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, 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 November 10, 1999:

                        9,465,059 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 September 30, 1999
               (unaudited) and December 31, 1998                               1

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

         Consolidated Statements of Cash Flows (unaudited) for
               the nine months ended September 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 Market 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)

                                   -----------


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

Rental properties:
  Land                                                $114,756         $108,562
  Buildings and improvements                           472,854          447,584
                                                      --------         --------
                                                       587,610          556,146
Accumulated depreciation                               (63,636)         (51,475)
                                                      --------         --------
Rental properties, net                                 523,974          504,671

Cash and equivalents                                     3,629            3,163
Tenant receivables, net                                 10,735            9,463
Deferred financing costs, net                            5,179            1,921
Other assets                                            12,654           13,736
                                                      --------         --------

          Total assets                                $556,171         $532,954
                                                      ========         ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Mortgage notes payable                              $270,558         $244,113
  Debentures                                              -              25,000
  Accounts payable and accrued expenses                 11,424           11,542
                                                      --------         --------
          Total liabilities                            281,982          280,655

Minority interest                                       65,308           66,218

Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock $.01 par value,
     3,800,000 shares designated; 2,692,049 and
     2,314,189 issued and outstanding, respectively
     (aggregate liquidation preference of $73,870
     and $57,855 respectively)                              27               23
  Common stock $.01 par value, 90,000,000 shares
     authorized; 9,457,541 and 8,566,985 shares issued
     and outstanding, respectively                          95               86
  Additional paid-in capital                           245,333          218,345
  Accumulated distributions in excess of earnings      (37,074)         (32,373)
                                                      --------         --------

          Total stockholders' equity                   208,381          186,081
                                                      --------         --------

          Total liabilities and stockholders' equity  $556,171         $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 nine months ended
                                       September 30,             September 30,
                                 ----------------------    ---------------------
                                    1999         1998         1999       1998
                                    ----         ----         ----       ----
         Revenues:
              Minimum rents         $16,765    $14,707       $49,187   $41,689
              Tenant reimbursements   3,828      3,360        12,232     9,847
              Percentage rents          435        170         1,317       925
              Other income              594        326         1,452       854
                                    -------    -------       -------   -------
                  Total revenues     21,622     18,563        64,188    53,315
                                    -------    -------       -------   -------

         Expenses:
              Property operating and
                 maintenance          4,676      4,254        14,669    12,838
              General and
                 administrative       1,004        857         3,168     2,709
              Interest                4,864      4,811        16,066    14,782
              Depreciation and
                 amortization         4,288      3,766        12,781    10,687
                                    -------    -------       -------   -------
                  Total expenses     14,832     13,688        46,684    41,016
                                    -------    -------       -------   -------

              Income  before  gain
                 on sale of properties,
                 income (loss)from
                 Management Company,
                 extraordinary item,
                 minority interest and
                 distributions to
                 Preferred
                 Stockholders         6,790      4,875        17,504    12,299

              Gain on sale of
                 properties             -          335           -       2,018


              Income (loss) from
                 Management Company    (444)       (59)         (674)      281
                                    -------    -------       -------   -------

              Income before
                 extraordinary item,
                 minority interest
                 and distributions to
                 Preferred
                 Stockholders         6,346      5,151        16,830    14,598

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

              Income before minority
                 interest and
                 distributions to
                 Preferred
                 Stockholders         6,346      5,151        16,830    14,240

              Income allocated to
                 minority interest   (1,512)    (1,116)       (4,091)   (3,069)
                                    -------    -------      --------   -------
              Income before
                 distributions to
                 Preferred
                 Stockholders         4,834      4,035        12,739    11,171
              Distributions to
                 Preferred
                 Stockholders        (1,658)    (1,410)       (4,480)   (4,231)
                                    -------    -------       -------   -------
              Income allocated to
                 Common Stockholders $3,176     $2,625        $8,259    $6,940
                                    =======    =======       =======   =======

              Earnings per Common
                 Share - Basic
                   Income before
                     extraordinary
                     item             $0.34      $0.31         $0.93     $0.94
                   Extraordinary item  0.00       0.00          0.00     (0.05)
                                    -------    -------       -------   -------
                   Net income         $0.34      $0.31         $0.93     $0.89
                                    =======    =======       =======   =======
              Earnings per Common
                    Share - Diluted
                  Income before
                    extraordinary
                    item              $0.33      $0.31         $0.91     $0.93
                  Extraordinary item   0.00       0.00          0.00     (0.05)
                                    -------    -------       -------   -------
                  Net income          $0.33      $0.31         $0.91     $0.88
                                    =======    =======       =======   =======
              Weighted Avg. Shares
                  of Common Stock-
                  Basic               9,411      8,506         8,928     7,769
                                    =======    =======       =======   =======
              Weighted Avg. Shares
                  of Common Stock-
                  Diluted             9,529      8,560         9,036     7,848
                                    =======    =======       =======   =======
              Distributions per
                  share             $0.4875    $0.4875       $1.4625   $1.4625
                                    =======    =======       =======   =======

              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)
                                    --------

                                                             Nine months ended
                                                             September 30, 1999
                                                             ------------------
                                                             1999          1998
                                                             ----          ----

Operating Activities:
  Income before distributions to Preferred Stockholders    $12,739      $11,171
  Adjustment to reconcile net cash provided by operating
       activities:
    Income allocated to minority interest                    4,091        3,069
    Depreciation and amortization                           12,781       10,687
    Gain of sale of rental properties                          -         (2,018)
    Loss on early extinguishment of debt                       -            358
    Amortization of deferred financing costs and loan
       premiums                                               (402)        (428)
    Equity in earnings of Management Company                 1,034           79
    Compensation paid or payable in common stock               936          953
    Provision for uncollectible accounts                       657        1,163
    Recognition of deferred rent                              (922)        (807)
    Net changes in:
      Tenant receivables                                    (1,007)        (762)
      Other assets                                          (2,385)      (5,434)
      Accounts payable and accrued expenses                    205          108
                                                           -------      -------
         Net cash provided by operating activities          27,727       18,139
                                                           -------      -------

Investing Activities:
  Additions to rental properties                            (4,136)      (3,443)
  Acquisition of rental properties                         (10,797)     (21,970)
  Proceeds from sale of rental properties                      -          4,957
                                                           -------      -------
         Net cash used in investing activities             (14,933)     (20,456)
                                                           --------     -------

Financing Activities:
  Net proceeds from line of credit                          27,000       30,937
  Net Proceeds from mortgage notes refinancings             18,822          318
 Proceeds from issuance of common stock                        -         25,781
 Proceeds from exercise of stock options                        62           57
  Repayment of line of credit                              (23,200)     (32,237)
  Mortgage notes principal payments                         (7,414)      (2,431)
  Additions to deferred financing costs                     (4,030)        (689)
  Distributions paid to Preferred Stockholders              (4,480)      (4,231)
  Distributions paid to Common Stockholders                (12,960)     (11,374)
  Distributions paid to minority interest                   (6,128)      (4,088)
                                                           --------     -------
         Net cash provided by (used in) financing
            activities                                     (12,328)       2,043
                                                           --------     -------

  Net change in cash and equivalents                           466         (274)
  Cash and equivalents, beginning of period                  3,163        3,142
                                                           --------     -------
         Cash and equivalents, end of period                $3,629       $2,868
                                                           ========     =======

              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 57 retail  properties  containing a total of approximately
         6.2 million square feet of gross  leasable area ("GLA")  located in the
         Mid-Atlantic region and the Chicago, Illinois metropolitan area.

                  The  Company  currently  owns   approximately   75.0%  of  the
         partnership  interests in First Washington  Realty Limited  Partnership
         (the  "Operating  Partnership").  All of the Company's  operations  are
         conducted through the Operating Partnership.  The Operating Partnership
         owns 38 Properties  directly and 19 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.       Acquisitions of Rental Properties

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

</TABLE>

<TABLE>
<S>
          The acquisitions were financed as follows:

             <C>                      <C>        <C>           <C>
                                   Number of
                                  Partnership   Market   Assumed Mortgage
         Property Name               Units      Value        Debt (1)
         -------------            -----------   ------   ---------------

         Kamp Washington               -        $  -        $ 3,045
         Newark Shopping Center      103,795     2,309        9,364
                                     -------    ------      -------
                                     103,795    $2,309      $12,409
                                     =======    ======      =======

               <C>                    <C>         <C>
         Line of Credit
              Draw                   Cash        Total
         --------------             ------      -------
             $ 9,800                $2,339  (2) $15,184
                -                      472       12,145
             -------                ------      -------
             $ 9,800                $2,811      $27,329
             =======                ======      =======
</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 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 nine months ended
                                                              September 30,
                                                      -------------------------
                                                              (unaudited)
                                                       1999               1998
                                                       ----               ----

           Pro forma Total Revenues                    $65,247          $60,528
                                                       =======          =======
           Pro forma net income                        $ 8,429          $ 7,399
                                                       =======          =======
           Pro forma earnings per Common Share-Basic   $  0.94          $  0.87
                                                       =======          =======
           Pro forma earnings per Common Share-Diluted $  0.93          $  0.86
                                                       =======          =======

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:

                                           Interest     Term      Closing
Collateral Properties           Amount       Rate      (years)      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
($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 September 30, 1999,
625,980 shares of Convertible Preferred Stock were converted into 802,538 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 nine months ended September
30, 1999 and 1998 were as follows:


                                                            1999            1998
                                                            ----            ----

Liabilities assumed in acquisition of rental properties     $12,409      $15,201
Common units in the Operating Partnership issued
  in connection with the acquisition of rental properties   $ 2,309      $20,341
Increase in minority interest's ownership of the
  Operating Partnership                                     $ 1,128      $15,266
Accrued compensation paid through the issuance
  of Common Stock                                           $ 1,258      $   898
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).  Resource allocation, determination of compensation packages and
financial analysis is 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:


                                         Retail
                                         Properties  FWM     Other (1)    Total
                                         ----------  ---     ---------    -----

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 (loss) 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
                                         ========   ======    ======    ========

Nine months ended September 30, 1998:
Revenues                                 $ 52,508   $4,938   ($4,131)   $ 53,315
Operating and maintenance expenses         12,838    4,657    (4,657)     12,838
                                         --------   ------    ------    --------
Income from operations                   $ 39,670   $  281    $  526    $ 40,477
                                         ========   ======    ======    ========
Commercial real estate property
 expenditures                            $ 60,806   $  -      $  -      $ 60,806
                                         ========   ======    ======    ========
Segment assets at September 30, 1998     $487,818   $  -      $  -      $487,818
                                         ========   ======    ======    ========


                                         Retail
                                         Properties  FWM     Other (1)    Total
                                         ----------  ---     ---------    -----

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 (loss) from operations            $ 16,656  ($  444)   $  734    $ 16,946
                                         ========   ======    ======    ========
Commercial real estate property
 expenditures                            $ 13,456   $  -      $  -      $ 13,456
                                         ========   ======    ======    ========
Segment assets at September 30, 1999     $556,171   $  -      $  -      $556,171
                                         ========   ======    ======    ========

Three months ended September 30, 1998:
Revenues                                 $ 18,160   $1,343   ($  940)   $ 18,563
Operating and maintenance expenses          4,254    1,402    (1,402)      4,254
                                         --------   ------    ------    --------
Income (loss) from operations            $ 13,906  ($   59)   $  462    $ 14,309
                                         ========   ======    ======    ========
Commercial real estate property
 expenditures                            $  1,324   $  -      $  -      $  1,324
                                         ========   ======    ======    ========
Segment assets at September 30, 1998     $487,818   $  -      $  -      $487,818
                                         ========   ======    ======    ========

                                        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  Nine months ended
                                               September 30,     September 30,
                                               -------------     ------------

                                            1999        1998    1999       1998
                                            ----        ----    ----       ----

Income from operations for reportable
     segments                              $16,946   $14,309   $49,519  $40,477
General and administrative expenses         (1,004)     (857)   (3,168)  (2,709)
Interest expense                            (4,864)   (4,811)  (16,066) (14,782)
Depreciation and amortization               (4,288)   (3,766)  (12,781) (10,687)
Income allocated to minority interest       (1,512)   (1,116)   (4,091)  (3,069)
Distributions to Preferred Stockholders     (1,658)   (1,410)   (4,480)  (4,231)
Income (loss) from Management Company         (444)      (59)     (674)     281
Gain on sale of properties                     -         335       -      2,018
                                            ------   -------   -------   ------
Income before extraordinary items          $ 3,176   $ 2,625   $ 8,259  $ 7,298
                                           =======   =======   =======  =======



(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 October 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 November 1, 1999, payable on November 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  September  30, 1999 to the three months
ended September 30, 1998

     For the three months ended September 30, 1999, the net income  allocated to
common  stockholders  increased  by $551 or 21.0% from  $2,625 to  $3,176,  when
compared to the three months  ended  September  30, 1998,  due to an increase in
revenues  which were  primarily due to the purchase of Wilston Centre I, Wilston
Centre  II  and  Town  Center  at   Sterling   in   November   1998  (the  "1998
Acquisitions"),  and Kamp  Washington  in January 1999 and Newark in August 1999
(the  "1999  Acquisitions"),  offset  by an  increase  in  expenses  and  income
allocated to minority interest.



                                        9

<PAGE>



     Total revenues  increased by $3,059 or 16.5%, from $18,563 to $21,622,  due
primarily to an increase in minimum rents of $2,058,  tenant  reimbursements  of
$468 and other income of $268 due to  termination  fees paid. The increases were
primarily due to the 1998 Acquisitions and 1999 Acquisitions.

     Property operating and maintenance expense increased by $422, or 9.9%, from
$4,254  to  $4,676,  due  primarily  to  the  1998  Acquisitions  and  the  1999
Acquisitions.  General and  administrative  expenses increased by $147 or 17.2%,
from $857 to $1,004.  General and Administrative  expenses as a percent of total
revenues remained the same at 4.6%

     Interest  expense  increased  by $53,  or 1.1%,  from  $4,811 to $4,864 due
primarily  to the  increased  mortgage  indebtedness  associated  with  the 1998
Acquisitions and the 1999  Acquisitions  offset by the conversion of the $25,000
debentures  to  Preferred  Stock in June  1999.  The  average  debt  outstanding
increased  from  $255.9  million  for 1998 to  $264.8  million  for 1999 and the
weighted average interest rate decreased from 7.5% to 7.4%.

     Depreciation and  amortization  expenses  increased by $522 or 13.9%,  from
$3,766  to  $4,288,  primarily  due  to  the  1998  Acquisitions  and  the  1999
Acquisitions.

     During  1998,  there was a $335 gain on sale of  properties.  There were no
such transactions during 1999.

     Income  allocated  to minority  interests  increased  by $396 or 35.5% from
$1,116 to $1,512 due to an increase in earnings of $1,195 ($259) and an increase
in the minority  interests'  ownership of the Operating  Partnership  during the
period from 21.7% to 23.8% ($137).

Comparison of the nine months ended  September 30, 1999 to the nine months ended
September 30, 1998

     For the nine months ended  September 30, 1999, the net income  allocated to
common  stockholders  increased  by $1,319 or 19.0% from $6,940 to $8,259,  when
compared  to the nine  months  ended  September  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 and Newark Shopping Center
in August 1999 (the "1999 Acquisitions"), offset by a gain on sale of properties
of $2,018  recorded  during the first and third quarters of 1998, an increase in
expenses and an increase in income allocated to minority interest.

     Total revenues increased by $10,873 or 20.4%, from $53,315 to $64,188,  due
primarily to an increase in minimum rents of $7,498 and tenant reimbursements of
$2,385.  The increases were primarily due to the 1998  Acquisitions and the 1999
Acquisitions.

     Property  operating and maintenance  expense  increased by $1,831 or 14.3%,
from $12,838 to $14,669,  due  primarily to the 1998  Acquisitions  and the 1999
Acquisitions.  General and  administrative  expenses increased by $459 or 16.9%,
from $2,709 to $3,168 due primarily to an increase in the amount of compensation
paid or  payable  in  Company  stock of $100 and an  increase  in the  amount of
internal  preacquisition  costs of  $166.  Prior to  March  19,  1998,  internal
preacquisition  costs were  capitalized  and  included in the cost of  acquiring
rental  properties.  General  and  Administrative  expenses as a  percentage  of
revenues decreased from 5.1% to 4.9%.

     Interest expense  increased by $1,284, or 8.7%, from $14,782 to $16,066 due
primarily  to the  increased  mortgage  indebtedness  associated  with  the 1998
Acquisitions and the 1999  Acquisitions  offset by the conversion of the $25,000
debentures  to  Preferred  Stock in June  1999.  The  average  debt  outstanding
increased  from  $253.5  million  for 1998 to  $276.8  million  for 1999 and the
weighted average interest rate decreased from 7.8% to 7.7%.



                                       10

<PAGE>



     Depreciation and amortization  expenses  increased by $2,094 or 19.6%, from
$10,687  to  $12,781,  primarily  due to the  1998  Acquisitions  and  the  1999
Acquisitions.

     During  1998,  there was a $2,018  gain on sale of  properties,  and a $358
extraordinary  loss due to the early  extinguishment of debt. There were no such
transactions during 1999.

     Income  allocated to minority  interests  increased by $1,022 or 33.3% from
$3,069 to $4,091 due to an increase in earnings of $2,590 ($559) and an increase
in the minority  interests'  ownership of the Operating  Partnership  during the
period from 21.6% to 24.3% ($463).


Liquidity and Capital Resources

Indebtedness

     As of September 30, 1999,  the Company had total mortgage  indebtedness  of
approximately   $270.6   million.   The   mortgage   indebtedness   consists  of
approximately  $263.9  million  in  indebtedness  collateralized  by 41  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,  $26.2 million  (9.7%) is variable rate  indebtedness,  and $244.4
million  (90.3%)  is at a  fixed  rate.  The  effective  interest  rates  of the
indebtedness  range from 5.1% to 9.8%, with a weighted  average interest rate of
7.6%,  and  will  mature  between  1999  and  2014.  Approximately  13.3% of the
Company's  indebtedness  will become due by 2000,  requiring balloon payments of
$3.7 million in 1999,  and $24.4 million in 2000.  From 1999 through  2014,  the
Company will have to refinance an aggregate of $216.7 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 $51,000  (which was increased from $45,000 to $51,000 on October 27, 1999)
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 February
1, 2001 and loans  under this line  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  bear interest at
LIBOR plus two percent (2%) per annum,  and is on a month-to-month  basis.  This
Line of Credit is collaterized  by a first mortgage lien on Brafferton  Shopping
Center. As of September 30, 1999, there was $13,000  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.



                                       11

<PAGE>



     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.

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: access to the Retail Properties does not rely on elevator service because
the  structures are no higher than two stories.) The Plan contains ten phases as
follows:
                                     Estimated            Estimated
    Phase Description                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 system      Commenced             Completed
5.  Send questionnaire to tenan      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             Completed
8.  Identify solutions (repair or
      replace)                       Commenced             Completed
9.  Test Solutions                   Commenced             Substantially
                                                             completed
10. Anticipate contingencies
      including the most reasonably
      likely worst case scenarios    Commenced             Continuous

         The   Company   has   incurred   approximately   $75  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.  The  Company  has  incurred
approximately  $340 to date and  anticipates  an additional  $160 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 to a new system because of the improved technology and
reporting capabilities of the new system.  The Company  successfully  converted
to the new system on October 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.



                                       12

<PAGE>



         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.

         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 nine months ended September 30, 1999 would have increased by $222,  based on
balances  during the nine months ending  September 30, 1999.  The following is a
summary of the Company's long term debt as of September 30, 1999:



                                       13

<PAGE>

<TABLE>
<S>
                   Expected Maturity Date of Balloon Payments

                              <C>         <C>        <C>       <C>      <C>
                             1999        2000       2001      2002     2003
                           --------    --------   --------  -------- --------
<C>
FIXED RATE                   $3,656     $24,367       $735   $11,843  $14,926
-----------

     Average Interest Rate    7.0%        8.4%       6.5%      7.1%     7.2%

VARIABLE RATE

LIBOR-based(1):

     Line of Credit (LIBOR
           plus 1.0%) (2)                           13,000
     Ashburn Farms (LIBOR
        plus 1.5%)                                   6,451
                           --------    --------   --------  -------- --------

Total LIBOR-based              0           0        19,451      0       0
Tax-exempt:
     Mayfair Shopping
       Center (3)
                           --------    --------   --------  -------- --------

Total variable rate debt       0           0        19,451      0       0
                           --------    --------   --------  -------- --------

Total Debt                   $3,656     $24,367    $20,186   $11,843  $14,926
                            ====================================================

   <C>                <C>              <C>
                     Total         Fair Value
                    Balloon       of Debt as of
 Thereafter         Payments         9/30/99
 ----------         --------      -------------

  $138,456          $193,983         $311,733


    7.6%              7.6%






                      13,000           13,000

                       6,451            6,451
                    --------         --------

      0               19,451           19,451


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

     3,235            22,686           22,686
  --------          --------         --------

  $141,691          $216,669         $334,419
  ===========================================

</TABLE>

     (1) At September 30, 1999 the LIBOR rate was 5.40%.

     (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 September  30, 1999,  this swap contract has a fair market value of
approximately  $619. If interest  rates  increase by 100 basis points,  the fair
market value of this interest rate hedge contract as of September 30, 1999 would
increase by approximately  $904. If interest rates decrease by 100 basis points,
the fair market value of this interest  rate hedge  contract as of September 30,
1999 would  decrease  by  approximately  $962.  In  addition,  we are exposed to
certain  losses in the event of  non-performance  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

               (a)        Securities Sold

               The following table sets forth the date of sale, title and amount
               of unregistered securities sold by the Company since December 31,
               1998:

               Date of Sale                  Title                       Amount
               ------------                  -----                       ------

               8/17/99                       Common Units               103,795

               (b)        Underwriters and other purchasers

                  I.      August 17, 1999 Sales.  Underwriters were not retained
                          in connection with the sale of these securities. These
                          units  were  sold to the  seller  of  Newark  Shopping
                          Center, an "accredited investor".

               (c)        Consideration

                  I.      August 17,  1999  Sales.  These  units were  issued in
                          exchange for property having a value of  approximately
                          $2.8 million, net of assumed indebtedness.  There were
                          no underwriting  discounts or commissions with respect
                          to such securities.

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

               None.

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:   November 10, 1999                /s/  William J. Wolfe
                                         ----------------------------------
                                         By:     William J. Wolfe
                                                 President and
                                                 Chief Executive Officer


   Date:   November 10, 1999               /s/ James G. Blumenthal
                                         ----------------------------------
                                         By:   James G. Blumenthal
                                               Executive Vice President and
                                               Chief Financial Officer

                                       16

<PAGE>