SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     FOR THE FISCAL PERIOD ENDED      June 30, 1997

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM __________________ to __________________ 

                        Commission File Number: 33-44980

THE CHESTNUT REAL ESTATE PARTNERSHIP   THE CHESTNUT PARTNERSHIP

           (Exact names of registrants as specified in their charters)

                                       MARYLAND

             (State or other jurisdiction of incorporation or organization)

               52-1640655                                42-1352739
       (IRS Employer Identification No.)       (IRS Employer Identification No.)

2330 West Joppa Road  Lutherville, Maryland                21093
 (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code     (515) 245-7616

Former name, former address and former fiscal year, if changed since last report

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

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes __X__ No _____

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date __N/A__


<PAGE>



                            THE CHESTNUT PARTNERSHIP
                                       AND
                      THE CHESTNUT REAL ESTATE PARTNERSHIP

                                      INDEX

                                                                          Page

Part I         FINANCIAL INFORMATION

Item 1         Financial Statements

               The Chestnut Real Estate Partnership
               and The Chestnut Partnership

               o    Separate and Combined Balance Sheets,
                    June 30, 1997 and December 31, 1996                    3

               o    Separate and Combined Statement of
                    Operations, for the six months ended
                    June 30, 1997 and June 30, 1996                        5

               o    Separate and Combined Statements of Partner's
                    Equity (Deficit) for the six months ended
                    June 30, 1997 and June 30, 1996                        7

               o    Separate and Combined Statement of Cash Flow,
                    for the six months ended June 30, 1997
                    and June 30, 1996                                      8

               o    Notes to Financial Statements                         10

Item 2         Management's Discussion and Analysis of Financial
               Condition and Results of Operations                        13

PART II        OTHER INFORMATION

Item 1         Legal Proceedings                                          15
Item 6         Exhibits and Reports on Form 8-K                           15


SIGNATURES                                                               124



<PAGE>





<TABLE>
<CAPTION>
                      THE CHESTNUT REAL ESTATE PARTNERSHIP    -------------  JUNE 30, 1997  --------------
                         AND THE CHESTNUT PARTNERSHIP                             The
                     SEPARATE AND COMBINED BALANCE SHEETS         The          Chestnut
                                                               Chestnut       Real Estate       Combined
                                  (UNAUDITED)                 Partnership     Partnership     Partnerships
                                                              ------------    ------------    ------------
                                    ASSETS
<S>                                                           <C>             <C>             <C>         
Current assets:
     Cash and cash equivalents                                $  1,908,751    $       --      $  1,908,751
     Accounts receivable                                           212,365            --           212,365
     Prepaid expenses and other                                    270,142            --           270,142
     Assets whose use is limited or restricted:
        Under bond indenture agreements, held in escrow
          by trustee                                               439,320            --           439,320
        Under letter of credit agreement, held in escrow            57,874            --            57,874
                                                              ------------    ------------    ------------
           Total current assets                                  2,888,452            --         2,888,452

Assets whose use is limited or restricted:
   Under bond indenture agreements, held in escrow
     by trustee                                                  1,633,116            --         1,633,116
   Under residency agreements, held in escrow                    1,633,310            --         1,633,310
   Health Center reserves                                        1,321,650            --         1,321,650
   Phase III and IV construction funds                           1,213,046            --         1,213,046

Operating property, at cost, net of depreciation                   219,937      53,438,697      53,658,634
Costs of acquiring intitial contracts, net of amortization       1,621,271            --         1,621,271
Deferred bond financing costs, net of amortization                 885,497            --           885,497
                                                              ------------    ------------    ------------
           Total assets                                       $ 11,416,279    $ 53,438,697    $ 64,854,976
                                                              ============    ============    ============

               LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:
     Bonds payable, current portion                           $    150,000    $       --      $    150,000
     Accounts payable                                              153,580            --           153,580
     Accrued expenses                                              265,815            --           265,815
     Accrued property taxes                                        287,162            --           287,162
     Accrued interest payable                                      135,475            --           135,475
     Advances payable                                              179,464            --           179,464
     Refundable deposits, residency agreements                     934,570            --           934,570
                                                              ------------    ------------    ------------
           Total current liabilities                             2,106,067            --         2,106,067

Construction costs payable                                       1,368,892            --         1,368,892
Bonds payable, less current portion                             13,505,000            --        13,505,000
Loans from residents                                            41,588,250            --        41,588,250
Advances payable to partners                                     7,800,000            --         7,800,000
Refundable deposits, escrowed                                      739,250            --           739,250
Deferred revenues from admission fees                            2,051,096            --         2,051,096
Equity in deficit of the Chestnut Partnership                         --        57,742,276            --

Commitments and Contingencies
                                                              ------------    ------------    ------------
           Total liabilities                                    69,158,555      57,742,276      69,158,555
Partners' equity (deficit)                                     (57,742,276)     (4,303,579)     (4,303,579)
                                                              ------------    ------------    ------------
           Total liabilities and partners' equity (deficit)   $ 11,416,279    $ 53,438,697    $ 64,854,976
                                                              ============    ============    ============


</TABLE>

<PAGE>



<TABLE>
<CAPTION>
                     THE CHESTNUT REAL ESTATE PARTNERSHIP     -----------  December 31, 1996  ------------
                         AND THE CHESTNUT PARTNERSHIP                             The
                     SEPARATE AND COMBINED BALANCE SHEETS          The         Chestnut
                                                                Chestnut      Real Estate       Combined
                                                               Partnership    Partnership     Partnerships
                                                              ------------    ------------    ------------
                                    ASSETS
<S>                                                           <C>             <C>             <C>         
Current assets:
     Cash and cash equivalents                                $  1,394,227    $       --      $  1,394,227
     Accounts receivable                                           197,444            --           197,444
     Prepaid expenses and other                                    274,133            --           274,133
     Assets whose use is limited or restricted:
        Under bond indenture agreements, held in escrow
          by trustee                                               393,293            --           393,293
        Under letter of credit agreement, held in escrow            57,874            --            57,874
                                                              ------------    ------------    ------------
           Total current assets                                  2,316,971            --         2,316,971

Assets whose use is limited or restricted:
   Under bond indenture agreements, held in escrow
     by trustee                                                  1,591,297            --         1,591,297
   Under residency agreements, held in escrow                    1,280,777            --         1,280,777
   Health Center reserves                                          751,627            --           751,627
   Phase III and IV constuction funds                              555,721            --           555,721

Operating property, at cost, net of depreciation                   305,421      48,615,205      48,920,626
Costs of acquiring intitial contracts, net of amortization       1,701,335            --         1,701,335
Deferred bond financing costs, net of amortization                 911,537            --           911,537
                                                              ------------    ------------    ------------
           Total assets                                       $  9,414,686    $ 48,615,205    $ 58,029,891
                                                              ============    ============    ============

               LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:

     Bonds payable, current portion                           $    150,000    $       --      $    150,000
     Accounts payable                                              149,151            --           149,151
     Accrued expenses                                              213,581            --           213,581
     Accrued property taxes                                        142,485            --           142,485
     Accrued interest payable                                      235,595            --           235,595
     Advances payable                                                    0            --                 0
     Refundable deposits, residency agreements                     743,167            --           743,167
                                                              ------------    ------------    ------------
           Total current liabilities                             1,633,979                       1,633,979

Construction costs payable                                       1,703,277            --         1,703,277
Bonds payable, less current portion                             13,655,000            --        13,655,000
Loans from residents                                            39,059,790            --        39,059,790
Advances payable to partners                                     1,600,000            --         1,600,000
Refundable deposits, escrowed                                      892,550            --           892,550
Deferred revenues from admission fees                            2,052,312            --         2,052,312
Equity in deficit of the Chestnut Partnership                         --        51,182,222            --

Commitments and Contingencies
                                                              ------------    ------------    ------------
           Total liabilities                                    60,596,908      51,182,222      60,596,908
Partners' equity (deficit)                                     (51,182,222)     (2,567,017)     (2,567,017)
                                                              ------------    ------------    ------------
           Total liabilities and partners' equity (deficit)   $  9,414,686    $ 48,615,205    $ 58,029,891
                                                              ============    ============    ============

</TABLE>


<PAGE>



                      THE CHESTNUT REAL ESTATE PARTNERSHIP
                          AND THE CHESTNUT PARTNERSHIP
                  SEPARATE AND COMBINED STATEMENT OF OPERATIONS
                  For the six month period ended June 30, 1997

<TABLE>
<CAPTION>
                                  (UNAUDITED)                                            The
                                                                          The         Chestnut
                                                                       Chestnut      Real Estate      Combined
                                                                      Partnership    Partnership    Partnerships
                                                                      -----------    -----------    -----------
<S>                                                                   <C>            <C>            <C>        
Revenues:
     Amortization of nonrefundable admission fees                     $   374,983    $      --      $   374,983
     Apartment service fees                                             2,495,779           --        2,495,779
     Health Center revenues                                               932,850           --          932,850
     Capital reserve fees                                                  33,070           --           33,070
     Other revenue                                                         83,383           --           83,383
     Income from The Chestnut Partnership                                    --          477,972           --
                                                                      -----------    -----------    -----------
        Total revenues                                                  3,920,066        477,972      3,920,066
                                                                      -----------    -----------    -----------

Operating expenses:
     Development fee amortization                                          85,484           --           85,484
     General and administrative                                           825,253           --          825,253
     Resident care                                                        757,362           --          757,362
     Dietary                                                              637,944           --          637,944
     Plant                                                                409,441           --          409,441
     Housekeeping                                                         167,478           --          167,478
     Depreciation and amortization                                        106,576        614,534        721,110
                                                                      -----------    -----------    -----------
                                                                        2,989,537        614,534      3,604,071
                                                                      -----------    -----------    -----------
        Income (loss) from operations                                     930,529       (136,562)       315,995
                                                                      -----------    -----------    -----------

Other income (expense)
     Interest income                                                      202,460           --          202,460
     Interest expense                                                    (655,016)          --         (655,016)
                                                                      -----------    -----------    -----------
                                                                         (452,556)          --         (452,556)
                                                                      -----------    -----------    -----------
        Net income (loss)                                             $   477,972    $  (136,562)   $  (136,562)
                                                                      ===========    ===========    ===========

</TABLE>


<PAGE>




                     THE CHESTNUT REAL ESTATE PARTNERSHIP
                         AND THE CHESTNUT PARTNERSHIP
                 SEPARATE AND COMBINED STATEMENT OF OPERATIONS 
                  For the six month period ended June 30, 1996

<TABLE>
<CAPTION>
                                  (UNAUDITED)                          The
                                                         The        Chestnut
                                                      Chestnut     Real Estate     Combined
                                                     Partnership   Partnership    Partnerships
                                                    -----------    -----------    -----------
<S>                                                 <C>            <C>            <C>        
Revenues:
     Amortization of nonrefundable admission fees   $   486,825    $      --      $   486,825
     Apartment service fees                           2,276,259           --        2,276,259
     Health Center revenues                             925,316           --          925,316
     Capital reserve fees                                31,713           --           31,713
     Other revenue                                        8,284           --            8,284
     Income from The Chestnut Partnership                  --          107,849           --
                                                    -----------    -----------    -----------
        Total revenues                                3,728,397        107,849      3,728,397
                                                    -----------    -----------    -----------

Expenses:
     Development fee amortization                       132,061           --          132,061
     General and administrative                         959,391           --          959,391
     Resident care                                      680,802           --          680,802
     Dietary                                            616,029           --          616,029
     Plant                                              407,889           --          407,889
     Housekeeping                                       159,656           --          159,656
     Depreciation and amortization                      106,576        593,695        700,271
                                                    -----------    -----------    -----------
                                                    $ 3,062,404    $   593,695    $ 3,656,099
                                                    -----------    -----------    -----------
        Income (loss) from operations                   665,993       (485,846)        72,298
                                                    -----------    -----------    -----------

Other income (expense)
     Interest income                                    100,680           --          100,680
     Interest expense                                  (658,823)          --         (658,823)
                                                    -----------    -----------    -----------
                                                       (558,143)             0       (558,143)
                                                    -----------    -----------    -----------
        Net income (loss)                               107,850       (485,846)      (485,845)
                                                    ===========    ===========    ===========

</TABLE>



<PAGE>




                     THE CHESTNUT REAL ESTATE PARTNERSHIP
                         AND THE CHESTNUT PARTNERSHIP
         SEPARATE AND COMBINED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
        For the six month period ended June 30, 1997 and the year ended
                               December 31, 1996

<TABLE>
<CAPTION>
                                  (UNAUDITED)                       The
                                                    The          Chestnut
                                                 Chestnut       Real Estate      Combined
                                                Partnership     Partnership     Partnerships
                                                ------------    ------------    ------------
<S>                                             <C>             <C>             <C>          
Balance, December 31, 1995                      $(47,407,626)   $   (230,988)   $   (230,988)

Net income (loss)                                    483,601        (736,029)       (736,029)

Transfer ownership of land preacquisition and
  project development assets to The Chestnut
  Real Estate Partnership                         (2,658,197)           --              --

Distribution to partners                          (1,600,000)     (1,600,000)     (1,600,000)
                                                ------------    ------------    ------------
Balance, December 31, 1996                      $(51,182,222)   $ (2,567,017)   $ (2,567,017)
                                                ============    ============    ============




Balance, December 31, 1996                      $(51,182,222)     (2,567,017)   $ (2,567,017)

Net income (loss)                                    477,972        (136,562)       (136,562)

Transfer ownership of land preacquisition and
  project development assets to The Chestnut
  Real Estate Partnership                         (5,438,026)           --              --

Contributions from partners                             --              --              --

Distributions to partners                         (1,600,000)     (1,600,000)     (1,600,000)

                                                ------------    ------------    ------------
Balance, June 30, 1997                          $(57,742,276)   $ (4,303,579)   $ (4,303,579)
                                                ============    ============    ============


</TABLE>



<PAGE>

                      THE CHESTNUT REAL ESTATE PARTNERSHIP
                          AND THE CHESTNUT PARTNERSHIP
                  SEPARATE AND COMBINED STATEMENT OF CASH FLOWS
                  For the six month period ended June 30, 1997

<TABLE>
<CAPTION>
                                  (UNAUDITED)                                                  The
                                                                                 The         Chestnut
                                                                              Chestnut      Real Estate      Combined
                                                                             Partnership    Partnership    Partnerships
                                                                             -----------    -----------    -----------
<S>                                                                          <C>            <C>            <C>         
Cash flows from operating activities:
     Net income (loss)                                                       $   477,972    $  (136,562)   $  (136,562)
     Adjustments to reconcile net income to net
       cash provided by operating activities:
          Depreciation                                                              --          614,534        614,534
          Other amortization                                                     106,576           --          106,576
          Amortization of nonrefundable admission fees                          (374,983)          --         (374,983)
          Amortization of development fees                                        85,484           --           85,484
          Admission fees received                                                373,600           --          373,600
          Income in Partnership                                                     --         (477,972)          --
          Change in operating assets and liabilities:
            Accounts receivable                                                  (14,921)          --          (14,921)
            Prepaid expenses and other                                             3,991           --            3,991
            Accounts payable                                                       3,958           --            3,958
            Accrued expenses                                                      96,791           --           96,791
                                                                             -----------    -----------    -----------
          Net cash provided by operating activities                              758,468           --          758,468
                                                                             -----------    -----------    -----------

Cash flows from investing activities:
     Increase in funds escrowed under residency agreements                      (352,533)          --         (352,533)
     Additions to operating property                                          (5,438,026)          --       (5,438,026)
     Decrease in construction payable                                           (334,385)          --         (334,385)
     Increase in Phase III and IV construction funds from partner advances      (657,325)          --         (657,325)
     Increase in assets held by trustee                                          (87,847)          --          (87,847)
     Decrease in funds escrowed under letter of credit agreement                       0           --                0
     Increase in Health Center reserves                                         (570,023)          --         (570,023)
                                                                             -----------    -----------    -----------
          Net cash used in investing activities                               (7,440,138)          --       (7,440,138)
                                                                             -----------    -----------    -----------

Cash flows from financing activities:
     Repayment of partner advances                                                  --             --             --
     Contributions from partners                                                    --             --             --
     Distributions to partners                                                (1,600,000)          --       (1,600,000)
     Proceeds from partner advances                                            6,200,000           --        6,200,000
     Increase in advances payable                                                179,464           --          179,464
     Principal payments on bonds                                                (150,000)          --         (150,000)
     Proceeds from loans from residents, deferred revenues
        and refundable deposits, net                                           2,566,730           --        2,566,730
                                                                             -----------    -----------    -----------
          Net cash provided by financing activities                            7,196,194           --        7,196,194
                                                                             -----------    -----------    -----------

Net increase in cash                                                             514,524           --          514,524

Cash, beginning of period                                                      1,394,227           --        1,394,227
                                                                             -----------    -----------    -----------
Cash, end of period                                                          $ 1,908,751    $      --      $ 1,908,751
                                                                             ===========    ===========    ===========

</TABLE>


<PAGE>


                      THE CHESTNUT REAL ESTATE PARTNERSHIP
                          AND THE CHESTNUT PARTNERSHIP
                  SEPARATE AND COMBINED STATEMENT OF CASH FLOWS
                  For the six month period ended June 30, 1996

<TABLE>
<CAPTION>
                                  (UNAUDITED)                                        The
                                                                        The        Chestnut
                                                                     Chestnut     Real Estate     Combined
                                                                    Partnership   Partnership    Partnerships
                                                                   -----------    -----------    -----------
<S>                                                                <C>            <C>            <C>         
Cash flows from operating activities:
     Net income (loss)                                             $   107,849    $  (485,845)   $  (485,845)
     Adjustments to reconcile net income to net
       cash provided by operating activities:
          Depreciation                                                    --          593,695        593,695
          Other amortization                                           106,576           --          106,576
          Amortization of nonrefundable admission fees                (486,825)          --         (486,825)
          Amortization of development fees                             132,061           --          132,061
          Admission fees received                                      248,465           --          248,465
          Income in Partnership                                           --         (107,849)          --
          Change in operating assets and liabilities:
            Accounts receivable                                         72,702           --           72,702
            Prepaid expenses and other                                  62,041         62,041
            Accounts payable                                            68,941           --           68,941
            Accrued expenses                                           187,577           --          187,577
                                                                   -----------    -----------    -----------
          Net cash provided by operating activities                    499,387           --          499,387
                                                                   -----------    -----------    -----------

Cash flows from investing activities:
     Increase in funds escrowed under residency agreements          (1,969,248)          --       (1,969,248)
     Additions to project operating property                          (160,335)          --         (160,335)
     Increase in construction payable                                     --             --             --
     Increase in assets held by trustee                               (128,385)          --         (128,385)
     Increase in assets payable to trustee                            (516,541)          --         (516,541)
     Decrease in funds escrowed under letter of credit agreement        51,824           --           51,824
     Decrease in Health Center reserves                                   --             --             --
                                                                   -----------    -----------    -----------
          Net cash used in investing activities                     (2,722,685)          --       (2,722,685)
                                                                   -----------    -----------    -----------

Cash flows from financing activities:
     Repayment of partner advances                                        --             --             --
     Contributions from Partners                                          --             --             --
     Distribution to partners                                             --             --             --
     Increase in advances payable                                       70,994           --           70,994
     Principal payments on bonds                                       (65,000)          --          (65,000)
     Decrease in Health Center reserves                                178,470           --          178,470
     Proceeds from loans from residents, deferred revenues
        and refundable deposits                                      1,796,520           --        1,796,520
                                                                   -----------    -----------    -----------
          Net cash provided by financing activities                  1,980,984           --        1,980,984
                                                                   -----------    -----------    -----------

Net decrease in cash                                                  (242,315)          --         (242,315)

Cash, beginning of period                                              601,767           --          601,767
                                                                   -----------    -----------    -----------
Cash, end of period                                                $   359,452    $      --      $   359,452
                                                                   ===========    ===========    ===========

</TABLE>


<PAGE>




                                         THE CHESTNUT REAL ESTATE PARTNERSHIP
                                             AND THE CHESTNUT PARTNERSHIP

                                             NOTES TO FINANCIAL STATEMENTS

A.       Basis for Presentation

         The accompanying unaudited financial statements of The Chestnut Real
         Estate Partnership (the Real Estate Partnership) and its subsidiary The
         Chestnut Partnership (the Partnership), in the opinion of management,
         reflect all adjustments (none of which were other than normal recurring
         items), eliminations, and reclassification considered necessary for a
         fair statement of the results of the interim periods presented. For
         purposes of preparing the combined financial statements, all material
         transactions between the Partnerships have been eliminated but not
         displayed, including the elimination of the Real Estate partnership's
         obligation to the Partnership.

         Both the Real Estate Partnership and the Partnership are general
         partnerships, and are sometimes referred to as "the Partnerships."

         The Real Estate Partnership is owned 50% by Blakehurst Joint Venture
         (Venture) and 50% by West Joppa Road Limited Partnership (West Joppa).

         The Partnership is owned 1% by Venture, 1% by West Joppa, and 98% by
         the Real Estate Partnership.

         The Real Estate Partnership and the Partnership were formed to develop,
         own, and operate a life care retirement community called Blakehurst
         (Project) in the Towson area of Baltimore County, Maryland.

         The Real Estate Partnership was organized by the Partnership solely for
         the purpose of owning the property and buildings and other improvements
         thereon that constitute the Project in order to minimize certain
         mortgage recordation taxes, and to act as a general partner of the
         Partnership. The publicly-held debt (both Series I and II) is a direct
         obligation of the Partnership, and is guaranteed by the Real Estate
         Partnership. The guaranty, however, is not intended to provide any
         additional security for payment of the principal and interest on the
         bonds than if the Partnership directly held the property and related
         improvements itself. The partners of the Real Estate Partnership own no
         other assets other than their interests in the Partnership. Therefore,
         management believes the combining financial statements of the
         Partnership and the Real Estate Partnership are the most informative,
         because of the guaranty and because of the Operating and Use Agreement,
         which obligates the Partnership to develop, operate and manage the
         Project at its expense and which grants the Partnership use of the
         property until dissolution, liquidation or other termination by mutual
         agreement. The Partnerships have common, ultimate ownership and do not
         have independent operating activities. Management believes this
         presentation best portrays the relationship between the two entities.

B.       Certain Accounting Policies

         Cash

         The Partnerships consider investments with maturities of three months
         or less when purchased, to be cash equivalents.

         Assets Where Use is Limited

         Assets held by the Trustee under the escrow agreement are cash
         equivalents as of June 30, 1997. Phase III and IV construction funds
         advanced by the partners are also cash equivalents as of June 30, 1997.


<PAGE>



         Deferred Revenues from Admission Fees

         Admission fees are not advance fees in payment for future services of
         for use of facility, because of the manner in which all operating
         expenditures are allocated to the current residents. The non-refundable
         admission fee is a payment in compensation to the Partnership for the
         development risk and is non-refundable except in isolated cases where
         the Partnership would cancel the Residency Agreement. In such cases,
         the resident could be due a portion of the Administration Fee if
         cancellation occurred within the first two years of the contract. The
         refund is based on the remaining life of the resident, actuarially
         determined. Accordingly, the Admission Fee and Resident Loan (together
         the Entrance Payment) is amortized using the Life Table of the U.S.
         Department of Health and Human Services, which in practice results in
         amortization of the Admission Fee portion of the Entrance Payment on a
         straight line over approximately two years. To date, the Partnership
         has never cancelled a Residency Agreement and accordingly has never had
         to refund any portion of the non-refundable admission fee after
         occupancy. Nonetheless, the unamortized admission fees are reported as
         deferred revenue.

         Capitalization of Operating Expenses and Certain Revenues

         Initial occupancy of the Project occurred in August of 1993, with
         cessation of major construction of phase I occurring in December 1993,
         at which time occupancy was 60%. Construction continued for tenant
         requested improvements and an auditorium addition.

         The Partnership ceased capitalization of operating expenses and certain
         revenues in August 1994, because of the extended time frame between
         initial occupancy, completion of major construction, and achievement of
         substantial occupancy.

         Costs of Acquiring Initial Contracts

         Costs of acquiring initial contracts are expected to be recovered from
         the future contract revenues and are therefore capitalized. These costs
         capitalized are amortized over the life expectancy of the initial
         residents, which based on actuarial data, is estimated to be
         approximately 13 years.

         Development Fee

         The development fee incurred in connection with the development of the
         Project is amortized on a pro rata basis as admission fee revenue is
         recognized. Admission fees are being recognized over a 24 month period
         from the date of move-in for those being received from Return of
         Capital Contracts. Admission Fees from Traditional contracts are
         amortized over the expected life of the resident.

C.       Results of Operations

         Admission fees are amortized over a twenty-four month period.

         At the time of initial occupancy, residents are required to make a
         non-refundable payment to a capital replacement reserve. This payment
         is reported as income when received by the Partnerships.

         The development fee incurred in connection with the development of the
         Project is amortized on a pro-rata basis and admission fee revenue is
         recognized.

D.       Financing

         In May, 1992, the Partnership completed the issuance of $14,000,000 of
         Ten Year - Put Option Mortgage Bonds, 1992 Series I. The bonds carry an
         initial rate of 9.5%.

         In August, 1992, the Venture and West Joppa, each of which had
         purchased $3,000,000 of Series I Bonds, sold their bonds back to the
         Partnership in conjunction with the Partnership sales of $6,000,000 of
         Ten Year - Put Option Mortgage Bonds, 1992 Series II. These bonds carry
         an initial rate of 8.75%.



<PAGE>



         In addition, $20,000,000 was provided by Venture and West Joppa. As of
         December 31, 1995, all such advances from Partners had been repaid,
         together with interest thereon.

         For the construction of Phase II, an auditorium and miscellaneous
         additional improvements, the partners funded the cost of approximately
         $800,000.

         For construction of Phase III, a 35 unit addition, the partners have
         advanced $7,600,000 and the Partnerships have arranged to borrow an
         additional $1,900,000, for a total of $9,500,000 of available funds.

         The partners have also advanced $200,000 for initial design of Phase
         IV.

E.       Operating Property

         Operating property includes construction costs in progress. As of June
         30, 1997, $8,023,966 of costs had been incurred for Phase III
         construction in progress and are included in operating property. As of
         December 31, 1996, $2,665,333 had been incurred for construction of
         Phase III. Also, at June 30, 1997, $53,764 had been incurred for
         designs of Phase IV; no such costs had been incurred at December 31,
         1996.

F.       Transactions with partners

         The Partnerships have agreements with Life Care Services Development
         Corporation (LCSD) and Life Care Services Corporation (LCS), affiliates
         through common ownership of Chestnut Village, Inc., a general partner
         of Venture for development and for management of the community
         respectively. LCSD administers planning, development, financing, and
         marketing functions for the partnerships. LCS has been retained to
         supervise the day-to-day operations of the community.

         The partnerships has entered into a construction management agreement
         with Mullan Contracting Company (Mullan), an affiliate through common
         ownership of one partner of West Joppa for Phase III.

         During the six months ended June 30, 1997, LCS was reimbursed $172,852
         for its services and $161,112 for the six months ended June 30, 1996.
         In addition, LCS was reimbursed in the six months ended June 30, 1997,
         $410,865 for marketing of Phase III units.

         In the six months ended June 30, 1997, LCSD was reimbursed $341,955 for
         development fees and had no such reimbursement in the six months ended
         June 30, 1996.

         In the six months ended June 30, 1997, Mullan was paid $43,220 of
         construction management fees, and reimbursed $3,981,222 for
         construction costs; there was no such reimbursement in the six months
         ended June 30, 1996.

G.       Income Taxes

         Income and losses of the Partnerships are included in the income tax
         returns of the partners. Accordingly, the financial statements make no
         provision for income taxes.

H.       Contingencies

         The realization of the costs of the Project in initially contingent
         upon the sale of the remaining units, and resale of units vacated due
         to death or transfer to the health center.

         Subsequent to initial occupancy, maintenance of and efficient operation
         of the Project are also critical to the long term success of the
         Project.



<PAGE>



                            THE CHESTNUT PARTNERSHIP
                                       AND
                      THE CHESTNUT REAL ESTATE PARTNERSHIP

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

Overall Financial Condition

The Project contains a total of 177 residential units, and a 50-bed health
center. As of June 30, 1997, 173 (97.7%) of the residential units have been
reserved or occupied. The apartment occupancy remained the same in the quarter,
during which there were 3 apartment units sold and one sale cancelled. As of
June 30, 1996, 95% of the residential units were sold or occupied.

As of June 30, 1997, the project had 117 full-time equivalent employees, none of
whom were members of a collective bargaining agreement.

The Partnership is accepting deposits on Phase III units. As of June 30, 1997,
32 of 35 units (91.4%) have been reserved by receipt by the Partnerships of
deposits equal to 10% of the Admission Fee. Construction is expected to be
completed such that occupancy will begin in late July 1997.

Results of Operations

As of June 30, 1997, 161 units (91%) were occupied and/or paying monthly service
fees. This occupancy compares to 158 (89%) of the units at June 30, 1996, and
163 units (92%) at December 31, 1996.

Amortization of non-refundable admission fees decreased because fewer residents
moved in during the six months ended June 30, 1996 than moved in during the six
months ended June 30, 1995.

On January 1, 1997, an average 4.8% increase in the monthly service fees became
effective. That increase together with an increase in average occupancy from
June 30, 1996 (87.9%) to the six months ended June 30, 1997 (90.4%), accounted
for the increase in apartment service fees.

Health center average occupancy in the first six months of 1996 was 92% compared
to an average occupancy of 91% in 1997. That decline, combined with an increase
in Medicare reimbursable rates, provided a modest increase in health center
revenues.

Capital reserve fees, which are a one-time payment from new residents related to
monthly service fees increased slightly because the apartment service fees
increased over the six months ended June 30, 1996.

Operating expenses were down about 1.5%, even though the average number of
full-time employees was 117 in the six months ended June 30, 1997, compared to
107 average full-time equivalent employees in 1996. Marketing expenditures have
declined in the current period as Phase I units are essentially completely sold.

The net loss decreased to approximately $137,000 at June 30, 1997, compared to a
net loss of approximately $486,000 at June 30, 1996.

Liquidity and Capital Resources

As of May 28, 1992, significant financing activities were concluded.
Construction financing and long-term financing both were achieved on that date.
Construction financing in the amount of $20,000,000 from a group of lenders was
achieved and the Partnership raised $14,000,000 (before deduction of costs of
underwriting) through long-term financing.

The Partnerships issued two types of taxable bonds in May, 1992. One type was
issued in underwritten public offering of $8,000,000 principal amount of
Blakehurst 10 Year Put Option Mortgage Bond 1992, Series I. Also in May the



<PAGE>



Partnership issued a private transaction to affiliates of the partnership, a
total of $6,000,000 principal amount of Blakehurst Retirement Community Put
Option Bonds, Private Placement Series on terms substantially identical to the
public offering except that the Private Placement Bonds provided for redemption
of such bonds from the proceeds of the sale of 1992 Series II Bonds. The
Partnership sold the 1992 Series II Bonds in the amount of $6,000,000 in August,
1992.

In 1993, the construction financing loan of $20,000,000 has been repaid, and in
1995 all of the Partners' advances (which initially totaled $20,000,000) were
repaid.

During the first quarter of 1996, an auditorium and miscellaneous additional
improvements, totaling approximately $800,000, which was funded by the Partners,
was essentially completed.

In 1996 the Partners advanced $6,200,000 for the construction of Phase III and
the design of Phase IV. In addition, $1,900,000 of long-term financing in
conjunction with Phase III was arranged.

During the six months ended June 30, 1997, the partnership distributed
$1,600,000 of Phase I proceeds from closings, after providing necessary working
capital funding as required in under the bond documents.

The net loss in being funded by the Partners from admission fees.

Net cash provided by operating activities increased by approximately $259,000 in
the six months ended June 30, 1997, compared to the six months ended June 30,
1996. The net income before depreciation/amortization provided cash of
approximately $585,000 in the six months ended June 30, 1997 compared to
approximately $215,000 in the six months ended June 30, 1996.

Net cash used by investing activities was approximately $4,700,000 more in the
six months ended June 30, 1997 compared to the six months ended June 30, 1996.
This change was due to the construction in progress for Phase III and the
Partners advances to fund Phase III construction.

Net cash provided by financing activities was approximately $5,200,000 better in
the six months ended June 30, 1997 compared to the six months ended June 30,
1996. Cash from Resident loans was $700,000 more in 1997 than in 1996 because of
more new residents. The partnerships distributed $1,600,000 from Phase I
closings and received $6,200,000 of advances from the Partners for construction
activities, in the six months ended June 30, 1997.

Because of the level of occupancy in Phase I and sales of Phase III, the
resident financing, and the long-term financing described above, the Partnership
believes adequate capital resources are available to successfully complete
occupancy of Phase III.

The long-term success of the Project is ultimately dependent upon maintaining
adequate levels of occupancy and operating of the Project efficiently.



<PAGE>



Part II - OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 6.       Exhibits and Reports on Form 8-K

         A.   Exhibits

              See attached Index to Exhibits - Page 16

         B.   Reports on Form 8-K

              None



<PAGE>



                                INDEX TO EXHIBITS

Exhibit                                                                   Page
  No.             Description of Exhibit                                  No.

3.1               First Amended and Restated Agreement
                  of Partnership of The Chestnut Partnership
                  dated as of April 25, 1990; Assignment, Acceptance
                  and Consent dated April 25, 1990; Assignment,
                  Acceptance and Consent dated December 16, 1992. (1)

3.2               Agreement of Partnership of The Chestnut Real Estate
                  Partnership dated as of April 25, 1990; Assignment,
                  Acceptance and Consent dated April 25, 1990;
                  Assignment, Acceptance and Consent dated
                  December 16, 1991. (1)

4.1               Trust Indenture, dated as of May 1, 1992, Between
                  The Chestnut Partnership and Boatmen's National Bank
                  of Des Moines, as Trustee. (1)

4.1.1             First Supplemental Trust Indenture Dated as of
                  August 1, 1992, between The Boatmen's National
                  Bank of Des Moines, as Trustee. (1)

4.2               Guaranty Agreement dated as of May 1, 1992,
                  between The Chestnut Real Estate Partnership and
                  Boatmen's National Bank of Des Moines,. (1)

4.3               Owner's Guaranty of Payment and Performance dated
                  as of May 28, 1992, made by The Chestnut Real
                  Estate Partnership to The Sumitomo Trust & Banking
                  Co., Ltd., New York Branch. (1)

4.4               Indemnity Deed of Trust and Security Agreement
                  dated as of May 28, 1992, among The Chestnut Real
                  Estate Partnership; Boatmen's National Bank of
                  Des Moines, Des Moines, Iowa, as Trustee; and The
                  Sumitomo Trust & Banking Co., Ltd., New York
                  Branch. (1)

4.5               Form of Subordination Agreement between Life
                  Care Services Corporation, Continuing Care
                  Communities of America, Inc., West Joppa Road
                  Limited Partnership, and Boatmen's National Bank
                  of Des Moines, Des Moines, Iowa, as Trustee. (1)

4.6               Inter-creditor Agreement dated as of May 28, 1992,
                  between Boatmen's National Bank of Des Moines,
                  Des Moines, Iowa, as Trustee, and The Sumitomo
                  Trust & Banking Co., Ltd., New York Branch. (1)


<PAGE>


Exhibit                                                                    Page
  No.             Description of Exhibit                                   No.

10.1              Contract of Purchase and Sales dated as of June 8,
                  1988, between The Chestnut Partnership and The
                  Mission Helpers of the Sacred Heart, as amended. (1)

10.1.1            Letter Agreement dated March 23, 1992, from the
                  Chestnut Real Estate Partnership to the Mission
                  Helpers of Baltimore City. (1)

10.1.2            License Agreement dated April 23, 1992, between
                  The Chestnut Real Estate Partnership, and Herbert
                  R. O'Conor, III and Kathalee M. O'Conor. (1)

10.2              Escrow Agreement dated June 8, 1988, among The
                  Chestnut Partnership, The Mission Helpers of the
                  Sacred Heart and O'Connor Piper & Flynn. (1)

10.3              License Agreement dated June 20, 1991, between
                  Institute of Mission Helpers of Baltimore City and
                  The Chestnut Real Estate Partnership. (1)

10.4              Restrictive Covenant Agreement dated October 13,
                  1988, among The Chestnut Partnership and The
                  Ruxton-Riderwood-Lake Roland Area Improvement
                  Association, Inc. and the Advisory Board, as amended. (1)

10.5              Consent Order dated October 25, 1988. (1)

10.6              Form of Residency Agreement, with addendum. (1)

10.6.1            Form of Domiciliary Care Residency Agreement. (1)

10.6.2            Form of Addendum to Residency Agreement
                  Regarding Admittance to the Health Care Center. (1)

10.6.3            Form of Residency Agreement with amendment,
                  September 7, 1993 (2)

10.6.35           Residency Agreement dated April 25, 1996 (3)

10.6.4            Form of Domiciliary Care Residency Agreement
                  with addendum, July 29, 1993 (2)

10.6.5            Residency Agreement for Traditional Plan, dated
                  November 1, 1993 and approved for use in late
                  summer, 1994 (2)

10.6.55           Residency Agreement for Traditional Plan, dated April 25,
                  1996 (3)

10.7              Form of Assignment of Rights to Repayments between
                  Resident/Assignor and Assignee. (1)



<PAGE>


Exhibit                                                                    Page
  No.             Description of Exhibit                                   No.

10.8              Admission Fee Escrow Agreement dated as of
                  January 19, 1990, by and between The Chestnut
                  Partnership and American Security Bank, N.A. (1)

10.8.1            Amended and Restated Admission Fee Escrow Agreement - Phase I,
                  dated July 18, 1996, between The Chestnut Partnership and
                  The First National Bank of Maryland (3)

10.8.2            Amended and Restated Wait List Escrow Agreement,
                  dated July 18, 1996, between The Chestnut Partnership and
                  The First National Bank of Maryland (3)

10.8.3            Amended and Restated Health Center Resident Loans
                  Escrow Agreement, dated July 18, 1996, between The
                  Chestnut Partnership and The First National Bank of
                  Maryland (3)

10.8.4            Admission Fee Escrow Agreement - Phase II (Phase III), dated
                  April 29, 1996, between The Chestnut Partnership and The First
                  National Bank of Maryland (3)

10.9              Form of Guaranty Agreement by The Chestnut Real
                  Estate Partnership. (1)

10.10             Form of Indemnity Deed of Trust and Security
                  Agreement from The Chestnut Real Estate Partnership
                  to ____________, as trustee. (1)
 
10.11             Form of Subordination Agreement from  ____________, as
                  trustee, to Boatmen's National Bank of Des Moines,
                  as Trustee and The Sumitomo Trust & Banking Co.,
                  Ltd. - New York Branch. (1)

10.12             Health Center Resident Loans Escrow Agreement
                  between The Chestnut Partnership and ____________,
                  as Escrow Agent. (1)

10.13             Development Agreement dated as of June 3, 1988,
                  between The Chestnut Partnership and Life Care
                  Services Corporation. (1)

10.13.1           Amendment to Development Agreement dated
                  December 30, 1994 between The Chestnut Partnership,
                  Life Care Services Corporation, Rosedale Care, Inc.,
                  and Continental Care, Inc. (2)

10.13.2           Amendment #2 to Development Agreement dated
                  October 30, 1996, between The Chestnut Partnership,
                  Life Care Services Corporation, Rosedale Care, Inc.,
                  and Continental Care, Inc. (3)



<PAGE>


Exhibit                                                                    Page
  No.             Description of Exhibit                                   No.

10.14             Management Agreement dated as of September 28,
                  1990, between The Chestnut Partnership and Life
                  Care Services Corporation. (1)

10.15             Services Agreement dated as of June 3, 1988,
                  between The Chestnut Partnership and West Joppa
                  Road Limited Partnership. (1)

10.16             Performance Agreement dated as of May 31, 1991,
                  between Chestnut Village, Inc. and Life Care
                  Services Corporation. (1)

10.17             Operating and Use Agreement between The
                  Chestnut Partnership and The Chestnut Real
                  Estate Partnership. (1)

10.18             Architect Agreement dated December 10, 1987,
                  between The Chestnut Partnership and D'Aleo, Inc.,
                  as amended. (1)

10.19             Construction Management Agreement dated
                  November 22, 1991, between The Chestnut Partnership
                  and The Weitz Company, Inc. (1)

10.19.1           Amendment No. 1 to Construction Management
                  Agreement. (1)

10.19.2           Construction Management Agreement dated July 11,
                  1996, between The Chestnut Partnership and The Mullan
                  Contracting Company.  (3)

10.19.3           Supplement to Construction Management Agreement,
                  dated October 30, 1996, between The Chestnut
                  Partnership and The Mullan Contracting Company. (3)

10.20             Asbestos and HazMat Abatement Engineering
                  Agreement dated August 11, 1988, between The
                  Chestnut Partnership and ATEC Associates. (1)

10.20.1           March 31, 1992, letter from Atec Associates, Inc. to
                  Life Care Services Corporation regarding Removal of
                  Underground Fuel Storage Tanks. (1)

10.21             Construction Contract dated August 6, 1991, between
                  The Chestnut Partnership and Marcor of Maryland, Inc. (1)

10.22             Retail Lease Agreement dated February 2, 1990,
                  between Cockney's Tavern Partnership and Life Care
                  Services Corporation, as amended. (1)


<PAGE>


Exhibit                                                                    Page
  No.             Description of Exhibit                                   No.

10.23             Office Building Lease dated June 22, 1989, between
                  Cockney's Tavern Partnership and The Chestnut
                  Partnership. (1)

10.25             Construction Loan Agreement dated as of May 28,
                  1992, between The Sumitomo Trust & Banking Co.,
                  Ltd., New York Branch and The Chestnut Partnership
                  and The Chestnut Real Estate Partnership. (1)

10.26             $20,000,000 Promissory Note dated May 28, 1992,
                  from The Chestnut Partnership to The Sumitomo
                  Trust & Banking Co., Ltd. - New York Branch. (1)

10.27             Guaranty of Payment Note dated as of May 28,
                  1992, from Continuing Care Communities of America,
                  Inc. to The Sumitomo Trust & Banking Co., Ltd.
                  New York Branch. (1)

10.28             Guaranty of Payment dated as of May 28, 1992,
                  Continuing Care Communities of America, Inc. to
                  The Sumitomo Trust & Banking Co., Ltd.,
                  New York Branch. (1)

10.29             Guaranty of Completion dated as of May 28, 1992,
                  from Life Care Services Corporation to The Sumitomo
                  Trust & Banking Co., Ltd. - New York Branch. (1)

10.30             Purchase Money Mortgage dated as of March 23, 1992,
                  from the Chestnut Real Estate Partnership to the
                   Mission Helpers of Baltimore City. (1)

10.31             Environmental Indemnification Agreement dated as
                  of May 28, 1992, from The Chestnut Partnership,
                  The Chestnut Real Estate Partnership, and The
                  Sumitomo Trust & Banking Co., Ltd. - New York Branch. (1)

10.32             Owner's Certification letter dated as of May 28,
                  1992, to Boatmen's National Bank of Des Moines,
                  Iowa, as Trustee, and The Sumitomo Trust &
                  Banking Co., Ltd., New York Branch. (1)

10.33             Letter Agreement dated as of May 28, 1992, from
                  The Chestnut Real Estate Partnership to Boatmen's
                  National Bank of Des Moines, Des Moines, Iowa, as
                  Trustee, and The Sumitomo Trust & Banking Co.,
                  Ltd., New York Branch. (1)

10.34             Assignment and Security Agreement dated as of May
                  28, 1992, among The Chestnut Partnership and
                  American Security Bank to The Sumitomo Trust &
                  Banking Co., Ltd., New York Branch. (1)



<PAGE>


Exhibit                                                                    Page
  No.             Description of Exhibit                                   No.

10.35             Consent and Subordination Agreement dated as of
                  May 28, 1992, by The Chestnut Partnership. (1)

10.36             Assignment of Subcontracts dated as of May 28,
                  1992, from The Weitz Company, Inc. to The
                  Sumitomo Trust & Banking Co., Ltd., New York
                  Branch and Boatmen's National Bank of Des Moines.
                  (1)

10.41             Escrow Agreement I dated as of January 23, 1992,
                  among Prime Holdings, Inc., The Chestnut
                  Partnership, The Chestnut Real Estate
                  Partnership, and The Sumitomo Trust & Banking
                  Co., Ltd., New York Branch. (1)

10.42             Escrow Agreement II dated as of January 23, 1992,
                  among West Joppa Road Limited Partnership, The
                  Chestnut Partnership, The Chestnut Real Estate
                  Partnership, and The Sumitomo Trust & Banking
                  Co., Ltd., New York Branch. (1)

10.43             Security Agreement dated as of May 28, 1992,
                  between The Chestnut Partnership, Boatmen's
                  National Bank of Des Moines, as Bond Trustee, and
                  The Sumitomo Trust & Banking Co., Ltd., New York
                  Branch. (1)

10.44             Indemnity Collateral Assignment of Leases,
                  Residency Agreements, Rents and Fees dated as of
                  May 28, 1992, from The Chestnut Real Estate
                  Partnership to Boatmen's National Bank of Des
                  Moines, as Bond Trustee and The Sumitomo Trust &
                  Banking Co., Ltd., New York Branch. (1)

10.45             Collateral Assignment of Leases, Residence
                  Agreements, Rents and Fees dated as of May 28,
                  1992, among The Chestnut Partnership to Boatmen's
                  National Bank of Des Moines, Iowa, as Trustee and
                  The Sumitomo Trust & Banking Co., Ltd., New York
                  Branch. (1)

10.46             Collateral Assignment of Contracts, Plans and
                  Permits dated as of May 28, 1992, among The
                  Chestnut Partnership to Boatmen's National Bank
                  of Des Moines, Des Moines, Iowa, as Trustee and
                  The Sumitomo Trust & Banking Co., Ltd., New York
                  Branch. (1)

10.47             Term Loan Agreement dated July 3, 1997, between         23-78
                  Norwest Bank Iowa, N.A., and The Chestnut
                  Partnership. (4)



<PAGE>


Exhibit                                                                    Page
  No.             Description of Exhibit                                   No.

10.47.1           $1,900,000 Term Loan dated July 3, 1997, between        79-80
                  Norwest Bank Iowa, N.A., and The Chestnut
                  Partnership. (4)

10.47.2           Guaranty Agreement dated July 3, 1997, between          81-91
                  Norwest Bank Iowa, N.A., and The Chestnut
                  Partnership, Life Care Services Corporation and
                  Home Health Care Services Corporation. (4)

10.47.3           Indemnity Deed of Trust and Security Agreement         92-123
                  dated July 3, 1997, between The Chestnut Real
                  Estate Partnership and Norwest Bank Iowa, N.A.
                  (4)

10.50             Joint Venture Agreement of the Blakehurst Joint
                  Venture dated December 16, 1991, entered into by
                  and between Chestnut Village, Inc. and Prime
                  Holdings, Inc. (1)

10.52             Indemnity Agreement dated as of March 11, 1992,
                  among The Chestnut Partnership, The Chestnut Real
                  Estate Partnership, Mullan-North Oaks Limited
                  Partnership, Life Care Services Corporation and
                  North Oaks Properties, Inc. (1)

10.53             Construction Management Agreement with Mullan
                  Contracting Company, entered into July, 1994 (2)

27.1              Financial Data Schedule - The Chestnut
                  Partnership (4)

27.2              Financial Data Schedule - The Chestnut Real
                  Estate Partnership (4)




(1)           Incorporated by reference from Registrants Statement on Form S-1
              previously filed with Commission (Commission File No: 33-32197),
              January 28, 1992, and August 7, 1992 and by Registrant's Form 10-
              K filed December 31, 1992 and 1993.

(2)           Incorporated by reference from the Registrant's Form 10-K,
              December 31, 1994, previously filed with the Commission.

(3)           Incorporated by reference from the Registrant's Form 10-K,
              December 31, 1996, previously filed with the Commission.

(4)           Filed herewith.

<PAGE>



                             SIGNATURES

                THE CHESTNUT REAL ESTATE PARTNERSHIP

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

                            THE CHESTNUT REAL ESTATE PARTNERSHIP

                            By:      BLAKEHURST JOINT VENTURE, a

                                     General Partner

                                     By:     CHESTNUT VILLAGE, INC.,
                                             General Partner

Date: August 13, 1997                by:     /s/ Stan G. Thurston
                                             ---------------------
                                             Stan G. Thurston, President and 
                                             Chief Executive Officer
                                             (Principal Executive Officer)

Date: August 13, 1997                by:     /s/ Arthur V. Neis
                                             -------------------
                                             Arthur V. Neis, Treasurer
                                             (Principal Financial and 
                                             Accounting Officer)

                            And By:          THE WEST JOPPA ROAD LIMITED
                                             PARTNERSHIP, General Partner

                                     By:     ROSEDALE CARE, INC.,
                                             General Partner

Date: August 13, 1997                by:     /s/ T. F. Mullan
                                             -----------------
                                             Thomas F. Mullan III, President

Date: August 13, 1997                by:     /s/ J. A. Luetkemeyer, Jr.
                                             ---------------------------
                                             John A. Luetkemeyer, Jr., 
                                             President


<PAGE>


                             SIGNATURES

                      THE CHESTNUT PARTNERSHIP

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

                                     THE CHESTNUT PARTNERSHIP

                           By:       BLAKEHURST JOINT VENTURE, a
                                     General Partner

                           By:       CHESTNUT VILLAGE, INC.,
                                             General Partner

Date: August 13, 1997      by:        /s/ Stan G. Thurston
                                      ---------------------
                                      Stan G. Thurston, President and 
                                      Chief Executive Officer
                                      (Principal Executive Officer)

Date: August 13, 1997      by:        /s/ Arthur V. Neis
                                      -------------------
                                      Arthur V. Neis, Treasurer
                                      (Principal Financial and 
                                      Accounting Officer)

                            And By:   THE WEST JOPPA ROAD LIMITED
                                      PARTNERSHIP, General Partner

                            By:       ROSEDALE CARE, INC.,
                                      General Partner

Date: August 13, 1997       by:       /s/ T. F. Mullan
                                      -----------------
                                      Thomas F. Mullan III, President

Date: August 13, 1997       by:       /s/ J. A. Luetkemeyer, Jr.
                                      ---------------------------
                                      John A. Luetkemeyer, Jr., President

                            And By:   THE CHESTNUT REAL ESTATE
                                      PARTNERSHIP, General Partner

                            By:      CHESTNUT VILLAGE, INC.,
                                     General Partner

Date: August 13, 1997       by:      /s/ Stan G. Thurston
                                     ---------------------
                                     Stan G. Thurston, President 

Date: August 13, 1997       by:      /s/ Arthur V. Neis
                                     -------------------
                                     Arthur V. Neis, Treasurer