SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10 - K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ending December 31, 1998      Commission file number 0-13693
-------------------------------------------       ------------------------------

                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

             (Exact name of registrant as specified in its charter)

         Massachusetts                                               13-6850434
         -------------                                               ---------- 
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

3111 Paces Mill Road, Suite A-200, Atlanta, GA                          30339   
(Address of principal executive offices)                             (Zip Code)

Registrant's telephone number, including area code:              (770) 984-9500 
                                                            --------------------

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

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

                 Shares of Beneficial Interest without par value
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

       Yes   X                                             No     
           -----                                               -----  
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __

Based on the average bid and asking price on March 4, 1999 the aggregate  market
value of the Registrant's  shares held by  non-affiliates  of the Registrant was
$4,470,802.

The number of shares outstanding as of March 15, 1999 was 1,100,505.

                       DOCUMENTS INCORPORATED BY REFERENCE

                     Portions of the Trust's Proxy Statement
                       relating to its 1999 Annual Meeting
                       of Shareholders are incorporated by
                            reference into Part III.

<PAGE>

                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

                               INDEX TO FORM 10-K

PART I............................................................... ..3
    ITEM 1  - Business..................................................3
    ITEM 2  - Properties................................................8
    ITEM 3  - Legal Proceedings.........................................8
    ITEM 4  - Submission of Matters to a Vote of Shareholders...........8

PART II.............................................................. ..9
    ITEM 5  - Market for Registrant's Shares of Beneficial Interest.....9

    ITEM 6  - Selected Financial Information...........................10

    ITEM 7  - Management's Discussion and Analysis of Financial

    ITEM 7A - Quantitative and Qualitative Disclosures About
              Market Risk..............................................19

    ITEM 8  - Financial Statements and Supplementary Data..............19

    ITEM 9  - Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure......................19

PART III...............................................................20
    ITEM 10 - Directors and Executive Officers of the Registrant.......20

    ITEM 11 - Executive Compensation...................................20

    ITEM 12 - Security Ownership of Certain Beneficial Owners
              and Management...........................................20

    ITEM 13 - Certain Relationships and Related Transactions...........20

PART IV................................................................21

    ITEM 14 - Exhibits, Financial Statements and Schedule and

Reports on Form 8-K....................................................21

Signatures ............................................................24



<PAGE>



This Form 10-K contains 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's actual results could differ materially from those projected
in the  forward-looking  statements.  Certain  factors  that might  cause such a
difference  are set forth in the section  entitled  "Certain  Factors  Affecting
Future  Operating   Results,"  in  the  relevant   paragraphs  of  "Management's
Discussion and Analysis of Results of Operations and Financial  Condition,"  and
elsewhere in this report.

                                     PART I
                                     ======
ITEM 1 - BUSINESS
-----------------

General Development of Business
-------------------------------

Vinings Investment  Properties Trust, a Massachusetts  business trust ("Vinings"
or  the  "Trust")  (formerly  known  as  Mellon  Participating  Mortgage  Trust,
Commercial  Properties  Series  85/10),  was  organized on December 7, 1984 as a
twenty year  finite-life  real estate  investment  trust ("REIT").  Its original
purpose was to invest in  participating,  shared  appreciation,  convertible and
fixed rate mortgages and joint venture financing  secured by office,  industrial
and retail facilities  located  throughout the United States. The Declaration of
Trust  provided,  among other  things,  that the  Trustees  would use their best
efforts  to  terminate  the Trust  within  approximately  ten  years;  provided,
however,  that the Trustees  would have the absolute  discretion to determine in
good  faith  such  termination  date as would be in the  best  interests  of the
shareholders of the Trust. The Trustees  proceeded with the orderly  liquidation
of assets and the distribution of proceeds to the  shareholders.  As of December
31, 1995 all of the assets to be  liquidated  had been sold except the Hawthorne
Note, which was sold on January 3, 1996.

In connection with the liquidation,  per share final distributions of $15.60 and
$1.28  (adjusted  for the Share  Split,  as  hereinafter  defined)  were paid on
February 2, 1996 and March 8, 1996,  respectively.  The remaining  assets of the
Trust were Peachtree Business Center ("Peachtree") and approximately $163,000 in
cash.

On January 31, 1996,  Vinings  Investment  Properties,  Inc.  (the  "Purchaser")
commenced a cash tender offer (the  "Tender  Offer") for a minimum of a majority
and a maximum of 85% of the outstanding shares of beneficial  interest,  without
par  value,  (the  "Shares")  of the Trust at a price of $0.47 per Share  ($3.76
adjusted for the Share Split, as hereinafter defined).  The Tender Offer expired
in  accordance  with its terms at midnight on February 28, 1996.  The  Purchaser
accepted an aggregate of 6,337,279 Shares (792,159 Shares adjusted for the Share
Split, as hereinafter  defined) validly  tendered  pursuant to the Tender Offer,
representing approximately 73.3% of the outstanding Shares.

The purpose of the Tender Offer was for the Purchaser to acquire  control of the
Trust and to rebuild Vinings' assets by expanding into the multifamily  property
markets.  In connection with the  consummation  of the Tender Offer,  all of the
trustees and officers of the Trust  resigned and were replaced with designees of
the  Purchaser.  In  addition,  prior to the  Tender  Offer,  the  Trust  was an
externally  advised REIT for which it paid advisory  fees to an unrelated  third
party (the "Advisor").  Upon  consummation of the Tender Offer, the relationship
with the Advisor was terminated and the Trust became self-administered.

On  June  11,  1996,  Vinings  Investment   Properties,   L.P.  (the  "Operating
Partnership"),  a Delaware limited partnership,  was organized. The Trust is the
sole general partner and an 80.94% limited partner in the Operating  Partnership
at  December  31,  1998.  During  the fourth  quarter  of the fiscal  year ended
December 31, 1997 ("fiscal  1997"),  242,546  limited  partnership  units in the
Operating  Partnership ("Units") were issued, of which 224,330 Units were issued
in connection with the acquisition of Windrush,  as defined below. The Units are
redeemable by their  holders for Shares of the Trust on a  one-for-one  basis or
for cash, at the option of the Trust. (This structure is commonly referred to as
an umbrella partnership REIT or "UPREIT").

On July 1, 1996,  Vinings  effected a 1-for-8  reverse  share  split (the "Share
Split") of its 8,645,000  outstanding  Shares pursuant to which  shareholders of
the Trust received one Share for every eight Shares owned. Vinings has purchased
and continues to purchase any fractional Shares at a cost of $5.50 per Share. As
of December 31, 1998,  fractional  Shares totaling 120 had been  repurchased and
retired and 1,100,505 Shares were outstanding.

At December 31, 1998,  approximately  ninety two percent (92%) of Vinings' total
assets were  invested in three real estate  assets.  They were:  (1) The Thicket
Apartments  ("Thicket"),  a  254-unit  apartment  complex  located  in  Atlanta,
Georgia, owned through Thicket Apartments, L.P., a Delaware limited partnership,
of  which  the  Operating  Partnership  is a 99%  limited  partner  and  Thicket
Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of the Trust,
is the sole general partner;  (2) Windrush Apartments  ("Windrush"),  a 202-unit
apartment  community  located  in  Atlanta,   Georgia,   owned  through  Vinings
Communities,  L.P.,  a  Delaware  limited  partnership  of which  the  Operating
Partnership is a 99% limited  partner and the Trust is the sole general  partner
and; and (3)  Peachtree,  an  approximately  75,000  square  foot,  single-story
business park located in Atlanta, Georgia, owned by the Operating Partnership.

On June 18,  1998  Vinings  entered  into 18 separate  contracts  to purchase 14
multifamily  communities  totaling  2,184  units  located in various  markets in
Mississippi.  On February 15, 1999, Vinings  renegotiated 17 of the contracts to
purchase 13 communities  totaling 2,032 units (the  "Portfolio")  and terminated
one of the  contracts.  The  renegotiated  purchase  price of the  Portfolio  is
$94,300,000,  consisting of cash and the assumption of approximately $81,000,000
in  existing  debt (the  "Acquisition  Transaction").  Five of the  communities,
totaling 976 units,  will be purchased through a joint venture structure between
the  Operating  Partnership  and a  private  investor  and the  remaining  eight
communities,  totaling  1,056 units,  will be purchased by  subsidiaries  of the
Operating  Partnership.  In  connection  with the  Acquisition  Transaction,  an
acquisition fee will be paid to an entity  affiliated with Management,  however,
the amount and form of such fee have not yet been determined.

Vinings has  completed  its due  diligence  review and the contracts are subject
only  to  satisfactory  title  conditions.   Vinings  has  received  conditional
commitments for most of its equity financing and is in the process of finalizing
its equity commitments. If Vinings receives all approvals and obtains sufficient
capital to finance  the  transaction,  the closing of the  Portfolio  could take
place early in the second  quarter of 1999,  however,  there can be no assurance
that the Acquisition Transaction will take place.

Vinings has  elected to be taxed as a REIT under the  Internal  Revenue  Code of
1986, as amended.  As a REIT,  Vinings will  generally not be subject to federal
income  taxation on that  portion of its income that  qualifies  as REIT taxable
income to the extent that it  distributes  at least 95% of its taxable income to
its shareholders and satisfies certain other requirements.

Vinings'  executive  offices are located at 3111 Paces Mill Road,  Suite  A-200,
Atlanta, Georgia 30339, (770) 984-9500.


Financial Information About Industry Segments
---------------------------------------------

Vinings'  operations and  identifiable  long-term assets have been attributed to
the real estate  industry for the entirety of its existence.  While  investments
prior to the Tender Offer were  primarily  mortgage  loans,  currently  Vinings'
assets  are equity  investments.  Management  plans to  continue  making  equity
investments in the multifamily real estate markets.


Narrative Description of Business
--------------------------------

Vinings'  primary  objective is to continue to expand into the multifamily  real
estate markets through the  acquisition of garden style  apartment  communities,
which are leased to middle-income  residents.  The  middle-income  resident is a
more  stable and  broader  based  market,  often  referred  to as "the renter by
necessity."  Management  believes that middle market properties  provide greater
potential for appreciation  through  increased  revenues and cash flows than the
more expensive  high-end  apartment  communities,  which cater to "the renter by
choice."

Management  believes that these investments will provide  attractive  sources of
income to  Vinings,  which  will not only  provide  cash  available  for  future
distributions,  but will increase the value of Vinings' real estate portfolio as
well.

In the past,  Vinings has reviewed each real estate  investment in its portfolio
on a quarterly  basis.  Management  plans to continue  this review as well as to
carefully review each acquisition to insure that Vinings makes sound investments
on behalf of its  shareholders.  In this  regard,  Vinings  has  established  an
Acquisition Committee comprised of four members of the Board of Trustees, one of
which is also an  officer.  The Board has also  established  certain  investment
criteria,  which must be met. The Acquisition  Committee must review and approve
each  potential  acquisition  before  it is  presented  to the  Board  for final
approval.


Growth and Expansion Strategy
-----------------------------

Management  intends to implement its growth and expansion  strategy by targeting
properties  that have been under managed and/or under  maintained,  and purchase
such properties at a price which is below  replacement  cost.  Through strategic
value added and return  oriented  capital  improvements  and intensive  property
management,  the Trust  believes  that cash  flow,  and in turn  value,  will be
increased.

Vinings  currently  anticipates  that future  acquisitions  may include  certain
properties within the existing  multifamily property portfolios of entities that
are affiliated with Management, as well as properties acquired from unaffiliated
third  parties such as the  Acquisition  Transaction.  These  properties  may be
acquired either for cash, through debt financing,  in exchange for Shares of the
Trust or Units or any combination  thereof.  In addition,  the Trust may seek to
raise capital through private offerings for specific acquisitions.


Competition
-----------

Vinings  competes  with a  number  of  housing  alternatives  for its  residents
including  other  multifamily  communities and single family homes available for
rent as well as purchase.  This competition could have an effect not only on the
properties' ability to lease rental units but also on the rents charged. Vinings
also competes with other investors for potential acquisitions, some of which may
have greater  resources  with which to purchase  projects  that the Trust may be
interested in acquiring.


Advisory and Property Management Services
-----------------------------------------

Since the consummation of the Tender Offer, Vinings has been  self-administered.
Vinings has entered  into  management  agreements  with an  affiliate of certain
officers and trustees of the Trust for property management services for Thicket,
Windrush  and  Peachtree  for a fee  equal to a  percentage  of  gross  revenues
collected.  Up until  December 31, 1998,  Peachtree was managed by a third-party
property  management  firm not affiliated  with  management.  In addition,  as a
commitment to the  rebuilding of the Trust,  The Vinings  Group,  Inc.,  also an
affiliate of certain officers and trustees of the Trust,  has provided  numerous
services to the Trust during the fiscal year ended  December  31, 1998  ("fiscal
1998") relating to administration,  acquisition,  and capital and asset advisory
services  at little cost to Vinings.  The Trust does not  anticipate  that these
services will continue to be provided free of charge. However, while Vinings has
been in its rebuilding  stages, the officers and trustees have been committed to
providing as many services as possible to promote the Trust's growth.


Employees
---------

Vinings does not currently have its own employees as The Vinings Group, Inc. has
been providing services to the Trust as described above. However, employees have
been hired through the managing  agent to provide  on-site  property  management
services  for  Vinings.  At  December  31,  1998,  Thicket and  Windrush  had 11
employees who performed  these on-site  management  services for the communities
and were paid with funds  generated  from  Thicket and  Windrush.  In  addition,
during fiscal 1998 the Trust paid a total of $45,000 to affiliated  entities for
shareholder services performed exclusively for the Trust by one of its employees
and a total of  $105,000  for the  reimbursement  of  overhead  expenses,  which
includes  salaries and benefits for other  employees hired by The Vinings Group,
Inc.  for the  benefit  of the  Trust.  The only  compensation  received  by the
officers of Vinings from the Trust for their services was in the form of a Share
bonus  totaling  $80,000.  (See Notes 6 and 13 to  Vinings'  December  31,  1998
Consolidated Financial Statements.)


Environmental Policy
--------------------

Investments in real property create a potential for  environmental  liability on
the part of the Trust.  Owners of real property may be held liable for all costs
and liabilities  relating to hazardous  substances  present on or emanating from
their properties.  Current management  assesses on an as needed basis,  measures
that may need to be taken to comply with environmental laws and regulations.  In
the event that there is a potential of environmental  responsibility,  the costs
to comply with  environmental  laws and  regulations  would be estimated at that
time. At December 31, 1998, Vinings was not aware of any potential environmental
contamination relating to investments in its portfolio.


Certain Factors Affecting Future Operating Results
--------------------------------------------------

This Form 10-K contains 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. Vinings' actual results could differ materially from those set forth in
the  forward-looking  statements.  Certain  factors  that  might  cause  such  a
difference  include  the  following:  the  failure  of the  Trust's  systems  or
software,  or the  systems  and  software  of a third  party on which  the Trust
relies,  to be Year  2000  compliant,  the  inability  of  Vinings  to  identify
multifamily  properties or property portfolios for acquisition which will have a
strategic fit with Vinings,  the inability of Vinings to close the  transactions
currently  anticipated,  including  the  Acquisition  Transaction  or such other
contracts  as Vinings may enter into in the future,  the less than  satisfactory
performance of any property which might be acquired by Vinings, the inability to
access  the  capital  markets  in  order to fund  Vinings'  present  growth  and
expansion strategy,  the cyclical nature of the real estate market generally and
locally  in  Georgia  and the  surrounding  southeastern  states,  the  national
economic  climate,  the local  economic  climate in Georgia and the  surrounding
southeastern  states,  and the local real estate  conditions and  competition in
Georgia and the surrounding southeastern states. There can be no assurance that,
as a result of the foregoing  factors,  Vinings'  growth and expansion  strategy
will be  successful  or that the business and  operations of Vinings will not be
adversely affected thereby.


ITEM 2 - PROPERTIES
-------------------

As of December 31, 1998, all of Vinings  investments were equity  investments in
real estate. While Vinings still owns Peachtree,  a single-story  business park,
it intends to continue investing only in multifamily communities.  Vinings' real
estate investments are summarized below by property:

                            ----------           ----------      -----------
                             Amount of           Investment       Occupancy
                            Investment           Percentage      at 12/31/98
                            ----------           ----------      -----------

The Thicket Apartments     $ 7,997,056              45%              98%
Windrush Apartments          7,428,038              42%              98%
Peachtree Business Center    2,219,640              13%             100%
                           ============          ========
Totals                     $17,644,734              100%
                           ============          ========
                                          
The above investment amounts are net of accumulated  depreciation.  Both Thicket
and Windrush are encumbered by fixed rate mortgage loans and Peachtree serves as
security for the line of credit.  Vinings  incorporates  herein by reference the
description of owned real property on Schedule III and the notes thereto.


ITEM 3 - LEGAL PROCEEDINGS
--------------------------

None of Vinings'  properties  are presently  subject to any material  litigation
nor, to Vinings' knowledge,  is any material  litigation  threatened against the
Trust or any of its  properties,  other  than  routine  actions  or  claims  and
administrative  proceedings arising in the ordinary course of business.  Some of
these  claims  are  expected  to be  covered  by  insurance  and  all  of  which
collectively are not expected to have a material adverse effect on the business,
the financial condition, or the results of operations of Vinings.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
--------------------------------------------------------

No matters  were  submitted  to a vote of the  Trust's  shareholders  during the
fourth quarter of fiscal 1998.
<PAGE>


                                     PART II
                                     =======
 

ITEM 5 - MARKET FOR REGISTRANT'S SHARES OF BENEFICIAL INTEREST
--------------------------------------------------------------

Stock Quotation
---------------

Vinings'  Shares are currently  traded on the  Over-the-Counter  Bulletin  Board
under the  symbol  "VIPIS."  On March 31,  1999,  the  closing  sales  price for
Vinings' Shares, as reported on the Over-the-Counter Bulletin Board, was $4.00.


Market Information 
------------------

The high and low sales prices for each  quarterly  period during fiscal 1998 and
fiscal  1997,  which  reflect  inter-dealer  prices,   without  retail  mark-up,
mark-down or commission and may not necessarily  represent actual  transactions,
are as follows:

                          ---------------------     ---------------------
                                  1998                      1997
                          ---------------------     ---------------------
Quarter Ended                High        Low          High        Low
-------------                ----        ---          ----        ---
March 31                       5        3 1/4         4 5/8      4 3/8
June 30                        5          3           4 7/8      4 3/8
September 30                 5 7/8      3 3/4         4 7/8        4
December 31                  4 3/4      3 7/8         5 1/4      3 3/4


Dividends
---------

No dividends  were  declared or paid during fiscal 1998. In an effort to rebuild
the Trust's assets,  all operating cash flow has been reserved for future growth
and  expansion.  However,  as  assets  are  acquired  and  operating  cash  flow
increases,  Vinings intends to pay  distributions  to shareholders in amounts at
least sufficient to enable the Trust to qualify as a REIT.


Holders
-------

Vinings had 704 holders of record of its Shares as of March 23, 1999.


ITEM 6 - SELECTED FINANCIAL INFORMATION
---------------------------------------

The following  table sets forth selected  financial  information for Vinings and
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations,  " as well as Vinings'  December
31,  1998  Consolidated  Financial  Statements,  which  are  made a part of this
report.  All share and per share  information  have been restated to reflect the
Share Split.
<PAGE>
<TABLE>

<CAPTION>
                                         -------------------------------------------------------------------------
                                                              For the year ended December 31,
                                          -------------------------------------------------------------------------
                                              1998           1997           1996           1995           1994     
                                          -------------  -------------  -------------  -------------  -------------
<S>                                         <C>            <C>            <C>            <C>            <C>        
Revenues                                    $4,102,003     $2,478,824     $1,796,917     $3,244,908     $4,159,170 
Expenses                                     3,998,110      3,146,005      2,580,195      1,779,475      2,477,923 
                                          -------------  -------------  -------------  -------------  -------------
Income (loss) before loss on
  real estate investments                      103,893       (667,181)      (783,278)     1,465,433      1,681,247 
Loss on real estate investments                      -              -        (26,800)      (886,887)      (816,307)
                                          -------------  -------------  -------------  -------------  -------------
Income (loss) before minority interest         103,893       (667,181)      (810,078)       578,546        864,940 

Minority interest                              (18,900)         5,464              -              -              - 
                                          -------------  -------------  -------------  -------------  -------------

Net income (loss)                             $ 84,993     $ (661,717)    $ (810,078)     $ 578,546      $ 864,940 
                                          =============  =============  =============  =============  =============

Net income (loss) per share - 
basic and diluted                             $    0.08    $    (0.61)    $    (0.75)     $    0.54      $    0.80 
                                          =============  =============  =============  =============  =============
Weighted average shares 
outstanding - basic                          1,090,701      1,080,513      1,080,528      1,080,625      1,080,625 
                                          =============  =============  =============  =============  =============
Weighted average shares 
outstanding - diluted                        1,336,391      1,089,435      1,080,528      1,080,625      1,080,625 
                                          =============  =============  =============  =============  =============
Dividends declared and paid:
Ordinary income                               $      -     $        -     $        -      $       -      $    0.08 
Return of capital                                    -              -          16.88          12.24          24.64 
                                          -------------  -------------  -------------  -------------  -------------

Total dividends declared and paid             $      -     $        -     $    16.88      $   12.24      $   24.72 
                                          =============  =============  =============  =============  =============

Total assets                               $19,148,178    $18,989,558    $11,519,469    $21,878,357    $34,348,242 
                                          =============  =============  =============  =============  =============

Shareholders' equity                       $ 2,426,972    $ 2,268,803    $ 2,232,548    $21,284,112    $33,932,908 
                                          =============  =============  =============  =============  =============
</TABLE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS
----------------------------------------------------------

Overview
--------

Vinings Investment  Properties Trust ("Vinings" or the "Trust") was organized on
December  7, 1984 as a twenty year  finite-life  real  estate  investment  trust
("REIT")  whose  original  purpose  was  to  invest  in  participating,   shared
appreciation,  convertible and fixed rate mortgages and joint venture  financing
secured by office,  industrial  and retail  facilities  located  throughout  the
United States. The Declaration of Trust provided,  among other things,  that the
Trustees  would use their best  efforts to  liquidate  and  terminate  the Trust
within  approximately  ten  years.  The  Trustees  proceeded  with  the  orderly
liquidation of assets and the distribution of proceeds to the shareholders.  The
remaining  assets of the Trust were Peachtree  Business  Center, a 75,000 square
foot business park located in Atlanta,  Georgia  ("Peachtree") and approximately
$163,000 in cash.

On January 31, 1996,  Vinings  Investment  Properties,  Inc.  (the  "Purchaser")
commenced a cash tender offer (the "Tender  Offer")  which expired in accordance
with its  terms at  midnight  on  February  28,  1996.  The  Purchaser  accepted
approximately  73.3% of the  outstanding  Shares and  appointed new trustees and
officers ("Management").

The purpose of the Tender  Offer was for  Management  to acquire  control of the
Trust and to rebuild  Vinings'  assets by expanding  into the  multifamily  real
estate markets  through the  acquisition of garden style  apartment  communities
which are leased to  middle-income  residents.  Management  believes  that these
investments will provide  attractive sources of income to Vinings which will not
only increase net income and provide cash  available  for future  distributions,
but will increase the value of Vinings' real estate portfolio as well.
<PAGE>
On  June  11,  1996,  Vinings  Investment   Properties,   L.P.  (the  "Operating
Partnership"),  was organized  with the Trust as the sole general  partner in an
effort to facilitate acquisitions.  This structure is commonly referred to as an
umbrella partnership REIT or "UPREIT".

Much of  Management's  efforts  during the fiscal year ended  December  31, 1997
("fiscal  1997")  were  focused on the  acquisition  of Windrush  Apartments,  a
202-unit apartment community located in Atlanta, Georgia ("Windrush"),  Vinings'
first  UPREIT  transaction  in exchange for units in the  Operating  Partnership
("Units").  In  addition,  Management  spent  a  good  portion  of  fiscal  1997
negotiating for a 2,365-unit portfolio, the contract for which was terminated by
the seller thirty days prior to closing (the "Portfolio Transaction"). (See Note
14 to Vinings' December 31, 1998 Consolidated Financial  Statements).  The costs
incurred  during  fiscal 1997  associated  with the  Portfolio  Transaction  are
included in the results of operations for fiscal 1997.

During the first half of the fiscal year ended December 31, 1998 ("fiscal 1998")
Management focused on the settlement of the Portfolio Transaction.  The proceeds
received,  net of  litigation  costs  incurred  during  fiscal  1998,  have been
included in the results of operations for fiscal 1998. During the second half of
fiscal 1998, Management  aggressively pursued its growth strategy by negotiating
contracts for the acquisition of 13 multifamily communities totaling 2,032 units
located in various  markets in  Mississippi  (the  "Portfolio").  The  aggregate
purchase  price of the  Portfolio  is  $94,300,000,  consisting  of cash and the
assumption of the existing  debt (the  "Acquisition  Transaction").  Five of the
communities,  totaling  976 units,  will be  purchased  through a joint  venture
structure  between the  Operating  Partnership  and a private  investor  and the
remaining  eight  communities,  totaling  1,056  units,  will  be  purchased  by
subsidiaries of the Operating Partnership. (See Note 10 to Vinings' December 31,
1998 Consolidated Financial Statements). However, there can be no assurance that
the Acquisition Transaction will take place.

The following  discussion and analysis of the financial condition and results of
operations  should be read in  conjunction  with the  accompanying  consolidated
financial statements of Vinings and the notes thereto.


Results of Operations
---------------------
Because  Vinings has begun to implement its growth and expansion  strategy,  net
income has increased  steadily from fiscal year ended December 31, 1996 ("fiscal
1996") to fiscal 1997 and fiscal 1998. In addition,  the nature of the operating
expenses has shifted from administrative  expenses and advisory fees to property
operating  expenses and mortgage interest expense connected with Vinings' income
producing assets.

As a  result  of the  liquidation  of  assets,  change  in  management,  and the
redirection of the Trust's business objectives,  substantially all of the income
producing  assets held prior to the Tender  Offer are no longer held by Vinings,
with the exception of Peachtree.


Comparison of Operating Results of 1998 to Operating Results of 1997
--------------------------------------------------------------------

Total  revenues  increased  $1,623,179,  or 65%,  from  $2,478,824 to $4,102,003
primarily  due to the fact that Vinings  continued  to implement  its growth and
expansion strategy with the acquisition of Windrush in December, 1997.

Rental and other property revenues increased $1,623,174, or 66%, from $2,476,746
to  $4,099,920  due  primarily to the  revenues  generated  in  connection  with
Vinings' ownership of Windrush for an entire year during fiscal 1998 as compared
to less than one month during  fiscal 1997.  Revenues from Thicket and Peachtree
also increased by $122,340 and $29,190, respectively.

Property  operating and maintenance  expense  increased  $659,281,  or 66%, from
$992,926 to $1,652,207. Of this increase, $633,662 represents expenses generated
in  connection  with  Vinings'  ownership  of Windrush for an entire year during
fiscal 1998 as compared to less than one month during  fiscal 1997.  Peachtree's
operating and maintenance  expense  increased $24,889 from fiscal 1997 to fiscal
1998 due to various  maintenance  and repair  items,  while  Thicket's  remained
constant.

Depreciation  and  amortization  increased  $214,749,  or 50%,  from $433,011 to
$647,760.  Of this increase,  $193,541 relates to Vinings' ownership of Windrush
for an entire year during  fiscal 1998 as compared to less than one month during
fiscal 1997.  Depreciation on Thicket and Peachtree  increased only slightly due
to additional improvements made during fiscal 1998.

Interest  expense  increased  $512,726,  or  63%  from  $816,551  to  $1,329,277
primarily due to Vinings' ownership of Windrush for an entire year during fiscal
1998 as compared to less than one month during fiscal 1997.  Interest expense on
the line of credit increased  $22,894 due to the increased balance during fiscal
1998.

General and  administrative  expense increased $262,498 or 78%, from $336,375 to
$598,873. Of this increase,  $105,000 represents overhead  reimbursements to The
Vinings Group (see Note 6 to Vinings' December 31, 1998  Consolidated  Financial
Statements);  $80,000 represents compensation expense relating to the Restricted
Stock  awarded  on July 1, 1998  (see  Note 13 to  Vinings'  December  31,  1998
Consolidated  Financial  Statements);  $51,589  represents  legal and accounting
fees; and $23,628 relates to travel and abandoned pursuit costs.

The unusual item,  net included in operating  expenses in fiscal 1998 relates to
the costs incurred,  net of the settlement  proceeds received in connection with
the Portfolio  Transaction  totaling $260,910.  The costs incurred during fiscal
1997 of $532,185  include due diligence  costs  incurred in connection  with the
Portfolio Transaction such as environmental and engineering reports, independent
financial  analysis,  investor appraisal costs and legal contract  negotiations.
The net cost to Vinings in  connection  with the  entire  Portfolio  Transaction
totaled  $271,275.  (See Note 14 to  Vinings'  December  31,  1998  Consolidated
Financial Statements).

Vinings had income  before  minority  interest  of  $103,893  for fiscal 1998 as
compared  to a loss of $667,181  for fiscal  1997,  representing  an increase of
$771,074.  The  minority  interest of ($5,464)  for fiscal 1997  represents  the
allocation of losses for the short period in December 1997 during which Units in
the  Operating  Partnership  were held.  The  minority  interest for fiscal 1998
totaled $18,900.


Comparison of Operating Results of 1997 to Operating Results of 1996
--------------------------------------------------------------------
Total revenues  increased  $681,907,  or 38%, from $1,796,917 to $2,478,824 due 
to the fact that Vinings had begun to pursue its growth and expansion strategy.

Rental and other property revenues increased  $924,263,  or 60%, from $1,552,483
to  $2,476,746  due  primarily to the  revenues  generated  in  connection  with
Vinings'  ownership of Thicket for an entire year during fiscal 1997 as compared
to six months  during  fiscal 1996.  Revenues  from  Peachtree  remained  fairly
constant.  Immaterial  amounts of revenue  were  generated  for the twelve  days
Windrush was owned during fiscal 1997.

Interest income decreased by $90,579,  or 98%, from $92,657 to $2,078. In fiscal
1996, interest income was generated from cash investments primarily in the first
two months of the year,  prior to the payment of  liquidating  dividends.  Since
that time there have been relatively small cash balances.

Property  operating and maintenance  expense  increased  $406,496,  or 69%, from
$586,430 to $992,926, primarily due to the expenses generated in connection with
Vinings'  ownership of Thicket for an entire year during fiscal 1997 as compared
to six months during fiscal 1996.

Depreciation  and  amortization  increased  $188,901,  or 77%,  from $244,110 to
$433,011.  Depreciation on Thicket increased  $185,165 due to Vinings' ownership
of Thicket  for an entire  year  during  fiscal  1997 as  compared to six months
during  fiscal 1996 as well as  additional  depreciation  on  improvements  made
during fiscal 1997. Depreciation on Peachtree decreased slightly.

Interest expense  increased  $407,832,  or 100% from $408,719 to $816,551 due to
Vinings'  ownership of Thicket for an entire year during fiscal 1997 as compared
to six months during fiscal 1996.

General and  administrative  expense decreased $651,598 or 66%, from $987,973 to
$336,375.  The majority of the  decrease  relates to costs  associated  with the
Tender Offer and structural  reorganization of the Trust during fiscal 1996 that
did not recur during fiscal 1997. The following expense  categories  included in
general  and   administrative   decreased  from  fiscal  1996  to  fiscal  1997:
professional fees by $398,733,  directors' and officers'  insurance by $176,768,
trustee expense by $31,312,  annual report and proxy costs by $27,361 and filing
fees by $17,425.

There were no investment  advisor's fees incurred during fiscal 1997. All of the
advisor's  fees during fiscal 1996 were incurred  during January and February as
the services of the Advisor were  terminated at the  consummation  of the Tender
Offer.

The unusual item, net of $532,185  included in operating  expenses during fiscal
1997 relates to costs  incurred in connection  with the  Portfolio  Transaction.
These expenses include due diligence costs such as environmental and engineering
reports,  independent  financial  analysis,  investor  appraisal costs and legal
contract  negotiations.  (See Note 14 to Vinings' December 31, 1998 Consolidated
Financial Statements).

There were no gains or losses on real estate investments during fiscal 1997. The
loss on real estate investment of $26,800 in fiscal 1996 represents  commissions
and fees on the sale of the Hawthorne Note. (See Note 4 to Vinings' December 31,
1998 Consolidated Financial Statements).

Vinings incurred a loss before minority  interest of $667,181 for fiscal 1997 as
compared to $810,078 for fiscal 1996,  representing a decrease of $142,897, even
with the unusual item described above. Had Vinings not incurred the unusual item
associated with the Portfolio Transaction, the loss before minority interest for
fiscal  1997  would  have been  $134,996.  The  minority  interest  of  ($5,464)
represents the allocation of losses for the short period in December 1997 during
which Units in the Operating Partnership were held.


Liquidity and Capital Resources
-------------------------------

Operating  activities  provided net cash of $624,783 for fiscal 1998 as compared
to $152,536 for fiscal 1997. As discussed  previously,  the settlement proceeds,
litigation  costs and  transaction  costs relating to the Portfolio  Transaction
have been included in operating  activities and totaled a net amount of $260,910
in income  during fiscal 1998 and $532,185 in expense  during fiscal 1997.  (See
Note 14 to Vinings' December 31, 1998 Consolidated  Financial  Statements).  The
balance of the increased  cash provided by operating  activities for fiscal 1998
relates to Vinings'  ownership of Windrush for an entire year during fiscal 1998
as compared to less than one month during fiscal 1997.

As a result of the implementation of Management's growth and expansion strategy,
cash flows from  investing and financing  activities  have changed  dramatically
from fiscal years 1996 to 1997 to 1998.  In fiscal 1996,  $673,200 was generated
from the sale of investments in connection with prior  management's  liquidation
of the Trust's  assets and  approximately  $8,700,000  was  invested in Thicket.
While  Windrush was acquired  during  fiscal 1997, it was not acquired with cash
but  through the  assumption  of debt and the  issuance of Units.  Approximately
$3,800  in cash  was  spent in  connection  with the  Windrush  acquisition  and
approximately  $135,000 was used to make  improvements to Thicket and Peachtree.
During fiscal 1998,  $612,000 was invested in the  Acquisition  Transaction  and
approximately $146,000 was used to make improvements to the existing assets.

Cash flows  provided by or used in financing  activities  were  comprised of (1)
distributions  to  shareholders,   and  (2)  debt  incurred.  Final  liquidating
dividends  totaling  $18,240,950  were made to shareholders  during fiscal 1996,
with no  distributions  during  fiscal 1997 or fiscal 1998.  During fiscal 1996,
Vinings  received net proceeds of $7,392,000  from a mortgage  note payable,  in
addition to $1,568,104  in proceeds from a secured line of credit,  all of which
were used in the  acquisition  of Thicket.  During  fiscal 1997,  an  additional
$150,000 was drawn from the line of credit.  In addition,  during fiscal 1997, a
mortgage note in the amount of  $6,464,898,  was assumed in connection  with the
acquisition of Windrush and is not considered a cash transaction.  During fiscal
1998, $281,896 was drawn from the line of credit and mortgage notes payable were
reduced by $144,501.

Many of the costs  associated with the liquidation of the Trust's assets and the
subsequent  Tender Offer and  organizational  restructuring  that were  incurred
during fiscal 1996,  have not continued  into fiscal 1997 or 1998. The cash held
by  Vinings at  December  31,  1998,  plus the cash flow from  Vinings'  assets,
including  the  Acquisition  Transaction,  is  expected  to  provide  sources of
liquidity to allow the Trust to meet current operating obligations.  The line of
credit held by the Trust,  which expired in December 1998,was purchased from the
bank by one of the Trustees. The line in now due on demand and Vinings is paying
interest monthly to the Trustee on the outstanding  balance at an annual rate of
8.50%.  The Trustee has agreed that he will not demand payment on the note prior
to January 1, 2000, unless alternate  financing is arranged or Peachtree,  which
serves as security  for the note,  is sold.  Vinings has agreed that it will use
its best  efforts  to obtain a new line of credit or  alternative  financing  to
repay the outstanding balance. (For additional information regarding the line of
credit  see  Note  5  to  Vinings  December  31,  1998  Consolidated   Financial
Statements.)  In  addition,  Vinings  continues  negotiations  with a number  of
capital sources  regarding the  Acquisition  Transaction and intends to continue
ongoing  discussions with capital sources,  both public and private,  as well as
explore  financing  alternatives,  so as to allow Vinings to expand and grow its
income producing investments. (See "Growth and Expansion Strategy".)


Recent Accounting Pronouncements
--------------------------------
Vinings adopted Statements of Financial  Accounting  Standards ("SFAS") No. 130,
"Reporting of Comprehensive  Income," during 1998, which  establishes  standards
for  reporting  and  display  of   comprehensive   income  and  its  components.
Comprehensive  income is the total of net income and all other nonowner  changes
in shareholders'  equity. As of December 31, 1998, Vinings had no items of other
comprehensive income.

Vinings also adopted SFAS No. 131,  "Disclosures About Segments of an Enterprise
and Related  Information,"  during 1998,  which  establishes  new  standards for
disclosure of segment  information on the so called  "management  approach." The
management  approach is based on the way that the chief operating decision maker
organizes segments within a company for making operating decisions and assessing
performance.   Since  Vinings'  real  estate   portfolio  has  similar  economic
characteristics,  customers,  and products and services,  Vinings  evaluates the
operating performance of its real estate portfolio as one reportable segment, on
the same basis of presentation for internal and external  reporting.  Therefore,
no additional segment information is presented herein.


Year 2000
---------
The statements in the following  section include "Year 2000 readiness  
disclosure"  within the meaning of the Year 2000 Information and Readiness 
Disclosure Act of 1998.

The "Year 2000 issue" is the term used to describe the various  problems  caused
from  the  improper  processing  of  dates  and date  sensitive  information  by
computers and other  machinery and equipment.  The Year 2000 issue is the result
of many computer  programs  recognizing a date ending with "00" as the year 1900
rather than the year 2000,  causing potential system failures or miscalculations
which could result in disruptions of normal business operations.

Vinings is currently  assessing the potential  impact Year 2000 will have on its
operations.  A compliance program has been implemented,  which will 1) determine
Vinings state of readiness for the Year 2000,  including the Trust's information
technology  ("IT")  systems,  its non-IT  systems and the state of  readiness of
Vinings  material  suppliers and third party vendors;  2) assess where potential
risks may occur,  recognizing that date sensitive  systems may fail at different
points in time  depending on their  function,  and  prioritize  those risks;  3)
determine  what  steps  need to be taken in order to bring  remaining  software,
hardware and systems,  including embedded systems, into Year 2000 compliance; 4)
implement,   test  and  re-evaluate  all  solutions  in  time  to  minimize  any
significant  detrimental  effects on operations;  and 5) determine a contingency
plan in the event that the Trust or any of its material suppliers or third party
vendors will not be Year 2000  compliant  (the  "Compliance  Program").  Vinings
believes  that its testing of all  systems  should be complete by the end of the
third quarter, 1999.

Vinings  believes  that most of its  computer  systems and related  software are
already  Year  2000  compliant.  These  systems  include  the  on-site  resident
management  software and associated  hardware as well as corporate financial and
accounting  software and related  hardware.  The costs  incurred to date for new
on-site  hardware and software  total  approximately  $6,200.  The financial and
accounting  systems  are shared with The Vinings  Group.  The costs  incurred to
upgrade these systems total approximately $70,000 and are in the form of monthly
lease payments of $1,178,  which expire in November 2002.  Currently these lease
payments are not a cost of the Trust.  Any additional costs to upgrade or modify
these systems are not expected to be material.

Vinings  is  still in the  process  of  determining  whether  many of its  other
operational  systems are Year 2000 compliant and therefore  cannot  determine at
this time the potential impact on the Trust's financial condition and results of
operations.  These systems include  administrative systems as well as mechanical
systems.   However,   Vinings  has  been  in  contact  with  the  suppliers  and
manufacturers of these systems and believes that all material systems within its
control will be Year 2000 compliant well in advance of January 1, 2000.

Vinings'  most  reasonably  likely  worst  case  scenario  relates  to Year 2000
non-compliance by third party vendors and service providers.  Vinings' relies on
a number of suppliers for utility services, financial services,  materials, etc.
Interruption  of  suppliers'  operations  due to Year 2000  issues  could have a
material adverse effect on the Trust's future financial condition and results of
operations.  Vinings'  has taken  steps to  evaluate  the  status of  suppliers'
efforts  in order to  determine  whether  any of these  suppliers  will  have an
adverse material effect. Once evaluation is complete, Vinings will determine any
required alternatives and contingency plan requirements.

The information  provided above regarding Vinings' Year 2000 compliance includes
forward-looking  statements  based on  management's  best  estimates  of  future
events.  Such   forward-looking   statements  involve  risks  and  uncertainties
including the  availability  of  resources,  the ability to identify and correct
potential  Year 2000  sensitive  problems  that could  have a serious  impact on
operations and the ability of third party  suppliers to bring their systems into
Year 2000  compliance.  There can be no  assurance  that any of the  factors  or
statements regarding the Trust's Year 2000 preparedness will not change and that
any  change  will  not  affect  the  accuracy  of  the  Trust's  forward-looking
statements.


Other Matters
-------------

Vinings  was  informed  on April 3, 1998 by NASDAQ that its shares no longer met
certain  maintenance  requirements for continued listing on the SmallCap Market.
Although  the  Trust  believed  that  all  requirements  were  met,  it made the
strategic decision not to submit a proposal for achieving compliance so that its
listing would be transferred  from the SmallCap  Market to the  Over-the-Counter
Bulletin  Board.  Vinings  made this  decision  because it feels that its growth
would have been severely  hindered by newly  implemented  SmallCap  requirements
pertaining to shareholder approval of new share issuances.  Therefore, effective
April 28,  1998,  Vinings'  shares are traded on the  Bulletin  Board  under the
symbol "VIPIS."

This Form 10-K contains 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. Vinings' actual results could differ materially from those set forth in
the  forward-looking  statements.  Certain  factors  that  might  cause  such  a
difference  include  the  following:  the  failure  of the  Trust's  systems  or
software,  or the  systems  and  software  of a third  party on which  the Trust
relies,  to be Year  2000  compliant,  the  inability  of  Vinings  to  identify
multifamily  properties or property portfolios for acquisition which will have a
strategic fit with Vinings,  the inability of Vinings to close the  transactions
currently  anticipated,  including  the  Acquisition  Transaction  or such other
contracts  as Vinings may enter into in the future,  the less than  satisfactory
performance of any property which might be acquired by Vinings, the inability to
access  the  capital  markets  in  order to fund  Vinings'  present  growth  and
expansion strategy,  the cyclical nature of the real estate market generally and
locally  in  Georgia  and the  surrounding  southeastern  states,  the  national
economic  climate,  the local  economic  climate in Georgia and the  surrounding
southeastern  states,  and the local real estate  conditions and  competition in
Georgia and the surrounding southeastern states. There can be no assurance that,
as a result of the foregoing  factors,  Vinings'  growth and expansion  strategy
will be  successful  or that the business and  operations of Vinings will not be
adversely affected thereby.


ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------

Vinings is exposed to market  risk from  changes in  interest  rates,  which may
adversely affect its financial  position,  results of operations and cash flows.
In seeking  to  minimize  the risks from  interest  rate  fluctuations,  Vinings
manages  exposures  through  its regular  operating  and  financing  activities.
Vinings  does not use  financial  instruments  for trading or other  speculative
purposes.  Vinings  is exposed  to  interest  rate risk  primarily  through  its
borrowing  activities,  which are  described in Note 5 to Vinings'  December 31,
1998 Consolidated  Financial  Statements.  All of Vinings'  borrowings are under
fixed rate instruments.  Vinings has determined that there is no material market
risk exposure to its consolidated  financial position,  results of operations or
cash flows.

The following table presents  principal  reductions and related weighted average
interest rates by year of expected maturity for Vinings' debt obligations:

 <TABLE>

<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                                    There-                  Fair Value
(In Thousands)                   1999       2000       2001      2002      2003    after       Total     December 31, 1999
---------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>        <C>       <C>      <C>       <C>        <C>           <C> 
Principal Reductions
  In Mortgage Notes            $  157       $170       $184      $200    $7,103     $5,826    $13,640         $13,640

Average Interest Rates          8.27%      8.27%      8.27%     8.27%     8.27%       7.5%      8.27%           8.27%

Line Of Credit                 $2,000        -          -          -         -          -     $ 2,000         $ 2,000

Interest Rate(1)                8.50%        -          -          -         -          -       8.50%           8.50%
<FN>
--------------------------------------
(1) Based on prime rate as of 12/31/98
</FN>
</TABLE>


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

The  consolidated  financial  statements  and  supplementary  data are listed  
under Item 14(a) and filed as part of this report on the pages indicated.


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE
----------------------------------------------------------

The  information  required  by this Item 9 was  previously  reported  in a 
Current  Report on Form 8-K filed  with the  Securities  and Exchange Commission
on January 14, 1997.


<PAGE>
                                    PART III
                                    ========


ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
The information concerning the Trustees and Executive Officers of the Registrant
required  by Item 10  shall  be  included  in the  Proxy  Statement  to be filed
relating  to the 1999 Annual  Meeting of the  Registrant's  shareholders  and is
incorporated herein by reference.


ITEM 11 - EXECUTIVE COMPENSATION
--------------------------------
The information concerning the Trustees and Executive Officers of the Registrant
required  by Item 11  shall  be  included  in the  Proxy  Statement  to be filed
relating  to the 1999 Annual  Meeting of the  Registrant's  shareholders  and is
incorporated herein by reference.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The information concerning Ownership of Certain Beneficial Owners and Management
required  by Item 12  shall  be  included  in the  Proxy  Statement  to be filed
relating  to the 1999 Annual  Meeting of the  Registrant's  shareholders  and is
incorporated herein by reference.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
The  information  concerning  Certain  Relationships  and  Related  Transactions
required  by Item 13  shall  be  included  in the  Proxy  Statement  to be filed
relating  to the 1999 Annual  Meeting of the  Registrant's  shareholders  and is
incorporated herein by reference.


<PAGE>
                                     PART IV
                                     =======


ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULE AND
          REPORTS ON FORM 8-K
---------------------------------------------------------

14(a) (1) and (2) Index to Consolidated Financial 
Statements and Schedule                                                     Page
                                                                            ----

Report of Independent Public Accountants                                      25

Consolidated Balance Sheets--As of December 31, 1998 and 1997                 26

Consolidated Statements of Operations--For the years ended
December 31, 1998, 1997 and 1996                                              27

Consolidated Statements of Shareholders' Equity--For the years ended
December 31, 1998, 1997 and 1996                                              28

Consolidated Statements of Cash Flows--For the years ended
December 31, 1998, 1997 and 1996                                              29

Notes to Consolidated Financial Statements--For the years ended
December 31, 1998, 1997 and 1996                                              30

Consolidated Financial Statement Schedule                                     48

14(a) (3) Exhibits

<TABLE>
<CAPTION>


Exhibit No.                     Description
-----------                     -----------
   <S>      <C>
   3.1      Second Amended and Restated Declaration of Trust of Vinings (filed herewith).

   3.2      Amendment  No. 1 to the Second  Amended and  Restated  Declaration  of Trust of the Trust
            (filed herewith).

   3.3      Amendment  No. 2 to the Second  Amended and  Restated  Declaration  of Trust of the Trust
            (filed herewith).

   3.4      Amended and  Restated  Bylaws of the Trust  (incorporated  by reference to Exhibit 3.2 to
            Vinings' Registration Statement on Form S-11, No. 2-94776).

  10.1      Amended and Restated Agreement of Limited  Partnership of Vinings Investment  Properties,
            L.P.  (incorporated  by reference to Exhibit 10.1 to Vinings'  Annual Report on Form 10-K
            for the fiscal year ended December 31, 1997, No. 0-13693).

  10.2      First Amendment to the Amended and Restated  Agreement of Limited  Partnership of Vinings
            Investment  Properties,  L.P.  (incorporated by reference to Exhibit 10.2 to the Vinings'
            Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).

  10.3      Second Amendment to the Amended and Restated Agreement of Limited  Partnership of Vinings
            Investment  Properties,  L.P.  (incorporated by reference to Exhibit 10.3 to the Vinings'
            Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).

  10.4      Third Amendment to the Amended and Restated  Agreement of Limited  Partnership of Vinings
            Investment Properties, L.P. (filed herewith).

  10.5      Fourth Amendment to the Amended and Restated Agreement of Limited  Partnership of Vinings
            Investment Properties, L.P. (filed herewith).

  10.6      Fifth Amendment to the Amended and Restated  Agreement of Limited  Partnership of Vinings
            Investment Properties, L.P. (filed herewith)

  10.7      Agreement to Contribute,  dated April 1, 1997,  between  Vinings  Investment  Properties,
            L.P.  and  Windrush  Partners,  Ltd.  (incorporated  by  reference to Exhibit 10.1 to the
            Trust's Current Report on Form 8-K filed December 29, 1997, No. 0-13693).

  10.8      Amendment to Agreement to Contribute,  dated August 11, 1997,  between Vinings Investment
            Properties,  L.P. and Windrush Partners,  Ltd. (incorporated by reference to Exhibit 10.2
            to the Trust's Report on Form 8-K filed December 29, 1997, No. 0-13693).

  10.9      Second  Amendment to Agreement to  Contribute,  dated October 30, 1997,  between  Vinings
            Investment  Properties,  L.P. and Windrush Partners,  Ltd.  (incorporated by reference to
            Exhibit 10.3 to the Trust's Report on Form 8-K filed December 29, 1997, No. 0-13693).

  10.10     Management  Contract  dated  December  19, 1997  between  Vinings  Communities,  L.P. and
            Vinings Properties,  Inc.  (incorporated by reference to Exhibit 10.10 to Vinings' Annual
            Report on Form 10-K for the fiscal year ended December 31 1997, No. 0-13693).

  10.11     Management  Contract  dated January 1, 1999,  between  Thicket  Apartments,  L.P. and VIP
            Management, LLC (filed herewith).

  10.12     Management  Contract dated January 1, 1999,  between  Vinings  Communities,  L.P. and VIP
            Management, LLC (filed herewith).

  10.13     Management  Contract dated January 1, 1999, between Vinings Investment  Properties,  L.P.
            and VIP Management, LLC (filed herewith).

  10.14     Form of  Amended  and  Restated  Agreement  of  Purchase  and  Sale  for The  Acquisition
            Transition  with attached  Schedule of Material  Differences  For All  Properties  (filed
            herewith).

  10.15     Commercial  Credit Agreement  between Hardwick Bank and Trust Company and the Trustees of
            the Trust dated June 28, 1997  (incorporated  by reference  to Exhibit  10.13 to Vinings'
            Annual Report on Form 10-K for the fiscal year ended December 31 1997, No. 0-13693).

  10.16     Amendment to Commercial  Credit Agreement between Hardwick Bank and Trust Company and the
            Trustees of the Trust dated July 1, 1998 (filed herewith).

  21.1      Subsidiaries of the Trust (filed herewith).

  27        Financial Data Schedule (filed herewith).
  </TABLE>      

         14(b) Reports on Form 8-K
         -------------------------

         Current Report on Form 8-K/A,  originally  dated December 29, 1997, was
         filed with the  Securities  and Exchange  Commission  on March 3, 1998,
         with respect to the Trust's acquisition of Windrush.

<PAGE>
                                   SIGNATURES
                                   ==========

Pursuant to the requirements of Sections 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.

VININGS INVESTMENT PROPERTIES TRUST

By: /s/ Peter D. Anzo
---------------------
Peter D. Anzo
President and
Chief Executive Officer

Dated: April 15, 1999


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

      Signature                     Title                         Date
      ---------                     -----                         ----


/s/ Peter D. Anzo              Chief Executive Officer,       April 15, 1999
-------------------------      President and Trustee
Peter D. Anzo  


/s/ Stephanie A. Reed          Vice President, Treasurer,     April 15, 1999
-------------------------      Secretary and Trustee
Stephanie A. Reed                   


/s/ Phill D. Greenblatt        Trustee                        April 15, 1999
-------------------------
Phill D. Greenblatt

/s/ Henry Hirsch               Trustee                        April 15, 1999
-----------------
Henry Hirsch


/s/ Martin H. Petersen         Trustee                        April 15, 1999
-------------------------
Martin H. Petersen


/s/ James D. Ross              Trustee                        April 15, 1999
-------------------------
James D. Ross


/s/ Gilbert H. Watts, Jr.      Trustee                        April 15, 1999
-------------------------
Gilbert H. Watts, Jr.



<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ========================================


To Vinings Investment Properties Trust:

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Vinings
Investment  Properties Trust and  subsidiaries  (the "Trust") as of December 31,
1998  and  1997  and  the  related   consolidated   statements  of   operations,
shareholders'  equity,  and cash flows for each of the three years in the period
ended  December  31,  1998.  These  consolidated  financial  statements  and the
schedule referred to below are the responsibility of the Trust's management. Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and schedule based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Vinings Investment
Properties  Trust and  subsidiaries  as of December  31, 1998 and 1997,  and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1998 in  conformity  with  generally  accepted
accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index to
financial  statements is presented for purposes of complying with the Securities
and  Exchange  Commission's  rules  and  is not  part  of  the  basic  financial
statements.  This schedule has been subjected to the auditing procedures applied
in the audits of the basic  financial  statements  and, in our  opinion,  fairly
states in all material  respects  the  financial  data  required to be set forth
therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

/s/ Arthur Andersen LLP

Atlanta, Georgia
February 26, 1999


<PAGE>
<TABLE>
                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       ===================================
 <CAPTION>
                                                                                ----------------------------------
                                                                                           December 31,
                                                                                 ----------------------------------
                                                                                       1998               1997
                                                                                 ---------------    ---------------
ASSETS
<S>                                                                                <C>                 <C>
Real estate assets:
    Land                                                                            $ 2,884,500        $ 2,884,500
    Buildings and improvements                                                       15,399,690         15,267,009
    Furniture, fixtures & equipment                                                   1,025,222          1,011,483
      Less:  accumulated depreciation                                                (1,664,678)        (1,036,311)
                                                                                 ---------------    ---------------
                                                                              
         Net real estate assets                                                      17,644,734         18,126,681

Cash and cash equivalents                                                               286,481            282,851
Cash escrows                                                                            330,698            314,684
Receivables and other assets                                                            694,998             63,402
Deferred financing costs, less accumulated amortization of $77,258 and                               
    $54,459 at December 31, 1998 and 1997, respectively                                 139,064            169,968
Deferred leasing costs, less accumulated amortization of $32,861 and
    $39,087 at December 31, 1998 and 1997, respectively                                  52,203             31,972
                                                                                 ---------------    ---------------
                                                                                
Total assets                                                                       $ 19,148,178        $18,989,558
                                                                                 ===============    ===============
                                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY

Mortgage notes payable                                                             $ 13,640,065        $13,784,566
Line of credit                                                                        2,000,000          1,718,104
Accounts payable and accrued liabilities                                                546,249            708,876
                                                                                 ---------------    ---------------
                                                        
       Total liabilities                                                             16,186,314         16,211,546
                                                                                 ---------------    ---------------
                                                              

Minority interest of unitholders in Operating Partnership                               534,892            509,209
                                                                                 ---------------    ---------------
                                                            

Commitments and Contingencies (Note 10)

Shareholders' equity:
    Shares of beneficial interest, without par value, unlimited shares
    authorized, 1,100,505 and 1,080,512 shares issued and outstanding
    at December 31, 1998 and 1997, respectively                                      19,502,911         19,429,735

    Cumulative earnings                                                              37,302,590         37,217,597

    Cumulative distributions                                                        (54,378,529)       (54,378,529)
                                                                                 ---------------    ---------------
                                                                           
       Total shareholders' equity                                                     2,426,972          2,268,803
                                                                                 ---------------    ---------------
                                                                            
Total liabilities and shareholders' equity                                         $ 19,148,178        $18,989,558
                                                                                 ===============    ===============
The accompanying notes are an integral part of these consolidated financial
statements.                                                                    

</TABLE>
<PAGE>

<TABLE>

                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      =====================================

<CAPTION>
                                                                    -----------------------------------------------
                                                                           For the years ended December 31,
                                                                    -----------------------------------------------
                                                                        1998              1997             1996
                                                                    -------------     -------------     -----------
<S>                                                                  <C>               <C>             <C>    
REVENUES

     Rental revenues                                                 $ 3,946,828       $ 2,392,072     $ 1,482,419
     Other property revenues                                             153,092            84,674          70,064
     Interest income                                                       1,519             2,078          92,657
     Other income                                                            564                 -         151,777
                                                                    -------------     -------------     -----------
                                                                   
                                                                       4,102,003         2,478,824       1,796,917
                                                                  -------------     -------------     -----------
                                                                
EXPENSES

     Property operating and maintenance                                1,652,207           992,926         586,430
     Depreciation and amortization                                       647,760           433,011         244,110
     Amortization of deferred financing costs                             30,903            34,957          19,502
     Interest expense                                                  1,329,277           816,551         408,719
     General and administrative                                          598,873           336,375         987,973
     Investment advisor's fee                                                  -                 -         333,461
     Unusual item, net                                                  (260,910)          532,185               -
                                                                    -------------     -------------     -----------
                                                                       3,998,110         3,146,005       2,580,195
                                                                    -------------     -------------     -----------

     Loss on real estate investments                                           -                 -         (26,800)

     Income (loss) before minority interest                              103,893          (667,181)       (810,078)
                                                                    -------------     -------------     -----------
     Minority interest of unitholders in Operating Partnership           (18,900)            5,464               -
                                                                    -------------     -------------     -----------
                                                        

     Net income (loss)                                                  $ 84,993        $ (661,717)      $(810,078)
                                                                    =============     =============     ===========
                                                             
NET INCOME (LOSS) PER SHARE - BASIC                                       $ 0.08           $ (0.61)        $ (0.75)
                                                                    =============     =============     ===========

NET INCOME (LOSS) PER SHARE - DILUTED                                     $ 0.08           $ (0.61)        $ (0.75)
                                                                    =============     =============     ===========

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC                            1,090,701         1,080,513       1,080,528
                                                                    =============     =============     ===========

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED                          1,336,391         1,089,435       1,080,528
                                                                    =============     =============     ===========

The accompanying notes are an integral part of these consolidated financial
statements.

</TABLE>
<PAGE>

<TABLE>
                      VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              For the years ended December 31, 1996, 1997 and 1998
              ====================================================

<CAPTION>
                                                 --------------   --------------   --------------   --------------
                                                   Shares of                                            Total
                                                  beneficial       Cumulative       Cumulative      shareholders'
                                                   interest         earnings       distributions       equity
                                                 --------------   --------------   --------------   --------------
                                         
<S>                                                <C>              <C>             <C>               <C>        
BALANCE AT DECEMBER 31, 1995                       $36,973,249      $38,689,392     $(54,378,529)     $21,284,112
                                                                                                     
Net loss                                                     -         (810,078)               -         (810,078)

Retirement of shares                                      (536)               -                -             (536)

Distributions to shareholders
     ($16.88 per share return of capital
     for federal income tax purposes)              (18,240,950)               -                       (18,240,950)
                                                 --------------   --------------   --------------   --------------
                                         

BALANCE AT DECEMBER 31, 1996                        18,731,763       37,879,314      (54,378,529)       2,232,548

Adjustment for minority interest of unitholders
     and issuance of units in Operating Partnership    698,056                                            698,056

Net loss                                                     -         (661,717)               -         (661,717)

Retirement of shares                                       (84)               -                -              (84)
                                                 --------------   --------------   --------------   --------------
                                              

BALANCE AT DECEMBER 31, 1997                        19,429,735       37,217,597      (54,378,529)       2,268,803

Net income                                                   -           84,993                -           84,993

Adjustment for minority interest of
     unitholders in Operating Partnership               (6,781)               -                -           (6,781)

Issuance of shares to officers and directors            80,000                -                -           80,000

Retirement of shares                                       (43)               -                -              (43)
                                                 --------------   --------------   --------------   --------------

BALANCE AT DECEMBER 31, 1998                       $19,502,911      $37,302,590     $(54,378,529)      $2,426,972
                                                 ==============   ==============   ==============   ==============
                               
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>

                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      =====================================
<CAPTION>
                                                                    -----------------------------------------
                                                                        For the years ended December 31,
                                                                    -----------------------------------------

                                                                      1998            1997          1996
                                                                    ----------     -----------   ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>           <C>           <C>        
Net income (loss)                                                     $84,993       $(661,717)    $ (810,078)
                                                                    ----------     -----------   ------------
                                                               

Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:

        Depreciation and amortization                                 647,760         433,011        244,110
        Amortization of deferred financing costs                       30,903          34,957         19,502
        Minority interest of unitholders in Operating Partnership      18,900          (5,464)             -
        (Gain) loss on real estate investments                              -               -         26,800
        Noncash compensation expense                                   80,000               -              -
        Changes in assets and liabilities:
           Cash escrows                                               (16,014)         75,745       (192,611)
           Receivables and other assets                               (19,511)         22,600        260,055
           Capitalized leasing costs                                  (39,621)        (36,931)        (5,639)
           Accounts payable and accrued liabilities                  (162,627)        290,335       (247,104)
                                                                    ----------     -----------   ------------

        Total adjustments                                             539,790         814,253        105,113
                                                                    ----------     -----------   ------------

Net cash provided by (used in) operating activities                   624,783         152,536       (704,965)
                                                                    ----------     -----------   ------------


CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of the Thicket Apartments                                          -               -     (8,660,900)
The Thicket capital expenditures                                      (46,129)       (109,333)       (49,635)
Peachtree capital expenditures                                        (33,712)        (26,205)       (29,862)
Windrush capital expenditures                                         (66,579)         (3,791)             -
Refundable deposits and acquisition costs                            (612,085)              -              -
Sale proceeds from real estate investments                                  -               -        673,200
                                                                    ----------     -----------   ------------

Net cash used in investing activities                                (758,505)       (139,329)    (8,067,197)
                                                                    ----------     -----------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from line of credit                                      281,896         150,000      1,568,104
Net proceeds from mortgage note payable                                     -               -      7,392,000
Deferred financing costs                                                    -               -       (224,427)
Principal repayments on mortgage notes payable                       (144,501)        (52,008)       (20,324)
Purchase of retired shares                                                (43)            (84)          (536)
Distributions to shareholders                                               -               -    (18,240,950)
                                                                    ----------     -----------   ------------

Net cash provided by (used in) financing activities                   137,352          97,908     (9,526,133)
                                                                    ----------     -----------   ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    3,630         111,115    (18,298,295)


CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                        282,851         171,736     18,470,031
                                                                    ----------     -----------   ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                             $286,481        $282,851      $ 171,736
                                                                    ==========     ===========   ============
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>

</TABLE>

<PAGE>


                       VININGS INVESTMENT PROPERTIES TRUST
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997 and 1996
                   ==========================================


NOTE 1 - FORMATION AND ORGANIZATION
----------------------------------

         Vinings  Investment  Properties  Trust  ("Vinings"  or the "Trust") was
         organized on December 7, 1984 as a twenty year  finite-life real estate
         investment  trust  ("REIT")  whose  original  purpose  was to invest in
         participating,   shared   appreciation,   convertible  and  fixed  rate
         mortgages and joint venture financing secured by office, industrial and
         retail facilities located throughout the United States. The Declaration
         of Trust  provided,  among other  things,  that the Trustees  would use
         their best efforts to  terminate  the Trust  within  approximately  ten
         years.  The Trustees  proceeded with the orderly  liquidation of assets
         and the  distribution  of proceeds to the  shareholders.  The remaining
         assets of the Trust were  Peachtree  Business  Center,  a 75,000 square
         foot  business  park  located in  Atlanta,  Georgia  ("Peachtree")  and
         approximately $163,000 in cash.

         On  January  31,  1996,  Vinings  Investment   Properties,   Inc.  (the
         "Purchaser")  commenced a cash tender offer (the "Tender  Offer") for a
         minimum of a majority and a maximum of 85% of the outstanding shares of
         beneficial  interest,  without par value (the "Shares"),  of the Trust.
         The Tender Offer  expired in  accordance  with its terms at midnight on
         February 28, 1996, and the Purchaser  accepted  approximately  73.3% of
         the  outstanding  Shares.  In connection  with the  consummation of the
         Tender  Offer,  all of the Trustees and officers of the Trust  resigned
         and were replaced with  designees of the Purchaser  ("Management").  In
         addition,  the Trust was an  externally  advised REIT for which it paid
         advisory  fees  to an  unrelated  third  party  (the  "Advisor").  Upon
         consummation of the Tender Offer, the relationship with the Advisor was
         terminated and Vinings became self-administered.

         The purpose of the Tender Offer was for  Management to acquire  control
         of the Trust and to  rebuild  Vinings'  assets  by  expanding  into the
         multifamily real estate markets through the acquisition of garden style
         apartment  communities  that are  leased  to  middle-income  residents.
         Management  believes  that these  investments  will provide  attractive
         sources of income to Vinings  which will not only  increase  net income
         and provide cash available for future distributions,  but will increase
         the value of Vinings' real estate portfolio as well.

         On June 11, 1996, Vinings Investment  Properties,  L.P. (the "Operating
         Partnership"),  a Delaware limited  partnership,  was organized.  As of
         December  31,  1998,  the Trust was the sole 1% general  partner and an
         80.94% limited partner in the Operating Partnership. (This structure is
         commonly referred to as an umbrella partnership REIT or "UPREIT").

         Vinings  currently  owns three real estate  assets,  which are: (1) The
         Thicket Apartments ("Thicket"), a 254-unit apartment complex located in
         Atlanta,  Georgia,  owned through Thicket Apartments,  L.P., a Delaware
         limited partnership of which the Operating Partnership is a 99% limited
         partner  and  Thicket  Holdings,   Inc.,  a  Delaware  corporation  and
         wholly-owned  subsidiary of the Trust, is the sole general partner; (2)
         Windrush  Apartments  ("Windrush"),   a  202-unit  apartment  community
         located in Atlanta, Georgia owned through Vinings Communities,  L.P., a
         Delaware  limited  partnership of which the Operating  Partnership is a
         99% limited partner and the Trust is the sole general partner;  and (3)
         Peachtree,  an approximately 75,000 square foot,  single-story business
         park located in Atlanta,  Georgia,  owned by the Operating Partnership.
         At December 31, 1998, Thicket, Windrush and Peachtree were 98%, 98% and
         100% leased, respectively.

         On July 1, 1996,  Vinings  effected a 1-for-8  reverse share split (the
         "Share  Split")  of  its  8,645,000  outstanding  Shares.  Shareholders
         tendered  their  Shares and  received  one Share for every eight Shares
         owned.  Vinings has purchased and continues to purchase any  fractional
         Shares  at a  cost  of  $5.50  per  share.  As of  December  31,  1998,
         fractional  Shares totaling 120 had been  repurchased and retired.  All
         share  and  per  share  data  included  in the  accompanying  financial
         statements  and notes  thereto have been  restated to reflect the Share
         Split.
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------

         Basis of Presentation
         ---------------------

         The accompanying  consolidated  financial statements of Vinings include
         the  consolidated  accounts  of the  Trust  and its  subsidiaries.  All
         significant intercompany balances and transactions have been eliminated
         in  consolidation.  The  minority  interest of the  unitholders  in the
         Operating  Partnership on the accompanying  balance sheet is calculated
         based on the  minority  interest  ownership  percentage  (18.06%  as of
         December  31,  1998)  multiplied  by the  Operating  Partnership's  net
         assets.  The minority interest of the unitholders in the income or loss
         of  the  Operating   Partnership  on  the  accompanying   statement  of
         operations is calculated based on the weighted average number of Shares
         and Units (as hereinafter  defined)  outstanding during the period. The
         term  "Vinings"  or "Trust"  hereinafter  refers to Vinings  Investment
         Properties  Trust  and  its   subsidiaries,   including  the  Operating
         Partnership.


         Income Taxes
         ------------

         Vinings  has elected to be taxed as a REIT under the  Internal  Revenue
         Code of 1986,  as  amended  (the  "Code").  As a result,  Vinings  will
         generally not be subject to federal income  taxation on that portion of
         its income that  qualifies  as REIT  taxable  income to the extent that
         Vinings  distributes  at  least  95%  of  its  taxable  income  to  its
         shareholders and satisfies certain other requirements.  Accordingly, no
         provision   for  federal   income  taxes  has  been   included  in  the
         accompanying consolidated financial statements.


         Cash and Cash Equivalents
         -------------------------
         Vinings  considers  all highly  liquid  investments  purchased  with an
         original maturity of three months or less to be cash equivalents.


         Cash Escrows
         ------------

         Cash  escrows  consist of real estate tax,  insurance  and  replacement
         reserve  escrows held by  mortgagees.  These escrows are funded monthly
         from property  operations and released solely for the purpose for which
         they were established.


         Use of Estimates
         ----------------
         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires  management  to make certain
         estimates and  assumptions  that affect the reported  amounts of assets
         and liabilities, the disclosure of contingent assets and liabilities at
         the  date of the  financial  statements  and the  reported  amounts  of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimates.


         Real Estate Assets
         ------------------

         Real estate assets are stated at depreciated  cost less  reductions for
         impairment,  if any. In identifying  potential  impairment,  management
         considers   such  factors  as  declines  in  a   property's   operating
         performance  or market  value,  a change in use, or adverse  changes in
         general market conditions. In determining whether an asset is impaired,
         management  estimates  the future cash flows  expected to be  generated
         from the asset's use and its eventual disposition.  If the sum of these
         estimated  future cash flows on an undiscounted  basis is less than the
         asset's  carrying cost, the asset is written down to its fair value. In
         management's  opinion,  there has been no  impairment  of Vinings' real
         estate assets as of December 31, 1998.

         Ordinary  repairs  and  maintenance  are  expensed as  incurred.  Major
         improvements  and  replacements  are capitalized  and depreciated  over
         their estimated useful lives when they extend the useful life, increase
         capacity or improve  efficiency of the related asset.  Depreciation  is
         computed  on a  straight-line  basis over the useful  lives of the real
         estate  assets  (buildings  and  improvements,  5-40 years;  furniture,
         fixtures and equipment,  3-5 years; and tenant improvements,  generally
         over the life of the related lease).


         Revenue Recognition
         -------------------

         All leases are  classified  as  operating  leases and rental  income is
         recognized   when  earned   which   materially   approximates   revenue
         recognition on a straight-line basis.


         Deferred Financing Costs and Amortization
         -----------------------------------------

         Deferred  financing  costs  include  fees and costs  incurred to obtain
         financing  and are  capitalized  and  amortized  over  the  term of the
         related debt.


         Net Income (Loss) Per Share
         ---------------------------

         The following is a reconciliation of net income (loss) available to the
         common  shareholders  and the weighted  average shares used in Vinings'
         basic and diluted net income (loss) per share computations:

                                      ----------------------------------------
                                          1998          1997          1996
                                      ----------------------------------------
   Net income (loss) - basic            $ 84,993      $(661,717)    $(810,078)
   Minority interest                      18,900         (5,464)            -
                                      -----------------------------------------
   Net income (loss) - diluted          $103,893      $(667,181)    $(810,078)
                                      =========================================


   Weighted average shares - basic     1,090,701      1,080,513     1,080,528
   Dilutive Securities
       Weighted average Units in
           Operating Partnership         242,546          8,922             -
       Share options                       3,144              -             -
                                      -----------------------------------------
   Weighted average shares - diluted   1,336,391      1,089,435     1,080,528
                                      =========================================



         Units in the Operating Partnership held by the minority unitholders are
         redeemable for Shares of the Trust on a one-for-one basis, or for cash,
         at the option of the Trust.  For the twelve  months ended  December 31,
         1998 options to purchase 27,500 shares were excluded and for the twelve
         months ended  December 31, 1997 options to purchase  26,000 shares were
         excluded as the impact of such options was antidilutive.

         Recent Accounting Pronouncement
         -------------------------------

         Vinings adopted Statements of Financial  Accounting  Standards ("SFAS")
         No. 130,  "Reporting  of  Comprehensive  Income,"  during  1998,  which
         establishes  a standard  for  reporting  and  display of  comprehensive
         income  and its  components.  Comprehensive  income is the total of net
         income and all other nonowner  changes in shareholders'  equity.  As of
         December 31, 1998, Vinings had no items of other comprehensive income.

         Vinings also adopted SFAS No. 131,  "Disclosures  About  Segments of an
         Enterprise and Related Information," during 1998, which establishes new
         standards  for  disclosure  of  segment  information  on the so  called
         "management approach." The management approach is based on the way that
         the chief operating  decision maker organizes segments within a company
         for  making  operating  decisions  and  assessing  performance.   Since
         Vinings' real estate  portfolio has similar  economic  characteristics,
         customers,  and products and services,  Vinings evaluates the operating
         performance of its real estate portfolio as one reportable  segment, on
         the same basis of  presentation  for internal  and external  reporting.
         Therefore, no additional segment information is presented herein.


         Reclassification
         ----------------

         Certain   1997  and  1996   financial   statement   amounts  have  been
         reclassified to conform with the current year presentation.

<PAGE>
NOTE 3 - REAL ESTATE ASSETS
---------------------------

         Windrush Apartments 
         -------------------

         On December 19, 1997, Vinings acquired Windrush for a purchase price of
         $7,555,000 consisting of the assumption of an existing mortgage loan in
         the amount of  $6,464,898  and other  liabilities  and the  issuance of
         224,330  limited   partnership  units  in  the  Operating   Partnership
         ("Units").


         The Thicket Apartments
         ----------------------

         On June 28,  1996,  Vinings  acquired  Thicket for a purchase  price of
         $8,650,000.  The  acquisition  was  financed by a mortgage  loan on the
         property in the amount of $7,392,000 and borrowings  from Vinings' line
         of credit.


         Peachtree Business Center
         -------------------------

         Vinings  acquired  Peachtree  through a deed-in-lieu  of foreclosure on
         April 12, 1990.  Peachtree was recorded at $1,700,000,  its fair market
         value,  which  was less  than the book  value of the  Trust's  mortgage
         investment at the date of foreclosure.  Subsequent to the  acquisition,
         approximately $1,121,800 of improvements have been capitalized.


         Acquisition Transaction
         -----------------------

         Vinings  has  entered  into  17  separate   contracts  to  purchase  13
         multifamily communities totaling 2,032 units located in various markets
         in Mississippi (the  "Portfolio").  The aggregate purchase price of the
         Portfolio is  $94,300,000,  consisting  of cash and the  assumption  of
         existing debt (the "Acquisition Transaction"). Five of the communities,
         totaling 976 units, will be purchased through a joint venture structure
         between  the  Operating  Partnership  and a private  investor,  and the
         remaining eight communities, totaling 1,056 units, will be purchased by
         subsidiaries  of  the  Operating  Partnership.   For  more  information
         regarding the Acquisition Transaction,  see Note 10 to Vinings December
         31, 1998 Consolidated Financial Statements.


NOTE 4 - REAL ESTATE INVESTMENTS
--------------------------------

         Hawthorne Note 
         --------------

         The Trust  acquired  the  Hawthorne  Research and  Development  Complex
         ("Hawthorne")  in 1992 through  foreclosure  of its mortgage  note. The
         Trust's  investment  in the property was written down from 1992 through
         1994 to $4,605,702 to reflect its anticipated net realizable  value. On
         March 30,  1995,  the Trust  sold  Hawthorne  for  $5,095,000  of which
         $3,500,000  was  paid  at  closing.  The  balance  of  $1,595,000  (the
         "Hawthorne Note") was payable pursuant to a nonrecourse  purchase money
         note and was subordinate to first mortgage liens totaling  $10,360,000.
         In connection with the sale of Hawthorne,  the Trust reported a gain of
         $152,825.  In  connection  with the  liquidation  of assets,  the Trust
         entered into an agreement  with the first  mortgage lien holder to sell
         the  Hawthorne  Note for  $700,000.  At December  31,  1995,  the Trust
         established  a  valuation  allowance  of  $895,000  to reflect  its net
         realizable  value of $700,000.  On January 3, 1996, the Trust closed on
         the sale of the Hawthorne Note and recorded  commissions and fees for a
         loss on the sale of $26,800.


NOTE 5 - NOTES PAYABLE
---------------------

         Mortgage Notes Payable
         ----------------------

         At December 31, 1998, Vinings had the following mortgage notes payable:

         1) 9.04% mortgage note payable in the original  principal  amount
         of  $7,392,000,  which is secured by Thicket and which matures on July
         1, 2003. Principal and interest are payable in monthly installments of
         $59,691.

         2) 7.5%  mortgage  note payable which was assumed on December 19,
         1997 with a  principal  balance  of  $6,464,898,  which is  secured by
         Windrush and which matures on July 1, 2024. Principal and interest are
         payable in monthly installments of $47,457.

         At December 31, 1998,  the total  outstanding  principal for both notes
         was $13,640,065.  Scheduled maturities of the mortgage notes payable as
         of December 31, 1998 are as follows:

                           1999              $   156,664
                           2000                  169,860
                           2001                  184,179
                           2002                  199,716
                           2003                7,103,494
                           Thereafter          5,826,152
                                             ------------
                           Total             $13,640,065
                                             ============

 
         Line of Credit
         -------------

         On June 28,  1998  Vinings  renewed its line of credit in the amount of
         $2,000,000 for six months,  which expired on December 28, 1998. Vinings
         did not renew  the line of credit at that time and the bank  informally
         extended the due date to February 4, 1999 with  interest  continuing to
         be paid monthly until Vinings secured alternate financing.  On February
         4, 1999 one of the  independent  Trustees  purchased the line of credit
         from the bank and Vinings is now paying interest to the Trustee monthly
         at the annual  rate of 8.50%.  The  Trustee has agreed that he will not
         demand  payment on the line of credit prior to January 1, 2000,  unless
         Vinings  obtains  alternative  finanacing  or unless  the  Trust  sells
         Peachtree,  which secures the note. Vinings has agreed that is will use
         its  best  efforts  to  obtain  a new  line of  credit  or  alternative
         financing as soon as possible,  which if obtained will be used to repay
         the outstanding indebtedness.


NOTE 6 - RELATED PARTY TRANSACTIONS
-----------------------------------

         Vinings  entered into management  agreements  with Vinings  Properties,
         Inc.,  an  affiliate of certain  officers  and Trustees of Vinings,  to
         provide property management services for Thicket and Windrush for a fee
         equal to a percentage of gross revenues plus a fee for data processing.
         A total  of  $188,032,  $93,235  and  $44,459  in  management  fees and
         $27,360,  $15,240 and $7,620 in data  processing  fees were incurred by
         Vinings during 1998, 1997 and 1996,  respectively.  On January 1, 1999,
         Vinings  entered into new management  agreements  with VIP  Management,
         LLC, also an affiliate of certain officers and Trustees of Vinings,  to
         provide  property  management   services  for  Thicket,   Windrush  and
         Peachtree on substantially the same terms as the previous agreements.

         In addition,  as a commitment to the  rebuilding  of Vinings,  prior to
         1998 The  Vinings  Group,  Inc.,  the  parent  corporation  of  Vinings
         Properties, Inc. (collectively, "The Vinings Group"), provided numerous
         services at no cost to Vinings relating to administration, acquisition,
         and capital and asset advisory  services.  Certain direct costs paid on
         Vinings'  behalf were  reimbursed  to The Vinings  Group and  beginning
         January 1, 1998, The Vinings Group charged Vinings for certain overhead
         charges.  However, while Vinings has been in its initial growth stages,
         The Vinings  Group has been  committed to providing as many services as
         possible to promote the Trust's growth. A total of $45,000, $45,000 and
         $15,000 was paid for 1998, 1997 and 1996, respectively,  to The Vinings
         Group for shareholder services provided for the sole benefit of Vinings
         by one of The  Vinings  Group's  employees.  In  addition,  a total  of
         $105,000 has been incurred for the year ended  December 31, 1998 to The
         Vinings  Group  for  the  reimbursement  of  overhead  expenses,  which
         includes salaries and benefits for other employees hired by The Vinings
         Group for the benefit of the Trust.  The officers of the Trust have not
         received  compensation from Vinings for their services during the three
         year period ended December 31, 1998 except for the Restricted Stock, as
         hereinafter defined, which was awarded on July 1, 1998. (See Note 13.)

         On  February  4, 1999 one of the  independent  Trustees  purchased  the
         Trust's line of credit,  which expired on December 28, 1998 and Vinings
         is now paying  interest  to the  Trustee  monthly at the annual rate of
         8.50%. (See Note 5.)

         On  December  19,  1997,  the Trust  acquired  Windrush  from  Windrush
         Partners,  Ltd. (the  "Partnership"),  a Georgia  limited  partnership,
         whose general partner was Hallmark Group Services Corp ("Hallmark"). At
         the time of the transaction,  Hallmark was an affiliate of the officers
         and certain  trustees of the Trust.  In connection with the acquisition
         of Windrush, an advisor's fee of $75,550 was paid by the Partnership to
         MFI  Realty,  Inc.("MFI"),  a wholly  owned  subsidiary  of The Vinings
         Group, Inc.

         In connection  with the  acquisition of Thicket on June 28, 1996, a 
         broker's  commission of $150,000 was paid by the seller of the property
         to MFI.

         In  addition,  the  Trust  paid a  total  of  $21,000  during  1997  to
         Northshore  Communications,  Inc., a company affiliated with one of the
         Trustees, for the design and production of Vinings' 1996 annual report.


NOTE 7 - ADVISORY AGREEMENT
---------------------------

         Prior to the  consummation  of the Tender Offer,  the Trust had engaged
         the  Advisor to provide  investment  advisory  services  and act as the
         administrator  of Trust  operations.  The  agreement  with the Advisor,
         which was terminated upon  consummation  of the Tender Offer,  provided
         for the payment of administrative, asset management and other servicing
         fees to the Advisor for services  rendered in administering the Trust's
         operations.  The  Advisor  earned  administrative,   asset  management,
         special services,  and mortgage servicing fees aggregating $333,461 for
         the year ended December 31, 1996.


NOTE 8 - DISTRIBUTIONS
---------------------

         There were no distributions declared or distributed for the years ended
         December 31, 1998 and 1997.  Distributions declared and distributed for
         the year ended December 31, 1996 aggregated $18,240,950,  or $16.88 per
         share. For federal income tax purposes,  all distributions  received by
         shareholders  for the year ended December 31, 1996 represented a return
         of capital.

         Since the consummation of the Tender Offer, management has not declared
         any dividends.  In an effort to rebuild Vinings' assets,  all operating
         cash flow has been reserved for future growth and  expansion.  However,
         as assets are  acquired  and  operating  cash flow  increases,  Vinings
         intends  to pay  distributions  to  shareholders  in  amounts  at least
         sufficient to enable the Trust to qualify as a REIT.

NOTE 9 - LEASING ACTIVITY
-------------------------

         The following is a schedule of future minimum rents due under operating
         leases that have  initial or  remaining  noncancellable  lease terms in
         excess of one year as of December 31, 1998, at Peachtree:

                              1999              $  541,410
                              2000                 412,217
                              2001                 313,573
                              2002                 120,557
                                               ------------
                              Total             $1,387,757
                                               ============

         One tenant  generated 50% of Peachtree's  revenues for the period 
         ended December 31, 1998. The same tenant accounts for 70% of the 
         future minimum lease payments.


NOTE 10 - Commitments and CONTINGENCIES
---------------------------------------

         Acquisition Transaction
         -----------------------

         On June 18, 1998 Vinings entered into 18 separate contracts to purchase
         14  multifamily  communities  totaling  2,184 units  located in various
         markets in Mississippi.  On February 15, 1999, Vinings  renegotiated 17
         of the contracts to purchase 13  communities  totaling 2,032 units (the
         "Portfolio")  and  terminated one of the  contracts.  The  renegotiated
         purchase price of the Portfolio is $94,300,000,  consisting of cash and
         the assumption of existing debt (the "Acquisition  Transaction").  Five
         of the  communities,  totaling 976 units,  will be purchased  through a
         joint venture structure between the Operating Partnership and a private
         investor and the remaining  eight  communities,  totaling  1,056 units,
         will be purchased by subsidiaries of the Operating Partnership.

         Vinings has completed  its due  diligence  review and the contracts are
         subject only to  satisfactory  title  conditions.  Vinings has received
         conditional  commitments for most of its equity financing and is in the
         process of finalizing its equity  commitments.  If Vinings receives all
         approvals and obtains  sufficient  capital to finance the  transaction,
         the  closing of the  Portfolio  could  take  place  early in the second
         quarter  of  1999,  however,   there  can  be  no  assurance  that  the
         Acquisition Transaction will take place.

         Miscellaneous
         -------------

         Vinings is, from time to time,  subject to various claims that arise in
         the ordinary course of business. These matters are generally covered by
         insurance.  While the  resolution of these matters  cannot be predicted
         with  certainty,  management  believes  that the final  outcome of such
         matters  will not  have a  material  adverse  effect  on the  financial
         position or results of operations of Vinings.


NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
--------------------------------------------

         Vinings paid interest of $1,299,005, $800,388 and $353,032 during 1998,
         1997 and 1996, respectively.

         In connection with the December 19, 1997 Windrush acquisition,  Vinings
         assumed a mortgage note payable in the amount of $6,464,898 and related
         cash escrow accounts. In addition, 242,546 limited partnership units in
         the Operating Partnership were issued during 1997 valued at $1,212,729.


NOTE 12 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
--------------------------------------------------------------

         Based on interest rates and other  pertinent  information  available to
         Vinings as of December 31, 1998 and 1997, the Trust  estimates that the
         carrying  value  of cash  and  cash  equivalents,  the  mortgage  notes
         payable,  the line of credit,  and other liabilities  approximate their
         fair values when compared to  instruments  of similar  type,  terms and
         maturity.

         Disclosure  about  fair  value  of  financial  instruments  is based on
         pertinent  information  available to management as of December 31, 1998
         and 1997.  Although  management  is not aware of any factors that would
         significantly  affect its estimated  fair value  amounts,  such amounts
         have not been comprehensively  revalued for purposes of these financial
         statements since December 31, 1998.


NOTE 13 - 1997 STOCK OPTION AND INCENTIVE PLAN
----------------------------------------------

         Vinings'  1997 Stock Option and  Incentive  Plan (the "Plan")  provides
         incentives  to  officers,  employees,  Trustees,  and other key persons
         including  the  grant  of share  options,  share  appreciation  rights,
         restricted and unrestricted share awards, performance share awards, and
         dividend equivalent rights.

         Under the Plan,  the maximum  number of shares that may be reserved and
         available for issuance is 10% of the total number of outstanding shares
         at any time  plus 10% of the  number of Units  outstanding  at any time
         that are subject to redemption  rights.  At December 31, 1998 the total
         number of shares  available  for  issuance  under the Plan was 134,305.
         Options granted under the Plan expire ten years from the date of grant.

         During 1998 and 1997,  Vinings granted  non-qualified  share options to
         the  officers,  Trustees and certain key  persons.  The options vest in
         full after one year from the date of the grant.  Of the options granted
         in 1998,  81,250 have an exercise  price of $4.00 per share as compared
         to a fair  value of $3.63 on the date of the grant  and  1,500  have an
         exercise price of $4.75 per share,  which is equal to the fair value on
         the date of grant.  The options  granted in 1997 have an exercise price
         of $5.00 per share as  compared  to a fair  value of $4.56 per share on
         the date of the grant.

         On July 1, 1998 Vinings  awarded  20,000 shares of restricted  stock to
         the   officers  and  certain   trustees   (the   "Restricted   Stock"),
         representing  a total value of $80,000  (based on the fair market value
         of a share of the Trust on the award date) which has been  reflected in
         compensation  expense in the second quarter and in shareholders' equity
         as  of  December  31,  1998.  The  Restricted   Stock  was  awarded  as
         compensation  for services to the Trust  provided by such  officers and
         trustees as well as by The Vinings Group.

         The  Trust  accounts  for  share  options  issued  under  the  Plan  in
         accordance  with APB Opinion No. 25,  "Accounting  for Stock  Issued to
         Employees,"  under which no compensation cost has been recognized since
         all options have been granted with an exercise  price equal to or above
         the fair value of the Trust's shares on the date of grant.

         In  accordance   with  SFAS  No.  123   "Accounting   for   Stock-Based
         Compensation,"  the Trust has  estimated  the fair value of the Options
         using a  binomial  option  pricing  model with the  following  weighted
         average assumptions:

                                                  ----------      ----------
                                                    1998             1997
                                                  ----------      ----------
           Risk free rate                           5.50%            6.12%
           Expected life                          5 years           5 years
           Expected volatility                       30%               30%
           Expected dividend yield                  3.6%              3.6%



         Using  these  assumptions,  the  estimated  fair  value of the  options
         granted were $87,112 and $38,000 for 1998 and 1997, respectively, which
         would be included in compensation  expense over the life of the vesting
         period. Accordingly, had Vinings accounted for the Plan under SFAS 123,
         Vinings'  pro forma net income  (loss) and net income  (loss) per share
         for the year  ended  December  31,  1998 and 1997  would  have  been as
         follows:

                                      ------------------- ---------------
                                              1998              1997
                                       ------------------- ---------------
             Net income:
               As reported                   $84,993         ($661,717)
                                       =================== ===============
               Pro forma                     $29,799         ($680,717)
                                       =================== ===============

             Net income per share:
               As reported                    $0.08             ($0.61)
                                       =================== ===============
               Pro forma                      $0.03             ($0.63)
                                       =================== ===============

         The pro forma annual  compensation  cost  included in  determining  pro
         forma net income may not be  representative  of future pro forma annual
         compensation  cost since the  estimated  fair value of stock options is
         included  in  compensation   expense  over  the  vesting  period,   and
         additional stock options may be granted in future years.

         A summary of stock option  activity  under the Plan is presented in the
         following table:

<TABLE>

<CAPTION>                                 --------------------------------------    -----------------------------------
                                                        1998                                     1997
                                          ------------ -------------------------    ---------- ------------------------
                                                           Weighted Average                       Weighted Average
                                            Shares          Exercise Price           Shares        Exercise Price
<S>                                         <C>            <C>                       <C>                <C>   
Options outstanding,                                    
     beginning of year                      26,000         $     5.00                  -                 -
Granted                                     82,750         $     4.01                26,000             $5.00
                                          ------------ -------------------------    ---------- ------------------------
Options outstanding,
     end of year                           108,750         $     4.25                26,000             $5.00
                                          ============ =========================    ========== ========================
Options exercisable,
     end of year                            26,000         $     5.00                   -                 -
                                                                                   
                                          ============ =========================    ========== ========================
Weighted average per share
     value of options granted                              $     1.05                                   $1.46
                                                       =========================               ========================
Options outstanding:
     Exercise price range                                    $4.00-$5.00                                $5.00
                                                       =========================               ========================
      Weighted average
         remaining life                                          9.11                                    9.5
                                                       =========================               ========================
</TABLE>



NOTE 14 - UNUSUAL ITEM
----------------------

         In August  1997,  Vinings,  through the  Operating  Partnership,  began
         contract  negotiations for the acquisition of a 2,365-unit portfolio of
         16  multifamily  properties.  The  sellers,  which  were 16  individual
         partnerships (the "Sellers"),  were to contribute the properties to the
         Operating  Partnership  in exchange for a  combination  of Units and/or
         cash  and  the  assumption  of  existing  mortgage   indebtedness  (the
         "Portfolio  Transaction").  The officers of Vinings  spent  substantial
         amounts of time and the Trust spent substantial amounts of money in its
         due  diligence  on  the   properties   and  in  contract   negotiations
         specifically  for this  portfolio.  Vinings  believes that it secured a
         binding  commitment  from the  Sellers for the  Portfolio  Transaction.
         Conditional  commitments for equity financing were obtained and Vinings
         was prepared to close on the  transaction in early 1998.  Within thirty
         days of closing,  the general  partner of the  Sellers  terminated  the
         contract for reasons  Vinings  believes to be pretextual,  in breach of
         the  contract  and not in the best  interests  of the  partners  of the
         selling partnerships or the shareholders of the Trust.

         On February 3, 1998,  Vinings  commenced an action against the Sellers,
         their  general  partners  and a  related  property  management  company
         seeking  specific  enforcement  of the  contract  and  damages  for the
         defendant's willful breach of contract,  lack of good faith negotiation
         and tortious interference in connection with the breach and termination
         of the  contract.  In a related  case,  the Sellers  filed an action on
         January 29, 1998 seeking a declaratory  judgement that the contract was
         not  valid,  binding  and  enforceable  against  them.  Because  of the
         uncertainty of the legal action at December 31, 1997,  Vinings expensed
         as  unrecoverable  due  diligence,   contract   negotiation  and  other
         acquisition  costs  totaling  $532,185  which has been shown as Unusual
         item, net on the Statement of Operations for 1997.

         On June 3,  1998,  a  settlement  was  agreed to  between  the  parties
         pursuant to a Settlement  Agreement  and Mutual  Release,  the terms of
         which are confidential. All pending claims have been dismissed. Amounts
         received  under the  Settlement  Agreement and Mutual  Release,  net of
         legal  fees  incurred  in  connection  with  the  litigation,   totaled
         $260,910, which has been shown as Unusual item, net on the Statement of
         Operations for 1998.


<TABLE>
                       VININGS INVESTMENT PROPERTIES TRUST
       
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                               December 31, 1998
             =======================================================       

<CAPTION>
                                               ---------------------------
                                                  Initial Cost to Trust
                                               ---------------------------
                                                                                Improvements
                                                                                Capitalized
                                                              Building and      Subsequent to
        Description              Encumbrance       Land       Improvements      Acquisition        Land
--------------------------------------------------------------------------  --------------  -------------
<S>                            <C>             <C>            <C>              <C>            <C>    
Peachtree Business Center      $  2,000,000    $  400,000     $ 1,300,000      $1,121,835     $  400,000
The Thicket Apartments            7,262,759     1,070,500       7,590,400         205,098      1,070,500
Windrush Apartments               6,377,306     1,414,000       6,141,000          66,579      1,414,000
                             ---------------------------------------------  --------------  -------------
                               $15,640,065     $2,884,500     $15,031,400      $1,393,512     $2,884,500
                             =============================================  ==============  =============



                                   ----------------------------------------------
                                       Gross amounts at which
                                     carried at close of period
                                   ----------------------------------------------
                                                                                        Life on
                                                                                         which                        Date of
                                     Building and                    Accumulated      Depreciation       Date        Original
           Description               Improvements          Total     Depreciation     is Computed      Acquired    Construction
----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                <C>            <C>                <C>             <C>          <C> 
Peachtree Business Center           $ 2,421,835        $ 2,821,835    $  602,195         5-40 Years      4/90         1984
The Thicket Apartments                7,795,498          8,865,998       868,942         5-40 Years      6/96         1989
Windrush Apartments                   6,207,579          7,621,579       193,541         5-40 Years      12/97        1983
                                   ----------------------------------------------
                                    $16,424,912        $19,309,412    $1,664,678
                                   ==============================================
<FN>
The accompanying notes are an integral part of this schedule.
</FN>
</TABLE>
<PAGE>

                       VININGS INVESTMENT PROPERTIES TRUST

                              NOTES TO SCHEDULE III
                                December 31, 1998
                       ===================================


(A)      The  Peachtree  investment  was  acquired  through  a deed  in-lieu  of
         foreclosure of an original mortgage note investment.  In June 1996, the
         Trust  obtained  a  $2,000,000  line of  credit,  which was  secured  
         by Peachtree.  At December 31, 1998,  $2,000,000  was  outstanding  on
         the line.

(B)      The  Thicket  Apartments  was  acquired on June 28, 1996 for a purchase
         price of $8,650,000. It was financed by a mortgage loan in the original
         amount of $7,392,000  and  borrowings  from the Trust's line of credit,
         which is secured by Peachtree.

(C)      Windrush  Apartments  was acquired on December 19, 1997, for a purchase
         price  of  $7,555,000  consisting  of  the  assumption  of an  existing
         mortgage loan in the amount of $6,464,898 and other liabilities and the
         issuance  of  224,330  limited   partnership  units  in  the  Operating
         Partnership.

(D)     Gross capitalized costs of real estate assets are summarized as follows:


                                   ---------------------------------------------
                                         1998         1997             1996
                                   ---------------------------------------------

 Balance at beginning of period    $19,162,992     $11,472,454      $ 2,732,057
                                   -------------- --------------   -------------

    Additions during period:
        Additions                         -          7,555,000        8,660,900
        Improvements                   146,420         135,538           79,497
                                   -------------- --------------   -------------
                                                                  
             Total additions           146,420       7,690,538        8,740,397
                                   -------------- --------------   -------------

 Balance at close of period        $19,309,412     $19,162,992      $11,472,454
                                   ============== ==============   =============

(E) Accumulated depreciation on real estate assets is as follows:


                                   -------------   ------------  -------------
                                       1998            1997           1996
                                   -------------   ------------  -------------

Balance at beginning of period     $1,036,311     $  613,918       $374,524
                                   -------------  --------------  -------------
 Additions during period:
    Peachtree Business Center          76,979         74,263         76,429
    The Thicket Apartments            357,847        348,130        162,965
    Windrush Apartments               193,541              -             -
                                 -------------    ------------    -------------
           Total additions            628,367        422,393        239,394
                                 -------------    ------------    -------------

Balance at close of period         $1,664,678     $1,036,311       $613,918
                                 =============    ============    =============
<PAGE>
  
                                INDEX TO EXHIBITS
                                =================
<TABLE>

<CAPTION>

Exhibit No.                                   Description
-----------                                   -----------

    <S>         <C>                                                                                      
    3.1         Second Amended and Restated Declaration of Trust of Vinings (filed herewith).

    3.2         Amendment  No. 1 to the Second  Amended and  Restated  Declaration  of Trust of the Trust
                (filed herewith).

    3.3         Amendment  No. 2 to the Second  Amended and  Restated  Declaration  of Trust of the Trust
                (filed herewith).

    3.4         Amended and  Restated  Bylaws of the Trust  (incorporated  by reference to Exhibit 3.2 to
                Vinings' Registration Statement on Form S-11, No. 2-94776).

   10.1         Amended and Restated Agreement of Limited  Partnership of Vinings Investment  Properties,
                L.P.  (incorporated  by reference to Exhibit 10.1 to Vinings'  Annual Report on Form 10-K
                for the fiscal year ended December 31, 1997, No. 0-13693).

   10.2         First Amendment to the Amended and Restated  Agreement of Limited  Partnership of Vinings
                Investment  Properties,  L.P.  (incorporated by reference to Exhibit 10.2 to the Vinings'
                Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).

   10.3         Second Amendment to the Amended and Restated Agreement of Limited  Partnership of Vinings
                Investment  Properties,  L.P.  (incorporated by reference to Exhibit 10.3 to the Vinings'
                Annual Report on Form 10-K for the fiscal year ended December 31, 1997, No. 0-13693).

   10.4         Third Amendment to the Amended and Restated  Agreement of Limited  Partnership of Vinings
                Investment Properties, L.P. (filed herewith).

   10.5         Fourth Amendment to the Amended and Restated Agreement of Limited  Partnership of Vinings
                Investment Properties, L.P. (filed herewith).

   10.6         Fifth Amendment to the Amended and Restated  Agreement of Limited  Partnership of Vinings
                Investment Properties, L.P. (filed herewith)

   10.7         Agreement to Contribute,  dated April 1, 1997,  between  Vinings  Investment  Properties,
                L.P.  and  Windrush  Partners,  Ltd.  (incorporated  by  reference to Exhibit 10.1 to the
                Trust's Current Report on Form 8-K filed December 29, 1997, No. 0-13693).

   10.8         Amendment to Agreement to Contribute,  dated August 11, 1997,  between Vinings Investment
                Properties,  L.P. and Windrush Partners,  Ltd. (incorporated by reference to Exhibit 10.2
                to the Trust's Report on Form 8-K filed December 29, 1997, No. 0-13693).

   10.9         Second  Amendment to Agreement to  Contribute,  dated October 30, 1997,  between  Vinings
                Investment  Properties,  L.P. and Windrush Partners,  Ltd.  (incorporated by reference to
                Exhibit 10.3 to the Trust's Report on Form 8-K filed December 29, 1997, No. 0-13693).

   10.10        Management  Contract  dated  December  19, 1997  between  Vinings  Communities,  L.P. and
                Vinings Properties,  Inc.  (incorporated by reference to Exhibit 10.10 to Vinings' Annual
                Report on Form 10-K for the fiscal year ended December 31 1997, No. 0-13693).

   10.11        Management  Contract  dated January 1, 1999,  between  Thicket  Apartments,  L.P. and VIP
                Management, LLC (filed herewith).

   10.12        Management  Contract dated January 1, 1999,  between  Vinings  Communities,  L.P. and VIP
                Management, LLC (filed herewith).

   10.13        Management  Contract dated January 1, 1999, between Vinings Investment  Properties,  L.P.
                and VIP Management, LLC (filed herewith).

   10.14        Form of  Amended  and  Restated  Agreement  of  Purchase  and  Sale  for The  Acquisition
                Transition  with attached  Schedule of Material  Differences  For All  Properties  (filed
                herewith).

   10.15        Commercial  Credit Agreement  between Hardwick Bank and Trust Company and the Trustees of
                the Trust dated June 28, 1997  (incorporated  by reference  to Exhibit  10.13 to Vinings'
                Annual Report on Form 10-K for the fiscal year ended December 31 1997, No. 0-13693).

   10.16        Amendment to Commercial  Credit Agreement between Hardwick Bank and Trust Company and the
                Trustees of the Trust dated July 1, 1998 (filed herewith).

   21.1         Subsidiaries of the Trust (filed herewith).

   27           Financial Data Schedule (filed herewith).

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