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

                                   FORM 10-K/A

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

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the fiscal year ended December 31, 1997

[ ]  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 1-8063
                       ------
                                  Capital Trust
                                  -------------
             (Exact name of registrant as specified in its charter)

            California                                          94-6181186
            ----------                                          ----------
  (State or other jurisdiction of                             (I.R.S. Employer
       incorporation or organization)                        Identification No.)

605 Third Avenue, 26th Floor, New York, NY                       10016
------------------------------------------                       -----
   (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code:           (212) 655-0220
                                                              --------------

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

                                                          Name of Each Exchange
    Title of Each Class                                    on Which Registered
    -------------------                                   ---------------------
Class A Common Shares of Beneficial Interest,           New York Stock Exchange
$1.00 par value ("Class A Common Shares")                Pacific Stock Exchange

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

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 the filing
requirements for at least the past 90 days.
                                                   Yes  /X/           No  /__/

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. / /

709766.3

<PAGE>



                                  MARKET VALUE

         Based on the  closing  sales price of $11.31 per share,  the  aggregate
market value of the outstanding  Class A Common Shares held by non-affiliates of
the registrant as of April 29, 1998 was $126,619,095.

                               OUTSTANDING SHARES

         As of April 29, 1998 there were 18,229,650  outstanding  Class A Common
Shares.  The Class A Common  Shares are listed on the New York and Pacific Stock
Exchanges  (trading  symbol  "CT").  Trading is reported in many  newspapers  as
"CapitalTr".

709766.3 

<PAGE>



                                  CAPITAL TRUST

                                    PART III

Item 10.  Trustees and Executive Officers of the Registrant...................1
Item 11.  Executive Compensation..............................................5
Item 12.  Security Ownership of Certain Beneficial Owners and Management.....10
Item 13.  Certain Relationships and Related Transactions.....................14


Signatures...................................................................17


709766.3  
                                       -i-

<PAGE>



         Capital Trust (the "Company") hereby amends the following items of Part
III of its Form 10-K Annual  Report for the fiscal year ended  December 31, 1997
as filed with the Securities and Exchange Commission on February 26, 1998.

                                    PART III


ITEM 10.          Trustees and Executive Officers of the Registrant

         The name,  age as of April 30, 1998,  and existing  positions  with the
Company of the trustees and executive and senior  officers of the Company are as
follows:
<TABLE>
<CAPTION>

                 Name                    Age   Office or Position Held
                 ----                    ---   -----------------------
<S>                                      <C>   <C>                              
Samuel Zell...........................   56    Chairman of the Board of Trustees
Jeffrey A. Altman.....................   31    Trustee
Martin L. Edelman.....................   56    Trustee
Carol J. Eglow........................   37    Managing Director
Jeremy FitzGerald.....................   34    Managing Director
Gary R. Garrabrant....................   40    Trustee
Craig M. Hatkoff......................   44    Trustee, Vice Chairman and Chairman of the Executive
                                               Committee
Marc Holliday.........................   31    Managing Director
John R. Klopp.........................   44    Trustee, Vice Chairman and Chief Executive Officer
Donald J. Meyer.......................   47    Managing Director and Chief Investment Officer
Sheli Z. Rosenberg....................   56    Trustee
Lynne B. Sagalyn......................   50    Trustee
Edward L. Shugrue III.................   32    Managing Director, Chief Financial Officer and Assistant
                                               Secretary
</TABLE>

         The  name,  principal  occupation  for the last  five  years,  selected
biographical  information  and the  period of service as a trustee or officer of
the Company of each of the trustees and  executive  and senior  officers are set
forth below.

Trustees

         Samuel Zell has been  Chairman of the Board of Trustees  since July 15,
1997.  Mr.  Zell  is  chairman  of  the  board  of  directors  of  Equity  Group
Investments,  Inc. ("EGI"),  American Classic Voyages Co., an owner and operator
of cruise lines ("American Classic"),  Anixter International Inc., a provider of
integrated   network  and  cabling  systems   ("Anixter"),   Manufactured   Home
Communities, Inc., a REIT

709766.3 


<PAGE>



specializing  in the ownership and management of manufactured  home  communities
("MHC"), and Jacor Communications, Inc. an owner of radio stations ("Jacor"). He
is chairman of the board of trustees of Equity  Residential  Properties Trust, a
REIT specializing in the ownership and management of multi-family  housing,  and
of Equity Office  Properties  Trust,  a REIT  specializing  in the ownership and
management of office buildings. Mr. Zell is also a director of Fred Meyer, Inc.,
an  owner  and  operator  of  supermarkets  and  discount  stores,  Chart  House
Enterprises,  Inc., an owner and operator of  restaurants,  Ramco Energy PLC, an
independent  oil company  based in the United  Kingdom,  and TeleTech  Holdings,
Inc., a provider of telephone and computer based customer care solutions.

         Jeffrey A. Altman has been a trustee of the Company  since  November 4,
1997.  Since  November  1996,  Mr.  Altman has been a senior vice  president  of
Franklin  Mutual  Advisers,  Inc.,  formerly  Heine  Securities  Corporation,  a
registered  investment adviser ("FMA"),  and a vice president of Franklin Mutual
Series Fund Inc., a mutual fund with assets in excess of $25 billion, advised by
FMA. From August 1988 to October  1996,  Mr. Altman was an analyst with FMA. Mr.
Altman is also the chairman of the board of trustees of Value Property  Trust, a
self-administered REIT engaged in the business of managing its portfolio of real
estate  investments,  and a director of  Resurgence  Properties  Inc., a company
engaged in diversified real estate activities.

         Martin L. Edelman has been a trustee of the Company  since  February 4,
1997.  Mr.  Edelman has been a director of  Chartwell  Leisure  Inc., a publicly
traded owner and operator of hotel properties ("Chartwell"), since November 1994
and has been  president  of Chartwell  since  January  1996.  He has also been a
director of Cendant  Corporation  and a member of that  corporation's  executive
committee  since November 1993. Mr. Edelman has been of counsel to Battle Fowler
LLP,  a New York City law firm that  provides  services  to the  Company,  since
January  1994 and was a partner  with that firm  from  1972  through  1993.  Mr.
Edelman also serves as a director of Avis Rent a Car,  Inc. and G. Soros Realty,
Inc.

         Gary R.  Garrabrant  has been a trustee of the Company since January 2,
1997.  Mr.  Garrabrant  was the vice  chairman of the Company from February 1997
until July 15,  1997.  Mr.  Garrabrant  is executive  vice  president of EGI and
managing  partner of EGI Capital  Markets,  L.L.C.  He joined EGI as senior vice
president in January 1996.  Previously,  Mr. Garrabrant was director of Sentinel
Securities Corporation and co-founded Genesis Realty Capital Management in 1994,
both of which were based in New York and  specialized in real estate  securities
investment  management.  From 1989 to 1994, he was  associated  with The Bankers
Trust Company. Mr. Garrabrant is a director of Meritage Hospitality Group Inc.

         Craig M. Hatkoff has been a trustee and a vice  chairman of the Company
since July 15, 1997. Mr. Hatkoff is a founder and has been a managing partner of
Victor  Capital Group,  L.P.  ("Victor  Capital")  since 1989. Mr. Hatkoff was a
managing  director and co-head of Chemical Realty  Corporation,  the real estate
investment  banking arm of Chemical Banking  Corporation,  from 1982 until 1989.
From  1978 to 1982,  Mr.  Hatkoff  was the head of new  product  development  in
Chemical  Bank's  Real Estate  Division,  where he  previously  served as a loan
officer.

         John R. Klopp has been a trustee of the Company  since January 2, 1997,
the chief  executive  officer  of the  Company  since  February  1997 and a vice
chairman of the Company since July 15, 1997. Mr. Klopp is a founder and has been
a managing  partner  of Victor  Capital  since  1989.  Mr.  Klopp was a managing
director and co-head of Chemical Realty  Corporation  from 1982 until 1989. From
1978 to 1982,

709766.3 
                                       -2-

<PAGE>



Mr. Klopp held various  positions  with  Chemical  Bank's Real Estate  Division,
where he was responsible for originating, underwriting and monitoring portfolios
of  construction  and permanent  loans.  He is a director of  Metropolis  Realty
Trust, Inc., a Manhattan office REIT.

         Sheli Z.  Rosenberg  has been a trustee of the  Company  since July 15,
1997.  Since  1994,  Ms.  Rosenberg  has been the chief  executive  officer  and
president of EGI and Ms.  Rosenberg has been a director of EGI for more than the
past five years.  She was a principal  of the law firm  Rosenberg &  Liebentritt
P.C.  from 1980 until  September  1997.  Ms.  Rosenberg  is a director of Jacor;
American Classic; MHC; Anixter; CVS Corporation, a drugstore chain; and Illinois
Power Co., a supplier  of  electricity  and  natural  gas in  Illinois,  and its
holding  company,  Illinova  Corporation.  She  is  also  a  trustee  of  Equity
Residential  Properties  Trust  and  of  Equity  Office  Properties  Trust.  Ms.
Rosenberg was a vice president of First Capital  Benefit  Administrators,  Inc.,
which  filed a petition  under the federal  bankruptcy  laws on January 3, 1995,
which resulted in its liquidation on November 15, 1995.

         Lynne B. Sagalyn has been a trustee of the Company since July 15, 1997.
Dr. Sagalyn has been a professor and the  coordinator of the M.B.A.  Real Estate
Program at the Columbia  University Graduate School of Business since 1992. From
1991 to 1992, she was a visiting  professor at Columbia.  From 1987 to 1991, she
was an  associate  professor  of  Planning  and Real Estate  Development  at the
Massachusetts Institute of Technology.  She is also on the faculty of the Weimer
School for Advanced Studies in Real Estate and Land Economics.  Dr. Sagalyn is a
director of United Dominion Realty Trust (NYSE) and The Retail Initiative and on
an advisory board for Initiatives for a Competitive Inner City.

Executive and Senior Officers

         Carol J. Eglow has been a managing  director of the Company  since July
15, 1997.  Prior to that time, Ms. Eglow served as a principal of Victor Capital
and had been employed in various positions at such firm since June 1989. She was
previously  employed in various  positions at Chemical  Realty  Corporation  and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.

         Jeremy  FitzGerald  has been a managing  director of the Company  since
July 15,  1997.  Prior to that time,  Ms.  FitzGerald  served as a principal  of
Victor Capital and had been employed in various positions at such firm since May
1990.  She  was  previously   employed  in  various   positions  at  PaineWebber
Incorporated.

         Marc  Holliday has been a managing  director of the Company  since July
15,  1997.  Prior to that time,  Mr.  Holliday  served as a principal  of Victor
Capital and had been  employed in various  positions at such firm since  January
1991. He was previously employed with Westpak Banking Corporation.

         Donald  J.  Meyer has been a  managing  director  and Chief  Investment
Officer of the Company  since July 15, 1997.  From 1979  through July 1997,  Mr.
Meyer held  various  positions  at The First  National  Bank of Chicago  ("First
Chicago").  From 1989 until 1990,  Mr. Meyer served as Senior Credit Officer for
real estate at First Chicago.  From 1990 to 1993, Mr. Meyer, at different times,
was the head of the Real Estate  Enhancement  Division and the Asset Disposition
Department.  Mr. Meyer was the Senior Credit Officer for Product Risk Management
at First Chicago from 1993 until 1995.  From 1995 until 1997, Mr. Meyer was Head
of Structural Investments and managed First Chicago's investments in

709766.3
                                       -3-

<PAGE>



non-investment grade tranches of commercial mortgage-backed securities. In 1991,
Mr. Meyer became a Senior Vice President at First Chicago.

         Edward L.  Shugrue  III has been the  chief  financial  officer  of the
Company since September 30, 1997 and a managing director and assistant secretary
of the Company since July 15, 1997.  Prior to that time, Mr. Shugrue served as a
principal of Victor Capital since January 1997. He previously served as director
of real estate for and a vice  president  of River Bank  America from April 1994
until June 1996  after  serving as a vice  president  of the bank since  January
1992. He was  previously  employed in various  positions at Bear,  Stearns & Co.
Inc.

Compliance with Section 16(a)

         Section 16(a) of the Exchange Act requires the  Company's  officers and
trustees, and persons who own more than ten percent of a registered class of the
Company's  equity  securities,  to file  reports  of  ownership  and  changes in
ownership  with the SEC and the NYSE.  Officers,  trustees  and greater than ten
percent  shareholders  are  required  by  regulation  of the SEC to furnish  the
Company with copies of all Section 16(a) forms they file.

         Based solely on its review of Forms 3, 4 and 5 and  amendments  thereto
available  to the  Company  and  written  representations  from  certain  of the
trustees,  officers and 10%  shareholders  that no form is required to be filed,
the Company  believes that no trustee,  officer or beneficial owner of more than
10% of its  Class A  Common  Shares  failed  to file on a timely  basis  reports
required  pursuant to Section  16(a) of the  Exchange  Act with  respect to 1997
except John McMahan, a former trustee of the Company,  who filed a Form 4 report
for January  1997 on or about  March 12, 1997 (30 days after the due date).  The
late Form 4 report  related to four  transactions.  Mr.  McMahan paid the profit
from the transactions to the Company on February 9, 1997.

709766.3
                                       -4-

<PAGE>



ITEM 11.          Executive Compensation

Executive Compensation

         The  following  table  sets  forth for the years  indicated  the annual
compensation of the chief executive officer and the other executive  officers of
the Company who earned annual salary and bonus in excess of $100,000.

<TABLE>
<CAPTION>

                                             Summary Compensation Table


                                                                                                       
                                                                                Long Term             Other
                                                       Annual Compensation     Compensation         Compensation
-------------------------------------- -------------------------------------------------------------------------
                                                                                Securities
                                                                                Underlying
Name and Principal Position             Year     Salary($)(1)     Bonus($)      Options(#)          
<S>                                     <C>      <C>              <C>           <C>                 <C>
John R. Klopp                           1997     $235,417(2)      $500,000       75,000             $   992 (3)
     Vice Chairman and Chief
     Executive Officer
Craig M. Hatkoff                        1997      235,417(2)       500,000       75,000                 992 (3)
     Vice Chairman and Chairman
     of the Executive Committee
Donald J. Meyer                         1997      139,773          150,000       75,000              35,125 (4)
     Managing Director and Chief
     Investment Officer
Edward L. Shugrue III                   1997      275,067          200,000       50,000                 --
     Managing Director and Chief
     Financial Officer

</TABLE>

----------

(1)   The  Company paid  total compensation of $140,000, $180,000 and $72,000 to
      Frank M. Morrow,  the Company's  former chief executive  officer,  for the
      years ended 1997, 1996 and 1995, respectively.

(2)   Excludes  $463,036 of capital  distributions  made by Victor Capital Group
      prior to the  acquisition  of such firm by the  Company to each of Messrs.
      Klopp and Hatkoff during 1997. Also,  excludes $475,021 of management fees
      paid to  Valentine  Wildove &  Company,  Inc.,  which is owned  equally by
      Messrs. Klopp and Hatkoff.

(3)   Represents term life insurance premiums paid by the Company.

(4)   Represents relocation expenses paid by the Company.



709766.3 
                                       -5-

<PAGE>



Employment Agreements

         The Company is a party to employment  agreements with John R. Klopp and
Craig M. Hatkoff.  The  employment  agreements  provide for  five-year  terms of
employment  commencing  as of July 15,  1997.  On the fifth  anniversary  of the
commencement of the employment agreements,  and on each succeeding  anniversary,
the terms of the employment  agreements shall be automatically  extended for one
additional  year unless,  not later than three months prior to such  anniversary
date,  either  party shall have  notified  the other that it will not extend the
term of the  agreement.  The  employment  agreements  provide  for  base  annual
salaries of $500,000,  which will be  increased  each  calendar  year to reflect
increases in the cost of living and will otherwise be subject to increase in the
discretion of the Board of Trustees. Mr. Klopp and Mr. Hatkoff are also entitled
to annual incentive cash bonuses to be determined by the Board of Trustees based
on individual  performance and the  profitability of the Company.  Mr. Klopp and
Mr. Hatkoff are also  participants  in the Company's  1997  long-term  incentive
share plan (the "Incentive  Share Plan") and other employee benefit plans of the
Company.

         If the  employment of Mr. Klopp or Mr.  Hatkoff is  terminated  without
cause,  with good reason or  following  a change of control,  as those terms are
defined in the employment agreements, the affected employee would be entitled to
(i) a  severance  payment  equal to the  greater of the  amount  payable to such
employee over the remainder of the term of the employment agreement or an amount
equal to the aggregate base salary and cash incentive bonus paid to the employee
during the previous year;  (ii) continued  welfare  benefits for two years;  and
(iii)  automatic  vesting of all  unvested  share  options  such that all of the
employee's  share  options  would become  immediately  exercisable.  Each vested
option will remain exercisable for a period of one year following the employee's
termination.  The employment agreements provide for a non-competition  period of
one year if Mr. Klopp or Mr. Hatkoff terminates his employment voluntarily or is
terminated for cause.

         The Company is a party to an employment  agreement with Donald J. Meyer
which provides for a term of employment for two years. The employment  agreement
provides  for a base  annual  salary of  $300,000,  minimum  annual  bonuses  of
$150,000 at the end of 1997 and 1998,  and for  participation  in the  Incentive
Share Plan.

Compensation of Trustees

         The Company  does not pay its  non-employee  trustees any cash fees for
their services as such,  but rather  compensates  non-employee  trustees with an
annual award of share units under the Company's 1997 non-employee  trustee share
plan with a value  equal to $30,000.  The number of share units  awarded to each
trustee,  which are  convertible  into an equal number of Class A Common  Shares
according to individual  schedules set by each trustee, is determined  quarterly
in arrears by dividing one-quarter of the annual retainer amount ($7,500) by the
average  closing price of the Class A Common  Shares for the quarter.  The share
units  vest when  issued.  There is no  separate  compensation  for  service  on
committees of the Board of Trustees. All trustees are also reimbursed for travel
expenses incurred in attending Board and committee meetings.

         The Company is a party to a consulting agreement,  dated as of July 15,
1997,  with  Gary R.  Garrabrant,  a  trustee  of the  Company.  The  consulting
agreement has a term of one year and, as amended,  provides for a consulting fee
of $180,000. Pursuant to the agreement, Mr. Garrabrant provides consulting

709766.3 
                                       -6-

<PAGE>



services  for  the  Company,  including,  strategic  planning,  identifying  and
negotiating mergers,  acquisitions,  joint ventures and strategic alliances, and
advising as to capital  structure  matters.  Mr.  Garrabrant is also entitled to
participate  in the  Company's  Incentive  Share  Plan,  on such basis as may be
determined  by  the  compensation  committee  of  the  board  of  trustees  (the
"Compensation Committee"). In 1998, Mr. Garrabrant was awarded 35,000 options to
purchase Class A Common Shares in recognition  of his ongoing  contributions  to
the Company.  The Compensation  Committee also awarded a one-time  discretionary
bonus of  $150,000  to Mr.  Garrabrant  for  services  rendered  during  1997 in
connection with the Company's public offering of 9,000,000 Class A Common Shares
(the "Offering").

         The Company is a party to a consulting  agreement,  dated as of January
1, 1998,  with  Martin L.  Edelman,  a trustee of the  Company.  The  consulting
agreement has a term of one year, is terminable by either party upon thirty (30)
days prior notice and provides for a consulting fee of $8,000 per month.  Unless
otherwise  terminated,  the  agreement  shall  automatically  be extended for an
additional  one year term.  Pursuant  to the  agreement,  Mr.  Edelman  provides
consulting  services for the Company  including client  development and advisory
services in connection with lending and investment  banking activities and asset
and business acquisition  transactions.  Pursuant to the agreement,  the Company
agreed to grant 50,000 options to purchase Class A Common Shares. Mr. Edelman is
also entitled to participate in the Company's Incentive Share Plan.

         In 1998, the Compensation Committee awarded Samuel Zell 120,000 options
to purchase Class A Common Shares in recognition of his ongoing contributions to
the Company.

Compensation Committee Interlocks and Insider Participation

         The  compensation  committee  of the board of  trustees  was  comprised
during 1997 of Ms. Rosenberg, Dr. Sagalyn and Messrs. Altman, Edelman and Klopp.
Other than Mr. Klopp, none of the committee's members was an officer or employee
of  the  Company  during  1997.  No  committee   member  had  any   interlocking
relationships requiring disclosure under applicable rules and regulations.

         Mr. Zell and Ms.  Rosenberg  serve as members of the board of directors
of numerous non-public  companies owned or controlled in whole or in part by Mr.
Zell or his affiliates which do not have  compensation  committees,  and in many
cases,  the  executive  officers  of those  companies  include  Mr. Zell and Ms.
Rosenberg.

         For a  description  of  certain  relationships  and  transactions  with
members  of the board of  trustees  or their  affiliates,  see "Item 13  Certain
Relationships and Related Transactions."


709766.3 
                                       -7-

<PAGE>



Incentive Share Option Plan

         The  following  table sets forth  share  options  issued in 1997 to the
executive officers named in the Summary  Compensation Table. The table also sets
forth the  hypothetical  gains that would exist for the share options at the end
of their ten-year terms,  assuming compound rates of appreciation of 5% and 10%.
The actual  future  value of the options  will depend on the market value of the
Company's Class A Common Shares.
<TABLE>
<CAPTION>


                                    Option/SAR Grants in Last Fiscal Year

                                                                                      Potential Realizable Value at Assumed
                                                                                      Annual Rates of Stock Price
                                                                                      Appreciation for Option
                  Individual Grants                                                   Term(2)
----------------------------------------------------------------------------------------------------------------------
             (a)           (b)             (c)             (d)          (e)              (f)                   (g)

                                                                      
                         Number of                                    
                         Securities       % of Total
                         Underlying       Option/SARs                 
                         Options/         Granted to     Exercise     
                         SARs             Employees      or Base      Expira-        
                         Granted          in Fiscal      Price        tion           
Name                     (#)(1)           Year           ($/sh)       Date                5% ($)              10% ($)
----                     ---------        -----------    ---------    -------         ------------       ------------

<S>                      <C>              <C>            <C>          <C>             <C>                <C>        
John R. Klopp            75,000           13.9665        $6.00         7/16/07         $283,002.58       $717,184.11
Craig M. Hatkoff         75,000           13.9665         6.00         7/16/07          283,002.58        717,184.11
Donald J. Meyer          75,000           13.9665         6.00         7/16/07          283,002.58        717,184.11
Edward L. Shugrue III    50,000            9.3110         6.00         7/16/07          188,668.39        478,122.73
</TABLE>

----------

(1)      Represents  shares  underlying  share  options;  none of the  executive
         officers were granted SARs. One-third of the options become exercisable
         in equal increments on the first, second and third anniversaries of the
         date of grant.

(2)      The amounts of potential  realizable value,  which are based on assumed
         appreciation  rates of 5% and 10% prescribed by Securities and Exchange
         Commission  ("Commission") rules, are not intended to forecast possible
         future appreciation,  if any, of the Company's share price. The amounts
         of  potential  value with  respect to the  options do not  account  for
         expiration  of  the  options  upon  termination  of  employment  or the
         phased-in exercise  schedule.  Future  compensation  resulting from the
         options is based  solely on the  actual  performance  of the  Company's
         share price in the trading market.



709766.3
                                       -8-

<PAGE>



         The following  chart shows the 1997 year-end value of the share options
held by the  named  executive  officers.  None of the named  executive  officers
exercised share options during 1997.


                         Year End 1997 Option/SAR Values


<TABLE>
<CAPTION>

                                    Number of Securities        
                                   Underlying Unexercised        Value of Unexercised In-the-
                                    Options/SARs at Year          Money Options/SARs at
                                            End #                       Year End(1)
                             ----------------------------   ----------------------------------------

     Name                    Exercisable    Unexercisable    Exercisable     Unexercisable
     ----                    -----------    -------------    -----------     -------------
     <S>                     <C>            <C>              <C>             <C>        
     John R. Klopp                0              75,000         $0.00           $393,750.00
     Craig M. Hatkoff             0              75,000          0.00            393,750.00
     Donald J. Meyer              0              75,000          0.00            393,750.00
     Edward L. Shugrue III        0              50,000          0.00            262,500.00

</TABLE>

----------

(1)      Amounts  shown  represent  the market value of the  underlying  Class A
         Common Shares at year end  calculated  using the December 31, 1997, the
         New York Stock  Exchange  ("NYSE")  closing  price per share of Class A
         Common  Shares of $11.25 minus the exercise  price of the share option.
         The actual value,  if any, an executive  may realize is dependent  upon
         the amount by which the market price of Class A Common  Shares  exceeds
         the exercise  price when the share  options are  exercised.  The actual
         value  realized  may be  greater  or less than the  value  shown in the
         table.




709766.3
                                      -9-

<PAGE>



ITEM 12.    Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth as of April 29, 1998 certain information
with respect to the  beneficial  ownership of Class A Common  Shares and class A
9.5% cumulative  convertible preferred shares of beneficial interest,  $1.00 par
value ("Class A Preferred  Shares" (and together with the Class A Common Shares,
the  "Company  Shares")),  and the  voting  power  possessed  thereby  (based on
18,229,650  Class A  Common  Shares  and  12,267,658  Class A  Preferred  Shares
outstanding  on that date),  by (i) each  person  known to the Company to be the
beneficial  owner  of more  than 5% of each of the  outstanding  Class A  Common
Shares and Class A  Preferred  Shares,  (ii) each  trustee  and named  executive
officer of the Company who is a  beneficial  owner of any Class A Common  Shares
and (iii) all trustees and  executive  officers of the Company as a group.  Such
information (other than with respect to trustees and officers of the Company) is
based on a review of statements  filed with the Commission  pursuant to Sections
13(d), 13(f) and 13(g) of the Exchange Act with respect to the Company's Class A
Common Shares.



<TABLE>
<CAPTION>

                                                         Class A                       Class A
                                                      Common Shares                  Preferred Shares
                                               ----------------------------     -------------------------
                                                   Amount and Nature of           Amount and Nature of
                                                  Beneficial Ownership(1)        Beneficial Ownership(1)
                                               ----------------------------     -------------------------
   Five Percent Shareholders,                                    Percent of                    Percent of
  Trustees and Executive Officers                 Number            Class        Number          Class
---------------------------------              ------------      ----------     ------------   ----------
<S>                         <C>                <C>               <C>            <C>            <C> 
Veqtor Finance Company, LLC (2)                6,959,593(3)         38.2%       12,267,658        100%
c/o Capital Trust (3)
605 Third Avenue, 26th Floor
New York, New York 10016

FMR Corp. (4)                                  2,357,982            12.9          --              --

Jeffrey A. Altman                                 30,000              *           --              --

Martin L. Edelman                                  2,043(6)           *           --              --

Gary R. Garrabrant (5)                             2,043(6)           *           --              --

Craig M. Hatkoff (3)                              18,000              *           --              --

John R. Klopp (3)(5)                                --               --           --              --

Sheli Z. Rosenberg (5)                             2,043(6)           *           --              --

Lynne B. Sagalyn                                   2,043(6)           *           --              --

Samuel Zell (3)(5)                                 2,043(6)           *           --              --

Donald J. Meyer                                    5,000(7)           *           --              --

Edward L. Shugrue III                             22,000(7)           *           --              --

All executive officers and trustees as a group    85,215              *           --              --
(10 persons) (3)(5)

*   Represents less than 1%.
</TABLE>


                                      -10-

<PAGE>
----------

(1)      The number of shares owned are those beneficially  owned, as determined
         under  the  rules  of  the  Commission,  and  such  information  is not
         necessarily  indicative of beneficial  ownership for any other purpose.
         Under such rules,  beneficial ownership includes any shares as to which
         a person has sole or shared  voting power or  investment  power and any
         shares which the person has the right to acquire within 60 days through
         the exercise of any option, warrant or right, through conversion of any
         security  or  pursuant  to the  automatic  termination  of a  power  of
         attorney or  revocation  of a trust,  discretionary  account or similar
         arrangement.

(2)      Capital Trust Investors Limited Partnership  ("CTILP") and V2 Holdings,
         LLC ("V2") are the sole  managing  members of Veqtor  Finance  Company,
         LLC, a Delaware  limited  liability  company  ("Veqtor").  The  general
         partner of CTILP is SZ Investments LLC, the managing member of which is
         Zell General  Partnership,  Inc.  ("Zell GP"). The sole  stockholder of
         Zell GP is the Samuel  Zell  Revocable  Trust (the "Zell  Trust").  Mr.
         Samuel Zell serves as the  trustee of the Zell Trust.  Messrs.  John R.
         Klopp and Craig M. Hatkoff are the sole members of V2.

(3)      John R. Klopp, Craig M. Hatkoff and Samuel Zell collectively indirectly
         control the affairs of Veqtor. Each of Messrs.  Hatkoff, Klopp and Zell
         disclaim beneficial ownership of the Common Shares and Preferred Shares
         owned  by  Veqtor.  Veqtor  issued  $50.0  million  of 12%  convertible
         redeemable notes ("Veqtor Notes") to four institutional lenders to fund
         the purchase of its Company Shares. The Veqtor Notes are convertible by
         the holders thereof into preferred  units of Veqtor ("Veqtor  Preferred
         Units") at a rate of $55.59 per unit from and after the earlier of July
         15, 2000, the  dissolution,  liquidation or winding up of Veqtor or the
         sale of any or all of Veqtor's  Company  Shares.  The Veqtor  Preferred
         Units may be redeemed by the holders  thereof in exchange for a portion
         of Veqtor's  Company  Shares at any time after six months from the date
         of  conversion  of the  Veqtor  Notes into such  units.  Veqtor and the
         institutional  lenders  have  reached  an  understanding,   subject  to
         completion of definitive  documentation,  that would provide for, among
         other  things,  the early  conversion  of the Veqtor  Notes into Veqtor
         Preferred  Units on the date of  execution of such  documentation.  The
         proposed  arrangement provides that the Veqtor Preferred Units would be
         redeemable  for a portion  of the  Company  Shares at any time from and
         after the earlier of July 15, 1999 or the  liquidation,  dissolution or
         winding up of Veqtor.  Pursuant  to the  proposed  arrangement,  if all
         Veqtor Preferred Units were redeemed by the holders thereof for Company
         Shares on July 16, 1999,  the  institutional  lenders  would receive in
         exchange  for their  units an  aggregate  of  9,648,946  of the Company
         Shares owned by Veqtor;  if all Veqtor Preferred Units were redeemed by
         the Company  prior to July 15, 2000,  the  institutional  lenders would
         receive in exchange  for their units an  aggregate  of 9,899,710 of the
         Company  Shares owned by Veqtor.  In addition,  in connection  with the
         Offering, CTILP, V2 and Veqtor agreed with the Company that upon either
         the  redemption  for cash of the Veqtor Notes or the  conversion of the
         Veqtor Notes into Veqtor  Preferred  Units, and in the latter case, the
         subsequent  redemption  of all such units in  exchange  for a specified
         portion of Veqtor's Company Shares,  Veqtor shall convert the remaining
         Class A Preferred Shares owned by it into Class A Common Shares. CTILP,
         V2 and Veqtor also agreed that Veqtor shall redeem the Veqtor Preferred
         Units on the  earliest  date upon which  Veqtor has the right to effect
         such redemption.

(4)      Beneficial  ownership  information is based on the Schedule 13G jointly
         filed by FMR Corp. ("FMR"),  Edward C. Johnson 3rd, Abigail P. Johnson,
         Fidelity  Management  and  Research  Company  (the "FMR  Advisor")  and
         Fidelity Growth & Income Fund (the "FGI Fund")  reporting  ownership of
         shares by the FGI Fund and other funds advised by the FMR Advisor.  FMR
         and the FMR  Advisor  are  located  at 82  Devonshire  Street,  Boston,
         Massachusetts, 02109.

(5)      Messrs.  Zell,  Klopp,  Hatkoff and Garrabrant  and Ms.  Rosenberg hold
         indirect economic ownership  interests in Veqtor equal to approximately
         34.2%, 25%, 25%, 4.5% and 4.5%, respectively.

(6)      Represents shares which may be obtained upon conversion of vested share
         units.

709766.3
                                      -11-

<PAGE>



(7)      Includes  20,000  and  5,000  shares  for Mr.  Shugrue  and Mr.  Meyer,
         respectively, that are the subject of restricted share awards for which
         the recipients retain voting rights.

Buy/Sell Agreement

         Veqtor,  CTILP,  V2 and  Messrs.  Klopp and  Hatkoff  are parties to an
agreement,  dated July 15, 1997, that contains buy/sell  provisions  pursuant to
which (i) one member of Veqtor may purchase from or sell to the other member its
interests  in Veqtor or (ii) one member of V2 or CTILP may purchase the other V2
member's interest in V2 (the "Buy/Sell  Agreement").  Pursuant to the agreement,
from and after July 15, 2000,  either CTILP or V2 as the  initiating  party (the
"Initiating  Party")  may  initiate  the  buy/sell  process  by  notifying  (the
"Buy/Sell Notice") the other party (the "Responding Party") of its desire either
to sell for cash all of its Veqtor  Common  Units (as  defined  in the  Buy/Sell
Agreement)  to the  Responding  Party or to purchase  for cash all of the Veqtor
Common Units owned by the Responding  Party, in each case, at the per unit price
specified by the Initiating Party (the "Specified  Price").  Upon receipt of the
Buy/Sell Notice,  the Responding Party must within 150 days elect either to sell
its Veqtor  Common  Units to the  Initiating  Party or purchase  the  Initiating
Party's  Veqtor Common Units at the Specified  Price.  If the  Responding  Party
fails to respond to the Buy/Sell  Notice,  it shall be deemed to have elected to
sell its Veqtor Common Units at the Specified Price.

         The Buy/Sell Agreement provides that upon the termination of employment
(including through death or disability) with the Company of either John R. Klopp
or Craig M. Hatkoff (the "Departing Person") other than by voluntary termination
(the "Termination Event"), whomever of Messrs. Klopp or Hatkoff has not been the
subject of the Termination  Event (the "Remaining  Person") shall have the right
to purchase  all of the  interests in V2 then held by the  Departing  Person for
cash at their fair  market  value as defined in the  Buy/Sell  Agreement  ("Fair
Market Value"). If the Remaining Person does not purchase the Departing Person's
interest in V2, the Buy/Sell  Agreement provides that CTILP shall have the right
to purchase  for cash from V2 50% of the Veqtor  Common Units then held by V2 at
their  fair  market  value,  upon  which  purchase  V2 shall  distribute  to the
Departing  Person (or his estate or  representative)  an amount equal to the net
proceeds  of such sale  reduced  by 50% of V2's  aggregate  liabilities  in full
redemption  of the  interest  in V2 then held by the  Departing  Person  (or his
estate or representative). If CTILP does not elect to purchase the Veqtor Common
Units held by V2 pursuant to the foregoing, (i) Veqtor must distribute to V2 50%
of its assets that V2 would be entitled to receive upon a liquidation  of Veqtor
(whereupon V2's economic  interest in Veqtor shall be  correspondingly  reduced)
and (ii) V2 must  distribute to the Departing  Person 50% of such assets reduced
by 50% of  V2's  aggregate  liabilities  in  full  redemption  of the  Departing
Person's interest in V2.

         Pursuant to the Buy/Sell Agreement,  upon the voluntary  termination of
employment  with  the  Company  of  either  of  Messrs.  Klopp or  Hatkoff  (the
"Voluntarily Departing Person"),  CTILP shall have the right to purchase from V2
50% of the Veqtor  Common  Units  then held by V2 for cash at their fair  market
value,  upon such  purchase V2 shall  distribute  to the  Voluntarily  Departing
Person an amount  equal to the net  proceeds of such sale reduced by 50% of V2's
aggregate  liabilities in full redemption of the interest in V2 then held by the
Voluntarily Departing Person. If CTILP does not purchase the Veqtor Common Units
pursuant to the foregoing, the agreement provides that whomever of Messrs. Klopp
or Hatkoff is not the Voluntarily  Departing Person (the "Voluntarily  Remaining
Member") shall have the right to purchase all of the interest in V2 then held by
the  Voluntarily  Departing  Person for cash at its Fair  Market  Value.  If the
Voluntarily  Remaining  Member does not purchase from the Voluntarily  Departing
Person all of the interest in V2 then held by the Voluntarily  Departing  Person
for cash at its Fair Market Value pursuant to the

709766.3
                                      -12-

<PAGE>



foregoing,  (i) Veqtor must  distribute to V2 50% of its assets that V2 would be
entitled to receive in a liquidation of Veqtor (whereupon V2's economic interest
in Veqtor shall be  correspondingly  reduced) and (ii) V2 must distribute to the
Voluntarily Departing Person 50% of such assets reduced by 50% of V2's aggregate
liabilities in full redemption of the Voluntarily Departing Person's interest in
V2.

         Pursuant to the Buy/Sell Agreement,  upon the termination of employment
with the Company of both Messrs.  Klopp and Hatkoff,  within any 30-day  period,
for any or no reason,  whether  voluntary  or  involuntary,  including,  without
limitation,  by reason of death or  disability,  CTILP  shall  have the right to
purchase  from V2 all of the  Veqtor  Common  Units  then held by V2 for cash at
their Fair Market  Value.  If CTILP does not  purchase  the Veqtor  Common Units
pursuant to the foregoing, Veqtor shall distribute to V2 100% of its assets that
V2 would be entitled to receive upon a liquidation of Veqtor in full  redemption
of 100% of the Veqtor Common Units then held by V2.

         Pursuant to the Buy/Sell Agreement,  upon the termination of employment
with the  Company  of either of Messrs.  Klopp or Hatkoff  for any or no reason,
whether voluntary or involuntary,  including,  without limitation,  by reason of
his death or disability, following by more than 30 days the prior termination of
employment  with the  Company  of the  other  individual  for any or no  reason,
whether voluntary or involuntary,  including,  without limitation,  by reason of
his death or  disability,  CTILP shall have the right to purchase from V2 all of
the Veqtor Common Units then held by V2 for cash at their Fair Market Value.  If
CTILP does not  purchase  the Veqtor  Common  Units  pursuant to the  foregoing,
Veqtor  shall  distribute  to V2 100% of its assets that V2 would be entitled to
receive upon a  liquidation  of Veqtor in full  redemption of 100% of the Veqtor
Common Units then held by V2.

         The Buy/Sell  Agreement  prohibits  the transfer of Veqtor Common Units
and interests in V2 except to permitted  transferees as defined in the agreement
or pursuant to right of first refusal provision contained in the agreement.  The
Buy/Sell  Agreement  contains  provisions  governing  the  management of Veqtor.
Pursuant to such provisions, in the event that V2 and CTILP do not hold the same
number of Veqtor Common Units, then, notwithstanding anything to the contrary in
the operating agreement governing Veqtor (the "Veqtor Operating Agreement"), all
matters to be determined by V2 and CTILP as the managing members of Veqtor shall
be  determined as between V2 and CTILP by an  affirmative  vote of a majority of
the Veqtor  Common  Units then held by V2 and CTILP,  and V2 and CTILP  shall be
bound to act on such matter as managing members in the manner determined by such
vote. The agreement  provides that no permitted  transferee or other third party
transferee  shall be entitled to be  appointed,  or otherwise act as, a managing
member of Veqtor.

         The Buy/Sell  Agreement provides that  notwithstanding  anything to the
contrary  in the Veqtor  Operating  Agreement,  as long as V2 and CTILP hold the
same  number of Veqtor  Common  Units,  each  shall be  entitled  to direct  the
nomination  of an equal  number of  trustees/directors  of the  Company,  and if
Veqtor shall be entitled to nominate an odd number of trustees/directors, V2 and
CTILP shall jointly select one of the trustee/director nominees. If V2 and CTILP
do not hold the same  number  of  Veqtor  Common  Units,  then,  notwithstanding
anything to the contrary in the Veqtor  Operating  Agreement,  V2 and CTILP each
shall be entitled  to direct the  nomination  of a number of  trustees/directors
equal to their relative percentage holdings of Veqtor Common Units multiplied by
the total number of trustees/directors which Veqtor is then entitled to nominate
(rounded to the nearest whole number).



709766.3  
                                      -13-

<PAGE>



ITEM 13.    Certain Relationships and Related Transactions

Interest Purchase Agreement

         In  connection  with the  acquisition  of Victor  Capital,  the Company
entered into an interest  purchase  agreement,  dated as of June 16, 1997,  with
John R. Klopp, Craig M. Hatkoff and Valentine Wildove & Company,  Inc., pursuant
to which the  Company  acquired  partnership  interests  in Victor  Capital  and
certain of its  affiliated  entities  for a purchase  price of $5  million.  The
purchase price under the interest purchase  agreement is payable by the delivery
by the Company to the sellers of the non-interest bearing acquisition notes (the
"Acquisition   Notes").  The  Acquisition  Notes  provide  for  ten  semi-annual
principal  amortization  payments  in  equal  installments.  Mr.  Klopp  and Mr.
Hatkoff,  each of whom is a trustee of the Company, each received an Acquisition
Note in the principal amount of $2,162,500.  Valentine Wildove & Company,  Inc.,
in which  Messrs.  Klopp and Hatkoff are each 50% owners,  received  $675,000 in
principal amount of the Acquisition Notes.

         The  interest  purchase   agreement  provides  that  the  sellers  will
indemnify  the  Company  from all  damages  as a  result  of any  breach  of any
representation,  warranty, covenant or agreement of the sellers contained in the
interest  purchase  agreement.  The Company's right to  indemnification  and the
seller's obligation to provide  indemnification  with respect to any breach of a
representation or warranty continue until July 15, 1999.

Investment Agreement

         Pursuant to the terms of the preferred share purchase agreement,  dated
as of June 16,  1997,  by and between  the  Company and Veqtor (the  "Investment
Agreement"),  on July 15, 1997,  the Company sold  12,267,658  Class A Preferred
Shares  to  Veqtor  for an  aggregate  purchase  price  of  $33.0  million.  The
Investment  Agreement  contains  certain  restrictive  covenants  binding on the
Company.  The Investment  Agreement provides that the Company will not amend the
Company's  amended and restated  declaration of trust,  dated July 15, 1997 (the
"Current  Declaration of Trust") unless (i) the Company has given Veqtor no less
than 15 days  prior  notice of such  change and (ii) the Board of  Trustees  has
reasonably  determined  that the  amendment  does not  contravene or violate the
provisions  of the  Investment  Agreement  or the terms of the Class A Preferred
Shares.  The Company has agreed that, so long as any Class A Preferred Shares or
class B 9.5%, cumulative  convertible  non-voting preferred shares of beneficial
interest,  $1.00 par value  ("Class B Preferred  Shares"),  remain  outstanding,
without  the  affirmative  vote of the  holders  of more than 50% of the Class A
Preferred  Shares and Class B  Preferred  Shares then  outstanding,  voting as a
single  class,  the Company  will not incur any  indebtedness  if the  Company's
debt-to-equity ratio would exceed 5:1.

         The Company has also agreed in the  Investment  Agreement only to issue
shares that are Junior  Shares and only to issue  Class B Preferred  Shares upon
the conversion of any Class A Preferred  Shares.  "Junior Shares" are defined as
common  shares  and any other  class or series of shares of the  Company  now or
hereafter authorized, issued or outstanding that are subject, under the terms of
the Current Declaration of Trust, to the following restrictions and limitations:
(i) no  dividend or  distribution  can be declared or paid on the shares of such
class or series  unless all accrued  dividends  and other  amounts then due with
respect to the Class A Preferred  Shares and Class B Preferred Shares shall have
been paid in full; (ii) in the event of any liquidation,  dissolution or winding
up of the  Company,  either  voluntary  or  involuntary,  the holders of Class A
Preferred  Shares and Class B Preferred  Shares shall be entitled to receive out
of the assets of the

709766.3
                                      -14-

<PAGE>



Company available for distribution to shareholders,  the liquidation  preference
with  respect to the Class A Preferred  Shares and Class B Preferred  Shares and
any accrued and unpaid dividends thereon before any payment shall be made or any
assets distributed to the holders of such other class or series of shares of the
Company;  and  (iii)  shares  of such  class or series  are not  required  to be
redeemed under any circumstances,  either at the option of the Company or of any
holder thereof, unless all of the outstanding Class A Preferred Shares and Class
B Preferred Shares have theretofore been redeemed or converted.

         The Investment  Agreement provides for certain registration rights with
respect  to  securities  of the  Company  held  by  Veqtor  at the  time  of the
Investment,  to the extent such securities  (whether or not converted into other
securities  of the Company)  continue to be held by Veqtor or the  Institutional
Investors  (as such  term is  defined  in the  Investment  Agreement)  (or their
respective  transferors).  The holders of such registrable  securities will have
the right to request that the Company prepare and file up to three  registration
statements  under  the  Securities  Act  covering  all or any  portion  of  such
registrable  securities.  In  addition,  if  the  Company  proposes  to  file  a
registration  statement  at any time,  the  Company  has  agreed to use its best
efforts,  upon Veqtor's and the other holders' request, to cause any shares held
by  Veqtor  and the  other  holders  to be  included  in such  registration.  In
connection  with any  securities  registration,  Veqtor  and the other  holders,
respectively,  have  agreed  to  pay  all  underwriting  discounts  and  selling
commissions on the shares  registered on behalf of Veqtor and the other holders.
All other costs of registration are to be paid by the Company.

Sharing Agreement

         Pursuant to an oral agreement with The Peregrine Real Estate Trust (the
"Former Parent"), costs for certain general administrative  services,  including
executive services (including the services of Mr. Morrow),  accounting services,
treasury  services,  financial  reporting  and  internal  bookkeeping  services,
shareholder  relations,  and directors' and officers' insurance were shared with
the Former Parent. The shared costs were allocated to the Company and the Former
Parent  based  upon their  respective  asset  values  (real  property  and notes
receivable),  subject  to  annual  negotiation.   Pursuant  to  this  agreement,
approximately  $435,000  and  $258,000  was paid or  accrued as a payable to the
Former  Parent in 1995 and 1996,  respectively.  As of December  31,  1996,  the
Company  owed the  Former  Parent  approximately  $31,000  pursuant  to the cost
sharing  agreement.  The  agreement  was  terminated  on January 7, 1997 and all
amounts owed thereunder were paid.

Reimbursement Agreement

         Pursuant to an expense reimbursement  arrangement with EGI, the Company
has  agreed  to  reimburse  EGI the  costs for  certain  general  administrative
services  to  the  Company,   including,   among  others,  certain  legal,  tax,
shareholder relations and insurance acquisition services,  which are provided by
employees  of EGI.  As of  December  31,  1997,  the Company had paid or accrued
approximately $82,000 to EGI.

Relationships with Martin L. Edelman

         Martin L.  Edelman,  a trustee of the Company,  is of counsel to Battle
Fowler  LLP,  a New York City law firm that is  representing  the  Company  with
respect  to  various  matters  and  has  represented  the  Company  and  certain
affiliates  thereof,  including  Victor  Capital,  in the past with  respect  to
various legal matters.  The Company  expects to continue to retain Battle Fowler
LLP for legal services in the future.

709766.3
                                      -15-

<PAGE>



Relationship with Rosenberg & Liebentritt, P.C.

         During  1997,  the  Company   retained  the  services  of  Rosenberg  &
Liebentritt,  P.C., a law firm which  performs legal  services  exclusively  for
entities in which Samuel Zell, a trustee of the Company, has an interest.

Asset Management Agreements

         VP Metropolis Services,  LLC, a wholly-owned  subsidiary of the Company
("VPM"), is a party to an asset management  agreement (the "VPM Asset Management
Agreement") with MVB Metropolis  Properties,  L.P. ("MVB") pursuant to which VPM
has agreed to manage, service and administer certain real estate assets owned by
MVB and its affiliates,  initially including a New York City property consisting
of 46 condominium units and a pool of 18 mortgages secured by properties located
throughout the Unites States. John R. Klopp and Craig M. Hatkoff,  both trustees
of the Company, are each 25.05% owners of VP-LP, LLC, which owns a 1.0% interest
in MVB. In addition,  Mr. Klopp is a vice president of MVB Metropolis Corp., the
general  partner and a 1.0% owner of MVB.  Pursuant to the VPM Asset  Management
Agreement, fees of $247,219, $149,069 and $149,090 were paid to VPM during 1995,
1996 and 1997, respectively.

         Victor Asset Management Partners, LLC, a wholly-owned subsidiary of the
Company ("VAMP"),  is a party to an asset management  agreement (the "VAMP Asset
Management  Agreement I") with S.H. Mortgage  Acquisition,  LLC ("S.H.  Mortgage
Acquisition")  pursuant  to  which  VAMP  has  agreed  to  manage,  service  and
administer certain real estate assets owned by S.H. Mortgage Acquisition and its
affiliates, initially including 21 loans secured by various properties and other
assets located in New Jersey.  Messrs. Klopp and Hatkoff are managing members of
VP-NJ,  LLC,  which owns a 1.0%  interest in and is the managing  member of S.H.
Mortgage Acquisition. Pursuant to the VAMP Asset Management Agreement I, fees of
$126,406,  $401,912 and $313,977  were paid to VAMP during 1995,  1996 and 1997,
respectively.

         VAMP is also a party to an asset management  agreement (the "VAMP Asset
Management Agreement II") with RE Acquisition,  LLC ("RE Acquisition")  pursuant
to which VAMP has agreed to manage,  service and administer  certain real estate
assets owned by RE Acquisition, initially including a pool of five mortgages and
other  rights  relating to real  properties  located in New York and New Jersey.
Messrs. Klopp and Hatkoff are managing members of VPC Partners,  LLC, which owns
a 0.7772% interest in RE Acquisition.  In addition, Mr. Klopp is a manager of RE
Acquisition.  Pursuant  to the  VAMP  Asset  Management  Agreement  II,  fees of
$380,566 were paid to VAMP during 1997.

709766.3
                                      -16-

<PAGE>


                                   SIGNATURES

         Pursuant  to the  requirements  of Section  13 or Section  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.

April 30, 1998                         /s/ John R. Klopp
--------------                         -----------------
Date                                   John R. Klopp
                                       Vice Chairman and Chief Executive Officer


709766.3
                                      -17-

<PAGE>