UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
/X/                    ANNUAL REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998
                         .......................................................

                                       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                    (IRS Employer
        Incorporation or organization                  Identification No.)


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

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

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

<TABLE>

<S>                                               <C>
        Title of each class                       Name of each exchange on which registered

Common Shares of Beneficial Interest,                       NASDAQ Small Cap Market
 .....................................            ............................................
    $0.01 Par Value Per Share
 .....................................
</TABLE>


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

                                      None
           ...........................................................
                                (Title of class)


   
<PAGE>




           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 the  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. /X/

            Aggregate market value of the Shares of Beneficial  Interest held by
non-affiliates of the registrant as of March 16, 1999: approximately $21,441563.

            Approximately   3,561,553  Shares  of  Beneficial  Interest  of  the
Registrant were outstanding as of March 16, 1999.


   
<PAGE>




                                TABLE OF CONTENTS


<TABLE>

<S>                                                                                                                           <C>

PART I........................................................................................................................1
   1. - Business..............................................................................................................1
   2. - Properties............................................................................................................5
   3. - Legal Proceedings.....................................................................................................5
   4. - Submission of Matters to a Vote of Security Holders...................................................................5

PART II.......................................................................................................................6
   5. - Market for Registrant's Common Equity and Related Stockholder Matters.................................................6
   6. - Selected Financial Data...............................................................................................7
   7. - Management's Discussion and Analysis of Financial Condition and Liquidation Activities................................7
   7A - Quantitative and Qualitative Disclosures About Market Risk............................................................10
   8. - Financial Statements and Supplementary Data...........................................................................10
   9. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................................10

PART III......................................................................................................................11
   10. - Directors and Executive Officers of the Registrant...................................................................11
   11. - Executive Compensation...............................................................................................13
   12. - Security Ownership of Certain Beneficial Owners and Management.......................................................15
   13. - Certain Relationships and Related Transactions.......................................................................16

PART IV.......................................................................................................................17
   14. - Exhibits, Financial Statement Schedules, and Reports on Form 8-K.....................................................17
</TABLE>


   

<PAGE>



                      CAUTIONARY STATEMENT FOR PURPOSES OF
                         THE "SAFE HARBOR" PROVISIONS OF
              THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

WHEN  USED  IN  THIS  ANNUAL  REPORT  ON  FORM  10-K,   THE  WORDS   "BELIEVES,"
"ANTICIPATES,"  "EXPECTS"  AND  SIMILAR  EXPRESSIONS  ARE  INTENDED  TO IDENTIFY
FORWARD-LOOKING  STATEMENTS.  STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K  PURSUANT TO THE "SAFE HARBOR"  PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN  RISKS AND  UNCERTAINTIES  WHICH  COULD CAUSE  ACTUAL  RESULTS TO DIFFER
MATERIALLY, INCLUDING, WITHOUT LIMITATION, THOSE STATEMENTS RELATING TO THE "RPS
TAX ISSUES"  DISCUSSED IN ITEM 1 OF THIS ANNUAL REPORT ON FORM 10-K,  STATEMENTS
SET FORTH IN THE SECTION  CAPTIONED  "RISK FACTORS" IN THE TRUST'S  REGISTRATION
STATEMENT ON FORM 10 FILED WITH THE SECURITIES AND EXCHANGE  COMMISSION ON MARCH
28, 1996 (FILE NO. 0-27562) AND STATEMENTS IN THE  "MANAGEMENT'S  DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" OF THIS ANNUAL REPORT
ON FORM  10-K.  READERS  ARE  CAUTIONED  NOT TO PLACE  UNDUE  RELIANCE  ON THESE
FORWARD-LOOKING  STATEMENTS,  WHICH SPEAK ONLY AS OF THE DATE HEREOF.  THE TRUST
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING  STATEMENTS TO
REFLECT EVENTS OR  CIRCUMSTANCES  OCCURRING  AFTER THE DATE HEREOF OR TO REFLECT
THE OCCURRENCE OF UNANTICIPATED EVENTS.


   

<PAGE>


                                     PART I

Item 1.  Business.

           Atlantic Realty Trust (together with its subsidiary,  the "Trust"), a
Maryland real estate investment  trust, was organized  pursuant to a Declaration
of Trust dated July 27,  1995 (as  amended,  the  "Declaration  of Trust").  The
principal office of the Trust is located at 747 Third Avenue, New York, New York
10017.

           The  Trust  commenced  operations  on May 10,  1996 as a result  of a
spinoff (the "Spin-Off Transaction") from RPS Realty Trust ("RPS"). The Spin-Off
Transaction  was  consummated  in order to permit RPS to complete an acquisition
(the  "Ramco  Acquisition")  of  assets  from  Ramco  Gershenson,  Inc.  and its
affiliates  ("Ramco"),  which  permitted RPS to become an equity shopping center
real estate investment trust (a "REIT").  RPS undertook the Spin-Off Transaction
because Ramco was unwilling to consummate  the Ramco  Acquisition  if the assets
that were contributed by RPS to the Trust (the "Trust Assets")  remained in RPS.
Pursuant to the  Spin-Off  Transaction,  the board of trustees of RPS approved a
distribution  of one common share of beneficial  interest (the  "Shares") of the
Trust for every eight shares of beneficial interest of RPS (the "Distribution").

           Under the provisions of its  Declaration  of Trust,  the Trust was to
continue for a period of 18 months from May 10, 1996 (November 10, 1997), during
which  time it was to reduce to cash or cash  equivalents  the Trust  Assets and
either (i) make a liquidating  distribution to its shareholders or (ii) agree to
merge or combine  operations with another real estate entity, in either case, as
soon as practicable  following the Distribution and within such 18-month period.
Such 18-month  period was subject to extension if (i) the Trust had not achieved
its objective and the holders of at least  two-thirds of the outstanding  Shares
approved the extension of such date or (ii) a contingent tax liability  relating
to RPS that has been assumed by the Trust had not been satisfactorily  resolved.
Because the RPS Tax Issues (as defined below) have not yet been  satisfactorily
resolved, the Trust has continued its business past November 10, 1997. 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.  Upon obtaining a satisfactory  resolution to the
RPS Tax Issues and liquidating  the Trust's  remaining  assets,  any liquidating
distribution  effected by the Trust would be subject to the  satisfaction of the
Trust's  liabilities  to its  creditors.  In the  event  that at the end of this
period, the Trust is unable to achieve its business  objectives,  the members of
the Trust's board of trustees (the "Trustees") will appoint an independent third
party to liquidate the Trust's remaining assets.

           As a result of the Spin-Off Transaction, the Trust acquired the Trust
Assets.  The  Trust  Assets  which  have not been  disposed  of by the Trust are
described  below under  "--Description  of Trust Assets." The Trust's  principal
investment  objective is to maximize shareholder value from the reduction of the
Trust Assets to cash or cash equivalents.  As part of its plan to reduce to cash
or cash equivalents the Trust Assets, the Trust intends,  among other things, to
continue to (i) contact  strategic  buyers of the Trust's  remaining  asset (the
Hylan Plaza Shopping Center) regarding possible sales transactions and (ii) list
the Hylan Plaza Shopping Center for sale with qualified real estate brokers.  No
assurance can be given, however, that such objective will be achieved. The Trust
expects to continue to invest the net proceeds from sales of the Trust Assets in
short-term  or  temporary   investments,   such  as   certificates  of  deposit,
pass-through mortgage-backed  certificates,  mortgage participation certificates
and mortgaged-backed securities (or similar investment products), all or some of
which  investments  may be guaranteed by Ginnie Mae,  Fannie Mae or Freddie Mac.
Unless otherwise approved by the shareholders, the Trust does not expect that it
will make new permanent investments or raise additional  capital.  In addition, 
the Trust does not expect to acquire additional mortgage loans or properties.


   
                                       1
<PAGE>


           In  addition,  the Trust may  explore the  possibility  of merging or
entering into a business  combination with another real estate entity. The Trust
expects  that  it will  pursue  such a  transaction  only  if it  represents  an
attractive  alternative to the  distribution to shareholders of the net proceeds
from the orderly liquidation of the Trust Assets, as described above. The merger
candidates  that may be available to the Trust may be limited as a result of the
amount  of cash  and the  nature  of the  assets  which  the  Trust  will  hold.
Accordingly, there can be no assurance that the Trust will successfully merge or
combine  operations  with  another  real  estate  entity.  Because the Trust has
adopted a policy not to re-invest sales proceeds in additional mortgage loans on
real  estate  (except  to  the  extent  necessary  to  satisfy  applicable  REIT
requirements),  a merger or other business  combination  involving the Trust and
another  real  estate  entity  may  constitute  a  "roll-up  transaction"  under
applicable  securities laws. In such case, the Trust would be required to comply
with the  heightened  disclosure  rules as well as special rules relating to the
proxy  solicitation  process and the listing of the  securities of the surviving
company on any exchange or the inclusion for quotation of such securities on the
Nasdaq SmallCap Market.  Application of the roll-up rules to a company merger or
business  combination  could  delay,  defer or prevent such a  transaction  from
occurring.

           The Trust was organized for the purpose of qualifying as a REIT under
sections  856-860 of the Internal Revenue Code of 1986, as amended (the "Code").
The Trust will elect to qualify as a REIT for the years ended December 31, 1998,
1997 and 1996 and intends to operate so as to continue to qualify as a REIT.

           As of December 31, 1998, the Trust had six employees.

Description of Trust Assets

           As of December 31, 1998, the Trust owned one real property, the Hylan
Plaza Shopping Center and held short-term investments in the principal amount of
approximately $20,000,000, consisting primarily of a certificate of deposit at a
major New York bank.

Mortgage Loan and Real Property Investments

           During the year ended  December  31,  1998,  the Trust  received net
proceeds  of  approximately  $3,242,000  from the sale of the  Norgate  Shopping
Center.

           Hylan Plaza Shopping Center.  At December 31, 1998, the Trust held an
equity  investment in one property,  the Hylan Plaza Shopping Center  ("Hylan").
Hylan is a one-story  community  shopping  center located in Staten Island,  New
York  which  was  acquired  by  the  Trust  in  April,   1996.   Hylan  contains
approximately  349,000 square feet of leasable space  approximately 99% of which
was leased and occupied as of December 31, 1998.  Major tenants  (i.e.,  tenants
who  accounted  for 10% or more of the  leasable  space as of December 31, 1998)
include K-Mart Corp., a department store chain ("K-Mart"),  Supermarkets General
Corp. d/b/a Pathmark,  a supermarket chain ("Pathmark"),  and the Toys "R" Us --
Nytex, Inc., a retail toy store chain ("Toys "R" Us"). These three tenants lease
approximately  105,000,  55,000  and 42,000  square  feet,  respectively,  which
constitutes  30%, 16% and 12%,  respectively,  of the total leasable space.  The
K-Mart  lease  expires in January  2002 and  provides  for  annual  base  rental
payments of approximately  $235,000;  the Pathmark lease expires in January 2002
and provides for annual base rental payments of approximately  $339,000; and the
Toys "R" Us  lease,  which  was due to  expire in  October  1995,  was  extended
pursuant to the  tenant's  exercise of a renewal  option and is due to expire in
October  2005 and  provides  for annual  base rental  payments of  approximately
$90,000.  The K-Mart lease  contains three 5-year tenant  renewal  options;  the
Pathmark lease contains five 5-year tenant renewal options;  and the Toys "R" Us
lease contains one 10-year


                                       2
   

<PAGE>

tenant renewal option.  Leases for approximately 1,483 square feet expired on or
prior to  December  31,  1998 and such space is  currently  leased on a month to
month basis, and leases for approximately 3,847 square feet are due to expire on
or prior to  December  31,  1999.  The  approximate  base  rental  revenue as of
December 31, 1998 was  $3,547,512.  The average  base rental  revenue per leased
square foot as of December 31, 1998 was $10.23,  excluding  percentage  rent and
similar  provisions.  The Trust  believes the property is adequately  covered by
insurance.  On May 31,  1996 the  Trust's  independent  real  estate  appraisers
appraised the value of the property at $27,300,000. As of December 31, 1998, the
estimated net realizable  value of Hylan was  $38,625,000,  including  estimated
cash flows using a disposition  period of 12 months.  Realized values may differ
depending on actual disposition results and time periods.

     Under various federal,  state, and local environmental laws, ordinances and
regulations,  a current or previous  owner or operator of real  property  may be
liable for the costs of removal or remediation of hazardous or toxic  substances
on, under or in such property.  Such laws often impose liability  whether or not
the owner or operator  knew of, or was  responsible  for,  the  presence of such
hazardous or toxic substances.  In connection with the ownership,  operation and
management  of  Hylan,  the Trust  may be  potentially  liable  for  removal  or
remediation   costs,   as  well  as  certain  other  related  costs,   including
governmental fines and injuries to persons and property.  Certain  environmental
laws and  common  law  principles  could  also be used to impose  liability  for
release of an exposure to hazardous  substances,  including  asbestos-containing
materials ("ACMs") into the air, and third parties may seek recovery from owners
or  operators  of  real  properties  for  personal  injury  or  property  damage
associated with exposure to released  hazardous  substances,  including ACMs. As
the owner of Hylan,  the Trust may be  potentially  liable  for any such  costs.

Qualification as a REIT

           The  Trust  intends  to  qualify  as a REIT for  federal  income  tax
purposes. If the Trust so qualifies,  amounts paid by the Trust as distributions
to its shareholders  will not be subject to corporate income taxes. For any year
in which the Trust does not meet the  requirements for electing to be taxed as a
REIT, it will be taxed as a corporation.

           The  requirements  for  qualification  as a  REIT  are  contained  in
Sections  856-860 of the Code and the regulations  promulgated  thereunder.  The
following  discussion  is a brief  summary of some of those  requirements.  Such
requirements  include  certain  provisions  relating  to the  nature of a REIT's
assets,  the  sources  of its  income,  the  ownership  of its  stock,  and  the
distribution  of its  income.  Among  other  things,  at the end of each  fiscal
quarter,  at least  75% of the value of the total  assets  of the  Company  must
consist of real estate assets (including  interests in mortgage loans secured by
real  property and  interests in other  REITs,  as well as cash,  cash items and
government   securities)  (the  "75%  Asset  Test").   There  are  also  certain
limitations  on the amount of other types of  securities  which can be held by a
REIT.  Additionally,  at least 75% of the gross  income of the  Company  for the
taxable year must be derived from certain  sources,  which  include  "rents from
real  property,"  and  interest  secured  by  mortgages  on  real  property.  An
additional  20% of the gross  income of the Company  must be derived  from these
same sources or from dividends, interest from any source, or gains from the sale
or other disposition of stock or securities or any combination of the foregoing.
Furthermore,  less than 30% of the annual gross income of a REIT must be derived
from the sale or other distribution of real property or obligations secured by a
mortgage on real property which has been held for less than four years (the "30%
Income Test").



                                       3
   

<PAGE>


           The Trust may  invest  the  proceeds  derived  from the sale or other
disposition of the Trust Assets in pass-through,  mortgage-backed  certificates,
mortgage participation certificates and mortgage-backed  securities, all or some
of which instruments may be guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac.
Such instruments  produce qualifying income for REIT qualification  purposes and
also satisfy the  requirements of the 75% Asset Test. A REIT is also required to
distribute  at least 95% of its REIT Taxable  Income (as defined in the Code) to
its shareholders.

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 requested
that the IRS enter into a closing  agreement with RPS that the Asset Issue would
not impact RPS' status as a REIT.  The IRS declined  such  request.  In February
1995, the IRS initiated an  examination  of the 1991-1995  income tax returns of
RPS (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,
Battle  Fowler LLP,  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
Spin-Off  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 four  trustees,  each of whom  are
trustees  of both RPS and the  Trust  (the  "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.  RPS and the Trust also have  received an
opinion from Wolf, Block, Schorr and Solis-Cohen LLP (the "Special Tax Counsel")
that,  to the extent there is a deficiency in RPS  distributions  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.

           As of December 31, 1998,  the Trust has not been  required to perform
its  indemnity  with  respect to the RPS Tax Issues  other than with  respect to
legal fees and expenses paid in connection with the IRS' ongoing examination. On
March 1, 1999,  the IRS revenue  agent  conducting  the  examination  issued his
examination report (the "Revenue Agent's Report") with respect to the tax issues
in the RPS Tax Audit,  including the RPS Tax Issues.  The Revenue Agent's Report
sets forth a number of positions  which the IRS  examining  agent has taken with
respect to the RPS Tax  Issues for the years that are  subject to the RPS Audit,
which Special Tax Counsel to the Continuing Trustees believes are not consistent
with  applicable  law and  regulations  of the IRS.  One of the  positions,  the
acquisition  of assets by RPS that could be viewed as  nonqualifying  assets for
REIT purposes,  has been addressed in the opinion letter of counsel  referred to
above.  In  addition,  the IRS  revenue  agent  has  proposed  to  disallow  the
deductions  for bad debts and certain  other  items  claimed by RPS in the years
under examination.  In reaching his conclusion with respect to the deduction for
bad  debts,  the IRS  revenue  agent has  disregarded  the fact that the  values
actually  obtained  for the assets  corresponded  to the  values  used by RPS in
determining  its bad  debt  deductions.  If all of the  positions  taken  in the
Revenue

                                        4

<PAGE>

Agent's  Report were to be  sustained,  RPS,  with funds  supplied by the Trust,
would have to distribute up to approximately  $16.5 million to its shareholders,
in accordance with the procedures for deficiency dividends, in order to preserve
its status as a REIT and could, in addition,  be subject to taxes,  interest and
penalties up to  approximately  $24 million through March 15, 1999. The issuance
of the  Revenue  Agent's  Report  constitutes  only  the  first  step in the IRS
administrative  process for determining  whether there is any deficiency in RPS'
tax  liability for the years at issue and any adverse  determination  by the IRS
revenue agent is subject to administrative  appeal with the IRS and, thereafter,
to judicial  review.  As noted above,  the Revenue  Agent's  Report sets forth a
number of positions  which  Special Tax Counsel to RPS and the Trust believe are
not consistent  with  applicable  law and  regulations of the IRS. The Trust has
been informed that RPS intends to file an administrative  appeal challenging the
findings contained in the Revenue Agent's Report.

Item 2.  Properties.

          The Trust  leases  approximately  4,800 square feet of office space at
747 Third  Avenue,  New York,  New York at an annual base rent of  approximately
$185,000. This lease will expire on October 31, 1999. The Trust has extended the
term of the  lease for an  additional  twelve  months at an annual  base rent of
$195,000.  In addition,  the Trust owns the Hylan Plaza Shopping Center property
described under Item 1.

Item 3.  Legal Proceedings.

          There are no material  pending legal  proceedings  other than ordinary
routine litigation  incidental to the business  (including  without  limitation,
foreclosure proceedings), against or involving the Trust or its properties

Item 4.  Submission of Matters to a Vote of Security Holders.

          The  Trust did not  submit  any  matter to a vote of its  shareholders
during the fourth quarter of 1998.

                                       5
   

<PAGE>


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

(a) Market Information

          The Shares of the Trust have been included for quotation on the Nasdaq
Small Cap Market under the symbol  ATLRS since May 10, 1996.  Set forth below is
the range of high and low bid prices  for the  shares  for each of the  quarters
during the period from May 10, 1996 through December 31, 1998.


                                                        High           Low
                                                        ----           ---

Inception (May 10, 1996) through June 30, 1996         $9.000         $7.500

Third Quarter 1996                                     $9.500         $8.375

Fourth Quarter 1996                                   $10.875         $9.250

First Quarter 1997                                    $11.750        $10.125

Second Quarter 1997                                   $12.000        $10.500

Third Quarter 1997                                    $12.500        $11.750

Fourth Quarter 1997                                   $12.750        $11.875

First Quarter 1998                                    $12.750        $11.500

Second Quarter 1998                                   $12.000         $6.750

Third Quarter 1998                                     $9.625         $6.750

Fourth Quarter 1998                                    $9.000         $7.250


(b) Approximate Number of Equity Security Holders


                                                          Approximate Number
                                                          of Record Holders
Title of Class                                        (As of February 19, 1999)
--------------                                        -------------------------

Shares of beneficial interest, $.01 par value                   3,272

(c) Dividend Information

           Under the Code, a REIT must meet certain  qualifications  including a
requirement that it distribute  annually to its shareholders at least 95% of its
REIT Taxable Income. The Trust has continued the cash distribution policy of the
predecessor  programs by making  quarterly  distributions to its shareholders in
amounts  such that  annual  distributions  equal  100% of REIT  Taxable  Income,
thereby  complying with the distribution  requirements of the federal income tax
laws applicable to REITs. See "Qualification as a REIT" in Item 1 above.

           The Trust  did not pay a  distribution  for the  fiscal  years  ended
December 31, 1997 and 1998.

                                       6

   

<PAGE>


Item 6.  Selected Financial Data.

           The   following   tables  set  forth  certain   selected   historical
information  for the Trust and for the net assets to be transferred to the Trust
pursuant to the Spin-Off  Transaction.  The financial information should be read
in conjunction with the financial statements and notes thereto included herein.

<TABLE>
<S>                                               <C>            <C>              <C>              <C>    
ATLANTIC REALTY TRUST                             12/31/98        12/31/97        12/31/96         5/10/96
                                                  --------        --------        --------         -------
Statement of Net Assets
In Liquidation Data:
           Total Assets                       $ 60,376,057     $ 56,962,910    $ 51,175,032     $ 54,445,060
           Total Liabilities                     4,164,168        2,914,206       3,559,268        9,580,845
           Net Assets in Liquidation            56,211,889       54,048,704      47,615,764       44,864,215

Statement of Changes in
Net Assets in Liquidation Data:
Increase (Decrease)
           Assets Transferred to the Trust
           Adjustments for RPS Transaction
           Distributions Payable                        -                 -      (1,389,006)               -

Adjustments to Reflect Liquidation
Basis of Accounting                             2,163,185         6,432,940       4,140,555
Net Change in net assets in Liquidation         2,163,185         6,432,940       2,751,549

</TABLE>
Net Assets to Be Transferred to Atlantic Realty Trust


<TABLE>
<CAPTION>
                                For the period
                                1/1/96-5/10/96               1995                      1994
                                --------------               ----                      ----

<S>                                <C>                      <C>                    <C>      
Total Revenues                     $ 1,255,607              4,573,011              4,423,519

Total Assets                        51,297,578             54,230,032             56,087,512

Income (Loss)                          595,587            (1,682,764)                722,058

</TABLE>



Item 7. Management's  Discussion and Analysis of Financial Condition and 
        Liquidation Activities.

Capital Resources and Liquidity -- Atlantic Realty Trust

           Upon consummation of the Spin-Off Transaction,  the Trust owned seven
mortgage loans and three retail properties (Hylan, located in Staten Island, New
York, the Norgate  Shopping  Center located in  Indianapolis,  Indiana and the 9
North Wabash Avenue Building, located in Chicago, Illinois), as well as cash and
certain other assets, which include furniture,  fixtures and equipment, formerly
held by RPS. In addition,  upon  consummation of the Spin-Off  Transaction,  the
Trust assumed the repayment  obligation in respect of $5,550,000 in indebtedness
from RPS.  This  indebtedness  was  evidenced  by a  promissory  note which bore
interest at a rate of 8.25% and  matured on  November  9, 1997 (the  "Promissory
Note").  The  Promissory  Note was  secured by a  collateral  assignment  of the
Trust's  interest in the Hylan  Shopping  Center.  On July 10,  1996,  the Trust
repaid  $3,500,000 of the principal  balance of the Promissory Note. On December
16, 1996 the Trust prepaid the remaining  balance of $2,050,000.  The Trust does
not intend to make new loans or actively  engage in either the mortgage  lending
or the property acquisition business.


                                       7

<PAGE>


           The Trust's primary  objective has been to liquidate its assets in an
eighteen-month  period from the date of the Spin-Off Transaction while realizing
the maximum values for such assets;  however because the RPS Tax Issues have not
been satisfactorily  resolved,  the Trust has continued its business beyond such
period.  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 and costs actually incurred for such assets will
not materially differ from the Trust's estimate.

           The Trust believes that cash and cash  equivalents on hand,  proceeds
generated by the real estate  property  that  continues  to operate  (Hylan) and
proceeds  from the eventual  sale of such property will be sufficient to support
the Trust and meet its  obligations.  As of  December  31,  1998,  the Trust had
approximately $21,000,000 in cash and short-term investments.

           During the first quarter of 1998,  the Trust received net proceeds of
approximately  $3,242,000  from  the sale of the  Norgate  Shopping  Center.  At
December 31, 1998 the Trust's remaining real property asset was the Hylan.

           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  December  31,  1997 the Trust  owned two  retail  properties,  Hylan and the
Norgate Shopping Center, which was sold by the Trust on February 25, 1998.

           During  the  period  ended  December  31,  1996,  the Trust  received
proceeds of approximately $8,715,000 from the prepayment of four mortgage loans.
At December 31, 1996,  the Trust owned three mortgage loans and the three retail
properties  discussed  above. As of December 31, 1997, the Trust had disposed of
all of its  mortgage  loans.  The  Trust  intends  to  reduce  to  cash  or cash
equivalents  its remaining asset 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.

Year 2000 Issue

           The Year 2000 issue is the result of computer  programs being written
using two digits rather than four to determine the applicable year. Any programs
that have time  sensitive  software may  recognize a date using "00" as the Year
1900 rather than the Year 2000.  The Trust has purchased  new computer  hardware
and software that is Year 2000  compliant for its corporate  operations  and has
ordered computer  hardware and software that is Year 2000 compliant at its Hylan
management office.  Management estimates that the total costs incurred, or to be
incurred in 1999,  in  connection  with such  improvements  to be  approximately
$20,000.

           The Trust also depends  upon the proper  functioning  of  third-party
computer and  non-information  technology  systems.  These third parties include
tenants,  commercial  banks  and other  lenders,  construction  contractors  and
vendors. The Trust has initiated  communications with third parties with whom it
has important financial or operational  relationships to determine the extent to
which they are vulnerable to the Year 2000 issue. The Trust has received written
notification  from two of its three  significant  outside service providers that
their systems correctly identify and process date

                                      8

<PAGE>


data  relating to the year 2000 issue.  The third  significant  outside  service
provider has  indicated to the Trust that it has designed a plan to achieve Year
2000 compliance and that such plan is  substantially in place and expected to be
complete ahead of schedule.  The Trust plans to contact its major tenants in the
second quarter of 1999 to inquire about such tenant's Year 2000 readiness.

            If third  parties  with  whom the  Trust  interacts  have  Year 2000
problems that are not remedied, the following problems could result:

            (i)  In the case of vendors,  disruption of important  services upon
                 which  the  Trust  depends,  such  as  professional   services,
                 including accounting and legal services, telecommunications and
                 electrical power; and

            (ii) In the case of banks  and  other  lenders,  the  disruption  of
                 capital flows potentially resulting in liquidity stress.

           The Trust does not believe the Year 2000 issue will materially impact
its tenant's ability to pay rent. However, financial difficulties of significant
tenants as a result of the Year 2000 issues could have a material adverse effect
on the Trust's  results of  operations or financial  position.  Though the Trust
does not expect the Year 2000  issue to have a  material  adverse  effect on its
result of operations or financial  position,  there can be no assurances of that
position.

Net Assets to Be Transferred to Atlantic Realty Trust

           The following  information is based upon the  consolidated  financial
statements of the Net Assets to be transferred to the Trust,  which were derived
from RPS' historical  financial statements to reflect the transfer of the assets
to the Trust as a result of the Distribution. The financial information, and the
discussion that follows,  assumes that the assets were  transferred to the Trust
at the  beginning  of the  periods  indicated,  and that the  Trust and RPS were
separate companies with separate  operations as of such dates. The allocation of
certain  expenses between the Trust and RPS was determined by using the weighted
average of the Trust's  total assets to RPS' total assets and the Trust's  total
revenues to RPS' total revenues and reflects  management's  best estimate of the
appropriate allocation of such expenses between the two companies.  As described
below, the Trust has utilized a weighted average of approximately  30%, 29%, and
24% for the purpose of allocating  such expenses for the period  January 1, 1996
through May 10, 1996 (Date of  Transfer)  and for the years ended  December  31,
1995 and 1994, respectively.

Results of Operations

Period from  January 1, 1996 to May 10, 1996  Compared to Period from January 1,
1995 to May 10, 1995

          Interest  income on mortgage  loans for the period  ended May 10, 1996
decreased by  approximately  $192,799 or 16% as compared to the period ended May
10, 1995.  During the 1995 period,  the Trust  received  contingent  interest of
$43,862 as compared to none during the  comparable  1996 period.  The Trust also
received $19,166 in extension fee income during the 1995 period.  For the period
of 1996 the Trust received rental income of $241,502 as compared to $369,755 for
the 1995  period or a reduction  of  $128,253 or 35%.  This is the result of the
tenant at the 9 No. Wabash property vacating at the end of 1995.

          During the period ended May 10, 1995,  the Trust  provided  additional
allowance for possible loan losses of $3,000,000  based on an offer for the sale
of the Hylan Mortgage received in the first quarter of 1995 which was $3,000,000
less than the Trust's net carrying  amount of the loan at such date.  During the
period ending May 10, 1996, the Trust  recognized a loss of $128,866 as a result
of

                                       9

<PAGE>


the  disposition  of the  Simmons  Mortgage  loan.  General  and  administrative
expenses  amounted to $321,197 for the period ended May 10, 1996.  This reflects
the use of a weighted average of  approximately  30% during the period ended May
10, 1996 for the purpose of allocating expenses between the Trust and RPS.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

           Not applicable.

Item 8.   Financial Statements and Supplementary Data.

           See pages F-1 through F-17, which are included herein.

Item 9.   Changes in and Disagreements with Accountants on Accounting and 
          Financial Disclosure.

           None.


                                       10

   

<PAGE>


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

           The Trust's Board of Trustees is composed of eight Trustees,  each of
whom will serve until the respective successors are elected and qualified.

           The trustees and executive officers of the Trust are as follows:

<TABLE>

<S>                          <C>          <C> 
Name                         Age          Offices and Positions
----                         ---          ---------------------

Joel M. Pashcow*             56           Chairman and  President of the Trust  effective as of February 29, 1996. He has
                                          been a member of the Bar of the State of New York since  1968.  Chairman of RPS
                                          from  inception  (December  1988) through May 1996. He is a graduate of Cornell
                                          University  and the  Harvard  Law  School.  Mr.  Pashcow  is also a trustee  of
                                          Ramco-Gershenson  Properties  Trust and  Chairman  of its  Executive  Committee
                                          (formerly named RPS Realty Trust).

Herbert Liechtung*           68           Private  investor.  President of RPS from December,  1988 to February 1996. Mr.
                                          Liechtung  is also a trustee of  Ramco-Gershenson  Properties  Trust  (formerly
                                          named RPS Realty Trust).

Edwin J. Glickman            66           Private  investor.  Executive  Vice  President of Capital  Lease  Funding Corp.
                                          from January 1995 to December  1997,  which is a company  engaged in commercial
                                          real  estate  lending.  Prior  to  that,  Mr.  Glickman  was  President  of the
                                          Glickman  Organization,  Inc.  ("Glickman") from January 1992 to December 1994.
                                          Glickman conducted real estate investment  consulting  services and real estate
                                          financial services, including mortgage brokerage,  arranging joint ventures and
                                          equity  financing.  Prior to that,  Mr.  Glickman was Chairman of the Executive
                                          Committee of Schoenfeld  Glickman Maloy Inc. from May 1989,  which is a company
                                          that conducted real estate financial  services,  including mortgage  brokerage,
                                          arranging  joint ventures and equity  financing.  Also served  successively  as
                                          Executive Vice  President,  President and Vice Chairman of Sybedon  Corporation
                                          from 1977 to 1993,  which is a company  that  conducted  real estate  financial
                                          services,  including  mortgage  brokerage,  arranging joint ventures and equity
                                          financing.  In all  positions,  Mr.  Glickman  has been  engaged in real estate
                                          financial services, including mortgage brokerage,  arranging joint ventures and
                                          equity financing.

Stephen R. Blank*            53           Senior Fellow,  Finance of the Urban Land Institute  ("ULI").  Prior to joining
                                          the ULI in  December  of  1998,  Mr.  Blank  was a  Managing  Director  of CIBC
                                          Oppenheimer  Corp.  ("Oppenheimer") since  November 1, 1993.  Prior to joining 
                                          Oppenheimer,  Mr. Blank was a Managing Director, Real


                                                           11
   
<PAGE>

                                           
                                          Estate Corporate Finance, of Cushman & Wakefield,  Inc. for four years. Prior to
                                          that,  Mr. Blank  was associated  for  ten  years  with  Kidder,  Peabody  & Co.
                                          Incorporated as a Managing  Director of the firm's Real Estate Group.  Mr. Blank
                                          graduated  from Syracuse  University in 1967 and was awarded a Masters Degree in
                                          Business  Administration  (Finance Concentration) by Adelphi University in 1971.
                                          He is a member of the Urban  Land  Institute  and the  American  Society of Real
                                          Estate Counselors.  He has lectured before the Practising Law Institute, the New
                                          York  University  Real  Estate  Institute,  the  Urban  Land  Institute  and the
                                          International  Council of  Shopping  Centers.  He is a Trustee of the  Crohn's &
                                          Colitis  Foundation of America,  Inc. and a Trustee of RPS since 1990. Mr. Blank
                                          is also a trustee  of  Ramco-Gershenson  Properties  Trust  (formerly  named RPS
                                          Realty Trust).

Edward Blumenfeld            58           A principal of Blumenfeld  Development  Group,  Ltd., a real estate development
                                          firm  principally  engaged in the  development of commercial  properties  since
                                          1978.

Samuel M. Eisenstat          59           Engaged  in  the  private  practice  of law  for  more  than  five  years.  Mr.
                                          Eisenstat  serves as a director of various  mutual funds managed by Sun America
                                          Asset  Management and of the North European Oil Royalty  Trust.  Mr.  Eisenstat
                                          received a B.S. degree from New York University  School of Commerce in 1961 and
                                          graduated from New York University School of Law.

Arthur H. Goldberg*          56           President of Manhattan Associates,  LLC, a merchant and investment banking firm
                                          since  February  1994.  Prior to that,  Mr.  Goldberg  was  Chairman of Reich &
                                          Company,  Inc.,  (formerly Vantage Services,  Inc.), a securities brokerage and
                                          investment  brokerage  firm,  from January 1990 to December 1993. Mr.  Goldberg
                                          was  employed by  Integrated  Resources,  Inc.  from its  inception in December
                                          1968,  as  President  and Chief  Operating  Officer  from May 1973 and as Chief
                                          Executive  Officer  from  February  1989 until  January  1990.  On February 13,
                                          1990, Integrated Resources,  Inc. filed a voluntary petition for reorganization
                                          under Chapter 11 of the United States  Bankruptcy Code. Mr. Goldberg has been a
                                          member of the Bar of the State of New York  since  1967.  He is a  graduate  of
                                          New York  University  School of Commerce and its School of Law.  Trustee of RPS
                                          since  1988.  Mr.  Goldberg  is also a trustee of  Ramco-Gershenson  Properties
                                          Trust (formerly named RPS Realty Trust).

William A. Rosoff            55           Vice-Chairman  of Advanta  Corporation,  a financial  services company,  since 
                                          January 1996. Prior thereto, Mr. Rosoff was associated with the law firm of Wolf,
                                          Block,  Schorr

                                                           12

   
<PAGE>

                                          and Solis-Cohen  since 1969, a partner since 1975. Mr. Rosoff is a past chairman
                                          of that firm's Executive Committee and is a past chairman of its tax department.
                                          Mr. Rosoff  serves on the Legal  Activities  Policy Board of Tax  Analysts,  the
                                          Advisory Board for Warren,  Gorham and Lamont's Journal of Partnership Taxation,
                                          and has served on the Tax Advisory Boards of Commerce Clearing House and Little,
                                          Brown and Company. Mr. Rosoff also serves on the Advisory Group for the American
                                          Law Institute's  ("ALI") ongoing Federal Income Tax Project; as a consultant for
                                          the ALI's current study of the Taxation of Pass-Through Entities. He is a fellow
                                          of the American College of Tax Counsel.

                                          Mr.  Rosoff  serves as a member of the Board of Directors  of the  Philadelphia
                                          Chapter  of the  American  Jewish  Congress  and is a  member  of the  Board of
                                          Regents of the  Philadelphia  chapter of the American  Society for  Technician.
                                          Mr.  Rosoff  earned a B.S.  degree with honors from Temple  University in 1964,
                                          and earned an L.L.B.  magna cum laude from the University of  Pennsylvania  Law
                                          School in 1967.

Edwin R. Frankel             53           Since the  inception  of the Trust in May 1996,  Mr.  Frankel has served as its
                                          Executive Vice  President,  Chief  Financial  Officer,  Secretary and Principal
                                          Financial and  Accounting  Officer.  From 1988 to 1992,  Mr.  Frankel served as
                                          Vice  President  and Chief  Financial  Officer  of RPS and from 1992 to 1996 as
                                          Senior Vice President, Chief Financial Officer and Treasurer of RPS.
</TABLE>
-------------------------------
*  Designates status as a Continuing Trustee.

           The Audit Committee, established on October 22, 1997, consists of two
trustees,  Messrs. Blank and Goldberg. The Audit Committee meets with management
and the Trust's  independent  accountants  to determine the adequacy of internal
controls and other financial  reporting  matters.  In addition,  the Disposition
Committee,  established  in July  1996,  consists  of  three  trustees,  Messrs.
Blumenfeld,  Glickman and Blank. The Disposition Committee works with management
in connection with the orderly disposition of the Trust's assets.

Item 11.  Executive Compensation.

Executive Officers

           Mr.  Pashcow  receives  no  cash  compensation  for  serving  as  an
executive   officer  of  the  Trust.  Mr.  Frankel   receives   compensation  of
approximately $158,000 per annum pursuant to an employment contract entered into
between the Trust and Mr. Frankel on June 11, 1998.


                                       13

   

<PAGE>


<TABLE>
                           SUMMARY COMPENSATION TABLE


<CAPTION>
                                                               Annual Compensation               
                                                               -------------------               
<S>                          <C>     <C>          <C>          <C>                  <C>              
                                                                                    Awards
Name and Principal                                             Other Annual         Restricted Stock 
Position                     Year    Salary ($)    Bonus ($)   Compensation ($)     Awards($)        
--------------------------   ----    ----------    ---------   ----------------     ---------------- 
Edwin R. Frankel*            1996     54,067           --            --                --           
Executive Vice President,    1997    100,672**          --          7,122               --           
Chief Financial Officer      1998    146,634            --          3,762***               --           
and Secretary


                                                                                
                                             
                                  
                                    Long Term Compensation              
                                    ----------------------              
<S>                                 <C>                        <C>              
                                                                               
Name and Principal                  Securities Underlying      Payout LTIP      
Position                     Year   Options/SARs ($)           Payouts ($)      
--------------------------   ----   --------------------       -----------      
Edwin R. Frankel*            1996           --                      --          
Executive Vice President,    1997           --                      --          
Chief Financial Officer      1998           --                      --          
and Secretary                                                                  
                                       
                                                  
                                             

</TABLE>

------------------------------
*   No other executive officer received compensation in excess of $100,000.
**  Compensation  was $79,040 per annum based on working two days per week, plus
    an amount on a per diem  basis at the same  rate,  for any  additional  time
    spent working on Trust matters.
*** Includes approximately $1,000 in imputed interest under the Frankel Note (as
    defined below).

           The Trust had no compensation committee,  however all of the Trustees
participated in deliberations of the registrant's  board of trustees  concerning
executive officer compensation.

           On June 11, 1998, the Trust entered into an employment agreement with
Mr.  Frankel (the "Frankel  Employment  Agreement"),  which provided Mr. Frankel
with a base  salary  of  $158,000  (as  adjusted  from  time to time,  the "Base
Salary") per annum.  The term of the Frankel  Employment  Agreement is from June
11, 1998 until the date of a "change of control" of the Trust (as defined in the
Frankel Employment Agreement) unless earlier terminated by either Mr. Frankel or
the Trust upon written notice.  The Frankel  Employment  Agreement also provides
that Mr. Frankel will be entitled to a one-time  payment upon the liquidation of
the Trust or a Change in  Control  of 150% of Mr.  Frankel's  Base  Salary as in
effect at such time. In addition,  the Frankel Employment Agreement provides for
a loan from the Trust to Mr. Frankel in the principal  amount of $37,500,  which
loan is evidenced by a promissory note, dated June 11, 1998, made by Mr. Frankel
in favor of the Trust (the  "Frankel  Note").  The Frankel Note will be canceled
upon the  occurrence  of certain  conditions,  including  a Change of Control or
liquidation of the Trust.

Trustees

           The  Trustees  do not  receive  any  compensation  for  serving  as
trustees and likewise will not receive any compensation  for attending  meetings
or for serving on any  committees  of the Board of Trustees;  however,  Trustees
will receive  reimbursement of travel and other expenses and other out-of-pocket
disbursements incurred in connection with attending any meetings.

           During  1998,  Messrs.  Edwin  Glickman  and Edward  Blumenfeld  each
received fees of $64,000 in connection  with services they provided to the Trust
as members of the Disposition Committee.

           During  1997,  Messrs.  Edwin  Glickman  and Edward  Blumenfeld  each
received fees of $56,250 in connection  with services they provided to the Trust
as members of the Disposition Committee. During 1996, Mr. Glickman received fees
of $80,000  and Mr.  Blumenfeld  received  fees of  $45,000,  in each  case,  in
connection  with  services  provided to the Trust as members of the  Disposition
Committee.


                                       14

   

<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management.

           As of March 9, 1999, each of the following  persons were known by the
Trust to be the beneficial owners of more than five percent of the Shares of the
Trust.

<TABLE>
<S>                              <C>                                                 <C>                 <C>    
                                                                                     AMOUNT AND
                                                                                     NATURE OF
                                                                                     BENEFICIAL          PERCENT OF
TITLE OF CLASS                   NAME AND ADDRESS OF BENEFICIAL OWNER                OWNERSHIP              CLASS      
--------------                   ------------------------------------                ----------          ---------      
                                                                                                 

Shares of beneficial interest    Private Management Group, Inc., an investment         692,055(1)         19.43%
$.01 par value                   advisor in a fiduciary capacity, 20 Corporate
                                 Park, Suite 400 
                                 Irvine, CA 92606

Shares of beneficial interest    Kimco Realty Corporation                              314,098(2)          8.8%
$.01 par value                   3333 New Hyde Park Rd.
                                 New Hyde Park, NY 11042

Shares of beneficial interest    Milton Cooper                                         496,979(3)         14.0%
$.01 par value                   c/o Kimco Realty Corporation
                                 3333 New Hyde Park Rd.
                                 New Hyde Park, NY 11042

Shares of beneficial interest    Gotham Partners, L.P., et al.                         224,011(4)          6.33%
$.01 par value                   110 East 42nd Street, 18th Floor
                                 New York, NY  10017

Shares of beneficial interest    Magten Asset Management Corp.                         205,100(5)          5.8%
$.01 per share                   35 East 21st Street
                                 New York, NY  10010
</TABLE>

-----------------
(1)  Based  upon  Schedule   13G/A  filing  with  the  Securities  and  Exchange
     Commission, filed on January 20, 1999. 
(2)  Based  upon  Schedule   13D/A  filing  with  the  Securities  and  Exchange
     Commission, filed on May 1, 1998.
(2)  Based  upon a  Schedule  13D/A  filing  with the  Securities  and  Exchange
     Commission,  filed on May 1, 1998, and information provided to the Trust by
     Kimco Realty Corporation. Includes 29,824 shares owned by Mr. Cooper, which
     are beneficially  owned with sole voting and disposition  power and 464,028
     shares for which Kimco Realty Services,  Inc., of which Mr. Cooper owns 60%
     of the outstanding  voting common stock,  has shared voting and disposition
     power.
(3)  Based upon Schedule 13G filing with the Securities and Exchange Commission,
     filed on January 20, 1999. Of the 224,011 shares beneficially owned by this
     group,  191,069 shares are solely owned by Gotham  Partners,  L.P.,  30,300
     shares are solely owned by Gotham International  Advisors,  L.L.C. ("Gotham
     L.L.C.") and 2,642 are solely owned by Gotham  Partners  III,  L.P.  Gotham
     L.L.C.  serves as the investment manager to Gotham Partners  International,
     Ltd.  which has an address  c/o  Goldman  Sachs  (Cayman)  Trust,  Limited,
     Harbour Centre, 2nd Floor, P.O. Box 896, George Town, Grand Cayman,  Cayman
     Islands, British West Indies.
(5)  Based upon Schedule 13G filing with the Securities and Exchange Commission,
     filed on January  12,  1999.  Of the  205,100  shares  beneficially  owned,
     100,500  shares are owned with  shared  power to vote or direct the vote of
     such shares and all 205,100  shares are owned with shared  power to dispose
     or direct the disposition of such shares.



                                       15
   

<PAGE>


Item 13.  Certain Relationships and Related Transactions.

           Set forth below is information as to the Shares beneficially owned as
of  March  10,  1997 by each of the  Trustees,  each of the  executive  officers
included in the Summary Compensation Table set forth in Item 11 and all Trustees
and  executive  officers  as a group,  based on  information  furnished  by each
Trustee and executive officer.

Name of Trustee/                             Shares Owned                       
Executive Officer                            Beneficially(1)   Percent of Class
-----------------                            ---------------   ----------------

Joel M. Pashcow      .....................     94,154(2)         2.62%
Herbert Liechtung    .....................     11,906(3)           *
Arthur H. Goldberg   .....................     24,487(4)           *
William A. Rosoff    .....................        125(5)           *
Stephen R. Blank     .....................        981(6)           *
Edward Blumenfeld    .....................        125              *
Samuel M. Eisenstat  .....................      1,125(7)           *
Edwin J. Glickman    .....................          0              *
Edwin R. Frankel     .....................          0              *
All Trustees and                                              
    Executive Officers as a group (9 persons) 130,903          3.68%

--------------------- 

* Less than 1% of class.


(1)  All amounts are directly owned unless stated otherwise.
(2)  Includes  25,890  shares  held in an IRA  account  for the  benefit  of Mr.
     Pashcow,  a retirement  savings plan, a pension and profit sharing  account
     and a money purchase plan,  47,662 shares owned by an irrevocable  trust of
     which Mr. Pashcow is a trustee, an irrevocable trust for his daughter and a
     foundation  of which Mr.  Pashcow is trustee  (for all of which  trusts Mr.
     Pashcow has shared voting and investment  powers).  Mr.  Pashcow  disclaims
     beneficial  ownership of the Shares owned by the foundation and each of the
     trusts.
(3)  Includes  11,906  shares  held in an IRA  account  for the  benefit  of Mr.
     Liechtung and a retirement savings plan.
(4)  Includes 19,563 shares owned by Mr.  Goldberg's wife, 1,875 shares owned by
     trusts for his  daughters  and 3,050 shares owned by a pension  trust.  Mr.
     Goldberg disclaims beneficial ownership of the shares owned by his wife and
     the trusts for his daughters.
(5)  Includes 125 shares held by Mr. Rosoff as a trustee for his sister, Barbara
     Rosoff, pursuant to a trust indenture dated December 30, 1991. 
(6)  Includes  706 shares  owned by trusts  for Mr.  Blank's  daughters  and 275
     shares  held in an IRA  account for the  benefit of Mr.  Blank.  Mr.  Blank
     disclaims  beneficial  ownership  of the shares owned by the trusts for his
     daughters.
(7)  Includes 125 shares held in an IRA account for which Mr. Eisenstat has sole
     voting and investment power.


                                       16

   

<PAGE>




                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

Financial Statements, Schedules and Exhibits

(a)(1)     Financial Statements
           See pages F-1 through F-17, which are included herein.

(a)(2)     Financial Statement Schedules
           All schedules have been omitted  because they are  inapplicable,  not
           required,  or the information is included in the financial statements
           or notes thereto.

(a)(3)     Exhibits
           The exhibits  listed in the Exhibit Index  immediately  preceding the
           exhibits are filed as a part of this Annual Report on Form 10-K.

(b)        No Current  Reports on Form 8-K were filed by the Company  during the
           last quarter of the period covered by this report.


                                       17

   

<PAGE>




<TABLE>
                          INDEX TO FINANCIAL STATEMENTS
<S>                                                                                                                        <C>
                                                                                                                           Page
                                                                                                                           ----


Financial Statements - Atlantic Realty Trust and Subsidiary (Liquidation Basis)

   Independent Auditors' Report........................................................................................     F-2
   Consolidated Statements of Net Assets in Liquidation at December 31, 1998 and 1997..................................     F-3
   Consolidated Statements of Changes in Net Assets in Liquidation for the Years Ended
     December 31, 1998, 1997 and the Period May 11, 1996 through December 31, 1996.....................................     F-4
   Notes to Consolidated Financial Statements..........................................................................     F-5-8

Financial Statements - Net Assets to be Transferred to Atlantic Realty Trust
   (Going Concern Basis)

   Independent Auditors' Report........................................................................................     F-9
   Combined Statements of Operations for the Period January 1, 1996 through
     May 10, 1996 (Date of Transfer)...................................................................................     F-10
   Combined Statement of Shareholders' Equity for the Period January 1, 1996
     through May 10, 1996 (Date of Transfer)...........................................................................     F-11
   Combined Statement of Cash Flows for the Period January 1, 1996 through
     May 10, 1996 (Date of Transfer)...................................................................................     F-12
   Notes to Combined Financial Statements for the Period January 1, 1996 through
     May 10, 1996 (Date of Transfer)...................................................................................     F-13-17
</TABLE>


                                       F-1
   

<PAGE>





                          INDEPENDENT AUDITORS' REPORT


To the Board of Trustees of
  ATLANTIC REALTY TRUST

        We have audited the accompanying  consolidated  statements of net assets
in  liquidation  of Atlantic  Realty  Trust and  subsidiaries  (the  "Trust") at
December 31, 1998 and 1997, and the related  consolidated  statements of changes
in net assets in liquidation for the years ended December 31, 1998, 1997 and the
period May 11, 1996  through  December 31, 1996.  These  consolidated  financial
statements are the responsibility of the Trust's management.  Our responsibility
is to express an opinion on these consolidated financial statements 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.

        As discussed in Note 1 to the  consolidated  financial  statements,  the
Trust was formed for the purpose of liquidating  the mortgage loan portfolio and
certain other assets and  liabilities  which were  transferred to the Trust from
RPS  Realty  Trust  on May 10,  1996  (Date of  Transfer)  and  liquidating  and
distributing capital to the Trust's shareholders. As a result, the Trust adopted
the liquidation basis of accounting effective May 10, 1996 (Date of Transfer).

        In our opinion,  such consolidated  financial statements present fairly,
in all material respects, the net assets in liquidation of the Trust at December
31, 1998 and 1997 and the changes in its net assets in liquidation for the years
ended December 31, 1998,  1997 and the period May 11, 1996 through  December 31,
1996 in conformity with generally  accepted  accounting  principles on the basis
described in the preceding paragraph.

        As discussed in Notes 1 and 6 to the consolidated  financial statements,
because  of  the  inherent  uncertainty  of  valuation  when  an  entity  is  in
liquidation,  the amounts  ultimately  realized  from assets  disposed and costs
incurred to settle  liabilities may differ  materially from amounts presented in
the accompanying financial statements.

/s/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP
New York, New York

March 11, 1999

                                      F-2


   

<PAGE>


<TABLE>

                           REALTY TRUST AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                        (Liquidation Basis of Accounting)

<CAPTION>
                                                          December 31, 1998             December 31, 1997
                                                          -----------------             -----------------

ASSETS:

<S>                                                       <C>                           <C>              
Investments in real estate..................              $     38,625,000              $      41,327,000
 Cash and short-term investments............                    21,751,057                     15,635,910
                                                          ----------------              -----------------
     Total assets...........................                    60,376,057                     56,962,910
                                                          ----------------              -----------------

LIABILITIES:

Estimated costs of liquidation..............                     4,164,168                      2,914,206
                                                          ----------------              -----------------
     Total liabilities......................                     4,164,168                      2,914,206
                                                          ----------------              -----------------
Net assets in liquidation...................              $     56,211,889              $      54,048,704
                                                          ================              =================
</TABLE>



                       See notes to consolidated financial statements.


                                      F-3

   

<PAGE>



<TABLE>
                      ATLANTIC REALTY TRUST AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                        (Liquidation Basis of Accounting)

<CAPTION>


                                                            For the Year Ended          For the Year Ended        For the Period
                                                               December 31,                December 31,           May 11, 1996 to
                                                                   1998                        1997              December 31, 1996
                                                        ----------------------       ----------------------      -----------------
<S>                                                     <C>                         <C>                           <C>    
Net assets in liquidation, beginning of
Period...........................................       $     54,048,704             $     47,615,764             $    44,864,215
Distributions payable                                           -                            -                         (1,389,006)
Adjustments to reflect liquidation basis of
Accounting.......................................              2,163,185                    6,432,940                   4,140,555
                                                        ----------------             ----------------------    ---------------------
Net assets in liquidation........................       $     56,211,889             $    54,048,704              $    47,615,764
                                                        ========================     ======================    =====================
</TABLE>





                       See notes to consolidated financial statements.


                                      F-4

   

<PAGE>




                      ATLANTIC REALTY TRUST AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (Liquidation Basis of Accounting)

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.  The  Trust  intends  to  conduct  its
operations  with the intent of meeting  the  requirements  applicable  to a real
estate  investment trust ("REIT") under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code").  RPS conducts its operations with
the intent of meeting the  requirements  applicable to a REIT under Sections 856
through  860 of the Code.  As a  result,  the Trust  will  have no  current  and
deferred tax liabilities.  See Note 5 for current developments.

           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 operating the Trust's plan for  disposition of assets.  The estimated costs
of  liquidation  represent the estimated cost 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,  subject to, among  certain other things,
satisfactory  resolution of the RPS Tax Issues (See Note 6). 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.


                                      F-5

   

<PAGE>




2.         Investments in Real Estate
<TABLE>
<CAPTION>
                                                              Estimated Net Realized Value
                                                          December 31,           December 31,
Property                       Location                       1998                    1997     
                                                         -------------------    ---------------

<S>                            <C>                        <C>                    <C>           
Hylan Shopping Center          Staten Island, NY         $  38,625,000          $   37,725,000
Norgate Shopping Center        Indianapolis, IN                  -                   3,602,000
                                                         -------------          --------------
                                                         $  38,625,000          $   41,327,000
                                                         =============          ==============
</TABLE>

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

(b)   On  February  25,  1998,  the Trust sold the Norgate  Shopping  Center for
      $3,850,000 and received net proceeds of approximately $3,242,000.

(c)   On July 1, 1997,  the Trust  received net proceeds of  $1,045,000  for the
      sale of the 9 North Wabash Building.

3.       Shares Outstanding

         The  weighted  average  number of  common  shares  outstanding  for the
periods ended December 31, 1998, 1997, and 1996 was 3,561,553, respectively.

4.         Short-Term Investments

           Short-term  investments  at  December  31,  1998  and  1997,  consist
primarily of Certificates of Deposit at a major New York bank of $20,000,000 and
$14,750,000,  respectively, bearing interest at a fixed rate of 4.50% and 5.00%,
respectively.

5.         Income Taxes

          Even though the Trust will not be subject to income taxes as discussed
in Note 1, since the Trust is a public  enterprise  it is required to  reconcile
the net  difference  between the assets and  liabilities  for tax  purposes  and
financial reporting, in accordance with the Financial Accounting Standards Board
Statement No. 109,  "Accounting for Income Taxes," such differences in basis are
not material.

           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 requested
that the IRS enter into a closing  agreement with RPS that the Asset Issue would
not impact RPS' status as a REIT.  The IRS declined  such  request.  In February
1995, the IRS initiated an  examination  of the 1991-1995  income tax returns of
RPS (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,
Battle  Fowler LLP,  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
Spin-Off  Transaction)  pursuant to a tax agreement,  dated May 10, 1996, by 

                                      F-6

   

<PAGE>


and  between   RPS  and  the  Trust,   which   provides   that  RPS  (now  named
Ramco-Gershenson Properties Trust) under the direction of four trustees, each of
whom are trustees of both RPS and the Trust (the "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.  RPS and the Trust also have  received an
opinion from Wolf, Block, Schorr and Solis-Cohen LLP (the "Special Tax Counsel")
that,  to the extent there is a deficiency in RPS  distributions  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.

           As of December 31, 1998,  the Trust has not been  required to perform
its  indemnity  with  respect to the RPS Tax Issues  other than with  respect to
legal fees and expenses paid in connection with the IRS' ongoing examination. On
March 1, 1999,  the IRS revenue  agent  conducting  the  examination  issued his
examination report (the "Revenue Agent's Report") with respect to the tax issues
in the RPS Tax Audit,  including the RPS Tax Issues.  The Revenue Agent's Report
sets forth a number of positions  which the IRS  examining  agent has taken with
respect to the RPS Tax  Issues for the years that are  subject to the RPS Audit,
which Special Tax Counsel to the Continuing Trustees believes are not consistent
with  applicable  law and  regulations  of the IRS.  One of the  positions,  the
acquisition  of assets by RPS that could be viewed as  nonqualifying  assets for
REIT purposes,  has been addressed in the opinion letter of counsel  referred to
above.  In  addition,  the IRS  revenue  agent  has  proposed  to  disallow  the
deductions  for bad debts and certain  other  items  claimed by RPS in the years
under examination.  In reaching his conclusion with respect to the deduction for
bad  debts,  the IRS  revenue  agent has  disregarded  the fact that the  values
actually  obtained  for  assets  corresponded  to  the  values  used  by  RPS in
determining  its bad  debt  deductions.  If all of the  positions  taken  in the
Revenue  Agent's  Report were to be sustained,  RPS, with funds  supplied by the
Trust,  would  have to  distribute  up to  approximately  $16.5  million  to its
shareholders,  in accordance  with the procedures for deficiency  dividends,  in
order to preserve  its status as a REIT and could,  in  addition,  be subject to
taxes,  interest and penalties up to approximately $24 million through March 15,
1999. The issuance of the Revenue Agent's Report constitutes only the first step
in  the  IRS  administrative  process  for  determining  whether  there  is  any
deficiency  in RPS'  tax  liability  for the  years  at  issue  and any  adverse
determination by the IRS revenue agent is subject to administrative  appeal with
the IRS and, thereafter, to judicial review. As noted above, the Revenue Agent's
Report sets forth a number of positions which Special Tax Counsel to RPS and the
Trust believe are not consistent with applicable law and regulations of the IRS.
The Trust has been  informed that RPS intends to file an  administrative  appeal
challenging the findings contained in the Revenue Agent's Report.

6.         Dividends/Distributions to Shareholders

           Under  the   Internal   Revenue   Code,  a  REIT  must  meet  certain
qualifications,  including  a  requirement  that it  distribute  annually to its
shareholders at least 95 percent of its taxable income. The Trust's policy is to
distribute to shareholders  all taxable income.  There were no dividends in 1998
and 1997.  Dividend  distributions  for the year  ended  December  31,  1996 are
summarized as follows:

                                      F-7
   

<PAGE>


Record Date                   Distribution            Payment
-----------                   ------------            -------

December 26, 1996             $.39 per share          January 21, 1997

7.         Commitments

           The Trust leases  approximately  4,800 square feet of office space at
747 Third  Avenue,  New York,  New York at an annual base rent of  approximately
$185,000.  This lease will expire on October 31, 1999.  Subsequent  to year-end,
the Trust  extended the lease for an additional  twelve months at an annual base
rental of approximately $195,000.


                                      F-8

   

<PAGE>



                          INDEPENDENT AUDITORS' REPORT

To the Board of Trustees of
  RPS REALTY TRUST AND
  ATLANTIC REALTY TRUST

           We have audited the accompanying combined statements of shareholders'
equity of the Net Assets to be  Transferred  to  Atlantic  Realty  Trust and the
related combined  statements of operations and cash flows for the period January
1, 1996  through  May 10,  1996 (Date of  Transfer).  These  combined  financial
statements  are the  responsibility  of  management.  Our  responsibility  is to
express an opinion on these financial statements based on our audits.

           We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined 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 audit  provides a  reasonable  basis for our
opinion.

          In our opinion,  such combined financial  statements present fairly in
all material  respects,  the results of operations and cash flows for the period
January 1, 1996  through  May 10, 1996 (Date of  Transfer)  in  conformity  with
generally accepted accounting principles.

          As more fully described in Note 1, Atlantic Realty Trust was obligated
to adopt the liquidation basis of accounting upon completion of the Transaction.
The  accompanying  combined  financial  statements  do not  give  effect  to the
adjustments if any, to be recorded at such time.


/s/Deloitte & Touche LLP

 New York, New York
 March 28, 1997
(March 11, 1999 as to Note 3)


                                      F-9


   

<PAGE>


                         NET ASSETS TO BE TRANSFERRED TO
                              ATLANTIC REALTY TRUST
                        COMBINED STATEMENTS OF OPERATIONS

                                                              For the Period
                                                              January 1, 1996
                                                                 Through
                                                               May 10, 1996  
                                                            (Date of Transfer)
                                                            ------------------
                                                   

REVENUES:
  Interest income..................................           $     1,014,205
   Contingent interest and fee income..............                     -
  Rental income....................................                   241,402
                                                              ---------------

           Total revenues..........................                 1,255,607
                                                              ---------------

EXPENSES:
  Loss on disposition of mortgage loan.............                   128,886
  General and administrative expenses..............                   321,197
  Property operating...............................                    63,285
  Real estate tax..................................                   110,161
  Depreciation.....................................                    36,491
                                                              ---------------

           Total expenses..........................                   660,020
                                                              ---------------


Net Income ........................................           $       595,587
                                                              ===============



                  See notes to combined financial statements.


                                      F-10

   

<PAGE>



                         NET ASSETS TO BE TRANSFERRED TO
                              ATLANTIC REALTY TRUST
                   COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
               FOR THE PERIOD JANUARY 1, 1996 THROUGH MAY 10, 1996
                               (DATE OF TRANSFER)




<TABLE>

<CAPTION>
                                                           Additional                                                     Total
                      Number of                            Paid-in          Cumulative           Cumulative          Shareholders'
                       Shares             Amount           Capital           Earnings          Distributions             Equity   
                       ------             ------           -------           --------          -------------             ------   


BALANCE:
<S>                     <C>          <C>                  <C>              <C>              <C>                  <C>               
   January 1, 1996      28,492,421    $  2,849,242        $  195,591,125   $  49,641,307     $   (194,914,998)   $     53,166,676

   Net Income                                                                    595,587                                  595,587

   Distributions                                                                                   (9,994,955)         (9,994,955)

   Net Assets
     Transferred       (28,492,421)     (2,849,242)         (195,591,125)    (50,236,894)         204,909,953          43,767,308
                     -------------     --------------     -----------------   ------------      ----------------    ----------------

BALANCE:
   May 10, 1996
(Date of Transfer)   $           0    $             0     $               0   $           0    $              0    $              0
                     =============    ===============     =================   =============    ================    ================

</TABLE>




                         See notes to combined financial statements.


                                      F-11

   

<PAGE>


<TABLE>

                         NET ASSETS TO BE TRANSFERRED TO
                              ATLANTIC REALTY TRUST
                        COMBINED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                          For the Period
                                                                                          January 1, 1996
                                                                                             Through
                                                                                           May 10, 1996
                                                                                        (Date of Transfer)   
                                                                                        ------------------   

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                      <C>           
  Net income....................................................................         $      595,587
  Adjustments to reconcile net income to
    net cash provided by operating activities
        Loss on disposition of mortgage loan....................................                128,886
        Depreciation............................................................                 36,491
        Changes in operating assets and liabilities:
          Interest and accounts receivable......................................                352,813
          Accounts payable and deferred
             commitment fees....................................................              1,149,735
                                                                                         --------------

           Net cash provided by operating activities............................              2,263,512
                                                                                         --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Satisfaction of mortgage loans receivable.....................................              3,416,564
  Investment in real estate.....................................................             (1,933,762)
                                                                                         --------------

           Net cash provided by investing activities............................              1,482,802
                                                                                         --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds of financing.........................................................              5,550,000
  Distribution to RPS Realty Trust..............................................             (9,994,955)
                                                                                         ---------------

           Net cash used in financing activities................................             (4,444,955)
                                                                                         ---------------

NET DECREASE IN CASH AND
   CASH EQUIVALENTS.............................................................               (698,641)

CASH AND CASH EQUIVALENTS
  BEGINNING OF PERIOD...........................................................              3,356,995
                                                                                         --------------

CASH AND CASH EQUIVALENTS END OF PERIOD.........................................         $    2,658,354
                                                                                         ==============

SUPPLEMENTAL SCHEDULE OF NONCASH
  INVESTING AND FINANCING ACTIVITIES:
  Investment in real estate.....................................................         $   25,455,310
  Interest and accounts receivable..............................................             (6,275,000)
  Use (recovery) of provision for possible loan losses..........................              5,819,690
  Gross mortgage receivable exchanged for real estate...........................            (25,000,000)

</TABLE>


                   See notes to combined financial statements.

                                      F-12

   

<PAGE>



                         NET ASSETS TO BE TRANSFERRED TO
                              ATLANTIC REALTY TRUST
                 NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE
                   PERIOD JANUARY 1, 1996 THROUGH MAY 10, 1996
                               (DATE OF TRANSFER)

1.         ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

          Atlantic  Realty Trust (the  "Trust") is a newly formed  Maryland real
     estate  investment trust formed as a condition of the Spin-Off  Transaction
     described in Note 4 for the transfer  from RPS Realty Trust  ("RPS") of the
     remaining  mortgage  loan  portfolio,  as well as certain  other assets and
     liabilities ("Net Assets").

          The  combined  financial  statements  reflect  the Net  Assets and the
     related results of  their operations for the period  presented.  Historical
     performance  of the  Net  Assets  is  presented  as if  those  assets  were
     separately  managed.  Under the provisions of its Declaration of Trust, the
     Trust is obligated to make a final liquidating distribution of the net cash
     proceeds  attributable  to the sale or  other  disposition  of the  Trust's
     assets  within 18 months,  or to merge or combine  operations  with another
     real estate entity during such  18-month  period,  unless on or before such
     date the holders of at least two-thirds of the Trust's  outstanding  shares
     approve the extension of such date or such date is  automatically  extended
     without a shareholder  vote because a contingent tax liability  relating to
     RPS  that  has  been  assumed  by the  Trust  has not  been  satisfactorily
     resolved.  In the event that at the end of such 18-month period,  the Trust
     is unable to  dispose of all of its  assets,  and the  shareholders  of the
     Company have not approved an extension of such date, the Trust will appoint
     an independent third party to liquidate the Trust's remaining assets.

          On May 10, 1996, the Transaction  was  consummated.  As a result,  the
     Trust was obligated to adopt the  liquidation  basis of  accounting.  Under
     this method of accounting,  assets are stated at the amounts to be realized
     in  liquidation  and  liabilities  are  stated  at  anticipated  settlement
     amounts.  The accompanying  financial  statements do not give effect to the
     adjustments,  if any, to be recorded upon adoption of the liquidation basis
     of accounting.

          Certain common payroll and other general and  administrative  expenses
     have been  allocated to the Net Assets based on the average of the weighted
     average of the  Trust's  total  revenue to the total  revenue of RPS.  Such
     average was 9 percent for the period  January 1, 1996  through May 10, 1996
     (Date of Transfer).

      The following is a summary of significant  accounting policies followed in
      the preparation of the historical financial statements of the Net Assets:

      a.   Income Tax Status - The Trust intends to conduct its operations  with
           the intent of meeting the  requirements  applicable  to a real estate
           investment  trust  ("REIT")  under  Sections  856  through 860 of the
           Internal Revenue Code of 1986, as amended (the "Code").  RPS conducts
           its operations with the intent of meeting the requirements applicable
           to a REIT under  Sections  856 through 860 of the Code.  As a result,
           the Trust will have no current and deferred tax liabilities. See Note
           3 for current developments.

      b.   Principles of Combination - The combined financial statements include
           the accounts of the Net Assets.

                                      F-13
   

<PAGE>


      c.   Investment in Real Estate - Investment in real estate is  depreciated
           using the straight-line  method over the estimated useful life of the
           property.  Repairs and maintenance are expensed. In the event that it
           appears  that  the  cost  less  accumulated  depreciation  cannot  be
           recovered  through  operations and/or a sale over a reasonable future
           period,  then it will be considered  probable that an impairment that
           is  other  than   temporary  has  occurred  and  the  net  cost  less
           accumulated  depreciation  will be written down to market value and a
           new cost basis will be established.

           In March  1995,  the  Financial  Accounting  Standards  Board  issued
           Statement  No. 121,  "Accounting  for the  Impairment  of  Long-Lived
           Assets and Assets to be Disposed of" which  requires  that long lived
           assets and certain identifiable intangibles to be held and used by an
           entity be  reviewed  for  impairment  whenever  events or  changes in
           circumstances  indicate that the carrying  amount of an asset may not
           be  recoverable.  The adoption of the Statement is required for years
           beginning  after  December 15, 1995. The provisions of this Statement
           were adopted as of January 1, 1996 and the adoption of this Statement
           did not have a significant  impact on the carrying  value of the real
           estate.

      d.   Income  Recognition - Current  interest  income on mortgage  loans is
           recognized  on the  accrual  method  during the  periods in which the
           mortgage  loans  are  outstanding.  Deferred  interest,  due  at  the
           maturity of the mortgage  loan,  is recognized as income based on the
           interest  method using the implicit  rate of interest on the mortgage
           loan.  Income  from  operating  leases  held in  connection  with the
           investments in real estate is recognized when earned.  Contingent and
           additional  contingent  income  and  prepayment  premium  income  are
           recognized as cash is received.  Certain leases at one of the Trust's
           real estate  properties  may have  percentage  rent features and such
           amounts are recognized upon receipt.

      e.   Impairment of Loans - In May 1993, the Financial Accounting Standards
           Board  issued  Statement  No.  114,   "Accounting  by  Creditors  for
           Impairment  of a Loan,"  which  requires  creditors  to  account  for
           impaired  loans at the present value of their future cash flows or at
           the  fair  value  of  the  collateral,  if  the  loan  is  collateral
           dependent.  The  provisions  of this  statement  were  adopted  as of
           January 1, 1995 and the  adoption  of this  statement  did not have a
           significant impact on the carrying value of the loans.

           An allowance  for possible  loan losses is  established  based upon a
           review  of each of the  loans in the  portfolio.  In  performing  the
           review,  management  considers the estimated net realizable  value of
           the  property or  collateral  as well as other  factors,  such as the
           current occupancy,  the amount and status of senior debt, if any, the
           prospects  for  the  property,  the  credit  worthiness  and  current
           financial  position of the borrower and the economic situation in the
           region where the property is located.

      f.   Allocation  of   Distributions  -  Net  Cash  flows  from  operating,
           financing and investing activities are those amounts which would have
           been  distributed to RPS or received from RPS to the extent  required
           to  fulfill  the  cash   contributions   of  RPS  to  the   Operating
           Partnership, as described in Note 7.

      g.   Use  of  Estimates  - The  preparation  of  financial  statements  in
           conformity with generally  accepted  accounting  principles  requires
           management to make estimates and assumptions that affect the reported
           amounts of assets and liabilities and 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.

                                      F-14
   

<PAGE>



2.         INVESTMENT IN REAL ESTATE

           Properties are  depreciated  over an estimated life of 39 years using
the straight-line method.

3.         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 requested
that the IRS enter into a closing  agreement with RPS that the Asset Issue would
not impact RPS' status as a REIT.  The IRS declined  such  request.  In February
1995, the IRS initiated an  examination  of the 1991-1995  income tax returns of
RPS (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,
Battle  Fowler LLP,  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
Spin-Off  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 four  trustees,  each of whom  are
trustees  of both RPS and the  Trust  (the  "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.  RPS and the Trust also have  received an
opinion from Wolf, Block, Schorr and Solis-Cohen LLP (the "Special Tax Counsel")
that,  to the extent there is a deficiency in RPS  distributions  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.

            As of December 31, 1998,  the Trust has not been required to perform
its  indemnity  with  respect to the RPS Tax Issues  other than with  respect to
legal fees and expenses paid in connection with the IRS' ongoing examination. On
March 1, 1999,  the IRS revenue  agent  conducting  the  examination  issued his
examination report (the "Revenue Agent's Report") with respect to the tax issues
in the RPS Tax Audit,  including the RPS Tax Issues.  The Revenue Agent's Report
sets forth a number of positions  which the IRS  examining  agent has taken with
respect to the RPS Tax  Issues for the years that are  subject to the RPS Audit,
which Special Tax Counsel to the Continuing Trustees believes are not consistent
with  applicable  law and  regulations  of the IRS.  One of the  positions,  the
acquisition  of assets by RPS that could be viewed as  nonqualifying  assets for
REIT purposes,  has been addressed in the opinion letter of counsel  referred to
above.  In  addition,  the IRS  revenue  agent  has  proposed  to  disallow  the
deductions  for bad debts and certain  other  items  claimed by RPS in the years
under examination.  In reaching his conclusion with respect to the deduction for
bad  debts,  the IRS  revenue  agent has  disregarded  the fact that the  values
actually  obtained  for the assets  corresponded  to the  values  used by RPS in
determining  its bad  debt  deductions.  If all of the  positions  taken  in the
Revenue  Agent's  Report were to be sustained,  RPS, with funds  supplied by the
Trust,  would  have to  distribute  up to  approximately  $16.5  million  to its
shareholders,  in accordance  with the procedures for deficiency  dividends,  in
order to preserve  its status as a REIT and could,  in  addition,  be subject to
taxes,  interest and penalties up to approximately $24 million through March 15,
1999. The issuance of the Revenue

                                      F-15

   

<PAGE>

Agent's Report constitutes only the first step in the IRS administrative process
for  determining  whether there is any  deficiency in RPS' tax liability for the
years at issue and any adverse determination by the IRS revenue agent is subject
to administrative  appeal with the IRS and,  thereafter,  to judicial review. As
noted above,  the Revenue  Agent's Report sets forth a number of positions which
Special Tax Counsel to the RPS and the Trust  believe  are not  consistent  with
applicable law and  regulations of the IRS. The Trust has been informed that RPS
intends to file an administrative  appeal  challenging the findings contained in
the Revenue Agent's Report.

      4.   RAMCO TRANSACTION

           On December 27, 1995, RPS and  Ramco-Gershenson,  Inc.  ("Ramco") and
its  affiliates  (the "Ramco Group")  entered into an agreement  relating to the
acquisition  through an  operating  partnership  (the  "Operating  Partnership")
controlled by RPS of substantially  all of the real estate assets as well as the
business  operations of Ramco (the  "Transaction").  As part of the Transaction,
the  Operating  Partnership  will  succeed to the  ownership  of interests in 22
shopping center and retail properties (the "Ramco Properties"),  as well as 100%
of the  nonvoting  stock and 5% of the voting  stock of Ramco  (representing  in
excess of 95% of the economic  interests of Ramco).  Under the proposed  revised
structure to the Transaction,  RPS will contribute to the Operating  Partnership
six retail  properties  ("RPS  Properties")  and $68,000,000 in cash and will be
liable for  approximately  $7,000,000  of  Transaction  expenses.  Following the
closing of the  Transaction,  Ramco will  manage the Ramco  Properties,  the RPS
Properties and properties of certain third parties and other Ramco affiliates.

           Upon  consummation of the  Transaction,  RPS will be the sole general
partner of and a limited  partner  in the  Operating  Partnership  and under the
proposed revised structure to the Transaction will initially hold  approximately
75% of the  interests  therein.  The  members of the Ramco Group will be limited
partners in the Operating Partnership and will initially hold, in the aggregate,
approximately 25% of the interests therein.  The Ramco Group could also increase
its interest in the Operating  Partnership  based on the future  performance  of
certain of the Ramco properties;  such performance incentives could increase the
Ramco Group's interest in the Operating  Partnership to approximately 29% in the
aggregate.  The  Ramco  Group's  units  in the  Operating  Partnership  will  be
exchangeable   for  shares  of  RPS  Realty  Trust  commencing  one  year  after
consummation of the  Transaction,  subject to purchase of such OP Units for cash
by RPS Realty Trust, at RPS' option.

           As part of the  Transaction,  it is anticipated  that RPS will change
its name to Ramco-Gershenson  Properties Trust and will implement a one-for-four
reverse share split.

           Upon consummation of the Transaction, it is contemplated that four of
the nine current members of the Board of Trustees of RPS will resign and will be
replaced by four individuals  designated by the Ramco Group, two of whom will be
independent of RPS, Ramco and their respective affiliates. In addition, the five
current principal  executive officers of Ramco will become executive officers of
RPS  and  will be  responsible  for  the  management  of the  RPS'  real  estate
operations.

         In connection with the  Transaction,  and as a condition  thereto,  RPS
will transfer its remaining  mortgage loan  portfolio,  as well as certain other
assets, to the Trust and thereafter will distribute the shares after taking into
account the  reverse  stock split  referred to above,  to the RPS  shareholders.
Additionally,  pursuant  to the terms of the  Transaction,  the Trust will incur
approximately  $6,500,000 in indebtedness,  the proceeds of which, together with
existing  resources  of RPS to be used  primarily  for the payment of  severance
benefits  of   approximately   $4,500,000,   distributions  to  shareholders  of
$2,279,000  and  directors' and officers'  insurance  premiums of  approximately
$1,150,000 and approximately $750,000 in working capital.

                                      F-16

   

<PAGE>



         It is anticipated  that such  indebtedness  will accrue interest at 10%
per annum  (approximately  $650,000 per year) and mature on the date which is 18
months after the  Transaction.  Such  interest will be included as a decrease in
the  Statement  of Changes  in Net  Assets  following  the  consummation  of the
Transaction.  Upon  consummation of the Transaction,  the Trust will assume this
indebtedness. The actual amount of such indebtedness may be less than $6,500,000
to the extent that RPS effects the sale of the assets to be  distributed  to the
Trust or is prepaid by any of the borrowers under its mortgage loans.

5.        COMMITMENTS

          In March 1995, a lease was entered into for approximately 4,863 square
feet of office space at 747 Third Avenue,  New York,  New York.  The term of the
lease  commenced on April 1, 1995.  The lease was extended in January 1997 at an
annual base rental of approximately $172,000. The lease will expire on April 30,
1998.  The Trust and the landlord each have options to terminate the lease as of
November 20, 1997 or as of February 28, 1998 upon 90 days' prior written  notice
to the other.

                                      F-17

   

<PAGE>


                                   SIGNATURES

           Pursuant to the requirements of Section 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,  on the 29th day of
March, 1999.

                                ATLANTIC REALTY TRUST

Date:  March 29, 1999           By:  /s/ Joel M. Pashcow                        
                                     -------------------------------------------
                                      Name: Joel M. Pashcow
                                      Title: President and Chairman of the Board


           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.
<TABLE>

<CAPTION>
   Signature                           Title                                        Date
   ---------                           -----                                        ----

<S>                                    <C>                                         <C>    

   /s/ Joel M. Pashcow                 President and Chairman of the                March 29, 1999
   -------------------                 Board
   Joel M. Pashcow

   /s/ Edwin R. Frankel                Executive Vice President,                    March 29, 1999
   --------------------                Chief Financial Officer, 
   Edwin R. Frankel                    Secretary and Principal
                                       Financial and Accounting
                                       Officer

   /s/ Herbert Liechtung               Trustee                                      March 29, 1999
   --------------------
   Herbert Liechtung

   /s/ Edwin J. Glickman               Trustee                                      March 29, 1999
   --------------------
   Edwin J. Glickman

   /s/ Stephen R. Blank                Trustee                                      March 29, 1999
   --------------------
   Stephen R. Blank

   /s/ Edward Blumenfeld               Trustee                                      March 29, 1999
   --------------------
   Edward Blumenfeld
                                       Trustee                                      March 29, 1999
   /s/ Samuel M. Eisenstat
   -----------------------
   Samuel M. Eisenstat

   /s/ Arthur H. Goldberg              Trustee                                      March 29, 1999
   ----------------------
   Arthur H. Goldberg                                                               

   /s/  William A. Rosoff              Trustee                                      March 29, 1999
   ----------------------
   William A. Rosoff

</TABLE>

   

<PAGE>


                                  Exhibit Index

The following exhibits are filed as part of this Annual Report on Form 10-K.


                                   Description

3.1        Amended and Restated  Declaration of Trust of the Trust (Incorporated
           by reference to the Trust's definitive registration statement on Form
           10, dated March 28, 1996, File No. 0-27562, Exhibit 3.1).

3.2        Amended and Restated By-Laws of the Trust  (Incorporated by reference
           to the Turst's  definitive  registration  statement on Form 10, dated
           March 28, 1996, File No. 0-27562, Exhibit 3.2).

3.3        First  Amendment to Amended and Restated  Declaration of Trust of the
           Trust   (Incorporated   by  reference   to  the  Trust's   definitive
           registration  statement on Form 10,  dated March 28,  1996,  File No.
           0-27562, Exhibit 3.3).

4.1        Form of Share  Certificate  (Incorporated by reference to the Trust's
           definitive  registration  statement on Form 10, dated March 28, 1996,
           File No. 0-27562, Exhibit 4.1).

10.1       Lease  Agreement,  dated as of January 16, 1997,  by and between Sage
           Realty  Corporation,  as the  lessor,  and the  Trust,  as the lessee
           (Incorporated  by reference to the Trust's annual report on Form 10-K
           for the year ended December 31, 1996, Exhibit 10.1.)

10.2       Form of Assignment,  Assumption and Indemnification Agreement between
           RPS Realty  Trust and the Trust  (Incorporated  by  reference  to the
           Trust's definitive registration statement on Form 10, dated March 28,
           1997, File No. 0-27562, Exhibit 10.1.)

10.3       Form  of Tax  Agreement  between  RPS  Realty  Trust  and  the  Trust
           (Incorporated  by  reference to the Trust's  definitive  registration
           statement on Form 10, dated March 28, 1996, File No. 0-27562, Exhibit
           10.2).

10.4       Form of  Information  Statement  (Incorporated  by  reference  to the
           Trust's definitive registration statement on Form 10, dated March 28,
           1996, File No. 0-27562, Exhibit 20.1).

10.5       Employment  Agreement,  dated June 11, 1998, by and between the Trust
           and  Edwin R.  Frankel  (Incorporated  by  reference  to the  Trust's
           quarterly  report on Form 10-Q for the three  months  ended  June 30,
           1998, File No. 000-27198, Exhibit 10.1)

21.1       Subsidiary of the Registrant.

27.1       Financial Data Schedule.