<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 June 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
August 6, 2004: 24,138,794

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                      KRAMONT REALTY TRUST AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                         (unaudited)
                                                                        June 30, 2004    December 31, 2003
                                                                        -------------    -----------------
<S>                                                                     <C>              <C>
                          ASSETS
Real estate - income producing, net of accumulated depreciation          $    747,852      $    724,668
Properties held for sale                                                            -             6,271
Mortgage notes receivable                                                      21,812            22,590
Mortgage notes receivable - related party                                           -             8,480
Investments in unconsolidated affiliates                                        9,037             8,880
Cash and cash equivalents (includes $904 and $903 as of June 30,
2004 and December 31, 2003, respectively)                                       6,521             9,196
Other assets                                                                   27,008            30,626
                                                                         ------------      ------------
                         Total assets                                    $    812,230      $    810,711
                                                                         ============      ============

               LIABILITIES AND BENEFICIARIES' EQUITY

LIABILITIES:
Mortgages and notes payable                                              $    488,135      $    451,071
Accounts payable and other liabilities                                         18,622            17,002
Distributions payable                                                          10,376             9,989
                                                                         ------------      ------------
                         Total liabilities                                    517,133           478,062
                                                                         ------------      ------------
Minority interests in Operating Partnerships                                   17,176            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, 24,107,325 and 24,054,925 as of June
 30, 2004 and December 31, 2003, respectively                                     241               241
Additional paid-in capital                                                    293,145           308,426
Retained earnings                                                              (9,040)           14,595
Accumulated other comprehensive income (loss)                                     (73)             (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)
                                                                         ------------      ------------
                                                                              278,243           314,420
  Unearned compensation on restricted shares of beneficial interest              (322)             (573)
                                                                         ------------      ------------
                         Total beneficiaries' equity                          277,921           313,847
                                                                         ------------      ------------
                         Total liabilities and beneficiaries' equity     $    812,230      $    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         Six Months Ended
                                                                           June 30,                  June 30,
                                                                      2004         2003         2004         2003
                                                                   ----------   ----------   ----------   ----------
<S>                                                                <C>          <C>          <C>          <C>
Revenues:
  Rent                                                             $   28,089   $   25,979   $   57,165   $   52,965
  Other property income                                                   960            -          960            -
                                                                   ----------   ----------   ----------   ----------
                                                                       29,049       25,979       58,125       52,965
                                                                   ----------   ----------   ----------   ----------
Expenses:
  Operating                                                             8,329        7,633       18,060       16,895
  Depreciation and amortization                                         5,029        4,541        9,870        8,928
  General and administrative                                            2,578        2,376        5,031        4,574
                                                                   ----------   ----------   ----------   ----------
                                                                       15,936       14,550       32,961       30,397
                                                                   ----------   ----------   ----------   ----------
Operating income                                                       13,113       11,429       25,164       22,568
Management and leasing fees                                               127            -          301            -
Interest income                                                           736          794        1,490        1,621
Interest income - related party                                           229          293          508          592
Other income                                                            2,198            -        2,198            -
Equity in income of unconsolidated affiliates                             266          126          549          275
Interest expense                                                       (8,789)      (8,575)     (16,513)     (16,855)
Minority interests in income of Operating Partnerships                   (369)        (161)         541         (325)
                                                                   ----------   ----------   ----------   ----------
Income from continuing operations                                       7,511        3,906       14,238        7,876
                                                                   ----------   ----------   ----------   ----------
Results from discontinued operations:
  Income from operations of properties sold or held for sale                -          147           22          111
  Gain (loss) on sale of properties                                         -          646           (4)       2,329
  Minority interest in discontinued operations                              -          (53)          (1)       (165)
                                                                   ----------   ----------   ----------   ----------
Income from discontinued operations                                         -          740           17        2,275
                                                                   ----------   ----------   ----------   ----------
Net income                                                              7,511        4,646       14,255       10,151
Preferred share distribution                                           (2,165)      (1,703)      (4,535)      (3,405)
Charge for redemption of preferred shares                                   -            -      (17,691)           -
                                                                   ----------   ----------   ----------   ----------
Income (loss) to common shareholders                               $    5,346   $    2,943   $   (7,971)  $    6,746
                                                                   ==========   ==========   ==========   ==========
Per common share:
  Income (loss) from continuing operations, basic                  $      .22   $      .09   $     (.33)  $      .19
  Income from discontinued operations, basic                       $        -   $      .03   $        -   $      .10
                                                                   ----------   ----------   ----------   ----------
Total net income (loss) per share, basic                           $      .22   $      .12   $     (.33)  $      .29
                                                                   ==========   ==========   ==========   ==========
  Income (loss) from continuing operations, diluted                $      .22   $      .09   $     (.33)  $      .19
  Income from discontinued operations, diluted                     $        -   $      .03   $        -   $      .10
                                                                   ----------   ----------   ----------   ----------
Total net income (loss) per share, diluted                         $      .22   $      .12   $     (.33)  $      .29
                                                                   ==========   ==========   ==========   ==========
  Dividends declared                                               $     .325   $     .325   $      .65   $      .65
                                                                   ==========   ==========   ==========   ==========
  Average common shares outstanding:
    Basic                                                          24,097,344   23,740,085   24,082,958   23,547,976
    Effective assumed conversation of share options                    59,041       36,831       59,041       36,831
                                                                   ----------   ----------   ----------   ----------
    Diluted                                                        24,156,385   23,776,916   24,141,999   23,584,807
                                                                   ----------   ----------   ----------   ----------
</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 June 30,      Six months Ended June 30,
                                                                         ---------------------------      -------------------------
                                                                            2004            2003            2004            2003
                                                                          --------        --------        --------        --------
<S>                                                                       <C>             <C>             <C>             <C>
Net income                                                                $  7,511        $  4,646        $ 14,255        $ 10,151
Change in fair value of cash flow hedges                                       (82)            (42)             (7)           (138)
Reclassification adjustment for hedge losses included in net income            115             313             411             625
                                                                          --------        --------        --------        --------
Comprehensive income                                                      $  7,544        $  4,917        $ 14,659        $ 10,638
                                                                          ========        ========        ========        ========
</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>
                                                                                Six months Ended
                                                                                    June 30,
                                                                              2004            2003
                                                                            --------        --------
<S>                                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities                                   $ 24,041        $ 15,815
                                                                            --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Collections on mortgage notes receivable                                       777             687
  Collections on mortgage notes receivable - related party                       256             224
  Proceeds from sale of mortgage note                                         10,422               -
  Acquisitions of real estate - income producing                             (19,894)         (4,295)
  Capital improvements including development costs                           (10,203)         (9,841)
  Net proceeds from the sale of real estate                                    6,228           7,862
  Change in restricted cash                                                       (1)            785
  Distributions from unconsolidated affiliates                                 1,041             412
  Investment in unconsolidated affiliates                                        (10)              -
  Other                                                                           (1)              -
                                                                            --------        --------
Net cash used in investing activities                                        (11,385)         (4,166)
                                                                            --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings                                                    53,700          17,800
  Repayments of borrowings                                                   (66,636)        (15,159)
  Net proceeds (repayments) from line of credit                               50,000          (4,000)
  Cash distributions paid on common shares of beneficial interest            (15,647)        (15,185)
  Cash distributions paid on preferred shares of beneficial interest          (4,165)         (3,405)
  Proceeds from issuance of common shares of beneficial interest                   -           3,933
  Proceeds from issuance of preferred shares of beneficial interest           10,016               -
  Cash received from share options exercised                                     580             250
  Repurchase of preferred shares of beneficial interest                      (41,330)              -
  Distributions to minority interests                                         (1,082)         (1,082)
  Deferred financing costs                                                      (768)         (2,072)
                                                                            --------        --------
Net cash used in financing activities                                        (15,332)        (18,920)
                                                                            --------        --------
Net decrease in unrestricted cash and cash equivalents                        (2,676)         (7,271)
Unrestricted cash and cash equivalents at the beginning of the period          8,293          16,486
                                                                            --------        --------
Unrestricted cash and cash equivalents at the end of the period             $  5,617        $  9,215
                                                                            --------        --------
Supplemental disclosure of cash flow information:
  Cash paid for interest                                                    $ 16,629        $ 17,844
                                                                            ========        ========
Acquisitions:
  Fair value of assets acquired                                             $      -        $(13,290)
  Liabilities assumed or incurred                                                  -           3,348
  Common shares on beneficial interest issued                                      -           5,647
                                                                            --------        --------
  Cash (paid) for acquisitions                                              $      -        $ (4,295)
                                                                            ========        ========
Restricted share awards                                                     $     97        $      -
                                                                            ========        ========
</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 June 30, 2004, Kramont owned 93.58% of Kramont
OP and is its sole general partner. As of June 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 June 30, 2004, the OPs owned and operated
eighty-one 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 12.2 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

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.

                                       6

<PAGE>

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.

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.

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         Six months Ended
                                                                                   June 30,                  June 30,
                                                                                 (unaudited)               (unaudited)
                                                                            -----------------------------------------------
                                                                              2004         2003         2004         2003
                                                                            --------     --------     --------     --------
<S>                                                                         <C>          <C>          <C>          <C>
Income (loss) to common shareholders
  Income (loss) to common shareholders, as reported                         $  5,346     $  2,943     $ (7,971)    $  6,746
  Stock-based employee compensation expense included in reported income          217          126          348          252
  Fair value of stock options and restricted stock awards                       (213)        (170)        (355)        (300)
                                                                            --------     --------     --------     --------
Pro forma                                                                   $  5,350     $  2,899     $ (7,978)    $  6,698
                                                                            ========     ========     ========     ========
Income per common share, basic and diluted:
  As reported , basic                                                       $    .22     $    .12     $   (.33)    $    .29
                                                                            ========     ========     ========     ========
  As reported , diluted                                                     $    .22     $    .12     $   (.33)    $    .29
                                                                            ========     ========     ========     ========
  Pro forma, basic                                                          $    .22     $    .12     $   (.33)    $    .28
                                                                            ========     ========     ========     ========
  Pro forma, diluted                                                        $    .22     $    .12     $   (.33)    $    .28
                                                                            ========     ========     ========     ========
</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.

Subsequent Events

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 expects to record a loss of approximately $800,000 as a result.

                                       7

<PAGE>

4) REAL ESTATE

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

<TABLE>
<CAPTION>
                                        June 30, 2004  December 31, 2003
                                        -------------  -----------------
<S>                                     <C>            <C>
Income producing:
Land                                      $ 138,656        $ 134,928
Shopping centers                            677,932          648,183
Office buildings                              5,973            6,873
                                          ---------        ---------
Total                                       822,561          789,984
Less accumulated depreciation               (74,709)         (65,316)
                                          ---------        ---------
Real estate - income producing, net       $ 747,852        $ 724,668
                                          =========        =========
Properties held for sale:
Land                                      $       -        $   1,371
Shopping centers, net                             -            4,900
                                          ---------        ---------
Properties held for sale                  $       -        $   6,271
                                          =========        =========
</TABLE>

(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 99% occupied and is
anchored by a 67,000 square foot supermarket. 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, Business Combinations, the
Company recorded an intangible liability in the amount of $2.3 million for below
market leases.

(c) Real Estate with a net book value of $665.9 million at June 30, 2004, is
pledged as collateral for borrowings (see Note 6).

Subsequent Events

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 $17.5
million plus transaction costs. The center is 95% occupied and 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.

(5) MORTGAGE NOTES RECEIVABLE

At June 30, 2004, the Company's mortgage notes receivable amounted to $21.8
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 $10.2 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 June 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.

                                       8

<PAGE>

(6) BORROWINGS

Borrowings consist of (in thousands):

<TABLE>
<CAPTION>
                                                                                           June 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.                           $  190,000     $ 190,000

Mortgage notes, net of unamortized premium of $2.1 million and $2.3 million for
2004 and 2003, respectively, payable through May 2018, interest ranging from
5.15% to 9.22% per annum, collateralized by mortgages on twenty-two shopping centers.        169,727       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.                              61,920        62,338

Mortgage notes payable through December 2005, interest at borrower's election of
prime plus .25% or one, three or six month LIBOR plus a minimum of 1.75% to a
maximum of 2.25% (blended rate of 3.16% at June 30, 2004), collateralized by
mortgages on sixteen shopping centers.                                                        51,988         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).                   14,500             -

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                                                                                    $  488,135     $ 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
are all 100% occupied and 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 June 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

                                       9

<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 be 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 June 30, 2004 and 2003

Net Income

For the quarter ended June 30, 2004, income to common shareholders was $5.3
million or $.22 per common

                                       10

<PAGE>

share, basic and diluted, compared to income to common shareholders of
beneficial interest of $2.9 million or $.12 per common share, basic and diluted,
for the same period of 2003.

During the quarter ended June 30, 2004, rent revenue and operating expenses
increased by $2.1 million and $696,000, respectively (a net rental income
increase of $1.5 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 $700,000 and an increase in rental revenue of $1.9
million resulting from the acquisition of six income-producing properties (three
on April 3, 2003, one on July 24, 2003, one on July 25, 2003 and one on February
17, 2004), offset by the loss of rent from tenant bankruptcies in the amount of
$490,000. Operating expenses increased during the second quarter of 2004
primarily due to an increase in general maintenance expense in the amount of
$175,000, an increase in real estate tax expense in the amount of $145,000, and
an increase in insurance expense in the amount of $75,000, and additional
operating expense of $440,000 as a result of the purchase of the six
income-producing properties, offset by a decrease in snow removal costs in the
amount of $60,000 and a decrease in utility expense in the amount of $70,000.

Other property income increased by $960,000 over 2003 due to a termination fee
received from an anchor tenant.

Depreciation and amortization increased by $488,000, primarily due to additional
expense of $246,000 as a result of capital expenditures and the additional
expense of $242,000 as a result of the purchase of the six income-producing
properties.

General and administrative expenses increased by $202,000, primarily due to an
increase in trustee fees of $120,000 of which $97,000 was attributable to the
grant of restricted shares that vested immediately, an increase in marketing
expense of $40,000, and an additional expense in the amount of $186,000 due to
the consolidation of Drexel in accordance with FASB Interpretation No. 46,
offset by lower payroll related expenses in the amount of $175,000.

Management and leasing fee income increased over 2003 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 $122,000
during the second quarter of 2004, primarily due to 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 2003 due to a premium received upon the sale of the
recreation mortgage note issued by H. Irwin Levy, a Trustee (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. The Company received net
proceeds of $9.8 million which will be used for acquisitions and general
corporate purposes. In addition, this transaction generated a one-time increase
in income to common shareholders of beneficial interest of approximately $1
million for the quarter ended June 30, 2004.

Interest expense increased by $214,000 during the second quarter of 2004 due to
an increase in expense in the amount of $285,000 as a result of the debt assumed
for the purchase of the income-producing properties and a penalty incurred due
to the early prepayment of the Collateralized Mortgage Obligation in the amount
of $1.1 million, offset by approximately $1.1 million as a result of a decrease
in rates on the Company's variable and fixed rate debt and the repayment of
borrowings.

Equity in income of unconsolidated affiliates increased by $140,000 primarily
due to the Company's 20% investment in a joint venture located in Vestal, NY in
July 2003.

                                       11

<PAGE>

There was no income from discontinued operations during the second quarter of
2004 compared to income of $740,000 for the second 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.

Six Months Ended June 30, 2004 and 2003

For the six months ended June 30, 2004, loss to common shareholders was $8
million or $.33 per common share, basic and diluted, compared to income to
common shareholders of $6.7 million or $.29 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. Net income (loss) per share was also impacted by the
increase in the weighted average of common shares of beneficial interest.

During the six months ended June 30, 2004, rent revenue and operating expenses
increased by $4.2 million and $1.2 million, respectively (a net rental income
increase of $3 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 $1.5 million and an increase in rental revenue of $3.6 million
resulting from the acquisition of six income-producing properties (three on
April 3, 2003, one on July 24, 2003, one on July 25, 2003 and one on February
17, 2004), offset by the loss of rent from tenant bankruptcies in the amount of
$925,000. Operating expenses increased during the second quarter of 2004
primarily due to an increase in general maintenance expense in the amount of
$575,000, an increase in real estate tax expense in the amount of $375,000, an
increase in insurance expense in the amount of $150,000, an increase in utility
expense in the amount of $90,000, and additional operating expense of $865,000
as a result of the purchase of the six income-producing properties, offset by a
decrease in snow removal costs in the amount of $865,000.

Other property income increased by $960,000 over 2003 due to a termination fee
received from an anchor tenant.

Depreciation and amortization increased by $942,000, primarily due to additional
expense of $525,000 as a result of capital expenditures and the additional
expense of $417,000 as a result of the purchase of the six income-producing
properties.

General and administrative expenses increased by $457,000, primarily due to an
increase in trustee fees of $145,000 of which $97,000 was attributable to the
grant of restricted shares that vested immediately, an increase in marketing
expense of $45,000, and an additional expense in the amount of $335,000 due to
the consolidation of Drexel in accordance with FASB Interpretation No. 46,
offset by lower payroll related expenses in the amount of $95,000.

                                       12

<PAGE>

Management and leasing fee income increased over 2003 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 $215,000
during the first six months of 2004, primarily due to 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 2003 due to a premium received 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. The Company received
net proceeds of $9.8 million which will be used for acquisitions and general
corporate purposes. In addition, this transaction generated a one-time increase
in income to common shareholders of beneficial interest of approximately $1
million for the six months ended June 30, 2004.

Equity in income of unconsolidated affiliates increased by $274,000 primarily
due the Company's 20% investment in a joint venture located in Vestal, NY in
July 2003.

Interest expense decreased by $342,000 compared to the same period in 2003 due
to a decrease in expense of approximately $2.3 million as a result of a decrease
in rates on the Company's variable and fixed rate debt and the repayment of
borrowings, offset by an increase in interest expense in the amount of $570,000
as a result of the debt assumed for the purchase of the income-producing
properties, a penalty incurred due to the early prepayment of the Collateralized
Mortgage Obligation in the amount of $1.1 million, and higher expense of
$200,000 due to amortization of deferred finance costs.

Net income from discontinued operations was $17,000 for the first six months of
2004 compared to income of $2.3 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 $1.1 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.

Funds From Operations

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

<TABLE>
<CAPTION>
                                                          Three Months Ended         Six months Ended
                                                               June 30,                  June 30,
                                                             (unaudited)                (unaudited)
                                                         --------------------     ----------------------
                                                          2004        2003          2004          2003
                                                         -------    ---------     ---------    ---------
<S>                                                      <C>        <C>           <C>          <C>
Net income to common shareholders (1)                    $ 5,346    $   2,943     $  (7,971)   $   6,746
Depreciation and amortization of real property (2) (3)     4,759        4,314         9,374        8,534
(Gain) on sale of income-producing real estate (4)             -            -             3            -
                                                         -------    ---------     ---------    ---------
FFO available to common shareholders                      10,105        7,257         1,406       15,280
                                                         =======    =========     =========    =========

</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 six months ended June 30, 2004.

                                       13
<PAGE>

(2)   Net of minority interests of $329 and $303, respectively, for the three
      months ended June 30, 2004 and June 30, 2003, and $648 and $617,
      respectively, for the six months ended June 30, 2004 and June 30, 2003.

(3)   Depreciation related to unconsolidated affiliates of $118 and $56,
      respectively, for the three months ended June 30, 2004 and June 30, 2003,
      and $236 and $99, respectively, for the six months ended June 30, 2004 and
      June 30, 2003.

(4)   Net of amounts attributable to minority interests of $(1) for the six
      months ended June 30, 2004.

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.

                         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 $24 million for the six months ended June
30, 2004 compared to $15.8 million for the same period in 2003. The increase in
cash flow is primarily due to an increase in the net operating income in the
amount of $3.6 million in the first six months of 2004 compared the same period
in 2003, a decrease in accounts payable and other liabilities of $208,000 in the
first six months of 2004 compared to an decrease of $3.6 million for the same
period in 2003, and a decrease in other assets in the amount of $3.6 million for
the first six months of 2004 compared to a decrease of $2.4 million for the same
period in 2003.

Net cash used in investing activities for the six months ended June 30, 2004
amounted to $11.4 million, compared to net cash used in investing activities of
$4.2 million for the same period in 2003. The 2004 amounts reflect $10.2 million
used for capital improvements, and $19.9 million used for acquisitions, 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 $6.2 million, $1
million of collections on mortgage notes receivable, and $1 million of
distributions from unconsolidated affiliates. The 2003 amounts reflect $9.8
million used for capital improvements and $4.3 million used for acquisitions,
offset by net proceeds from the sale of real estate in the

                                       14

<PAGE>

amount of $7.9 million, $900,000 of collections on mortgage notes receivable,
$785,000 change in restricted cash, and $412,000 of distributions from
unconsolidated affiliates.

Net cash used in financing activities was $15.3 million for the six months ended
June 30, 2004 compared to cash used in financing activities of $18.9 million in
the same period in 2003. The 2004 amounts consist of $41.3 million for the
repurchase of preferred shares of beneficial interest, cash distributions of
$19.8 million to shareholders, cash distributions of $1.1 million to minority
interests, and $768,000 for deferred finance costs, partially offset by $37.1
million of net borrowings, $10 million of proceeds from the issuance of
preferred shares of beneficial interest and $580,000 received from share options
exercised. The 2003 amounts consist of cash distributions of $18.6 million to
shareholders, $1.4 million of net repayment of borrowings, cash distributions of
$1 million to minority interests, and $2.1 million for deferred finance costs
offset by $4 million of proceeds from the issuance of common shares of
beneficial interest.

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.

Borrowings

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

                          Payments Due by Period
                              (in millions)
Less than 1 year     1 to 3 years     4 to 5 years     After 5 years
----------------     ------------     ------------     -------------
     $ 4.6              $ 96.7          $ 102.4          $ 284.4

At June 30, 2004, borrowings were $488.1 million. Scheduled principal payments
over the remainder of this year and the next four years are $203.7 million with
$284.4 million due thereafter. Borrowings consist of $435 million of fixed rate
indebtedness, with a weighted average interest rate of 6.52% at June 30, 2004,
and $53.1 million of variable rate indebtedness with a weighted average interest
rate of 3.16% at June 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.

                                       15

<PAGE>

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 with a
term of three years 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 June 30, 2004. Credit Facility
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 175 to 225 basis points based on
such ratio. Interest rates may be set for one, three or six-month periods.
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. The outstanding
balance on the Credit Facility was approximately $52 million as of June 30,
2004. Based on the current collateral the Company can borrow an additional $22.7
million as of June 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 $61.9 million as
of June 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-two mortgage loans outstanding as of June
30, 2004 which were primarily assumed in connection with various acquisitions of
certain shopping centers. These mortgage loans have maturity dates ranging from
2004 through 2018. Twenty of the twenty-two mortgage loans have fixed interest
rates ranging from 5.15% to 9.22%. The outstanding principal balance on these
mortgage loans at June 30, 2004 was approximately $168.6 million. The remaining
two mortgage loans, in the aggregate amount of $1.1 million at June 30, 2004,
have variable rates ranging from 6.50% to 6.88%.

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%

On July 12, 2001, the Company established a secured line of credit in the amount
of $3.2 million with Wachovia Bank, N.A. This line is secured by a shopping
center and has 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 October 31, 2004. No
amounts were outstanding at June 30, 2004 on this line of credit.

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

                                       16

<PAGE>

LIBOR plus 1.8%. The line of credit matures on June 27, 2005. At June 30, 2004
there was no outstanding balance on this line of credit.

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 99% occupied and is anchored
by a 67,000 square foot supermarket. The shopping center was initially funded
using cash and the property was subsequently pledged as collateral under the
Credit Facility.

Subsequent Event

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 $17.5
million plus transaction costs. The center is 95% occupied and 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.

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.

Subsequent Event

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 expects to record a loss of approximately $800,000 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

                                       17

<PAGE>

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, 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 $488.1
million of debt outstanding as of June 30, 2004 of which $435 million, or 89.1%,
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 June 30, 2004,
a 100 basis point increase in interest rates would result in an additional
$531,000 in interest incurred per year and a 100 basis point decline would lower
interest incurred by $531,000. 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 $25 million in the fair value of the fixed
rate debt and a 100 basis point decline would result in an approximate increase
of $25 million in the fair value.

The Company also has $21.8 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 $1 million decrease in the
fair value of the mortgage notes receivable and a 100 basis point decline would
result in a $1 million increase in the fair value.

                                       18

<PAGE>

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 June 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 June 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.

                           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;

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<PAGE>

      -     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.

                           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

            The Company held its Annual Meeting of Shareholders on June 10,
            2004.

            The shareholders elected Bernard J. Korman and Laurence Gerber as
            Class I trustees, in each case for a three-year term expiring 2007
            and until their successors are duly elected and qualify.

            The shareholders ratified the appointment of BDO Seidman, LLP as the
            Company's independent public accountants for the fiscal year ending
            December 31, 2004.

            Common shares of beneficial interest (including Series B-1
            cumulative convertible preferred shares of beneficial interest equal
            to the number of common shares into which the Series B-1 preferred
            shares were convertible) were voted as follows:

            TRUSTEE NOMINEE OR PROPOSAL      FOR    AGAINST/WITHHELD ABSTENTIONS

            Bernard J. Korman            22,350,058      81,106              -

            Laurence Gerber              22,899,928     341,236              -

            Ratification of Accountants  22,239,409     151,635         40,119

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<PAGE>

            There were no broker non-votes for any Trustee nominee or proposal.

ITEM 5.     Other Information

            Not Applicable.

ITEM 6.     Exhibits and Reports on Form 8-K:

(a)         Exhibits:

            EXHIBIT NO.             DOCUMENT

            10.89   Assignment of Mortgage and Loan Documents, dated June
                    15, 2004, by and between Recreation Mortgages, L.P., a
                    Delaware limited partnership, as assignor, and Bank of
                    America, N.A., as assignee.

            10.90   Promissory Note for $14,500,000, dated June 15, 2004, by
                    and between Recreation Mortgages, L.P., a Delaware
                    limited partnership, as borrower, Bank of America, N.A.,
                    as lender.

            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.

            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

(b)         Form 8-K

            On May 11, 2004, the Company furnished a Current Report on Form 8-K,
            reporting under Item 9 - "Regulation FD Disclosure" and Item 12 -
            "Results of Operations and Financial Condition" - Consolidated
            financial results for the quarter ended March 31, 2004.

            On June 8, 2004, the Company furnished a Current Report on Form 8-K,
            reporting under Item 7 - "Financial Statements, Pro Forma Financial
            Information and Exhibits" and Item 9 - "Regulation FD Disclosure" -
            Kramont Realty Trust NAREIT Institutional Investor Forum
            Presentation - June 7, 2004.

            Information in any of our Current Reports on Form 8-K furnished
            under Item 9 - "Regulation FD Disclosure" or Item 12, "Results of
            Operations and Financial Condition," shall not be deemed to be
            "filed" for the purposes of Section 18 of the Exchange Act, or

                                       21

<PAGE>

            otherwise subject to the liabilities of that section, nor shall it
            be incorporated by reference into a filing under the Securities Act
            of 1933, as amended, or the Exchange Act, except as shall be
            expressly set forth by specific reference in such a filing.

                                       22

<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)


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


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

                                       23