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

                                   FORM 10-Q

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

               For the quarterly period ended September 30, 1998

                                       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:333-42441

                       MID-AMERICA CAPITAL PARTNERS, L.P.
               (Exact Name of Registrant as Specified in Charter)

              TENNESSEE                            62-1717980
      (State of Incorporation)       (I.R.S. Employer Identification Number)

                         6584 POPLAR AVENUE, SUITE 340
                            MEMPHIS, TENNESSEE 38138
                    (Address of principal executive offices)

                                 (901) 682-6600
               Registrant's telephone number, including area code

 N/A (Former name, former address and former fiscal year, if changed since last
                                    report)


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.
                                                                  [X] Yes [ ] No



                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

                                                    Number of Shares Outstanding
                       Class                               at October 31, 1998
                                                                  none



<PAGE>




                               TABLE OF CONTENTS


                         PART I - FINANCIAL INFORMATION


 Item 1.          Financial Statements

                    Balance Sheets of Mid-America  Capital  Partners,  L.P. (the
                    "Partnership")  as of  September  30, 1998 and  December 31,
                    1997

                    Statement of Operations of the Partnership for the three and
                    nine months ended September 30, 1998 and Combined  Statement
                    of Operations of Capital Properties Group  ("Predecessor" to
                    Mid-America  Capital Partners,  L.P.) for the three and nine
                    months ended  September 30, 1997  

                    Statement  of Cash  Flows  of the  Partnership  for the nine
                    months ended  September  30, 1998 and Combined  Statement of
                    Cash  Flows of the  Predecessor  for the nine  months  ended
                    September, 30, 1997 

                    Notes to Financial Statements

Item 2.           Management's Discussion and Analysis of Financial Condition
                    and Results of Operations



                          PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

Item 2.           Changes in Securities

Item 3.           Defaults Upon Senior Securities

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

Item 5.           Other Information

Item 6.           Exhibits and Reports on Form 8-K

                  Signatures

<PAGE>


                         PART I. Financial Information
                                    ITEM 1.

                       Mid-America Capital Partners, L.P.
                            (a limited partnership)

                                 Balance Sheets
              September 30, 1998 (Unaudited) and December 31, 1997

                             (Dollars in thousands)
                                                  1998         1997
Assets:

Real estate assets:
      Land                                     $ 21,016    $ 21,016
      Buildings and improvements                203,356     201,499
      Furniture, fixtures and equipment           4,389       3,354
      Construction in progress                    1,815       1,739
--------------------------------------------------------------------
                                                230,576     227,608
      Less accumulated depreciation             (20,196)    (13,985)
--------------------------------------------------------------------
            Real estate assets, net             210,380     213,623

      Cash                                          387       1,570
      Restricted cash                               402         932
      Deferred financing costs, net               4,491       1,743
      Due from limited partner                    9,251       1,264
      Other assets                                  202         231
---------------------------------------------------------------------
          Total assets                         $225,113    $219,363
=====================================================================

Liabilities and Partner's Capital

Liabilities:
      Bonds payable                           $ 142,000      $    0
      Bridge notes payable                            -     140,000
      Accounts payable                              340         390
      Accrued expenses and other liabilities      3,609       2,875
      Due to affiliate                            1,278       1,596
      Security deposits                             713         713
--------------------------------------------------------------------
          Total liabilities                     147,940     145,574

Partner's Capital:
      General Partner                             2,397       2,363
      Limited Partner                            74,776      71,426
--------------------------------------------------------------------
          Total partner's capital                77,173      73,789
--------------------------------------------------------------------
          Total liabilities and 
          partner's capital                    $225,113    $219,363
===================================================================


                See accompanying notes to financial statements.

<PAGE>

                       Mid-America Capital Partners, L.P.
                            (a limited partnership)
                 Statement of Operations of the Partnership and
              Combined Statement of Operations of the Predecessor
            Three and nine months ended September 30, 1998 and 1997

                             (Dollars in thousands)
                                  (Unaudited)
     
                                     Three months ended      Nine months ended
                                        September 30,           September 30,
                                     ------------------    ------------------
                                              Predecessor           Predecessor
                                         1998      1997        1998      1997
                                     --------   -------    --------  --------
Revenues:
       Rental                         $ 9,715   $ 7,683    $ 28,757  $ 22,233
       Other                              104        66         335       187
--------------------------------------------------------  --------------------
       Total revenues                   9,819     7,749      29,092    22,420
--------------------------------------------------------  --------------------

Expenses:
       Personnel                        1,106       745       3,244     2,283
       Building repairs and
         maintenance                      610       464       1,521     1,110
       Real estate taxes 
         and insurance                    921       741       2,788     2,125
       Utilities                          425       306       1,177       859
       Landscaping                        239       198         728       617
       Other operating                    414       337       1,150       940
       Depreciation and amortization 
         real estate assets             2,080     1,566       6,179     4,586
       Depreciation and amortization 
         non-real estate assets            17         8          32        21
       General and administrative         392       310       1,130       897
       Interest                         2,268         0       6,894       724
       Amortization of deferred 
         financing costs                  247        14         779        35
--------------------------------------------------------  --------------------
       Total expenses                   8,719     4,689      25,622    14,197

--------------------------------------------------------  --------------------
Income before extraordinary item        1,100     3,060       3,470     8,223
--------------------------------------------------------  --------------------
Extraordinary item:
       Loss on debt extinguishment          -         -          86         -
--------------------------------------------------------  --------------------
Net income                            $ 1,100   $ 3,060     $ 3,384   $ 8,223
========================================================  ====================

                See accompanying notes to financial statements.

<PAGE>

                       Mid-America Capital Partners, L.P.
                            (a limited partnership)
                 Statement of Cash Flows of the Partnership and
              Combined Statement of Cash Flows of the Predecessor
                 Nine months ended September 30, 1998 and 1997
                             (Dollars in thousands)
                                  (Unaudited)
                                                                    Predecessor
                                                              1998      1997
                                                            ------    ------
Cash flows from operating activities:
      Net income                                            $3,384    $8,223
      Adjustments to reconcile net income to net 
          cash provided by operating activities:
               Depreciation and amortization                 6,990     4,642
               Extraordinary item                               86         -
               Changes in assets and liabilities:
                   Restricted cash                             530       278
                   Due to affiliate                           (318)        -
                   Other assets                                 29        (8)
                   Accounts payable                            (50)     (160)
                   Accrued expenses and other
                     liabilities                               734       516
                   Security deposits                             -         8
-----------------------------------------------------------------------------
               Net cash provided by operating activities    11,385    13,499
-----------------------------------------------------------------------------
Cash flows from investing activities:
               Purchases of real estate assets              (2,968)  (19,211)
               Improvements to properties                        -    (3,544)
-----------------------------------------------------------------------------
               Net cash used in investing activities        (2,968)  (22,755)
-----------------------------------------------------------------------------
Cash flows from financing activities:
               Proceeds from notes payable                 142,000         -
               Principal payments on bridge
                  notes payable                           (140,000)        -
               Principal payments on notes payable               -   (16,460)
               Deferred financing costs                     (3,613)        -
               Due from limited partner                     (7,987)        -
               Capital contributions, net (Predecessor)          -    25,674
-----------------------------------------------------------------------------
               Net cash provided by (used in) 
                 financing activities                       (9,600)    9,214
-----------------------------------------------------------------------------
               Net increase in cash and cash equivalents    (1,183)      (42)
-----------------------------------------------------------------------------
Cash, beginning of period                                    1,570       134
-----------------------------------------------------------------------------
Cash, end of period                                          $ 387      $ 92
-----------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
   Interest paid                                           $ 6,978     $ 658
-----------------------------------------------------------------------------


                See accompanying notes to financial statements.

<PAGE>


                       MID-AMERICA CAPITAL PARTNERS, L.P.
                            (a limited partnership)
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)



1.       Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance
with the accounting  policies in effect as of December 31, 1997, as set forth in
the annual  financial  statements of  Mid-America  Capital  Partners,  L.P. (the
"Partnership"),  as of such date. In the opinion of management,  all adjustments
necessary for a fair presentation of the financial statements have been included
and all such  adjustments  were of a normal  recurring  nature.  The  results of
operations  for  the  nine-month   period  ended  September  30,  1998  are  not
necessarily indicative of the results to be expected for the full year.

The  Partnership  is  a  special  purpose  Delaware  limited  partnership.   The
Partnership  was formed on  November  24,  1997 for the sole  purpose to own and
operate  26  apartment   communities  (the  Mortgaged  Properties)  and  manage,
renovate, improve, lease, sell, transfer,  exchange, mortgage and otherwise deal
with the Mortgaged  Properties.  The sole limited  partner of the Partnership is
Mid-America Apartments,  L.P., a Tennessee limited partnership (MAALP), which is
a majority owned subsidiary of Mid-America Apartment  Communities,  Inc. (MAAC).
MAAC owns, directly or through its subsidiaries, all of the outstanding units of
Partnership  interest.  MAAC is a  self-administered  and self-managed  umbrella
partnership  real estate  investment  trust (REIT).  MAAC conducts a substantial
portion of its  operation  through  MAALP and  subsidiaries  of MAALP.  The sole
general  partner of the  Partnership  is MAACP,  Inc.,  a Tennessee  corporation
(MAACP), a wholly-owned subsidiary of MAAC. The term of the Partnership shall be
to December 31, 2020, unless  terminated  earlier as provided in the Partnership
Agreement or as otherwise provided by law.

2.       Financing Transactions

On March 6, 1998 the Partnership issued $142 million aggregate  principal amount
of 6.376% Bonds due 2003 (the Bonds).  The Bonds are secured by a first priority
deed of trust,  security agreement and assignment of rents and leases in respect
of the  Mortgaged  Properties.  The net proceeds from the sale of the Bonds were
applied to the bridge notes payable and utilized to fund costs of the offering.

The  Partnership  has  only  limited   involvement  with  derivative   financial
instruments  and  does  not use  them  for  trading  purposes.  The  Partnership
occasionally utilizes derivative financial instruments as hedges in anticipation
of future debt transactions to manage well-defined interest rate risk.

In  anticipation  of the March 6,  1998  Bonds  issuance  discussed  above,  the
Partnership  entered into four  separate  interest  rate  contracts in 1997 with
notional amounts  aggregating $140 million,  the effect of which was to lock the
interest rate on $140 million of the Bonds at an average interest rate of 6.62%.
On March 6, 1998 the  Partnership  realized a $1.4 million  realized loss on the
interest  rate  contracts.  The realized loss  resulting  from the change in the
market value of these  contracts is being  amortized into interest  expense over
the life of the related debt issuance.


6.        Recent Accounting Pronouncements

In June 1998, SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging
Activity," was issued  effective for years  beginning  after June 15, 1999. This
new  accounting  statement  is not  expected  to have a  material  impact on the
Company's  consolidated  financial  statements.  The  Company  will  adopt  this
accounting standard in 2000.


<PAGE>

                         PART I. Financial Information
                                    ITEM 2.

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

OVERVIEW

The  following  is a  discussion  of the  financial  condition  and  results  of
operations of the  Partnership for the three and nine months ended September 30,
1998 and the  combined  financial  condition  and results of  operations  of the
Partnership  for the  three and nine  months  ended  September  30,  1997.  This
discussion should be read in conjunction with the financial  statements included
in this report. These financial  statements include all adjustments,  which are,
in the  opinion of  management,  necessary  to reflect a fair  statement  of the
results for the interim  periods  presented,  and all such  adjustments are of a
normal recurring nature.

The total number of apartment  units owned at September 30, 1998 was 5,949 in 26
apartment  communities,  compared to 4,804 in 20  communities  at September  30,
1997.  Average  monthly rental per apartment unit increased to $569 at September
30,  1998  from $546 at  September  30,  1997.  Overall  occupancy  was 94.6% at
September 30, 1998 and 96.4% at September 30, 1997.


RESULTS OF OPERATIONS

COMPARISON OF THE PARTNERSHIP'S THREE MONTHS ENDED SEPTEMBER 30, 1998
TO THE PREDECESSOR'S THREE MONTHS ENDED SEPTEMBER 30, 1997

Total  revenues  for the three  months  ended  September  30, 1998  increased by
approximately  $2,070,000 due primarily to (i) approximately $1,655,000 from the
communities acquired in 1997and (ii) approximately $415,000 from the communities
owned throughout both periods.

Property  operating  expenses  for the three  months  ended  September  30, 1998
increased by approximately  $924,000 due primarily to (i) approximately $670,000
from the communities  acquired in 1997 and (ii) approximately  $254,000 from the
communities owned throughout both periods.

Depreciation and amortization expense increased  approximately  $756,000 for the
three months ended September 30, 1998 compared to the same period a year earlier
primarily due to (i)  depreciation  expense of  approximately  $340,000 from the
communities  acquired  in  1997,  (ii)  depreciation  expense  of  approximately
$183,000  from  the  communities  owned  throughout  both  periods,   and  (iii)
approximately  $233,000 of  additional  amortization  expense  for the  deferred
financing  costs  incurred on the March 6, 1998 offering of  $142,000,000  bonds
payable (the "First Mortgage Bonds").

Interest  expense  increased  approximately  $2,268,000  during the three months
ended September,  1998 compared to the same period a year earlier  primarily due
to the  issuance  of the  First  Mortgage  Bonds.  No debt  was  carried  on the
properties  during the quarter ended  September 30, 1997.  The borrowing cost of
the Partnership First Mortgage Bonds was 6.62% at September 30, 1998.


COMPARISON OF THE PARTNERSHIP'S NINE MONTHS ENDED SEPTEMBER 30, 1998
TO THE PREDECESSOR'S NINE MONTHS ENDED SEPTEMBER 30, 1997

Total  revenues  for the nine  months  ended  September  30, 1998  increased  by
approximately  $6,672,000 due primarily to (i) approximately $5,289,000 from the
communities  acquired  in  1997  and  (ii)  approximately  $1,383,000  from  the
communities owned throughout both periods.

Property  operating  expenses  for the nine  months  ended  September  30,  1998
increased  by  approximately  $2,674,000  due  primarily  to  (i)  approximately
$1,991,000 from the communities acquired in 1997 and (ii) approximately $683,000
from the communities owned throughout both periods.
<PAGE>

Depreciation and amortization expense increased approximately $2,348,000 for the
nine months ended  September 30, 1998 compared to the same period a year earlier
primarily due to (i)  depreciation  expense of  approximately  $979,000 from the
communities  acquired in 1997, (ii) approximately  $625,000 from the communities
owned throughout both periods,  and (iii)  approximately  $744,000 of additional
amortization  expense for the deferred  financing costs incurred on the March 6,
1998 offering of $142,000,000 bonds payable (the "First Mortgage Bonds").

Interest expense increased approximately $6,170,000 during the nine months ended
September,  1998 compared to the same period a year earlier primarily due to the
issuance of the First  Mortgage  Bonds.  The borrowing  cost of the  Partnership
First Mortgage Bonds was 6.62% at September 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow  provided  by  operating  activities  decreased  by  approximately
$2,114,000  for the nine months ended  September  30, 1998.  The decrease in net
cash flow was primarily due to a decrease in net income,  mainly  related to the
additional  interest  costs of the First  Mortgage  Bonds,  which was  partially
offset by an increase in depreciation and amortization.

Net  cash  flow  used  in  investing   activities   decreased  by  approximately
$19,787,000  for the nine months  ended  September  30, 1998 from  approximately
$22,755,000  for the nine months  ended  September  30, 1997.  This  decrease is
mainly due to the purchase of two properties by the Predecessor during the first
quarter  of 1997,  Howell  Commons  and  Westside  Creek  I,  for  approximately
$19,064,000.  There were no property  acquisitions  during the nine months ended
September 30, 1998.

Net  cash  flow  used  in  financing   activities   increased  by  approximately
$18,814,000  during the nine months ended September 30, 1998. The principal uses
of cash from financing activities were approximately  $140,000,000 for repayment
of the bridge notes payable, approximately $7,987,000 in advances to the limited
partner,  and approximately  $3,613,000 for additional  deferred financing costs
related to the issuance of  $142,000,000  Bonds payable.  During the nine months
ended September 30, 1997 the Predecessor received capital contributions totaling
$25,674,000  used  primarily to acquire the  properties  mentioned  above and to
settle the outstanding  mortgages relating to the two properties.  There were no
capital  contributions  or property  acquisitions  during the nine months  ended
September 30, 1998.

The  Partnership  believes  that cash  provided by  operations  is adequate  and
anticipates that it will continue to be adequate in both the short and long-term
to meet operating requirements  (including recurring capital expenditures at the
Communities).


INSURANCE

In the opinion of management,  property and casualty insurance is in place which
provides  adequate  coverage  to provide  financial  protection  against  normal
insurable risks such that it believes that any loss experienced would not have a
significant  impact  on the  Partnership's  liquidity,  financial  position,  or
results of operations.

INFLATION

Substantially  all of the resident leases at the Communities  allow, at the time
of renewal, for adjustments in the rent payable thereunder,  and thus may enable
the Partnership to seek rent increases. The substantial majority of these leases
are for one year or less. The short-term nature of these leases generally serves
to reduce the risk to the Partnership of the adverse effects of inflation.

YEAR 2000

The Company has  conducted a review of its  computer  operating  systems and has
identified  those  areas that could be affected by the "Year 2000" issue and has
developed a plan to resolve this issue.  The Company  believes that by modifying
certain  existing  hardware and software and, in other cases,  converting to new
application  systems,  the Year 2000 problem can be resolved without significant
operational  difficulties.  The Company has initiated formal communications with
all of its significant  suppliers to determine the extent to which the Company's
interface  systems are vulnerable to those third  parties'  failure to remediate
their own Year 2000 issues.  Management  has  assessed the Year 2000  compliance
expense and believe that the related potential effect on the Company's business,
financial condition and results of operations should be immaterial.  The Company
is  expensing  all costs  associated  with the Year 2000  issue as the costs are
incurred.
<PAGE>


RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

The Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe  harbors  created  thereby.  These  statements  include  the  plans and
objectives of management for future  operations,  including plans and objectives
relating  to capital  expenditures  and  rehabilitation  costs on the  apartment
communities. The forward-looking statements included herein are based on current
expectations that involve numerous risks and  uncertainties  which are discussed
in "Risk  Factors" in this report.  Although the  Partnership  believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and,  therefore,  there can be no assurance that
the  forward-looking  statements  included  in  this  report  will  prove  to be
accurate.   In  light  of  the   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be  regarded  as a  representation  by the  Partnership  or any other
person that the objectives and plans of the Partnership will be achieved.


<PAGE>


                          PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

            None.

Item 2.     Changes in Securities

            None.

Item 3.     Defaults Upon Senior Securities

            None.

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

            None.

Item 5.     Other Information

            None.

Item 6.    Exhibits and Reports on Form 8-K


           (a) The following exhibit is filed as part of this form:

               (27) Financial Data Schedule 


           (b)  Reports on Form 8-K


                None.


<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.


                                              MID-AMERICA CAPITAL PARTNERS, L.P.


                                              /s/Simon R.C. Wadsworth
Date: November 14, 1998                       ---------------------------------

                                                 Simon R.C. Wadsworth
                                                 President and Director
                                                (Principal Executive Officer)

                                              /s/Mark S. Martini
Date:  November 14, 1998                      ---------------------------------

                                                 Mark S. Martini
                                                 Director
                                                (Principal Financial and 
                                                  Accounting Officer)