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 June 30, 1997


                      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 August 13, 1997:

                             5,211,013 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 June 30, 1997 (unaudited) and
              December 31, 1996                                              1

         Consolidated Statements of Operations (unaudited) for the three 
              months and six months ended June 30, 1997 and 1996             2

         Consolidated Statements of Cash Flows (unaudited) for the 
              six months ended June 30, 1997 and 1996                        3

         Notes to Unaudited Consolidated Financial Statements                4

Item 2.  Management's Discussion and Analysis of Financial Condition 
              and Results of Operations                                      9


Part II:  Other Information


Item 2.  Market for the Registrant's Common Equity and Related Shareholders
              Matters                                                       12

Item 6.  Exhibits and Reports on Form 8-K                                   12

Signatures                                                                  14




<PAGE>



                  FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                                 CONSOLIDATED BALANCE SHEETS

                           (dollars in thousands except share data)

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

                                              June 30,             December 31,
                                              1997                 1996
                                             (unaudited)
                                   ASSETS

Rental properties:
  Land                                         $ 70,930              $ 61,959
  Buildings and improvements                    287,549               252,276
                                              ---------              --------
                                                358,479               314,235
Accumulated depreciation                        (35,056)              (30,450)
                                              ---------             ---------
  Rental properties, net                        323,423               283,785

Cash and equivalents                              2,650                11,780
Tenant receivables, net                           5,783                 4,639
Deferred financing costs, net                     3,964                 4,403
Other assets                                      8,253                 9,006
                                             ----------            ----------
          Total assets                         $344,073              $313,613
                                               ========              ========
</TABLE>


                       LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<S>                                          <C>                    <C>
Liabilities:
  Mortgage notes payable                       $192,377              $167,047
  Debentures                                     25,000                25,000
  Accounts payable and accrued expenses          10,179                 6,328
                                            -----------            ----------

          Total liabilities                     227,556               198,375

Minority interest                                18,418                16,661

Stockholders' equity:
  Convertible preferred stock $.01 par value, 
  3,750,000 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; 5,038,999 and 4,946,245 
  shares issued and outstanding, respectively        50                    49
  Additional paid-in capital                    121,247               116,068
  Accumulated distributions in excess of 
  earnings                                      (23,221)              (17,563)
                                              ----------          -----------
    Total stockholders' equity                   98,099                98,577
                                               ---------             ---------

    Total liabilities and stockholders'
    equity                                     $344,073              $313,613
                                               ========              ========

</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 For six months ended
                                            June 30,              June 30,
                                     -----------------------   -----------------
                                      1997          1996      1997         1996
                                      ----          ----      ----         ----
<S>                                  <C>         <C>         <C>       <C>

Revenues:
         Minimum rents                $10,514     $7,920      $20,666   $15,018
         Tenant reimbursements          2,108      1,718        4,231     3,273
         Percentage rents                 245        199          573       394
         Other income                     260        401          447       914
                                     --------   --------     --------  --------
              Total revenues           13,127     10,238       25,917    19,599
                                      -------    -------       ------    ------

Expenses:
         Property operating and 
          maintenance                   3,152      2,451        6,726     4,992
         General and administrative     1,282      1,114        2,140     1,700
         Interest                       4,556      3,711        8,928     7,026
         Depreciation and amortization  2,656      2,008        5,117     3,744
                                      -------    -------      -------   -------
              Total expenses           11,646      9,284       22,911    17,462
                                      -------    -------       ------    ------

Income before income from Management 
         Company, minority interest 
         and distributions to Preferred
         Stockholders                   1,481        954        3,006     2,137

Income from Management Company            136         30          299         7
                                     --------      -----       ------    ------

Income before minority interest and 
         distributions to
         Preferred Stockholders         1,617        984        3,305     2,144

Income allocated to minority interest    (242)      (126)        (499)     (298)
                                      --------   --------        -----     -----

Income before distributions to 
         Preferred Stockholders         1,375        858        2,806     1,846

Distributions to Preferred 
         Stockholders                  (1,410)    (1,410)      (2,820)   (2,820)
                                       -------    -------      -------   -------

Net Income (loss) allocated to 
         common stockholders             ($35)     ($552)        ($14)    ($974)
                                    ==========  =========   ==========  ========

Net Income (loss) per Common Share     ($0.01)    ($0.17)      ($0.00)   ($0.30)
                                    ========== ==========    =========   =======

Weighted average shares of 
         Common Stock, in thousands     4,989      3,201        4,968     3,196
                                     ========  =========    ==========  ========

Distributions per share               $0.4875    $0.4875      $0.9750   $0.9750
                                      =======    =======      =======    =======

</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 six months ended
                                                               June 30,
                                                      1997                 1996

<S>                                                <C>                  <C> 

Operating activities:
  Income before distributions 
    to Preferred Stockholders                       $2,806               $1,846
  Adjustment to reconcile net cash 
     provided by operating activities:
    Income allocated to minority interest              499                  298
    Depreciation and amortization                    5,117                3,744
    Amortization of deferred financing 
     costs and loan discounts                          902                1,165
    Equity in earnings of Management Company           (59)                 233
    Compensation paid or payable in 
     company stock                                   1,400                  743
    Provision for uncollectible accounts               759                  157
    Recognition of deferred rent                      (621)                (446)
    Gain on sale of rental property                    (45)                  -
    Net changes in:
      Tenant receivables                            (1,282)                (978)
      Other assets                                     736                 (719)
      Account payable and accrued expenses             149                 (320)
                                                   -------             ---------
         Net cash provided by operating 
          activities                                10,361                5,723
                                                 ---------             ---------

Investing activities:
  Additions to rental properties                    (4,841)              (1,675)
  Acquisition of rental properties                 (16,751)             (38,962)
  Proceeds from sale of rental property              1,172                  -
                                                 ---------           -----------
         Net cash used in investing
          activities                               (20,420)             (40,637)
                                                  --------              --------

Financing activities:
  Proceeds from line of credit                      18,100                6,848
  Proceeds from mortgage notes                       2,235               29,615
  Proceeds from issuance of common stock             2,000                  -
  Repayment on mortgage notes                      (11,918)                (449)
  Additions to deferred financing costs               (525)                (554)
  Distributions paid to Preferred 
   Stockholders                                     (2,820)              (2,820)
  Distributions paid to Common Stockholders         (4,823)              (3,115)
  Distributions paid to minority interest           (1,320)                (958)
                                                   --------             --------
         Net cash provided by financing 
          activities                                   929               28,567
                                                  ---------            ---------

  Net decrease in cash and equivalents              (9,130)              (6,347)
  Cash and equivalents, beginning of period         11,780                7,806
                                               ------------           ----------
         Cash and equivalents, end of period        $2,650               $1,459
                                                ===========           ==========

</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 39 retail  properties  containing a total of approximately
         4.1  million  square  feet of  gross  leasable  area  and  two  related
         multifamily properties located in the Mid-Atlantic region.

                  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   84.0%  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 27 Properties  directly and 14 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.  In addition to the
         Properties,  FWM provides  management,  leasing and related services to
         third-party clients, including individual,  institutional and corporate
         property  owners.  FWM is also  referred  to herein as the  "Management
         Company".

                  On December 2, 1996, the Company  completed a public  offering
         of 1,500,000 shares of Common Stock (the "December 1996 Offering"). The
         shares of stock were  priced at $21.75 per  share,  resulting  in gross
         offering  proceeds of $32.6  million.  The Company netted $30.2 million
         after  deducting the  underwriter's  discount and offering  expenses of
         $2.4 million.

                  On December 30, 1996, an additional  155,000  shares of Common
         Stock  were  issued  pursuant  to  the  exercise  of a  portion  of the
         underwriter's  over-allotment  option. The Company received  additional
         proceeds of $3.2 million net of underwriter's discount.

                  On April 17, 1997,  the  Company's  Registration  Statement on
         Form S-3,  which  provides for the offering from  time-to-time  of $175
         million of securities was declared effective.


                                                         4

<PAGE>


                FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

               NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


                  On May 9, 1997, 85,562 common shares of stock were issued to a
         current  shareholder.  The Company  received  proceeds of approximately
         $2.0  million  which it used to pay down a portion  of its  outstanding
         line of credit.

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  statement  and the
         notes  thereto of the  Company's  1996 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.

                  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/Loss per Share

                  Income/loss  per share is calculated by dividing  income after
         minority interest, less preferred distributions by the weighted average
         number of common  shares  outstanding  during the three  months and six
         months ended June 30, 1997 and 1996 respectively.  The weighted average
         number of common shares  outstanding during three months ended June 30,
         1997  and 1996  were  4,989,000  and  3,201,000,  respectively  and the
         weighted average number of common shares  outstanding during six months
         ended  June  30,   1997  and  1996  were   4,968,000   and   3,196,000,
         respectively.   Potentially   dilutive   items  i.e.  the  exercise  of
         outstanding  stock options and the conversion of Convertible  Preferred
         Stock,  Operating  Partnership Units and Exchangeable  Debentures would
         not have a material dilutive effect.

         Recent Accounting Pronouncements

                  Effective  for the Company's  fiscal year ending  December 31,
         1997,  the Company  will be required to adopt  Statements  of Financial
         Accounting Standards No. 128, "Earnings per Share", No. 130, "Reporting
         Comprehensive  Income",  No.  131,  "Disclosures  about  Segment  of an
         Enterprise  and  Related  Information".  The  potential  impact  on the
         Company of adopting the new standards  has not been  quantified at this
         time. The Company intends to adopt the statements in the fourth quarter
         of 1997.

3.       Acquisition of Rental Properties

                  On January 24, 1997,  the Company  acquired City Line Shopping
         Center, located in Philadelphia,  Pennsylvania for an approximate price
         of $14.8  million.  The shopping  center is anchored by Acme Market and
         Thrift  Drugs.  The  acquisition  was financed  through the issuance of
         approximately 143,000 Common Units to the seller of the property with a
         value of approximately $3.4 million,  assumed mortgage  indebtedness of
         approximately $10.0 million,  new indebtedness of $1.0 million and $0.4
         million in cash.  The mortgage  loan bears  interest at 8.00% per annum
         and is payable monthly based on a 24 year  amortization  schedule.  The
         loan is due in October 2005.

                                                         5

<PAGE>



             FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


                  On January  28,  1997,  the  Company  acquired  Four Mile Fork
         Shopping Center located in Fredericksburg,  Virginia for an approximate
         price  of  $5.7  million.   The  center  is  anchored  by  Safeway  and
         CVS/Pharmacy.  The  acquisition  was  financed  with  proceeds  of  the
         December 1996 Offering.

                  On January 31, 1997, the Company  acquired  Shoppes of Graylyn
         located in  Wilmington,  Delaware.  The price of the  property was $7.2
         million.  The  center is  anchored  by Rite Aid.  The  acquisition  was
         financed by a $3.8 million draw on the  Company's  line of credit,  $.4
         million  from the  proceeds  of the  sale of  Thieves  Market  and $3.0
         million in cash from the proceeds of the December 1996 Offering.

                  On March 19,  1997  (effective  March 1,  1997),  the  Company
         acquired Ashburn Farms Village Center located in Ashburn,  Virginia for
         an  approximate  price of $9.2  million.  The  center  is  anchored  by
         Superfresh Supermarket. The acquisition was financed with mortgage debt
         of $6.8 million,  the issuance of approximately  55,000 Common Units to
         the seller of the property with a value of approximately  $1.2 million,
         the issuance of  approximately  9,500  Preferred Units to the seller of
         the  property   with  a  value  of   approximately   $0.2  million  and
         approximately $1.0 million in cash. The mortgage loan bears interest at
         LIBOR + 1.5% per annum and has an annual  amortization of approximately
         $.1 million. The loan is due in January 2001.

                  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
         December 1996 Offering occurred on January 1, of the periods presented.
         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.

<TABLE>

                                              For the six months   For the year
                                                 ended June 30,        ended
                                              1997          1996  Dec. 31, 1996
                                              ----          ----   -------------

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

             Total revenues                   $25,917    $24,586       $49,679
             Expenses:
                 Property operating and 
                  maintenance                   6,726      6,299        12,562
                 General and administrative     2,140      1,700         3,137
                 Interest                       8,928      8,786        18,152
                 Depreciation and amortizatio   5,117      4,710         9,704
                                                -----      -----       -------
                                               22,911     21,494        43,555
                                               ------     ------        ------
             Income before income from Management
               Company, minority interest and 
               distributions to Preferred 
               Stockholders                     3,006      3,092        6,124
             Income from Management Company       299          7          221
                                                  ---          -       ------
             Income before minority interest and
               distributions to Preferred 
               Stockholders                     3,305      3,099        6,345
             Income allocated to minority 
               interest                          (499)      (484)        (990)
                                                 -----      -----        -----
             Income before distributions to 
               Preferred Stockholders           2,806      2,615        5,355
             Distributions to Preferred 
               Stockholders                    (2,820)    (2,820)      (5,641)
                                               -------    -------      -------
             Net Income (loss) allocated 
               to Common Stockholders            $(14)     $(205)       $(286)
                                              ========    =======      =======
             Net Income (loss) per 
               common share                     $0.00     $(0.04)      $(0.06)
                                                ======    =======      =======
</TABLE>


                                                         6

<PAGE>



                  FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


4.       Mortgage Debt

                  In order to minimize the Company's  exposure to interest rates
         on debt that is maturing in 1999, the Company has recently entered into
         two  interest  rate  swap  contracts.  On June 13,  1997,  the  Company
         purchased  an  option  to enter  into a five  year  interest  rate swap
         effective  June 1, 1999.  The  underlying  swap would be for a notional
         amount of $15 million. If exercised, the Company would pay a fixed rate
         of 7.5% per annum and would receive variable  payments from the counter
         party  based  on the 30 day  Libor  rate.  The cost of the  option  was
         $159,000 which will be amortized  over the life of the underlying  swap
         commencing  June 1, 1999. On August 1, 1997, the Company entered into a
         five year interest  rate swap  contract  with a notional  amount of $20
         million.  The contract is effective March 1, 1999. The Company will pay
         a fixed  rate of 6.438% and will  receive  variable  payments  from the
         counter  party  based  on the 30 day  Libor  rate.  The  contracts  are
         accounted  for on the accrual basis with net  payments/receipts  due on
         the swap recognized as an adjustment to interest expense.

5.       Summary of Noncash Investing and Financing Activities

         Significant noncash transactions for the six months ended June 30, 1997
and 1996 and were as follows:

<TABLE>
                                                          1997             1996
                                                          ----             ----

           <S>                                         <C>               <C>   

           Liabilities assumed in acquisition 
            of rental properties                       $16,843           $8,097

           Common units in the Operating 
            Partnership issued in connection 
            with the acquisition of rental properties   $4,660           $5,646

           Preferred units in the Operating 
            Partnership issued in connection with 
            the acquisition of rental properties          $277           $1,679

           Increase in minority interest's ownership 
             of the Operating Partnership               $1,258           $1,921
</TABLE>


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

6.       Commitments & Contingencies

                  The  Company  has  entered  into  agreements  to  acquire  six
         supermarket-anchored  neighborhood  shopping  centers  in  the  Chicago
         metropolitan  area.  The  total   consideration  for  all  six  of  the
         properties  is  approximately  $67  million.   The  properties  contain
         approximately   760,000  square  feet  of  gross  leasable  area.  Four
         properties  are  anchored  by  Dominick's  supermarkets  and two of the
         properties  are anchored by Omni  Supermarket.  Both food store formats
         are owned and  operated by  Dominick's  Supermarkets,  Inc.  Closing is
         expected  to take  place  in early  September  1997.  Financing  of the
         properties will be through the assumption of existing  mortgage debt of
         approximately  $43.6  million,  the issuance of  approximately  836,000
         Common  Units  to  the  Seller  of  the   property   with  a  value  of
         approximately $19.6 million and the balance in cash.

7.       Stock Option Plans

                  On May 16, 1997, 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 351,540
         to 801,540 shares.

                                                         7

<PAGE>



                   FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                   NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


                  On June 1, 1997, the Company issued 129,500 options to certain
offices, directors and employees.

8.       Subsequent Events

                  On  July  17,   1997  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 August 1,
         1997, payable on August 15, 1997.

                  Under the  terms of their  employment  agreements,  two of the
         Company's officers (or their designees) were eligible to receive 66,667
         shares  each of  Common  Stock  based on the  Company  meeting  certain
         operating result  requirements.  These  requirements were satisfied and
         the shares were  issued on July 1, 1997.  The total value of the shares
         was  approximately  $3.2 million and had been recorded as  compensation
         expense over the periods earned.































                                                         8

<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.


Comparison  of the three  months  ended June 30, 1997 to the three  months ended
June 30, 1996

         For the three  months ended June 30,  1997,  the net loss  allocated to
common  stockholders  decreased by $517,000 from a net loss of $552,000 to a net
loss of  $35,000,  when  compared  to the  three  months  ended  June 30,  1996,
primarily  due to an increase in revenues off set by an increase in expenses and
an increase in the amount of income allocated to minority interests.

         Total revenues  increased by $2,889,000 or 28.2%,  from  $10,238,000 to
$13,127,000,  due primarily to an increase in minimum  rents of  $2,594,000  and
tenant  reimbursements  of $390,000.  The  increases  were  primarily due to the
purchase of Takoma Park Shopping Center on April 29, 1996, Southside Marketplace
on June 7, 1996, Kings Park Shopping Center on December 19, 1996, Newtown Square
Shopping  Center on December 27, 1996 and Northway  Shopping  Center on December
30, 1996 (the "1996  Acquisitions"),  City Line  Shopping  Center on January 24,
1997, Four Mile Fork Shopping Center on January 28, 1997,  Shoppes of Graylyn on
January 31, 1997 and Ashburn Farm Village Shopping Center on March 19, 1997 (the
"1997 Acquisitions").

         Property  operating and maintenance  expense increased by $701,000,  or
28.6%,  from  $2,451,000  to  $3,152,000,  due  primarily  to the  1996 and 1997
Acquisitions.  General  and  administrative  expenses  increased  by $168,000 or
15.1%,  due  primarily  to an  increase  in the amount of  compensation  paid or
payable  in  Company  stock of  $585,000,  offset by a  decrease  in other  cash
expenses,  primarily  cash  bonuses of $155,000 and one time NYSE filing fees of
$180,000 paid in 1996.

         Interest expense  increased by $845,000,  or 22.8%,  from $3,711,000 to
$4,556,000,  due primarily to the increase mortgage indebtedness associated with
the 1996 and 1997  Acquisitions.  The average debt  outstanding  increased  from
$175.8  million  for 1996 to $216.6  million  for  1997.  The  weighted  average
interest rate was 8.4% in 1996 and 1997.

         Depreciation and amortization expenses increased by $648,000, or 32.3%,
from $2,008,000 to $2,656,000, primarily due to the 1996 and 1997 Acquisitions.

         Income  allocated  to minority  interests  increased  by $116,000  from
$126,000  to  $242,000  due to an  increase in net income and an increase in the
minority interests ownership of the Operating Partnership.

Comparison of the six months ended June 30, 1997 to the six months ended 
June 30, 1996

         For the six  months  ended June 30,  1997,  the net loss  allocated  to
common  stockholders  decreased by $960,000 from a net loss of $974,000 to a net
loss of $14,000,  when compared to the six months ended June 30, 1996, primarily
due to an  increase  in  revenues  off set by an  increase  in  expenses  and an
increase in the amount of income allocated to minority interests.

         Total revenues  increased by $6,318,000 or 32.2%,  from  $19,599,000 to
$25,917,000,  due primarily to an increase in minimum  rents of  $5,648,000  and
tenant  reimbursements  of $958,000.  The  increases  were  primarily due to the
purchase of Centre Ridge  Marketplace  on March 29, 1996,  Takoma Park  Shopping
Center on April 29,  1996,  Southside  Marketplace  on June 7, 1996,  Kings Park
Shopping Center on December 19, 1996, Newtown Square Shopping Center on December
27, 1996 and Northway Shopping Center on December 30, 1996 (the "1996

                                                         9

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Acquisitions"),  City Line Shopping  Center on January 24, 1997,  Four Mile Fork
Shopping Center on January 28, 1997,  Shoppes of Graylyn on January 31, 1997 and
Ashburn   Farm   Village   Shopping   Center  on  March  19,   1997  (the  "1997
Acquisitions").

         Property operating and maintenance expense increased by $1,734,000,  or
34.7%,  from  $4,992,000  to  $6,726,000,  due  primarily  to the  1996 and 1997
Acquisitions.  General  and  administrative  expenses  increased  by $440,000 or
25.9%,  due  primarily  to an  increase  in the amount of  compensation  paid or
payable in Company stock of $812,000 offset by a decrease in other cash expenses
primarily  cash bonuses of $155,000 and one time NYSE filing of $180,000 paid in
1996.

         Interest expense increased by $1,902,000,  or 27.1%, from $7,026,000 to
$8,928,000,  due primarily to the increase mortgage indebtedness associated with
the 1996 and 1997  Acquisitions.  The average debt  outstanding  increased  from
$163.2  million  for 1996 to $204.8  million  for  1997.  The  weighted  average
interest rate was 8.7% in 1996 and 1997.

         Depreciation  and  amortization  expenses  increased by $1,373,000,  or
36.7%,  from  $3,744,000  to  $5,117,000,  primarily  due to the  1996  and 1997
Acquisitions.

         Income  allocated  to minority  interests  increased  by $201,000  from
$298,000  to  $499,000  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  June  30,  1997,   the  Company  had  total   indebtedness   of
approximately   $217.4  million  (including  $25.0  million  of  debentures  and
approximately  $192.4  million of mortgages  and lines of credit).  The mortgage
indebtedness   consisted  of   approximately   $185.3  million  in  indebtedness
collateralized by 39 of the Properties and tax-exempt bond financing obligations
issued by the  Philadelphia  Authority  for  Industrial  Development  (the "Bond
Obligations")  of  approximately  $7.1  million  collateralized  by  one  of the
properties.  Of the Company's  mortgage  indebtedness,  $36.6 million (19.0%) is
variable rate indebtedness,  and $155.8 million (81.0%) is at a fixed rate. This
indebtedness  has interest  rates ranging from 5.0% to 10.125%,  with a weighted
average interest rate (excluding the Bond  Obligations) of 7.7%, and will mature
between 1998 and 2021. A large portion of the Company's indebtedness will become
due by 2000,  requiring  balloon payments of $4.1 million in 1998, $87.5 million
in 1999,  and $34.1 million in 2000.  From 1998 through  2021,  the Company will
have to  refinance  an  aggregate of  approximately  $194.9  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 three  collateralized  revolving  lines of
credit (the "Lines of Credit") totaling  approximately $39 million.  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 will bear interest at LIBOR plus two
percent (2%) per annum,  and will mature on June 30, 1998.  Loans under the line
of credit will be collateralized by a first mortgage lien on Brafferton Shopping
Center. The Company has an additional collateralized revolving line of credit of
approximately  $8.25 million with Mellon Bank.  This line is  collateralized  by
Kenhorst  Plaza and  expires  March 29,  1998.  Loans  under this line will bear
interest at LIBOR plus 1.5% ( recently  reduced  from 2%). On January 31,  1997,
the Company closed a $25 million line of credit with  Corestates  Bank. The line
is  collateralized  by Shoppes of Graylyn,  Newtown  Square,  Four Mile Fork and
Centre Ridge Marketplace, bears interest at LIBOR plus 1.50% and expires January
31, 2000. As of June 30, 1997, $18.1 was outstanding under the lines of credit.

                                                        10

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         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 1997.

         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, $87.5 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 fully  refinance  the loans  without an
additional requirement for capital.

         In order to minimize the Company's  exposure to interest  rates on debt
that is maturing in 1999,  the Company has  recently  entered  into two interest
rate swap contracts.  On June 13, 1997, the Company purchased an option to enter
into a five year interest rate swap effective June 1, 1999. The underlying  swap
would be for a notional amount of $15 million.  If exercised,  the Company would
pay a fixed rate of 7.5% per annum and would receive variable  payments from the
counter  party  based  on the 30 day  Libor  rate.  The cost of the  option  was
$159,000 which will be amortized over the life of the underlying swap commencing
June 1, 1999. On August 1, 1997,  the Company  entered into a five year interest
rate swap  contract  with a notional  amount of $20  million.  The  contract  is
effective  March 1, 1999.  The Company  will pay a fixed rate of 6.438% and will
receive variable payments from the counter party based on the 30 day Libor rate.
The contracts are accounted for on the accrual basis with net  payments/receipts
due on the swap recognized as an adjustment to interest expense.

         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.




















                                                        11

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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, 1996:

                  Date of Sale               Title                       Amount

                  01/24/97                   Common Units         143,385 units
                  03/19/97                   Common Units          55,335 units
                  03/19/97                   Preferred Units        9,538 units

               (b)        Underwriters and other purchasers

                  i.      January 24, 1997 Sales. Underwriters were not retained
                          in connection with the sale of these
                          securities.  These units were sold to the seller of 
                          City Line Shopping Center, an "accredited
                          investor".

                  ii.     March 19, 1997 Sales.  Underwriters were not retained
                          in connection with the sale of these
                          securities.  These units were sold to the seller of 
                          Ashburn Farm Village Shopping Center, an
                          "accredited investor".

               (c)        Consideration

                  i.      January  24,  1997  Sales.  These units were issued in
                          exchange for property having a value of  approximately
                          $4.8 million, net of assumed indebtedness.  There were
                          no underwriting  discounts or commissions with respect
                          to such securities.

                  ii.     March 19,  1997  Sales.  These  units  were  issued in
                          exchange for property having a value of  approximately
                          $3.8 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

 3.1           Articles of Incorporation of the Company (1)

 3.2           Bylaws of the Company (3)

10.40          Revolving Credit Loan Agreement dated January 31, 1997 between 
               Corestates Bank, N.A. and First
               Washington Realty Limited Partnership.  (1)

                                                        12

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10.41          Contribution Agreement dated March 19, 1997, by and between 
               Ashburn Farms Village Center,  L.L.C.
               and First Washington Limited Partnership.  (1)

21.1           List of Subsidiaries (1)

27             Financial Data Schedule (2)

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


(1)            Incorporated herein by reference from the Company's Form 10-K 
               for the year ended December 31, 1996.

(2)            Filed herewith.

(3)            Incorporated herein by reference from the Company's Registration 
               Statement on Form S-11 (No. 33-83960).

(b)            Reports on Form 8-K.

               An  interim  report  on Form 8-K was  filed on  August  1,  1997,
               reporting the acquisition of six retail properties.

                                                        13

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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:          August 13, 1997          /s/ William J. Wolfe
                                                ------------------------------
                                                By:      William J. Wolfe
                                                    President and
                                                    Chief Executive Officer


                  Date:          August 13, 1997        /s/ James G. Blumenthal
                                                ------------------------------
                                                By:      James G. Blumenthal
                                                    Executive Vice President and
                                                    Chief Financial Officer

                                                        14

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