SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1   


      X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
                    For the Fiscal Year Ended July 31, 1996

                                      OR

        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
            For the transition period from            to

                          Commission File No. 1-7003

                           PROPERTY CAPITAL TRUST
            (Exact name of registrant as specified in its charter)



                    MASSACHUSETTS                          04-2452367
          (State or other jurisdiction of                (I.R.S. Employer
          incorporation or organization)                 Identification No.)


           101 FEDERAL STREET, 4TH FLOOR
               BOSTON, MASSACHUSETTS                            02110-1817
         (Address of principal executive offices)            (Zip Code)

 Registrant's telephone number, including area code:  (617) 737-0100

            Securities registered pursuant to Section 12(b) of  the Act:

                                                           NAME OF EXCHANGE
              TITLE OF EACH CLASS                        ON WHICH REGISTERED

          COMMON SHARES, WITHOUT PAR VALUE              AMERICAN STOCK EXCHANGE
           RIGHTS TO PURCHASE COMMON SHARES             AMERICAN STOCK EXCHANGE


Securities registered pursuant to Section 12(g) of the Act: NONE

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    .

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not  be  contained,  to the
best  of  registrant's knowledge, in definitive proxy or information statements
incorporated  by  reference  in  Part III of this Form 10-K or any amendment to
this Form 10-K.  Yes   X    No    .

As of September 30, 1996, the aggregate  market  value of Common Shares held by
non-affiliates of the registrant was approximately $85,539,000

As of September 30, 1996, there were 9,374,123 Common Shares outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement  to  be  filed  for the
Annual Meeting of Shareholders to be held on December 17, 1996 are incorporated
by reference into Part III as set forth herein.

<PAGE>                            
Page 2

PART I


ITEM 1. BUSINESS


Property  Capital  Trust  (the  "Trust")  is  an  unincorporated business trust
organized  under the laws of the Commonwealth of Massachusetts  pursuant  to  a
Declaration  of  Trust dated June 9, 1969, as amended.  The Trust has qualified
and has elected to  be  taxed  as a real estate investment trust ("REIT") under
Sections 856-860 of the Internal  Revenue  Code  since  1969.   It  intends  to
continue to qualify as a REIT.

The  Trust  currently  operates  under  a  business plan which provides for the
orderly  disposition of the Trust's investments  (the  "Business  Plan").   The
Business Plan  contemplates  the disposition of Owned Properties and Structured
Transactions on a property-by-property  basis, although the Trust will consider
bulk  sales  and  other  opportunities  that  may   arise  which  expedite  the
disposition  process.  At the Trust's Annual Meeting of  Shareholders  held  on
December 15, 1995,  the  Trust's  shareholders  ratified  the Business Plan and
approved certain amendments to the Trust's Declaration of Trust  necessary  for
its  implementation.  The Trust has utilized, and currently intends to continue
to utilize,  net proceeds from the sale of its properties to retire debt and/or
make distributions  to  shareholders to the extent such funds are not needed by
the Trust for its operations.

The progress made by the  Trust  in  implementing  the  Business  Plan has been
greater  than  initially anticipated.   Immediately prior to the implementation
of the Business  Plan,  the Trust owned 27 investments.  During fiscal 1996, 13
properties were sold or otherwise  disposed  of.  The proceeds from these sales
and approximately $5,000,000 in cash received  by  the Trust from sales made at
the end of fiscal 1995, were used to retire all of the  Trust's  10% and 9 3/4%
Convertible Subordinated Debentures ($31,671,000 principal amount),  to  prepay
$3,000,000  of  the first mortgage loan on the Trust's Loehmanns Fashion Island
property in Aventura,  Florida,  and to pay special dividends aggregating $2.75
per share ($25,403,000).  Since the  end of fiscal 1996, the Trust has disposed
of two additional properties.

In implementing the Business Plan, the  Trustees  have  followed  two different
approaches  with  respect  to  the  disposition  process,  one relating to  the
Structured Transactions (land leasebacks and/or mortgage loans)  and  the other
relating to the Owned Properties.  With respect to the Structured Transactions,
the  Trust  has  commenced  discussions  with  many  of  its lessees/mortgagors
regarding repurchasing or repaying the Trust's investments.   Since  management
is intent on realizing full value for the Structured Transactions, negotiations
with  some of these logical purchasers are likely to extend over a considerable
period of time.  With respect to the disposition of Owned Properties, the Trust
has used  brokers  to  handle  most  sales.  The Trust bases its decision as to
timing of sales on such factors as the  physical  condition, occupancy and cash
flow status of each property and prevailing market conditions.  Once a decision
to sell an Owned Property is made, the process of broker  selection, marketing,
contract negotiations and closing normally takes between six and nine months.

No  properties have been, and it is not expected that any properties  will  be,
sold  to  persons deemed to be affiliates of the Trust.  Each offer to purchase
Trust assets  must  be  acted  upon  by  the  Board of Trustees, which Board is
currently comprised of seven Trustees, five of  whom  are unaffiliated with the
Trust.  Effective as of the Trust's 1996 Annual Meeting  of Shareholders, it is
expected that the Board of Trustees will be reduced to six  Trustees,  four  of
whom will be unaffiliated with the Trust.

Although  no assurances can be given as to the time required to sell all of the
Trust's investments  or  the  amount of net proceeds that will be realized from
the sale thereof, management estimated,  on  August  23, 1996, that the bulk of
the Trust's remaining investments will be sold by the  end  of  fiscal 1998 and
that the amount of future distributions its shareholders will receive  from the
disposition  of  the Trust's investments will be approximately $9.25 per share.
When  added  to  the   $2.75  per  share  of  disposition  proceeds  previously
distributed, this results  in  an  increase  in  management's estimate of total
distributions to approximately $12.00 per share from  the  approximately $10.00
per  share  set  forth  in  the  Trust's  1995  Proxy  Statement.  See  Item  7
"Management's  Discussion and Analysis of Financial Condition  and  Results  of
Operations--Special Note on Forward-Looking Statements."

Distributions to  shareholders will be made periodically at such times and upon
such terms as determined  by  the  Trustees.   Following the sale of all of the
Trust's  investments  and  satisfaction  by  the  Trust,   through  payment  or
establishment of reserves, of all of its liabilities and obligations, the Trust
will  distribute  to its shareholders the balance of available  proceeds.   The
Trustees may from time  to  time  fix a date in respect of any distribution for
the  determination of the persons to  be  treated  as  shareholders  of  record
entitled  to  receive  such distributions.  Shareholders will be advised at the
time of any such distribution  as  to  the  details  of  the  mechanics  of the
distribution  and  the  means  by which shares will be canceled once all of the
Trust's assets have been distributed.

Before  the  final  distributions  of  the  Trust's  remaining  assets  to  the
shareholders,  the Common Shares will  continue  to  be  transferable  and  the
Trust's shareholders  will  continue  to  have  such  rights  as applicable law
confers upon shareholders.  It is the intention of the Trustees to maintain the
listing of the Common Shares on the American Stock Exchange until  such time as
the American Stock Exchange  causes  the  Common  Shares  to be delisted.  Once
either  all  of  the  Trust's  assets  have  been sold and the net proceeds are
distributed to the Trust's

<PAGE>                            
Page 3


ITEM 1. BUSINESS (continued)


shareholders,  the legal formalities of terminating the Trust will be completed
in  accordance  with   the   terms   of  the  Declaration  of  Trust  and  with
Massachusetts' laws.

REAL ESTATE INVESTMENTS

The Trust's real estate portfolio is comprised  primarily of equity investments
in office buildings, shopping centers, apartment  complexes  and hotels located
throughout  the  United  States.   The  Trust's  investments  were either  made
directly  (including  through  wholly  owned  subsidiaries) or through  limited
partnerships   (classified   as   and   referred  to  herein   as   "Investment
Partnerships") in which the Trust or its  subsidiary  is  general  partner  and
other institutional investors are the limited partners.

Investments  in  land  leasebacks  and/or  mortgage  loans  are  classified  as
Structured Transactions.  Investments representing ownership of improved income
producing  properties  are  classified  as  Owned Properties.  Owned Properties
involve  operation  and  management  responsibility  with  property  management
delegated  to  independent  contractors.   Owned  Properties  which  have  been
approved for sale by the Trustees  (and, if applicable, the limited partners of
an Investment Partnership) and are being  marketed  for  sale are classified as
Assets Held for Sale.  For financial reporting purposes, the  Trust categorizes
its investments into four groups, Owned Properties held directly  by  the Trust
(which  includes  investments  held  by  wholly owned subsidiaries), Structured
Transactions held directly by the Trust, Assets  Held  for Sale directly by the
Trust (which currently consist of Owned Properties) and interests in Investment
Partnerships (which currently hold Owned Properties and Assets Held for Sale).

At July 31, 1996, the portfolio of real estate investments  included four Owned
Properties,  consisting  of three held directly by the Trust, or  wholly  owned
subsidiaries  and one held  by  an  Investment  Partnership,  seven  Structured
Transactions held  directly by the Trust and three Assets Held for Sale, one of
which is classified as an Asset Held for Sale directly by the Trust (previously
classified as an Owned  Property  held  directly by the Trust) and two of which
are classified as Assets Held for Sale in  Investment  Partnerships (previously
classified as Owned Properties held in Investment Partnerships).  Subsequent to
the end of fiscal 1996 the two Assets Held for Sale in Investment  Partnerships
were sold.

For  a  description  of  the  Trust's  individual  investments and developments
relating to such investments during the year, see Item 2, Item 7, Note 2 of the
Notes  to  Consolidated  Financial Statements of the Trust  and  Schedule  III,
Schedule IV and Exhibit A included in Item 14 hereof.

COMPETITION, REGULATION AND OTHER FACTORS

The success of the Trust depends,  among  other  factors, upon general economic
conditions  and trends, including real estate and population  trends,  interest
rates, government regulations and legislation, income tax laws and zoning laws.
The success of  the  Business  Plan  depends  on  the  Trust's  ability to sell
investments  at  prices  that reflect the underlying value of such investments.
The Trust does not consider its real estate business to be seasonal in nature.

The Trust's real estate investments  are  located in markets in which they face
significant  competition  for  the  revenues  they   generate.    The   Trust's
investments,  particularly  the  office  buildings  and  hotels, are located in
markets  which  have  a  substantial  supply of available space,  resulting  in
significant competition on the basis of  price and amenities.  The Trust's real
estate investments also compete with other  properties  that  are being offered
for sale.  The market for Owned Properties is competitive and the  interest  of
potential  buyers  can  be   impacted  by  various  factors  including property
performance,  physical  condition,  neighborhood  characteristics  and  trends,
interest rates, price and general economic conditions.  The Trust has typically
sold its Structured Transactions to its lessees either  in  conjunction  with a
project  refinancing  or  sale.   In  addition to the factors noted above, such
sales are also dependent on the willingness  of the lessee to consummate such a
transaction.

TENANTS

Spaces in the Owned Properties are leased to 1,033  tenants including 56 retail
tenants, 59 office tenants and 921 apartment tenants.   The  lease  terms range
from tenancies-at-will to 20 years.

PROPERTY MANAGEMENT

All Owned Properties are managed by professional property management firms that
are  independent  of  the  Trust and report directly to the Trust's management.
Property management fees range  from  2.25% to 5% of annual gross receipts from
the operations of the properties and each  property management agreement may be
terminated upon 30 days' notice.

<PAGE>                            
Page 4

ITEM 1.  BUSINESS (continued)

INSURANCE


The Owned Properties and Assets Held for Sale,  which  include  properties that
are  owned  directly  by the Trust (or its subsidiaries) and by the  Investment
Partnerships,  have  commercial  general  liability  coverage  with  limits  of
$76,000,000 per occurrence  and  $89,000,000  in  the  aggregate except for PCA
Southwest  Associates  Limited Partnership which is subject  to  a  $77,000,000
aggregate limit.   This  coverage protects the Trust and, where applicable, the
Investment Partnerships against  liability  claims  as  well  as  the  costs of
defense.   Property insurance on the Owned Properties and Assets Held for  Sale
is maintained  on  a  replacement  value basis covering both the cost of direct
physical  damage  and  the  loss  of rental  income,  subject  to  a  limit  of
$50,000,000 at any one location except  Loehmann's  Fashion  Island,  which  is
subject  to  a  $20,000,000 limit, and the apartments located in Houston, which
are subject to a $24,816,600 limit.  Separate flood and earthquake insurance is
provided with an annual aggregate limit of $10,000,000 for each peril, with the
exception of the  Houston  apartments which are subject to a $17,500,000 limit,
with  a  $1,000,000  per  occurrence  deductible  (for  flood  coverage  only).
Liability and property insurance  for Structured Transactions is carried by the
Trust's lessees/mortgagors.

At  the  end  of  fiscal 1996, two Investment  Partnerships,  Property  Capital
Midwest Associates,  L.P.  ("Midwest")  and  PCA Canyon View Associates Limited
Partnership ("Canyon View"),  each held, as its  only investment, an Asset Held
for Sale which was sold subsequent to the end of fiscal 1996.  Additionally, at
July 31, 1996, PCA Southwest Associates Limited Partnership ("Southwest") held,
as its only investment, an Owned Property.  The Trust,  as  general partner, is
liable for all obligations of and claims made against Midwest  and  Canyon View
beyond the net worth of such partnerships and, in the case of claims covered by
the Investment Partnership's liability insurance, the amount of such insurance.
The  Trust  has  sought to obviate such liability with respect to Southwest  by
transferring its general partnership interest to a limited partnership of which
a wholly owned subsidiary  of the Trust is the general partner and the Trust is
the limited partner.

THE ADVISOR; INTERNALIZATION OF MANAGEMENT

Effective August 1, 1992, the  Trust internalized the investment and day-to-day
administrative services previously  performed by its former investment advisor,
Property Capital Advisors, Inc. (the  "Advisor"),  under  its advisory contract
with the Trust (the "Advisory Contract") which expired on July 31, 1992 and was
not renewed.  No consideration was paid to the Advisor in connection  with  the
expiration   and   non-renewal   of  the  Advisory  Contract.   For  additional
information  relating  to the Advisory  Contract  and  the  internalization  of
management, see Note 6 of the Notes to Consolidated Financial Statements of the
Trust.

GOVERNMENT REGULATIONS

A number of jurisdictions  have  laws and regulations relating to the ownership
of real estate, such as local building  and  similar codes.  From time to time,
capital expenditures at Owned Properties may be required to comply with changes
in  these laws.  When Canyon View took title to  its  Phase  II  investment  in
August 1995, it voluntarily commenced a program to correct certain construction
deficiencies  and  make repairs to the exterior siding at a cost of $1,050,000.
This property was sold  by  the Investment Partnership subsequent to the end of
fiscal 1996.

Under various Federal, state,  and  local  laws,  ordinances and regulations, a
current or previous owner or operator of real estate  may  be  liable  for  the
costs  of  removal  or  remediation  of  certain  hazardous or toxic substances
released  on,  under  or  in  its  property.   The  costs of  such  removal  or
remediation can be substantial.  Such laws often impose  such liability without
regard  to whether the owner or operator knew of, or was responsible  for,  the
release or  presence  of  such  hazardous or toxic substances.  The presence of
such substances, or the failure to  remediate  such  substances  properly,  may
adversely  affect  the  owner's ability to sell or lease such real estate or to
borrow using such property  as  collateral.   Management  is  not  aware of any
material violation of applicable environmental requirements with respect to any
of  its  real  estate  investments, nor does it contemplate having to make  any
material expenditures in order to comply with any current environmental laws or
regulations.

CUSTOMERS

As of July 31, 1996, the  Trust's most significant relationship with any single
third-party owner of real estate  was with the National Corporation for Housing
Partnerships ("NHP") which, through  affiliates, is the lessee/mortgagor in two
of the Trust's apartment investments.   The  Trust's  investments  consist of a
$5,400,000 land leaseback in Sandpiper Cove apartments and investments totaling
$9,770,000  in  Elm  Creek  apartments  (a  $2,230,000  land  leaseback  and  a
$7,540,000   leasehold   mortgage   loan).   These  investments  accounted  for
approximately 14% of the Trust's real  estate portfolio as of July 31, 1996 and
approximately 7% of the Trust's total revenues  from  its real estate portfolio
during fiscal 1996.  Neither NHP nor any other lessee or borrower is affiliated
with the Trust or its Trustees.


<PAGE>                           
Page 5



ITEM 1.  BUSINESS (continued)

ANTICIPATED CAPITAL EXPENDITURES

In accordance with the Business Plan, no new acquisitions  of  property will be
made.    The  Owned  Properties  will  continue  to  be  managed   
to maximize performance and values. For fiscal 1997 the aggregate amount of 
anticipated capital expenditures at Owned Properties held directly by the Trust
and Assets Held for Sale directly by the Trust is $4,050,000, primarily for 
tenant improvements and leasing commissions. The funds necessary for  capital
expenditures  are anticipated to  be  available  from  cash  flow  provided by
operations and proceeds from the sale of properties.

Additionally, the  Trust's  share  of  anticipated tenant improvements, leasing
commissions and other capital expenditures  at Owned Properties and Assets Held
for Sale in Investment Partnerships is approximately $100,000.  These funds are
anticipated to be available from the  Investment Partnerships' cash flows.

BORROWINGS

At July 31, 1996, the Trust had $36,889,000 of debt outstanding as follows:

                                      PRINCIPAL
                                AMOUNT         INTEREST RATE          MATURITY

Mortgage Notes Payable
  Loehmann's Fashion Island  $ 18,732,000          7.97%{(1)}        July 1998
  One Park West                 9,727,000          9.50%             June 2000
  Park Place                    8,430,000          5.65%              May 2008
                             ------------
                             $ 36,889,000
                             ============

{(1)} Rate is fixed until December 1996; see below for further information.

For additional information, see Item 7, "Management's  Discussion  and Analysis
of Financial Condition and Results of Operations", and Note 3 of the  Notes  to
Consolidated Financial Statements of the Trust.


ITEM 2. PROPERTIES


The  Trust's Real Estate Investments (net of accumulated depreciation)  consist
of the following:

                                                          JULY 31,
                                         1996          1995          1994

Owned   Properties   held
 directly by the Trust               $ 56,810,000   $ 83,985,000  $105,295,000
Structured Transactions  held 
 directly by the Trust
   Land leasebacks                    14,180,000      17,140,000    17,140,000
   Mortgage loans                     14,020,000      15,431,000    15,441,000
Investment Partnerships*               9,600,000      48,299,000    51,998,000
                                      ----------     -----------   -----------
                                      94,610,000     164,855,000   189,874,000
Allowance for possible investment 
 losses                               (4,636,000)    (14,077,000)  (17,413,000)
                                      ----------      ----------    ----------
                                      89,974,000     150,778,000   172,461,000
Asset Held for Sale directly by 
 the Trust                            16,938,000      10,185,000             -
                                      ----------      ----------   -----------
                                    $106,912,000    $160,963,000  $172,461,000
                                    ============    ============  ============

  *  Includes,  Canyon  View  II  and Plaza  West  Retail Center,  which  were
classified  as  Assets  Held  for  Sale  in  Investment Partnerships in fiscal 
1996, and which were both sold subsequent to July 31, 1996.

<PAGE>                           
Page 6



ITEM 2.  PROPERTIES (continued)

Many  of  the  investments  in the portfolio  are  subject  to  first  mortgage
financing, which aggregated $111,420,000 as of July 31, 1996.  Included in this
amount is $27,162,000 of debt  on  two of the Owned Properties held directly by
the Trust, $9,727,000 of debt on the  Asset Held for Sale directly by the Trust
and $10,314,000 of debt on an Owned Property held in an Investment Partnership.
The balance represents mortgage debt on  Structured  Transactions  which is not
presented  as  a  liability  in  the  Trust's financial statements because  the
obligation to pay such debt is that of  the Trust's lessees/mortgagors.  All of
this indebtedness, with the exception of  $12,000,000  of  debt  
on  Loehmann's  Fashion  Island, is  non-recourse to the Trust.  For additional
information,  see Note  3 of the   Notes  to  Consolidated Financial Statements
of the Trust and Schedule III and Exhibit A included in Item 14 hereof.

As of July 31, 1996, the Trust's  Real  Estate  Investments (net of accumulated
depreciation  and  before the allowance for possible  investment  losses)  were
diversified by type of property as follows:

                                   NUMBER OF     INVESTMENT          % OF
TYPE OF PROPERTY                   PROPERTIES      AMOUNT            TOTAL

Shopping Centers{(1)}                  4          $47,127,000         42%
Office Buildings                       3           37,591,000         34
Apartments{(2)}                        5           18,514,000         17
Hotels                                 2            8,316,000          7
                                      --       --------------         --
                                      14        $ 111,548,000        100%
                                      ==       ==============        ====

As  of  July  31, 1996, the Trust's Real Estate Investments (net of accumulated
depreciation and  before  the  allowance  for  possible investment losses) were
diversified by geographic region as follows:

                                    NUMBER OF       INVESTMENT        % OF
GEOGRAPHIC REGION                   PROPERTIES        AMOUNT          TOTAL

Midwest{(1)}                            6          $45,395,000         41%
South                                   3           42,865,000         38
East                                    1           16,938,000         15
West{(2)}                               4            6,350,000          6
                                       --        -------------        ---
                                       14        $ 111,548,000        100%
                                       ==        =============        ===

{(1)} Includes Plaza West Retail Center which was sold subsequent to year-end.
{(2)} Includes Canyon View II which was sold subsequent to year-end.

<PAGE>                            
Page 7

ITEM 2.  PROPERTIES (continued)

The  following  is  a  schedule  of  the  14  properties in which the Trust has
investments at July 31, 1996.

INVESTMENTS HELD DIRECTLY BY THE TRUST

<TABLE>
<CAPTION>
                                                                             Trust's                    Average       Percent
                                                              Year Built/   Carrying    Third Party      Rent per      Leased
                              Location       Property Size     Renovated     Value      Indebtedness     Sq. Ft.      7/31/96
------------------------------------------------------------------------------------------------------------------------------

OWNED PROPERTIES HELD DIRECTLY BY THE TRUST
<S>                      <C>               <C>             <C>           <C>            <C>           <C>            <C>
OFFICE
Citibank Office Plaza      Schaumburg, IL   105,400 sq.ft.       1978      $  9,452,000          -       $17.67         78%
Park Place                    Clayton, MO    72,000 sq.ft.       1984        11,201,000  $8,430,000       22.44        100%
                                            -------------                   -----------  ----------
                                            177,400 sq.ft.                  $20,653,000  $8,430,000
                                            =============                   ===========  ==========

RETAIL
Loehmann's Fashion Island    Aventura, FL   282,000 SQ.FT.    1980/1994     $36,157,000 $18,732,000       $14.87{(1)}   90%
                                            =============                   ===========  ==========


ASSET HELD FOR SALE DIRECTLY BY THE TRUST

OFFICE
One Park West             Chevy Chase, MD   136,000 SQ.FT.       1980       $16,938,000  $9,727,000       $26.01         99%
                                            =============                   ===========  ==========



</TABLE>

<TABLE>
<CAPTION>
                                                                             Trust's                     Percent
                                                              Year Built/   Carrying    Third Party      Leased
                              Location       Property Size     Renovated     Value      Indebtedness     7/31/96
----------------------------------------------------------------------------------------------------------------

STRUCTURED TRANSACTIONS HELD DIRECTLY BY THE TRUST

<S>                      <C>               <C>             <C>           <C>            <C>           <C>  
RETAIL
Roseburg Valley Mall       Roseburg, OR      237,000 sq.ft.  1980          $3,964,000     $6,685,000       95%
Lakeside Center             Burbank, CA       66,000 sq.ft.  1962/1986        350,000        131,000      100%
                                             -------------                 ----------     ----------
                                             303,000 sq.ft.                $4,314,000     $6,816,000
                                             =============                 ==========     ==========

APARTMENTS


Sandpiper Cove         Boynton Beach, FL        416 units    1989          $5,400,000    $16,418,000      90%
Elm Creek                   Elmhurst, IL        372 units    1988           9,770,000     20,921,000      99%
Northbrook            San Bernardino, CA        190 units    1972             400,000               -     87%
                                                ---------                ------------    -----------
                                                978 units                 $15,570,000    $37,339,000
                                                =========                ============    ===========

HOTELS
City Centre Holiday Inn      Chicago, IL        500 rooms    1976          $2,000,000    $ 9,689,000      72%{(2)}
Cincinnati  Marriott Inn  Cincinnati, OH        350 rooms    1968/1985      6,316,000     10,373,000      68%{(2)}
                                                ---------                  ----------    -----------
                                                850 rooms                  $8,316,000    $20,062,000
                                                =========                  ==========    ===========
</TABLE>





<PAGE>                            
Page 8

ITEM 2.  PROPERTIES (continued)

INVESTMENTS HELD IN INVESTMENT PARTNERSHIPS

<TABLE>
<CAPTION>
                                                                                               Percent    Percent
                                                 Year Built/   Partnership's    Third Party     Owned     Leased
                 Location        Property Size    Renovated       Equity        Indebtedness   by PCT     7/31/96
-------------------------------------------------------------------------------------------------------------------

OWNED PROPERTIES HELD IN INVESTMENT PARTNERSHIPS

APARTMENTS
<S>                <C>              <C>             <C>         <C>            <C>               <C>         <C>
Telegraph Hill        Houston, TX    921 UNITS          1978      $2,877,000       $10,314,000       45.5%     100%



ASSETS HELD FOR SALE IN INVESTMENT PARTNERSHIPS

RETAIL
Plaza West Retail 
 Center{(3)}      Overland Park, KS  98,000 SQ.FT.     1988     $12,488,000               -        53.3%      100%

APARTMENTS


Canyon View II{(3)}   San Ramon, CA    188 UNITS       1988      $6,870,000               -         23.8%      99%


</TABLE>
{(1)} Net rent
{(2)} Average occupancy for fiscal 1996
{(3)} Sold subsequent to July 31, 1996


OWNED PROPERTIES HELD DIRECTLY BY THE TRUST

The carrying value of  the  three  Owned  Properties held directly by the Trust
totals $56,810,000 (51% of Real Estate Investments  before  the  allowance  for
possible  investment  losses).   Two  of  the  properties  are office buildings
located in suburban markets and the third property is a retail  center  located
in  Aventura, Florida.  Each property accounts for more than 5% of either  Real
Estate  Investments  (before  the  allowance for possible investment losses) or
total revenues and is described below.

CITIBANK OFFICE PLAZA - SCHAUMBURG, ILLINOIS

Citibank Office Plaza - Schaumburg is a 105,400 square foot, five story, multi-
tenant office building, built in 1978.   The  property  is  located in suburban
Chicago, Illinois, and is not encumbered by mortgage financing.   At  July  31,
1996,  the  property  was 78% leased.  Two tenants each occupy more than 10% of
the building with spaces  aggregating 30,490 square feet and 11,909 square feet
and lease expiration dates  of  October  31,  2001  (with  an early termination
option  of  October 31, 1998) and December 31, 2003 (with an early  termination
option at December 31, 1999), respectively.

PARK PLACE - CLAYTON, MISSOURI

Park Place is  a  72,000  square foot, five story, multi-tenant office building
with a parking garage, built  in 1984.  The property is located in suburban St.
Louis, Missouri.  At July 31, 1996,  the  property  was  100%  leased  and  was
encumbered  by  a mortgage securing an $8,430,000 Industrial Revenue Bond issue
with an average interest  rate  of  5.65%, due in May 2008.  Three tenants each
occupy more than 10% of the building  with  spaces  aggregating  14,455  square
feet,  12,836 square feet and 9,934 square feet, and lease expiration dates  of
March 31, 2001, May 31, 2000 and October 31, 1997, respectively.

LOEHMANN'S FASHION ISLAND - AVENTURA, FLORIDA

Loehmann's Fashion Island is a 282,000 square foot open mall specialty shopping
center located  in  Aventura,  Dade  County,  Florida,  which underwent a major
redevelopment that was substantially completed in fiscal 1994.  The property is
owned  by  a partnership  whose partners  are  wholly owned subsidiaries of the
Trust.  At  July 31, 1996, the property was 90% leased and was encumbered by an
$18,732,000 mortgage, which is due in July 1998. The loan bears interest at the
lender's floating prime  rate  plus 1/4%.  The borrower, however, has

<PAGE>                            
Page 9

ITEM 2.  PROPERTIES (continued)

the  option, at no cost to it, to fix the rate from time to time at 2.25%  over
comparable  term LIBOR or U.S. Treasury rates, for a specified number of times.
The borrower made such an election as to the then outstanding principal balance
in July 1995,  and  through  December 1996 the interest rate is fixed at 7.97%.
Two tenants each occupy more than  10%  of  the  shopping  center  with  spaces
aggregating 47,813 square feet and 47,220 square feet and lease expirations  of
May 31, 2013 and May 30, 2013, respectively.

For additional information on the Trust's Owned Properties held directly by the
Trust  see  Item 7, Note 2 of the Notes to Consolidated Financial Statements of
the Trust and Schedule III of Item 14.

STRUCTURED TRANSACTIONS HELD DIRECTLY BY THE TRUST

The  carrying   value   of   the  seven  properties  classified  as  Structured
Transactions held directly by  the Trust totals $28,200,000 (25% of Real Estate
Investments before the allowance  for  possible  investment  losses at July 31,
1996).  Three of the Structured Transactions held directly by  the  Trust  each
account  for  more  than  5%  of  either  Real  Estate  Investments (before the
allowance for possible investment losses) or total revenues  and  are described
below.

ELM CREEK APARTMENTS - ELMHURST, ILLINOIS

Elm  Creek  apartments  is  a 372 unit luxury apartment complex built in  1988,
located in suburban Chicago,  Illinois.  At July 31, 1996, the property was 99%
leased.  The Trust's total investment  in  this  property  is $9,770,000 and is
comprised  of  a $2,230,000 land leaseback and a $7,540,000 leasehold  mortgage
loan.  The land  lease, including renewal options, expires in December 2063 and
provides for annual fixed rent of $223,000, payable monthly and overage rent of
40% of increases in  revenues  (as  defined)  of  the  property  over specified
amounts.  In fiscal 1996, the Trust earned overage rent (rent in excess  of the
annual  fixed  payment)  of $90,100.  The lessee has the right to sell the land
and improvements to a third party at any time (subject to the Trust's leasehold
mortgage being repaid in full  at  that  time).   If  the lessee so elects, the
purchase  price for the land shall be determined at that  time  pursuant  to  a
previously agreed upon formula based on the sales price of the project, but not
less than $2,230,000.   The  Trust's  leasehold  mortgage bears interest at the
rate of 10% per annum and matures in November 2018.   No  amortization payments
are  required  under this loan prior to maturity.  The Trust's  investments  in
this property are  subordinated  to  a  third  party  first  mortgage  loan  of
$20,921,000 bearing interest at 9.5% and due in 1997.

CITY CENTRE HOLIDAY INN - CHICAGO, ILLINOIS

City Centre Holiday Inn, located in downtown Chicago, is a 500 room hotel built
in  1976.   In  fiscal  1996, the average occupancy was 72%.  The Trust holds a
$2,000,000 land leaseback interest in this property.  The land lease, including
renewal options, expires  in  December 2052 and provides for fixed monthly rent
payments of $220,000 per annum.   In addition, the Trust is entitled to receive
overage rent annually equal to 1% of  gross  receipts  (as  defined) and 15% of
gross room revenues (as defined) over specified amounts.  In  fiscal  1996, the
overage  rent  earned  by  the  Trust from this investment was $1,613,000.   In
September 1996, the lessee exercised  an  option to repurchase the Trust's land
investment  in  January  1997  for  approximately   $20,000,000.   The  Trust's
investment is subordinated to a third party first mortgage  loan  of $9,689,000
bearing interest at 9.13% and due in 1997.

CINCINNATI MARRIOTT INN - CINCINNATI, OHIO

Cincinnati Marriott Inn is a 350 room hotel built in 1968.  In fiscal 1996, the
average  occupancy  was  68%.   The  Trust  holds  a  $2,000,000 land leaseback
interest in this property and two leasehold mortgage loans totaling $4,316,000.
The  land  lease,  including  renewal  options,  expires in December  2058  and
provides  for fixed annual rental of $240,000, payable  monthly.   The  primary
leasehold mortgage of $3,716,000 bears interest at the rate of 5.65% per annum,
with  amortization   commencing   May   1,   1999   and  maturing  March  2014.
Additionally, during fiscal 1996, the Trust funded a  $600,000 junior leasehold
mortgage  loan to finance the cost of certain capital improvements.   The  loan
bears interest  at  8%  per annum, with amortization commencing May 1, 1999 and
maturing March 2014.  The Trust's investments in this property are subordinated
to a third party first mortgage  loan  of $10,373,000 bearing interest at 9.75%
and due in 1999.

No other Structured Transaction held directly  by  the  Trust constitutes 5% or
more of the Trust's Real Estate Investments (before the allowance  for possible
investment  losses)  or  represents  more  than  5%  of  total  revenues.   For
additional  information  on  the  Structured  Transactions held directly by the
Trust see Item 7, Note 2 of the Notes to Consolidated  Financial  Statements of
the Trust and Schedules III and IV of Item 14.


<PAGE>                            
Page 10




ITEM 2.  PROPERTIES (continued)

INVESTMENT PARTNERSHIPS


The  Trust's  three  Investment  Partnerships  hold one Owned Property and  two
Assets Held for Sale.  The Trust's equity investments in these
three Investment Partnerships total $9,600,000 (9%  of  Real Estate Investments
before the allowance for possible investment losses).  The

Trust's most significant partnership investment accounted  for  more than 5% of
either  Real  Estate  Investments  (before  allowance  for  possible investment
losses) or total revenues, and is discussed below.

PROPERTY CAPITAL MIDWEST ASSOCIATES, L.P.

In the beginning of fiscal 1996, Midwest (in which the Trust has an interest of
53.3%) owned three office properties, which were sold during  the  year,  and a
98,000  square foot shopping center building built in 1988, which is classified
as an Asset  Held  for  Sale at July 31, 1996.  Subsequent to the end of fiscal
1996, the shopping center  was  sold.   All properties in this partnership were
located in Overland Park, Kansas, a suburb  of  Kansas City, Missouri, and were
owned free and clear of mortgage debt.  At July 31,  1996,  the  Trust's equity
investment  in this partnership was $6,656,000.  The shopping center  was  100%
leased at July  31,  1996.  Two tenants occupy 10% or more of the 98,000 square
feet of rentable space  with  spaces  aggregating 20,784 square feet and 13,105
square feet with lease expiration dates  of  January  10, 2001 and February 28,
2001,  respectively.   For  further  information  see  Item  7,   "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

For further information on all of the Investment Partnerships, see Item 7, Note
2 of the Notes to Consolidated Financial Statements of the Trust and Exhibit A.

ASSET HELD FOR SALE DIRECTLY BY THE TRUST

The Trust has one property classified as an Asset Held for Sale directly by the
Trust  at  July  31, 1996, One Park West (15% of Real Estate Investments before
the allowance for possible investment losses), which is discussed below.

ONE PARK WEST - CHEVY CHASE, MARYLAND

One  Park West is a  136,000  square  foot,  five  story,  multi-tenant  office
building  with  underground parking, built in 1980.  The property is located in
suburban Washington,  D.C.  At July 31, 1996, the property was classified as an
Asset Held for Sale directly  by  the  Trust and was under contract to be sold.
Subsequent to the end of fiscal 1996, the  sales  contract  was terminated.  At
July 31, 1996, the property was 99% leased and was encumbered  by  a $9,727,000
first mortgage which bears interest at 9.5%, due June 2000.  Four tenants  each
occupy more than 10% of the building, with spaces of 34,883 square feet, 22,925
square  feet,  15,901  square  feet  and  14,400  square  feet,  and with lease
expiration dates of December 31, 1996 (this tenant is not renewing  its lease),
October  31,  2000, September 30, 1996 (this tenant is not renewing its  lease)
and March 31, 1998  (the  last  with  an  early termination option at March 31,
1997), respectively.

The Owned Properties held directly by the Trust,  Structured  Transactions held
directly  by  the  Trust,  Assets  Held  for  Sale  directly  by the Trust  and
Investment  Partnerships  described above, constitute 88% of the  Trust's  Real
Estate Investments before the  allowance for possible investment losses and 75%
of the Trust's revenues from real estate.


ITEM 3. LEGAL PROCEEDINGS


None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


No matters were submitted to a vote of the Trust's security  holders during the
last quarter of its fiscal year ended July 31, 1996.

<PAGE>                            
Page 11

ITEM 4A. EXECUTIVE OFFICERS OF THE TRUST


<TABLE>
<CAPTION>
NAME                    AGE       PRINCIPAL OCCUPATIONS AND AFFILIATIONS DURING THE PAST FIVE YEARS

<S>                     <C>   <C>
John A. Cervieri Jr.     65    Managing  Trustee  of  the  Trust  since 1992.  Prior to 1992, Managing Trustee and Chief Executive
                               Officer  of  the  Trust; Chairman and President  of  Property  Capital  Associates,  Inc.  and  its
                               affiliates (the former investment advisor to the Trust); Director of BankBoston; Chairman and Chief
                               Executive Officer of Americana Hotels and Realty Corporation.

Robert M. Melzer         55    Trustee, President and Chief Financial Officer of the Trust since 1992; prior to 1992, President of
                               the Trust.

William A. Bonn          45    Senior Vice President, General Counsel and Assistant Secretary of the Trust.

Robin W. Devereux        37    Vice President and  Treasurer  of  the  Trust  since November 1993; Treasurer and Controller of the
                               Trust (August 1992 to November 1993); Assistant  Vice  President  and Controller of the Trust (June
                               1990 to July 1992).

Michael I. Sucoff        58    Vice President of the Trust since September 1992; Senior Vice President  of  Capital  Partners Inc.
                               (1990-1992).

Randolph L. Kazazian III 35    Vice President of the Trust since November 1993; prior to that Assistant Vice President of the 
                               Trust.

Walter F. Leinhardt      64    Secretary  and  Trustee  of the Trust.  Partner in the law firm of Paul, Weiss, Rifkind, Wharton  &
                               Garrison, New York, NY.



</TABLE>
There is no family relationship among any of the officers listed above, nor are
there  any arrangements or understandings  between any such  officers  and  any
other person  pursuant  to  which  he  or she was selected as an officer.  Each
officer will hold office until the next Annual Meeting of Trustees or until his
or her successor has been elected and has qualified.

<PAGE>                            
Page 12


PART II


ITEM 5. MARKET FOR THE TRUST'S COMMON SHARES AND RELATED SECURITY HOLDER
        MATTERS

(a)   Price Range of Common Shares

      The Trust's  Common  Shares  are  traded  on  the American Stock Exchange
("ASE")  -  symbol  PCT.  The high and low prices on theASE  for  each  quarter
during the past two fiscal  years  and dividends declared for such quarters are
shown below.

                                                FISCAL 1996
                                                                    DIVIDENDS
QUARTER                  HIGH                        LOW            DECLARED

First                  $ 8 7/16                   $ 7 15/16           $  .12
Second                        9                      8 3/16              .12
Third                    11 1/8                      8 1/2               .12
Fourth                   10 7/8                      7 1/2              2.87*
                                                                      ------
                                                                      $ 3.23
                                                                      ======


                                                 FISCAL 1995
                                                                    DIVIDENDS
QUARTER                  HIGH                      LOW               DECLARED

First                   $  6 1/2                  $ 5 5/8$             .09
Second                     6 1/4                    5 5/8              .10
Third                      6 3/4                    6                  .10
Fourth                     8 1/4                    6 5/8              .12
                                                                    ------
                                                                    $  .41
                                                                    ======
*Special dividends totaling $2.75 were paid during the quarter representing
proceeds from dispositions of certain of the Trust's investments.


(B)   APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

                                           APPROXIMATE NUMBER OF HOLDERS
TITLE OF CLASS                                AS OF SEPTEMBER 30, 1996
---------------------------------------------------------------------------
      Common Shares                                          5,000


(C) DIVIDENDS DECLARED ON COMMON SHARES

Cash dividends have usually been at least 100% of income before gain on sale of
real  estate  investments  and  extraordinary  items.The Trust typically pays a
dividend approximately 55 days following the end  of  each  fiscal quarter.  To
maintain its status as a REIT,the Trust is required each year  to distribute to
its  shareholders  at  least  95% of its taxable income (excluding net  capital
gains and aftercertain other adjustments).   In  addition,  the  Trust  will be
subject to a 4% nondeductible excise tax on the amount, if any, by whichcertain
distributions  paid  by it with respect to any calendar year are less than  the
sum of 85% of its ordinary income for the calendaryear, 95% of its capital gain
income for the calendar  year,  and  any  amount  of  such  income that was not
distributed  in  prior  years.The  Trust  did  not  incur  any such excise  tax
liability with respect to calendar 1995 or 1994.

Pursuant to the Business Plan, during fiscal 1996, the Trust  declared  special
dividends  from  the  proceeds  of  its  disposition  ofinvestments.  The Trust
expects  that  it  will continue to distribute substantially  all  of  its  net
proceeds from sales  of investments toshareholders unless needed to retire debt
or  otherwise  satisfy the  Trust's  cash  requirements.   It  is  the  current
intention of the  Trusteesto  distribute  proceeds from dispositions as special
dividends at the same time as the quarterly  dividend.   However,  the Trustees
maychoose to make an additional dividend from time to time rather than wait for
a quarterly dividend payment.

<PAGE>                            
Page 13



ITEM  5.   MARKET  FOR  THE  TRUST'S  COMMON SHARES AND RELATED SECURITY HOLDER
MATTERS (continued)

Listed below is the income tax classification  for dividends paid during fiscal
year ended July 31, 1996.

<TABLE>
<CAPTION>
DECLARATION         RECORD      PAYABLE     DIVIDENDS      ORDINARY     RETURN OF      CAPITAL
DATE                DATE        DATE        PER SHARE      TAXABLE      CAPITAL        GAIN
----------------------------------------------------------------------------------------------
<S>              <C>          <C>           <C>           <C>           <C>         <C>
 08/25/95          09/11/95    09/22/95      $ 0.12        $ 0.120        $    -      $    -

 11/29/95          12/11/95    12/22/95        0.12          0.060             -         .060

 02/23/96          03/15/96    03/26/96        0.12          0.120             -           -

 05/22/96          06/13/96    06/24/96        0.12          0.120             -           -

 05/22/96          06/13/96    06/24/96        1.75*         0.117          1.364       0.269

 06/27/96          07/12/96    07/26/96        1.00*         0.067          0.933          -
                                             -------       -------        -------     -------
                                             $ 3.23        $ 0.604        $ 2.297     $ 0.329
                                             ======        =======        =======     =======

</TABLE>
 *Special Dividends paid pursuant to the Trust's Business Plan.

<PAGE>                            
Page 14

ITEM 6. SELECTED FINANCIAL DATA


<TABLE>
<CAPTION>
                                                                      YEARS  ENDED  JULY 31,
                                                ------------------------------------------------------------------------
(IN THOUSANDS EXCEPT  PER  SHARE  DATA)               1996             1995          1994           1993*        1992*
------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>           <C>            <C>          <C>     
SUMMARY OF OPERATIONS
Revenues                                            $ 21,799        $ 22,619       $ 21,623       $ 16,535   $  19,109
Expenses                                              21,506          20,603         20,044         24,865      33,544
                                                    --------        --------       --------       --------   ---------

Income (Loss) before Gain (Loss) on Sale of Real
  Estate Investments and Extraordinary Item              293           2,016          1,579         (8,330)    (14,435)

Gain (Loss) on Sale of  Real  Estate  Investments      6,094           3,209          2,510          7,700      (9,150)
                                                    --------         -------        -------       ---------     -------

Income (Loss) before Extraordinary Item                6,387           5,225          4,089           (630)    (23,585)

Extraordinary (Loss) Gain from Extinguishment           (473)             88              -              -       7,950
 of Debt                                            --------          ------        -------       ---------     ------

Net Income (Loss)                                    $  5,914      $   5,313       $  4,089      $    (630)  $ (15,635)
                                                    =========      =========       ========      ==========  ==========

PER SHARE DATA
Primary Net Income (Loss)
Income (Loss) before Gain (Loss) on Sale of Real
  Estate Investments and Extraordinary Item            $ 0.03     $     0.23         $ 0.17        $ (0.93)    $ (1.60)

Gain  (Loss) on Sale of Real Estate Investments          0.67           0.35           0.28           0.85       (1.01)
                                                     --------       --------       --------       --------   ---------

Income (Loss) before Extraordinary Item                  0.70           0.58           0.45          (0.08)      (2.61)

Extraordinary  (Loss) Gain from Extinguishment 
 of Debt                                                (0.05)          0.01              -              -        0.88
                                                     --------       --------       --------       --------   ---------
Net Income (Loss) per Share                            $ 0.65         $ 0.59         $ 0.45        $ (0.08)    $ (1.73)
                                                     ========       ========       ========       ========   =========
Fully Diluted Net Income (Loss) per Share              $ 0.65         $ 0.59         $ 0.45        $ (0.08)    $ (1.73)
                                                     ========       ========       ========       ========   =========
Dividends Declared per Share                           $ 3.23         $ 0.41         $ 0.30        $  0.28     $  0.28
                                                     ========       ========       ========       ========   =========
Average Shares Outstanding                              9,097          9,044          9,030          9,029       9,029
                                                     ========       ========       ========       ========   =========

FINANCIAL POSITION AT YEAR-END
Total Assets                                        $ 112,619      $ 169,439      $ 176,833      $ 179,459    $173,748
Net Real Estate Investments                           106,912        160,963        172,461        176,024     168,403
Commitments                                                 -              -              -              -         616
Total Debt Outstanding                                 36,889         71,816         81,479         86,492      76,337
Shareholders' Equity                                   70,076         93,709         91,703         90,134      93,202

</TABLE>
* Restated for change in  accounting  method  to  the  equity method for 
Investment Partnerships.   The  change  did  not  affect  net  income(loss)
or shareholders' equity.  See Note 1 of the Notes  to  Consolidated Financial
Statements of the Trust which describes the Trust'sprevious method of 
accounting and the reasons for the change. 


<PAGE>                            
Page 15


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Trust has reviewed its short-term and long-term  liquidity needs in view of
its Business Plan and the adequacy of cash provided by operating activities and
other liquidity sources to meet these needs.  The Trust's  principal short-term
liquidity   needs   are  to  fund  normal  operating  expenses,  debt   service
requirements and capital  expenditures  for  Owned Properties (including Assets
Held for Sale) and the minimum dividend distributions  required to maintain the
Trust's REIT status under the Internal Revenue Code.  The Trust expects to fund
these  short-term  liquidity  needs  from  cash  flows  provided  by  operating
activities and the proceeds of sales of investments and,  if  needed, available
borrowings under its existing demand line of credit.  The Trust expects to fund
its  long-term  liquidity  requirements  for  scheduled  debt  maturities  from
property  sales  and,  if  needed,  its  existing  demand  line of credit.   In
accordance   with  the  Business  Plan,  the  Trust  will  not  make  any   new
acquisitions.   Proceeds from the sales of the Trust's investments will be used
to retire debt and  make  dividend distributions to the Trust's shareholders or
otherwise satisfy the Trust's cash needs.

The Trust's debt to equity  ratio  was  .52x at July 31, 1996, .77x at July 31,
1995  and  .89x  at July 31, 1994.  The Trust's  debt  at  July  31,  1996  was
$36,889,000,  composed  solely  of  mortgage  notes  payable,  as  compared  to
$71,816,000 at July 31, 1995 and $81,479,000 at July 31, 1994.  The decrease in
the Trust's debt  in fiscal 1996 was primarily due to the retirement (primarily
at  par)  of  all of the  Trust's  10%  and  9  3/4%  Convertible  Subordinated
Debentures,  ($29,125,000   and   $2,546,000   aggregate   principal   amounts,
respectively) and a $3,000,000 prepayment of the first mortgage loan secured by
Loehmann's Fashion Island.

The  Trust's  mortgage  notes  payable  of  $36,889,000  at  July 31, 1996 were
comprised of three mortgages, two on the Trust's Owned Properties held directly
by the Trust and one on the Asset Held for Sale directly by the Trust.

With  respect  to  one of the Trust's Owned Properties, Park Place,  the  Trust
acquired its lessee's  interest  in  this  office  building located in Clayton,
Missouri, in January 1991, subject to an $8,600,000 non-recourse mortgage loan.
In  November  1993,  the Trust refinanced the first mortgage,  resulting  in  a
reduction in the annual  effective interest rate from 8.25% to 5.65%.  Interest
is payable semi-annually.  The mortgage balance was $8,430,000 at July 31, 1996
and amortizes $85,000 annually  in  May  through  2003,  and  $430,000 annually
thereafter through May 2007.  The then remaining balance of  $6,115,000 matures
in May 2008.

With  respect  to  the  second  Owned  Property  held  directly  by the  Trust,
Loehmann's  Fashion  Island,  the  first mortgage on Loehmann's Fashion  Island
shopping center was refinanced on June  30,  1994  with  an  initial advance of
$18,000,000.  The loan commitment was for $30,000,000, with additional advances
to  be  made  through  June 1996 based upon property performance.   There  were
subsequent advances aggregating  $6,000,000  and periodic amortization payments
including a $3,000,000 payment made during fiscal  1996.   The  first  mortgage
loan  had  a  balance at July 31, 1996 of $18,732,000 ($12,000,000 of which  is
recourse to the Trust), matures in July 1998 and bears interest at the lender's
prime rate plus 1/4%, with the Trust having the option to fix the interest rate
from time to time  at  2.25% above comparable term LIBOR or U.S. Treasury notes
for a specified number of  times.   This  option may be exercised at no cost or
additional liability to the Trust.  In July  1995, the Trust fixed the interest
rate on the total outstanding borrowings at 7.97%  (2.25%  over comparable term
U.S. Treasury notes) until December 1996.

The Asset Held for Sale directly by the Trust which is encumbered  by  a  first
mortgage  is  One  Park  West.   In March 1993, the Trust acquired its lessee's
interest in this office building located in Chevy Chase, Maryland, subject to a
non-recourse mortgage loan which had  a balance of $9,727,000 at July 31, 1996.
The loan carries an annual interest rate  of 9.5%, requires monthly payments of
principal and interest and matures in June 2000.

The Trust has a $10,000,000 revolving line  of  credit from a major New England
bank.  Borrowings under the line are repayable on  demand  by  the  lender.  At
July 31, 1996 there were no outstanding borrowings under the line.  Interest is
at the bank's prime rate, (8.25% at July 31, 1996).

For  additional information regarding the Trust's indebtedness, see Note  3  of
the Notes to Consolidated Financial Statements of the Trust.

FUNDS FROM OPERATIONS

Funds  from  Operations is considered by the REIT industry to be an appropriate
measure of performance  of an equity REIT.  Funds from Operations is calculated
by the Trust consistent with the National Association of Real Estate Investment
Trusts' definition: Funds  from  Operations  equals net income, excluding gains
(losses)  from  debt restructurings and sales of  properties  and  nonrecurring
items,  plus  depreciation   and   amortization   and   after  adjustments  for
unconsolidated partnerships and joint ventures.  Funds from  Operations  should
be considered in conjunction with net income (loss) as presented in the Trust's
audited  financial  statements.   Funds from Operations does not represent cash
provided  by  operating  activities  in   accordance  with  generally  accepted
accounting principles and should not be considered  as  a  substitute  for  net
income  as a measure of results of operations or for cash provided by operating
activities as a measure

<PAGE>                            
Page 16


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)

of liquidity.  In connection with the Business Plan, the Trust is disposing  of
all  of  its  assets.   As  a result, the Trust's Funds from Operations and Net
income will decline as assets  are sold and the net proceeds are distributed to
shareholders.  Funds from Operations was calculated by the Trust as follows:

                                               YEARS ENDED JULY 31,
                                    -------------------------------------------
                                     1996               1995          1994
-------------------------------------------------------------------------------
Income before gain on sale of 
 Real Estate Investments
 and Extraordinary Item           $  293,000       $  2,016,000    $  1,579,000

Depreciation on Owned Properties  
held  directly  by  the  Trust     4,008,000          4,192,000       3,538,000

Trust's share of depreciation on 
unconsolidated Investment
 Partnerships                        473,000          2,086,000       1,445,000


Nonrecurring item                  3,000,000{(1)}      (404,000){(2)}         -
                                   ---------           ---------      ---------

Funds from operations            $ 7,774,000        $ 7,890,000     $ 6,562,000
                                 ===========        ===========     ===========


{(1)}Nonrecurring  expense resulting from a write-down of Loehmann's  Fashion
Island.
{(2)}Nonrecurring income  resulting from the settlement of a bankruptcy claim
filed by the Trust against a former tenant atLoehmann's Fashion Island.

Management  believes  that with  its  cash  provided  by  operating  activities
retained after dividend  distributions,  the proceeds from sales of investments
and, if necessary, borrowings under the existing  bank line, it will be able to
meet its cash requirements for anticipated capital  expenditures  on  the Owned
Properties held directly by the Trust and Assets Held for Sale directly  by the
Trust.   The  Trust  currently  expects that these cash requirements will total
approximately $4,050,000 during fiscal 1997.

REVIEW OF REAL ESTATE INVESTMENTS

At July 31, 1996, the Trust's principal  asset is its $106,912,000 portfolio of
real estate investments, which, except as  noted below, is carried at cost, net
of accumulated depreciation and the allowance  for  possible investment losses,
and includes Assets Held for Sale (which are carried  at  the  lower of cost or
net  realizable  value).   At  July  31,  1996,  the  portfolio  consisted   of
investments  in  14 properties, two of which were sold subsequent to the end of
the year, comprised  of  investments  in five apartment complexes, three office
buildings,  four  shopping  centers and two  hotels.   Set  forth  below  is  a
discussion of significant changes in the portfolio during the year.

APARTMENTS

At July 31, 1996, the Trust's  real  estate  investments include five apartment
investments, consisting of three Structured Transactions  held  directly by the
Trust, one Owned Property held in an Investment Partnership and one  Asset Held
for Sale in an Investment Partnership (which was sold subsequent to the  end of
fiscal  1996).   During  fiscal  1996  six  apartment  investments were sold or
otherwise disposed of.

Southwest, an Investment Partnership in which the Trust, through a wholly owned
subsidiary,  owns  a  45.45%  general partner interest, sold  three  properties
during fiscal 1996.  On September 29, 1995, the Investment Partnership sold the
714 unit Chimney Rock apartments,  at  a  gain of $1,000 to the Trust.  At July
31, 1995, this property was reclassified to  an  Asset  Held  for Sale and  was
written down to its net realizable value.  The Trust's share of  the write-down
($54,000) was charged against the Trust's previously established allowance  for
possible investment losses.  On June 21, 1996, this Investment Partnership sold
the St. Charles and Boardwalk apartments at a gain to the Trust of $50,000.  At
January  31,  1996,  these  properties had been reclassified to Assets Held for
Sale  and  the  Trust's   investment  was  written  down  by  $710,000  to  the
properties' estimated net realizable value.

Southwest's  remaining  investment  is  the  Telegraph  Hill  apartments.   The
Partnership was in default  under  the  terms of the first mortgage on Phase B,
259  units  of this 1,180 unit complex, due  to  nonpayment  of  principal  and
interest.  The  Partnership  was unable to restructure this $2,487,000 mortgage
loan on terms satisfactory to  it, and therefore did not oppose the foreclosure
by the first mortgagee

<PAGE>                            
Page 17

ITEM  7.  MANAGEMENT'S DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS (continued)

in December  1995.   The  Trust  incurred a loss of $307,000 on this investment
which was charged against the Trust's allowance for possible investment losses.
The remaining 921 units were 100%  leased  at  July 31, 1996 as compared to 98%
leased at July 31, 1995 and 81% at July 31, 1994.

At  July 31, 1995, the Trust had a $3,277,000 investment  in  Canyon  View,  an
Investment  Partnership that held Structured Transactions in Phases I and II of
the Canyon View  apartments  in  San Ramon, California.  The Trust has a 23.81%
general  partner  interest  in  this Investment  Partnership.   The  Investment
Partnership's investments in Phase  I  (a  Structured  Transaction  held  in an
Investment  Partnership) were subordinate to a $12,000,000 first mortgage which
had a scheduled  maturity of August 1, 1993, but was extended to August 1, 1994
in anticipation of  a  proposed  sale.   Both  phases were also subject to non-
subordinated land leases held by a third party.  In August 1994, when it became
apparent that a sale was unlikely to occur, the first mortgagee initiated court
proceedings for the appointment of a receiver for  Phase  I  and foreclosure of
its  mortgage.   Shortly thereafter the Investment Partnership initiated  court
proceedings for the  appointment  of a receiver for Phase II and foreclosure of
its loans on Phases I and II.  In December  1994,  the  Investment  Partnership
filed  for  protection under Chapter 11 of the U.S. Bankruptcy Code.  Extensive
negotiations then ensued with the Investment Partnership's lessee and the first
mortgagee of  Phase  I.   In  August  1995, the litigation was settled with the
Investment  Partnership  receiving  $300,000   from  the  first  mortgagee  for
permitting  it  to foreclose on Phase I and the Investment  Partnership  taking
title to Phase II  and  receiving  the  proceeds  from  two  letters  of credit
aggregating  $1,750,000.  As a result, the Trust incurred a $1,538,000 loss  on
these transactions resulting from a $533,000 write-off of the Canyon View Phase
I  investment  and  a  $1,005,000  write-down  of  the  Canyon  View  Phase  II
investment.  These  losses  had  been  previously  provided  for in the Trust's
allowance for possible investment losses.  The Investment Partnership undertook
a  $1,050,000  capital  expenditure  program  during  fiscal  1996  to  correct
structural  deficiencies,  construction deviations and damaged siding at  Phase
II.

At July 31, 1996, Canyon View  Phase  II  was reclassified to an Asset Held for
Sale; no further write-down was recorded.   Subsequent to the end of the fiscal
year,  on  August 30, 1996, the Partnership sold  the  complex  and  the  Trust
realized a gain of approximately $800,000.

Additionally, during fiscal 1996, the Trust sold the land underlying the Bluffs
II apartments  for  $2,150,000.   The  Trust's  investment  in  this Structured
Transaction  was $825,000 resulting in a gain to the Trust of $1,320,000  after
closing costs.   For the year ended July 31, 1995, the Trust earned $215,000 on
this investment.   Also, during fiscal 1996, the Trust sold the land underlying
the Yorkshire apartments  for  $460,000  resulting in a gain of $310,000, after
closing costs, on its $135,000 investment.   For  the year ended July 31, 1995,
the Trust earned $42,000 on this investment.

The  Trust's remaining apartment investments are all  Structured  Transactions.
They are  all  current  with respect to payments due the Trust at September 30,
1996, although there are  ongoing  disputes  with  respect  to  the  amount  of
percentage rent due from certain investments.

OFFICE BUILDINGS

At  July  31, 1996, the Trust  had three office building investments consisting
of two Owned  Properties held directly by the Trust and one Asset Held for Sale
directly by the Trust (previously classified as an Owned Property held directly
by the Trust).  During fiscal 1996 the Trust sold four office properties.

At July 31, 1996,  One  Park  West,  located  in  Chevy  Chase,  Maryland,  and
previously  classified  as  an  Owned  Property held directly by the Trust, was
reclassified to an Asset Held for Sale directly  by  the  Trust and was written
down to its estimated net realizable value of $16,938,000.   The resulting loss
of $1,519,000 was charged against the Trust's previously established  allowance
for  possible  investment  losses.   On  July  31, 1996, the property was under
contract  to  be sold.  Subsequent to the end of the  fiscal  year,  the  sales
contract was terminated.   The  property  is  subject  to  a  $9,727,000  first
mortgage  loan  and was 99% leased at July 31, 1996 versus 98% at July 31, 1995
and 100% at July 31, 1994.

During the third quarter of fiscal 1996 the Trust sold three office properties,
Financial Plaza, a cluster of four buildings, College Hills 3 and College Hills
8,  all  of  which  were  held  by  Midwest,  one  of  the  Trust's  Investment
Partnerships in which  the  Trust  holds a 53.3% general partner interest.  The
Trust realized a gain from these sales  of $443,000, primarily from the sale of
College Hills 8.  The properties had been written down previously by $2,575,000
(the Trust's share) to their estimated net  realizable  values  when  they were
classified as Assets Held for Sale in an Investment Partnership.

<PAGE>                            
Page 18


ITEM  7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL CONDITION AND
           RESULTS OF  OPERATIONS (continued)

During the second quarter of fiscal 1996, Citibank Office Plaza - Oak Brook was
sold at a gain to the Trust of $470,000.  At July 31, 1995  this investment was
reclassified to an Asset Held for Sale directly by the Trust  and  was  written
down by $971,000 to its then expected net realizable value.

SHOPPING CENTERS

At  July 31, 1996, the Trust had four shopping center investments comprised  of
one Owned Property held directly by the Trust, two Structured Transactions held
directly  by the Trust and one Asset Held for Sale in an Investment Partnership
(previously classified as an Owned Property held in an Investment Partnership).
During the year the Trust sold one shopping center investment.

Loehmann's Fashion Island in Aventura, Florida, an Owned Property held directly
by the Trust,  is  the  Trust's  largest  investment.  Its redevelopment, which
included  the expansion and renovation of two  existing  anchor  tenant  spaces
(Loehmann's and AMC Theatres), the demolition of an existing building to permit
construction  of  a  new  47,813  square  foot  Publix  market and new facades,
walkways, signage, landscaping and tenant improvements for  the  entire center,
was  substantially  completed  during  fiscal  1994.   As  previously reported,
management has been disappointed with the leasing performance  of  this center.
An  independent appraisal was ordered and based upon its analysis at  July  31,
1996,  the  Trust  wrote  down  its investment in the property by $5,612,000 to
$36,157,000, $3,000,000 of which  was  charged to operations and $2,612,000 was
charged to the Trust's allowance for possible  investment losses.  The property
was 90% leased at July 31, 1996, 1995 and 1994.

The  Trust's  other retail Owned Property, Plaza West  Retail  Center,  was  in
Overland Park,  Kansas,  and  was  held in an Investment Partnership,  Midwest.
The property was held free and clear of debt.  At July 31, 1995, the Investment
Partnership reclassified the center  to  an  Asset  Held for Sale and wrote the
property down to its estimated net realizable value.   The Trust's share of the
write-down  was  $991,000,  which  was  charged against the Trust's  previously
established  allowance  for possible investment  losses.   The  Trust's  equity
investment in this property  was $6,656,000 at July 31, 1996.  The property was
100% leased at July 31, 1996 and  1995,  as  compared to 93% leased at July 31,
1994.  Subsequent to the end of the fiscal year, this property was sold.

During the first quarter of fiscal 1996, the Investment Partnership which owned
the land under Crossroads Mall in Boulder, Colorado,  sold  its investment back
to  its  lessee.   The  Trust  realized a gain of $3,500,000 on its  $2,000,000
investment.

The remaining two shopping center  investments,  both  of  which are Structured
Transactions, are current with respect to their payments due  to  the  Trust at
September 30, 1996.

HOTELS

At  July  31,  1996,  the  Trust  had  two hotel investments, both of which are
Structured Transactions held directly by  the  Trust.   During fiscal 1996, the
Trust sold two hotel investments.

The Trust's most significant hotel investment is in City  Centre  Holiday  Inn,
located  in Chicago Illinois.  Subsequent to the end of fiscal 1996, the lessee
exercised its option to repurchase the Trust's $2,000,000 land investment for a
price  which   is  not  yet  final  but  is  anticipated  to  be  approximately
$20,000,000.  The  finalization  of the price is dependent on the completion of
audits of the hotel's operations for  1993,  1994  and  1995.   At  the time of
exercise of the option, the lessee delivered a non-refundable $200,000  deposit
to the Trust.  The closing is scheduled for January 1997.  Consummation of  the
transaction  remains  subject to numerous conditions to closing.  During fiscal
1996, the Trust earned $1,833,000 on this investment.  The average occupancy of
the hotel was 72% for the  year  ended July 31, 1996 as compared to 67% and 71%
for the years ending July 31, 1995 and 1994.

During the third quarter, the Trust,  as  previously  agreed, funded a $600,000
junior leasehold mortgage loan to its lessee of the Cincinnati  Marriott Inn to
make certain capital improvements.  The loan bears interest at 8.0%  per  annum
with  amortization  commencing  May  1,  1999 and maturing March 1, 2014.  This
increased the Trust's investment in the Cincinnati Marriott Inn to $6,316,000.

During the fourth quarter of fiscal 1996,  the first mortgage investment in the
Lisle Hilton Inn, which was held by an Investment  Partnership,  was prepaid at
par.   No gain or loss was realized on this prepayment.  The Trust's  share  of
the proceeds was $8,942,000.

<PAGE>                            
Page 19


ITEM 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION AND
          RESULTS OF OPERATIONS (continued)

During   the   second   quarter   of   fiscal  1996,  the  Trust  sold  to  its
lessee/mortgagor the Trust's $4,000,000  Structured  Transaction investments in
Grosvenor Airport Inn, a 206 room hotel in South San Francisco, California, for
$2,500,000.  The loss of $1,500,000 on the sale had been  fully provided for in
the Trust's allowance for possible investment losses.  For  the year ended July
31, 1995 the Trust earned $200,000 on this investment.

ALLOWANCE FOR POSSIBLE INVESTMENT LOSSES

The  Trust's $4,636,000 allowance for possible investment losses  at  July  31,
1996 was  based  upon  management's  estimate  of  net realizable value of each
investment.  To the extent the estimated net realizable value of any investment
is  less than its carrying value, an allowance for possible  investment  losses
for such  investment  was  established.   In  estimating  net realizable value,
consideration  was given to many factors, such as the pace of  dispositions  as
anticipated in the  Business Plan, income to be earned from the investment, the
cost to operate the property  to  the anticipated time of sale, the anticipated
selling price the property would bring  at such time, the cost of improving the
property to the condition contemplated in  determining  the  selling price, the
cost of disposing of the property and prevailing economic conditions, including
availability  of  credit.  In the opinion of both the Trustees and  management,
this allowance adequately  reflects the extent of the estimated impairment that
existed at July 31, 1996 in  the  net realizable value of each of the assets in
the portfolio.

RESULTS OF OPERATIONS - 1996 VS. 1995

The  Trust  is  in  the process of disposing  of  all  of  its  investments  in
connection with the Business Plan.  As a result, the Trust anticipates that its
revenues, funds from  operations  and  net  income will continue to decrease as
investments are sold.

REVENUES

Rents from Owned Properties held directly by  the Trust (base rent plus expense
reimbursements) decreased 20%, primarily due to  the  Trust's sales of Citibank
Office  Plaza - Oak Brook office building in January 1996  and  6110  Executive
Boulevard  office building in January 1995, and the receipt by the Trust in the
first quarter of the prior year of $404,000 of nonrecurring revenues related to
the settlement of a bankruptcy claim filed by the Trust against a former tenant
at Loehmann's Fashion Island.

There was no  significant  change  in  base income from Structured Transactions
held directly by the Trust (land rent


There  was  no  significant  change in base income from Structured Transactions
held directly by the Trust (land rent and mortgage interest) for the year ended
July 31, 1996, as compared to the prior year.

Overage  income  from  Structured  Transactions  held  directly  by  the  Trust
increased 24% for the year  ended July 31, 1996, as compared to the prior year,
primarily due to increased overage  income  from  the  Sandpiper  Cove and City
Centre Holiday Inn investments.

The  Trust's  share  of  income  from  unconsolidated  Investment  Partnerships
increased 79% for the year ended July 31, 1996, as compared to the prior  year,
primarily  due  to the increased net income recorded by the Trust from Midwest.
This resulted primarily from the cessation of depreciation on the Partnership's
properties when they were reclassified to Assets Held for Sale and written down
to their estimated  net realizable value.  The increase is also due to improved
performance of certain properties in the Southwest portfolio.  Additionally, as
previously reported, Canyon View settled pending litigation and the Partnership
received certain income  in  fiscal 1996 which had not been previously accrued.
These increases were offset by  the  loss  of  revenues due to the sales of the
Lisle Hilton Inn investment and the St. Charles and Boardwalk apartments in the
fourth quarter of fiscal 1996, Financial Plaza,  College  Hills  3  and College
Hills  8   in  the third quarter of fiscal 1996, the Crossroads Mall investment
and the Chimney  Rock  apartments  in  the first quarter of fiscal 1996 and the
Braes Hill apartments in the third quarter of fiscal 1995.

Advisory fee income increased 18% for the year ended July 31, 1996, as compared
to the prior year, primarily due to the  increase  in  operating  distributions
paid by the Trust's Investment Partnerships.

Interest income was earned by the Trust in the amount of $486,000 for  the year
ended July 31, 1996 as compared to $108,000 in the
prior year.  The increased interest income in fiscal 1996 is primarily from the
short-term  investment  of sales proceeds prior to their use for the retirement
of debentures or payment of special dividends.

<PAGE>                            
Page 20


ITEM  7.  MANAGEMENT'S DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS (continued)

EXPENSES

Expenses  on  Owned properties held directly by the Trust decreased 18% for the
year ended July  31,  1996, as compared to the prior year, primarily due to the
sale of Citibank Office  Plaza - Oak Brook in January 1996 and the sale of 6110
Executive Boulevard in January 1995.

Interest expense decreased  31% for the year ended July 31, 1996 as compared to
the prior year primarily due  to the retirement of all of the Trust's remaining
outstanding 10% and 9 3/4% Convertible  Subordinated  Debentures  during fiscal
1996  and  the  sale  of  6110  Executive Boulevard in January 1995, which  was
encumbered by a first mortgage, partially  offset  by  an  increase in interest
expense related to Loehmann's Fashion Island.

Depreciation expense decreased 4% for the year ended July 31,  1996 as compared
to the prior year, primarily due to the elimination of depreciation on Citibank
Office  Plaza - Oak Brook upon its reclassification to an Asset Held  for  Sale
directly  by the Trust in July 1995 and the sale of 6110 Executive Boulevard in
January 1995,  offset  in part by the write-off in the second quarter of fiscal
1996 of certain tenant improvements  at  Citibank  Office  Plaza  -  Schaumburg
related   to  a  tenant's  bankruptcy  and  the  write-off  of  certain  tenant
improvements  at  Loehmann's Fashion Island related to the early termination of
certain space leases.

General and administrative  expenses  increased 65% for the year ended July 31,
1996, as compared to the prior year, primarily  due to the accrual of severance
arrangements for the Trust's employees in conjunction  with  the implementation
of the Business Plan.

During the fourth quarter of fiscal 1996, the Trust wrote down  its  investment
in Loehmann's Fashion Island by $5,612,000, of which $3,000,000 was charged  to
operations  and  $2,612,000  was  charged to the Trust's previously established
allowance for possible investment losses.

Professional fees increased 31% for  the  year  ended July 31, 1996, due to the
legal fees associated with the Trust's adoption of  its Business Plan.  Trustee
fees did not change significantly in fiscal 1996 from fiscal 1995.

GAIN ON SALE OF REAL ESTATE INVESTMENTS

Net income for the year ended July 31, 1996 included  a  gain  on  sale of real
estate  investments  of  $6,094,000  ($0.67 per share) consisting of a gain  of
$1,320,000 ($.15 per share) from the sale  of  the land underlying Bluffs II, a
gain of $50,000 ($.01 per share) from the sale of  St.  Charles  and  Boardwalk
apartments,  a  gain  of  $443,000  ($.05  per share) from the sales of certain
properties held in Midwest, primarily College Hills 8, a gain of $470,000 ($.05
per share) from the sale of the Citibank Office  Plaza  -  Oak Brook, a gain of
$310,000  ($.03 per share) gain from the sale of the land underlying  Yorkshire
apartments,  a  gain  of  $3,500,000 ($.38 per share) from the sale of the land
underlying Crossroads Mall,  and a gain of $1,000 from the sale of Chimney Rock
apartments.  In the prior year net income included a a gain on the sale of real
estate investments of $3,209,000  consisting  of a gain of $3,099,000 ($.34 per
share) from the sale of 6110 Executive Boulevard  and  a gain of $110,000 ($.01
per share) from the sale of Braes Hill apartments.

EXTRAORDINARY LOSS FROM EXTINGUISHMENT OF DEBT

During  fiscal 1996, the Trust retired all of its 10% Convertible  Subordinated
Debentures  ($29,125,000 principal amount), and 9 3/4% Convertible Subordinated
Debentures ($2,546,000 principal amount).  Due to the early retirement of these
Convertible Subordinated Debentures the Trust incurred an extraordinary loss on
the extinguishment  of debt from the write-off of capitalized issuance costs in
the amount of $473,000 ($.05 per share).

DIVIDENDS

Dividends declared for  fiscal  1996 were $3.23 per share versus $.41 per share
for fiscal 1995.  Included in the  1996  dividends  were  special  dividends of
$1.75  per  share  paid  on June 24, 1996 and $1.00 per share paid on July  26,
1996.  These two dividends  represented the first distributions to shareholders
from the proceeds from the sale of investments under the Business Plan.

<PAGE>                            
Page 21



ITEM  7.  MANAGEMENT'S DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS (continued)

RESULTS OF OPERATIONS - 1995 VS. 1994

REVENUES

Rents from  Owned Properties held directly by the Trust (base rent plus expense
reimbursement)  increased  12% in fiscal 1995 from fiscal 1994 primarily due to
an increase in rental revenues  from  the redeveloped Loehmann's Fashion Island
and $404,000 of nonrecurring revenues related to the settlement of a bankruptcy
claim filed by the Trust against a former  tenant at Loehmann's Fashion Island.
Additionally, the increase was attributable  to increased occupancy at One Park
West.  This increase was offset in part by a decrease  in rental revenue due to
the  sale of Eagle apartments (March 1994).  Rents from Owned  Properties  held
directly by the Trust included rents from the Citibank Office Plaza - Oak Brook
which  was reclassified to an Asset Held for Sale directly by the Trust at July
31, 1995.

Base income  from Structured Transactions held directly by the Trust (land rent
and/or mortgage  interest)  decreased  12%  in  fiscal  1995  from fiscal 1994,
primarily due to the conversion of 6110 Executive Boulevard and  One  Park West
to Owned Properties held directly by the Trust, the sale of the land underlying
the  Village  Oaks  apartments (March 1994), the prepayment of the loan on  and
sale of the land underlying  the  Brown  County  Inn  (January  1994)  and  the
prepayment  of  the  mortgage loan investment in Rapids Mall (June 1994).  This
decrease was offset in part by an increase in base income from the restructured
Cincinnati Marriott Inn investment (April 1994).

Overage income decreased  3%  in  fiscal 1995 from fiscal 1994 primarily due to
the sale of the Village Oaks and Brown County Inn investments.  These decreases
were offset in part by the receipt  of  increased overage income in fiscal 1995
from two apartment investments and one hotel investment.

The  Trust's  share  of  income  from  unconsolidated  Investment  Partnerships
decreased 18% in fiscal 1995 from fiscal  1994  primarily  due  to depreciation
expense   recorded   by   the  Trust  from  PCA  Southwest  Associates  Limited
Partnership, the Partnership  which  owned,  at  July 31, 1995, 2,848 apartment
units in Texas.  The apartments were converted to  Owned  Properties  in  March
1994  and  since  that  date  the  Trust's share of income from this Investment
Partnership  is reported net of depreciation  expense.   Previously,  when  the
apartments  were   held  as  Structured  Transactions  held  in  an  Investment
Partnership, the Partnership incurred no depreciation expense.  The decrease in
income from Investment  Partnerships  was also due to the cessation of rent and
interest payments from the sublessee/mortgagor  of  the  Canyon  View apartment
investments  and  the  associated  legal and professional fees incurred  during
negotiations.

EXPENSES

Expenses on Owned Properties held directly  by  the  Trust  decreased  by 1% in
fiscal  1995  from  fiscal  1994  primarily due to the sale of Eagle apartments
(March  1994), offset in part by an  increase  in  operating  expenses  at  the
redeveloped  Loehmann's  Fashion  Island.   Expenses  on  Owned Properties held
directly by the Trust included expenses from Citibank Office  Plaza - Oak Brook
which was reclassified to an Asset Held for Sale directly by the  Trust at July
31, 1995.

Interest expense decreased by 1% in fiscal 1995 from fiscal 1994 primarily  due
to  the  sale of Eagle apartments, which was encumbered by a mortgage loan, the
refinancing  of  Park  Place at a lower interest rate and the repurchase of 10%
Convertible Subordinated  Debentures.   These  decreases were offset in part by
the expensing of interest related to Loehmann's  Fashion Island (which had been
capitalized during construction).

Depreciation expense increased 18% in fiscal 1995  from  fiscal  1994 primarily
due  to the increase in depreciation on Loehmann's Fashion Island (portions  of
the redeveloped  center  were in service for the entire fiscal 1995 as compared
to only a part of the prior year) and an increase in depreciation of the office
buildings due to capital expenditures  made in conjunction with the lease-up of
these properties.  These increases were  offset  in  part by the elimination of
depreciation on Eagle apartments which was sold.

General and administrative expenses increased 5% in fiscal  1995 as compared to
fiscal  1994  primarily  due  to  the accrual of expenses related  to  employee
severance plans associated with the Business Plan.

Trustee fees decreased 15% in fiscal  1995  due to the reduction in the size of
the Board of Trustees from nine Trustees to seven Trustees.


<PAGE>                            
Page 22




ITEM  7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS  OF  FINANCIAL  CONDITION  AND
           RESULTS OF OPERATIONS (continued)

GAIN (LOSS) ON REAL ESTATE INVESTMENTS

The Trust sold two investments  in  fiscal  1995  resulting  in  a gain on real
estate investments of $3,209,000 ($.35 per share).  The Trust's 6110  Executive
Boulevard  office  building  was  sold for $16,380,000, resulting in a gain  of
$3,099,000.  Southwest, an Investment Partnership, sold its investment in Braes
Hill apartments at a gain, of which the Trust's share was $110,000.

EXTRAORDINARY GAIN FROM EXTINGUISHMENT OF DEBT

The Trust purchased $1,698,000 of its  10%  Convertible Subordinated Debentures
at less than the Trust's carrying value, producing  an  extraordinary  gain  of
$88,000 ($.01 per share).

DIVIDENDS

Dividends  declared  for  fiscal 1995 were $.41 per share versus $.30 per share
for fiscal 1994.  The Trust  paid dividends approximately 55 days following the
end of each fiscal quarter.

INFLATIONARY AND ECONOMIC FACTORS

The effect of inflation upon the Trust's operations and real estate investments
has varied.  For several years  prior  to  fiscal  1995  rental  rates  did not
increase  by  the  rate of inflation as extremely competitive market conditions
existed at most of the Trust's properties.  The Trust believes that many of the
real estate markets  in  which  the  Trust  operates have improved.  Though not
applicable to all properties in the Trust's portfolio,  rental rates at many of
these properties in fiscal 1996 have increased by the rate  of  or in excess of
inflation.   Although  operating expenses are generally impacted by  inflation,
increases in operating expenses  in  the past year caused by inflation have not
been material.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in Item 1 "Business" and Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations" constitute "forward-
looking statements" within the meaning  of  the  Private  Securities Litigation
Reform Act of 1995 (the "Reform Act").  Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which  may  cause  the
actual  results,  performance or achievements of the Trust, including the sales
proceeds payable to  the  Trust  for its properties, or industry results, to be
materially  different from any future  results,  performance,  or  achievements
expressed or implied by such forward-looking statements.  Such factors include,
among others,  the following: general economic and business conditions, adverse
changes in the real  estate  market  in the regions of the country in which the
Trust owns properties or has investments,  and  other  factors  noted  in  this
report.


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  consolidated  financial statements and supplementary data of the Trust are
included under Item 14 of this Annual Report.


ITEM 9. CHANGES IN  AND DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
        FINANCIAL DISCLOSURE

None.

<PAGE>                            
Page 23

PART III


ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT


The information required to be furnished  pursuant to this item with respect to
Trustees of the Trust is set forth under the  caption "Election of Trustees" in
the  Trust's  proxy  statement  (the  "Proxy Statement")  to  be  furnished  to
shareholders in connection with the solicitation  of  proxies  by  the  Trust's
Board of Trustees for use at the 1996 Annual Meeting of Shareholders to be held
on  December 17, 1996 and is incorporated herein by reference.  The information
with   respect  to  Executive  Officers  is  set  forth,  pursuant  to  General
Instruction G of Form 10-K, under Part I of this Report.


ITEM 11. EXECUTIVE COMPENSATION


The  information  required  to be furnished pursuant to this item is set  forth
under the caption "Executive  Compensation"  in the Proxy Statement, other than
information set forth under the subcaptions "Compensation Committee's Report on
Compensation"  and  "Performance  Graphs",  and  is   incorporated   herein  by
reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The  information required to be furnished pursuant to this item  is  set  forth
under the captions "Voting Securities and Principal Shareholders" and "Election
of Trustees" in the Proxy Statement, and is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information  required  to  be  furnished pursuant to this item is set forth
under the caption "Certain Relationships and Related Transactions" in the Proxy
Statement, and is incorporated herein by reference.

<PAGE>
Page 24
(ITEM 14(A))  INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                  DESCRIPTION
<S>   <C>                                                                              <C>
3.1   Declaration  of  Trust as currently in effect except for the five Amendments     N/A
      below is incorporated herein by reference to Exhibit  4.1  of  the May 13, 
      1983 Form S-2 Registration Statement (Registration No. 2-83624).


3.2   Amendment,  dated October 1, 1987,  to  the  Declaration  of  the  Trust  is     N/A
      incorporated herein by reference to the exhibit to the Trust's  Form  10-K 
      Annual Report for the fiscal year ended July 31, 1987.


3.3   Amendment, dated August 21,  1992,  to  the  Declaration  of  the  Trust  is     N/A
      incorporated herein by reference to Exhibit  3.3  of  the  Trust's  form  
      10-K  for  the fiscal year ended July 31, 1992.


3.4   Amendment,  dated  December  29,  1992,  to  the  Declaration  of  Trust  is     N/A
      incorporated by reference to Exhibit 3.4 or the Trust's Form 10-K for the 
      fiscal year ended July 31, 1993.


3.5   Amendment, dated February 26, 1993, to the Declaration  of  Trust  as to the     N/A
      number and identity of Trustees is incorporated herein by reference to 
      Exhibit 3.5 of the Trust's Form 10-K for the fiscal year ended July  31, 1993.


3.6   Amendment,  dated  June 19, 1996, to the Declaration of Trust as to the  New     N/A
      Business Plan.


3.7   By-Laws of the Trust  as  currently  in  effect  are  incorporated herein by     N/A
      reference to Exhibit 3.3 of the Trust's Form 10-K for the fiscal year ended 
      July 31, 1992.


4.3   Form of Certificate representing shares of Beneficial Interest  of the Trust     N/A
      incorporated  herein  by referenceto Exhibit 4 of the Trust's Annual Report  
      on Form 10-K for the fiscal year ended July 31, 1990.


4.4   Shareholder Rights Plan,  incorporated  herein  by  reference to the Trust's     N/A
      Form 8-K report dated October 12, 1990.


10.1  Termination Agreement dated as of October 19, 1992 between Robert M. Melzer      N/A
      and the Trust is incorporated herein by reference to Exhibit 10.1 of the 
      Trust's Form  10-K  for  the  fiscal year ended July 31, 1992.


10.2  Amendment,  dated  as  of August 25, 1995, to Termination Agreement, dated       N/A
      October 19, 1992 between Robert M. Melzer and the Trust is incorporated  
      herein by reference to Exhibit 10.2 of the Trust's Form 10-K for the fiscal 
      year ended July 31, 1995.
</TABLE>
<PAGE>
Page 25
(ITEM 14(A))  INDEX TO EXHIBITS (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                  DESCRIPTION
<S>   <C>                                                                              <C>
10.3  Termination  Agreement,  dated  as of October 19, 1992, between William A.       N/A
      Bonn and the Trust is incorporated herein by reference to Exhibit 10.3 of 
      the Trust's Form 10-K for the fiscal year ended July 31, 1995.


10.4  Amendment, dated as of August 16,  1995, to Termination Agreement, dated         N/A
      October 19, 1992 between William A. Bonn  and  the  Trust  is  incorporated  
      herein by reference to Exhibit 10.4 of the Trust's Form 10-K for the fiscal 
      year ended July 31, 1995.


10.5  Property Capital Trust 1992 Employee Stock Option Plan, as Amended (the "1992    N/A
      Plan") is incorporated herein by reference to Exhibit 10.3 of  the  Trust's 
      Form 10-Q For the quarter ended October 31, 1992.


10.6  Subcontract and Option Agreement dated  August  1, 1992 between Property         N/A
      Capital Trust and PCA Institutional Advisors is incorporated herein by 
      reference to Exhibit 10.6 of the Trust's Form 10-K for the fiscal year ended
      July 31, 1995.


10.7  Property  Capital  Trust  Amended and Restated Deferred Stock Plan for           N/A
      Non-Employee Trustees is incorporated herein by reference to Exhibit 10.7 
      of the Trust's Form 10-K for the fiscal year ended July 31, 1995.


10.8  Property Capital Trust 1994  Stock Option Plan for Non-Employee Trustees is      N/A
      incorporated herein by reference to Exhibit 10.8 of the Trust's Form 10-K 
      for the fiscal year ended July 31, 1995.


10.9  Incentive  Compensation  Agreement,  dated  August  25, 1995, between Robert     N/A
      M. Melzer and the Trust is incorporated herein by reference to Exhibit 10.9 
      of the Trust's Form 10-K for the fiscal year ended July 31, 1995.

21    List of the Trust's subsidiaries.                                                90


23    Consent of Independent Auditors.                                                 91

</TABLE>
<PAGE>
Page 26
PART IV


ITEM 14.  EXHIBITS, CONSOLIDATED FINANCIAL  STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

(A)  1. CONSOLIDATED FINANCIAL STATEMENTS
         The consolidated financial statements listed  in  the  accompanying
         index to financial statements on Page 29 are filed as part of this 
         Annual Report.

     2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
         The consolidated financial statement schedules listed in the  
         accompanying index to financial statements on Page 29 are filed as 
         part of this Annual Report.

     3. EXHIBITS
         The exhibits  listed  in  the accompanying index to exhibits on 
         Pages 24 and 25 are filed as part of the Annual Report.

(B)     REPORTS ON FORM 8-K

Current Report dated August  27, 1996 attaching the Trust's press release dated
August 23, 1996.
Current Report dated October  8,  1996  attaching the Trust's press release
dated October 8, 1996.

<PAGE>
Page 27

SIGNATURES



Pursuant  to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934,  the  Trust has duly caused this amendment to the report to be 
signed on its behalf by the undersigned, thereunto duly authorized.

PROPERTY CAPITAL TRUST
(Registrant)

By   /S/ ROBERT M. MELZER
     Robert M. Melzer                                   NOVEMBER 4, 1996
     President and Chief Executive Officer                     Date

Pursuant  to  the  requirements  of  the  Securities Exchange Act of 1934, this
report has been signed below by the following  persons  on  behalf of the Trust
and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S>                               <C>                             <C>
                                  Managing Trustee                
John A. Cervieri Jr.


                                  Trustee, President and          
Robert M. Melzer                  Chief Executive Officer
                                  (Principal Executive and Financial Officer)


                                  Trustee                         
Walter M. Cabot


                                  Trustee                         
Graham O. Harrison


                                  Trustee                         
Walter F. Leinhardt


                                  Trustee                         
Edward H. Linde


                                  Trustee                         
Glenn P. Strehle


                                 Vice President & Treasurer       
Robin W. Devereux              (Principal Accounting Officer)

</TABLE>
<PAGE>

Page 28




                             ANNUAL REPORT ON FORM 10-K
                       ITEM 8 AND ITEM 14(A) (1), (2) AND (D)




          INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES,

                              FINANCIAL STATEMENTS AND

                            FINANCIAL STATEMENT SCHEDULES






                            PROPERTY CAPITAL TRUST
                             Boston, Massachusetts
                           Year Ended July 31, 1996


                   PROPERTY CAPITAL MIDWEST ASSOCIATES, L.P.
                             Boston, Massachusetts
                         Year Ended December 31, 1995


                        PCA CROSSROADS ASSOCIATES, LTD.
                             Boston, Massachusetts
                         Year Ended December 31, 1995
<PAGE>
Page 29
ITEM  14(A)(1),AND  (2)  INDEX TO FINANCIAL STATEMENTS AND FINANCIAL  STATEMENT
SCHEDULES
<TABLE>
<CAPTION>
                                                                                                    PAGE
<S>                                                                                                 <C>
Property Capital Trust
The following consolidated  financial  statements of Property Capital Trust are
included in Item 8:

Consolidated balance sheet at July 31, 1996 and 1995                                                 31
Consolidated statement of income for each of the three years in the period ended July 31, 1996       32
Consolidated statement of cash flows for each of the three years in the period ended 
 July 31, 1996                                                                                       33
Consolidated statement of shareholders' equity for each of the three years in the period ended 
 July 31, 1996                                                                                       34
Notes to consolidated financial statements                                                        35-51
Consolidated Quarterly Financial Data (unaudited)                                                    52

The following consolidated financial statement  schedules  of  Property Capital
Trust are included in Item 14 (d):

II  - Allowance for possible investment losses                                                       53
III  -  Investments - Land Leasebacks held directly by the Trust, and Owned
        Properties held directly by the Trust and Assets Held for Sale directly 
        by the Trust                                                                              54-59
IV - Investments - Mortgage Loans held directly by the Trust                                      60-62
Exhibit A - Investment Partnerships - Owned Properties and Assets Held for Sale                   64-69

The following separate financial  statements are required pursuant to Rule 3-09
of Regulation S-X:

PROPERTY CAPITAL MIDWEST ASSOCIATES, L.P.
The following financial statements of Property Capital Midwest Associates, L.P.
are included in Item 8:

Balance sheet at December 31, 1995 and 1994                                                         72
Statement of operations for each of the three years in the period ended December 31, 1995           73
Statement of cash flows for each of the three years in the period ended December 31, 1995           74
Statement of changes in partners' equity for each of the three years in the period ended  
 December 31, 1995                                                                                  75
Notes to financial statements                                                                    76-78

The  following  financial  statement  schedule   of  Property  Capital  Midwest
Associates, L.P. are included in Item 14 (d):

III - Assets Held for Sale                                                                       80-81

PCA CROSSROADS ASSOCIATES, LTD.
The  following  financial  statements of PCA Crossroads  Associates,  Ltd.  are
included in Item 8:

Balance sheet at December 31, 1995 and 1994                                                         84
Statement of income for each of the three years in the period ended December 31, 1995               85
Statement of cash flows for each of the three years in the period ended December 31, 1995           86
Statement of changes in partners' equity for each of the three years in the period ended 
 December 31, 1995                                                                                  87
Notes to financial statements                                                                    88-89


All other schedules for which  provision  is  made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
instructions or are inapplicable and therefore have been omitted.
</TABLE>
<PAGE>
Page 30
REPORT OF INDEPENDENT AUDITORS





The Trustees and Shareholders
Property Capital Trust



We  have  audited  the  accompanying consolidated balance  sheets  of  Property
Capital Trust (a real estate  investment  trust)  as of July 31, 1996 and 1995,
and the related consolidated statements of income, cash flows and shareholders'
equity  for each of the three years in the period ended  July  31,  1996.   Our
audits also  included  the financial statement schedules listed in the Index at
Item 14(a).  These financial statements and schedules are the responsibility of
the Trust's management.   Our  responsibility is to express an opinion on these
financial statements and schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require  that  we  plan  and  perform  the audit to
obtain reasonable assurance about whether the financial statements are  free of
material  misstatement.  An audit includes examining, on a test basis, evidence
supporting  the  amounts and disclosures in the financial statements.  An audit
also  includes  assessing   the  accounting  principles  used  and  significant
estimates made by management,  as  well  as  evaluating  the  overall financial
statement presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  consolidated  financial position of
Property Capital Trust at July 31, 1996 and 1995, and the consolidated  results
of  its operations and its cash flows for each of the three years in the period
ended   July  31,  1996,  in  conformity  with  generally  accepted  accounting
principles.   Also,  in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.




                                     ERNST & YOUNG LLP


Boston, Massachusetts
August 23, 1996
<PAGE>
Page 31
Property Capital Trust
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                        JULY 31,
                                                               1996                  1995
<S>                                                        <C>                    <C>
ASSETS
Real Estate Investments
  Owned Properties held directly by the Trust
   (net of accumulated depreciation of $12,932,000
   and $10,522,000 in 1996 and 1995, respectively)         $56,810,000            $83,985,000
  Structured Transactions held directly by the Trust        28,200,000             32,571,000
  Investment Partnerships                                    9,600,000             48,299,000

                                                            94,610,000            164,855,000
Allowance for possible investment losses                   (4,636,000)            (14,077,000)

                                                            89,974,000            150,778,000
Asset Held for Sale directly by the Trust                   16,938,000             10,185,000

                                                           106,912,000            160,963,000

Cash and cash equivalents                                    2,997,000              5,209,000
Interest and rents receivable
  Owned Properties held directly by the Trust                1,503,000              1,958,000
  Structured Transactions held directly by the Trust           241,000                221,000
  Other assets                                                 966,000              1,088,000

                                                         $ 112,619,000          $ 169,439,000

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Accounts payable and accrued expenses                     $5,367,000             $3,207,000
  Accrued interest                                             287,000                707,000
  Mortgage notes payable                                    36,889,000             40,145,000
  9 3/4%  Convertible Subordinated Debentures                   -                   2,546,000
  10% Convertible Subordinated Debentures                       -                  29,125,000

                                                            42,543,000             75,730,000

Shareholders' Equity
  Common Shares (without par value, unlimited shares
   authorized,  9,278,261  and  9,053,881 issued and
   outstanding in 1996 and 1995, respectively)             107,672,000           106,190,000
   Accumulated deficit                                     (36,341,000)          (12,481,000)

                                                            71,331,000            93,709,000
Less cost of Treasury Shares                                (1,255,000)               -

Total Shareholders' Equity                                  70,076,000            93,709,000


                                                         $ 112,619,000         $ 169,439,000

                                   See accompanying notes
</TABLE>
<PAGE>
Page 32
Property Capital Trust
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                                  YEARS     ENDED     JULY    31,
                                                               1994            1995           1996
<S>                                                        <C>             <C>            <C>
REVENUES
Rents from Owned Properties held directly by the Trust     $ 12,641,000    $ 15,777,000   $ 14,083,000
Structured Transactions held directly by the Trust
  Base income                                                 2,664,000       2,693,000      3,074,000 
  Overage income                                              2,297,000       1,858,000      1,911,000
Income from unconsolidated Investment Partnerships            3,326,000       1,858,000      2,264,000

                                                             20,928,000      22,186,000     21,332,000

Interest income                                                 486,000         108,000          1,000
Advisory fee income                                             385,000         325,000        290,000

                                                             21,799,000      22,619,000     21,623,000

EXPENSES
Expenses on Owned Properties held directly by the Trust       5,569,000       6,822,000      6,915,000
Interest                                                      4,800,000       6,931,000      6,994,000
Depreciation                                                  4,008,000       4,192,000      3,538,000
General and administrative expenses                           3,518,000       2,138,000      2,034,000
Write-down of real estate investment                          3,000,000            -              -
Professional fees                                               474,000         362,000        377,000
Trustees' fees and expenses                                     137,000         158,000        186,000

                                                             21,506,000      20,603,000     20,044,000

INCOME BEFORE GAIN ON SALE OF REAL ESTATE
  INVESTMENTS AND EXTRAORDINARY ITEM                            293,000       2,016,000      1,579,000
GAIN ON SALE OF REAL ESTATE INVESTMENTS                       6,094,000       3,209,000      2,510,000

INCOME BEFORE EXTRAORDINARY ITEM                              6,387,000       5,225,000      4,089,000
EXTRAORDINARY (LOSS) GAIN FROM EXTINGUISHMENT OF DEBT          (473,000)         88,000              -

NET INCOME                                                $   5,914,000    $  5,313,000  $   4,089,000

NET INCOME PER SHARE

INCOME BEFORE GAIN ON SALE OF REAL ESTATE
  INVESTMENTS AND EXTRAORDINARY ITEM                            $ 0.03          $ 0.23         $ 0.17
GAIN ON SALE OF REAL ESTATE INVESTMENTS                           0.67            0.35           0.28

INCOME BEFORE EXTRAORDINARY ITEM                                  0.70            0.58           0.45
EXTRAORDINARY (LOSS) GAIN FROM EXTINGUISHMENT OF DEBT            (0.05)           0.01            -

NET INCOME PER SHARE                                            $ 0.65          $ 0.59          $ 0.45

AVERAGE SHARES OUTSTANDING                                   9,097,000       9,044,000       9,030,000

</TABLE>
<PAGE>
Page 33
Property Capital Trust
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                  YEARS     ENDED     JULY    31,
                                                               1994            1995           1996
<S>                                                        <C>             <C>            <C>
OPERATING ACTIVITIES
Net Income                                                $  5,914,000   $  5,313,000     $  4,089,000
Adjustments to Net Income
  Gain on sale of real estate investments                   (6,094,000)    (3,209,000)      (2,510,000)
  Extraordinary loss (gain) from extinguishment of debt        473,000        (88,000)           -
  Depreciation and amortization                              4,205,000      4,398,000        3,611,000
  Write-down of real estate investment                       3,000,000          -                -
  Income from unconsolidated Investment Partnerships        (3,326,000)    (1,858,000)      (2,264,000)
  Distributions of income from Investment Partnerships       3,326,000      2,106,000        2,048,000
Changes in assets and liabilities
  Decrease (increase) in interest and rents receivable         435,000        (68,000)        (115,000)
  (Increase) decrease in other assets, net                    (137,000)       247,000         (387,000)
  Increase in accounts payable and accrued
   expenses and accrued interest                             1,418,000        380,000          818,000

Net Cash Provided by Operating Activities                    9,214,000      7,221,000        5,290,000

Owned Properties held directly by the Trust
  Dispositions                                              10,828,000     15,310,000       12,567,000
  Additions                                                 (1,075,000)    (6,249,000)      (9,030,000)
Structured Transactions held directly by the Trust
  Dispositions/repayments                                    5,101,000         10,000        5,434,000
  Additions                                                   (600,000)         -                -
Investment Partnerships
  Distributions in excess of income                         38,883,000      1,196,000          146,000

Net Cash Provided by Investing Activities                   53,137,000     10,267,000        9,117,000

FINANCING ACTIVITIES
Redemption/repurchase of Convertible 
 Subordinated Debentures                                   (31,645,000)    (1,610,000)         -
Cash dividends paid                                        (29,774,000)    (3,437,000)      (2,528,000)
Prepayment of mortgage notes payable                        (3,000,000)    (8,440,000)     (17,492,000)
Scheduled amortization of mortgage notes payable              (256,000)      (525,000)        (469,000)
Proceeds from exercise of stock options                        112,000         13,000            8,000
Proceeds from mortgage notes payable                              -         6,000,000       18,000,000
Repayment of bank note payable, net                               -        (5,000,000)     (11,530,000)

Net Cash Used in Financing Activities                      (64,563,000)   (12,999,000)     (14,011,000)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS        (2,212,000)     4,489,000          396,000

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               5,209,000        720,000          324,000

CASH AND CASH EQUIVALENTS AT END OF YEAR                  $  2,997,000   $  5,209,000     $    720,000

</TABLE>
<PAGE>
Page 34


Property Capital Trust
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                  YEARS     ENDED     JULY    31,
                                                               1994            1995           1996
<S>                                                        <C>             <C>            <C>
COMMON SHARES
Balance at beginning of year                             $ 106,190,000   $ 106,060,000   $ 106,052,000
Common Shares issued in payment of deferred
  Trustees' compensation                                     1,344,000         117,000          -
Stock options exercised                                        112,000          13,000          8,000
Conversion of Convertible Subordinated Debentures               26,000           -              -

Balance at end of year                                     107,672,000     106,190,000    106,060,000

ACCUMULATED DEFICIT
Balance at beginning of year                               (12,481,000)    (14,357,000)   (15,918,000)
Net income                                                   5,914,000       5,313,000      4,089,000
Cash dividends paid ($3.23, $0.38 and $0.28 per share
  in 1996, 1995 and 1994, respectively)                    (29,774,000)     (3,437,000)    (2,528,000)

Balance at end of year                                     (36,341,000)    (12,481,000)   (14,357,000)

TREASURY SHARES
Balance at beginning of year                                     -              -              -
Purchase of Treasury Shares included in Rabbi
  Trust for the benefit of Trustees (184,639 Treasury
  Shares  in  1996,  and  0 in 1995 and  1994)             (1,255,000)          -              -

Balance at end of year                                     (1,255,000)          -              -


Total Shareholders' Equity                               $ 70,076,000     $ 93,709,000   $ 91,703,000






NUMBER OF COMMON SHARES
Common shares issued and outstanding at beginning of year   9,053,881        9,030,585      9,028,585
Common Shares issued in payment of deferred
  Trustees' compensation                                      199,542           20,296                                             -
Stock options exercised                                        23,640            3,000          2,000
Conversion of Convertible Subordinated Debentures               1,198            -              -

Common Shares Issued and Outstanding at End of Year         9,278,261        9,053,881      9,030,585
</TABLE>
See accompanying notes

<PAGE>
Page 35
Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS PLAN

On  June  14, 1995, the Trustees adopted a business plan which provides for the
orderly disposition  of  the  Trust's  investments  (the "Business Plan").  The
Trustees anticipate that the Business Plan will involve  dispositions  of Owned
Properties   and  Structured  Transactions  on  a  property-by-property  basis,
although the Trust  will  consider  bulk sales and other opportunities that may
arise which expedite the disposition process.  At the Trust's Annual Meeting of
Shareholders held on December 15, 1995,  the  Trust's shareholders ratified the
Business Plan and approved certain amendments to  the  Trust's  Declaration  of
Trust necessary for its implementation.

To the extent the Trust receives net proceeds from sales of its properties, the
Trust  intends  to  utilize  such  net  proceeds  to  retire  debt  and/or make
distributions  to  shareholders.   No  assurances  can be given as to the  time
required to carry out the plan (although the Trustees  anticipated in June 1995
that the plan would be fully implemented within three to  five  years)  or  the
prices  at  which  the  properties  can  be sold.  To date the Business Plan is
proceeding  more  rapidly and generating higher  sales  prices  than  initially
anticipated.  Immediately prior to the implementation of the Business Plan, the
Trust owned 27 investments.   During fiscal 1996, thirteen properties have been
sold  or otherwise disposed of and  the  proceeds  have  been  used  to  retire
$31,671,000  principal  amount  of  the  Trust's  10%  and  9  3/4% Convertible
Subordinated Debentures and to prepay $3,000,000 of the first mortgage  loan on
the  Trust's  Loehmann's  Fashion  Island  property  in  Aventura, Florida.  In
addition,  the  Trust  paid  special  dividends  aggregating  $2.75  per  share
($25,403,000).

CONSOLIDATION

The consolidated financial statements of the Trust include the  accounts of its
wholly   owned   subsidiaries.   All  significant  intercompany  accounts   and
transactions have been eliminated in consolidation.

FEDERAL INCOME TAXES

The Trust has qualified and has elected to be taxed as a real estate investment
trust under Sections  856-860  of the Internal Revenue Code.  The Trust intends
to continue to qualify as a real  estate  investment  trust.   Accordingly,  no
provision  has been made for Federal income taxes in the consolidated financial
statements.

CASH AND CASH EQUIVALENTS

For purposes  of  the  Statement  of Cash Flows, the Trust considers all highly
liquid investments with an initial  maturity of three months or less to be cash
equivalents.

INVESTMENT PARTNERSHIPS

Certain of the Trust's investments have  been  made  through  partnerships or a
participation  agreement in which the Trust or one of its subsidiaries  is  the
general partner  or  lead  lender and other institutional investors are limited
partners or participants ("Investment Partnerships").  During the third quarter
of fiscal 1994, the Trust changed  its  method of accounting for its Investment
Partnerships to the equity method and prior  period  financial  statements were
restated  to reflect the change as if it had occurred at the beginning  of  the
period.  Previously,  the  Trust  consolidated  its  share  of  the  Investment
Partnerships'  results  of  operations  and  related  assets  and  liabilities.
Although the change in accounting did not affect the Trust's net income  (loss)
or  shareholders'  equity, the change was, and continues to be, to a preferable
method  based  upon  generally  accepted  accounting  principles  and  is  more
consistent with current accounting practices in the real estate industry.

VALUATION OF REAL ESTATE INVESTMENTS

Real estate investments  (except for Assets Held for Sale) are carried at cost,
net of accumulated depreciation  and  less an allowance for possible investment
losses.   When  the  Trust acquires a property  from  its  lessee/mortgagor  it
records the acquired property  improvements  at  the  lesser  of  cost  or  net
realizable  value  at  the  time  of  acquisition.   The  Trust's allowance for
possible  investment  losses  is based upon management's estimate  of  the  net
realizable value of each investment  and  to  the  extent this is less than the
carrying value of an investment, an allowance for possible investment losses is
established.  In determining estimated net realizable  value,  consideration is
given  to  many  factors, such as income to be earned from the investment,  the
cost to hold the property to the hypothetical time of sale, the selling price a
property would bring  at  such  time, the cost of improving the property to the
condition contemplated in determining  the selling price, the cost of disposing
of the property and prevailing economic  conditions  including  availability of
credit.
<PAGE>
Page 36

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Depreciation  and  amortization  have  been  calculated under the straight-line
method, based upon the estimated useful lives  of  the  assets.  Properties and
property improvements are depreciated over 25 to 39 years.  Leasing commissions
and tenant improvements are amortized under the straight-line  method  over the
terms  of  the  related  leases.   Expenditures  for  maintenance,  repairs and
betterments which do not materially prolong the normal useful life of  an asset
are charged to operations as incurred.

ASSETS HELD FOR SALE

The  Trust  defines an "Asset Held for Sale" as an asset that has been approved
for sale by the  Trustees  and,  if  applicable, the Investment Partnership and
either is being marketed for sale or is soon to be marketed by a broker who has
already been selected by the Trust.  Assets  Held  for Sale are written down to
the lower of cost or net realizable value and, in the  case of investments held
directly  by  the  Trust,  are  classified  separately  on the  balance  sheet.
Depreciation is not recorded on these assets.  The revenues  and expenses of an
Asset Held for Sale are not reclassified, and continue to be recorded  as  they
were prior to the reclassification.

MORTGAGE LOANS

The  Trust  accounts  for  its  mortgage  loans  under  the  provisions of FASB
Statement  No.  114,  "ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF  A  LOAN,"  as
amended by FASB Statement  118.  The statement requires impairment losses to be
recorded, when it is probable  that  a  creditor  will be unable to collect all
amounts  due  according to the contractual terms of the  loan  agreement.   The
statement requires  impaired loans to be measured based on the present value of
expected future cash  flows  discounted  at the loan's effective interest rate,
or as a practical expedient at the loan's  observable  market price or the fair
value of the collateral if collateral dependent.

STOCK OPTION ACCOUNTING POLICY DISCLOSURE

The Trust accounts for its stock compensation arrangements under the provisions
of APB 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES," and  intends to continue
to do so.

REVENUE RECOGNITION

For  financial  reporting purposes, the Owned Properties held directly  by  the
Trust and the Investment  Partnerships  are  accounted  for on a one-month lag.
Certain space leases at the Owned Properties held directly by the Trust provide
for free rent periods and stepped minimum rents which are  accounted  for  on a
straight-line  basis  over  the  terms of the leases.  Rental income recognized
under  the  straight-line method was  greater  (less)  than  rent  received  or
receivable by  the  Trust  for  financial  reporting  purposes  by  ($119,255),
$280,000  and  ($32,000)  for  the  years  ended  July 31, 1996, 1995 and 1994,
respectively.

NET INCOME PER SHARE

Net  income  per share is calculated by dividing net  income  by  the  weighted
average Common  Shares  outstanding during the year.  Net income per share on a
quarterly basis may not total  to  the  annual  net  income  per  share  due to
rounding.

USE OF ESTIMATES

The  preparation  of financial statements in conformity with generally accepted
accounting principles  requires  management  to  make estimates and assumptions
that affect the amounts reported in the financial  statements  and accompanying
notes.  Actual results could differ from those estimates.

RECLASSIFICATION

Certain items in the 1995 and 1994 financial statements have been  reclassified
to conform to the 1996 presentation.



<PAGE>
Page 37



Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

NEW ACCOUNTING STANDARDS

In  March  1995,  the  FASB  issued  Statement  No.  121,  "ACCOUNTING  FOR THE
IMPAIRMENT  OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED  OF",
which requires  impairment  losses  to be recorded on long-lived assets used in
operations where indicators of impairment
are present and the undiscounted cash  flows estimated to be generated by those
assets are less than the assets' carrying amount.  Statement 121 also addresses
the accounting for long-lived assets that  are expected to be disposed of.  The
Trust will adopt Statement 121 in the first  quarter  of fiscal 1997.  Based on
current  circumstances,  including  implementing  the  Business  Plan  and  the
available loss reserve, the financial statement impact of adoption of Statement
121 is not anticipated to adversely impact the Trust's financial statements.


NOTE 2.  REAL ESTATE INVESTMENTS

The Trust's real estate investments consist primarily of  equity investments in
completed,  income-producing properties located throughout the  United  States.
Investments consisting  of land leasebacks and/or mortgage loans are classified
as Structured Transactions.   Operating  properties  are  classified  as  Owned
Properties.   Certain  properties  are  classified as Assets Held for Sale (see
Note 1).  Investments made through partnerships  or participation agreements in
which the Trust or its subsidiary is the general partner  or  lead  lender  and
other institutional investors are the limited partners or participating lenders
are  classified as Investment Partnerships.  As of July 31, 1996, the Trust had
seven   Structured  Transactions  held  directly  by  the  Trust,  three  Owned
Properties  held  directly by the Trust and one Asset Held for Sale directly by
the Trust.  The Trust  had investments in three Investment Partnerships, one of
which only held an Owned Property and two of which each only held an Asset Held
for Sale.


The Trust's Real Estate  Investments  (net  of accumulated depreciation) are as
follows:
                                                             JULY 31,
                                                      1996             1995

Owned Properties held directly by the Trust       $56,810,000      $83,985,000

Structured Transactions held directly by the Trust
  Land leasebacks                                  14,180,000       17,140,000
  Mortgage loans                                   14,020,000       15,431,000

  Investment Partnerships*                          9,600,000       48,299,000

                                                   94,610,000      164,855,000

  Allowance for possible investment losses         (4,636,000)     (14,077,000)

                                                   89,974,000      150,778,000

  Asset Held for Sale directly by the Trust        16,938,000       10,185,000

                                                $ 106,912,000    $ 160,963,000

*Inclusive of Assets Held for Sale in Investment Partnerships.


<PAGE>                            
Page 38


Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

The   Trust's  Real  Estate  Investments  (net  of  accumulated  depreciation),
including  Assets  Held  for  Sale and before allowance for possible investment
losses, are diversified by type of property as follows:

                                                           JULY 31,
                                              --------------------------------
                                                   1996                1995
------------------------------------------------------------------------------
OWNED PROPERTIES HELD DIRECTLY BY THE TRUST
Shopping centers                               $   36,157,000   $  43,603,000
Office buildings                                   20,653,000      40,382,000
Apartments                                                  -               -
Hotels                                                      -               -
                                               ---------------   ------------
                                                    56,810,000     83,985,000
                                               ---------------   ------------

STRUCTURED TRANSACTIONS HELD DIRECTLY 
BY THE TRUST
Shopping centers                                     4,314,000      4,325,000
Office buildings                                             -              -
Apartments                                          15,570,000     16,530,000
Hotels                                               8,316,000     11,716,000
                                               ---------------   ------------
                                                    28,200,000     32,571,000
                                               ---------------   ------------

INVESTMENT PARTNERSHIPS
Shopping centers {(1)}                               6,656,000      8,552,000
Office buildings                                             -     18,611,000
Apartments {(1)}                                     2,944,000     12,155,000
Hotels                                                       -      8,981,000
                                               ---------------   ------------
                                                     9,600,000     48,299,000
                                               ---------------   ------------

ASSET HELD FOR SALE DIRECTLY BY THE TRUST
Office buildings                                    16,938,000     10,185,000
                                               ---------------   ------------
Total Real Estate Investments                    $ 111,548,000  $ 175,040,000
                                               ===============  =============

REAL ESTATE INVESTMENTS BY TYPE OF PROPERTY
Shopping centers                                $   47,127,000  $  56,480,000
Office buildings                                    37,591,000     69,178,000
Apartments                                          18,514,000     28,685,000
Hotels                                               8,316,000     20,697,000
                                               ---------------   ------------
Total Real Estate Investments                    $ 111,548,000  $ 175,040,000
                                               ===============  =============
NUMBER OF PROPERTIES                                        14             27
                                                            ==             ==

{(1)} Inclusive of Assets Held for Sale in Investment Partnerships
      as of July 31, 1996.

<PAGE>                            
Page 39




Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

The   Trust's  Real  Estate  Investments  (net  of  accumulated  depreciation),
including  Assets  Held  for  Sale and before allowance for possible investment
losses, are diversified as of July 31, 1996, by geographic region as follows:

                               NUMBER OF            INVESTMENT           % OF 
GEOGRAPHIC REGION             PROPERTIES              AMOUNT            TOTAL
------------------------------------------------------------------------------

Midwest                          6                $   45,395,000          41%
South                            3                    42,865,000          38
East                             1                    16,938,000          15
West                             4                     6,350,000           6
                                ---                -------------          --
                                14                 $ 111,548,000         100%
                                ===                =============         ====



OWNED PROPERTIES HELD DIRECTLY BY THE TRUST

Owned Properties held directly by the Trust (which include those held in wholly
owned  subsidiaries)  include  land, buildings, tenant improvements, and other.
Tenant improvements represent the  cost  of  constructing  or  finishing tenant
space  under the terms of a lease for that space.  Material disbursements  that
constitute  new  assets  or  improvements  to existing assets that extend their
useful lives and/or substantially increase their value are capitalized.

Assets included as Owned Properties held directly by the Trust are as follows:

                                                      JULY 31,
                                           ----------------------------------
                                                 1996              1995
------------------------------------------------------------------------------
Land                                        $  13,985,000      $ 17,485,000
Buildings                                      44,881,000        65,700,000
Tenant improvements                             8,893,000         9,206,000
Other                                           1,983,000         2,116,000
                                             ------------      ------------
                                               69,742,000        94,507,000
Accumulated depreciation                      (12,932,000)      (10,522,000)
                                             ------------       -----------
Owned Properties
held directly by the Trust                  $  56,810,000      $ 83,985,000
                                            =============      ============

<PAGE>                            
Page 40

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

The  operating  results  of  Owned  Properties  held directly by the Trust  are
reflected  in  the  consolidated  statement  of  income  as  Rents  from  Owned
Properties held directly by the Trust and Expenses  on  Owned  Properties  held
directly  by the Trust.  Rents from Owned Properties held directly by the Trust
represent base  rents  and  expense  reimbursements  from tenants.  Expenses on
Owned Properties held directly by the Trust are as follows:

                                              YEARS ENDED JULY 31,
                           --------------------------------------------------
                                 1996                1995            1994
-----------------------------------------------------------------------------
Repairs and maintenance      $ 1,819,000       $ 2,175,000        $ 2,272,000
Real estate taxes              1,295,000         1,333,000          1,585,000
Utilities                      1,002,000         1,336,000          1,322,000
General and administrative       836,000         1,209,000          1,072,000
Management fees                  448,000           570,000            487,000
Insurance                        169,000           199,000            177,000
                               ---------        ----------         ----------
Expenses on Owned Properties
 held directly by the Trust  $ 5,569,000       $ 6,822,000        $ 6,915,000
                             ===========       ===========        ===========


During the quarter ended July 31, 1996, the Trust wrote  down its investment in
Loehmann's  Fashion  Island,  a  shopping  center  in  Aventura,   Florida,  by
$5,612,000 to $36,157,000. $3,000,000 of the write-down was charged to earnings
and  the  balance  was charged to the Trust's allowance for possible investment
losses.

During fiscal 1995, the Trust sold the 6110 Executive Boulevard office building
to an unrelated party  for  $16,380,000,  resulting  in a gain of approximately
$3,099,000.  Effective February 1, 1994, a wholly owned subsidiary of the Trust
acquired  the  equity  interest of its lessee in 6110 Executive  Boulevard,  an
office  building  in Rockville,  Maryland,  subject  to  a  non-recourse  first
mortgage loan of $6,478,000.   During  the  quarter  ended January 31,1994, the
Trust  wrote  down  its investment in 6110 Executive Boulevard  by  $2,000,000.
This  write-down  was  charged  against  the  Trust's  allowance  for  possible
investment losses.

During fiscal 1994, the Trust sold Eagle apartments to an unrelated third party
for approximately $12,570,000, resulting in a loss of $90,000.

ASSETS HELD FOR SALE

At July 31, 1996, the Trust  had one Asset Held for Sale directly by the Trust,
One Park West office building.   This investment, which had a net book value of
$18,457,000, had previously been classified  as an Owned Property held directly
by the Trust.  At July 31, 1996, the Trust wrote  down  its  investment in this
property  by  $1,519,000  to  $16,938,000.  This loss was charged  against  the
Trust's previously established  allowance  for  possible investment losses.  In
addition, during fiscal 1996, the Trust sold the  Citibank  Office  Plaza - Oak
Brook building to an unrelated third party for $11,380,000, resulting in a gain
of  approximately $470,000.  In fiscal 1995, this investment, which had  a  net
book  value of $11,156,000, had previously been classified as an Owned Property
held directly  by the Trust.  During the quarter ended July 31, 1995, the Trust
wrote down its investment  in  this  property by $971,000 to $10,185,000.  This
loss  was  charged  against the Trust's previously  established  allowance  for
possible investment losses.

During fiscal 1996 and  1995,  the Investment Partnerships reclassified certain
of their real estate investments  to  Assets Held for Sale and wrote down these
assets to estimated net realizable value,  which  the  Trust  then  charged its
share against its allowance for possible investment losses.

STRUCTURED TRANSACTIONS HELD DIRECTLY BY THE TRUST

Land leasebacks consist of land purchased under income-producing properties and
leased  back  under long-term net lease arrangements.  These leases, which  are
classified as operating leases, have remaining initial terms of 21 to 68 years,
with a weighted  average  term  of  56 years.  The leases require fixed monthly
base rental payments to the Trust and generally also provide for overage rental
payments,  which are typically computed  as  a  percentage  of  property  gross
receipts in excess of base amounts.  Base rental income contractually due under
land leasebacks  existing at July 31, 1996 is approximately $1,376,000 per year
for the next five years.

Certain land leasebacks  contain options whereby the lessees may repurchase the
land at prices typically based  on  fair  market  value,  but not less than the
Trust's  cost,  or  may  cause the land and improvements to be  sold  to  third
parties.  When a property  is  sold  to  a  third  party,  the  Trust typically
receives the greater of a percentage of total sales proceeds of the property or
its  cost.  During the next five years, repurchase or similar options  covering
$2,750,000 of land leasebacks become exercisable.

<PAGE>                            
Page 41

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

The mortgage  loan investments are generally long-term loans that require fixed
monthly base interest  payments  and,  when  not  payable  on a self-amortizing
basis,  require principal payments at maturity.  Mortgage loans  are  generally
owned in   conjunction with land leaseback transactions  and are subordinate to 
and have   cross-default provisions with the land leasebacks.   The loans allow 
for prepayment  prior to maturity, and during the next five years all loans may 
be prepaid.

Because the mortgage  loans  were  made  and continue to be held in conjunction
with  land  leaseback  transactions  and  these   loans  were  not   originally
structured to be considered separately from the land leaseback transactions, it
is  not  practicable to estimate the fair values of these  mortgage  loans.   A
determination  of  the  fair  values  of  these  mortgage  loans  as a separate
component would be too subjective and as such would not result in a  meaningful
estimate.

During  fiscal  1996, the Trust disposed of three Structured Transactions  held
directly by the Trust.   The  Trust's  $825,000  Bluffs  II land investment was
purchased by the Trust's lessee for $2,150,000, resulting  in  a  gain  to  the
Trust  of  $1,320,000 after closing costs.  The Trust's $135,000 Yorkshire land
investment was purchased by an unrelated third party for $460,000, resulting in
a gain to the  Trust  of  $310,000 after closing costs.  The Trust's $2,000,000
Grosvenor Airport Inn land  investment  was purchased by the Trust's lessee for
$2,000,000 and the Trust's related $2,000,000  mortgage  loan  was  prepaid for
$500,000,  with  the  resulting  loss  of $1,500,000 being charged against  the
Trust's allowance for possible investment losses.

In  addition,  during  fiscal  1996,  as  provided   for   in  the  March  1994
restructuring  of  the Trust's Cincinnati Marriott Inn investments,  the  Trust
loaned an additional  $600,000  to  its  lessee,  secured by a junior leasehold
mortgage, to make certain approved capital improvements to the hotel.  The loan
bears interest at 8.0% per annum, with amortization  commencing May 1, 1999 and
matures on March 1, 2014.

During  fiscal  1994 the Trust disposed of three Structured  Transactions  held
directly  by  the  Trust.   The  Trust's  $1,000,000  Village  Oaks  apartments
investment was purchased  by  the  Trust's  lessee for $3,500,000.  The Trust's
Brown County Inn $500,000 land investment was  purchased  by the Trust's lessee
for $600,000 and the Trust's related $973,000 leasehold mortgage was prepaid at
par.  The Trust's $500,000 Rapids Mall mortgage loan was prepaid  for $350,000,
with the resulting loss of $150,000 being charged against the Trust's allowance
for possible investment losses.

INVESTMENTS IN UNCONSOLIDATED INVESTMENT PARTNERSHIPS

As  of  July  31,  1996  the  Trust or its subsidiary had investments in  three
unconsolidated Investment Partnerships  and,  as of July 31, 1995 and 1994, the
Trust  or  its  subsidiary  had investments in five  unconsolidated  Investment
Partnerships.  These investments  are  accounted for on the equity method.  The
Investment Partnerships provide for the  allocation  of  profits and losses and
cash distributions in proportion to ownership as shown below:

                                                 % OWNED BY THE TRUST
                                                      JULY 31,
                                            ---------------------------------
INVESTMENT  PARTNERSHIPS                         1996         1995
-----------------------------------------------------------------------------
Property Capital Midwest Associates, L.P.        53.30%      53.30%
PCA Southwest  Associates  Limited  Partnership  45.45%      45.45%
PCA  Canyon View Associates Limited Partnership  23.81%      23.81%
Lisle Hilton Inn Loan Participation                  -       41.67%
PCA Crossroads Associates, Ltd.                      -       25.00%




<PAGE>                            
Page 42


Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

Condensed  combined  financial  statements  of  the  unconsolidated  Investment
Partnerships are as follows:

Investment Partnerships
CONDENSED COMBINED BALANCE SHEET


                                                           JULY 31,
                                              --------------------------------
                                                  1996                1995
------------------------------------------------------------------------------
ASSETS
Current assets                                $  2,711,000       $  2,686,000
Owned Properties                                12,682,000         37,258,000
Assets Held for Sale                            18,210,000         55,549,000
Mortgage loans                                           -         34,675,000
Land leasebacks                                          -          9,084,000
Other assets                                        23,000             72,000
                                              ------------      -------------
                                              $ 33,626,000      $ 139,324,000
                                              ============      =============

LIABILITIES AND CAPITAL
Current liabilities                           $  1,077,000      $   3,330,000
Other liabilities                                        -            462,000
Mortgage notes payable                          10,314,000         25,420,000

Trust's share of combined capital                9,600,000         48,299,000

Limited partners' share of combined capital     12,635,000         61,813,000
                                               -----------       ------------
                                              $ 33,626,000      $ 139,324,000
                                              ============      =============


<PAGE>                            
Page 43

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

Investment Partnerships
CONDENSED  COMBINED STATEMENT OF INCOME

                                                    YEARS ENDED JULY 31,
                                       ---------------------------------------
                                            1996          1995         1994
-------------------------------------------------------------------------------
REVENUES
Rents from Owned Properties            $ 19,483,000  $ 21,042,000  $ 10,968,000
Structured Transactions
 Base income                              2,261,000     2,664,000     4,225,000
 Overage income                             183,000       644,000       339,000
Other income                                219,000        68,000        33,000
                                         ----------    ----------   -----------
                                         22,146,000    24,418,000    15,565,000
                                         ----------    ----------   -----------

EXPENSES
Owned Properties expenses                10,933,000     12,651,000    5,538,000
Depreciation                              1,190,000      4,144,000    2,787,000
Interest                                  1,707,000      1,915,000      732,000
Other                                       987,000      1,440,000      794,000
                                          ---------    -----------   ----------
                                         14,817,000     20,150,000    9,851,000
                                         ----------    -----------   ----------

INCOME  BEFORE  GAIN  (LOSS)  ON  
REAL ESTATE INVESTMENTS                   7,329,000      4,268,000    5,714,000


GAIN (LOSS) ON REAL ESTATE INVESTMENTS
 Gain on sale of real estate investments 14,944,000        242,000            -
 Write-down of real estate investments  (11,051,000)    (4,454,000)           -
                                        ------------     ----------   ---------
NET INCOME                              $11,222,000     $   56,000   $5,714,000
                                        ===========     ==========   ==========


INCOME BEFORE GAIN (LOSS) ON REAL ESTATE INVESTMENTS
Trust's share of income before gain 
(loss) on real estate investments       $ 3,326,000     $ 1,858,000  $2,264,000
Limited Partners' share of income before
  gain (loss) on real estate investments  4,003,000       2,410,000   3,450,000

GAIN (LOSS) ON REAL ESTATE INVESTMENTS
Trust's share of gain on sale of real 
  estate investments                      3,994,000         110,000           -
Limited Partners' share of gain on sale 
  of real estate investments             10,950,000         132,000           -
Trust's share of write-down of real 
  estate investments 
  (previously recorded by the Trust)     (3,810,000)     (2,365,000)          -
Limited Partners' share of write-down 
  of real estate investments             (7,241,000)     (2,089,000)          -
                                        ------------     ----------   ---------

NET INCOME                             $ 11,222,000      $   56,000  $5,714,000
                                       ============      ==========  ==========

<PAGE>                            
Page 44

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

The Trust's equity in unconsolidated Investment Partnerships is as follows:


                                                           JULY 31,
                                             ---------------------------------
                                                   1996              1995
------------------------------------------------------------------------------
Property Capital Midwest Associates, L.P.      $ 6,656,000         $25,140,000
PCA Southwest Associates Limited Partnership     1,308,000           8,878,000
PCA Canyon View Associates Limited Partnership   1,636,000           3,277,000
Lisle Hilton Inn Loan Participation                   -              8,981,000
PCA Crossroads Associates, Ltd.                       -              2,023,000
                                               -----------         -----------
                                               $ 9,600,000         $48,299,000
                                               ===========         ===========


The  Trust's  share  of  net  income  (loss)  (including  gain  on  sales) from
unconsolidated Investment Partnerships is as follows:


                                                    YEARS ENDED JULY 31,
                                      ----------------------------------------
                                          1996            1995           1994
-------------------------------------------------------------------------------
Property Capital Midwest 
Associates, L.P. {(1)}                $ 2,277,000     $  987,000    $  950,000
PCA Southwest Associates Limited
Partnership {(2)}                         721,000        101,000       209,000
PCA Canyon View Associates
Limited Partnership{(3)}                  153,000       (145,000)      195,000
Lisle Hilton Inn Loan Participation       566,000        660,000       617,000
PCA Crossroads Associates, Ltd.         3,603,000        365,000       293,000
                                        ---------      ----------     ---------
                                      $ 7,320,000    $ 1,968,000   $ 2,264,000
                                      ===========    ===========   ============


{(1)}Net  of  the  Trust's  share  of depreciation of $21,000, $1,373,000 and
$1,213,000 for years ended July 31, 1996, 1995 and 1994, respectively.

{(2)}Net  of  the Trust's share of  depreciation  of   $372,000,  $713,000  and
$232,000 for the  years ended July 31, 1996, 1995and 1994, respectively.  These
properties converted  from Structured Transactions to Owned Properties on March
1994.

{(3)}Net   of  the  Trust's share  of  depreciation  of  $80,000  for  the year
ended July 31, 1996.   This property converted from a   Structured  Transaction
to an Owned Property in August 1995.

Cash  distributions  received  by  the Trust from the unconsolidated Investment
Partnerships are as follows:

                                                    YEARS ENDED JULY 31,
                                      ----------------------------------------
                                          1996            1995           1994
-------------------------------------------------------------------------------
Property Capital Midwest 
Associates, L.P.                       $ 19,506,000  $  1,195,000   $ 1,054,000
PCA Southwest Associates Limited
Partnership                               7,274,000     1,046,000             -
PCA Canyon View Associates
Limited Partnership                         256,000             -       232,000
Lisle Hilton Inn Loan Participation       9,547,000       703,000       610,000
PCA Crossroads Associates, Ltd.           5,626,000       358,000       298,000
                                       ------------       -------     ---------
                                       $ 42,209,000   $ 3,302,000    $2,194,000
                                       ============   ===========    ==========


<PAGE>                            
Page 45

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

The  Trust's  Investment Partnerships reclassified certain of their real estate
investments to  Assets  Held  for Sale and wrote down these assets to estimated
net realizable value aggregating  $2,970,000  during fiscal 1996 and $2,365,000
during fiscal 1995.  In addition, during fiscal  1996, PCA Southwest Associates
Limited  Partnership and PCA Canyon View Associates  Limited  Partnership  each
wrote off  an  investment  resulting  in  a  loss  to the Trust of $307,000 and
$533,000,  respectively.   The  Trust  then charged these  losses  against  its
allowance for possible investment losses as follows:

                                                       JULY 31,
                                         -------------------------------------
                                                   1996             1995
------------------------------------------------------------------------------
Property  Capital  Midwest  Associates, L.P.   $ 1,255,000       $ 2,311,000
PCA Southwest Associates Limited Partnership     1,017,000            54,000
PCA Canyon View Associates Limited Partnership   1,538,000                 -
                                                ----------       -----------
                                               $ 3,810,000       $ 2,365,000
                                               ===========       ===========

The  Structured  Transactions  held by Investment Partnerships were similar  to
those held directly by the Trust.   The  land  leaseback  leases required fixed
monthly base rental payments to the Investment Partnerships  and  also provided
for overage rental payments.

The  mortgage  loans  held  by Investment Partnerships were generally long-term
loans that required fixed monthly  base interest payments and, when not payable
on a self-amortizing basis, required  principal  payments  at maturity.  Except
for  the  Lisle  Hilton Inn loan participation, mortgage loans  were  owned  in
conjunction with land  leaseback  transactions  and were subordinate to and had
cross-default provisions with the land leasebacks.   The  Lisle Hilton Inn loan
participation,  although  not  owned  in  conjunction  with  a  land  leaseback
transaction,  also  required  overage  interest  payments  similar to the  land
leasebacks.

During fiscal 1996, certain of the Trust's Investment Partnerships  disposed of
three Structured Transactions.  PCA Crossroads Associates, Ltd. ("Crossroads"),
an  Investment Partnership which owned the land underlying the Crossroads  Mall
in Boulder,  Colorado,  sold the land to its lessee, resulting in a gain to the
Trust of $3,500,000 on its  investment  of  $2,000,000.   The Trust had a 25.0%
general partner interest in Crossroads.  The first mortgage  held  by the Lisle
Hilton  Inn  loan  participation  ("Lisle"),  secured  by the Lisle Hilton  Inn
located  in  Lisle,  Illinois,  was  prepaid at par.  The Trust  had  a  41.67%
interest in Lisle and received $8,942,000 from the prepayment.  PCA Canyon View
Associates Limited Partnership ("Canyon View"), an Investment Partnership which
held Structured Transactions in Phases  I  and II of the Canyon View apartments
in  San  Ramon,  California  settled  certain litigation.   As  a  result,  the
Investment Partnership received $300,000  from  the  first mortgagee of Phase I
for permitting it to foreclose on Phase I and the Investment  Partnership  took
title  to  Phase  II  and  received  the  proceeds  from  two letters of credit
aggregating $1,750,000.  At that time, the Trust wrote down  its  investment in
this  partnership  by  $1,538,000.   This  write-down  was charged against  the
Trust's allowance for possible investment losses.  At July  31,  1996, Phase II
was reclassified from an Owned Property to an Asset Held for Sale.   The  Trust
has a 23.81% general partner interest in Canyon View.

During  fiscal 1996, two Investment Partnerships sold six Assets Held for Sale,
three of  which  were  classified  as Assets Held for Sale at July 31, 1995 and
three  were  reclassified to Assets Held  for  Sale  during  fiscal  1996.   In
addition,  one  Investment  Partnership  permitted  an  Owned  Property  to  be
foreclosed  by   the   first   mortgagee.   PCA  Southwest  Associates  Limited
Partnership  ("Southwest"),  an  Investment   Partnership   which  owned  2,848
apartments in Houston, Texas at July 31, 1995, sold the Chimney Rock complex to
an unrelated party resulting in a gain to the Trust of $1,000.  St. Charles and
Boardwalk investments were reclassified during fiscal 1996 to  Assets  Held for
Sale  resulting in a write-down by the Trust of $710,000.  This write-down  was
charged  against  the  Trust's  previously  established  allowance for possible
investment losses.  These investments were sold in June 1996  to  an  unrelated
third  party  resulting  in  a  gain  to  the Trust of $50,000.  Southwest also
disposed of its Telegraph Hill - Phase B investment (259 units) by allowing the
first mortgage lender to foreclose on the property  and, as a result, the Trust
wrote  off  its  net investment in this property.  The $307,000  write-off  was
charged against the  Trust's  allowance  for  possible  investment losses.  The
Trust, through a wholly owned subsidiary, has a 45.45% general partner interest
in Southwest.

Property   Capital   Midwest   Associates,  L.P.  ("Midwest"),  an   Investment
Partnership which owned four investments in Overland Park, Kansas, reclassified
its investment in College Hills 3 to an Asset Held for Sale in fiscal 1996.  In
addition,  Midwest's  Financial  Plaza   investment,   which   was   previously
reclassified  to an Asset Held for Sale, was further written down by the  Trust
by  $1,255,000.  Financial Plaza, College Hills 3 and College Hills 8 were sold 
to  unrelated  third  parties  and  the net sales  prices  of  these properties
resulted in a gain to the Trust aggregating $443,000.  The Trust  has  a  53.3%
general  partner  interest  in Midwest.

<PAGE>                            
Page 46

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  REAL ESTATE INVESTMENTS (continued)

During fiscal 1995, Southwest sold the Braes Hill project to an unrelated party
resulting  in  a  gain  to  the Trust of $110,000.  At July 31, 1995, Southwest
reclassified its investment in  the  Chimney Rock apartments to Assets Held for
Sale resulting in a write-down by the  Trust  of  $54,000,  which  was  charged
against  the  Trust's  previously established allowance for possible investment
losses.  The Trust's investment in Southwest had a net book value of $8,932,000
prior to the Chimney Rock  property  write-down.   At  July  31,  1995, Midwest
reclassified its investments in Financial Plaza, Plaza West Retail  Center  and
College  Hills  8  to  Assets  Held for Sales, resulting in a write-down by the
Trust of $2,311,000.  The Trust's investment in Midwest had a net book value of
$27,451,000 prior to the Financial Plaza, College Hills 8 and Plaza West Retail
Center's write-downs. The Trust's  share  of the write-down was charged against
the Trust's previously established allowance for possible investment losses.

On March 31, 1994, Southwest acquired for $427,000  its  lessee's  interest  in
five properties subject to first mortgages aggregating $25,989,000.  During the
quarter  ended  July  31,  1994,  the  Trust  wrote down its investment in this
partnership  by  $566,000.   This write-down was charged  against  the  Trust's
allowance for possible investment losses.


NOTE 3.  INDEBTEDNESS

The Trust has available a total of $10,000,000 under a revolving line of credit
from  a major New England bank.   Borrowings  under  the  line  of  credit  are
repayable  on demand by the lender.  At July 31, 1996 there were no outstanding
borrowings under the line.  Interest is at the bank's prime rate (8.25% at July
31, 1996).

A majority of  the  real  estate  investments  are  subject  to long-term first
mortgage  financing  which  aggregated  $111,420,000  at  July  31,  1996   and
$182,686,000  at  July  31,  1995.   At July 31, 1996, long-term first mortgage
financing consisted of $27,162,000 of debt on Owned Properties held directly by
the Trust, $9,727,000 of debt on the Asset  Held for Sale directly by the Trust
and $10,314,000 of debt on Owned Properties held  in  Investment  Partnerships.
The balance of $64,217,000 represents debt on Structured Transactions  which is
not  reflected on the Trust's balance sheet because the obligation to pay  such
debt is that of the Trust's lessees/mortgagors.

At July 31, 1996 two of the Trust's Owned Properties held directly by the Trust
and an  Asset  Held  for  Sale  directly  by the Trust were encumbered by first
mortgages aggregating $36,889,000 and at July  31,  1995,  three of the Trust's
Owned Properties held directly by the Trust were encumbered  by first mortgages
aggregating $40,145,000.

                             PRINCIPAL BALANCE
                                  JULY 31,               INTEREST
                              1996           1995           RATE     MATURITY

Loehmann's Fashion Island   $18,732,000  $  21,732,000    7.97%*    July 1998
One Park West                 9,727,000      9,898,000    9.50%     June 2000
Park Place                    8,430,000      8,515,000    5.65%      May 2008
                            -----------  ------------- 
                           $ 36,889,000   $ 40,145,000
                           ============  =============


* Rate is fixed until December 1996; see below for further information.


<PAGE>                            
Page 47

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. INDEBTEDNESS (continued)

The  book  value  of  real  estate  pledged  as collateral for these loans  was
approximately $64,296,000.  Scheduled principal payments on these loans at July
31, 1996 are as follows:


YEAR ENDING JULY 31,


1997                                                $      273,000
1998                                                    19,023,000
1999                                                       312,000
2000                                                     9,191,000
2001                                                        85,000
2002 and thereafter                                      8,005,000
                                                      ------------
Total                                                 $ 36,889,000
                                                      ============

With  respect  to  an  Owned  Property held directly by the  Trust,  Loehmann's
Fashion Island, the first mortgage  on this property was refinanced on June 30,
1994  with an initial advance of $18,000,000.   The  loan  commitment  was  for
$30,000,000,  with  additional advances to be made through June 1996 based upon
property performance.   There  were  subsequent advances aggregating $6,000,000
and periodic amortization payments including  a  $3,000,000 payment made during
fiscal  1996.   The  first mortgage loan had a balance  at  July  31,  1996  of
$18,732,000 ($12,000,000  of  which  is recourse to the Trust), matures in July
1998 and bears interest at the lender's  prime  rate  plus  1/4% with the Trust
having  the option to fix the interest rate from time to time  at  2.25%  above
comparable  term  LIBOR or U.S. Treasury notes for a specified number of times.
This option may be  exercised  at no cost or additional liability to the Trust.
In  July 1995, the Trust fixed the  interest  rate  on  the  total  outstanding
borrowings  at  7.97%  (2.25%  over  comparable term U.S. Treasury notes) until
December 1996.

In November 1993, the Trust refinanced  the  $8,600,000  first  mortgage on the
Park  Place  office  building  located  in  Clayton, Missouri, resulting  in  a
reduction in the annual effective interest rate  from 8.25% to 5.65%.  Interest
is payable semi-annually.  The mortgage balance was $8,430,000 at July 31, 1996
and  amortizes  $85,000  annually in May through 2003,  and  $430,000  annually
thereafter through May 2007.   The then remaining balance of $6,115,000 matures
in May 2008.

The Trust issued $40,000,000 of  9  3/4% Convertible Subordinated Debentures in
May  1983,  maturing  May  15,  2008,  and   $40,000,000   of  10%  Convertible
Subordinated Debentures in December 1984, maturing December  15,  2009.   As of
July  31,  1995,  $2,546,000  and $29,125,000 of the 9 3/4% and 10% Debentures,
respectively,  were outstanding.   During  fiscal  1996,  all  of  the  Trust's
outstanding Debentures were retired.

For the years ended July 31, 1996, 1995 and 1994, cash paid for interest on all
of the Trust's debt  was  $5,044,000, $6,818,000, and  $6,961,000 respectively,
net of capitalized interest of $0, $0, and $858,000, respectively.

The fair value of the Trust's  mortgage  notes  payable  at  July  31,  1996 is
$36,992,000.   The fair value was estimated using discounted cash flow analyses
on the mortgage  notes.   The  mortgage notes payable are assumed to be held to
maturity.


<PAGE>                            
Page 48

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4.  RENTS UNDER OPERATING LEASES

All  space  leases at the Owned Properties  held  directly  by  the  Trust  are
classified as  operating leases.  Minimum future base rents to be received from
leases in effect at July 31, 1996 are as follows:

YEAR ENDING JULY 31,

1997                $   8,805,000
1998                    7,676,000
1999                    6,912,000
2000                    6,254,000
2001                    5,112,000
2002 and thereafter     4,990,000
                     ------------
Total                $ 39,749,000
                     ============


The minimum future base rents do not include contingent rentals, such as tenant
reimbursements which are received  under  certain  leases  based  upon property
operating costs, or percentage rents which are based on the level of a tenant's
sales.


NOTE 5.  RENTAL EXPENSE

In  July  1996,  the  Trust  moved  its  offices to 101 Federal Street, Boston,
Massachusetts and entered into a lease that expires on August 31, 1998. In July
1996, the Trust's prior space lease was terminated  by  the  landlord.   Rental
expense under the Trust's previous lease was $152,000, $132,000 and $128,000 in
fiscal years 1996, 1995 and 1994, respectively.  Future minimum rental payments
will be $103,000 per year for  fiscal years 1997 and 1998.


NOTE 6.  ADVISORY SERVICES

Effective  August  1,  1992  the  Trust  entered  into  an  agreement  with PCA
Institutional   Advisors   ("PCAIA")   pursuant  to  which  the  Trust  assumed
responsibility for rendering services under  advisory agreements (the "Advisory
Agreements") between PCAIA and the five Investment Partnerships.

The Trust receives annually the first $150,000  of  amounts payable pursuant to
the  Advisory  Agreements as compensation for providing  such  services,  which
amount generally  corresponds  to the additional expenses incurred by the Trust
in performance of such tasks, plus  50%  of additional amounts payable pursuant
to  the  Advisory  Agreements, which additional  amounts  aggregated  $235,000,
$175,000 and $140,000  in  fiscal  1996,  1995  and  1994, respectively.  PCAIA
receives the remaining 50% of such payments in excess  of  $150,000.   Excluded
from the foregoing arrangement was the termination fee provided for in the  PCA
Crossroads  Associates,  Ltd.  ("Crossroads") advisory agreement, which fee was
paid in fiscal 1996 solely to PCAIA.

Commencing on August 1, 1997, the  Trust  may terminate the foregoing agreement
and thereafter receive 100% of all payments  under  the  Advisory Agreements by
paying PCAIA three times PCAIA's share of the average of the  annual  payments,
(the  "Buy-Out Amount") that it received under such sharing arrangement  during
the  two   prior   fiscal  years,  calculated  without  reference  to  payments
attributable to properties  sold  or  otherwise  disposed of during such fiscal
years.  The Buy-Out Amount is payable to PCAIA in three annual installments, in
arrears, with interest accruing on the unpaid principal  amount of such payment
at the prime rate of the Trust's primary bank lender.  The  Buy-Out  Amount  is
reduced  in  the event that properties are sold or otherwise disposed of during
the three years over which such amount is payable.

NOTE 7.  RELATED PARTY TRANSACTIONS

During fiscal  1996, 1995 and 1994, the Trust incurred legal fees in the amount
of $262,000, $224,000  and  $346,000,  respectively  (exclusive  of  additional
amounts  paid by the Trust's lessees and borrowers, if any), from the law  firm
of Paul, Weiss,  Rifkind,  Wharton  &  Garrison,  of which Walter F. Leinhardt,
Secretary and Trustee of the Trust, is a partner.   Not  included  in the above
amount  is  the  Trust's  share  of  legal  fees  incurred  by  the  Investment
Partnerships  in  the amount of $66,000, $17,000, and $46,000 for fiscal  1996,
1995 and 1994, respectively.





<PAGE>
Page 49
Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8.  ANTICIPATED CAPITAL EXPENDITURES

Amounts aggregating approximately $4,050,000 may be required during fiscal 1997
for  capital  expenditures on the Trust's Owned Properties held directly by the
Trust and Assets  Held  for  Sale  directly  by  the  Trust.  Additionally, the
Trust's share of capital expenditures which may be required  by  the Investment
Partnerships during fiscal 1997 is approximately $100,000.


NOTE 9.  SHAREHOLDERS' EQUITY

1992 EMPLOYEE STOCK OPTION PLAN

The Property Capital Trust 1992 Employee Stock Option Plan (the "Plan") for key
employees of the Trust and its subsidiaries is a plan under which  options  for
400,000  shares  may  be granted to purchase Common Shares for a purchase price
equal to, at a minimum,  the  fair  market  value  of the shares on the date of
grant, subject to certain adjustments.  The Compensation Committee of the Board
of  Trustees  administers  the  Plan  and  is  responsible  for  selecting  the
individuals  eligible  to receive options and for  determining  the  number  of
options to be granted to such individuals and the purchase price of the shares.
Under the plan 20% of the options become exercisable on each anniversary of the
date of grant and all options  vest  once the option price declines below $2.00
per share.  The options are subject to termination under certain circumstances.
Changes in options outstanding during the period were as follows:
<TABLE>
<CAPTION>

                                                               Average
                                                  Number     Option Price
                                                 of Shares    per Share
<S>                                              <C>         <C>
Granted - 1993                                    107,750     $  3.750*
Canceled - 1993                                    (4,000)       3.750

Shares under option at July 31, 1993              103,750        3.750

Granted - 1994                                     68,850        6.375*
Exercised - 1994                                   (2,000)       3.750

Shares under option at July 31, 1994              170,600        4.809

Granted - 1995                                     82,500        6.140*
Exercised - 1995                                   (3,000)       4.625

Shares under option at July 31, 1995              250,100        5.251

Exercised - 1996                                  (23,640)       4.751

Shares under option at July 31, 1996              226,460     $  5.303

Options exercisable at July 31, 1996              126,150

Options available for grant at beginning of year  144,900

Options available for grant at July 31, 1996      144,900

* Subsequent to the end of fiscal 1996 the option price was reduced
  as a result of distributions made in excess of funds from operations as
  provided for in the Plan.

</TABLE>
<PAGE>
Page 50

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. SHAREHOLDERS EQUITY (continued)

1994 STOCK OPTION PLAN FOR NON-EMPLOYEE TRUSTEES

The Property Capital Trust 1994 Stock Option  Plan  for  Non-Employee Trustees,
approved by the shareholders of the Trust in November 1994,  is  a  plan  under
which options for 100,000 shares may be granted to purchase Common Shares for a
purchase price equal to the fair market value of such Common Shares at the time
the option is granted, subject to certain adjustments.

Each  non-employee  Trustee receives automatically upon election or re-election
as a Trustee at an Annual  Meeting  of Shareholders an option to purchase 4,000
Common Shares.  The option vests on the  day  immediately  preceding the Annual
Meeting of Shareholders next succeeding the date of grant of such option.

                  Options granted on November 30, 1994 @ $6.125*
                    and outstanding at July 31, 1995                     24,000
                  Options granted on December 15, 1995 @ $8.563*         24,000

                  Options outstanding July 31, 1996                      48,000

                  Options exercisable July 31, 1996                      24,000

                  *  Subsequent  to the end of fiscal 1996 the option price was
                     reduced as a result of distributions  made in excess of 
                     funds from   operations as provided for in the Plan.

AMENDED AND RESTATED DEFERRED STOCK PLAN FOR NON-EMPLOYEE TRUSTEES

In November 1994, the Amended and Restated Deferred Stock Plan for Non-Employee
Trustees was approved by the shareholders of the Trust.  If a Trustee elects to
defer payment of Trustee fees, share units  are  allocated  to  such  Trustee's
account based upon the closing price for the Common Shares on the date the fees
would  have  been  earned.  Share units are also allocated to reflect dividends
that would have been  paid on such share units.  Payments to a Trustee are made
upon death, disability  or  ceasing  to  serve as a Trustee.  There are 250,000
Common Shares available under this Plan.   This  plan  replaced a previous plan
the shares of which were transferred to this plan on November 30, 1994.

In  fiscal  1994,  the  Trust entered into a Trust Agreement  with  BayBank,  a
Massachusetts corporation,  whereby  BayBank  agreed  to hold the Common Shares
(and  dividends  thereon)  that are issued under the Deferred  Stock  Plan  (an
arrangement commonly known as  a   "Rabbi  Trust").   In fiscal 1996, the Rabbi
Trust  was  funded with Common Shares that had been deferred  under  the  Plan.
Under current  accounting  rules, assets of a Rabbi Trust must be accounted for
as if they are assets of the Trust.


Share units transferred November 30, 1994                   118,385
Share units issued fiscal 1995                               30,983
Share units exercised fiscal 1995                           (20,296)
Share units outstanding July 31, 1995                       129,072
Share units issued fiscal 1996                               20,922
Share units exercised fiscal 1996                           (14,903)
Share units outstanding prior to transfer to Rabbi Trust    135,091
Share units issued in Property Capital Trust 
 Common Shares and transferred to the Rabbi Trust          (135,080)

Share units outstanding July 31, 1996                            11

Common  Shares issued and transferred to the Rabbi Trust    135,080
Dividends reinvested in Common Shares                        49,559

Common Shares issued and outstanding  in the
 Rabbi Trust July 31, 1996                                  184,639

<PAGE>
Page 51

Property Capital Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. SHAREHOLDERS EQUITY (continued)

SHAREHOLDER RIGHTS PLAN

On  September  28,  1990  (the  "Declaration  Date"),  the  Trustees  adopted a
Shareholder  Rights Plan (the "Plan") and, in connection therewith, declared  a
dividend distribution  of  one right for each of the Trust's outstanding Common
Shares to shareholders of record  at the close of business on October 12, 1990.
Each right entitles the holder thereof,  upon  the occurrence of certain events
making such rights exercisable, to exercise the  right  to buy one Common Share
at a purchase price of $27.00.  The rights become exercisable  (i)  10 business
days following the announcement that a person or group of persons has  acquired
or  obtained  the  right  to  acquire  9.8%  or more of the Common Shares (with
certain exceptions for persons who were shareholders  on  the Declaration Date)
or (ii) upon the closing of a tender offer resulting in ownership  of  9.8%  or
more of the Common Shares (any person acquiring in excess of 9.8% of the Common
Shares  being  an  "Acquiror").   On  the  twenty-first  business day after the
acquisition of 9.8% or more of the Common Shares by an Acquiror,  or  upon  the
closing of a tender offer for 9.8% or more of the Common Shares by an Acquiror,
each  right will entitle its holder to purchase, at the right's exercise price,
that number  of  Common  Shares having a market value at that time of twice the
right's exercise price.  Each  right  will  also become exercisable to purchase
Common Shares at a 50% discount in the event  that an Acquiror engages in self-
dealing transactions with the Trust.  If, at any  time  after the rights become
exercisable, the Trust is involved in a merger or other business combination in
which the Trust is not the surviving entity, each right will entitle its holder
to  purchase,  at  the  right's exercise price, that number of  shares  of  the
acquiring company's common  stock  having  a market value at that time of twice
the right's exercise price.  The rights will  expire  on  the  earlier  of  (i)
September  28,  2000 or (ii) their redemption by the Trustees at any time prior
to the date that  they  become  exercisable,  as described above, at a price of
$.01 per right.


NOTE 10.  DIVIDENDS

The Trust typically pays a dividend approximately 55 days following each fiscal
quarter, normally equal to at least 100% of income  before  gains  (losses)  on
real  estate  investments.   In  addition,  in  July  1996,  the  Trust paid an
additional  dividend  to  distribute  proceeds  from  dispositions.  It is  the
current intention of the Trustees to distribute proceeds  from  dispositions as
special  dividends  at  the same time as the quarterly dividend.  However,  the
Trustees may choose to make  an  additional  dividend  from time to time rather
than wait for a quarterly dividend payment date.

                                     YEARS ENDED JULY 31,
                                     1996    1995   1994

Quarterly  dividends declared        $.48    $.41   $.30
Special dividends declared           2.75      -      -
Total dividends declared            $3.23    $.41   $.30


On August 23, 1996, the Trustees declared a dividend of $.12 per share, payable
on  September 24, 1996  to shareholders of record on September 13, 1996,  which
dividend is included in the above table.

In order to qualify as a  real  estate investment trust, Property Capital Trust
must distribute substantially all  of  its  taxable  income to shareholders not
later than twelve months following the end of its fiscal year.

<PAGE>
Page 52

Property Capital Trust
CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
                                                         OCTOBER 31,    JANUARY 31,   APRIL 30,      JULY 31,
<S>                                                     <C>            <C>          <C>           <C> 
FISCAL 1996
Revenues                                                 $ 5,828,000   $ 5,463,000   $ 5,255,000   $ 5,253,000
Expenses                                                   4,998,000     4,931,000     4,257,000     7,320,000{(1)}

Income (Loss) before Gain on Sale of Real Estate
  Investments and Extraordinary Item                         830,000       532,000       998,000    (2,067,000)
Gain on Sale of Real Estate Investments                    3,501,000       780,000       443,000     1,370,000

Income (Loss) before Extraordinary Item                    4,331,000     1,312,000     1,441,000      (697,000)
Extraordinary Loss from Extinguishment of Debt               (63,000)     (169,000)     (165,000)      (76,000)

Net Income (Loss)                                        $ 4,268,000   $ 1,143,000   $ 1,276,000    $ (773,000)

Net Income (Loss) per Share
Income (Loss ) before Gain on Sale of Real Estate
  Investments and Extraordinary Item                          $ 0.09        $ 0.06        $ 0.11       $ (0.22)
Gain on Sale of Real Estate Investments                         0.39          0.09          0.05          0.15

Income (Loss) before Extraordinary Item                         0.48          0.15          0.16         (0.07)
Extraordinary Loss from Extinguishment of Debt                 (0.01)        (0.02)        (0.02)        (0.01)

Net Income (Loss) per Share                                   $ 0.47        $ 0.13        $ 0.14       $ (0.08)

Average Shares Outstanding                                 9,054,000     9,064,000     9,088,000     9,182,000


FISCAL 1995
Revenues                                                 $ 5,951,000   $ 5,778,000   $ 5,415,000   $ 5,475,000
Expenses                                                   5,243,000     5,405,000     4,958,000     4,997,000

Income before Gain on Sale of Real Estate Investments
  and Extraordinary Item                                     708,000       373,000       457,000       478,000
Gain on Sale of Real Estate Investments                         -        3,099,000       110,000          -

Income before Extraordinary Item                             708,000     3,472,000       567,000       478,000
Extraordinary Gain from Extinguishment of Debt                  -               -         88,000          -

Net Income                                                 $ 708,000   $ 3,472,000   $   655,000   $   478,000

Net Income per Share
Income before Gain on Sale of Real Estate Investments
  and Extraordinary Item                                      $ 0.08        $ 0.04        $ 0.05        $ 0.05
Gain on Sale of Real Estate Investments                          -            0.34          0.01           -

Income before Extraordinary Item                                0.08          0.38          0.06          0.05
Extraordinary Gain from Extinguishment of Debt                   -             -            0.01           -

Net Income per Share                                          $ 0.08        $ 0.38        $ 0.07        $ 0.05

Average Shares Outstanding                                 9,031,000     9,043,000     9,051,000     9,051,000

</TABLE>
{(1)} Includes $3,000,000 write-down of Loehmann's Fashion Island.
<PAGE>
Page 53

Property Capital Trust
SCHEDULE II


ALLOWANCE FOR POSSIBLE INVESTMENT LOSSES
                                           YEARS ENDED JULY 31,
                                     1996              1995           1994

Balance at beginning of year     $ 14,077,000      $ 17,413,000   $ 20,129,000
Additions during year                  -                 -              -
Property write-downs               (9,441,000)       (3,336,000)    (2,716,000)

Balance at end of year            $ 4,636,000      $ 14,077,000   $ 17,413,000

Allowance as a % of Real Estate 
Investments (before allowance 
for possible investment losses 
and Asset Held for Sale directly 
by the Trust)                         4.9%              8.5%           9.2%


The  allowance  for  possible  investment  losses  represents the excess of the
carrying value of individual real estate investments  over  their estimated net
realizable  value.   Based  upon  a review and evaluation of each  real  estate
investment in the Trust's portfolio,  management  believes  the  allowance  was
adequate as of each date presented.

<PAGE>
Page 54

Property Capital Trust
SCHEDULE III
JULY 31, 1996
(dollars in thousands)



LAND LEASEBACKS HELD DIRECTLY BY THE TRUST
<TABLE>
<CAPTION>
                                                                                          Third Party Senior
                                                                                            Indebtedness


                                                  Rentable             Date of            Balance           Interest Rate/
TYPE AND NAME OF PROPERTY     LOCATION              SPACE              INVESTMENT         AT 7/31/96           MATURITY
<S>                           <C>                 <C>                 <C>                <C>                 <C>         

APARTMENTS

Sandpiper Cove                Boynton Beach, FL    416 units           Apr  89            $ 16,418             9.25% / 1999
Elm Creek                     Elmhurst, IL         372 units           Nov 88               20,921             9.50% / 1997
Northbrook                    San Bernardino, CA   190 UNITS           May 74                  -                         -

                                                   978 UNITS                                37,339


SHOPPING CENTERS

Roseburg Valley Mall          Roseburg, OR         237,000 sq. ft.     Sep 82                6,685             9.25% / 2015
Lakeside Center               Burbank, CA          66,000 SQ. FT.      Mar 73                  131             8.00% / 1998

                                                   303,000 SQ. FT.                           6,816


HOTELS
            
City Centre Holiday Inn        Chicago, IL         500 rooms           Mar 77                9,689             9.13% / 1997
Cincinnati Marriott Inn        Cincinnati, OH      350 ROOMS           Feb 84               10,373             9.75% / 1999

                                                   850 ROOMS                                20,062


                                                                                          $ 64,217

</TABLE>



<PAGE>                            
Page 55

<TABLE>
<CAPTION>

 Amount of                         Rent and          Base         Overage
Trust's Land         Annual         Overage         Income        Income
 Investment           Base         Receivable        Y/E            Y/E
 AT 7/31/96 (A)    LAND RENT       AT 7/31/96       7/31/96       7/31/96
<S>                <C>             <C>              <C>           <C>

$   5,400            7.40 % (c)    $   6            $   360        $    222
    2,230(b)        10.00 % (d)        6                200              90
      400           10.50 %            3                 42              70

    8,030                             15                602             382




    1,800(b)        12.00 %            -                216             -
      350           10.00 %            5                 35             152

    2,150                              5                251             152




    2,000           11.00%           157                220           1,613
    2,000(b)        12.00%           (20)               240            -

    4,000                            137                460           1,613


$  14,180(e)                       $ 157            $ 1,313(f)      $ 2,147(g)

</TABLE>





<PAGE>                            
Page 56





Property Capital Trust
SCHEDULE III (CONTINUED)
JULY 31, 1996
(dollars in thousands)



OWNED PROPERTIES HELD DIRECTLY BY THE TRUST



<TABLE>
<CAPTION>
                                                                              THIRD PARTY SENIOR       AMOUNT OF TRUST'S INVESTMENT
                                                                                 INDEBTEDNESS               AT DATE OF ACQUISITION
                                                                             ------------------        ----------------------------
                                           RENTABLE           DATE OF       BALANCE     INTEREST RATE/               BUILDING AND
TYPE AND NAME OF PROPERTY   LOCATION        SPACE         ACQUISITION(H)   AT 7/31/96    MATURITY       LAND         IMPROVEMENTS
<S>                         <C>            <C>            <C>              <C>          <C>             <C>          <C>

OFFICE BUILDINGS
Park Place                  Clayton, MO     72,000 sq. ft.  Jan 91         $   8,430    5.65% / 2008    $ 3,000       $   9,194
Citibank Office Plaza       Schaumburg, IL 105,400 sq. ft.  Feb 89                -            -          1,275           9,001


                                           177,400 SQ. FT.                     8,430                      4,275          18,195


SHOPPING CENTERS
Loehmann's Fashion Island   Aventura, FL   282,000 SQ. FT.  May 89            18,732    7.97% / 1998      4,800          17,546

                                                                           $  27,162                    $ 9,075        $ 35,741

</TABLE>
For information on Owned Properties Held in Investment Partnerships see 
Exhibit A




ASSET HELD FOR SALE DIRECTLY BY THE TRUST



<TABLE>
<CAPTION>
                                                                               THIRD PARTY SENIOR    AMOUNT OF TRUST'S INDEBTEDNESS
                                                                              THIRD PARTY SENIOR       AMOUNT OF TRUST'S INVESTMENT
                                                                                 INDEBTEDNESS               AT DATE OF ACQUISITION
                                                                             ------------------        ----------------------------
                                           RENTABLE           DATE OF       BALANCE     INTEREST RATE/               BUILDING AND
TYPE AND NAME OF PROPERTY   LOCATION        SPACE         ACQUISITION(H)   AT 7/31/96    MATURITY       LAND         IMPROVEMENTS
<S>                         <C>            <C>            <C>              <C>          <C>             <C>          <C>

OFFICE BUILDINGS

One Park West               Chevy Chase, MD 136,000 SQ. FT. Mar 93          $ 9,727      9.50% / 2000    $ 3,500      $ 14,942

</TABLE>
For Information on Assets Held for Sale in Investment Partnerships see Exhibit A








<PAGE>                            
Page 57




<TABLE>
<CAPTION>
                                                                                                            RENTS FROM    
                                                                                                                OWNED     
  COSTS                                                                                                      PROPERTIES   
CAPITALIZED     WRITE-DOWN  GROSS AMOUNT OF TRUST'S INVESTMENT                        NET         RENTS    HELD DIRECTLY  
 SUBSEQUENT         OF            BUILDINGS AND                  ACCUMULATED       INVESTMENT   RECIVABLE  BY THE TRUST   
TO ACQUISITION  INVESTMENT  LAND (A)    IMPROVEMENTS      TOTAL  DEPRECIATION      AT 7/31/96   AT 7/31/96   Y/E 7/31/96  
<S>             <C>         <C>         <C>           <C>        <C>               <C>          <C>          <C>  

 $  1,147           -       $  3,000     $ 10,341     $ 13,341   $   2,140         $ 11,201     $     2      $ 1,507      
    3,477           -          1,275       12,478       13,753       4,301            9,452         623(i)     1,474      
---------        --------   --------     --------     --------   ---------

    4,624           -          4,275       22,819       27,094       6,441           20,653         625         2,981     
---------        --------   --------     --------     --------   ---------

   25,914        $ 5,612       9,706       32,942       42,648       6,491           36,157         624(i)      5,458     
---------        --------   --------     --------     --------   ---------


 $ 30,538        $ 5,612    $ 13,981     $ 55,761     $ 69,742(j) $ 12,932         $ 56,810       1,249       $ 8,439(k)  
---------        -------    --------     --------     --------    -------- 
---------        -------    --------     --------     --------    --------
</TABLE>

(TABLE CONT'D)

  EXPENSES ON
     OWNED
   PROPERTIES
 HELD DIRECTLY    DEPRECIATION
  BY THE TRUST     EXPENSE
  Y/E 7/31/96      Y/E 7/31/96
[C]               [C]

   $    680         $    450
      1,048              990
-----------         --------

      1,728            1,440
-----------         --------


      2,394            2,046
-----------         --------

    $ 4,122(l)      $ 3,486(m)
-----------         --------
-----------         --------



 <TABLE>
 <CAPTION>

                                                                                                               RENTS FROM
                                                                                                                 OWNED
   COSTS                                                                                                       PROPERTIES
 CAPITALIZED       GROSS AMOUNT OF TRUST'S INVESTMENT      WRITE-OFF OF  WRITE-DOWN       NET         RENTS    HELD DIRECTLY
  SUBSEQUENT                BUILDINGS AND                  ACCUMULATED      OF        INVESTMENT   RECIVABLE   BY THE TRUST
 TO ACQUISITION    LAND        IMPROVEMENTS      TOTAL     DEPRECIATION  INVESTMENT    AT 7/31/96  AT 7/31/96   Y/E 7/31/96
<S>                <C>         <C>          <C>            <C>           <C>          <C>          <C>          <C>            

  $ 1,613         $ 3,500      $ 16,555     $ 20,055(n)    $ 1,598(n)    $ 1,519(n)    $ 16,938(n)  $  254(i)   $ 3,280(o)
---------         -------      --------     ---------      --------      --------      --------     --------    ---------
---------         -------      --------     ---------      --------      --------      --------     --------    ---------


</TABLE>
<TABLE CON'T>

 EXPENSES ON
  OWNED
 PROPERTIES
 HELD DIRECTLY     DEPRECIATION
  BY THE TRUST     EXPENSE
  Y/E 7/31/96      Y/E 7/31/96


 $ 1,059(p)          $ 522
 ---------           -----
 ---------           -----






                                         

<PAGE>                            
Page 58
  
Property Capital Trust
NOTES TO SCHEDULE III




(a)This  amount  represents  the cost of each land investment and the amount at
which each investment is carried  on  the balance sheet atJuly 31, 1996.  There
are  no differences between the cost of  each  land  investment  for  financial
reporting  purposes  and the cost of eachland investment for federal income tax
purposes, except as follows:

      NAME OF PROPERTY                      BOOK  BASIS            TAX BASIS


      Cincinnati Marriott Inn               $2,000,000             $1,419,000
      Park Place                             3,000,000                767,000
      Loehmann's Fashion Island              9,706,000              5,535,000
      Citibank Office Plaza - Schaumburg     1,275,000                531,000


(b)The  Trust  also holds a leasehold mortgage on this property  (see  Schedule
IV).

(c)The base land  rent  rate  was renegotiated, effective April 1, 1993, from a
base payment rate of 10% to a base  payment  rate  of6.3% until March 31, 1996,
and 7.4% thereafter.

(d)The base land rent rate was renegotiated, effective  April  1,  1993, from a
base  payment  rate of 10% to a base payment rate of 8.5%until March 31, 1996,
and 10% thereafter.

(e)Changes in the  Trust's  investment  in land leasebacks held directly by the
Trust are summarized below (dollars in thousands).

                                                  YEARS  ENDED  JULY 31,
                                              -------------------------------
                                              1996        1995        1994
---------------------------------------       -------------------------------
      Balance at beginning of year            $ 17,140    $ 17,140   $ 21,140
      Sales                                     (2,960)       -       ( 1,500)
      Conversions to Owned Properties
         held directly by the Trust                -          -        (2,500)
                                               --------   --------    --------
     Balance at end of year                   $ 14,180     $ 17,140   $ 17,140
                                              --------     --------   --------
                                              --------     --------   --------

(f)This total does not include base income  of  $107,000  earned in fiscal 1996
from investments disposed of during the year.

(g)This total does not include overage income of $150,000 earned in fiscal 1996
from investments disposed of during the year.

(h)The  Trust  acquired  the  equity  interests  in these properties  from  its
lessees.   The  date of the acquisition reflects the  date  on  which  theTrust
converted its land  leaseback  investment to an Owned Property held directly by
the Trust.

(i)Many leases provide for stepped  minimum  rents.  Certain of these have been
accounted for on a straight line basis.  Rents receivableincludes rents accrued
but not yet due in the amount of $605,000, $508,000,  and $183,000 for Citibank
Office  Plaza  -  Schaumburg,Loehmann's  Fashion  Island  and  One  Park  West,
respectively.



<PAGE>
Page 59

Property Capital Trust
NOTES TO SCHEDULE III (continued)




(j) Changes in the Trust's investment in Owned Properties held  directly  by the
Trust are summarized below (dollars in thousands).

                                                 YEARS   ENDED   JULY  31,
                                           ----------------------------------
                                           1996         1995         1994
--------------------------------------     ----------------------------------

      Balance at beginning of year          $ 94,507    $ 116,354   $ 109,372
      Acquisitions and additions                 902        5,551      15,490
      Sales to third parties                    -         (12,465)    (14,008)
      Conversions from mortgage loans
         held directly by the Trust             -             -         3,000
      Conversions from land leasebacks
         held directly by the Trust             -             -         2,500
      Investments written down                (5,612)         -           -
      Property reclassified to Assets
         Held for Sale directly by the Trust (20,055)     (14,933)        -
                                             --------     --------    --------
      Balance at end of year                 $ 69,742   $  94,507   $ 116,354
                                             --------     --------    --------
                                             --------     --------    --------

 
(k)This total does not include rental income  earned in fiscal 1996 of 
$3,280,000 from One Park West which was reclassified to Asset
Held for Sale directly by the Trust at July 31, 1996.

(l)This total does not include operating expenses  incurred  in  fiscal 1996 of
$1,059,000  from  One  Park West which was reclassified toAsset Held  for  Sale
directly by the Trust at July 31, 1996.

(m)This total does not include  depreciation expense in fiscal 1996 of $522,000
from One Park West which was reclassified to Asset Heldfor Sale directly by the
Trust at July 31, 1996.

(n)Changes in the Trust's investment  in  Assets  Held for Sale directly by the
Trust is summarized below (dollars in thousands).

                                                    YEARS ENDED JULY 31,
                                               -------------------------------
                                                1996            1995
----------------------------------------       -------------------------------

      Balance at beginning of year             $ 10,185       $     -
      Additions                                     173             -
      Sale to third party                       (10,358)            -
      Property reclassified from Owned
        Property held directly by the Trust      20,055         14,933
      Investment written down                   (1,519)           (971)
      Write-off of accumulated depreciation     (1,598)         (3,777)
                                                --------       ---------

      Balance at end of year                   $ 16,938        $ 10,185
                                               --------        ---------

(o)This total does not include rental income earned in fiscal 1996 of $922,000 
 from  Citibank  Office  Plaza  - Oak Brook which was disposed of during the 
 year.

(p)This total does not include operating expenses incurred in fiscal 1996 of 
$388,000 from Citibank Office Plaza  -  Oak Brook which
was disposed of during the year.

<PAGE>                            
Page 60


Property Capital Trust
SCHEDULE IV
JULY 31, 1996
(dollars in thousands)



MORTGAGE LOANS HELD DIRECTLY BY THE TRUST



<TABLE>
<CAPTION>
                                                      


                                                                                         Periodic     Amount of      Principal
                                           Type of         Interest                       Payment     Trust's Loan    Payment at
Type and Name of Property   Location       Mortgage         Rate          Maturity       Terms      at 7/31/96(a)      Maturity
---------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>            <C>             <C>            <C>          <C>      <C>             <C>


APARTMENTS
Elm Creek                    Elmhurst, IL   First leasehold  10.00%(b)       11/01/18   (c)       $  7,540         $ 7,540


SHOPPING CENTERS
Roseburg Valley Mall         Roseburg, OR   First leasehold   12.00%         10/01/22   (d)          2,164               -

HOTELS
Cincinnati Marriott Inn    Cincinnati, OH   First leasehold    5.65%(e)      03/01/14  (f)           3,716               -
                                            Junior leasehold   8.00%         03/01/14  (f)             600               -
                                                                                                     -----         -------
                                                                                                     4,316               -
                                                                                                     -----         -------

                                                                                                  $ 14,020(g)      $ 7,540
                                                                                                  ========         =======


<PAGE>                            
Page 61



(TABLE CONT'D)

                                 Interest
 Principal        Interest         Income
 Amount           Receivable         Y/E
DELINQUENT                     AT 7/31/967/31/96



     -              $ 63         $   679



     -                 21            260



     -                 -             210
     -                 -              21

     -                 -             231


     -              $ 84        $ 1,170(h)






<PAGE>                             
Page 62





Property Capital Trust
NOTES TO SCHEDULE IV




(a)The Trust also  has  land  leaseback investments in these properties.  First
mortgage indebtedness and rentable  space  are shown withthose investments (see
Schedule III).

(b)The  interest  rate on this mortgage was renegotiated,  effective  April  1,
1993, from a payment rate of 10% to a payment rate of 8.5%until March 31, 1996,
and 10% thereafter.

(c)Monthly payments  of  interest  only,  with  the  entire  principal  due  at
   maturity.  Commencing July 1, 1996 the loan may be prepaid without penalty.

(d)Monthly  payments  of  interest  and  principal  amortizing  over  a 26-year
schedule.   The  loan  may be prepaid at a premium of 103 1/2%through September
30, 1996.  Thereafter the prepayment premium declines 1/2% annually.

(e)The interest rate on  this  mortgage  was  renegotiated,  effective April 1,
1994, from a cash flow basis to 5.65% through March 31, 1997and 7% thereafter.

(f)Monthly payments of interest only until April 30, 1999.  Thereafter, monthly
payments of interest and principal amortizing on a 30-year schedule.   The loan
may be prepaid at any time.

(g)Changes  in  the  Trust's investment in mortgage loans held directly by  the
Trust are summarized below (dollars in thousands).


</TABLE>
<TABLE>
<CAPTION>

                                                          YEARS ENDED JULY 31,
                                                    ------------------------------
                                                     1996         1995       1994
------------------------------------------------------------------------------------
<S>                                              <C>           <C>        <C>

      Balance at beginning of year                 $ 15,431      $ 15,441  $ 21,925
      New mortgage loans                                600             -        -
      Repayments                                       (511)          (10)   (1,334)
      Mortgage loans written down                    (1,500)            -    (2,150)
      Conversions to Owned Properties held 
       directly by the Trust                              -              -   (3,000)
                                                   --------      ---------   -------
      Balance at end of year                       $ 14,020       $ 15,431  $ 15,441
                                                   ========      =========  ========

</TABLE>
(h)This total does not  include  interest  income  of $74,000 earned in fiscal 
1996 from the loan on Grosvenor Airport Inn which was prepaid during the year.



<PAGE>
Page 63





                     (THIS PAGE INTENTIONALLY LEFT BLANK)

<PAGE>
Page 64
Property Capital Trust
EXHIBIT A
JULY 31, 1996
(dollars in thousands)



OWNED PROPERTIES HELD IN INVESTMENT PARTNERSHIPS



                 Investment
<TABLE>
<CAPTION>
                                                                                                             Investment
                                                                          Third Party Senior             Partnership's Investment
                                                                              INDEBTEDNESS               AT DATE OF ACQUISITION
                                           Rentable      Date of      Balance      Interest Rate/                  Buildings and
TYPE AND NAME OF PROPERTY    LOCATION       SPACE      ACQUISITION(A) AT  7/31/96    MATURITY             LAND     IMPROVEMENTS
<S>                          <C>          <C>          <C>            <C>           <C>                  <C>        <C>
APARTMENT
Telegraph Hill(b)             Houston, TX  921 UNITS      Mar 94       $ 10,314         (c)               $ 1,260    $ 11,766

</TABLE>

<PAGE>
Page 65

<TABLE>
<CAPTION>

                                                                               
                                                                  Investment 
    Costs            Gross Amount of                             Partnership's
  Capitalized  INVESTMENT PARTNERSHIP'S INVESTMENT                    Net      
  Subsequent        Buildings and                   Accumulated    Investment  
TO ACQUISITION LAND     IMPROVEMENT    TOTAL        DEPRECIATION  AT 7/31/96   
<S>            <C>      <C>            <C>          <C>           <C>          
 $ 685          $ 1,260  $ 12,451       $ 13,711(d)  $ 1,029      $ 12,682     

</TABLE>
<TABLE CON'T>

      INVESTMENT           PARTNERSHIP'S

 -------------------------------------------------
   Rent      Rental      Other than   Depreciation  Owned
Receivable   Income      Depreciation   Expense     by the
AT 7/31/96  Y/E 7/31/96  Y/E 7/31/96  Y/E 7/31/96   TRUST

 $ 2         $ 4,096(e)   $ 2,591(f)   $ 450(g)      45.5%






<PAGE>
Page 66


Property Capital Trust
EXHIBIT A (CONTINUED)
JULY 31, 1996
(dollars in thousands)



ASSETS HELD FOR SALE IN INVESTMENT PARTNERSHIPS



<TABLE>                                                          
<CAPTION>                                                                                              Third Party Senior         
                                                                                                INDEBTEDNESS             
                                                        Rentable         Date of            Balance       Interest Rate/ 
TYPE  AND  NAME  OF  PROPERTY      LOCATION               SPACE         ACQUISITION(A)       AT 7/31/96        MATURITY  

SHOPPING CENTERS



<S>                                <C>                  <C>               <C>                <C>            <C>          
Plaza West Retail Center(h)         Overland Park, KS    98,000 SQ. FT.    May 89                -               -       



APARTMENTS
Canyon View  II (i)                  San Ramon, CA        188 UNITS        Aug 95                -                -      
                                                          ------------                         -----------               

                                                                                                 -                       
</TABLE>


<TABLE CON'T>

         Investment
    Partnership's Investment
     AT DATE OF ACQUISITION
         Buildings and
       LAND     IMPROVEMENTS






        $ 3,800     $   8,762




           -             9,998
        ---------   -----------

         $ 3,800      $ 18,760 


<PAGE>
Page 67

<TABLE>
<CAPTION>
                                                                              Investment   
      Costs            Gross Amount of                                        Partnership's
  Capitalized  INVESTMENT PARTNERSHIP'S INVESTMENT Write-off of  Write-down      Net       
  Subsequent        Buildings and                   Accumulated      of        Investment  
TO ACQUISITION  LAND     IMPROVEMENT       TOTAL   DEPRECIATION  INVESTMENT    AT  7/31/96 
<S>             <C>      <C>               <C>     <C>           <C>           <C>         
 
$ 4,818          $ 3,800  $ 13,580         $ 17,380 $ 2,921       $ 1,859       $ 12,600   




    167            -         10,165          10,165     335         4,220          5,610   
-------           ------   --------        -------- -------       -------       ---------  
$ 4,985          $ 3,800   $ 23,745        $ 27,545 $ 3,256       $ 6,079       $ 18,210(j)

</TABLE>


<TABLE CON'T>

 ---------- INVESTMENT PARTNERSHIP'S---------------
                       Expenses                       %
   Rent     Rental     Other than     Depreciation  Owned
 Receivable  Income     Depreciation   Expenseby      the
 AT 7/31/96 Y/E 7/31/96  Y/E 7/31/96   Y/E 7/31/96   TRUST


  $ 74       $ 2,379      $    941      $  -          53.3%




    -          1,996         1,387         335        23.8%
  -----      -------       -------       -----
  $ 74       $ 4,375       $ 2,328       $ 355





<PAGE>
Page 68


Property Capital Trust
NOTES TO EXHIBIT A




(a)The  Partnerships  acquired  the  equity  interests in these properties from
their  lessees.  The date of the acquisition reflects  the  date  onwhich  each
Partnership  converted  its land leaseback/mortgage loan investment to an Owned
Property held in an InvestmentPartnership.

(b)This investment is held  by  PCA Southwest Associates Limited Partnership, a
partnership in which an affiliate  of the Trust is the solegeneral partner with
a 45.45% interest and other institutional investors are the limited partners.

(c)Telegraph Hill apartment complex,  held  by PCA Southwest Associates Limited
Partnership, is encumbered by third party seniorindebtedness as follows.

                                                Principal       Interest
                                      BALANCE                              RATE
MATURITY

<TABLE>
<CAPTION>
<S>                                         <C>                    <C>          <C>
      Telegraph Hill A                        $   2,535,000         8.25%       1997
      Telegraph Hill C                            1,898,000         7.50%       1998
      Telegraph Hill D                            1,910,000         7.50%       1998
      Telegraph Hill E                            1,905,000         8.75%       1998
      Telegraph Hill F                            1,905,000         8.75%       1998
      Telegraph Hill E&F  Note B                    161,000         8.00%       1998

                                               $ 10,314,000

</TABLE>
(d)Changes  in  Owned Properties held in Investment Partnerships are summarized
below (dollars in thousands).
<TABLE>
<CAPTION>
                              
                                                    YEARS ENDED JULY 31,
                                                  ---------------------------------

                                                  1996       1995         1994


<S>                                               <C>        <C>          <C> 
      Balance at beginning of year                 $ 39,223   $ 108,950   $   59,148
      Acquisitions and additions                        609       4,497       27,802
      Sales/dispositions to third parties            (3,608)     (2,221)        -
      Conversions from mortgage loans held
        in Investment Partnerships                    9,998         -         17,100
      Conversions from land leasebacks held
        in Investment Partnerships                      -           -          4,900
      Properties reclassified to Assets Held
        for Sale in Investment Partnerships         (32,511)    (72,003)         -

      Balance at end of year                       $ 13,711  $   39,223    $ 108,950

</TABLE>

(e)This total does  not include rental income earned in fiscal 1996 of 
$6,283,000 from PCA Southwest Associates LimitedPartnership's Telegraph 
B, Chimney  Rock, Boardwalk and St. Charles apartment investments which 
were disposedof during the year.  Also disposed of during fiscal 1996 were  
Property  Capital  Midwest  Associates,  L.P.'s  College Hills 3, College 
Hills 8 and Financial Plaza office building investments and their related 
rental income of $4,729,000 is not included in this total.  Also not included 
in this total is $4,375,000 from Assets Held for Sale in Investment 
Partnerships; see Exhibit A .


<PAGE>
Page 69




Property Capital Trust
NOTES TO EXHIBIT A (CONTINUED)




(f)This  total  does  not  include expenses other than depreciation incurred in
fiscal 1996 of $3,594,000 from  PCA  SouthwestAssociates  Limited Partnership's
Telegraph  B,  Chimney  Rock,  Boardwalk and St. Charles apartment  investments
which weredisposed of during the  year.   Also  disposed  of during fiscal 1996
were Property Capital Midwest Associates, L.P.'s CollegeHills  3, College Hills
8  and  Financial Plaza office building investments and their related  expenses
other than  depreciation  of$2,420,000 is not included in this total.  Also not
included in this total is $2,328,000  from  Assets  Held for Sale in Investment
Partnerships; see Exhibit A.


(g)This total does not include depreciation expense in  fiscal 1996 of $367,000
from PCA Southwest Associates LimitedPartnership's Telegraph  B,  Chimney Rock,
Boardwalk and St. Charles apartment investments which were disposed  of  during
the  year.Also  disposed  of  during  fiscal 1996 were Property Capital Midwest
Associates, L.P.'s, College Hills 3, College  Hills 8 andFinancial Plaza office
building investments and their related depreciation  expense  of $38,000 is not
included in this total.  Alsonot included in this total is $335,000 from Assets
Held for Sale in Investment Partnerships; see Exhibit A.


(h)This  investment  is  held by Property Capital Midwest Associates,  L.P.,  a
partnership in which the Trust is the sole general partner witha 53.3% interest
and other institutional investors are the limited partners.

(i)This investment is held by PCA Canyon View Associates Limited Partnership, a
partnership in which the Trust  participates  as thesole general partner with a
23.81% interest and other institutional investors are the limited partners.

(j)Changes in Assets Held for Sale in Investment  Partnerships  are  summarized
below (dollars in thousands).

<TABLE>
<CAPTION>
                                                    YEARS ENDED JULY 31,
                                             ---------------------------------------
                                             1996              1995            1994



<S>                                          <C>                <C>             <C>
      Balance at beginning of year            $ 55,549           $   -           $    -
      Additions                                    752               -                -
      Sales to third parties                    (60,542)             -                -

      Properties reclassified from Owned
      Properties in Investment Partnerships      32,511             72,003             -
      Investments written down                   (8,137)            (4,454)            -
      Write-off of accumulated depreciation      (1,923)           (12,000)            -

      Balance at end of year                   $ 18,210           $  55,549       $    -


<PAGE>
Page 70




                                ANNUAL REPORT ON FORM 10-K
                                  ITEM 8 AND ITEM 14(D)





                   FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                               Year Ended December 31, 1995




                         PROPERTY CAPITAL MIDWEST ASSOCIATES, L.P.
                                   Boston, Massachusetts


<PAGE>
Page 71

REPORT OF INDEPENDENT AUDITORS





To the Partners
Property Capital Midwest Associates, L.P.



We  have  audited  the  accompanying balance sheets of Property Capital Midwest
Associates, L.P. as of December  31,  1995 and 1994, and the related statements
of operations, cash flows and partners'  equity  for each of the three years in
the  period ended December 31, 1995.  Our audits also  included  the  financial
statement  schedule  listed  in  the  Index  at  Item  14(a).   These financial
statements and the financial statement schedule are the responsibility  of  the
Partnership's management.  Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.   Those  standards  require  that  we  plan and perform the audit to
obtain reasonable assurance about whether the financial  statements are free of
material misstatement.  An audit includes examining, on a  test basis, evidence
supporting the amounts and disclosures in the financial statements.   An  audit
also   includes  assessing  the  accounting  principles  used  and  significant
estimates  made  by  management,  as  well  as evaluating the overall financial
statement presentation.  We believe that our  audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred  to  above present fairly, in
all  material  respects,  the  financial position of Property  Capital  Midwest
Associates,  L.P. at December 31,  1995  and  1994,  and  the  results  of  its
operations and  its  cash  flows  for  each  of three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.





                                               ERNST & YOUNG LLP



Boston, Massachusetts
February, 23, 1996, except for Note 6,
as to which the date is October 7, 1996




<PAGE>
Page 72
Property Capital Midwest Associates, L.P.
BALANCE SHEET





DECEMBER 31,
                                         1995
1994

ASSETS
Real estate investments:

</TABLE>
<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>
  Assets held for sale                                     $ 45,847,531             -
  Owned properties (net of accumulated depreciation 
    of $10,419,464)                                                -         $ 52,897,128
Cash and cash equivalents                                       531,214           452,625

Rent receivable (net of allowance for doubtful accounts of


  $37,378 and $58,800 in 1995 and 1994, respectively)            62,709           191,047
Prepaid insurance                                                30,407            32,491
Other assets                                                     58,629            89,907

                                                           $ 46,530,490      $ 53,663,198

</TABLE>

LIABILITIES AND PARTNERS' EQUITY
Liabilities
<TABLE>
<CAPTION>
<S>                                                    <C>                <C>
  Real estate taxes payable                               $     737,897     $     659,824
  Accounts payable and accrued expenses                         222,588           137,182
  Prepaid rent                                                  122,882           162,222
  Security deposits                                             201,872           218,286

                                                              1,285,239         1,177,514

Partners' Equity
  Capital contributions                                      55,491,695        55,491,695
  Accumulated deficit                                       (10,246,444)       (3,006,011)

  Total Partners' Equity                                     45,245,251        52,485,684

                                                           $ 46,530,490      $ 53,663,198



</TABLE>

                            See accompanying notes

<PAGE>
Page 73

Property Capital Midwest Associates, L.P.
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                 YEARS ENDED DECEMBER 31,
                                          1995                    1994           1993

REVENUES
<S>                                       <C>                     <C>          <C>
Rental income                                        $  8,790,766  $ 8,158,180  $ 7,477,067
Short-term interest income                                 40,738       21,878       19,008

                                                        8,831,504    8,180,058    7,496,075

PROPERTY EXPENSES
Write-down of real estate investments                   6,690,172         -           -
Depreciation                                            1,567,827    2,378,829   2,239,698
Real estate taxes                                       1,310,337    1,182,887   1,310,222
Utilities                                               1,095,158    1,074,710     973,469
Repairs and maintenance                                   446,591      458,169     408,216
Management                                                314,371      298,463     334,535
Cleaning                                                  306,885      284,753     280,337
Roads and grounds                                         169,959      174,245     158,938
Other                                                     148,983      115,034     131,598
Security                                                   59,214       38,144      62,483
Insurance                                                  34,446       64,357      44,468

                                                       12,143,943    6,069,591   5,943,964


PARTNERSHIP EXPENSES
Advisory fee                                              271,803      114,091      99,488
Administrative expense                                     60,191       45,743      53,801

                                                          331,994      159,834     153,289

NET INCOME (LOSS)                                    $ (3,644,433) $ 1,950,633 $ 1,398,822


</TABLE>




                            See accompanying notes





<PAGE>                            
Page 74
Property Capital Midwest Associates, L.P.
STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                    YEARS ENDED DECEMBER 31,
                                                 ---------------------------------------------------
                                                       1995                 1994                 1993
----------------------------------------------------------------------------------------------------
<S>                                                 <C>                <C>                    <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)                                    $ (3,644,433)      $ 1,950,633            $ 1,398,822
Adjustments to reconcile net income (loss)to
 net cash provided by operating activities:
  Depreciation                                          1,567,827         2,378,829              2,239,698
  Write-down of real estate investments                 6,690,172              -                      -
  Changes in assets and liabilities
    Decrease in rent receivable                           128,338           191,953                138,669
    Decrease (increase) in prepaid insurance                2,084            (6,405)                (4,009)
    Decrease (increase) in other assets                    31,278           (85,055)                15,430
    Increase (decrease) in real estate taxes payable       78,073            39,449                 (6,427)
    Increase  (decrease) in accounts payable
    and accrued expenses                                   85,406           (79,594)              (135,724)
    (Decrease) increase in prepaid rent                   (39,340)          (30,604)                13,975
    (Decrease) increase in security deposits              (16,414)           33,435                (15,088)
                                                        ---------         ---------             ----------      
Net Cash Provided by Operating Activities               4,882,991         4,392,641              3,645,346
                                                        ---------         ---------             ----------
CASH FLOW FROM INVESTING ACTIVITIES

Capital expenditures                                   (1,208,402)       (2,717,074)            (2,267,410)
                                                        ---------         ---------              ---------

Net Cash Used in Investing Activities                  (1,208,402)       (2,717,074)            (2,267,410)

CASH FLOW FROM FINANCING ACTIVITIES

Distributions to partners                              (3,596,000)       (1,827,649)            (1,228,133)
                                                        ---------         ---------              --------- 

Net Cash Used in Financing Activities                  (3,596,000)       (1,827,649)            (1,228,133)
                                                        ---------         ---------              ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS       78,589          (152,082)               149,803


CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR                                    452,625           604,707                454,904
                                                        ---------         ---------              ---------      

CASH AND CASH EQUIVALENTS
  AT END OF YEAR                                     $    531,214      $    452,625           $    604,707
                                                     ============      ============           ============



</TABLE>


                            See accompanying notes

<PAGE>                            
Page 75
     
Property Capital Midwest Associates, L.P.
STATEMENT OF CHANGES IN PARTNERS' EQUITY

<TABLE>
<CAPTION>


                                                            Beginning          Net             Operating            Ending
                                         Ownership          Partners'         (Loss)           Income               Partners'
                                         PERCENTAGE         EQUITY             INCOME          DISTRIBUTION         EQUITY
----------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
<S>                                      <C>                <C>                <C>             <C>                  <C> 
Property Capital Trust,                                                                                
  General Partner                          53.2967%          $27,973,140        $(1,942,363)    $(1,916,549)         $24,114,228

Limited Partners                           46.7033            24.512.544         (1.702.070)     (1.679.451)          21,131,023
                                          --------            ----------        -----------     -----------          ----------- 
                                          100.0000%          $52,485,684        $(3,644,433)    $(3,596,000)         $45,245,251
                                          ========           ===========        ===========     ===========          ===========


FOR THE YEAR ENDED DECEMBER 31, 1994
Property Capital Trust,
  General Partner                          53.2967%          $27,907,594        $1,039,623      $  (974,077)         $27,973,140

Limited Partners                           46.7033            24,455,106           911,010         (853,572)          24,512,544
                                          --------           -----------        ----------      -----------          -----------  
                                          100.0000%          $52,362,700        $1,950,633      $(1,827,649)         $52,485,684
                                          ========           ===========        ==========      ===========          ===========



FOR THE YEAR ENDED DECEMBER 31, 1993
Property Capital Trust,
  General Partner                          53.2967%          $27,816,622        $  745,527      $  (654,555)         $27,907,594

Limited Partners                           46.7033            24,375,389           653,295         (573,578)          24,455,106
                                          --------           -----------        ----------      -----------          -----------  
                                          100.0000%          $52,192,011        $1,398,822      $(1,228,133)         $52,362,700
                                          ========           ===========        ==========      ============         ===========



</TABLE>







                            See accompanying notes


<PAGE>                            
Page 76

Property Capital Midwest Associates, L.P.
NOTES TO FINANCIAL STATEMENTS

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Property  Capital Midwest Associates, L.P. (the "Partnership") was organized on
April 20, 1983  as a Delaware limited partnership (under the name PCA Executive
Hills Associates, L.P.) and is qualified to do business in the State of Kansas.
Property Capital  Trust  is the sole general partner (the "General Partner") of
the Partnership and six institutional investors are limited partners.

BASIS OF PRESENTATION

The accompanying financial  statements  have  been  prepared in conformity with
generally accepted accounting principles.

ASSETS HELD FOR SALE

The  Partnership  defines  "Assets  Held  for Sale" as assets  that  have  been
approved for sale by the partners and are being  marketed  for sale or are soon
to be marketed by a broker who has already been chosen.  At  December 31, 1995,
all  of  the  Partnership's  real estate investments, Financial Plaza,  College
Hills 3, College Hills 8 and Plaza  West  Retail  Center,  were  classified  to
Assets Held for Sale.  Depreciation is no longer taken on these assets.

VALUATION OF OWNED PROPERTIES

Owned  Properties  are  carried  at  cost,  net  of  accumulated  depreciation.
Depreciation has been calculated under the straight-line method, based upon the
estimated useful lives of the assets.  Properties and property improvements are
depreciated  over  25 to 39 years.  Leasing commissions and tenant improvements
are amortized under  the  straight-line  method  over  the  term of the related
leases.   Expenditures for maintenance, repairs and betterments  which  do  not
materially prolong the normal useful life of an asset are charged to operations
as incurred.

CASH AND CASH EQUIVALENTS

For purposes  of  the  Statement  of  Cash Flows, the Partnership considers all
highly liquid investments with an initial  maturity  of three months or less to
be cash equivalents.

USE OF ESTIMATES

The preparation of financial statements in conformity  with  generally accepted
accounting  principles  requires  management to make estimates and  assumptions
that affect the amounts reported in  the  financial statements and accompanying
notes.  Actual results could differ from those estimates.

REVENUE RECOGNITION

Certain space leases at the properties provide  for stepped minimum rents which
are accounted for on a straight-line basis over the  terms  of the leases.  The
excess  of  rental  income  accrued  under the straight-line method  over  rent
received or receivable by the Partnership  for financial reporting purposes was
$18,300, $18,300 and $54,300 for the years ended  December 1995, 1994 and 1993,
respectively.

INCOME TAXES

The  Partnership  is  not  subject  to  Federal  or  state  income  taxes  and,
accordingly,  no  provisions  have been made for such taxes  in  the  financial
statements.


<PAGE>                            
Page 77

Property Capital Midwest Associates, L.P.
NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 2.  REAL ESTATE INVESTMENTS

As  of December 31, 1995 and 1994  the  Partnership  has  investments  in  four
properties, which are all located in Overland Park, Kansas, as follows:
<TABLE>
<CAPTION>

                                        Investment             Investment             Net Rentable
PROPERTY                                12/31/95               12/31/95               SQUARE FEET
----------------------------------------------------------------------------------------------------------
<S>                                     <C>                    <C>                    <C>    
Financial Plaza                          $ 27,798,603           $ 38,285,619           300,600
Plaza West Retail Center                   12,562,240             17,085,376            98,000
College Hills 8                             3,178,353              5,213,275            50,900
College Hills 3                             2,308,335              2,732,322            37,700
                                         ------------           ------------           -------  
                                           45,847,531             63,316,592           487,200
                                         ------------           ------------           =======

Accumulated Depreciation                       -                 (10,419,464)
                                         ------------           ------------     

                                         $ 45,847,531           $ 52,897,128
                                         ============           ============

</TABLE>

At  June  30,  1995,  the  Partnership wrote down its investments in Plaza West
Retail Center, Financial Plaza  and  College  Hills 8 by $1,858,832, $1,464,290
and  $1,012,308,  respectively.   In  addition,  at   December  31,  1995,  the
Partnership further wrote down its investment in Financial Plaza by $2,354,742.
These write-downs were charged to earnings.

The  Partnership  acquired  the  equity interest in these properties  from  its
lessee  in May 1989.  The former owner  is  entitled  to  a  deferred  residual
payment in  the amount equal to 5% of the cash flow from the properties over an
11% imputed return  on  the  Partnership's  investment, at cost, plus 5% of the
gain, as defined, on each property sold by 1999.   If  any property is not sold
by 1999, the calculation of gain is to be based upon an independent appraiser's
estimate of current market value for such property.


NOTE 3.  MANAGEMENT AGREEMENT

Services related to investment matters and day-to-day administration  have been
provided  to  the  Partnership  under a contract, dated May 24, 1989, with  PCA
Institutional Advisors (the "Advisor").  The  contract  had  an initial term of
five  years  and  is  extended  automatically  on  a year-to-year basis  unless
terminated by the Partnership or the Advisor.  The contract provides for a base
advisory fee equal to 8% of the Partnership's cash flow  (as defined) and for a
disposition  fee  equal  to  8% of the gain from the sale of the  Partnership's
properties.  The Partnership paid  PCA  Institutional  Advisors management fees
aggregating   $271,803,   $114,091  and  $74,297  in  1995,  1994   and   1993,
respectively.  Management fees  payable  are  $4,088,  $13,213  and  $30,832 at
December 31, 1995, 1994 and 1993, respectively.

Effective  August 1, 1992, Property Capital Trust, the General Partner  of  the
Partnership, assumed responsibility for managing the affairs of the Partnership
pursuant to a subcontract and option agreement with PCA Institutional Advisors.
This change was approved by the Partners.


NOTE 4.  DISTRIBUTIONS

The Partnership  makes  monthly  cash  distributions  to  its Partners equal to
approximately 100% of available cash flow from investments,  including  returns
of capital, if any.  For the years ended December 31, 1995, 1994 and 1993,  the
Partnership distributed $3,596,000, $1,827,649 and $1,228,133, respectively.







<PAGE>                            
Page 78

Property Capital Midwest Associates, L.P.
NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 5.  LEASES

Expected  future minimum rents to be received from tenants under non-cancelable
operating leases in effect at December 31, 1995 are as follows:

  YEARS ENDING DECEMBER 31,
-------------------------------------------------------------------------------
  1996                                                            $  7,410,409
  1997                                                               5,936,712
  1998                                                               4,430,190
  1999                                                               2,807,666
  2000                                                               1,627,602
  Thereafter                                                         2,609,769
                                                                  $ 24,822,348

NOTE 6.  SUBSEQUENT EVENT

College Hills 3 was sold for $2,400,000 before closing costs on March 12, 1996.
College Hills 8 was sold for $4,325,000 before closing costs on April 18, 1996.
Financial  Plaza was sold for $28,330,000 before closing  costs  on  April  22,
1996.  Plaza  West  Retail Center was sold for $12,500,000 before closing costs
on October 7, 1996.







<PAGE>                            
Page 79

                     (THIS PAGE INTENTIONALLY LEFT BLANK)










<PAGE>                            
Page 80

Property Capital Midwest Associates, L.P.
SCHEDULE III
DECEMBER 31, 1995
(dollars in thousands)


ASSETS HELD FOR SALE
<TABLE>
<CAPTION>
                                                      Amount of
                                               Partnership's Investment                                                             
                                                at Date of Acquisition                                               Costs
                                               ------------------------                                              Capitalized
                                                Rentable           Date of                        Buildings and      Subsequent
Type and Name of Property    Location           Space              Acquisition(a)      Land       Improvements       to Acquisition
-----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>                    <C>                <C>            <C>            <C>                <C>  
OFFICE BUILDING

Financial Plaza           Overland Park, KS      300,600 sq. ft.    May 89         $   5,500       $ 24,879          $   8,563
College Hills 3           Overland Park, KS       37,700 sq. ft.    May 89               900          1,217                637
College Hills 8           Overland Park, KS       50,900 sq. ft.    May 89               500          3,254              1,733
                                                 ---------------                   ---------       --------          ---------
                                                 389,200 sq. ft.                       6,900         29,350             10,933
                                                 ===============                   ---------       --------          ---------
                     


SHOPPING CENTERS
Plaza West Retail Center  Overland Park, KS       98,000 sq. ft.    May 89             3,800          8,762              4,780
                                                  ==============                    --------       --------           --------   

                                                                                    $ 10,700       $ 38,112           $ 15,713
                                                                                    ========       ========           ========     
</TABLE>

NOTES TO SCHEDULE III

(a)  The  Partnership  acquired  the  equity  interests  in  these properties
from its lessee.   The  date of the acquisition reflects the date on which the
Partnership converted its land leaseback/mortgage  loan  investments  to 
Owned Properties.

(b)  Changes in the Partnership's investment in Assets Held for Sale are
summarized below (dollars in thousands).

<TABLE>
<CAPTION>

                   YEAR ENDED DECEMBER 31,                                1995                 1994                   1993
                   ---------------------------------------------          -----------------------------------------------------
<S>                                                  <C>                  <C>                   <C>                   <C>
        Balance at beginning of year                   $  -                 $  -                  $  -
        Properties reclassified from Owned              63,991                 -                     -                  
        Properties   
        Additions                                          534                 -                     -
        Investments written down                        (6,690)                -                     -
        Write-off of accumulated depreciation          (11,987)                -                     -
                                                       -------              -------               -------  
        Balance at end of year                         $45,848              $  -                  $  -
                                                       


</TABLE>


<PAGE>                            
Page 81


<TABLE>
<CAPTION>


                                                                                            YEAR ENDED 12/31/95
                                                                                    ----------------------------------------    
      Gross Amount of                                        Net          Rent   
   PARTNERSHIP'S INVESTMENT    Write-off of  Write-down   Investment   Receivable              
       Buildings and           Accumulated      of            at           at                   Expenses
                                                                                      Rental    on Owned      Depreciation
LAND     IMPROVEMENT  TOTAL    DEPRECIATION  INVESTMENT    12/31/95     12/31/95      INCOME    PROPERTIES      EXPENSE
<S>      <C>          <C>      <C>           <C>          <C>           <C>           <C>       <C>           <C>
$  5,500  $ 33,442    $ 38,942  $  7,323       $ 3,819     $ 27,800      $  (57)       $ 5,208   $ 2,265       $   895
    900      1,854       2,754       446           -         2,308           23            595       368            83
    500      4,987       5,487      1,297         1,012       3,178          5            726        348           154
--------     --------   --------   --------       -------    --------      ------       -------   -------       -------

  6,900      40,283      47,183     9,066         4,831       33,286        (29)          6,529     2,981          1,132
--------     --------    --------   --------       -------    --------    -------        -------  -------       ------- 


  3,800       13,542      17,342     2,921         1,859       12,562         92           2,262     905           435
--------      --------    -------    ------        ------      -------     -----           ------   -------      -------
$ 10,700   $ 53,825     $ 64,525  $ 11,987(b)   $ 6,690(b)   $ 45,848(b)  $   63         $ 8,791  $ 3,886       $ 1,567
========      ========   ========   ========      =======       ========    ======        =======   =======       =======

</TABLE>





<PAGE>                            
Page 82







                          ANNUAL REPORT ON FORM 10-K
                                    ITEM 8




                             FINANCIAL STATEMENTS


                         Year Ended December 31, 1995




                        PCA CROSSROADS ASSOCIATES, LTD.
                             Boston, Massachusetts

<PAGE>                            
Page 83
 

REPORT OF INDEPENDENT AUDITORS





To the Partners
PCA Crossroads Associates, Ltd.



We  have  audited the accompanying balance sheets of PCA Crossroads Associates,
Ltd. as of  December  31,  1995 and 1994, and the related statements of income,
cash flows and changes in partners'  equity  for each of the three years in the
period  ended  December  31,  1995.   These  financial   statements   are   the
responsibility  of  the  Partnership's  management.   Our  responsibility is to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.   Those  standards  require  that we plan and perform the  audit  to
obtain reasonable assurance about whether  the financial statements are free of
material misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the financial  statements.   An audit
also   includes  assessing  the  accounting  principles  used  and  significant
estimates  made  by  management,  as  well  as evaluating the overall financial
statement presentation.  We believe that our  audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred  to  above present fairly, in
all  material  respects,  the financial position of PCA Crossroads  Associates,
Ltd. at December 31, 1995 and  1994,  and the results of its operations and its
cash flows for each of three years in the  period  ended  December 31, 1995, in
conformity with generally accepted accounting principles.




                                                      ERNST & YOUNG LLP



Boston, Massachusetts
February, 23, 1996, except for Note 6,
as to which the date is April 26, 1996







<PAGE>                            
Page 84


PCA Crossroads Associates, Ltd.
BALANCE SHEET

<TABLE>
<CAPTION>

                                                          DECEMBER 31,
                                                     1995                1994

ASSETS
<S>                                                 <C>                 <C>
Real estate investment in Crossroads Mall            $       -           $ 8,000,000

Cash and cash equivalents                                   88,515            80,822

Rent receivable                                              -                46,894

Prepaid insurance                                            -                   922
                                                         ---------       -----------
                                                         $  88,515       $ 8,128,638
                                                         =========       ===========
</TABLE>



LIABILITIES AND PARTNERS' EQUITY
Liabilities
<TABLE>
<CAPTION>
<S>                                                  <C>                 <C>
Accounts payable and accrued expenses                 $  25,272           $     31,336


Partners' Equity
   Contributed Capital                                      -                8,000,000
   Undistributed net income                              63,243                 97,302
                                                       --------            -----------
   Total Partners' Equity                                63,243              8,097,302
                                                       --------            -----------

                                                      $  88,515            $ 8,128,638
                                                      =========            ===========

</TABLE>




                            See accompanying notes

<PAGE>
Page 85
PCA Crossroads Associates, Ltd.
STATEMENT OF INCOME


<TABLE>
<CAPTION>

                                               YEARS ENDED DECEMBER 31,
                                       ----------------------------------------------
                                       1995                 1994          1993

REVENUES
<S>                                    <C>                  <C>           <C>        
Base income                             $      766,452       $    960,881  $   960,000
Overage income                                 470,209            534,733      364,243
Short-term interest income                      20,476              1,569          763
                                             ---------          ---------    ---------
                                             1,257,137          1,497,183    1,325,006
                                             ---------          ---------    ---------

PARTNERSHIP EXPENSES

Management fee                                   97,005            118,656     103,822
Administrative expense                           10,976             12,418      26,461
                                               --------           --------     -------

                                                107,981            131,074     130,283
                                                -------            -------     -------

NET OPERATING INCOME                          1,149,156          1,366,109   1,194,723

Gain on sale of real estate investment       14,000,420              -            -
                                           ------------        ----------  -----------                                 
NET INCOME                                 $ 15,149,576        $ 1,366,109 $ 1,194,723
                                           ============        =========== ===========


</TABLE>




                            See accompanying notes

<PAGE>
Page 86

PCA Crossroads Associates, Ltd.
STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                 YEARS ENDED DECEMBER 31,
                                         ------------------------------------------
                                            1995              1994          1993

CASH FLOW FROM OPERATING ACTIVITIES

<S>                                         <C>                <C>          <C>
Net income                                    $ 15,149,576      $ 1,366,109  $ 1,194,723

Adjustments to reconcile net income to
  net cash provided by operating activities:
   Gain on sale of real estate investment       (14,000,420)      -             -
   Changes in assets and liabilities
     Decrease (increase) in net receivable           46,894      (6,894)        (8,439)
     Decrease (increase) in prepaid insurance           922        (922)           -
     (Decrease) increase in accounts payable and
       and accrued expenses                          (6,064)      6,184           6,410

Net Cash Provided by Operating Activities         1,190,908        1,364,477    1,192,694


CASH FLOW FROM INVESTING ACTIVITIES
Disposition of real estate investment,
  net of closing costs                           22,000,420              -             -

Net Cash Provided by Investing Activities        22,000,420              -             -


CASH FLOW FROM FINANCING ACTIVITIES
Distributions to partners                       (23,183,635) (1,342,904)     (1,210,196)

Net Cash Used in Financing Activities           (23,183,635) (1,342,904)     (1,210 196)

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                      7,693      21,573      (17,502)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR        80,822      59,249        76,751

CASH AND CASH EQUIVALENTS AT END OF YEAR        $     88,515  $   80,822     $  59,249



</TABLE>





                            See accompanying notes
<PAGE>
Page 87

PCA Crossroads Associates, Ltd.
STATEMENT OF CHANGES IN PARTNERS' EQUITY



                                                                         
<TABLE>
<CAPTION>
                                                                                  DISTRIBUTIONS
                                                                       -----------------------------------
                                                                                   Proceeds in
                                Beginning    Net           Gain        Return       Excess of                   Ending
                    Ownership   Partners'  Operating        on          of         Contributed   Operating      Partners'
                    PERCENTAGE   EQUITY     INCOME         SALE        CAPITAL       CAPITAL      INCOME        EQUITY

<S>                 <C>          <C>        <C>            <C>          <C>          <C>           <C>           <C>
FOR THE YEAR ENDED DECEMBER 31, 1995
Property Capital Trust,
  General Partner    25.00%       $2,024,335 $  287,289     $ 3,500,105  $(2,000,000) $ (3,492,079) $  (303,830)  $   15,820

Limited Partners     75.00         6,072,967    861,867      10,500,315   (6,000,000)  (10,476,237)    (911,489)      47,423

                    100.00%       $8,097,302 $1,149,156     $14,000,420  $(8,000,000) $(13,968,316) $(1,215,319)  $    63,243



FOR THE YEAR ENDED DECEMBER 31, 1994
Property Capital Trust,

  General Partner     25.00%       $2,018,524 $  341,528       -              -              -      $   (335,717)  $2,024,335

Limited Partners      75.00         6,055,573  1,024,581       -              -              -        (1,007,187)   6,072,967

                     100.00%       $8,074,097 $1,366,109       -              -              -      $(1,342,904)   $8,097,302



FOR THE YEAR ENDED DECEMBER 31, 1993
Property Capital Trust,
 
 General Partner      25.00%       $2,022,389  $  298,681       -             -                -      $ (302,546)  $2,018,524

Limited Partners      75.00         6,067,181     896,042       -             -                -        (907,650)   6,055,573

                     100.00%       $8,089,570  $ 1,194,723      -             -                -      $(1,210,196) $8,074,097 


</TABLE>
                           See accompanying notes

<PAGE>
Page 88

PCA crossroads Associates, Ltd.
NOTES TO FINANCIAL STATEMENTS                          

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

PCA  Crossroads  Associates,  Ltd. (the "Partnership") was organized on January
19, 1983 as a Colorado limited partnership.  Property Capital Trust is the sole
general  partner  (the  "General  Partner")   of   the   Partnership   and  ten
institutional investors are limited partners.

REAL ESTATE INVESTMENTS

Real  estate  investments  are  carried  at  cost  at  December  31, 1994.  The
investment was sold in October 1995.

CASH AND CASH EQUIVALENTS

For  purposes  of  the  Statement of Cash Flows, the Partnership considers  all
highly liquid investments  with  an initial maturity of three months or less to
be cash equivalents.

USE OF ESTIMATES

The preparation of financial statements  in  conformity with generally accepted
accounting  principles requires management to make  estimates  and  assumptions
that affect the  amounts  reported in the financial statements and accompanying
notes.  Actual results could differ from those estimates.

INCOME TAXES

The  Partnership  is  not  subject  to  Federal  or  state  income  taxes  and,
accordingly, no provisions have  been  made  for  such  taxes  in the financial
statements.

NOTE 2.  REAL ESTATE INVESTMENTS

The Partnership was formed to invest in the Crossroads Mall Shopping  Center in
Boulder,  Colorado.   The investment was originally structured as an $8,000,000
land leaseback and a $32,000,000 first leasehold mortgage loan which was repaid
in  1986.   On October 19,  1995  the  Partnership  sold  its  $8,000,000  land
investment for  a gross sales price of $23,236,500 to the Partnership's lessee.
After closing costs  the  Partnership  realized  a  gain  of  $14,000,420 on an
historical cost basis.

NOTE 3.  MANAGEMENT AGREEMENT

Services related to investment matters and day-to-day administration  have been
provided to the Partnership under a contract, dated January 26, 1983, with  PCA
Institutional  Advisors  (the  "Advisor").  The contract had an initial term of
five  years  and  is  extended  automatically on a  year-to-year  basis  unless
terminated by the Partnership or the Advisor.  The contract provides for a base
advisory fee equal to 8% of the Partnership's  cash flow (as defined) and for a
disposition  fee equal to 8% of the gain from the  sale  of  the  Partnership's
interest.  Pursuant  to the agreement the Advisor was paid a disposition fee of
$1,214,636 in connection with the sale.

Effective August 1, 1992,  Property  Capital  Trust, the General Partner of the
Partnership, assumed responsibility for managing the affairs of the Partnership
pursuant to a subcontract and option agreement with PCA Institutional Advisors.
This change was approved by the Partners.

NOTE 4.  DISTRIBUTIONS

The  Partnership makes monthly cash distributions  to  its  partners  equal  to
approximately  100%  of  available  cash  flow from investments.  For the years
ended December 31, 1995, 1994 and 1993 the  partnership distributed $1,215,319,
$1,342,904 and $1,210,196 respectively.  On October  24,  1995  the Partnership
distributed $21,968,316 from the sale of its land investment.



<PAGE>
Page 89
PCA Crossroads Associates, Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)


NOTE 5.  SUBSEQUENT EVENT

Subsequent  to the end of the year the Partnership received additional  overage
income from its  former lessee.  The following is an accounting of the activity
in the Partnership  from  January 1, 1996 through the final distribution of the
remaining Partnership assets  in  the  amount  of $96,049.20 on April 26, 1996.
The Partnership has been terminated and all assets have now been distributed.


               Cash Balance at December 31, 1995        $ 88,515

               Overage income                             41,124
               Short-term interest income                  1,183
               Less:
                 Management fee                           (8,352)
                 Administrative expenses                  (1,149)
                 December 31, 1995 payables               (25,272)

               Cash balance for final distribution         96,049

               Distribution to Partners                   (96,049)

               Ending Cash                              $     -