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 September 30, 2000


                         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 November 14, 2000

                        10,643,862 Shares of Common Stock


<PAGE>


                       FIRST WASHINGTON REALTY TRUST, INC.
                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>


<S>                                                                             <C>
Part I:  Financial Information                                                    Page

Item 1.  Consolidated Balance Sheets as of September 30, 2000 (unaudited) and
              December 31, 1999 ................................................    1

         Consolidated Statements of Operations (unaudited) for the three months
              and nine months ended September 30, 2000 and 1999 ................    2

         Consolidated Statements of Cash Flows (unaudited) for the nine months
              ended September 30, 2000 and 1999 ................................    3

         Notes to Unaudited Consolidated Financial Statements ..................    4

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
              of Operation .....................................................   10

Item 3   Quali1tive and Quantitative Disclosures about Market Risk

Part II:  Other Information


Item 2.  Recent Sales of Unregistered Equity Securities ........................   13

Item 4.  Submission of Matters to a Vote of Security Holders ...................   13

Item 6.  Exhibits and Reports on Form 8-K ......................................   14

Signatures .....................................................................   15
</TABLE>



<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                    (dollars in thousands except share data)

                                   -----------

                                                      September 30, December 31,
                                                         2000          1999
                                                         ----          ----
                                                      (unaudited)
             ASSETS

Rental properties:
  Land ..............................................  $ 120,684    $ 119,965
  Buildings and improvements ........................    500,656      495,031
                                                       ---------    ---------
                                                         621,340      614,996
Accumulated depreciation ............................    (79,751)     (67,029)
                                                       ---------    ---------
Rental properties, net ..............................    541,589      547,967

Cash and equivalents ................................      6,698        4,332
Tenant receivables, net .............................     16,232       11,750
Deferred financing costs, net .......................      6,395        5,137
Other assets ........................................     17,634       14,107
                                                       ---------    ---------

          Total assets ..............................  $ 588,548    $ 583,293
                                                       =========    =========


        LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Mortgage notes payable ............................  $ 309,748    $ 298,116
  Accounts payable and accrued expenses .............     14,362       12,350
                                                       ---------    ---------
          Total liabilities .........................    324,110      310,466

Minority interest ...................................     64,143       66,267

Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock $.01 par value,
    10,000,000 shares authorized, 3,800,000 shares
    designated; 1,960,604 and 2,359,202 issued
    and outstanding, respectively, liquidation
    value of $25.00 per share .......................         20           24
  Common stock $.01 par value, 90,000,000 shares
    authorized; 10,472,525 and 9,709,670 shares
    issued and outstanding, respectively ............        105           97
  Additional paid-in capital ........................    244,445      245,054
  Accumulated distributions in excess of earnings ...    (44,275)     (38,615)
                                                       ---------    ---------

          Total stockholders' equity ................    200,295      206,560
                                                       ---------    ---------

          Total liabilities and stockholders' equity   $ 588,548    $ 583,293
                                                       =========    =========


        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)
<TABLE>
<CAPTION>
                                                           For three months ended   For nine months ended
                                                                September 30,           September 30,
                                                            --------------------    --------------------
                                                               2000        1999        2000        1999
                                                               ----        ----        ----        ----
Revenues:
<S>                                                         <C>         <C>         <C>         <C>
  Minimum rents .........................................   $ 17,988    $ 16,765    $ 53,796    $ 49,187
  Tenant reimbursements .................................      4,315       3,828      14,439      12,232
  Percentage rents ......................................        527         435       1,469       1,317
  Other income ..........................................      1,343         594       2,417       1,452
                                                            --------    --------    --------    --------
  Total revenues ........................................     24,173      21,622      72,121      64,188
                                                            --------    --------    --------    --------

Expenses:
  Property operating and maintenance ....................      5,297       4,676      16,817      14,669
  General and administrative ............................      1,093       1,004       3,426       3,168
  Disposition and merger costs ..........................      2,097          --       2,097          --
  Interest ..............................................      5,980       4,864      17,765      16,066
  Depreciation and amortization .........................      4,694       4,288      14,094      12,781
                                                            --------    --------    --------    --------
         Total expenses .................................     19,161      14,832      54,199      46,684
                                                            --------    --------    --------    --------
  Income before gain on sale of properties, loss from
     Management Company, minority interest, extraordinary
     item, and distributions to Preferred Stockholders ..      5,012       6,790      17,922      17,504
  Gain on sale of properties ............................         --          --         648          --

  Loss from Management Company ..........................       (351)       (444)       (810)       (674)
                                                            --------    --------    --------    --------
  Income before minority interest, extraordinary
   item, and distributions to Preferred Stockholders ....      4,661       6,346      17,760      16,830

  Income allocated to minority interest .................     (1,040)     (1,512)     (4,467)     (4,091)
                                                            --------    --------    --------    --------
  Income before extraordinary item and distributions
   to Preferred Stockholders ............................      3,621       4,834      13,293      12,739

  Extraordinary item (net of minority interest)-
    Loss on early extinguishment of debt ................         --          --        (117)         --
                                                            --------    --------    --------    --------

  Net income ............................................      3,621       4,834      13,176      12,739

  Distributions to Preferred Stockholders ...............     (1,230)     (1,658)     (3,958)     (4,480)
                                                            --------    --------    --------    --------

  Net income allocated to Common Stockholders ...........   $  2,391    $  3,176    $  9,218    $  8,259
                                                            ========    ========    ========    ========
  Earnings per Common Share  - Basic
    Income before extraordinary item ....................   $   0.23    $   0.34    $   0.91    $   0.93
    Extraordinary item ..................................       0.00        0.00       (0.01)       0.00
                                                            --------    --------    --------    --------
    Net income ..........................................   $   0.23    $   0.34    $   0.90    $   0.93
                                                            ========    ========    ========    ========
  Earnings per Common Share - Diluted
    Income before extraordinary item ....................   $   0.23    $   0.33    $   0.91    $   0.91
    Extraordinary item ..................................       0.00        0.00        (.01)       0.00
                                                            --------    --------    --------    --------
    Net income ..........................................   $   0.23    $   0.33    $   0.90    $   0.91
                                                            ========    ========    ========    ========
     Weighted average shares of Common Stock - Basic ....     10,415       9,411      10,212       8,928
   Dilutive effect of stock options and contingent stock          85         118          62         108
                                                            --------    --------    --------    --------
    Weighted average shares of Common Stock - Diluted ...     10,500       9,529      10,274       9,036
                                                            ========    ========    ========    ========

     Distributions per share ............................   $ 0.4875    $ 0.4875    $ 1.4625    $ 1.4625
                                                            ========    ========    ========    ========
</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)
                                    --------

                                                        For nine months ended
                                                            September 30,
                                                        ------------------------
                                                           2000          1999
                                                           ----          ----

Operating Activities:
 Net income ........................................     $ 13,176      $ 12,739
  Adjustments to reconcile net income to
    net cash provided by operating activities:
    Income allocated to minority interest ..........        4,467         4,091
    Depreciation and amortization ..................       14,094        12,781
    Gain on sale of rental properties ..............         (648)           --
    Loss on early extinguishment of debt ...........          117            --
    Amortization of deferred financing costs
     and loan premiums .............................         (153)         (402)
    Equity in earnings of Management Company .......        1,170         1,034
    Compensation paid or payable in common
     shares ........................................          990           936
    Provision for uncollectible accounts ...........          466           657
    Recognition of deferred rent ...................         (789)         (922)
    Net changes in:
      Tenant receivables ...........................       (4,159)       (1,007)
      Other assets .................................       (5,530)       (2,385)
      Accounts payable and accrued expenses ........        2,835           205
                                                         --------      --------
         Net cash provided by operating
          activities ...............................       26,036        27,727
                                                         --------      --------

Investing Activities:
 Acquisition of rental properties ..................       (4,222)      (10,797)
 Additions to rental properties ....................       (3,436)       (4,136)
 Net proceeds from sale of rental property .........        1,351            --
                                                         --------      --------
         Net cash used in investing
          activities ...............................       (6,307)      (14,933)
                                                         --------      --------

Financing Activities:
  Proceeds from line of credit .....................       56,500        27,000
  Proceeds from mortgage notes refinancings ........       26,873        18,822
  Repayment of line of credit ......................      (52,500)      (23,200)
  Repayment of mortgage notes ......................      (18,283)       (7,414)
  Additions to deferred financing costs ............       (2,146)       (4,030)
  Proceeds from exercise of stock options ..........           21            62
  Distributions paid to Preferred Stockholders .....       (3,958)       (4,480)
  Distributions paid to Common Stockholders ........      (14,878)      (12,960)
  Distributions paid to minority interest ..........       (6,470)       (6,128)
  Repurchase of Preferred and Common Shares ........       (2,522)           --
                                                         --------      --------
         Net cash used in financing activities .....      (17,363)      (12,328)
                                                         --------      --------

  Net increase in cash and equivalents .............        2,366           466
  Cash and equivalents, beginning of period ........        4,332         3,163
                                                         --------      --------
  Cash and equivalents, end of period ..............     $  6,698      $  3,629
                                                         ========      ========



              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 62 retail properties (the
"Retail Properties") containing a total of approximately 6.7 million square feet
of gross  leasable  area  ("GLA")  located  in the  Mid-Atlantic  region and the
Chicago, Illinois and Milwaukee, Wisconsin metropolitan areas.

         The  Company  currently  owns  approximately  74.2% 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 43 Properties directly and
19  Properties  are  owned  by  lower  tier  entities  in  which  the  Operating
Partnership  either owns a 100% or a 99%  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 Retail  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  1999 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  a  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)


3. Pending Sale of the Company

         On  September  27,  2000,  the Company and U.S.  Retail  Partners,  LLC
("USRP"),  along with certain  affiliates of the Company and USRP entered into a
Master Agreement,  Agreement and Plan of Merger,  Real Estate Purchase Agreement
and Limited Partnership Interest Purchase and Sale Agreement (collectively,  the
"Agreements")  whereby the Company will sell substantially all of its assets to,
and merge with and into, certain affiliates of USRP.  Management  estimates that
the net  proceeds  of the  transactions  will  yield  to the  shareholders  as a
liquidation distribution, approximately $26.00 per share of common stock in cash
(and  approximately  $33.33 per share of preferred stock in cash).  The ultimate
amount of the distribution value is subject to a variety of closing  adjustments
and expenses related to the transaction.

         The transactions  contemplated by the Agreements are subject to various
customary closing conditions,  including obtaining the approval of the Company's
stockholders and the partners of the Operating Partnership.  It is expected that
the transaction will close in January 2001.

         As of September 30, 2000, the Company has incurred approximately $2,097
in legal,  advisory  and other  expenses  relating to this  transaction  and has
reflected  these  costs as  disposition  and  merger  costs in the  Consolidated
Statements of Operations.

4. Acquisition and Disposition of Rental Properties

         During the first nine months of 2000, the Company acquired Goshen Plaza
for an aggregate  cost of  approximately  $4,300.  The Company sold one property
during the first nine  months of 2000 for  $1,485.  Net  proceeds of $1,351 were
used to purchase Goshen Plaza in July 2000 in a Section 1031 tax-free  exchange.
A gain on sale of property was recognized in the amount of $648.

         During the first nine months of 1999, the Company acquired two shopping
centers  for  an  aggregate  acquisition  cost  of  approximately  $27,349.  The
acquisitions  were accounted for using the purchase method of accounting and the
operations  of the  properties  are  included  in  the  Company's  Statement  of
Operations  from the dates of  acquisition.  The  following  is a summary of the
acquisition transactions:
<TABLE>
<CAPTION>

Date                                                               Total           Anchor           Anchor
Acq      Property Name             Location           GLA          Cost            Tenant           (GLA)
---      -------------             --------           ---          ----            ------           -----
<S>     <C>                       <C>             <C>            <C>           <C>                 <C>
1/99     Kamp Washington           Fairfax, VA       71,825       $15,204       Border Books        30,000
8/99     Newark Shopping Center    Newark, DE       182,860        12,145
                                                    -------        ------
                                                    254,685       $27,349
                                                    =======       =======
</TABLE>

The acquisitions were financed as follows:

<TABLE>
<CAPTION>

                         Number of       Market        Assumed       Line
                         Partnership     Value         Mortgage      Of Credit
Property Name            Units           of Units      Debt (1)      Draw            Cash           Total
-------------            -----           --------      --------      ----            ----           -----
<S>                      <C>               <C>        <C>            <C>            <C>            <C>
Kamp Washington               --          $   --      $ 3,045        $9,800         $2,359(2)      $15,204
Newark Shopping Center   103,795           2,309        9,364            --            472          12,145
                         -------           -----       ------        ------         ------          ------
                         103,795          $2,309      $12,409        $9,800         $2,831         $27,349
                         =======          ======       ======        ======         ======         =======
</TABLE>
-------------

(1)  Includes loan premiums.

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

                                       5
<PAGE>

The following  unaudited pro forma results of operations are presented as if the
acquisitions  and sales of the rental  properties that occurred during the first
nine months of 2000 and 1999 had occurred on January 1 of the period  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.


                                                       For the nine months ended
                                                              September 30,
                                                       -------------------------
                                                           2000           1999
                                                           ----           ----
Pro forma total revenues ...........................     $ 72,410     $   65,205
                                                         ========     ==========
Pro forma net income ...............................     $ 13,335     $   12,912
                                                         ========     ==========
Pro forma earnings per Common Share - Basic ........     $   0.92     $     0.94
                                                         ========     ==========
Pro forma earnings per Common Share - Diluted ......     $   0.91     $     0.93
                                                         ========     ==========


5. Mortgage Debt

         During the nine months ended  September 30, 2000 the Company  closed on
the following loans:


                                            All in          Amortization
Collateral Properties     Date     Amount    Rate    Term      Period
---------------------     ----     ------    ----    ----      ------
Cudahy Center             1/00    $ 2,215   7.94%  10 years   30 years
Racine Centre             1/00    $ 4,585   7.89%  10 years   30 years
Whitnall Square           1/00    $ 5,525   7.89%  10 years   30 years
Festival at Woodholme     6/00    $13,800   7.75%  10 years   30 years
Stonebrook Plaza          7/00    $ 6,400   8.90%   5 years   20 years


         On May 19, 2000 the Company  closed on a line of credit  facility  with
First Union  National Bank  ("FUNB").  This line is  collateralized  by thirteen
properties  (Brafferton  Center,  Bryans Road, Kamp Washington,  Kenhorst Plaza,
Newtown Square,  Riverside  Square,  Shoppes of Graylyn,  Spring Valley,  Takoma
Park, The Village,  Watkins Park Plaza,  Willston Center I and Woodmoor Shopping
Center).  The line matures on May 19, 2003,  and loans under this line will bear
interest  at the  30-day  LIBOR rate plus  1.35% or 1.50%  depending  on certain
financial ratios. As of September 30, 2000, there was $48,000  outstanding under
the Line of Credit. This line of credit replaces the UBS AG line of credit which
was due to mature in January 2001. An extraordinary  loss of $117 was recognized
due to the early extinguishment of the UBS AG line of credit.

         The  Company  currently  has in  place  a cap on  30-day  LIBOR  in the
notional amount of $46,000,  which limits the Company's  exposure to an increase
in interest rates. The cap contract covers the period from July 19, 2000 through
January 19,  2001.  The cap counter  party is required to pay to the Company any
amount in excess of 6.5%,  thereby  limiting  the  Company's  exposure to 30-day
LIBOR to a maximum of 6.5%.

         In May 2000,  simultaneously with the execution of rate lock agreements
with the lenders of Festival at Woodholme and Stonebrook  Plaza the Company sold
its $24,000 forward interest rate swap contract for $1,640.  These proceeds will
be amortized  over the life of the new loans and will be recorded as a reduction
of interest expense.

6. Preferred Stock

         Effective June 1, 1999,  shares of Convertible  Preferred  Stock became
convertible  into 1.282051 shares of Common Stock.  During the nine months ended
September 30, 2000, 298,198 shares of Convertible Preferred Stock were converted
into  382,305  shares of Common  Stock.  The Company may redeem the  Convertible
Preferred Stock at a redemption price of $26.95 which reduces annually in stages
to $25.00 on July 15, 2004.


                                        6
<PAGE>


7. Share Buyback Authorization

         In December  1999,  the  Company's  Board of Directors  authorized  the
repurchase of the Company's  Common and Preferred  Stock up to 1,000,000  common
equivalent  shares  (after taking into account the  Preferred  Stock  conversion
ratio). Since December 1999 the Company has repurchased 29,900 common shares and
219,646  preferred shares for an aggregate cost of $5,857.  The repurchases were
funded  primarily from  operating  cash flows and  borrowings  under the Line of
Credit.

8. Stock and Stock Option Plans

         In January 2000, under the current Stock Option Plan the Company issued
250,000 options each to two executive officers at a strike price of $18.6875 per
share.  The fair value of the options issued are estimated to be $555, as of the
date of the grant,  using a binomial  model with the following  weighted-average
assumptions: risk-free interest rate of 6.4%, dividend rate of 9.3 %, volatility
factors of the expected  market price of the  Company's  shares of 17.5%,  and a
weighted average expected life of the options of 2.8 years.

         On January 1, 2000, two executive  officers  received  restricted stock
grants  of  150,000  shares  of  common  stock  each in  accordance  with  their
employment agreements. In March, 2000, these officers also received stock grants
of 12,500  shares of common  stock  each in  accordance  with  their  employment
agreements.











                                        7

<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)

                                    ---------

9. Summary of Noncash Investing and Financing Activities

         Significant  noncash  transactions  for the nine months ended September
30, 2000 and 1999 were as follows:


                                                              2000         1999
                                                              ----         ----
Liabilities assumed in acquisition of
 rental properties ....................................     $    --      $12,409
Common units in the Operating Partnership
 issued in connection with the payoff of
 deferred acquisition liabilities .....................     $ 1,344      $ 2,309
Increase (decrease) in minority interest's
 ownership of the
  Operating Partnership ...............................     $   (81)     $ 1,128
Accrued compensation paid through the issuance
  of Common Stock .....................................     $   524      $ 1,258
Exchange of debentures for 1,000,000 shares
  of preferred stock ..................................     $    --      $25,000


10. Business Segments

         The Company owns one  property  type only (i.e.  neighborhood  shopping
centers).  Resource  allocation,  determination  of  compensation  packages  and
financial  analysis are performed by the Company's  management for each segment.
The Company  measures  performance  of the segments based on total revenues less
property operating and maintenance expenses, as detailed in the following table:







                                        8

<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)

                                    ---------

<TABLE>
<CAPTION>

                                          Retail
                                        Properties     FWM     Other (1)     Total
                                        ----------     ---     ---------     -----
Nine months ended September 30, 2000:
<S>                                      <C>        <C>         <C>         <C>
Revenues .............................   $ 71,332   $  4,609    $ (3,820)   $ 72,121
Operating and maintenance expenses ...     16,817      5,419      (5,419)     16,817
                                         --------   --------    --------    --------
Income (loss) from operations ........   $ 54,515   $   (810)   $  1,599    $ 55,304
                                         ========   ========    ========    ========
Commercial real estate property
 expenditures ........................   $  7,658   $    (--)   $     --    $  7,658
                                         ========   ========    ========    ========
Segment assets at September 30, 2000 .   $621,340   $     --    $     --    $621,340
                                         ========   ========    ========    ========

Nine months ended September 30, 1999:
Revenues .............................   $ 63,266   $  4,782    ($ 3,860)   $ 64,188
Operating and maintenance expenses ...     14,669      5,456      (5,456)     14,669
                                         --------   --------    --------    --------
Income from operations ...............   $ 48,597   $   (674)   $  1,596    $ 49,519
                                         ========   ========    ========    ========

Commercial real estate property
 expenditures ........................   $ 31,465   $     --    $     --    $ 31,465
                                         ========   ========    ========    ========
Segment assets at September 30, 1999 .   $556,171   $     --    $     --    $556,171
                                         ========   ========    ========    ========


                                          Retail
                                        Properties     FWM     Other (1)     Total
                                        ----------     ---     ---------     -----
Three months ended September 30, 2000:
Revenues .............................   $ 23,893   $  1,150    $   (870)   $ 24,173
Operating and maintenance expenses ...      5,297      1,501    $  1,501       5,297
                                         --------   --------    --------    --------
Income (loss) from operations ........   $ 18,596   $   (351)   $    631    $ 18,876
                                         ========   ========    ========    ========
Commercial real estate property
 expenditures ........................   $  5,548   $     --    $     --    $  5,548
                                         ========   ========    ========    ========

Three months ended September 30, 1999:
Revenues .............................   $ 21,332   $  1,406    $ (1,116)   $ 21,622
Operating and maintenance expenses ...      4,676      1,850      (1,850)      4,676
                                         --------   --------    --------    --------
Income from operations ...............   $ 16,656   $   (444)   $    734    $ 16,946
                                         ========   ========    ========    ========

Commercial real estate property
 expenditures ........................   $ 13,456   $     --    $     --    $ 13,456
                                         ========   ========    ========    ========
</TABLE>



                                        9

<PAGE>


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

<TABLE>
<CAPTION>

                                                  Three months ended       Nine months ended
                                                      September 30,          September 30,
                                                 --------------------    ---------------------
                                                    2000        1999        2000        1999
                                                    ----        ----        ----        ----
<S>                                              <C>         <C>         <C>         <C>
Income from operations for reportable segments   $ 18,876    $ 16,946    $ 55,304    $ 49,519
General and administrative expenses ..........     (1,093)     (1,004)     (3,426)     (3,168)
Disposition and merger costs .................     (2,097)         --      (2,097)         --
Interest expense .............................     (5,980)     (4,864)    (17,765)    (16,066)
Depreciation and amortization ................     (4,694)     (4,288)    (14,094)    (12,781)
Income allocated to minority interest ........     (1,040)     (1,512)     (4,467)     (4,091)
Distributions to Preferred Stockholders ......     (1,230)     (1,658)     (3,958)     (4,480)
Loss from Management Company .................       (351)       (444)       (810)       (674)
Gain on sale of properties ...................         --          --         648          --
                                                 --------    --------    --------    --------
Income before extraordinary items ............   $  2,391    $  3,176    $  9,335    $  8,259
                                                 ========    ========    ========    ========
</TABLE>
-------------
(1)  Represents the adjustment for  straight-lining  of rents and reflecting the
     net income from FWM using the equity method of accounting.


11. Subsequent Events

         On October 13, 2000, the Board of Directors  declared a distribution of
$0.4875 and $0.6094 per share of Common Stock and Preferred Stock, respectively,
to stockholders of record as of November 1, 2000, payable on November 15, 2000.

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
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  September  30, 2000 to the three
months ended September 30, 1999

         For the three months ended September 30, 2000, the net income allocated
to common  stockholders  decreased by $785 or 24.7% from $3,176 to $2,391,  when
compared  to the  three  months  ended  September  30,  1999,  primarily  due to
disposition  and merger costs,  an increase in expenses,  and an increase in the
amount of income  allocated to minority  interests,  offset by a net increase in
revenues.

         Total  revenues  increased  by $2,551 or 11.8% from $21,622 to $24,173,
due primarily to the purchase of Newark Shopping Center in August 1999, Saratoga
Shopping Center in October 1999,  Woodmoor Shopping Center in November 1999, and
Westmont  Shopping Center,  Cudahy Center,  Racine Centre and Whitnall Square in
December 1999  (collectively the "1999  Acquisitions")  and Goshen Plaza in July
2000 (the "2000  Acquisition").  Total  revenues  increased by $1,673 due to the
1999 and 2000 Acquisitions. This increase in total revenues was due primarily to
an increase in minimum rents of $1,254 and tenant  reimbursements  of $285.  For
properties  owned for all of 1999 and 2000,  total  revenues  increased  by $788
(3.8%).  This  increase was  primarily due to increases in minimum rents of $591
(3.8%) and tenant reimbursements of $282 (7.6%). The increases in total revenues
were offset by a decrease of $396 due to the sale of properties  during 1999 and
2000.

         Property  operating and maintenance  expense increased by $621 or 13.3%
from $4,676 to $5,297.  Operating and maintenance expenses increased by $429 due
to the purchase of the 1999 and 2000 Acquisitions.  For properties owned for all
of 1999 and 2000 total  operating  and  maintenance  expense  increased  by $266
(5.9%)  due  to  an  overall  increase  in  operating  expenses.  Operating  and
maintenance  expenses  decreased by $74 due to  properties  sold during 1999 and
2000.  General and  administrative  expenses  increased  by $210 or 17.3%,  from
$1,004 to $1,215 due  primarily to increases in write offs of abandoned  project
costs.


                                       10

<PAGE>


         For the three months ended  September  30, 2000,  the Company  incurred
$2,097 of  disposition  and  merger  costs  related to the  pending  sale of the
Company. There were no such costs in 1999.

         Interest expense  increased by $1,116,  or 22.9% from $4,864 to $5,980,
due primarily to the associated increased line of credit borrowings and mortgage
indebtedness  associated with the 1999  Acquisitions.  The weighted average debt
outstanding increased from $264.9 million in 1999 to $306.0 million in 2000, and
the weighted average interest rate increased from 7.4% to 7.8%.

         Depreciation and amortization  expenses  increased by $406 or 9.5% from
$4,288 to $4,694 primarily due to the 1999 and 2000 Acquisitions.

         Income  allocated to minority  interests  decreased by $472, or 31.2% ,
from  $1,512 to $1,040 due to an decrease  in net  income,  and  decrease in the
minority interests ownership of the Operating Partnership from 23.8% to 22.3%.

         Comparison  of the nine  months  ended  September  30, 2000 to the nine
months ended September 30, 1999

         For the nine months ended September 30, 2000, the net income  allocated
to common  stockholders  increased  by $959 or 11.6% from  $8,259 to $9,218 when
compared  to  the  nine  months  ended  September  30,  1999,  primarily  due to
disposition  and merger  costs,  increases in revenues  offset by an increase in
expenses,  and an  increase  in the  amount  of  income  allocated  to  minority
interests.

         Total revenues  increased by $7,933 or 12.4%,  from $64,188 to $72,121,
due primarily to the purchase of Newark Shopping Center in August 1999, Saratoga
Shopping Center in October 1999,  Woodmoor Shopping Center in November 1999, and
Westmont  Shopping Center,  Cudahy Center,  Racine Centre and Whitnall Square in
December 1999  (collectively the "1999  Acquisitions")  and Goshen Plaza in July
2000 (the "2000  Acquisition").  Total  revenues  increased by $5,521 due to the
1999 and 2000 Acquisitions. This increase in total revenues was due primarily to
an increase in minimum rents of $3,938 and tenant  reimbursements of $1,155. For
properties  owned for all of 1999 and 2000,  total revenues  increased by $2,371
(3.8%).  This increase was primarily due to increases in minimum rents of $1,479
(3.2%) and tenant  reimbursements  of $1,301  (10.9%).  The  increases  in total
revenues  were  offset by a  decrease  of $1,167  due to the sale of  properties
during 1999.

         Property  operating and  maintenance  expense  increased by $2,148,  or
14.6%, from $14,669 to $16,817.  Operating and maintenance expenses increased by
$1,484 due to the  purchase of the 1999 and 2000  Acquisitions.  For  properties
owned for all of 1999 and 2000 total operating and maintenance expense increased
by $925 (6.5%) primarily due to an increase in snow removal expenses.  Operating
and maintenance  expenses  decreased by $261 due to properties sold during 1999.
General and  administrative  expenses increased by $382 or 12.1%, from $3,167 to
$3,549 due  primarily  to  increases  in payroll  expenses  and the write off of
abandoned project costs.

         For the nine months  ended  September  30, 2000,  the Company  incurred
$2,097 of  disposition  and  merger  costs  related to the  pending  sale of the
Company. There were no such costs in 1999.

         Interest  expense  increased  by  $1,699,  or 10.6%,  from  $16,066  to
$17,765,  due primarily to the increase in borrowings  under the Line of Credit,
an increase in new and assumed  mortgage  indebtedness  associated with the 1999
Acquisitions and an increase in borrowings from net refinancing proceeds, offset
by a decrease in  indebtedness  due to the  curtailment  of mortgage  debt.  The
weighted  average  debt  outstanding  increased  from $276.8  million in 1999 to
$304.5  million in 2000, and the weighted  average  interest rate increased from
7.7% to 7.8%.

         Depreciation  and  amortization  expenses  increased by $1,313 or 10.3%
from $12,781 to $14,467 primarily due to the 1999 and 2000 Acquisitions.

         Income allocated to minority interests increased by $376, or 9.2%, from
$4,091 to  $4,467  due to an  increase  in net  income  and an  increase  in the
minority interests ownership of the Operating Partnership from 24.3% to 25.2%.


                                       11

<PAGE>


Liquidity and Capital Resources

Indebtedness

         As of September 30, 2000, the Company had total  mortgage  indebtedness
of approximately  $309,748. The mortgage indebtedness is collateralized by 48 of
the properties. Of the Company's indebtedness,  $63,443 (20.5%) is variable rate
indebtedness,  and $246,305  (79.5%) is at a fixed rate. The effective  interest
rates of the  indebtedness  range  from 6.4% to 9.1%,  with a  weighted  average
interest rate of 7.9%, and will mature between 2001 and 2014. Approximately 4.4%
of the Company's  indebtedness  will become due during 2001,  requiring  balloon
payments of $13,680.  From 2001 through 2014, the Company will have to refinance
an  aggregate  of  $258,858.  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 has a  collateralized  revolving Line of Credit of $100,000
with the First Union  National  Bank.  This line is  collateralized  by thirteen
properties  (Brafferton  Center,  Bryans Road, Kamp Washington,  Kenhorst Plaza,
Newtown Square,  Riverside  Square,  Shoppes of Graylyn,  Spring Valley,  Takoma
Park,  The Village,  Watkins Park Plaza,  Willston  Center I, Woodmoor  Shopping
Center).  The line  matures on May 19,  2003 and loans under this line will bear
interest  at the  30-day  LIBOR rate plus  1.35% or 1.50%  depending  on certain
financial ratios. As of September 30, 2000, there was $48,000  outstanding under
the Line of Credit. This line of credit replaces the UBS AG line of credit which
was due to mature in January 2001. An extraordinary  loss of $117 was recognized
due to the early extinguishment of the UBS AG line of credit.

         The  Company  currently  has in  place  a cap on  30-day  LIBOR  in the
notional amount of $46,000,  which limits the Company's  exposure to an increase
in interest rates. The cap contract covers the period from July 19, 2000 through
January 19,  2001.  The cap counter  party is required to pay to the Company any
amount in excess of 6.5%,  thereby  limiting  the  Company's  exposure to 30-day
LIBOR to a maximum of 6.5%.

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 Line of  Credit  and the  leveraging  of  currently  unencumbered  Retail
Properties. The Company believes that the foregoing sources of liquidity will be
sufficient to fund liquidity needs through 2001.

         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 Line of Credit and
the issuance of additional equity and debt securities.  The Company also expects
to  use  funds  available  under  the  Line  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.

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 nine months ended  September 30, 2000 would have  increased by $434 based on
balances  during the nine months ending  September 30, 2000.  The following is a
summary of the Company's long term debt as of September 30, 2000:


                                       12

<PAGE>

<TABLE>
<CAPTION>

                   Expected Maturity Date of Balloon Payments
                                                                                                              Total    Fair Value
                                                                                                             Balloon  of Debt as of
                                           2000      2001        2002        2003       2004    Thereafter   Payments    9/30/00
                                           ----      ----        ----        ----       ----    ----------   --------    -------
<S>                                       <C>     <C>        <C>         <C>         <C>        <C>         <C>         <C>
FIXED RATE ...........................       --   $  7,237    $  9,031    $ 14,927          --   $167,567    $198,762   $236,938
     Average Interest Rate ...........       --        7.8%        7.0%        7.2%         --        7.8%

VARIABLE RATE

LIBOR-based(1):
     Potomac Plaza (LIBOR  plus 2.25%)                                                   2,418                  2,418      2,418
     Line of Credit (LIBOR
           plus 1.35%)(2) ............                                      48,000                             48,000     48,000
     Ashburn Farms (LIBOR
        plus 1.5%) ...................               6,443                                                      6,443      6,443
                                       --------   --------    --------    --------    --------   --------    --------   --------

Total LIBOR-based ....................       --      6,443          --      48,000       2,418         --      56,861     56,861
Tax-exempt:
     Mayfair Shopping
       Center (3) ....................                                                              3,235       3,235      3,235
                                       --------   --------    --------    --------    --------   --------    --------   --------

Total variable rate debt .............       --      6,443          --      48,000       2,418      3,235      60,096     60,096
                                       --------   --------    --------    --------    --------   --------    --------   --------

Total Debt ........................... $      0   $ 13,680    $  9,031    $ 62,927    $  2,418   $170,802    $258,858   $297,034
                                       ========   ========    ========    ========    ========   ========    ========   ========
</TABLE>
---------------

(1)  At September 30, 2000 the LIBOR rate was 6.6%.
(2)  This  schedule  assumes  that the Line of Credit is repaid at the  maturity
     date.
(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.


                                     Part II

OTHER INFORMATION

Item 2. Recent Sales of Unregistered Equity Securities

         None

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

         None



                                       13

<PAGE>


(a)  Exhibits

     27         Financial Data Schedule


(b)  Reports on Form 8-K.


         An  interim  report  on Form  8-K  was  filed  on  September  28,  2000
announcing the sale of subtantially all of the Company's assets.






                                       14

<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: November 14, 2000               By:  /s/   James G. Blumenthal
                                           -------------------------------------
                                           James G. Blumenthal
                                           Executive Vice President and
                                           Chief Financial Officer








                                       15