SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB/A-1

                [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1997

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 33-96716

                      ESSEX HOSPITALITY ASSOCIATES IV L.P.

               (Exact name of registrant as specified in charter)

                                    NEW YORK
         (State or other jurisdiction of incorporation or organization)

                                   16-1485632
                      (I.R.S. Employer Identification No.)

                               100 CORPORATE WOODS
                            ROCHESTER, NEW YORK 14623
                     (Address of principal executive office)

       Registrant's telephone number, including area code: (716) 272-2300

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

          Yes   X                                     No  
               ---                                       ---


As of September 19, 1997, a total of 2,416 Limited Partnership Units were
outstanding.


<PAGE>




                                     PART 1
                                     ------

                              FINANCIAL INFORMATION
                              ---------------------

Item 1.   Financial Statements
---------------------------------------------------------------
<TABLE>
<CAPTION>

                      Essex Hospitality Associates IV L.P.
                                 Balance Sheets
                             June 30, 1997 and 1996
                                   (Unaudited)



          Assets                                     1997            1996
          ------                                     ----            ----
<S>                                           <C>              <C>

Investments in real estate, at cost:
     Land                                         $2,074,526      2,638,672
     Construction in progress                      4,806,188      4,980,300
                                                  ----------      ---------
                                                   6,880,714      7,618,972
     Less accumulated depreciation                         0              0
                                                  ----------      ---------
        Net investments in real estate             6,880,714      7,618,972
                                                  ----------      ---------

Investment in partnership                            529,494              0

Cash and cash equivalents                             11,013      2,175,220

Deferred costs:
     Debt issuance                                   610,147        652,221
     Franchise                                        85,000        128,000
     Other                                            73,224        121,795
                                                  ----------      ---------
                                                     768,371        902,016
     Less accumulated amortization                   (97,840)       (40,366)
                                                  ----------      ---------
                                                     670,531        861,650
                                                  ----------      ---------
Other assets                                           8,411         75,850
                                                  ----------      ---------

     Total assets                                 $8,100,163     10,731,692
                                                  ==========     ==========

                       LIABILIITIES AND PARTNERS' CAPITAL
                       ----------------------------------
Liabilities
     Accounts payable - construction              $1,566,637      1,347,036
     Accounts payable and accrued expenses                 -          8,143
     Due to affiliate                                596,156              -
     Subordinated notes payable                    5,298,000      4,643,000
     Construction loan payable                             -      1,177,149
     Notes payable                                         -      1,500,000
                                                  ----------      ---------
         Total liabilities                         7,460,793      8,675,328
                                                  ----------      ---------
     Minority interest - Essex Glenmaura L.P.              -        996,417
                                                  ----------      ---------

Commitments and contingencies (note 5 and 6

Partners' capital                                    677,812      1,230,757
     Less notes receivable from partners             (38,442)      (170,810)
                                                  ----------      ---------
       Total partners' capital                       639,370      1,059,947
                                                  ----------      ---------
Total liabilities and partners' capital           $8,100,163     10,731,692
                                                  ==========     ==========


</TABLE>

See accompanying notes to unaudited financial statements.


<PAGE>



<TABLE>
<CAPTION>

                      Essex Hospitality Associates IV L.P.
                               Statement of Income
                 For the Quarters ended June 30, 1997 and 1996
                                   (Unaudited)

<S>                                            <C>              <C> 
                                                      1997         1996
                                                      ----         ----
Revenue:
--------
     Rooms                                           334,336              -
     Food and beverage                                39,413              -
     Telephone and other commissions                  22,268              -
                                                  ----------       --------
                                                     396,017              -
                                                  ----------       --------

Operating expenses:
-------------------
     Rooms                                            92,171              -
     Food & beverage expenses                         41,576              -
     Commissions expenses                             11,096              -
     Advertising & promotion                          22,119              -
     Repairs & maintenance                            20,295              -
     Utilities                                        22,346              -
     Administrative & general                         38,010            749
     Property taxes                                    6,334              -
     Royalty fees                                     11,403              -
     Management fees                                  17,495              -
     Partnership management fees                       2,916              -
     Depreciation and amortization                   101,727         10,995
     Miscellaneous                                    13,498          9,911
                                                  ----------       --------
                                                     400,986         21,655
                                                  ----------       --------

           Loss from operations                       (4,969)       (21,655)

     Interest expense                               (140,513)      (100,675)
     Interest income                                  10,666          7,026
     Loss on termination of franchise agreement      (40,000)             0
     Equity (loss) of partnership                    (12,763)             0
                                                  ----------       --------
                                                    (182,610)       (93,649)
                                                  ----------       --------
          Loss before minority interest in 
            loss of partnership                     (187,579)      (115,304)
                                                  ----------       --------

Minority interest in income/(loss) of partner        (22,955)        (2,500)
                                                  ----------       --------

Net loss                                            (164,624)      (112,804)
                                                  ===========      =========
Net loss - general partners                           (1,646)        (1,128)
         - limited partners                         (162,978)      (111,676)
                                                  ----------       --------
                                                    (164,624)      (112,804)
                                                  ==========================

Net loss per limited partner unit                       (68)           (133)
                                                  ==========================
</TABLE>

See accompanying notes to financial statements.


<PAGE>




<TABLE>
<CAPTION>

                      Essex Hospitality Associates IV L.P.
                            Statements of Cash Flows
                 For the Quarters ended June 30, 1997 and 1996
                                   (Unaudited)



                                                      1997           1996
                                                      ----           ----
<S>                                              <C>           <C> 

Cash flows from operating activities
     Cash received from customers                    373,852            100
     Cash paid to suppliers                         (305,672)      (148,905)
     Interest received                                10,666          7,026
     Interest paid                                  (140,513)      (100,675)
                                                   ---------       --------- 
        Net cash from operating activities           (61,667)      (242,454)

Cash flows from investing activities
     Payments for land and construction in
          progress                                (2,792,945)    (1,252,586)
     Proceeds from sale of partnership
          interest                                   105,000              -
     Cash change with change in controlling
          interest in partnership                      5,131              -
     Payments for franchise fees                     (45,000)             -
     Payments for deposits                             2,709        (33,986)
                                                  ----------      ---------- 
        Net cash used in investing activities     (2,725,105)    (1,286,572)

Cash flows from financing activities
     Partners' capital contributions                 170,234        580,631
     Payments for syndication costs                   (4,788)       (62,181)
     Proceeds from subordinated notes payable        116,000        797,000
     Proceeds from construction loan                       -      1,177,149
     Advance from affiliate                          551,156              -
     Payments for escrow accounts                    (34,653)             -
     Payments for debt acquisition costs             (52,822)      (117,621)
     Payments for organization costs                 (22,458)             -
     Payments for distributions                      (10,500)       (24,997)
                                                   ---------       --------- 
        Net cash from financing activities           712,169      2,349,981

Net increase in cash and cash equivalents         (2,074,603)       820,955

Cash and cash equivalents - beginning of quarter   2,085,616      1,354,265
                                                   ---------       --------- 
Cash and cash equivalents - end of quarter            11,013      2,175,220
                                                   =========     ==========

</TABLE>


See accompanying notes to unaudited financial statements.


<PAGE>




<TABLE>
<CAPTION>

                      Essex Hospitality Associates IV L.P.
                            Statements of Cash Flows
                 For the Quarters ended June 30, 1997 and 1996
                                   (Unaudited)




Reconciliation of net income to net cash flows from operating activities:
<S>                                                  <C>              <C> 

Net loss                                               (164,624)         (112,804)

Adjustments to reconcile net loss to net
  cash used in operating activities:
     Depreciation and amortization                      101,727            10,995
     Minority interest in net loss of partnership       (22,955)           (2,500)
     Equity loss of partnership                          12,763                 0
     Loss on termination of franchise agreement          40,000                 0
     Changes in:
          Other assets                                  (20,699)         (125,318)
     Accounts payable and other expenses                 (7,879)          (12,827)
                                                       ---------        ---------- 
                                                        (61,667)         (242,454)
                                                       ==========       ========== 



Supplemental schedule of noncash investing and financing
      activities:
        Obligations incurred in connection with 
          construction in progress                      716,520           874,478

        Notes received from  (paid by) general and 
          limited partners                             (127,811)           (9,899)


</TABLE>








See accompanying notes to unaudited financial statements.


<PAGE>






                      ESSEX HOSPITALITY ASSOCIATES IV L.P.
                        (A New York Limited Partnership)

                    Notes to Unaudited Financial Statements

                                 June 30, 1997





(1)  ORGANIZATION

     Essex  Hospitality  Associates  IV L.P.  (the  Partnership)  is a New  York
     limited  partnership formed on August 30, 1995 for the purpose of acquiring
     land and  constructing,  owning  and  operating  a series  of  hotels.  The
     Partnership  may also invest in and lend funds to other  partnerships  that
     own hotels.  The  Partnership is financing its activities  through a public
     offering of notes and limited partnership units. The Partnership's  general
     partner is Essex  Partners  Inc.  (Essex  Partners),  a subsidiary of Essex
     Investment Group, Inc. (Essex).

     The Partnership has acquired land in order to construct and operate hotels.
     In December 1995, land was purchased in Solon,  Ohio. The Solon site is now
     under  construction for a Hampton Inn hotel which opened August 1, 1997. As
     a condition to receiving permanent financing,  a special purpose entity was
     created to own the Solon Hampton Inn, Solon Hotel LLC. The managing  member
     of Solon Hotel LLC is Essex Hotel LLC, a single  purpose  entity created to
     act as the managing member of Solon Hotel LLC. The membership  interests in
     Solon Hotel LLC are owned 99% by the Partnership and 1% by Essex Hotel LLC,
     whose sole member is the Partnership.

     In December 1995,  the  Partnership  also purchased land in Warwick,  Rhode
     Island in  anticipation  of the  construction  of a Homewood  Suites hotel.
     Construction   was  delayed  at  as  a  result  of  higher  than  projected
     construction costs and a change in market  conditions.  The Partnership has
     decided not to proceed  with  construction  of the  Homewood  Suites and is
     currently pursuing a sale of the site. The disposal is not expected to have
     a significant impact on the Partnership's financial statements.

     In June,  1997, the Partnership  purchased land in Erie,  Pennsylvania  for
     construction  of a  Hampton  Inn  hotel.  In June,  1997,  the  Partnership
     transferred the Erie property to a single purpose  entity,  Erie Hotel LLC.
     The  managing  member of Erie  Hotel LLC is Essex  Hotels II LLC,  a single
     purpose entity created to act as the managing member of Erie Hotel LLC. The
     membership interests in Erie Hotel LLC are owned 99% by the Partnership and
     1% by Essex  Hotels  II LLC,  whose  sole  member is the  Partnership.  The
     Partnership is currently negotiating with GMAC for a first mortgage loan in
     the  principal  amount of $4.5 million to finance the  construction  of the
     Erie Hampton Inn hotel.

     In  January  1996,  the  Partnership  acquired  a 54%  limited  partnership
     interest in Essex Glenmaura L.P.  (Glenmaura)  through the purchase of 12.5
     limited  partnership units for $1,250,000.  The purchase price was equal to
     the prorata portion of the fair value of the net assets acquired. Glenmaura
     owns  and   operates  a  Courtyard   by  Marriott   hotel  near   Scranton,
     Pennsylvania.  Construction  of the hotel  was  completed  during  1996 and
     operations  began  on  September  4,  1996.  As a  condition  to  receiving
     permanent financing for the Solon Hampton Inn, the Partnership was required
     to reduce its investment in Glenmaura to less than 50%. In June 1997,  1.05
     units  were  sold  to  the  general  partner  for  $105,000,  reducing  the
     Partnership's interest to 49.8%.

     The following is a general  description of the allocation of income,  loss,
     and distributions. For a more comprehensive description see the Partnership
     Agreement:



                                       1
<PAGE>

                      ESSEX HOSPITALITY ASSOCIATES IV L.P.
                        (A New York Limited Partnership)

                    Notes to Unaudited Financial Statements

                                 June 30, 1997

(1)  ORGANIZATION (continued)

          Allocation  of income from  operations  will be  allocated  99% to the
          limited  partners  and 1% to the  general  partner  until  the  amount
          allocated to the limited partners equals the cumulative  annual return
          of 8% of their  contribution.  Any remaining income from operations is
          allocated 80% to the limited  partners and 20% to the general partner.
          Income on the sale of any or all of the hotels is allocated 99% to the
          limited  partners until each limited partner has been allocated income
          in an amount  equal to his or her pro rata share of the  nondeductible
          syndication  expenses  and  sales  commission  and 1% to  the  general
          partner.  Thereafter,  income on the sale of any or all the  hotels is
          allocated in the same manner as income from operations.

          Allocations  of losses from  operations  will be allocated  80% to the
          limited  partners  and  20%  to the  general  partner  in the  amounts
          sufficient to offset all income which was allocated 80% to the limited
          partners.  Thereafter,  operating  losses  are  allocated  99%  to the
          limited  partners and 1% to the general  partner.  Loss on the sale of
          any or all of the hotels will be first allocated in the same manner as
          losses from operations,  except that the allocation of such loss would
          be made prior to  allocations  of income  from  operations.  All other
          losses are allocated 99% to the limited partners and 1% to the general
          partner.

          Cash  distributions will initially be made 99% to the limited partners
          and 1% to  the  general  partner.  After  the  limited  partners  have
          received  a  cumulative  annual  return  of 8% of their  contribution,
          additional  distributions may then be made 80% to the limited partners
          and 20% to the general  partner.  Distributions of the net proceeds of
          sale  or  refinancing  of any or all  hotels  will  be  made 1% to the
          general partner and 99% to the limited  partners prorata in accordance
          with the  number  of units  held by each  limited  partner  until  the
          limited partners have received distributions from sale or refinance of
          hotels equal to $1,000 per unit. Thereafter,  distributions shall next
          be made 1% to the  general  partner  and 99% to the  limited  partners
          until each limited partner has received any unpaid  cumulative  return
          accrued through the date of the distribution. Additional distributions
          will then be made 20% to the  general  partner  and 80% to the limited
          partners.

     Essex  Partners  and  its  affiliates  are  receiving  substantial  fees in
     connection  with the  offering  of notes  and  limited  partnership  units.
     Additional  fees will be paid to them in connection  with the  acquisition,
     development  and operation of the hotels and management of the  Partnership
     (see note 5).

     In accordance with the Partnership  agreement,  the ratio of gross proceeds
     from the offering of limited partnership units to total gross proceeds from
     the public  offering  of notes and limited  partnership  units prior to the
     termination  of the  offering  may not be less  than  .15 to 1. At June 30,
     1997, that ratio was .31 to 1.



                                       2

<PAGE>



                      ESSEX HOSPITALITY ASSOCIATES IV L.P.
                        (A New York Limited Partnership)

                    Notes to Unaudited Financial Statements

                                 June 30, 1997




(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF ACCOUNTING

     The financial  statements of the  Partnership  were prepared on the accrual
     basis of  accounting  in  conformity  with  generally  accepted  accounting
     principles.

     UNAUDITED INTERIM FINANCIAL INFORMATION

     The interim  financial  data  included  in these  financial  statements  is
     unaudited;  however,  in the opinion of  management,  such  financial  data
     includes all adjustments of a normal  recurring nature necessary for a fair
     presentation  of the  Partnership's  financial  condition  and  results  of
     operation.

     INVESTMENT IN PARTNERSHIP

     Investment in  partnership  with a 50% or less  ownership  interest will be
     accounted for by the equity method.  Ownership interests exceeding 50% will
     be accounted for under the consolidated method.

     The  statement  of  operations  and cash flows  include the accounts of the
     Partnership  and  Glenmaura  through  June 9,  1997,  date  upon  which the
     Partnership's ownership interest of Glenmaura decreased to less than 50% as
     discussed  in note 1. For the period  from June 10, 1997  through  June 30,
     1997, the Partnership's  investment in Glenmaura is accounted for under the
     equity method.

     INVESTMENT IN REAL ESTATE

     Investment  in real estate is stated at cost.  Investment in real estate is
     reviewed for possible  impairment when events or changed  circumstances may
     affect the underlying basis of the asset.  Depreciation is calculated using
     the  straight-line  method for buildings and  accelerated  methods for land
     improvements,   furniture,   fixtures  and  equipment  over  the  following
     estimated useful lives of the assets as each hotel commences operations:



          Buildings                           39 years

          Land improvements                   15 years

          Furniture, fixtures and equipment   5 - 7 years


     CASH AND CASH EQUIVALENTS

     Cash  investments  with  maturities  of three months or less at the time of
     purchase are considered to be cash equivalents.




                                       3
<PAGE>

                      ESSEX HOSPITALITY ASSOCIATES IV L.P.
                        (A New York Limited Partnership)

                    Notes to Unaudited Financial Statements

                                 June 30, 1997


(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     DEFERRED COSTS

     Costs of issuing the debt will be amortized on a  straight-line  basis over
     the term of the debt.

     Franchise  fees paid for the right to own and  operate  the hotels  will be
     amortized  on a  straight-line  basis  over  the  term  of  each  franchise
     agreement, as each hotel commences operations.

     SYNDICATION COSTS

     Selling commissions and legal, accounting,  printing and other filing costs
     totaling $327,138 related to the offering of the limited  partnership units
     were charged against the proceeds of the public offering.

     INCOME TAXES

     No provision for income taxes has been provided  since any liability is the
     individual responsibility of the partners.

     RECOGNITION OF REVENUE

     Revenues  are   recognized  as  earned  in  accordance   with   contractual
     arrangements for each transaction.

     LIMITED PARTNERSHIP PER UNIT DATA

     Net loss per limited partner unit is calculated by dividing net loss by the
     weighted  average  number  of units  outstanding  during  the  period.  The
     weighted average number of units outstanding was 2,402 for the three months
     ended June 30, 1997.

     USE OF ESTIMATES

     The  preparation of the financial  statements in conformity  with generally
     accepted  accounting  principles  requires  the  general  partner  to  make
     estimates  and  assumptions  that affect the reported  amounts of asset and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the financial statements and the reported amounts of income and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.


                                       4
<PAGE>





(3)  DEBT

     FIRST MORTGAGE LOAN

     On July 7, 1997,  Solon Hotel LLC obtained  permanent  financing  from GMAC
     Commercial Mortgage  Corporation for $4,500,000.  The term of the loan will
     be for four years with a one year  extension  available upon the payment of
     an extension fee and if certain debt service coverage is attained. Interest
     will  accrue at 3.25% over the 30-day  LIBOR  index.  Monthly  payments  of
     interest  only  will be due for the  first  year.  Principal  and  interest
     payments are due thereafter  based on a 25-year  amortization.  Starting in
     the second year of the loan, Solon Hotel LLC will be required to maintain a
     replacement reserve of 2% of monthly room revenues. The replacement reserve
     payment will  increase to 4% of monthly room  revenues in the third year of
     the loan. The loan is  collateralized by the real and personal property and
     certain other assets.

     SUBORDINATED NOTES PAYABLE

     Subordinated  notes payable of the  Partnership of $5,298,000 bear interest
     at a rate of 10.5% per annum,  payable  monthly,  and mature  December  31,
     2001,  unless extended by the Partnership to December 31, 2002 upon payment
     to holders of an extension fee equal to .5% of the principal  amount of the
     subordinated  notes   outstanding.   The  notes  are  issued  as  unsecured
     obligations of the Partnership.

     The aggregate annual principal payments of the debt obligations due for the
     six months ended December 31, 1997 and the years  subsequent to 1997 are as
     follows:




                         1997                   -0-

                         1998                   -0-

                         1999                   -0-

                         2000                   -0-

                         2001             5,298,000
                                        -----------
                                          5,298,000

     For the three months ended June 30, 1997 and 1996,  interest of $91,121 and
     $45,188, respectively, was capitalized in investments in real estate as the
     debt was used to finance construction of hotels.


                                       5
<PAGE>


                      ESSEX HOSPITALITY ASSOCIATES IV L.P.
                        (A New York Limited Partnership)

                    Notes to Unaudited Financial Statements

                                 June 30, 1997


(4)  FRANCHISE FEES

     In 1996, Promus  Corporation  (Promus) approved a license agreement for the
     Partnership  to  operate a Hampton  Inn hotel in Solon,  Ohio.  An  initial
     franchise fee of $40,000 was paid. In 1997, the Partnership  entered into a
     license   agreement   with  Promus  to  operate  a  Hampton  Inn  in  Erie,
     Pennsylvania  which required an initial franchise fee of $45,000.  The term
     and  amortization  period of the license  agreements  is twenty  years.  In
     addition,  for each hotel, the Partnership will be required to pay Promus a
     monthly   royalty   fee  of  4%  of  gross   rooms   revenues,   a  monthly
     marketing/reservation fee of 4% of gross rooms revenue, an initial software
     license  fee of $3,000  plus $85 per guest room with a monthly  maintenance
     charge of $200 to $400 per month,  and a monthly  amount equal to any sales
     tax or similar tax imposed on Promus on payments received under the license
     agreement.

     Promus  requires  the  Partnership  to establish a capital  reserve  escrow
     account  based on a percentage  of gross  revenues  generated by each hotel
     which  will  be  used  for  product  quality  requirements  of  the  hotel.
     Cumulative  funding of the reserve for the first five years  increases from
     1% to 5% of  gross  revenues  and  stabilizes  at 5% for  the  term  of the
     agreement.  The Promus franchise  agreements impose certain restrictions on
     the  transfer of limited  partnership  units.  Promus  restricts  the sale,
     pledge or transfer of units in excess of 25% without their consent.

     In 1995, the  Partnership  entered into a license  agreement with Promus to
     operate a  Homewood  Suites  hotel in  Warwick,  Rhode  Island.  An initial
     franchise fee of $40,000 was paid. The franchise agreement for the Homewood
     Suites in Warwick has expired. The franchise fee has been written off since
     the franchise agreement has expired.



                                       6
<PAGE>


(5)  RELATED PARTY TRANSACTIONS

     A summary of fees earned by Essex  Partners or its affiliates for the three
     months  ended  June 30,  1997 and 1996  under the terms of the  Partnership
     agreement follows:


<TABLE>
<CAPTION>



TYPE OF FEE              AMOUNT OF FEE                      1997         1996
-----------              -------------                      ----         ----
<S>                    <C>                               <C>          <C>

Selling Commission       Up to $80 per limited partnership  $ 9,740     $86,805
                         unit and $55 per $1,000 sold


Organization and         3.4% of the gross proceeds           5,374      46,307
Offering Fee             of the offering

Acquisition Fee          $110,000 per hotel site            110,000          -

Development Fee          $160,000 per hotel, plus 5% of           -          -
                         the total cost of the hotel in 
                         excess of $2.7 million (not to 
                         exceed $325,000 per hotel)

Property Management      4.5% of gross operating revenues
Fee                      from the hotels                     17,495          -


Partnership Management   .75% to 1.25% of gross operating     2,916          -
Fee                      revenues from the hotels

Accounting Fee           $800 per month                       1,600          -
                                                           --------      ------

                                                           $147,125    $133,112
                                                           ========    ========

</TABLE>


                                       7
<PAGE>




(5)  RELATED PARTY TRANSACTIONS (CONTINUED)

     The above fees are reflected in the  accompanying  financial  statements as
     follows:
<TABLE>
<S>                                                       <C>    



                                                                 1997
                                                                 ----
     Balance Sheet:
     
        Investment in real estate                              $110,000

        Deferred debt issuance costs                             10,324

        Syndication costs, charged to partner's capital           4,790

                                                               $125,114
                                                               ========


     Statements of Operations:

        Management fees to affiliates                           $17,495

        Administrative expense                                    1,600

        Partnership management fees                               2,916

                                                                $22,011
                                                                =======
</TABLE>

     Organization and offering fees are allocated to syndication  costs and debt
     issuance costs based on the pro-rata share of limited  partner's  units and
     notes payable to the total offering.

     In 1995, the Partnership paid a $110,000 acquisition fee in connection with
     the Warwick,  Rhode Island site.  The  acquisition  fee was refunded to the
     Partnership in the second quarter 1997.



                                       8
<PAGE>


(5)  RELATED PARTY TRANSACTIONS (CONTINUED)

     Under  the  terms  of the  Partnership  agreement,  Essex  Partners  or its
     affiliates will also earn other fees as follows:


<TABLE>
<S>                               <C> 

               TYPE OF FEE                        AMOUNT OF FEE
               -----------                        -------------

Investor Relations Fee               .25% of the gross proceeds of the offering 
                                      payable annually in 1998 through 2001

Refinancing Fee                       1% of the gross proceeds of re-financing 
                                      any or all of the hotels

Sales Fee                             3% of the gross sale price of any or all 
                                      of the hotels

</TABLE>

     The  Partnership  will also be subject to a number of conflicts of interest
     arising from its  relationships  with the general  partner,  its owners and
     affiliates  and due to other  activities  and entities in which the general
     partner and its affiliates have or may have a direct or indirect  financial
     interest.

(6)  INVESTMENT IN PARTNERSHIP

     The Partnership owns a 49.8% interest in Essex Glenmaura L.P. (see note 1).
     Summarized  financial  information  for Essex  Glenmaura  as of and for the
     three months ended June 30, 1997 follows:



<TABLE>
                       <S>                 <C>

                         Assets              $7,765,000

                         Liabilities          6,623,000

                         Partners' capital    1,142,000

                         Revenues               608,000

                         Net loss              (113,000)

</TABLE>


                                       9
<PAGE>



<TABLE>
<CAPTION>

                              ESSEX GLENMAURA L.P.
                                 BALANCE SHEETS
                             JUNE 30, 1997 AND 1996
                                   (UNAUDITED)




                         Assets                        1997            1996
                         ------                        ----            ----
<S>                                               <C>              <C>   

 Investments in real estate, at cost: 
        Land                                         $ 1,223,636      1,223,636
        Land improvements                                272,008           --
        FF&E                                           1,337,474           --
        Building                                       4,961,877           --
        Construction in progress                            --        4,802,981
                                                      ----------      ---------
                                                       7,794,995      6,026,617
        Less accumulated depreciation                   (461,897)          --
                                                      ----------      ---------
           Net investments in real estate              7,333,098      6,026,617
                                                      ----------      ---------

Unrestricted cash and cash equivalents                   (13,610)        16,655

Restricted cash and cash equivalents                     120,520           --

Deferred costs:
        Debt issuance                                    268,430        180,680
        Franchise                                         48,000         48,000
        Other                                             10,000         10,000
                                                      ----------      ---------
                                                         326,430        238,680
        Less accumulated amortization                   (155,403)       (18,376)
                                                      ----------      ---------
                                                         171,027        220,304
                                                      ----------      ---------

Other assets                                             154,261            486
                                                      ----------      ---------

        Total assets                                 $ 7,765,296      6,264,062
                                                     ===========      =========

        Liabiliities and Partners' Capital
        ----------------------------------
Liabilities
        Accounts payable and accrued expenses        $   103,142           --
        Accounts payable - construction                   19,876      1,342,245
        First mortgage loan payable                    5,000,000           --
        Construction loan payable                           --        1,177,149
        Notes payable                                  1,500,000      1,500,000
                                                       ---------      ---------
            Total liabilities                          6,623,018      4,019,394
                                                       ---------      ---------

Commitments and contingencies (notes 5 and 6)

Partners' capital                                      1,142,278      2,244,668
                                                       ---------      ---------

Total liabilities and partners' capital              $ 7,765,296      6,264,062
                                                     ===========      =========
</TABLE>

 See accompanying notes to unaudited financial statements.


<PAGE>


<TABLE>
<CAPTION>

                              ESSEX GLENMAURA L.P.
                            STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
                                   (UNAUDITED)


                                                          1997             1996
                                                          ----             ----
<S>                                                   <C>              <C>  

Revenue:
--------
    Rooms                                                513,884              0
    Food and beverage                                     59,350              0
    Telephone and other commissions                       34,998              0
                                                         -------         -------
                                                         608,232              0
                                                         -------         -------

Operating expenses:
-------------------
    Rooms                                                139,873              0
    Food & beverage expenses                              61,777              0
    Administrative & general                              55,534            268
    Utilities                                             29,475              0
    Advertising & promotion                               31,927              0
    Repairs & maintenance                                 33,580              0
    Management fees                                       26,521              0
    Royalty fees                                          18,962              0
    Commissions expenses                                  16,347              0
    Property taxes                                         9,501              0
    Insurance                                                  0              0
    Miscellaneous                                          7,370          5,247
    Partnership management fees                            4,420              0
    Depreciation and amortization                        133,417              0
                                                         -------         -------
                                                         568,704          5,515
                                                         -------         -------

Income (loss) from operations before interest             39,528         (5,515)

    Interest expense                                    (142,899)             0
    Interest income                                           60             39
                                                         -------         -------
                                                        (142,839)            39
                                                         -------         -------

Net loss                                                (103,311)        (5,476)
                                                         -------         -------


Net loss - general partners                               (4,132)          (219)
         - limited partners                              (99,179)        (5,257)
                                                     -----------     -----------
                                                    $   (103,311)    $ (  5,476)
                                                    ============     ========== 

Net loss per limited partner unit                   $   (  4,508)    $ (    239)
                                                    ============     ========== 
</TABLE>


See accompanying notes to unaudited financial statements.

<PAGE>


<TABLE>
<CAPTION>
                              ESSEX GLENMAURA L.P.
                            STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
                                   (UNAUDITED)


<S>                                                                     <C>              <C>  


                                                                                1997            1996
                                                                                ----            ----
Cash flows from operating activities
    Cash received from customers                                            $  582,284             0
    Cash paid to suppliers                                                    (449,494)       (5,515)
    Interest received                                                               60            39
    Interest paid                                                             (142,899)            0
                                                                              --------     ---------- 
       Net cash from operating activities                                      (10,049)       (5,476)
                                                                              --------     ---------- 

Cash flows from investing activities
    Payments for land and construction in progress                               1,000    (1,183,572)
    Payments for deposits                                                       (4,000)      (33,983)
                                                                              --------     ---------- 
       Net cash used in investing activities                                    (3,000)   (1,217,555)
                                                                              --------     ---------- 

Cash flows from financing activities
    Construction loan advances                                                       0     1,177,149
    Escrow account deposits                                                    (46,204)            0
    Payments for debt acquisition costs                                        (12,499)      (40,177)
    Partner capital contributions                                                    0         6,000
    Payments for distributions                                                 (23,000)            0
                                                                              --------     ---------- 
       Net cash from financing activities                                      (81,702)    1,142,972
                                                                              --------     ---------- 

Net increase in cash and cash equivalents                                      (94,751)      (80,059)

Cash and cash equivalents - beginning of period                                 81,141        96,714
                                                                              --------     ---------- 

Cash and cash equivalents - end of period                                   $  (13,610)       16,655
                                                                            ==========     =========

Reconciliation of net income to net cash flows from operating activities:

Net loss                                                                      (103,311)       (5,476)

Adjustments to reconcile net loss to net
  cash used in operating activities:
       Depreciation and amortization                                           133,417             0
       Changes in:
         Shortterm assets                                                      (25,302)            0
         Accounts payable and other expenses                                   (14,853)            0
                                                                              --------       -------- 
                                                                           $   (10,049)       (5,476)
                                                                            ==========     =========

Supplemental schedule of noncash investing and financing
      activities:
         Obligations incurred in connection with
            construction in progress                                                 0       875,000

</TABLE>



See accompanying notes to unaudited financial statements.


<PAGE>



                              ESSEX GLENMAURA L.P.
                             (A Limited Partnership)
                     Notes to Unaudited Financial Statements
                             June 30, 1997 and 1996

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Scope of Business

         The Partnership is a New York Limited  Partnership formed to construct,
         own and operate a 120-room hotel,  Courtyard by Marriott,  Southeast of
         Scranton,  Pennsylvania  under  a  franchise  agreement  with  Marriott
         International,  Inc. (the Project).  Construction  was completed during
         1996 and operations began on September 4, 1996.

         The  Partnership  was formed on May 18, 1995 and will  terminate on the
         earlier of December 31, 2045 or the date the  Partnership is terminated
         pursuant to the partnership agreement or by law.

         Unaudited Interim Financial Information

         The interim  financial data included in these  financial  statements is
         unaudited;  however, in the opinion of management,  such financial data
         includes all adjustments of a normal  recurring  nature necessary for a
         fair presentation of the Partnership's  financial condition and results
         of operations
 .
         Allocations of Income or Loss

         The Partnership  agreement  provides that net losses of the Partnership
         be first  allocated  among the  Partners to the extent of the  positive
         balances in the  Partners'  capital  accounts,  to make the  respective
         balances equal to the  distributions  that would have been made had the
         aggregate  balances in all Partners'  capital accounts been distributed
         in  accordance  with each  Partner's  pro rata  share.  Losses are next
         allocated in accordance with each Partner's pro rata share in an amount
         equal to the difference between nonrecourse debt of the Partnership and
         the  adjusted  basis  of  the   Partnership   property   securing  such
         nonrecourse  debt. All  additional  losses are allocated to the General
         Partner.  Net income is  allocated  first to the General  Partner in an
         amount equal to the loss allocated to the General  Partner as described
         above.  Next, income is allocated in accordance with each Partner's pro
         rata share in an amount equal to the loss  allocated to the Partners as
         described  above.  Income  is then  allocated  to those  Partners  with
         negative balances in their capital  accounts.  All additional income is
         then allocated in accordance with each Partner's pro rata share.

         Cash and Cash Equivalents

         For the purposes of the financial statements, cash and cash equivalents
         include money market funds and commercial savings accounts.

         Method of Accounting

         The  Partnership  has prepared its financial  statements on the accrual
         method of accounting.

         Income Taxes

         No provision for income taxes has been provided  since any liability is
         the individual responsibility of the Partners.

         Investment in Real Estate

         The  investment in real estate is stated at cost and includes  $261,929
         of capitalized interest. Depreciation is calculated using straight-line
         and accelerated methods over the estimated useful lives of the assets.



                                     


<PAGE>


                              ESSEX GLENMAURA L.P.
                             (A Limited Partnership)
                     Notes to Unaudited Financial Statements
                             June 30, 1997 and 1996

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Deferred Costs

         Organization costs are being amortized on a straight-line  basis over a
         period of sixty months, beginning the first month of operation.

         Debt  acquisition fees are being amortized over the life of the related
         debt on a straight-line basis.

         Distributions

         Distributions  shall be made in accordance with each Partner's pro rata
         share at an amount and time determined by the General Partner.

         Syndication Costs

         Selling commissions,  legal and other costs totaling $46,617 related to
         the  offering  of  limited   Partnership  units  were  charged  against
         Partner's capital.

         Use of Estimates in the Preparation of Financial Statements

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and the reported  amounts of revenues
         and expenses during the reporting  period.  Actual results could differ
         from those estimates.

         Revenue Recognition

         Revenues  are  recognized  as earned  in  accordance  with  contractual
         arrangements for each transaction.

         Impairment of Long-Lived Assets

         In accordance with Statement of Financial Accounting Standards No. 121,
         "Accounting  for  Impairment  of Long-Lived  Assets and for  Long-Lived
         Assets to Be Disposed Of", the Partnership  reviews  long-lived  assets
         and certain  identifiable  intangibles for possible impairment whenever
         events or changes in circumstances indicate that the carrying amount of
         an asset may not be recoverable.

2.       DEPOSIT

         The Partnership has made a  non-refundable  deposit of $55,000 pursuant
         to an option to purchase a second  parcel of land (the Second  Project)
         adjacent to the Project for purposes of  constructing  a second  hotel.
         The option agreement expired in December of 1996 but is currently being
         renegotiated.





  
                                   

<PAGE>


                              ESSEX GLENMAURA L.P.
                             (A Limited Partnership)
                     Notes to Unaudited Financial Statements
                             June 30, 1997 and 1996

3.       FINANCING OF INVESTMENT IN REAL ESTATE

         Financing of real estate consists of the following at June 30, 1997 and
         1996:

         Notes Payable

         Notes  payable  consist of  $1,500,000  of  unsecured  notes  requiring
         monthly  installments  of interest  only at 10.5% per annum.  The notes
         mature on June 1, 1998 upon which all principal  will be due unless the
         Partnership  exercises its early  repayment or note extension  options.
         The  Partnership  has the right to repay the notes at face  value.  The
         Partnership also has the option to exercise two one-year  extensions at
         extension  fees ranging from  one-half to one percent.  Essex  Partners
         Inc. guarantees payment of principal and interest on the notes.

         Mortgage Loan

         On February 28, 1997, the Partnership obtained permanent financing from
         GMAC  Corporation  for  $5,000,000.  The term of the loan is four years
         with a one year extension available if certain debt service coverage is
         attained. Monthly payments of interest only are due for the first year.
         Interest  accrues at 3% over the LIBOR  rate.  Principal  and  interest
         payments  are  due  thereafter   based  on  a  twenty-five   year  loan
         amortization.  Starting in the second year of the loan, the Partnership
         will be required to maintain a replacement reserve escrow at 4% of room
         revenues.  A commitment  fee of $50,000 (1% of the loan  proceeds)  was
         paid,  50% of the fee  upon  acceptance  of the  commitment  and 50% at
         closing.  The loan is  collateralized by the real and personal property
         and certain other assets.

         The aggregate  annual  principal  payments for the years  subsequent to
         1997 are as follows: (there are no principal payments required in 1997)

<TABLE>
                 <S>                        <C>    

                    1998                        $   1,539,129
                    1999                               51,449
                    2000                               56,836
                    2001                            4,852,586
                                                -------------
                                                  $ 6,500,000
                                                =============

</TABLE>

         Construction Loan

         The Partnership received construction  financing from Key Bank of up to
         $4,500,000, of which $1,177,149 had been drawn down as of June 30, 1996
         and required  monthly  payments of interest only at a rate of 2.5% over
         the LIBOR rate. The construction loan was repaid with proceeds from the
         first mortgage loan.






                                     

<PAGE>


                              ESSEX GLENMAURA L.P.
                             (A Limited Partnership)
                     Notes to Unaudited Financial Statements
                             June 30, 1997 and 1996

4.       RELATED PARTY TRANSACTIONS

         A summary of the fees  earned by Essex  Partners or its  affiliates  in
         1996 and 1995  under  the  terms of the  Partnership  agreement  are as
         follows:

<TABLE>
<CAPTION>
                                                                                                      Three months ended
                                                                                                    ---------------------

TYPE OF FEE                            AMOUNT OF FEE                                              JUNE 1997        JUNE 1996
-----------                            -------------                                              ---------        ---------
<S>                                 <C>                                                        <C>              <C>    


Property Management Fee                4.5% of gross operating revenues from the hotel               26,521              -

Partnership Management Fee             .75% of gross operating revenues from the hotel                4,420              -

Accounting Fee                         $800 per month                                                 2,400              -

</TABLE>

         In addition, Essex Partners may receive the following fees:

         a)       a  refinancing  fee upon the closing of a  refinancing  of the
                  Project,  in the aggregate  amount of 1% of the gross proceeds
                  of the refinancing,

         b)       a sales fee upon the closing of a sale of the Project,  in the
                  aggregate  amount of 2.5% of the gross sales  price,  provided
                  that  the sum of such  fee and  any  competitive  real  estate
                  commission paid by the  Partnership  with respect to such sale
                  does not  exceed 5% of the gross  sale  price,  and that Essex
                  Partners Inc. renders substantial  services in connection with
                  the sale,

         c)       in the event the General  Partner  elects to proceed  with the
                  Second  Project on behalf of the  Partnership,  Essex Partners
                  Inc.  will  receive  additional  compensation  related  to the
                  acquisition of the second parcel,  construction  of the Second
                  Project and securing  additional  equity and debt financing to
                  fund  such  activities.  Such  compensation  will  include  an
                  acquisition  fee equal to $50,000 for its services  related to
                  the  acquisition of the second parcel and a development fee up
                  to $150,000 plus 3% of total  construction,  site  development
                  and fixtures,  furniture and equipment  costs, as compensation
                  for its  services  related  to the  development  of the Second
                  Project.   In  addition,   as   compensation   for   arranging
                  construction  and permanent  financing for the Second Project,
                  Essex Partners Inc. may receive a financing fee equal to 1% of
                  the gross proceeds of the financing.  Essex Partners Inc. also
                  will  receive  an  additional   property  management  fee  and
                  partnership  management  fee  calculated  as  described in the
                  summary  schedule above based on the gross operating  revenues
                  of the Second  Project.  If the Second  Project is sold and/or
                  refinanced,  Essex Partners Inc. will receive additional sales
                  and/or  refinancing fees calculated as described in paragraphs
                  (a) and (b) above based on the gross sales and/or  refinancing
                  proceeds of the Second Project, and

                  
                                     

<PAGE>


                              ESSEX GLENMAURA L.P.
                             (A Limited Partnership)
                     Notes to Unaudited Financial Statements
                             June 30, 1997 and 1996


4.       RELATED PARTY TRANSACTIONS (CONTINUED)

         d)       Essex  Partners  Inc.  and its  affiliates  also will  receive
                  offering-related  fees for services in connection with (I) the
                  offering of additional  partnership interests and/or notes, or
                  (ii) the  possible  refinancing  of the  Project or the Second
                  Project   to  fund  the   acquisition   of  the  land   and/or
                  construction or one or both of those projects.  Essex Partners
                  Inc. and its  affiliates  are expressly  authorized to receive
                  from  the   Partnership   the  fees  and   sales   commissions
                  customarily  charged by Essex Partners Inc. and its affiliates
                  for rendering comparable services on competitive terms.

5.       FRANCHISE FEES

         The  Partnership  has entered into a franchise  agreement with Marriott
         International,  Inc. Under the terms of the agreement,  the Partnership
         paid an initial  franchise  fee of $48,000.  The term and  amortization
         period of the franchise  agreement is twenty  years,  with an option to
         renew for an additional ten-year period.

         The  Partnership is required to pay a monthly  royalty fee in an amount
         equal to 4% of gross room rentals for the first two years of operations
         and 5% during the remainder of the term of the  agreement,  a marketing
         fee of 2-3% of gross  revenues,  a  reservation  system fee, a property
         management  system  fee,  a  communication  support  fee and a  revenue
         management fee.  Payments to Marriott for the three month period ending
         June 30,  1997  included  royalty  fees of $18,962,  marketing  fees of
         $9,481,  reservation  system fees of $12,870 and other fees of $13,785.
         There were no fees paid in the three months ending June 30, 1996.





                                     

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The  Partnership  was  formed on August  30,  1995.  Since  its  formation,  the
Partnership  has been  involved  in raising  capital  pursuant  to the  Original
Prospectus,  and the acquisition and construction of properties. The Partnership
has received Gross Offering  Proceeds of $7.6 million,  including  approximately
$6.3 million from the sale of subordinated  notes and approximately $2.3 million
from the sale of  limited  partnership  units.  The two sites  specified  in the
Prospectus  were  acquired on December  29,  1995, a 2.535 acre site in Warwick,
Rhode Island and a 2.28 acre site in Solon, Ohio.  Limited  partnership units in
another partnership were purchased in the first quarter, 1996.

The Partnership  began  construction of a 103-room Hampton Inn in Solon, Ohio in
late 1996,  which opened  August 1, 1997.  The Solon  Hampton Inn is expected to
cost about  $7,000,000,  including the cost of the land,  cost of  construction,
cost of furnishings,  construction  period  interest,  financing costs (debt and
equity) and all soft costs such as architectural costs,  engineering,  franchise
fee and working  capital.  The General Partner secured first mortgage  financing
from GMAC Commercial  Mortgage  Corporation (GMAC) in July, 1997. As a condition
of receiving  financing,  the Partnership was required to create special purpose
entities to own each of its  properties.  Solon Hotel LLC was created to own the
Solon Hampton Inn. The membership interests of the Solon Hotel LLC are owned 99%
by the  Partnership  and  1% by  Essex  Hotel  LLC,  whose  sole  member  is the
Partnership.  The first  mortgage  is in the amount of $4.5  million and will be
advanced in three  installments.  The first  installment  of $1,000,000  (net of
offering  costs) was received upon the closing of the loan. The second and third
installments are expected to be advanced after the hotel is completed.  The term
of the  first  mortgage  loan is for a  period  of four  years,  with a one year
extension  upon  the  payment  of an  extension  fee  and the  achievement  of a
specified debt service coverage ratio. Monthly payments of interest only are due
for the first year,  thereafter,  monthly payments of principal and interest are
due based on a 25 year  amortization.  Interest will accrue at the rate of 3.25%
over the 30- day LIBOR  index.  Starting in the second  year of the loan,  Solon
Hotel LLC will be  required to maintain a  replacement  reserve  escrow at 2% of
room revenues. The required replacement reserve increases to 4% of room revenues
in the third year of the loan.  The  balance of the amount  required to complete
the Solon Hampton Inn was provided through the  Partnership's  offering of Notes
and Units.  The General  Partner has provided  interim  financing  for the Solon
Property  until the Solon Hotel LLC  received the amount due from GMAC under the
first  mortgage  financing.  As of June 30, 1997, a total of $596,000 is owed to
the General Partner, which is composed of construction advances and unpaid fees.

The Partnership acquired a site in Erie Pennsylvania in June, 1997 as a possible
location for the  construction and operation of a Hampton Inn hotel. The site is
approximately  2.5 acres and was  acquired for an  aggregate  purchase  price of
$650,000 plus closing  costs of $27,000 and  demolition  costs of  approximately
$15,000.  The Partnership has obtained a license  agreement from Promus Hotel to
construct and operate a 100-room  Hampton Inn hotel. The General Partner expects
to start  construction  of the Erie Hampton Inn in October,  1997.  The hotel is
expected  to open in the  late  spring,  1998.  The  Partnership  does  not have
sufficient  funds to complete  construction  of the Erie  Hampton  Inn. So as to
enable the Partnership to pursue favorable external financing opportunities with
respect to the Erie Hampton Inn, in June 1997 the  Partnership  transferred  the
Erie  property  to Erie Hotel  LLC,  a single  purpose  entity.  The  membership
interests of the Erie Hotel LLC are owned 99% by the Partnership and 1% by Essex
Hotels  II LLC,  whose  sole  member  is the  Partnership.  The  Partnership  is
currently  negotiating  with  GMAC for a first  mortgage  loan in the  principal
amount of $4.5  million to finance  construction  of the Erie Hampton Inn. As of
the date of this filing, the Partnership has received no commitment for external
financing.

The Partnership  acquired 12.5 limited  partnership units in Essex Glenmaura for
$1,250,000 with proceeds from the offering,  representing a limited  partnership
interest  of  54.3%.  Essex  Glenmaura  completed  construction  of a 120-  room
Marriott Courtyard in Scranton,  Pennsylvania in September, 1996. The total cost
of the  project  was  $8.7  million,  including  the cost of the  land,  cost of
construction, cost of furnishings, construction period interest, financing costs
(debt and equity) and all soft costs such as architectural  costs,  engineering,
franchise  fee and working  capital.  The project was funded with  $2,300,000 of
partner equity,  $1,500,000 of unsecured  notes and a $5,000,000  first mortgage
loan  from  GMAC.  The term of the first  mortgage  loan is for a period of four
years,  with a one year  extension  upon the payment of an extension fee and the
achievement  of a specified debt service  coverage  ratio.  Monthly  payments of
interest  only are due for the  first  year,  thereafter,  monthly  payments  of
principal and


<PAGE>



interest are due based on a 25 year  amortization.  Interest  will accrue at the
rate of 3% over the 30-day LIBOR index. Starting in the second year of the loan,
Essex Glenmaura will be required to maintain a replacement  reserve escrow at 4%
of room  revenues.  As a condition of receiving the first  mortgage loan for the
Solon  Hampton Inn, the  Partnership  was required to reduce its  investment  in
Essex  Glenmaura  to less than 50%.  In June  1997,  the  Partnership  sold 1.05
limited  partnership  units  to the  General  Partner  at a  purchase  price  of
$105,000,  which  is  equal  to  the  purchase  price  originally  paid  by  the
Partnership.  As a result,  the  Partnership  now owns a 49.8% interest in Essex
Glenmaura.

The Partnership  intended to build an 80-room  Homewood Suites hotel in Warwick,
Rhode Island. The purchase price for the property was $501,400.  However,  prior
to commencing construction,  the Partnership learned that additional hotels were
planned for  construction  near the Warwick site which would be competitive with
the Partnership's  hotel and result in a 57% potential increase in the number of
hotel rooms in the area. The Partnership elected to postpone  construction until
it could better assess the effect of the additional  hotel rooms on the expected
performance  of the  Partnership's  hotel.  Based on the  results  of an updated
market  survey,  the  Partnership  concluded  that the  estimated  57% potential
increase  in the  number of hotel  rooms in the area  would  have a  significant
negative  impact upon the expected  performance of the  Partnership's  hotel. In
light of these  findings,  the  Partnership  has  elected  not to  proceed  with
development of the Warwick site and is currently  pursuing the sale of the site.
In the second  quarter,  1997,  the  franchise  agreement  for the Warwick  site
expired.  Although the  Partnership  has received some interest in the site from
potential  buyers,  there is no  assurance  that the  Partnership  will sell the
Warwick  site or that it will  be  sold  at a price  sufficient  to  enable  the
Partnership  to recover all the costs and expenses  incurred by the  Partnership
with respect to the Warwick site.  The  Partnership  has invested  approximately
$682,000 in the Warwick site,  including  the cost of the site,  the cost of the
franchise fee and engineering and architectural costs.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The following discussion analyzes the financial statements of the Partnership as
of June 30, 1997 and December 31, 1996, which are attached.  The Partnership had
an ownership  interest of 54.3% in Essex  Glenmaura until June 9, 1997, at which
time the Partnership's ownership interest was reduced to 49.8%. Accordingly, the
statements  of  operations  and cash flows for the  quarter  ended June 30, 1997
include the  accounts of the  Partnership  and Essex  Glenmaura  through June 9,
1997.  For the period from June 10,  1997 to June 30,  1997,  the  Partnership's
investment  in Essex  Glenmaura  is  accounted  for on the  equity  method.  The
financial  statements of the  Partnership and Essex Glenmaura as of December 31,
1996  are  consolidated.  The  consolidated  financial  statements  include  the
accounts of the Partnership and Essex Glenmaura.

From  April 1,  1997 to June 30,  1997,  the  total  assets  of the  Partnership
decreased  approximately  $5.8 million.  The primary reason for the decrease was
the change in accounting method for Essex Glenmaura from the consolidated to the
equity method.  The investments in real estate  decreased $3.8 million in total.
The  investment  in the Solon and Erie  Properties  increased  by $3.8  million,
primarily  relating to  construction  costs for the  Hampton Inn in Solon.  This
increase  was offset by a  decrease  of  approximately  $7.6  million  for Essex
Glenmaura.  The  Partnership's  cash balance decreased from  approximately  $2.2
million to $11,000 from costs incurred in the construction of the Hampton Inn in
Solon and the purchase of the property in Erie. The assets of the Partnership at
June 30, 1997 include  $529,000 of investment in partnership,  which  represents
the Partnership's  investment in Glenmaura,  net of reductions for net losses of
$603,000  incurred  through June 30, 1997, the sale of 1.05 limited  partnership
units for  $105,000 and  distributions  of $12,500.  The deferred  assets of the
Partnership  decreased  $201,000 from the change in accounting  method for Essex
Glenmaura  as discussed  above.  During the quarter,  the  Partnership  incurred
additional deferred costs of $113,000,  representing additional debt acquisition
costs from the  offering of  subordinated  notes,  costs  incurred to obtain the
first  mortgage  financing for the Solon Hampton Inn, the $45,000  franchise fee
paid for the Erie Hampton Inn and additional organization costs of $22,000.

The Partnership's  liabilities decreased approximately 5.2 million from April 1,
1996 to June 30,  1997,  primarily  from the  change  in  accounting  method  as
discussed  previously.  From  April 1, 1996 to June 30,  1997,  the  outstanding
balance in subordinated  notes payable  increased  $116,000 from the issuance of
subordinated   notes   payable   in   the   Partnership's   offering.   Accounts
payable-construction increased $559,000 from outstanding


<PAGE>



construction invoices for the Solon Hampton Inn. The first mortgage loan payable
and notes payable of $6,500,000 as of March 31, 1997 represented  liabilities of
Essex Glenmaura,  which no longer are presented in the financial  statements due
to the change in accounting  method.  In June,  1997, the general partner of the
Partnership,  Essex Partners Inc., advanced $596,000 as a short-term loan to the
Partnership for  construction  costs incurred for the Hampton Inn in Solon.  The
Partnership  expects to repay all  amounts due the  general  partner  during the
third quarter from the proceeds of the first  mortgage loan on the Solon Hampton
Inn.  The minority  interest in Glenmaura is no longer  presented in the balance
sheet due to the change in accounting  method for Glenmaura.  Partners'  capital
was  unchanged  for the second  quarter.  During the  quarter,  the  Partnership
received  $42,000 in limited  partner equity from proceeds of the  Partnership's
offering  and  collected  $128,000 in  promissory  note  payments  from  limited
partners. These increases were offset by $5,000 in syndication costs and the net
loss of 165,000 for the Partnership from April 1, 1997 through June 30, 1997.

The primary revenue source for the quarter ended June 30, 1997 was room revenues
of $334,000 from Essex  Glenmaura,  which was the only hotel in operation.  Food
and beverage revenue and telephone and other commission revenue totaled $62,000,
for total  revenues of $396,000.  For the quarter ended June 30, 1996 there were
no operating  hotels.  The only income for 1996 was  interest  income of $7,000.
Operating  expenses for the quarter  ended June 30, 1997,  before  depreciation,
totaled  $299,000.  Depreciation  of  $102,000  was  recorded  for a  loss  from
operations of $5,000. Before depreciation,  the single largest operating expense
for the  Partnership is rooms expense,  followed by food and beverage  expenses.
Operating  expenses  for 1996  totaled  $22,000 and were  composed  primarily of
depreciation  of $11,000.  Since there were no operating  revenues for 1996, the
loss from operations was $22,000.  The Partnership's  interest expense for 1997,
net of interest income was $130,000, representing interest incurred on the notes
payable and the first  mortgage  loan for  Glenmaura  through June 9, 1997,  and
interest on the  subordinated  notes for the quarter to the extent the  proceeds
were not used for  construction.  The net interest expense for 1996 was $94,000,
representing  interest on the subordinated notes to the extent the proceeds were
not used for construction. Also included in other expenses are the Partnership's
equity in the loss of  Glenmaura  for the period from June 10, 1997 through June
30,  1997 of  $12,000  and the  loss on  termination  of the  Warwick  franchise
agreement of $40,000. The net loss for the quarter is $187,000 before allocating
$23,000 of the net loss to the minority interest in Glenmaura.  The net loss for
the  Partnership  for the  quarter  ended June 30,  1997 was  $165,000.  For the
quarter ended June 30, 1996, the loss before minority interest was $115,000, and
the net  loss was  $113,000  after  allocating  $2,500  of loss to the  minority
interests in Glenmaura.

The  Courtyard by Marriott  owned by Glenmaura  opened in September,  1996.  The
property achieved an average occupancy of 69% for the second quarter of 1997, at
an average daily rate of $68.20.  The revenue per available  room for the second
quarter of 1997 was $47.06.  Glenmaura is in the start-up  phase of  operations.
New hotels  require from several  months to a couple years to establish a stable
customer base. During the start-up phase,  occupancy is building, and room rates
may  be  lower  to  attract  new  customers.  When a  strong  customer  base  is
established, room rates can be raised to a more competitive level.

At the current time, the Partnership  does not have sufficient funds to complete
the  construction  of the  Erie  Property.  The  Partnership  intends  to  raise
additional  funds  from the  Offering  and  obtain  External  Financing  from an
institutional  lender.  No commitments have been received as of the date of this
Prospectus for such External  Financing.  Since the  Partnership can control the
timing of  construction,  the  construction  of the Erie Property can be delayed
until  the  required  additional  financing  can be  obtained.  The  Partnership
included a working capital reserve in its total costs for the Solon Hampton Inn.
The  Partnership  expects that the working capital reserve will be sufficient to
fund any operating deficits of the Solon Hampton Inn.



<PAGE>





                                     PART II
                                     -------

                                OTHER INFORMATION
                                -----------------


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-------  --------------------------------

         a.       EXHIBITS

                  None

         b.       REPORTS ON FORM 8-K

                  There was one report 8-K filed in the  second  quarter,  1997.
                  The report was dated June 10, 1997 and  described the purchase
                  of land in Erie,  Pennsylvania.  No financial  statements were
                  required. The report was filed on June 25, 1997.





                                   SIGNATURES

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


                                     ESSEX HOSPITALITY ASSOCIATES IV L.P.
                                        Registrant



Dated:   September 19, 1997          /s/ LORRIE L. LOFASO
                                     --------------------
                                     Essex Hospitality Associates IV L.P.
                                     Essex Partners Inc.
                                     Lorrie L. LoFaso
                                     Vice President and Chief Accounting Officer