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


                                   FORM 10-K/A
(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, 1996
                                              -----------------
                                       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 $244,838,298 as of December 31, 1996.

As of February 1, 1997 there were 25,393,369  shares of the registrant's  common
stock outstanding.

Documents  incorporated by reference:  See Item 14 herein.  The exhibit index is
located on pages 25-34. The total number of pages in this document is 77.


<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 multi-family 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 of its 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 to 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 is the general partner and
currently 88.15% owner. 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.

     To permit the organization of the Operating Partnership, on May 1, 1995 an
affiliate of Berkshire Realty Advisor Limited Partnership ("Advisor"),
contributed $5,000 and The River Oaks Apartments subject to mortgage debt of
$5.4 million on May 1, 1995 at a valuation of $10,500,000 approved by the
independent members of the Board of Directors. The seller received 534,975 Units
for its interest ("Minority Interest") in the Operating Partnership in exchange
for the property. Under the agreement, the Company may not sell the River Oaks
Apartments for a period of three years following the closing date. The
contribution was accounted for using the purchase method. The River Oaks is a
17-story, 136-unit, multi-family complex located in the exclusive River Oaks
area of Houston, Texas.

     On March 1, 1996 the Company acquired, via contribution, certain assets of
the entity providing advisory and development services to the Company (the
"Advisor Transaction") of Berkshire Companies Limited Partnership, in exchange
for 1,300,000 Units of the Operating Partnership. 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 to the transferor during a six-year
period if certain Share price benchmarks are achieved. (See Note C to the
Consolidated Financial Statements). The Units are convertible only upon
shareholder approval. This transaction enabled the Company to eliminate fees
previously incurred by the Company for asset management, acquisition and
disposition functions. The Company outsourced with affiliates of certain
directors and officers for certain administrative services such as shareholder
relations, computer systems and support, and legal services.

     Besides becoming self-administered, the Board of Directors and management
determined that the Company should become self-managed. After year-end, on
February 26, 1997, based on the recommendation of a Special Committee of the
Independent Directors, the Board approved the acquisition of certain assets of
the affiliate which provides multifamily property management services to the
Company for 1,700,000 Units in the Operating Partnership. The transaction was
valued at $17.6 million (based on a $10.375 per share price), closed on February
28, 1997, and will be recorded as the acquisition of third-party management
contracts and the acquisition of a workforce.


                                      -2-
<PAGE>

     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.
Based upon current market conditions, management does not believe that it is
likely the shareholders would liquidate the Company. 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, development, rehabilitation 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 continues its focus as a growth oriented equity REIT
specializing in the ownership and operation of quality apartment communities.
The Company is committed to maintaining a balance between prudent geographic
diversification and specific market specialization by limiting operations to a
specific group of carefully selected markets. While the Company primarily
invests in equity interests in real estate, it has also invested in multi-family
mortgage loans with the potential for subsequent ownership of the underlying
property.

     The Company targets five regions to operate its multi-family communities:
Georgia/Tennessee, the Carolinas, Florida, Texas and the Maryland/D.C. area. The
Company has regional offices in these regions in order to provide our residents
with quality service.

     The Company's business plan objectives are to increase  shareholder returns
by a)  improving  the  profitability  of the existing  real estate  portfolio by
maximizing cash flows through higher  occupancies,  rent  increases,  low tenant
turnover and control of operating  expenses,  b) providing high quality services
and  a  superior   living   experience  to  our  residents  which  meets  market
requirements and the needs of residents,  c) prudently  acquiring and developing
quality  apartment  communities  which  provide  a  solid  current  return  with
potential for increased  cash flow through growth in occupancy and rental rates,
and d) selling  properties if their  retention will no longer  contribute to the
achievement of the above-mentioned goals. In addition, the Company may implement
programs of  expansion  and  renovation  of any  property to increase  cash flow
growth and appreciation potential.

     While Berkshire's long term plan is to hold its properties and increase
earnings, there are four reasons management will recommend a sale: 1) when a
property with a low yield potential can be sold with the proceeds reinvested at
a significantly higher yield; 2) when profit margins of a property are judged
too low and can be replaced by another property with better operating leverage;
3) when a property is the only property owned in a market in which the Company
does not plan to expand, or 4) when a specific market is judged to be going into
decline.

Financing Strategy
------------------

     The Company's policy is to limit debt (including debt under lines of
credit) to 50% of the estimated fair value of assets. This prudent level of debt
should insure that debt service requirements are adequately funded with
operating cash flows.

     The Company may seek additional capital through additional equity
offerings, debt offerings or retention of cash flows, or a combination thereof.
The net proceeds of any capital offering will be contributed to the Operating
Partnership in exchange for Units in the Operating Partnership. The Company may
also issue senior securities such as preferred stock or debt securities, which
may be


                                      -3-
<PAGE>



convertible to stock. Additionally, the Company will continue to finance, when
possible, the acquisition of apartment communities in exchange for Operating
Partnership Units.

Other Matters
-------------

     The Company's real estate investments are 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.

     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.

     As of December 31, 1996, the Company has recorded $12 million in provisions
for losses on the wholly-owned and joint venture retail assets as a result of
the Company's strategic decision to divest of its retail portfolio over time and
redeploy proceeds in multifamily assets. In the third quarter of 1996, the
Company began actively marketing four of its wholly-owned retail centers, one of
which was sold in December 1996. As a result of these efforts, the Company has
reclassified these centers to assets held for sale and has recorded a provision
for losses of $4.2 million which represents the difference between carrying
value and estimated fair value less cost to sell. Depreciation will no longer be
recorded on these assets.

     A fifth retail center, which is not currently for sale had a significant
lease restructuring during the third quarter of 1996. As a result of this
situation, the Company has recorded a provision for a loss of $3.3 million which
represents the difference between carrying value and estimated fair value.
Depreciation will be calculated on the adjusted book value of this asset.

     Finally, one of the Company's joint venture investments, Brookwood Village,
recorded a $9 million provision for loss, of which $4.5 million represents the
Company's pro-rata share of the provision.

Employees
---------

     At December 31, 1996, the Company had 704 employees.



                                      -4-
<PAGE>



ITEM 2. PROPERTY
------

     As of December 31, 1996, the Company had investments in 41 properties in 9
states consisting of 35 apartment communities having in the aggregate 12,435
units and 6 retail centers with a total of 1,568,811 square feet of leasable
space. Two of the retail centers are owned through joint ventures with
affiliates of the Company. In addition, the Company owns a mortgage loan
collateralized by a multi-family apartment complex located in Florida, two
development projects located in Greenville, South Carolina and Mauldin, South
Carolina totaling 296 units and 96 units, respectively, and two parcels of land
for future development located in Durham, North Carolina, and Dallas, Texas.
Schedule III and IV and Notes D, E and F to the Consolidated Financial
Statements included in Appendix A to this report contain additional detailed
information with respect to individual assets.

     The Company's apartment communities and three of the wholly-owned retail
centers have been pledged as collateral for various debt incurred by the
Company.

     The following table summarizes the Company's real estate investments at
December 31, 1996 and also sets forth the aggregate number of apartment units
and the amount of current leasable commercial square footage by geographic
region. The table does not reflect the value of the Company's investments.

<TABLE>
<CAPTION>
                            Wholly-Owned                  Joint Venture
             ----------------------------------------   ------------------  
Region          Multi-family            Retail                Retail          Mortgage Loans
----------   ------------------    -------------------  ------------------   -----------------
             Properties   Units    Properties   Sq.Ft.  Properties  Sq.Ft.   Properties  Units
             ----------  ------    ----------  -------  ---------- -------   ----------  -----
<S>              <C>      <C>         <C>      <C>          <C>    <C>          <C>      <C>
Carolinas        10       3,133        -          -         -         -
Georgia/                
  Tennessee       6       2,036        3       690,027      -         -
Florida           6       1,752        1        83,962      -         -          1       120
Texas            11       4,181        -          -         -         -
Maryland/DC       1       1,119
Other             1         214        -          -         2      794,822(1)
                 --      ------        -       -------      -      -------       - 
                        
                 35      12,435        4       773,989      2      794,822       1       120
                 ==      ======        =       =======      =      =======       =       ===
</TABLE>

     (1)  The Company owns a 50.1% joint venture interest and a 50% joint
          venture interest in these properties.

     The following table provides a more detailed description of the individual
properties in which the Company has an interest at December 31, 1996. 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.

<TABLE>
<CAPTION>
                                                                                            Avg. Rent
Apartment                                               Year                Avg.Occupancy   Per Apart.
Communities               Location                    Acquired     Units    1996     1995     1996
-----------               --------                    --------     -------   ----    ----     ----
<S>                       <C>                           <C>         <C>      <C>     <C>     <C>
Carolinas Region
----------------
South Carolina
Brookfield Trace(1)(6)    Mauldin (Greenville)           1995        204     92%      97%     $967
Brookwood Valley(6)       Mauldin (Greenville)           1995        226     94%      97%      624
Howell Commons(6)         Greenville                     1988        348     92%      96%      518
Huntington Downs(6)       Greenville                     1988        502     94%      96%      600
The Oaks(6)               Mauldin (Greenville)           1990        176     93%      97%      644
Roper Mountain(6)         Greenville                     1988        248     95%      98%      514
Stoneledge(6)             Greenville                     1988        320     92%      97%      538

North Carolina
Cumberland Cove (1)(6)    Raleigh                        1991        552     96%      98%      753
East Lake(6)              Charlotte                      1993        214     95%      98%      650
The Timbers(6)            Charlotte                      1993        343     95%      96%      575





                                      -5-
<PAGE>

<CAPTION>
                                                                                            Avg. Rent
Apartment                                               Year                Avg.Occupancy   Per Apart.
Communities               Location                    Acquired     Units    1996     1995     1996
-----------               --------                    --------     -------   ----    ----     ----
<S>                       <C>                           <C>         <C>      <C>     <C>     <C>

Georgia/Tennessee Region
Georgia
Arbors at
  Breckenridge(1)(6)      Duluth (Atlanta)               1993        514     94%      95%    $ 750
Avalon on Abernathy(6)    Atlanta                        1992        240     95%      95%      891
Huntington Chase(1)(6)    Norcross (Atlanta)             1993        467     93%      96%      776

Tennessee
British Woods(6)          Nashville                      1995        264     93%      96%      646
Highland Ridge(6)         Madison (Nashville)            1995        280     92%      94%      531
Windover(6)               Knoxville                      1995        271     90%      93%      588

Florida Region
Altamonte Bay Club(6)     Altamonte Springs (Orlando)    1992        224     95%      94%      610
Lakes at Jacaranda(6)     Plantation (Broward County)    1990        340     94%      92%      824
Newport(6)                Tampa                          1992        320     96%      96%      513
Park Colony(6)            Hollywood (Broward County)     1994        316     95%      95%      759
Plantation Colony(6)      Plantation (Broward County)    1993        256     95%      96%      750
Woodland Meadows(6)       Tamarac (Broward County)       1992        296     97%      93%      668

Texas Region
Benchmark (6)             Irving (Dallas)                1996        250     95%      N/A      579
Golf Side (6)             Halton City (Dallas)           1996        402     90%      N/A      442
Hunters Glen (6)          Plano (Dallas)                 1996        276     96%      N/A      625
Indigo on Forest(3)(6)    Dallas                         1994      1,217     93%      84%      589
Kings Crossing (2)(6)     Kingwood (Houston)             1994        404     92%      91%      614
Kingwood Lakes (2)(6)     Kingwood (Houston)             1994        390     94%      84%      607
Pleasant Woods (6)        Dallas                         1996        208     95%      N/A      548
Prescott Place (6)        Mesquite                       1996        318     95%      N/A      499
Prescott Place II (6)     Mesquite                       1996        336     95%      N/A      497
Providence (6)            Dallas                         1996        244     83%      N/A      494
River Oaks(6)             Houston                        1995        136     92%      98%    1,994

D.C. Area
Berkshire Towers (6)      Silver Spring, Maryland        1996      1,119     91%      N/A      827

Other
New York
Southpointe at
  Massapequa(6)           Massapequa, New York           1992        214     99%      98%     1,164
                                                                  ------     ---      ---
                          Total                                   12,435     93%      94%
                                                                  ======     ===      ===
</TABLE>

<TABLE>
<CAPTION>
Retail                                                   Year            Year End Occupancy
Property                  Location                     Acquired  Sq.Ft.    1996     1995
--------                  --------                     --------  ------  --------  --------
<S>                       <C>                            <C>    <C>         <C>      <C> 
Georgia/Tennessee Region
------------------------
Banks Crossing(6)         Fayetteville (Atlanta)         1987    243,660     98%     100%
Crossroads(6)             Jonesboro (Atlanta)            1987    211,186     98%      98%
Tara Crossing             Jonesboro (Atlanta)            1987    235,181     90%      92%

Florida Region
College Plaza             Fort Myers                     1987     83,962     95%      94%

Other Region
Alabama
Brookwood Village (4)     Birmingham                     1986    474,138     93%      94%

New York
Spring Valley (5)         Spring Valley                  1988    320,684     98%      98%
                                                               ---------
                          Total                                1,568,811

</TABLE>

                                      -6-
<PAGE>


(1)  Occupancy figures for 1995 do not include units which were constructed in
     1995.

(2)  The properties suffered extensive flood damage late in 1994 which impacted
     1995 occupancies.

(3)  Indigo underwent a significant tenant repositioning and rehabilitation in
     late 1994 and 1995 which impacted occupancies.

(4)  The Company holds a 50% joint venture interest in this property.

(5)  The Company holds a 50.1% joint venture interest in this property.

(6)  These properties are pledged as collateral to outstanding debt. See Notes H
     and I to the Consolidated Financial Statements which are included in
     Appendix A to this report.

ITEM 3. LEGAL PROCEEDINGS
------

     There are no material pending legal proceedings to which the Company is a
party.

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

     None.




                                      -7-
<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 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 1996 and 1995 and dividends declared for such common
stock are:

                                                       Dividends
          Quarter Ended             High       Low       Paid
          -------------            ------     -----    ---------

          March 31, 1996           10 3/8     9 3/4     $.225
          June 30, 1996            11         9 7/8      .225
          September 30, 1996       11         9 5/8      .225
          December 31, 1996        10 1/4     9 3/8      .225
                                                        -----
                                                        $.900


          March 31, 1995           10         9         $.215
          June 30, 1995            10 1/4     9 1/4      .225
          September 30, 1995       10 3/8     91/2      .225
          December 31, 1995        10 1/8     9 1/4      .225
                                                        -----
                                                        $.890

     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, as
discussed below. The high and low prices of the Company warrants based on a
composite average for each quarter during 1996 and 1995 are:

          Quarter Ended                  High            Low
          -------------                 ------          -----

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


          March 31, 1995                $.75            $.56
          June 30, 1995                  .69             .38
          September 30, 1995             .50             .31
          December 31,1995               .75             .41

     In 1994, a court ordered settlement of a class action-suit related to the
Exchange provided that the Company issue three million stock warrants to the
plaintiff class. Upon exercise, each stock warrant entitles the holder to the
right to acquire one share of common stock of the Company. For further
information see Note T to Notes to the Consolidated Financial Statement included
in Appendix A to this report.

     The Company's practice is to review and declare its dividend quarterly, 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 6, 1997, the Board approved a dividend of $.225
per Share payable on May 15, 1997 to the Shareholders of record on May 1, 1997.

     The Company is authorized to repurchase or otherwise acquire Shares in the
open market or in negotiated transactions if the Board determines such actions
are in the best interest of the Company and of the Shareholders. Through
December 31, 1992, the Company had purchased a total of 506,497 shares for
approximately $1,743,075, inclusive of brokerage commissions. No shares have
been repurchased since that time.


                                      -8-
<PAGE>



     As of January 31, 1997 there were approximately 28,400 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>
                                        1996           1995            1994          1993          1992
                                     ---------      ---------       ---------      ---------      -------
<S>                                 <C>            <C>             <C>            <C>           <C> 
Operating Data:

Rental revenue                         $89,451        $70,068         $63,222        $44,236       $34,493
Total revenues                          93,002         74,441          68,470         50,071        39,602
Property operating
  expenses including property
  management fees                       42,353         33,347          31,826         21,867        17,283
Depreciation and amortization           30,171         21,984          19,507         14,384        12,414
Provision for losses on
   real estate investments (5)           7,500            -               -              -             -
Interest expense                        20,501         15,618          10,794          3,858           334
Joint venture net income(loss)          (2,737)         1,387           1,178          1,137         1,057
Gains (losses) on sales of
   investments                              53         15,387           4,069            -            (152)
Non-recurring charges (1)(2)(3)           (442)        (1,728)         (2,555)        (1,225)          -
Minority interest                        1,137             70             -              -             -
Extraordinary items (4)                   (149)          (901)            -              -             -
Net income (loss)                      (14,308)        14,786           5,757          6,503         7,310

Per Share Data:

Net income (loss)                        $(.56)          $.58            $.23           $.26          $.29

Dividends paid                            $.90           $.89            $.86           $.80         $1.15

Weighted average
Shares outstanding                  25,393,147     25,392,621      25,391,478     25,391,426    25,467,044

Balance Sheet Data:

Total Assets                          $569,670       $486,968        $458,207       $412,516      $342,482

Real estate, excluding
   joint ventures, before
   accumulated depreciation           $585,795       $465,846        $448,058       $373,055      $296,380

Long-term fixed rate                  $206,837       $155,201         $88,279            -             -
   obligations

Other Information:

Apartment units owned,
 end of year                            12,435          9,433           9,385          7,554         5,721
</TABLE>



                                      -10-
<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA



(1)  Non-recurring charges in 1993 and 1994 relate to the settlement of
     litigation. See Note N to the Consolidated Financial Statements.

(2)  The non-recurring charge in 1995 is related to costs associated with the
     restructuring of the Company. See Note N to the Consolidated Financial
     Statements.

(3)  The non-recurring charge in 1996 is related to costs associated with the
     restructuring of the Company and litigation related to a property
     disposition. See Note N to the Consolidated Financial Statements.

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

(5)  As reflected in the Notes to the Consolidated Financial Statements, the
     Company recorded a $7,500,000 provision for losses on its retail assets
     which represents the difference between carrying value and estimated fair
     value less cost to sell.


                                      -11-
<PAGE>



ITEM 7. MANAGEMENTS 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.

     The Company is a Real Estate Investment Trust ("REIT") whose operations
consist primarily of the acquisition, development, rehabilitation and management
of apartment communities located in the Southeast and Texas. As of December 31,
1996, the Company owns 35 apartment communities consisting of 12,435 units and
also has investments in six retail centers, two of which are held in joint
venture investments. Over the next two to three years, the Company expects the
retail properties will be marketed for sale and subsequently replaced with
multi-family properties. The Company also has approximately 320 multifamily
units under development.

     UPREIT Reorganization:
     ----------------------

     The Company reorganized as an Umbrella Partnership ("UPREIT") on May 1,
1995 whereby the Company contributed substantially all of its assets subject to
all liabilities to BRI OP Limited Partnership ("Operating Partnership") in which
the Company is General Partner. In addition, on May 1, 1995, George and Douglas
Krupp and other minority investors in GN Limited Partnership contributed River
Oaks Apartments in exchange for 534,975 units ("Units") in the Operating
Partnership. The Units are convertible to shares only upon shareholder approval.
The purpose of becoming an UPREIT is 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 Operating Partnership
Units for a seller's assets will defer the tax liability associated with the
sale. Effectively, this allows the Company to use Operating Partnership 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,
including George and Douglas Krupp. 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
1,300,000 Units of the Operating Partnership. 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 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. (See Note C to
Consolidated Financial Statements.) As of December 31, 1996, no additional Units
have been issued.

     The value of the transaction was based on 1,300,000 Units at a share price
of $10, or $13 million, which together with related costs, was recorded as an
intangible asset associated with the workforce acquired and is being amortized
on a straight-line method over a 10-year period.





                                      -12-
<PAGE>



     Property Management Transaction:
     --------------------------------

     Besides becoming self-administered, the Board of Directors and management
determined that the Company should become self-managed. On February 26, 1997,
based on the recommendation of a Special Committee of the Independent Directors,
the Board approved the acquisition of the third-party management contracts,
workforce and other assets of the affiliate which provides multifamily property
management services to the Company for 1,700,000 Units in the Operating
Partnership. The transaction was valued at $17.6 million (based on a $10.375 per
share price) which closed on February 28, 1997, and will be recorded as
third-party property management contracts and the acquisition of a workforce and
other assets.

     The acquired property manager manages 57 multifamily assets, 35 of which
are the Company's and the remainder are primarily owned by affiliated
partnerships of certain officers and directors. By becoming self-managed the
Company will no longer pay management fees and reimbursements for multifamily
assets and will receive fees and reimbursements for managing the assets of
others. In addition, the Company assumed approximately 85 non-site employees
engaged in the operation of the property manager. The transaction is expected to
add approximately $.05 per share to funds from operations ("FFO") on an
annualized basis and should impact 1997 FFO by approximately $0.04 per share.

     Ownership:
     ----------

     Certain officers and directors and their affiliates own the following
percentages of the Company and the Operating Partnership:

                                                 Related Party Ownership
                                                 -----------------------
                                                    BRI            OP
                                                 --------        -------
     As of December 31, 1996                        2%             10%
     As of March 1, 1997                            2%             16%

     As of December 31, 1996, the Company had a 88.15% General Partner interest
in the Operating Partnership. As of March 1, 1997, this had changed to a 1%
General Partner interest and 80% limited partner interest in the Operating
Partnership.

B.   Results of Operations:
     ----------------------

     The results of operations from period to period are impacted by acquisition
and disposition activity within the portfolio. Comparisons will be made as to
constant 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.

Summary Overview
----------------

     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. Whereas in
1996, the Company recorded $12 million in provisions for losses on its
wholly-owned and joint venture retail investments. The Company has announced a
plan to liquidate the retail portfolio over the next several years and reinvest
the proceeds into acquisitions or development of multifamily assets. This
divesture strategy necessitated the valuation adjustments which represent the
differences between current market value of these assets and their carrying
value (See Note D to the Consolidated Financial Statements for additional
details).



                                      -13-
<PAGE>



     1995 to 1994
     ------------

     From 1994 to 1995, net income increased approximately $9 million, primarily
because of gains of $15.6 million recognized on sales of assets in 1995 compared
to $4.1 million in gains recorded in 1994.

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. Rental revenues for the year ended
December 31, 1996 increased $18.6 million or 25% over the prior year and the
property operating expenses mentioned above increased $8.1 million or 27% for
the same periods. Average apartment units increased 23.6% between 1995 and 1996.

Revenues for 1995 increased over 1994 by $6.0 million or 8.7% and property
operating expenses increased by $1.2 million or 7.2%. Average apartment units
increased in 1995 over 1994 by 7%. Detail of the Company's apartment unit growth
is set forth below:

                                               1996            1995        1994
                                               ----            ----        ----
Weighted Average Units:
     Total                                   11,022           8,914       8,326
     Increase                                 2,108             588       2,326
     Percent Increase                         23.6%            7.1%       39.5%

Apartment Units:
     Beginning of period                      9,433           9,385       7,554
         Acquired                             3,153           1,381       1,533
         Sold                                  (223)         (1,717)       (496)
         Completed developments                  72             384          -
         Converted from loans to
            real estate                         -              -            794
                                             ------         -------       -----
     End of period                           12,435           9,433       9,385
                                             ======         =======       =====



     Depreciation and amortization increased $7.1 million from 1995 to 1996 and
$2.5 million from 1994 to 1995 due to an increased property asset base in both
periods. In addition, amortization of intangible assets associated with the 1996
Advisor Transaction accounted for $1.1 million of the increase from 1995 to
1996.

     General and administrative expenses increased in 1996 compared to 1995 as a
result of becoming self-administered on March 1, 1996. These costs include
employee salaries and benefits, administrative and office related expenses. With
respect to 1994 compared to 1995, general and administrative expenses decreased
due to overall savings in legal, audit and transfer agent expenses.

     State and corporate franchise taxes in 1996 are higher than in 1995 because
a one-time reduction for taxes pertaining to 1994 is reflected in 1995.




                                      -14-
<PAGE>



Interest Expense
----------------

     Interest expense has 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.)

                                             1996         1995          1994
                                             ----         ----          ----

Weighted Average
     Debt Outstanding
        Fixed Rate                        $185,616     $ 98,115     $ 51,840
        Variable Rate                       78,577       89,957       88,586
                                          --------     --------     --------
              Total                       $264,193     $188,072     $140,426
                                          ========     ========     ========

Weighted Average
     Interest Rates
        Fixed Rate                           7.47%        8.39%        8.15%
        Variable Rate                        6.73%        7.49%        6.51%

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

     In 1995, average fixed rate debt increased by approximately $46 million
primarily because $61 million of fixed rate debt acquired in the second quarter
of 1994 was outstanding for all of 1995. In addition, the Company added $17.8
million of fixed rate debt by financing the two Kingwood, Texas assets in June
1995.

     The following represents total debt and weighted average cost of debt
(coupon interest rate plus amortization of financing costs) at December 31,
1996: (Dollars in thousands)

                                        Balance                  Weighted
                                      Outstanding              Average Cost
                                      -----------              ------------
        Fixed Rate                      $206,837                     8.0%
        Variable Rate (1)                 88,329                     7.1%
                                        --------
                                        $295,166

(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% plus the
     spread paid to lenders under the revolving credit agreements.

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

     Joint venture net loss was $3 million in 1996 compared to net income of
$1.4 million in 1995. One joint venture recorded a provision for a loss of $9
million which represents the difference between carrying value and estimated
fair value less costs to sell. The Company's pro-rata share of this provision is
$4.5 million. As discussed above, this valuation adjustment is the result of the
Company's strategic decision to divest of its retail investments.

     Gain on sales of properties and payoff of mortgage loans was $58,000 in
1996 compared to $15.6 million in 1995. In 1995, the gains were the result of
the sales of seven apartment complexes consisting of 1,717 units. The remainder
of the gain in 1995 was the result of the early payoff of two mortgages that the
Company had previously purchased at a discount. The Company sold two assets in
1996 for a net gain of $58,000. When comparing 1994 to 1995, the $11.5 million
increase was due to 1,717 apartment units being sold in 1995 compared to 496
apartment units sold in 1994.


                                      -15-
<PAGE>



     Non-recurring charges of $442,000 were recorded in 1996 and 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. And in 1994, non-recurring charges of $2.6
million were the result of the settlement of a class action lawsuit. See Note N
and Note T to the Consolidated Financial Statements.

     Extraordinary items in both 1996 and 1995 represents costs associated with
the refinancing or retirement of debt. See Note D Consolidated Financial
Statements.

C. Funds from Operations (FFO) (fully 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, 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 because of needed capital
replacement or expansion, debt service obligations or other commitments. FFO is
calculated for the periods presented as follows (dollars in thousands):

                                                    Year ended December 31,
                                           ------------------------------------
                                              1996          1995         1994
                                           ----------    ----------   ----------
  
     Net income (loss)                      $(14,308)     $ 14,786     $  5,757
     Depreciation (including
         depreciation related to
         joint ventures)                      30,724        24,081       21,463
     Amortization of workforce acquired        1,121           -            -
     Minority interest                        (1,136)         (177)         -
     Gains on sales of investments
         and payoff of mortgage
         loans receivable                        (53)      (15,282)      (4,069)
     Non-recurring charges                       442         1,728        2,556
     Extraordinary items                         149           895          -
     Provision for losses (including
         reserves recorded on joint
         venture investments)                 12,000           -            -
                                          ----------    ----------   ----------
     Funds from operations                  $ 28,939      $ 26,031     $ 25,707
                                          ==========    ==========   ==========
     Cash flows provided by (used for):
         Operating activities               $ 27,505      $ 25,029     $ 22,431
         Investing activities               $(36,393)     $(25,049)    $(53,784)
         Financing activities               $  4,761      $    670     $ 33,835
     Weighted Average:
         Shares                           25,393,147    25,392,621   25,391,478
         Units                             2,520,959       359,093        -
                                          ----------    ----------   ----------
            Total                         27,914,106    25,751,714   25,391,478
                                          ==========    ==========   ==========


                                      -16-
<PAGE>



     Overview
     --------

     FFO increased from 1994 to 1995 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 that are
fully stabilized for the two most recent years. The operating performance of the
19 communities aggregating 6,763 units which are considered same-store is
summarized as follows: (Dollars in thousands)


                                        Year Ended December 31,
                                 ------------------------------------
                                  1996           1995          Change
                                 -------       -------         ------

     Revenues                    $48,499       $45,566          6.44%
     Expenses                     23,042        22,207          3.76%
                                 -------       -------
     Net Operating Income        $25,457       $23,359          8.98%
                                 =======       =======

     Average occupancy               95%            93%

     Average monthly rent
              per unit           $   632       $   608

     Capital Expenditures(1)     $ 2,663       $ 1,722

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

     Growth in same-store multifamily revenues was approximately 6.4% for 1996
when compared to 1995. Rent increases accounted for 4.3% of the increase and
higher occupancies contributed to the remaining 2.3%. Occupancy at December 31,
1996 was 93.5% for same-store assets.

Same-Store Retail Properties
----------------------------

     Net operating income ("NOI") of the six retail properties (two of which are
50.1% and 50% held in joint ventures) is summarized as follows: (Dollars in
thousands)

                                       Year Ended December 31,
                                ------------------------------------
                                  1996          1995          Change
                                -------        -------        ------

Revenues                        $12,663        $12,463        1.60%
Expenses                          4,408          4,256        3.57%
                                -------        -------
Net Operating Income            $ 8,255        $ 8,207        0.58%
                                =======        =======

Average economic
     occupancy                      95%            96%

Capital Expenditures (1)        $ 1,228        $   740

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

     Same-store NOI increased 0.6% for the twelve months ended December 31, 1996
when compared to 1995. Average occupancies have decreased as a result of tenant
losses in three retail assets and the closing of 10,000 square feet of
commercial office space at another property.

 
                                      -17-
<PAGE>


D. Liquidity and Capital Resources
   -------------------------------

     The Company's net cash provided by operating activities increased from
$22.4 million in 1994 to $25 million in 1995 and to $27.5 million in 1996,
principally due to increased property net operating income. Net cash used in
investing activities decreased from $53.8 million in 1994 to $25.1 million in
1995, principally due to a $59.2 million increase in proceeds from the sales of
assets in 1995, offset by an increase in spending on acquisitions of real estate
assets and apartment community development activity of $30.5 million. Net cash
used in investing activities increased from $25.1 million in 1995 to $36.4
million in 1996 principally 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. The Company's net cash provided by
financing activities decreased from $33.8 million in 1994 to $.7 million in 1995
and increased to $4.8 million in 1996 primarily due to net borrowing activity as
discussed in Notes H and I to the Consolidated Financial Statements.

     Historically, operations, debt financing and sales of assets have been the
sources of liquidity employed by the Company. 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
acquisitions, development and rehabilitation of apartment communities.

     The Company's policy is to pay dividends to investors as a percentage of
FFO. For the past three years, the Company has paid between 85% 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 13, 1997, the Board approved
a dividend of $.225 per Share payable on May 15, 1997 to the Shareholders of
record on May 1, 1997.

     The Company has a policy to maintain leverage at or below 50% of reasonably
estimated fair 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. Debt as a percentage of fair value
as estimated by management for each of the two years ended December 31, 1996 and
1995 were 45.2% and 42.6%, respectively.

     The following table represents the components of debt as of December 31,
1996, and 1995:

                                         December 31,
                             --------------------------------------
                                    1996                1995
                             -----------------   ------------------
                              Amount   Percent    Amount   Percent
                              ------   -------    ------   -------
                                   (Dollar Amounts in millions)
      
      Short-term variable     $ 48.3     16%     $ 16.1        8%
      
      Long-term fixed (1)      246.9     84%      195.2       92%
                              ------    ----     ------     -----
                              $295.2    100%     $211.3      100%
                              ======    ====     ======     =====


     (1)  In 1996 and 1995, $40 million of variable rate debt has been included
          as fixed because the Company entered into a five-year fixed interest
          rate swap agreement with a bank 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


                                      -18-
<PAGE>


approximately 45% of its variable rate debt and variable rate debt to total debt
was 16% at December 31, 1996. Additionally, the Company has spread its
maturities on long-term debt and has weighted average maturities of 11.1 years.

     The Company has adequate sources of liquidity to meet its current cash flow
requirements including dividends, capital improvements as well as planned
acquisitions.

     Since becoming an UPREIT in 1995, the Company has issued through December
31, 1996, 3,413,778 units in the Operating Partnership which, if converted on
December 31, 1996 at the then current share price of $9.875, represents $33.7
million in additional equity capital. Approximately 62% of these Operating
Partnership Units were issued for the acquisition of seven multifamily
communities, five of which were acquired from unrelated sellers.

     In 1997, the Company issued additional Operating Partnership Units in
connection with the Property Manager Transaction as discussed above, as well as
for the acquisition of a multifamily asset from another unrelated seller. It is
the Company's intention to continue to use Operating Partnership Units as a form
of currency to grow the asset base of the Company.

     Future capital offerings are also being considered, however, the Company is
not currently engaged in a secondary or preferred stock offering. Equity
capital, whether publicly or privately raised, will be utilized when the Company
sees the opportunity to invest the proceeds in assets that would increase
shareholder returns.

     The Company currently has sufficient unadvanced commitments under debt
facilities to fund ongoing development and rehabilitation activities.

E. Business Conditions/Risks:
   -------------------------

     The Company believes that favorable economic conditions exist in
substantially all of its real estate markets. For the Company's stabilized
apartment communities, physical occupancy was 93.5% as of December 31, 1996
which generally represents current market occupancies. In addition, the Company
continues to maintain competitive rental rates by providing superior services
combined with well-maintained assets which sets the Company apart from its
competition. Through intense asset management efforts, the Company expects to
realize solid performance from the real estate assets and to continue its
favorable rental results, however, no assurances can be made in this regard.

     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"). Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from results or plans expressed or implied by such forward-looking
statements. Such factors include, among other things, adverse changes in the
real estate markets, risk of default under the Company's outstanding
indebtedness due to increased borrowing; financial condition and bankruptcy of
tenants; environmental/safety requirements; adequacy of insurance coverage; and
general and local economic and business conditions. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included or incorporated by reference in this Form 10-K will prove to be
accurate. In light of the


                                      -19-
<PAGE>



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.

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 1997. 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. 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. Mr. Marshall replaces Laurence Gerber who will
continue to serve as a director of the Company. Mr. Gerber is the President and
Chief Executive Officer of The Berkshire Group. 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, 1996
were as follows:

                                                                Date Initially
  Name and Age            Class   Offices Held                     Elected
  ------------            -----   ------------                 -----------------
  Douglas Krupp (50)         3    Chairman of the Board        February 8, 1996
                                   and Director
  Laurence Gerber (40)       2    Chief Executive Officer
                                   and Director                April 30, 1990
* J. Paul Finnegan (72)      1    Director                     October 17, 1990
* Charles N. Goldberg (55)   3    Director                     October 17, 1990
* E. Robert Roskind (52)     2    Director                     October 17, 1990
* David M. deWilde (56)      1    Director                     March 8, 1993
  David Marshall (48)             President                    March 1, 1996
  Marianne Pritchard (47)         Senior Vice President and
                                   Chief Financial Officer     August 15, 1991
  David Olney (36)                Senior Vice President        March 1, 1996
  Dennis Suarez (43)              Senior Vice President        March 1, 1996
  Richard Willingham (42)         Vice President               March 1, 1996
  Fred Lauro (32)                 Assistant Treasurer          March 1, 1996
  Scott D. Spelfogel (36)         Secretary                    May 7, 1991

-------------------
*Independent Directors

     Douglas Krupp is Co-Chairman and Co-Founder of The Berkshire Group.
Established in 1969 as the Krupp Companies, this real estate-based firm expanded
over the years within its areas of expertise including investment program
sponsorship, property and asset management, mortgage banking, healthcare
facility ownership and the management of the Company. Today, The Berkshire Group
is an integrated real estate financial services firm which is headquartered in
Boston with regional offices throughout the country. A staff of 3,400 are
responsible for the more than $3 billion under management for institutional and
individual clients. Mr. Krupp is a graduate of Bryant College. In 1989 he
received an honorary Doctor of Science in Business Administration from this
institution and was elected trustee in 1990. Mr. Krupp also serves as a Director
of Harborside Healthcare Corporation.



                                      -21-
<PAGE>


     Laurence Gerber is the President and Chief Executive Officer of The
Berkshire Group, and was Chief Executive Officer of the Company until February
28, 1997 (See above). 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 and Director on February 28, 1997. He was previously
President of Berkshire Realty Affiliates since 1991. His duties at Berkshire
Realty Affiliates consisted of overall management of Berkshire's Realty
Companies. Prior to that, from July 1986, he served as President of Berkshire
Mortgage Finance where he was involved in the start-up phase and ongoing
operations of Berkshire's Mortgage Companies. Before joining The Berkshire Group
in July 1986, Mr. Marshall was President of Resource Savings Association from
June 1984 through June 1986, and 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 an M.B.A. degree from the University of Michigan.

     J. Paul Finnegan is a retired partner of Coopers & Lybrand where he
specialized in tax matters. He retired in September 1987 and since then has been
engaged in business as a consultant, a director and an arbitrator for the
American Arbitration Association and the National Association of Securities
Dealers, Inc. Mr. Finnegan is a graduate of Harvard College and Boston College
Law School and is a Certified Public Accountant. 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.

     Charles N. Goldberg is a partner in the law firm of Hirsch & Westheimer,
P.C. Prior to joining Hirsch & Westheimer, P.C., Mr. Goldberg was the Managing
Partner of Goldberg Brown, Attorneys at Law from 1980 to March of 1997. 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. He received a B.B.A. degree and J.D. degree from the University of Texas.

     E. Robert Roskind is the Chairman and Co-Chief Executive Officer of
Lexington Corporate Properties, a self-administered REIT which owns 23
properties, each net leased to a single corporate tenant, and whose shares 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, which has acquired on behalf of
the partnerships sponsored by the firm over 400 properties throughout the United
States. Most of such properties have been net leased to major U.S. corporations.
The LCP Group is the successor to Lepercq Capital Partners and Lepercq Capital
Corporation. Mr. Roskind in 1974 co-founded Lepercq Capital Corporation and
served as its Chairman. Mr. Roskind is also Chairman of Net Lease Partners
Realty Advisors, a registered pension fund advisor, which advises pension funds
with respect to the acquisition and subsequent management of properties net
leased to major corporations. He is a graduate of the University of Pennsylvania
and Columbia Law School and has been a member of the New York Bar since 1970.

     David M. deWilde has been Chief Executive Officer of Chartwell Partners
International Inc., an executive search firm headquartered in San Francisco,
since he founded it in 1989. Mr. deWilde entered the executive search field in
1984 as Managing Director of Boyden International, Inc., where he headed the San
Francisco office. His responsibilities in the executive search field have
included conducting a variety of senior level searches, primarily for clients in


                                      -22-
<PAGE>


financial services: investment banking, investment management, depositary
institutions, mortgage finance and real estate. Mr. deWilde is also 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.,
in addition to prior legal experience. He has been a member of the New York and
Washington, D.C. Bars since 1968 and 1972, respectively. He holds an A.B. from
Dartmouth College, a L.L.B. from the University of Virginia and a M.S. in
Management from Stanford University. He previously served as a director from
1985 until 1989 of Strategic Mortgage Investors, Glendale, California.

     Marianne Pritchard is the Senior Vice President and Chief Financial Officer
of the Company. Prior to being elected, she was Senior Vice President and Chief
Financial Officer of Berkshire Realty Affiliates. Prior to rejoining The
Berkshire Group, she was Vice-President and Controller from July 1989 to August
1991 for Liberty Real Estate Group, a subsidiary of Liberty Mutual Insurance
Company. Prior to Liberty, Ms. Pritchard held the position of
Controller/Treasurer of Berkshire Mortgage Finance from April 1987 to July 1989.
Prior to that, Ms. Pritchard was Senior Audit Manager with Deloitte and Touche,
an international accounting and consulting firm. She is a Certified Public
Accountant and received her B.B.A. degree in Accounting from the University of
Texas.

     David J. Olney is the Senior Vice President of Acquisitions with
responsibility for all acquisition, property sales, finance and other asset
management activities for the Company. He most recently held a similar position
with The Berkshire Group and has held several positions within The Berkshire
Group since joining the firm in 1986. Prior to joining The Berkshire Group, he
participated in a three-year financial management rotational program with
Sanders Associates in Nashua, New Hampshire. Mr. Olney received a B.S. from
Bryant College and an M.B.A. from Babson College.

     Dennis Suarez is Senior Vice President of Development. Prior to being
elected on March 1, 1996 he served in a similar position with Berkshire
Multifamily Development Corporation, a member of The Berkshire Group, since
January 1994, with responsibility for all development activities. Prior to that
he was Vice President of Construction for Lane Management, Realty Construction
Corp. His work experience includes commercial high rise, multifamily and single
family construction. He earned Bachelor's Degrees in Architecture and Building
Construction from the University of Florida, and a Bachelor's of Arts in
Interior Design from Southern College.

     Richard Willingham is Vice President in charge of the Company's
Atlanta-based acquisitions office, with responsibility for acquisitions,
property sales, finance and other asset management activities. He previously
served as a Vice President of Acquisitions for The Berkshire Group, since 1989.
Before joining The Berkshire Group in 1989, Mr. Willingham was Vice President,
Property Sales, for Balcor Company, a national real estate investment firm,
where he was responsible for the disposition of over $200 million of real estate
held in either debt or equity oriented investment vehicles. He holds a B.S. from
the University of Tennessee and an M.B.A. from Wake Forest University.

     Fred Lauro is the Assistant Treasurer for the Company. He previously held
various positions with The Berkshire Group since he joined the firm in December
1987. Mr. Lauro received a B.S. in Business Administration from Stonehill
College.

     Scott D. Spelfogel is the Senior Vice President and General Counsel to The
Berkshire Group. Before joining the firm in November 1988, he was a litigator in
private practice in Boston. He received a Bachelor of Science degree in


                                      -23-
<PAGE>


Business Administration from Boston University, a Juris Doctor Degree from
Syracuse University's College of Law, and a Master of Laws degree in Taxation
from Boston University Law School. He is admitted to practice law in
Massachusetts and New York and is a licensed real estate broker in
Massachusetts.

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, 1996.

                           SUMMARY COMPENSATION TABLE
                                                                     Long-Term
                                                                   Compensation
                                    Annual Compensation(1)            Awards
                                                                    Securities
     Name and                                                       Underlying
Principal Position            Year        Salary($)      Bonus($)    Options(#)
------------------            ----        ---------      --------  -------------
Laurence Gerber               1996         85,520           -         200,000
  Chief Executive
  Officer and Director

David Marshall                1996        272,500        113,100      200,000
  President

Marianne Pritchard            1996        131,623         46,158       40,000
  Senior Vice President
  and Chief Financial
  Officer

David Olney                   1996        125,685         83,260       40,000
  Senior Vice President
  of Acquisitions

Dennis Suarez                 1996        123,276         55,750       40,000
  Senior Vice President
  of Development

(1)  The Annual Compensation amounts reflect ten months of compensation due to
     the Company becoming self-administered on March 1, 1996 as discussed in
     Item 1 and 7 herein.

     The Company entered into employment agreements with Laurence Gerber, David
Marshall 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 not less than $100,000 for Mr. Gerber, $325,000 for Mr. Marshall and
$157,000 for Ms. Pritchard. 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 the case of Mr. Gerber, the Company shall pay severance
compensation in twelve monthly installments (eighteen and nine months in the
case of Mr. Marshall and Ms. Pritchard, respectively) at the same rate as the
base salary in effect at the date of termination.

     The following table provides option information for the Company's Chief
Executive Officer and the top four Executive Officers as of December 31, 1996.
No options have been exercised by the Executive Officers as of December 31,
1996.




                                      -24-
<PAGE>


                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                        Potential Realized  
                                                                       Value at Expiration  
                                   % of Total                            Date at Assumed    
                                    Options                           Annual Rates of Stock 
                       Number of   Granted to                          Price Appreciation(1)
                      Securities   Employees                              (in thousands)    
                      Underlying   in Fiscal   Exercise  Expiration  -----------------------
Name                    Options       Year       Price      Date        5%($)      10%($)
----                  ----------   ----------  --------  ----------    ------      ------
<S>                      <C>          <C>        <C>      <C>          <C>         <C>  
Laurence Gerber          200,000      32%        9.75     2-28-06      1,226       3,108

David Marshall           200,000      32%        9.75     2-28-06      1,226       3,108

Marianne Pritchard        40,000       6%        9.75     2-28-06        245         622

David Olney               40,000       6%       10.25      5-1-06        258         653

Dennis Suarez             40,000       6%       10.25      5-1-06        258         653
</TABLE>

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


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

                                                  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
----                 ------------   --------     -------------     -------------
Laurence Gerber           0              0        0/200,000          0/25,000

David Marshall            0              0        0/200,000          0/25,000

Marianne Pritchard        0              0        0/ 40,000          0/ 5,000

David Olney               0              0        0/ 40,000            0/0

Dennis Suarez             0              0        0/ 40,000            0/0


     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 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 and $25,000 during 1993 and 1994, respectively.





                                      -25-
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------

     As of December 31, 1996, 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 is a summary of the security ownership of management as of
December 31, 1996:

       Title of       Name of Beneficial    Amount and Nature of     Percent
        Class               Owner           Beneficial Interest      of Class
      ----------     ------------------     --------------------     --------

     Common Stock     Laurence Gerber         517,203 Shares*           2.04%
     Common Stock     Douglas Krupp           538,253 Shares**          2.12%
     Common Stock     E. Robert Roskind        10,000 Direct             ***
     Common Stock     Paul Finnegan               700 Direct             ***
     Common Stock     David M. deWilde            300 Direct             ***
     Common Stock     David Marshall            3,848 Direct             ***
     Common Stock     Marianne Pritchard        1,000 Direct             ***
     Common Stock     Dennis Suarez             1,261 Direct             ***
     Common Stock     David Olney               2,552 Direct             ***
     Common Stock     All Directors and      
                       Officers               599,617 Shares            2.36%
                                            
*    Mr. Gerber is a beneficial owner of 512,203 Shares 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. In such case where Mr. Gerber is a
     beneficial owner of Shares he has shared voting and investment powers and
     such Shares are also beneficially owned by Mr. Krupp.

**   Mr. Krupp directly owns 10,100 Shares, is a beneficial owner of the 512,203
     Shares 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. In
     such case where Mr. Krupp is a beneficial owner of Shares he has shared
     voting and investment powers and such Shares are also beneficially owned by
     Mr. Gerber. Mr. Krupp disclaims beneficial ownership of 15,950 Shares owned
     by his immediate family.

***  Amount owned does not exceed one percent of the common stock of the Company
     outstanding as of December 31, 1996.

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 to the Notes to the Consolidated Financial
Statements).

     Berkshire Property Management, an affiliate of the Company, provided
day-to-day on-site management services for the Company's properties. For a
summary of amounts paid to related parties for services rendered and for
reimbursements see Note L to the Consolidated Financial Statements included in
Appendix A.

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

                                     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


                                      -26-
<PAGE>


          Item 8, Appendix A on pages F-30 through F-42. 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.

(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)].*

              (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)].*


                                      -27-
<PAGE>



              (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.

              (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)].*




                                      -28-
<PAGE>



              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)].*

             (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)].*




                                      -29-
<PAGE>



                (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 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)].*



                                      -30-
<PAGE>


                (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 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)].*



                                      -31-
<PAGE>


                (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)].*

                (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)].*




          
                                      -32-
<PAGE>



          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)].*

         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)].*



                                      -33-
<PAGE>


                (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)].*

         *  Incorporated by reference.
         +  Filed herein.

      (c) 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)].*




                                      -34-
<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)].*

      (b) Reports on Form 8-K
          -------------------

           Date              Event Reported           Financial Statements
           ----              --------------           --------------------
           May 29, 1996      Property Acquisition     None

           Reports on Form 8-K/A
           ---------------------

           Date              Event Reported           Financial Statements
           ----              --------------           --------------------
           July 29, 1996     Property Acquisition     Yes




                                      -35-
<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 26th day of
March, 1997.

                                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 26th day of March, 1997.

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




/s/ Laurence Gerber               Chief Executive Officer and Director of
-------------------------         Berkshire Realty Company, Inc.
Laurence Gerber                   


/s/ David Marshall                President of Berkshire Realty Company, Inc.
-------------------------
David Marshall



/s/ Marianne Pritchard            Senior 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





                                      -36-
<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 26th day of
March, 1997.

                                BERKSHIRE REALTY COMPANY, INC.



                                By:
                                    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 26th day of March, 1997.

Signatures                        Title(s)




                                  Chief Executive Officer and Director of
-------------------------         Berkshire Realty Company, Inc.
Laurence Gerber                   


                                  President of Berkshire Realty Company, Inc.
-------------------------
David Marshall


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


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


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


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


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





                                      -37-
<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, 1996




                                       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, 1996 and 1995                   F-4

Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994                                      F-5 - F-6

Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994                                F-7

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994                                      F-8 - F-9

Notes to Consolidated Financial Statements                          F-10 - F-29

Schedule III - Real Estate and Accumulated Depreciation             F-30 - F-41

Summary Quarterly Financial Information (Unaudited)                        F-42

Separate Financial Statements - Brookwood Village Joint Venture     F-43 - F-56


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, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, 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 D 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  
February 13, 1997, except
for Note Q, for which the
date is February 28, 1997








                                       F-3


                                                        F-3

<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1996 and 1995

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

<TABLE>
<CAPTION>
                    ASSETS
                                                               1996           1995
                                                            ------------  ------------
<S>                                                         <C>           <C>
Real estate assets: (Note D)
     Multifamily apartment complexes, net of
         accumulated depreciation                           $430,936,889  $324,752,425
     Retail center, net of accumulated depreciation           11,064,630    59,708,271
     Investments in unconsolidated joint ventures
         (Note E)                                             36,036,723    41,689,843
     Mortgage loans and other loans receivable,
        net of purchase discounts (Note F)                     4,094,241    19,964,524
     Land and construction-in-progress                         4,035,820     2,880,668
     Land held for future development                          2,331,988       863,456
     Property held for sale, net of valuation
         reserve (Note D)                                     30,556,482         -
                                                            ------------  -------------
         Total real estate assets                            519,056,773   449,859,187

Cash and cash equivalents                                      7,015,953    11,142,710
Mortgage-backed securities, net ("MBS") (Note G)               9,232,956    11,576,326
Escrows                                                       11,096,213     3,872,826
Deferred charges and other assets                             10,940,879    10,517,138
Workforce and other intangible assets,
   net of amortization (Note C)                               12,327,039         -
                                                            ------------  ------------
              Total assets                                  $569,669,813  $486,968,187
                                                            ------------  ------------

      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Credit agreements (Note H)                               $136,060,000  $ 95,140,000
   Mortgage notes payable (Note I)                           149,805,607   105,200,620
   Repurchase agreements (Note J)                              9,300,000    10,950,000
   Tenant security deposits and prepaid rents                  2,443,716     2,043,792
   Accrued real estate taxes, insurance,
   other liabilities and accounts payable                     11,797,967     7,845,744
                                                            ------------  ------------

                  Total liabilities                          309,407,290   221,180,156
                                                            ------------  ------------

Minority interest in operating
 partnership (Notes A, C, D and K)                            36,608,607     5,000,414

Commitments and Contingencies (Notes D and P)                     -             -

Shareholders' equity:
     Preferred stock, $0.01 par value; 60,000,000
              shares authorized, none issued                      -             -
     Common stock ("Shares"), $0.01 par value;
              140,000,000 Shares authorized and
              25,899,866 and 25,899,449 Shares issued,
              respectively                                       258,998       258,994
     Additional paid-in capital                              239,446,270   262,271,698
     Retained earnings (deficit)                             (14,308,277)       -
     Less common stock in treasury at cost
              (506,497 Shares)                                (1,743,075)   (1,743,075)
                                                            ------------  ------------

              Total shareholders' equity                     223,653,916   260,787,617
                                                            ------------  ------------

              Total liabilities and shareholders' equity    $569,669,813  $486,968,187
                                                            ------------  -----------
</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, 1996, 1995 and 1994

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


<TABLE>
<CAPTION>
                                                 1996           1995             1994
                                            ------------    ------------     -----------
<S>                                         <C>              <C>             <C>
Revenue:
  Rental                                    $ 89,450,647     $70,068,230     $63,221,799
  Interest from mortgage
    loans (Note F)                             1,647,356       2,010,110       3,423,887
  Interest income from MBS                       942,191       1,154,336       1,433,599
  Other interest income                          961,472       1,208,743         391,043
                                            ------------      ----------     -----------

        Total revenue                         93,001,666      74,441,419      68,470,328
                                            ------------     -----------     -----------

Expenses:
  Property operating (Note L)                 22,727,069      17,989,860      16,729,088
  Repairs and maintenance                      6,647,344       4,920,685       5,626,176
  Real estate taxes                            8,653,898       7,015,706       6,400,764
  Property management fees to an
    affiliate   (Note L)                       4,324,843       3,421,107       3,069,506
  Depreciation and amortization               29,050,960      21,983,582      19,506,878
  Amortization of workforce acquired           1,120,640           -               -
  Provision for losses on real
    estate investments                         7,500,000           -               -
  General and administrative
  (Notes C and L)                              3,632,078       1,083,948       1,812,844
  Interest (Notes H, I and J)                 20,500,533      15,618,224      10,793,915
  State and corporate franchise
        taxes                                    367,563          11,993           -
  Professional fees                              254,000         259,891         230,711
  Non-recurring charges (Note N)                 441,783       1,727,768       2,554,796
  Asset management fees to an
    affiliate (Note C)                           392,636       1,565,546       1,235,169
                                            ------------     -----------     -----------

        Total expenses                       105,613,347      75,598,310      67,959,847
                                            ------------     -----------     -----------

Income (loss) from operations                (12,611,681)     (1,156,891)        510,481

  Minority interest                            1,136,586          69,859           -

  Joint venture net income (loss),
    net of minority interest(Note E)          (2,736,912)      1,387,467       1,178,272
                                            -------------    -----------     -----------

  Income (loss) before gains on
  sales and extraordinary items              (14,212,007)        300,435       1,688,753

  Gains on payoff of mortgage loans,
    net of minority interest                       -           1,158,749           -

  Gains on sales of properties,
    net of minority interest                      53,002      14,227,784       4,068,526
                                            ------------     -----------     -----------

  Income (loss) before
    extraordinary items                      (14,159,005)     15,686,968       5,757,279
</TABLE>




                                    Continued

                                       F-5

<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994



<TABLE>
<CAPTION>
                                                 1996           1995             1994
                                            ------------    ------------     -----------
<S>                                         <C>              <C>             <C>

  Extraordinary items, net of
    minority interest (Note D)                  (149,272)       (900,926)         -
                                            ------------     -----------     ----------

Net income (loss)                           $(14,308,277)    $14,786,042     $5,757,279
                                            ============     ===========     ==========

Per share:

  Income (loss) before
    extraordinary item                      $       (.56)    $       .62     $      .23
                                            ============     ===========     ==========

  Net income (loss)                         $       (.56)    $       .58     $      .23
                                            ============     ===========     ==========

  Weighted average Shares                     25,393,147      25,392,621     25,391,478
                                            ============     ===========     ==========
</TABLE>










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

                                       F-6

<PAGE>




                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CHANGES IN
                       SHAREHOLDERS' EQUITY For the Years
                     Ended December 31, 1996, 1995 and 1994



<TABLE>
<CAPTION>
                                   Common Stock at Par            Additional          Retained         Treasury
                                   No. of                          Paid-in            Earnings           Stock
                                   Shares         Amount           Capital            (Deficit)         at Cost            Total
                                   ------         ------           -------            ---------         -------            -----
<S>                            <C>               <C>            <C>                 <C>              <C>               <C>
Balance at
    December 31, 1993          25,391,426        $258,979       $284,511,143        $      -         $(1,743,075)      $283,027,047

Net income                                           -                  -             5,757,279             -             5,757,279

Stock warrants (Note T)                              -             1,638,000               -                -             1,638,000

Proceeds from the
    exercise of stock
    warrants (Note T)                 503               5              5,402               -                -                 5,407

Dividends                                            -           (16,079,438)        (5,757,279)            -           (21,836,717)
                               ----------        --------       -------------       -----------      -----------       ------------

Balance at
    December 31, 1994          25,391,929         258,984        270,075,107               -          (1,743,075)       268,591,016

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

Proceeds from the
    exercise of stock
    warrants (Note T)               1,023              10             10,087               -                -                10,097

Dividend                                             -            (7,813,496)       (14,786,042)            -           (22,599,538)
                               ----------        --------       ------------        -----------      -----------       ------------

Balance at
    December 31, 1995          25,392,952         258,994        262,271,698               -          (1,743,075)       260,787,617

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

Proceeds from the
    exercise of stock
    warrants (Note T)                 417               4              5,880               -                -                 5,884

Stock options grants
    (Note M)                                         -                22,584               -                -                22,584

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

Balance at
    December 31, 1996          25,393,369        $258,998       $239,446,270        $(14,308,277)    $(1,743,075)      $223,653,916
                               ==========        ========       ============        ============     ===========       ============

</TABLE>











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

                                      F-7

<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>
                                                     1996           1995          1994
                                                 ------------    -----------   ------------
<S>                                              <C>             <C>           <C>
Operating activities:
     Net income(loss)                            $(14,308,277)   $14,786,042   $  5,757,279
     Adjustments to reconcile net
     income to net cash provided by
     operating activities:
           Depreciation                            29,050,960     21,983,582     19,506,878
           Amortization of workforce acquired       1,120,640           -              -
           Provision for losses on real
                 estate investments                 7,500,000           -              -
           Joint venture net (income) loss          2,736,912     (1,378,467)    (1,178,272)
           Distributions received from
                 joint ventures                          -         1,378,467      1,178,272
           Non-employee stock option plan              22,584           -              -
           Issuance of stock warrants                    -              -         1,638,000
           Gains on sales of investments              (53,002)   (15,386,533)    (4,068,526)
           Minority interest in operations
            of   operating partnership             (1,136,586)       (69,859)          -
           Discount amortization                     (511,976)      (535,401)    (1,467,737)
           Costs associated with the
                 refinancing of debt                     -           249,977           -
           Write-off of deferred financing
                 costs                                149,272        650,949           -
           Amortization of deferred
                 financing costs                    1,052,283      1,446,242      1,096,969
           Decrease (increase) in operating
                 escrows and other assets          (2,470,167)     2,550,889       (879,332)
           Increase (decrease) in accrued
                 real estate taxes, insurance
                 and other liabilities              3,952,223       (298,263)     1,258,692
           Increase (decrease) in tenant
                 security deposits prepaid
                 rents and escrows held               399,924       (348,768)      (410,723)
                                                 ------------    -----------   ------------
                     Net cash provided by
                          operating activities     27,504,790     25,028,857     22,431,500
                                                 ------------    -----------   ------------


Investing activities:
     Costs to acquire properties                  (37,894,563)   (48,905,137)   (59,694,010)
     Land and construction-in-progress            (13,512,645)   (18,618,220)   ( 5,400,697)
     Rehabilitation and non-recurring
        capital expenditures                      (15,900,996)   ( 8,389,316)   ( 7,893,337)
     Recurring capital expenditures                (4,397,131)   ( 3,166,208)   ( 2,159,437)
     Proceeds from sales of properties             19,580,079     61,020,687     19,158,879
     Distributions received from joint
        ventures in excess of earnings              2,644,533      1,511,477      1,304,389
     Acquisition of mortgage loans                       -       (28,083,544)          -
     Proceeds from the payoff of
        mortgage loans                             15,324,802     17,296,112           -
     Principal collections on MBS                   2,360,929      1,761,562      7,159,930
     Principal collections on mortgage
        loans                                       1,039,898        473,976        163,002
     Initial funding of escrows                    (5,189,961)        49,758     (6,422,280)
     Cost to acquire workforce and
        other intangible assets                      (447,679)          -              -
                                                 ------------    -----------   ------------
                 Net cash used for
                     investing activities         (36,392,734)   (25,048,853)   (53,783,561)
                                                 ------------    -----------   ------------
</TABLE>


                                    Continued

                                       F-8

<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)
              For the Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>
                                                     1996           1995          1994
                                                 ------------    -----------   ------------
<S>                                              <C>             <C>           <C>
Financing activities:
     Payment of financing costs                    (1,222,170)     (3,044,443)   (3,612,952)
     Proceeds from repurchase agreement                  -            350,000          -
     Payment on repurchase agreement               (1,650,000)     (1,200,000)   (8,300,000)
     Proceeds from credit agreement                48,970,000      67,140,000    36,000,000
     Repayment of credit agreement                 (8,050,000)    (51,000,000)  (56,700,000)
     Proceeds from mortgage notes
       payable                                           -         17,800,000    88,689,919
     Costs associated with the
        refinancing of debt                              -           (253,500)         -
     Principal payments on mortgage notes
        payable                                    (8,591,947)     (6,296,501)     (410,533)
     Proceeds from the exercise of stock
        warrants                                        5,884          10,097         5,407
     Dividends                                    (22,853,892)    (22,599,538)  (21,836,717)
     Distribution to minority interest             (1,846,688)       (240,739)        -
     Contribution from minority interest                 -              5,000         -
             Net cash provided by
                  financing activities              4,761,187         670,376    33,835,124
                                                  -----------     -----------   -----------

Net (decrease) increase in cash and
  cash equivalents                                 (4,126,757)        650,380     2,483,063

Cash and cash equivalents, beginning
  of year                                          11,142,710      10,492,330     8,009,267
                                                 ------------     -----------   -----------

Cash and cash equivalents, end of
  year                                           $  7,015,953     $11,142,710   $10,492,330
                                                 ============     ===========   ===========


Supplemental cash flow disclosure:
     Cash paid for interest during
       year                                      $ 20,143,571     $16,274,850   $11,085,742
                                                 ============     ===========   ===========

     Interest capitalized during year            $    514,258     $   658,480   $   380,928
                                                 ============     ===========   ===========

Supplemental disclosure of non-cash financing
 and investing activities:
     Property contributed by minority
        interests                                $ 90,895,512     $10,500,000         -
     Cash to minority contributors                (21,381,175)           -            -
     Debt assumed from minority
        contributors                              (47,641,639)     (5,417,735)        -
                                                 ------------     -----------   -----------

        Increase in minority interest            $ 21,872,698      $5,082,265         -
                                                 ============     ===========   ===========

     Debt assumed in conjunction with
        property acquisition                     $  5,555,295            -            -
                                                 ============     ===========   ===========

     Units issued related to acquisition
        of workforce and other
        intangible assets                        $ 13,000,000           -            -
                                                 ============     ===========   ===========

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


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

                                       F-9

<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 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.

     To permit 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 for its interest ("Minority Interest") in the Operating Partnership
     in exchange for the property. Under the agreement, the Company may not sell
     the River Oaks Apartments for a period of three years following the closing
     date. The contribution was accounted for using the purchase method. River
     Oaks is a 17-story, 136-unit, multifamily apartment complex located in the
     exclusive 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 Berkshire Companies Limited
     Partnership (BCLP). BCLP had been retained since the inception of the
     Company to provide advisory services with respect to investments and other
     matters. In exchange for the assets acquired, BCLP received 1.3 million
     Units of the Operating Partnership and, if certain Share price benchmarks
     are achieved during a six-year period, BCLP may receive up to $7.2 million
     of additional Units (See Note C to the Consolidated Financial Statements
     "The Advisor Transaction").

     In addition to the two UPREIT transactions mentioned above, the Company has
     grown by utilizing the UPREIT structure by acquiring six other multifamily
     communities in 1996. These UPREIT transactions have increased the ownership
     of the Operating Partnership by minority limited partners to 11.85% which
     includes a 10.04% ownership by companies affiliated with Douglas Krupp,
     George Krupp and Laurence Gerber. The Company owns the remaining 88.15% of
     the Operating Partnership.

     Property management services 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 Operating Partnership Units. The
     transaction was valued at $17.6 million (based on a $10.375 share price)
     which will be recorded on the balance sheet of the Company in the first
     quarter of 1997 as third-party property management contracts and the
     acquisition of a workforce and other intangible assets.

     The property manager currently manages 57 multifamily apartment
     communities, including the Company's 35 assets. The Company has acquired
     the management contracts for the remaining 22 multifamily communities and

                                    Continued

                                      F-10

<PAGE>



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

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


A.   Organization - Continued
     ------------

     will provide property management services to those owners, generally for a
     5% management fee.

     The property manager employs approximately 85 professionals, excluding site
     employees. The Company will continue to contract with an affiliate of
     certain officers and directors for property management of the retail
     portfolio.

     The Company has several wholly-owned qualifying REIT subsidiaries which
     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 ownership and operation of
     apartment communities located in the Southeast and Texas. In addition, the
     Company has investments in six community and regional shopping centers, two
     of which are held in joint venture.

     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.

     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. 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".

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

     For the period after the UPREIT restructuring, the accompanying
     Consolidated Financial Statements include the consolidated accounts of the
     Company, Operating Partnership and the subsidiaries of the Operating
     Partnership. For the period prior to the UPREIT restructuring, the
     accompanying financial statements reflect the consolidated accounts of the
     Company and its wholly-owned qualifying REIT subsidiaries.

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




                                    Continued

                                      F-11

<PAGE>



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

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


B.   Significant Accounting Policies - Continued
     -------------------------------

     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,
     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, deferred maintenance and renovation costs are capitalized at
     cost. Ordinary repairs and maintenance are expensed as incurred.

     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

     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. (See Note D).

     Investments in Unconsolidated Joint Ventures
     --------------------------------------------

     The Company has a 50% interest in Brookwood Village Joint Venture and a
     50.1% interest in Spring Valley Partnership (collectively, the "Joint
     Ventures"). These investments are accounted for using the equity method

                                    Continued

                                      F-12

<PAGE>



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

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


B.   Significant Accounting Policies - Continued
     -------------------------------

     Investments in Unconsolidated Joint Ventures
     --------------------------------------------

     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 net 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 Revenues
     ---------------

     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.


     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 a building is
     placed in service as evidenced by a certificate of occupancy.

     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

                                    Continued

                                      F-13

<PAGE>



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

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

B.   Significant Accounting Policies - Continued
     -------------------------------

     Interest Rate Swap Agreement
     ----------------------------

     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 are not significant.

     Earnings per Share
     ------------------

     Earnings per share is calculated based on the weighted average Shares
     outstanding during the years presented. The weighted average Shares
     outstanding during the years ended December 31, 1996, 1995 and 1994 were
     25,393,147, 25,392,621 and 25,391,478, respectively. Upon the exercise of
     certain stock warrants, the Company issued 417 Shares in 1996, 1,023 Shares
     in 1995 and 503 shares in 1994. Annual dividends paid per share were $.90
     in 1996, $.89 in 1995 and $.86 in 1994.

     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 BCLP in exchange for 1.3 million Units of the Operating Partnership.

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

     The Special Committee retained the services of an investment banking firm
     and an independent law firm to identify and evaluate the options available
     to the Company to achieve its goal. The process included, among other
     things, a review of the existing contractual arrangements with BCLP,
     identification of the employees, office space, computer systems and
     software, policies and procedures and other business documentation
     required. The Board concluded that the most beneficial method of achieving
     the strategic objective was to seek the acquisition of BCLP's workforce and
     related assets. The decision was predicated on the determination that such
     acquisition (rather than the assembling of a similar workforce and
     organization) would provide the best results to the Company in terms of
     immediate efficiency of operations and improved cash flows.

                                    Continued

                                      F-14

<PAGE>



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

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

<PAGE>


C.   The Advisor Transaction - Continued
     -----------------------

     In establishing the consideration to be paid, the Board reviewed comparable
     transactions and, after deliberation, the Board approved the acquisition of
     the assets of BCLP in exchange for 1.3 million Units or 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 10-year period.

     The value of the assets acquired was determined by evaluating the future
     cash flows attributable to the immediate operating efficiencies obtained
     through the acquisition of a cohesive assembled workforce. Accordingly, the
     value of the transaction was allocated to the workforce acquired and other
     intangible assets.

     Additional Units, up to a total of $7.2 million, may be issued to BCLP
     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, BCLP will receive Units equal to $1.2
     million. If issued, the value of any additional Units will be recorded as
     an expense in the period the Units are issued. As of December 31, 1996, no
     additional Units have been issued.

     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 certain directors and
     officers for certain administrative services such as shareholder
     communications, computer systems and support and legal services. Property
     management services were performed by Berkshire Property Management, an
     affiliated company of certain directors and officers. (See Note L).

D.   Multifamily and Retail Property
     -------------------------------

     As of December 31, 1996, the Company had investments in 41 properties in 9
     states consisting of 35 apartment communities having in the aggregate
     12,435 units and 6 retail centers, including the two joint ventures, with a
     total of 1,171,720 square feet of leasable space.

     The following summarizes the carrying value of the Company's multifamily
     apartment complexes and retail centers, excluding joint ventures (in
     thousands):

                                                              December 31,
                                                      ------------------------
                                                         1996            1995
                                                      ---------      --------

        Land                                           $ 76,525      $ 67,976
        Buildings and improvements                      419,932       337,790
        Appliances, carpeting and equipment              82,971        56,336
                                                       --------       --------

          Total multi-family and retail property        579,428        462,102
          Accumulated depreciation                     (106,870)       (77,641)
                                                       --------       --------
                                                       $472,558       $384,461


                                    Continued

                                      F-15

<PAGE>



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

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


D.   Multifamily and Retail Property - Continued
     -------------------------------

     Acquisitions
     ------------

     On May 14, 1996, the Company acquired Berkshire Towers (formerly The Point
     Apartments), a 1,119-unit high-rise apartment community located in Silver
     Spring, Maryland, an asset formerly majority-owned by certain directors and
     officers of the Company. The Company acquired the property for $52.3
     million in exchange for 1.6 million of Operating Partnership Units to be
     issued over three years and the assumption of $35.5 million of non-recourse
     indebtedness on the property. The debt has a fixed rate of 7 5/8% and
     matures in 2029. Under the terms of the contribution agreement, the Company
     may not sell Berkshire Towers for a period of five years following the
     closing date.

     In the second quarter or 1996, the Company completed the acquisition of
     five multi-family communities for a total of 1,422 apartment units. The
     properties are located in Dallas and Fort Worth, Texas. One asset (318
     units) was purchased with cash from an unrelated seller for a purchase
     price of $8.7 million. The four remaining assets (1,104 units) were
     acquired as a package from another unrelated seller for a purchase price of
     $28.7 million. The purchase price included the assumption of $5.8 million
     in debt, the issuance of $4.1 million in Operating Partnership Units and
     the remainder was paid in cash. For these four assets, the contribution
     agreement restricts the Company from selling the assets for a period of
     three years following the closing date. The debt bears interest at 7.695%
     and matures in 2005.

     On July 30, 1996, the Company acquired Hunter's Glen Apartments, a 276-unit
     apartment community located in Plano, Texas. The purchase price was $10
     million which included the assumption of $5.5 million in mortgage debt. The
     mortgage requires interest at a rate of 9% and matures March 1, 2000.

     On November 12, 1996, the Company acquired Prescott Place II Apartments
     (formerly Merit Ridge Apartments), a 336-unit apartment community located
     in Mesquite, Texas. The purchase price was $10.2 million which included the
     assumption of $6.3 million in debt, the issuance of $1.3 million in
     Operating Partnership Units and the remainder was paid in cash.

     With respect to the debt assumed in conjunction with the acquisitions
     mentioned above, the debt agreements require monthly principal and interest
     payments along with monthly funding of real estate tax and insurance
     escrows. In addition, certain agreements require monthly funding of
     mortgage insurance and replacement reserve escrows.

     Information on the eight apartment communities acquired in 1996 is as
     follows:

                                                                       Number of
                   Name                         Location                 Units
                   ----                         --------                 -----
      Golf Side Apartments          Haltom City (Fort Worth), Texas       402
      Benchmark Apartments          Irving, Texas                         250
      Pleasant Wood Apartments      Dallas, Texas                         208
      Providence Apartments         Dallas, Texas                         244
      Prescott Place Apartments     Mesquite (Dallas), Texas              318
      Hunters Glen Apartments       Plano (Dallas), Texas                 276
      Berkshire Towers Apartments   Silver Spring (D.C.), Maryland      1,119
      Prescott Place II Apartments  Mesquite(Dallas),Texas                336
                                                                        -----
                                                                        3,153
                                                                        ======

                                    Continued

                                      F-16

<PAGE>



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

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


D.   Multifamily and Retail Property - Continued
     -------------------------------

     Development
     -----------

     The Company substantially completed the construction of Huntington Chase
     II, a 72-unit additional phase to an existing property owned by the Company
     in Norcross, Georgia. The project is expected to cost approximately $4.7
     million of which $4.6 million has been recorded at December 31, 1996.

     The Company is also building 96-units as an additional phase to Brookfield
     Trace, an existing community in Mauldin (Greenville), South Carolina. As of
     December 31, 1996, 72 units have been completed and lease-up is underway.
     The remaining 24 units were completed in February 1997. The project is
     expected to cost approximately $7 million when completed. As of December
     31, 1996, the project has incurred $6.3 million of construction costs.

     In the fourth quarter of 1996 the Company began construction of a 296-unit
     apartment community in Durham, North Carolina. The project, Berkshires at
     Crooked Creek, is currently estimated to cost approximately $20.2 million
     and construction of the 13-building apartment community is expected to be
     completed in the third quarter of 1998. As of December 31, 1996, costs of
     $2.5 million, which included the cost of land, have been incurred.

     The Company also owns two parcels of land located in Dallas, Texas and
     Greenville, South Carolina. Development plans are under consideration for
     these two sites.

     Dispositions
     ------------

     On September 12, 1996, the Company sold Pointe West Apartments, a 223-unit
     apartment community located in Des Moines, Iowa for a sales price of
     $11,225,000. The property had a depreciated cost basis of $10,125,418 and
     resulted in a gain on the sale of $947,326. Proceeds from the sale were
     used to payoff debt of $6.6 million and necessitated the write-off of
     deferred costs of $164,089. An additional $664,000 of proceeds were used to
     pay down a portion of the debt collateralized by four separate multifamily
     communities which the Company owns. With the sale of Pointe West, the
     Company completed its plans to exit the Midwest.

     On December 19, 1996, the Company sold Greentree Plaza, a 110,077 square
     feet retail center in Marlton, New Jersey, for a sales price of $9,250,000
     resulting in a loss on the sale of $889,063. The sale of Greentree Plaza is
     consistent with the Company's plan to sell its retail properties and focus
     on multifamily communities. The proceeds from the sale will be used to fund
     the development of Berkshires at Crooked Creek.

     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. 


                                   Continued

                                      F-17

<PAGE>



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

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


D.   Multifamily and Retail Property - Continued
     -------------------------------

     Impairment of Long-Lived Assets
     -------------------------------

     As of December 31, 1996, the Company has recorded $12 million in provisions
     for losses on the wholly-owned and joint venture retail assets as a result
     of the Company's strategic decision to divest of its retail portfolio over
     time and redeploy proceeds in multifamily assets. In the third quarter of
     1996, the Company began actively marketing four of its wholly-owned retail
     centers. As a result of these efforts, the Company has reclassified these
     centers to assets held for sale and has recorded a provision for losses of
     $4.2 million which represents the difference between carrying value and
     estimated fair value less cost to sell. Depreciation will no longer be
     recorded on these assets.

     A fifth retail center, which is not currently for sale had a significant
     lease restructuring during the third quarter. As a result of this
     situation, the Company has recorded a provision for a loss of $3.3 million
     which represents the difference between carrying value and estimated fair
     value. Depreciation will be calculated on the adjusted book value on this
     asset.

     Finally, one of the Company's joint venture investments, Brookwood Village
     Joint Venture, recorded a $9 million provision for losses of which $4.5
     million represents the Company's pro-rata share of the provision.

     Rental Income
     -------------

     Future base rents receivable under non-cancelable commercial operating
     leases for the four remaining wholly-owned properties for the years 1997
     through 2001 and thereafter are as follows:

                              1997          $ 4,982,600
                              1998          $ 4,719,500
                              1999          $ 4,161,200
                              2000          $ 3,784,600
                              2001          $ 3,395,500
                              Thereafter    $24,223,200
















                                    Continued


                                      F-18

<PAGE>



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


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


E.   Investments in Unconsolidated Joint Ventures
     --------------------------------------------

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

                      CONDENSED COMBINED BALANCE SHEETS
                         DECEMBER 31, 1996 AND 1995


                     ASSETS
                     ------
                                                        1996            1995
                                                   ------------    ------------

     Property at cost                              $110,058,875   $108,888,115
     Less accumulated depreciation                  (40,173,598)   (27,248,453)
                                                   ------------   ------------

                                                     69,885,277     81,639,662
     Other assets                                     2,774,699      2,034,197
                                                   ------------   ------------

       Total assets                                $ 72,659,976   $ 83,673,859
                                                   ============   ============


           LIABILITIES AND PARTNERS' EQUITY
           --------------------------------

     Liabilities                                   $    558,639   $    267,707
                                                   ------------   ------------

     Partners' equity:
       The Company                                   36,036,723     41,689,843
       Joint venture partner                         36,064,614     41,716,309
                                                   ------------    -----------

       Total partners' equity                        72,101,337     83,406,152
                                                   ------------    -----------

       Total liabilities and partners' equity      $ 72,659,976    $83,673,859
                                                   ============    ===========


                   CONDENSED COMBINED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                          1996          1995           1994
                                      -----------    -----------    -----------

     Revenues                         $13,118,356    $12,873,159    $12,150,491
     Property operating expenses       (6,214,033)    (5,912,347)    (5,888,029)
     Depreciation                      (3,925,146)    (4,150,399)    (3,908,620)
     Provision for loss                (9,000,000)          -              -
                                      -----------    -----------    -----------

     Net income/(loss)                $(6,020,823)   $ 2,810,413    $ 2,353,842
                                      ===========    ===========    ===========

     Allocation of net income (loss):
             The Company              $(3,008,587)   $  1,407,025   $ 1,178,272
             Joint venture partner     (3,012,236)      1,403,388     1,175,570
                                      ------------    -----------   -----------

                                      $(6,020,823)   $  2,810,413   $ 2,353,842
                                      ===========     ===========   ===========


     In 1996, one of the joint venture investments,  Brookwood Village, recorded
     a $9,000,000  provision for loss which  represents the  difference  between
     carrying  value and estimated fair value of the retail center less costs to
     sell.



                                    Continued

                                      F-19

<PAGE>



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


F.   Mortgage and other loans receivable
     -----------------------------------

     As of December 31, 1996, the Company held a mortgage loan with a carrying
     value of approximately $2,268,000 and a promissory note with a principal
     balance of approximately $1,826,000. The mortgage loan is collateralized by
     a 120-unit apartment complex in Palm Bay, Florida. The mortgage loan
     requires principal payments based on a 23-year amortization along with an
     interest rate of 7%. 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 is approximately $3,016,000. The promissory note requires
     monthly interest payments of 10% and matures April 13, 1998.

     In May 1996, a mortgage loan receivable was paid off for $7,016,547 which
     was the principal balance as of the payoff date. The loan was
     collateralized by a 185-unit apartment complex in Miami, Florida. In
     addition, in November 1996, a separate mortgage loan receivable was paid
     off for $8,308,255 which was the principal balance as of the payoff date.
     The loan was collateralized by a 212- unit apartment complex in Miami,
     Florida.

G.   MBS
     ---

     At December 31, 1996, the Company's MBS portfolio had an approximate market
     value of $9,849,000 with unrealized gains of $616,000. The market value of
     the MBS portfolio at December 31, 1995 was approximately $12,372,000 with
     unrealized gains of $796,000. At December 31, 1996 and 1995, the MBS
     portfolio's cost basis was $9,232,956 and $11,576,326 with a face value of
     $9,294,121 and $11,655,051, 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 coupon rate of 9% per
     annum maturing in 2024. The Company has the intention and ability to hold
     these to maturity.

H.   Credit Agreements
     ------------------

     At December 31, 1996, the Company has in place two lines of credit to
     provide for future development, acquisitions and general business
     activities. One credit agreement is a Master Credit Facility ("Facility")
     with the Federal National Mortgage Association ("FNMA"). The commitment
     under this interest only facility, which is collateralized by multifamily
     assets, is for $100,000,000 of which $63,345,000 is fixed rate ("Base") and
     $36,655,000 is a revolving component ("Revolver") expiring in November
     2000.

     As of December 31, 1996, the Company has pledged fourteen apartment
     communities as collateral under the Facility. At that time, $92,310,000 was
     advanced on the available collateral. Future advances under the commitment
     are dependent on the delivery of additional collateral. The borrowings
     under the Credit Facility at December 31, 1996 were as follows:

                                   Contract    Contract
                                     Start       End     Interest
     Borrowings                      Date        Date      Rate       Amount
     ----------                      ----        ----      ----       ------
     Credit Facility - Fixed       11/22/95   11/20/05    6.997%   $50,000,000
     Credit Facility - Fixed       09/20/96   09/20/03    7.54%     13,345,000
     Credit Facility - Revolver    12/03/96   03/03/97    5.976%    28,965,000
                                                                   -----------
                                                                   $92,310,000
                                                                   ============

                                    Continued

                                      F-20

<PAGE>



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


H.   Credit Agreements, Continued
     ------------------

     Simultaneous with the closing of the Facility mentioned above, the Company
     significantly amended the terms of the other Credit Agreement ("Credit
     Agreement") with the Bank of Boston and Mellon Bank. The commitment of
     $49.5 million has an interest rate set at 175 basis points over LIBOR
     (5.5%) as of December 31, 1996. Multifamily and retail assets are pledged
     as collateral under the Credit Agreement. The terms of the amended facility
     expires December 31, 1997. The borrowings under the Credit Agreement at
     December 31, 1996 were as follows:

                                     Contract     Contract
                         Start         End        Interest
     Borrowings           Date         Date         Rate        Amount

     LIBOR borrowings   12/30/96     01/28/97*    7.4375%    $ 1,250,000
     LIBOR borrowings   12/30/96     01/28/97*    7.2500%     17,000,000
     LIBOR borrowings   11/25/96     03/26/97     7.3125%     16,500,000
     LIBOR borrowings   12/30/96     03/31/97     7.3125%      9,000,000
                                                             -----------
                                                             $43,750,000
                                                             ===========

     *  On January 28, 1997, the Company paid down these contracts by
        $8,250,000 and repriced the new contracts at the then current interest
        rate of 7.3125%.

     As an interest rate hedge against variable rate debt, in November 1995 the
     Company entered into a five-year interest rate swap contract with a bank as
     counterparty. Under the swap arrangement, 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 anticipated revolving facilities.
     The current swap amount will cover anticipated borrowing levels under
     revolvers in the near term. The Company will continually reassess its rate
     exposure relative to debt levels and will execute additional interest rate
     protection as circumstances dictate.

     The following summarizes the Company's Credit Facility and Credit Agreement
     at December 31, 1996 and 1995.

                                               As of December 31,
                            ---------------------------------------------------
                                        1996                       1995
                            -------------------------  ------------------------
                            Outstanding   Commitment   Outstanding   Commitment
                            -----------   ----------   ----------- ------------
     Credit Agreement       $ 43,750,000 $ 49,450,000  $37,000,000 $ 48,000,000
     Master Credit Facility   92,310,000   92,310,000   58,140,000   58,140,000
                            ------------ ------------  ----------- ------------
                            $136,060,000 $141,760,000  $95,140,000 $106,140,000
                            ------------ ------------  ----------- ------------

     Credit Facility and Credit Agreement borrowings averaged $122,168,671,
     $74,039,637 and $75,004,167 during the years ended December 31, 1996, 1995
     and 1994, respectively, and the maximum amount outstanding at any month-end
     during fiscal years 1996, 1995 and 1994 was $144,110,000. The weighted
     average interest rates of these borrowings were 6.87%, 8.10% and 6.88%
     during the years ended December 31, 1996, 1995 and 1994, respectively.

     The Credit Facility and Credit Agreement requires the Company to be in
     compliance with certain debt covenants. Two of the more restrictive
     covenants include: the Company is required to maintain interest coverage
     ratios of 2 1/4 to one along with a total liability to net worth ratio of
     not more than 50%. As of December 31, 1996 the Company was in compliance
     with all covenants.

                                    Continued

                                      F-21

<PAGE>



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



I.   Mortgage Notes Payable
     ----------------------

     The following table sets forth certain information regarding the mortgage
     notes payable at December 31, 1996:

<TABLE>
<CAPTION>
                                                                                                    Principal
      Apartment                                                    Interest       Maturity           Balance
      Communities                   Location                         Rate           Date         As of 12/31/96
      -----------                   --------                         ----           ----         --------------
<S>                                <C>                              <C>          <C>             <C> 
      Conventional Fixed Rate

      Altamonte                     Altamonte Springs, FL            8.34%         4/1/2001       $  4,077,409
      Huntington Chase              Norcross, GA                     8.34%         4/1/2001          8,145,258
      Newport                       Tampa, FL                        8.34%         4/1/2001          3,698,115
      Timbers                       Charlotte, NC                    8.34%         4/1/2001          6,542,818
      Avalon                        Atlanta, GA                      8.45%         6/1/2001          5,507,837
      East Lake                     Charlotte, NC                    8.45%         6/1/2001          2,898,861
      Southpointe                   Massapequa, NY                   8.45%         6/1/2001          5,121,322
      Huntington Downs              Greenville, SC                   8.45%         7/1/2001          8,968,660
      Lakes of Jacaranda            Plantation, FL                   8.45%         7/1/2001          8,010,842
      Kings Crossing                Kingwood, TX                     8.45%         7/1/2005          8,919,943
      Kingwood Lakes                Kingwood, TX                     8.45%         7/1/2005          8,527,858
      Golf Side                     Fort Worth, TX                   7.695%       11/1/2005          5,739,577
      Hunter's Glen                 Plano, TX                        9.000%        3/1/2000          5,529,629
      Berkshire Towers              Silver Spring, MD                7.625%        4/1/2029         35,370,790
                                                                                                  ------------
                                                                                                  $117,058,919
      Tax Exempt

      Prescott Place II             Dallas, TX                       5.775%       12/5/2003       $  6,313,480
      Plantation Colony             Plantation, FL                   7.13%         9/1/2004          9,533,208
      Park Colony and               Hollywood, FL
      Woodland Meadows              Tamarac, FL                      6.41%         4/1/2002         16,900,000
                                                                                                  ------------
                                                                                                  $ 32,746,688
</TABLE>

     The aggregate scheduled principal amounts of long-term borrowings due
     during the five years 1997 through 2001 and thereafter are $1,769,009,
     $1,896,709, $2,035,287, $7,462,851, $50,672,917 and $85,968,929,
     respectively.

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

J.   Master 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 the Company's investments in MBS. The balance outstanding at December
     31, 1996 is $9,300,000 at a rate of 5.70%. Subsequent to December 31, 1996,
     this borrowing was paid down by $500,000 and the remaining principal
     balance of $8,800,000 was rolled over to a new maturity of May 19, 1997. On
     May 19, 1997, all or a majority of the borrowings outstanding will be
     repriced at the then current interest rates.







                                    Continued


                                      F-22

<PAGE>



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



J.   Master Repurchase Agreement - Continued
     ---------------------------

     Master Repurchase Agreement borrowings averaged $10,201,644, $11,534,795
     and $13,582,222 during the years ended December 31, 1996, 1995 and 1994,
     respectively, and the maximum amounts outstanding at any month-end during
     fiscal 1996, 1995 and 1994 were $10,950,000, $11,800,000 and $14,100,000,
     respectively. The weighted average interest rates of these agreements were
     5.85%, 6.24%, and 4.46% during the years ended December 31, 1996, 1995 and
     1994, respectively.

K.   Minority Interest
     -----------------

     Minority interest in the Operating Partnership consists of the following at
     December 31, 1996 and 1995 (in thousands):

                                                  1996             1995
                                                  ----             ----
       Balance, beginning of year               $ 5,000           $  -
       Value of Units Issued to
             Minority Unitholders:
                Affiliated Parties               29,435            5,082
                Unrelated Parties                 5,438              -
       Initial cash contribution                   -                   5
       Distribution to Unitholders               (1,846)            (241)
       Minority income(loss) allocation          (1,418)             154
                                                -------           ------

       Balance, end of year                     $36,609           $5,000
                                                =======           ======

L.   Related Party Transactions
     --------------------------

     For the three years ended December 31, 1996, the Company contracted with an
     affiliate of certain officers and directors for services as management
     agent to the Company's properties. Such agreements provide 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 properties including
     accounting, computer support, risk management, real estate tax services and
     administration.

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

                                            1996       1995         1994
                                            ----       ----         ----
       Costs reimbursements related
             to the operation of the
             Company's properties        $1,666,695   $1,315,960   $1,625,604

       Fees and reimbursements for
             administrative services     $  740,273   $  629,270   $  677,604

     As a result of the acquisition of the property manager as described in Note
     Q, the Company will no longer reimburse an affiliate for services related
     to multifamily property operations.

                                    Continued



                                      F-23

<PAGE>



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

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


M.   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
     will be administered by the Compensation Committee which is comprised of
     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 0-1 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 in the notes to
     the financial statements. The Company adopted the disclosure provisions of
     SFAS 123 in 1996 and has applied APB Opinion No. 25 and related
     Interpretations in accounting for the Plan. Accordingly, compensation
     expense was only recognized for 24,000 options issued to a consultant of
     the Company, which had a fair value of approximately $22,000. Had
     compensation cost for the Plan been determined based on the fair value of
     all the options calculated in accordance with SFAS 123, the Company's net
     income and earnings per share for the year ended December 31, 1996 would
     have been reduced to the pro-forma amounts indicated below:

                                          Net Income         Earnings Per Share
       As Reported                      ($14,308,277)             $(.56)
       Pro-Forma*                       ($14,745,759)             $(.58)

     *The pro-forma effect of compensation costs determined using the fair value
     based method are not indicative of future amounts when the new method will
     apply to all outstanding vested and nonvested awards.

     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: an expected life 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 as of December 31, 1996 and changes
     during the year then ended is presented below:

                                                             Weighted Avg.
                                                Shares       Exercise Price
                                                ------       --------------
       Outstanding at beginning               
          of the year                               -                -
       Granted                                  623,964            $9.90
          Exercised                                 -                -
       Forfeited/Expired                            -                -
       Outstanding at end of the year           623,964
                                                =======
                                              
       Options exercisable at year-end          567,964
                                              
       Weighted average fair value of         
          options granted during the year.        $.74


                                    Continued

                                      F-24

<PAGE>




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

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

M.   Benefit Plans, Continued
     -------------

     The following table summarizes information about options outstanding at
     December 31, 1996:

                                  Options Outstanding
                                  -------------------
                                    Weighted Average

                                         Remaining
          Range of            Number     Contractual      Weighted Average
      Exercise Prices      Outstanding      Life           Exercise Price
      ---------------      -----------   ----------        --------------
         $9.75-$10.25        623,964      9.4 years             $9.90


                                 Options Exercisable
                                 -------------------
                           Number            Weighted Average
                        Exercisable           Exercise Price
                        -----------           --------------
                           567,964                $9.86
         

     Profit Sharing Plans
     --------------------

     Beginning in 1996, the Company has a defined contribution plan 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.
     Contributions, if any, are allocated to each participant based on the
     relative compensation of the participant to the compensation of all
     participants. Aggregate contributions of approximately $76,000 were made
     for the year ended December 31, 1996.

N.   Non-Recurring Charges
     ---------------------

     Non-recurring charges in 1996 relate primarily to the settlement of a
     lawsuit related to the sale of an apartment asset, Carrollwood Gables
     Apartments, which was sold to an unaffiliated buyer in January, 1994. Prior
     to the sale, the buyer engaged a third party to report on the physical
     condition of the property. The physical inspection estimated outstanding
     repairs of approximately $20,000 which was satisfactory to the buyer.
     Subsequent to the sale, the buyer claimed there was significant roof and
     window leakage and brought suit against the Company, claiming that the
     Company concealed evidence of the leaks and misrepresented to the buyer
     that no roof leaks existed at the property.

     On September 5, 1996, the two counts brought against the Company were
     dismissed by the court. However, the buyer still had a number of options,
     including appealing the order. On September 18, 1996, the litigation was
     settled in mediation with the Company agreeing to pay a cash settlement of
     $150,000 to the buyer. Although the Company is confident there was no wrong
     doing on its part and believes there was no basis for litigation, the
     Company believed a settlement at this time was a better option given the
     alternatives, which could have meant a reversal of the dismissal and an
     expensive trial in the future, and in any event the incurrence of
     additional costs of defense.

     In addition to the cash settlement, the Company has incurred legal fees and
     costs which are recorded as a non-recurring charge on the Consolidated
     Statement of Operations.

                                    Continued


                                      F-25

<PAGE>



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


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

     In 1995, the non-recurring charges relate to costs associated with the
     restructuring of the company to an UPREIT as discussed in Note A. The
     non-recurring charges in 1994 relate to the settlement of a class action
     lawsuit brought against the Company at its inception by investors in the
     two publicly held limited partnerships which were combined to form
     Berkshire Realty Company, Inc. (See Note T).

O.   Dividends to Shareholders
     --------------------------


     For federal income tax purposes, the following summarizes the tax
     components of dividends paid in 1996, 1995 and 1994:

                                                   Year Ended December 31,
                                               --------------------------------
                                               1996          1995          1994
                                               ----         -----         -----
         Per Share:
               Ordinary income                 $.44          $.36          $.48
               Non-taxable distributions        .46           .53           .38
                                               ----          ----          ----
                  Total                        $.90          $.89          $.86
                                               ====          ====          ====

     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 (see Note T) and recognition of
     effective interest income on mortgage loans (see Note F) are recognized for
     federal tax purposes when realized.

P.   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 is $20.2 million.

Q.   Subsequent Events
     -----------------

     Property Acquisition
     --------------------

     Subsequent to December 31, 1996, the Company acquired Westchester
     Apartments, a 345-unit apartment community located in Silver Spring,
     Maryland. The purchase price was $16.1 million which included the
     assumption of $11.4 million in debt and the issuance of 388,333 Operating
     Partnership Units based on a share price of $10. The remainder was paid in
     cash.

     Property Disposition
     --------------------

     Subsequent to December 31, 1996, the Company sold Howell Commons
     Apartments, a 348-unit apartment community located in Greenville, South
     Carolina for a sale price of $13 million which resulted in a gain of
     approximately $6.4 million.


                                    Continued

                                      F-26

<PAGE>



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


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


Q.   Subsequent Events - Continued
     -----------------

     Acquisition of the Management Company
     -------------------------------------

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

     The Property Manager manages 57 apartment communities, including the
     Company's 35 assets, and employs approximately 85 professionals, excluding
     site employees. As a result of this transaction, the Company will no longer
     pay management fees and reimbursements for the management operations of its
     multifamily portfolio. In addition, the Company will receive 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 Company will continue to engage
     an affiliated company to manage its six retail assets.

     The value of the Operating Partnership Units issued will be recorded on the
     balance sheet and reflected as third-party property management contracts
     and the acquisition of a workforce. These recorded amounts will be
     amortized over the expected periods to be benefitted.

R.   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 G).

     Mortgage loans and other loans receivable
     -----------------------------------------

     The Company estimates the fair value of its mortgage loans using the market
     value of the properties which collaterize 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.

     Credit agreements
     -----------------

     At December 31, 1996, the Company has 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

                                    Continued


                                      F-27
<PAGE>



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


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

R.   Fair Value of Financial Instruments - Continued
     -----------------------------------

     Credit agreements - Continued
     -----------------

     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 fixed rate portion at December 31, 1996 and 1995 to be $61,873,000
     and $50,000,000, respectively.

     Repurchase agreements
     ---------------------

     The carrying amount of the Company's repurchase agreement approximates 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 $150,000 which is the amount the Company would receive if the swap
     was terminated on December 31, 1996. If the swap agreement was terminated
     on December 31, 1995, the Company estimated it would owe $945,000, if the
     contract was terminated.

     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.

S.   Pro-Forma Results (Unaudited):
     -----------------------------

     The following unaudited pro-forma operating results for the Company have
     been prepared as if the 1996 property acquisitions 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. Comparisons are not made to 1995
     since the Company became an umbrella partnership real estate investment
     trust ("UPREIT") May 1, 1995.

                                                     For the Twelve Months Ended
                                                         December 31, 1996
                                                     ---------------------------

       Revenues                                             $102,822,224
                                                            ============
       Expenses including depreciation                      $115,747,161
                                                            ============
       Net loss                                             $(14,636,894)
                                                            ============ 
       Net loss per weighted average share                  $       (.58)
                                                            ============

T.   Issuance of 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

                                    Continued


                                      F-28

<PAGE>



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

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


T.   Issuance of Warrants - Continued
     --------------------

     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
     exercise price was $10.75 from September 7, 1994 through September 6, 1995
     and $11.79 from September 7, 1995 through September 8, 1998. As of December
     31, 1996, 1,943 shares of common stock were issued upon exercise of
     warrants.












                                   Continued


                                      F-29
<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

             SCHEDULE III - Real Estate and Accumulated Depreciation

                                December 31, 1996


<TABLE>
<CAPTION>
                                                                        Costs Capitalized
                                                                        -----------------
                                                                                            Subsequent to
                                                      Initial cost to Partnership            Acquisition
                                                     ---------------------------             -----------
                                                                        Buildings             Buildings
                                                                           and                    and
         Description                                 Land              Improvements          Improvements
         -----------                                 ----              ------------          ------------
<S>                                              <C>                  <C>                   <C>
  Residential
  -----------

  Altamonte Bay Club
  Altamonte Springs, Florida                     $    485,599          $ 4,370,388           $   775,346

  Arbors at Breckenridge
  Duluth, Georgia                                   3,260,522           23,355,675               912,714

  The Avalon on Abernathy
  Atlanta, Georgia                                  2,013,424            5,177,377             5,043,002

  Benchmark
  Irving, Texas                                       808,417            7,275,757             1,011,623

  Berkshire Towers
  Silver Spring, Maryland                           5,439,135           48,952,217             3,770,605

  British Woods
  Nashville, Tennessee                              1,212,396           10,911,569               692,159

  Brookfield Trace
  Mauldin, South Carolina                           1,529,428           13,435,004               459,270

  Brookwood Valley
  Mauldin, South Carolina                             972,241            8,750,174               573,199

  Cumberland Cove
  Raleigh, North Carolina                           1,840,482           23,524,150             1,269,301

  East Lake Village
  Charlotte, North Carolina                           531,629            4,784,665             2,275,107

  Golfside
  Haltom City, Texas                                1,444,530            6,988,219               654,689

  Highland Ridge,
  Nashville, Tennessee                                720,695            6,486,261             1,097,598

  Howell Commons
  Greenville, South Carolina                        1,050,352            9,453,164               921,813

  Hunters Glen
  Plano, Texas                                      1,012,130            9,109,173               530,205

  Huntington Chase
  Norcross, Georgia                                 1,423,792           17,840,204             1,441,657

  Huntington Downs
  Greenville, South Carolina                          791,173           18,091,240             1,414,593
</TABLE>



                                      F-30


<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996
<TABLE>
<CAPTION>
                                                                        Costs Capitalized
                                                                        -----------------
                                                                                            Subsequent to
                                                     Initial cost to Partnership             Acquisition
                                                     ---------------------------             -----------
                                                                        Buildings             Buildings
                                                                           and                   and
         Description                                 Land              Improvements          Improvements
         -----------                                 ----              ------------          ------------
<S>                                                <C>                  <C>                   <C>
  Residential
  -----------

  Indigo on Forest
  Dallas, Texas                                    10,951,649           26,256,230             5,294,329

  Kings Crossing
  Houston, Texas                                    3,614,838            9,295,300             1,246,220

  Kingwood Lake
  Houston, Texas                                    3,106,935            9,320,806             1,542,496

  Lakes of Jacaranda
  Plantation, Florida                               3,060,000           17,818,748               838,407
</TABLE>

<TABLE>
<CAPTION>
                                                          Gross Amounts Carried at End of Year
                                                          ------------------------------------
                                                                         Buildings
                                                                            and
         Description                                 Land              Improvements           Total
         -----------                                 ----              ------------           -----
<S>                                               <C>                  <C>                 <C>
  Residential

  Altamonte Bay Club
  Altamonte Springs, Florida                     $    485,599          $ 5,145,734         $ 5,631,333


  Arbors at Breckenridge
  Duluth, Georgia                                   3,260,522           24,268,389          27,528,911

  The Avalon on Abernathy
  Atlanta, Georgia                                  2,013,424           10,220,379          12,233,803

  Benchmark
  Irving, Texas                                       808,417            8,287,380           9,095,797

  Berkshire Towers
  Silver Spring, Maryland                           5,439,135           52,722,822          58,161,957

  British Woods
  Nashville, Tennessee                              1,212,396           11,603,728          12,816,124

  Brookfield Trace
  Mauldin, South Carolina                           1,529,428           13,894,274          15,423,702

  Brookwood Valley
  Mauldin, South Carolina                             972,241            9,323,373          10,295,614

  Cumberland Cove
  Raleigh, North Carolina                           1,840,482           24,793,451          26,633,933
</TABLE>



                                      F-31


<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996

<TABLE>
<CAPTION>
                                                           Gross Amounts Carried at End of Year
                                                           ------------------------------------
                                                                         Buildings
                                                                            and
         Description                                 Land              Improvements           Total
         -----------                                 ----              ------------           -----
<S>                                              <C>                   <C>                <C>
  Residential
  -----------

  East Lake Village
  Charlotte, North Carolina                      $    531,629          $ 7,059,772         $ 7,591,401

  Golfside
  Haltom City, Texas                                1,444,530            7,642,908           9,087,438

  Highland Ridge
  Nashville, Tennessee                                720,695            7,583,859           8,304,554

  Howell Commons
  Greenville, South Carolina                        1,050,352           10,374,977          11,425,329

  Hunters Glen
  Plano, Texas                                      1,012,130            9,639,378          10,651,508

  Huntington Chase
  Norcross, Georgia                                 1,423,792           19,281,861          20,705,653

  Huntington Downs
  Greenville, South Carolina                          791,173           19,505,833          20,297,006

  Indigo on Forest
  Dallas, Texas                                    10,951,649           31,550,559          42,502,208

  Kings Crossing
  Houston, Texas                                    3,614,838           10,541,520          14,156,358

  Kingwood Lake
  Houston, Texas                                    3,106,935           10,863,302          13,970,237

  Lakes of Jacaranda
  Plantation, Florida                               3,060,000           18,657,155          21,717,155
</TABLE>



                                      F-32


<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996

<TABLE>
<CAPTION>
                                                                           Year
                                                 Accumulated           Construction         Date
         Description                             Depreciation           Completed         Acquired
         -----------                             ------------           ---------         --------
<S>                                             <C>                   <C>                 <C>
  Residential
  -----------

  Altamonte Bay Club
  Altamonte Springs, Florida                     $ 1,467,802           1984-1986          10/14/92

  Arbors at Breckenridge
  Duluth, Georgia                                  3,962,160           1986-1989/         12/17/93
                                                                       1995

  The Avalon on Abernathy
  Atlanta, Georgia                                 2,344,205           1971               06/02/92

  Benchmark
  Irving, Texas                                      290,312           1982               06/27/96

  Berkshire Towers
  Silver Spring, Maryland                          2,177,953           1965-1969          05/14/96

  British Woods
  Nashville, Tennessee                               851,954           1984               11/01/95

  Brookfield Trace
  Mauldin, South Carolina                            730,676           1995               11/01/95

  Brookwood Valley
  Mauldin, South Carolina                          1,065,755           1992               04/13/95

  Cumberland Cove
  Raleigh, North Carolina                          4,434,653           1985/1995          12/19/91

  East Lake Village
  Charlotte, North Carolina                        1,665,593           1972               10/19/93

  Golfside
  Haltom City, Texas                                 290,428           1980/1985          06/06/96

  Highland Ridge
  Nashville, Tennessee                               568,114           1972               11/01/95

  Howell Commons
  Greenville, South Carolina                       4,999,067           1985-1986          01/15/88

  Hunters Glen
  Plano, Texas                                       284,513           1979               07/30/96

  Huntington Chase
  Norcross, Georgia                                3,595,753           1987/1996          07/07/93

  Huntington Downs
  Greenville, South Carolina                       9,228,213           1986-1987          01/15/88

  Indigo on Forest
  Dallas, Texas                                    5,539,722           1984               08/31/94
</TABLE>


                                      F-33

<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996

<TABLE>
<CAPTION>
                                                                           Year
                                                 Accumulated           Construction         Date
         Description                             Depreciation           Completed         Acquired
         -----------                             ------------           ---------         --------
<S>                                               <C>                 <C>                 <C> 
  Residential
  -----------

  Kings Crossing
  Houston, Texas                                   2,038,800           1983               03/23/93

  Kingwood Lake
  Houston, Texas                                   2,102,008           1980               03/23/93

  Lakes of Jacaranda
  Plantation, Florida                              6,848,611           1988-1989          03/30/90
</TABLE>









                                      F-34






<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996


<TABLE>
<CAPTION>
                                                                             Costs Capitalized
                                                                             -----------------
                                                                                            Subsequent to
                                                      Initial cost to Partnership            Acquisition
                                                      ---------------------------           -----------
                                                                        Buildings             Buildings
                                                                           and                   and
         Description                                 Land              Improvements          Improvements
         -----------                                 ----              ------------          ------------
<S>                                              <C>                   <C>                   <C>
  Residential
  -----------

  Newport
  Tampa, Florida                                 $   486,478           $  4,378,303          $ 1,151,420

  The Oaks
  Mauldin, South Carolina                          1,509,268              6,434,249              343,327

  Park Colony
  Hollywood, Florida                               1,888,641             16,997,765            1,242,739

  Plantation Colony
  Plantation, Florida                              1,341,571             12,074,143              809,087

  Pleasant Woods
  Dallas, Texas                                      605,068              5,445,610              799,503

  Prescott Place
  Mesquite, Texas                                    873,614              7,862,525              568,354

  Prescott Place II
  Mesquite, Texas                                  1,501,725              8,941,424              299,108

  Providence
  Dallas, Texas                                      676,617              6,089,549              928,489

  River Oaks
  Houston, Texas                                   2,464,193              8,249,691            3,117,089

  Roper Mountain Woods
  Greenville, South Carolina                         667,352              6,006,172              898,555

  Southpoint at Massapequa
  Massapequa, New York                               874,448              7,870,033              755,592

  Stoneledge Plantation
  Greenville, South Carolina                         988,672              8,898,048              799,953

  The Timbers
  Charlotte, North Carolina                          965,823              8,692,408              837,266

  Windover
  Knoxville, Tennessee                               890,613              8,015,515            2,861,945

  Woodland Meadows
  Tamarac, Florida                                   517,212              4,654,918            2,710,034
                                                 -----------           ------------          -----------

  Total Residential                              $61,520,662           $401,806,674          $49,886,794
                                                 -----------           ------------          -----------
</TABLE>



                                      F-35
<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996
<TABLE>
<CAPTION>
                                                         Gross Amounts Carried at End of Year
                                                         ------------------------------------
                                                                         Buildings
                                                                            and
         Description                                 Land               Improvements             Total
         -----------                                 ----               ------------             -----
<S>                                              <C>                   <C>                   <C>
  Residential
  -----------

  Newport
  Tampa, Florida                                 $   486,478              5,529,723             6,016,201

  The Oaks
  Mauldin, South Carolina                          1,509,268              6,777,576             8,286,844

  Park Colony
  Hollywood, Florida                               1,888,641             18,240,504            20,129,145

  Plantation Colony
  Plantation, Florida                              1,341,571             12,883,230            14,224,801

  Pleasant Woods
  Dallas, Texas                                      605,068              6,245,113             6,850,181

  Prescott Place
  Mesquite, Texas                                    873,614              8,430,879             9,304,493

  Prescott Place II
  Mesquite, Texas                                  1,501,725              9,240,532            10,742,257

  Providence
  Dallas, Texas                                      676,617              7,018,038             7,694,655

  River Oaks
  Houston, Texas                                   2,464,193             11,366,780            13,830,973

  Roper Mountain Woods
  Greenville, South Carolina                         667,352              6,904,727             7,572,079

  Southpoint at Massapequa
  Massapequa, New York                               874,448              8,625,625             9,500,073

  Stoneledge Plantation
  Greenville, South Carolina                         988,672              9,698,001            10,686,673

  The Timbers
  Charlotte, North Carolina                          965,823              9,529,674            10,495,497

  Windover
  Knoxville, Tennessee                               890,613             10,877,460            11,768,073

  Woodland Meadows
  Tamarac, Florida                                   517,212              7,364,952             7,882,164
                                                 -----------           ------------          ------------

  Total Residential                              $61,520,662           $451,693,468          $513,214,130
                                                 -----------           ------------          ------------
</TABLE>




<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996

<TABLE>
<CAPTION>
                                                                           Year
                                                 Accumulated           Construction         Date
         Description                             Depreciation           Completed         Acquired
         -----------                             ------------           ---------         --------
<S>                                              <C>                   <C>                   <C>
  Residential
  -----------

  Newport
  Tampa, Florida                                 $ 1,666,434           1985               10/14/92

  The Oaks
  Mauldin, South Carolina                          2,501,825           1989               03/02/90

  Park Colony
  Hollywood, Florida                               2,963,630           1987               07/13/94

  Plantation Colony
  Plantation, Florida                              2,597,333           1984               12/01/93

  Pleasant Woods
  Dallas, Texas                                      247,735           1979               06/06/96

  Prescott Place
  Mesquite, Texas                                    321,172           1983               06/06/96

  Prescott Place II
  Mesquite, Texas                                     99,128           1984               11/12/96

  Providence
  Dallas, Texas                                      261,858           1980               06/26/96

  River Oaks
  Houston, Texas                                   1,377,606           1966               05/01/95

  Roper Mountain Woods
  Greenville, South Carolina                       3,339,913           1984               01/15/88

  Southpoint at Massapequa
  Massapequa, New York                             2,525,959           1969               10/14/92

  Stoneledge Plantation
  Greenville, South Carolina                       4,623,807           1986               01/15/88

  The Timbers
  Charlotte, North Carolina                        2,410,560           1989               03/22/93

  Windover
  Knoxville, Tennessee                               806,430           1974               11/01/95

  Woodland Meadows
  Tamarac, Florida                                 2,047,559           1974               10/14/92
                                                 -----------

  Total Residential                              $82,277,241

</TABLE>


                                      F-37


<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996


<TABLE>
<CAPTION>
                                                                        Costs Capitalized
                                                                        -----------------
                                                                                           Subsequent to
                                                 Initial cost to Partnership                Acquisition
                                                 ---------------------------                -----------
                                                                        Buildings             Buildings
                                                                           and                   and
         Description                                 Land              Improvements          Improvements
         -----------                                 ----              ------------          ------------
<S>                                              <C>                   <C>                   <C>
  Commercial
  ----------

  Banks Crossing Shopping Ctr
  Fayetteville, Georgia                          $ 3,991,003           $ 14,451,711          $   350,436

  College Plaza
  Fort Myers, Florida                              3,187,958              6,510,077              628,183

  Crossroads South Shopping Ctr
  Jonesboro, Georgia                               3,727,876             12,177,275              429,372

  Tara Crossing
  Jonesboro, Georgia                               4,097,159             16,045,810              616,518
                                                 -----------           ------------          -----------

      Total Commercial                           $15,003,996           $ 49,184,873          $ 2,024,509
                                                 -----------           ------------          -----------


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

  Berkshires at Brookfield
   Development
  Mauldin, South Carolina                        $   149,680                 -               $ 1,421,344

  Berkshires at Crooked Creek
  Durham, North Carolina                           1,261,970                 -                 1,202,633

  Garlington Road
  Greenville, South Carolina                       1,193,883                 -                   274,843

  Indigo Land
  Dallas, Texas                                      863,455                 -                         0
                                                 -----------           ------------          -----------

      Total Land                                 $ 3,468,988           $     -               $ 2,898,820
                                                 -----------           ------------          -----------

      Grand Total - All Real Estate              $79,993,646           $450,991,547          $54,810,123
                                                 ===========           ============          ===========
</TABLE>



                                    Continued


                                      F-38
<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996

<TABLE>
<CAPTION>
                                                           Gross Amounts Carried at End of Year
                                                           ------------------------------------
                                                                         Buildings
                                                                            and
         Description                                 Land               Improvements             Total
         -----------                                 ----               ------------             -----
<S>                                              <C>                   <C>                   <C>
  Commercial
  ----------

  Banks Crossing Shopping Ctr
  Fayetteville, Georgia                          $ 3,991,003           $ 14,802,147          $ 18,793,150

  College Plaza
  Fort Myers, Florida                              3,187,958              7,138,260            10,326,218

  Crossroads South Shopping Ctr
  Jonesboro, Georgia                               3,727,876             12,606,647            16,334,523

  Tara Crossing
  Jonesboro, Georgia                               4,097,159             16,662,328            20,759,487
                                                 -----------           ------------          ------------

      Total Commercial                           $15,003,996           $ 51,209,382          $ 66,213,378
                                                 -----------           ------------          ------------


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

  Berkshires at Brookfield
   Development
  Mauldin, South Carolina                        $   149,680           $  1,421,344          $  1,571,024

  Berkshires at Crooked Creek
  Durham, North Carolina                           1,261,970              1,202,633             2,464,603

  Garlington Road
  Greenville, South Carolina                       1,193,883                274,843             1,468,726

  Indigo Land
  Dallas, Texas                                      863,455                      0               863,455
                                                 -----------           ------------          ------------

      Total Land                                 $ 3,468,988           $  2,898,820          $  6,367,808
                                                 -----------           ------------          ------------

      Grand Total - All Real Estate              $79,993,646           $505,801,670          $585,795,316
                                                 ===========           ============          ============
</TABLE>



                                    Continued

                                      F-39

<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - Real Estate and Accumulated Depreciation - Continued

                                December 31, 1996
<TABLE>
<CAPTION>
                                                                           Year
                                                 Accumulated           Construction         Date
         Description                             Depreciation           Completed         Acquired
         -----------                             ------------           ---------         --------
<S>                                              <C>                   <C>                   <C>
  Commercial
  ----------

  Banks Crossing Shopping Ctr
  Fayetteville, Georgia                          $ 5,942,130           1986 & 1987        12/16/87

  College Plaza
  Fort Myers, Florida                              4,198,355           1983 & 1985        04/30/87

  Crossroads South Shopping Ctr
  Jonesboro, Georgia                               4,756,926           1986 - 1987        12/31/87

  Tara Crossing
  Jonesboro, Georgia                               9,694,855           1986               06/25/87
                                                 -----------

      Total Commercial                           $24,592,266


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

  Berkshires at Brookfield
   Development
  Mauldin, South Carolina                                -             N/A                11/01/95

  Berkshires at Crooked Creek
  Durham, North Carolina                                 -             N/A                08/25/95

  Garlington Land
  Greenville, South Carolina                             -             N/A                06/10/96

  Indigo Land
  Dallas, Texas                                          -             N/A                08/31/94
                                                 ------------

      Total Land                                         -
                                                 -------------
                                                 $106,869,507
                                                 ============
</TABLE>


Notes: Brookfield Trace includes portion of Berkshires at Brookfield
       Development which is completed.

       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 $569,304,045 million. and the aggregate
       accumulated depreciation for federal income tax purposes is approximately
       $85,195,257 million.





                                    Continued


                                      F-40
<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued

                                December 31, 1996


     Reconciliation of Real Estate and Accumulated Depreciation for each of the
     three years ended December 31:

<TABLE>
<CAPTION>
                                       1996               1995             1994
                                    ------------      ------------    -------------
     <S>                            <C>               <C>             <C> 

     Real Estate

     Balance, beginning of year     $465,846,375      $448,057,874     $373,054,511

     Acquisition and improvements    146,774,969        89,578,886       96,707,447

     Sales and retirements           (26,826,028)      (71,790,385)     (21,704,084)
                                    ------------      ------------     ------------

     Balance at December 31,        $585,795,316      $465,846,375     $448,057,874
                                    ============      ============     ============


     Accumulated Depreciation


     Balance, beginning of year     $ 77,641,555      $ 80,863,231     $ 67,970,084

     Depreciation expense             29,032,162        21,976,356       19,506,878

     Provision for losses              7,500,000            -                 -

     Sales and retirements            (7,304,210)      (25,198,032)      (6,613,731)
                                    ------------       ------------    ------------

     Balance at December 31,        $106,869,507      $ 77,641,555     $ 80,863,231
                                    ============      ============     ============
</TABLE>






                                      F-41
<PAGE>



                 BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES

               Summary Quarterly Financial Information (Unaudited)

     The consolidated results of operations of the Company for the quarters
     ended March 31, June 30, September 30 and December 31, 1996 and 1995 are as
     follows:

<TABLE>
<CAPTION>
                                                 (Dollars in thousands, except per Share amounts)
                                     March 31,                  June 30,            September 30,              December 31,
                              ----------------------    ----------------------  ---------------------      --------------------
                                 1995        1996         1995        1996        1995        1996           1995          1996
                              ----------  ----------   ----------  ----------   ----------  ---------      ----------    -------
<S>                            <C>         <C>         <C>          <C>          <C>         <C>            <C>          <C>    

  Revenue                      $18,212     $20,429     $18,173      $22,161      $18,592     $25,334        $19,464      $25,078
                               =======     =======     =======      =======      =======     =======        =======      =======

  Income (loss) from
  Operations                      $621        $201        $693        $(497)        $442     $(8,825)(a)       $223      $(6,057)(a)

  Joint venture
  income (loss)                    414         427         389          231          358         486 (b)        246       (4,152)(b)

  Gains (losses) on
  sales of investment            5,190         -         4,147          -          5,842       1,084            424       (1,026)

  Non-recurring
  charge (a)                       -           -        (1,728)         -            -          (287)           -           (155)

  Minority interest                -            (7)        (60)          27          (90)        670             (4)         728

  Extraordinary items              -           -          (253)         -            -          (164)          (661)          -
                               -------     -------     -------      -------      -------     -------        -------      -------

  Net income (loss)            $ 5,811     $   194     $ 2,799      $  (470)     $ 6,194     $(7,522)       $   (18)     $(6,510)(b)
                               =======     =======     =======      =======      =======     =======        =======      =======

  Net income
  per weighted
  average Share                $   .23     $   .01     $   .11      $  (.02)     $   .24     $  (.30)       $   .00      $  (.25)
                               =======     =======     =======      =======      =======     =======        =======      =======

  Dividends paid
  per Share                    $  .215     $  .225     $  .225      $  .225      $  .225     $  .225        $  .225      $  .225
                               =======     =======     =======      =======      =======     =======        =======      =======

  Weighted Average Shares
  Outstanding               25,392,273  25,392,952  25,392,486   25,392,962   25,392,774   25,393,299    25,392,943   25,393,369
                            ==========  ==========  ==========   ==========   ==========   ==========     =========   ==========
</TABLE>


(a)  Items represent the costs of legal settlements, which includes the legal
     costs associated with such settlements. See additional information in
     Footnotes N and T to Consolidated Financial Statements.

(b)  Consolidated results of operations include charges for the impairment in
     carrying value of retail assets. See additional information in Footnote D
     to Consolidated Financial Statements.


                                      F-42