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

                                 FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 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

              For the transition period from       to      .

                     Commission file number:  33-20614

                        SHOPCO REGIONAL MALLS, L.P.
           Exact name of Registrant as specified in its charter


           Delaware                                   13-3217028
State or other jurisdiction of
incorporation or organization               I.R.S. Employer Identification No.

Attn. Andre Anderson
3 World Financial Center, 29th Floor, New York, NY      10285-2900
Address of principal executive offices                   zip code

Registrant's telephone number, including area code: (212) 526-3237

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

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

                       LIMITED PARTNERSHIP INTERESTS
                              Title of Class

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 shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
                         Yes  X      No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the 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.  (x)

State the aggregate market value of the voting stock held by non-affiliates
of the registrant:  Not applicable.

Documents incorporated by reference:  See Exhibit Index at Item 14.



                                PART I

Item 1.  Business

(a) General Development of Business

Shopco Regional Malls, L.P., a Delaware limited partnership (the "Partnership")
was formed on March 11, 1988.  The affairs of the Partnership are conducted by
its general partner, Regional Malls Inc. (the "General Partner," formerly
Shearson Regional Malls, Inc.) , a Delaware corporation and an affiliate of
Lehman Brothers Inc. ("Lehman").  The Partnership is the general partner of
Shopco Malls L.P. (the "Owner Partnership", formerly Shearson Shopco Malls
L.P.),  a Delaware limited partnership that previously owned two enclosed
regional malls, The Mall at Assembly Square ("Assembly Square") located in
Somerville, Massachusetts and Cranberry Mall ("Cranberry") located in
Westminster, Maryland (both Assembly Square and Cranberry are referred to
herein as the "Malls").  On December 20, 1996, the Owner Partnership
transferred title of Assembly Square to the holder of the mortgage secured by
Assembly Square pursuant to a foreclosure proceeding.  See Item 7 and Note 3 of
the Notes to the Consolidated Financial Statements for discussions regarding
the foreclosure on Assembly Square.  As of December 31, 1997 the Owner
Partnership owned only Cranberry Mall.  The sole limited partner of the Owner
Partnership is Shopco Limited Partnership ("Shopco L.P."), a Delaware limited
partnership and an affiliate of The Shopco Group. (The Partnership and Shopco
L.P. are referred to collectively as the "Owner Partners.")

On June 14, 1988 the Partnership commenced an offering of 110,000 depositary
units ("Units") at $1,000 per Unit to be sold by the underwriter, Lehman,
(formerly Shearson Lehman Brothers Inc.) on a "best efforts" basis
(the "Offering"), of which the Partnership accepted subscriptions of 70,250
Units, the maximum closing amount authorized by the Amended and Restated
Agreement of Limited Partnership of Shopco Regional Malls, L.P.
(the "Agreement of Limited Partnership"). Concurrent with the consummation of
the Offering, the Assignor Limited Partner assigned its rights as a limited
partner to the holders of Units ("Unitholders") who then became limited
partners.

The Partnership was formed to acquire the fee interest and improvements in the
Malls.  The Malls were purchased using the proceeds of the Offering, the
issuance of two Promissory Notes and a loan from Lehman Brothers Holdings Inc.
("Lehman Holdings", formerly Shearson Lehman Brothers Holdings Inc.), an
affiliate of the General Partner, (the "Gap Loan") in October 1988.  The
aggregate purchase price of the Malls was $96,205,500.  Assembly Square was
acquired from Somerville S.C. Associates L.P., a Massachusetts limited
partnership for a purchase price of $42,358,000 on October 11, 1988.  Cranberry
was acquired from Cranberry L.P., a Maryland limited partnership and an
affiliate of The Shopco Group for a purchase price of $53,847,500 on
October 5, 1988.

Two mortgage loans were issued in October 1988.  The first was from the Aetna
Life Insurance Company ("Aetna") in the initial principal amount of $28,000,000
(the "Assembly Note"),  and the second in the original principal amount of
$27,250,000 (the "Original Cranberry Note") from the Mutual Life Insurance
Company of New York ("MONY").  In December 1996, Aetna acquired Assembly Square
pursuant to a foreclosure proceeding, and the Owner Partnership was absolved of
its mortgage obligation under the Assembly Note.  Aetna subsequently pursued
claims arising out of its mortgage and security agreement, and a settlement
agreement was reached between the Partnership and Aetna in September 1997.  See
Item 3 for a discussion of the settlement.  In September 1990, MONY issued an
additional mortgage loan in the original principal amount of $3,775,000 (the
"Additional Cranberry Note") and at such time, the Original Cranberry Note and
the Additional Cranberry Note were consolidated.  The MONY loan was
subsequently purchased by Metropolitan Life Insurance Company.  The Cranberry
note matured on November 1, 1993, was extended to May 1994, and was modified
and extended until 1999.  See Note 6 to the Consolidated Financial Statements
and Item 7 for a description of the terms of the Cranberry note.

The Owner Partnership's business, as an owner of mall properties, is somewhat
seasonal since a portion of its revenue is derived from a percentage of the
retail sales of certain tenants.  Generally, such sales are higher in November
and December during the holiday season.

(b) Financial Information about Industry Segments

Substantially all of the Partnership's revenues, operating profit or loss and
assets relate to its interest as general partner of the Owner Partnership whose
operating profit or loss and assets relate to its ownership and operation of
mall properties.

(c) Narrative Description of Business

The Partnership's primary business is acting as general partner for the Owner
Partnership.  As of December 31, 1997, the Owner Partnership's sole business is
the ownership and operation of Cranberry Mall (See Item 2 for a description of
Cranberry Mall and its operations).

Competition

See Item 2 for a discussion of competitive conditions at Cranberry Mall.

Employees

The Partnership has no employees.  The business of the Partnership is managed
by the General Partner.  Cranberry Mall is managed on a day-to-day basis by
Insignia Retail Group, (the "Property Manager").  See Note 8 to the
Consolidated Financial Statements for the terms of the Management Agreement and
amounts paid thereunder.

Item 2.  Properties

The Owner Partnership's remaining mall property, Cranberry Mall, is a single
level enclosed regional shopping center located in Westminster, Maryland,
approximately 30 miles northwest of Baltimore.  Cranberry, which opened in
March 1987, consists of approximately 530,000 square feet of gross leasable
area including space for approximately 90 retail tenants, a nine-theater cinema
complex and four anchor stores; Sears, Caldor, Belk (formerly Leggett) and
Montgomery Ward.  Cranberry is located on 55.61 acres and provides parking for
2,597 automobiles.

The total gross leasable building area of Cranberry Mall is allocated as
shown in the table below.

                                Square Feet       Percentage of
                                Leasable to       Gross Leasable
    Tenants                     Tenants           Area
    Anchor Stores:
      Caldor                      81,200              15%
      Belk                        65,282              12%
      Montgomery Ward             80,260              15%
      Sears                       70,000              13%
    Enclosed Mall Tenants        224,377              43%
    Outparcel Store(a)             9,000               2%

    Total                        530,119             100%

(a)  Outparcel Store is an auto service center leased to Montgomery Ward.

On May 1, 1997, Insignia Retail Group ("Insignia") was installed as the new
property manager for Cranberry Mall replacing Shopco Management Corporation, an
affiliate of the Owner Partnership.  Insignia receives an annual fee equal to
4% of the gross rents collected from Cranberry Mall.  The agreement expires on
April 30, 1998 and can be renewed annually for one-year terms.

Mall Tenants - As of December 31, 1997, Cranberry Mall had approximately 67
mall tenants (excluding anchor tenants) occupying gross leasable area of
approximately 184,000 square feet.  As of December 31, 1997, Cranberry Mall had
18 vacant mall stores containing approximately 40,000 gross leasable square
feet.

Anchor Tenants - Sears leases approximately 70,000 square feet of gross
leasable building area.  The Sears store opened in October 1987 and the initial
term of the lease expires in 2002, with two successive five-year renewal
options.  Sears pays an annual fixed rent of $195,800 and an annual percentage
rent equal to 2.25% of net sales in excess of $10,000,000 up to $15,000,000 and
2% of net sales in excess of $15,000,000.  Beginning in 1993, Sears commenced
paying its pro rata share of increases in real estate taxes, but such tax
payments may be deducted from percentage rent due on an annual non-cumulative
basis.  Also commencing in 1993, Sears became responsible for contributing to
exterior common area maintenance on a flat rate basis.  Sears currently pays
all utilities directly and is not required to carry its own fire insurance.
Sears is required to use the premises as a Sears retail store until the year
2002 or under such other trade name as the majority of Sears retail stores are
then operating.  Thereafter, the tenant may assign or sublet the premises with
the landlord's consent, not to be unreasonably withheld.

Caldor leases 81,200 square feet of gross leasable building area and paid an
annual minimum rent of $574,000 through June 30, 1997.  At Caldor's request,
and in recognition of Caldor's precarious financial state (see below), Caldor
and the Partnership negotiated an agreement that provides Caldor with rent
relief over the next four years.  The material terms of this agreement reduce
Caldor's rent from the original lease terms at the Mall by $175,000 in the
first year and by $125,000 in each of the three successive years, after which
the rent returns to the original amount indicated in Caldor's lease.  The
agreement was approved by the lender and took effect July 1, 1997.

The initial term of Caldor's lease expires in 2008.  Four successive five-year
renewal options are available at specified rents.  In addition, Caldor pays an
annual percentage rent of 2% of gross sales between $18,000,000 and
$24,000,000, and 1.25% of gross sales above $24,000,000.  During each option
period, each of the percentage rent figures increases by $1,200,000.  Pursuant
to its lease, Caldor is required to pay for its own fire insurance and a
portion of common area maintenance. Caldor obtains and pays for all utilities
directly from the public utilities.  During the first 15 years of the lease,
ending March 4, 2002, the tenant is required to use the premises continuously
as a Caldor's retail department store or under such other trade name as all
Caldor department stores in the Baltimore area are then operating.  For the
five years following the initial 15 years of the lease, the tenant may use the
premises for a retail department store under any trade name.  The tenant may
assign or sublet the premises during the first 15 years of its lease, provided
that the assignee or sublessee complies with the covenants stated above.

On September 18, 1995, Caldor filed for protection under the U.S. Federal
Bankruptcy Code. In February 1998, Caldor announced that it will close its
store at Cranberry pursuant to the provisions of the Federal Bankruptcy Code.
See Item 7 for a discussion of the effects of Caldor's departure on the
Partnership.

On November 1, 1996, Belk acquired 100% in the stock of Leggett of Virginia
Inc. and its affiliated Leggett stores, which includes the Leggett store at
Cranberry Mall.  Belk currently leases 65,282 square feet of gross leasable
building area.  The initial term of the lease expires in 2007 and the lease
provides four successive, five-year renewal options at the same rent.  Belk
is obligated to pay an annual fixed rent of $228,487 and an annual percentage
rent equal to 2% of sales above $10,608,325.  Belk is responsible for its pro
rata share of increases in real estate taxes after the third year of full
assessment but it may deduct one-half of these tax payments on a cumulative
basis from percentage rent due.  Utility charges are paid directly to the
public utility and Belk is not required to carry its own fire insurance or to
pay for common area maintenance.  During the first 15 years of the lease,
ending March 4, 2002, the tenant is required to use the premises as a Belk
retail department store or under such other trade name as Belk is then
operating substantially all of its department stores.  The tenant cannot assign
or sublet the premises during the first 15 years of the lease term without the
landlord's consent to anyone other than another Belk mercantile company of
comparable net worth as the tenant.

Montgomery Ward leases approximately 80,000 square feet of gross leasable
building area and 9,000 square feet for an automotive center.  The Montgomery
Ward store opened for business on November 4, 1990 and the initial term of the
lease expires in 2010 with four successive five-year renewal options.
Montgomery Ward pays an annual fixed rent of $348,114 and an annual percentage
rent equal to 2.5% of the net retail sales in excess of $13,924,560.
Montgomery Ward is required to reimburse the landlord for its pro rata share of
insurance and utility costs and real estate taxes based on its gross leasable
area of the building.  Montgomery Ward will be required to reimburse the
landlord for a portion of the common area and maintenance charges as set forth
under the lease agreement.  During the first 15 years of the lease term, the
tenant is required to use the premises as a retail store under the trade name
Montgomery Ward or under such other name as the tenant is doing business in the
majority of its retail department stores in the State of Maryland.  Montgomery
Ward has the right to sublease the premises at any time during its lease term
with the landlord's written consent, however, they will not be relieved of
their obligations under the terms of the lease.

On July 7, 1997, Montgomery Ward filed for protection under Chapter 11 of the
U.S. Federal Bankruptcy Code.  On October 10, 1997, as part of its bankruptcy
reorganization process, Montgomery Ward announced the closing of 48 stores.
Although the Cranberry Mall store was not among those scheduled to be closed,
Montgomery Ward may in the future, with court approval, choose to reject or
accept the terms of its lease.

Historical Occupancy -  The following table sets forth the historical occupancy
rates for Cranberry Mall at December 31 for the years indicated.

                            1997      1996      1995      1994     1993
Including Anchor Stores      92%       93%       93%       91%      92%

Excluding Anchor Stores      82%       84%       83%       80%      80%

Competition - The General Partner believes that the primary trade area for
Cranberry (i.e., the primary geographical area from which Cranberry derives its
repeat sales and regular customers) is the area within a radius of
approximately 15 miles from Cranberry.  The General Partner believes the
secondary trade area is within a radius of 15 to 20 miles from Cranberry.

There are no competitive shopping malls in the primary trade area of Cranberry,
although there is considerable retail activity in strip centers and on local
roads near Cranberry.  Also, a 116,000 square foot free-standing WalMart opened
in November of 1992 near Cranberry in the Englar Business Park and a Sam's Club
store is under construction.  In addition, in 1996, a Target store opened
approximately one mile southeast of Cranberry.  In the secondary trade area
there are three competitive shopping centers; Hunt Valley Mall, Carrolltowne
Mall and Owings Mill Mall.  Hunt Valley Mall is a bi-level enclosed shopping
center located approximately 25 miles east of Cranberry and is anchored by
Macy's and Sears.  Carrolltowne Mall is located 25 miles from Cranberry and was
expanded and enclosed during 1989.  Carrolltowne Mall is oriented to the
discount shopper.  Owings Mill Mall is located approximately 25 miles from
Cranberry and is anchored by Macy's, Hechts and is adding a J.C. Penney store.
Owings Mill Mall caters to the upscale market.  Cranberry also competes with
the North Hanover Mall in Hanover, Pennsylvania, located 26 miles north of
Cranberry.  North Hanover Mall is a 450,000 square foot regional mall anchored
by Bon Ton, J.C. Penney, Kmart and Sears.  Retail stores at malls also compete
with local shops, stores and power centers.  Generally, competition among
retailers for customers is intense, with retailers competing on the basis of
quality, price, service and location.

Item 3.  Legal Proceedings

On October 18, 1996, a purported first consolidated and amended class action
complaint was filed in the Court of Chancery of the State of Delaware and for
New Castle County on behalf of all persons who purchased units in the
Partnership, among other investments.  The complaint names the General Partner
of the Partnership, Lehman Brothers Inc. and others (the "Defendants").  This
case consolidates previous actions against the Defendants.  The Partnership was
not named as a defendant.  The complaint alleges, among other things, that the
Unitholders were induced to purchase Units based upon misrepresentation and/or
omitted statements in the sales materials used in connection with the offering
of Units in the Partnership.  The complaint purports to assert a claim for
breach of fiduciary duty by the Defendants based on the foregoing.  The
Defendants intend to defend the action vigorously.

Following the foreclosure on the mortgage of Assembly Square Mall by Aetna in
December 1996, Aetna advised the Partnership it would pursue environmental
remediation claims for land contamination under the terms of the mortgage.  On
September 3, 1997, the Partnership and Aetna entered into a Settlement
Agreement whereby the Partnership paid $400,000 to Aetna for a complete release
from the mortgage's loan covenants.  The release excludes environmental claims
already made by Aetna regarding existing environmental conditions and
environmental claims which could arise in the future because of existing
conditions.  The Partnership separately funded approximately $500,000 to pay
for work performed to address environmental conditions at the Assembly Square
property.  Accordingly, the Partnership accrued costs of $900,000, reflected in
the consolidated statements of operations as environmental remediation and
settlement costs.  At December 31, 1997, $788,958 of this amount had been paid
by the Partnership.  It is uncertain whether the Commonwealth of Massachusetts
will test the remediation performed at Assembly Square, whether such tests
would lead to additional remediation or whether Aetna will pursue additional
claims against the Partnership.

The Partnership has demanded contribution from a prior owner of Assembly Square
for the amounts the Partnership expended in connection with the environmental
site remediation.  The prior owner has responded to the Partnership's demand by
making a preliminary offer to pay a portion of the site remediation costs.  The
Partnership has rejected the amount and terms of the prior owner's offer.  It
is uncertain at this time whether the Partnership will recover remediation
costs from the prior owner.


Item 4.  Submissions of Matters to a Vote of Security Holders

No matters were submitted to a vote of the Unitholders at a meeting or
otherwise during the year for which this report has been filed.



                               PART II

Item 5.  Market for Registrant's Limited Partnership Units and Related Security
Holder Matters

(a) Market Price Information

The Partnership has issued no common stock. There is no established trading
market for the Units nor is there anticipated to be any in the future.

(b) Holders

As of December 31, 1997, there were 5,019 Unitholders.

(c) Distribution of Net Cash Flow

The Partnership's policy is to distribute to the Unitholders their allocable
portion of Net Cash Flow (as defined in the prospectus) with respect to each
fiscal year in quarterly installments.  Distributions of Net Cash Flow, if any,
are paid on a quarterly basis to registered Unitholders on record dates
established by the Partnership, which generally are the last day of each
quarter.

In consideration of a decline in operations at Assembly Square, the General
Partner suspended cash distributions beginning with the 1996 first quarter.
Distributions have remained suspended since this time in consideration of
the foreclosure of Assembly Square, reduced Partnership cash flow and issues
concerning certain anchor tenants at Cranberry Mall.  See Item 7.

Item 6.  Selected Financial Data

(dollars in thousands except per Unit data)

As of and for the years ended December 31,

                                 1997(c)  1996      1995      1994      1993

Total Income                 $  8,172  $13,022  $ 13,806  $ 13,985  $ 13,157
Gain on foreclosure
  of property (b)            $      -  $ 9,337         -         -         -
Net Income (Loss)            $ (7,594) $ 1,008  $(17,536) $    693  $   (447)
Net Income (Loss) per Unit   $(107.02) $  9.88  $(247.13) $   9.77  $  (6.30)
Cash Distributions per Unit  $      -  $    -   $  15.00  $      -  $   8.23(a)
Real Estate, net of
  accumulated depreciation   $ 39,275  $48,197  $ 73,162  $ 92,807  $ 94,363
Mortgages Payable            $ 31,025  $31,025  $ 55,323  $ 55,887  $ 56,455
Total Assets                 $ 50,814  $58,266  $ 81,655  $100,542  $100,436

(a) A special distribution was made from funds previously escrowed for the
    expansion of the Macy's (formerly Jordan Marsh) store at Assembly Square,
    which did not occur, and did not represent the resumption of regular
    quarterly distributions.

(b) On December 20, 1996, Aetna obtained title to Assembly Square at the
    foreclosure sale.  As a result, the Partnership recorded a gain on
    foreclosure of $9,336,544 due to the release of mortgage debt on the
    property.

(c) The decrease in total income is due to the foreclosure sale of Assembly
    Square in December 1996.

The above selected financial data should be read in conjunction with Item 7 and
the Consolidated Financial Statements and notes thereto in Item 8.




Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

Liquidity and Capital Resources

At December 31, 1997, the Partnership had cash and cash equivalents totaling
$9,600,824 compared with $8,318,465 at December 31, 1996.  The increase is due
to net cash provided by operating activities exceeding net cash used for
investing activities and financing activities.

As of May 1, 1996, cash flow from Assembly Square was not sufficient to meet
all of the property's obligations and only a partial payment of real estate
taxes due was made by the Owner Partnership, thereby constituting a default
under the mortgage encumbering the property.  The remainder of the outstanding
real estate taxes were paid on July 24, 1996, thereby curing the default.  On
October 15, 1996, the Owner Partnership received notice of default from Aetna
due to the Owner Partnership's failure to escrow real estate taxes with Aetna
after the initial default as required under the Assembly Note.  On account of
such default, and pursuant to its rights and remedies under the Assembly Note,
Aetna declared the entire outstanding mortgage loan balance (as such term is
defined in the Assembly Note) immediately due and payable, without any further
presentment, demand or notice.  On November 26, 1996, Aetna commenced
advertising for a public nonjudicial foreclosure sale to be held on
December 20, 1996.  The Owner Partnership continued to hold negotiations with
Aetna concerning restructuring the mortgage in default.  In addition to such
negotiations, the Owner Partnership considered alternatives available to it
with respect to such potential foreclosure sale.  On December 20, 1996, Aetna
bid $15 million to obtain title to Assembly Square at the foreclosure sale.  As
a result, the Partnership recorded a loss provision of $7,910,126 to reduce
Assembly Square's carrying value to its estimated fair value of $15 million.
In addition, the Partnership recognized a gain on foreclosure of $9,336,544 due
to the cancellation of mortgage debt on the property.

Following the foreclosure on the mortgage of Assembly Square, Aetna advised the
Partnership it would pursue claims arising out of its mortgage and security
agreement.  On September 3, 1997, the Partnership and Aetna entered into a
Settlement Agreement ("Agreement") whereby the Partnership paid $400,000 to
Aetna for a complete release under the loan covenants.  The release excludes
environmental claims already made by Aetna regarding existing environmental
conditions and environmental claims which could arise in the future because of
existing conditions.  The Partnership separately funded approximately $500,000
to pay for work performed or now underway to address environmental conditions
at the Assembly Square property.  Accordingly, the Partnership has accrued
costs of $900,000, reflected in the consolidated statements of operations as
settlement costs.  At December 31, 1997, $788,958 of this amount had been paid
by the Partnership.  The Partnership has no information suggesting any
likelihood or amount of future environmental claims which could arise in
connection with current conditions at the Assembly Square property.

The Partnership has demanded contribution from a prior owner of Assembly Square
for the amounts the Partnership expended in connection with the environmental
site remediation.  The prior owner has responded to the Partnership's demand by
making a preliminary to offer pay a portion of the site remediation costs.  The
Partnership has rejected the amount and terms of the prior owner's offer.  It
is uncertain at this time whether the Partnership will recover remediation
costs from this prior owner.

On September 18, 1995, Caldor, an anchor tenant at Cranberry Mall, filed for
protection under the U.S. Bankruptcy Code. At Caldor's request, Caldor and the
Partnership negotiated an agreement that provided Caldor with rent relief over
four years. The material terms of this agreement reduce Caldor's rent from the
original lease terms at the Mall by $175,000 in the first year of the agreement
and by $125,000 in each of the three successive years, after which the rent
returns to the original amount indicated in Caldor's lease.  In February 1998,
Caldor announced that it will be closing its store at Cranberry, effective
July 1, 1998.  The General Partner is working to secure a new anchor tenant for
Caldor's space, although Caldor could attempt to sell its lease at the Mall.
Attracting a replacement anchor is likely to take time and require substantial
capital outlays by the Partnership to fund tenant improvements.  In the event
that a new tenant is not secured by the date of Caldor's departure, cash flow
generated by Cranberry will be reduced assuming Caldor rejects its lease.

On July 7, 1997, Montgomery Ward, an anchor tenant at Cranberry Mall filed for
protection under Chapter 11 of the Bankruptcy Code.  On October 10, 1997, as
part of its bankruptcy reorganization process, Montgomery Ward announced the
closing of 48 stores.  Although the Cranberry Mall store was not among those
scheduled to be closed, Montgomery Ward may in the future, with court approval,
choose to reject or accept the terms of its lease.

Deferred rent receivable increased from $322,799 at December 31, 1996 to
$468,188 at December 31, 1997.  Deferred rent receivable represents rental
income which is recognized on a straight-line basis over the lease terms which
will not be received until later periods.  The increase is due to leasing
activity at Cranberry during 1997.

Other liabilities totaled $111,042 at December 31, 1997, compared with $0 at
December 31, 1996.  The 1997 balance represents amounts payable in association
with the Settlement Agreement with Aetna (see above) relating to environmental
costs at the Mall.

Due to affiliates totaled $33,748 at December 31, 1997 compared to $531 at
December 31, 1996.  Effective as of January 1, 1997, the Partnership began
reimbursing certain expenses incurred by the General Partner and its affiliates
in servicing the Partnership to the extent permitted by the partnership
agreement.  In prior years, affiliates of the General Partner had voluntarily
absorbed these expenses.

Results of Operations

1997 versus 1996
For the year ended December 31, 1997, the Partnership operations resulted in a
net loss of $7,594,087, compared with net income of $1,007,864 in 1996.  The
change from net income to a net loss is primarily attributable to the
$9,336,544 gain recognized in 1996 on the foreclosure of Assembly Square.
Excluding this gain, operations resulted in a net loss of $8,328,680 in 1996.
Losses before extraordinary gain and minority interest in both 1996 and 1997
are primarily attributable to losses on writedown of real estate, resulting
from the write down of Cranberry Mall to its estimated fair market value due to
a reduction in the holding period in 1997 and Assembly Square in 1996.

Primarily as a result of the foreclosure of Assembly Square on December 20,
1996, the following income and expense categories decreased from 1996 to 1997:
rental income, escalation income, miscellaneous income, interest expense,
property operating expense, depreciation and amortization, and real estate
taxes.

Interest income totaled $480,283 for the year ended December 31, 1997, compared
with $401,786 in 1996.  The increase is primarily due to the Partnership's
higher average cash balance in 1997.

Environmental remediation and settlement costs totaled $900,000 for the year
ended December 31, 1997, compared with $0 in 1996.  The 1997 amount represents
costs related to the Settlement Agreement with Aetna (see "Liquidity and
Capital Resources" above) relating to environmental costs at Assembly Square.

General and administrative expenses totaled $372,181 for the year ended
December 31, 1997, compared with $284,653 for the year ended December 31, 1996.
Effective as of January 1, 1997, the Partnership began reimbursing certain
expenses incurred by the General Partner and its affiliates in servicing the
Partnership to the extent permitted by the partnership agreement.  In prior
years, affiliates of the General Partner had voluntarily absorbed these
expenses.

Mall tenant sales for the year ended December 31, 1997 were $35,732,000
compared with sales of $34,077,000 for year ended December 31, 1996.  Mature
tenant sales for the year ended December 31, 1997 were $29,040,000 compared
with sales of $28,371,000 for the year ended December 31, 1996.  As of December
31, 1997 and 1996, Cranberry was 82% and 84% occupied, respectively (exclusive
of anchor and outparcel tenants).  For the year ended December 31, 1997,
Cranberry generated net operating income of $4,512,000 on revenues of
$7,692,000 and property operating expenses and real estate taxes totaling
$3,180,000.

1996 versus 1995
For the year ended December 31, 1996, the Partnership generated net income of
$1,007,864 compared to a net loss of $17,536,302 in 1995.  The change from a
net loss to net income is primarily due to the $17,903,567 write-down in 1995
of Assembly Square to its estimated fair market value and the $9,336,544 gain
recognized in 1996 on the foreclosure of Assembly Square.

Escalation income, which represents billings to tenants for their proportional
share of common area maintenance, operating and real estate tax expenses,
totaled $4,421,035 during 1996 compared to $5,071,283 during 1995.  The
decrease in escalation income is primarily due to a lower anticipated recovery
rate from the Assembly Square tenants for operating expenses during 1996 as a
result of a decline in occupancy.

Total expenses for the year ended December 31, 1996 totaled $20,858,011
compared to $31,518,669 during 1995.  The decrease in total expenses is
primarily due to the write-down in 1995 of Assembly Square to its estimated
fair market value, decreases in property operating expenses and lower
depreciation and amortization.  Property operating expenses decreased from
$5,015,637 for the year ended December 31, 1995 to $4,738,799 in 1996 primarily
due to lower security, maintenance and payroll expenses at Assembly Square.

Depreciation and amortization decreased from $2,619,786 during 1995 to
$2,194,527 during 1996 primarily due to the write-down of Assembly Square to
its estimated fair market value at December 31, 1995.

Mall tenant sales at Cranberry Mall for the year ended December 31, 1996
were $34,077,000, compared with sales of $33,985,000 for year ended
December 31, 1995.  Mature tenant sales for the year ended December 31, 1996
were $28,371,000, compared with $30,987,000 for the year ended December 31,
1995.  The General Partner attributes the decrease in mature tenant sales at
Cranberry to a turnover of tenants in the normal course of business.  As of
December 31, 1996 and 1995, Cranberry was 84% and 83% occupied, respectively
(exclusive of anchor and outparcel tenants).  For the year ended December 31,
1996, Cranberry generated net operating income of $4,850,000 on revenues of
$7,770,000 and property operating expenses and real estate taxes totalling
$2,920,000.

Property Appraisal

The appraised fair market value of Cranberry at January 1, 1998, as determined
by Cushman & Wakefield, Inc., an independent, third-party appraisal firm, was
$40,000,000 compared with $42,700,000, on January 1, 1997.

It should be noted that appraisals are only estimates of current value and
actual values realizable upon sale may be significantly different.  A
significant factor in establishing an appraised value is the actual selling
price for properties which the appraiser believes are comparable.  Because of
the nature of the Partnership's property and the limited market for such
property, there can be no assurance that the other properties reviewed by the
appraiser are comparable.  Further, the appraised value does not reflect the
actual costs which would be incurred in selling the property.  As a result of
these factors and the illiquid nature of an investment in Units of the
Partnership, the variation between the appraised value of the Partnership's
property and the price at which Units of the Partnership could be sold is
likely to be significant.  Fiduciaries of Limited Partners which are subject to
ERISA or other provisions of law requiring valuation of Units should consider
all relevant factors, including but not limited to the net asset value per
Unit, in determining the fair market value of the investment in the Partnership
for such purposes.

Item 8.  Financial Statements and Supplementary Data

See Item 14a for a listing of the Consolidated Financial Statements and
Supplementary data filed in this report.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

                               PART III

Item 10.  Directors and Executive Officers of the Registrant

Certain officers or directors of Regional Malls Inc. are now serving (or in the
past have served) as officers and directors of entities which act as general
partners of a number of real estate limited partnerships which have sought
protection under the provisions of the Federal Bankruptcy Code.  The
partnerships which have filed bankruptcy petitions own real estate which has
been adversely affected by the economic conditions in the markets in which that
real estate is located and, consequently, the partnerships sought the
protection of the bankruptcy laws to protect the partnerships' assets from loss
through foreclosure.

The following is a list of the officers and directors of Regional Malls Inc. at
December 31, 1997:

     Name                         Office

     Rocco F. Andriola            Director
     Robert J. Hellman            President and Director
     Joan B. Berkowitz            Vice President & Chief Financial Officer
     Robert J. Sternlieb          Vice President

Rocco F. Andriola, 39, is a Managing Director of Lehman Brothers in its
Diversified Asset Group and has held such position since October 1996.  Since
joining Lehman in 1986, Mr. Andriola has been involved in a wide range of
restructuring and asset management activities involving real estate and other
direct investment transactions.  From June 1991 through September 1996,
Mr. Andriola held the position of Senior Vice President in Lehman's Diversified
Asset Group.  From June 1989 through May 1991, Mr. Andriola held the position
of First Vice President in Lehman's Capital Preservation and Restructuring
Group.  From 1986 to 1989, Mr. Andriola served as a Vice President in the
Corporate Transactions Group of Shearson Lehman Brothers' office of the general
counsel.  Prior to joining Lehman, Mr. Andriola practiced corporate and
securities law at Donovan Leisure Newton & Irvine in New York.  Mr. Andriola
received a B.A. from Fordham University, a J.D. from New York University School
of Law, and an LLM in Corporate Law from New York University's Graduate School
of Law.

Robert J. Hellman, 43, is a Senior Vice President of Lehman Brothers and is
responsible for investment management of retail, commercial and residential
real estate.  Since joining Lehman Brothers in 1983, Mr. Hellman has been
involved in a wide range of activities involving real estate and direct
investments including origination of new investment products, restructurings,
asset management and the sale of commercial, retail and residential properties.
Prior to joining Lehman Brothers, Mr. Hellman worked in strategic planning for
Mobil Oil Corporation and was an associate with an international consulting
firm.  Mr. Hellman received a bachelor's degree from Cornell University, a
master's degree from Columbia University, and a law degree from Fordham
University.

Joan B. Berkowitz, 38, is a Vice President of Lehman Brothers, responsible
for investment management of retail, commercial and residential real estate
within the Diversified Asset Group.  Ms. Berkowitz joined Lehman Brothers in
May 1986 as an accountant in the Realty Investment Group.  From October 1984 to
May 1986, she was an Assistant Controller to the Patrician Group.  From
November 1983 to October 1984, she was employed by Diversified Holdings
Corporation.  From September 1981 to November 1983, she was employed by
Deloitte Haskins & Sells.  Ms. Berkowitz, a Certified Public Accountant,
received a B.S. degree from Syracuse University in 1981.

Robert Sternlieb, 33, is an Assistant Vice President of Lehman Brothers and
is responsible for asset management within the Diversified Asset Group.
Mr. Sternlieb joined Lehman Brothers in April 1989 as an asset manager.  From
May 1986 to April 1989, he was a systems analyst at Drexel Burnham Lambert.
Mr. Sternlieb received a B.S. degree in Finance from Lehigh University in 1986.


Item 11.  Executive Compensation

The Officers and Directors of the General Partner do not receive any salaries
or other compensation from the Partnership.  See Item 13 below with respect to
a description of certain transactions of the General Partner and its affiliates
with the Partnership.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

(a) Security ownership of certain beneficial owners

At December 31, 1997, to the Partnership's knowledge, no investor held more
than 5% of the outstanding Units.

(b) Security ownership of management

Various employees of Lehman Brothers that perform services on behalf of the
General Partner own no units of the Partnership as of December 31, 1997.

(c) Changes in control

None.

Item 13.  Certain Relationships and Related Transactions

Affiliates of the General Partner have been responsible for certain
administrative functions of the Partnership. Effective as of January 1, 1997,
the Partnership began reimbursing certain expenses incurred by the General
Partner and its affiliates in servicing the Partnership to the extent permitted
by the partnership agreement.  In prior years, affiliates of the General
Partner had voluntarily absorbed these expenses. Disclosure relating to amounts
paid to the General Partner or its affiliates during the past three years is
incorporated herein by reference to Note 7 of Notes to the Consolidated
Financial Statements.

On July 31, 1993, Shearson Lehman Brothers Inc. ("Shearson") sold certain of
its domestic retail brokerage and asset management businesses to Smith Barney,
Harris Upham & Co. Incorporated ("Smith Barney").  Subsequent to this sale,
Shearson changed its name to Lehman Brothers Inc.  The transaction did not
affect the ownership of the Partnership or the Partnership's General Partner.
However, the assets acquired by Smith Barney included the name "Shearson."
Consequently, the general partner changed its name to Regional Malls Inc., the
Assignor Limited Partner changed its name to Regional Malls Depositary Corp.
and the Owner Partnership changed its name to Shopco Malls L.P. to delete any
references to "Shearson."


                                  Part IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) (1) and (2).


       Index to Consolidated Financial Statements and Schedules
                                                                Page
                                                               Number

      Independent Auditors' Report                               F-1

      Consolidated Balance Sheets
      At December 31, 1997 and 1996                              F-2

      Consolidated Statements of Partners' Capital (Deficit)
      For the years ended December 31, 1997, 1996 and 1995       F-2

      Consolidated Statements of Operations
      For the years ended December 31, 1997, 1996 and 1995       F-3

      Consolidated Statements of Cash Flows
      For the years ended December 31, 1997, 1996 and 1995       F-4

      Notes to the Consolidated Financial Statements             F-5

      Schedule II - Valuation and Qualifying Accounts            F-12

      Schedule III - Real Estate and Accumulated Depreciation    F-13


(b) Exhibits

       Subject to Rule 12b-32 of the Securities Exchange Act of 1934 regarding
       incorporation by reference, listed below are the exhibits which are
       filed as part of this report.

  3.   Partnership's Amended and Restated Agreement of Limited Partnership,
       dated October 6, 1988, is hereby incorporated by reference to Exhibit A
       to the Prospectus contained in Registration Statement No. 33-20614,
       which Registration Statement (the "Registration Statement") was declared
       effective by the SEC on May 20, 1988.

  4.1  The form of Unit Certificate is hereby incorporated by reference to
       Exhibit 7 to the Form 8-A dated April 10, 1989.

  10.1 The form of Subscription Agreement is hereby incorporated by reference
       to Exhibit C to the Registration Statement.

  10.2 Escrow Agreement between Partnership and United States Trust Company of
       New York, is hereby incorporated by reference to Exhibit 10.2 to the
       Registration Statement.

  10.3 The form of Depository Agreement between Partnership and Shearson
       Regional Malls Depository Corp., as Assignor Limited Partner is hereby
       incorporated by reference to Exhibit 10.3 to the Registration Statement.

  10.4 The form of Sale Contract concerning the acquisition of Assembly Square
       is hereby incorporated by reference to Exhibit 10.4 to the Registration
       Statement.

  10.5 Letter of Intent to Purchase Cranberry is hereby incorporated by
       reference to Exhibit 10.5 to the Registration Statement.

  10.6 The form of Master Rental Income Guaranty is hereby incorporated by
       reference to Exhibit 10.6 to the Registration Statement.

  10.7 The form of Management and Leasing Agreement is hereby incorporated by
       reference to Exhibit 10.7 to the registration Statement.

  10.8 Amendment of Mortgage Loan Modification between Shearson Shopco Malls,
       L.P. and Aetna Life Insurance Company is hereby incorporated by
       reference to Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
       for the year ended December 31, 1992.

  10.9 Note Modification Agreement between Shopco Malls, L.P. and Metropolitan
       Life Insurance Company for Cranberry Mall as of May 31, 1994, is hereby
       incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly
       Report on Form 10-Q for the quarter ended June 30, 1994.

  27   Financial Data Schedule

  98   Complete Appraisal of Real Property for Cranberry Mall as of January
       1998 as prepared by Cushman & Wakefield, Inc.

(c) Reports on Form 8-K filed during the fourth quarter of 1997:

       No reports on Form 8-K were filed during the three months ended
       December 31, 1997.



                           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 30, 1998
                         SHOPCO REGIONAL MALLS, L.P.

                         BY:    Regional Malls, Inc.
                                General Partner



                         BY:    /s/Robert J. Hellman
                         Name:  Robert J. Hellman
                         Title: President and Director


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


                         REGIONAL MALLS, INC.
                         General Partner



Date:  March 30, 1998
                         BY:    /s/ Rocco F. Andriola
                                Rocco F. Andriola
                                Director




Date:  March 30, 1998
                         BY:    /s/ Robert J. Hellman
                                Robert J. Hellman
                                President and Director




Date:  March 30, 1998
                         BY:    /s/ Joan Berkowitz
                                Joan Berkowitz
                                Vice President & Chief Financial Officer




Date:  March 30, 1998
                         BY:    /s/ Robert J. Sternlieb
                                Robert J. Sternlieb
                                Vice President





Consolidated Balance Sheets                  At December 31,   At December 31,
                                                        1997              1996
Assets
Real estate (notes 3, 5 and 6):
 Land                                            $ 5,401,132       $ 6,442,555
 Building                                         33,101,956        51,207,886
 Improvements                                        771,912         2,059,544
                                                  39,275,000        59,709,985
 Less accumulated depreciation and amortization            _       (11,512,517)
                                                  39,275,000        48,197,468

Cash and cash equivalents                          9,600,824         8,318,465
Construction escrow (note 5)                         455,246           437,346
Accounts receivable, net of allowance of $366,868
  in 1997 and $160,393 in 1996                       345,148           306,352
Deferred rent receivable                             468,188           322,799
Deferred charges, net of accumulated amortization
 of $79,527 in 1997 and $46,055 in 1996              258,212           291,684
Prepaid expenses                                     410,908           391,501
  Total Assets                                   $50,813,526       $58,265,615

Liabilities, Minority Interest and
  Partners' Capital
Liabilities:
 Accounts payable and accrued expenses           $   104,995       $   108,210
 Other liabilities (note 3)                          111,042                 _
 Mortgages payable (note 6)                       31,025,000        31,025,000
 Due to affiliates (note 8)                           33,748               531
 Security deposits payable                             4,771             4,771
 Deferred income                                     507,574           439,166
  Total Liabilities                               31,787,130        31,577,678
Minority interest                                     15,731            83,185
Partners' Capital (note 4):
 General Partner                                       8,648            84,589
 Limited Partners (70,250 limited partnership
 units authorized issued and outstanding)         19,002,017        26,520,163
  Total Partners' Capital                         19,010,665        26,604,752
  Total Liabilities, Minority Interest
  and Partners' Capital                          $50,813,526       $58,265,615



Consolidated Statement of Partners' Capital (Deficit)
For the years ended December 31, 1997, 1996 and 1995
                                       General         Limited
                                       Partner        Partners           Total
Balance at December 31, 1994        $  (43,318)    $44,240,902     $44,197,584
Net loss                              (175,363)    (17,360,939)    (17,536,302)
Distribution (note 9)                        _      (1,053,750)     (1,053,750)
Balance at December 31, 1995        $ (218,681)    $25,826,213     $25,607,532
Net income                             313,914         693,950       1,007,864
Distributions (note 9)                 (10,644)              _         (10,644)
Balance at December 31, 1996        $   84,589     $26,520,163     $26,604,752
Net loss                               (75,941)     (7,518,146)     (7,594,087)
Balance at December 31, 1997        $    8,648     $19,002,017     $19,010,665






Consolidated Statements of Operations
For the years ended December 31,                1997         1996         1995
Income
Rental income (note 3)                  $  4,886,656  $ 7,954,473 $  8,156,792
Escalation income (note 3)                 2,639,481    4,421,035    5,071,283
Interest income                              480,283      401,786      396,102
Miscellaneous income                         165,569      244,659      182,214
  Total Income                             8,171,989   13,021,953   13,806,391

Expenses
Interest expense                           2,249,312    4,225,832    4,339,057
Property operating expenses                2,448,079    4,738,799    5,015,637
Loss on write-down of real estate          7,572,838    7,910,126   17,903,567
Depreciation and amortization              1,559,102    2,194,527    2,619,786
Real estate taxes                            732,018    1,504,074    1,434,129
General and administrative                   372,181      284,653      206,493
Environmental remediation and
  settlement costs (note 3)                  900,000            _            _
  Total Expenses                          15,833,530   20,858,011   31,518,669

Income (Loss) before extraordinary
 item and minority interest               (7,661,541)  (7,836,058) (17,712,278)

Extraordinary Item:
Gain on foreclosure of property                    _    9,336,544            _
Income (loss) before minority interest    (7,661,541)   1,500,486  (17,712,278)
Minority interest                             67,454     (492,622)     175,976
  Net Income (Loss)                     $ (7,594,087) $ 1,007,864 $(17,536,302)

Net Income (Loss) Allocated:
To the General Partner                  $    (75,941) $   313,914 $   (175,363)
To the Limited Partners                   (7,518,146)     693,950  (17,360,939)
                                        $ (7,594,087) $ 1,007,864 $(17,536,302)

Per limited partnership unit
(70,250 units outstanding):
Net income (loss) before extraordinary item $(107.02)    $(109.33)    $(247.13)
Extraordinary item                                 _       119.21            _
  Net Income (Loss)                         $(107.02)    $   9.88     $(247.13)




Consolidated Statements of Cash Flows
For the years ended December 31,                  1997       1996         1995
Cash Flows From Operating Activities:
Net income (loss)                          $(7,594,087)$1,007,864 $(17,536,302)
Adjustments to reconcile net income (loss)
 to net cash provided by
 operating activities:
   Minority interest                           (67,454)   492,622     (175,976)
   Extraordinary gain on
    foreclosure of property                          _  9,336,544)           _
   Depreciation and amortization             1,559,102  2,194,527    2,619,786
   Loss on write-down of real estate         7,572,838  7,910,126   17,903,567
   Increase (decrease) in cash arising
    from changes in operating assets
    and liabilities:
      Accounts receivable                      (38,796)   308,490      381,703
      Deferred rent receivable                (145,389)  (129,412)      25,259
      Deferred charges                               _     (5,292)    (320,172)
      Prepaid expenses and other assets        (19,407)   (25,529)     (56,742)
      Accounts payable, accrued expenses
          and other liabilities                107,827    206,131      (13,089)
      Accrued interest payable                       _    272,797      172,111
      Due to affiliates                         33,217     (1,476)       1,423
      Security deposits payable                      _          _       (2,200)
      Deferred income                           68,408     25,089       42,498
Net cash provided by operating activities    1,476,259  2,919,393    3,041,866

Cash Flows From Investing Activities:
Additions to real estate                      (176,000)   (55,212)    (836,706)
Construction escrows                           (17,900)   (20,778)     (28,043)
Net cash used for investing activities        (193,900)   (75,990)    (864,749)

Cash Flows From Financing Activities:
Payment of mortgage principal                        _   (552,618)    (564,483)
Distributions paid - minority interest               _    (11,761)     (23,225)
Distributions paid - general partner                 _    (10,644)           _
Distributions paid - limited partners                _   (265,603)    (788,147)
Net cash used for financing activities               _   (840,626)  (1,375,855)

Net increase in cash and cash equivalents    1,282,359  2,002,777      801,262
Cash and cash equivalents, beginning
  of period                                  8,318,465  6,315,688    5,514,426
Cash and cash equivalents, end of period   $ 9,600,824 $8,318,465  $ 6,315,688

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest   $ 2,249,312 $3,953,035  $ 4,166,946

Supplemental Disclosure of Non-Cash Operating Activities:
In 1996, the Owner Partnership transferred $146,241 of net operating
liabilities of Assembly Square to Aetna pursuant to the foreclosure sale.

Supplemental Disclosure of Non-Cash Financing Activities:
In connection with the foreclosure sale of Assembly Square in 1996, Aetna
released the Owner Partnership from the related $24,190,303 mortgage
obligation.

Notes to the Consolidated Financial Statements
December 31, 1997, 1996 and 1995

1. Organization
Shopco Regional Malls, L.P. ("SRM" or the "Partnership") was formed as a
limited partnership on March 11, 1988 under the laws of the State of Delaware.
The Partnership is the general partner of Shopco Malls L.P. (the "Owner
Partnership"), a Delaware limited partnership, which in October 1988 purchased
The Mall at Assembly Square ("Assembly Square") and Cranberry Mall
("Cranberry").  The Partnership sold Assembly Square at a foreclosure sale
during 1996.  Cranberry is held for investment as of December 31, 1997.

The general partner of SRM is Regional Malls Inc. (the "General Partner")
formerly Shearson Regional Malls, Inc., an affiliate of Lehman Brothers Inc.
formerly Shearson Lehman Brothers Inc. (see below).

On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic
retail brokerage and asset management businesses to Smith Barney, Harris Upham
& Co. Incorporated ("Smith Barney").  Subsequent to the sale, Shearson Lehman
Brothers Inc. changed its name to Lehman Brothers Inc. ("Lehman Brothers").
The transaction did not affect the ownership of the general partner.  However,
the assets acquired by Smith Barney included the name "Shearson."
Consequently, effective October 29, 1993, the General Partner changed its name
to Regional Malls Inc. to delete any reference to "Shearson."

The first investor closing occurred in October 1988 and the offering was
completed in April 1989 when 70,250 total authorized limited partnership units
("Unitholders") were accepted.

2. Summary of Significant Accounting Policies

Basis of Accounting - The consolidated financial statements of SRM have been
prepared on the accrual basis of accounting and include the accounts of SRM
and the Owner Partnership.  All significant intercompany accounts and
transactions have been eliminated.

Real Estate - Prior to December 31, 1997, real estate, which consists of
buildings, land and improvements at Cranberry, was recorded at cost less
accumulated depreciation and amortization.  Cost includes the initial purchase
price of each property plus closing costs, acquisition and legal fees and
capital improvements.  Depreciation is computed using the straight-line method
based on an estimated useful life of 40 years.  Depreciation of improvements is
computed using the straight-line method over estimated useful lives of 7 to 12
years.

Impairment of Long-Lived Assets - Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" ("FAS 121"), requires the Partnership to assess its
real estate investments for impairment whenever events or changes in
circumstances indicate that the carrying amount of the real estate may not be
recoverable.  Recoverability of real estate to be held and used is measured by
a comparison of the carrying amount of the real estate to future net cash flows
(undiscounted and without interest) expected to be generated by the real
estate.  If the real estate is considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the real
estate exceeds the fair value of the real estate.

At December 31, 1997 and 1996, the Partnership completed reviews of
recoverability of the carrying amount of Cranberry and related accounts based
upon estimates of undiscounted future cash flows expected to result from
Cranberry's use and eventual disposition.  Based upon the review completed at
December 31, 1997, and a change in the estimated holding period for Cranberry,
the Partnership wrote down the carrying value of Cranberry and related assets
in the amount of $7,572,838 in accordance with FAS 121 (See Note 3).

At December 31, 1996 and 1995, the Partnership completed reviews of
recoverability of the carrying amount of Assembly Square and related accounts
based upon estimates of undiscounted future cash flows expected to result from
Assembly Square's use and eventual disposition at that time.  Based upon those
reviews completed in prior years, the Partnership wrote down the carrying value
of Assembly Square and related accounts in the amount of $7,910,126 and
$17,903,567 in 1996 and 1995, respectively.

Fair Value of Financial Instruments - Statement of Financial Accounting
Standards No. 107 "Disclosures about Fair Value of Financial Instruments"
("FAS 107"), requires the Partnership to disclose the estimated fair values of
its financial instruments.  Fair values generally represent estimates of
amounts at which a financial instrument could be exchanged between willing
parties in a current transaction other than in forced liquidation.

Fair value estimates are subjective and are dependent on a number of
significant assumptions based on management's judgment regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments, and other factors.  In addition, FAS 107 allows
a wide range of valuation techniques, therefore, comparisons between entities,
however similar may be difficult.

Deferred Charges - Mortgage commitment and placement fees, and extension fees
are being amortized over the life of the mortgages payable.  Leasing
commissions are amortized using the straight-line method over 7 years, which
approximates the average life of the leases.

Offering Costs - Offering costs are non-amortizable and are deducted from
limited partners' capital.

Transfer of Units and Distributions - Net income or loss from operations is
allocated to registered Unitholders.  Upon the transfer of a limited
partnership unit, net income (loss) from operations attributable to such unit
generally is allocated between the transferor and the transferee based on the
number of days during the year of transfer that each is deemed to have owned
the unit.  The Unitholder of record on the first day of the calendar month is
deemed to have transferred their interest on the first day of such month.

Distributions of operating cash flow, as defined in the Partnership Agreement,
will be paid on a quarterly basis to registered Unitholders on record dates
established by the Partnership.  Distributions are generally paid 45 days after
quarter end.

Income Taxes - No provision is made for income taxes in the consolidated
financial statements since such liability is the liability of the individual
partners.

Net Income (Loss) Per Limited Partnership Unit - Net income (loss) per limited
partnership unit is calculated based upon the number of limited partnership
units outstanding during the period.

Rental Income and Deferred Rent - The Partnership leases its property to tenants
under operating leases with various terms.  Deferred rent receivable consists
of rental income which is recognized on the straight-line basis over the lease
terms, but will not be received until later periods as a result of scheduled
rent increases.

Cash and Cash Equivalents - Cash and cash equivalents consist of short-term,
highly liquid investments which have maturities of three months or less from
the date of issuance.  The carrying amount approximates fair value because of
the short maturity of these investments.

Concentration of Credit Risk - Financial instruments which potentially subject
the Partnership to a concentration of credit risk principally consist of cash
and cash equivalents in excess of the financial institutions' insurance limits.
The Partnership invests available cash with high credit quality financial
institutions.

Use of Estimates - 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 income and expenses during the reporting
period.  Actual results could differ from those estimates.

Reclassifications - Certain prior year amounts have been reclassified to
conform to the current year's presentation.

3. Real Estate
SRM's real estate consisted of one enclosed mall as of December 31, 1997 and
1996, and two malls as of December 31, 1995.

Cranberry Mall
Cranberry Mall in Westminster, Maryland, which includes approximately 55.61
acres of land, was purchased on October 5, 1988 for $53,847,500.  Cranberry
contains approximately 530,000 square feet of gross leasable area including
four anchor tenants: Sears, Caldor, Belk (formerly Leggett) and Montgomery
Ward.

Sears leases approximately 70,000 square feet of gross leasable building area.
Sears is required to use the premises as a Sears retail store until the year
2002 or under such other trade name as the majority of Sears retail stores are
then operating.

Caldor leases approximately 81,200 square feet of gross leasable building area.
During the first 15 years of the lease, ending March 4, 2002, Caldor is
required to use the premises continuously as a Caldor retail department store
or under such other trade name as all Caldor department stores in the Baltimore
area are then operating.  For the five years following the initial 15 years of
the lease, the tenant may use the premises for a retail department store under
any trade name.

On September 18, 1995, Caldor filed for protection under the U.S. Federal
Bankruptcy Code.  Caldor has been current with its rental payments to the
Partnership since the bankruptcy filing.  At Caldor's request, Caldor and the
Partnership negotiated an agreement that provided Caldor with rent relief over
four years.  The material terms of this agreement reduce Caldor's rent from the
original lease terms at the Mall by $175,000 in the first year of the agreement
and by $125,000 in each of the three successive years, after which the rent
returns to the original amount indicated in Caldor's lease. The agreement was
approved by the lender and took effect July 1, 1997.  Caldor represented
approximately 10% of Cranberry's rental income for the years ended
December 31, 1997, and 1996.

In February 1998, Caldor announced that it will be closing its store at
Cranberry, effective July 1, 1998.  The General Partner is working to secure a
new anchor tenant for Caldor's space, although Caldor could attempt to sell its
lease at the Mall.  Attracting a replacement anchor is likely to take time and
require substantial capital outlays by the Partnership to fund tenant
improvements.  In the event that a new tenant is not secured by the date of
Caldor's departure, cash flow generated by Cranberry will be reduced assuming
Caldor rejects its lease.

Belk (formerly "Leggett") currently leases 65,282 square feet of gross leasable
building area.  During the first 15 years of the lease, ending March 4, 2002,
the tenant is required to use the premises as a Belk retail department store or
under such other trade name as Belk is then operating substantially all of its
department stores.

Montgomery Ward leases approximately 80,000 square feet of gross leasable
building area and 9,000 square feet for an automotive center.  During the first
15 years of the lease term, the tenant is required to use the premises as a
retail store under the trade name Montgomery Ward or under such other name as
the tenant is doing business in the majority of its retail department stores in
the State of Maryland.

On July 7, 1997, Montgomery Ward filed for protection under Chapter 11 of the
U.S. Federal Bankruptcy Code.  On October 10, 1997, as part of its bankruptcy
reorganization process, Montgomery Ward announced the closing of 48 stores.
Although the Cranberry store was not among those scheduled to be closed,
Montgomery Ward may in the future, with court approval, choose to reject or
accept the terms of its lease.

The following is a schedule of the remaining minimum lease payments as called
for under the lease agreements, excluding the Caldor lease after June 30, 1998:

                 Year ending
                 December 31,           Amount
                 1998            $   3,825,131
                 1999                3,265,924
                 2000                2,914,690
                 2001                2,503,813
                 2002                2,409,321
                 Thereafter          9,200,164
                                 $  24,119,043

In addition to the minimum lease amounts, the leases provide for percentage
rents and escalation charges to tenants for common area maintenance and real
estate taxes.  For the years ended December 31, 1997, 1996 and 1995,
respectively, percentage rents amounted to $240,961, $293,718 and $269,609 for
Cranberry. These amounts are included in rental income.  For the years ended
December 31, 1997, 1996 and 1995, respectively, temporary tenant income
amounted to $291,706, $296,226 and $330,111 for Cranberry.  These amounts are
included in rental income.

The appraised fair market values, as determined by an independent appraisal
firm, at January 1, 1998 and 1997 were $40,000,000 and $42,700,000,
respectively, for Cranberry.

Assembly Square
The Mall at Assembly Square in Somerville, Massachusetts was purchased on
October 11, 1988 for $42,358,000.  Assembly Square contained approximately
322,000 square feet of gross leasable area (including kiosk space) including
two anchor tenants: Macy's, formerly Jordan Marsh, and Kmart.

For the years ended December 31, 1996 and 1995, respectively, percentage rents
amounted to $151,981 and $91,191 for Assembly Square.  For the years ended
December 31, 1996 and 1995, respectively, temporary tenant income amounted to
$267,757 and $270,498 for Assembly Square.

The appraised fair market value, as determined by an independent appraisal
firm, at January 1, 1996 was $23,500,000 for Assembly Square.  No appraisal
was obtained after January 1, 1996.

A decrease in the appraised fair market value of Assembly Square from December
31, 1994, to December 31, 1995, and the near-term maturity date of the Assembly
Square mortgage loan were determined by management to be indicators of
impairment of the carrying value of Assembly Square.  Management completed a
recoverability review of the carrying value of Assembly Square based upon an
estimate of undiscounted future cash flows expected to result from its use and
eventual disposition.  As of December 31, 1995, management concluded that the
sum of the undiscounted future cash flows estimated to be generated by Assembly
Square was less than its carrying value and, as a result, the Partnership
recorded a loss provision of $17,903,567 to reduce Assembly Square's carrying
value to its estimated fair value of $23,500,000 as of December 31, 1995.

As a result of the continued decline in tenant sales and occupancy rates during
1996, management determined that an additional adjustment to the carrying value
was required to reflect the estimated fair value of Assembly Square at the date
of its foreclosure.  As a result, the Partnership recorded a loss provision of
$7,910,126 to reduce Assembly Square's carrying value to its estimated fair
value of $15,000,000 as of the date of foreclosure.

Foreclosure Sale of Assembly Square
On October 15, 1996, the Owner Partnership received notice of default from its
lender, Aetna Life Insurance Company ("Aetna"), due to the Owner Partnership's
failure to escrow real estate taxes with Aetna as required under the Mortgage
and Security Agreement (the "Mortgage") secured by Assembly Square.  On account
of such default, and pursuant to its rights and remedies under the Mortgage,
Aetna declared the entire outstanding mortgage loan balance immediately due and
payable.  On November 26, 1996, Aetna commenced advertising for a public
nonjudicial foreclosure sale to be held on December 20, 1996.  On
December 20, 1996, Aetna acquired Assembly Square at the foreclosure sale and,
as a result, the Partnership recognized a gain from the foreclosure sale of
$9,336,544.  The gain was allocated to the partners in accordance with the
Partnership Agreement.

Subsequent to the date of foreclosure, Aetna advised the Partnership that it
would pursue environmental remediation claims for land contamination under the
terms of the Mortgage.  On September 3, 1997, the Partnership and Aetna entered
into a Settlement Agreement whereby the Partnership paid $400,000 to Aetna for
a complete release from the Mortgage's loan covenants.  The release excludes
environmental claims already made by Aetna regarding existing environmental
conditions and environmental claims which could arise in the future because of
existing conditions.  The Partnership separately funded approximately $500,000
to pay for work performed to address environmental conditions at Assembly
Square.  Accordingly, the Partnership recognized a provision of $900,000 for
environmental remediation and settlement costs in the accompanying consolidated
statements of operations for the year ended December 31, 1997.  At
December 31, 1997, $788,958 of this amount had been paid by the Partnership.

It is uncertain whether the Commonwealth of Massachusetts will test the
remediation performed at Assembly Square, whether such tests would lead to
additional remediation or Aetna will pursue additional claims against the
Partnership.

The Partnership has demanded contribution from a prior owner of Assembly Square
for the amounts the Partnership expended in connection with the environmental
site remediation.  The prior owner has responded to the Partnership's demand by
making a preliminary offer to pay a portion of the site remediation costs.  The
Partnership has rejected the amount and terms of the prior owner's offer.  It
is uncertain at this time whether the Partnership will recover remediation
costs from this prior owner.  No amounts have been provided for the recovery of
remediation costs from others in the accompanying consolidated financial
statements.

4. Partnership Agreement
The Partnership has a 98% interest in the operating income, profits and cash
distributions, and a 99% interest in the operating losses, of the Owner
Partnership.  The Limited Partnership Agreement provides that all operating
income, operating losses and cash distributions are generally allocated 1% to
the General Partner and 99% to the Unitholders.

5. Construction Escrow
In 1990, the Partnership borrowed $3,775,000 to fund the expansion of
Montgomery Ward at Cranberry. During 1991, $3,425,000 of the funds were
released.  The remaining proceeds of $455,246, inclusive of interest income,
remain in a construction escrow account as of December 31, 1997.

6. Mortgages Payable
                                                            1997         1996
Secured by Cranberry. Interest only, at 7.25%,
  payable monthly until maturity on April 1, 1999   $ 27,250,000 $ 27,250,000
Secured by Cranberry. Interest only, at 7.25%,
  payable monthly until maturity on April 1, 1999      3,775,000    3,775,000
                                                    $ 31,025,000 $ 31,025,000

Cranberry Mall
The original notes secured by Cranberry matured on November 1, 1993.  The
lender, Metropolitan Life Insurance Company, agreed to extend the maturity date
of the notes to May 1, 1994.  During the extension period, the General Partner
and Metropolitan Life Insurance Co. continued discussions and reached an
agreement to modify and extend the notes on mutually acceptable terms.  Under
the terms of the agreement, the amended Cranberry notes, effective
April 1, 1994, require payments of interest only on the unpaid principal
balance of $31,025,000 at an interest rate of 7.25% per annum until their
maturity on April 1, 1999.  Interest expense for the years ended
December 31, 1997, 1996 and 1995 was $2,249,312, $2,762,279, and $2,925,892.

Based on the borrowing rates currently available to the Partnership for
mortgage loans with similar terms, the fair value of the Cranberry notes
approximates its carrying value as of the balance sheet date.

Assembly Square
The Owner Partnership had a $28,000,000 mortgage loan secured by Assembly
Square which was scheduled to mature on November 1, 1997, bore interest at a
rate of 8.5% per annum, and required monthly payments of principal and interest
based upon a twenty-year amortization schedule.  Interest expense for 1996 and
1995 was $1,976,520 and $2,089,745 respectively.

As discussed in Note 3, the Owner Partnership received notice of default from
Aetna due to the Owner Partnership's failure to escrow real estate taxes with
the lender.  On account of such default, and pursuant to its rights and
remedies under the mortgage, Aetna declared the entire outstanding mortgage
loan balance (as such term is defined in the mortgage) immediately due and
payable.  On November 6, 1996, the Owner Partnership received notice of default
from Aetna for failure to pay the November 1, 1996 monthly installment of
principal and interest. As discussed in Note 3, Aetna bid $15 million and
obtained title to Assembly Square at the foreclosure sale.  As a result, the
outstanding balance of the Aetna loan of $24,190,303 was forgiven on
December 20, 1996.

7. Transactions With Related Parties
Under the terms of the Partnership Agreement, the Partnership reimburses the
General Partner and affiliates, at cost, for certain administrative expenses.
For the years ended December 31, 1997, 1996, and 1995, costs were $3,495,
$5,719, and $8,595, respectively.  At December 31, 1997 and 1996, $133 and
$531 were due to the General Partner and affiliates for these expenses.

Effective as of January 1, 1997, the Partnership began reimbursing certain
expenses incurred by the General Partner and its affiliates in servicing the
Partnership to the extent permitted by the partnership agreement.  For the year
ended December 31, 1997, costs were $95,549 of which $33,615 was unpaid at
December 31, 1997.  In prior years, affiliates of the General Partner had
voluntarily absorbed these expenses.

Cash and Cash Equivalents - Certain cash accounts were on deposit with an
affiliate of the General Partner during a portion of 1996.  As of
December 31, 1996 and throughout 1997, no cash and cash equivalents were on
deposit with an affiliate of the General Partner or the Partnership.

8. Management Agreement
On May 1, 1997 the Partnership withdrew from its former management agreement
with Shopco Management Corporation, an affiliate of the Owner Partnership, and
entered into an agreement with Insignia Retail Group, Inc. ("Insignia").
Insignia receives an annual fee equal to 4% of the gross rents collected from
Cranberry Mall.  The agreement expires on April 30, 1998 and can be renewed
annually for one-year terms.  For the years ended December 31, 1997, 1996 and
1995, respectively, management fees earned by Shopco Management Corporation
were $69,849, $327,712 and $321,379.  The management fee earned by Insignia
during 1997 was $119,901.

9. Distributions to Limited Partners
Distributions to the limited partners for 1995 were $1,053,750 ($15 per limited
partnership unit) which were paid during 1996 and 1995.  No cash distributions
were declared payable to limited partners during 1997 and 1996.

10. Reconciliation of Consolidated Financial Statement Basis Net Income (Loss)
and Partners' Capital To Federal Income Tax Basis Net Income (Loss) and
Partners' Capital Reconciliations of consolidated financial statement basis
net income (loss) and partners' capital to federal income tax basis net
income (loss) and partners' capital follow:

                                             1997          1996           1995
Consolidated financial statement
  basis net income (loss)             $(7,594,087) $  1,007,864   $(17,536,302)
Tax basis depreciation over financial
  statement depreciation                 (211,566)     (768,323)      (357,373)
Tax basis recognition of deferred
  income over (under) financial
  statement recognition of deferred
  income                                   18,224       (33,640)        (6,913)
Tax basis recognition of real
  estate taxes under (over) financial
  statement recognition of real
  estate taxes                            (14,115)            _         (2,497)
Tax basis recognition of rental income
  over (under) financial statement
  recognition of rental income           (143,936)     (128,118)        25,007
  Tax basis recognition of loss
  on property sale over financial
  statement recognition of gain
  on sale                                       _   (23,612,844)             _
Financial statement loss on
  write-down of properties               7,497,11    17,910,126     17,903,567
Other                                           _       (26,177)         5,317
Federal income tax basis
  net income (loss)                   $  (448,369) $(15,651,112)  $     30,806



                                             1997          1996           1995
Financial statement basis partners'
  capital                             $19,010,665   $26,604,752    $25,607,532
Current year financial statement net income
  (loss) over (under) federal income
  tax basis  net income (loss)          7,145,718   (16,658,976)    17,567,108
Cumulative federal income tax basis net loss
  over (under) cumulative financial
  statement net loss                      795,966    17,454,942       (112,166)
Federal income tax basis partners'
  capital                             $26,952,349   $27,400,718    $43,062,474

Because many types of transactions are susceptible to varying interpretations
under Federal and state income tax laws and regulations, the amounts reported
above may be subject to change at a later date upon final determination by the
respective taxing authorities.

11. Litigation
On October 18, 1996, a purported first consolidated and amended class action
complaint was filed in the Court of Chancery of the State of Delaware and for
New Castle County on behalf of all persons who purchased units in the
Partnership, among other investments.  The complaint names the General Partner
of the Partnership, Lehman Brothers Inc. and others (the "Defendants").  This
case consolidates previous actions against the Defendants.  The Partnership was
not named as a defendant.  The complaint alleges, among other things, that the
Unitholders were induced to purchase Units based upon misrepresentation and/or
omitted statements in the sales materials used in connection with the offering
of Units in the Partnership.  The complaint purports to assert a claim for
breach of fiduciary duty by the Defendants based on the foregoing. The
Defendants intend to defend the action vigorously.



                  Independent Auditors' Report



The Partners
Shopco Regional Malls, L.P.:


We have audited the consolidated financial statements of Shopco Regional Malls,
L.P. (a Delaware limited partnership) and consolidated partnership as listed in
the accompanying index.  In connection with our audits of the consolidated
financial statements, we also have audited the financial statement schedules as
listed in the accompanying index.  These consolidated financial statements and
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these consolidated
financial statements and the financial statement 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 audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Shopco Regional
Malls, L.P. and consolidated partnership as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.  Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.

                                        KPMG PEAT MARWICK LLP

Boston, Massachusetts
March 18, 1998




Schedule II Valuation and Qualifying Accounts

                                 Balance at  Charged to             Balance at
                                  Beginning   Costs and                 End of
                                  of Period    Expenses   Deductions    Period
Allowance for doubtful accounts:
Year ended December 31, 1995:     $ 604,598   $ 342,127   $  148,942  $ 797,783
Year ended December 31, 1996:       797,783     419,095    1,056,485    160,393
Year ended December 31, 1997:     $ 160,393   $ 207,803   $    1,328  $ 366,868


Schedule III - Real Estate and Accumulated Depreciation
December 31, 1997
                                            Cranberry Mall
                                           Shopping Center

Location                                   Westminster, MD

Construction date                                     1980
Acquisition date                                     10-88
Life on which depreciation
in latest income statements
is computed                                            (3)
Encumbrances                                  $ 31,025,000
Initial cost to Partnership:
     Land                                        6,610,235
     Buildings and
     improvements                               47,649,669
Costs capitalized
subsequent to acquisition:
     Land, buildings
     and improvements                            5,450,081

Gross amount at which
carried at close of period:
     Land                                     $  5,401,132
     Buildings and
     improvements                               33,873,868
                                              $ 39,275,000


(1)  The initial cost to the Partnership represents the original purchase price
     of the property.
(2)  For Federal income tax purposes, the costs basis of the land, building and
     improvements at December 31, 1997 is $71,625,476.
(3)  Buildings - 40 years; personal property - 12 years; tenant improvements -
     7 years.

A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended December 31, 1997, 1996, and 1995 follows:

                                    1997             1996             1995
Real estate investments:
Beginning of year          $  59,709,985     $ 83,291,450     $107,034,954
Additions                        176,000           55,212          836,706
Writedown                    (20,610,985)      (8,636,677)     (24,522,234)
Dispositions                           _      (15,000,000)         (57,976)
End of year                $  39,275,000     $ 59,709,985     $ 83,291,450

Accumulated depreciation:
Beginning of year          $  11,512,517     $ 10,129,658     $ 14,227,478
Depreciation expense           1,525,630        2,109,410        2,520,847
Writedown                    (13,038,147)        (726,551)      (6,618,667)
Dispositions                           _                _                _
End of year                $           _     $ 11,512,517     $ 10,129,658