<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

For the quarterly period ended September 30, 1997

                                       OR

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

For the transition period from _____________ to ____________

Commission file number 0-27562

                             ATLANTIC REALTY TRUST
            (Exact name of registrant as specified in its charter.)

            MARYLAND                                          13-3849655
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

747 Third Avenue, New York, N.Y.                                 10017
(Address of principal executive offices)                       (Zip Code)

                                  212-702-8561
              (Registrant's telephone number, including area code)

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_____

Number of shares of beneficial interest ($.01 par value) of the Registrant
outstanding as of October 31, 1997: 3,561,553.


<PAGE>   2


ATLANTIC REALTY TRUST             FORM 10-Q                  SEPTEMBER 30, 1997
AND SUBSIDIARY


                                    I N D E X

This Quarterly Report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. They involve known and unknown risks
and uncertainties that may cause the Trust's actual results in future periods to
be materially different from any future performance suggested herein. In the
context of forward-looking information provided in this Form 10-Q and in other
reports, please refer to the discussion of risk factors detailed in, as well as
the other information contained in, the Trust's filings with the Securities and
Exchange Commission.

<TABLE>
<CAPTION>
Part I.  FINANCIAL INFORMATION                                                                 PAGE NO.
                                                                                               --------


Item 1. Financial Statements

      Consolidated Statements of Net Assets in Liquidation
<S>                                                                                            <C>
      September 30, 1997 and December 31,1996 ................................................    3

      Consolidated Statements of Changes in Net Assets in Liquidation Periods
      July 1, 1997 through September 30, 1997, and January 1, 1997 through
      September 30,1997 ......................................................................    4

      Notes to Financial Statements ..........................................................    5

Item 2. Management's Discussion and Analysis of Financial Condition and Liquidation Activities    8

Part II.  OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K .....................................................    9
</TABLE>


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<PAGE>   3


ATLANTIC REALTY TRUST               FORM 10-Q                 SEPTEMBER 30, 1997
AND SUBSIDIARY


                      ATLANTIC REALTY TRUST AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
                        (LIQUIDATION BASIS OF ACCOUNTING)

<TABLE>
<CAPTION>
                                            September 30, 1997     December 31, 1996
                                            ------------------     -----------------
<S>                                         <C>                    <C>        
                  ASSETS
Investments in Real Estate ........            $39,700,000            $36,995,500
Mortgage Loans and Related Interest                     --              7,132,434
Cash and Short Term Investments ...             15,512,565              7,047,098
                                               -----------            -----------
      Total Assets ................            $55,212,565            $51,175,032
                                               ===========            ===========


                  LIABILITIES

Estimated Costs of Liquidation ....              1,525,625              2,170,262
Distribution Payable ..............                     --              1,389,006
                                               -----------            -----------
      Total Liabilities ...........            $ 1,525,625            $ 3,559,268
                                               -----------            -----------
Net Assets in Liquidation .........            $53,686,940            $47,615,764
                                               ===========            ===========
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       -3-
<PAGE>   4


ATLANTIC REALTY TRUST               FORM 10-Q                 SEPTEMBER 30, 1997
AND SUBSIDIARY


                      ATLANTIC REALTY TRUST AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                        (LIQUIDATION BASIS OF ACCOUNTING)

<TABLE>
<CAPTION>
                                                 For the Period         For the Period
                                                7/1/97 to 9/30/97      1/1/97 to 9/30/97
                                                -----------------      -----------------
<S>                                             <C>                    <C>        
Net Assets in Liquidation
  Beginning of Period .................            $50,643,234            $47,615,764
Adjustments to Reflect
  Liquidation Basis of Accounting .....              3,043,706              6,071,176
                                                   -----------            -----------
Net Assets in Liquidation End of Period            $53,686,940            $53,686,940
                                                   ===========            ===========
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       -4-
<PAGE>   5


ATLANTIC REALTY TRUST               FORM 10-Q                 SEPTEMBER 30, 1997
AND SUBSIDIARY


                      ATLANTIC REALTY TRUST AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      Atlantic Realty Trust (the "Trust"), a Maryland real estate investment
trust, was formed on July 27, 1995 for the purpose of liquidating its interests
in real properties, the mortgage loan portfolio and certain other assets and
liabilities which were transferred to the Trust from RPS Realty Trust ("RPS") on
May 10, 1996 (the "Spin-Off Transaction"). The Trust had no operations from the
date of formation to the date of the Spin-Off Transaction. The Trust adopted the
liquidation basis of accounting as of the date of the Spin-Off Transaction based
on its intention to liquidate its assets or merge or combine operations with
another real estate entity within eighteen months from the date of the Spin-Off
Transaction.

Liquidation Basis of Accounting

      As a result of the Spin-Off Transaction, the Trust has adopted the
liquidation basis of accounting. The liquidation basis of accounting is
appropriate when liquidation appears imminent and the Trust is no longer viewed
as a going concern. Under this method of accounting, assets are stated at their
estimated net realizable values and liabilities are stated at the anticipated
settlement amounts.

      The valuations presented in the accompanying Statements of Net Assets in
Liquidation represent the estimates at the dates shown, based on current facts
and circumstances, of the estimated net realizable value of assets and estimated
costs of liquidating the Trust. In determining the net realizable values of the
assets, the Trust considered each asset's ability to generate future cash flows,
offers to purchase received from third parties, if any, and other general market
information. Such information was considered in conjunction with the Trust's
plan for disposition of assets. The estimated costs of liquidation represent the
estimated costs of operating the Trust through its anticipated termination.
These costs primarily include payroll, consulting and related costs, rent,
shareholder relations, legal and auditing. Computations of net realizable value
necessitate the use of certain assumptions and estimates. Future events,
including economic conditions that relate to real estate markets in general, may
differ from those assumed or estimated at the time such computations are made.
Because of inherent uncertainty of valuation when an entity is in liquidation,
the amounts ultimately realized from assets disposed and costs incurred to
settle liabilities may materially differ from amounts presented.

      Pursuant to the terms of the Trust's Amended and Restated Declaration of
Trust, the Trust was to continue for a period of 18 months from the date of the
Spin-Off Transaction (November 10, 1997), subject to, among certain other
things, satisfactory resolution of the RPS Tax Issues. Because the RPS Tax
Issues have not yet been satisfactorily resolved, the Trust will continue its
business past that date. The Trust cannot currently estimate the timing of the
future satisfactory resolution of the RPS Tax Issues. Accordingly, the Trust
will continue until there is a final determination of these issues.
Consolidation

      The consolidated financial statements include the accounts of the Trust
and its subsidiary. All significant intercompany accounts and transactions have
been eliminated in consolidation.


                                       -5-
<PAGE>   6


ATLANTIC REALTY TRUST                FORM 10-Q                SEPTEMBER 30, 1997
AND SUBSIDIARY


                      ATLANTIC REALTY TRUST AND SUBSIDIARY
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2.    MORTGAGE LOANS AND RELATED INTEREST

(a)   On June 9, 1997 the Trust received proceeds of approximately $2,422,000
      from the repayment of the Rector mortgage loan. Previously in 1997, the
      Trust received $225,000 as a good faith deposit.

(b)   On June 18, 1997 the Trust received approximately $2,862,000 from the sale
      of the Copps Hill Plaza mortgage loan.

(c)   On August 29, 1997 the Trust received proceeds of approximately $1,889,500
      from the repayment of the Mt. Morris Commons mortgage loan. Previously in
      1997 the Trust received $125,000 as a good faith deposit.

3.    INVESTMENTS IN REAL ESTATE 

<TABLE>
<CAPTION>
                                                               ESTIMATED NET 
                                                              REALIZABLE VALUE 
PROPERTY                           LOCATION                      9/30/97(a) 
--------                           --------                      ---------- 
<S>                                <C>                          <C>        
Hylan Shopping Center .            Staten Island, NY            $35,850,000
Norgate Shopping Center            Indianapolis, IN               3,850,000
                                                                -----------
                                                                $39,700,000
                                                                ===========
</TABLE>

-------------
(a)   Includes estimated cash flows using a disposition period of 4 months.
      Realized values may differ depending on actual disposition results and
      time period.

(b)   On July 1, 1997 the Trust received proceeds of approximately $1,045,000
      from the sale of the 9 North Wabash Avenue Building.

4.    SHARES OUTSTANDING

      The weighted average number of common shares outstanding for the period
ending September 30, 1997 was 3,561,553.


                                       -6-
<PAGE>   7


ATLANTIC REALTY TRUST                FORM 10-Q                SEPTEMBER 30, 1997
AND SUBSIDIARY

                      ATLANTIC REALTY TRUST AND SUBSIDIARY
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5.    TAX CONTINGENCY

      During the third quarter of 1994, RPS held more than 25% of the value of
its gross assets in overnight Treasury Bill reverse repurchase transactions
which the Internal Revenue Service ("IRS") may view as non-qualifying assets for
the purposes of satisfying an asset qualification test applicable to REITs,
based on a Revenue Ruling published in 1977 (the "Asset Issue"). RPS has
requested that the IRS enter into a closing agreement with RPS that the Asset
Issue will not impact RPS' status as a REIT. The IRS has deferred any action
relating to the Asset Issue pending the further examination of RPS' 1991-1994
tax returns (the "RPS Audit," and together with the Asset Issue, the "RPS Tax
Issues"). Based on developments in the law which occurred since 1977, RPS' tax
counsel rendered an opinion that RPS' investment in Treasury Bill repurchase
obligations would not adversely affect its REIT status. However, such opinion is
not binding upon the IRS.

      In connection with the Spin-Off Transaction, the Trust assumed all tax
liability arising out of the RPS Tax Issues (other than liability that relates
to events occurring or actions taken by RPS following the date of the
Transaction) pursuant to a tax agreement, dated May 10, 1996, by and between RPS
and the Trust, which provides that RPS (now named Ramco-Gershenson Properties
Trust) under the direction of its Continuing Trustees, and not the Trust, will
control, conduct and effect the settlement of any tax claims against RPS
relating to the RPS Tax Issues. Accordingly, the Trust does not have any control
as to the timing of the resolution or disposition of any such claims and no
assurance can be given that the resolution or disposition of any such claims
will be on terms or conditions as favorable to the Trust as if they were
resolved or disposed of by the Trust or that any such claims will be resolved
within 18 months from the date of the Spin-Off Transaction. RPS and the Trust
also have received an opinion from legal counsel that, to the extent there is a
deficiency in RPS' taxable income arising out of the IRS examination and
provided RPS timely makes a deficiency dividend (i.e. declares and pays a
distribution which is permitted to relate back to the year for which each
deficiency was determined to satisfy the requirement that a REIT distribute 95
percent of its taxable income), the classification of RPS as a REIT for the
taxable years under examination would not be affected. If, notwithstanding the
above-described opinions of legal counsel, the IRS successfully challenged the
status of RPS as a REIT, the REIT status of the Trust could be adversely
affected. Management estimates that this would have an effect of approximately
$0 for 1996, $600,000 for 1995 and $400,000 for prior years which have not been
provided in the financial statements of RPS or the Trust. Such amounts do not
include potential penalties and interest. The possible effect on the Trust for
subsequent periods could be significant depending on the taxable income of
either RPS or the Trust in such periods. As of September 30, 1997, the Trust has
not been required to perform its indemnity with respect to the RPS Tax Issues
and Management is not aware of any determination of tax liability by the IRS
against RPS.


                                       -7-
<PAGE>   8


ATLANTIC REALTY TRUST                FORM 10-Q                SEPTEMBER 30, 1997
AND SUBSIDIARY


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        LIQUIDATION ACTIVITIES

CAPITAL RESOURCES AND LIQUIDITY

      At December 31, 1996, the Trust owned three mortgage loans and three
retail properties (Hylan Plaza Shopping Center, located in Staten Island, New
York, Norgate Shopping Center located in Indianapolis, Indiana and 9 North
Wabash Avenue Building, located in Chicago, Illinois), as well as cash and
certain other assets, which include furniture, fixtures and equipment. The Trust
does not intend to make new loans or actively engage in either the mortgage
lending or the property acquisition business, other than in connection with
potential workouts of certain of its mortgage loans.

      The Trust's primary objective has been to liquidate its assets in an
18-month period from the date of the Spin-Off Transaction while realizing the
maximum values for such assets. Although the Trust considers its assumptions and
estimates as to the values and timing of such liquidations to be reasonable, the
period of time to liquidate the assets and distribute the proceeds of such
assets is subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Trust's control.
There can be no assurance that the net values ultimately realized for such
assets and costs actually incurred to liquidate such assets will not materially
differ from the Trust's estimate.

      The Trust believes that cash and cash equivalents on hand, proceeds
generated from the mortgage loans and real estate properties that continue to
operate and from the eventual sale of such assets will be sufficient to support
the Trust and meet its obligations. At September 30, 1997 the Trust had
approximately $15,512,000 in cash and short term investments, which amount
reflects a distribution of $1,389,006 to shareholders in January 1997.

      During the third quarter of 1997 the Trust received proceeds, in the
aggregate of approximately $2,934,500 in connection with the disposition of the
9 North Wabash Building ($1,045,000) and the Mt. Morris Commons mortgage loan
($1,889,500).

      During the second quarter of 1997 the Trust received proceeds of
approximately $5,284,000 in connection with the disposition of the Rector
mortgage loan ($2,422,000) and the Copps Hill Plaza mortgage loan ($2,862,000).
At September 30, 1997 the Trust owned two retail properties (Hylan Plaza
Shopping Center and Norgate Shopping Center). The Trust intends to reduce to
cash equivalents the real property portfolio in an orderly manner as soon as
practicable and make a liquidating distribution or distributions to its
shareholders, or merge or combine operations with another real estate entity.


                                       -8-
<PAGE>   9


ATLANTIC REALTY TRUST                FORM 10-Q                SEPTEMBER 30, 1997
AND SUBSIDIARY


                           PART II - OTHER INFORMATION


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      There were no submission of matters to a vote of security holders during
the three month period ended September 30, 1997.

ITEM 5 - OTHER INFORMATION

      Pursuant to the terms of the Trust's Amended and Restated Declaration of
Trust, the Trust was to continue for a period of 18 months from the date of the
Spin-Off Transaction (November 10, 1997), subject to, among certain other
things, satisfactory resolution of the RPS Tax Issues. Because the RPS Tax
Issues have not yet been satisfactorily resolved, the Trust will continue its
business past that date. The Trust cannot currently estimate the timing of the
future satisfactory resolution of the RPS Tax Issues. Accordingly, the Trust
will continue until there is a final determination of these issues.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

A.    EXHIBITS
      
       3.1 Amended and Restated Declaration of Trust (filed as Exhibit 3.1 to
           Registration Statement on Form 10A/1, filed with the Commission
           on March 10, 1996, and incorporated herein by reference).

      27.1 Financial Data Schedule

B.    The registrant has not filed any reports on Form 8-K for the three month
      period ended September 30, 1997.


                                       -9-
<PAGE>   10


ATLANTIC REALTY TRUST                FORM 10-Q                SEPTEMBER 30, 1997
AND SUBSIDIARY


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                          ATLANTIC REALTY TRUST



Date: November 7, 1997                    /s/ Joel M. Pashcow
                                          -------------------
                                          Joel M. Pashcow
                                          Chairman and President
                                          (Principal Executive Officer)



Date: November 7, 1997                    /s/ Edwin R. Frankel
                                          --------------------
                                          Edwin R. Frankel
                                          Executive Vice President,
                                          Chief Financial Officer
                                          and Secretary
                                          (Principal Financial and
                                          Accounting Officer)


<PAGE>   11
                                     INDEX



Exhibit Number                    Description                     
--------------                    -----------

    3.1             Amended and Restated Declaration of Trust
                    (filed as Exhibit 3.1 to Registration 
                    Statement on Form 10A/1, filed with the 
                    Commission on March 10, 1996, and 
                    incorporated herein by reference).


   27.1             Financial Data Schedule.