tax basis by approximately $7,689,000 at December 31,
     1996. The tax and book basis of the Joint Venture's liabilities were the
     same.


                                                           F-65

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

             SCHEDULE III- REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1997


<TABLE>
<CAPTION>
                                                                                            Costs Capitalized
Subsequent
                                          Initial Costs to Joint Venture                    to Acquisition(a)
                                          ------------------------------                    -----------------
                                                                 Buildings               Buildings
                                                                    and                     and
     Description                             Land               Improvements            Improvements             Land
     -----------                             ----               ------------            ------------             ----
<S>                                       <C>                   <C>                     <C>                   <C>
Brookwood Village Mall
and Convenience Center
Birmingham, Alabama                       $14,569,321           $32,713,684             $ 12,066,272          $1,325,818
                                          ===========           ===========             ============          ==========


                                                              Gross Amounts Carried at End of Year
                                         -------------------------------------------------------------------------------

                                                                                        Disposition
                                                                  Buildings             of Buildings,
                                                                    and                 Improvements
                                             Land (a)           Improvement (a)         and Land (b)            Total
                                             --------           ---------------         ------------            -----
(b)
Brookwood Village Mall
and Convenience Center
Birmingham, Alabama                       $15,895,139           $    44,779,956         $ (60,675,095)        $     -
                                          ===========           ===============         =============         =======




                                  Accumulated
                                  Depreciation
                                      and                     Year
                                   Valuation               Construction             Date         Depreciable
                                  Provisions (b)            Completed             Acquired          Life
Brookwood Village Mall
and Convenience Center
Birmingham, Alabama              $       -                      1973              12/16/86       3 to 25 Years
                                 ===============
</TABLE>

(a)  For financial reporting purposes, the carrying value of the properties was
     increased ($1,325,818 to land and $2,974,182 to buildings and
     improvements), based on the settlement of the previous owner's lien for
     $4,300,000 (see Note A).

(b)  On May 13, 1997, Brookwood Village Mall and Convenience Center was sold
     (see Note C).

                                    Continued

                                      F-66

<PAGE>

                         BROOKWOOD VILLAGE JOINT VENTURE

       SCHEDULE III- REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
                               December 31, 1997

Reconciliation of Real Estate and Accumulated Depreciation for each of the three
years in the period ended December 31, 1997:


                                      1997          1996          1995
                                 ------------   -----------   --------
Real Estate

Balance at beginning of year     $ 60,530,292   $55,478,818   $54,898,470

Adjustment to basis based on
     previous owner's lien               -        4,300,000          -

Improvements                          144,803       751,474       580,348

Sale of property                  (60,675,095)         -             -
                                 ------------   -----------   -----------

Balance at end of year           $       -      $60,530,292   $55,478,818
                                 ============   ===========   ===========


                                     1997           1996          1995
                                 ------------   -----------   -----------
Accumulated Depreciation
and Valuation Provisions

Balance at beginning of year     $ 26,190,274   $15,164,143   $12,854,388

Depreciation expense                  731,909     2,026,131     2,309,755

Provisions for losses on real
     estate                         1,472,096     9,000,000          -

Sale of property                  (28,394,279)         -             -
                                 ------------   -----------   -----------

Balance at end of year           $       -      $26,190,274   $15,164,143
                                 ============   ===========   ===========


                                      F-67
<PAGE>


                            SPRING VALLEY PARTNERSHIP








                        FINANCIAL STATEMENTS AND SCHEDULE
                      For the Year Ended December 31, 1997





                                      F-68
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE




Report of Independent Accountants                                           F-70


Balance Sheets at December 31, 1997 and December 31, 1996                   F-71


Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995                                            F-72


Statements of Changes in Partners' Equity for the Years
Ended December 31, 1997, 1996 and 1995                                      F-73


Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995                                            F-74


Notes to Financial Statements                                        F-75 - F-79


Schedule III - Real Estate and Accumulated Depreciation                     F-80


All other schedules are omitted as they are not applicable or not required, or
the information is provided in the financial statements or the notes thereto.




                                      F-69
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Partners of
Spring Valley Partnership:

     We have audited the financial statements and financial statement schedule
of Spring Valley Partnership (the "Joint Venture") listed in the index on page
F-16 of these Financial Statements. These financial statements and the financial
statement schedule are the responsibility of the Joint Venture's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Spring Valley Partnership as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.

     As discussed in Note I, the Joint Venture's property was sold on January
30, 1998. As a result, the Joint Venture will be liquidated in 1998.




Boston, Massachusetts                              COOPERS & LYBRAND L.L.P.
January 30, 1998


<PAGE>

                            SPRING VALLEY PARTNERSHIP

                                 BALANCE SHEETS
                           December 31, 1997 and 1996

                                     ASSETS

                                                1997                  1996
                                            ------------          ------------
Real estate assets:
     Land                                   $ 10,403,471          $ 10,403,471
     Building and improvements                43,632,731            43,425,111
                                            ------------          ------------
                                              54,036,202            53,828,582
     Less accumulated depreciation at
         December 31, 1996 (Note G)          (25,327,070)          (13,983,325)
                                            ------------          ------------

              Total real estate assets        28,709,132            39,845,257

Cash and cash equivalents                      1,565,492             1,153,075
Other assets                                   1,392,739             1,099,725
                                            ------------          ------------

              Total assets                  $ 31,667,363          $ 42,098,057
                                            ============          ============




                        LIABILITIES AND PARTNERS' EQUITY


Liabilities:
     Accrued expenses and other
         liabilities (Note C)               $    380,150          $    185,163
     Accounts payable                               -                   30,044
     Due to affiliates (Note F)                      828                 7,320
                                            ------------          ------------

              Total liabilities                  380,978               222,527

Partners' equity (Note D)                     31,286,385            41,875,530
                                            ------------          ------------

              Total liabilities and
                 Partners' equity           $ 31,667,363          $ 42,098,057
                                            ============          ============




                      Theaccompanying notes are an integral
                        part of the financial statements.


                                      F-71
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                            STATEMENTS OF OPERATIONS
              For the Years Ended December 31, 1997, 1996 and 1995

                                        1997           1996         1995
                                     -----------    ----------   ----------
Revenue:
     Rental (Note E)                 $ 6,734,019    $6,938,222   $6,544,064
     Other income                         51,936        33,438       35,233
                                     -----------    ----------   ----------

         Total revenue                 6,785,955     6,971,660    6,579,297
                                     -----------    ----------   ----------

Expenses:
     Operating (Note F)                  344,832       376,480      350,023
     Maintenance                         493,218       649,491      511,014
     Management fees (Note F)            394,601       416,414      398,642
     Real estate taxes                 2,238,599     1,804,942    1,661,539
     Depreciation                      2,066,312     1,899,015    1,840,644
     Provision for losses on real
         estate (Note G)               9,277,433          -            -
                                     -----------    ----------   ----------

         Total expenses               14,814,995     5,146,342    4,761,862
                                     -----------    ----------   ----------


Net income (loss) (Note H)           $(8,029,040)   $1,825,318   $1,817,435
                                     ===========    ==========   ==========


Allocation of net income (loss)
  (Note D):

         Cash Plus-V Limited
              Partnership            $(4,006,491)   $  910,834   $  906,900
                                     ===========    ==========   ==========

         Berkshire Realty
              Company, Inc.          $(4,022,549)   $  914,484   $  910,535
                                     ===========    ==========   ==========


                      Theaccompanying notes are an integral
                        part of the financial statements.


                                      F-72
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                       STATEMENTS OF CHANGES IN PARTNERS'
          EQUITY For the Years Ended December 31, 1997, 1996, and 1995



                                          Berkshire
                         Cash Plus-V        Realty             Total
                           Limited          Company,          Partners'
                         Partnership         Inc.              Equity

Balance at
 December 31, 1994       $21,865,991      $21,841,786       $43,707,777

Distributions             (1,468,058)      (1,473,942)       (2,942,000)

Net income                   906,900          910,535         1,817,435
                         -----------      -----------       -----------

Balance at
 December 31, 1995        21,304,833       21,278,379        42,583,212

Distributions             (1,263,967)      (1,269,033)       (2,533,000)

Net income                   910,834          914,484         1,825,318
                         -----------      -----------       -----------

Balance at
 December 31, 1996        20,951,700       20,923,830        41,875,530

Distributions (Note D)    (1,277,494)      (1,282,611)       (2,560,105)

Net loss (Note D)         (4,006,491)      (4,022,549)       (8,029,040)
                         -----------      -----------       -----------

Balance at
 December 31, 1997       $15,667,715      $15,618,670       $31,286,385
                         ===========      ===========       ===========


                      Theaccompanying notes are an integral
                        part of the financial statements.


                                      F-73
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                          STATEMENTS OF CASH FLOWS For
                the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                                1997                1996               1995
                                                            -----------         -----------        -----------
<S>                                                         <C>                 <C>                <C>
Operating activities:
     Net income (loss)                                      $(8,029,040)        $ 1,825,318        $ 1,817,435
     Adjustments to reconcile net income
       (loss) to net cash provided by
       operating activities:
         Depreciation                                         2,066,312           1,899,015          1,840,644
         Provision for losses on real
              estate                                          9,277,433                -                  -
         Changes in assets and liabilities:
              Increase in other assets                         (293,014)           (183,554)          (143,627)
              Increase (decrease) in accounts
                      payable                                   (23,044)            (22,532)            37,044
              Increase (decrease) in due to
                      affiliates                                 (6,492)              4,598              2,722
              Increase (decrease) in other
                      liabilities                               194,987                 (52)            (9,839)
                                                            -----------         -----------         ----------

                      Net cash provided by
                           operating activities               3,187,142           3,522,793          3,544,379
                                                            -----------         -----------        -----------

Investing activities:
         Increase (decrease) in accounts
              payable related to fixed asset
              additions                                          (7,000)              7,000               -
         Additions to fixed assets                             (207,620)           (419,284)          (279,315)
                                                            -----------         -----------        -----------

                      Net cash used in
                           investing activities                (214,620)           (412,284)          (279,315)
                                                            -----------         -----------        -----------

Financing activity:
     Distributions                                           (2,560,105)         (2,533,000)        (2,942,000)
                                                            -----------         -----------        -----------

Net increase in cash and cash equivalents                       412,417             577,509            323,064

Cash and cash equivalents, beginning
     of year                                                  1,153,075             575,566            252,502
                                                            -----------         -----------        -----------

Cash and cash equivalents, end
     of year                                                $ 1,565,492         $ 1,153,075        $   575,566
                                                            ===========         ===========        ===========
</TABLE>

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


                                      F-74
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

A.   Organization

     Spring Valley Partnership (the "Joint Venture") was formed on December 13,
     1988 by filing a Business Certificate in the Commonwealth of Massachusetts.
     The original General Partner interests were issued to Krupp Cash Plus-IV
     Limited Partnership ("Cash Plus-IV"), at 50.1%; Krupp Cash Plus-V Limited
     Partnership ("Cash Plus-V"), at .01%; and Krupp Realty Company Limited
     Partnership ("Krupp Realty Company"), at 49.89%. Pursuant to the original
     Partnership Agreement, Cash Plus-V purchased Krupp Realty Company's
     interest in the Joint Venture and succeeded to its capital contributions
     and its share of profit and loss allocations and distributions. On June 25,
     1991, The Joint Venture executed an Amended and Restated Partnership
     Agreement, whereby Cash Plus-IV assigned its rights, title and interest in
     the Partnership to Berkshire Realty Company, Inc. ("Berkshire"), a Delaware
     Corporation. Pursuant to the Assignment and First Amendment to Spring
     Valley Partnership Amended and Restated Partnership Agreement dated May 1,
     1995, Berkshire assigned 49.1% of its rights, title and interest in the
     Partnership to BRI OP Limited Partnership ("BRI OP LP"), its majority owned
     subsidiary. As of December 31, 1995, the Joint Venture Partners of Spring
     Valley Partnership are BRI OP LP (49.1%) and Berkshire (1%), collectively,
     "Berkshire Realty Company, Inc." (50.1%) and Cash Plus-V Limited
     Partnership (49.9%). Profits and losses and distributions will continue to
     be allocated to the Joint Venture Partners based on the percentage of their
     respective capital contributions to total Partners' capital contributions.

     On December 14, 1988, the Joint Venture acquired Spring Valley Marketplace
     (the "Marketplace"), a 320,684 square foot shopping center located on 30
     acres of land in Spring Valley, Rockland County, New York. The Joint
     Venture acquired the Marketplace for $50,000,000 and incurred closing costs
     of $359,408 related to the acquisition. Additionally, the Joint Venture
     executed a Net Operating Income Guaranty Agreement ("NOI Guaranty
     Agreement") with the seller, by which, the seller would reimburse the Joint
     Venture if the net operating income from the Marketplace did not meet or
     exceed $4.3 million annually. Per the NOI Guaranty Agreement, which expired
     on December 13, 1990, the seller's obligation was limited to $1,000,000 on
     a cumulative basis. As a result of the NOI Guaranty Agreement, the Joint
     Venture has collected $1,000,000, the maximum obligation due from the
     seller, and has therefore reduced the cost basis of the Marketplace by this
     amount for financial reporting purposes. The Marketplace, built in 1987,
     consists of one structure anchored by five major tenants and is connected
     by five sections occupied by smaller tenants. The Joint Venture owns the
     Marketplace free and clear from all material liens or encumbrances.

     On December 2, 1997, Berkshire Realty Enterprise Limited Partnership, an
     affiliate of the Joint Venture Partners, as agent for the Joint Venture,
     entered into an Agreement of Sale to sell the Joint Venture's property,
     Spring Valley Marketplace, to Kejack, Inc. and its permitted assigns, which
     are unaffiliated third parties. Spring Valley Marketplace was included in a
     package with thirteen other properties owned by affiliates of the Joint
     Venture Partners. The transaction was consummated on January 30, 1998 (see
     Note I).

     The sale of the Marketplace is considered a cause for dissolution of the
     Joint Venture as defined by the Partnership Agreement. Accordingly, the
     Joint Venture Partners expect to liquidate and distribute the remaining
     assets of the Joint Venture in 1998. All distributions of net cash proceeds
     from the Terminating Capital Transaction shall be governed by Section 8.3
     (b) of the Partnership Agreement.


                                    Continued

                                      F-75
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued


B.   Significant Accounting Policies

     The Joint Venture uses the following accounting policies for financial
     reporting purposes, which may differ in certain respects from those used
     for federal income tax purposes (see Note H):

         Risks and Uncertainties

         The Joint Venture invests its cash primarily in deposits and money
         market funds with commercial banks. The Joint Venture has not
         experienced any
         losses to date on its invested cash.

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

         Cash and Cash Equivalents

         The Joint Venture includes all short-term investments with maturities
         of three months or less from the date of acquisition in cash and cash
         equivalents. Cash equivalents are recorded at cost, which approximates
         current market value.

         Rental Revenues

         Commercial leases require the payment of base rent monthly in advance.
         Rental revenues are recorded on the accrual basis. Leases generally
         contain provisions for additional rent based on a percentage of tenant
         sales and other provisions which are also recorded on the accrual
         basis, but are billed in arrears. Minimum rental revenue for long term
         commercial leases is recognized on a straight-line basis over the life
         of the related lease.

         Depreciation

         Depreciation of building and improvements is provided for by the use of
         the straight-line method over estimated useful lives of 3 to 25 years.
         Tenant improvements are depreciated over the life of the lease.

         Impairment of Long-Lived Assets

         Real estate assets and equipment are stated at depreciated cost.
         Pursuant to Statement of Financial Accounting Standards Opinion No. 121
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to be Disposed of", impairment losses are recorded on long-lived
         assets used in operations on a property by property basis, when events
         and circumstances indicate that the assets might be impaired and the
         estimated undiscounted cash flows to be generated by those assets are
         less than the carrying amount of those assets. Upon determination that
         an impairment has occurred, those assets shall be reduced to fair value
         less estimated costs to sell (see Note G).

         Leasing Commissions

         Leasing commissions are deferred and amortized over the life of the
         related lease.
                                    Continued


                                      F-76
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

B.   Significant Accounting Policies, Continued

              Income Taxes

              The Joint Venture is not liable for federal or state income taxes
              because Joint Venture income or loss is allocated to the Partners
              for income tax purposes. In the event the Joint Venture's tax
              returns are examined by the Internal Revenue Service or state
              taxing authority and such an examination results in a change in
              Joint Venture taxable income or loss, such change will be reported
              to the Partners.

C.   Accrued Expenses and Other Liabilities

     Accrued expenses and other liabilities consisted of the following at
     December 31, 1997 and 1996:

                                             1997            1996
                                           --------        --------
            Prepaid rent                   $225,000        $   -
            Accrued insurance                89,673         110,846
            Tenant security deposits         65,185          71,614
            Other accrued expenses              292           2,703
                                           --------        --------

                                           $380,150        $185,163
                                           ========        ========

D.   Partners' Equity

     Under the terms of the Partnership Agreement, profits, losses and
     distributions are allocated 49.9% to Cash Plus-V Limited Partnership and
     50.1% to Berkshire Realty Company, Inc.

     Upon the occurrence of the sale by the Joint Venture of all or
     substantially all of the Property and other assets owned by the Joint
     Venture, the Joint Venture shall be dissolved. After payment of the debts
     and allowances for the liabilities of the Joint Venture, the remaining
     assets shall be distributed to the Joint Venture Partners on the basis of
     the amount of each Partner's capital contribution in proportion to total
     capital contributions.

     As of December 31, 1997, the following cumulative Partner contributions and
     allocations have been made since inception of the Joint Venture:

                                                   Berkshire
                                  Cash Plus-V       Realty           Total
                                    Limited        Company,         Partners'
                                  Partnership        Inc.            Equity

        Capital contributions     $ 26,379,755   $ 26,373,641     $ 52,753,396
        Net income                   2,245,368      2,254,369        4,499,737
        Distributions              (12,957,408)   (13,009,340)     (25,966,748)
                                  ------------   ------------     ------------

            Total at
             December 31, 1997    $ 15,667,715   $ 15,618,670     $ 31,286,385
                                  ============   ============     ============

E.   Future Base Rents Due Under Commercial Operating Leases

     As a result of the sale of the Marketplace subsequent to year-end, all
     commercial operating leases were assumed by the buyer (see Note I).

                                    Continued


                                      F-77
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

F.   Related Party Transactions

     Property management fees are paid monthly to an affiliate of the Joint
     Venture Partners at the rate of up to 6% of rentals and other operating
     income received by the Marketplace. The Joint Venture also reimburses
     affiliates for certain expenses incurred in connection with operation of
     the Joint Venture and its property including administrative expenses.

     Amounts paid or accrued to affiliates of the Joint Venture Partners during
     the years ended December 31, 1997, 1996 and 1995 were as follows:


                                            1997        1996         1995
                                          --------    --------     ------

              Property management fees    $394,601    $416,414     $398,642

              Expense reimbursements        42,841      87,766       58,284
                                          --------    --------     --------

                  Charged to operations   $437,442    $504,180     $456,926
                                          ========    ========     ========


     Due to affiliates consisted of expense reimbursements of $828 and $7,320 at
     December 31, 1997 and 1996, respectively.

G.   Provision for Losses on Real Estate

     In accordance with Financial Accounting Standard No. 121, "Accounting for
     the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
     Disposed Of", the Joint Venture recorded a valuation provision for losses
     on its real estate asset of $9,277,433 as of December 31, 1997, these
     provisions represent the difference between carrying value and selling
     price less estimated costs to sell as a result of the forthcoming sale of
     the Joint Venture's property subsequent to year end (see Note I). As this
     asset is held for sale, the Joint Venture has discontinued depreciation.

H.   Federal Income Taxes

     The reconciliation of the net income (loss) for each year reported in the
     accompanying Statement of Operations with the net income reported in the
     Joint Venture's federal income tax return is as follows:

<TABLE>
<CAPTION>
                                                             1997               1996                1995
                                                          -----------        ----------          -------
<S>                                                       <C>                <C>                 <C>
              Net income (loss) per
                  Statement of Operations                 $(8,029,040)       $1,825,318          $1,817,435

                  Difference in book to tax
                   depreciation                               784,586           624,845             573,232

                  Difference in book to tax
                   bad debt                                   (21,428)           15,566                -

                  Difference in book to tax
                   fixed asset revaluation                  8,886,565              -                   -

                  Rental adjustment required
                   by Generally Accepted
                   Accounting Principles                        1,969            26,293             (18,176)
                                                          -----------        ----------          ----------

              Net income for federal
                  income tax purposes                     $ 1,622,652        $2,492,022          $2,372,491
                                                          ===========        ==========          ==========
</TABLE>

                                    Continued


                                      F-78
<PAGE>

                            SPRING VALLEY PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

H.   Federal Income Taxes, Continued

     The allocation of the 1997 net income for federal income tax purposes is as
     follows:

                                     Passive       Portfolio
                                     Income         Income         Total
                                    ----------    ---------     ----------
        Cash Plus-V
             Limited Partnership     $ 763,862      $ 25,915     $ 789,777

        Berkshire Realty Company,
             Inc.                      806,856        26,019       832,875
                                    ----------    ----------    ----------

                                    $1,570,718    $   51,934    $1,622,652
                                    ==========    ==========    ==========

     The basis of the Joint Venture's assets for financial reporting purposes is
     less than its tax basis by approximately $16,543,000 and $6,157,000 at
     December 31, 1997 and 1996, respectively. The tax and book basis of the
     Joint Venture's liabilities are the same.

I.   Subsequent Event

     The sale of the Joint Venture's property, as discussed in Note A, was
     consummated on January 30, 1998. The total selling price of the fourteen
     properties was $138,000,000, of which the Joint Venture Partners received
     $29,571,700, less their share of the closing costs.

     The sale is considered a cause for dissolution of the Joint Venture as
     defined by the Partnership Agreement. Accordingly, the Joint Venture
     Partners expect to liquidate and distribute the remaining assets of the
     Joint Venture in 1998. All distributions of net cash proceeds from the sale
     and dissolution of the Joint Venture shall be governed by Section IV,
     Paragraph 17, of the Partnership Agreement, as discussed above in Note D.




                                      F-79
<PAGE>

                            SPRING VALLEY PARTNERSHIP

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1997

                                                             Costs
                                                          Capitalized
                                                          Subsequent to
                  Initial Cost to Joint Venture            Acquisition
                  -----------------------------    ---------------------------
                                 Buildings &       Buildings &     Depreciable
 Description          Land       Improvements      Improvements       Life
 -----------          ----       ------------      ------------   -------------
Spring Valley
Marketplace       $10,403,471    $ 41,613,880      $  2,018,851   3 to 25 years
                  ===========    ============      ============


<TABLE>
<CAPTION>
                        Gross Amounts Carried at End of Year
                      ----------------------------------------                    Accumulated
                                    Buildings                      Depreciation     Year
                                       and                        & Valuation     Construction       Year
 Description             Land      Improvements      Total(a)      Provision        Completed     Acquired
-------------         ----------   ------------    -----------    ------------    ------------    --------
<S>                   <C>          <C>             <C>            <C>                 <C>           <C>
Spring Valley
Marketplace           $10,403,471  $ 43,632,731    $54,036,202    $ 25,327,070        1987          1988
                      ===========  ============    ===========    ============
</TABLE>


     Reconciliation of Real Estate and Accumulated Depreciation for each of the
     three years in the period ended December 31, 1997:

     Real Estate                     1997           1996           1995
     -----------                  -----------   -----------     -----------

     Balance at
        beginning of year         $53,828,582   $53,409,298     $53,129,983

     Improvements                     207,620       419,284         279,315
                                  -----------   -----------     -----------

     Balance at
        end of year               $54,036,202   $53,828,582     $53,409,298
                                  ===========   ===========     ===========



     Accumulated Depreciation
     and Property Valuation           1997          1996            1995
     ------------------------     -----------   -----------     -----------

     Balance at
        beginning of year         $13,983,325   $12,084,310     $10,243,666

     Property valuation             9,277,433          -               -

     Depreciation expense           2,066,312     1,899,015       1,840,644
                                  -----------   -----------     -----------

     Balance at end of year       $25,327,070   $13,983,325     $12,084,310
                                  ===========   ===========     ===========


     (a) The aggregate cost of the Joint Venture's real estate for federal
     income tax purposes was $53,170,799 and the aggregate accumulated
     depreciation for federal income tax purposes was $8,242,176 for the year
     ended December 31,
     1997.

                                      F-80