<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-K

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

For the fiscal year ended:  December 31, 1997
                                       OR
[_]    Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission file number:  1-10547

             (Exact name of registrant as specified in its charter)

              MISSOURI                              94-3058019
     (State of incorporation)          (I.R.S. Employer Identification No.)

     655 MONTGOMERY STREET, SUITE 800
     SAN FRANCISCO, CALIFORNIA                      94111
     (Address of principal executive offices)    (Zip Code)

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (415) 956-3031

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

    Title of Each Class             Name of each exchange on which registered
    -------------------                -----------------------------------------

Common Stock, par value $0.001 per share       American Stock Exchange
Preferred Stock, par value $0.001 per share    American 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 disclosures of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained here, 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.
Yes  X         No  ___
    ---

          The aggregate market value of the voting stock held by non-affiliates
of the registrant on March 26, 1998 was $30,815,342 computed by reference to the
respective closing sales prices of the common stock and preferred stock reported
on the American Stock Exchange and by excluding shares owned by trustees,
executive officers and principal shareholders (i.e., holders of 5% or more of
the registrant's outstanding shares).

          The registrant had 1,709,937 shares of common stock and 5,273,927
shares of preferred stock outstanding on March 26, 1998.
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.

                           ANNUAL REPORT ON FORM 10-K
                      FOR THE YEAR ENDED DECEMBER 31, 1997


                               Table of Contents
                               -----------------

<TABLE>
<CAPTION>
          Form 10-K
          Item No          Name of Item                                                           Page
          -------          ------------                                                           ----
<S>       <C>              <C>                                                                   <C>
Part I
          Item 1           Business                                                                  3
          Item 2           Properties                                                                6
          Item 3           Legal Proceedings                                                         7
          Item 4           Submission of Matters to a Vote of Security Holders                       7

Part II
          Item 5           Market for Registrant's Common Equity and Related
                           Shareholder Matters                                                       8
          Item 6           Selected Financial Data                                                   9
          Item 7           Management's Discussion and Analysis of
                             Financial Condition and Results of Operations                          10
          Item 8           Financial Statements and Supplementary Data                              14
          Item 9           Changes in and Disagreements with Accountants on
                           Accounting and Financial Disclosure                                      14

Part III
          Item 10          Directors and Executive Officers of the Registrant                       15
          Item 11          Executive Compensation                                                   17
          Item 12          Security Ownership of Certain Beneficial Owners and
                             Management                                                             18
          Item 13          Certain Relationships and Related Transactions

Part IV
          Item 14          Exhibits, Financial Statement Schedules and Reports on
                           Form 8-K                                                                 21

                           Signatures                                                               28

                           Report of Independent Public Accountants                                 29
                           Consolidated Financial Statements and Financial
                           Statement Schedules                                                      30
</TABLE>

                                      -2-
<PAGE>

                                     PART I


ITEM 1.  BUSINESS.

The Company
-----------

  Meridian Point Realty Trust VIII Co. (the "Company") is a Missouri corporation
whose shares of common and preferred stock are traded on the American Stock
Exchange.  The Company was organized in December 1987 under the name Sierra
Capital Realty Trust VIII Co.  The Company changed its name to Meridian Point
Realty Trust VIII Co. in September 1993.

  The Company was organized to qualify as a real estate investment trust
("REIT") under Sections 856-860 of the Internal Revenue Code of 1986, as amended
(the "Code").  Under the Code, a REIT must meet certain criteria, including
requirements (a) that certain percentages of its gross income be derived from
specific sources, (b) that it distribute annually to its shareholders at least
95% of its REIT taxable income (as defined in the Code), and (c) that it not
have five or fewer shareholders who own more than 50% of the total value of its
stock.  The Company did not qualify as a REIT for the years ended December 31,
1992 and 1993 because of the failure to satisfy requirement (c) above.  However,
the Revenue Reconciliation Act of 1993 added a provision which allows stock held
by a qualified trust to be treated as held directly by its beneficiaries in
proportion to their actuarial interest; this new "look-through" rule allows the
Company to satisfy requirement (c) above.  The Internal Revenue Service
permitted the Company to re-elect its REIT status beginning in the 1994 tax
year. (See Item 7 below and Note 7 to the Company's financial statements.)

  The Company was formed for the purpose of making equity investments in income-
producing industrial and commercial real estate in selected areas of projected
growth in the United States.  At December 31, 1997, the Company had eight real
estate equity investments consisting of twenty-five properties (see Item 2 below
for a detailed description of the properties).  The Company's principal
objectives are to preserve, protect and grow the shareholders' capital, provide
shareholders with cash dividends, and achieve capital appreciation through
potential appreciation in the values of the Company's properties.  There is no
guarantee that the Company's objectives will be met.

  The Company was formed as a self liquidating finite-life REIT.  At the annual
meeting held on June 14, 1996, the shareholders approved an amendment to the
Company's Bylaws related to investment policy which allowed the Company to
reinvest proceeds from the sale of property into the purchase of new property,
thereby converting the Company to an infinite-life REIT.  The general purpose of
the Company is to seek income that qualifies under the REIT provisions of the
Code.  At such time as it is in the best interests of the Company's shareholders
to do so, the Board of Directors intends to make investments in such a manner as
to comply with the requirements of the REIT Provisions of the Internal Revenue
Code with respect to the composition of the Company's investments and the
derivation of its income.  The Directors' decision to acquire or sell properties
will be based on a number of factors such as: (i) the vitality of the real
estate and money markets, (ii) the economic climate, (iii) potential
environmental liabilities, and (iv) the income tax consequences to the Company
and its shareholders.

  On or about October 30, 1997, the Company engaged Prudential Securities
Incorporated ("Prudential Securities") as the Company's exclusive financial
advisor with respect to the Company implementing a strategic plan for
enhancing shareholder value.

  On November 4, 1997, with the advice of Prudential Securities, the Company
adopted a Shareholder Rights Plan, which was intended to protect the Company's
shareholders in the event of coercive or unfair takeover tactics, or an
unsolicited attempt to acquire control of the Company in a transaction the
Board of Directors believed was not in the best interests of the shareholders.

  On January 16, 1998, the Company received an unsolicited offer to merge from
EastGroup Properties, Inc. ("EastGroup"). In the offer to merge, each preferred
share would be converted into EastGroup shares with a value of $9.75, and each
common share would be converted into EastGroup shares with a value of $6.75.
Company shareholders would have the option to exchange their preferred shares or
common shares for $9.75 and $6.75 in cash, respectively, provided that the total
number of preferred shares and common shares surrendered for cash, including
shares surrendered pursuant to the exercise of dissenter's rights, would not
exceed 30 percent of all issued and outstanding preferred shares (excluding
preferred shares currently held by EastGroup) and 30 percent of all issued and
outstanding common shares.

  After receipt of the offer to merge, conversations occurred between
representatives of EastGroup and representatives of the Company, representatives
of PaineWebber Incorporated ("PaineWebber"), financial advisor to EastGroup, and
representatives of Prudential Securities, and counsel to EastGroup and counsel
to the Company. Counsel to EastGroup sent counsel to the Company a draft of a
proposed Agreement and Plan of Merger pursuant to which the proposed offer to
merge would be effected.

  Following receipt of the offer to merge from EastGroup, the Company, in
conjunction with Prudential Securities, continued to explore its strategic
alternatives with other potential merger partners, purchasers or companies
interested in an equity infusion.

  On January 29, 1998, the Company's Board of Directors met to consider the
pending EastGroup offer to merge. Prudential Securities advised at that time of
several preliminary indications of interest from other parties at values and
terms in excess of and more favorable than the EastGroup offer.

  As a result, on January 29, 1998, the Company advised EastGroup by letter and
telephone that the Company was not prepared to accept the offer at that time.
The Company advised EastGroup of its belief that the value of the Company was in
excess of the offer. In addition, the cash component of the offer was expressed
to be problematic for the Company's shareholders, particularly in view of the
absence of proposed board representation. In addition, the price protection
mechanism was believed to be inadequate. Finally, there were certain due
diligence contingencies in the proposed agreement that were not acceptable.

  During the period from January 30, 1998 through February 18, 1998, discussions
continued between and among representatives of EastGroup and PaineWebber and
counsel to the Company. these discussions included the amount and kind of
consideration to be paid to holders of common share and preferred shares, the
conditions of a proposed Agreement and Plan of Merger, and whether EastGroup
would execute a confidentiality agreement with respect to the receipt of certain
non-public information regarding the Company. On February 10, 1998, EastGroup
did execute a limited confidentiality agreement with no standstill provision and
was given access to certain of the Company's non-public information (relating
primarily to the structural and environmental conditions of the Company's
properties) on February 10 and 11, 1998.

  On February 17, 1998, EastGroup presented the Company with a new offer to
merge, containing the terms now set forth in the Merger Agreement described
below. The Company's Board of Directors met on the same date to consider the
offer. The Company's directors were advised that several interested parties had
determined to drop out of the process. The directors were also advised that
certain other interested parties were continuing negotiations, and one party had
expressed an interest at a potential value slightly higher than the EastGroup
offer. However, it was noted that this party had a variety of contingencies in
its indication of interest, and was several weeks away from being able to
present a definitive proposal. Moreover, EastGroup's position as a stockholder
in the Company, and its publicly stated intention to oppose and vote Preferred
Shares Against any alternative strategic transaction, created a significant
execution risk with respect to any alternative proposal. After extensive
discussion, the directors then approved the EastGroup proposal. The trustees
also voted to amend the Shareholder Rights Plan to render it inapplicable to the
EastGroup offer.

  On February 18, 1998, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with EastGroup Properties, Inc. (NYSE-EGP) providing
for EastGroup's acquisition of the Company for $10.00 per outstanding preferred
share and $8.50 per outstanding common share, payable in cash. Pursuant to the
terms of the Merger Agreement, EastGroup (through a wholly-owned subsidiary)
commenced a tender offer (the "Offer") for all issued and outstanding preferred
shares of the Company not currently held by EastGroup for $10.00 per share in
cash, and for all issued and outstanding common shares of Meridian VIII for
$8.50 per share in cash on February 23, 1998. Following completion of the Offer,
the Company and EastGroup plans on engaging in a second-step merger in which all
remaining preferred shares of the Company (excluding those held by EastGroup)
will be converted into $10.00 per share in cash and all remaining common Shares
of the Company (excluding those held by EastGroup) will be converted into $8.50
per share in cash. EastGroup will also assume all of the Company's outstanding
indebtedness, resulting in a total transaction value of approximately $100
million. Further details of the Merger Agreement are contained in the Company's
Amended and Restated Solicitation/Recommendation Statement (Schedule 14D-9)
filed February 23, 1998.

  The Company's Board of Directors has unanimously approved the Merger Agreement
and recommends that all Preferred and Common shareholders of the Company tender
their Shares into the Offer. The Company's management can provide no assurance
as to the timing or ultimate closure of these transactions.

                                      -3-
<PAGE>

Management and Employees
------------------------

  The Company's affairs are overseen by a Board of Directors (referred to herein
as the "Directors"). There are seven Directors of the Company, six of whom are
independent (i.e. not an affiliate of a person or entity providing services for
the Company or performing services for the Company other than in his capacity
as a Director).

  From its inception until March 31, 1991, the Company was externally managed by
companies operating on a for-profit basis.  That external management was
discontinued effective April 1, 1991.  From April 1, 1991 through November 30,
1995, the Company and other companies of common initial sponsorship were
effectively self-administered through an internalized management structure (the
Company and those other companies are collectively referred to herein as the
"Companies").

  The Companies leased employees at cost from Meridian Point Properties, Inc., a
California corporation ("MPP"),  a captive company controlled by the Companies,
to perform administrative, accounting, asset management, and property management
functions under the terms of an Amended and Restated Employee Leasing Agreement
and certain other agreements.  Prior to December 1, 1995, the cost
reimbursements made to MPP were allocated among the Companies in accordance with
the Amended and Restated Employee Leasing Agreement and other agreements between
MPP and the Companies in the following manner.  First, costs directly
attributable to a particular Company were allocated to that Company. Second,
costs that were not directly attributable to a particular Company but benefited
a group or all of the Companies were allocated among those Companies under
formulas that varied depending upon the type of cost involved.

  Effective December 1, 1995, the Company terminated the Amended and Restated
Employee Leasing Agreement with MPP and entered into a management agreement with
TIS Financial Services, Inc. ("TIS") of San Francisco, California. Under the
terms of the management agreement, the Company retained TIS to manage its
assets, properties and investments in addition to performing administrative
services for the Company.  The Company paid TIS a base management fee calculated
on an annual basis of 0.75% of the Company's Average Invested Assets, as defined
in the agreement.  Effective January 1, 1998, the Company entered into an
Amended Management Agreement with TIS, under the terms of which the Company pays
TIS a base management fee of $35,000 per month for asset management services as
defined in the agreement. The agreement requires that TIS pay the employment
expenses of its personnel. The amended management agreement will expire by its
terms on June 30, 1998. At that time, assuming completion of the pending tender
offer and expected second-step merger, and following transition of management to
EastGroup, TIS will be paid a termination fee of $50,000.

  On June 30, 1997, the Company announced the appointment of Robert H. Gidel as
Chief Executive Officer of the Company.  Effective July 1, 1997, the Company
entered into an Agreement for Personal Services with Mr. Gidel whereby Mr. Gidel
provides services to the Company as Chief Executive Officer and is in turn paid
an annual fee of $180,000, payable quarterly, and reimbursed for certain
out-of-pocket expenses incurred on behalf of the Company.  On September 21,
1997, the Company entered into a Stock Appreciation Rights Agreement with Mr.
Gidel, whereby the Company granted Stock Appreciation Rights ("SARs") to Mr.
Gidel as follows:  150,000 shares of common stock SARs at $5.50 per share and
75,000 shares of preferred stock SARs at $8.50 per share.  These SARs vest after
one year of service or upon a change of control of the Company.  Upon exercise,
the grantee of the SARs will be paid the difference between the fair market
price of the stock and the exercise price.  In connection with the pending
EastGroup Offer and Merger Agreement, the Company anticipates that Mr.
Gidel will exercise all of his SARs, in which event he will be entitled to a
cash payment from the Company of up to $563,000.

Insurance
---------

  In addition to other types of insurance maintained by the Company, the Company
carries comprehensive general liability and excess liability coverage on
properties it currently owns in the aggregate amount of $50,000,000 to insure
against liability claims and provide for the costs of defense.  Similarly, the
Company is insured against the risk of direct physical damage in amounts
necessary to reimburse the Company on a replacement cost basis for costs
incurred to repair or rebuild each property, including loss of rental income
during the construction period in the aggregate amount of $25,000,000.

Tenants
-------

  The rental revenue generated by the Company's real estate portfolio is
affected by the terms of its 42 different tenant leases.  Lease terms generally
range from three to five years, with some leases having renewal options beyond
their initial

                                      -4-
<PAGE>

terms. The schedule below lists information regarding existing leases which
expire in each of the next five years and from 2002 forward.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                Total Sq. Ft.
                   Number of         of            % of Trust         Annual Rent of      % of Trust
                    Leases         Leases       Total Potential      Leases Expiring         Total
         Year      Expiring       Expiring          Sq. Ft.          (in dollars)(1)     Annual Rent (1)
        -------   ----------   --------------   ----------------   -------------------   ---------------
     <S>        <C>           <C>              <C>                <C>                  <C>
         1998         8           209,939                 8%           $  596,203              7%
         1999        14           615,984                23%            1,525,667             17%
         2000         4           245,695                 9%              681,556              7%
         2001         4           178,831                 7%              533,801              6%
         2002         2            96,344                 4%              309,468              3%
         2003+       10         1,201,244                45%            5,510,974             60%
-------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Based on the projected 1998 base rent of existing leases.

     The Company had an overall occupancy level of 96.2% as of December 31,
1997.

     Three tenants represent 50% of the total rental revenue of the Company
based on the projected 1998 base rent of existing leases.  Leases for these
three tenants are scheduled to expire in 2003 (18% of total annual rental
revenue based on 1997 existing leases), 2010 (12% of total annual rental revenue
based on 1997 existing leases), and 2012 (20% of total annual rental revenue
based on 1997 existing leases).

     The Company's single-tenant industrial properties are generally leased to
tenants on a triple-net basis, with tenants responsible for most day-to-day
operating expenses such as real estate taxes, insurance, utilities, maintenance
of common areas and non-structural repairs.  The Company's multiple-tenant
industrial properties are generally leased to tenants on a modified gross basis,
with tenants responsible for utilities, maintenance of common areas and non-
structural repairs.  Under a modified gross lease, the Company is responsible
for base year real estate taxes and insurance, with the tenants responsible for
any increases over the base year for these expenses.  Triple-net and modified
gross leases generally reduce the Company's exposure to increases in operating
expenses.  Leases may include both fixed rent and escalating rent during their
terms. For occupancy rates of the Company's individual investments, see Item 2
below.


Real Estate Considerations
--------------------------

     The results of the Company's operations depend to a great extent on the
Company's ability to lease its properties.  In attracting and retaining tenants,
the Company competes with similar properties for location, lease terms and
property condition. In addition, the success of the Company depends, among other
factors, upon trends in the economy, the financial condition of tenants and
prospective tenants, availability and cost of capital, interest rates, increases
or decreases in operating expenses, income tax laws, governmental regulations
and legislation, real estate market fluctuations, population trends and zoning
laws.

Regulation and Supervision
--------------------------

     Many jurisdictions have adopted laws and regulations relating to the
ownership of real estate.  Compliance with these requirements may from time to
time require capital expenditures by the Company (for example, expenditures
necessary in order to comply with the Americans with Disabilities Act or changes
in local building or other codes).  In addition, the Company may from time to
time have to expend capital for environmental control facilities.  While the
ownership of real estate may entail environmental risks and liabilities to the
owner, Company management is sensitive to environmental issues and is not
currently aware of and does not expect any material effects on current or future
capital expenditures, earnings or competitive position resulting from compliance
with present federal, state or local environmental control provisions.


ITEM 2.  PROPERTIES.

     As of December 31, 1997, the Company's portfolio of eight real estate
equity investments consisted of twenty-five properties (either in the form of
direct ownership of the real property or in the form of an interest in a
partnership that directly owns the real property).  The table below provides
information as to the location, the general character and the occupancy level of
those properties.

                                      -5-
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                               NET          NUMBER
                                      NUMBER                                 RENTABLE         OF          OCCUPANCY
       EQUITY INVESTMENT                OF                PROPERTY            SQ. FT.        LEASES      PERCENTAGE
       NAME AND LOCATION            PROPERTIES           DESCRIPTION         12/31/97       12/31/97      12/31/97
-----------------------------------------------------------------------------------------------------------------------
<C>  <S>                            <C>                  <C>                 <C>            <C>           <C>
I    AUBURN I (1)
     Auburn Hills, MI                    1           Office building          114,000            1        100%

II   Waldenbooks Facility (1)(3)
     La Vergne, TN                       1           Warehouse/distribution   564,300            1        100%
                                                     center building

III  Memphis 8 (2)(3)
     Memphis, TN                         8           Warehouse/distribution   696,232           14        100%
                                                     center buildings

IV   JC Penney (3)
     Memphis, TN                         1           Warehouse/distribution   105,785            1        100%
                                                     center building

V    Florida 3(5)
     West Palm Beach, FL                 3           Warehouse/distribution    71,640            4        100%
                                                     center building

VI   Ethan Allen(4)
     Chino, CA                           1           Warehouse/distribution   300,300            1        100%
                                                     center building

VII  Phoenix 5(4)
     Phoenix, AZ                         5           Warehouse/distribution   319,209           14         95%
                                                     center buildings

VIII Brookhollow
     Dallas, TX                          5           Warehouse/distribution   467,730            6         82%
                                                     center buildings

-----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) This property serves as collateral pursuant to a first deed of trust for the
    repayment of a promissory note.  (See Note 4 of the Company's financial
    statements.)
(2) One of the Memphis 8 properties serves as collateral pursuant to a first
    deed of trust for the repayment of a promissory note.  (See Note 4 of the
    Company's financial statements.)
(3) These properties are owned by Interchange Distribution Limited Partnership,
    a California limited partnership.  The partners of the partnership are the
    Company (the limited partner) and NASH-IND Corporation, a wholly owned
    subsidiary of the Company (the general partner).
(4) Four Phoenix 5 properties and the property in Chino, California serve as
    collateral pursuant to a first deed of trust for the repayment of a
    promissory note (See Note 4 of the Company's financial statements.)
(5) One of the Florida 3 properties serves as collateral pursuant to a first
    deed of trust for the repayment of a promissory note (See Note 4 of the
    Company's financial statements.)

ITEM 3.  LEGAL PROCEEDINGS.

         There are no material pending legal proceedings to which the Company
or any partnership in which it has an interest is a party, or to which any of
the assets of the Company or any such partnership are subject.

                                      -6-
<PAGE>

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

         No matters were submitted to a vote of the Company's security holders
during the last quarter of its fiscal year ended December 31, 1997.

                                      -7-
<PAGE>

--------------------------------------------------------------------------------
                                    PART II

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

         The principal market on which the Company's shares of common stock and
preferred stock are traded is the American Stock Exchange ("AMEX").  The listing
symbols of the common stock and preferred stock on the AMEX are "MPH" and
"MPHpr", respectively.

         As of March 26, 1998, the Company had outstanding a total of 1,709,937
shares of common stock and 5,273,927 shares of preferred stock.  As of the same
date, the common and preferred stock were held by approximately 808 and 1,235
holders of record, respectively (i.e. these figures do not reflect beneficial
ownership of shares held in nominee names).

         The following table illustrates the published high and low closing
sales price information for the common stock and preferred stock during each
calendar quarter for 1996 and 1997 (amounts in dollars).


<TABLE>
<CAPTION>
                   CALENDAR QUARTER           CLASS              HIGH              LOW
              -----------------------------------------------------------------------------
              <S>                    <C>                     <C>                 <C>
                         1996

                 First Quarter          Common                        2-1/4           1-3/4
                                        Preferred                     6-1/4           4-3/4

                 Second Quarter         Common                        2-5/8               2
                                        Preferred                     6-1/8           4-3/8

                 Third Quarter          Common                        3-1/4           2-1/4
                                        Preferred                     5-1/8           4-1/2

                 Fourth Quarter         Common                            3           2-1/4
                                        Preferred                     5-3/8           4-3/4

                         1997

                 First Quarter          Common                        3-1/2           2-5/8
                                        Preferred                     5-7/8               5

                 Second Quarter         Common                        4-1/2           3-1/8
                                        Preferred                     8-1/8           5-1/2

                 Third Quarter          Common                        6-3/4         3-13/16
                                        Preferred                     9-1/4               7

                 Fourth Quarter         Common                        6-5/8           4-1/2
                                        Preferred                         9           7-3/4
</TABLE>

     On March 26, 1998, high and low sales prices for shares of the Company's
common stock on the AMEX were $8-7/16 and $8-5/8. On March 25, 1998, the high
and low sales prices for shares of the Company's preferred stock on the AMEX was
$10.

     As a REIT, the Company is required to make distributions to shareholders
that aggregate annually at least 95% of its taxable income.  In accordance with
the Company's organizational documents, dividend distributions to be made by the
Company will always be at the discretion of the Directors and will depend on,
among other factors, the Company's operations, cash flow, and financial
condition, compliance with debt covenants, required principal amortization
payments, and applicable statutory and organizational restrictions on the
payment of dividends.

     In the event of a dividend distribution, holders of preferred stock are
entitled to a dividend preference under certain circumstances as specified in
the Company's Articles of Incorporation.  See Note 5 to the Company's financial
statements.

                                      -8-
<PAGE>

     In 1996, the Company declared and paid four quarterly distributions whereby
the holders of preferred stock and holders of common stock participated equally,
share for share as specified in the Company's Articles of Incorporation, as
follows:
<TABLE>
<CAPTION>
                                         Dividend
                                     Per Share Amount
                                  ------------------------
         Payable Date             Preferred         Common
-------------------------------   ---------         ------
<S>                               <C>               <C>
      March 29, 1996                  $0.07          $0.07
      June 28, 1996                   $0.07          $0.07
      September 30, 1996              $0.07          $0.07
      December 27, 1996               $0.07          $0.07
</TABLE>

     Similarly, in 1997, the Company declared and paid four quarterly
distributions whereby the holders of preferred stock and holders of common stock
participated equally, share for share as specified in the Company's Articles of
Incorporation, as follows:
<TABLE>
<CAPTION>
                                            Dividend
                                       Per Share Amount
                                  ---------------------------
         Payable Date             PREFERRED            COMMON
-------------------------------   ---------            ------
<S>                               <C>                  <C>
          March 31, 1997              $0.07             $0.07
          June 30, 1997               $0.07             $0.07
          September 30, 1997          $0.07             $0.07
          December 31, 1997           $0.08             $0.08
</TABLE>

ITEM 6.  SELECTED FINANCIAL DATA.

     The following table summarizes certain selected financial data for the
Company for the five years ended December 31, 1997.  This table should be read
in conjunction with the more detailed financial statements included elsewhere
herein.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                    For the Years Ended December 31,
                                   1997            1996           1995            1994            1993
----------------------------------------------------------------------------------------------------------
<S>                            <C>             <C>            <C>             <C>             <C>
Rentals from Real Estate
 Investments                    $10,355,548    $ 9,976,457     $10,868,405     $11,886,484     $11,353,018
Income (Loss) Before
 Extraordinary Item               3,434,293      1,352,171        (144,912)     (1,874,789)       (703,270)
Extraordinary Item                  (62,233)            --        (129,433)             --              --
Net Income (Loss)                 3,372,060      1,352,171        (274,345)     (1,874,789)       (703,270)
Rental Properties, Net           85,353,734     81,834,510      81,765,163      83,469,941      88,129,068
Total Assets                     79,930,142     71,593,955      76,494,325      91,757,548      95,842,193
Mortgage Notes Payable           33,706,682      7,570,281       7,782,168       7,976,495       1,843,696
Long-term Debt Facilities                --     20,042,421      24,259,396      36,754,964      43,622,525
Net Income (Loss) per
 Common Share:
Income (Loss) Before
 Extraordinary Item             $      1.17    $     (0.08)    $     (1.01)    $     (1.89)    $     (0.44)
Extraordinary Item                    (0.04)            --           (0.08)             --              --
Net Income (Loss) per
 Common Share                          1.13          (0.08)          (1.09)          (1.89)          (0.44)
Distributions Declared
 per Share:
Preferred                              0.29           0.28            0.28            0.22              --
Common                                 0.29           0.28            0.28            0.22              --
----------------------------------------------------------------------------------------------------------
</TABLE>

     See "Material Changes in Results of Operations" under Item 7 for
information regarding material changes in results of operations during 1997,
1996 and 1995.

                                      -9-
<PAGE>

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

INTRODUCTION
------------

  The Company's principal asset is a portfolio of twenty-five industrial and
commercial properties, which are carried at the lower of depreciated cost or net
realizable value.

  This section should be read in conjunction with the financial statements and
supplementary data listed in Item 8 below.  Unless otherwise defined in this
report, or unless the context otherwise requires, the capitalized words or
phrases used in this section either:  (a) describe accounting terms that are
used as line items in such financial statements, or (b) have the meanings
ascribed to them in such financial statements and the notes thereto.


DISCUSSION OF KNOWN TRENDS, EVENTS AND UNCERTAINTIES
----------------------------------------------------

  The economic climate for commercial real estate has stabilized and in several
markets has actually improved. Notwithstanding an improving real estate market,
tenants may or may not continue to renew leases as they expire or may renew on
less favorable terms.  Conditions differ in each market in which the Company's
properties are located.  Because of the continuing uncertainty of future
economic developments in each market, the impact these developments will have on
the Company's future cash flow and results of operations is uncertain.

  Inflation, inflationary expectations and their effects on interest rates may
affect the Company in the future by changing the underlying value of the
Company's real estate or by impacting the costs of financing the Company's
operations.  The Company's policy of negotiating leases on a triple-net basis or
modified gross basis, whenever possible, is designed to help protect the Company
against some of the increased costs that might otherwise result from inflation.

  One of the requirements for REIT qualification is that five or fewer
shareholders cannot own more than 50% of the total value of a company's
outstanding stock at any time during the last half of the taxable year (the
"five or fewer rule") For purposes of this rule under the law as it existed
before 1994, domestic pension trusts were treated as a single individual. Due to
fluctuations in the fair market value of its preferred stock relative to its
common stock, the Company failed to satisfy the five or fewer rule and therefore
did not qualify as a REIT for the years ended December 31, 1992 and 1993. As a
result of the loss of REIT status, the Company was taxed as a regular
corporation for the years ended December 31, 1992 and 1993; however, the loss of
REIT status did not have a material tax impact on the Company because the
Company did not have any taxable income in 1992 or 1993. Beginning with the 1994
tax year, the five or fewer rule was modified to allow REITs to "look through"
to the beneficiaries of a domestic pension trust and treat each beneficiary as
owning stock in the Company in proportion to the beneficiary's actuarial
interest in the domestic pension trust. This new "look-through" rule allowed the
Company to again satisfy the five or fewer rule and again elect REIT status
beginning in the 1994 tax year.

  During 1995, the Company engaged C.S. First Boston as its financial advisor to
explore future strategic opportunities available to the Trust. In that regard,
the Company's Board of Directors considered all options which were available,
including liquidation of the Company's assets, conversion of the Company to an
infinite-life REIT with accompanying changes to the self-liquidating policy, or
other options.  At the annual meeting of shareholders held on June 14, 1996, the
shareholders approved an amendment to the Company's Bylaws related to investment
policy which allows the Company to reinvest proceeds from the sale of property
into the purchase of new property, making it an infinite-life REIT.

  The Company has previously determined the existence of a soil settlement
problem at the 1033 East Maricopa property in Phoenix, Arizona. In that regard,
in 1996, the Company instituted and settled a lawsuit against the entity from
which the property was purchased and a related party. The Company has recently
commenced a construction project to rehabilitate the property and anticipates
completion in the spring of 1998. The amount of the lawsuit settlement is
expected to offset, to a material extent, the costs of rehabilitation and
reconstruction.


                                      -10-
<PAGE>

Liquidity and Capital Resources
-------------------------------

  The Company's main sources of liquidity are: (i) cash flows from operating
activities, (ii) Funds From Operations, (iii) cash reserves, and (iv) net
proceeds from the sale of the Company's real properties.  Secondary sources of
liquidity may include: (i) proceeds from the issuance of additional shares of
stock, and (ii) proceeds from secured and unsecured debt.  A summary of the
Company's historical cash flows is as follows:

<TABLE>
<CAPTION>
                                                         Year Ending December 31,
                                                    1997           1996           1995
                                                    ----           ----           ----
<S>                                            <C>            <C>            <C>
Cash flows provided by (used in):
 Operating Activities                           $ 4,209,153    $ 4,278,463    $ 3,842,343
 Investing Activities                            (2,976,981)      (146,663)     1,021,317
 Financing Activities                             3,095,845     (6,356,346)    (4,807,843)
</TABLE>

  In addition to cash flows and net income, management and industry analysts
generally consider Funds From Operations to be one additional measure of the
performance of an equity Real Estate Investment Trust (REIT) because, together
with net income and cash flows, Funds From Operations provides investors with an
additional basis to evaluate the ability of the Company to incur and service
debt and to fund acquisitions and other capital expenditures.  However, The
White Paper on Funds from Operations approved by the Board of Governors of the
National Association of Real Estate Investment Trusts ("NAREIT") in March 1995
(the "White Paper") defines Funds from Operations as net income (loss) (computed
in accordance with GAAP), excluding gains (or loses) from debt restructuring and
sales of properties, plus real estate related depreciation and amortization.
Management considers FFO an appropriate measure of performance of an equity REIT
because it is predicated on cash flow analyses. The Company computes FFO in
accordance with standards established by the White Paper, which may differ from
the methodology for calculating FFO utilized by other REITs and, accordingly,
may not be comparable to such other REITs. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indicator
of the Properties' financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as an indicator of the
Properties' financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Properties' liquidity,
nor is it indicative of funds available to fund the Properties' cash needs,
including its ability to make distributions. A reconciliation of the Company's
net income (loss) to Funds From Operations is as follows:

<TABLE>
<CAPTION>
                                                        Year Ending December 31,
                                                    1997          1996          1995
                                                    ----          ----          ----
<S>                                             <C>            <C>           <C>
Net Income (Loss)                               $ 3,372,060    $1,352,171     ($274,345)
Reconciling Items
 Depreciation and Amortization                    2,445,881     2,431,448     2,718,862
 Gains from Disposition of Assets                (1,995,776)      (47,452)       (1,197)
 Extraordinary Item                                  62,233            --       129,433
                                             ------------------------------------------
Funds From Operations, including
 NRV Provisions                                   3,884,398     3,736,167     2,572,753
NRV Provisions                                           --            --     1,182,015
                                             ------------------------------------------
Funds From Operations, excluding
 NRV Provisions                                 $ 3,884,398    $3,736,167    $3,754,768
                                             ==========================================
</TABLE>

  Management considers Funds From Operations, excluding NRV provisions, to
represent one of the appropriate operating performance measures of an equity
REIT.  Management considers NRV provisions to reflect adjustments of real estate
values based upon rising or falling market conditions which, although indicative
of impairment of the Company's investment, do not necessarily correlate to
ongoing operating results.

  The Company's principal applications of its cash resources are (i) operating
expenses related to real estate operations, general and administrative expenses,
interest expense, and legal costs, (ii) capital improvements, (iii) principal
payments under one of its long-term debt facilities (see discussion below) and
mortgage notes payable, and (iv) payment of distributions to its shareholders.

  As of December 31, 1997, the Company had approximately $7.1 million in cash
and cash equivalents.

                                      -11-
<PAGE>

DEBT
----

  As of December 31, 1996 there was debt outstanding with an insurance company
of $20,042,421.  On July 30, 1997 this facility was retired and paid off in
full.  To fund this payoff, the Company entered into a $12,500,000 loan with an
insurance company secured by four of its properties in Phoenix, Arizona and its
one property in Chino, California.  This new loan has a maturity of June 2007
and bears interest at 8.06%.  In addition to this loan, the Company also used
approximately $7,860,000 of proceeds from an interim construction loan secured
by its property in La Vergne, Tennessee to retire the debt facility.

  On September 8, 1997 the Company entered into a $13,000,000 permanent loan
with an insurance company secured by its property in La Vergne, Tennessee.  This
new loan has a maturity of September 15, 2007 and bears interest at a rate of
7.83%.  The Company used the loan proceeds to pay off the interim construction
loan.

  On August 27, 1997 the Company assumed a $994,301 mortgage on the Australian
One Building in conjunction with the acquisition of three properties in West
Palm Beach, Florida.

  After these transactions, the Company has Mortgage Notes Payable as follows:

<TABLE>
<CAPTION>

                                       STATED        ANNUAL     MATURITY     BALANCE AS OF DECEMBER 31,
NAME AND LOCATION OF PROPERTY        INTEREST RATE   PAYMENTS    DATES          1996           1997
-----------------------------------------------------------------------------------------------------------
<S>                                 <C>            <C>         <C>        <C>           <C>
Phoenix, AZ and Chino, CA Properties    8.060%      $1,163,693   06/26/07   $12,447,408      $        -
La Vergne, TN Property                  7.830%       1,186,518   09/15/07    12,957,570               -
Australian One; W. Palm Beach, FL       8.250%         113,160   09/30/00       991,269               -
Memphis #20, Memphis, TN                8.000%         185,700   11/01/98     1,664,295       1,714,643
Auburn I, Auburn Hill, MI               8.875%         714,513   08/01/09     5,646,140       5,855,638
------------------------------------------------------------------------------------------------------------
Total                                               $3,363,584              $33,706,682      $7,570,281
============================================================================================================
</TABLE>

As of December 31, 1997 scheduled principal payments are due as follows:

<TABLE>
<CAPTION>

<S>                     <C>
1998                   $ 2,310,227
1999                       697,366
2000                     1,717,035
2001                       856,707
2002                     1,073,941
Thereafter              27,051,406
----------------------------------
                       $33,706,682
==================================
</TABLE>

Real Estate Activity
--------------------

  In March 1997, the Company entered into an Amendment to Lease Agreement in
connection with an expansion of approximately 187,500 square feet to its
Waldenbooks industrial warehouse facility in La Vergne, Tennessee.  As amended,
the lease now provides for a 15 year term upon completion of the expansion,
which was completed in late August 1997.  The property now has a total of
approximately 564,300 square feet.  As amended, the lease provides the Company
with a specified return on its investment to expand the property.  As of
December 31, 1997, $5,340,304 has been spent on the project, which, at
completion is estimated to cost $5,377,944.  In connection with the Waldenbooks
expansion, the Company utilized an interim construction loan from a Tennessee
bank.  Under the loan agreement, the Company was permitted to borrow up to
$13,000,000, a portion of which was used to fund interim settlement of the long
term debt facility.  The construction loan bore interest at LIBOR plus 1.75% and
was retired on September 8, 1997 upon the takeout of the permanent financing.

  On June 13, 1997, the Company sold the Interchange D building located in
Jackson, Mississippi to EastGroup Properties, Inc. for a selling price of
$3,050,000, in an arms length transaction.  Net proceeds amounted to $3,019,123
after $47,112 of adjustments for closing costs and pro-rations.  The Company
recognized a Gain on Sale of Property of $1,059,484.

  On August 27, 1997 the Company completed its purchase of three properties
aggregating 71,428 square feet in Palm Beach County, Florida for a purchase
price of $6,031,886.  In conjunction with this purchase, the Company assumed a
mortgage in the amount of $994,301 which has a maturity of September 30, 2000
and bears interest at a rate of 8.250%.

  On October 9, 1997 the Company sold its South Sayre building in Bedford Park,
Illinois for a selling price of $5,387,071.  Net proceeds amounted to $4,794,748
after adjustments of (i) $435,796 for the second half of 1996 and the 1997 pro-
rata share of property taxes; and (ii) $162,631 for  closing costs.  The
property had previously been written down to its estimated net realizable value,
and the Company recognized a Gain on Sale of Property of $936,293.


                                      -12-
<PAGE>

  Capital expenditures for the years ended December 31, 1997, 1996 and 1995
totaled $5,532,097, $153,827, and $519,937, respectively. Lease commissions for
1997, 1996, and 1995 were $221,170, $66,439, and $185,485, respectively.
In 1997 the Company spent $5,340,304 on a major expansion at the waldenbooks
Property; the rest of the capital expenditures were for roof repairs at the
Memphis 8 properties. Capital expenditures in 1996 were primarily for roof
repairs at a number of the Memphis 8 properties. In formulating plans for
capital improvements, the Company considers, among other factors, the reasonable
prospect of being able to recover the costs of such improvements over a
reasonable period of time either from increased rental revenues or upon the sale
of the property and the potential effects of such improvements on funds
available for distribution. The Company has budgeted capital expenditures of
$165,000 in 1998 for further roof repairs and replacements at the Memphis 8
properties.

Distributions
-------------

  The Company paid distributions to shareholders aggregating $2,004,319 in the
year ended December 31, 1997 and $1,927,483 in each of the years ended December
31, 1996 and 1995. See Item 5 above and Note 5 to the Company's financial
statements for a discussion of distribution restrictions.

YEAR 2000 COMPLIANCE
--------------------

  The Company utilizes a number of computer software programs and operating
systems across its entire organization, including applications used in financial
business systems and various administrative functions. To the extent that the
Company's software applications contain source code that is unable to
appropriately interpret the upcoming calendar year "2000" and beyond, some level
of modification, or replacement of such application will be necessary. The
Company has completed its identification of applications that are not yet "Year
2000" compliant and has  commenced modification of replacement of such
applications, as necessary. Given information known at this time about the
Company's systems that are non-compliant, coupled with the Company's ongoing,
normal course-of-business efforts to upgrade or replace critical systems, as
necessary, management does not expect Year 2000 compliance costs to have any
material adverse impact on the Company's liquidity or ongoing results
of operations. No assurance can be given, however, that all of the Company's
systems will be Year 2000 compliant or that compliance costs or the impact of
the Company's failure to achieve substantial Year 2000 compliance will not have
a material adverse impact on the Company's future liquidity or results of
operations.

MATERIAL CHANGES IN RESULTS OF OPERATIONS
-----------------------------------------

Revenues
--------

  Rentals from Real Estate Investments totaled $10,355,548, $9,976,457, and
$10,868,405 for the years ended December 31, 1997, 1996 and 1995, respectively.
The increase of $379,091 during 1997 as compared to the same period in the prior
year was due primarily to the Waldenbooks expansion and the purchase of the
three Florida properties.  The decrease of $891,948 during 1996 as compared to
the same period in the prior year was primarily due to the loss of rents from
the Kroger and Tropicana properties, which where sold in 1995, and adjustments
to expense recaptures.

  Interest and Other Income totaled $214,259, $244,300, and $326,170 for the
years ended December 31, 1997, 1996 and 1995, respectively. The year-to-year
changes as compared to their respective prior years were primarily due to
changes in the Company's average cash balances available for investment.


EXPENSES
--------

  Interest and amortization of loan costs totaled $2,582,891, $2,817,784, and
$3,393,743 for the years ended December 31, 1997, 1996 and 1995, respectively.
The net decrease of $234,893 in 1997 as compared to 1996 is a result of the
retirement of the debt facilities with subsequent refinancing at more favorable
interest rates, combined with the costs incurred related to obtaining the
loans.  The decrease of $575,959 in 1996 from the 1995 level resulted from
principal paydown on the mortgage notes payable and long-term debt facility. The
average debt outstanding during the year ended December 31, 1997 was $30,329,678
as compared to $30,818,853 in the prior year.

  Property taxes totaled $1,471,126, $1,558,852, and $1,536,584 for the years
ended December 31, 1997, 1996 and 1995, respectively.  The decrease of $87,726
during 1997 is primarily due to the sale of the Interchange D and South Sayre
properties.  The increase of $22,268 during 1996 occurred because of increases
in assessed values of certain of the Company's properties.  However, to a large
extent, such increases were recaptured from tenants and are therefore included
in revenues.  Also in 1996, there were no significant refunds of prior year
taxes as there were in 1995.

  Property Operating Costs totaled $1,376,679, $1,346,723, and $1,757,154 for
the years ended December 31, 1997, 1996 and 1995, respectively.  The decrease of
$410,431 in 1996 is primarily the result of the 1995 property sales.

                                      -13-
<PAGE>

  Legal Costs during the years ended December 31, 1997, 1996 and 1995 totaled
$300,569, $107,058, and $63,290 respectively. The increase of $193,511 during
1997 is a result of services related to: (i) the refinancing of the Company's
debt; (ii) the sales of the Interchange D and South Sayre properties; (iii) the
purchase of the Florida properties; (iv) the adoption of the Shareholder Rights
Plan; and (v) certain litigation relating to the June 13, 1997 Annual Meeting of
Shareholders. The increase in 1996 from 1995 included legal costs relating to
Bylaw amendments approved by the shareholders which terminated the self-
liquidating provisions of the Bylaws.

  General and Administrative expenses for the three years ended December
31,1997, 1996 and 1995 totaled $954,144, $654,173, and $689,036 respectively.
The increase of $299, 971 in 1997 is primarily due to (i) expenses involved in
developing strategic alternatives for the Company; (ii) compensation expense for
the Chief Executive Officer, and (iii) increased annual meeting and trustee
expenses.

  Included in Net Income are the non-cash expenses of Depreciation and
Amortization. For the years ended December 31, 1997, 1996 and 1995, these
expenses totaled $2,445,881, $2,431,448 and $2,718,862 respectively. The
increase of $14,433 during 1997 as compared to 1996 was due primarily to the
purchase of the three Florida properties, offset by the sale of the Interchange
D and South Sayre properties. The decrease of $287,414 during 1996
from the prior year was primarily due to the sale of the Kroger and
Tropicana properties.


OTHER MATTERS
-------------

  On February 18, 1998, the Company entered into an Agreement and Plan of Merger
with EastGroup Properties, Inc. (NYSE-EGP) providing for EastGroup's acquisition
of the Company for $10.00 per outstanding preferred share and $8.50 per
outstanding common share, payable in cash. Pursuant to the terms of the Merger
Agreement, EastGroup (through a wholly-owned subsidiary commenced a tender offer
for all issued and outstanding preferred shares of the Company not currently
held by EastGroup for $10.00 per share in cash, and for all issued and
outstanding common shares of the Company for $8.50 per share in cash on February
23, 1998. The Offer is scheduled to expire on April 17, 1998. following
completion of the Offer, the Company (excluding those held by EastGroup) will be
converted in $10.00 per share in cash and all remaining common shares of the
Company (excluding those held by EastGroup) will be converted into $8.50 per
share in cash. EastGroup will also assume all of the Company's outstanding
indebtedness, resulting in a total transaction value of approximately $100
million. Further details of the Merger Agreement are contained in the Company's
Amended and Restated Solicitation/Recommendation Statement (Schedule 14D-9)
filed February 23, 1998.

  The Company's Board of Directors has unanimously approved the Merger Agreement
and recommends that all preferred and common shareholders of the Company tender
their shares into the Offer. The Company's management can provide no assurance
as to the timing or ultimate closure of these transactions.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  The financial statements and supplementary data listed in Item 14(a)(1) and
(a)(2) below are incorporated herein by reference and filed as part of this
report.

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

  The Company has not changed its independent certified public accountants
and has not had any disagreement with its independent certified public
accountants on accounting or financial disclosures required to be made under
rules of the Securities and Exchange Commission.

                                      -14-
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

DIRECTORS
---------

     The Directors are elected annually and serve until the next annual meeting
of shareholders and until their successors are elected and qualified.  The
Company's Bylaws provide that the number of Directors shall be not less than
three nor more than seven.  Presently the authorized number of Directors is
seven.  In addition, the Company's Bylaws provide that a majority of the
Directors shall be "Independent Directors."  An "Independent Director" generally
means a Director who is neither an affiliate of a person or entity providing
services to the Company nor is himself performing services for the Company other
than as a Director.  The Board of Directors of the Company presently consists of
the seven individuals named below.  Six of the  seven individuals named below
are "Independent Directors."  Set forth below are each Director's age, current
position with the Company, and business experience during the past five years or
more.

CHRISTOPHER J. DOHERTY
Chairman and Director (2) (5)
Age:  42
Mr. Doherty is Managing Director and General Counsel of the financial consulting
firm of Potomac Investment Services LP. Previously he was a partner at the
Washington D.C. law firm of Fox, Bennett & Turner. He was with the firm for a
total of six years from 1989 to 1991 and from 1993 to 1997. Mr. Doherty served
as General Counsel and Deputy Treasurer to the Commonwealth of Massachusetts
State Treasurer and as Massachusetts Special Assistant Attorney from 1991 to
1993. From 1986 to 1989, he served as Legislative Assistant and Counsel to the
U.S. Senate Committee on Labor and Human Resources. From 1979 to 1986 he served
as a Special Assistant to Senator Edward M. Kennedy. Mr. Doherty has a J.D. from
the Georgetown University Law Center and a B.A. from Harvard University. Mr.
Doherty has been a Director of the Company since September 1993, and Chairman
since June, 1997.

ROBERT H. GIDEL
Chief Executive Officer and Director (3) (4) (5)
Age: 46
Mr. Gidel was the President, Chief Operating Officer of Paragon Group, Inc., a
diversified real estate investment trust, and Paragon GP Holdings from January
1996 to April 1997.  He served as a Director of these companies from February
1996 until April 1997.  Mr. Gidel has been the President, Chief Operating
Officer and a director of the general partner of Brazos Partners, L.P., a
partnership that was formed to acquire and liquidate a $3 billion portfolio of
real estate assets previously owned by failed thrifts, since July 1993.  He also
was Chief Operating Officer and a director of Brazos Fund, L.P., a real estate
investment fund, from March 1994 to January 1996, and currently remains a
director of that fund.  Mr. Gidel was Managing Director and a director of Alex
Brown Kleinwort Benson Realty Advisors, a real estate investment management firm
based in Baltimore, Maryland from 1986 to 1993. Mr. Gidel has been Chief
Executive Officer and a Director since June 1997.

S. MICHAEL LUCASH
Director (2) (4) (5)
Age: 47
Mr. Lucash has been a Managing Director for Real Estate at Llama Company since
December 1995. Mr. Lucash was Chief Operating Officer of Boston Capital Mortgage
Company from March through December 1995. From 1993 to 1995 he was Chief
Operating Officer of ARBOR National Commercial Mortgage Corporation. Mr. Lucash
was President of Commercial Mortgage Corporation of America from 1987 to 1993.
From 1985 to 1987 Mr. Lucash was Vice President of Mortgage Banking at City
Trust. Mr. Lucash has a B.S. from Southern Connecticut State University. Mr.
Lucash also attended Massachusetts School of Law. Mr. Lucash has been a Director
of the Company since September 1993, and served as Chairman from September 1993
until June 1997.

Lawrence P. Morris
Director (1)
Age:  42
Mr. Morris has been the Executive Vice President and Head of the Public Finance
Department for Mesirow Financial, Inc. since 1994.  From 1985 to 1994, Mr.
Morris was a Vice President of First Chicago Capital Markets Inc. where he
managed the investment activities associated with bond financings and escrow
restructuring.  From 1982 to 1985 Mr. Morris was an Assistant Vice President at
the First National Bank of Chicago.  Mr. Morris received his B. A. from the
University of Notre Dame in 1978 and is a Certified Public Accountant.  Mr.
Morris has served as a director of the Company since December 1995.

                                      -15-
<PAGE>

Homer McK. Rees
Director (1) (3) (4)
Age:  67
From 1982 to 1992, Mr. Rees held various positions with The Prudential Insurance
Company of America, including Chairman in 1992 and President from 1988 to 1991
of Prudential Capital Corporation, a marketing unit responsible for origination
of private placements.  Mr. Rees retired in 1992.  Mr. Rees has an M.B.A. from
Harvard University and a B.A. from Yale University.  Mr. Rees has served as a
Director of the Company since March 1993.

RICHARD M. OSBORNE
Director (1)
Age:  51
Mr. Osborne is President and Chief Executive Officer of OsAir, Inc., Mentor,
Ohio ("OsAir") a company he founded in 1963.  OsAir is a manufacturer of
industrial gases for pipeline delivery and a real property developer.  Mr.
Osborne is also a director of Brandywine Realty Trust, a publicly-held REIT, and
a director of Great Lakes Bank, Mentor, Ohio.  Through OsAir or personally, Mr.
Osborne or personally, Mr. Osborne has over 30 years in real estate development
and management.  Mr. Osborne has been a director of the Company since June 1997.

MICOLYN M. YALONIS
Director (2) (3)
Age:  38
Ms. Yalonis has been Vice President of Callan Associates, Inc. since 1993.  She
was an independent real estate consultant from October 1992 to 1993, providing
independent real estate consulting services to advisors, plan sponsors, and
other institutional market participants.  From 1988 to 1992, she held various
positions with Callan Associates Inc., including Vice President, Manager from
1991 to 1992 and Assistant Vice President from June 1990 to November 1991.  Ms.
Yalonis has a B.A. from the University of California, Los Angeles.  Ms. Yalonis
has been a Director of the Company since September 1993.

___________________________
(1)  Member of the Audit Committee
(2)  Member of the Nominating Committee
(3)  Member of the Compensation Committee
(4)  Member of the Strategic Alternatives Committee
(5)  Member of the Executive Committee



EXECUTIVE OFFICERS
------------------

     The following table sets forth as to each person who currently serves as an
executive officer, his or her name, age, and positions with the Company:
<TABLE>
<CAPTION>


Name                          Age           Position
----                          ---           --------
<S>                           <C>          <C>

Robert H. Gidel                46           Chief Executive Officer

Lorraine O. Legg               58           President

John E. Castello               53           Senior Vice President and
                                            Chief Financial Officer

Michael Gilbert                54           Vice President Real Estate

Denis F. Shanagher             41           Secretary
</TABLE>

     Officers of the Company hold office at the discretion of the Directors.
Each executive officer's principal occupations during the past five years or
more are set forth below.

                                      -16-
<PAGE>

LORRAINE O. LEGG
President
Ms. Legg has been President and Chief Executive Officer and a director of TIS
Financial Services, Inc. since 1984, TIS Mortgage Investment Company since 1988,
and TIS Asset Management, Inc. since 1990.  She is also President and Chief
Executive Officer and a director of Corporate Capital Investment Advisors.  TIS
Financial Services, Inc., and its affiliates manage portfolios of real estate
and mortgage investments for individuals and corporations.  Ms. Legg is also
President and Chairman of the Board of TIS Mortgage Investment Company, a real
estate investment trust traded on the New York Stock Exchange.  In addition, Ms.
Legg is a director of CFI Proservice, Inc. located in Portland, Oregon.  Ms.
Legg has over thirty-two years of experience in corporate and real estate
finance.  Ms. Legg has served as a Director of the Company from March 1993 until
June 1997 and was elected as President and Chief Executive Officer in December
1995.

JOHN E. CASTELLO
Senior Vice President and Chief Financial Officer
John E. Castello has been Senior Vice President  of TIS Financial Services, Inc.
since 1985, Executive Vice President and Chief Financial Officer of TIS Mortgage
Investment Company since 1988, and Senior Vice President and Chief Financial
Officer of TIS Asset Management, Inc. since 1991  He is a Director of TIS
Mortgage Acceptance Corporation.

MICHAEL GILBERT
Vice President Real Estate
Mr. Gilbert has served as Vice President Real Estate for TIS Financial Services
since 1995.  Prior to this time he was a real estate consultant, active in major
development projects in Southern California and many other areas of the country.
Previously Mr. Gilbert was vice president of S.H. Management, Inc. a privately
owned Los Angeles based investment concern.  He was previously a vice president
and director of Gordon Capital Limited, a member firm of the major Canadian
Stock Exchanges.

DENIS F. SHANAGHER
Secretary
Mr. Shanagher has been a partner of the law firm of Preuss Walker & Shanagher
since August of 1993.  Mr. Shanagher was a partner in the law firm of Bronson,
Bronson & McKinnon from 1987 to 1993, and an associate in the firm from 1981-
1987.  Mr. Shanagher has a J.D. from Hastings College of the Law and a B.A. from
Stanford University.  Mr. Shanagher has served as outside General Counsel to the
Company since December of 1994.

ITEM 11. EXECUTIVE COMPENSATION.

COMPENSATION OF EXECUTIVE OFFICERS
----------------------------------

     On June 30, 1997, the Company announced the appointment of Robert H. Gidel
as Chief Executive Officer of the Company. Effective July 1, 1997, the Company
entered into an Agreement for Personal Services with Mr. Gidel whereby Mr. Gidel
provides services to the Company as Chief Executive Officer and is in turn paid
an annualized fee of $180,000, payable quarterly, and reimbursed for certain
out-of-pocket expenses incurred on behalf of the Company. On September 21, 1997,
the Company also entered into a Stock Appreciation Rights Agreement with Mr.
Gidel, whereby the Company granted Stock Appreciation Rights ("SARs") to Mr.
Gidel as follows: 150,000 shares of common stock SARs at $5.50 per share and
75,000 shares of preferred stock SARs at $8.50 per share. These SARs vest after
one year of service or upon a change of control of the Company. Upon exercise,
the grantee of the SARs will be paid the difference between the fair market
price of the stock and the exercise price. In connection with the pending
EastGroup Merger Offer and subsequent Change in Control, the Company anticipates
that Mr. Gidel will exercise all of his SARs, in which event he will be entitled
to a cash payment from the Company of up to $563,000.

     As of December 31, 1997, the Company had no full-time employees and is
currently managed under a Management Agreement with TIS Financial Services Inc.
This agreement requires that TIS pay the employment expenses of its personnel.

     Prior to December 1995, the Company shared employee costs under an
internalized management structure using MPP.  See Item 1.  For the year ended
December 31, 1995, the Company's allocated share of each of its executive
officer's cash and non-cash compensation did not exceed $100,000.

                                      -17-
<PAGE>

COMPENSATION OF DIRECTORS
-------------------------

     Director Fees.  The Company pays each Director an annual fee of $8,000.  In
     --------------
1997, Ms. Yalonis, and Messrs. Lucash, Morris, and Rees each received $8,000 as
a Director fee. Messrs. Doherty and Peter O. Hanson received $4,000 as Directors
fee from January 1, 1997 to June 30, 1997. Messrs. Gidel and Osborne each
received $4,000 as Directors fees for the period July 1, 1997 to December 31,
1997.

     Chairman's Fees.  The Company pays the Chairman an annual fee of $25,000
     ---------------
which amount was paid in 1997.

     Committee and Other Meeting Fees.  The Directors are also entitled to be
     --------------------------------
paid $500 for each Board meeting attended in person, $400 for each committee
meeting attended in person, and $300 for each Board or committee meeting
attended by means of conference telephone call. Directors are also paid $300 per
half day for time spent attending to the Company's business. During 1997 Mr.
Doherty was paid $5,500, Mr. Gidel was paid $3,800, Mr. Hanson was paid $6,500,
Mr. Lucash was paid $11,500, Mr. Morris was paid $4,300, Mr. Osborne was paid
$2,200, Mr. Rees was paid $10,600, and Ms. Yalonis was paid $7,400.

     Reimbursements.  All Directors are reimbursed for reasonable travel and
     --------------
other out-of-pocket expenses incurred in connection with attending Board and
committee meetings.

     In December of 1995, TIS Financial Services Inc., of which Lorraine O. Legg
is President and Chief Executive Officer, became the Manager of the Company.
The management agreement provides that a management fee be paid to TIS Financial
Services in return for services.  The management agreement requires that TIS pay
the employment expenses of its own personnel.   Ms. Legg receives no
compensation from the Company for serving as President.

     The compensation and expense reimbursement arrangements for Directors as
set forth above may be changed by the Board of Directors pursuant to the
authority granted to it in the Company's Bylaws.

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

     The following table sets forth the amount and nature of the beneficial
ownership of shares of common and preferred stock as of January 5, 1998, by (i)
each person known by the Company to own more than 5% of any class of the
Company's voting stock (based upon filings made with the Securities and Exchange
Commission), (ii) each Director, (iii) the executive officer named in the
Summary Compensation Table, and (iv) all Directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>

                                   Amount of Shares
                                  Beneficially Owned       Title      Percent
          Name (1)              Directly or Indirectly   of Class    of Class
          -------               ----------------------   --------    --------
<S>                             <C>                      <C>         <C>
Massachusetts State                   1,560,754          Preferred     29.6%
Teachers' and Employees'
Retirement Systems Trust
  c/o The Commonwealth of
Massachusetts Treasury
  Department, One
  Ashburton Place, #1200
  Boston, MA 02108

EastGroup Properties, Inc.            1,456,956          Preferred     27.6%
300 One Jackson Pkwy
188 East Capital Street
Jackson, MS  39201

Chicago Truck Driver,                   521,164          Preferred      9.9%
Helpers & Warehouse
Workers Union
(Independent)
Pension Fund
809 W. Madison Street
Chicago, IL  60607
</TABLE>

                                      -18-
<PAGE>

<TABLE>
<S>                                       <C>          <C>            <C>
John E. Castello                           5,000         Common            (2)
Christopher J. Doherty                     1,000         Preferred         (3)
                                             500         Common            (3)
Robert H. Gidel                          100,000         Common             -
Lorraine O. Legg                           1,000         Common            (2)
                                             200         Preferred         (2)
S. Michael Lucash                             --            --              -
Lawrence P. Morris                            --            --              -
Homer McK. Rees                            1,000         Preferred         (2)
                                           5,000         Common            (2)
Micolyn M. Yalonis                            --            --              -

All Directors and
executive officers
as a group (12 persons)                    2,200         Preferred         (2)
                                         111,500         Common             -
</TABLE>
(1)  Unless otherwise indicated in these footnotes, the persons listed above
     have sole voting and investment power over the shares, subject to community
     property laws were applicable.
(2)  Less than 1%.
(3)  Purchased on January 5, 1998.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     During the period April 1, 1991 through December 1, 1995, the Company and
several other Companies were self-administered through an internalized
management structure (collectively, the "Participating Companies").  The
structure of the self-administered management is described in Item 1.

     Effective December 1, 1995, the Company terminated the Amended and Restated
Employee Leasing Agreement with MPP.  On February 22, 1996, the Company entered
into a MPP Termination Agreement by which its interest in MPP was terminated.
Under the terms of the Agreement, the Company sold its outstanding MPP stock to
MPP and its proportionate interest in MPP's assets to Meridian Industrial Trust
("MIT") at fair market value.  In connection with transactions, MPP was to be
dissolved.

     The MPP Termination agreement further required the termination of certain
other agreements between the Company and MPP, and the transfer of certain third
party agreements, right in actions, rights in certain insurance policies and
books and records from MPP to the Company.  The Company and MPP further agreed
to the release of any claims, known or unknown, against the other.  The Company
received par value of $3.84 per share for its stock in MPP and $71,850 for its
proportionate interest in the assets of MPP.  The Company subsequently received
a final accounting relating to the dissolution of MPP  and received the return
of its original advance of funds to MPP less certain MPP expenses for December
1995.

     Effective December 7, 1995, Lorraine O. Legg was elected President and
Chief Executive Officer of the Company. Effective December 1, 1995, TIS managed
the Company's assets, properties and investments in addition to performing
administrative services for the Company in return for a base management fee in
an amount equal to 0.75% of the Company's Average Invested Assets, as defined in
the Management Agreement.  The Agreement further requires that TIS pay all
employment expenses of its personnel performing services for the Company.  Ms.
Legg does not receive any compensation from the Company for her services as an
Officer of the Company.

     In addition, on December 7, 1995, following the resignations of the other
senior officers of the Company affiliated with MPP, various other TIS Officers
and employees were elected as officers of the Company.  Those officers of the
Company affiliated with TIS receive no direct compensation from the Company in
exchange for their services.

     On June 30, 1997, the Company announced the appointment of Robert H. Gidel
as Chief Executive Officer of the Company. Effective July 1, 1997, the Company
entered into an Agreement for Personal Services with Mr. Gidel whereby Mr. Gidel
provides services to the Company as Chief Executive Officer and is in turn paid
an annual fee of $180,000, payable quarterly, and reimbursed for certain out-of-
pocket expenses incurred on behalf of the Company. On September 21, 1997, the
Company entered into a Stock Appreciation Rights Agreement with Mr. Gidel,
whereby the Company granted Stock Appreciation Rights ("SARs") to Mr. Gidel as
follows: 150,000 shares of common stock SARs at $5.50 per share and 75,000


                                      -19-
<PAGE>

shares of preferred stock SARs at $8.50 per share.  These SARs vest after
one year of service or upon a change of control of the Company.  Upon exercise,
the grantee of the SARs will be paid the difference between the fair market
price of the stock and the exercise price.  In connection with the pending
EastGroup Offer and Merger Agreement, the Company anticipates that Mr.
Gidel will exercise all of his SARs, in which event he will be entitled to a
cash payment from the Company of up to $563,000.

  On February 18, 1998, the Company entered into an Agreement and Plan of Merger
with EastGroup Properties, Inc. (NYSE-EGP) providing for EastGroup's acquisition
of the Company for $10.00 per outstanding preferred share and $8.50 per
outstanding common share, payable in cash. Pursuant to the terms of the Merger
Agreement, EastGroup (through a wholly-owned subsidiary commenced a tender offer
for all issued and outstanding preferred shares of the Company not currently
held by EastGroup for $10.00 per share in cash, and for all issued and
outstanding common shares of the Company for $8.50 per share in cash on February
23, 1998. The Offer is scheduled to expire on April 17, 1998. following
completion of the Offer, the Company (excluding those held by EastGroup) will be
converted in $10.00 per share in cash and all remaining common shares of the
Company (excluding those held by EastGroup) will be converted into $8.50 per
share in cash. EastGroup will also assume all of the Company's outstanding
indebtedness, resulting in a total transaction value of approximately $100
million. Further details of the Merger Agreement are contained in the Company's
Amended and Restated Solicitation/Recommendation Statement (Schedule 14D-9)
filed February 23, 1998.

  The Company's Board of Directors has unanimously approved the Merger Agreement
and recommends that all preferred and common shareholders of the Company tender
their shares into the Offer. The Company's management can provide no assurance
as to the timing or ultimate closure of these transactions.


                                      -20-
<PAGE>

                                    PART IV

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

(a) (1) FINANCIAL STATEMENTS.  The following Company financial statements are
        --------------------
        filed as part of this report:
<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                      <C>
        Report of Independent Public Accountants........................    29
        Consolidated Balance Sheets.....................................    30
        Consolidated Statements of Operations...........................    31
        Consolidated Statements of Shareholders' Equity.................    32
        Consolidated Statements of Cash Flows...........................    33
        Supplemental Schedule of Non-Cash Transactions..................    34
        Notes to Consolidated Financial Statements......................    35
</TABLE>

(a) (2) FINANCIAL STATEMENT SCHEDULES.  The following financial statement
        -----------------------------
        schedules are filed as part of this report:

<TABLE>
<CAPTION>                                                                  Page
                                                                           ----
<S>                                                                       <C>
     Valuation and Qualifying Accounts..................................    43
     Real Estate and Accumulated Depreciation...........................    44
</TABLE>
     Schedules for which provision is made in applicable accounting regulations
of the Securities and Exchange Commission which have not been included have been
omitted because of the absence of conditions for which they are required or
because the information is included elsewhere in this report.

(a) (3)  EXHIBITS.
         --------
<TABLE>
<CAPTION>
NO.                                             DESCRIPTION
---                                             -----------
(in accordance with Item 601 of Regulation S-K)
<C>    <S>
3.1    Amended and Restated Bylaws of the Registrant dated March 5, 1992 filed
       as Exhibit 3.4 to Registrant's Form 10-K for the fiscal year ended
       December 3l, 1991 and incorporated herein by reference.

10.1   Loan Agreement between Sierra Capital Realty Trust VIII Co. and Citicorp
       Real Estate, Inc. dated as of July 14, 1989, filed as Exhibit 10.1 to
       Registrant's Form 8-K dated July 14, 1989 and incorporated herein by
       reference.

10.2   Letter Agreement dated as of June 13, 1990 between Sierra Capital Realty
       Trust VIII Co. and Citicorp Real Estate, Inc. filed as Exhibit 10.8 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.3   Amendment to Loan Documents dated as of July 14, 1991 between Sierra
       Capital Realty Trust VIII Co. and Citicorp Real Estate, Inc. filed as
       Exhibit 10.9 to Registrant's Form 10-K for the fiscal year ended December
       3l, 1991 and incorporated herein by reference.

10.4   Amended and Restated Promissory Note executed by Sierra Capital Realty
       Trust VIII Co. in favor of Citicorp Real Estate, Inc. dated July 14, 1991
       filed as Exhibit 10.11 to Registrant's Form 10-K for the fiscal year
       ended December 3l, 1991 and incorporated herein by reference.

10.5   Mortgage and Security Agreement with Assignment of Rents dated as of July
       14, 1989 made by Sierra Capital Realty Trust VIII Co. in favor of
       Citicorp Real Estate, Inc. filed as Exhibit 10.12 to Registrant's Form
       10-K for the fiscal year ended December 31, l991 and incorporated herein
       by reference.

10.6   Omnibus Amendment to Security Agreements dated as of July 14, 1991
       between Sierra Capital Realty Trust VIII Co. in favor of Citicorp Real
       Estate, Inc. filed as Exhibit 10.15 to Registrant's Form 10-K for the
       fiscal year ended December 31, l991 and incorporated herein by reference.
</TABLE>

                                      -21-
<PAGE>

<TABLE>
<C>   <S>
10.7   Environmental Agreement between Sierra Capital Realty Trust VIII Co. and
       Citicorp Real Estate, Inc. dated July 14, 1989, filed as Exhibit 10.3 to
       Registrant's Form 8-K dated July 14, 1989 and incorporated herein by
       reference.

10.8   Loan Agreement between Sierra Capital Realty Trust VIII Co. and The
       Prudential Insurance Company of America dated as of May 25, 1990, filed
       as Exhibit 10.1 to Registrant's Form 8-K dated June 14, 1990 and
       incorporated herein by reference.

10.9   Promissory Note executed by Sierra Capital Realty Trust VIII Co. in favor
       of The Prudential Insurance Company of America; Loan No. 7-503-316, filed
       as Exhibit 10.3 to Registrant's Form 8-K dated June 14, 1990 and
       incorporated herein by reference.

10.10  Employment Agreement dated July 2, 1991 by and among Sierra Real Estate
       Equity Trust `82, Sierra Real Estate Equity Trust `83, Sierra Real Estate
       Equity Trust `84 Co., Sierra Capital Realty Trust IV Co., Sierra Capital
       Realty Trust VI Co., Sierra Capital Realty Trust VII Co., Sierra Capital
       Realty Trust VIII Co., Milton K. Reeder, and Meridian Point Company,
       filed as Exhibit 10.2 to Registrant's Form 10-Q for the quarter ended
       September 30, 1991 and incorporated herein by reference.

10.11  Change of Control Agreement dated December 12, 1991 among Al E. Andrews,
       Jr. and Meridian Point Realty Trust `82, Meridian Point Realty Trust `83,
       Sierra Real Estate Equity Trust `84 Co., Meridian Point Realty Trust IV
       Co., Meridian Point Realty Trust VI Co., Meridian Point Realty Trust VII
       Co. and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.5l to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.12  Change of Control Agreement dated December 12, 1991 among Robert A.
       Dobbin and Meridian Point Realty Trust `82, Meridian Point Realty Trust
       `83, Sierra Real Estate Equity Trust `84 Co., Meridian Point Realty Trust
       IV Co., Meridian Point Realty Trust VI Co., Meridian Point Realty Trust
       VII Co. and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.52
       to Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.13  Change of Control Agreement dated December 12, 1991 among Dennis D. Higgs
       and Meridian Point Realty Trust `82, Meridian Point Realty Trust `83,
       Sierra Real Estate Equity Trust `84 Co., Meridian Point Realty Trust IV
       Co., Meridian Point Realty Trust VI Co., Meridian Point Realty Trust VII
       Co. and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.53 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.14  Change of Control Agreement dated December 12, 1991 among Barbara J.
       Schuessler and Meridian Point Realty Trust `82, Meridian Point Realty
       Trust `83, Sierra Real Estate Equity Trust `84 Co., Meridian Point Realty
       Trust IV Co., Meridian Point Realty Trust VI Co., Meridian Point Realty
       Trust VII Co. and Sierra Capital Realty Trust VIII Co. filed as Exhibit
       10.55 to Registrant's Form 10-K for the fiscal year ended December 3l,
       1991 and incorporated herein by reference.

10.15  Stock Option Agreement, effective April 1, 1991, among Milton K. Reeder,
       Meridian Point Properties, Inc., Meridian Point Company, Meridian Point
       Realty Trust `82, Meridian Point Realty Trust `83, Sierra Real Estate
       Equity Trust `84 Co., Meridian Point Realty Trust IV Co., Meridian Point
       Realty Trust VI Co., Meridian Point Realty Trust VII Co. and Sierra
       Capital Realty Trust VIII Co. filed as Exhibit 10.60 to Registrant's Form
       10-K for the fiscal year ended December 3l, 1991 and incorporated herein
       by reference.

10.16  Amended and Restated Articles of Incorporation of Meridian Point
       Properties, filed March 24, 1992 filed as Exhibit 10.6l to Registrant's
       Form 10-K for the fiscal year ended December 3l, 1991 and incorporated
       herein by reference.

10.17  Indemnity Agreement, dated July 29, 1988, between Sierra Capital Realty
       Trust VIII Co. and Thomas B. Swartz filed as Exhibit 10.62 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.18  Indemnity Agreement, dated July 29, 1988, between Sierra Capital Realty
       Trust VIII Co. and Thomas B. Swartz filed as Exhibit 10.63 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.
</TABLE>

                                      -22-
<PAGE>

<TABLE>
<C>   <S>
10.19  Indemnity Agreement, dated July 29, 1988, between Sierra Capital Realty
       Trust VIII Co. and Robert A. Dobbin filed as Exhibit 10.64 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.20  Indemnity Agreement, dated July 29, 1988, between Sierra Capital Realty
       Trust VIII Co. and Milton K. Reeder filed as Exhibit 10.65 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.21  Indemnity Agreement, dated June 26, 1989, between Sierra Capital Realty
       Trust VIII Co. and Steven B. Sinnett filed as Exhibit 10.71 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.22  Indemnity Agreement, dated March 5, 1992, between Sierra Capital Realty
       Trust VIII Co. and Dennis H. Higgs filed as Exhibit 10.78 to Registrant's
       Form 10-K for the fiscal year ended December 3l, 1991 and incorporated
       herein by reference.

10.23  Indemnity Agreement, dated July 29, 1988, between Sierra Capital Realty
       Trust VIII Co. and Peter O. Hanson filed as Exhibit 10.66 to Registrant's
       Form 10-K for the fiscal year ended December 3l, 1991 and incorporated
       herein by reference.

10.24  Indemnity Agreement, undated, between Sierra Capital Realty Trust VIII
       Co. and Richard H. Hughes filed as Exhibit 10.67 to Registrant's Form 10-
       K for the fiscal year ended December 3l, 1991 and incorporated herein by
       reference.

10.25  Indemnity Agreement, dated July 29, 1988, between Sierra Capital Realty
       Trust VIII Co. and Charles L. Smythe, Jr. filed as Exhibit 10.68 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.26  Indemnity Agreement, dated August 17, 1988, between Sierra Capital Realty
       Trust VIII Co. and  Richard S. Stanson filed as Exhibit 10.69 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.27  Indemnity Agreement, dated June 26, 1989, between Sierra Capital Realty
       Trust VIII Co. and William B. Stevenson filed as Exhibit 10.70 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.28  Indemnity Agreement, effective June 6, 1991, between Sierra Capital
       Realty Trust VIII Co. and Kermit Mowbray filed as Exhibit 10.72 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.29  Indemnity Agreement, effective June 6, 1991, between Sierra Capital
       Realty Trust VIII Co. and James B. Davis filed as Exhibit 10.73 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.30  Indemnity Agreement, effective June 6, 1991, between Sierra Capital
       Realty Trust VIII Co. and Lee W. Wilson filed as Exhibit 10.74 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.31  Indemnity Agreement, dated September 13, 1991, between Sierra Capital
       Realty Trust VIII Co. and Al E. Andrews, Jr. filed as Exhibit 10.75 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.32  Indemnity Agreement, dated March 5, 1992, between Meridian Point Realty
       Trust VIII Co. and Milton K. Reeder filed as Exhibit 10.76 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.33  Indemnity Agreement, dated March 5, 1992, between Meridian Point Realty
       Trust VIII Co. and Robert A. Dobbin filed as Exhibit 10.77 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.
</TABLE>

                                      -23-
<PAGE>

<TABLE>
<C>   <S>
10.34  Indemnity Agreement, dated March 5, 1992, between Meridian Point Realty
       Trust VIII Co. and James S. McCaffrey filed as Exhibit 10.79 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.35  Indemnity Agreement, dated March 5, 1992, between Meridian Point Realty
       Trust VIII Co. and Steven B. Sinnett filed as Exhibit 10.80 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.36  Indemnity Agreement, dated March 5, 1992, between Meridian Point Realty
       Trust VIII Co. and Barbara J. Finnegan filed as Exhibit 10.8l to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.37  Indemnity Agreement, dated March 5, 1992, between Sierra Capital Realty
       Trust VIII Co. and Meridian Point Properties, Inc. filed as Exhibit 10.82
       to Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.38  Indemnity Agreement, dated March 5, 1992, between Sierra Capital Realty
       Trust VIII Co. and Meridian Point Company filed as Exhibit 10.83 to
       Registrant's Form 10-K for the fiscal year ended December 3l, 1991 and
       incorporated herein by reference.

10.39  First Amendment to Loan Agreement dated as of April 10, l992 between the
       Prudential Company of America and Sierra Capital Realty Trust VIII Co.
       filed as Exhibit 10.l to Registrant's Form 10-Q for the quarter ended
       March 3l, l992 and incorporated herein by reference.

10.40  Amended and Restated Employee Leasing Agreement, effective March 24,
       l992, among Meridian Point Realty Trust `82, Meridian Point Realty Trust
       `83, Sierra Real Estate Equity Trust `84 Co., Meridian Point Realty Trust
       IV Co., Meridian Point Realty Trust VI Co., Meridian Point Realty Trust
       VII Co., and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.l
       to Registrant's Form 10-Q for the quarter ended June 30, l992 and
       incorporated herein by reference.

10.41  Amended and Restated Registrar, Transfer Agent, Dividend Disbursement and
       Service Agreement, effective March 24, l992, among Meridian Point
       Properties, Inc. and Meridian Point Realty Trust `82, Meridian Point
       Realty Trust `83, Sierra Real Estate Equity Trust `84 Co., Meridian Point
       Realty Trust IV Co., Meridian Point Realty Trust VI Co., Meridian Point
       Realty Trust VII Co., and Sierra Capital Realty Trust VIII Co. filed as
       Exhibit 10.2 to Registrant's Form 10-Q for the quarter ended June 30,
       l992 and incorporated herein by reference.

10.42  Amendment No. l to Stock Option Agreement, effective March 24, l992,
       among Milton K. Reeder, Meridian Point Properties, Inc., Meridian Point
       Realty Trust `82, Meridian Point Realty Trust `83, Sierra Real Estate
       Equity Trust `84 Co., Meridian Point Realty Trust IV Co., Meridian Point
       Realty Trust VI Co., Meridian Point Realty Trust VII Co., and Sierra
       Capital Realty Trust VIII Co. filed as Exhibit 10.3 to Registrant's Form
       10-Q for the quarter ended June 30, l992 and incorporated herein by
       reference.

10.43  Amendment to Promissory Note dated April 10, l992 to Promissory Note
       dated June l4, l990 from Sierra Capital Realty Trust VIII Co. in favor of
       The Prudential Insurance Company of America in the amount of $8,l20,000
       representing Loan No. 7-503-3l6 filed as Exhibit 10.5 to Registrant's
       Form 10-Q for the quarter ended June 30, l992 and incorporated herein by
       reference.

10.44  Promissory Note dated June 29, l990 from Sierra Capital Realty Trust VIII
       Co. in favor of The Prudential Insurance Company of America in the amount
       of $3,000,000 representing Loan No. 7-503-3l7 filed as Exhibit 10.6 to
       Registrant's Form 10-Q for the quarter ended June 30, l992 and
       incorporated herein by reference.

10.45  Amendment to Promissory Note dated April 10, l992 to Promissory Note
       dated June 29, l990 from Sierra Capital Realty Trust VIII Co. in favor of
       The Prudential Insurance Company of America in the amount of $3,000,000
       representing Loan No. 7-503-3l7 filed as Exhibit 10.7 to Registrant's
       Form 10-Q for the quarter ended June 30, l992 and incorporated herein by
       reference.

10.46  Promissory Note dated October 29, l990 from Sierra Capital Realty Trust
       VIII Co. in favor of The Prudential Insurance Company of America in the
       amount of $8,725,000 representing Loan No. 7-503-3l9 filed as Exhibit
       10.10 to Registrant's Form 10-Q for the quarter ended June 30, l992 and
       incorporated herein by reference.
</TABLE>

                                      -24-
<PAGE>

<TABLE>
<C>    <S>
10.47  Amendment to Promissory Note dated April 10, l992 to Promissory Note
       dated October 29, l990 from Sierra Capital Realty Trust VIII Co. in favor
       of The Prudential Insurance Company of America in the amount of
       $8,725,000 representing Loan No. 7-503-3l9 filed as Exhibit 10.11 to
       Registrant's Form 10-Q for the quarter ended June 30, l992 and
       incorporated herein by reference.

10.48  Amended and Restated Promissory Note dated June l4, l992 from Sierra
       Capital Realty Trust VIII Co. in favor of The Prudential Insurance
       Company of America in the amount of $12,160,619.35 representing Loan No.
       7-503-3l5 filed as Exhibit 10.l2 to Registrant's Form 10-Q for the
       quarter ended June 30, l992 and incorporated herein by reference.

10.49  Amended and Restated Promissory Note dated June 29, l992 from Sierra
       Capital Realty Trust VIII Co. in favor of The Prudential Insurance
       Company of America in the amount of $6,389,289.l3 representing Loan No.
       7-503-3l8 filed as Exhibit 10.l3 to Registrant's Form 10-Q for the
       quarter ended June 30, l992 and incorporated herein by reference.

10.50  Sublease dated September 11, 1992 between Chicago Title Insurance Company
       and Meridian Point Properties, Inc. filed as Exhibit 10.95 to
       Registrant's Form 10-K for the fiscal year ended December 31, 1992 and
       incorporated herein by reference.

10.51  Indemnity Agreement effective February l, l992 between Sierra Capital
       Realty Trust VIII Co. and Debra H. Paul filed as Exhibit 10.96 to
       Registrant's Form 10-K for the fiscal year ended December 31, 1992 and
       incorporated herein by reference.

10.52  Indemnity Agreement dated September 10, l992 between Sierra Capital
       Realty Trust VIII Co. and Dennis D. Higgs filed as Exhibit 10.97 to
       Registrant's Form 10-K for the fiscal year ended December 31, 1992 and
       incorporated herein by reference.

10.53  Change of Control Agreement dated December 2, 1992 among Debra H. Paul
       and Meridian Point Realty Trust `82, Meridian Point Realty Trust `83,
       Sierra Real Estate Equity Trust `84 Co., Meridian Point Realty Trust IV
       Co., Meridian Point Realty Trust VI Co., Meridian Point Realty Trust VII
       Co. and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.98 to
       Registrant's Form 10-K for the fiscal year ended December 31, 1993 and
       incorporated herein by reference.

10.54  Indemnity Agreement dated March 4, 1993 between Sierra Capital Realty
       Trust VIII Co. and Lorraine O. Legg filed as Exhibit 10.1 to Registrant's
       Form 10-Q for the quarter ended March 31, 1993 and incorporated herein by
       reference.

10.55  Indemnity Agreement dated March 4, 1993 between Sierra Capital Realty
       Trust VIII Co. and Robert E. Morgan filed as Exhibit 10.2 to Registrant's
       Form 10-Q for the quarter ended March 31, 1993 and incorporated herein by
       reference.

10.56  Indemnity Agreement between Sierra Capital Realty Trust VIII Co. and
       Homer McK Rees filed as Exhibit 10.3 to Registrant's Form 10-Q for the
       quarter ended March 31, 1993 and incorporated herein by reference.

10.57  Second Amendment to Loan Agreement dated as of June 24, 1993 between The
       Prudential Insurance Company of America and Sierra Capital Realty Trust
       VIII Co. filed as Exhibit 10.1 to Registrant's Form 10-Q for the quarter
       ended June 30, 1993 and incorporated herein by reference.

10.58  Amendment No. 1 to the Employment Agreement of Milton K. Reeder dated
       September 14, 1993 filed as Exhibit 10.1 to Registrant's Form 10-Q for
       the quarter ended September 30, 1993 and incorporated herein by reference .

10.59  Letter Agreement dated August 2, 1993 amending Change of Control
       Agreement for Al E. Andrews, Jr. filed as Exhibit 10.2 to Registrant's
       Form 10-Q for the quarter ended September 30, 1993 and incorporated
       herein by reference.

10.60  Letter Agreement dated August 2, 1993 amending Change of Control
       Agreement for Robert A. Dobbin filed as Exhibit 10.3 to Registrant's Form
       10-Q for the quarter ended September 30, 1993 and incorporated herein by
       reference.

10.61  Letter Agreement dated August 2, 1993 amending Change of Control
       Agreement for Barbara S. Finnegan filed as Exhibit 10.4 to Registrant's
       Form 10-Q for the quarter ended September 30, 1993 and incorporated
       herein by reference.
</TABLE>

                                      -25-
<PAGE>

<TABLE>
<C>    <S>
10.62  Letter Agreement dated August 2, 1993 amending Change of Control
       Agreement for Dennis D. Higgs filed as Exhibit 10. 5 to Registrant's Form
       10-Q for the quarter ended September 30, 1993 and incorporated herein by
       reference.

10.63  Letter Agreement dated August 2, 1993 amending Change of Control
       Agreement for Debra H. Paul filed as Exhibit 10.6 to Registrant's Form 10-
       Q for the quarter ended September 30, 1993 and incorporated herein by
       reference.

10.64  Letter Agreement dated August 2, 1993 amending Change of Control
       Agreement for Steven B. Sinnett filed as Exhibit 10.7 to Registrant's
       Form 10-Q for the quarter ended September 30, 1993 and incorporated
       herein by reference.

10.65  Amendment to Promissory Note dated June 24, 1993 (Prudential Loan No. 7-
       503-315) filed as Exhibit 10.8 to Registrant's Form 10-Q for the quarter
       ended September 30, 1993 and incorporated herein by reference.

10.66  Amendment to Promissory Note dated June 24, 1993 (Prudential Loan No. 7-
       503-317) filed as Exhibit 10.9 to Registrant's Form 10-Q for the quarter
       ended September 30, 1993 and incorporated herein by reference.

10.67  Amendment to Promissory Note dated June 24, 1993 (Prudential Loan No. 7-
       503-318) filed as Exhibit 10.10 to Registrant's Form 10-Q for the quarter
       ended September 30, 1993 and incorporated herein by reference.

10.68  Amendment to Promissory Note dated June 24, 1993 (Prudential Loan No. 7-
       503-319) filed as Exhibit 10.11 to Registrant's Form 10-Q for the quarter
       ended September 30, 1993 and incorporated herein by reference.

10.69  Promissory Note executed by Meridian Point Realty Trust VIII Co. in favor
       of the Prudential Insurance Company of America, Loan No. 7-503-316 filed
       as Exhibit 10.12 to Registrant's Form 10-Q for the quarter ended
       September 30, 1993 and incorporated herein by reference.

10.70  Indemnity Agreement dated September 17, 1993 between Micolyn Magee
       Yalonis and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.13
       to Registrant's Form 10-Q for the quarter ended September 30, 1993 and
       incorporated herein by reference.

10.71  Indemnity Agreement dated September 17, 1993 between Philip R. O'Connor
       and Sierra Capital Realty Trust VIII Co. filed as Exhibit 10.14 to
       Registrant's Form 10-Q for the quarter ended September 30, 1993 and
       incorporated herein by reference.

10.72  Promissory Note and Deed of Trust dated October 1993 in the principal
       amount of $1,850,000 (for refinancing of Memphis 20 property) filed as
       Exhibit 10.15 to Registrant's Form 10-Q for the quarter ended September
       30, 1993 and incorporated herein by reference.

10.73  Promissory Note dated December 10, 1993 executed by Meridian Point Realty
       Trust VIII Co. in favor of the Prudential Insurance Company of America,
       Loan No. 7-503-319 filed as Exhibit 10.69 to Registrant's Form 10-K for
       the fiscal year ended December 31, 1993 and incorporated herein by
       reference.

10.74  Indemnity Agreement dated September 17, 1993, between Sierra Capital
       Realty Trust VIII Co. and S. Michael Lucash filed as Exhibit 10.70 to
       Registrant's Form 10-K for the fiscal year ended December 31, 1993 and
       incorporated herein by reference.

10.75  Modification to Promissory Note dated June 29, 1994 (Prudential Loan No.
       7-503-317) filed as Exhibit 10.1 to Registrant's 10-Q for the quarter
       ended June 30, 1994 and incorporated herein by reference.

10.76  Mortgage and Security Agreement dated August 8, 1994 between Meridian
       Point Realty Trust VIII Co. and PFL Life Insurance Company filed as
       Exhibit 10.2 to Registrant's Form 10-Q for the quarter ended June 30,
       1994 and incorporated herein by reference.

10.77  Mortgage Note dated August 8, 1994 executed by Meridian Point Realty
       Trust VIII Co. in favor of PFL Life Insurance Company filed as Exhibit
       10.3 Registrant's Form 10-Q for the quarter ended June 30, 1994 and
       incorporated herein by reference.
</TABLE>

                                      -26-
<PAGE>

10.78  Amendment No. 1 to Amended and Restated Employee Leasing Agreement,
       effective as of February 1, 1994 filed as Exhibit 10.1 to Registrant's
       Form 10-Q for the quarter ended September 30, 1994 and incorporated
       herein by reference.

10.79  Indemnity Agreement effective January 31, 1995, between Meridian Point
       Realty Trust VIII Co. and Brian F. Zywiciel filed as Exhibit 10.1 to
       Registrant's Form 8-K dated January 31, 1995, and incorporated herein by
       reference.

10.80  Indemnity Agreement effective January 31, 1995, between Meridian Point
       Realty Trust VIII Co. and Barbara S. Finnegan filed as Exhibit 10.2 to
       Registrant's Form 8-K dated January 31, 1995, and incorporated herein by
       reference.

10.80  Indemnity Agreement effective January 31, 1995, between Meridian Point
       Realty Trust VIII Co. and Brian F. Zywiciel filed as Exhibit 10.3 to
       Registrant's Form 8-K dated January 31, 1995, and incorporated herein by
       reference.

10.81  Management Agreement dated October 18, 1995 and effective December 1,
       1995 by and between Meridian Point Realty Trust VIII Co. and TIS
       Financial Services, Inc. filed as Exhibit 10.81 to Registrant's Form 10-K
       dated April 1, 1996, and incorporated herein by reference

10.82  MPP Termination  Agreement among Meridian Point Properties, Inc. Meridian
       Point Industrial Trust, Inc. Meridian Point Realty Trust VIII Co. Dated
       as of February 22, 1996 filed as Exhibit 10.82 to Registrant's Form 10-K
       dated April 1, 1996, and incorporated herein by reference.

10.83  Shareholder Rights Agreement, dated as of November 14, 1997, between
       Meridian Point Realty Trust VIII Co. and First Chicago Trust Company of
       New York, which includes as Exhibit A thereto the Form of Purchase
       Rights Certificate and as Exhibit B thereto the Form of Exchange Rights
       Certificate. Incorporated herein by reference to Exhibit 1 to the
       Company's Registration Statement on Form 8-A, dated November 21, 1997
       and as amended on December 15, 1997.

10.84  Agreement and Plan of Merger dated as of February 18, 1998, among
       EastGroup, the Purchaser and Meridian Point Realty Trust VIII Co.,
       incorporated herein by reference to Exhibit 1 to the Company's
       Registration Statement on Schedule 14D-9, dated February 23, 1998 and
       as amended on March 12, 1998.

(b)    REPORTS ON FORM 8-K.
       -------------------

     The following reports on Form 8-K were filed during the quarter ended
December 31, 1997:

       Current Report on Form 8-K under Item 5 - Other Events, dated November
       24, 1997 announcing the Shareholders Rights Agreement.

       Current Report on Form 8-K under Item 5 - Other Events, dated December
       15, 1997 announcing an amendment to the Shareholders Rights Agreement.

(c)    The exhibits listed in Item 14(a)(3) above are submitted as part of this
       report.

(d)    The financial statement schedules listed in Item 14(a)(2) above are
       submitted as part of this report.


                                      -27-
<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.


Dated:  March 26, 1998              MERIDIAN POINT REALTY TRUST VIII CO.

                                    By:   /s/ Lorraine O. Legg
                                        ------------------------------------
                                         Lorraine O. Legg
                                         President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


           /s/Robert H. Gidel                     Dated: March 26, 1998
--------------------------------------------
Robert H. Gidel
Chief Executive Officer and Director
(Principal Executive Officer)

           /s/Lorraine O. Legg                    Dated: March 26, 1998
--------------------------------------------
Lorraine O. Legg
President

           /s/John E. Castello                    Dated: March 26, 1998
--------------------------------------------
John E. Castello
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)

           /s/ Christopher J. Doherty             Dated: March 26, 1998
--------------------------------------------
Christopher J. Doherty
Chairman and Director

           /s/ S. Michael Lucash                  Dated: March 26, 1998
--------------------------------------------
S. Michael Lucash
Director

           /s/ Lawrence P. Morris                 Dated: March 26, 1998
--------------------------------------------
Lawrence P. Morris
Director

           /s/ Richard M. Osborne                 Dated: March 26, 1998
--------------------------------------------
Richard M. Osborne
Director

           /s/ Homer McK. Rees                    Dated: March 26, 1998
--------------------------------------------
Homer McK. Rees
Director

           /s/ Micolyn Magee Yalonis              Dated: March 26, 1998
--------------------------------------------
Micolyn Magee Yalonis
Director

                                      -28-
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To The Shareholders and Board of Directors
of Meridian Point Realty Trust VIII Co.:

      We have audited the accompanying Consolidated Balance Sheets of Meridian
Point Realty Trust VIII Co. (a Missouri corporation) and subsidiary as of
December 31, 1997 and 1996, and the related Consolidated Statements of
Operations, Shareholders' Equity, and Cash Flows for each of the three years in
the period ended December 31, 1997.  These financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.

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

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Meridian
Point Realty Trust VIII Co. and subsidiary as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally accepted
accounting principles.

      Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The Financial Statement
Schedules listed in Item 14 (a)(2) are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not part of the
basic consolidated financial statements. These schedules have been subjected to
the auditing procedures applied in our audits of the basic consolidated
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic consolidated financial statements taken as a whole.

                                                         /s/ ARTHUR ANDERSEN LLP
San Francisco, California
February 27, 1998

                                      -29-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                                1997                   1996
---------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                   <C>
ASSETS
INVESTMENT IN REAL ESTATE:
Rental Properties, Net                                                      $ 85,353,734           $ 81,834,510
Less:   Accumulated Depreciation                                             (15,514,356)           (15,152,397)
---------------------------------------------------------------------------------------------------------------
                                                                              69,839,378             66,682,113
OTHER ASSETS:
Cash and Cash Equivalents                                                      7,119,687              2,791,670
Receivables, Net of Reserves of $0 and $25,961
 as of December 31, 1997 and 1996, respectively                                  422,144                493,942
Capitalized Loan Costs, Net of Accumulated Amortization of
 $55,472 and $709,158 as of December 31, 1997
 and 1996, respectively                                                          487,366                108,918
Capitalized Lease Commissions, Net of Accumulated Amortization
 of $425,816 and $331,172 as of December 31, 1997
 and 1996, respectively                                                          341,333                308,835
Other Assets, Net of Accumulated Amortization of
 $442,509 and $365,084 as of December 31, 1997
 and 1996, respectively                                                        1,720,234              1,208,477
TOTAL ASSETS                                                                $ 79,930,142           $ 71,593,955
===============================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage Notes Payable                                                      $ 33,706,682           $  7,570,281
Long-term Debt Facility                                                               --             20,042,421
Due to Affiliate                                                                 170,000                163,000
Accounts Payable                                                                 990,537              1,184,057
Prepaid Rent, Tenant Deposits and Other Liabilities                              666,205                168,218
TOTAL LIABILITIES                                                             35,533,424             29,127,977
---------------------------------------------------------------------------------------------------------------

Commitments and Contingencies

SHAREHOLDERS' EQUITY:
Shares of Common and Preferred Stock with par value of $0.001;
 an aggregate of 50,000,000 Common and Preferred Shares
 authorized; 1,709,937 Common Shares and 5,273,927 Preferred
 Shares issued and outstanding as of December 31, 1997
 and 1996, respectively                                                            6,984                  6,884
Paid-in Capital                                                               65,952,719             65,389,820
Distributions in Excess of Income                                            (21,562,985)           (22,930,726)

TOTAL SHAREHOLDERS' EQUITY                                                    44,396,718             42,465,978
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                  $ 79,930,142           $ 71,593,955
===============================================================================================================
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      -30-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                               1997                 1996                  1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                  <C>                   <C>
REVENUES:
Rentals from Real Estate Investments                        $10,355,548           $ 9,976,457          $ 10,868,405
Interest and Other                                              214,259               244,300               326,170
TOTAL REVENUES                                               10,569,807            10,220,757            11,194,575
-------------------------------------------------------------------------------------------------------------------

EXPENSES:
Interest and Amortization of Loan Costs                       2,582,891             2,817,784             3,393,743
Property Taxes                                                1,471,126             1,558,852             1,536,584
Property Operating Costs, Including Amounts Paid
 to Related Parties of $668,692, $668,309, and
 $680,015, respectively                                       1,376,679             1,346,723             1,757,154
Legal Costs                                                     300,569               107,058                63,290
General and Administrative, Including Amounts
 Paid to Related Parties of $236,082, $131,318,
 and $168,205, respectively                                     954,144               654,173               689,036
Provision for Decrease in Net Realizable Value                       --                    --             1,182,015
Depreciation and Amortization                                 2,445,881             2,431,448             2,718,862
TOTAL EXPENSES                                                9,131,290             8,916,038            11,340,684
-------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE GAIN ON
 DISPOSITION OF ASSETS                                        1,438,517             1,304,719              (146,109)
Gain on Disposition of Assets                                 1,995,776                47,452                 1,197
-------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                       3,434,293             1,352,171              (144,912)
Extraordinary Item -
 Prepayment Penalty on Paydown of Debt                          (62,233)                   --              (129,433)
-------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                           $ 3,372,060           $ 1,352,171             ($274,345)
===================================================================================================================

NET INCOME (LOSS)                                           $ 3,372,060           $ 1,352,171             ($274,345)
Preferred Distributions Declared                             (1,529,439)           (1,476,700)           (1,476,700)
-------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
                                                            $ 1,842,621           ($  124,529)          ($1,751,045)
===================================================================================================================

NET INCOME (LOSS) PER COMMON SHARE BASIC
 AND DILUTED:
Income (Loss) Before Extraordinary Item                     $      1.17                ($0.08)               ($1.01)
Extraordinary Item - Prepayment Penalty                           (0.04)                   --                 (0.08)


NET INCOME (LOSS) PER COMMON SHARE                          $      1.13                ($0.08)               ($1.09)
===================================================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                    1,623,636             1,609,937             1,609,937
PREFERRED DISTRIBUTIONS PAID PER SHARE                      $      0.29           $      0.28          $       0.28
COMMON DISTRIBUTIONS PAID PER SHARE                         $      0.29           $      0.28          $       0.28
===================================================================================================================
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      -31-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>

                                 Common Stock               Preferred Stock                            Distributions
                           -------------------------   -------------------------       Paid-in           in Excess
                              Shares        Amount        Shares        Amount         Capital           Of Income
----------------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>          <C>            <C>          <C>               <C>
BALANCE
 JANUARY 1, 1995              1,609,937       $1,610      5,273,927       $5,274       $65,389,820        $(20,153,586)
Net Loss                             --           --             --           --                --            (274,345)
Distributions Declared:
 Common                              --           --             --           --                --            (450,783)
 Preferred                           --           --             --           --                --          (1,476,700)
----------------------------------------------------------------------------------------------------------------------
BALANCE
 DECEMBER 31, 1995            1,609,937        1,610      5,273,927        5,274        65,389,820         (22,355,414)
Net Income                           --           --             --           --                --           1,352,171
Distributions Declared:
 Common                              --           --             --           --                --            (450,783)
 Preferred                           --           --             --           --                --          (1,476,700)
----------------------------------------------------------------------------------------------------------------------
BALANCE
 DECEMBER 31, 1996            1,609,937        1,610      5,273,927        5,274        65,389,820         (22,930,726)
Net Income                           --           --             --           --                --           3,372,060
Distributions Declared:
 Common                                                                                                       (474,880)
 Preferred                           --           --             --           --                --          (1,529,439)
Stock Issuance
 Common                         100,000          100             --           --           562,899
----------------------------------------------------------------------------------------------------------------------
BALANCE
 DECEMBER 31, 1997            1,709,937       $1,710      5,273,927       $5,274       $65,952,719        $(21,562,985)
======================================================================================================================
</TABLE>

   The accompany notes are an integral part of these consolidated statements.

                                      -32-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                               1997                  1996                  1995
--------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)                                           $  3,372,060           $ 1,352,171             ($274,345)
Adjustments to Reconcile Net Income (Loss) to
 Net Cash Provided by Operating Activities:
  Depreciation                                                 2,239,719             2,253,477             2,519,491
  Amortization - Other                                           305,788               282,542               307,905
  Provision for Decrease in Net Realizable Value                      --                    --             1,182,015
  Rent Adjustment                                                     --                    --               (16,698)
  Prepayment Penalty on Paydown of Debt                           62,233                    --               129,433
  Gain on Disposition of Assets                               (1,995,776)              (47,452)               (1,197)
Decrease (Increase) in Accounts Receivable                        96,672                91,829               143,011
Decrease (Increase) in Other Assets                             (591,378)                14,091                56,781
Increase (Decrease) in Accounts Payable                         (187,626)              110,777              (242,078)
Increase (Decrease) in Due from/to Affiliate                       7,000               274,791               (15,697)
Increase (Decrease) in Other Liabilities                         900,461               (53,763)               53,722
NET CASH PROVIDED BY OPERATING ACTIVITIES                      4,209,153             4,278,463             3,842,343
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to Existing Real Estate                          (5,532,097)             (153,827)             (519,937)
Additions to Capitalized Lease Commissions                      (221,170)              (66,439)             (185,485)
Cash Received on Sale of Properties                            7,813,871                    --             1,730,124
Cash Paid on Purchase of Properties                           (5,037,585)                   --                    --
Sales (Purchases) of Personal Property                                --                73,603                (3,385)

NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES                                         (2,976,981)             (146,663)            1,021,317
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Construction Loan Payable                       11,799,788                    --                    --
Principal Payments on Construction Loan Payable              (11,799,788)                   --                    --
Net Proceeds from Mortgage Notes Payable                      25,457,236                    --                    --
Additions to Capitalized Loan Costs                             (457,516)                   --                    --
Long-Term Debt Facility                                      (20,104,654)           (4,216,976)           (2,686,033)
Principal Payments on Mortgage Notes Payable                    (357,901)             (211,887)             (194,327)
Distributions Paid to Shareholders                            (2,004,319)           (1,927,483)           (1,927,483)
Issuance of Additional Shares of Stock                           562,999                    --                    --
--------------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) FINANCING ACTIVITIES                        3,095,845            (6,356,346)           (4,807,843)
--------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                              4,328,017            (2,224,546)               55,817
CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR                                             2,791,670             5,016,216             4,960,399
--------------------------------------------------------------------------------------------------------------------

 END OF YEAR                                                $  7,119,687           $ 2,791,670           $ 5,016,216
====================================================================================================================
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      -33-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.
                 SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                                   1997                1996               1995

Acquisition of Properties
<S>                                                     <C>                  <C>                <C>
    Assumption of Mortgage Note Payable                        $  994,301                  --                 --

Disposition of Properties Due to Sale:
 Net Book Value of Assets Disposed                              6,282,153             $26,151        $11,563,062
 Other Assets Written-Off, Net of Other Liabilities              (464,058)                 --            104,833
 Paydown of Long-Term Debt Facility                                    --                  --          9,809,535
 Prepayment Penalties                                                  --                  --            129,433
 Interest Paid in Escrow                                               --                  --             27,650
 Cash Held in Escrow                                                   --                  --            175,000
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      -34-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1997

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

       (A) ORGANIZATION.  Meridian Point Realty Trust VIII Co. ("the Company")
is a corporation organized for the purpose of acquiring, operating and holding
for investment income-producing commercial and industrial real estate.  The
Company was formed as a self liquidating finite-life REIT.  However, at the
annual meeting of shareholders held on June 14, 1996, the shareholders approved
an amendment to the Company's Bylaws related to investment policy which will
allow the Company to reinvest proceeds from the sale of property into the
purchase of new property, making the Company an infinite-life REIT.  The general
purpose of the Company is to seek income that qualifies under the REIT
provisions of the Internal Revenue Code.  At such time as it is in the best
interests of the Company's shareholders to do so, the Board of Directors intends
to make investments in such a manner as to comply with the requirements of the
REIT Provisions of the Internal Revenue Code with respect to the composition of
the Company's investments and the derivation of its income.  The Company
commenced operations on October 17, 1988.

       From April 1, 1991 through November 30, 1995, the Company operated under
a self-administered management structure in conjunction with other commonly-
sponsored real estate investment trusts (the Company and such other real estate
investment trusts are collectively referred to herein as the "Companies").
Under this management structure, Meridian Point Properties, Inc. ("MPP"), leased
employees to the Companies at cost to perform the administrative, accounting,
asset management, and property management functions.  In addition, through
December 31, 1994, MPP, at cost, acted as the transfer agent for the Companies
and provided shareholder account maintenance and dividend reimbursement and
reinvestment services.  The reimbursements made to MPP were allocated among the
Companies in accordance with agreements between MPP and the Companies.

  Effective December 1, 1995, the Company terminated the Amended and Restated
Employee Leasing Agreement with MPP and entered into a management agreement with
TIS Financial Services, Inc. ("TIS") of San Francisco, California. Under the
terms of the management agreement, the Company retained TIS to manage its
assets, properties and investments in addition to performing administrative
services for the Company.  The Company paid TIS a base management fee calculated
on an annual basis of 0.75% of the Company's Average Invested Assets, as defined
in the agreement.  Effective January 1, 1998, the Company entered into an
Amended Management Agreement with TIS, under the terms of which the Company pays
TIS a base management fee of $35,000 per month, for asset management services as
defined in the agreement.  The agreement requires that TIS pay the employment
expenses of its personnel.  The amended management agreement will expire by its
terms on. June 30, 1998. At that time, assuming completion of the pending tender
offer and expected second-step merger, and following transition of Management to
EastGroup, T1S will be paid a termination fee of $50,000.

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


       (c)  CONSOLIDATION.  The consolidated financial statements include the
Company and NASH-IND Corporation, a wholly-owned corporate subsidiary of the
Company. All significant intercompany transactions and balances have been
eliminated.

       (d)  STATEMENTS OF CASH FLOWS.  For purposes of the statements of cash
flows, the Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.

       Cash paid for interest was $2,664,700, $2,740,085 and $3,366,056 for the
years ended December 31, 1997, 1996, and 1995, respectively.

       (e)  INVESTMENT IN REAL ESTATE AND DEPRECIATION METHODS.  In accordance
with Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long Lived Assets to Be
Disposed Of", investments in Real Estate are stated at the lower of
depreciated cost or net realizable value. Net realizable value for financial
reporting purposes: (i) is evaluated by the Company on a property by property
basis using undiscounted cash flows; (ii) is measured by comparing the
Company's estimate of fair value based upon either sales comparables or the
net cash expected to be generated by the property (comprised of the forecasted
operations for the property based upon historical results, together with
management's estimates of the property's future occupancy, lease rates and
capital improvement requirements), less estimated carrying costs (including
interest) throughout the anticipated holding period, plus the estimated cash
proceeds from the ultimate disposition of the property; and (iii) is not
necessarily an indication of a property's current value or the amount that
will be realized upon the ultimate disposition of the property. To the extent
net realizable value is less than the carrying value of the property, a
Provision for Decrease in Net Realizable Value is recorded in


                                      -35-
<PAGE>

the amount by which the carrying value exceeds estimated fair value. As of
December 31, 1997 the Company's Investment in Real Estate is stated net of a
Cumulative Provision for Decrease in Net Realizable Value of $4,617,000. As of
December 31, 1996 the Cumulative Provision was $5,167,000. Investors should
consider any net realizable value provisions in evaluating realization of their
investments. (See Note 3.)

  Depreciation and amortization have been calculated under the straight-line
method, based upon the estimated useful lives of the assets.  Property and
property additions are depreciated over 35 years.  Expenditures for maintenance,
repairs, and improvements which do not materially prolong the normal useful life
of an asset are charged to operations as incurred.  Leasing commissions and
tenant improvements are amortized under the straight-line method over the term
of the related lease.

      (f)  RENTALS FROM REAL ESTATE INVESTMENTS.  Certain of the Company's
leases relating to its properties require lessees to pay all or a portion of
real estate taxes, insurance, and operating costs ("Expense Recaptures").
Expense Recaptures of $1,407,500, $1,203,380 and $1,393,576 are included in
Rentals from Real Estate Investments for the years ended December 31, 1997,
1996, and 1995, respectively.

       All leases are classified as operating leases. The Company recognizes
rental income on the straight-line basis over the terms of the leases. Deferred
rent receivable, included in other assets, represents the excess of rental
revenue recognized on a straight-line basis over cash received under the
applicable lease provisions.

      (g)  CAPITALIZED LOAN COSTS.  Costs incurred in obtaining long-term debt
are capitalized and amortized in relation to the corresponding debt.

      (h)  OTHER ASSETS.  Other Assets consists primarily of prepaid insurance
and deferred rent receivable relating to straight-line rents. Additionally, in
1997, Other Assets includes the three year Directors and Officers Insurance
accrual and a deposit for the possible purchase of a building (the deposit was
returned to the Company on January 6, 1998).

      (i)  RECLASSIFICATIONS.  Certain prior year amounts have been reclassified
in the consolidated financial statements and related notes to conform to the
1997 presentation.

     (j) NEW ACCOUNTING PRONOUNCEMENTS.  In June 1997, the Financial Accounting
Standards Board issued Statement No. 130, "Reporting Comprehensive Income" (SFAS
No. 130).  SFAS No. 130 is effective for financial statements for fiscal years
beginning after December 15, 1997.  This standard defines comprehensive income
as the changes in equity of an enterprise except those resulting from
stockholder transactions.  All components of comprehensive income will be
required to be reported in financial statements issued for periods beginning
after the effective date of SFAS No. 130.  Management believes the adoption of
SFAS No. 130 will not have a material effect on the Company's financial
statements.

     In June 1997, the Financial Accounting Standards Board also issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS No. 131).  SFAS No. 131 is effective for financial statements
for periods beginning after December 15, 1997.  SFAS No. 131 establishes
standards for disclosures about operating segments, products and services
geographic areas and major customers.  Management believes the adoption of SFAS
No. 131 will not have a material effect on the Company's financial statements.

2.  RELATED PARTIES.

    For the three years ended December 31, 1997, the Company incurred fees and
expenses for services rendered by the directors of the Company totaling
$236,082, $131,318 and $168,205, respectively. Such amounts were paid directly
to the directors. Prior to December 1, 1995, the Company operated under a self-
administered management structure. (See Note 1)

    In accordance with agreements then existing between the Company and MPP,
reimbursements were allocated among the Companies based on (i) gross rental
receipts of the Companies' properties and the Companies' relative real estate
assets for property and asset management costs; and (ii) proportionate time
incurred, the number of shareholders and relative real estate assets for costs
incurred in conducting the Companies' daily operations. For the year ended
December 31, 1995, reimbursements to MPP totalled $624,015.

    On October 18, 1995, the Company entered into a management agreement with
TIS and terminated its employee leasing agreement with MPP effective December 1,
1995. Pursuant to the termination provisions in the agreements between the
Company and MPP, the Company is obligated for its pro-rata share of any
contractual obligations that MPP entered into on behalf and for the benefit of
the Company. The financial impact from such contractual obligations did not have
a material impact on the Company's financial position or results of operation in
1997, 1996 or 1995 and management believes that any future impact will also be
immaterial.

                                      -36-
<PAGE>
    Under the agreement with TIS, the Company retained TIS to manage its
    assets, properties and investments in addition to performing administrative
    services for the Company. The Company paid TIS, for services rendered under
    the agreement, a base management fee in an amount equal to 0.75% of the
    Company's Average Invested Assets, as defined in the agreement, during each
    calendar year. For the years ended December 31, 1997, 1996 and 1995, the
    Company has incurred $668,692, of which $170,000 was due at year end;
    $668,309, of which $163,000 was due at year end; and $56,000, respectively,
    under this agreement. The Company's President is also an officer of TIS.
    Commencing January 1, 1998, the Company has amended the agreement to pay TIS
    a base management fee of $35,000 per month.

3.  RENTAL PROPERTIES, NET.

    Rental properties, net of provision for decrease in net realizable value at
December 31, 1997 and 1996 consist of the following:
<TABLE>
<CAPTION>
                                                                                      1997                    1996
<S>                                                                             <C>                    <C>
Land                                                                               $15,584,368             $14,833,973
Buildings                                                                           66,807,825              63,957,172
Capital Improvements                                                                 2,960,656               3,040,065
Construction in Progress                                                                   885                   3,300
-----------------------------------------------------------------------------------------------------------------------
Total                                                                              $85,353,734             $81,834,510
=======================================================================================================================
</TABLE>

    The cumulative Provision for Decrease in Net Realizable Value and net book
value as of December 31, 1997 are as follows:

<TABLE>
<CAPTION>

                                                   CUMULATIVE
                                                   PROVISION
                                                FOR DECREASE IN
                                                      NET
                           PROPERTY             REALIZABLE VALUE      NET BOOK VALUE
               -----------------------------------------------------------------------
<S>               <C>                          <C>                  <C>

                  Memphis #1                               31,000            1,575,303
                  Memphis #8                              233,000              286,460
                  Memphis #20                             781,000            2,159,795
                  3821 Getwell                             94,000              471,447
                  1033 East Maricopa                      420,000              556,219
                  616 South 55th Avenue                   406,000            2,896,141
                  2455 South 7th Street                   910,000              976,691
                  9219 Viscount                           203,000            1,770,692
                  9100 Carpenter                          322,000              603,403
                  7601 Ambassador                       1,137,000            2,186,102
                  7811/7901 Ambassador                     80,000            1,852,028
               -----------------------------------------------------------------------
                  Subtotal                              4,617,000           15,334,281
                  Total for all properties with no
                   Cumulative Provision for
                   Decrease in Net                             --           49,888,097
                  Realizable Value
               -----------------------------------------------------------------------
                  Total                                $4,617,000          $69,839,378
               =======================================================================
</TABLE>

                                      -37-
<PAGE>

          All the Company's leases relating to its rental properties are
operating leases.  The minimum future rental revenues from these leases as of
December 31, 1997, are as follows:

<TABLE>
                          <S>                          <C>
                           1998                          $ 9,119,649
                           1999                            7,821,826
                           2000                            6,622,313
                           2001                            6,203,939
                           2002                            5,736,283
                           Thereafter                     31,575,759
</TABLE>

       There are currently three major tenants comprising 50% of the total
rental revenue of the Company based on the projected 1998 base rent of existing
leases.  As of December 31, 1997, the Company's properties were 96.2% occupied.
During 1998, leases covering approximately 8% of the Company's leasable space
are scheduled to expire.

4.  DEBT FACILITY AND MORTGAGE NOTES PAYABLE

       As of December 31, 1996 there was debt outstanding with an insurance
company of $20,042,421. On July 30, 1997, this facility was retired and paid off
in full. To fund this payoff, the Company entered into a $12,500,000 loan with
an insurance company secured by four of its properties in Phoenix, Arizona and
its one property in Chino, California. This new loan has a maturity of June 2007
and bears interest at 8.06%. In addition to this loan, the Company also used
approximately $7,860,000 of proceeds from an interim construction loan secured
by its property in La Vergne, Tennessee to retire the debt facility.

       On September 8, 1997 the Company entered into a $13,000,000 permanent
loan with an insurance company secured by its property in La Vergne, Tennessee.
This new loan has a maturity of September 15, 2007 and bears interest at a rate
of 7.83%.  The Company used the loan proceeds to pay off the interim
construction loan.

       On August 27, 1997 the Company assumed a $994,301 mortgage on the
Australian One Building in conjunction with the acquisition of three properties
in West Palm Beach, Florida (See Note 8).

       After these transactions, the Company has Mortgage Notes Payable as
follows:

<TABLE>
<CAPTION>
                                         STATED         ANNUAL    MATURITY      BALANCE AS OF DECEMBER 31,
NAME AND LOCATION OF PROPERTY         INTEREST RATE    PAYMENTS    DATES           1996         1997
-------------------------------------------------------------------------------------------------------------
<S>                                         <C>      <C>           <C>        <C>           <C>
Phoenix, AZ and Chino, CA Properties        8.060%    $1,163,693   06/26/07   $12,447,408   $        --
La Vergne, TN Property                      7.830%     1,186,518   09/15/07    12,957,570            --
Australian One; W. Palm Beach, FL           8.250%       113,160   09/30/00       991,269            --
Memphis #20, Memphis, TN                    8.000%       185,700   11/01/98     1,664,295     1,714,643
Auburn I, Auburn Hill, MI                   8.875%       714,513   08/01/09     5,646,140     5,855,638
-------------------------------------------------------------------------------------------------------------
Total                                                 $3,363,584              $33,706,682    $7,570,281
=============================================================================================================
</TABLE>
      As of December 31, 1997 scheduled principal payments are due as follows:
<TABLE>
                                        <S>              <C>
                                            1998           $2,310,227
                                            1999              697,366
                                            2000            1,717,035
                                            2001              856,707
                                            2002            1,073,941
                                            Thereafter     27,051,406
                                            -------------------------
                                                          $33,706,682
                                            =========================
</TABLE>

                                      -38-
<PAGE>

5.  DISTRIBUTIONS.

          The analysis below presents the amount of distributions paid to
shareholders and the percentage of the distribution which the Company estimates
is nontaxable for the years ended December 31, 1997, 1996 and 1995.  In 1997,
the Company elected to distribute its capital gains to its shareholders and a
portion of the 1997 distribution is so designated.  Nontaxable distributions are
considered a return of capital to shareholders.

<TABLE>
<CAPTION>

                                                1997                        1996                        1995
                                         Common     Preferred          Common     Preferred      Common     Preferred
----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>            <C>             <C>          <C>          <C>          <C>
Distributions Declared Per Share         $0.290        $0.290          $0.280          $0.280    $0.280        $0.280
----------------------------------------------------------------------------------------------------------------------
Nontaxable Distributions                      -             -          25.00%          22.88%      100%          100%
Capital Gains Distributions
     Taxable at 25% Rate                 51.22%        51.22%               -               -         -             -
     Taxable at 20% Rate                 12.62%        12.62%               -               -         -             -

Taxable Distributions                    36.16%        36.16%          75.00%          77.12%       --%           --%
----------------------------------------------------------------------------------------------------------------------
                                           100%          100%            100%            100%      100%          100%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

          Under the Company's articles of incorporation, the Board cannot
declare any dividends on common shares until it has first declared dividends on
the preferred shares' annual preference amount as computed under those articles.

          The preferred shares generally have a non-cumulative preferential
right to such current distributions as are declared each year by the Board of
Directors up to an amount equal to the lesser of (a) 6% on the aggregate
adjusted stated value of preferred shares, (b) earnings and profits for the
prior year, or (c) the amount legally available for distribution by the Company.

          The preferred shares are generally entitled to the first declared sale
or refinance distributions attributable to a property up to an amount equal to
their proportionate share of the equity initially invested in that property.

          The preferred shares will receive all declared liquidating
distributions until these shares have recovered their entire investment via sale
or refinance distributions and liquidating distributions.

          During each of the years ended December 31, 1997, 1996 and 1995,
distributions totaling $2,004,319, $1,927,483 and $1,927,483, respectively were
made to shareholders. Information with regard to the declaration and payment of
these distributions follows:

<TABLE>
<CAPTION>
                                                                      Per Preferred   Per Common
      Date Declared            Record Date          Payable Date          Share         Share
      -------------            -----------          ------------      -------------   ----------
<S>                       <C>                    <C>               <C>              <C>
1997
----
March 10, 1997              March 20, 1997       March 31, 1997               $0.07        $0.07
June 19, 1997               June 19, 1997        June 30, 1997                 0.07         0.07
September 12, 1997          September 19, 1997   September 30, 1997            0.07         0.07
December 12, 1997           December 19, 1997    December 31, 1997             0.08         0.08

1996
----
March 12, 1996              March 19, 1996       March 29, 1996               $0.07        $0.07
June 14, 1996               June 21, 1996        June 28, 1996                 0.07         0.07
September 13, 1996          September 23, 1996   September 30, 1996            0.07         0.07
December 13, 1996           December 23, 1996    December 27, 1996             0.07         0.07
</TABLE>


<TABLE>
<CAPTION>
1995
-------------------------
<S>                        <C>                          <C>                          <C>                 <C>
April 28, 1995             May 4, 1995                  May 15, 1995                              $0.07               $0.07
June 7, 1995               June 20, 1995                June 30, 1995                              0.07                0.07
September 8, 1995          September 19, 1995           September 29, 1995                         0.07                0.07
December 8, 1995           December 19, 1995            December 29, 1995                          0.07                0.07
</TABLE>


In connection with the June 30, 1997 dividend distribution, the Company withheld
approximately $45,800 from distributions to Richard Osborne and Turkey Vulture
Fund XIII, representing at least 654,327 shares held in violation of Section 6.5
of the Company's bylaws and thereby treated as excess shares. On August 27,
1997, Richard Osborne and Turkey Vulture Fund XIII sold their shares in the
Company to EastGroup Properties, Inc. Subsequently, in 1997, the Company,
Richard Osborne and Turkey Vulture Fund XIII reached a settlement of a pending
lawsuit under the terms of which the withheld dividend amounts have been paid to
Turkey Vulture Fund XIII with interest.

                                      -39-
<PAGE>

6.  BASIC NET INCOME (LOSS) PER COMMON SHARE.

    Basic Net Income (Loss) per share of common stock has been determined by
dividing Net Income (Loss), after deduction of preferred distributions declared,
by the weighted average number of shares of common stock outstanding during the
year. Weighted average common shares outstanding totaled 1,623,636 for 1997 and
1,609,937 for 1996 and 1995. For the years ended December 31, 1997, 1996 and
1995 there were no common stock equivalents outstanding, as such, no diluted
income per share information has been presented in the accompanying statements
of operations.

7.  INCOME TAXES.

    The Company previously made an election to be taxed as a real estate
investment trust ("REIT") beginning with the calendar tax year 1989.  The
Company continued to satisfy all of the requirements to maintain its status as a
REIT for the tax years ended December 31, 1990 and 1991.

    One of the requirements for REIT qualification is that five or fewer
shareholders cannot own more than 50% of the total value of the Company's
outstanding stock at any time during the last half of the taxable year (the
"five or fewer rule").  For purposes of this rule under 1992 and 1993 tax law,
domestic pension trusts were treated as a single individual.  During the last
half of the year ended December 31, 1992, the Company failed to satisfy the five
or fewer rule.  The failure was caused, for the most part, by the decline and
fluctuations in the fair market value of its preferred stock relative to its
common stock and was not the result of increases in the shares held by any
shareholders.  The decline and fluctuations in the fair market value of its
preferred and common stock were due in part to recent declines in real estate
values coupled with the preferred shareholders' liquidation preference.

    As a result of its loss of REIT status, the Company was taxed as a regular
corporation beginning with the tax year ended December 31, 1992.  Accordingly,
any of the Company's taxable income remaining after utilizing any available net
operating loss carryovers, would have been subject to federal and state
corporate income tax.  However, the Company had no material federal or state tax
liability for 1992 or 1993.

    Under applicable tax rules, the Company would have been prohibited from re-
electing REIT status for a five year period (i.e. until calendar year 1997)
unless: (1) the Company satisfied all of the REIT requirements including, but
not limited to, the five or fewer rule; and (2) the Company had received
permission from the Internal Revenue Service ("IRS") under a special procedure.
With respect to item (1), the Company should be able to satisfy all of the REIT
requirements, but most importantly, satisfy the five or fewer rule beginning
with the calendar year 1994 because of an amendment to the five or fewer rule.
The amendment, which became effective on January 1, 1994, allowed the Company to
"look-through" to the beneficiaries of a domestic pension trust and treat each
beneficiary as owning stock in the Company in proportion to the beneficiary's
actuarial interest in the domestic pension trust for purposes of the five or
fewer rule.  With respect to item (2), the Company's formal request for re-
election of REIT status was granted by the IRS effective January 1, 1994.

    The Company made an election to be taxed as a REIT beginning with the
calendar year 1994. Under certain circumstances, loss of REIT status may result
in the imposition of federal and state corporate level tax on certain "built-in-
gains" (if any) with respect to Company properties that exist on the date of its
re-election of REIT status. The Company intends to qualify and elect to be
treated as a real estate investment trust ("REIT") for the years ending December
31, 1997, 1996 and 1995. As such, the Company should be allowed a deduction for
dividends paid to shareholders if the Company satisfies certain income, asset
and distribution requirements (see Note 5). Accordingly, no provision for
federal income taxes has been made in the accompanying Consolidated Statements
of Operations for the years ended December 31, 1997, 1996 and 1995.

8.   ADDITIONS TO RENTAL PROPERTIES.

     The Company has completed a major expansion of its Waldenbooks facility in
La Vergne, Tennessee.  As of December 31, 1997, $5,340,304 has been spent on the
project, which, at completion is estimated to cost $5,377,944.  In connection
with the Waldenbooks expansion, the Company utilized an interim construction
loan from a Tennessee bank.  Under the loan agreement, the Company was permitted
to borrow up to $13,000,000, a portion of which was used to fund interim
settlement of the long term debt facility.  The construction loan bore interest
at LIBOR plus 1.75% and was retired on September 8, 1997 upon the takeout of the
permanent financing.  (see Note 4)

  On August 27, 1997 the Company completed its purchase of three properties
aggregating 71,428 square feet in Palm Beach County, Florida for a purchase
price of $6,031,886.  In conjunction with this purchase, the Company assumed a
mortgage in the amount of $994,301 which has a maturity of September 30, 2000
and bears interest at a rate of 8.250%.  (see Note 4)

                                      -40-
<PAGE>

9.   DISPOSITION OF PROPERTIES.

     On May 25, 1995, the Company sold the Kroger property located in Jackson,
Mississippi.  The selling price of $2,000,000 was paid entirely in cash.  The
Company received net proceeds of $1,927,677, after deductions for closing costs
and prorated items totaling $72,323.  In connection with the sale, the Company
recognized a Gain on Sale of Property of $157,257.  The property had previously
been written down to its estimated net realizable value.

     On July 24, 1995, the Company sold the Tropicana Marketplace located in Las
Vegas, Nevada for a selling price of $10,218,000.  Net proceeds amounted to
$9,644,065 after (i) $398,935 of adjustments for closing costs, interest earned
and pro-rations, and (ii) adjustment for an escrow holdback amounting to
$175,000.  The net proceeds from the sale and additional funds of $322,553
deposited by the Company into an escrow account totaling $9,966,618 were
remitted to the insurance company as additional principal reduction totaling
$9,809,535, prepayment penalties amounting to $129,433, and an interest payment
of $27,650.  As a result of this payment, an interest rate contract maturing in
October 1995 with a notional amount of $5,541,419 was paid off completely, and
the amount due in December 1996 was reduced.

     In connection with the sale, the Company recognized a Loss on Sale of
Property of $156,060.  The property had previously been written down to its
estimated net realizable value.  Subsequent to July 24, 1995, the Company
received a partial refund of the $175,000 escrow holdback in the amount of
$126,393, reflecting deductions totaling $50,000 that were incurred in
connection with the settlement of tenant disputes outstanding on the date the
Tropicana Marketplace property was sold.  The refund includes interest earned on
the escrow holdback in the amount of $1,393.  The $50,000 deduction is included
in the Loss on Sale of Property.

     In 1996, the Company sold all of its personal property for $73,603
resulting in a gain of $47,452.

     On June 13, 1997, the Company sold the Interchange D building located in
Jackson, Mississippi for a selling price of $3,050,000.  Net proceeds amounted
to $3,019,123 after $47,112 of adjustments for closing costs and pro-rations.
The Company recognized a Gain on Sale of Property of $1,059,484.

     On October 9, 1997 the Company sold the South Sayre property located in
Bedford Park, Illinois for a selling price of $5,387,071. Net proceeds amounted
to $4,794,748 after adjustments of (i) $435,796 for the second half of 1996 and
the 1997 pro-rata share of property taxes; and (ii) $162,631 for closing costs.
The prope rty had previously been written down to its estimated net realizable
value, and the Company recognized a Gain on Sale of Property of $936,292.

10.  PERSONAL SERVICES AGREEMENT/STOCK APPRECIATION RIGHTS AGREEMENT.

     On June 30, 1997, the Board of Directors announced the appointment of
Robert H. Gidel as Chief Executive Officer of the Company, following his
election as a director.  Effective July 1, 1997 the Company entered into an
Agreement for Personal Services with Mr. Gidel whereby Mr.Gidel provides
services to the Company as Chief Executive Officer and is paid an annual fee
of $180,000, payable quarterly.  Mr. Gidel is also reimbursed for certain direct
out of pocket expenses incurred on behalf of the Company.  The agreement runs
until September 22, 1998.  For the year ended December 31, 1997, compensation
expense for Mr. Gidel totaled $90,000, of which $45,000 was payable at year end.
Mr. Gidel also had the option to purchase, directly or through a partnership, up
to 100,000 shares of the Company's common stock.  Effective November 11, 1997
Mr. Gidel exercised his right to purchase those shares at the weighted average
trading price for the previous ten days, calculated to be $5.63 per share.

     In conjunction with the Personal Services Agreement, the Company also
entered into a Stock Appreciation Rights Agreement whereby the Company granted
stock appreciation rights ("SARs") to Mr. Gidel as follows: 150,000 shares of
common stock SARs at $5.50 per share and 75,000 shares of preferred stock SARs
at $8.50 per share. These SARs vest after one year of service or upon a change
in control in the company. They may be exercised at any time until September 21,
2000. Upon exercise, Mr. Gidel of the SARs will be paid the difference between
the fair market price of the stock as determined by the Board of Directors and
the exercise price. Through December 31, 1997, the Company recorded compensation
expense of $2,594 relating to the SARs. As of December 31, 1997, none of the
SARs had been exercised.

11.  SUBSEQUENT EVENT.

  On February 18, 1998, the Company entered into an Agreement and Plan of Merger
with  EastGroup Properties, Inc. (NYSE-EGP) providing for EastGroup's
acquisition of the Company for $10.00 per outstanding preferred share and $8.50
per outstanding common share, payable in cash.  Pursuant to the terms of the
Merger Agreement, EastGroup (through a wholly-owned subsidiary) commenced a
tender offer for all issued and outstanding preferred shares of the Company not
currently held by EastGroup for $10.00 per share in cash, and for all issued and
outstanding common shares of the Company for $8.50 per share in cash on February
23, 1998.  The Offer is scheduled to expire on April 17, 1998.  Following
completion of the Offer, the Company and EastGroup plans on engaging in a
second-step merger in which all remaining preferred shares of the Company
(excluding those held by EastGroup) will be converted into $10.00 per share in
cash and all remaining common shares of the Company (excluding those held by
EastGroup) will be converted into $8.50 per share in cash.  EastGroup will also
assume all of the Company's outstanding indebtedness, resulting in a total
transaction value of approximately $100 million.  Further details of the Merger
Agreement are contained in the Company's Amended and Restated
Solicitation/Recommendation Statement (Schedule 14D-9) filed February 23, 1998.

  The Company's Board of Directors has unanimously approved the Merger Agreement
and recommends that all preferred and common shareholders of the Company tender
their shares into the Offer.  The Company's management can provide no assurance
as to the timing or ultimate closure of these transactions.

12.  SHAREHOLDERS RIGHTS PLAN.


  On November 4, 1997, with the advice of Prudential Securities, the Company
adopted a Shareholder Rights Plan, which was intended to protect the Company's
shareholders in the event of coercive or unfair takeover tactics, or an
unsolicited attempt to acquire control of the Company in a transaction the Board
of Trustees believed was not in the best interests of the shareholders.


                                      -41-
<PAGE>

                      MERIDIAN POINT REALTY TRUST VIII CO.
                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS
                               December 31, 1997

<TABLE>
<CAPTION>

                                 BALANCE                                      BALANCE
                               BEGINNING OF       CHARGED TO                   END OF
         DESCRIPTION              YEAR             EXPENSE     DEDUCTIONS       YEAR
----------------------------------------------------------------------------------------
<S>                              <C>               <C>          <C>              <C>
1995
----
Reserve for Bad Debts            117,278           201,281      (183,588)       134,971

1996
----
Reserve for Bad Debts            134,971           (38,121)      (70,889)        25,961

1997
----
Reserve for Bad Debts             25,961                 -       (25,961)             -
</TABLE>

                                      -42-
<PAGE>

                     MERIDIAN POINT REALTY TRUST VIII CO.
                                 SCHEDULE III
                   REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                                          COST CAPITALIZED
                                                    INITIAL COST TO COMPANY           SUBSEQUENT TO ACQUISITION
                                                    -----------------------           -------------------------
                                                                                                                  NET REALIZABLE
                                                                                                       RENTAL          VALUE
DESCRIPTION                              ENCUMBRANCES       LAND        BUILDING     IMPROVEMENTS    GUARANTEES    WRITEDOWNS (4)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>           <C>             <C>           <C>
Office Building
 Auburn Hills, MI                        $ 5,646,140    $ 1,990,705    $11,665,913   $          -    $        -    $           -

Warehouse/Distribution
 Lavergne, TN                             12,957,570      1,693,892     11,866,236      5,377,945             -                -
 Memphis, TN                               1,664,295      3,215,594     12,872,967      1,660,210             -       (1,139,000)

 Chino, CA(1)                             12,447,408      3,416,095      7,259,203              -             -                -
 Phoenix, AZ (1)                                          2,488,197      9,952,790        290,817      (227,129)      (1,736,000)
 Dallas, TX                                               2,085,889      7,251,811      1,010,513             -       (1,742,000)
 West Palm Beach, FL                         991,269      1,717,318      4,381,768              -             -                -
----------------------------------------------------------------------------------------------------------------------------------
Total                                    $33,706,682    $16,607,690    $65,250,688   $  8,339,485    $ (227,129)   $  (4,617,000)
==================================================================================================================================


<CAPTION>
                                                       GROSS AMOUNT
                                                 CARRIED AT END OF PERIOD
                                                 ------------------------
                                                       BUILDINGS &                   ACCUMULATED           DATE OF        DATE OF
DESCRIPTION                                 LAND       IMPROVEMENTS       TOTAL(3)   DEPRECIATION       CONSTRUCTION    ACQUISITION
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>           <C>                <C>             <C>
Office Building
 Auburn Hills, MI                        $ 1,990,705    $11,665,913    $13,656,618    $ 3,003,947          1986-87        12/27/88

Warehouse/Distribution
 Lavergne, TN                              1,693,892     17,244,181     18,938,073      2,931,886          1988-89        06/28/89
 Memphis, TN                               2,962,554     13,647,217     16,609,771      3,796,713          1968-82       12/21/89 &
                                                                                                                          04/27/90
 Chino, CA(1)                              3,416,095      7,259,203     10,675,298      1,642,437            1982         01/31/90
 Phoenix, AZ (1)                           2,095,571      8,673,104     10,768,675      2,100,522          1987-89        06/29/90
 Dallas, TX                                1,708,233      6,897,980      8,606,213      1,998,063          1958-68        10/29/90
 West Palm Beach, FL                       1,717,318      4,381,768      6,099,086         40,788          1992-93        08/27/97
------------------------------------------------------------------------------------------------------------------------------------
Total                                    $15,584,368    $69,769,366    $85,353,734    $15,514,356
====================================================================================================================================

<CAPTION>
                                   DEPRECIABLE
DESCRIPTION                           LIFE
-----------------------------------------------
<S>                                <C>
Office Building
 Auburn Hills, MI                     35 YRS.

Warehouse/Distribution
 Lavergne, TN                         35 YRS.
 Memphis, TN                          35 YRS.

 Chino, CA(1)                         35 YRS.
 Phoenix, AZ (1)                      35 YRS.
 Dallas, TX                           35 YRS.
 West Palm Beach, FL                  35 YRS.
-----------------------------------------------
Total
===============================================
</TABLE>

   A RECONCILIATION OF COST AND ACCUMULATED DEPRECIATION FOR THE YEARS ENDED
                DECEMBER 31, 1997, 1996 AND 1995 IS AS FOLLOWS:

<TABLE>
<CAPTION>
                                                                 1997                                1996
                                                                 ----                                ----
                                                                       ACCUMULATED                           ACCUMULATED
                                                         COST          DEPRECIATION           COST           DEPRECIATION
                                                     -------------------------------       --------------------------------
                                                      <C>               <C>                <C>               <C>
Balance at Beginning of Year                          $81,834,510       $15,152,397        $81,765,163       $12,987,770

Additions During period
  Capital Improvements                                  5,542,965                 -            153,827                 -
  Depreciation                                                  -       $ 2,284,804                  -
Provision for Decrease in Net Realizable Value                  -                 -                  -         2,249,107
Deletions                                                       -                 -            (84,480)          (84,480)
Cost of Real Estate Purchased(2)                        6,099,086                 -                  -                 -
Cost of Real Estate Disposed                           (8,122,827)       (1,922,845)                 -                 -
                                                      ------------------------------       ------------------------------
Balance at End of Year                                $85,353,734      $ 15,514,356        $81,834,510       $15,152,397
                                                      ==============================       ==============================

<CAPTION>
                                                                 1995
                                                                 ----
                                                                       ACCUMULATED
                                                         COST          DEPRECIATION
                                                      ------------------------------
<S>                                                   <C>              <C>
Balance at Beginning of Year                          $ 96,820,813     $13,350,872

Additions During period
  Capital Improvements                                     519,937               -
  Depreciation                                                   -       2,467,408
Provision for Decrease in Net Realizable Value                   -               -
Deletions                                               (1,182,015)       (358,256)
Cost of Real Estate Purchased(2)                          (358,256)              -
Cost of Real Estate Disposed                           (14,035,316)     (2,472,254)
                                                      ------------------------------
Balance at End of Year                                $ 81,765,163     $12,987,770
                                                      ==============================
</TABLE>

(1)  On July 30, 1997, the Company entered into a $12,500,000 loan with an
     insurance company secured by four of its properties in Phonenix, Arizona
     and its one property in Chino, California. The balance on December 31, 1997
     on this Mortgage Note Payable is $12,447,408.
(2)  The 1997 dispositions represent the property basis of Interchange D and
     South Sayre, net of Decrease in Net Realizable Value, which were disposed
     on June 13, and October 9, 1997, respectively.
     The 1995 disposition represent the property basis of Kroger and Tropicana
     Marketplace, net of Decrease in Net Realizable Value, which were disposed
     on May 25, 1995 and July 24, 1995, respectively.
(3)  The aggregate cost for Federal Income Tax purposes was approximately
     $87,000,000.
(4)  Represents the cumulative Provision for Decrease in Net Realizable Value
     at December 31, 1997 and 1996, which is measured as the amount by which the
     carrying value of the properties exceeds their respective current estimated
     fair values.

                                     -44-