SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                 FORM 10-Q

(Mark One)

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

     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998, 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 number 1-14369

                    American Community Properties Trust
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)

               Maryland                                     52-2058165
     -------------------------------                   --------------------
     (State or other jurisdiction of                   (I.R.S. Employer
      incorporation or organization)                    Identification No.)

                       222 Smallwood Village Center
                       St. Charles, Maryland  20602
                 ----------------------------------------
                 (Address of Principal Executive Offices)
                                (Zip Code)


                              (301) 843-8600
           ----------------------------------------------------
           (Registrant's telephone number, including area code)


                              Not Applicable
          -------------------------------------------------------
          (Former name, former address and former fiscal year, if
                        changed since last report)


     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has
been subject to such filing requirements for the past 90 days.

                         Yes / /                   No /X/


     Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                          5,207,952 Common Shares
                         ------------------------
<PAGE>
                    AMERICAN COMMUNITY PROPERTIES TRUST
                                 FORM 10-Q
                                   INDEX

                                                                  Page  
PART I         FINANCIAL INFORMATION                              Number
                                                                  ------
Item 1.        Financial Statements of American
                 Community Portfolio Properties                        3

               Combined Statements of Income for
                 the Nine Months Ended September 30, 1998 and
                 1997. (Unaudited)                                     4

               Combined Statements of Income for
                 the Three Months Ended September 30, 1998 and
                 1997. (Unaudited)                                     5

               Combined Balance Sheets at September 30, 1998
                 (Unaudited) and December 31, 1997.                    6

               Combined Statements of Cash Flow for the
                 Six Months Ended September 30, 1998 and 1997.
                 (Unaudited)                                           8

               Combined Statements of Cash Flow for the
                 Three Months Ended September 30, 1998 and 1997.
                 (Unaudited)                                           9

               Notes to Combined Financial Statements.                10

               Financial Statement of American Community
               Properties Trust                                       21

               Balance Sheet as of September 30, 1998 (Unaudited)     21

               Notes to Balance Sheet                                 22

Item 2.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations for the Three
               and Six Month Periods Ended September 30, 1998 and
               1997 for American Community Portfolio Properties       23

PART II        OTHER INFORMATION

Item 1.        Legal Proceedings                                      30

Item 2.        Material Modifications of Rights of Registrant's       30
               Securities

Item 3.        Defaults Upon Senior Securities                        30

Item 4.        Submission of Matters to a Vote of Security Holders    30

Item 5.        Other Information                                      30

Item 6.        Exhibits and Reports on Form 8-K                       31

               Signatures                                             32
<PAGE>

Introductory Note

     On March 17, 1997, American Community Properties Trust ("ACPT") was
formed as a real estate investment trust under Article 8 of the Maryland
Trust Law.  Prior to October 5, 1998, ACPT was a wholly owned subsidiary of
Interstate General Company L.P. ("IGC").  ACPT was formed to succeed to
most of IGC's real estate operations.

     On October 5, 1998, IGC transferred to ACPT the common shares of four
subsidiaries that collectively comprised the principal real estate
operations and assets of IGC.  In exchange ACPT issued to IGC 5,207,952
common shares of ACPT, all of which were distributed to the partners of
IGC.

     As of September 30, 1998, ACPT had not commenced operations.  The
financial statements included herein for American Community Portfolio
Properties represent the operations and assets that would have been
transferred to American Community Properties Trust ("ACPT") if the
restructure and distribution had been completed at January 1, 1997.







































<PAGE>

                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
                       COMBINED STATEMENTS OF INCOME
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                 (In thousands, except per share amounts)
                                (Unaudited)


                                                      1998         1997
                                                   ----------   -----------

REVENUES
  Community development-land sales
    Non-affiliates                                $   11,776    $    4,340
    Affiliates                                         1,179         3,105
  Equity in earnings from partnerships
    and developer fees                                 1,144           938
  Rental property revenues                             6,693         6,540
  Management and other fees, substantially 
    all from related entities                          2,518         3,038
  Interest and other income                              892           594
                                                  ----------    ----------
    Total revenues                                    24,202        18,555
                                                  ----------    ----------

EXPENSES
  Cost of land sales, including purchases
    from affiliates of $936 and $1,760                 8,011         4,749
  Selling and marketing                                   54           113
  General and administrative                           4,289         4,765
  Interest expense                                     2,726         2,852
  Rental properties operating expense                  2,748         2,784
  Depreciation and amortization                        1,420         1,368
  Write-off of deferred project costs                     --             6
  Spin-off costs                                       1,831           300
                                                  ----------    ----------
    Total expenses                                    21,079        16,937
                                                  ----------    ----------

INCOME BEFORE PROVISION FOR INCOME
  TAXES AND MINORITY INTEREST                          3,123         1,618
PROVISION FOR INCOME TAXES                               582           473
                                                  ----------    ----------
INCOME BEFORE MINORITY INTEREST                        2,541         1,145
MINORITY INTEREST                                       (607)         (249)
                                                  ----------    ----------
NET INCOME                                        $    1,934    $      896
                                                  ==========    ==========
BASIC NET INCOME PER SHARE                        $      .37    $      .17
                                                  ==========    ==========
PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING          5,216         5,189
                                                  ==========    ==========




                The accompanying notes are an integral part
                     of these consolidated statements.

<PAGE>

                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
                        COMBINED STATEMENTS OF LOSS
                 FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                 (In thousands, except per share amounts)
                                (Unaudited)


                                                      1998         1997
                                                   ----------   -----------

REVENUES
  Community development-land sales                                        
    Non-affiliates                                $      187    $    1,843
    Affiliates                                           559            35
  Equity in earnings from partnerships
    and developer fees                                   498           287
  Rental property revenues                             2,261         2,240
  Management and other fees, substantially
    all from related entities                            769           769
  Interest and other income                              219           179
                                                  ----------    ----------
    Total revenues                                     4,493         5,353
                                                  ----------    ----------

EXPENSES
  Cost of land sales, including purchases
    from affiliates of $446 and $52                      678         1,269
  Selling and marketing                                   13            49
  General and administrative                           1,173         1,512
  Interest expense                                       983           951
  Rental properties operating expense                    967         1,016
  Depreciation and amortization                          476           427
  Spin-off costs                                         783           300
                                                  ----------    ----------
    Total expenses                                     5,073         5,524
                                                  ----------    ----------

LOSS BEFORE PROVISION FOR INCOME
  TAXES AND MINORITY INTEREST                           (580)         (171)
PROVISION FOR INCOME TAXES                               184           465
                                                  ----------    ----------
LOSS BEFORE MINORITY INTEREST                           (764)         (636)
MINORITY INTEREST                                       (103)         (148)
                                                  ----------    ----------
NET LOSS                                          $     (867)   $     (784)
                                                  ==========    ==========
BASIC NET (LOSS) PER SHARE                        $     (.17)   $     (.15)
                                                  ==========    ==========
PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING          5,211         5,189
                                                  ==========    ==========





                The accompanying notes are an integral part
                     of these consolidated statements.

<PAGE>
                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
                          COMBINED BALANCE SHEETS
                              (In thousands)

                                A S S E T S

                                                September 30,  December 31,
                                                     1998          1997
                                                -------------  -----------
                                                 (Unaudited)    (Audited)
CASH AND CASH EQUIVALENTS
  Unrestricted                                     $  1,451      $  2,127
  Restricted cash                                     2,467           374
                                                   --------      --------
                                                      3,918         2,501
                                                   --------      --------
ASSETS RELATED TO INVESTMENT PROPERTIES
  Operating properties, net of accumulated
    depreciation of $22,343 and $21,392 as
    of September 30, 1998 and December 31,
    1997, respectively                               37,635        38,143
  Investment in unconsolidated rental property
    partnerships, net of deferred income of
    $1,901 and $2,193 as of September 30,
    1998 and December 31, 1997, respectively          7,376         8,657
  Other receivables, net of reserves of
    $128 and $223 as of September 30,
    1998 and December 31, 1997, respectively          1,314           621
                                                   --------      --------
                                                     46,325        47,421
                                                   --------      --------

ASSETS RELATED TO COMMUNITY DEVELOPMENT
  Land and development costs
    Puerto Rico                                      33,346        34,268
    St. Charles, Maryland                            25,584        21,750
  Notes receivable on lot sales and other             2,066         5,629
                                                   --------      --------
                                                     60,996        61,647
                                                   --------      --------
ASSETS RELATED TO HOMEBUILDING
  Investment in joint venture                           976           591
                                                   --------      --------
                                                        976           591
                                                   --------      --------
OTHER ASSETS
  Receivables and other                               2,417         2,514
  Property, plant and equipment, less accumulated
    depreciation of $1,709 and $1,675 as of
    September 30, 1998 and December 31, 1997,
    respectively                                        428           448
                                                   --------      --------
                                                      2,845         2,962
                                                   --------      --------
    Total assets                                   $115,060      $115,122
                                                   ========      ========

                The accompanying notes are an integral part
                   of these consolidated balance sheets.
<PAGE>

                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
                          COMBINED BALANCE SHEETS
                              (In thousands)

                          LIABILITIES AND CAPITAL
                                                                           
                                                                           
                                               September 30,   December 31,
                                                    1998           1997
                                               -------------   ------------
                                                (Unaudited)      (Audited)

LIABILITIES RELATED TO INVESTMENT PROPERTIES
  Recourse debt                                   $    905        $    969
  Non-recourse debt                                 38,775          39,101
  Accounts payable and accrued liabilities           2,905           2,779
                                                  --------        --------
                                                    42,585          42,849
                                                  --------        --------

LIABILITIES RELATED TO COMMUNITY DEVELOPMENT
  Recourse debt                                     40,213          39,784
  Non-recourse debt                                     --           2,295
  Accounts payable and accrued liabilities           3,019           4,502
  Deferred income                                      356             598
                                                  --------        --------
                                                    43,588          47,179
                                                  --------        --------

OTHER LIABILITIES
  Accounts payable and accrued liabilities           4,302           3,246
  Notes payable and capital leases                     183             173
  Accrued income tax liability - current             2,457           1,539
  Accrued income tax liability - deferred            4,256           4,120
                                                  --------        --------
                                                    11,198           9,078
                                                  --------        --------
    Total liabilities                               97,371          99,106
                                                  --------        --------
CAPITAL                                             17,689          16,016
                                                  --------        --------
    Total liabilities and capital                 $115,060        $115,122
                                                  ========        ========












                The accompanying notes are an integral part
                   of these consolidated balance sheets.

<PAGE>

                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
                     COMBINED STATEMENTS OF CASH FLOW
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                              (In thousands)
                                (Unaudited)

                                                        1998        1997
                                                     ----------  ----------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                          $  1,934     $   896
  Adjustments to reconcile net income to net cash
    provided by (used by) operating activities:
      Depreciation and amortization                      1,420       1,368
      Provision (benefit) for deferred income taxes        136        (526)
      Equity in earnings from unconsolidated
        partnerships and developer fees                   (759)     (1,004)
      Distributions from unconsolidated partnerships     1,912       5,142
      Cost of sales                                      8,011       4,749
      Equity in (earnings) loss from homebuilding
        joint venture                                     (385)         66
      Write-off of deferred project cost                    --           6
      Changes in notes and accounts receivable, due
        from affiliates changed $4,004 and $(176)        3,551          31
      Changes in accounts payable, accrued liabilities
        and deferred income                              2,713      (2,055)
                                                       -------     -------
  Net cash provided by operating activities             18,533       8,673
                                                       -------     -------
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in land improvements for future sales     (10,083)     (4,370)
  Change in assets related to unconsolidated
    rental property partnerships                           128        (760)
  Change in restricted cash                             (2,093)        291
  Additions to rental operating properties, net           (780)       (396)
  Acquisitions of other assets, net                       (696)     (1,304)
  Contributions to homebuilding joint venture               --        (245)
                                                       -------     -------
  Net cash used in investing activities                (13,524)     (6,784)
                                                       -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES
  Cash proceeds from debt financing                     12,287      19,000
  Payment of debt                                      (14,533)    (15,440)
  Purchase of minority interest in subsidiary           (3,100)         --
  Cash contributions from (distributions to) IGC, net     (398)     (5,334)
  Distributions to Unitholders                            (209)         --
  Issuance of Warrants                                     268          --
                                                       -------     -------
  Net cash used in financing activities                 (5,685)     (1,774)
                                                       -------     -------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS      (676)        115
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR             2,127       2,143
                                                       -------     -------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30                $ 1,451     $ 2,258
                                                       =======     =======

                The accompanying notes are an integral part
                     of these consolidated statements.
<PAGE>

                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
                     COMBINED STATEMENTS OF CASH FLOW
                 FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                              (In thousands)
                                (Unaudited)

                                                        1998        1997
                                                     ----------  ----------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                               $(867)     $ (784)
  Adjustments to reconcile net loss to net cash
    provided by (used by) operating activities:
      Depreciation and amortization                        476         427
      Provision for deferred income taxes                  784         574
      Equity in earnings from unconsolidated
        partnerships and development fees                 (276)       (305)
      Distributions from unconsolidated partnerships       116         175
      Cost of sales                                        678       1,269
      Equity in (earnings) loss from homebuilding
        joint venture                                     (222)         18
      Changes in notes and accounts receivable, due
        from affiliates changed $(75) and $2              (464)         92
      Changes in accounts payable, accrued liabilities
        and deferred income                              1,941      (1,813)
                                                       -------     -------
  Net cash provided by (used in) operating activities    2,166        (347)
                                                       -------     -------
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in land improvements for future sales      (4,460)     (2,386)
  Change in assets related to unconsolidated
    rental property partnerships                           (14)          1
  Change in restricted cash                               (238)        208
  Additions to rental operating properties, net           (223)        (46)
  Acquisitions of other assets, net                       (583)       (653)
  Contributions to homebuilding joint venture               --         (20)
                                                       -------     -------
  Net cash used in investing activities                 (5,518)     (2,896)
                                                       -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES
  Cash proceeds from debt financing                      8,347      16,143
  Payment of debt                                       (2,585)     (9,365)
  Purchase of minority interest in subsidiary           (3,100)         --
  Cash contributions from (distributions to) IGC, net     (449)     (2,823)
  Distributions to Unitholders                              --          --
  Issuance of Warrants                                     268          --
                                                       -------     -------
  Net cash provided by financing activities              2,481       3,955
                                                       -------     -------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS      (871)        712
CASH AND CASH EQUIVALENTS, JUNE 30                       2,322       1,546
                                                       -------     -------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30                $ 1,451     $ 2,258
                                                       =======     =======

                The accompanying notes are an integral part
                     of these consolidated statements.

<PAGE>
                  AMERICAN COMMUNITY PORTFOLIO PROPERTIES
             NOTES TO COMBINED FINANCIAL STATEMENTS OF ASSETS
                   AND LIABILITIES TO BE TRANSFERRED TO
           AMERICAN COMMUNITY PROPERTIES TRUST AND SUBSIDIARIES
                            SEPTEMBER 30, 1998
                                (Unaudited)

(1)  ORGANIZATION AND BASIS OF PRESENTATION

     Interstate General Company L.P. ("IGC") was formed as a Delaware
limited partnership in 1986.  Directly and through predecessors, IGC has
been engaged in business since 1957.  IGC has traded publicly as a master
limited partnership since February 1987 on the American Stock Exchange and
Pacific Stock Exchange.  Company Management and the Board of Directors of
IGC's Managing General Partner have undertaken steps to restructure IGC.

     IGC is a diversified real estate organization specializing in
community development, investment apartment properties, property management
services and homebuilding.  IGC owns and participates in these operations
directly and through the following subsidiaries:  Interstate General
Properties, S.E. ("IGP"); St. Charles Associates Limited Partnership
("SCA"); Land Development Associates, S.E. ("LDA"); and American Family
Homes, Inc. ("AFH").  IGC's assets and operations are concentrated
primarily in the metropolitan areas of Washington, D.C. and San Juan,
Puerto Rico.  Additionally, its homebuilding operations are active in
Virginia, North Carolina and South Carolina.  Through its wholly owned
subsidiary Interstate Waste Technologies, Inc. ("IWT"), IGC is involved in
the pre-development of municipal waste treatment facilities.

     American Community Properties Trust ("ACPT"), American Rental
Properties Trust ("American Rental"), American Rental Management Company
("American Management"), American Land Development U.S., Inc. ("American
Land") and Interstate General Properties Group, S.E. ("IGP Group") are or
will be formed to carry out the restructuring of IGC.  These entities and
their subsidiaries collectively represent American Community Portfolio
Properties ("ACPP").  IGC expects to transfer its principal operations to
ACPT and distribute to the partners of IGC, including its Unitholders, all
the common shares of ACPT (the "Restructuring").  Due to these companies
being commonly controlled entities, the transfers to ACPT will occur at
book value.

     ACPT is a Maryland real estate investment trust that is expected to be
taxed as a partnership.  It is a self-managed holding company that owns all
of the outstanding equity interests in American Management, American Land,
and IGP Group and all of the common stock of American Rental.

     American Rental.

     IGC expects to transfer to American Rental substantially all of its
partnership interests in United States investment properties and its land
in the United States presently intended for development as apartment
properties.  The partnership interests in 13 investment apartment
properties ("U.S. Apartment Partnerships") will be held by American Rental
indirectly through American Housing Properties L.P. ("American Housing"), a
Maryland partnership, in which American Rental will have a 99% limited
partner interest and American Housing Management Company, a wholly owned
subsidiary of American Rental, will have a 1% general partner interest. 
The transfer of the general partner interest in five partnerships requires
limited partner approval which is not expected to be obtained prior to the
<PAGE>

Restructuring.  Therefore, IGC will assign to ACPT beneficial ownership in
these partnerships.  The beneficial interests in two of these partnerships
will be evidenced by a Class C IGP interest.  ACPT has agreed to indemnify
IGC against any losses it may suffer as a result of being the general
partner and IGC will be obligated to remit to ACPT any cash received from
these five partnerships.  To avoid termination of the partnership for tax
purposes, sixty percent of the general partners' interest in four
additional partnerships will not be transferred to ACPT until twelve months
and one day after the date of Restructure.  Where control does not exist
the cost method of accounting will be used.

     American Management.

     Effective December 31, 1997 IGC transferred to American Management its
United States property management operations.  The United States property
management operations provide management services for the United States
apartment properties and for other rental apartments not owned by IGC.

     American Land.

     IGC expects to transfer to American Land its principal United States
property assets and operations.  These will include the following:

     1.   A 100% interest in St. Charles Community LLC which holds 4,500
          acres of land in St. Charles, Maryland.  This constitutes all of
          the land formerly held by SCA, a partnership in which IGC holds a
          99% partnership interest and Interstate Business Corporation
          ("IBC") holds a 1% partnership interest, except for a 50%
          interest in Brandywine Investment Associates L.P., which hold 277
          acres of land held for development in Brandywine, Maryland, that
          will continue to be held by SCA.  

          IGC will retain 26 remaining single-family lots in Dorchester and
          an 800 acre tract held for development in Pomfret, Maryland, 90
          acres and 27 acres, respectively, in the communities of Montclair
          and Westbury and the Wetlands Properties.

     2.   A 41.0346% interest in Maryland Cable Limited Partnership which
          holds receivables from the 1988 sale of IGC's cable television
          assets.

     3.   The Class B IGP interest that represents IGP's rights to income,
          gains and losses associated with land in Puerto Rico held by LDA
          and designated for development as saleable property.

     4.   As part of the asset transfers, IGC conditionally has agreed to
          transfer to American Land 14 acres of land in St. Charles that
          currently is zoned for commercial use (the "Commercial Parcel")
          if and when IGC settles the wetlands litigation on terms approved
          by the Board of Directors of IGMC, provided that IGC shall have
          received confirmation that the transfer of the Commercial Parcel
          (and resulting decrease in the value of IGC's assets) will not
          cause the IGC Units to be delisted from AMEX or the PSE.  The
          Commercial Parcel has a book value of approximately $1,000,000 at
          July 28, 1998.  If IGC is unable to settle the wetlands
          litigation on satisfactory terms or IGC does not receive
          confirmation of the continued listing of IGC Units, IGC will
          retain the Commercial Parcel.
<PAGE>

     There have been no adjustments made to the accompanying financial
statements to record the inclusion of the Commercial Parcel.

     IGP Group.

     IGC expects to transfer to IGP Group its entire 99% limited
partnership interest and 1% general partner interest in IGP other than the
Class B IGP interest to be held by American Land and the Class C interest
to be held by American Land.  IGP's assets and operations will continue to
include:

     1.   an 80% partnership interest in LDA, a Puerto Rico special
          partnership, which holds 312 acres of land in the planned
          community of Parque Escorial and 543 acres of land in Canovanas. 
          On July 30, 1998, LDA acquired the 20% interest in LDA owned by
          an unrelated third party at a purchase price of $5.5 million.  As
          a result of this purchase, IGP owns 100% of LDA;

     2.   a 50% partnership interest in Escorial Builders Associates S.E.
          ("Escorial Builders"), which is engaged in the construction of
          condominiums in the planned community of Parque Escorial;

     3.   a 1% interest in El Monte Properties S.E., a Puerto Rico special
          partnership which owns El Monte Mall Complex, a 169,000 square
          foot office complex in San Juan, Puerto Rico; and

     4.   general partner interests in 11 Puerto Rico apartment
          partnerships.

     After these asset transfers have been completed, IGC expects to
distribute all of the outstanding common shares of ACPT to the general and
limited partners (including Unitholders) of IGC pro rata in accordance with
their percentage interest in IGC (the "Distribution").  Unitholders in the
aggregate will receive 99% of ACPT's common shares.

     Basis of Presentation

     The accompanying financial statements of ACPP have been presented on a
combined historical cost basis because of affiliated ownership, common
management and because the assets and liabilities of IGC are expected to be
transferred to ACPT, a newly formed entity with no prior operations.  IGC's
historical basis in the assets and liabilities of ACPP have been carried
over to the combined historical financial statements.  Certain assets and
liabilities of IGC will not be contributed to ACPP and, therefore, these
financial statements are not intended to represent the financial positions
and results of operations of IGC or any entity included therein.  In
management's opinion, these financial statements include the assets,
liabilities, revenues and expenses associated with the portions of IGC
operations intended to be transferred to ACPT.  All significant
intercompany balances and transactions have been eliminated in the
presentation.  Changes in the capital account represent the net income of
ACPP, the exercise of employee and director options, asset transfers less
cash distributions to Unitholders and net cash (distributions to)
contributions from IGC.  Net income per share is calculated based on the
weighted average shares that would have been outstanding had the
Restructuring and Distribution been completed prior to January 1, 1997. 
Diluted earnings per share for the three and nine months ended September
30, 1998 does not differ from basic earnings per share.
<PAGE>

     The combined historical financial statements include the accounts of
ACPP and its majority owned partnerships and subsidiaries, after
eliminating intercompany transactions.  All of the entities included in the
combined historical financial statements are hereinafter referred to
collectively as the "Company" or "ACPP".  As of December 31, 1997, the
combined group includes ACPT, American Rental, American Management,
American Land and IGP Group.  The following entities are consolidated with
American Rental: Lancaster Apartments Limited Partnership, New Forest
Apartments Partnership, Fox Chase Apartments General Partnership, Palmer
Apartments Associates Limited Partnership, Headen House Associates Limited
Partnership, Wakefield Terrace Associates Limited Partnership and Wakefield
Third Age Associates Limited Partnership.  St. Charles Community LLC is
consolidated with American Land.  The following entities are consolidated
with IGP Group:  Interstate General Properties S.E. and Land Development
Associates S.E.

     These financial statements should be read in conjunction with the
audited financial statements and the notes included in ACPT's Registration
Statement on Form S-11 No. 333-58835.

(2)  IMPACT ON RECENTLY ISSUED ACCOUNTING STANDARDS

     During 1998, IGC adopted the provisions of SFAS No. 130 "Reporting
Comprehensive Income" and will adopt SFAS No. 131 "Disclosures about
Segments of an Enterprise and Related Information" at December 31, 1998. 
The adoption of SFAS No. 130 did not have a material effect on IGC's
financial statements.

(3)  INVESTMENT IN UNCONSOLIDATED PARTNERSHIPS

     Housing Partnerships

     The following information summarizes financial data and principal
activities of unconsolidated housing partnerships which the Company
accounts for under the equity method.  The information is presented to
segregate the two projects undergoing condominium conversion from the
operating properties (in thousands).

                                                        Projects
                                            Operating  Under Condo
                                            Properties Conversions  Total
                                            ---------- -----------  -----
SUMMARY FINANCIAL POSITION:
  Total Assets
    September 30, 1998                       $ 96,076    $10,791  $106,867
    December 31, 1997                         102,466      9,509   111,975
  Total Non-Recourse Debt
    September 30, 1998                        104,834     12,014   116,848
    December 31, 1997                         106,390     11,612   118,002
  Total Other Liabilities
    September 30, 1998                          9,545      2,253    11,798
    December 31, 1997                           9,903        122    10,025
  Total Equity
    September 30, 1998                        (18,303)    (3,476)  (21,779)
    December 31, 1997                         (13,827)    (2,225)  (16,052)
  Company's Investment
    September 30, 1998                          7,377         --     7,377
    December 31, 1997                           8,657         --     8,657
<PAGE>

                                                        Projects
                                            Operating  Under Condo
                                            Properties Conversions  Total
                                            ---------- -----------  -----

SUMMARY OF OPERATIONS:
  Total Revenue
    Three Months Ended September 30, 1998    $  6,758   $     10  $  6,768
    Three Months Ended September 30, 1997       6,571        324     6,895
    Nine Months Ended September 30, 1998       20,264        103    20,367
    Nine Months Ended September 30, 1997       19,704      1,417    21,121
  Net Income (Loss)
    Three Months Ended September 30, 1998         290       (433)     (143)
    Three Months Ended September 30, 1997         216       (169)       47
    Nine Months Ended September 30, 1998          685     (1,251)     (566)
    Nine Months Ended September 30, 1997          574        (99)      475
  Company's recognition of equity in
  earnings and developer fees
    Three Months Ended September 30, 1998         277         --       277
    Three Months Ended September 30, 1997         341        (35)      306
    Nine Months Ended September 30, 1998          760         --       760
    Nine Months Ended September 30, 1997        1,003         --     1,003

SUMMARY OF CASH FLOWS:
  Cash flows from operating activities
    Three Months Ended September 30, 1998       1,290       (899)      391
    Three Months Ended September 30, 1997         920        136     1,056
    Nine Months Ended September 30, 1998        4,142     (2,605)    1,537
    Nine Months Ended September 30, 1997        3,213        573     3,786

  Company's share of cash flows
  from operating activities
    Three Months Ended September 30, 1998         442       (450)       (8)
    Three Months Ended September 30, 1997         367         67       434
    Nine Months Ended September 30, 1998        1,519     (1,303)      216
    Nine Months Ended September 30, 1997        1,285        286     1,571

  Cash distributions
    Three Months Ended September 30, 1998         261         --       261
    Three Months Ended September 30, 1997         479         --       479
    Nine Months Ended September 30, 1998        5,074         --     5,074
    Nine Months Ended September 30, 1997        1,335      9,292    10,627

  Company's share of cash distributions
    Three Months Ended September 30, 1998         116         --       116
    Three Months Ended September 30, 1997         204        (25)      179
    Nine Months Ended September 30, 1998        1,912         --     1,912
    Nine Months Ended September 30, 1997          500      4,646     5,146

     The unconsolidated rental properties partnerships as of September 30,
1998 include 19 partnerships owning 4,563 rental units in 22 apartment
complexes owned by Alturas Del Senorial Associates Limited Partnership,
Bannister Associates Limited Partnership, Bayamon Gardens Associates
Limited Partnership, Brookside Gardens Limited Partnership, Carolina
Associates Limited Partnership, Colinas de San Juan Associates Limited
Partnership, Crossland Associates Limited Partnership, Essex Apartments
Associates Limited Partnership, Huntington Associates Limited Partnership,
Jardines de Caparra Associates Limited Partnership, Lakeside Apartments
<PAGE>

Limited Partnership, Monserrate Associates Limited Partnership, Monte de
Oro Associates Limited Partnership, New Center Associates Limited
Partnership, San Anton Associates Limited Partnership, Turabo Limited
Dividend Partnership and Valle del Sol Limited Partnership.  The Company
holds a general partner interest in these partnerships and generally shares
in zero to 5% of profits, losses and cash flow from operations until such
time as the limited partners have received cash distributions equal to
their capital contributions.  Thereafter, the Company generally shares in
50% of cash distributions from operations.  Pursuant to the partnership
agreements, the general partners of the unconsolidated partnerships are
prohibited from selling or refinancing the apartment complexes without
majority limited partner approval.  Due to the absence of control and non-
majority ownership, these partnerships are accounted for under the equity
method of accounting.

     During 1997, the rental complexes owned by Monte de Oro and New Center
were refinanced to provide distributions to their partners and funds to
convert the rental units into condominiums.  Rental revenues started to
decline in 1997 as the units were vacated in preparation for conversion.

     Homebuilding Joint Venture

     The Company holds a 50% joint venture interest in Escorial Builders
S.E.  Escorial Builders was formed in 1995 to purchase lots from the
Company and construct homes for resale.  It purchased land to construct 118
units in 1997 and land to construct 98 units in 1996.  The profit on these
lots are deferred until sold by Escorial Builders to a third party.  The
following tables summarize Escorial Builders' financial information (in
thousands):

SUMMARY OF FINANCIAL POSITION:

                                                         AS OF
                                             ----------------------------
                                             September 30,   December 31,
                                                 1998            1997
                                             -------------   ------------

Total assets                                      $11,660        $13,374
Total liabilities                                   9,709         12,191
Total equity                                        1,951          1,183
Company's investment                                  976            591


SUMMARY OF OPERATIONS:

                                FOR THE NINE MONTHS   FOR THE THREE MONTHS
                                ENDED SEPTEMBER 30,   ENDED SEPTEMBER 30,
                                -------------------   --------------------
                                  1998        1997      1998         1997
                                  ----        ----      ----         ----

Total revenue                   $ 8,431      $    2    $3,950        $   2
Net income (loss)                   768        (136)      442          (41)
Company's recognition of
  equity in earnings (losses)       384         (68)      221          (20)


<PAGE>

SUMMARY OF OPERATING CASH FLOWS:

                                FOR THE NINE MONTHS   FOR THE THREE MONTHS
                                ENDED SEPTEMBER 30,   ENDED SEPTEMBER 30,
                                -------------------   --------------------
                                  1998        1997      1998         1997
                                  ----        ----      ----         ----
Cash flows from operating
  activities                    $ 3,801     $(7,642)  $ 2,423      $(2,012)
Company's share of cash flows
  from operating activities       1,900      (3,821)    1,211       (1,006)
Operating cash distributions         --          --        --           --
Company's share of operating
  cash distributions                 --          --        --           --

(4)  DEBT

     The Company's outstanding debt is collateralized primarily by land,
land improvements, housing, receivables, investments in partnerships, and
rental properties.  The following table summarizes the indebtedness of the
Company at September 30, 1998 and December 31, 1997 (in thousands):

                                                         Outstanding
                              Maturity Interest  --------------------------
                              Dates    Rates (a) September 30, December 31,
                              From/To  From/To        1998         1997
                              -------- --------- ------------- ------------
Related to community
  development:
    Recourse debt             12-31-98   P+6.5%/     $40,213      $39,784
                              07-31-04   10.0% (b)
    Non-recourse debt         Paid       P+1.5%           --        2,295

Related to investment
  properties:
    Recourse debt             Demand     8.19%           905          969
    Non-recourse debt         10-01-19/  6.85%/       38,775       39,101
                              10-01-28   8.5%

General:
    Recourse debt             Demand     9.56%/          183          173
                              04-01-03   18.5%       -------      -------
      Total debt                                     $80,076      $82,322
                                                     =======      =======

      (a)  P = Prime lending interest rate.

      (b)  Approximately $15,484,000 of this debt requires additional
           interest payments on each annual anniversary date.  The amount
           due is 1% of the outstanding balance in 1998 and 1999, and
           increases 1/2% each year thereafter, through 2003.

     As of September 30, 1998, the $40,213,000 of recourse debt related to
community development assets is fully collateralized by substantially all
of the community development assets.  Approximately $15,484,000 of this
amount is further secured by investments in apartment rental partnerships.


<PAGE>

     As of September 30, 1998, recourse investment property debt is secured
by cash receipts received by the Company pursuant to the terms of a sales
contract.  The non-recourse investment properties debt is collateralized by
apartment projects and secured by FHA or the Maryland Housing Fund. 
Mortgage notes payable of $7,147,000 have stated interest rates of 7.5% and
7.75%; however, after deducting interest subsidies provided by HUD, the
effective interest rate over the life of the loans is 1%.

     The homebuilding debt is secured by eight homes under construction.

(5)  RELATED PARTY TRANSACTIONS

     Certain officers, directors and a general partner, IBC, of IGC and
certain officers and trustees of the Company have ownership interests in
various entities that conducted business with the Company during the last











































<PAGE>

two years.  The financial impact of the related party transactions on the
accompanying financial statements are reflected below:
<TABLE>
<CAPTION>
INCOME STATEMENT IMPACT:
                                                                                  Nine Months Ended      Three Months Ended
                                                                                    September 30,           September 30,  
                                                                                  -----------------      -------------------
                                                                                    1998       1997        1998         1997
                                                                                    ----       ----        ----         ----
<S>                                                                    <C>        <C>        <C>         <C>          <C>
Community Development - Land Sales (A)
  IGC                                                                             $   --     $  105      $   --       $   35
  Homebuilding joint venture                                                       1,179         --         559           --
  Affiliate of IBC, general partner of IGC,
    and James Michael Wilson, trustee, IGC director                    (A2)           --      3,000          --           --
                                                                                  ------     ------      ------       ------
                                                                                  $1,179     $3,105      $  559       $   35
                                                                                  ======     ======      ======       ======
Cost of Land Sales
  IGC                                                                             $   --     $   71      $   --       $   22
  Homebuilding joint venture                                                         936         --         446           --
  Affiliate of IBC, general partner of IGC,
    and James Michael Wilson, trustee, IGC director                    (A2)           --      1,689          --           30
                                                                                  ------     ------      ------       ------
                                                                                  $  936     $1,760      $  446       $   52
                                                                                  ======     ======      ======       ======
Management and Other Fees (B)
  Unconsolidated subsidiaries                                                     $1,795     $2,282      $  530       $  527
  Affiliate of IBC, general partner of IGC                             (B1)          183        291          58           57
  Affiliate of James Michael Wilson, trustee, IGC director, Thomas B.
    Wilson, trustee, IGC director, and James J. Wilson, IGC director                 118        113          41           39
  Affiliate of James Michael Wilson, trustee, IGC director, Thomas B.
    Wilson, trustee, IGC director, James J. Wilson, IGC director, and
    an Affiliate of IBC, general partner of IGC                                       62         52          22           15
                                                                                  ------     ------      ------       ------
                                                                                  $2,158     $2,738      $  651       $  638
                                                                                  ======     ======      ======       ======
Interest and Other Income
  Unconsolidated subsidiaries                                                     $   42     $   36      $   18       $   12
  Affiliate of a former director                                                      97        126          40           35
  Affiliate of IBC, general partner of IGC                                            39         --          --           --
  Affiliate of Thomas B. Wilson, trustee, IGC director                                --         13          --            4
                                                                                  ------     ------      ------       ------
                                                                                  $  178     $  175      $   58       $   51
                                                                                  ======     ======      ======       ======
General and Administrative Expense
  Affiliate of IBC, general partner of IGC                             (C1)       $  246     $  246      $   84       $   91
  Reserve additions and other write-offs-
    Affiliate of IBC, general partner of IGC                           (B2)          (59)        88        (123)          31
    Unconsolidated subsidiaries                                        (B2,C4)         8         86         (97)          31
                                                                                  ------     ------      ------       ------
                                                                                  $  195     $  420      $ (136)      $  153
                                                                                  ======     ======      ======       ======
Interest Expense
  IBC, general partner of IGC                                                     $    8     $   --      $    8       $   --
                                                                                  ======     ======      ======       ======

<PAGE>

<CAPTION>
BALANCE SHEET IMPACT:
                                                                                              Increase                 Increase  
                                                                                  Balance     (Decrease)   Balance     (Decrease)
                                                                               September 30, in Reserves December 31, in Reserves
                                                                                   1998          1998        1997         1997  
                                                                               ------------- ----------- ------------ -----------
<S>                                              <C>                   <C>        <C>          <C>         <C>          <C>
Assets Related to Rental Properties
Receivables, all unsecured and due on demand-
  Unconsolidated subsidiaries                                                     $  818       $ (35)      $ 552        $ 111
  Affiliate of IBC, general partner
    of IGC                                                             (B1)           79         (60)         51           (9)
  Affiliate of James Michael Wilson, trustee,
    IGC director and James J. Wilson, IGC
    director                                                                          69          --          20           --
                                                                                  ------       -----       ------       -----
                                                                                  $  966       $ (95)      $  623       $ 102
                                                                                  ======       =====       ======       =====

Assets Related to Community Development
Notes receivable and accrued interest-
  Affiliate of a former IGC                      Interest 10%
    director, secured by land                    matured April 1,
                                                 1998, paid            (A1)       $   --       $  --       $  980       $  --
  Affiliate of a former IGC                      Interest 10%
    director, secured by land                    payments per month
                                                 $27,000, matures
                                                 April 1, 1999         (A1)        2,077          --        2,088         388
  Affiliate of IBC, general partner              Interest P+1.5%
   of IGC, secured by land                       matured June 29,
                                                 1998, paid            (A2)           --          --        2,520          --
                                                                                  ------       -----       ------       -----
                                                                                  $2,077       $  --       $5,588       $ 388
                                                                                  ======       =====       ======       =====

Other Assets
Receivables - All unsecured
  IBC, general partner of IGC                    Payable from IGC
                                                 distributions, paid   (C2)       $   --       $  --       $  681       $  --
  Affiliate of IBC, general partner              demand
   of IGC, and Thomas B. Wilson,
   trustee, IGC director                                               (B)             8          --           12          --
  IBC, general partner of IGCdemand                                                   28          --          (39)         --
                                                                                  ------       -----       ------       -----
                                                                                  $   36       $  --       $  654       $  --
                                                                                  ======       =====       ======       =====

Liabilities Related to Community Development
  Accounts payable
  Whitman, Requardt                                                    (C3)       $  277       $  --       $  121       $  --
                                                                                  ======       =====       ======       =====
</TABLE>





<PAGE>

     (A) Land Sales

     The Company sells land to affiliates and non-affiliates with similar
terms.  The sales prices to affiliates are based on third party appraisals,
payable in cash or a combination of a 20% cash down payment and a note for
the balance.  The notes receivable are secured by deeds of trust on the
land sold, and bear an interest rate equal to those charged at that time
for land sales.  The notes mature in one year or mature in five or less
years with annual amortizations.  As circumstances dictate, the maturity
dates and repayment terms of the notes receivable due from affiliates or
non-affiliates have been modified.  Any sales transactions that vary from
these terms are described below:

     (1) The notes receivable due from an affiliate of a former IGC
         director did not bear interest until certain infrastructure
         improvements were completed.  This infrastructure was delayed and
         the interest commencement dates modified.  These delays created
         the additional discount reflected above.

     (2) On June 30, 1997, the Company sold 374 acres to an affiliate of
         IBC for $3,000,000 and recognized a profit of $1,311,000.  As
         payment for this parcel, the Company received a 20% down payment
         and assumption of a note payable.

     (B) Management and Other Services

     The Company provides management and other support services to its
unconsolidated subsidiaries and other related entities in the normal course
of business.  These fees are typically collected on a monthly basis, one
month in arrears.  These receivables are unsecured and due upon demand. 
Certain partnerships experiencing cash shortfalls have not paid timely.  As
such, these receivable balances are reserved until satisfied or the
prospects of collectibility improves.  Decreases to the reserves for other
than routine cash payments are discussed below:

     (1) During the second quarter of 1997, an affiliate of IBC purchased
         the management fees receivable of $190,000 due from Chastleton,
         Coachman's, Rolling Hills, and Village Lake for a cash payment of
         $190,000.  The collection of these receivables had previously been
         questionable and they had been fully reserved.  This transaction
         resulted in income recognition of $190,000.

     (2) The collectibility of management fee receivables are evaluated
         quarterly.  Any increase or decrease in the reserves are reflected
         as additional expenses or recovery of such expenses.

     (C) Other

     Other transactions with related parties are as follows:

     (1) The Company rents executive office space and other property from
         affiliates both in the United States and Puerto Rico pursuant to
         leases that expire through 2005.  In management's opinion, all
         leases with affiliated persons are on terms generally available
         from unaffiliated persons for comparable property.



<PAGE>

     (2) During 1996, the sale of four properties in Puerto Rico triggered
         a taxable gain, a portion of which is passed through to the
         predecessor of IGC that contributed those assets.  IGC's
         partnership agreement provides for (1) an allocation to that
         predecessor of the income tax payable in Puerto Rico on such
         portion of the gain and (2) a reduction from its cash
         distributions in an amount equivalent to the Puerto Rico income
         tax specifically allocated to the predecessor.  In accordance with
         these provisions, the Company recorded a receivable from IBC of
         $881,000 which was subsequently paid.

     (3) Thomas J. Shafer became a director of IGMC and a trustee of ACPT
         in 1998 after his retirement from Whitman, Requardt, where he was
         a Senior Partner.  Whitman, Requardt provides engineering services
         to IGC.  In management's opinion, services performed are on terms
         available to other clients.

     (4) James J. Wilson, as a former general partner of IGP, was entitled
         to priority distributions made by each housing partnership in
         which IGP is the general partner.  If IGP received a distribution
         which represents 1% or less of a partnership's total distribution,
         Mr. Wilson received the entire distribution.  If IGP received a
         distribution which represents more than 1% of a partnership's
         total distribution, Mr. Wilson received the first 1% of such
         total.

(6)  PURCHASE OF MINORITY INTEREST IN LDA

     On July 30, 1998, the Company redeemed the 20% minority interest in
Land Development Associates S.E. ("LDA") from an outside partner for
$3,100,000 and assumed a $472,000 deferred tax obligation.  LDA also repaid
a $2,400,000 note due to an affiliate of this unrelated partner.  This
transaction was financed with a $5,600,000 loan from a commercial bank. 
The loan bears interest at prime plus 1%, matures in one year and is
collateralized by an assignment of the 20% partnership interest in LDA and
a second mortgage on Parque El Comandante land held by LDA.

(7)  PUERTO RICO EXPROPRIATION

     During the third quarter 1998, a Puerto Rico government agency
expropriated 52 cuerdas located in Parque El Comandante and deposited
$784,000 into an account for the Company.  The $784,000 was based on
appraisals that were over five years old that do not reflect the current
market value.  The Company believes that the market value is significantly
higher and therefore has begun the appeal process to increase the amount of
payment received for this land to the current market price.  As a result of
this transaction during the third quarter, the basis of the land was
removed from inventory but no corresponding income was recorded.  This
transaction will be recorded as a sale in the period that the Company and
the government agree upon the fair market value of this property.








<PAGE>

                    AMERICAN COMMUNITY PROPERTIES TRUST
                               BALANCE SHEET
                         AS OF SEPTEMBER 30, 1998





                                  ASSETS


Total Assets                                                        $ --
                                                                    ====



                      LIABILITIES AND OWNERS' EQUITY


Owners' Equity
   Common Stock $.01 par value, 10,000,000 shares
   authorized, one share outstanding                                $ --
                                                                    ====

































    The accompanying notes are an integral part of this balance sheet.

<PAGE>

                    AMERICAN COMMUNITY PROPERTIES TRUST

                          NOTES TO BALANCE SHEET

                            September 30, 1998




Organization

     On March 17, 1997, American Community Properties Trust ("ACPT") was
formed as a real estate investment trust under Article 8 of the Maryland
Trust Law.  On August 18, 1998 ACPT issued one common share to its sole
owner, Interstate General Company L.P. ("IGC").  ACPT was formed to succeed
to most of IGC's real estate operations.

     On October 5, 1998 IGC transferred to ACPT the common shares of four
subsidiaries that collectively comprised the principal real estate
operations and assets of IGC.  In exchange ACPT issued to IGC 5,207,952
common shares of ACPT, all of which were distributed to the partners of
IGC.

     As of September 30, 1998, ACPT had not commenced operations, and
therefore no statements of operations or cash flows have been presented.

































<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
          FINANCIAL CONDITIONS

General:

     Historically, the Company's financial results have been significantly
affected by the cyclical nature of the real estate industry.  Accordingly,
the Company's historical financial statements may not be indicative of
future results.

For the Nine Months Ended September 30, 1998 and 1997

Community Development Operations.

     Community development land sales revenue increased $5,510,000 to
$12,955,000 during the nine months ended September 30, 1998, compared to
sales of $7,445,000 during the nine months ended September 30, 1997.  The
increase was attributable to residential lot sales in Puerto Rico of
$7,900,000 which are sold to homebuilders in bulk.  The gross profit margin
for the nine months ended September 30, 1998 increased to 38%, as compared
to 36% in the same period of 1997.  This increase was due primarily to the
sales mix.  During the first nine months of 1998, 28% of the sales revenue
was generated by sales of U.S. commercial parcels, compared to 11% in the
first three quarters of 1997.  Commercial parcels have historically
produced higher gross profits due to their high sales prices and relatively
low development costs.

Rental Property Revenues and Operating Results.

     Rental property revenues, net of operating expenses, increased 5% to
$3,945,000 for the nine months ended September 30, 1998, as compared to
$3,756,000 in the same period in 1997.  The increase is primarily
attributable to a 2% increase in rental revenues and a less than 1%
decrease in operating expenses.  The increase in rental revenues is a
result of a reduction in vacancies and an increase in rental rates.

Equity in Earnings from Partnerships and Developer Fees.

     Equity in earnings increased 18% to $1,144,000 during the first nine
months of 1998, as compared to $938,000 during the first nine months of
1997.  The increase is primarily attributable to an increase of earnings
generated from the homebuilding joint venture during the first nine months
of 1998, as compared to the first nine months of 1997, offset in part by
reduced earnings from rental partnerships that paid refinancing fees.

Management and Other Fees.

     Management and other fees decreased 21% to $2,518,000 in the first
nine months of 1998, as compared to $3,038,000 in the same period in 1997. 
This decrease is primarily due to a reduction of $435,000 in fees earned
from the refinancing of certain apartment complexes and a reduction of
$230,000 in fees recognized related to prior periods earned during the nine
months ended September 30, 1997, offset by $100,000 of incentive fees
earned during the first nine months of 1998.




<PAGE>
Interest Expense.

     Interest expense decreased 5% to $2,726,000 during the nine months
ended September 30, 1998, as compared to $2,852,000 for the nine months
ended September 30, 1997.  This decrease is primarily attributable to a
$5,374,000 decrease in outstanding debt from September 30, 1998 as compared
to September 30, 1997.

General and Administrative Expense.

     General and administrative expenses decreased 11% to $4,289,000 for
the nine months ended September 30, 1998, as compared to $4,765,000 for the
same period of 1997.  This decrease is a result of the recognition during
1998 of previously reserved management fee receivables.

Spin-off Costs.

     Costs of $1,831,000 related to the restructuring of the Company were
recognized as an expense for the nine months ended September 30, 1998, as
compared to $300,000 for the same period of 1997.

For the Three Months Ended September 30, 1998 and 1997

Community Development Operations.

     Community development land sales revenue decreased $1,132,000 to
$746,000 during the three months ended September 30, 1998, compared to
sales of $1,878,000 during the three months ended September 30, 1997.  The
decrease was attributable to a commercial sale in Puerto Rico of $1,500,000
during the third quarter of 1997 and no such sale in the comparable 1998
period.  The gross profit margin for the nine months ended September 30,
1998 decreased to 10%, as compared to 32% in the same period of 1997.  This
decrease was due primarily to the absorption of period costs by less sales
revenue in the third quarter 1998 as compared to the third quarter 1997 and
the sales mix.  During the third quarter of 1998, 12% of the sales revenue
was generated by sales of commercial parcels, as compared to 80% in the
third quarter of 1997.  U.S. commercial parcels have historically produced
higher gross profits due to their high sales prices and relatively low
development costs.  Eighty-eight percent of the sales were generated by
residential sales in the three months ended September 30, 1998, as compared
to 20% in the same period of 1997.

Rental Property Revenues and Operating Results.

     Rental property revenues, net of operating expenses, increased 5% to
$1,294,000 for the three months ended September 30, 1998, as compared to
$1,224,000 in the same period in 1997.  This increase is primarily due to a
1% increase in rental revenues and a 5% decrease in operating expenses. 
The decrease in operating expenses is a result of a decrease in maintenance
expenses and timing difference of utility costs.

Equity in Earnings from Partnerships and Developer Fees.

     Equity in earnings increased $211,000 to $498,000 during the three
months ended September 30, 1998, as compared to $287,000 during the three
months ended September 30, 1997.  This increase is primarily attributable
to an increase in earnings from the homebuilding joint venture during the
three months ended September 30, 1998, as compared to the same period of
1997.
<PAGE>

Management and Other Fees.

     Management and other fees remained constant at $769,000 for the three
months ended September 30, 1998, as compared to the three months ended
September 30, 1997.

Interest Expense.

     Interest expense increased 3% to $983,000 during the three months
ended September 30, 1998, as compared to $951,000 for the three months
ended September 30, 1997.  This increase is a result of increased
outstanding loan balances during the third quarter of 1998 as compared to
the same quarter in 1997.

General and Administrative Expense.

     General and administrative expenses decreased 29% to $1,173,000 for
the three months ended September 30, 1998, as compared to $1,512,000 for
the same period of 1997.  This decrease is primarily attributable to the
recognition during 1998 of previously reserved management fee receivables.

Spin-off Costs.

     Costs of $783,000 related to the restructuring of the Company were
recognized as an expense for the three months ended September 30, 1998, as
compared to $300,000 for the three months ended September 30, 1997.

Liquidity and Capital Resources

     Cash and cash equivalents were $1,451,000 and $2,127,000 at September
30, 1998 and December 31, 1997, respectively.  This decrease was
attributable to $13,524,000 and $5,685,000 used in investing and financing
activities, respectively, offset by $18,533,000 provided by operating
activities.  The cash inflow from operating activities was primarily
attributable to distributions from unconsolidated partnerships, land sales,
accounts payable and accrued liabilities and collection of notes
receivable.  The cash outflow for investing activities was primarily
attributable to land improvements put in place for future land sales and
deposits into escrow accounts.  During the first nine months of 1998, the
Company paid down debt by $2,246,000 net of advances, purchased a
subsidiary's minority interest for $3,100,000 and distributed $209,000 to
the Unitholders.

     The Company has historically met its liquidity requirements
principally from cash flow generated from home and land sales, property
management fees, distributions from residential rental partnerships and
from bank financing providing funds for development and working capital.

     Over the past several years, the Company's cash flows have been
constrained because of the terms of its existing debt agreements and the
reluctance of lenders to provide financing in the U.S. as a result of IGC's
wetlands litigation.  As a result, substantially all of the cash generated
has been used to pay debt service requirements with existing lenders.  This
resulted in limited opportunities for new construction and development in
the U.S.  The Banc One financing closed in 1997 provided funding to
commence construction in Fairway Village, the third village in St. Charles,
and allows the Company to retain a greater portion of its U.S. land sales
proceeds.  The Company currently has other development projects in various
<PAGE>

stages of completion.  Substantially all of the projects under construction
have sufficient development loans in place to complete the construction.

     The Company's principal demands for liquidity are expected to be the
continued funding of its current debt service and operating costs. 
Management expects to obtain additional funding which can be used by ACPT
to fund new community development projects.  Such sources of funding may
include, but are not limited to, excess operating cash flows, secured or
unsecured financings, private or public offerings of debt or equity
securities and proceeds from sales of properties.  The Company's
anticipated cash provided by operations, new and existing financing
facilities, and extension or refinancing of $14,702,000 of loans that are
due in the next twelve months are expected to satisfy the Company's capital
needs for the next year.  However, there are no assurances that these funds
will be generated.

Debt Summary

     As of September 30, 1998, the consolidated rental properties with a
net asset book value of $38,000,000 were encumbered by $39,000,000 of non-
recourse debt.  The remaining assets with a book value of $77,000,000 are
substantially all collateralized by $33,800,000 of recourse debt.  The
significant terms of IGC's recourse debt financing arrangements are shown
below (dollars in thousands):

                                                                Balance  
                                Maximum   Interest  Maturity  Outstanding
 Descriptions                 Borrowings    Rate      Date      9/30/98  
 ------------                 ----------  --------  --------  -----------

Banc One-term loan (a)           $11,000  P+6.5%     7/31/04      $10,000
Banc One-development loan (a)      4,000  P+6.5%     7/31/04        1,905
Banc One-remediation loan (a)      5,000  P+6.5%     7/31/04        3,578
First Bank-term loan (b)           9,865  P+1.5%     6/30/99        6,399
First Bank-construction loan (b)   5,500  P+1.5%     9/30/98          463
First Bank-construction loan (b)   8,350  P+1.5%    12/31/00        2,523
RG-Premier Bank (c)                1,641  P+1.5%     4/30/99        1,317
Citibank (d)                         969  (e)         demand          905
Washington Savings Bank (e)        1,317  9.5%       9/30/99          923
Banco Popular (f)                  5,600  P+1.0%     7/30/99        5,600

Other miscellaneous                  264  Various    Various          187
                                 -------                          -------
                                 $53,506                          $33,800
                                 =======                          =======

      (a)  The three notes are cross-collateralized by substantially all
           of the U.S. land and the U.S. and Puerto Rico future cash
           entitlements pursuant to its ownership interest in the housing
           partnerships.  Interest is paid monthly.  The loan agreement
           calls for a minimum of $2,000,000 principal curtailments in
           1998, and $3,000,000 in each of the following six years.  In
           addition, IGC is to establish a $1,000,000 development reserve
           during 1998.  It is IGC's intention to meet the required
           payments from land sales and proceeds from the refinancing of a
           rental property.  On each anniversary date, IGC is to pay an
           additional fee, 1% in 1998 and 1999, increasing 1/2% in the
           following four years, and grant an option to the lender to
<PAGE>

           purchase an additional 75,000 Units at a strike price to be
           determined after the restructure.  The loan agreement covenants
           include restrictions on additional indebtedness of IGC and St.
           Charles Community LLC.  The loan agreement contains a cross
           default provision for any amounts in excess of $1,000,000 past
           due for 45 days after demand notification.  On October 1, 1998,
           in connection with the restructuring plan, Banc One released
           its lien on the investment properties in exchange for pledge of
           the stock in four major subsidiaries and an increased interest
           rate to prime plus 6.5%.  The interest rate reverted back to
           prime plus 2.5% when the security interests in the investment
           properties were reestablished on November 13, 1998.

      (b)  The three notes are cross collateralized by the Puerto Rico
           land assets.  The interest is paid monthly from an interest
           reserve.  Principal payments are funded through the partial
           release prices of the collateral.  IGC expects to extend the
           maturity date of these loans.  The loan agreement covenants
           include restrictions on distributions by LDA and additional
           indebtedness of LDA and cross default provisions for other loan
           payment defaults.

      (c)  The note requires monthly principal payments of $27,000 and is
           secured by three mortgage notes receivable totalling
           $2,717,600.  Interest is paid monthly by advances under the
           loan agreement.

      (d)  The note requires monthly payments of interest calculated at
           250 basis points over the cost of funds, 8.1875% at September
           30, 1998.

      (e)  The note requires monthly payments of interest and is
           collateralized by the land under development for 115 townhome
           lots in St. Charles, Maryland.  The loan is to be repaid from
           the sale of townhome lots that are currently under an option
           contract.

      (f)  The note requires monthly payment of interest, calculated at 1%
           over the prime rate, 9.5% at September 30, 1998.  The note is
           secured by 549 acres comprising Parque El Comandante, and the
           assignment of the purchased 20% partnership interest in LDA.

Year 2000

What is Year 2000?:

     The Year 2000 "Y2K" issue exists because many computer systems and
applications and other electronically controlled systems and equipment
currently use two-digit fields to designate a year.  As the century date
occurs, date sensitive systems with this deficiency may recognize the year
2000 as 1900 or not at all.  This inability to recognize or properly treat
the year 2000 can cause the systems to process critical financial and
operations information incorrectly.
     
     The Company has assessed and continues to assess the impact of the Y2K
issue on its reporting systems and operations.


<PAGE>

Current State of Readiness:

     The systems and applications that can critically affect the Company's
operations due to the Y2K issue are its financial reporting and billing
systems and those electronically controlled systems and equipment installed
at the commercial and residential properties managed by the Company, many
of which the Company holds an ownership interest.  These systems include
five accounting/billing applications, two time and attendance applications
and the computer network systems on which they are installed and the
telephone, security, elevator, HVAC, and other like systems installed at
the Company's properties.  Of secondary importance are those administrative
systems and equipment not directly involved in revenue production but can
still minimally impact the Company's operations.

     Of the five software financial applications employed by the Company,
three are currently certified by their respective publishers to be Y2K
compliant.  Of the two non-compliant applications, the first is in minimal
use and will not be used for active financial reporting after December 31,
1998.  The second application, the property management billing system for
the Puerto Rico properties, is non Y2K compliant and is scheduled for
upgrade during the first quarter of 1999.  Active testing to verify the Y2K
compliance of the Company's financial systems will be conducted after
December 31, 1998.  "Dummy" companies will be setup in the critical systems
with dates forwarded to beyond 2000 for these tests.

     The U.S. and Puerto Rico operations rely on separate time and
attendance systems for payroll processing.  The U.S. payroll system
utilizes the services of a third party provider and is certified Y2K
compliant.  The Puerto Rico payroll system is not Y2K compliant.  The
Company is currently evaluating its options and costs in either upgrading
or replacing the Puerto Rico payroll system.  This evaluation is expected
to be completed by December 31, 1998.

     The hardware component of the Company's financial systems consists of
industry standard PC operating systems, servers, desktop computers, and
networking hardware.  These systems have been evaluated and tested for Y2K
compliance.  It has been found that two of the network operating systems
maintained by the Puerto Rico division require minor upgrades to achieve
Y2K compliance.  These upgrades are available from the publisher at no cost
and are expected to be installed and tested by December 1998.  The
remaining information technology "IT" hardware has been verified to be Y2K
compliant.

     The non-IT related electronically controlled systems installed at the
Company's owned and managed properties are currently being inventoried and
evaluated for Y2K exposure.  This evaluation is expected to be completed by
January 1999.  Once the extent of Y2K exposure is determined for these
systems, costs will be ascertained and procedures implemented to bring non-
compliant systems into Y2K compliance.  Since it has already been
determined that a majority of these systems are not "date sensitive" and do
not perform data logging, it is expected that Y2K exposure and related
costs in this area will be minimal.

     The administrative applications (word processing, spreadsheet,
messaging, etc) utilized by the Company have been certified by the various
publishers to be Y2K compliant.  Testing is currently in progress to verify
compliance of these applications and is expected to be completed by
December 31, 1998.
<PAGE>

Third Party Impact on Company Operations:

     The Company performs all financial and revenue production procedures
in house with the exception of U.S. rental payment processing.  Failure to
timely process and deposit tenant payments indirectly impacts the Company's
cash flow.  Statements of Y2K compliance have been requested from those
vendors supplying these services to the Company.

     Of the administrative procedures, only U.S. payroll processing is
performed by a third party vendor.  A statement of Y2K compliance has been
obtained from the vendor in question and ACPT considers Y2K exposure with
U.S. payroll processing to be minimal.

     With the exception of payment processing, the Company does not foresee
any adverse impact to company fiscal operations due to third party non-
compliance.

Costs to Achieve Y2K Compliance:

     Because of the Company's almost exclusive use of "off the shelf"
applications and hardware and that the Company maintains service
maintenance agreements on all critical business systems, costs to achieve
Y2K compliance have been nominal.  Y2K upgrades for a majority of the
Company's financial and billing systems have been included with standard
system updates as part of the normal maintenance procedures.

     Costs to upgrade the Puerto Rico property management system is
expected to be in the range of $4,000 to $5,000.

     The Company does not separately track the internal costs incurred for
the Y2K project.  These costs are principally related to payroll costs for
the Company's information systems and property management groups.  The
costs for the financial departments to perform the scheduled tests of the
accounting and billing systems for Y2K compliance has not been ascertained,
though it is expected that these costs will be nominal.

Risks of the Company's Y2K Issues:

     The failure of one or all of the Company's financial systems for more
than a few days would create a hardship on company operations.  Failure of
the basic accounting systems will affect the Company's general ledger,
accounts payable, accounts receivable, and reporting functions.  Of utmost
importance is the correct operation of the Company's property management
systems.  Failure of these systems could jeopardize the Company's cash flow
from these rental operations.

     Failure of the various non-IT systems installed at the Company's owned
and managed properties could seriously affect employee/tenant ingress and
egress and could affect environmental conditions at these properties.

     The Company has not obtained insurance specific to Y2K liability
issues and is evaluating whether current policies will cover damages due to
Y2K non-compliance.

The Company's Contingency Plans:

     The Company is currently evaluating its various Y2K failure scenarios
and developing contingency plans to ensure continued company operations.
<PAGE>

Forward-Looking Statements

     Certain matters discussed and statements made within this Form 10-Q
are forward-looking statements within the meaning of the Private Litigation
Reform Act of 1995 and as such may involve known and unknown risks,
uncertainties, and other factors that may cause the actual results,
performance or achievements of the company to be different from any future
results, performance or achievements expressed or implied by such forward-
looking statements.  Although the Company believes the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be
attained.  These risks are detailed from time to time in the Company's
filings with the Securities and Exchange Commission or other public
statements.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On October 30, 1998, St. Charles Community, LLC filed a complaint in
the Circuit Court for Charles County, Maryland against the County
Commissioners of Charles County and five individual members of the
commission.  The complaint presents a challenge to Charles County Ordinance
No. 98-69, which became effective on October 1, 1998.  That ordinance
places a moratorium on the issuance of building permits for multi-family or
townhouse developments in Charles County for the period of October 2, 1998
through March 15, 1999.  The complaint alleges that the County's
enforcement of the moratorium against St. Charles Community, LLC amounts to
a breach of a 1989 settlement agreement between St. Charles Associates and
the County.  St. Charles Community, LLC is a successor in interest to the
rights of St. Charles Associates under that agreement.  The October 30,
1998 complaint also alleges that the procedure by which the moratorium
ordinance was enacted violated Maryland law relating to open government
meetings.  The complaint seeks in excess of $7,000,000 in damages and an
injunction preventing enforcement of the moratorium.

ITEM 2. MATERIAL MODIFICATIONS OF RIGHTS OF REGISTRANT'S SECURITIES

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5. OTHER INFORMATION
        
    None.







<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)    Exhibits required by Securities and Exchange Commission
               Section 601 of Regulation S-K.


Exhibit
  No.            Description of Exhibit                    Reference
-------  -----------------------------------------   ----------------------

10.1     First Modification to Credit Facility and   Filed herewith
         Second Amendment to Master Loan Agreement
         between Banc One Capital Partners IV, Ltd.,
         Interstate General Company L.P., American
         Community Properties Trust, St. Charles
         Community, LLC, James J. Wilson, J. Michael
         Wilson, Edwin L. Kelly, American Rental
         Properties Trust, American Rental Management
         Company, American Land Development U.S.,
         Inc., IGP Group Corp., and American Housing
         Properties L.P. dated October 1, 1998

10.2     Seventh Amendment to Second Amended and     Filed herewith
         Restated Certificate and Agreement of
         Limited Partnership of Interstate General
         Properties Limited Partnership S.E. dated
         October 1, 1998


        (b)  None.




























<PAGE>

                                SIGNATURES


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


                                        AMERICAN COMMUNITY PROPERTIES TRUST
                                        -----------------------------------
                                                  (Registrant)




Dated:  November 16, 1998               By:  /s/ J. Michael Wilson
        -----------------                    -----------------------------
                                             J. Michael Wilson
                                             Chairman and Chief
                                             Executive Officer




Dated:  November 16, 1998               By:  /s/ Cynthia L. Hedrick
        -----------------                    -----------------------------
                                             Cynthia L. Hedrick
                                             Vice President and Controller






























<PAGE>

                             INDEX TO EXHIBITS



EXHIBIT
NUMBER                                     EXHIBIT
-------                                    -------

10.1     First Modification to Credit Facility and Second Amendment to
         Master Loan Agreement between Banc One Capital Partners IV, Ltd.,
         Interstate General Company L.P., American Community Properties
         Trust, St. Charles Community, LLC, James J. Wilson, J. Michael
         Wilson, Edwin L. Kelly, American Rental Properties Trust, American
         Rental Management Company, American Land Development U.S., Inc.,
         IGP Group Corp., and American Housing Properties L.P. dated
         October 1, 1998

10.2     Seventh Amendment to Second Amended and Restated Certificate and
         Agreement of Limited Partnership of Interstate General Properties
         Limited Partnership S.E. dated October 1, 1998

27.      Financial Data Schedule