<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   ----------

                                    FORM 10-Q

(Mark One)

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

                    For the quarter ended September 30, 2004

                                       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: 1-15923

                              KRAMONT REALTY TRUST
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

              Maryland                              25-6703702
              --------                              ----------
      (State of Incorporation)          (I.R.S. Employer Identification No.)

580  West Germantown Pike, Plymouth Meeting, PA                         19462
-----------------------------------------------                         -----
   (Address of principal executive offices)                           (Zip Code)

       Registrant's telephone number, including area code: (610) 825-7100

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X]  No [ ]

Number of Common Shares of Beneficial Interest, par value $.01 per share, as of
November 8, 2004: 24,151,896

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      KRAMONT REALTY TRUST AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                                                                    (unaudited)
                                                                                 September 30, 2004    December 31, 2003
                                                                                 ------------------    -----------------
<S>                                                                              <C>                   <C>
                        ASSETS
Real estate - income producing, net of accumulated depreciation                       $ 789,204           $ 724,668
Properties held for sale                                                                      -               6,271
Mortgage notes receivable                                                                21,326              22,590
Mortgage notes receivable - related party                                                     -               8,480
Investments in unconsolidated affiliates                                                  9,143               8,880
Cash and cash equivalents (includes $903 restricted cash as of December 31, 2003)         2,472               9,196
Other assets                                                                             36,250              30,626
                                                                                      ---------           ---------
                                           Total assets                               $ 858,395           $ 810,711
                                                                                      =========           =========

                   LIABILITIES AND BENEFICIARIES' EQUITY

LIABILITIES:
Mortgages and notes payable                                                           $ 535,505           $ 451,071
Accounts payable and other liabilities                                                   21,181              17,002
Distributions payable                                                                    10,389               9,989
                                                                                      ---------           ---------

                                           Total liabilities                            567,075             478,062
                                                                                      ---------           ---------

Minority interests in Operating Partnerships                                             16,907              18,802
                                                                                      ---------           ---------

BENEFICIARIES' EQUITY:

Preferred shares of beneficial interest                                                      40                  54
Common shares of beneficial interest, $0.01 par value; authorized
96,683,845 shares; outstanding, 24,151,896 and 24,054,925 as of September
30, 2004 and December 31, 2003, respectively                                                242                 241
Additional paid-in capital                                                              293,830             308,426
Retained earnings (cumulative distributions in excess of net income)                    (12,954)             14,595
Accumulated other comprehensive income (loss)                                              (141)               (477)
Treasury stock, cumulative preferred shares of beneficial interest Series
A-1, 11,155 shares, at cost                                                              (6,070)             (6,070)
Treasury stock,  Redeemable preferred shares of beneficial interest Series
D, 146,800 shares, at cost                                                                    -              (2,349)
                                                                                      ---------           ---------

                                                                                        274,947             314,420

  Unearned compensation on restricted shares of beneficial interest                        (534)               (573)
                                                                                      ---------           ---------
                                           Total beneficiaries' equity                  274,413             313,847
                                                                                      ---------           ---------
                                           Total liabilities and beneficiaries'
                                           equity                                     $ 858,395           $ 810,711
                                                                                      =========           =========
</TABLE>

           See accompanying notes to consolidated financial statements.

                                       2

<PAGE>

                      KRAMONT REALTY TRUST AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  (dollars in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                  Three Months Ended                    Nine Months Ended
                                                                     September 30,                         September 30,
                                                            -------------------------------       -------------------------------
                                                                2004               2003               2004               2003
                                                            ------------       ------------       ------------       ------------
<S>                                                         <C>                <C>                <C>                <C>
Revenues:
  Rent                                                      $     28,639       $     26,897       $     85,804       $     79,862
  Other property income                                            1,178                  -              2,138                  -
                                                            ------------       ------------       ------------       ------------
                                                                  29,817             26,897             87,942             79,862
                                                            ------------       ------------       ------------       ------------
Expenses:
  Operating                                                        8,512              7,927             26,572             24,823
  Depreciation and amortization                                    5,284              4,774             15,154             13,702
  General and administrative                                       2,641              2,148              7,672              6,722
                                                            ------------       ------------       ------------       ------------
                                                                  16,437             14,849             49,398             45,247
                                                            ------------       ------------       ------------       ------------
Operating income                                                  13,380             12,048             38,544             34,615
Management and leasing fees                                          158                 30                459                 30
Interest income                                                      741                789              2,231              2,411
Interest income - related party                                        -                289                508                880
Other income                                                         450                  -              2,648                  -
Equity in income of unconsolidated affiliates                        311                232                860                507
Interest expense                                                  (7,933)            (8,344)           (24,446)           (25,198)
Gain (loss) on sale of properties                                   (737)                 -               (737)                 -
Minority interests in income of Operating Partnerships              (272)              (221)               269               (546)
                                                            ------------       ------------       ------------       ------------
Income from continuing operations                                  6,098              4,823             20,336             12,699
                                                            ------------       ------------       ------------       ------------
Results from discontinued operations:
  Income from operations of properties sold or held for
  sale                                                                 -                946                 22              1,057
  Gain (loss) on sale of properties                                    -              1,793                 (4)             4,122
  Minority interest in discontinued operations                         -               (182)                (1)              (347)
                                                            ------------       ------------       ------------       ------------
Income from discontinued operations                                    -              2,557                 17              4,832
                                                            ------------       ------------       ------------       ------------

Net income
                                                                   6,098              7,380             20,353             17,531
Preferred share distribution                                      (2,165)            (1,703)            (6,700)            (5,108)

Charge for redemption of preferred shares
                                                                       -                  -            (17,691)                 -
                                                            ------------       ------------       ------------       ------------
Income (loss) to common shareholders                        $      3,933       $      5,677       $     (4,038)      $     12,423
                                                            ============       ============       ============       ============
Per common share:
  Income (loss) from continuing operations, basic           $        .16       $        .13       $       (.17)      $        .32
  Income from discontinued operations, basic                $          -       $        .11            $     -       $        .20
                                                            ------------       ------------       ------------       ------------
Total net income (loss) per share, basic                    $        .16       $        .24       $       (.17)      $        .52
                                                            ============       ============       ============       ============
  Income (loss) from continuing operations, diluted         $        .16       $        .13       $       (.17)      $        .32
  Income from discontinued operations, diluted              $          -       $        .11            $     -       $        .20
                                                            ------------       ------------       ------------       ------------
Total net income (loss) per share, diluted                  $        .16       $        .24       $       (.17)      $        .52
                                                            ============       ============       ============       ============
  Dividends declared                                        $       .325       $       .325       $       .975       $       .975
                                                            ============       ============       ============       ============
  Average common shares outstanding:
    Basic                                                     24,140,341         23,931,746         24,102,378         23,677,305
    Effective assumed conversation of share options               49,423             41,450             53,532             41,450
                                                            ------------       ------------       ------------       ------------
    Diluted                                                   24,189,764         23,973,196         24,155,910         23,718,755
                                                            ============       ============       ============       ============
</TABLE>

           See accompanying notes to consolidated financial statements

                                       3
<PAGE>

              CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended September 30,      Nine months Ended September 30,
                                                                2004               2003               2004               2003
                                                            ------------       ------------       ------------       ------------
<S>                                                         <C>                <C>                <C>                <C>
Net income                                                  $      6,098       $      7,380       $     20,353       $     17,531
Change in fair value of cash flow hedges                            (192)                 -               (199)              (138)
Reclassification adjustment for hedge losses included
in net income                                                        124                323                535                948
                                                            ------------       ------------       ------------       ------------
Comprehensive income                                        $      6,030       $      7,703       $     20,689       $     18,341
                                                            ============       ============       ============       ============
</TABLE>


           See accompanying notes to consolidated financial statements

                                       4
<PAGE>

                      KRAMONT REALTY TRUST AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                             Nine months Ended
                                                                                September 30,
                                                                             2004           2003
                                                                           --------       ---------
<S>                                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities                                  $ 32,923       $  23,517
                                                                           --------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Collections on mortgage notes receivable                                    1,264           1,116
  Collections on mortgage notes receivable - related party                      256             365
  Proceeds from sale of mortgage note                                        10,422               -
  Acquisitions of real estate - income producing                            (66,195)        (14,186)
  Capital improvements including development costs                          (15,963)        (14,264)
  Net proceeds from the sale of real estate                                   9,085          16,736
  Change in restricted cash                                                     903             784
  Distributions from unconsolidated affiliates                                1,246             623
  Investment in unconsolidated affiliates                                       (10)         (5,776)
  Other                                                                          (1)              -
                                                                           --------       ---------
Net cash used in investing activities                                       (58,993)        (14,602)
                                                                           --------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings                                                   79,881         199,500
  Repayments of borrowings                                                  (69,947)       (198,644)
  Net proceeds from line of credit                                           74,500          11,000
  Cash distributions paid on common shares of beneficial interest           (23,482)        (22,906)
  Cash distributions paid on preferred shares of beneficial interest         (6,330)         (5,108)
  Proceeds from issuance of common shares of beneficial interest                  -           3,932
  Proceeds from issuance of preferred shares of beneficial interest          10,016               -
  Cash received from share options exercised                                    746             492
  Repurchase of preferred shares of beneficial interest                     (41,330)              -
  Distributions to minority interests                                        (1,623)         (1,623)
  Deferred financing costs                                                   (2,182)         (2,364)
                                                                           --------       ---------
Net cash provided by (used in) financing activities                          20,249         (15,721)
                                                                           --------       ---------
Net decrease in unrestricted cash and cash equivalents                       (5,821)         (6,806)
Unrestricted cash and cash equivalents at the beginning of the period         8,293          16,487
                                                                           --------       ---------
Unrestricted cash and cash equivalents at the end of the period            $  2,472       $   9,681
                                                                           ========       =========
Supplemental disclosure of cash flow information:
  Cash paid for interest                                                   $ 25,180       $  24,842
                                                                           ========       =========
Acquisitions:
  Fair value of assets acquired                                            $(79,219)      $ (47,105)
  Liabilities assumed or incurred                                            13,024          24,124
  Common shares on beneficial interest issued                                     -           8,795
                                                                           --------       ---------
  Cash (paid) for acquisitions                                             $(66,195)      $ (14,186)
                                                                           ========       =========
Restricted share awards                                                    $    617       $     527
                                                                           ========       =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                      KRAMONT REALTY TRUST AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND BUSINESS

Kramont Realty Trust, a Maryland real estate investment trust ("Kramont"), is a
self-administered, self-managed equity real estate investment trust ("REIT")
which is engaged in the ownership, acquisition, development, redevelopment,
management and leasing of primarily community and neighborhood shopping centers.
Kramont does not directly own any assets other than its interest in Kramont
Operating Partnership, L.P. ("Kramont OP") and conducts its business through
Kramont OP and its affiliated entities, including Montgomery CV Realty L.P.
("Montgomery OP", together with Kramont OP and their wholly-owned subsidiaries,
hereinafter collectively referred to as the "OPs", which together with Kramont
are hereinafter referred to as the "Company"). The OPs, directly or indirectly,
own all of the Company's assets, including its interest in shopping centers.
Accordingly, the Company conducts its operations through an Umbrella Partnership
REIT ("UPREIT") structure. As of September 30, 2004, Kramont owned 93.59% of
Kramont OP and is its sole general partner. As of September 30, 2004, Kramont OP
indirectly owned 99.87% of the limited partnership interest of Montgomery OP and
owned 100% of its sole general partner. As of September 30, 2004, the OPs owned
and operated eighty-three shopping centers and two office buildings, managed
four shopping centers for third parties and four shopping centers in connection
with a joint venture, located in 16 states aggregating approximately 12.6
million leasable square feet.

In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. For further information please refer to the
audited financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003.

Certain 2003 income statement amounts have been reclassified to conform to
current year presentation. These reclassifications had no impact on net income
to common shareholders as previously reported.

(2) ACCOUNTING POLICIES AND PROCEDURES

Real Estate - Income producing

Real estate - income-producing ("Real Estate") is stated at cost, less
accumulated depreciation. Upon acquisition of properties, we estimate the fair
value of the land, building and improvements and identify intangible assets and
liabilities and assumed debt in accordance with Statement of Financial
Accounting Standards No. 141, Business Combinations ("SFAS 141"). Based on these
estimates, we allocate the purchase price to the applicable assets and
liabilities.

In order to estimate the fair value of acquired assets and liabilities, we use
methods similar to those used by independent appraisers. The Company also
considers information gathered about each property during the pre-acquisition
due diligence in estimating the fair value of the tangible and intangible assets
acquired. The fair value of the tangible assets of an acquired property
considers the value of the property as "if-vacant". The "if-vacant" fair value
of tangible assets are allocated to land, building, and tenant improvements,
where applicable, based on relevant information obtained in connection with the
acquisition of the property.

In allocating the purchase price to identified intangible assets and
liabilities, the fair value of debt is estimated by using the Company's current
borrowing rate as compared to the contractual rate of the debt assumed. The
difference between the contractual amounts to be paid and the amounts estimated
to be due using the Company's current borrowing rates measured over a period
equal to the remaining term of the debt is recorded as a premium or discount on
the debt. The premium or discount is amortized to interest expense over the
remaining term of the debt assumed.

                                       6
<PAGE>

The value of above-market and below-market leases is estimated based on the
present value of the difference between the contractual amounts to be paid
pursuant to the in-place leases and the Company's estimate of the market lease
rates measured over a period equal to the estimated remaining term of the lease.
The capitalized value of the above or below-market lease values is amortized to
rental income over the estimated remaining term of the respective leases.

The value of "at market" leases is estimated based on the value connected with
the costs avoided in originating leases and includes rent lost during the
lease-up period, leasing commissions to procure tenants with leases comparable
to the current leases in place, and landlord costs that are not reimbursed by
tenants during the downtime period. The capitalized value of the "at market"
leases is amortized as real estate amortization over the estimated
weighted-average remaining lease lives of each property.

Depreciation and amortization of tangible assets are provided on the
straight-line method over the estimated useful lives of the assets. Building are
depreciated over 40 years which is the expected useful life of a building,
building and leasehold improvements are depreciated or amortized over the term
of the tenant leases or useful life of the improvement, whichever is shorter,
and land improvements are depreciated over the useful life of the asset.
Expenditures for maintenance and repairs are charged to operations as incurred.
Significant renovations and replacements, which improve and extend the life of
the asset, are capitalized. The useful lives of amortizable intangible assets
are evaluated each reporting period with any changes in estimated useful lives
being accounted for over the revised remaining useful life.

New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46").
FIN 46 addresses the consolidation by business enterprises of variable interest
entities, as defined in the Interpretation. FIN 46 expands existing accounting
guidance regarding when a company should include in its financial statements the
assets, liabilities, and activities of another entity. Many variable interest
entities have commonly been referred to as special-purpose entities or
off-balance sheet structures. In December 2003, the FASB issued Interpretation
No. 46R ("FIN 46R"), a revision to FIN 46. FIN 46R clarifies some of the
provisions of FIN 46 and exempts certain entities from its requirements. FIN 46R
is effective at the end of the first interim period ending after March 15, 2004.
The Company believes that the adoption of FIN 46 will not have a material impact
on the Company's financial position, results of operations or cash flows.

In July 2003, the FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments With Characteristics of Both
Liabilities and Equity ("SFAS 150"). SFAS 150 requires the shares that are
mandatorily redeemable for cash or other assets at a specified or determinable
date or upon an event certain to occur to be classified as liabilities, not as
part of shareholders' equity. This pronouncement does not currently impact the
Company's financial position, results of operations or cash flows.

Stock Options

The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its stock option plans.
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), Accounting for
Stock-Based Compensation, requires the Company to provide pro forma information
regarding net income and net income per common share as if compensation cost for
stock options granted under the plans, if applicable, had been determined in
accordance with the fair value based method prescribed in SFAS 123. The Company
does not plan to adopt the fair value based method prescribed by SFAS 123.

                                       7
<PAGE>

Solely for the purpose of providing the pro forma information required by SFAS
123, the Company estimates the fair value of each stock option grant by using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants: expected lives of ten years, dividend yield of
8.70%, volatility at 30%, risk free interest rate of 5.05% for 2003. There were
no stock options issued in 2004.

Under accounting provisions of SFAS 123, the Company's net income to common
shareholders and net income per common share, would have been reduced to the pro
forma amounts indicated below (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                  Three Months Ended            Nine months Ended
                                                                      September 30,                September 30,
                                                                      (unaudited)                 (unaudited)
                                                                 ---------------------       ----------------------
                                                                  2004          2003          2004           2003
                                                                 -------       -------       -------       --------
<S>                                                              <C>           <C>           <C>           <C>
Income (loss) to common shareholders
    Income (loss) to common shareholders, as reported            $ 3,933       $ 5,677       $(4,038)      $ 12,423
    Stock-based employee compensation expense included in
    reported income                                                  307           346           655            598
    Fair value of stock options and restricted stock awards         (311)         (350)         (666)          (650)
                                                                 -------       -------       -------       --------
Pro forma                                                        $ 3,929       $ 5,673       $(4,049)      $ 12,371
                                                                 =======       =======       =======       ========
Income per common share, basic and diluted:
    As reported , basic and diluted                              $   .16       $   .24       $  (.17)      $    .52
                                                                 =======       =======       =======       ========
    Pro forma, basic and diluted                                 $   .16       $   .24       $  (.17)      $    .52
                                                                 =======       =======       =======       ========
</TABLE>

(3) DISCONTINUED OPERATIONS

On March 15, 2004, the Company sold an 83,000 square foot shopping center in
Capitol Heights, Maryland. The sale price of the shopping center was $7 million
with net proceeds of approximately $1.2 million after the repayment of debt in
the amount of $5.2 million. The Company recognized a loss of approximately
$4,000.

The result of operations from this property, along with other properties sold in
2003, is reported as income from operations of properties sold or held for sale.

4) REAL ESTATE

(a) Real Estate is located in 16 states and consists of (in thousands):

<TABLE>
<CAPTION>
                                     September 30,    December 31,
                                         2004             2003
                                     -------------    ------------
<S>                                  <C>              <C>
Income producing:
Land                                 $     146,941    $    134,928
Shopping centers                           715,691         648,183
Office buildings                             5,973           6,873
                                     -------------    ------------
Total                                      868,605         789,984
Less accumulated depreciation              (79,401)        (65,316)
                                     -------------    ------------
Real estate - income producing, net  $     789,204    $    724,668
                                     =============    ============
Properties held for sale:
Land                                 $           -    $      1,371
Shopping centers, net                            -           4,900
                                     -------------    ------------
Properties held for sale             $           -    $      6,271
                                     =============    ============
</TABLE>

                                       8
<PAGE>



(b) On February 17, 2004, the Company completed the acquisition of a 203,000
square foot shopping center in Worcester, Massachusetts for a purchase price of
$19.9 million including transaction costs. The center is anchored by a 67,000
square foot supermarket. The shopping center was funded using cash. In
accordance with SFAS 141, the Company recorded an intangible asset in the amount
of $275,000 for "at market" leases and an intangible liability in the amount of
$2.3 million for below market leases.

(c) On August 6, 2004, the Company completed the acquisition of a 223,000 square
foot shopping center in Harrisburg, Pennsylvania for a purchase price of $17.3
million plus transaction costs. The center is anchored by a 60,000 square foot
supermarket. The shopping center was funded by the assumption of $13 million in
debt and the balance in cash. In accordance with SFAS 141, the Company recorded
an intangible asset in the amount of $483,000 for "at market" leases.

(d) On August 17, 2004, the Company completed the acquisition of a 302,000
square foot shopping center in Manchester, Connecticut for a purchase price of
$28.2 million plus transaction costs. The center is anchored by a 73,000 outlet
marketplace. The shopping center was initially funded using cash and the
property was subsequently pledged as collateral under the Credit Facility. In
accordance with SFAS 141, the Company recorded intangible assets in the amount
of $748,000 for "above market" rents and $589,000 for "at market" leases.

(e) On August 6, 2004 the Company sold a portion of its shopping center in
Spartanburg, South Carolina. The 11 acre parcel was sold for $3.5 million with
net proceeds of approximately $2.7 million and the Company recorded a loss of
approximately $740,000 as a result. The portion of the property sold is not
considered a component of an entity because the cash flows are not clearly
distinguished, and therefore the income and loss are included in income from
continuing operations.

(f) Real Estate with a net book value of $717.1 million at September 30, 2004,
is pledged as collateral for borrowings (see Note 6).

(5) MORTGAGE NOTES RECEIVABLE

At September 30, 2004, the Company's mortgage notes receivable amounted to $21.3
million. On June 15, 2004, a mortgage note in the amount of $8.2 million due
from H. Irwin Levy, a Trustee, was sold to Bank of America for $10.4 million. In
this transaction, the Company recognized $2.2 million in other income as a
result of the premium received on the note. The remaining notes are secured by
first mortgages on the recreation facilities at two Century Village adult
condominium communities in southeast Florida. As of September 30, 2004, none of
the mortgage notes were delinquent.

The recreation notes provide for self-amortizing equal monthly principal and
interest payments in the aggregate amount of $4.7 million per annum, through
January 2012, and bear interest ranging from 8.84% to 13.5%. The recreation
notes are pledged as collateral for certain borrowings (see Note 6). One of the
recreation notes matures in 2007 and the two remaining recreation notes are
prepayable without penalty in 2007.

(6) BORROWINGS

Borrowings consist of (in thousands):

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                                                            September 30,  December 31,
                                                                                                 2004          2003
                                                                                            -------------  ------------
<S>                                                                                         <C>            <C>
Mortgage notes payable through June 2013, interest fixed at a rate of 6.12% per annum,
collateralized by mortgages on fifteen shopping centers (see Note 4)                        $     190,000  $    190,000

Mortgage notes, net of unamortized premium of $2 million and $2.3 million for
2004 and 2003, respectively, payable through May 2018, interest ranging from
3.78% to 9.22% per annum, collateralized by mortgages on twenty-three shopping
centers (see Note 4)                                                                              187,740       182,107

Mortgage notes payable through October 2008, interest fixed at a rate of 7.00% per annum,
collateralized by mortgages on nine shopping centers (see Note 4).                                 61,707        62,338

Line of credit payable through December 2007, interest at borrower's election of
prime or prime plus .25% or one, three or six month LIBOR plus a minimum of
1.35% to a maximum of 1.75% (blended rate of 3.44% at September 30, 2004),
collateralized by mortgages on eighteen shopping centers (see Note 4).                             76,488         1,988

Mortgage note, payable through June 2007, interest fixed at 5.15% per annum through
December 2006, collateralized by the recreation notes (see Note 5).                                14,070             -

Line of credit, payable through June 2005, interest at one month LIBOR plus a spread of
1.80% (3.64% at September 30, 2002), collateralized by three shopping centers (see Note 4).         3,500             -

Line of credit, payable through August 2007, interest at one month LIBOR plus a spread of
1.75% (3.59% at September 30, 2002), collateralized by two shopping centers (see Note 4).           2,000             -

Collateralized Mortgage Obligations, net of unamortized discount of $102,000 interest
fixed at 8.84% per annum, collateralized by certain of the recreation notes (see Note 5).               -        14,638
                                                                                            -------------  ------------
Totals                                                                                      $     535,505  $    451,071
                                                                                            =============  ============
</TABLE>

(7) INVESTMENT IN UNCONSOLIDATED AFFILIATES

The Company owns 45% - 50% general and limited partnership interests in three
partnerships whose principal assets consist of self-storage warehouses located
in southeast Florida, with an aggregate of approximately 2,800 units and 320,000
square feet, managed by unaffiliated parties. The Company has no financial
obligations with respect to such partnerships except under state law, as general
partners. The Company receives monthly distributions from each of the
partnerships based on cash flows.

In July 2003, the Company formed a joint venture with Tower Fund ("Tower"), for
the purpose of acquiring real estate assets. Tower is a commingled separate
account available through annuity contracts of Metropolitan Life Insurance
Company (New York, New York) and managed by SSR Realty Advisors. The Company
administers the day-to-day affairs of the joint venture which is owned 80% by
Tower and 20% by the Company. The joint venture owns four shopping centers
comprising 553,000 square feet in Vestal, New York. The joint venture properties
were purchased by the joint venture for $69.7 million plus transaction costs.
The properties were purchased using $43.7 million in non-recourse debt and the
balance in cash. The Company's equity contribution to the joint venture was
approximately $6 million including transaction costs.

The Company owns a 95% economic interest in Drexel Realty, Inc. ("Drexel"),
which is engaged in the leasing and management of real estate. As of September
30, 2004, Drexel managed four properties in Pennsylvania and New Jersey owned by
third parties. Currently, the Company owns 1% of the voting stock and 100% of
the

                                       10
<PAGE>

non-voting stock. 99% of the voting stock of Drexel is beneficially owned by Mr.
Louis P. Meshon, Sr., a Trustee, and held in a voting trust. Mr. Meshon
currently serves as President of Drexel.

The Company accounts for its investments in unconsolidated affiliates using the
equity method except for, effective January 1, 2004, Drexel is reported on a
consolidated basis in accordance with FIN 46.

(8) BENEFICIARIES' EQUITY

On April 3, 2002, the Company filed a shelf registration statement on Form S-3
("Shelf Registration Statement") to register $150 million in common and
preferred shares of beneficial interest, depository shares, warrants and debt
securities. The Shelf Registration Statement became effective April 17, 2002.

On January 30, 2004, the Company redeemed all of its outstanding 9.5% Series D
Cumulative Redeemable Preferred Shares of beneficial interest for $25.00 per
share plus accrued and unpaid distributions though January 30, 2004 of $0.066
per share. The total outstanding shares redeemed were 1,653,200 with a par value
of $.01 per share. At that time, the Company retired all 1,800,000 shares of
Series D preferred shares originally issued. In connection with the redemption
of the Series D preferred shares, the Company's first quarter 2004 results
reflect a one-time reduction in income to common shareholders of beneficial
interest of approximately $17.7 million. This reduction was taken in accordance
with the July 31, 2003 Securities and Exchange Commission interpretation of
FASB-EITF Abstract Topic No. D-42, "The Effect on the Calculation of Earnings
per Share for the Redemption or Induced Conversion of Preferred Stock" ("Topic
D-42"). Under Topic D-42, the difference between the carrying amount of the
shares and the redemption price must be recorded as a reduction in income to
shareholders of beneficial interest and, therefore, will impact net income per
share for the period in which the redemption is made.

On February 27, 2004 under the Shelf Registration Statement, the Company sold
400,000 of its 8.25% Series E Cumulative Redeemable Preferred Shares to certain
investment advisory clients of Cohen & Steers Capital Management, Inc. for net
proceeds of $10 million. Shares were priced at $25.50 and the purchasers paid
accrued dividends of $.3306 per share. There were no placement or underwriting
fees associated with the transaction. The Company used the $10 million for
general corporate purposes.

On April 8, 2004, the Company filed a post-effective amendment to the Shelf
Registration Statement. As of that date, the Company had issued common shares
and preferred shares registered under the Shelf Registration Statement with an
aggregate initial offering price of $131,586,500, leaving securities with an
aggregate maximum initial offering price of $18,413,500 unsold under the Shelf
Registration Statement (the "Remaining Amount"). The Company removed from
registration the Remaining Amount of securities registered but unsold under the
Shelf Registration Statement.

On April 8, 2004, the Company filed a new shelf registration statement on Form
S-3 ("New Shelf Registration Statement") to register $250 million in common and
preferred shares of beneficial interest, depository shares, warrants and debt
securities. The New Shelf Registration Statement became effective April 21,
2004.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

                              RESULTS OF OPERATIONS

Three Months Ended September 30, 2004 and 2003

Net Income

For the quarter ended September 30, 2004, income to common shareholders was $3.9
million or $.16 per

                                       11
<PAGE>

common share, basic and diluted, compared to income to common shareholders of
$5.7 million or $.24 per common share, basic and diluted, for the same period of
2003.

During the quarter ended September 30, 2004, rent revenue and operating expenses
increased by $1.7 million and $585,000, respectively (a net rental income
increase of $1.1 million). The rent revenue increase is primarily due to
increased base rentals and recoveries of operating expense in the existing
portfolio in the amount of $186,000 and an increase in rental revenue of $1.9
million resulting from the acquisition of five income-producing properties (one
on July 24, 2003, one on July 25, 2003, one on February 17, 2004, one on August
6, 2004, and one on August 17, 2004), offset by the loss of rent from tenant
bankruptcies in the amount of $349,000. Operating expenses increased during the
third quarter of 2004 primarily due to an increase in real estate tax expense in
the amount of $166,000, and additional operating expense of $471,000 as a result
of the purchase of the five income-producing properties, offset by a decrease in
utility expense in the amount of $51,000.

Other property income increased by $1.2 million over 2003 due to a termination
fee received from a major tenant.

Depreciation and amortization increased by $510,000, primarily due to additional
expense of $137,000 as a result of capital expenditures and the additional
expense of $373,000 as a result of the purchase of the five income-producing
properties.

General and administrative expenses increased by $493,000, primarily due to
higher payroll related expenses as a result of increased salaries and
performance related bonuses in the amount of $287,000, an increase in accounting
expense of $119,000 as a result of outsourcing the project to evaluate and test
the Company's internal controls in compliance with Section 404 of the
Sarbanes-Oxley Act of 2002, and an additional expense in the amount of $165,000
due to the consolidation of Drexel in accordance with FASB Interpretation No.
46.

Management and leasing fee income increased by $128,000 during the third quarter
due to income of $89,000 as a result of the consolidation of Drexel in
accordance with FASB Interpretation No. 46, and an additional $39,000 as a
result of the Company entering into an exclusive management and leasing
agreement in conjunction with the Company's investment in a joint venture in
Vestal, New York in July 2003.

Interest income and interest income from related parties decreased by $337,000
during the third quarter of 2004, due to a decrease of interest income from
related parties in the amount of $289,000 as a result of the sale of the
recreation mortgage note issued by H. Irwin Levy, a Trustee (the "Boca Note"),
and a decrease of interest income in the amount of $48,000 as a result of
scheduled repayments of mortgage notes receivable (see Note 5 to our
consolidated financial statements) which are long term and require
self-amortizing payments through 2012.

Other income increased by $450,000 over the same period in 2003 due to the
redemption by the issuer of stock owned by the Company (the "Stock Sale"). The
book value of the investment was $50,000. The issuer paid the Company $250,000
in cash, with the balance due in equal installments on July 1, 2005 and July 1,
2006.

Equity in income of unconsolidated affiliates increased by $79,000 primarily due
to the Company's 20% investment in a joint venture located in Vestal, NY in July
2003.

Interest expense decreased by $411,000 during the third quarter of 2004 due to
lower interest expense in the amount of $580,000 as a result of a decrease in
rates on the Company's variable and fixed rate debt, higher capitalized interest
in the amount of $111,000, and lower amortization of deferred finance costs in
the amount of $42,000, offset by an increase in interest expense in the amount
of $66,000 as a result of the debt assumed for the purchase of two of the five
income-producing properties and additional interest expense in the amount

                                       12
<PAGE>

of $256,000 due to higher debt balances.

Loss on sale of properties increased over 2003 due to the sale of a portion of
the Company's shopping center in Spartanburg, South Carolina, that is not
considered to be a component of an entity because the cash flows are not clearly
distinguished. Therefore the income and loss on sale are included in income from
continuing operations.

There was no income from discontinued operations during the third quarter of
2004 compared to income of $2.6 million for the third quarter of 2003. The 2003
amount consists of the net income from properties sold in 2004 and 2003, as well
as the properties held for sale.

Preferred share distribution increased by $462,000 as a result of the issuance
of 2.4 million shares of Series E preferred shares on December 30, 2003 and
400,000 shares of Series E preferred shares on February 27, 2004, offset by the
redemption of Series D preferred shares on January 30, 2004.

Nine Months Ended September 30, 2004 and 2003

For the nine months ended September 30, 2004, loss to common shareholders was $4
million or $.17 per common share, basic and diluted, compared to income to
common shareholders of $12.4 million or $.52 per common share, basic and
diluted, for the same period of 2003. On January 30, 2004, the Company redeemed
all of its outstanding 9.5% Series D Cumulative Redeemable Preferred Shares of
beneficial interest for $25.00 per share plus accrued and unpaid distributions
though January 30, 2004 of $0.066 per share. The total outstanding shares
redeemed were 1,653,200 with a par value of $.01 per share. At that time, the
Company retired all 1,800,000 shares of Series D preferred shares originally
issued. In connection with the redemption of the Series D preferred shares, the
Company's first quarter 2004 results reflect a non-recurring reduction in income
to common shareholders of beneficial interest of approximately $17.7 million.
This reduction was recorded in accordance with the July 31, 2003 Securities and
Exchange Commission interpretation of FASB-EITF Abstract Topic No. D-42, "The
Effect on the Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock" ("Topic D-42"). Under Topic D-42, the difference
between the carrying amount of the shares and the redemption price must be
recorded as a reduction in income to common shareholders of beneficial interest
and, therefore, impacts net income per share for the period in which the
redemption is made.

During the nine months ended September 30, 2004, rent revenue and operating
expenses increased by $5.9 million and $1.7 million, respectively (a net rental
income increase of $4.2 million). The rent revenue increase is primarily due to
increased base rentals and recoveries of operating expense in the existing
portfolio in the amount of $2 million and an increase in rental revenue of $5.2
million resulting from the acquisition of eight income-producing properties
(three on April 3, 2003, one on July 24, 2003, one on July 25, 2003, one on
February 17, 2004, one on August 6, 2004, and one on August 17, 2004), offset by
the loss of rent from tenant bankruptcies in the amount of $1.3 million.
Operating expenses increased during the first nine months of 2004 primarily due
to an increase in general maintenance expense in the amount of $583,000, an
increase in real estate tax expense in the amount of $541,000, an increase in
insurance expense in the amount of $145,000, and additional operating expense of
$1.3 million as a result of the purchase of the eight income-producing
properties, offset by a decrease in snow removal costs in the amount of
$865,000.

Other property income increased by $2.1 million over 2003 due to termination
fees received from two major tenants.

Depreciation and amortization increased by $1.5 million, primarily due to the
additional expense of $861,000 as a result of the purchase of the eight
income-producing properties, and additional expense of $591,000 as a result of
capital expenditures.

                                       13
<PAGE>

General and administrative expenses increased by $950,000, primarily due to
higher payroll related expenses as a result of increased salaries and
performance related bonuses in the amount of $192,000, an increase in accounting
expense of $152,000 primarily as a result of outsourcing the project to evaluate
and test the Company's internal controls in compliance with Section 404 of the
Sarbanes-Oxley Act of 2002, an increase in trustee fees of $136,000 of which
$97,000 was attributable to the grant of restricted shares that vested
immediately, and an additional expense in the amount of $502,000 due to the
consolidation of Drexel in accordance with FASB Interpretation No. 46.

Management and leasing fee income increased by $429,000 during the first nine
months of 2004 due to income of $334,000 as a result of the consolidation of
Drexel in accordance with FASB Interpretation No. 46, and an additional $95,000
as a result of the Company entering into an exclusive management and leasing
agreement in conjunction with the Company's investment in a joint venture in
Vestal, New York in July 2003.

Interest income and interest income from related parties decreased by $552,000
during the first nine months of 2004, due to a decrease of interest income from
related parties in the amount of $372,000 as a result of the sale of the Boca
Note, and a decrease of interest income in the amount of $180,000 as a result of
scheduled repayments of mortgage notes receivable (see Note 5 to our
consolidated financial statements) which are long term and require
self-amortizing payments through 2012.

Other income increased over the same period of 2003 due to a premium received in
the amount of $2.2 million upon the sale of the Boca Note. The Boca Note, which
had an outstanding balance of $8.2 million, was sold to Bank of America for
$10.4 million on June 15, 2004. In addition other income also increased by
$450,000 over the same period in 2003 due to the Stock Sale.

Equity in income of unconsolidated affiliates increased by $353,000 primarily
due the Company's 20% investment in a joint venture located in Vestal, NY in
July 2003.

Interest expense decreased by $752,000 during the first nine months of 2004 due
to a decrease in interest expense in the amount of $2.6 million as a result of a
decrease in rates on the Company's variable and fixed rate debt and higher
capitalized interest in the amount of $204,000, offset by a penalty incurred due
to the early prepayment of the Collateralized Mortgage Obligation in the amount
of $1.1 million, an increase in interest expense in the amount of $636,000 as a
result of the debt assumed for the purchase of two of the eight income-producing
properties, additional interest expense in the amount of $192,000 due to higher
debt balances, and an increase in amortization of deferred finance costs in the
amount of $162,000.

Loss on sale of properties increased over 2003 due to the sale of a portion of
the Company's shopping center in Spartanburg, South Carolina, that is not
considered to be a component of an entity because the cash flows are not clearly
distinguished. Therefore the income and loss on sale are included in income from
continuing operations.

Net income from discontinued operations was $17,000 for the first nine months of
2004 compared to income of $4.8 million for the same period of 2003. The 2004
amount includes one property sold in 2004. The 2003 amount consists of the net
income from properties sold in 2004 and 2003, as well as the properties held for
sale.

Preferred share distribution increased by $1.6 million as a result of the
issuance of 2.4 million shares of Series E preferred shares on December 30, 2003
and 400,000 shares of Series E preferred shares on February 27, 2004, offset by
the redemption of Series D preferred shares on January 30, 2004.

                                       14
<PAGE>

Funds From Operations

The following schedule reconciles FFO to net income (in thousands):

<TABLE>
<CAPTION>
                                                               Three Months Ended            Nine months Ended
                                                                  September 30,                September 30,
                                                                   (unaudited)                  (unaudited)
                                                             ----------------------       -----------------------
                                                              2004           2003           2004           2003
                                                             -------       --------       --------       --------
<S>                                                          <C>           <C>            <C>            <C>
Net income to common shareholders (1)                        $ 3,933       $  5,677       $ (4,038)      $ 12,423
Depreciation and amortization of real property (2) (3)         5,015          4,583         14,389         13,107
(Gain) loss on sale of income-producing real estate (4)          694         (1,678)           697         (1,668)
                                                             -------       --------       --------       --------
FFO available to common shareholders                           9,642          8,582         11,048         23,862
                                                             =======       ========       ========       ========
</TABLE>

      (1)   Includes a reduction in income to common shareholders of beneficial
            interest of approximately $16.6 million, net of minority interest,
            in connection with the redemption of the Company's 9.5% Series D
            Cumulative Redeemable Preferred Shares of beneficial interest in
            accordance with Topic D-42 for the nine months ended September 30,
            2004.

      (2)   Net of minority interests of $344 and $322, respectively, for the
            three months ended September 30, 2004 and September 30, 2003, and
            $993 and $929, respectively, for the nine months ended September 30,
            2004 and September 30, 2003.

      (3)   Depreciation related to unconsolidated affiliates of $118 and $100,
            respectively, for the three months ended September 30, 2004 and
            September 30, 2003, and $379 and $199, respectively, for the nine
            months ended September 30, 2004 and September 30, 2003.

      (4)   Net of amounts attributable to minority interests of $47 and $118,
            respectively, for the three months ended September 30, 2004 and
            September 30, 2003, and $47 and $117, respectively, for the nine
            months ended September 30, 2004 and September 30, 2003.

The Company presents Funds from Operations (FFO), a non-GAAP financial measure,
because it considers it an important supplemental measure of our operating
performance and believes it is frequently used by securities analysts, investors
and other interested parties in the evaluation of Real Estate Investment Trusts
(REITs), many of which present FFO when reporting their results. FFO, as defined
by the National Association of Real Estate Investment Trusts (NAREIT), an
industry trade group, consists of net income available to common shareholders
(computed in accordance with generally accepted accounting principles in the
United States, or GAAP) before depreciation and amortization of real estate
assets, extraordinary items and gains and losses on sales of income producing
real estate assets. FFO excludes GAAP depreciation and amortization of real
estate assets, which assumes that the value of real estate assets diminishes
ratably over time. Historically, however, real estate values have increased or
decreased with market conditions. Because FFO excludes depreciation and
amortization of real estate assets, gains and losses from property dispositions
and extraordinary items, it provides a performance measure that, when compared
year over year, reflects the impact to operations from trends in occupancy
rates, rental rates, operating costs, acquisition and development activities and
interest costs, providing a perspective not immediately apparent from net
income. The Company uses FFO to provide this additional information and
perspective. FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and should not be
considered as an alternative to either net income as a measure of the Company's
operating performance or to cash flows from operating activities as an indicator
of liquidity or cash available to fund all cash flow needs. Recognizing these
limitations in the use of FFO as a financial measure, the Company considers FFO
as only one in a group of measures, which, together, provide information about
the Company's operations. Since all companies do not calculate FFO in a similar
fashion, the Company's calculation, presented above, may not be comparable to
similarly titled measures reported by other companies.

                                       15
<PAGE>

                         LIQUIDITY AND CAPITAL RESOURCES

Consolidated Statements of Cash Flows

Net cash provided by operating activities, as reported in the Consolidated
Statements of Cash Flows, amounted to $32.9 million for the nine months ended
September 30, 2004 compared to $23.5 million for the same period in 2003. The
increase in cash flow is primarily due to an increase in the operating income in
the amount of $5.1 million in the first nine months of 2004 compared the same
period in 2003, an increase in accounts payable and other liabilities of $2.2
million in the first nine months of 2004 compared to an decrease of $475,000 for
the same period in 2003, and an increase in accounts receivable and other assets
in the amount of $2.3 million in the first nine months of 2004 compared to an
increase of $3.9 million for the same period in 2003.

Net cash used in investing activities for the nine months ended September 30,
2004 amounted to $59 million, compared to net cash used in investing activities
of $14.6 million for the same period in 2003. The 2004 amounts reflect $66.2
million used for acquisitions, and $16 million used for capital improvements
including developments, offset by net proceeds from the sale of the Boca Note in
the amount of $10.4 million, net proceeds from the sale of real estate in the
amount of $9.1 million, $1.5 million of collections on mortgage notes
receivable, $1.2 million of distributions from unconsolidated affiliates, and
$900,000 change in restricted cash. The 2003 amounts reflect $14.3 million used
for capital improvements, $14.2 million used for acquisitions, and a $5.8
million investment in unconsolidated affiliates , offset by net proceeds from
the sale of real estate in the amount of $16.7 million, $1.5 million of
collections on mortgage notes receivable, $784,000 change in restricted cash,
and $623,000 of distributions from unconsolidated affiliates.

Net cash provided by financing activities was $20.2 million for the nine months
ended September 30, 2004 compared to cash used in financing activities of $15.7
million in the same period in 2003. The 2004 amounts consist of $84.4 million of
net proceeds of borrowings, $10 million of proceeds from the issuance of
preferred shares of beneficial interest and $746,000 received from share options
exercised, partially offset by $41.3 million for the repurchase of preferred
shares of beneficial interest, cash distributions of $29.8 million to
shareholders, cash distributions of $1.6 million to minority interests, and $2.2
million for deferred finance costs. The 2003 amounts consist of cash
distributions of $28 million to shareholders, cash distributions of $1.6 million
to minority interests, and $2.4 million for deferred finance costs, offset by
$11.9 million of net proceeds of borrowings, $3.9 million of proceeds from the
issuance of common shares of beneficial interest and $492,000 received from
share options exercised.

The Company's operating funds are generated from rent revenue net of operating
expense from income producing properties and, to a much lesser extent, interest
income on the mortgage notes receivable. The Company believes that the operating
funds will be sufficient in the foreseeable future to fund operating and
administrative expenses, interest expense, recurring capital expenditures and
distributions to shareholders in accordance with REIT requirements. Sources of
capital for non-recurring capital expenditures and scheduled principal payments,
including balloon payments, on outstanding borrowings are expected to be
obtained from property refinancings, scheduled principal repayments on the
mortgage notes receivable, sales of non-strategic real estate, the Company's
lines of credit and/or potential debt or equity financings in the public or
private markets.

                                       16
<PAGE>

Borrowings

At September 30, 2004, the Company's contractual obligations are as follows:

<TABLE>
<CAPTION>
                           Payments Due by Period
                               (in millions)
Less than 1 year     1 to 3 years    4 to 5 years    After 5 years
----------------     ------------    ------------    -------------
<S>                  <C>             <C>             <C>
    $ 1.3               $ 48.2          $ 188.6         $ 297.4
</TABLE>

At September 30, 2004, borrowings were $535.5 million. Scheduled principal
payments over the remainder of this year and the next four years are $238.1
million with $297.4 million due thereafter. Borrowings consist of $444.8 million
of fixed rate indebtedness, with a weighted average interest rate of 6.41% at
September 30, 2004, and $90.7 million of variable rate indebtedness with a
weighted average interest rate of 3.51% at September 30, 2004. The borrowings
are collateralized by a substantial portion of the Company's income-producing
real estate and two notes (collectively, the "Recreation Notes") that are
secured to the Company by first mortgages on the recreation facilities at two
Century Village adult condominium communities in southeast Florida. The Company
expects to refinance certain of these borrowings, at or prior to maturity,
through new mortgage loans on real estate. The ability to do so, however, is
dependent upon various factors, including the income level of the properties,
interest rates and credit conditions within the commercial real estate market.
Accordingly, there can be no assurance that such refinancing can be achieved.

Effective June 16, 2003, the Company entered into a ten year, fixed rate loan
agreement with Metropolitan Life Insurance Company (the "Metlife Loan") for a
loan in the amount of $190 million to replace a $181.7 million fixed rate real
estate mortgage loan that matured on June 20, 2003. The Metlife Loan is secured
by fifteen shopping center properties (the "Mortgaged Properties") and the
remaining principal balance of the Metlife Loan is due in June 2013. The Metlife
Loan bears a fixed interest rate of 6.12% per annum and requires monthly
payments of interest only for the first two years of the ten year term and
monthly payments of interest and principal based on a 30-year amortization for
the remaining term.

Effective December 20, 2002, the Company entered into a loan agreement (the
"Loan Agreement") with Bank of America (previously Fleet National Bank, N.A.) on
its own behalf and as agent for certain other banks providing for a credit
facility (the "Credit Facility"). As of December 30, 2002, the date of the
initial funding, the maximum amount of the Credit Facility was then $100 million
and the maximum amount the Company could borrow was $68 million based on the
then current collateral. The maximum amount of the Credit Facility was increased
to $125 million on March 19, 2003, under the terms and conditions of the Loan
Agreement. The Borrowing Base available to Kramont OP under the Credit Facility
is subject to increase or decrease from its current amount pursuant to the terms
of the Loan Agreement. The Credit Facility is a revolving line of credit and is
secured by guarantees by the Company and those of its subsidiaries who have
provided mortgages to the lenders, seventeen first mortgages on shopping centers
and a first priority security interest in the membership interests and
partnership interests of the subsidiary entities. The Credit Facility contains
various financial covenants that must be observed. The Company was in compliance
with these covenants at September 30, 2004. Advances under the Credit Facility
may be used for general corporate purposes and, among other purposes, to fund
acquisitions, repayment of all or part of outstanding indebtedness, expansions,
renovations, financing and refinancing of real estate, closing costs and for
other lawful purposes. On September 30, 2004, the Company modified and extended
the Credit Facility extending the maturity for two years with an option to
extend for one additional year, adding the right to increase the Credit Facility
amount to $200 million in the next 24 months, and added a $20 million swingline
loan feature. The Credit Facility also was amended so that borrowings bear
interest at the Borrower's election of (a) at the prime rate or the prime rate
plus 25 basis points based on the leverage ratio of the Company's and Kramont
OP's total debt and liabilities to its total asset value, or (b) London
InterBank Offered Rate ("LIBOR") plus 130 to 175 basis points based on such
ratio. Interest rates may be set for one, three or six-month periods. The

                                       17
<PAGE>

outstanding balance on the Credit Facility was approximately $76.5 million as of
September 30, 2004. Based on the current collateral the Company can borrow an
additional $20.2 million as of September 30, 2004.

In 1998, the Company obtained a $65.9 million fixed rate mortgage from Salomon
Brothers Realty Corp. This loan is secured by a first mortgage on nine
properties acquired by the Company in September 1998. The mortgage loan bears a
fixed interest rate of 7% per annum and requires monthly payments of interest
and principal based on a 30-year amortization. The loan matures on October 1,
2008. The outstanding balance on the mortgage was approximately $61.7 million as
of September 30, 2004. Pursuant to the mortgage loan, the Company is required to
make monthly escrow payments for the payment of tenant improvements and repair
reserves.

In addition, the Company has twenty-three mortgage loans outstanding as of
September 30, 2004 which were primarily assumed in connection with various
acquisitions of certain shopping centers. These mortgage loans have maturity
dates ranging from 2005 through 2018. Twenty of the twenty-three mortgage loans
have fixed interest rates ranging from 5.15% to 9.22%. The outstanding principal
balance on these mortgage loans at September 30, 2004 was approximately $179
million. The remaining three mortgage loans, in the aggregate amount of $8.7
million at September 30, 2004, have variable rates ranging from 3.78% to 6.50%.

On June 15, 2004, the Company entered into a $14.5 million non- revolving term
loan with Bank of America that matures in June 2007. The loan is collateralized
by the Recreation Notes and requires monthly principal and interest payments
based upon a straight line seven year real estate amortization. The note bears
an interest rate equal to the sum of the 30 day LIBOR plus 1.75%. The Company
has entered into a swap agreement through December, 2006, converting the
floating rate to a fixed rate of 5.15%. The outstanding balance on the loan was
$14.1 million as of September 30, 2004.

On July 19, 2004, the Company established a secured line of credit in the amount
of $10 million with Wachovia Bank, N.A. This line is secured by a two shopping
centers and one office building and has an interest rate payable at a rate
adjusted monthly to the sum of 30 day LIBOR plus 1.75%. The line of credit
matures on August 1, 2007. The outstanding balance on the line of credit was $2
million as of September 30, 2004.

The Company has a line of credit with Wilmington Trust of Pennsylvania in the
amount of $3.5 million secured by two shopping centers with an interest rate
payable at a rate adjusted monthly to the sum of 30 day LIBOR plus 1.8%. The
line of credit matures on June 27, 2005. The outstanding balance on the line of
credit was $3.5 million as of September 30, 2004.

Acquisitions

On February 17, 2004, the Company completed the acquisition of a 203,000 square
foot shopping center in Worcester, Massachusetts for a purchase price of $19.9
million including transaction costs. The center is anchored by a 67,000 square
foot supermarket. The shopping center was using cash.

On August 6, 2004, the Company completed the acquisition of a 223,000 square
foot shopping center in Harrisburg, Pennsylvania for a purchase price of $17.3
million plus transaction costs. The center is anchored by a 60,000 square foot
supermarket. The shopping center was funded by the assumption of $13 million in
debt and the balance in cash.

On August 17, 2004, the Company completed the acquisition of a 302,000 square
foot shopping center in Manchester, Connecticut for a purchase price of $28.2
million plus transaction costs. The center is anchored by a 73,000 outlet
marketplace. The shopping center was initially funded using cash and the
property was subsequently pledged as collateral under the Credit Facility.

                                       18
<PAGE>

Dispositions

On March 15, 2004, the Company sold an 83,000 square foot shopping center in
Capitol Heights, Maryland. The sale price of the shopping center was $7 million
with net proceeds of approximately $1.2 million after the repayment debt of $5.2
million. The Company recognized a loss of approximately $4,000.

On August 6, 2004 the Company sold a portion of its shopping center in
Spartanburg, South Carolina. The 11 acre parcel was sold for $3.5 million and
the Company recognized a loss of approximately $740,000 as a result.

Capital Resources

On April 3, 2002, the Company filed a shelf registration statement on Form S-3
("Shelf Registration Statement") to register $150 million in common and
preferred shares of beneficial interest, depository shares, warrants and debt
securities. The Shelf Registration Statement became effective April 17, 2002.

On January 30, 2004, the Company redeemed all of its outstanding 9.5% Series D
Cumulative Redeemable Preferred Shares of beneficial interest for $25.00 per
share plus accrued and unpaid distributions though January 30, 2004 of $0.066
per share. The total outstanding shares redeemed were 1,653,200 with a par value
of $.01 per share. At that time, the Company retired all 1,800,000 shares of
Series D preferred shares originally issued. In connection with the redemption
of the Series D preferred shares, the Company's first quarter 2004 results
reflected a non-recurring reduction in income to common shareholders of
beneficial interest of approximately $17.7 million. This reduction was recorded
in accordance with the July 31, 2003 Securities and Exchange Commission
interpretation of FASB-EITF Abstract Topic No. D-42, "The Effect on the
Calculation of Earnings per Share for the Redemption or Induced Conversion of
Preferred Stock" ("Topic D-42"). Under Topic D-42, the difference between the
carrying amount of the shares and the redemption price must be recorded as a
reduction in income to common shareholders of beneficial interest and,
therefore, will impact net income per share for the period in which the
redemption is made.

On February 27, 2004 under the Shelf Registration Statement, the Company sold
400,000 of its 8.25% Series E Cumulative Redeemable Preferred Shares to certain
investment advisory clients of Cohen & Steers Capital Management, Inc. for net
proceeds of $10 million. Shares were priced at $25.50 and the purchasers paid
accrued dividends of $.3306 per share. There were no placement or underwriting
fees associated with the transaction. The Company used the $10 million for
general corporate purposes.

On April 8, 2004, the Company filed a post-effective amendment to the Shelf
Registration Statement. As of that date, the Company had issued common shares
and preferred shares registered under the Shelf Registration with an aggregate
initial offering price of $131,586,500, leaving securities with an aggregate
maximum initial offering price of $18,413,500 unsold under the Shelf
Registration Statement (the "Remaining Amount"). The Company removed from
registration the Remaining Amount of securities registered but unsold under the
Shelf Registration Statement.

On April 8, 2004, the Company filed a new shelf registration statement on Form
S-3 ("New Shelf Registration Statement") to register $250 million in common and
preferred shares of beneficial interest, depository shares, warrants and debt
securities. The New Shelf Registration Statement became effective April 21,
2004.

Inflation

During recent years, the rate of inflation has remained at a low level and has
had minimal impact on the Company's operating results. Most of the tenant leases
contain provisions designed to lessen the impact of inflation. These provisions
include escalation clauses in certain leases which generally increase rental
rates periodically based on stated rental increases which are currently higher
than recent cost of living increases,

                                       19
<PAGE>

and percentage rentals based on tenant's gross sales, which generally increase
as prices rise. Many of the leases are for terms of less than ten years which
increases the Company's ability to replace those leases which are below market
rates with new leases at higher base and/or percentage rentals. In addition,
most of the leases require the tenants to pay their proportionate share of
increases in operating expenses, including common area maintenance, real estate
taxes, and insurance.

However, in the event of significant inflation, the Company's operating results
could be adversely affected if general and administrative expenses and interest
expense increases at a rate higher than rent income or if the increase in
inflation exceeds rent increases for certain tenant leases which provide for
stated rent increases.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary exposure to market risk is to changes in interest rates.
The Company has both fixed and variable rate debt. The Company has $535.5
million of debt outstanding as of September 30, 2004 of which $444.8 million, or
83.1%, has been borrowed at fixed rates ranging from 5.15% to 9.22% with
maturities through 2018. As these debt instruments mature, the Company typically
refinances such debt at the current market interest rates which may be more or
less than interest rates on the maturing debt. Changes in interest rates have
different impacts on the fixed and variable rate portions of the Company's debt
portfolio. A change in interest rates impacts the net market value of the
Company's fixed rate debt, but has no impact on interest incurred or cash flows
on the Company's fixed rate debt. Interest rate changes on variable debt impacts
the interest incurred and cash flows but does not impact the net market value of
the debt instrument. Based on the variable rate debt of the Company as of
September 30, 2004, a 100 basis point increase in interest rates would result in
an additional $907,000 in interest incurred per year and a 100 basis point
decline would lower interest incurred by $907,000. To mitigate the risks of
interest rate increases, the Company has entered into an interest rate swap
agreement in the notional amount of $14.5 million. A 100 basis point increase in
interest rates would result in an approximate decrease of $21.4 million in the
fair value of the fixed rate debt and a 100 basis point decline would result in
an approximate increase of $22.7 million in the fair value.

The Company also has $21.3 million of fixed rate mortgage notes receivable.
Changes in interest rates impacts the market value of the mortgage notes
receivable, but has no impact on interest earned or cash flows. A 100 basis
point increase in interest rates would result in a $900,000 decrease in the fair
value of the mortgage notes receivable and a 100 basis point decline would
result in a $900,000 increase in the fair value.

ITEM 4.  CONTROLS AND PROCEDURES

The Company's management, including the Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the Company's "disclosure
controls and procedures," as that term is defined in Rule 13a-15(e) promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
of September 30, 2004. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the disclosure controls and procedures
are effective to ensure that information required to be disclosed by the Company
in the reports that the Company files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms, and to ensure that such information is accumulated
and communicated to the Company's management, including the Chief Executive
Officer and Chief Financial Officer as appropriate to allow timely decisions
regarding required disclosure.

There were no changes in the Company's internal control over financial reporting
during the quarter ended September 30, 2004 identified in connection with the
evaluation thereof by the Company's management, including the Chief Executive
Officer and Chief Financial Officer, that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                                       20
<PAGE>

                           Forward-Looking Statements

Certain statements contained in this Quarterly Report may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and as such may involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or achievements to
be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements, which are based on certain assumptions and describe our future
plans, strategies and expectations, are generally identifiable by use of the
words "may," "will," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project", or the negative thereof, or other variations thereon or
comparable terminology. Factors which could have a material adverse effect on
the operations and future prospects of our company include:

      -     our inability to identify properties to acquire or our inability to
            successfully integrate acquired properties and operations;

      -     our dependence on the retail industry, including the effect of
            general or regional economic downturns on demand for leased space at
            and the amount of rents chargeable by neighborhood and community
            shopping centers;

      -     changes in tax laws or regulations, especially those relating to
            REITs and real estate in general;

      -     our failure to continue to qualify as a REIT under U.S. tax laws;

      -     the number, frequency and duration of tenant vacancies that we
            experience;

      -     the time and cost required to solicit new tenants and to obtain
            lease renewals from existing tenants on terms that are favorable to
            us;

      -     tenant bankruptcies and closings;

      -     the general financial condition of, or possible mergers or
            acquisitions involving, our tenants;

      -     competition from other real estate companies or from competing
            shopping centers or other commercial developments;

      -     changes in interest rates and national and local economic
            conditions;

      -     increases in our operating costs;

      -     compliance with regulatory requirements, including the Americans
            with Disabilities Act;

      -     the continued service of our senior executive officers;

      -     possible environmental liabilities;

      -     the availability, cost and terms of financing;

      -     the time and cost required to identify, acquire, construct or
            develop additional properties that result in the returns anticipated
            or sought;

      -     the costs required to re-develop or renovate any of our current or
            future properties; and

      -     our inability to obtain insurance coverage to cover liabilities
            arising from terrorist attacks or other causes or to obtain such
            coverage at commercially reasonable rates.

You should also carefully consider any other factors contained in this Quarterly
Report, including the information incorporated by reference into this Quarterly
Report. Unless otherwise indicated, statements herein are made as of the end of
the period to which this Quarterly Report relates, and the Company disclaims any
obligation to publicly update or revise any forward-looking statement in this
Quarterly Report which may thereafter appear to be inaccurate for any reason.
You should not rely on the information contained in any forward-looking
statements, and you should not expect us to update any forward-looking
statements.

                                       21
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.      Legal Proceedings

             None.

ITEM 2.      Changes in Securities and Use of Proceeds

             None.

ITEM 3.      Defaults upon Senior Securities

             None.

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

             None.

ITEM 5.      Other Information

             Not Applicable.

ITEM 6.      Exhibits:

(a)          Exhibits:

<TABLE>
<CAPTION>
EXHIBIT NO.                             DOCUMENT
-----------                             --------
<S>            <C>
   10.91       Secured Revolving Credit Loan Agreement dated July 19, 2004 by and
               between KR Livonia LLC, Plymouth Plaza Associates, L.P., and 550
               West Germantown Pike LLC, as borrowers and Wachovia Bank National
               Association, as lender.

   10.92       Fourth Amendment to Loan Agreement dated September 30, 2004 by and
               between Kramont Operating Partnership, L.P., as borrower and Fleet
               National Bank, as lender (incorporated by reference to Exhibit 99.2
               of the Company's Form 8-K filed October 7, 2004)

   10.93       $20,000,000 Swingline Note dated September 30, 2004 by and between
               Kramont Operating Partnership, L.P., as borrower and Fleet National
               Bank, as lender (incorporated by reference to Exhibit 99.3 of the
               Company's Form 8-K filed October 7, 2004)

   31.1        Certification by Chief Executive Officer of Kramont Realty Trust
               pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2002.

   31.2        Certification by Chief Financial Officer of Kramont Realty Trust
               pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2002.

   32.1        Certification by Chief Executive Officer of Kramont Realty Trust
               pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

                                       22
<PAGE>

<TABLE>
   <S>         <C>
   32.2        Certification by Chief Financial Officer of Kramont Realty Trust
               pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.
</TABLE>


                                       23
<PAGE>

                                   SIGNATURES

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

                                      KRAMONT REALTY TRUST
                                      __________________________________________
                                                    (Registrant)

                                      /s/ Louis P. Meshon, Sr.
November 9, 2004                      ------------------------------------------
                                      Louis P. Meshon Sr., President

                                      /s/ Carl E. Kraus
                                      ------------------------------------------
November 9, 2004                      Carl E. Kraus, Chief Financial Officer and
                                      Treasurer

                                       24