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


                          FORM 10-Q


     Quarterly Report Pursuant to Section 13 or 15(d) of
             the Securities Exchange Act of 1934



     For the quarter ended September 30, 1998     Commission file number 0-7589



            USP  REAL  ESTATE  INVESTMENT  TRUST
   (Exact name of registrant as specified in its charter)



                      Iowa                                42-6149662
(State or other jurisdiction of incorporation or       (I.R.S. Employer
                 organization)                       Identification No.)


       4333 Edgewood Road N.E., Cedar Rapids, IA                52499
       (Address of principal executive offices)              (Zip Code)


Registrant's telephone number, including area code:  (319) 398-8975


                             N/A
(Former name, address and 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


The number of shares of beneficial interest of the registrant
outstanding at November 13, 1998 was 3,880,000.


PART 1.  FINANCIAL INFORMATION

Item 1.  Financial Statements.
<TABLE>
USP REAL ESTATE INVESTMENT TRUST                                                                 
Balance Sheets                                                                                   
(unaudited)                                                                                      
             <S>                                                 <C>         <C>            <C>
                                                                                                
                                                                    September 30,      December 31,
                                                                  1998       1997           1997
                                                                                                
ASSETS                                                                                           
  Real estate                                                                                    
    Land, buildings and improvements at cost            $     40,722,496   40,695,104   40,694,216
    Less accumulated depreciation                            (12,747,098) (11,922,726) (12,122,752)
                                                              27,975,398   28,772,378   28,571,464
  Mortgage loans receiveable, net of deferred gain                 -        1,238,796         -
     Real estate and mortgage loans receivable                27,975,398   30,011,174   28,571,464
  Cash and cash equivalents                                    1,809,854      502,324    1,606,427
  Rents and other receivables                                    354,272      371,494      421,637
  Prepaid and deferred expenses                                  278,337      340,302      351,874
  Taxes held in escrow                                           159,467       97,160      153,016
                                                                                                  
                                                        $     30,577,328   31,322,454   31,104,418
                                                                                                 
                                                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY                                                             
  Liabilities                                                                                    
    Mortgage loans payable                              $     13,813,825   14,454,257   14,140,584
    Accounts payable and accrued expenses                        619,498      698,118      560,917
    Due to affiliates                                             48,442       43,954       97,473
    Distribution declared                                        310,400      310,400      310,400
    Tenant deposits                                               80,095       71,235       80,818
    Other                                                         32,924       64,801       44,278
                                                              14,905,184   15,642,765   15,234,470
                                                                                                
  Shareholders' Equity                                                                           
    Shares of beneficial interest,                                                               
      $1 par value, 20,000,000                                                                   
      shares authorized, 3,880,000                                                               
      shares issued and outstanding                            3,880,000    3,880,000    3,880,000
    Additional paid-in capital                                11,792,144   11,799,689   11,989,948
                                                              15,672,144   15,679,689   15,869,948
                                                                                                
                                                        $     30,577,328   31,322,454   31,104,418
</TABLE>

<TABLE>
USP REAL ESTATE INVESTMENT TRUST                                                                           
Statements of Earnings                                                                                     
(Unaudited)                                                                                                
  <S>                                                          <C>         <C>            <C>         <C>
                                                                                                           
                                                             Three Months Ended         Nine Months Ended
                                                                September 30,              September 30,
                                                               1998         1997          1998        1997
REVENUE                                                                                                     
  Rents                                               $     1,201,595   1,200,960      4,034,705   3,604,226
  Interest                                                     29,021      49,495         85,400     159,969
                                                            1,230,616   1,250,455      4,120,105   3,764,195
                                                                                                           
EXPENSES                                                                                                    
  Property expenses:                                                                                        
    Real estate taxes                                         152,955     170,150        458,865     520,286
    Repairs and maintenance                                   132,259     191,353        317,128     380,283
    Utilities                                                  33,309      25,963         82,611      94,968
    Management fee                                             55,442      55,980        187,316     167,217
    Insurance                                                  10,757      12,039         33,554      35,021
    Other                                                      37,107      35,277        151,102     108,187
  Property expenses, excluding depreciation                   421,829     490,762      1,230,576   1,305,962
    Depreciation                                              206,985     200,045        624,346     606,307
  Total property expenses                                     628,814     690,807      1,854,922   1,912,269
  Interest                                                    343,753     359,525      1,039,252   1,087,234
  Administrative fee                                           63,909      64,536        191,727     192,330
  Other administrative                                         81,265      69,482        300,808     176,735
                                                            1,117,741   1,184,350      3,386,709   3,368,568
                                                                                                           
Net earnings                                          $       112,875      66,105        733,396     395,627
                                                                                                            
Basic and diluted net earnings per share              $           .03         .02            .19         .10
                                                                                                           
Distributions to shareholders                         $       310,400     310,400        931,200     931,200
                                                                                                            
Distributions to shareholders per share               $           .08         .08            .24         .24
</TABLE>

<TABLE>
USP REAL ESTATE INVESTMENT TRUST                                                             
Statements of Cash Flows                                                                     
(unaudited)                                                                                  
  <S>                                                                     <C>           <C>
                                                                                            
                                                                          Nine Months Ended
                                                                             September 30,
                                                                         1998          1997
                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:                                                        
  Rents collected                                              $      4,090,636     3,675,732
  Interest received                                                      85,400       167,506
  Payments for operating expenses                                    (1,662,072)   (1,677,658)
  Interest paid                                                      (1,036,728)   (1,084,710)
    Net cash provided by operating activities                         1,477,236     1,080,870
                                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES:                                                        
  Principal collections on mortgage loans receivable                       -           22,130
  Capital expenditures                                                  (28,280)   (1,011,825)
  Other, net                                                             12,430       (26,069)
    Net cash used by investing activities                               (15,850)   (1,015,764)
                                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES:                                                        
  Principal portion of scheduled                                                  
    mortgage loan payments                                             (326,759)     (365,222)
  Distributions paid to shareholders                                   (931,200)     (931,200)
    Net cash used by financing activities                            (1,257,959)   (1,296,422)
                                                                                            
Net increase (decrease) in cash and cash equivalents                    203,427    (1,231,316)
Cash and cash equivalents at beginning of period                      1,606,427     1,733,640
Cash and cash equivalents at end of period                     $      1,809,854       502,324
                                                                                            
Reconciliation of net earnings to net cash                                                   
  provided by operating activities:                                                          
Net earnings                                                   $        733,396       395,627
Add (deduct) reconciling adjustments:                                                        
  Depreciation                                                          624,346       606,307
  Amortization                                                            2,524         2,524
  Decrease in rent and other receivables                                 67,285        76,965
  Decrease (increase) in prepaid and deferred expenses                   57,940       (63,823)
  Decrease (increase) in taxes held in escrow                            (6,451)       49,711
  Increase in accounts payable                                                               
    and accrued expenses                                                 58,581        13,973
  Decrease in due to affiliates                                         (49,031)       (2,492)
  Increase (decrease) in advance rents                                  (11,354)        2,078
Net cash provided by operating activities                      $      1,477,236     1,080,870
</TABLE>

NOTES TO FINANCIAL                                                             
STATEMENTS
                                                                               
Note 1:  The unaudited interim financial statements are prepared in
accordance with generally accepted accounting principles and include all
adjustments of a normal recurring nature necessary for a fair presentation of
the financial position and quarterly results.  Interim reports should be read
in conjunction with the audited financial statements and related notes included
in the 1997 Annual Report.                                                     
                                                                               
Note 2:   Shareholders' equity, December 31, 1997    $    15,869,948           
              Net earnings                                   733,396            
              Distributions to shareholders                 (931,200)           
          Shareholders' equity, September 30, 1998   $    15,672,144           


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

USP  Real Estate Investment Trust's net earnings for the three
and  nine months ended September 30, 1998 were $112,875  ($.03
per  share)  and  $733,396  ($.19  per  share),  respectively,
compared  to $66,105 ($.02 per share) and $395,627  ($.10  per
share)  for the same periods in 1997.  (All per share  amounts
are  on  a basic and diluted basis.)  The increase in year-to-
date  net earnings from 1997 to 1998 continues to be primarily
the result of higher revenues.

The  Trust's rental income for the first nine months  of  1998
increased  by $430,000, or 12%, from the first nine months  of
1997.   Rents  at  Geneva  Square in  Lake  Geneva,  Wisconsin
increased  significantly  due to the  receipt  of  settlements
totaling $333,000, previously reserved as uncollectible,  from
P.W. Enterprises and MMM Foods, both former tenants.  Rents at
Kingsley  Square in Orange Park, Florida increased by $180,000
due  to  the Trust's ability to secure OfficeMax as an  anchor
tenant in 1997.  Rents at First Tuesday in Carrollton, Georgia
decreased by $88,000 in 1998 primarily due to the lack of base
rent  and  percentage rents (additional rents based on  tenant
sales) received from Belk Rhodes in 1997.  Belk Rhodes vacated
49,836 square feet of space in July 1997, though continued  to
pay  base rent.  On July 30, 1998, this space was occupied  by
Martin's  Family Clothing, pursuant to a ten year  lease.   At
September  30, 1998, overall leased occupancy of  the  Trust's
portfolio was 88%.  Interest income for the first nine  months
of  1998 was $75,000 less than 1997 due to a lower balance  of
funds  available  for investment and a lower average  interest
rate earned on the available funds.

Total   property   expenses  excluding  depreciation,   as   a
percentage of rental income, decreased from 36% in 1997 to 30%
in  1998.   Real estate taxes decreased by $61,000  from  1997
primarily  due  to  the Trust's success in appealing  the  tax
assessments and reducing the assessed values at Geneva  Square
and  several of the other properties.  Repairs and maintenance
decreased  by  $63,000 during the first nine  months  of  1998
primarily due to tenant remodeling expenses along with parking
lot and roof repairs incurred in 1997.  Utilities decreased by
$12,000,  or  13%,  during  the  first  nine  months  of  1998
primarily due to the mild winter experienced at Geneva Square.
Management fees increased by 12% from 1997 due to the increase
in   rents   as  mentioned  above.   Other  property  expenses
increased  by  $43,000  primarily  due  to  unamortized  lease
commissions at First Tuesday (pertaining to Luria's, a  former
tenant) being written off in 1998 and due to various insurance
claims  totaling  $12,000 being paid in the first  quarter  of
1998 at Geneva Square.

Other administrative expenses increased by $124,000 during the
first  nine  months of 1998 compared to the same  period  last
year.   The  increase  is  primarily  due  to  legal  expenses
incurred during 1998 in connection with the Trust's efforts to
maximize shareholder value.  As previously reported, the Board
of  Trustees has been exploring various strategic alternatives
with  the intent to maximize shareholder value.  Raymond James
&  Associates, Inc. has been engaged as financial  advisor  to
assist the Trust with these ongoing efforts.

In  March  1998, Yamaha Motor Corporation, the sole tenant  at
Yamaha Warehouse in Cudahy, Wisconsin, exercised both of their
remaining  one year options in order to renew their lease  for
two  more  years.   The lease now expires in  June  2000.   As
reported last quarter, strong winds damaged a portion  of  the
building.  The building has been repaired and all repairs were
covered by the tenant's insurance proceeds.

Capital  resources  of the Trust consist  of  equity  in  real
estate   investments.   Properties  are  maintained  in   good
condition   and  adequate  insurance  coverage  is   provided.
Liquidity   is  represented  by  cash  and  cash   equivalents
($1,809,854 at September 30, 1998) as well as cash  flow  from
the  continued operation of the Trust's real estate portfolio,
which is considered sufficient to meet current obligations.

The  Trust is continuing its initiative to refinance the  real
estate  properties.   The  North  Park  Plaza  and  Mendenhall
Commons  mortgages  mature on March 1, 1999  and  need  to  be
refinanced.   Since the current interest rate  environment  is
favorable and prepayment penalties associated with most of the
other  mortgage loans are relatively low, the Trustees believe
it  is  in the best interest of the shareholders to attempt  a
refinancing of the entire portfolio.  The mortgage  on  Yamaha
would be excluded due to its high prepayment penalty.

The Board of Trustees declared a third quarter distribution of
$.08  per share, payable November 16, 1998 to shareholders  of
record   November  3,  1998.   Distributions  to  shareholders
continue  to be dependent upon earnings, cash flow,  financial
condition and other factors reviewed by the Board of Trustees.

YEAR 2000 ISSUE
Management  of  the  Trust is well aware  of  the  issues  and
concerns  surrounding the potential problems  associated  with
computer systems that may not be able to distinguish the  year
2000  from  the year 1900, typically referred to as "the  year
2000  issue."   The Trust does not own or use any  information
technology directly, because all services necessary to conduct
the  day-to-day operations of the Trust are performed by AEGON
USA  Realty  Advisors, Inc. and its affiliates (the  Advisor).
Nevertheless,  the  Trust  could  be  adversely  affected   if
computer systems, as well as certain embedded technology, used
by  the Advisor, tenants, vendors, financial institutions  and
other third parties do not properly process and calculate date-
related information and data from and after January 1, 2000.

The  most  significant risks associated with year 2000  issues
that  could  negatively impact the Trust  include  failure  of
tenants  to  pay  rent, failure by the Trust to  pay  its  own
obligations,  failure  of  various  building  systems  at  the
Trust's  real estate properties, failure of any and all  third
parties  to  provide  services and  failure  of  any  and  all
information,   accounting   and   recordkeeping   systems   or
processes.  The reasons for such failures could range  from  a
simple inability to process electronic information in a timely
manner to a total business failure somehow related to, or  the
result of, the year 2000 issue.

The  Advisor  has  developed plans to modify,  upgrade  and/or
replace portions of its information technology to ensure  that
its  computer systems will function properly in the year  2000
and  thereafter,  and  is in process of  obtaining  reasonable
assurances  that  comparable steps  are  being  taken  by  the
Trust's'  other  major  service  providers.   The  Advisor  is
targeted to be year 2000 compliant by December 31, 1998 and to
conduct  revalidation testing of its systems throughout  1999,
including   the   development  of  business   continuity   and
contingency plans.

The Trust is not expected to incur any direct costs associated
with  year  2000  issues.   Based on these  efforts  to  date,
management of the Trust is not aware of any consequence of the
year  2000 issue that it believes would have a material effect
on  the  Trust's business, results of operations or  financial
condition.   There  can be no assurance, however,  that  these
efforts will be sufficient to avoid any adverse impact to  the
Trust.


Item 6.  Exhibits and Reports on Form 8-K.

No reports on Form 8-K were filed during the third quarter of 1998.


SIGNATURE

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.

                              USP REAL ESTATE INVESTMENT TRUST


                             /s/ Alan F. Fletcher
                             Alan F. Fletcher
                             Vice President and Treasurer
                             (principal financial officer)


                             /s/ Roger L. Schulz
                             Roger L. Schulz
                             Controller
                             (principal accounting officer)

Dated:  November 13, 1998