<PAGE>

ANNUAL REPORT 1999


The Town and Country Trust  A Real Estate Investment Trust


[3 Photos arranged vertically, described from top to bottom as follows: portion
of an apartment building at Fox Run, Germantown, Maryland (Photo 1); portion of
a tree (Photo 2); portion of apartment building wall with exterior lamps at
Versailles--North Charles, Towson, Maryland (Photo 3)]

<PAGE>

The Town and Country Trust (NYSE: TCT) is a self-administered and self-managed
real estate investment trust which owns and manages 15,415 units in 42
multifamily properties in major markets in the mid-Atlantic and southeast
states. Town and Country is recognized as a leading provider of quality rental
housing for middle-income residents in the communities it serves. A great
strength of the Trust is its senior management, which has been working together
as a team in this business for over twenty years.

<PAGE>


1999,
another year of growth and improvement.


[six Photos arranged in a block of two across and three down, described as
follows (left to right, top to bottom): reverse of Photo 2; Photo 1;
apartment building at Barton's Crossing, Alexandria, Virginia (Photo 4);
Photo 2; apartment building at Town & Country Cockeysville, Cockeysville,
Maryland (Photo 5); and Photo 3]

<PAGE>




                             FUNDS FROM OPERATIONS

                                 [BAR GRAPH]

<TABLE>
<CAPTION>
                           1995          1996         1997          1998        1999
<S>                     <C>          <C>          <C>           <C>          <C>
(BASELINE $25,000,000)  $29,277,000  $30,547,000  $31,771,000   $32,605,000  $35,712,000

</TABLE>



                                 FFO PER SHARE
                               (assuming dilution)

                                 [BAR GRAPH]

<TABLE>
<CAPTION>
                     1995    1996     1997     1998     1999
<S>                 <C>     <C>      <C>      <C>      <C>
(BASELINE $1.50)    $1.63   $1.69    $1.75    $1.80    $1.96

</TABLE>

<PAGE>

[three Photos arranged vertically, described as follows: apartment building
at Versailles--North Charles, Towson, Maryland (Photo 6); reverse of Photo 2;
apartment buildings and pool at Barton's Crossing, Alexandria, Virginia
(Photo 7)]


DEAR SHAREHOLDER: In 1999, the Trust continued to improve its financial
performance and to invest in and expand its portfolio of apartment communities
in accordance with a carefully-developed business plan. > Funds from operations
(FFO) increased by 9.5%, growing to $1.96 per share, compared to $1.80 per share
in 1998. Total operating revenues were up 14.5% and net operating income (NOI)
by more than 15.4%. On a same store basis (i.e. for the properties owned for the
period from January 1, 1998 through December 31, 1999), NOI increased by 5.9%,
as same store revenues grew by 4.5% while expenses rose only 2.6%. >
Contributing to these results were strong occupancy rates, significant
reinvestment in our core portfolio of properties and management's successful
efforts to control costs. > We have declared a dividend of $0.42 per share for
the fourth quarter, thereby increasing the quarterly per share distribution by
$.01 from that which we paid during 1999 and increasing the annual rate of
dividend payment during 2000 to $1.68. This is our second consecutive annual
increase and is based upon the strength of our performance during 1999 and our
confidence in our ability to sustain positive performance in 2000 and beyond. >
During the year, we acquired four properties in Florida - one in Orlando, where
we had purchased two communities in December, 1998, and three in the
Sarasota-Bradenton area
                  on the Gulf Coast - with a total of 1,112 apartment units. For
                  the first time, we sold a property - Union Deposit, containing
                  468 apartments, in Harrisburg. These transactions reflect our
                  operating strategy of focusing our financial resources in
                  areas that we believe have the best growth potential. > We
                  have now completed the first two phases of our
                  revenue-enhancing capital expenditure program. More than $37
                  million has been invested in property upgrades that have
                  resulted in improved performance of a significant portion of
                  our core portfolio. In 2000, we plan to address the balance of
                  the core portfolio with the investment of an additional $9-12
                  million. We believe we have sufficient liquidity to fund this
                  program without capital market transactions or further
                  property sales. > Technology is playing a growing role in our
                  operations. We have begun to provide high-speed internet
                  services to our residents to enhance both revenues and
                  livability of our communities. We are also exploring ancillary
                  revenue-producing activities such as separate billing of
                  residents' water use. And we are investing as well in our
                  internal operating technology. > The Trust has the benefit of
                  seasoned, deep and focused management. We want to thank this
                  team for their competence and extraordinary devotion to the
                  interests of the Trust, and to you, our shareholders, for your
                  continued support.


                      /s/ Alfred Lerner             /s/ Harvey Schulweis


                      ALFRED LERNER                 HARVEY SCHULWEIS

                      Chairman                      President and
                                                    Chief Executive Officer

<PAGE>

CONTINUED IMPROVED PERFORMANCE AND GROWTH In 1999, funds from operations grew
substantially, fueled by strong revenue growth and continued high occupancy
throughout our portfolio - on a per share basis FFO grew from $1.80 to $1.96.
This performance was enhanced by the significant cash returns we realized from
the upgrading investments we have made in our core portfolio. Same store results
were also impressive with revenues growing by 4.5%, expenses growing only 2.6%
and net operating income up by 5.9%. In addition we have continued to grow the
size of our portfolio by expanding into new high-growth markets. We now own and
manage 15,415 apartment units in six distinct markets: Southeastern
Pennsylvania, Suburban Baltimore, Suburban Washington, D.C./Northern Virginia,
Charlotte, Orlando and Sarasota.

[Seven Photos arranged in a horizontal line, described as follows: apartment
building at Versailles--North Charles, Towson, Maryland (Photo 8); Photo 2;
Photo 1; Photo 5; Photo of Clubhouse at Barton's Crossing, Alexandria,
Virginia (Photo 9); reverse of Photo 2; Photo of an apartment building at
University Heights, Ashburn, Virginia (Photo 10)]



                  A COMPREHENSIVE BUSINESS PLAN The management of the Trust is
                  guided by the following business plan: - > Actively manage our
                  portfolio by seeking to continue to acquire quality properties
                  in mature markets with opportunities for growth in net
                  operating income while selectively disposing of properties
                  with limited growth prospects. - > Invest in the existing
                  portfolio to maintain competitive leadership, increase rental
                  revenue and minimize operating costs. - > Develop ancillary
                  sources of income. - > Use technology to enhance revenues and
                  operating efficiencies. - > Sustain continuity and enthusiasm
                  of senior management staff. In 1999, we made important
                  progress on all fronts.

<PAGE>



                              NET OPERATING INCOME

                                   [BAR GRAPH]

<TABLE>
<CAPTION>
                             1995           1996         1997          1998           1999
<S>                      <C>            <C>           <C>           <C>           <C>
(BASELINE $45,000,000)   $52,033,000    $52,545,000   $53,981,000   $58,315,000   $67,321,000

</TABLE>



                               OPERATING REVENUES

                                   [BAR GRAPH]

<TABLE>
<CAPTION>
                              1995          1996          1997          1998          1999
<S>                      <C>            <C>           <C>           <C>           <C>
(BASELINE $75,000,000)   $88,904,000    $90,637,000   $92,085,000   $98,262,000   $112,478,000

</TABLE>

<PAGE>



                              SAME-STORE REVENUES

                                   [BAR GRAPH]

<TABLE>
<CAPTION>
                            1995             1996           1997           1998          1999
<S>                      <C>             <C>            <C>            <C>            <C>
(BASELINE $80,000,000)   $86,253,000     $87,938,000    $89,435,000    $92,949,000    $97,163,000

</TABLE>

                              [Reverse of Photo 2]

<PAGE>

PORTFOLIO ENHANCEMENT THROUGH ACQUISITION AND DISPOSITION We acquired four
Florida properties during the year, bringing our holdings in that state to 11%
of our overall portfolio, which now contains a total of 15,415 apartments in 42
multi-family communities. > In April, we bought Town & Country at Kirkman, an
upscale 370-unit community in the Metro West submarket of Orlando, close to its
business district, for $25,000,000. We now own three properties in Orlando, with
a total of 930 apartments. > In October, we branched out into the
Sarasota-Bradenton area on the Gulf Coast with three acquisitions containing an
aggregate of 742 units for $39,300,000. Two are in Sarasota - Heron's Run, with
274 apartments, built around a lake and adjacent to a Bobby Jones public golf
course, and 212-unit McIntosh, which is nearby. The third, Perico, contains 256
apartments in Bradenton, 1-1/2 miles from the Gulf of Mexico and Santa Maria
Island. > For the first time, we sold a property, disposing of Union Deposit
with 468 units in Harrisburg, PA for $14,650,000, recording an

<TABLE>
<CAPTION>
[PHOTO of pool and       [PHOTO of lake and         [PHOTO of pool and           [PHOTO of lake, pool,
apartment buildings at   apartment buildings at     clubhouse at Town &          clubhouse and apartment
Town & Country           Town & Country Heron's     Country at Kirkham,          buildings at Town &
McIntosh, Sarasota,      Run, Sarasota, Florida     Orlando, Florida             Country, Perico, Bradenton,
Florida (Photo 11)]      (Photo 12)]                (Photo 13)]                  Florida (Photo 14)]
<S>                      <C>                         <C>                         <C>
TOWN & COUNTRY MCINTOSH  TOWN & COUNTRY HERON'S RUN  TOWN & COUNTRY AT KIRKMAN   TOWN & COUNTRY PERICO
   Sarasota, Florida         Sarasota, Florida            Orlando, Florida         Bradenton, Florida
------------------------------------------------------------------------------------------------------
</TABLE>

accounting gain of approximately $7 million. > These transactions reflect our
strategy of focusing our financial resources in areas that we believe have
the greatest growth potential, through the selective disposition of
properties and reinvestment of the proceeds in higher-growth markets. We are
considering the sale of other communities that, while stabilized and well
maintained, don't meet our growth standards. Our experience in Harrisburg
demonstrates that there may be local buyers with strong motivation, ambitious
vision and the financial ability to bid aggressively for properties in their
own community. Also, this type of purchaser can use leveraging techniques to
enhance return on equity that may not be prudent for us as a public company.
As a consequence of these factors, we believe that we may be able to dispose
of certain holdings advantageously and reinvest the net proceeds in new
property without suffering significant dilution.

<PAGE>

              [PIE CHART]

                                     MARKET
                                 CAPITALIZATION
<TABLE>
<S>                                     <C>
Common Shares                           36.7%
Operating Partnership Units              5.7%
Debt-Fixed Rate                         46.8%
Debt-Floating Rate                      10.8%

</TABLE>


              [PIE CHART]

                                    PORTFOLIO
                                    LOCATION
<TABLE>
<S>                                     <C>
Suburban Baltimore, MD                  44.9%
Suburban Washington, DC                 19.8%
Pennsylvania                            17.5%
Newark, DE area                          3.3%
Charlotte, NC                            3.8%
Florida                                 10.8%

</TABLE>

CAPITAL RESOURCES The Trust believes it has funds available to implement the
acquisition and reinvestment needs of its portfolio management program. In
addition to inaugurating a policy of selective dispositions to provide proceeds
for reinvestment, we filed a shelf registration with the SEC in December which
will allow us to sell, from time to time, $75 million in common and preferred
shares of beneficial interest and warrants. > We continually explore external
capital-raising options, including joint venture structures, but have not yet
found any that we believe will be in the best interest of our shareholders. We
are committed to producing the best long-term results for our shareholders and
will endeavor to avoid significant long-term dilutive transactions in any form.

OUR MARKETS Our latest acquisitions mark our entry into the Sarasota-Bradenton
market, one of the most attractive growth regions in the entire country. It
ranked first among the largest metro areas in job growth percentage and is
projected as third in the U.S. in population growth (trailing only Las Vegas and
Orlando, another one of our key markets) for the decade ending in 2005. Equally
significant is the forecast by the Florida Department of Labor and Employment
that job growth will consist primarily of high- and medium- wage positions. This
clearly bodes well for the multi-family housing market, with occupancy rates and
rent levels supported by the influx of young, mobile professionals who need
accommodations like those in which we are investing. This market also benefits
from its proximity to the flourishing Tampa-St-Petersburg-Clearwater area, which
is just a 35 to 40-minute drive from Bradenton via Interstate highways. > Both
Business Week and Fortune ranked Orlando, home to three of our most recent
acquisitions, as the top U.S. business center in 1998. It combines such Florida
tourist icons as Disney World, Universal Studios, Sea World and Disney MGM
Studios, with surging employment by corporate giants including Federal Express,
Lockheed Martin, AT&T, Oracle and Westinghouse. The Orlando area ranked sixth
nationally in population growth since 1990 and fourth in employment gains in the
year ending March 1999. > Charlotte, North Carolina, which we entered in 1998,
is another area marked by substantial population and employment growth, spurred
by its ranking as the nation's second largest financial center, measured by
headquartered banking assets. > In the mid-Atlantic region, where our core
portfolio is concentrated, growth is not quite as dramatic as in Florida or
North Carolina but is nevertheless consistent and solid. This is reflected in
strong occupancy rates for our properties in all three of our markets in this
region. In our Maryland and Delaware properties, occupancy was 94.9% and 95.1%,
respectively, in 1999. For the same period in the suburban Washington D.C.
metropolitan area, occupancy grew to 97.4% from 95.4%. In Pennsylvania,
occupancy was 93.3% in 1999.

<PAGE>


                           ANNUALIZED TOTAL RETURNS



                                 [LINE GRAPH]

ANNUALIZED RATE OF RETURN
<TABLE>
<S>                                                 <C>       <C>       <C>       <C>       <C>
The Town and Country Trust                          21.9%     10.3%     16.9%     19.0%     15.5%

Wilshire Real Estate Securities Index               (3.1%)   (10.6%)    (1.4%)     7.0%      8.3%

NAREIT Real Time Market Index--All Equity REITS     (4.6%)   (11.3%)    (1.8%)     6.4%      8.1%
                                                       1         2         3         4         5
</TABLE>


                            HOLDING PERIOD IN YEARS


              [ REFLECTING DIVIDEND YIELD AND PRICE APPRECIATION ]



                  [Photo of lake and apartment buildings at
                   Stonegate, Elkton, Maryland (Photo 15)]

<PAGE>



                              AVERAGE MONTHLY RENT

                                  [BAR GRAPH]

<TABLE>
<CAPTION>

                  1995   1996    1997    1998    1999
<S>               <C>    <C>     <C>     <C>     <C>
(BASELINE $500)   $561   $574    $586    $602    $632

</TABLE>


                         [Photo of apartment building at
                   Versailles--North Charles, Towson, Maryland]
<PAGE>

                                    HISTORIC
                                 OCCUPANCY RATE


                                   [LINE GRAPH]


<TABLE>
<CAPTION>
                                    1995      1996      1997      1998      1999
                                   ------    ------    ------    ------    ------
<S>                               <C>       <C>       <C>       <C>       <C>
                                    94%       93.7%     92.9%     94.1%    94.7%

</TABLE>


INVESTING IN PROPERTY IMPROVEMENTS The Trust has now completed the first two
phases of a three-part revenue-enhancing capital improvement program. To date,
we have invested $37 million in upgrades at a significant portion of our core
portfolio, increasing the marketability of our product and, in turn, occupancy
and rent levels. Among the items addressed were providing washers and dryers
where none had existed before, installation of carpeting, replacement of kitchen
cabinets and appliances and upgrading of bathroom fixtures. We have also
enhanced the curb appeal of these properties as we replaced original exterior
siding with contemporary materials, completely revamped our signage and
accelerated our normal cycle of parking lot repaving and roof replacement. In
2000, the third phase of this program will be devoted to similar work in the
balance of the core portfolio, involving an additional investment of $9-12
million. > We believe that this program, in addition to enhancing revenues, will
have the collateral effect of allowing us to keep our operating expenses under
control through reduced maintenance expenditures. We expect to have the
liquidity to fund this program without further property sales or capital market
transactions.

TECHNOLOGY AND ANCILLARY REVENUES We are constantly pursuing opportunities to
take advantage of technological advances that have application to our industry.
> We have contracted with a leading internet service provider and are making
high-speed internet and other communication services, including cable television
and telephone, available to a majority of our residents. We are also developing
other ancillary revenue-producing activities, such as separate billing of water
usage by our residents, which we expect can represent a meaningful addition to
our net property income. > In addition, we are making a significant investment
in our operating technology, so that our residential management, accounting and
reporting systems will be state-of-the-art. And we have staffed our information
technology department with the capability to keep pace with the rapid and
inevitable changes in this critical new aspect of business life.

THE SENIOR MANAGEMENT STAFF Certainly one of the Trust's most valuable assets is
seasoned, deep, dedicated and focused management. Our senior staff has been
working together successfully as a team for more than twenty years. During the
year, we completed a compensation review that resulted in a program to maintain
this continuity and motivation by providing strong incentives for middle and
upper management. > The professionalism and hands-on service approach of our
staff has produced a level of satisfaction and loyalty of our residents that has
resulted in high occupancy and one of the lowest turnover rates in the country.
Our "whatever it takes" philosophy is focused on the well-being of our residents
and puts our team at their disposal 24 hours a day, seven days a week.

<PAGE>

[MAP of East Coast United States bounded on the north by Pennsylvania and
on the south by Florida, depicting the location of all of the Registrant's
apartment properties]

PORTFOLIO

<TABLE>
<CAPTION>

Name                                              Location      Number of Units
-------------------------------------------------------------------------------
<S>                                               <C>           <C>
MARYLAND
--------
TRIANGLE   Fox Run                                GERMANTOWN        218
  / /      Stonegate                              ELKTON            260
   -       Town & Country Bowley's Quarters       BALTIMORE         462
   -       Town & Country Charlesmont             DUNDALK           565
   -       Town & Country Cockeysville            COCKEYSVILLE      540
   -       Town & Country Foxhaven                BALTIMORE         460
   -       Town & Country Gardenwood              BALTIMORE         492
   -       Town & Country Hallfield               PERRY HALL         75
   -       Town & Country Harford                 CARNEY            336
   -       Town & Country Hollows                 GLEN BURNIE       336
   -       Town & Country Montgomery Knolls       GAITHERSBURG      210
   -       Town & Country Ridgeview               ROSSVILLE         257
   -       Town & Country Rolling Road            BALTIMORE         384
   -       Town & Country Rossville               ROSSVILLE         692
   -       Town & Country Tall Oaks               LAUREL            352
   -       Town & Country West/Greensview         ELLICOTT CITY   1,350
   -       Town & Country Willow Lake             LAUREL            456
   -       Town & Country Woodhill                GLEN BURNIE       334
   -       Town & Country Woodmoor                BALTIMORE         424
   -       Versailles - North Charles             TOWSON            210

PENNSYLVANIA
------------
   -       Colonial Crest Emmaus                  EMMAUS            329
   -       Hidden Village                         ALLENTOWN         264
TRIANGLE   Rolling Hills                          YORK              184
   -       Town & Country Colonial Park           HARRISBURG        626
   -       Town & Country Hanover                 HANOVER           215
   -       Town & Country Lancaster West          LANCASTER         413
   -       Town & Country Lancaster East          LANCASTER         272
   -       Town & Country York                    YORK              396

VIRGINIA
--------
TRIANGLE   Barton's Crossing                      ALEXANDRIA        532
  / /      Carlyle Station                        MANASSAS          408
TRIANGLE   The Glen at Leesburg                   LEESBURG          134
TRIANGLE   University Heights                     ASHBURN           466
TRIANGLE   The Village at McNair Farms            HERNDON           283

DELAWARE
--------
  / /      Christina Mill                         NEWARK            228

NORTH CAROLINA
--------------
DIAMOND    Town & Country Forest Ridge            CHARLOTTE         330
DIAMOND    Town & Country Fairington              CHARLOTTE         250

FLORIDA
-------
   @       Town & Country Perico                  BRADENTON         256
   @       Town & Country at Kirkman              ORLANDO           370
DIAMOND    Town & Country Twelve Oaks             ORLANDO           284
DIAMOND    Town & Country Windermere Lakes        ORLANDO           276
   @       Town & Country Heron's Run             SARASOTA          274
   @       Town & Country McIntosh                SARASOTA          212

                                                                -------
                                                                -------
TOTAL UNITS                                                      15,415

</TABLE>

   -       Core Portfolio
TRIANGLE   1993 Acquisitions
  / /      1994 Acquisitions
DIAMOND    1998 Acquisitions
   @       1999 Acquisitions

<PAGE>

                                  Financial Report >                  [GRAPHIC]


<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 14.


CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT SHARE DATA)       DECEMBER 31,                  1999              1998
                                                                   ----------       ----------
<S>                                                                <C>              <C>
ASSETS
------
Real estate assets:
   Land                                                             $  99,850        $  90,146
   Buildings and improvements                                         624,975          571,680
   Other                                                                4,921            4,264
                                                                   ----------       ----------
                                                                      729,746          666,090
Less accumulated depreciation                                        (264,180)        (248,411)
                                                                   ----------       ----------
                                                                      465,566          417,679
Cash and cash equivalents                                               2,280            3,784
Restricted cash                                                         1,805            1,455
Receivables                                                             2,475            1,871
Prepaid expenses and other assets                                       4,464            4,162
Deferred financing costs, net of allowance for amortization
   (1999-$982; 1998-$488)                                               4,259            3,433
                                                                   ----------       ----------
Total assets                                                        $ 480,849        $ 432,384
                                                                   ----------       ----------
                                                                   ----------       ----------

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Mortgages payable                                                   $ 444,941        $ 385,299
Accrued interest                                                        2,348            1,847
Accounts payable and other liabilities                                  5,456            6,539
Security deposits                                                       2,631            2,097
Minority interest                                                       3,424            4,994
                                                                   ----------       ----------
Total liabilities                                                     458,800          400,776
Shareholders' equity:
   Common shares of beneficial interest ($.01 par value),
     500,000,000 shares authorized, 15,790,580 and 15,767,148
     issued and outstanding at December 31, 1999 and 1998                 158              158
   Additional paid-in capital                                         319,481          319,141
   Accumulated deficit                                               (295,698)        (285,415)
   Unearned compensation-restricted stock                              (1,892)          (2,276)
                                                                   ----------       ----------
                                                                       22,049           31,608
                                                                   ----------       ----------
Total liabilities and shareholders' equity                          $ 480,849        $ 432,384
                                                                   ----------       ----------
                                                                   ----------       ----------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 15.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT PER SHARE DATA)  YEAR ENDED DECEMBER 31,      1999            1998           1997
                                                                -----------     ----------     ----------
<S>                                                             <C>             <C>            <C>
Revenues:
   Revenue from rental operations                                  $112,478       $ 98,262       $ 92,085
   Other                                                                430            628            563
                                                                -----------     ----------     ----------
                                                                    112,908         98,890         92,648
Expenses:
   Utilities                                                          6,550          5,954          5,886
   Other property operations                                         17,929         15,841         15,287
   Real estate taxes                                                  8,185          7,106          6,837
   Depreciation                                                      24,920         25,564         24,311
   Marketing and advertising                                          4,181          3,903          3,577
   Repairs and maintenance                                            8,312          7,143          6,517
   General and administrative                                         3,331          3,233          2,414
                                                                -----------     ----------     ----------
                                                                     73,408         68,744         64,829
Interest expense                                                     28,012         22,529         18,601
Interest expense related to the amortization of deferred
   financing costs                                                      494            374          1,559
                                                                -----------     ----------     ----------
                                                                    101,914         91,647         84,989
                                                                -----------     ----------     ----------
Income before gain on disposition of property, minority
   interest and extraordinary item                                   10,994          7,243          7,659
Gain on disposition of property                                       7,073             --             --
                                                                -----------     ----------     ----------
Income before minority interest and extraordinary item               18,067          7,243          7,659
Income allocated to minority interest                                 2,475            993          1,048
                                                                -----------     ----------     ----------
Income before extraordinary item                                     15,592          6,250          6,611
Extraordinary item-cost related to refinancing of debt
   (net of $397 minority interest)                                       --             --         (2,512)
                                                                -----------     ----------     ----------
Net income                                                         $ 15,592       $  6,250       $  4,099
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------

Weighted average common shares outstanding-basic                     15,537         15,523         15,513
Dilutive effect of outstanding options and restricted shares            252            159            176
                                                                -----------     ----------     ----------
Weighted average common shares outstanding-diluted                   15,789         15,682         15,689
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------

Per common share-basic:
Income before extraordinary item                                   $   1.00       $    .40       $    .42
Extraordinary item                                                       --             --           (.16)
                                                                -----------     ----------     ----------
Net income-basic                                                   $   1.00       $    .40       $    .26
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------

Per common share-diluted:
Income before extraordinary item                                   $    .99       $    .40       $    .42
Extraordinary item                                                       --             --           (.16)
                                                                -----------     ----------     ----------
Net income-diluted                                                 $    .99       $    .40       $    .26
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------

Dividends declared and paid per share outstanding                  $   1.64       $   1.60       $   1.60
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------

Tax treatment of dividends (unaudited):
   Ordinary income                                                 $   1.13       $   1.14       $   1.08
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------
   Return of capital                                               $    .51       $    .46       $    .52
                                                                -----------     ----------     ----------
                                                                -----------     ----------     ----------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 16.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                       Common Shares of Beneficial Interest     Additional
                                       ------------------------------------       Paid-In       Accumulated       Unearned
(IN THOUSANDS, EXCEPT PER SHARE DATA)               Shares          Amount        Capital         Deficit       Compensation
                                       -------------------------------------------------------------------------------------
<S>                                                 <C>          <C>            <C>             <C>             <C>
Balance at January 1, 1997                          15,678       $     157       $ 317,791       $(245,391)       $  (1,812)
Net income                                              --              --              --           4,099               --
Common shares of beneficial interest
   issued under Long Term Incentive Plan                76               1           1,164              --           (1,165)
Dividends declared and paid
   ($1.60 per share)                                    --              --              --         (25,148)              --
Earned compensation under Long Term
   Incentive Plan                                       --              --              --              --              316
Share options exercised                                  7              --             106              --               --
                                       -------------------------------------------------------------------------------------
Balance at December 31, 1997                        15,761             158         319,061        (266,440)          (2,661)
Net income                                              --              --              --           6,250               --
Dividends declared and paid
   ($1.60 per share)                                    --              --              --         (25,225)              --
Earned compensation under Long Term
   Incentive Plan                                       --              --              --              --              385
Share options exercised                                  6              --              80              --               --
                                       -------------------------------------------------------------------------------------
Balance at December 31, 1998                        15,767             158         319,141        (285,415)          (2,276)
Net income                                              --              --              --          15,592               --
Dividends declared and paid
   ($1.64 per share)                                    --              --              --         (25,875)              --
Earned compensation under Long Term
   Incentive Plan                                       --              --              --              --              384
Share options exercised                                 23              --             340              --               --
                                       -------------------------------------------------------------------------------------
Balance at December 31, 1999                        15,790       $     158       $ 319,481       $(295,698)       $  (1,892)
                                       -------------------------------------------------------------------------------------
                                       -------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 17.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

(IN THOUSANDS)                       YEAR ENDED DECEMBER 31,                 1999             1998             1997
                                                                         ----------       ----------       ----------
<S>                                                                      <C>              <C>              <C>
OPERATING ACTIVITIES
--------------------

Income before minority interest and extraordinary item                    $  18,067        $   7,243        $   7,659
Adjustments to reconcile income before minority interest and
   extraordinary item to net cash provided by operating activities:
     Gain on disposition of property                                         (7,073)              (9)             (10)
     Depreciation                                                            24,920           25,564           24,311
     Interest expense related to the amortization of deferred
       financing costs                                                          494              374            1,559
     Amortization of unearned compensation                                      384              385              316
     Changes in operating assets and liabilities:
       Increase in restricted cash                                             (350)            (330)            (120)
       Decrease in funds deposited with mortgagee                                --               --            6,030
       (Increase) decrease in receivables, prepaid expenses
         and other assets                                                      (906)             237           (1,000)
       (Decrease) increase in accounts payable, other liabilities,
         accrued interest and security deposits                                 (48)           2,298           (2,814)
                                                                         ----------       ----------       ----------
Net cash provided by operating activities                                    35,488           35,762           35,931

INVESTING ACTIVITIES
--------------------

Property acquisitions                                                       (66,227)         (69,835)              --
Additions to real estate assets                                              (5,160)          (4,638)          (4,400)
Net proceeds from disposition of property                                    14,263                9               32
Additions pursuant to value-added capital improvements program               (8,610)         (17,764)          (5,185)
                                                                         ----------       ----------       ----------
Net cash used in investing activities                                       (65,734)         (92,228)          (9,553)

FINANCING ACTIVITIES
--------------------

Borrowings on mortgages payable                                              83,825           85,308          300,000
Payments on mortgages payable                                               (24,183)              (9)        (232,000)
Payments on notes payable                                                        --               --          (58,409)
Proceeds from exercise of share options                                         340               80              106
Costs related to refinancing of debt                                             --               --             (742)
Increase in deferred financing costs                                         (1,320)            (216)          (3,705)
Dividends and distributions                                                 (29,920)         (29,172)         (29,094)
                                                                         ----------       ----------       ----------
Net cash provided by (used in) financing activities                          28,742           55,991          (23,844)
                                                                         ----------       ----------       ----------
(Decrease) increase in cash and cash equivalents                             (1,504)            (475)           2,534

Cash and cash equivalents at beginning of period                              3,784            4,259            1,725
                                                                         ----------       ----------       ----------
Cash and cash equivalents at end of period                                $   2,280        $   3,784        $   4,259
                                                                         ----------       ----------       ----------
                                                                         ----------       ----------       ----------
Cash interest paid                                                        $  27,643        $  22,727        $  21,709
                                                                         ----------       ----------       ----------
                                                                         ----------       ----------       ----------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 18.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------

ORGANIZATION The Town and Country Trust (the "Trust"), and subsidiaries
(collectively the "Company"), is a self-administered and self-managed Real
Estate Investment Trust organized in 1993 to own, manage, and acquire
multi-family residential properties.

     In conjunction with its initial public offering, a series of transactions
occurred: the Company acquired an 86% general partnership interest in The TC
Operating Limited Partnership (the "Operating Partnership"); the remaining 14%
limited partnership interest in the Operating Partnership was retained by the
minority interest owners as consideration for their contribution to the
Operating Partnership of controlled interests in The Town and Country Management
Corporation and 26 property partnerships (the "TC Companies"). The TC Companies,
along with the property partnerships acquired concurrent with and subsequent to
the public offering, total 42 property partnerships located in Maryland,
Pennsylvania, Virginia, Delaware, North Carolina and Florida and are
collectively referred to as "The TC Property Partnerships." All operating
expenses of the Trust will be borne pro rata by the general and limited partners
of the Operating Partnership in proportion to their respective interests in the
properties.

PRINCIPLES OF CONSOLIDATION The consolidated financial statements of the Company
include the accounts of the Trust and its subsidiaries. All significant
intercompany transactions and accounts have been eliminated.

RECLASSIFICATIONS Certain amounts previously reported have been reclassified to
conform with the 1999 presentation.

INCOME TAXES The Trust has made an election to be taxed as a Real Estate
Investment Trust ("REIT") under Sections 856 through 860 of the Internal Revenue
Code. As a REIT, the Trust generally will not be subject to Federal income tax
to the extent that it distributes at least 95% of its REIT taxable income to its
shareholders. If the Trust fails to qualify as a REIT in any taxable year, the
Trust will be subject to Federal income tax (including any applicable
Alternative Minimum Tax) at regular corporate rates on its taxable income. Even
if the Trust qualifies for taxation as a REIT, the Trust may be subject to
certain state and local taxes on its income and property and to Federal income
and excise taxes on its undistributed income.

     The Company makes a number of special allocations for tax purposes only. In
general, 100% of the interest deductions related to $232,000,000 of borrowings
will be allocated to the Trust and 85% of depreciation deductions related to 32
of the properties will be allocated to the minority interest ownership.

REAL ESTATE AND DEPRECIATION Real estate assets are stated at cost, net of
accumulated depreciation, unless an impairment indicator exists. If impairment
conditions exist, the Company makes an assessment of the recoverability of the
carrying amounts of the properties by estimating the future undiscounted cash
flows, excluding interest charges. If the carrying amount exceeds the aggregate
future cash flows, the Company would recognize an impairment loss to the extent
the carrying amount exceeds the discounted fair value of the property. Any
long-lived assets to be disposed of are valued at estimated fair value less cost
to sell. Based on such periodic assessments, no impairments have been determined
and, therefore, no real estate carrying amounts have been adjusted.

     All costs related to the improvement or replacement of fixed assets are
capitalized. Maintenance and repairs are charged to expense as incurred.
Provision for depreciation is computed using the straight-line method over the
estimated useful lives of the assets, as follows:

<TABLE>
                          ---------------------------------------------------
                          <S>                                   <C>
                          Buildings                             40 years
                          Major Improvements                    20 years
                          Furniture, Fixtures and Equipment     5 to 12 years
</TABLE>

CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.

DEFERRED FINANCING COSTS Deferred financing costs consist of certain fees
incurred in the financing of indebtedness which are being amortized to interest
expense using the straight-line method, which approximates the effective yield
method, over the term of the related debt.

INTEREST RATE RISK MANAGEMENT The Company uses an interest rate protection
agreement to reduce the potential impact of increases in interest rates relating
to the floating rate portion of certain borrowings. Unamortized premiums paid
for the agreement are included in deferred financing costs in the Company's
balance sheet. Amounts received under the agreement are credited as a reduction
of interest expense.

<PAGE>
                                                  THE TOWN AND COUNTRY TRUST 19.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME RECOGNITION Revenues from rental property are recognized when due from
tenants. Leases are generally for one year or less.

USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions, such as depreciable lives of assets, that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

NOTE 2. RESTRICTED CASH
-----------------------

Pursuant to Maryland, Delaware, North Carolina and Florida state law, the
Company maintains certificates of deposit to cover the aggregate amount of
tenant security deposits retained by the properties in those states. At December
31, 1999, and 1998, the amount of the certificates of deposit, with a maturity
of three months or less, was $1,805,000 and $1,455,000, respectively.

NOTE 3. REAL ESTATE ACQUISITIONS AND DISPOSITIONS
-------------------------------------------------

During the years ended December 31, 1998 and 1999, the Company purchased the
following apartment communities:

<TABLE>
<CAPTION>

Property                                  Location      Date of Acquisition   Number of Units       Contract Amount
--------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                <C>                   <C>                   <C>
TOWN & COUNTRY FOREST RIDGE          CHARLOTTE, NC           MARCH 31, 1998               330           $18,500,000
TOWN & COUNTRY FAIRINGTON            CHARLOTTE, NC         OCTOBER 15, 1998               250           $18,000,000
TOWN & COUNTRY WINDERMERE LAKES        ORLANDO, FL        DECEMBER 10, 1998               276           $15,200,000
TOWN & COUNTRY TWELVE OAKS             ORLANDO, FL        DECEMBER 10, 1998               284           $16,500,000
TOWN & COUNTRY AT KIRKMAN              ORLANDO, FL           MARCH 31, 1999               370           $25,000,000
TOWN & COUNTRY HERON'S RUN            SARASOTA, FL          OCTOBER 5, 1999               274           $15,000,000
TOWN & COUNTRY MCINTOSH               SARASOTA, FL          OCTOBER 5, 1999               212           $10,900,000
TOWN & COUNTRY PERICO                BRADENTON, FL          OCTOBER 5, 1999               256           $13,400,000

</TABLE>

On October 5, 1999 the Company sold the Union Deposit garden apartment community
consisting of 468 units in Harrisburg, PA. The proceeds of the sale of Union
Deposit were used to acquire the Heron's Run community, in Sarasota, FL, a
transaction that was treated as a tax-free exchange.

     The other acquisitions were funded through the use of mortgage loans and
the Company's credit facilities, and in one case, the assumption of existing
mortgage debt. Results of operations for the property partnerships listed above
are included in the Company's statements of operations for the periods from the
date of acquisition through December 31, 1999.

NOTE 4. MORTGAGES PAYABLE
-------------------------

In September, 1997 the Company entered into an agreement that provides a
$375,000,000 collateralized financing facility. The initial borrowing under the
facility of $300,000,000 matures in 2008 and bears a fixed interest rate of
6.91%.

     A portion of the proceeds was used to refinance the Company's existing
publicly-issued and bank mortgage indebtedness which had scheduled maturities of
August, 1998. As a result of the refinancing of the publicly-issued and bank
mortgage indebtedness, in 1997 the Company recorded an extraordinary expense of
$2,512,000, net of minority interest of $397,000. The expense consisted of the
write-off of $2,167,000 of unamortized deferred financing costs and other costs
in the amount of $742,000.

     Of the remaining $75,000,000 (available as a 10 1/2 year, variable rate
revolving credit facility), $67,000,000 and $54,500,000 was outstanding as of
December 31, 1999 and 1998, respectively. The applicable variable rates at
December 31, 1999 and 1998 were 6.18% and 5.51%, respectively. Any outstanding
portion can be converted to a fixed rate term loan maturing in 2008 at the
Company's option. The Company purchased an interest rate protection contract
which limits the maximum floating interest rate to approximately 10.5%.

     During 1998, the Company arranged a $50,000,000 revolving line of credit
with a bank to be used for acquisitions. Borrowings under this facility will
bear interest at 120 basis points over LIBOR (7.03% at December 31, 1999).
Individual

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 20.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

draws under the facility mature in eighteen months, and the initial term of the
facility expires in September, 2001. As of December 31, 1999 $16,250,000 was
outstanding under this facility.

     In conjunction with the acquisition of a property during 1998, the Company
assumed an amortizing mortgage in the amount of $6,745,000, which resulted in a
non-cash investing activity. During 1999, the mortgage was increased by
$3,500,000. At December 31, 1999 the mortgage had an outstanding balance of
$10,129,000, matures in 2003 and bears a fixed interest rate of 7.74%.

     During 1999, the Company entered into mortgages in the amount of
$33,175,000 secured by certain of the properties that were purchased in 1998,
the proceeds of which were used to repay the bank revolving line of credit. The
mortgages mature in 2009 and bear a fixed rate of interest of 6.81%.

     During 1999, the Company entered into amortizing mortgages in the amount of
$18,400,000 in conjunction with the acquisitions of properties. The mortgages
mature in 2009 and bear a fixed interest rate of 7.85%. At December 31, 1999 the
mortgages had outstanding balances of $18,387,000.

     In connection with the mortgages, the Company maintains unused letters of
credit with a bank totaling $5,025,000 in lieu of paying real estate tax
escrows. The letters of credit are renewed annually.

     The following is a summary of scheduled debt maturities:

<TABLE>
<CAPTION>
                            (IN THOUSANDS)
                            <S>                                    <C>
                                                                 ----------
                            2000                                   $ 16,582
                            2001                                        358
                            2002                                        387
                            2003                                      9,772
                            2004                                        218
                            After 2004                              417,624
                                                                 ----------
                            Total scheduled debt maturities        $444,941
                                                                 ----------
                                                                 ----------
</TABLE>

NOTE 5. MINORITY INTEREST
-------------------------

In conjunction with the formation of the Company and its majority-owned
Operating Partnership, persons contributing interests in properties to the
Operating Partnership received limited partnership interests in the Operating
Partnership. The aggregate outstanding limited partnership interests are
convertible into common shares of the Company, and the interests have the same
economic characteristics as 2,466,535 common shares inasmuch as they share
proportionally in the net income or loss and any distributions of the Operating
Partnership. Since the limited partnership interests have the same economic
characteristics as shares, these interests have no impact on earnings per share
calculations.

     Minority interest in the accompanying consolidated financial statements
relates to such limited partnership interests.

NOTE 6. EMPLOYEE BENEFIT PLANS
------------------------------

SHARE OPTION PLANS In 1993 the Company established a long-term incentive plan
for the purpose of attracting and retaining executive officers, other key
employees and non-employee trustees (the "1993 Plan"). The 1993 Plan provides
for the granting of restricted stock and incentive share options and
non-qualified share options to purchase up to 750,000 shares of the Company's
common shares at a price not less than the fair market value at the date the
options are granted. During 1997 the Company established an additional long-term
incentive plan (the "1997 Plan" and together with the 1993 Plan, the "Plans").
The 1997 Plan provides for the granting of options to purchase up to 1,200,000
of the Company's common shares at a price not less than the fair market value at
the date the options are granted. The Company has elected to follow Accounting
Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB
25") and related interpretations in accounting for its employee stock options as
permitted under FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION,
("Statement 123"). Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.

     Under the Plans, options generally become exercisable in equal installments
over a three-year period, commencing with the first anniversary of the date of
grant. All options expire ten years from the date of grant. During the year
ended December 31,

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 21.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1999, 6,000 options were granted pursuant to the 1993 Plan at an exercise price
of $16.25 and 100,000 options granted pursuant to the 1997 Plan at an exercise
price of $15.25.

     An additional 1,007,800, 1,112,800, and 1,115,650 common shares have been
authorized for issuance in future grants of options under the Plans as of
December 31, 1999, 1998 and 1997, respectively. The option price of future
grants may not be less than the fair market value of the shares on the date of
grant.

Details of share options are as follows:
<TABLE>
<CAPTION>
                                                         Number of Shares
                                              ---------------------------
                                                 Incentive  Non-qualified                    Option  Weighted Average
                                                   Options        Options                     Price    Exercise Price
                                              ------------------------------------------------------------------------
<S>                                              <C>        <C>                       <C>            <C>
Shares under option at January 1, 1997             283,469        188,731              $13.50-22.00            $14.67
Granted                                             99,672         26,328             $14.75-15.125            $15.11
Exercised                                           (7,350)            --              $14.00-14.75            $14.48
Forfeited                                           (6,150)            --             $14.00-15.125            $14.58
                                              ---------------------------
Shares under option at December 31, 1997           369,641        215,059              $13.50-22.00            $14.77
Granted                                                 --          6,000                   $17.625            $17.63
Exercised                                           (5,733)            --             $14.00-15.125            $14.04
Forfeited                                           (3,150)            --             $14.00-15.125            $14.65
                                              ---------------------------
Shares under option at December 31, 1998           360,758        221,059              $13.50-22.00            $14.81
Granted                                             56,896         49,104              $15.25-16.25            $15.31
Exercised                                          (23,432)            --             $14.00-15.125            $14.52
Forfeited                                           (1,000)            --                   $15.125            $15.13
                                              ---------------------------
Shares under option at December 31, 1999           393,222        270,163              $13.50-22.00            $14.89
                                              ---------------------------
                                              ---------------------------
Shares exercisable at December 31, 1999            304,390        220,283              $13.50-22.00            $14.81
                                              ---------------------------
                                              ---------------------------
Shares exercisable at December 31, 1998            295,265        207,507              $13.50-22.00            $14.75
                                              ---------------------------
                                              ---------------------------
Shares exercisable at December 31, 1997            237,706        183,461              $13.50-22.00            $14.75
                                              ---------------------------
                                              ---------------------------
</TABLE>

Pro forma information regarding net income and earnings per share is required by
Statement 123, which also requires that the information be determined as if the
Company had accounted for its employee stock options granted subsequent to
December 31, 1994 under the fair value method of that Statement. The fair value
for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                         1999              1998        1997
                                 ------------        ----------------------
<S>                                     <C>                <C>        <C>
Risk free interest rate                  6.7%              5.3%        6.1%
Dividend yield                          11.0%              9.1%       10.6%

</TABLE>

The model assumed a volatility factor of the expected market price of the
Company's common shares of 0.19 and a weighted-average expected life of the
options of five years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected share price
volatility. Because the Company's employee share options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee share options.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except for earnings per share
information):

<TABLE>
<CAPTION>
                                               1999              1998         1997
                                         -----------         ----------------------
<S>                                          <C>                <C>          <C>
Pro forma net income                         $15,543            $6,221       $4,057
Pro forma net income per share-basic         $  1.00            $  .40       $  .26
Pro forma net income per share-diluted       $   .98            $  .40       $  .26

</TABLE>
<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 22.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The weighted average fair value of options granted during the years ended
December 31, 1999, 1998 and 1997 was $.66, $.87 and $.59, respectively. The
weighted average remaining contractual life of options granted is 6.1 years.

PENSION PLAN The Company maintained a non-contributory defined contribution
plan (the "Pension Plan") for the benefit of employees which was terminated
June 30, 1998. Effective June 30, 1998 the Company implemented a contributory
defined contribution 401(k) benefit plan (the "401(k) Plan") covering
substantially all employees who have attained the age of 20 1/2 and have 6
months of service. Assets of the Pension Plan were transferred to the 401(k)
Plan, and all participants became 100% vested. The Company also makes
discretionary contributions to the 401(k) Plan for each participant.
Employees qualify for benefits upon reaching the age of sixty-five and early
retirees qualify provided they have reached the age of fifty-five and have
completed ten years of service. After three years of service, employees
become 20% vested in employer contributions which are based on current
compensation levels. From the fourth through the seventh years, vesting
increases until full vesting occurs. The aggregate cost of these
contributions to the Plans by the Company was $231,000, $260,000, and
$245,000 for the years ended December 31, 1999, 1998, and 1997, respectively.

RESTRICTED SHARES During the period 1995 through 1997 the Company granted
242,000 restricted Common Shares to certain officers pursuant to the 1993 Plan.
The officers become fully vested in the shares upon retirement from the Company.
Should such officers leave the Company prior to retirement, the shares revert
back to the Company. The market value as of the dates of grant of the shares
awarded, $3,431,000, has been recorded as unearned compensation -- restricted
stock and is shown as a separate component of shareholders' equity. Unearned
compensation is being amortized into expense over the vesting period. The
amortization amounted to $384,000, $385,000, and $316,000 for the years ended
December 31, 1999, 1998, and 1997, respectively.

SUPPLEMENTAL EMPLOYEES RETIREMENT PLAN The Company has established a
split-dollar life insurance plan for certain officers pursuant to the 1993 Plan.
The Company advances the premiums on life insurance policies for these officers.
The policies are assigned to the Company. In the event of retirement or death,
the Company will be repaid the aggregate amount of premiums paid from the cash
surrender value at the time the benefits are paid. The remaining cash surrender
value is paid to the employee or beneficiary. The cash surrender values of the
policies are recognized as an asset to the Company.

NOTE 7. LEASES
--------------

The Company leases certain office facilities and equipment under noncancellable
operating leases. Future minimum rental commitments under noncancellable leases
with remaining terms in excess of one year are as follows at December 31, 1999:

<TABLE>
<CAPTION>
                            (IN THOUSANDS)
                                                               ------------
                            <S>                                      <C>
                            2000                                     $  410
                            2001                                        410
                            2002                                        410
                            2003                                        410
                            2004                                        337
                                                               ------------
                            Total lease commitments                  $1,977
                                                               ------------
                                                               ------------
</TABLE>

Total rent expense for the years ended December 31, 1999, 1998, and 1997, was
approximately $401,000, $394,000, and $374,000, respectively.

NOTE 8. RELATED PARTY TRANSACTIONS
----------------------------------

At December 31, 1999 and 1998, the Company had an unsecured loan to an officer,
the balance of which was $310,000 and $340,000, respectively. $270,000 of the
loan balance bears an interest rate comparable to the rate earned on the
Company's invested funds. The remaining portion of the loan is non-interest
bearing.

     A Trustee of the Company was chairman of a law firm which is general
counsel to the Company through December 31, 1999.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 23.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9. FAIR VALUE OF FINANCIAL INSTRUMENTS
-------------------------------------------

The following table presents the carrying amounts and estimated fair values of
the Company's financial instruments as of December 31, 1999 and 1998. FASB
Statement No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS,
defines the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties.

<TABLE>
<CAPTION>
                                                             DECEMBER 31, 1999              December 31, 1998
                                                     ---------------------------      -------------------------
                                                       CARRYING             FAIR        Carrying           Fair
(IN THOUSANDS)                                           AMOUNT            VALUE          Amount          Value
                                                     ---------------------------      -------------------------
                                                     ---------------------------
<S>                                                    <C>              <C>             <C>            <C>
FINANCIAL ASSETS
   Deferred financing costs
     (interest rate protection agreement)              $     42         $     12        $     57       $     12
FINANCIAL LIABILITIES
   Mortgages payable
     Fixed rate notes                                  $361,691         $353,641        $306,745       $317,589
     Floating rate notes                                 83,250           83,250          78,554         78,554

</TABLE>

The carrying amounts shown in the above table are included in the balance sheet
under the indicated captions.

The following methods and assumptions were used to estimate the fair values of
each class of financial instruments:

     DEFERRED FINANCING COSTS: The amounts reported relate to the interest rate
protection agreement. The carrying amount is comprised of the unamortized
premiums paid for this agreement. The fair value represents what the Company
would pay for a similar agreement at December 31, 1999 and 1998 based upon
quotes from the agreement's counterparty.

     MORTGAGES PAYABLE: The fair value of the fixed rate portion of the
Company's mortgages payable is estimated by discounting expected cash flows
based on the Company's incremental borrowing rate for similar types of borrowing
arrangements. The floating rate portion of the Company's mortgages payable
approximated market.

NOTE 10. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
--------------------------------------------------

The following is a summary of quarterly results of operations for the years
ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT PER SHARE DATA)  QUARTER ENDED       March 31      June 30    September 30    December 31
                                                      ---------------------------------------------------------
<S>                                                        <C>           <C>        <C>             <C>
1999
Revenues                                                    $26,822      $28,101         $28,584        $29,401
Income from property operations                               8,310        8,782          10,755         11,653
Net income                                                    1,490        1,533           3,114          9,456
Net income per share-basic                                      .10          .10             .20            .61
Net income per share-diluted                                    .10          .10             .20            .60

1998
Revenues                                                    $23,249      $24,625         $25,213        $25,803
Income from property operations                               6,870        7,294           7,605          8,377
Net income                                                    1,335        1,414           1,624          1,877
Net income per share-basic and diluted                          .09          .09             .10            .12

</TABLE>
<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 24.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11. SUBSEQUENT EVENTS
--------------------------

On February 2, 2000 the Company's Board of Trustees declared a quarterly
dividend of $.42 per share, aggregating approximately $6,688,000. Concurrent
with the payment of the dividend, a limited partnership ownership distribution
will be made to the minority interest holders of approximately $1,036,000. The
dividend and distribution will be paid on March 10, 2000 to holders of record on
February 18, 2000.



--------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS



TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
THE TOWN AND COUNTRY TRUST

We have audited the accompanying consolidated balance sheets of The Town and
Country Trust and subsidiaries (the "Company") as of December 31, 1999, and
1998, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Town and
Country Trust and subsidiaries at December 31, 1999, and 1998, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.

                                                       /s/ ERNST & YOUNG LLP

BALTIMORE, MARYLAND
FEBRUARY 1, 2000

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 25.

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


OVERVIEW
--------

The following discussion is based primarily on the consolidated financial
statements of The Town and Country Trust and its subsidiaries (the "Company") as
of December 31, 1999 and 1998, and for the years ended December 31, 1999, 1998,
and 1997. This information should be read in conjunction with the accompanying
consolidated financial statements and notes thereto.

     The Company believes that funds from operations provides an indicator of
its financial performance. Funds from operations is defined as net income (loss)
excluding adjustments for unconsolidated partnerships and joint ventures as well
as gains (losses) from debt restructuring and sales of property, plus
depreciation of revenue producing real property. This definition of funds from
operations is consistent with the National Association of Real Estate Investment
Trusts (NAREIT) definition. Funds from operations is affected by the financial
performance of the properties and the capital structure of the Company. Funds
from operations does not represent cash flow from operations as defined by
generally accepted accounting principles and is not necessarily indicative of
cash available to fund all cash flow needs. Funds from operations should not be
considered as an alternative to net income as an indicator of operating
performance or as an alternative to cash flow as a measure of liquidity.

RESULTS OF OPERATIONS
---------------------

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Income
before minority interest for the year ended December 31, 1999 was $18,067,000,
compared to $7,243,000 for the same period in 1998, an increase of $10,824,000.
The gain on disposition of the Union Deposit property contributed $7,073,000 of
this increase. Funds from operations before minority interest increased by
$3,107,000 or 9.5% to $35,712,000 for the year ended December 31,1999 from
$32,605,000 for the year ended December 31, 1998. Revenues were $112,908,000 for
the year ended December 31, 1999 compared to $98,890,000 for 1998, an increase
of $14,018,000, or 14.2%. On a same-property basis (i.e., those properties owned
by the Company for all of 1999 and 1998) revenues increased by $3,978,000 or
4.3% over the same period in 1998 due to increases in rental rates as well as
improvements in occupancy. Properties acquired during 1998 and 1999 net of the
reduction in revenue from the sale of a property, contributed $10,040,000 in
revenue growth during the period. Occupancy was 94.7% for all properties for the
year ended December 31, 1999 and 95.3% on a same store basis, compared to 94.1%
and 94.2%, respectively, for the year ended December 31, 1998.

     Total expenses, excluding depreciation, amortization and interest were
$48,488,000 for the year ended December 31, 1999 compared to $43,180,000 for
1998, an increase of $5,308,000, or 12.3%. Of this increase, $4,246,000 is due
to the newly-acquired properties net of the reduction in expense from the sale
of a property. Same property operating expenses, excluding general and
administrative expenses and depreciation, increased by $963,900 or 2.6%, over
the year ended December 31, 1998 due to management's successful efforts to
control costs. Depreciation for the year ended December 31, 1999 decreased by
$644,000, or 2.5%, to $24,920,000 from $25,564,000 for the year ended December
31, 1998 due to reductions in depreciation as some assets became fully
depreciated offset by acquisitions of new properties.

     Interest expense for the year ended December 31, 1999 increased by
$5,483,000 to $28,012,000 from $22,529,000 for 1998 due to increases in the
amount of borrowings that resulted from the financing of the capital
improvements program and the new acquisitions.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 Revenues
for the year ended December 31, 1998 were $98,890,000 compared to $92,648,000
for the year ended December 31, 1997, an increase of $6,242,000, or 6.7%. Same
property revenues (i.e., those properties owned by the Company for all of 1998
and 1997) increased by $3,558,000 or 3.8% due to increases in rental rates,
increased occupancy and the impact of revenue-enhancing capital improvements.
Properties acquired during 1998 contributed $2,684,000 in revenue during the
year. Occupancy for the year ended December 31, 1998 was 94.1% for all
properties compared to 92.9% for the year ended December 31, 1997. On a same
store basis, occupancy was 94.2% for the year ended December 31, 1998. Funds
from operations before minority interest increased to $32,605,000 for the year
ended December 31, 1998 from $31,771,000 for the year ended December 31, 1997.

     Total expenses, excluding depreciation and interest, were $43,180,000 for
the year ended December 31, 1998 compared to $40,518,000 for the previous year,
an increase of $2,662,000. Of this increase, $905,000 is due to the
newly-acquired properties. Same store expenses, excluding general and
administrative expenses and depreciation, increased by $938,000 or 2.5% over
1997.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 26.

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


     Interest expense for the year ended December 31, 1998 increased by
$3,928,000 over that expense for 1997 due to increases in the amount of
borrowings and interest rates that resulted from the expanded financing facility
and borrowings under the line of credit related to the property acquisitions.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Operating activities provided net cash for the year ended December 31, 1999 of
$35,488,000, of which $29,920,000 was paid out in dividends and distributions.

     In 1997, the Company commenced a two-year program that provides for
approximately $30,000,000 in capital improvements to certain properties. The
improvements include paving, roofs, vinyl siding and the expansion of the
on-going program to make such revenue-enhancing improvements as the
modernization of kitchens and bathrooms and the installation of washers, dryers
and carpeting within certain apartment units. $29,911,000 in costs were incurred
related to this new program through December 31, 1999. The Company has a
collateralized financing facility which allows for draws to finance this capital
improvement program.

     During 1999, the Company acquired four properties, comprising 1,112 units,
located in Orlando, Sarasota and Bradenton, Florida. The total contract price of
these acquisitions was $64,300,000. The acquisitions were funded through
borrowings on the revolving credit facility, the revolving line of credit,
property specific debt and in one case, the sale of a property.

     In September, 1997 the Company entered into an agreement that provides a
$375,000,000 collateralized financing facility. The initial borrowing under the
facility of $300,000,000 matures in 2008 and bears a fixed interest rate of
6.91%. The remaining $75,000,000 is available as a 10 1/2 year, variable rate
revolving credit facility which can be converted to a fixed-rate term loan
maturing in 2008 at the Company's option. These funds are available for property
acquisitions and to expand the ongoing extensive capital improvement program for
certain of the Company's existing properties. Total borrowings under the
collateralized financing facility as of December 31, 1999 were $367,000,000.

     The Company's primary market risk exposure relates to changes in interest
rates in its revolving credit facility and the variable rate portion of its line
of credit. The Company had $83,250,000 and $78,554,000 in variable rate debt
outstanding at December 31, 1999 and 1998, respectively. A hypothetical 100
basis point increase in interest rates in the year 2000 over the rates in effect
at December 31, 1999 would result in an increase of interest expense and a
corresponding decrease in net income of approximately $833,000. This estimate
incorporates only those exposures that exist as of December 31, 1999 and it does
not consider exposures which could arise after that date. The Company uses an
interest rate protection agreement to reduce the potential impact of increases
in interest rates related to $67,000,000 of the floating rate borrowings. The
interest rate protection contract limits the maximum floating interest rate to
approximately 10.5%.

     The Company has arranged a $50,000,000 revolving line of credit with a bank
to be used for acquisitions. Borrowing under this facility will bear interest at
120 basis points over LIBOR. Individual draws under the facility mature in
eighteen months, and the initial term of the facility expires in September,
2001. As of December 31, 1999, $16,250,000 was outstanding under this facility.

     The following table sets forth certain information regarding the Company's
outstanding indebtedness as of December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                                         December 31, 1999
                                                    Amount     % of Debt     Interest Rate             Maturity
                                              ------------------------------------------------------------------
<S>                                               <C>          <C>       <C>                     <C>
Fixed Rate Debt: Collateralized facility          $300,000         67.4%             6.91%          April, 2008
                 Conventional mortgage              61,691         13.9%             7.27%          July, 2003-
                                                                                                 November, 2009
                                              --------------------------
                                                   361,691         81.3%
                                              --------------------------
Floating Rate Debt: Revolving credit facility       67,000         15.0%             6.18%          April, 2008
                    Line of credit                  16,250          3.7%             7.03%        October, 2000
                                              --------------------------
                                                    83,250         18.7%
                                              --------------------------
Total mortgage debt                               $444,941        100.0%             6.86%
                                              --------------------------
                                              --------------------------
</TABLE>

Rental income from the properties is received on a monthly basis. All cash
accumulated for the payment of quarterly dividends is invested in short-term
instruments. Management believes that the Company will have access to the
capital resources necessary to expand and develop its business. The Company
expects that adequate cash will be available to fund its operating and
administrative expenses, capital expenditures, debt service obligations and
payments of dividends in the foreseeable future.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 27.

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


INFLATION
---------

Substantially all of the leases of the properties are for a term of one year or
less, which enables the Company to seek increased rents upon renewal or
reletting of apartment units. Such short-term leases minimize the risk of the
adverse effects of inflation; however, as a general rule, such leases permit
tenants to leave at the end of the lease term without penalty.

IMPACT OF YEAR 2000
-------------------

As a result of computer programs being written using two digits rather than four
to define the applicable year, any of the Company's computer programs that have
time-sensitive hardware and software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including among other things,
a temporary inability to process transactions, collect rents, or engage in
similar normal business activities.

     Management completed an assessment of its information technology ("IT")
systems and non-IT systems to assess their year 2000 readiness in 1998. Critical
systems include, but are not limited to accounts receivable and rent
collections, fixed assets, and security systems. In order for these systems to
function properly with respect to the year 2000 and thereafter, the Company
modified or replaced portions of its software. The Company utilized both
internal and external resources to modify or replace software. The total cost of
the Company's year 2000 project was $153,000. All modifications were completed
in time for the year 2000, and no problems have thus far developed in the year
2000.

     Various third-party vendors were queried on their year 2000 readiness.
There were no significant suppliers or vendors with a year 2000 issue that had a
material impact on the Company.

     Management had an effective program in place to resolve the year 2000 issue
in a timely manner. Contingency plans involved system enhancement, manual
workarounds, and adjusting staffing strategies, and management was able to
continue its normal business operations.

SAFE HARBOR STATEMENT
---------------------

With the exception of historical information, the matters discussed in this
Annual Report to Shareholders are forward-looking statements that involve risks
and uncertainties and actual results could differ materially from those
discussed. Certain statements herein and in future filings by the Trust with the
Securities and Exchange Commission and in written and oral statements made by or
with the approval of any authorized executive officer of the Trust constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Trust
intends that such forward-looking statements be subject to the safe harbors
created by such Acts. The words and phrases "looking ahead," "we are confident,"
"should be," "will be," "predicted," "believe," "expect," "anticipate," and
similar expressions identify forward-looking statements. These forward-looking
statements reflect the Trust's current views in respect of future events and
financial performance, but are subject to many uncertainties and factors
relating to the Trust's operations and business environment which may cause the
actual results of the Trust to differ materially from any future results
expressed or implied by such forward-looking statements. Examples of such
uncertainties include, but are not limited to, interest rate fluctuations;
competition for tenants and acquisitions from others, many of whom may have
greater financial resources than the Trust; changes in rental rates which may be
charged by the Trust in response to market rental rate changes or otherwise;
Year 2000 readiness; changes in federal income tax laws and regulations; any
changes in the Trust's capacity to acquire additional apartment properties and
any changes in the Trust's financial condition or operating results due to the
acquisition of additional apartment properties; unanticipated increases in
operating expenses due to factors such as casualties to the Trust's apartment
properties or adverse weather conditions in the geographic locations of the
Trust's apartment properties; and local economic and business conditions,
including, without limitation, conditions which may affect public securities
markets generally, the real estate investment trust industry, or the markets in
which the Trust's apartment properties are located. The Trust undertakes no
obligation to update publicly or revise any forward-looking statements whether
as a result of new information, future events or otherwise.

<PAGE>

                                                  THE TOWN AND COUNTRY TRUST 28.
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31,        1999          1998          1997           1996          1995
                                                                  ---------     ----------------------------------------------------
<S>                                                               <C>           <C>           <C>            <C>           <C>
OPERATING DATA
--------------
Revenue                                                           $ 112,908     $  98,890     $  92,648      $  91,163     $  89,455
Operating expenses                                                   45,157        39,947        38,104         38,092        36,871
Depreciation                                                         24,920        25,564        24,311         24,282        24,147
General and administrative expenses                                   3,331         3,233         2,414          2,333         2,389
                                                                  ---------     ----------------------------------------------------
Income from operations                                               39,500        30,146        27,819         26,456        26,048
Interest expense                                                     28,012        22,529        18,601         17,750        18,427
Interest expense related to the amortization of
   deferred financing costs                                             494           374         1,559          2,166         2,556
                                                                  ---------     ----------------------------------------------------
Income before gain on disposition of property,
   minority interest and extraordinary item                          10,994         7,243         7,659          6,540         5,065
                                                                  ---------     ----------------------------------------------------
Gain on disposition of property                                       7,073            --            --             --            --
                                                                  ---------     ----------------------------------------------------
Income before minority interest and
   extraordinary item                                                18,067         7,243         7,659          6,540         5,065
Income allocated to minority interest                                 2,475           993         1,048            895           695
                                                                  ---------     ----------------------------------------------------
Income before extraordinary item                                     15,592         6,250         6,611          5,645         4,370
Extraordinary item-cost related to refinancing
   of debt (net of minority interest)                                    --            --        (2,512)            --            --
                                                                  ---------     ----------------------------------------------------
Net income                                                        $  15,592     $   6,250     $   4,099      $   5,645     $   4,370
                                                                  ---------     ----------------------------------------------------
                                                                  ---------     ----------------------------------------------------
Per common share-basic:
Income before extraordinary item                                  $    1.00     $     .40     $     .42      $     .36     $     .28
Extraordinary item-basic                                                 --            --          (.16)            --            --
                                                                  ---------     ----------------------------------------------------
Net income-basic                                                  $    1.00     $     .40     $     .26      $     .36     $     .28
                                                                  ---------     ----------------------------------------------------
                                                                  ---------     ----------------------------------------------------
Per common share-diluted:
Income before extraordinary item                                  $     .99     $     .40     $     .42      $     .36     $     .28
Extraordinary item-diluted                                               --            --          (.16)            --            --
                                                                  ---------     ----------------------------------------------------
Net income-diluted                                                $     .99     $     .40     $     .26      $     .36     $     .28
                                                                  ---------     ----------------------------------------------------
                                                                  ---------     ----------------------------------------------------
Dividends declared per share                                      $    1.64     $    1.60     $    1.60      $    1.60     $    1.60
                                                                  ---------     ----------------------------------------------------
                                                                  ---------     ----------------------------------------------------
Funds from operations before minority interest                    $  35,712     $  32,605     $  31,771      $  30,547     $  29,277
Funds from operations applicable to the
   Trust's shareholders                                           $  30,819     $  28,135     $  27,424      $  26,366     $  25,263

</TABLE>

<TABLE>
<CAPTION>

(IN THOUSANDS)                                                         1999          1998          1997           1996          1995
                                                                  ---------     ----------------------------------------------------
<S>                                                               <C>           <C>           <C>            <C>           <C>
BALANCE SHEET DATA AT YEAR-END
------------------------------
Real estate assets, before accumulated
   depreciation                                                   $ 729,746     $ 666,090     $ 573,952      $ 564,443     $ 558,100
Net real estate assets                                              465,566       417,679       351,006        365,754       383,549
Total assets                                                        480,849       432,384       366,251        383,396       402,405
Total mortgages payable                                             444,941       385,299       300,000        232,000       232,000
Total notes payable                                                      --            --            --         58,409        56,809
Shareholders' equity                                                 22,049        31,608        50,118         70,745        89,901
Minority interest                                                     3,424         4,994         7,948         11,243        14,294

</TABLE>

NOTE: ALL FUNDS FROM OPERATIONS INFORMATION HAS BEEN PRESENTED UNDER THE NAREIT
DEFINITION. THE EARNINGS PER SHARE AMOUNTS PRIOR TO 1997 HAVE BEEN RESTATED AS
REQUIRED TO COMPLY WITH STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128,
EARNINGS PER SHARE. FOR FURTHER DISCUSSION OF EARNINGS PER SHARE AND THE IMPACT
OF STATEMENT NO. 128, SEE THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

Designed and produced by Posner Advertising

     INVESTOR
  INFORMATION

BOARD OF TRUSTEES
-----------------

ALFRED LERNER
Chairman

HARVEY SCHULWEIS
President and Chief Executive Officer

JAMES H. BERICK, ESQ.
Partner,
Squire, Sanders & Dempsey L.L.P.

H. GRANT HATHAWAY
Retired Vice Chairman,
MNC Financial Inc.
and Maryland National Bank

DR. MILTON A. WOLF
United States Ambassador, Retired;
Chairman, Milton A. Wolf Investors;
Chairman, Zehman Wolf Management

OFFICERS
--------

ALFRED LERNER
Chairman

HARVEY SCHULWEIS
President and Chief Executive Officer

MICHAEL H. ROSEN
Executive Vice President and
Chief Operating Officer

GERALD J. HAAK
Senior Vice President
Property Management

ALAN W. LASKER
Senior Vice President-Finance

JENNIFER C. MUNCH
Senior Vice President and Treasurer

RICHARD M. BERKOWITZ
Vice President
Capital Improvements

DAVID T. BOYCE
Vice President
Property Management

ANTHONY P. CONRAD
Vice President
Acquisitions

WILLIAM J. FISHELL
Vice President
Controller

J. ANDREW PIERSON
Vice President
Supplemental Business Development

DENNIS E. SMITH
Vice President
Insurance

LANA C. WARFIELD
Vice President
Leasing and Marketing

ANNUAL MEETING
--------------

The annual meeting will be held at the Center Club, 100 Light Street, Baltimore,
Maryland on May 4, 2000 at 11:00 a.m.

COMMON STOCK MARKET PRICES AND DIVIDENDS
----------------------------------------
<TABLE>
<CAPTION>
                                 SALES PRICE         CASH
                       ---------------------    DIVIDENDS
QUARTER ENDED              HIGH          LOW     DECLARED
---------------------------------------------------------
<S>                    <C>          <C>         <C>
March 31, 1998         $17 15/16    $15 15/16    $.40
June 30, 1998          $17 13/16    $15 3/4      $.40
September 30, 1998     $16 3/4      $13 3/4      $.40
December 31, 1998      $16 5/16     $13 5/16     $.40
March 31, 1999         $16 5/16     $14 13/16    $.41
June 30, 1999          $19          $15          $.41
September 30, 1999     $18 7/16     $16 13/16    $.41
December 31, 1999      $18 15/16    $16 1/2      $.41

</TABLE>

On February 2, 2000, a cash dividend of $.42 per share was declared, payable
March 10, 2000, to shareholders of record as of February 18, 2000.

At December 31, 1999, the approximate number of record holders of the Trust's
shares was 617. This does not include beneficial owners for whom Cede & Co. or
others act as nominee.

FORM 10-K
---------

The Trust will be pleased to provide, without charge, a copy of its 1999 Annual
Report on Form 10-K, filed with the Securities and Exchange Commission, to any
shareholder upon written request to Harvey Schulweis, President, The Town and
Country Trust, 100 South Charles Street, Baltimore, Maryland 21201.

CORPORATE HEADQUARTERS
----------------------

The Town and Country Trust
100 South Charles Street
Baltimore, Maryland 21201
Telephone: 410.539.7600

GENERAL COUNSEL
---------------

Squire, Sanders & Dempsey L.L.P.
Cleveland, Ohio 44114

TRANSFER AGENT
--------------

National City Bank
Cleveland, Ohio 44114
Telephone: 800.622.6757

INDEPENDENT AUDITORS
--------------------

Ernst & Young LLP
Baltimore, Maryland 21201

STOCK EXCHANGE LISTING
----------------------

New York Stock Exchange
Symbol: TCT

WEBSITE ADDRESS
---------------

www.tctrust.com

[LOGO of the National Association of                [LOGO TCT LISTED NYSE]
Real Estate Investment Trusts]
<PAGE>


                                 TOWN & COUNTRY


                           THE TOWN AND COUNTRY TRUST
                            100 South Charles Street
                            Baltimore, Maryland 21201