UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

1. QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2007

or

( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0001260793

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.(Exact Name of Registrant as Specified in Its Charter)



|Maryland                                                                           | 56-2356626                          
|---------------------------------------------------------------------------------- | ------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization)                     | (I.R.S. Employer Identification No.)
|                                                                                   |                                     
|One Boston Place, Suite 2100, Boston, MA  02108                                   
|(Address of Principal Executive Offices)
(Zip code)                               
|                                                                                   |                                     
|(617) 624-8900                                                                    
|(Registrant's Telephone Number, Including Area Code)                              
|                                                                                   |                                     
|Not Applicable                                                                    
|(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



|Yes | X |  | No | _
|--- | - |  | -- | -
|    |   |  |    |  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.  (Check One):



|Large Accelerated Filer | __ | Accelerated Filer | __ | Non-Accelerated Filer | X
|----------------------- | -- | ----------------- | -- | --------------------- | -

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



|Yes | __ |  | No | X
|--- | -- |  | -- | -

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

7,684,467 shares of common stock, par value $.001 per share, outstanding as of August 14, 2007





BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

QUARTERLY REPORT ON FORM 10-QFOR THE QUARTER ENDED JUNE 30, 2007

TABLE OF CONTENTS

|PART I - FINANCIAL INFORMATION |                                                                                                
|------------------------------ | -----------------------------------------------------------------------------------------------
|                               |                                                                                                
|                               | Item 1. Consolidated Financial Statements.                                                     
|                               |                                                                                                
|                               |                                                                                                
|                               |                                                                                                
|                               |                                                                                                
|                               |                                                                                                
|                               |                                                                                                
|                               | Item 2. Management's Discussion and Analysis of Financial 
Condition and Results of Operations.
|                               |                                                                                                
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                            
|                               |                                                                                                
|                               | Item 4. Controls and Procedures.                                                               
|                               |                                                                                                
|PART II - OTHER INFORMATION    |                                                                                                
|                               |                                                                                                
|                               | Item 1. Legal Proceedings.                                                                     
|                               |                                                                                                
|                               | Item 1A. Risk Factors.                                                                         
|                               |                                                                                                
|                               | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.                           
|                               |                                                                                                
|                               | Item 3. Defaults Upon Senior Securities.                                                       
|                               |                                                                                                
|                               | Item 4. Submission of Matters to a Vote of Security Holders.                                   
|                               |                                                                                                
|                               | Item 5. Other Information.                                                                     
|                               |                                                                                                
|                               | Item 6. Exhibits.                                                                              
|                               |                                                                                                
|                               |                                                                                                
|                               | Signatures                                                                                     
|                               |                                                                                                
|                               |                                                                                                
|                               |                                                                                                





Part I

Financial Information

Item 1. Consolidated Financial Statements.

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.



(Dollars in thousands, except share amounts)



|                              |                                                                                                                                                                                                                                                                                      | June 30,
2007
(Unaudited) |          | December 31,
2006
|----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | -------- | -----------------
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Assets:                       |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              | Real Estate                                                                                                                                                                                                                                                                          |                           |          |                  
|                              | Land                                                                                                                                                                                                                                                                                 | $                         | 31,084   | $                
|                              | Building and improvements                                                                                                                                                                                                                                                            |                           | 149,526  |                  
|                              | Furniture, fixtures and equipment                                                                                                                                                                                                                                                    |                           | 8,688    |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           | 189,298  |                  
|                              | Less accumulated depreciation                                                                                                                                                                                                                                                        |                           | (22,603) |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      | 166,695                   |          | 169,592          
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              | Cash and cash equivalents                                                                                                                                                                                                                                                            |                           | 11,745   |                  
|                              | Accounts receivable-tenants, net of allowance for doubtful 
   accounts of $25 and $28, respectively                                                                                                                                                                                 |                           | 217      |                  
|                              | Cash in escrow                                                                                                                                                                                                                                                                       |                           | 1,876    |                  
|                              | Deferred financing costs, net of accumulated amortization of 
    $1,582 and $1,562, respectively                                                                                                                                                                                    |                           | 779      |                  
|                              | Other assets                                                                                                                                                                                                                                                                         |                           | 406      |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Total                         | $                                                                                                                                                                                                                                                                                    | 181,718                   | $        | 183,103          
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                             
|Liabilities:                  |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              | Mortgage notes payable                                                                                                                                                                                                                                                               | $                         | 132,435  | $                
|                              | Line of credit-non affiliate                                                                                                                                                                                                                                                         |                           | 11,053   |                  
|                              | Accounts payable and accrued expenses                                                                                                                                                                                                                                                |                           | 2,627    |                  
|                              | Due to related party                                                                                                                                                                                                                                                                 |                           | 504      |                  
|                              | Other liabilities                                                                                                                                                                                                                                                                    |                           | 1,371    |                  
|                              | Distributions payable                                                                                                                                                                                                                                                                |                           | 379      |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Total liabilities             |                                                                                                                                                                                                                                                                                      | 148,369                   |          | 180,557          
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Commitments and contingencies |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Minority interest             |                                                                                                                                                                                                                                                                                      | 136                       |          | 147              
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Redeemable common stock       |                                                                                                                                                                                                                                                                                      | 544                       |          | 169              
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Stockholders' equity:         |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              | Preferred stock, $.001 par value, 50,000,000 shares authorized, 250
     shares classified and designated as 12% Series A cumulative non-voting
     shares, 0 and 173, respectively issued and outstanding at June 30, 2007
    and December 31, 2006 ($87 liquidation  preference) |                           | -        |                  
|                              | Common stock, $.001 par value, 400,000,000 shares authorized, 
    7,684,467 and 3,681,606 shares issued and outstanding at June 30, 2007
    and December 31, 2006, respectively                                                                                                    |                           | 8        |                  
|                              | Additional paid-in capital                                                                                                                                                                                                                                                           |                           | 69,226   |                  
|                              | Distributions in excess of accumulated earnings                                                                                                                                                                                                                                      |                           | (2,248)  |                  
|                              | Redeemable common stock                                                                                                                                                                                                                                                              |                           | (544)    |                  
|                              | Accumulated deficit                                                                                                                                                                                                                                                                  |                           | (33,773) |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Total stockholders' equity    |                                                                                                                                                                                                                                                                                      | 32,669                    |          | 2,230            
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|Total                         | $                                                                                                                                                                                                                                                                                    | 181,718                   | $        | 183,103          
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  
|                              |                                                                                                                                                                                                                                                                                      |                           |          |                  

See accompanying notes



1



BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

(Dollars in thousands, except per share amounts)

(Unaudited)





|                                                                 |                                              | Three Months Ended June 30, |       | Six Months Ended June 30,
|---------------------------------------------------------------- | -------------------------------------------- | --------------------------- | ----- | -------------------------
|                                                                 |                                              | 2007                        |       | 2006                     
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Revenue                                                          |                                              |                             |       |                          
|                                                                 | Rental revenue                               | $                           | 6,993 | $                        
|                                                                 | Other revenue                                |                             | 109   |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              | 7,102                       |       | 6,747                    
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Expenses                                                         |                                              |                             |       |                          
|                                                                 | Property operating costs                     |                             | 3,296 |                          
|                                                                 | General and administrative                   |                             | 1,417 |                          
|                                                                 | Depreciation and amortization                |                             | 1,648 |                          
|                                                                 | Asset management fee-related party           |                             | 366   |                          
|                                                                 | Non-monetary loss                            |                             | 798   |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              | 7,525                       |       | 5,389                    
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Operating income                                                 |                                              | (423)                       |       | 1,358                    
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Interest (income) expense                                        |                                              |                             |       |                          
|                                                                 | Interest expense on line of credit-affiliate |                             | -     |                          
|                                                                 | Interest expense-other                       |                             | 1,991 |                          
|                                                                 | Amortization of deferred financing costs     |                             | 131   |                          
|                                                                 | Interest income                              |                             | (106) |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             | 2,016 |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Loss before minority interest                                    |                                              | (2,439)                     |       | (1,991)                  
|                                                                 |                                              |                             |       |                          
|Loss attributed to minority interest                             |                                              | (4)                         |       | (5)                      
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Net loss                                                         | $                                            | (2,435)                     | $     | (1,986)                  
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Loss per common share-basic and diluted                          | $                                            | -                           | $     | (70)                     
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|Weighted average common shares 
   outstanding-basic and diluted |                                              | 6,884,063                   |       | 28,304                   
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          
|                                                                 |                                              |                             |       |                          



See accompanying notes



2

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

|                                               |                                                                                                                                                |                                                              | Six Months Ended June 30,                          
|---------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------------------------
|                                               |                                                                                                                                                |                                                              | 2007                                               
|                                               |                                                                                                                                                |                                                              |                                                    
|Cash flows from operating activities:          |                                                                                                                                                |                                                              |                                                    
|                                               | Net loss                                                                                                                                       |                                                              | $                                                  
|                                               | Adjustments to reconcile net loss to net cash provided                                                                                         |                                                              |                                                    
|                                               | by (used in) operating activities                                                                                                              |                                                              |                                                    
|                                               |                                                                                                                                                | Depreciation and amortization                                |                                                    
|                                               |                                                                                                                                                | Loss allocated to minority interest                          |                                                    
|                                               |                                                                                                                                                | Non-monetary loss                                            |                                                    
|                                               |                                                                                                                                                | Changes in assets and liabilities                            |                                                    
|                                               |                                                                                                                                                | Increase in accounts receivable-tenants                      |                                                    
|                                               |                                                                                                                                                | Increase in cash in escrow                                   |                                                    
|                                               |                                                                                                                                                | (Increase) decrease in other assets                          |                                                    
|                                               |                                                                                                                                                | Increase in interest payable on line of credit - affiliate   |                                                    
|                                               |                                                                                                                                                | (Increase) decrease in accounts payable and accrued expenses |                                                    
|                                               |                                                                                                                                                | Increase (decrease) in due to related party                  |                                                    
|                                               |                                                                                                                                                | Increase in other liabilities                                |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              | Net cash (used in) provided by operating activities
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|Cash flows from investing activities:          |                                                                                                                                                |                                                              |                                                    
|                                               | Investment in real estate                                                                                                                      |                                                              |                                                    
|                                               | Withdrawals from cash in escrow                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              | Net cash used in investing activities              
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|Cash flows from financing activities           |                                                                                                                                                |                                                              |                                                    
|                                               | Payments on mortgage note payable                                                                                                              |                                                              |                                                    
|                                               | Payments on line of credit-non affiliate                                                                                                       |                                                              |                                                    
|                                               | Amortization of financing costs                                                                                                                |                                                              |                                                    
|                                               | Advances from (repayments to)  related party                                                                                                   |                                                              |                                                    
|                                               | Payment of deferred offering costs                                                                                                             |                                                              |                                                    
|                                               | Payment of equity issuance costs                                                                                                               |                                                              |                                                    
|                                               | Proceeds from sale of preferred stock                                                                                                          |                                                              |                                                    
|                                               | Redemption of preferred stock                                                                                                                  |                                                              |                                                    
|                                               | Proceeds from sale of common stock                                                                                                             |                                                              |                                                    
|                                               | Distributions to common stockholders                                                                                                           |                                                              |                                                    
|                                               | Distributions to preferred stockholders                                                                                                        |                                                              |                                                    
|                                               | Distribution to minority partner                                                                                                               |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              | Net cash provided by financing activities          
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              | Net increase in cash and cash equivalents          
|                                               |                                                                                                                                                |                                                              |                                                    
|Cash and cash equivalents, beginning of period |                                                                                                                                                |                                                              | 6,050                                              
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|Cash and cash equivalents, end of period       |                                                                                                                                                | $                                                            | 11,745                                             
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|Supplemental cash flow information:            |                                                                                                                                                |                                                              |                                                    
|                                               | Interest paid (includes $0 and $2,730, respectively, of related party interest)                                                                |                                                              | $                                                  
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               | Offset of deferred offering costs and related party advances                                                                                   |                                                              | $                                                  
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               | Deferred offering costs                                                                                                                        |                                                              | $                                                  
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               | Building and furniture, fixture and equipment reduction due to non-monetary loss, net of accumulated depreciation of $102 and $0, respectively |                                                              | $                                                  
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               | Common and preferred stockholder distributions accrued                                                                                         |                                                              | $                                                  
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               | Common stockholder distributions reinvested in accordance with our  distribution reinvestment program                                          |                                                              | $                                                  
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    
|                                               |                                                                                                                                                |                                                              |                                                    

See accompanying notes.

3

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007



(Unaudited)

(Dollars in thousands, except per share data)

NOTE A - ORGANIZATION

Boston Capital Real Estate Investment Trust, Inc., a Maryland Corporation, was formed on May 2, 2003 and commenced operations on May 15, 2003.  We are a real estate company engaged in the acquisition, ownership, management, and operation of market rate apartment communities.  We have elected to qualify as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2005.



Boston Capital REIT Advisors, LLC is one of our affiliates and our advisor under the terms and conditions of an advisory agreement.  Our advisor identifies and, subject to the approval of our board of directors, makes acquisitions and investments on our behalf.  We have no employees of our own.  Our advisor is wholly-owned by Boston Capital Holdings Limited Partnership.  Our Chairman and Chief Executive Officer is the general partner of and owns a controlling limited partnership interest in Boston Capital Holdings Limited Partnership.  Certain of our officers and directors are also officers of our advisor.



We filed a Registration Statement on Form S-11 and the related prospectus, as amended and supplemented (the "Prospectus"), with the Securities and Exchange Commission that became effective June 22, 2005 in connection with our public offering of up to 100,000,000 shares of our common stock on a best efforts basis at a price of $10.00 per share.  The registration statement also covered the offering of up to 5,000,000 shares of common stock pursuant to our distribution reinvestment plan.



As previously announced, our board of directors authorized our advisor to hire Wachovia Capital Markets, LLC, to assist the board in exploring a broad range of strategic alternatives to maximize shareholder value, and authorized us to suspend sales under our current plan of distribution with regard to our best-efforts offering of securities, as soon as practicable, but in any event no later than April 30, 2007.  We suspended sales of our common stock under our current plan of distribution and sales under our distribution reinvestment plan as of April 30, 2007, and suspended redemptions under our share repurchase plan as of May 31, 2007.  As of June 30, 2007, we had sold 7,607,184 shares from our public offering raising net proceeds of $75,928 and in addition, we issued 57,283 shares pursuant to our distribution reinvestment plan.



We have experienced losses since inception. We believe that a combination of our efforts to (i) extend the maturity dates on our line of credit and mortgage notes related to our Seattle communities or refinance our debt; and (ii) defer certain discretionary capital improvements and payments to affiliates until July 2008, will be sufficient to meet our operating, debt service and other working capital needs for at least one year from June 30, 2007.



As of June 30, 2007 we owned interests in 11 apartment communities, which were 93% leased.  The terms "the Company," "we", "us" and "our" refer to Boston Capital Real Estate Investment Trust, Inc., together with its consolidated subsidiaries and joint ventures.











4



BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007



(Unaudited)

(Dollars in thousands, except per share data)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

We prepared the accompanying unaudited consolidated financial statements as of June 30, 2007 and for the six months then ended in accordance with generally accepted accounting principles for interim financial information in accordance with the rules and regulations of the Securities and Exchange Commission for interim financial information.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation are included.  Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.  These financial statements should be read in conjunction with our December 31, 2006 audited financial statements and notes included in our Annual Report on 
Form 10-K for the fiscal year ended December 31, 2006.

Principles of Consolidation

The consolidated financial statements include our interest in wholly-owned and majority-owned operating limited liability companies that own our apartment communities.  Minority interest relates to the interest in a property partnership we do not wholly own.  All inter-company balances and transactions have been eliminated in consolidation.



Real Estate



Real estate is stated at cost.  All our real estate has been pledged as security for various notes payable as described more fully in Note C.



We account for our real estate acquisitions using the purchase method of accounting in accordance with SFAS No. 141, "Business Combinations".  The fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, based in each case on their fair values.



The fair value of the tangible assets of an acquired property (which includes land, building and improvements) is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on our determination of the relative fair values of these assets.  We determine the as-if-vacant fair value of a property using methods similar to those used by independent appraisers.



In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) our estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.  Our leases do not currently include fixed-rate renewal periods.  At June 30, 2007, we have not identified any above-market or below-market leases.



The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as if vacant.  Factors we considered in performing these analyses include an estimate of carrying costs during



5

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 2007



(Unaudited)

(Dollars in thousands, except per share data)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

the expected lease-up periods considering current market conditions and costs to execute similar leases.  In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand.  We also estimate costs to execute similar leases including leasing commissions, legal and other related costs.  The value of in-place leases exclusive of the value of the above-market and below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases.  If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.  As of June 30, 2007, we have not identified any terminated leases for which the accounting treatment was not proper.

Depreciation

Buildings and furniture, fixtures and equipment are depreciated on the straight line method over 40 and 5 years, respectively, from the date of acquisition. Building improvements are depreciated on the straight line method over their estimated service lives, as determined by management, generally between 5 and 15 years.

Impairment

We periodically evaluate our long-lived assets, including our investments in real estate, for impairment indicators in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".  The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns.  We have not identified any impairment indicators and consequently have not recognized an impairment loss on any of our communities.

Cash and Cash Equivalents

All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.  We maintain our cash and cash equivalents with various financial institutions.  Some of our account balances exceed the amount insured by the Federal Deposit Insurance Corporation, and as a result we are subject to concentration of credit risk.  We do not believe this risk is significant as we periodically review the performance of these institutions.  To date we have not experienced any losses due to such risk.



Accounts Receivable - Tenant

Tenant accounts receivable are reported net of an allowance for doubtful accounts.  Management's estimate of the allowance is based on historical collection experience and a review of the current status of tenant accounts receivable.  It is reasonably possible that management's estimate of the allowance will change.



Cash in Escrow

Cash in escrow primarily consists of amounts held by mortgage lenders and restricted under the terms of various loan agreements to be used for payment of property taxes and insurance as well as operating expenses and property improvements.

Deferred Financing Costs

Deferred financing costs include fees and costs to obtain our mortgages, other note payable, line of credit-affiliate and line of credit-non affiliate.  These costs are amortized over the term of the respective loans.  As of June 30, 2007, deferred financing costs related to the fees and costs to obtain our mortgage financing and line of credit-non affiliate.

6

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 2007



(Unaudited)



(Dollars in thousands, except per share data)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)



Other Assets

Other assets include current prepaid expenses and current other receivables and deferred offering costs in the prior year.



Revenue Recognition



Tenant leases are classified as operating leases.  Rental income attributable to leases is recorded net of concessions on a straight line basis over the term of the lease.  Tenant leases for the rental of an apartment unit are generally year-to-year, renewable upon consent of both parties on an annual basis.  Advanced receipts of rental income are deferred and classified as liabilities until earned.  Interest income is recorded on an accrual basis.

Income Taxes

We have made an election to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with the taxable year ended December 31, 2005.  Our management believes that we are organized and operate in such a manner as to qualify for treatment as a REIT, and we intend to continue to be organized and operate in such a manner in the foreseeable future so that we will remain qualified as a REIT for federal income tax purposes.  As a REIT, we generally will not be required to pay federal corporate income taxes on our taxable income to the extent it is currently distributed to stockholders.



Accordingly, we have not recorded any current or deferred taxes for the period ended June 30, 2007.  However, qualification and taxation as a REIT depends upon our ability to meet the various on-going requirements imposed by the Code relating to the sources of our gross income, the nature of our assets, the amount of our distributions and the diversity of our stock ownership, among other requirements.  Accordingly, no assurance can be given that we will be able to operate in a manner to remain qualified as a REIT.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at the applicable corporate tax rates.  Finally, in order to qualify as a REIT, we cannot have at the end of any taxable year any undistributed earnings and profits that are attributable to a non-REIT taxable year. We do not believe that we have any non-REIT earnings and profits at June 30, 2007, and therefore we believe that we satisfy this requirement.



During the six month periods ended June 30, 2007 and 2006 we generated a net operating loss of approximately $4,035 and $2,939, respectively.  Additionally, during the period beginning May 15, 2003 and ending December 31, 2005, we generated passive activity loss carry forwards of $22,034.  The net operating loss from 2006 and 2007 may be carried forward for up to 20 years.  The passive activity losses may be carried forward indefinitely.  The deferred tax assets attributable to these items were established by us using a federal tax rate of 34% and a state and local tax rate of 6%.  However, a corresponding valuation allowance was established at June 30, 2007, in an amount equal to each deferred tax asset due to the uncertainty as to whether we will be able to use the loss carry forwards.

We acquired properties prior to January 1, 2005, the first day of the first taxable year for which we qualified as a REIT (the "REIT Commencement Date"). If we recognize gain on the disposition of any of these assets during the 10-year period beginning on the REIT Commencement Date, then we will be subject to tax at the highest regular corporate rate on the lesser of





7

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 2007



(Unaudited)



(Dollars in thousands, except per share data)

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)

the "Built-In Gain" or the amount of gain recognized on the disposition of such asset.  It may be possible to reduce the amount of such income subject to corporate level tax by certain loss carryforwards of ours.  Built-in-Gain for this purpose means the fair market value of the asset as of the REIT Commencement Date over our adjusted tax basis in the asset as of the REIT Commencement Date.  We would be subject to this tax liability even if we qualify and maintain our status as a REIT.   We are subject to U.S. federal income tax as well as income tax of multiple state and local jurisdictions but, as a REIT, we generally are not subject to income tax on our net income distributed as dividends to our shareholders.



The net carrying cost of our real estate assets in the consolidated balance sheets exceeds our net tax basis by approximately $4,622 as of June 30, 2007.



In July 2006, the FASB issued Interpretation No. 48, or FIN 48, "Accounting for Uncertainty in Income Taxes".   We adopted FIN 48 in January 2007 and it did not have a material impact on our results of operations.  Accordingly, we did not record a cumulative effect adjustment related to the adoption of FIN 48.



Tax returns filed, or to be filed, for the 2003 through 2006 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our financial statements as a component of general and administrative expense.



Earnings Per Share

Earnings per share is calculated based on the weighted average number of common shares outstanding during the period.



Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.

Reclassifications



Certain amounts in the 2006 period have been reclassified to conform to the 2007 presentation.  These reclassifications have not changed the results of operations or stockholders' equity.



Redeemable Common Stock

Our share redemption program provides that redemptions are limited to those that can be funded with proceeds raised from our distribution reinvestment plan.  As the use of proceeds raised from our distribution reinvestment plan is outside of our control, those proceeds are considered to be temporary equity under Accounting Series Release No. 268, Presentation in Financial Statements of Redeemable Preferred Stock.  Therefore, we have included an amount equal to proceeds from shares issued through our distribution reinvestment plan, less the amount of redemptions previously funded with such proceeds, as redeemable common stock in the accompanying consolidated financial statements as of June 30, 2007.  As of June 30, 2007, no shares had been tendered for redemption.

8

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007



(Unaudited)



(Dollars in thousands, except per share data)

NOTE C - MORTGAGE NOTES PAYABLE

All of our mortgage debt outstanding at June 30, 2007 is fixed rate debt secured by mortgages and deeds of trust on our apartment communities.  The total outstanding mortgage debt at June 30, 2007 is $132,435 with an average effective interest rate of 5.00%.

An affiliate of our joint venture partner who oversees the operation of the Seattle communities has provided certain guarantees on notes payable related to the Seattle communities.  The total amount outstanding on the notes payable as of June 30, 2007 was $45,747.

Affiliates of our joint venture partner of the Jacksonville communities have provided certain guarantees on notes payable related to the Jacksonville communities.

NOTE D - LINE OF CREDIT- NON AFFILIATE



On December 6, 2006, we closed on a $45,000 line of credit with an unaffiliated lender.  An initial draw was made to repay our former line of credit-affiliate and other note payable.  The line of credit is unsecured, bears interest at varying contract rates ranging from the 30-day LIBOR plus 225 basis points (which was approximately 7.57% as of June 30, 2007) to prime plus 100 basis points (which was 9.25% at June 30, 2007) and matures on January 1, 2008.  Under the terms of our credit agreement, we are obligated to utilize all net proceeds from our common stock offering to repay any amounts outstanding after the payment of (i) amounts necessary to pay a maximum dividend of 6% per annum (if authorized by our board of directors), (ii) costs necessary to maintain our REIT status, (iii) reasonable operating reserves and (iv) the asset management fee payable monthly to our advisor.  As of June 30, 2007, $11,053 was outstanding on the line of credit and interest of $949 had been incurred and paid during the six month period ended June 30, 2007.  Under the terms of our credit agreement, the January 1, 2008 maturity date for our line of credit could be extended for a period of six months, provided that prior to January 1, 2008, we extended the current termination date of our offering to a date later than the extended maturity date of our line of credit.   As previously announced, we suspended sales of our offering as of April 30, 2007.  Additionally, if on or before June 1, 2007, we had not extended the current termination date of our offering to a date beyond January 1, 2008, we would be unable to make additional borrowings under our line of credit.  On August 10, 2007 we obtained a waiver from our lenders under our line of credit pursuant to which we may extend the January 1, 2008 maturity date of our line of credit for a period of six months without the requirement that we extend the term of our offering, subject to the payment of applicable fees and the satisfaction of certain conditions, including that there exist no event of default under the terms of our credit agreement.  In addition, we obtained amendments to our credit agreement from our lenders to permit us to make additional borrowings under the line of credit without the requirement that we repay the initial borrowings under the line of credit.















9





BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.



(Unaudited)



(Dollars in thousands, except per share data)

NOTE E - RELATED PARTY TRANSACTIONS

Offering, Acquisition and Organizational Costs

During the six month period ended June 30, 2007, we reimbursed one of our affiliates $388 for prior advances to fund various costs associated with our operations.

Advisor Fees

Our advisor earns a monthly asset management fee in an amount equal to 1/12th of 0.75% of our Real Estate Asset Value (as defined in the advisory agreement)as of the end of the preceding month.  During the six month periods ended June 30, 2007 and 2006, our advisor earned asset management fees of $731 and $731, respectively, all of which had been paid as of June 30, 2007.



Our advisor earns acquisition fees and expenses in amounts equal to up to 2.7% and 0.5%, respectively, of Gross Offering Proceeds (as defined in the advisory agreement).  During the six months ended June 30, 2007, $212 of acquisition fees and $100 of acquisition expenses were incurred and paid.



Portfolio Management Fees



During the six months ended June 30, 2007, we paid an affiliate $367 of portfolio management fees related to the period May 15, 2003 through December 31, 2004.  As of June 30, 2007, $164 remains payable to the affiliate and is included in due to related party on the consolidated balance sheets.



Dealer Manager Fees



Our securities were being sold through an affiliate of our advisor, which is a registered broker dealer (the "Dealer Manager").  The Dealer Manager received a selling commission of up to 7% of the public offering price of the shares sold, excluding the sale of 20,000 shares to an affiliate and shares issued from our distribution reinvestment plan, all of which was reallowed to participating broker dealers.  The Dealer Manager also received a fee of up to 2% of the public offering price of the shares sold, excluding the sale of 20,000 shares to an affiliate and including shares issued from our distribution reinvestment plan, as compensation for acting as Dealer Manager and for expenses incurred in connection with coordinating sales efforts, training of personnel and generally performing "wholesaling" functions.  The Dealer Manager reallowed up to 1.5% of this compensation to participating broker dealers.  In connection with our sale of 3,963,368 shares of common stock during the six months ended June 30, 2007, we incurred $2,644 in selling commissions, all of which has been paid.  In connection with the sale of 3,963,368 shares of common stock and the issuance of 39,493 shares from our distribution reinvestment plan during the six months ended June 30, 2007, we incurred $801 in dealer manager fees, all of which has been paid.

10



BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.



(Unaudited)



(Dollars in thousands, except per share data)

NOTE F - FEES TO OUR JOINT VENTURE PARTNERS

Our joint venture partners and their affiliates are entitled to various fees as follows:

Incentive Management Fees

During the six month periods ended June 30, 2007 and 2006, we incurred incentive management fees of $333 and $175, respectively, which were payable to our joint venture partner of the Seattle communities.  These amounts are included in property operating costs on the consolidated statements of operations.  As of June 30, 2007, the accrued and unpaid incentive management fees due to our joint venture partner were $85 and are included in accounts payable and accrued expenses on the consolidated balance sheets.

During the six month periods ended June 30, 2007 and 2006, we incurred rate lock fees of $12 and $12, respectively, which were payable to an affiliate of our joint venture partner of the Portland communities.  The affiliate



Upon disposition, after we have received certain priority returns, our joint venture partners may be entitled to portions of net sale proceeds.

NOTE G - STOCKHOLDERS' EQUITY

Preferred Stock

In January 2006, we issued 173 shares of 12% Series A Cumulative Non-Voting Preferred Stock raising net proceeds of $87.  The outstanding preferred shares were subject to redemption, in whole or in part, at any time following January 30, 2007 at a price of $500 per share plus all accrued and unpaid dividends.  These shares were redeemed for $87 on February 15, 2007.



Common Stock

At June 30, 2007, we had 7,684,467 shares of common stock outstanding, valued at $76,845.  7,607,184 shares were sold from our offering and 20,000 shares were sold prior to our offering to an affiliate of the Company.   At June 30, 2007, we had also issued 57,283 shares of common stock pursuant to our distribution reinvestment plan at $9.50 per share.



Our board of directors declared monthly distributions payable to daily record date common stockholders beginning with the month ended July 31, 2006.  The distributions are equal to an annual distribution rate of approximately 6.0% ($.60 per share) and are paid on or about the 21st of the following month.  Total distributions declared as of December 31, 2006 were $553 of which $169 was reinvested pursuant to our distribution reinvestment plan and $177 remained payable.  Distributions declared for the periods January through June 2007 totaled $1,685.  Distributions paid during the six months ended June 30, 2007 were $1,107 and distributions reinvested were $375.  As of June 30, 2007, distributions of $379 remained payable.



Our board of directors has also declared distributions to daily record holders for the months of July 2007 and August 2007, payable August 21, 2007 and September 21, 2007, respectively, equal to an annual distribution rate of approximately 6.0% ($.60 per share).



11

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST, INC.



(Unaudited)



(Dollars in thousands, except per share data)

NOTE H - NON-MONETARY LOSS

On May 2, 2007, a fire occurred at one of the Portland communities (Settler's Point Apartments) which damaged 8 units within one of the buildings.  A preliminary estimate of $900 to repair the units was provided by a private adjuster.  We have recorded a $798 non-monetary loss as of June 30, 2007, which represents the preliminary estimate net of accumulated depreciation on the damaged assets.  As more detailed information is received from the insurance company, we will review our estimate.   Insurance proceeds, net of a deductible, are expected to cover the repair costs and lost rent on the damaged units.

















































12

Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands).

The following discussion and analysis should be read in conjunction with our accompanying financial statements and the notes thereto.

Significant Events

As previously announced, our board of directors hired Wachovia Capital Markets, LLC to assist the board in exploring a broad range of strategic alternatives to maximize shareholder value, and authorized us to suspend sales under our current plan of distribution with regard to our best-efforts offering of securities, as soon as practicable, but in any event no later than April 30, 2007.  We suspended sales of our common stock under our current plan of distribution and sales under our distribution reinvestment plan as of April 30, 2007 and suspended redemptions under our share repurchase plan as of May 31, 2007.

Forward Looking Information

This quarterly report contains statements that may be deemed to be "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. The words "believes",  "estimates", "expects" and "anticipates" and other similar expressions that are predictions of or indicate future events and trends and which do not relate solely to historical matters identify forward-looking statements.  Such forward-looking statements are subject to risks and uncertainties, which could cause actual results, performance, or achievements of ours to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.  Factors that might cause such differences include, but are not limited to, the following:

- Anticipated capital expenditures for replacements and building improvements all reflect our best estimates and are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation;
- Sources of capital or labor and materials required for maintenance, repair, capital expenditure or development are more expensive than anticipated;
- Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction of multifamily housing, slow employment growth, availability of low interest mortgages for single-family home buyers and the potential for geopolitical instability, all of which are beyond our control; and
- Additional factors as discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2006 and in our Quarterly Report on Form 10-Q for the period ended March 31, 2007.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

We were formed on May 2, 2003, and have a limited operating history.  Our operations consist of acquiring, managing and operating apartment communities in the United States.  All of our apartment communities were purchased with funds from our former line of credit or a bank note.  In December 2006, we repaid our former line of credit and the bank note with a combination of offering proceeds and initial borrowings under our current line of credit.



We expect that we will acquire properties by paying the purchase price of each property in cash or equity securities, or a combination thereof, and the remainder with permanent mortgage financing which will encumber all or certain properties.  Though we have no current plans to do so, if our directors deem it advisable, we may take additional loans on all or certain communities, if favorable terms are available, and use the proceeds from such loans to acquire additional properties and increase cash flow.  Our ability to diversify our investments may be diminished because our initial public offering was not fully sold.



13



We have elected to be taxed as a REIT beginning with the tax year ended December 31, 2005.  We believe that we are organized in conformity with the requirements for taxation as a REIT for federal income taxes, but cannot assure you that we will meet such requirements.  If we fail to meet these requirements, our distributions will not be deductible to us and we will 
have to pay a corporate level tax on our income.  This would substantially reduce our cash available to pay dividends.  In addition, such a tax liability might cause us to borrow funds, liquidate some of our investments or take other steps which could negatively affect our operating results.  Moreover, if our REIT status is terminated because of our failure to meet a technical REIT requirement or if we voluntarily revoke our election, we would generally be disqualified from electing treatment as a REIT for the four taxable years following the year in which REIT status is lost.



We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from the acquisition and operation of the communities, other than those referred to in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

Liquidity and Capital Resources

Our current and potential future sources of liquidity include: (i) cash from investments in real estate; (ii) interest earned on capital raised and held pending investment; (iii) proceeds from secured or unsecured financing, including from banks; (iv) undistributed funds; (v) sale of assets; and (vi) the issuance of shares in a private offering to institutional investors.



As of June 30, 2007, we had not raised funds sufficient to repay the initial borrowing under our current line of credit, and we were restricted from utilizing our line of credit for additional real estate purchases until such borrowing had been repaid.  Our apartment communities as of June 30, 2006 were purchased with financing obtained under our former line of credit, mortgage notes payable and through a bank note.   In December 2006, we repaid our former line of credit and bank note with a combination of offering proceeds and initial borrowings under our current line of credit.  On August 10, 2007 we obtained a waiver from our lenders under our current line of credit pursuant to which we may extend the January 1, 2008 maturity date of our line of credit for a period of six months without the requirement that we extend the term of our offering, subject to the payment of applicable fees and the satisfaction of certain conditions, including that there exist no event of default under the terms of our credit agreement.  In addition, we obtained amendments to our credit agreement from our lenders to permit us to make additional borrowings under the line of credit without the requirement that we repay the initial borrowings under the line of credit.



We have experienced losses since inception. We believe that a combination of our efforts to (i) extend the maturity dates on our line of credit and mortgage notes related to our Seattle communities or refinance our debt; and (ii) defer certain discretionary capital improvements and payments to affiliates until July 2008, will be sufficient to meet our operating, debt service and other working capital needs for at least one year from June 30, 2007.



Our cash and cash equivalents balance increased approximately $5,695 from approximately $6,050 at January 1, 2007 to $11,745 at June 30, 2007. All cash and cash equivalents are held in money market or checking accounts.  The major factors affecting our cash flows are as follows:

- We raised $39,503 in proceeds from our public offering and expended $3,836 on equity issuance costs.



- We repaid $27,037 of line of credit financing.



- We expended $800 on operating activities.



- We expended $1,173 on capital improvements.



- We expended $1,114 on distributions to our common and preferred stockholders.







14

Related Party Transactions

We have an advisory agreement with our advisor, Boston Capital REIT Advisors, LLC, by which our advisor originates and presents investment opportunities to our board of directors and provides day-to-day management services to us. Our advisor is wholly owned by Boston Capital Holdings Limited Partnership. Our Chairman and Chief Executive Officer is the general partner of and owns a controlling limited partnership interest in Boston Capital Holdings Limited Partnership. Each of our executive officers is also an officer of our advisor.  For managing our affairs, our advisor is compensated with a monthly asset management fee equal to 1/12th of 0.75% of the amount invested in apartment communities (including the original principal amount of any mortgage indebtedness).  During the six months ended June 30, 2007, our advisor earned asset management fees of $731, all of which have been paid.



Also pursuant to the advisory agreement, we will pay our advisor, as compensation for services rendered in connection with the investigation, selection and acquisition (by purchase, investment or exchange) of properties, acquisition fees and expense reimbursements in amounts equal up to 2.7% and .5% of Gross Offering Proceeds, respectively.  A portion of such fees and expenses was previously incurred and is included in building and improvements and other assets.  During the six months ended June 30, 2007, $212 of acquisition fees and $100 of acquisition expenses were incurred and paid.



In the offering, our shares of common stock were sold through an affiliate of our advisor, which is a registered broker dealer (the "Dealer Manager").  The Dealer Manager received a selling commission of up to 7% of the public offering price of the shares sold, all of which was reallowed to participating broker dealers.  The Dealer Manager also received a fee of up to 2% of the public offering price of the shares sold as a dealer manager fee and for expenses incurred in connection with coordinating sales efforts, training of personnel and generally performing "wholesaling" functions.  The Dealer Manager may reallow up to 1.5% of this compensation to participating broker dealers.  In connection with our sale of 3,963,368 shares of common stock during the six months ended June 30, 2007, we incurred $2,644 in selling commissions, all of which had been paid.  In connection with the sale of 3,963,368 shares of common stock and the issuance of 39,494 shares from our distribution reinvestment plan during the six months ended June 30, 2007, we incurred $801 in dealer manager fees, all of which had been paid.



During the six months ended June 30, 2007, we paid an affiliate $367 of portfolio management fees related to the period May 15, 2003 through December 31, 2004.  As of June 30, 2007, $164 remains payable to the affiliate and is included in due to related party on the consolidated balance sheets.



We had a $60,000 line of credit with an affiliate which was repaid in December 2006. During the six months ended June 30, 2006, interest of $1,452 was incurred, which had been paid as of June 30, 2007.

During the six months ended June 30, 2007, we repaid an affiliate $388 for funds advanced to pay various costs associated with our operations.  As of June 30, 2007, the total amount of due to related parties for organization costs, deferred offering costs, prepaid expenses, acquisition costs and operating expenses is $233.

Contractual Obligations

We pay operating expenses and interest expense from cash generated from property operations.  Below is a summary of our other material obligations by maturity as of June 30, 2007.



|                                |   | Less than 1 year |   |   | 1-3 years |  |   | 3-5 years |   | More than5 years |   | Total  
|------------------------------- | - | ---------------- | - | - | --------- |  | - | --------- | - | ---------------- | - | -------
|                                |   |                  |   |   |           |  |   |           |   |                  |   |        
|Mortgages                       | $ | 45,747           |   | $ | 74,707    |  | $ | -         | $ | 11,981           | $ | 132,435
|Line of Credit-Non
   affiliate |   | 11,053           |   |   | -         |  |   | -         |   | -                |   | 11,053 
|Due to Related
   Party         |   | 504              | a |   | -         |  |   | -         |   | -                |   | 504    
|                                |   |                  |   |   |           |  |   |           |   |                  |   |        
|                                |   |                  |   |   |           |  |   |           |   |                  |   |        
|Total                           | $ | 57,304           |   | $ | 74,707    |  | $ | -         | $ | 11,981           | $ | 143,992
|                                |   |                  |   |   |           |  |   |           |   |                  |   |        
|                                |   |                  |   |   |           |  |   |           |   |                  |   |        
|                                |   |                  |   |   |           |  |   |           |   |                  |   |        





a.	Payments of amounts due to related parties, although currently due, can be deferred until such time as cash from operations or other sources 
	is sufficient to pay the obligations.

15







Real Estate Assets

As of June 30, 2007, we owned interests in 11 properties.  Ten of the apartment communities in which we owned interests are in 3 portfolios, and the remaining apartment community is a single community property.  Details on the properties are as follows:

The Seattle portfolio consists of four apartment communities containing 802 apartment units as follows:



|Property name                |  | City, State    |  | Numberof units |  | Date acquired |  | Occupancy
 Rate as ofJune 30, 2007 |  | Occupancy
Rate as ofJune 30, 2006
|---------------------------- |  | -------------- |  | -------------- |  | ------------- |  | ---------------------------------- |  | ---------------------------------
|                             |  |                |  |                |  |               |  |                                    |  |                                  
|Alderwood Park
   Apartments |  | Lynwood, WA    |  | 188            |  | May 15, 2003  |  | 98%                                |  | 95%                              
|Ridgegate 
   Apartments     |  | Kent, WA       |  | 153            |  | May 15, 2003  |  | 100%                               |  | 96%                              
|Ridgetop 
   Apartments      |  | Silverdale, WA |  | 221            |  | May 15, 2003  |  | 91%                                |  | 99%                              
|Wellington 
   Apartments    |  | Silverdale, WA |  | 240            |  | May 15, 2003  |  | 90%                                |  | 98%                              

The Portland portfolio consists of three apartment communities containing 1,027 apartment units as follows:



|Property name                 |  | City, State        |  | Numberof units |  | Date acquired |  | Occupancy
Rate as ofJune 30, 2007 |  | Occupancy
Rate as ofJune 30, 2006
|----------------------------- |  | ------------------ |  | -------------- |  | ------------- |  | --------------------------------- |  | ---------------------------------
|                              |  |                    |  |                |  |               |  |                                   |  |                                  
|Boulder Creek
   Apartments   |  | Portland, OR       |  | 296            |  | May 30, 2003  |  | 95%                               |  | 98%                              
|Bridge Creek 
   Apartments   |  | Portland, OR       |  | 315            |  | May 30, 2003  |  | 98%                               |  | 96%                              
|Settler's Point
   Apartments |  | Salt Lake City, UT |  | 416            |  | May 30, 2003  |  | 93%                               |  | 93%                              



The Jacksonville portfolio consists of three apartment communities containing 1,040 apartment units as follows:



|Property name                                             |  | City, State      |  | Numberof units |  | Date acquired |  | Occupancy
Rate as ofJune 30, 2007 |  | Occupancy
Rate as ofJune 30, 2006
|--------------------------------------------------------- |  | ---------------- |  | -------------- |  | ------------- |  | --------------------------------- |  | ---------------------------------
|                                                          |  |                  |  |                |  |               |  |                                   |  |                                  
|Bay Pointe
  Apartments                                   |  | Jacksonville, FL |  | 300            |  | May 22, 2003  |  | 91%                               |  | 96%                              
|Savannah Oaks
 Apartments  (formerly 
 Oaks at Timuquana) |  | Jacksonville, FL |  | 228            |  | May 22, 2003  |  | 85%                               |  | 97%                              
|Spicewood Springs
  Apartments                            |  | Jacksonville, FL |  | 512            |  | May 28, 2003  |  | 95%                               |  | 96%                              







16







The Plano community consists of one apartment community containing 229 apartment units as follows:



|Property name                                                                            |  | City, State    |  | Numberof units |  | Date acquired      |  | Occupancy
Rate as ofJune 30, 2007 |  | Occupancy
Rate as ofJune 30, 2006
|---------------------------------------------------------------------------------------- |  | -------------- |  | -------------- |  | ------------------ |  | --------------------------------- |  | ---------------------------------
|                                                                                         |  |                |  |                |  |                    |  |                                   |  |                                  
|Broadstone Preston at Willowbend Apartments (formerly Preston at Willow Bend Apartments) |  | West Plano, TX |  | 229            |  | September 15, 2005 |  | 86%                               |  | 83%                              



On May 2, 2007, a fire occurred at one of the Portland communities (Settler's Point Apartments) which damaged 8 units within one of the buildings.  A preliminary estimate of $900 to repair the units was provided by a private adjuster.  We have recorded a $798 non-monetary loss as of June 30, 2007, which represents the preliminary estimate net of accumulated depreciation on the damaged assets.  As more detailed information is received from the insurance company, we will review our estimate.   Insurance proceeds, net of a deductible, are expected to cover the repair costs and lost rent on the damaged units.



Results of Operations



Comparison of Operations for the Six Months ended June 30, 2007 and 2006

The following summarizes changes in our operations for the six month periods ended June 30, 2007 and 2006.  Net loss for the period ended June 30, 2007 decreased from the same prior period by approximately $115, from $4,057 to $3,942, or 2.8%.

Revenue

Revenues increased approximately $715, from $13,322 to $14,037, or 5.4%, in the current period.   The increase was mainly the result of increased rental rates and decreased concessions at the communities.

Property operating costs

Property operating costs increased approximately $1,157, from $4,977 to $6,134, or 23.3%, in the current period.  Increased insurance costs at the Jacksonville communities contributed $155 to the increase.  The remainder of the increase was mainly the result of repair costs at the communities as follows: landscaping and stairwell repair costs at the Portland communities, roof and deck repair costs at the Seattle communities; stairwell repair costs at the Jacksonville communities; and roof repair costs at the Plano community.

General and administrative expenses

General and administrative expenses increased approximately $759, from $1,922 to $2,681, or 39.5%, in the current period.   The current period experienced an increase in investor servicing and reporting costs, legal fees, director compensation and professional fees associated with ensuring Sarbanes-Oxley compliance.



17



Depreciation and amortization

Depreciation and amortization expense increased approximately $76, from $3,196 to $3,272, or 2.4%, in the current period.  The increase is a result of depreciation incurred on capital improvements made subsequent to June 30, 2006.

Asset management fee-related party

Asset management fees were $731 for both the current and prior period.

Interest Expense

Net interest expense decreased approximately $2,192, from $6,563 to $4,371, or 33.4%, in the current period.  The decrease was substantially the result of refinancing an existing line of credit in December 2006 with a new line of credit.  Proceeds of stockholders' equity were utilized to finance the new line of credit at a lower interest rate and a lower principal balance.



Comparison of Operations for the Three Months ended June 30, 2007 and 2006

The following summarizes changes in our operations for the three month periods ended June 30, 2007 and 2006.  Net loss for the period ended June 30, 2007 increased from the same prior period by approximately $449, from $1,986 to $2,435, or 22.6%.

Revenue

Revenues increased approximately $355, from $6,747 to $7,102, or 5.3%, in the current period.   The increase was mainly the result of increased rental rates and decreased concessions at the communities.

Property operating costs

Property operating costs increased approximately $800, from $2,496 to $3,296, or 32.1%, in the current period.  Increased insurance costs at the Jacksonville communities contributed $110 to the increase.  The remainder of the increase was mainly the result of repair costs at the communities as follows: landscaping and stairwell repair costs at the Portland communities, roof and deck repair costs at the Seattle communities; stairwell repair costs at the Jacksonville communities; and roof repair costs at the Plano community.

General and administrative expenses

General and administrative expenses increased approximately $475, from $942 to $1,417, or 50.4%, in the current period.   The current period experienced an increase in investor servicing and reporting costs, legal fees, director compensation and professional fees associated with ensuring Sarbanes-Oxley compliance.



Depreciation and amortization

Depreciation and amortization expense increased approximately $63, from $1,585 to $1,648, or 4.0%, in the current period.  The increase is a result of depreciation incurred on capital improvements made subsequent to June 30, 2006.

Asset management fee-related party

Asset management fees were $366 for both the current and prior period.

Interest Expense

Net interest expense decreased approximately $1,333, from $3,349 to $2,016, or 39.8%, in the current period.  The decrease was substantially the result of refinancing an existing line of credit in December 2006 with a new line of credit.  Proceeds of stockholders' equity were utilized to finance the new line of credit at a lower interest rate and a lower principal balance.



















18

Critical Accounting Policies and Estimates

To prepare our financial statements in conformity with accounting principles generally accepted in the United States of America, we are required to make estimates and assumptions that affect the amounts reported in the financial statements. On a regular basis, we review these estimates and assumptions, including those related to revenue recognition, allocation of purchase price, asset lives and depreciation and impairment of long-lived assets. These estimates are based on our historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe, however, that the estimates, including those for the above-listed items, are reasonable. We believe the following critical accounting policies involve the most complex, difficult and subjective judgments and estimates used in the preparation of these financial statements:

Real Estate

We allocate the acquisition cost of each apartment community to various property components such as land, buildings and improvements, and furniture, fixtures and equipment and each component generally has a different useful life.  Acquisition cost allocations and the determination of the useful lives are based on our management's estimates, or under some circumstances, studies commissioned from independent real estate appraisal firms.  We allocate the value of real estate acquired among land, building and improvements, furniture, fixtures and equipment, the value of in-place leases and the fair market value of above or below market leases.  We compute related depreciation expense using the straight line method over estimated useful lives of up to 40 years for buildings, up to 15 years for building improvements, and up to 5 years for furniture, fixtures and equipment.  The value of intangible assets is amortized over the life of the respective lease, which is typically one year.  The allocated cost of land is not depreciated.  Inappropriate allocation of acquisition costs or incorrect estimates of useful lives could result in depreciation and amortization expenses which do not appropriately reflect the allocation of our capital expenditures over future periods required by generally accepted accounting principles.

We periodically evaluate our apartment communities for impairment indicators.  These indicators may include weak or declining tenant occupancy, cash flow or liquidity, or our decision to dispose of an asset before the end of its estimated useful life, and market or industry changes that could permanently reduce the value of the related apartment community.  If impairment indicators are present, we evaluate the carrying value of the related apartment community by comparing it to the expected future undiscounted cash flows to be generated from that community.  If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the community to its fair value.  This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows.  If we misjudge or estimate incorrectly or if future tenant occupancy, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate or fail to record a charge when we should have done so, or the amount of such charges may be inaccurate.

Revenue Recognition

We classify tenant leases as operating leases. Rental income attributable to leases is recorded net of concessions on a straight line basis over the term of the lease.  Leases between a tenant and property for the rental of an apartment unit are generally year-to-year, renewable upon consent of both parties on an annual or monthly basis. Interest income is recorded on an accrual basis.

These policies involve significant judgments based upon our experience, including judgments about current valuations, ultimate realizable value, estimated useful lives, salvage or residual values, and the current and likely future operating and competitive environments in which our apartment communities are operated.  In the future we may need to revise our assessments to incorporate information which is not now known, and such revisions could increase or decrease our depreciation expense.





















19





|Item 3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Quantitative and Qualitative Disclosure About Market Risk (dollars in thousands).
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                  
|We had one variable rate line of credit outstanding as of June 30, 2007 in the amount of $11,053, which is subject to market risk associated with interest rate changes.  The remainder of our debt at June 30, 2007 is fixed rate debt.  All of our long-term debt is fixed rate debt with interest rates ranging from 4.26% to 5.14%.  Our short-term debt is a combination of fixed rate and floating rate debt with interest rates ranging from the 4.67% to 12.0%.  The weighted average interest rate on debt outstanding at June 30, 2007 was 5.2%. We do not have any derivative investment, direct foreign exchange, or other market risk.  Management estimates that, as of June 30, 2007, a one percentage point increase in interest rates on variable rate outstanding debt would result in additional annual interest of $111 per year.  Our market risk has not changed materially from the amounts and information reported in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", of our Annual Report on Form 10-K for the year ended December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                  
|Item 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Controls and Procedures.                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | (a)                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                  
|As required by Rule 15d-15(b) under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  In designing and evaluating our disclosure controls and procedures, we and our management recognize that any controls and procedures, no matter how well designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2007, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  In connection with the rules regarding disclosure and control procedures, we intend to continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

|                                                                                                                                                                                                                                                    | (b) | Changes in Internal Controls
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ----------------------------
|                                                                                                                                                                                                                                                    |     |                             
|There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2007 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II - OTHER INFORMATION (dollars in thousands)

|Item 1. | Legal Proceedings.                                                                                                         
|------- | ---------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                            
|        | Previously reported in Item 3., "Legal Proceedings" in our Annual Report on Form 10-K for the year ended December 31, 2006.
|        |                                                                                                                            













20





|Item 1.A. | Risk Factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|          | Other than as set forth below, there have been no material changes in the risk factors described in Item 1A., "Risk Factors", in our Annual Report on Form 10-K for the period ended December 31, 2006 and in our Quarterly Report on Form 10-Q for the period ended March 31, 2007.

We have experienced net losses since our inception.

For the period ended June 30, 2007, we incurred net losses of approximately $3,942.  We have engaged Wachovia Capital Markets, LLC to assist the board in exploring a broad range of strategic alternatives to maximize stockholder value, and have suspended sales under our offering as of April 30, 2007.  We expect that we will continue to experience net losses until we repay our current line of credit.  We cannot be certain that we will be able to achieve and/or sustain profitability in future periods.

Our debt covenants may restrict our operating activities, which may harm our financial condition and operating results.

The mortgages on our communities contain and will contain customary negative covenants such as those that limit the owner's ability, without the prior consent of the lender, to transfer interests or further mortgage the applicable property or to discontinue insurance coverage. In addition, our current line of credit contains customary restrictions, requirements and other limitations on our ability to incur indebtedness, which we will have to maintain. These include the requirement to provide financial statements and information requested by the lender, and limit indebtedness to our current line of credit, property mortgages and indebtedness incurred for the payment of taxes and governmental charges and for services and materials in the ordinary course of business. We must also obtain the lender's consent to the sale or refinancing of any of our properties, to any change in our control and to the placing of any lien on our properties or other assets.  Our current line of credit is due and payable on the initial maturity date of January 1, 2008 which could be extended for a period of six months, provided that prior to January 1, 2008, we extended the current termination date of our offering to a date later than the extended maturity date of our current line of credit.  Additionally, if on or before June 1, 2007, we had not extended the current termination date of our offering to a date beyond January 1, 2008, we would be unable to make additional borrowings under our line of credit.  On August 10, 2007 we obtained a waiver from our lenders under our line of credit pursuant to which we may extend the January 1, 2008 maturity date of our line of credit for a period of six months without the requirement that we extend the term of our offering subject to the payment of applicable application fees and the satisfaction of certain conditions, including that there exist no event of default under the terms of our credit agreement.  In addition, we obtained amendments to our credit facility from our lenders to permit us to make additional borrowings under the line of credit without the requirement that we repay the initial borrowings under the line of credit.

We may rely on borrowings under another line of credit to finance capital improvement projects and for working capital.  If we are unable to borrow funds under our current line of credit or to extend its initial maturity date, to borrow under another line of credit or to refinance existing indebtedness, our financial condition and results of operations would be adversely impacted. If we breach covenants in our debt agreements, the lenders could declare a default and require us to repay the debt immediately and, if the debt is secured, could immediately take possession of the property securing the loan.
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          











21



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------
|        |                                                             

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | On June 22, 2005, our Registration Statement on Form S-11 (File No. 333-108426), covering a public offering (the "Offering") of up to 105,000,000 shares of common stock to be offered at a price of $10 per share (of which 5,000,000 shares are available pursuant to our distribution reinvestment plan at a price of $9.50 per share) was declared effective under the Securities Act of 1933, as amended.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                               
|As of June 30, 2007, we had sold 7,607,184 shares of our common stock pursuant to the offering.  The net offering proceeds to us, after deducting the total expenses incurred and described herein, were $68,489.  After subscriptions are released from escrow and until we invest them, the net offering proceeds therefrom will be held in short-term, liquid investments.  As of June 30, 2007, we had also issued 57,283 shares of our common stock pursuant to our distribution reinvestment plan.

|                                                                                                                                                                                                                         | From the commencement of our offering through June 30, 2007, we incurred the following expenses in connection with the issuance and distributions of the registered securities pursuant to our offering:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         
|                                                                                                                                                                                                                         | Other expenses to affiliates*                                                                                                                                                                           
|                                                                                                                                                                                                                         | Other expenses to non-affiliates                                                                                                                                                                        
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         
|                                                                                                                                                                                                                         | Total expenses                                                                                                                                                                                          
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         
|* "Other expenses to affiliates" includes commissions and dealer manager fees paid to Boston Capital Securities Inc., our affiliate, which reallowed all or a portion of the commissions and fees to soliciting dealers.
|A portion of the total expenses in the amount of $4,007 have been incurred by our advisor.   The net offering proceeds to us after deducting our share of costs were $68,489.                                           
|                                                                                                                                                                                                                         |                                                                                                                                                                                                         

|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------
|        |                                 
|        | None.                           
|        |                                 



|Item 4. | Submission of Matters to a Vote of Security Holders.                                                                                                                                                                                                                
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                     
|        | We held our Annual Meeting of Stockholders on June 26, 2007  Our stockholders voted on two proposals presented at the meeting and both received the requisite number of votes to pass.   The results of the stockholders' votes on the two proposals are as follows:

| | Proposal I - Election of the following directors to serve until the 2008 Annual Meeting of Stockholders.
| | --------------------------------------------------------------------------------------------------------
| |                                                                                                         
| | Nominee                                                                                                 
| |                                                                                                         
| | Philip S. Cottone                                                                                       
| | Kevin C. Phelan                                                                                         
| | Nicholas L. Iacuzio                                                                                     
| | John P. Manning                                                                                         
| | Jeffrey H. Goldstein                                                                                    



22



|        |                                                                                                                                                                   
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | Proposal II- The ratification of the appointment of Ernst & Young, LLP as our independent registered public accounting firm for the year ending December 31, 2007.
|        |                                                                                                                                                                   
|        |                                                                                                                                                                   
|        |                                                                                                                                                                   
|        |                                                                                                                                                                   
|        |                                                                                                                                                                   
|        | No other matters were submitted to a vote of security holders at the Annual Meeting.                                                                              
|        |                                                                                                                                                                   
|Item 5. | Other Information.                                                                                                                                                
|        |                                                                                                                                                                   
|        | None.                                                                                                                                                             
|        |                                                                                                                                                                   

|Item 6. | Exhibits.
|------- | ---------
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          
|        |          





































23
SIGNATURES

Pursuant to the requirements 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.

|                       | Boston Capital Real Estate Investment Trust Inc.
|---------------------- | ------------------------------------------------
|                      
|Date:  August 14, 2007 | By:                                             
|                       |                                                 
|                       |                                                 
|                       |                                                 
|                       | By:                                             
|                       |                                                 
|                       |                                                 
|                       |                                                 
|                       |                                                 
|                       |                                                 





























































24



EXHIBIT INDEX

BOSTON CAPITAL REAL ESTATE INVESTMENT TRUST INC.

JUNE 30, 2007 FORM 10-Q



|Exhibit No. |  | Description                                                                                                                                                                         | 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|31.1*       |  | Certification of John P. Manning, Chief Executive Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                               | 
|            |  |                                                                                                                                                                                     | 
|31.2*       |  | Certification of Marc N. Teal, Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                   | 
|            |  |                                                                                                                                                                                     | 
|32.1**      |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of John P. Manning, Chief Executive Officer of the Company. | 
|            |  |                                                                                                                                                                                     | 
|32.2**      |  | Certification pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Marc N. Teal, Chief Financial Officer of the Company.     | 

.



*  Filed herewith

** Furnished herewith