UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

      For Quarter Ended: September 30, 1996 Commission File Number: 1-9646
                        -------------------

                           ASR Investments Corporation
             ------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

                                    Maryland
         --------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   86-0587826
                      ------------------------------------
                      (I.R.S. Employer Identification No.)

                   335 N. Wilmot, Suite 250, Tucson, AZ 85711
                   ------------------------------------------
                    (Address of principal executive offices)

                                 (520) 748-2111
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

                                (Not applicable)
              ----------------------------------------------------
              (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.
                                       X   Yes           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.

Common Stock (par value $.01)  outstanding as of October 31, 1996 were 3,159,161
shares.
<PAGE>
                           ASR INVESTMENTS CORPORATION
                           Consolidated Balance Sheets
                    September 30, 1996 and December 31, 1995
                             (Dollars in Thousands)




                                                           1996      1995
                                                        ---------  -------
                                                        Unaudited

Assets
    Real estate investments
       Apartments, net of depreciation                   $70,857   $71,338
       Investments in joint ventures                       2,853     3,043
       Construction in progress                            9,968
       Land held for development                           1,047     3,928
       Other real estate                                     932     1,201
                                                         -------   -------
          Total real estate investments                   85,657    79,510
    Mortgage assets                                        5,527    11,877
    Cash                                                   5,917     2,421
    Other assets                                             543       361
                                                         -------   -------
           Total assets                                  $97,644   $94,169
                                                         =======   =======


Liabilities
    Real estate notes payable                            $49,564   $49,633
    Short-term borrowing                                   1,954     4,495
    Other liabilities                                      5,595     2,646
                                                         -------   -------
           Total  liabilities                             57,113    56,774

Stockholders' Equity
    40,000,000 shares of $.01 Common Stock authorized;
    3,307,892  shares  issued with 148,731 held
    in Treasury                                           40,531    37,395
                                                         -------   -------
       Total liabilities and stockholders' equity        $97,644   $94,169
                                                         =======   =======


See Notes to Consolidated Financial Statements.
                                        2
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      Consolidated Statements of Operations
       For the Quarters and Nine Months Ended September 30, 1996 and 1995
                     (In Thousands Except Per Share Amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                        Quarters             Nine  Months
                                                 --------------------    --------------------
                                                   1996         1995        1996       1995
                                                 --------    --------    --------    --------
<S>                                              <C>         <C>         <C>         <C>     
Real  Estate  Operations
     Rental and other income                     $  3,660    $  3,419    $ 10,941    $ 10,493
                                                 --------    --------    --------    --------
     Operating and maintenance expenses             1,452       1,414       4,007       ,3827
     Real estate taxes and insurance                  350         366       1,069       1,116
     Depreciation and amortization                    706         685       2,074       1,959
                                                 --------    --------    --------    --------
       Total  operating  expenses                   2,508       2,465       7,150       6,902
                                                 --------    --------    --------    --------
     Income from  real  estate                      1,152         954       3,791       3,591
                                                 --------    --------    --------    --------

Mortgage  Assets
     Prospective yield  income                        604         873       2,174       3,063
     Income from redemptions and sales              2,738         473       7,725       4,927
                                                 --------    --------    --------    --------
     Income from mortgage assets                    3,342       1,346       9,899       7,990
                                                 --------    --------    --------    --------

Operating and Administrative Expenses              (1,422)       (612)     (2,759)     (2,802)
                                                 --------    --------    --------    --------
     Total Operating Income                         3,072       1,688      10,931       8,779

Interest Expense and Other Income
     Interest and other income                        127          33         248         708
     Interest expense on real estate mortgages     (1,079)     (1,104)     (3,269)     (3,373)
     Other interest expense                           (28)        (47)       (152)       (170)
                                                 --------    --------    --------    --------
Net Income                                       $  2,092    $    570    $  7,758    $  5,944
                                                 ========    ========    ========    ========

Net  Income  Per  Share of Common
     Stock and Common Stock Equivalents          $   0.66    $   0.18    $   2.46    $   1.90
                                                 ========    ========    ========    ========
Average  Shares of Common Stock and
     Common Stock Equivalents                       3,155       3,151       3,155       3,137
                                                 ========    ========    ========    ========
Dividends  Declared  Per  Share                  $   0.50    $   0.50    $   1.50    $   1.50
                                                 ========    ========    ========    ========
</TABLE>

See Notes to Consolidated Financial Statements.
                                        3
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      Consolidated Statements of Cash Flows
              For the Nine Months Ended September 30, 1996 and 1995
                                 (In Thousands)
                                   (Unaudited)
                                                           Nine Months
                                                       --------------------
                                                          1996       1995
                                                       --------    --------
OPERATING  ACTIVITIES
Net income                                             $  7,758    $  5,944
Principal noncash charges (credits)
    Depreciation and amortization                         2,415       2,048
    Reversal of yield maintenance accrual                            (2,420)
    Increase in accrual                                     507         705
                                                       --------    --------
Cash  Provided  By  Operations                           10,680       6,277
                                                       --------    --------

INVESTING  ACTIVITIES
Investment in apartments                                 (1,716)     (7,858)
Investment in joint ventures                                (28)     (1,751)
Construction expenditures                                (7,027)
Purchase of land for development                            (60)     (3,879)
Sale of other real estate                                             1,252
Other real estate assets                                    269       2,343
Reduction in mortgage assets                              6,350       6,161
(Increase) decrease in other assets                        (182)        140
                                                       --------    --------
Cash  Used  In  Investing  Activities                    (2,394)     (3,592)
                                                       --------    --------

FINANCING  ACTIVITIES
Issuance of real estate notes payable                                 6,895
Proceeds from construction loan                             247
Repayment of notes payable
   Real estate notes                                       (316)     (7,824)
   Notes secured by mortgage assets                                  (4,002)
Short-term borrowing                                     (2,541)      4,495
Construction cost payable                                 1,384
Increase in other liabilities                             1,147         594
Exercise of stock options                                    23          45
Payment of dividends                                     (4,734)     (4,727)
                                                       --------    --------
Cash  Used  In  Financing  Activities                    (4,790)     (4,524)
                                                       --------    --------

Cash
    Increase (decrease) during the period                 3,496      (1,839)
    Balance - beginning of period                         2,421       4,129
                                                       --------    --------
    Balance - end of period                            $  5,917    $  2,290
                                                       ========    ========

Supplemental Disclosure of Cash Flow Information
Interest Paid                                          $  3,424    $  4,105
                                                       ========    ========
See Notes to Consolidated Financial Statements
                                        4
<PAGE>
                           ASR INVESTMENTS CORPORATION
                 Consolidated Statement of Stockholders' Equity
                  For the Nine Months Ended September 30, 1996
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                              Common
                                                     Additional                              Stock in
                                Number of   Par       Paid-In                    Notes      Treasury -
                                 Shares    Value      Capital      Deficit     Receivable    at Cost       Total
                               ----------  ------- ------------  -----------  -----------  ------------  ---------

<S>                            <C>         <C>     <C>           <C>          <C>          <C>           <C>    
Balance, December 31, 1995          3,303      $33     $155,822    ($115,497)       ($652)      ($2,311)   $37,395
Net income                                                             7,758                                 7,758
Dividends declared                                                    (4,734)                               (4,734)
Stock issuance                         5                    53                       (30)                       23
Other                                                       89                                                  89
                               ----------  ------- ------------  -----------  -----------  ------------  ---------
Balance, September  30, 1996        3,308      $33     $155,964    ($112,473)       ($682)      ($2,311)   $40,531
                               ==========  ======= ============  ===========  ===========  ============  =========
</TABLE>

See Notes to Consolidated Financial Statements.
                                        5
<PAGE>
                           ASR INVESTMENTS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


1.  BASIS OF PRESENTATION

            The accompanying interim  consolidated  financial statements include
the accounts of the Company and its wholly owned subsidiaries  (collectively the
"Company").  Investments  in joint  ventures in which the Company does not own a
controlling  interest are accounted for under the equity method. All significant
inter-company balances and transactions have been eliminated.  In the opinion of
management,   all  adjustments  (consisting  of  normal  recurring  adjustments)
considered  necessary for a fair  presentation  have been included.  They do not
include all of the  information and  disclosures  generally  required for annual
financial  statements.  These  interim  operating  results  are not  necessarily
indicative  of the  results  that may be  expected  for the entire  year.  These
interim consolidated financial statements should be read in conjunction with the
December 31, 1995 audited consolidated financial statements and notes thereto.

2.  REAL ESTATE INVESTMENTS

            As of September  30, 1996 and December 31, 1995,  the Company  owned
directly eighteen apartment communities (2,683 units) located in Arizona, Texas,
and New Mexico which consisted of the following (in thousands):

                                                       1996            1995
                                                     -------         -------
            Land                                     $15,514         $15,514
            Building and improvements                 58,067          57,214
            Accumulated depreciation                  (6,759)         (4,687)
            Restricted cash and
                deferred loan fees                     4,035           3,297
                                                     -------        --------
            Apartments, net                          $70,857         $71,338
                                                     =======        ========

            In  March  1996,  the  Company  began  construction  of  a  356-unit
apartment community, Finisterra Apartments, in Tempe, Arizona. The total cost is
estimated  to  be  approximately  $21  million.   The  Company  has  obtained  a
$15,350,000 construction loan of which $247,000 was outstanding at September 30,
1996.  As of  September  30,  1996,  the  Company  had  invested  $9,968,000  in
construction in progress.

            In addition,  the Company  owned six apartment  communities  (1,441,
units)  located in Arizona  through joint ventures with a pension plan affiliate
of Citicorp.  The Company is a 15% equity  partner and the  managing  partner or
managing member of the joint ventures. The
                                        6
<PAGE>
                           ASR INVESTMENTS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


Company is  entitled  to receive  15%-51%  of the total  profits  and cash flows
depending on the  financial  performance  of the joint  ventures.  The condensed
combined  financial  statements  of  the  joint  ventures  are  as  follows  (in
thousands):

                        Condensed Combined Balance Sheets
                 As of September 30, 1996 and December 31, 1995

                                                           1996           1995
                                                           ----           ----
Real estate, at cost net
    of depreciation                                      $53,734         $54,489
Cash and other assets                                      2,019           2,133
                                                         -------         -------
 Total Assets                                            $55,753         $56,622
                                                         =======         =======

Notes payable                                            $35,938         $35,754
Other liabilities                                            787             575
                                                         -------         -------
    Total Liabilities                                     36,725          36,329
                                                         -------         -------
Equity
   The Company                                             2,853           3,043
   Joint venture partner                                  16,175          17,250
                                                         -------         -------
   Total Equity                                           19,028          20,293
                                                         -------         -------
Total Liabilities and Equity                             $55,753         $56,622
                                                         =======         =======


                   Condensed Combined Statement of Operations
              For the Quarters and Nine Months Ended September 30,

                                          Quarters              Nine Months
                                          --------              -----------
                                      1996        1995        1996       1995
                                      ----        -----       ----       ----

Rental and other income             $ 2,308     $ 2,060     $ 6,872     $ 4,798
Operating expenses                     (938)     (1,007)     (2,803)     (2,152)
Depreciation                           (493)       (463)     (1,453)       (975)
Interest expense                       (721)       (692)     (2,157)     (1,547)
                                    -------     -------     -------     -------
Net Income (Loss)                   $   156     $  (102)    $   459     $   124
                                    =======     =======     =======     =======

                                        7
<PAGE>
                           ASR INVESTMENTS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


                                           Quarters         Nine Months
                                         -----------        -----------
                                         1996   1995        1996   1995
                                         ----   ----        ----   ----
Allocation of net income
   The Company                           $ 23   $(15)       $ 69   $ 19
   Joint venture partner                  133    (87)        390    105



3.  MORTGAGE ASSETS

            The mortgage assets entitle the Company to receive the excess of the
cash flows on pools of  mortgage  instruments  over the  required  payments on a
series of structured  financing that they secure. The Company also has the right
to cause  the early  redemption  of the  structured  financing  under  specified
conditions;  in such  event,  the  mortgage  instruments  are  sold  and the net
proceeds after the  redemption of the  structured  financing are remitted to the
Company.  In some cases, the Company sells the mortgage asset that is redeemable
in the foreseeable  future.  Redemption and sale transactions occur from time to
time as  specified  conditions  are met rather  than on a monthly  or  quarterly
basis; therefore,  the amount of net proceeds and the income from the redemption
transactions fluctuates significantly between periods.

            During the third  quarter of 1996,  the  Company  sold six  mortgage
assets and  realized  redemption  income of  $2,738,000  and total  proceeds  of
$5,750,000.  For the nine months ended September 30, 1996, the Company  realized
redemption  income of $7,725,000 and received  proceeds of $11,750,000  from the
sale and redemption of seven mortgage assets.  In October 1996, the Company sold
or redeemed two mortgage  assets for total  proceeds of $1,825,000 and estimated
income of  $1,700,000  which will be recorded in the fourth  quarter of 1996. At
September  30, 1996 and  December 31, 1995,  the  prospective  yield on mortgage
assets (excluding the mortgage assets sold in October) was 38% and 29% .
                                        8
<PAGE>
                           ASR INVESTMENTS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


4.  NOTES PAYABLE

            At  September  30,  1996  and  December  31,  1995,   the  Company's
short-term  borrowing was secured by mortgage assets with a total carrying value
of $3,340,000 and $7,639,000, respectively.

            As  discussed  in Note 2, the  Company  has  obtained a  $15,350,000
construction  loan to  finance  the  construction  of its  Finisterra  apartment
community.  The loan bears interest at 1% per annum above the bank's prime rate.
At September 30, 1996, the amount outstanding was $247,000.


5.  RELATED PARTY TRANSACTIONS

            Subject to the supervision of the Company's Board of Directors, Pima
Mortgage L.P. (the "Manager"), manages the day-to-day  operations of the Company
pursuant to a management  agreement that has a current term through December 31,
1996.  For the quarters and nine months ended  September 30, 1996 and 1995,  the
management fees were as follows (in thousands):

                                          Quarters          Nine Months
                                          --------          -----------
                                         1996   1995        1996   1995
                                         ----   ----        ----   ----
Base management fee                      $ 71   $ 97        $279   $283
Administrative fee                       $ 46   $ 52        $151   $167

            The Company  has a property  management  agreement  with Pima Realty
Advisors,  Inc. (the "Property Manager"),  an affiliate of the Manager, for each
of its apartment  communities.  Under the property  management  agreements,  the
Property Manager provides the customary property management services at its cost
without profit or distributions to its owners,  subject to the limitation of the
prevailing  management fee rates for similar properties in the market. The costs
are  allocated to the Company  monthly based on the ratio of the number of units
owned by the  Company  relative  to the total  apartment  units  managed  by the
Property  Manager.  The costs allocated to the Company for the nine months ended
September 30, 1996 and 1995 were $329,800 and $304,200, respectively, which were
equal to approximately 3.0% and 2.9%, respectively,  of rental and other income.
For the  quarters  ended  September  30, 1996 and 1995,  cost  allocated  to the
Company were $121,900 and $102,200, respectively.
                                        9
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT 'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


General

            ASR  Investments  Corporation  (the  "Company")  is  a  real  estate
investment trust engaged primarily in the acquisition and operation of apartment
communities  in the  southwestern  United  States.  In January 1994, the Company
acquired  seventeen  apartment  communities  (2,461  units)  located  in Tucson,
Arizona,  Houston,  Texas,  and Albuquerque,  New Mexico.  In February 1995, the
Company acquired a 222-unit apartment community in Mesa, Arizona. In March 1996,
the Company  began  construction  of a 356-unit  luxury  apartment  community in
Tempe,  Arizona.  Total  project  costs are  estimated to be  approximately  $21
million and the Company has obtained a construction loan of $15.4 million.

            In addition to wholly owned apartments communities,  the Company has
acquired six apartment communities (1,441 units) in Phoenix and Tucson,  Arizona
through joint ventures with a pension plan affiliate of Citicorp. The Company is
a 15% equity  partner  and  managing  member of the joint  ventures  and Company
receives  15%-51% of the net profits and cash flow depending on the  performance
of the joint ventures.

            The Company  continues to own mortgage assets (all acquired prior to
1993) to  generate  cash  flows  for  apartment  acquisitions  and  development,
operations,  payment of dividends and other corporate  purposes.  These mortgage
assets  entitle  the  Company to receive the excess of the cash flow on pools of
mortgage  instruments  over the  required  payments  on a series  of  structured
financing  that they secure.  The Company also has the option to cause the early
redemption of the structured financing at par after specified conditions are met
(generally when the structured financing is below a specified balance or after a
specified  date). In such event,  the mortgage  instruments are sold and the net
proceeds after the  redemption of the  structured  financing are remitted to the
Company.  In some cases,  the Company  decides to sell a mortgage  asset that is
expected to be redeemable in the foreseeable future.  Mortgage asset redemptions
and sales  accelerate  the cash flows and increase the present  value but reduce
the cash flows and income in future periods.  Redemption and sales  transactions
occur from time to time as specified conditions are met rather than on a monthly
or quarterly  basis and the net proceeds are affected by the market price of the
mortgage  instruments.  Thus, the cash flows and income from redemption and sale
transactions fluctuate significantly between periods.
                                       10
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT 'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


Results of Operations

Comparison of Quarters Ended September 30, 1996 and 1995

            Real  Estate  Operations  - Rental  and  other  income  for the 1996
quarter  increased by $241,000,  or 7%. The increase is due to $203,000 from the
wholly owned  properties  and $38,000  from the joint  venture  properties  both
increases  resulting from improved  occupancy rates. The average  occupancy rate
for the 1996 quarter for the wholly owned properties  increased from 88% in 1995
to 93% in 1996. This higher rate is attributable primarily to an increase in the
Tucson  market from 82.3% to 93.7% and an  increase  in the Houston  market from
90.6% to 93.7%.  The Albuquerque and Phoenix  communities  maintained  occupancy
rates  between 90% and 91% in both  years.  The Company  believes  the  improved
occupancy rates are due to improved economic conditions in the Company's markets
as well as  aggressive  marketing  strategies  used by the  property  management
company.  Operating and maintenance  expenses increased by 2.7% due to increases
in administration expenses and marketing expenses.

            Mortgage  Assets -  Prospective  yield income  decreased  due to the
decrease  in  the  mortgage  asset  balance  as a  result  of  amortization  and
redemptions.  The average  mortgage  asset balance was  $6,450,000  for the 1996
quarter compared with $14,060,000 for the 1995 quarter.  The average prospective
yield for the  quarter  was 39% in 1996  compared  to 26% in 1995.  Income  from
redemptions  and sales  increased by $2,265,000 as a result of the redemption of
six mortgage asset in the quarter 1996 for income of $2,738,000  compared to the
redemptions of two mortgage assets in the quarter 1995 for income of $473,000.

            Operating  Expenses  and Other  Income - Interest  and other  income
increased due to interest earned on the Company's average cash balance which was
higher during the 1996 quarter compared to the 1995 quarter.  Operating expenses
increased  in 1996 due to an  accrual  of  employee  stock  appreciation  rights
expenses  of  $507,000 as a result of  increases  in the price of the  Company's
common  stock and  $400,000  for  consulting  and legal fees  relating to future
acquisitions.  The increases were mitigated by lower administrative  expenses of
$95,000 due  primarily  to lower costs for  officer  and  director's  insurance.
Interest expense on real estate mortgages decreased in 1996 compared to 1995 due
to lower principal balances resulting from monthly payments.
                                       11
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT 'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


Comparison of Nine Months Ended September 30, 1996 and 1995

            Real Estate Operations - Rental and other income for the 1996 period
increased by $448,000,  or 4.39%,  due primarily to improved  rental income from
the Company's wholly owned properties.  Rental rate increases  provided $335,000
of the additional  rental income due primarily to the Houston  communities which
had  a 4%  rental  rate  increase  over  the  1995  period.  Improved  occupancy
contributed  $96,000  of the  additional  rental  income,  due  primarily  to an
increase in the Tucson communities's occupancy rate increasing from 89.8% in the
1995 period to 93.1% in the 1996  period.  The  Company  believes  the  improved
occupancy  rate is due to improved  economic  conditions in the Tucson market as
well as aggressive marketing strategies used by the property management company.
Rental  revenue also  increased  due to  approximately  $200,000 from prior rate
increases  becoming  effective  as  leases  are  renewed  or  the  apartment  is
re-leased.  These prior rent increases were experienced  primarily in the Tucson
communities.  The  increases in rental  income were  mitigated by an increase in
rental concession expense of $183,000 primarily  attributable to the Albuquerque
communities.  The increased rental  concessions result from competition from new
apartment communities in their rent up phase. Operating and maintenance expenses
increased  by 4.7% due to the  1995  apartment  acquired  in  February  1995 and
increases in payroll  expenses  and  marketing  expenses.  Real estate taxes and
insurance expenses decreased 4.2% due to an adjustment made in 1995 based on the
actual property tax assessment.  Depreciation expense in 1996 increased 5.9% due
to capital improvements on the apartment communities.

            Mortgage Assets - Prospective  yield income decreased in 1996 due to
the  decrease in the  mortgage  asset  balance as a result of  amortization  and
redemptions.  The average  mortgage  asset balance was  $9,284,000  for the 1996
period compared with $15,559,000 for the 1995 period. The decrease was mitigated
by an increase in the average  prospective  yield from 29% in the 1995 period to
34% in  the  1996  period.  Income  from  redemptions  and  sales  increased  by
$2,798,000 as a result of the sale and  redemption of seven  mortgage  assets in
1996 for income of  $7,725,000  compared  to the  redemptions  and sales of four
mortgage  assets in 1995 for income of  $4,927,000.  Included in the 1995 income
was $2,420,000 from the reversal of an excess yield maintenance  payment accrued
in 1993 on borrowing secured by mortgage assets.

            Operating  Expenses  and  Other  Income -  Operating  expenses  were
$43,000  lower in 1996  than the  comparable  period  in 1995.  The 1996  amount
included an accrual of stock
                                       12
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT 'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


appreciation  rights  expense of $507,000 and an accrual of $400,000 of expenses
related to future  acquisition  costs.  The 1995  amount  included an accrual of
stock appreciation expense of $705,000 and also included  approximately $100,000
of  costs  related  to the  reverse  stock  split in July  1995.  Administrative
expenses for 1996 were also lower by  approximately  $145,000  primarily  due to
lower costs for officer and  director's  insurance.  Interest  and other  income
decreased as the 1995 amount  included a gain of $311,000  from the early payoff
of a note  payable  and a gain of $180,000  from the sale of an asset.  Interest
expense on real  estate  mortgages  decreased  due to lower  principal  balances
resulting from monthly payments. Other interest expense decreased as the Company
paid off the unsecured real estate note payable in April 1995.


Liquidity, Capital Resources and Commitments

            Cash provided by operations for the nine months ended  September 30,
1996 was  $10,680,000  compared with $6,277,000 for the same period in 1995. The
increase  was  due to (i) an  increase  in net  income  of  $1,814,000,  (ii) an
increase in non-cash charge for  depreciation  and  amortization of $367,000 and
(iii) the 1995 net  income  included  a non-cash  credit of  $2,420,000  for the
reversal of accrued  excess  yield  maintenance  payment on notes  payable.  The
increase was mitigated by a decrease in 1996 in non-cash accrual of $198,000.

            Cash  used  in  investing  activities  for  the  nine  months  ended
September 30, 1996 was $2,394,000  compared with  $3,592,000 for the same period
in 1995.  The decrease was due to (i) a decrease of $6,142,000 in investments in
apartments as the Company purchased an apartment  community in February 1995 and
did not make any purchases in 1996,  (ii) a decrease of $1,723,000 in investment
in joint ventures as the Company made  investments in new joint ventures in 1995
to  acquire  two  apartment  communities  and made no  investment  in new  joint
ventures in 1996 and (iii) an increase  of $189,000 in the  amortization  in the
carrying value of mortgage assets. The decrease was mitigated by (i) an increase
of $3,208,000 in expenditures for construction of the Finisterra  Apartments and
other  land  development,  (ii)  a  decrease  of  $3,326,000  in  proceeds  from
dispositions  of other real estate  assets and (iii) an increase in other assets
of $322,000.

            Cash  used  in  financing  activities  for  the  nine  months  ended
September 30, 1996 was $4,790,000  compared with  $4,524,000 for the same period
in 1995. The increase was  principally  due to (i) a decrease in the issuance of
real estate notes payable of $6,895,000 as
                                       13
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT 'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


the Company did not make any purchases in 1996, (ii) a decrease of $3,034,000 in
notes payable  secured by mortgage  assets and short-term  borrowing and (iii) a
decrease of $22,000 in the exercise of stock options.  The increase in cash used
in  financing  activities  was  mitigated  by (i) an increase  of $247,000  from
proceeds from the Finisterra  Apartments  construction  loan, (ii) a decrease of
$7,508,000 in the repayment of real estate notes payable as the Company  prepaid
the unsecured real estate notes in 1995, (iii) accrued construction cost payable
of $1,384,000 for the Finisterra Apartment community for September that was paid
in October and (iv) an increase in other  liabilities of $546,000  primarily due
to accrued 1996 legal and consulting fees related to future acquisitions.

            The Company  continues  to realize  substantial  cash flows from its
mortgage  assets.  A majority of the cash flows is generated from redemptions of
the  mortgage  assets.  The  Company  may also  sell a  mortgage  asset  that is
redeemable in the foreseeable  future.  The redemptions or sales  accelerate the
mortgage asset cash flows and increase the present value.  During the first nine
months of 1996, the mortgage  assets  generated  total cash flow of $16,229,000,
including  $11,750,000 from the redemption of seven mortgage assets. The Company
used a portion of the proceeds to reduce short-term borrowing by $2,541,000.  In
addition,  the Company sold or redeemed two mortgage  assets in October 1996 for
total proceeds of $1,825,000.

            The Company has  prepared  the  following  estimates  of future cash
flows from the  mortgage  assets.  Cases 1, 2 and 3 assume  that  except for the
early  redemptions or sales of the mortgage asset in October as described in the
preceding  paragraph,  there would be no further early  redemptions  or sales of
mortgage assets. The assumed interest rate and mortgage prepayment rates in Case
2 are the  approximate  interest rate and forecasts of prepayment  rates made by
market  participants  as  of  September  30,  1996.  Mortgage  prepayment  rates
represent the average annual prepayment rate assumed for the underlying mortgage
instruments  The estimates in Case 4 have been prepared  using the same interest
rate and mortgage  prepayment rates as Case 2 except that each mortgage asset is
assumed to be redeemed at the first available date and the underlying  mortgages
are sold at the September 30, 1996 prices.
                                       14
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT 'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


 (Dollars in thousands):
                                     Case 1     Case 2     Case 3     Case 4
                                    -------    -------    -------    -------

Assumed one month LIBOR                 3.5%       5.5%       7.5%       5.5%

Assumed annual mortgage
  prepayments                         19.63%     12.45%      8.45%     12.45%

Average sale price of
   mortgages (% of par)                                               106.92%


Estimated cash flows
1996 (fourth quarter)               $ 2,729    $ 2,660    $ 2,590    $ 2,660
1997                                  3,389      2,874      2,354      8,815
1998                                  2,440      2,240      1,914        868
1999                                  1,732      1,740      1,612      3,995
2000                                  1,232      1,386      1,388     17,847
2001-2020                             5,378     10,865     18,353        967
                                    -------    -------    -------    -------
            Total                   $16,900    $21,765    $28,211    $35,152
                                    =======    =======    =======    =======


            There can be no assurance  that the actual  interest and  prepayment
rates will be as assumed or that the  prices of the  mortgage  instruments  will
remain at the assumed levels.  Proceeds from redemptions are highly dependent on
prices available upon sale of the mortgages as well as the timing of meeting the
conditions for redemption  (generally reduction of the structured financing to a
specified  balance or a specified  date). As an example,  if the assumed average
price above par for mortgage sales in Case 4 above were to decrease by half (the
average mortgage prices decreases to 103.46%),  the estimated total cash flow in
Case 4 would decline by $12,227,000 of which $2,806,000 would relate to 1997.

            At  September  30,  1996,  the  Company had cash of  $5,917,000.  In
October,  the Company  received  cash  proceeds of  $1,825,000  from the sale or
redemption of two mortgage assets. In addition, the Company will receive funding
from the  Finisterra  apartments  construction  loan for the  costs  paid by the
Company, which amount to approximately
                                       15
<PAGE>
                           ASR INVESTMENTS CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
       For the Quarters and Nine Months Ended September 30, 1996 and 1995


$2,500,000.   The  Company  intends  to  use  such  funds  to  pay  for  capital
improvements   on  existing   apartment   communities,   to  acquire   apartment
communities, and to pay dividends and operating expenses.


Other Information

            Apartment  leases  generally  are  for  terms  of six to 12  months.
Management  believes that such short-term  leases lessen the impact of inflation
as a result of the  ability to adjust  rental  rates to market  levels as leases
expire. To the extent that the inflation rate influences federal monetary policy
and results in rising short-term interest rates or declines in mortgage interest
rates, the income and cash flows from the mortgage assets would be affected.
                                       16

<PAGE>
                           ASR INVESTMENTS CORPORATION
                         QUARTERLY REPORT ON FORM 10-Q
                    For the Quarter Ended September 30, 1996

PART  II

OTHER INFORMATION

Item 1.       Legal Proceedings - None
              -----------------

Item 2.       Changes in Securities - Not applicable
              ---------------------

Item 3.       Defaults Upon Senior Securities - Not applicable
              -------------------------------

Item 4.       Submission of Matters to a Vote of Security Holders - None
              ---------------------------------------------------

Item 5.       Other Information - Not applicable
              -----------------

Item 6        Exhibits and Reports on Form 8-K - None
              --------------------------------

                              ********************

                                   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.

ASR INVESTMENTS CORPORATION

Mary C. Clements                               Joseph C. Chan
-----------------------                        ---------------------
Mary C. Clements                               Joseph C. Chan
Controller                                     Executive Vice President,
November 8, 1996                                        Chief Operating Officer,
                                                        Chief Financial and
                                                        Accounting Officer
                                                        November 8, 1996
                                       17