FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549


                    [X] Quarterly Report Pursuant to Section
                     13 or 15(d) of the Securities Exchange
                                   Act of 1934

                       For the period ended March 31, 1998


                         Commission File Number 0-25230



                       FIRST WASHINGTON REALTY TRUST, INC.
             (Exact name of registrant as specified in its charter)



Maryland                                                         52-1879972
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           identification no.)



4350 East-West Highway, Suite 400, Bethesda, MD                      20814
   (Address of principal executive offices)                      (Zip code)



Registrant's telephone number, including area code (301) 907-7800

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

                           Common Stock,  $.01 par value,  outstanding as of May
14, 1998:

                                         7,399,446 Shares of Common Stock


<PAGE>








                       FIRST WASHINGTON REALTY TRUST, INC.
                                    FORM 10-Q

                                      INDEX









Part I:  Financial Information                                             Page

Item 1.  Consolidated Balance Sheets as of March 31, 1998 
         (unaudited) and December 31, 1997                                    1

         Consolidated Statements of Operations 
         (unaudited) for the three months
         ended March 31, 1998 and 1997                                        2

         Consolidated Statements of Cash Flows 
         (unaudited) for the three months
         ended March 31, 1998 and 1997                                        3

         Notes to Unaudited Consolidated Financial Statements                 4

Item 2.  Management's Discussion and Analysis of 
         Financial Condition and Results of Operations                        8


Part II:  Other Information

Item 2.  Market for the Registrant's Common Equity and 
         Related Shareholders Matters                                        10

Item 6.  Exhibits and Reports on Form 8-K                                    10

Signatures                                                                   11




<PAGE>




              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                    (dollars in thousands except share data)

                                   -----------
<TABLE>

                                                     March 31,      December 31,
                                                       1998             1997
                                                    -----------    -------------
                                                    (unaudited)
                               ASSETS

<S>                                                 <C>               <C> 

Rental properties:
  Land                                               $ 93,755          $ 89,042
  Buildings and improvements                          382,839           367,756
                                                     --------          --------
                                                      476,594           456,798
Accumulated depreciation                              (41,132)          (40,839)
                                                     ---------        ---------
Rental properties, net                                435,462           415,959

Cash and equivalents                                    1,931             3,142
Tenant receivables, net                                 6,768             7,274
Deferred financing costs, net                           2,614             2,734
Other assets                                           10,097            10,032
                                                  -----------       -----------

          Total assets                               $456,872          $439,141
                                                     ========          ========


                    LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Mortgage notes payable                             $226,903          $212,030
  Debentures                                           25,000            25,000
  Accounts payable and accrued expenses                 8,655            10,914
                                                  -----------       -----------
          Total liabilities                           260,558           247,944

Minority interest                                      40,350            38,255

Stockholders' equity:
  Convertible preferred stock $.01 
     par value, 3,800,000 shares designated; 
     2,314,189 issued and outstanding
     (aggregate liquidation preference of $57,855)         23                23
  Common stock $.01 par value, 90,000,000 
     shares authorized; 7,399,446 and 7,291,732 
     shares issued and outstanding, respectively           73                72
  Additional paid-in capital                          183,322           179,356
  Accumulated distributions in excess of earnings     (27,454)          (26,509)
                                                   ----------       -----------
          Total stockholders' equity                  155,964           152,942
                                                     --------        ----------

          Total liabilities and stockholders'        $456,872          $439,141
           equity                                    ========          ========


</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                        1

<PAGE>




              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                    (dollars in thousands, except share data)

                                   (unaudited)
                                     -------

<TABLE>

                                                        For three months ended
                                                               March 31,
                                                        ------------------------
                                                        1998              1997
                                                        -------       ----------
         <S>                                           <C>             <C> 

         Revenues:
              Minimum rents                             $12,928         $9,632
              Tenant reimbursements                       3,088          2,123
              Percentage rents                              396            328
              Other income                                  228            276
                                                       --------       --------
                  Total revenues                         16,640         12,359
                                                        -------        -------

         Expenses:
              Property operating and maintenance          4,143          3,054
              General and administrative                    837            858
              Interest                                    4,851          4,372
              Depreciation and amortization               3,265          2,461
                                                        -------        -------
                  Total expenses                         13,096         10,745
                                                        -------        --------

              Income before gain on sale 
               of properties, income from Management
               Company, extraordinary item, minority 
               interest and distributions to 
               Preferred Stockholders                     3,544          1,614

              Gain on sale of properties                  1,683             45

              Income from Management Company                280            163
                                                       --------          -----

              Income before extraordinary item, 
               minority interest and distributions 
               to Preferred Stockholders                  5,507          1,822

              Extraordinary item - loss on early 
               extinguishment of debt                      (358)          (134)
                                                       --------        -------

              Income before minority interest and
               distributions to Preferred Stockholders    5,149          1,688

              Income allocated to minority interest      (1,065)          (257)
                                                      ----------      ---------
              Income before distributions to 
               Preferred Stockholders                     4,084          1,431 
              Distributions to Preferred Stockholders    (1,410)        (1,410)
                                                        -------        -------
              Income allocated to Common Stockholders    $2,674            $21
                                                      =========       =========
              Earnings per Common Share - Basic
                 Income before extraordinary item         $0.41          $0.03
                 Extraoridinary item                      (0.05)         (0.03)
                                                      ---------       ---------
                 Net income                               $0.36          $0.00
                                                      =========       =========

              Earnings per Common Share - Diluted
                 Income before extraordinary item         $0.41          $0.03
                 Extraoridinary item                      (0.05)         (0.03)
                                                      ---------       ---------
                 Net income                               $0.36          $0.00
                                                      =========       =========
              Shares of Common Stock, in 
               thousands - Basic                          7,380          4,946
                                                     ==========       =========
              Shares of Common Stock, in 
               thousands - Diluted                        7,481          4,997
                                                     ==========       =========
              Distributions per share                   $0.4875        $0.4875
                                                        =======        =======

</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        2

<PAGE>





              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Dollars in thousands)
                                   (unaudited)
                                    --------

<TABLE>


                                                     For the three months ended
                                                              March 31,
                                                     ---------------------------
                                                         1998              1997
                                                     ---------           -------

<S>                                                    <C>              <C> 

Operating Activities:
  Income before distributions to 
     Preferred Stockholders                             $4,083           $1,431
  Adjustment to reconcile net cash 
     provided by operating activities:
    Income allocated to minority interest                1,065              257
    Depreciation and amortization                        3,265            2,461
    Gain of sale of rental properties                   (1,683)             (45)
    Loss on early extinguishment of debt                   358              134
    Amortization of deferred financing 
     costs and loan premiums                              (120)             455
    Equity in earnings of Management Company              (160)             (43)
    Compensation paid or payable in company stock          323              560
    Provision for uncollectible accounts                   627              520
    Recognition of deferred rent                          (145)            (294)
    Net changes in:
      Tenant receivables                                    23             (940)
      Other assets                                         (40)           1,140
      Account payable and accrued expenses                (652)           2,125
                                                     ----------       ---------
         Net cash provided by operating activities       6,944            7,761
                                                      ---------       ---------
Investing Activities:
  Additions to rental properties                        (1,914)          (4,371)
  Acquisition of rental properties                     (17,989)         (17,101)
  Proceeds from sale of rental properties                4,253            1,172
                                                    ----------       ----------
         Net cash used in investing activities         (15,650)         (20,300)
                                                      --------         --------

Financing Activities:
  Proceeds from line of credit                          21,437           17,100
  Proceeds from mortgage notes                               0            1,443
  Proceeds from exercise of stock options                   37              -
  Repayment of line of credit                           (6,300)             -
  Repayment on mortgage notes                             (978)         (11,564)
  Additions to deferred financing costs                   (487)            (343)
  Distributions paid to Preferred Stockholders          (1,410)          (1,410)
  Distributions paid to Common Stockholders             (3,619)          (2,411)
  Distributions paid to minority interest               (1,185)            (599)
                                                      --------       ----------
         Net cash provided by financing activities       7,495            2,216
                                                     ---------        ---------

  Net increase (decrease) in cash and equivalents       (1,211)         (10,323)
  Cash and equivalents, beginning of period              3,142           11,780
                                                     ---------         --------
         Cash and equivalents, end of period            $1,931           $1,457
                                                      ========         ========

</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        3

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)
                                    ---------



1.       Business

         General

                  First Washington Realty Trust, Inc. (the "Company") is a fully
         integrated  real estate  organization  with expertise in  acquisitions,
         property management, leasing, renovation and development of principally
         supermarket- anchored neighborhood shopping centers. The Company owns a
         portfolio of 50 retail  properties  containing a total of approximately
         5.4  million  square  feet  of  gross  leasable  area  located  in  the
         Mid-Atlantic   region  and  the  Chicago   metropolitan  area  and  two
         multifamily properties located in Charleston, South Carolina.

                  The  Company,  incorporated  in  Maryland  in April  1994,  is
         self-managed  and  self-administered  and has  elected to be taxed as a
         real estate  investment  trust ("REIT") under the Internal Revenue Code
         of 1986, as amended (the "Code").

                  The  Company  currently  owns   approximately   78.8%  of  the
         partnership  interests in First Washington  Realty Limited  Partnership
         (the  "Operating  Partnership").  All of the Company's  operations  are
         conducted through the Operating Partnership.  The Operating Partnership
         owns 35 Properties  directly and 15 Properties  are owned by lower tier
         partnerships  or limited  liability  companies  in which the  Operating
         Partnership  owns a 99%  partnership  interest  and the  Company  (or a
         wholly-owned subsidiary of the Company) owns a 1% partnership interest.

                  Due to the  Company's  ability,  as the  general  partner,  to
         exercise  both  financial  and  operational  control over the Operating
         Partnership,  the Operating  Partnership is consolidated  for financial
         reporting purposes. Allocation of net income to the limited partners of
         the  Operating  Partnership  is based on their  respective  partnership
         interests and is reflected in the accompanying  Consolidated  Financial
         Statements  as  minority  interests.  Losses  allocable  to the limited
         partners  in  excess  of  their  basis  are  allocated  to  the  Common
         Stockholders  as the  limited  partners  have  no  requirement  to fund
         losses.

                  The  Operating  Partnership  also owns 100% of the  non-voting
         preferred stock of First  Washington  Management,  Inc.  ("FWM") and is
         entitled  to 99% of the cash flow from FWM.  FWM  provides  management,
         leasing and related  services  for the  Properties  and to  third-party
         clients,  including  individual,  institutional and corporate  property
         owners. FWM is also referred to herein as the "Management Company".

2.       Summary of Significant Accounting Policies

         Basis of Presentation

                  The unaudited interim consolidated financial statements of the
         Company  are  prepared   pursuant  to  the   Securities   and  Exchange
         Commission's  rules  and  regulations  for  reporting  on Form 10-Q and
         should be read in  conjunction  with the financial  statements  and the
         notes  thereto of the  Company's  1997 Annual  Report to  Stockholders.
         Accordingly,   certain   disclosures   accompanying   annual  financial
         statements  prepared in accordance with generally  accepted  accounting
         principles are omitted. In the opinion of management,  all adjustments,
         consisting solely of normal recurring  adjustments,  necessary for fair
         presentation of the consolidated  financial  statements for the interim
         periods have been included.  The current period's results of operations
         are not  necessarily  indicative  of results  which  ultimately  may be
         achieved for the year.



                                        4

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)
                                    ---------

                  The consolidated  financial statements include the accounts of
         the  Company  and  its  majority  owned  partnerships,   including  the
         Operating  Partnership.   All  significant  intercompany  balances  and
         transactions have been eliminated.

         Income per Share

                  Basic and diluted  income per share is  calculated by dividing
         income after minority  interest,  less preferred  distributions  by the
         weighted average number of common shares outstanding during the periods
         presented.

         Recent Accounting Pronouncements

                  On March 19, 1998, the Emerging  Issues Task Force ("EITF") of
         the Financial Accounting Standards Board reached a consensus opinion on
         issue #97-11,  "Accounting  for Internal  Costs Relating to Real Estate
         Property  Acquisitions"  which  requires  that  the  internal  costs of
         preacquisition  activities  incurred in connection with the acquisition
         of an  operating  property  be expensed  as  incurred.  The Company has
         historically  capitalized  internal  preacqusition  costs of  operating
         properties  as a component of the  acquisition  price and  accordingly,
         will realize an increase in expense upon  adoption of this ruling which
         is effective immediately.

                  The Company adopted SFAS No. 130 "Reporting Comprehensive 
         Income" on January 1, 1998.  The Company has no items of other 
         comprehensive income.

3.       Acquisition of Rental Properties

                  During the first  quarter of 1998,  the Company  acquired  two
         shopping  centers for an aggregate  acquisition  cost of  approximately
         $26,395.  All the  acquisitions  were  accounted for using the purchase
         method of accounting and the operations of each property is included in
         the Company's  Statement of Operations from their  respective  dates of
         acquisition. The following is a summary of the acquisitions:

<TABLE>
         <S>     <C>          <C>         <C>     <C>     <C>          <C>

            Date  Property                         Total   Anchor       Anchor
         Acquired Name         Location    GLA     Cost    Tenant       (GLA)
         -------- --------     --------    ------- ------  --------     -----

          1/98    Bowie      Bowie, MD     104,836 $12,100 Giant Food  21,750
                  Plaza      Maryland

          3/98    Watkins    Mitchellville,
                  Park Plaza Maryland      112,143  14,295 Safeway     43,205
                                           ------- -------             ------
                                           216,979 $26,395             64,955
                                           ======= =======             ======
</TABLE>

         The acquisitions were financed as follows:

<TABLE>
         <S>      <C>          <C>     <C>       <C>             <C>    <C>
 

                   Number of            Assumed
         Property  Partnerships Market  Mortgage  Line of Credit
         Name      Units        Value   Debt (1)       Draw       Cash   Total
         ---------------------  ------- --------- --------------  -----  -----

         Bowie 
         Plaza      130,626     $3,600  $5,400     $ 3,000       $ 100   $12,100

         Watkins 
         Park Plaza    -           -       -        10,000       4,295(2) 14,295
                   --------     ------  ------     -------       -----   -------
                    130,626     $3,600  $5,400     $13,000      $4,395   $26,395
                    =======     ======  ======     ======       ======   =======
</TABLE>

(1)  Includes loan premiums.
(2)  Includes net proceeds from the sale of properties of approximately $4,253.

                  The following  unaudited pro forma condensed  combined results
         of  operations  are  presented  as if the  acquisitions  of the  rental
         properties occurred on January 1 of the period presented.  In preparing
         the pro forma  data,  adjustments  have  been  made to assume  that the
         September 1997 Offering occurred on January 1, 1997. The proforma  
         statements  are provided for  information  purposes only. They are 
         based on historical information and do not necessarily reflect
         the actual  results that would have  occurred nor are they  necessarily
         indicative of future results of operations of the Company.



                                                         5

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)
                                    ---------
<TABLE>

                                       For the three months ended
                                                 March 31,       
                                       ---------------------------
                                            1998           1997  
                                            ----           ----  
           <S>                           <C>           <C> 

           Total Revenues                $17,059       $16,964
           Pro forma net income
           before extraordinary item      $3,131        $1,711   
           Extraordinary item               (358)         (134)  
                                          ------        ------   
           Pro forma net income           $2,773        $1,577   
                                          ======        ======   
           Pro forma earnings per 
           Common Share - Basic
              Income before 
               extraordinary item         $0.38         $0.21    
              Extraordinary item          (0.05)        (0.02)   
                                          ------        -----     
              Net income                  $0.33         $0.19     
                                          ======        =====     
           Pro forma earnings per Common 
            Share - Diluted
              Income before 
               extraordinary item         $0.37         $0.21     
              Extraordinary item          (0.05)        (0.02)    
                                          -----         -----     
              Net income                  $0.32         $0.19     
                                         ======         =====     

</TABLE>


4.       Sale of Properties

                  In  March  1998,   the  Company  sold  its  two   multi-family
         properties  (Branchwood and Park Place Apartments) for a combined sales
         price of approximately $8,050. The gain on sale is approximately $1,536
         and net proceeds  after the payment of the existing  mortgage  debt was
         approximately  $3,962.  In  March  1998,  the  Company  sold one of the
         Georgetown  retail shops  consisting of 5,000 square feet for $750. The
         gain on sale is  approximately  $147 and net proceeds after the payment
         of existing mortgage debt was approximately $291. The proceeds of these
         sales were used to purchase Watkins Park Plaza in a like-kind  exchange
         as defined in Internal Revenue Code Section 1031.

                  In   January   1998,   the   Company   closed   on  a  $35,500
         collateralized revolving Line of Credit with Union Bank of Switzerland.
         This line is collateralized by six properties  (Kenhorst Plaza, Shoppes
         of Graylyn,  Four Mile Fork,  Takoma Park, Centre Ridge Marketplace and
         Newtown  Square).  The line which  matures on January 31, 2001 replaces
         the Lines of Credit the Company  had with  Mellon  Bank and  Corestates
         Bank.  Loans  under  this  line will bear  interest  at LIBOR  plus one
         percent (1%). The line was  subsequently  increased to $45,000 on March
         20, 1998 and Watkins Park Plaza was pledged as additional collateral.

5.       Summary of Noncash Investing and Financing Activities

         Significant  noncash  transactions  for the nine months ended March 31,
         1998 and 1997 were as follows:
<TABLE>
          <S>                                           <C>              <C>  

                                                          1998              1997
                                                          ----              ----

          Liabilities assumed in acquisition 
           of rental properties                         $4,466           $16,843
          Common units in the Operating 
           Partnership issued in connection with 
           the acquisition of rental properties         $5,384            $4,660
          Preferred units in the Operating 
           Partnership issued in connection with 
           the acquisition of rental properties            -                $277
          Increase in minority interest's ownership 
           of the Operating Partnership                $2,125             $1,709
          Accrued compensation paid through the issuance
           of Common Stock                               $760                -
</TABLE>



                                        6

<PAGE>




              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)
                                    ---------



The above  information  supplements  the  disclosures  required by  Statement of
Financial Accounting Standards No. 95 - "Statement of Cash Flows."

6.       Stock Option Plans

                  On May 8, 1998, the Stockholders  approved an amendment to the
         Company's 1994 Stock Option Plan. The amendment increases the number of
         shares  available for issuance under the Stock Option Plan from 796,691
         to 1,296,691 shares.

                  On May 8, 1998, the Stockholders  approved an amendment to the
         Company's  1996  Restricted  Stock Plan.  The  Amendment  increases the
         number of shares available for issuance under the Restricted Stock Plan
         from 18,508 to 368,508 shares.

                  On May 8, 1998, the Stockholders  approved an amendment to the
         Company's  1996  Contingent  Stock  Agreements.  The amendment  further
         grants  an  additional   150,000  shares  of  Common  Stock  to  senior
         management under a performance-based incentive plan.

7.       Subsequent Events

                  In April 1998, the Company acquired  Parkville Shopping Center
         located in Baltimore,  Maryland.  The total  acquisition cost of $8,450
         was financed through the issuance of 185,361 common units to the seller
         of the property with a value of approximately $4,950,  assumed mortgage
         indebtedness of $3,500.  The mortgage loan carries an all-in  effective
         rate of 7.1% and matures in 2008.  The Center  contains  140,925 square
         feet of GLA and is anchored by A&P Superfresh and Rite Aid.

                  On  April  17,  1998,  the  Board  of  Directors   declared  a
         distribution  of  $0.4875  and  $.6094  per share of  Common  Stock and
         Preferred  Stock,  respectively  to shareholders of record as of May 1,
         1998, payable on May 15, 1998.




















                                        7

<PAGE>



Item 2. Management's  Discussion and Analysis of Financial Condition and Results
     of Operation

Overview

         The  following  discussion  should  be read  in  conjunction  with  the
"Selected  Consolidated  Financial Information" and the Financial Statements and
notes thereto of the Company appearing  elsewhere in this Form 10-Q. Dollars are
in thousands except per share data.

Comparison  of the three  months  ended March 31, 1998 to the three months ended
March 31, 1997

         For the three months ended March 31, 1998, the net income  allocated to
common stockholders increased by $2,652 from $21 to $2,673, when compared to the
three  months  ended March 31,  1997,  primarily  due to an increase in revenues
offset by an increase in expenses,  an increase in  extraordinary  losses and an
increase in the amount of income allocated to minority interests.

         Total revenues  increased by $4,236 or 34.1%,  from $12,404 to $16,640,
due   primarily   to  an  increase  in  minimum   rents  of  $3,296  and  tenant
reimbursements  of $965.  The  increases  were  primarily due to the purchase of
Ashburn Farm Village  Shopping Center in March 1997, the six Chicago  properties
purchased in September 1997,  Mitchellville Plaza in October 1997, Spring Valley
Center in December 1997 (the "1997  Acquisitions"),  Bowie Plaza in January 1998
and Watkins Park Plaza in March 1998 (the "1998 Acquisitions").

         Property  operating and  maintenance  expense  increased by $1,089,  or
35.7%,  from $3,054 to $4,143,  due primarily to the 1997  Acquisitions  and the
1998 Acquisitions. General and administrative expenses decreased by $21 or 2.4%,
due  primarily  to a decrease in the amount of  compensation  paid or payable in
Company stock of $117, offset by an increase in other cash expenses of $96.

         Interest  expense  increased by $479, or 11.0%,  from $4,372 to $4,851,
due primarily to the increase  mortgage  indebtedness  associated  with the 1997
Acquisitions  and the 1998  Acquisitions  offset by a reduction of mortgage debt
through proceeds from the September 1997 offering.  The average debt outstanding
increased from $204.0 million for 1997 to $235.3 million for 1998.

         Depreciation  and  amortization  expenses  increased by $804, or 32.7%,
from  $2,461 to  $3,265,  primarily  due to the 1997  Acquisitions  and the 1998
Acquisitions.

         During  1998  there  was a $358  extraordinary  loss  due to the  early
extinguishment  of debt  compared to $134 for the same period in 1997.  In 1998,
$4,236 of mortgage debt was retired before the scheduled maturity date. In 1997,
$734 of mortgage debt was retired before the scheduled maturity date.

         Income allocated to minority  interests  increased by $808 from $257 to
$1,065  due  to an  increase  in net  income  and an  increase  in the  minority
interests' ownership of the Operating Partnership.

Liquidity and Capital Resources

Indebtedness

         As  of  March  31,  1998,  the  Company  had  total   indebtedness   of
approximately   $251.9  million  (including  $25.0  million  of  debentures  and
approximately   $226.9   million  of  mortgage   indebtedness).   The   mortgage
indebtedness   consists  of   approximately   $220.0  million  in   indebtedness
collateralized by 34 of the Properties and tax-exempt bond financing obligations
issued by the  Philadelphia  Authority  for  Industrial  Development  (the "Bond
Obligations")  of  approximately  $6.9  million  collateralized  by  one  of the
properties.  Of the Company's  indebtedness,  $32.0 million  (12.7%) is variable
rate indebtedness,  and $219.9 million (87.3%) is at a fixed rate. The effective
interest  rates of the  indebtedness  range  from 6.3% to 9.8%,  with a weighted
average  interest rate of 7.96%,  and will mature between 1999 and 2014. A large
portion of the

                                        8

<PAGE>



Company's  indebtedness  will become due by 2000,  requiring balloon payments of
$88.9 million in 1999,  and $24.4 million in 2000.  From 1999 through 2014,  the
Company will have to refinance an  aggregate of  approximately  $215.0  million.
Since the Company anticipates that only a small portion of the principal of such
indebtedness  will be repaid  prior to maturity  and the Company will likely not
have sufficient funds on hand to repay such indebtedness,  the Company will need
to refinance such  indebtedness  through  modification  or extension of existing
indebtedness,  additional  debt  financing or through an additional  offering of
equity securities.

         The Company currently has two collateralized  revolving lines of credit
(the "Lines of Credit") totaling approximately $51 million. In January 1998, the
Company  closed on $35,500  collateralized  revolving  Line of Credit with Union
Bank of Switzerland.  This line is  collateralized  by six properties  (Kenhorst
Plaza, Shoppes of Graylyn, Four Mile Fork, Takoma Park, Centre Ridge Marketplace
and Newtown  Square).  The line which  matures on January 31, 2001  replaces the
Lines of Credit the  Company had with Mellon  Bank and  Corestates  Bank.  Loans
under this line will bear interest at LIBOR plus one percent (1%).  The line was
subsequently  increased  to $45,000 on March 20, 1998 and Watkins Park Plaza was
pledged as additional  collateral.  The Company has a  collateralized  revolving
line of credit of up to $5.8 million from First Union Bank. Loans under the line
of credit bear interest at LIBOR plus two percent (2%) per annum,  and mature on
June 30,  1998.  Loans  under the line of credit are  collateralized  by a first
mortgage lien on Brafferton  Shopping  Center.  As of March 31, 1998,  there was
$18,437 outstanding under the Lines of Credit.

         The  Company  expects  to meet its  short-term  liquidity  requirements
generally through its working capital, net cash provided by operations and draws
on the Lines of Credit.  The  Company  believes  that the  foregoing  sources of
liquidity will be sufficient to fund liquidity needs through 1999.

         The Company expects to meet certain  long-term  liquidity  requirements
such  as  development,   property   acquisitions,   scheduled  debt  maturities,
renovations,  expansions and other non-recurring  capital  improvements  through
long-term secured and unsecured indebtedness,  including the Lines of Credit and
the issuance of additional  equity  securities.  The Company also expects to use
funds  available  under the Lines of  Credit to fund  acquisitions,  development
activities and capital improvements on an interim basis.

         During 1999, $88.9 million of the Company's  indebtedness  becomes due,
including the $25.0 million Exchangeable  Debentures.  The Company believes that
it will be able to retire this debt  through  either a  refinancing  of the debt
using the properties as collateral, an equity offering or a combination of both.
The Company currently  believes that the loan-to-values on the properties are at
a level  that  will  enable  the  Company  to  refinance  the loans  without  an
additional requirement for capital.

         The Company  has  elected to qualify as a REIT for  federal  income tax
purposes  commencing  with its tax year ended December 31, 1994. To qualify as a
REIT, the Company is required,  among other items, to pay  distributions  to its
shareholders of at least 95% of its taxable income.  The Company intends to make
quarterly distributions to its shareholders from operating cash flow.

         On March 19, 1998,  the  Emerging  Issues Task Force  ("EITF") of the  
Financial Accounting  Standards  Board  reached  a  consensus  opinion  on  
issue  #97-11, "Accounting  for Internal Costs Relating to Real Estate  Property
Acquisitions" which requires that the internal costs of preacquisition  
activities incurred in connection  with  the  acquisition  of an  operating  
property  be  expensed  as incurred. The Company has historically  capitalized
internal preacqusition costs of operating properties as a component of the 
acquisition price and accordingly, will  realize an increase  in expense  upon  
adoption  of this  ruling  which is effective immediately.













                                        9

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                                     Part II

OTHER INFORMATION

 Item 2.       Recent Sales of Unregistered Equity Securities

               (a)        Securities Sold

                  The  following  table sets  forth the date of sale,  title and
                  amount of  unregistered  securities  sold by the Company since
                  December 31, 1997:

                  Date of Sale               Title                       Amount

                  01/01/98                   Common Units               130,626
                  04/30/98                   Common Units               185,361

               (b)        Underwriters and other purchasers

                  i.      January 1, 1998 Sales.  Underwriters were not retained
                          in connection with the sale of these securities. These
                          units  were  sold to the  seller  of Bowie  Plaza,  an
                          "accredited investor".

                  ii.     April 30, 1998 Sales.  Underwriters  were not retained
                          in connection with the sale of these securities. These
                          units  were sold to the seller of  Parkville  Shopping
                          Center, an "accredited investor".

               (c)        Consideration

                  i.      January 1, 1998  Sales.  These  units  were  issued in
                          exchange for property having a value of  approximately
                          $6.7 million, net of assumed indebtedness.  There were
                          no underwriting  discounts or commissions with respect
                          to such securities.

                  ii.     April 30,  1998  Sales.  These  units  were  issued in
                          exchange for property having a value of  approximately
                          $4.9 million, net of assumed indebtedness.  There were
                          no underwriting  discounts or commissions with respect
                          to such securities.

Item 6.        Exhibits and Reports on Form 8-K

(a)            Exhibits

27             Financial Data Schedule (2)
-----------------------------------------------------------------------


(1)  Incorporated  herein by reference from the Company's Form 10-K for the year
     ended December 31, 1997.

(2)  Filed herewith.

(b)  Reports on Form 8-K.

     None.

                                       10

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                                   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.


                        FIRST WASHINGTON REALTY TRUST, INC.


         Date:          May 14, 1998               /s/ William J. Wolfe
                                                  ------------------------------
                                                  By:  William J. Wolfe
                                                       President and
                                                       Chief Executive Officer


         Date:          May 14, 1998             /s/ James G. Blumenthal
                                                 -------------------------------
                                                  By:  James G. Blumenthal
                                                       Executive Vice President
                                                       & Chief Financial Officer

                                       11

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