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, 1999


                         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, 1999:

                        9,404,901 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, 1999
          (unaudited) and December 31, 1998                                  1

         Consolidated Statements of Operations (unaudited)
          for the three months and six months ended
          June 30, 1999 and 1998                                             2

         Consolidated Statements of Cash Flows (unaudited)
          for the six months ended June 30, 1999 and 1998                    3

         Notes to Unaudited Consolidated Financial Statements                4

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

Item 3.   Qualitative and Quantitative Disclosures about Risk               13

Part II:  Other Information

Item 2.  Market for the Registrant's Common Equity and Related
          Shareholders Matters                                              15

Item 4.  Submission of Matters to a Vote of Security Holders                15

Item 6.  Exhibits and Reports on Form 8-K                                   15

Signatures                                                                  16



<PAGE>




              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                    (dollars in thousands except share data)

                                   -----------

                                                 June 30,           December 31,
                                                   1999                 1998
                                                 --------           ------------
                                                (unaudited)
                                     ASSETS

Rental properties:
  Land                                           $111,771              $108,562
  Buildings and improvements                      462,354               447,584
                                                  -------               -------
                                                  574,125               556,146
Accumulated depreciation                          (59,564)              (51,475)
                                                  -------               -------
Rental properties, net                            514,561               504,671

Cash and equivalents                                4,045                 3,163
Tenant receivables, net                             9,385                 9,463
Deferred financing costs, net                       5,306                 1,921
Other assets                                       10,191                13,736
                                                 --------              --------
     Total assets                                $543,488              $532,954
                                                 ========              ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Mortgage notes payable                         $259,115              $244,113
  Debentures                                         -                   25,000
  Accounts payable and accrued expenses            10,690                11,542
                                                 --------              --------
          Total liabilities                       269,805               280,655

Minority interest                                  65,396                66,218

Commitments and Contingencies

Stockholders' equity:
  Convertible preferred stock $.01 par
     value, 3,800,000 shares designated;
     2,726,349 and 2,314,189 issued and
     outstanding, respectively (aggregate
     liquidation preference of $68,159 and
     $57,855 respectively)                              27                    23
  Common stock $.01 par value, 90,000,000
     shares authorized; 9,394,801 and 8,566,985
     shares issued and outstanding, respectively       94                    86
  Additional paid-in capital                      243,830               218,345
  Accumulated distributions in excess of
     earnings                                     (35,664)              (32,373)
                                                   ------                ------
          Total stockholders' equity              208,287               186,081
                                                  -------               -------
          Total liabilities and stockholders'
           equity                                $543,488              $532,954
                                                 ========              ========



        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

                      (in thousands, except per share data)

                                   (unaudited)
                                     -------

                                    For three months ended  For six months ended
                                           June 30,                June 30,
                                    ----------------------  --------------------
                                      1999          1998       1999       1998
         Revenues:
              Minimum rents           $16,445    $14,054      $32,422   $26,982
              Tenant reimbursements     4,106      3,399       8,404      6,487
              Percentage rents            501        359         881        755
              Other income                388        300         858        528
                                      -------    -------      ------    -------
                  Total revenues       21,440     18,112      42,565     34,752
                                      -------    -------      ------    -------
         Expenses:
              Property operating and
               maintenance              4,787      4,441       9,993      8,584
              General and
               administrative           1,068      1,015       2,162      1,852
              Interest                  5,677      5,120      11,202      9,971
              Depreciation and
               amortization             4,282      3,656       8,494      6,921
                                       ------     ------      ------     ------
                  Total expenses       15,814     14,232      31,851     27,328
                                       ------     ------      ------     ------
              Income before gain on
               sale of properties,
               income (loss) from
                Management Company,
                extraordinary item,
                minority interest and
                distributions to
                Preferred Stockholders  5,626      3,880      10,714      7,424

              Gain on sale of properties  -          -           -        1,683


              Income (loss) from
               Management Company        (315)        60        (230)       340
                                        ------     -----      -------     -----
              Income before extraordinary
               item, minority interest
               and distributions to
               Preferred Stockholders   5,311      3,940      10,484      9,447

              Extraordinary item - loss
               on early extinguishment
               of debt                    -          -           -         (358)
                                        -----      -----      ------      ------
              Income before minority
               interest and distributions
               to Preferred
               Stockholders             5,311      3,940      10,484      9,089

              Income allocated to
               minority interest       (1,273)      (887)     (2,579)    (1,953)
                                       -------     ------     -------    -------
              Income before
               distributions to
               Preferred Stockholders   4,038      3,053       7,905      7,136
              Distributions to Preferred
               Stockholders            (1,412)    (1,410)     (2,822)    (2,820)
                                       -------    -------     -------    -------
              Income allocated to
               Common Stockholders     $2,626     $1,643      $5,083     $4,316
                                       ======     ======      ======     ======
              Earnings per Common
               Share - Basic
                  Income before
                   extraordinary item   $0.30      $0.22       $0.59      $0.63
                  Extraordinary item     0.00       0.00        0.00      (0.05)
                                        -----      -----       -----      ------
                  Net income            $0.30      $0.22       $0.59      $0.58
                                        =====      =====       =====      =====
              Earnings per Common
               Share - Diluted
                  Income before
                   extraordinary item   $0.30      $0.22       $0.58      $0.63
                  Extraordinary item     0.00       0.00        0.00      (0.05)
                                        -----      -----       -----      ------
                  Net income            $0.30      $0.22       $0.58      $0.58
                                        =====      =====       =====      =====
              Shares of Common Stock -
               Basic                    8,787      7,405       8,682      7,395
                                        =====      =====       =====      =====
              Shares of Common Stock -
               Diluted                  8,875      7,488       8,763      7,486
                                        =====      =====       =====      =====
              Distributions per share $0.4875    $0.4875     $0.9750    $0.9750
                                      =======    =======     =======    =======

              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)
                                    --------

                                                      Six months ended June 30,
                                                    ---------------------------
                                                    1999                   1998
                                                    ----                   ----
Operating Activities:
  Income before distributions to Preferred
    Stockholders                                  $7,905                 $7,136
  Adjustment to reconcile to net cash provided
   by operating activities:
    Income allocated to minority interest          2,579                  1,953
    Depreciation and amortization                  8,494                  6,921
    Gain of sale of rental properties                -                   (1,683)
    Loss on early extinguishment of debt             -                      358
    Amortization of deferred financing costs
     and loan premiums                              (252)                  (273)
    Equity in earnings of Management Company         470                   (100)
    Compensation paid or payable in common stock     642                    655
    Provision for uncollectible accounts             637                    921
    Recognition of deferred rent                    (632)                  (404)
    Net changes in:
      Tenant receivables                              73                   (818)
      Other assets                                   858                   (244)
      Accounts payable and accrued expenses         (339)                  (628)
                                                   ------                 ------
         Net cash provided by operating activities 20,435                13,794
                                                   ------                -------
Investing Activities:
  Additions to rental properties                   (2,804)               (2,119)
  Acquisition of rental properties                (10,345)              (21,968)
  Proceeds from sale of rental properties             -                   4,253
                                                  --------              --------
         Net cash used in investing activities    (13,149)              (19,834)
                                                  --------              --------
Financing Activities:
  Net proceeds from line of credit                 19,300                22,637
  Net Proceeds from mortgage notes refinancings    18,822                   318
 Proceeds from exercise of stock options               49                    37
  Repayment of line of credit                     (23,200)                  -
  Mortgage notes principal payments                (2,131)               (1,670)
  Additions to deferred financing costs            (3,965)                 (672)
  Distributions paid to Preferred Stockholders     (2,822)               (2,820)
  Distributions paid to Common Stockholders        (8,375)               (7,203)
  Distributions paid to minority interest          (4,082)               (2,542)
                                                   -------               -------
         Net cash provided by (used in) financing
          activities                               (6,404)                8,085
                                                   -------               -------
  Net change in cash and equivalents                  882                 2,045
  Cash and equivalents, beginning of period         3,163                 3,142
                                                   -------               -------
         Cash and equivalents, end of period       $4,045                $5,187
                                                   =======               =======

              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 that 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  owns a
         portfolio of 56 retail  properties  containing a total of approximately
         6.0  million  square  feet  of  gross  leasable  area  located  in  the
         Mid-Atlantic region and the Chicago, Illinois metropolitan area.

                  The  Company  currently  owns   approximately   75.3%  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 38 Properties  directly and 18 Properties  are owned by lower tier
         entities  in which the  Operating  Partnership  owns a 99%  partnership
         interest and the Company (or a wholly-owned  subsidiary of the Company)
         owns a 1% 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"  or
         "Management Company") 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.

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  1998 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  entities,  including the Operating
         Partnership.  All significant  intercompany  balances and  transactions
         have been eliminated.



                                        4

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


         Derivatives

                  The Company may enter into various forward  interest rate swap
         arrangements  from  time to time in  anticipation  of a  specific  debt
         transaction.  These  arrangements  are  used to  manage  the  Company's
         exposure to  fluctuations  in  interest  rates.  The  Company  does not
         utilize these arrangements for trading or speculative  purposes.  These
         arrangements,  considered  qualifying  hedges,  are not recorded in the
         financial  statements until the debt transaction is consummated and the
         arrangement  is settled.  The proceeds or payments  resulting  from the
         settlement of the  arrangement are deferred and amortized over the life
         of the debt as an  adjustment  to interest  expense.  Premiums  paid to
         purchase  interest  rate  protection  agreements  (such  as  caps)  are
         capitalized and amortized over the terms of those  agreements using the
         interest  method.   Unamortized   premiums  are  included  in  deferred
         financing costs in the  consolidated  balance sheet.  Amounts  received
         under  the  interest  rate  protection  agreements  are  recorded  as a
         reduction of interest expense.


3.       Acquisition of Rental Properties

                  During the first three  months of 1999,  the Company  acquired
         one shopping center for an aggregate  acquisition cost of approximately
         $15,204. The acquisition was accounted for using the purchase method of
         accounting  and the  operations  of the  property  is  included  in the
         Company's  Statement of Operations  from the date of  acquisition.  The
         following is a summary of the acquisition transaction:

         Date                                          Total    Anchor    Anchor
         Acquired Property Name    Location     GLA     Cost    Tenant     (GLA)
         -------- -------------    --------   ------   -----    ------    ------
         1/99    Kamp Washington  Fairfax, Va 71,825 $15,204 Border Books 30,000

         The acquisition was financed as follows:
<TABLE>
<S>
            <C>               <C>         <C>           <C>             <C>
                          Number of
         Property         Partnerships  Market   Assumed Mortgage Line of Credit
         Name             Units         Value        Debt (1)         Draw
         --------         ------------  ------   ---------------- --------------
         Kamp Washington     -           -            $3,045         $9,800

          <C>             <C>
         Cash            Total
         ----            -----
         $2,359  (2)     $15,204
</TABLE>

                  (1) Includes loan premiums.
                  (2) Includes net  proceeds  from the sale of  properties  that
                      occurred  in the  fourth  quarter  of 1998.  Approximately
                      $1,814  of  net   proceeds   were  used  to  acquire  Kamp
                      Washington in a Section 1031 tax free exchange.



                                        5

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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



                 The following unaudited pro forma financial information results
         of  operations  are presented as if the  acquisitions  and sales of the
         rental properties that occurred during 1998 and 1999, and the July 1998
         offering had occurred on January 1, 1998.  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.

                                                       For the six months ended
                                                                 June 30,
                                                       ------------------------
                                                               (unaudited)
                                                        1999               1998
                                                        ----               ----

           Pro forma Total Revenues                   $42,565           $39,310
                                                      =======           =======
           Pro forma net income                       $ 5,083           $ 4,750
                                                      =======           =======
           Pro forma earnings per Common Share -
              Basic                                   $  0.59           $  0.56
                                                      =======           =======
           Pro forma earnings per Common Share -
              Diluted                                 $  0.58           $  0.55
                                                      =======           =======
4.       Mortgage Debt

         In February 1999 the Company  signed an application  with  Metropolitan
Life  Insurance  Company  ("Met Life") for six  separate  loans  totaling  $75.0
million. The loans were all closed by June 30, 1999 as follows:

     Collateral
     Properties           Amount    Interest Rate   Term (years)    Closing Date
     ----------           ------    -------------   ------------    ------------

    Mallard Creek Shopping
       Center             $10,900       6.85%           10        April 30, 1999
    McHenry Commons         6,700       6.85%           10        April 30, 1999
    Davis Ford Crossing    10,700       6.79%           10        May 28, 1999
    First State Plaza      13,700       6.79%           10        May 28, 1999
    Valley Centre          21,200       6.84%           12        May 28,  1999
    Fox Mill Shopping
       Center              11,800       6.84%           12        June 29, 1999
                          -------
                          $75,000
                          =======

         There are six separate loans and six separate mortgages.  The loans are
not cross-collateralized and allow for the assumption of each individual loan to
a qualified buyer upon sale of the property by the Company.  The all-in weighted
average  interest rate of the loans will be 7.31% including the  amortization of
financing  costs and the costs of closing out interest  rate swap  agreements as
discussed  below.  Monthly  debt  service  payments  will be  based on a 25 year
amortization  schedule. The proceeds of the loans were used to retire the Nomura
loan  ($38,500)  Mallard Creek  ($11,400) and McHenry  Commons  ($6,300)  loans.
Excess proceeds of approximately $18,800 were used to pay down the Company's
line of credit.



                                        6

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)


         With the  application  to Met Life the  Company  executed  a rate  lock
agreement  thereby  fixing  the  interest  rate  for  the  term  of  the  loans.
Accordingly,  in February 1999 the Company closed out the three swap  agreements
which were to commence in 1999. These  agreements which had a combined  notional
amount of $73.5  million  were  closed out at  combined  cost for the Company of
$3,100. This cost will be amortized over the life of the Met Life loan using the
effective interest rate method.

5.       Debentures

          The $25,000 8.25%  Debentures  matured on June 27, 1999. The holder of
     the  Debentures  exercised  the option to exchange the  Debentures  for one
     million  shares  of  Convertible  Preferred  Stock  on June 27,  1999.  The
     Debentures were  collateralized by the Fox Mill and Penn Station properties
     which became unencumbered. Fox Mill was subsequently used as collateral for
     the Met Life loan.

6.       Preferred Stock

          Effective  June 1, 1999 shares of Convertible  Preferred  Stock became
     convertible  into  1.282051  shares of Common  Stock.  As of June 30,  1999
     591,680 shares of Convertible  Preferred  Stock were converted into 758,564
     shares of Common Stock.  The Company may redeem the  Convertible  Preferred
     Stock  commencing July 15, 1999 at a redemption  price of $27.44 per share.
     The redemption price reduces annually thereafter to $26.95, $26.46, $25.98,
     $25.49 and finally to $25.00 on July 15, 2004.

7.       Stock Option Plan

         In May 1999 under the current  Stock  Option  Plan the  Company  issued
183,000  options to officers and employees at a strike price of $20.75 per share
and 20,000 options to its directors at a strike price of $21.75 per share.

8.       Summary of Noncash Investing and Financing Activities

         Significant noncash transactions for the six months ended June 30, 1999
and 1998 were as follows:


                                                                  1999     1998
                                                                  ----     ----
         Liabilities assumed in acquisition of rental
           properties                                            $3,045  $15,201
         Common units in the Operating Partnership issued
           in connection with the acquisition of rental
            properties                                              -    $20,341
         Increase in minority interest's ownership of the
           Operating Partnership                                 $1,307  $12,813
         Accrued compensation paid through the issuance
           of Common Stock                                       $1,129     $760
         Exchange of Debentures for 1,000,000 shares of
           Preferred Stock                                      $25,000      -


                                        7

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


9.       Business Segments

         The Company  owns one  property  type only i.e.  neighborhood  shopping
centers.  The Company's  management  makes decisions on allocation of resources,
designs compensation  packages and performs internal financial analysis based on
the following business segments:

                                    Retail
                                    Properties    FWM, Inc.   Other (1)    Total
                                    ----------    ---------   ---------    -----

Six months ended June 30, 1999:
Revenues                             $ 41,933       $3,446    ($2,814)  $ 42,565
Operating and maintenance expenses      9,993        3,676     (3,676)     9,993
                                     --------       ------     ------   --------
Income (loss) from operations        $ 31,940      ($  230)    $  862   $ 32,572
                                     ========       ======     ======   ========
Commercial real estate property
 expenditures                        $ 18,009       $  -       $   -    $ 18,009
                                     ========       ======     ======   ========
Segment assets at June 30, 1999      $543,488       $  -       $   -    $543,488
                                     ========       ======     ======   ========

Six months ended June 30, 1998:
Revenues                             $ 34,348       $3,566    ($3,162)  $ 34,752
Operating and maintenance expenses      8,584        3,226     (3,226)     8,584
                                     --------       ------     ------   --------
Income from operations               $ 25,764       $  340     $   64   $ 26,168
                                     ========       ======     ======   ========
Commercial real estate property
 expenditures                        $ 59,482       $  -       $  -     $ 59,482
                                     ========       ======     ======   ========
Segment assets at June 30, 1998      $488,091       $  -       $  -     $488,091
                                     ========       ======     ======   ========

                                     Retail
                                     Properties    FWM, Inc.   Other (1)   Total
                                     ----------    ---------   ---------   -----
Three months ended June 30, 1999:
Revenues                             $ 21,127       $1,636    ($1,323)  $ 21,440
Operating and maintenance expenses      4,787        1,951     (1,951)     4,787
                                     --------       ------     ------   --------
Income (loss) from operations        $ 16,340      ($  315)    $  628   $ 16,653
                                     ========       ======     ======   ========
Commercial real estate property
 expenditures                        $    605       $  -       $  -     $    605
                                     ========       ======     ======   ========
Segment assets at June 30, 1999      $543,488       $  -       $  -     $543,488
                                     ========       ======     ======   ========

Three months ended June 30, 1998:
Revenues                             $ 17,853       $1,521    ($1,262)  $ 18,112
Operating and maintenance expenses      4,441        1,461     (1,461)     4,441
                                     --------       ------     ------   --------
Income from operations               $ 13,412       $   60     $  199   $ 13,671
                                     ========       ======     ======   ========
Commercial real estate property
 expenditures                        $ 31,173       $  -       $  -     $ 31,173
                                     ========       ======     ======   ========
Segment assets at June 30, 1998      $488,091       $  -       $  -     $488,091
                                     ========       ======     ======   ========

                                        8

<PAGE>



              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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



         The following  table  reconciles  income from operations for reportable
segments to income before  extraordinary  items as reported in the  Consolidated
Statements of Operations.

                                       Three months ended       Six months ended
                                            June 30,                 June 30,
                                       ------------------       ----------------
                                       1999          1998       1999        1998
                                       ----          ----       ----        ----

Income from operations for reportable
  segments                            $16,653      $13,671     $32,572  $26,168
General and administrative expenses    (1,068)      (1,015)     (2,162)  (1,852)
Interest expense                       (5,677)      (5,120)    (11,202)  (9,971)
Depreciation and amortization          (4,282)      (3,656)     (8,494)  (6,921)
Income allocated to minority interest  (1,273)        (887)     (2,579)  (1,953)
Distributions to Preferred
  Stockholders                         (1,412)      (1,410)     (2,822)  (2,820)
Income (loss) from Management Company    (315)          60        (230)     340
Gain on sale of properties                -            -           -      1,683
                                       -------      -------     -------  -------
Income before extraordinary items      $2,626       $1,643      $5,083   $4,674
                                       =======      =======     =======  =======

(1)  Represents the adjustment for straight-lining of rents and reflecting the
     net income from FWM using the equity method of accounting.

10.  Subsequent Events

     On July 16, 1999, the Board of Directors declared a distribution of $0.4875
and $0.6094  per share of Common  Stock and  Preferred  Stock,  respectively  to
shareholders of record as of August 1, 1999, payable on August 15, 1999.


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 June 30, 1999 to the three  months ended
June 30, 1998

     For the three  months  ended June 30,  1999,  the net income  allocated  to
common  stockholders  increased  by $983 or 59.8% from  $1,643 to  $2,626,  when
compared to the three months ended June 30, 1998, due to an increase in revenues
which were primarily due to the purchase of Parkville  Shopping  Center in April
1998,  Elkridge Corners Shopping Center in May 1998,  Village Shopping Center in
June 1998,  Wilston  Centre I, Wilston  Centre II and Town Center at Sterling in
November 1998 (the "1998  Acquisitions"),  and Kamp Washington in January  1999
(the "1999 Acquisition"), offset by an increase in expenses and income allocated
to minority interest.


                                        9

<PAGE>




     Total revenues  increased by $3,328 or 18.4%, from $18,112 to $21,440,  due
primarily to an increase in minimum rents of $2,391 and tenant reimbursements of
$707.  The  increases  were  primarily  due to the  1998  Acquisitions  and 1999
Acquisition.

     Property operating and maintenance expense increased by $346, or 7.8%, from
$4,441  to  $4,787,  due  primarily  to  the  1998  Acquisitions  and  the  1999
Acquisition.  General and administrative expenses increased by $53 or 5.2%, from
$1,015 to $1,068.

     Interest  expense  increased by $557,  or 10.9%,  from $5,120 to $5,677 due
primarily  to the  increased  mortgage  indebtedness  associated  with  the 1998
Acquisitions and the 1999  Acquisition.  The average debt outstanding  increased
from $260.1 million for 1998 to $287.2 million for 1999 and the weighted average
interest rate remained constant at 7.9%.

     Depreciation and  amortization  expenses  increased by $626 or 17.1%,  from
$3,656  to  $4,282,  primarily  due  to  the  1998  Acquisitions  and  the  1999
Acquisition.

     Income allocated to minority interests increased by $386 or 43.5% from
 $887 to $1,273  due to an  increase  in  earnings  of $1,371  ($308) and an
 increase in the minority interests' ownership of the Operating  Partnership
 during the period from 22.5% to 23.9% ($77).

Comparison of the six months ended June 30, 1999 to the six months ended
  June 30, 1998

     For the six months ended June 30, 1999, the net income  allocated to common
stockholders  increased by $767 or 17.8% from $4,316 to $5,083, when compared to
the  six  months  ended  June  30,  1998, due to an increase in revenues  which
were  primarily  due to the purchase of Watkins Park Plaza in March 1998,
Parkville Shopping Center in April 1998,  Elkridge Corners Shopping Center in
May 1998,  Village  Shopping  Center in June 1998,  Wilston  Centre I, Wilston
Centre II and Town  Center at  Sterling  in  November  1998 (the  "1998
Acquisitions"),  and Kamp Washington in January  1999 (the "1999 Acquisition"),
and to a gain  on  sale of properties of $1,683  recorded during the first
quarter of 1998 offset by an increase in expenses and income allocated to
minority interest.

     Total revenues  increased by $7,813 or 22.5%, from $34,752 to $42,565,  due
primarily to an increase in minimum rents of $5,440 and tenant reimbursements of
$1,917.  The  increases  were  primarily due to the 1998  Acquisitions  and the
1999 Acquisition.

     Property  operating and maintenance  expense  increased by $1,409 or 16.4%,
from  $8,584 to $9,993,  due  primarily  to the 1998  Acquisitions  and the 1999
Acquisition.  General and  administrative  expenses  increased by $310 or 16.7%,
from $1,852 to $2,162 due primarily to an increase in the amount of compensation
paid or  payable  of  Company  stock of $106 and an  increase  in the  amount of
internal  preacquisition  costs of  $138.  Prior to  March  19,  1998,  internal
preacquisition  costs were  capitalized  and  included in the cost of  acquiring
rental properties.

     Interest expense  increased by $1,231, or 12.3%, from $9,971 to $11,202 due
primarily  to the  increased  mortgage  indebtedness  associated  with  the 1998
Acquisitions and the 1999  Acquisition.  The average debt outstanding  increased
from $252.3 million for 1998 to $282.7 million for 1999 and the weighted average
interest rate remained constant at 7.9%.

     Depreciation and amortization  expenses  increased by $1,573 or 22.7%, from
$6,921  to  $8,494,  primarily  due  to  the  1998  Acquisitions  and  the  1999
Acquisition.

     During  1998,  there was a $1,683  gain on sale of the  properties,  and a
$358 extraordinary  loss due to the early  extinguishment of debt. There were no
such transactions during 1999.


                                       10

<PAGE>



     Income  allocated  to minority  interests  increased  by $626 or 32.1% from
$1,953 to $2,579 due to an increase in earnings of $1,395 ($300) and an increase
in the minority interests' ownership of the Operating  Partnership during the
period from 21.5% to 24.6% ($326).

     Earnings per Common  Share-Diluted  remained unchanged at $.58 due to items
that  occurred  in 1998 but not in  1999.  In  1998,  there  was gain on sale of
properties of $1,683 and an extraordinary  loss on early  extinguishment of debt
of $358. These items did not occur in 1999. If not for these items, Earnings per
Common Share-Diluted for 1998 would have been $0.40.

Liquidity and Capital Resources

Indebtedness

     As of June 30,  1999,  the  Company  had  total  mortgage  indebtedness  of
approximately   $259.1   million.   The   mortgage   indebtedness   consists  of
approximately  $252.4  million  in  indebtedness  collateralized  by 40  of  the
Properties and tax-exempt bond financing  obligations issued by the Philadelphia
Authority for Industrial  Development (the "Bond  Obligations") of approximately
$6.7  million  collateralized  by  one  of  the  properties.  Of  the  Company's
indebtedness,  $18.5 million  (7.1%) is variable rate  indebtedness,  and $240.6
million  (92.9%)  is at a  fixed  rate.  The  effective  interest  rates  of the
indebtedness  range from 5.1% to 10.0%, with a weighted average interest rate of
7.6%,  and  will  mature  between  1999  and  2014.  Approximately  16.1% of the
Company's  indebtedness  will become due by 2000,  requiring balloon payments of
$7.8 million in 1999,  and $24.4 million in 2000.  From 1999 through  2014,  the
Company will have to refinance an aggregate of $205.5 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"). The Company has a collateralized revolving Line of Credit of
up to $45,000 with Union Bank of  Switzerland.  This line is  collateralized  by
seven properties (Kenhorst Plaza,  Shoppes of Graylyn,  Watkins Park Plaza, Four
Mile Fork, Takoma Park,  Centre Ridge Marketplace and Newtown Square).  The line
matures on January  31,  2001 and loans  under this line will bear  interest  at
LIBOR plus one  percent  (1%).  The  Company  has an  additional  collateralized
revolving Line of Credit of up to $5,775 from First Union Bank. Loans under this
line will bear  interest  at LIBOR plus two  percent  (2%) per  annum,  and will
mature on August  31,  1999.  This  Line of  Credit is  collaterized  by a first
mortgage  lien on Brafferton  Shopping  Center.  As of June 30, 1999,  there was
$5,300 outstanding under the Lines of Credit.

Liquidity

     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 2000.

     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.

     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

<PAGE>



Other

Year 2000 Issue

     The "Year 2000  Issue" is the  result of many  existing  computer  programs
using only the last two  digits to refer to a year.  Therefore,  these  computer
programs may not properly  recognize a year that begins with "20" instead of the
familiar "19".
If not  corrected,  many computer  applications  could fail or create  erroneous
results.

     The  Company  is in the  process  of  conducting  a review of its  computer
systems to identify  which  systems could be affected by the "Year 2000" problem
and to what extent such  problems  will have an impact on the Company 's ability
to conduct its business.

         The Company has developed a Year 2000  Compliance  Plan ("The Plan") to
address these issues.  The Plan is being managed by two of the Company's  senior
executives and has been approved by senior management.  The progress of the Plan
is being monitored by the Company's Board of Directors. The Plan focuses on four
major  components:  IT systems  such as the  Company's  accounting  and property
management  software packages and related  hardware;  non-IT systems such as the
Company's  telephone system,  voice mail system and other office equipment;  the
state of readiness of the Company's critical trading partners such as its banks,
utilities and tenants;  and embedded systems,  particularly those located at the
Company's Retail Properties such as sprinkler  systems,  security systems,  etc.
(Note:  the Retail  Properties  access does not rely on elevator service because
the  structures are no higher than two stories.) The Plan contains ten phases as
follows:

Phase Description                    Estimated             Estimated
                                     Start Date            Completion Date
-----------------                    ----------            ---------------

1. Educate senior management         Commenced             Completed
2. Designate a Plan manager          Commenced             Completed
3. Inventory all systems             Commenced             Completed
4. Contact suppliers of systems      Commenced             Completed
5. Send questionnaire to tenants     All have been mailed  Currently receiving
                                                             responses
6. Send questionnaire to other
    critical trading partners        Commenced             Substantially
                                                             completed, awaiting
                                                             some responses
7. Prioritize problems
    (critical vs. non-critical)      Commenced             September 1, 1999
8. Identify solutions (repair or
     replace)                        Commenced             September 1, 1999
9. Test Solutions                    July 1, 1999          September 30, 1999
10.Anticipate contingencies
     including the most reasonably
     likely worst case scenarios     Commenced             Continuous

         The   Company   has   incurred   approximately   $40  to  date  in  the
implementation  of the Plan. These costs have primarily been incurred to upgrade
the desktop PC's at the Company's home office.  The Company has determined  that
implementing  the Plan will  cost  less than  $100.  However,  the  Company  has
budgeted $500 to replace its current accounting and property management software
system. Although the Company believes that the current system is materially Year
2000  compliant  the  Company  has  decided to migrate  because of the  improved
technology and reporting capabilities of the new system. The Company anticipates
going live on the new system by October 1, 1999 and will be tested for Year 2000
compliant by November 1, 1999. These costs will be funded from the Company's
cash flow. The Plan efforts will be primarily staffed by employees of the
Company.

         The most  reasonably  likely worst case  scenario is that the Company's
tenants are delayed in  generating  their rental  payments due to their own Year
2000 IT problems. If this occurs the Company's property managers will attempt to
accelerate  rental payments by requesting  manual checks by personally  visiting
the tenants or by contacting the appropriate  personnel at the tenants' accounts
payable  departments.  Also, the Company will have available its Lines of Credit
to fund immediate cash flow needs if such delay occurs.



                                       12

<PAGE>



         The Company  presently  believes that the Year 2000 issue will not pose
significant  operational  problems  for the Company.  However,  if all Year 2000
issues are not properly  identified,  or if assessment,  remediation and testing
are not effected  timely or accurately with respect to Year 2000 issues that are
identified,  there  can be no  assurance  that  the  Year  2000  issue  will not
materially adversely affect the Company's results of operations. Also, there can
be no assurance that the Year 2000 issues of the Company's  suppliers,  vendors,
tenants and other important  trading  partners will not have a material  adverse
impact on the Company's business or results of operations.

         The  costs  of the  Company's  Year  2000  identification,  assessment,
remediation and testing  efforts and the dates on which the Company  believes it
will complete such efforts are based upon  management's  best  estimates,  which
were derived using numerous assumptions  regarding future events,  including the
continued availability of certain resources,  third-party remediation plans, and
other factors.  There can be no assurance that these  estimates will prove to be
accurate,  and actual  results  could  differ  materially  from those  currently
anticipated.  Specific  factors  that  could  cause  such  material  differences
include,  but are not limited to, the availability and cost of relevant computer
codes and embedded technology,  and similar uncertainties.  Although some of the
Company's agreements with suppliers and contractors contain provisions requiring
such parties to indemnify the Company under some circumstances,  there can be no
assurance that such  indemnification  agreements will cover all of the Company's
liabilities  and costs  related to claims by third  parties  related to the Year
2000 issue.

Item 3.  Qualitative and Quantitative Disclosure about Market Risk

        The  Company is exposed to certain  financial  market  risks,  the most
predominant being fluctuations in interest rates. Interest rate fluctuations are
monitored  by  management  as an integral  part of the  Company's  overall  risk
management program,  which recognizes the  unpredictability of financial markets
and seeks to reduce the potentially adverse effect on the Company's results. Our
interest rate risk management  objective is to limit the impact of interest rate
changes on earnings and cash flows and to lower our overall  borrowing costs. To
achieve  these  objectives,  from time to time we enter into interest rate hedge
contracts such as swap and cap agreements in order to mitigate our interest rate
risk with  respect to various  debt  instruments.  We do not hold or issue these
derivative contracts for trading or speculative purposes. The effect of interest
rate  fluctuations  historically  has  been  small  relative  to  other  factors
affecting operating results, such as rental rates and occupancy.

         The  Company's  operating  results are  affected by changes in interest
rates on  variable  rate  borrowings  including  the  Company's  Line of  Credit
facilities as well as other mortgages and notes with variable interest rates. If
interest  rates  increased by 100 basis points,  the Company's  interest
expense for the six months ended June 30, 1999 would have increased by $183,
based on balances  during the year ending June 30, 1999. The following is a
summary of the Company's long term debt as of June 30, 1999:

                   Expected Maturity Date of Balloon Payments
<TABLE>
<S>
<C>                    <C>      <C>      <C>      <C>      <C>       <C>
                         1999     2000     2001     2002     2003    Thereafter
                       -------  -------  -------  -------  -------   ----------

FIXED RATE              $7,731  $24,367     $735  $11,843  $14,926   $130,898
--------------

  Average Interest
   Rate                   7.7%     8.5%     6.5%     7.1%     7.2%      7.6%

VARIABLE RATE
--------------

LIBOR-based(1):

  Line of Credit (LIBOR
    plus 1.0%)(2)                          5,300
  Ashburn Farms
   (LIBOR plus 1.5%)                       6,451
                       -------  -------  -------  -------  -------   ----------
Total LIBOR-based         0        0      11,751     0        0           0
Tax-exempt:
     Mayfair Shopping
      Center (3)                                                        3,235
                       -------  -------  -------  -------  -------   ----------
Total variable
  rate debt               0        0      11,751     0        0         3,235
                       -------  -------  -------  -------  -------   ----------

Total Debt              $7,731  $24,367  $12,486  $11,843  $14,926   $134,133
                       =======  =======  =======  =======  =======   ==========

                                       13

<PAGE>
                                                         <C>            <C>
                                                                     Fair Value
                                                                   of Debt as of
                                                        Total         06/30/99
                                                       --------     -----------

                                                       $190,500        $244,101



                                                           7.7%







                                                          5,300           5,300

                                                          6,451           6,451
                                                       --------     -----------
                                                         11,751          11,751


                                                          3,235           3,235
                                                       --------     -----------

                                                         14,986          14,986
                                                       --------     -----------

                                                       $205,486        $259,087
                                                       ========     ===========
</TABLE>

     (1) At June 30, 1999 the LIBOR rate was 5.18%.

     (2) This schedule assumes that the Line of Credit is repaid at the maturity
         date.  Management  believes  that the line will be renewed at  maturity
         under similar terms.

     (3) The interest rate is determined weekly at the rate necessary to produce
         a bid in the process of remarketing  the  obligation  equal to par plus
         accrued  interest.  The  Company  also  pays a 1.5%  letter  of  credit
         enhancement fee to Mellon Bank.

     Currently the Company has only one interest rate swap contract in effect.
The notional amount is $24,000, the contract period is May 1, 2000 through
May 2, 2005.  The Company pays a fixed rate of 5.85% and receives the 30 day
libor rate.  As of June 30, 1999, this swap contract has a fair market value of
approximately $453.  If interest rates increase by 100 basis points, the fair
market value of this interest rate hedge contract as of June 30, 1999 would
increase by approximately $900.  If interest rates decrease by 100 basis points,
the fair  market  value of this  interest  rate  hedge  contract as of June 30,
1999 would decrease by approximately $1,000. In addition,  we are  exposed to
certain  losses in the event of  nonperformance  by the  counter party under the
hedge contract.  We expect the counter  party,  which is a major financial
institution,  to perform fully under this contract.  However, if the counter
party were to default on their  obligations  under the interest rate hedge
contract,  we could be  required to pay the full rates on our debt, even if such
rates were in excess of the rates in the contract.

                                       14
<PAGE>




                                     Part II

OTHER INFORMATION

Item 2.        Recent Sales of Unregistered Equity Securities

               None

Item 4.        Submission of matters to a vote of security holders

     On May 7, 1999 the Company held its annual meeting of shareholders.  The
matters on which the shareholders voted, in person or by proxy, were (i) for the
election of two nominees to serve on the Board of Directors for a term of three
years or until their respective successors are duly elected and qualify and (ii)
the ratification of the appointment of PricewaterhouseCoopers as the Company's
independent auditors.  The two nominees were elected and the ratification of the
appointment of the independent auditors was approved.  The results of the voting
are shown below:

     Election of Directors:

                                                       Votes Cast
                                                       Against or
          Director            Votes Cast For            Withheld
          --------            --------------           ----------

          William J. Wolfe      8,433,133                27,523
          Matthew J. Hart       8,431,133                29,523


     Ratification of Appointment of Independent Auditors:

                                                       Votes Cast
                                                       Against or
                              Votes Cast For            Withheld
                              --------------           ----------

                                8,430,257                30,399



Item 6.        Exhibits and Reports on Form 8-K

(a)            Exhibits

         27    Financial Data Schedule
-----------------------------------------------------------------------


(b)      Reports on Form 8-K.

         An interim report on Form 8-K was filed on March 10, 1999 reporting the
acquisition of two retail properties.

         Three  interim  reports  on Form 8-K  were  filed  on  March  24,  1999
including certain exhibits thereto.

         An  interim  report on Form 8-K was filed on March 24,  1999  regarding
Risk Factors.






                                       15

<PAGE>



                                   SIGNATURES



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


                       FIRST WASHINGTON REALTY TRUST, INC.


                  Date:    August 13, 1999      /s/ William J. Wolfe
                                             -----------------------------------
                                             By:    William J. Wolfe
                                                    President and
                                                    Chief Executive Officer


                  Date:    August 13, 1999      /s/ James G. Blumenthal
                                             -----------------------------------
                                             By:    James G. Blumenthal
                                                    Executive Vice President and
                                                    Chief Financial Officer

                                       16

<PAGE>