UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB


(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, 2001

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
          For the quarterly period ended September 30, 2001

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

          For the transition period ended  ______________to______________


                        Commission file number 333-35063


                               Baron Capital Trust

        (Exact name of small business issuer as specified in its charter)

            Delaware                                     31-1574856
   (State or other jurisdiction                        (IRS Employer
of incorporation or organization)                    Identification No.)

                    7800 Cooper Road, Cincinnati, Ohio 45242

                    (Address of principal executive offices)

                                 (513) 936-3408
                           (Issuer's telephone number)

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 the date of this Report, the Registrant has outstanding  961,006 shares of
beneficial interest ("Common Shares"), its only class of common equity.



<PAGE>


                         PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements

          See following pages.



                                       2

<PAGE>
                              BARON CAPITAL TRUST

                         INDEX TO FINANCIAL STATEMENTS


                                                                         Page
                                                                         ----
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 Balance Sheets                                                           F-1

 Statements of Operations                                                 F-2

 Statements of Shareholders' Equity                                       F-3

 Statements of Cash Flows                                                 F-4

Notes to Financial Statements                                           F-5 F-14
<PAGE>

                              BARON CAPITAL TRUST

                     CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                             September 30,      December 31,
                                                                                 2001              2000
                                                                                 ----              ----
                                                                              (Unaudited)
<S>                                                                          <C>                <C>
                                      ASSETS
Rental Apartments:
   Land                                                                      $  5,643,600       $  5,643,600
   Rental property held for sale                                                       --          3,635,000
   Depreciable property                                                        26,211,036         26,091,407
                                                                             ------------       ------------
                                                                               31,854,636         35,370,007
   Less accumulated depreciation                                                3,158,120          2,304,148
                                                                             ------------       ------------
                                                                               28,696,516         33,065,859

Cash and Cash Equivalents                                                       1,562,647             20,908
Restricted Cash                                                                   611,325            359,894
Receivables from Affiliates                                                     6,788,177          6,580,099
Other Property and Equipment                                                      102,017            105,960
Other Assets                                                                      746,017            910,162
                                                                             ------------       ------------
                                                                             $ 38,506,699       $ 41,042,882
                                                                             ============       ============

                       LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Mortgages payable                                                         $ 23,235,164       $ 23,540,172
   Accounts payable and accrued liabilities                                     1,132,511          2,129,615
   Notes payable                                                                2,139,525          2,482,498
   Payables to affiliates                                                         796,339          2,237,762
   Security deposits                                                              225,348            208,406
                                                                             ------------       ------------
         Total liabilities                                                     27,528,887         30,598,453
                                                                             ------------       ------------

Shareholders' Equity:
   Common shares of beneficial interest, no par value; 2,500,000
      shares authorized; 961,006 shares issued and outstanding                 18,875,273         18,875,273
   Deficit                                                                     (7,554,954)        (8,088,337)
   Distributions                                                                 (342,507)          (342,507)
                                                                             ------------       ------------
         Total shareholders' equity                                            10,977,812         10,444,429
                                                                             ------------       ------------
                                                                             $ 38,506,699       $ 41,042,882
                                                                             ============       ============
</TABLE>


           See notes to consolidated condensed financial statements.



                                      F-1


<PAGE>


                               BARON CAPITAL TRUST

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                   Nine Months Ended                Three Months Ended
                                                                     September 30,                     September 30,
                                                                     -------------                     -------------
Revenues:                                                        2001             2000            2001              2000
                                                                 ----             ----            ----              ----
   Property:                                                                    RESTATED                          RESTATED
<S>                                                          <C>              <C>              <C>              <C>
      Rental                                                 $ 4,234,132      $ 3,155,896      $ 1,289,137      $ 1,411,137
      Equity in net loss of unconsolidated partnership                --         (113,915)              --          (34,921)
   Interest and other income                                   1,086,763          634,476          419,402          266,342
                                                             -----------      -----------      -----------      -----------
                                                               5,320,896        3,676,457        1,708,539        1,642,558
                                                             -----------      -----------      -----------      -----------

Real Estate Expenses:
   Depreciation                                                  853,972          647,491          357,881          306,264
   Amortization of loan costs                                     69,753          110,100           30,667           52,119
   Interest                                                    1,344,748        1,045,039          329,446          489,524
   Repairs and maintenance                                       827,543          502,951          424,804          222,387
   Personnel                                                     614,089          442,644          187,092          177,268
   Property taxes                                                381,152          274,838          117,319          127,020
   Property insurance                                             96,498           68,504           30,943           30,474
   Utilities                                                     409,509          283,151          121,328          138,997
   Other                                                         321,142          187,843          195,775           98,475
                                                             -----------      -----------      -----------      -----------
                                                               4,918,406        3,562,561        1,795,255        1,642,528
                                                             -----------      -----------      -----------      -----------

Administrative Expenses:
   Personnel, including officer's compensation                   438,381          691,864          133,852          156,403
   Professional services                                          59,931          288,556           (9,014)          34,517
   Other                                                         401,809          388,832          155,899          179,209
                                                             -----------      -----------      -----------      -----------
                                                                 900,121        1,369,252          280,737          370,129
                                                             -----------      -----------      -----------      -----------

Loss Before Other Expenses and Extraordinary Item               (497,631)      (1,255,355)        (367,453)        (370,099)
                                                             -----------      -----------      -----------      -----------

Other Income/(Expenses):
    Income from loan discount repayment                          400,881               --          400,881               --
    Credit for loan losses                                       465,514               --          465,514               --
    Prepayment penalties                                        (827,013)              --         (292,938)              --
   Write-off of loan costs on refinanced loans                  (176,769)              --          (28,539)              --
    Loss on sale of property                                    (210,854)              --               --               --
                                                             -----------      -----------      -----------      -----------
                                                                (348,241)              --          544,918               --
                                                             -----------      -----------      -----------      -----------

Income (Loss) Before Extraordinary Item                         (845,872)      (1,255,355)         177,465         (370,099)
                                                             -----------      -----------      -----------      -----------

Extraordinary Item - Extinguishment of Debt
    Affiliates                                                 1,267,755               --          135,746               --
    Former Chief Executive Officer                               111,500               --               --               --
                                                             -----------      -----------      -----------      -----------
                                                               1,379,255               --          135,746               --
                                                             -----------      -----------      -----------      -----------

Net Income (Loss)                                            $   533,383      $(1,255,355)     $   313,211      $  (370,099)
                                                             ===========      ===========      ===========      ===========

Income (Loss) Per Share - Basic and Diluted :

     Before Extraordinary Item                               $     (0.89)     $     (1.78)     $      0.18      $     (0.50)

     Extraordinary Item                                             1.45               --             0.14               --
                                                             -----------      -----------      -----------      -----------

     Net Income (Loss)                                       $      0.56      $     (1.78)     $      0.32      $     (0.50)
                                                             ===========      ===========      ===========      ===========

Weighted Average Number of Common Shares Outstanding             949,599          706,793          959,830          739,406
                                                             ===========      ===========      ===========      ===========
</TABLE>


           See notes to consolidated condensed financial statements.



                                      F-2


<PAGE>


                               BARON CAPITAL TRUST

            CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                     Common Shares of
                                                    Beneficial Interest
                                                   Shares        Amount         Deficit     Distributions      Total
                                                   ------        ------         -------     -------------      -----

<S>                                               <C>          <C>            <C>             <C>           <C>
Balance, December 31, 2000                        3,390,383    $18,875,273    $(8,088,337)    $(342,507)    $10,444,429

Nine Months Ended September 30, 2001:
   Conversion of Operating Partnership units
      for shares of beneficial interest              20,115             --             --            --              --
   Net Income                                            --             --        533,383            --         533,383
                                                  ---------    -----------    -----------     ---------     -----------

Balance, September 30, 2001                       3,410,498    $18,875,273    $(7,554,954)    $(342,507)    $10,977,812
                                                  =========    ===========    ===========     =========     ===========
</TABLE>


           See notes to consolidated condensed financial statements.



                                      F-3


<PAGE>


                               BARON CAPITAL TRUST

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                           Nine Months Ended September 30,
                                                                                           -------------------------------
                                                                                              2001                2000
                                                                                              ----                ----
                                                                                                                RESTATED
                                                                                                                --------
<S>                                                                                         <C>               <C>
Cash Flows from Operating Activities:
   Net income (loss)                                                                        $   533,383       $(1,255,355)
   Adjustments to reconcile net income (loss) to net cash and cash
      equivalents used in operating activities:
         Credit for estimated fair value of services performed by officer                            --           162,750
         Extinguishment of debt                                                              (1,483,974)
         Depreciation                                                                           853,972           647,491
         Credit for loan losses                                                                (465,514)
         Loss on sale of property                                                               210,854
         Amortization of loan costs                                                              69,753           110,100
         Write-off of loan costs on refinanced loans                                            176,769
         Equity in net loss of unconsolidated partnership                                            --          (113,915)
         (Increase) decrease in operating assets:
            Other receivables                                                                        --            50,973
            Other assets                                                                        (82,377)           (9,450)
         Increase (decrease) in operating liabilities:
            Accounts payable and accrued liabilities                                           (869,579)          (17,893)
            Security deposits                                                                    16,942           (28,092)
                                                                                            -----------       -----------
               Net cash and cash equivalents used in operating activities                    (1,039,771)         (453,391)
                                                                                            -----------       -----------

Cash Flows from Investing Activities:
   Proceeds from sale of property, net                                                        3,424,146                --
   Additions to rental apartments                                                              (119,629)         (196,277)
   Cash distributions from partnerships                                                              --            (4,979)
   Increase in restricted cash                                                                 (251,431)         (101,990)
   Other                                                                                          3,943             1,203
                                                                                            -----------       -----------
               Net cash and cash equivalents provided by (used in) investing activities       3,057,029          (302,043)
                                                                                            -----------       -----------

Cash Flows from Financing Activities:
   Proceeds from mortgage refinancings                                                        8,095,000                --
   Proceeds from sale of common shares of beneficial interest                                        --           248,308
   Proceeds from notes payable                                                                       --           315,791
   Payments on notes payable                                                                   (342,973)          (90,000)
   Payments on mortgages payable                                                             (8,400,008)         (157,928)
   Increase (decrease) in loans payable to affiliates, net                                      172,462           598,954
                                                                                            -----------       -----------
               Net cash and cash equivalents (used in) provided by financing activities        (475,519)          915,125
                                                                                            -----------       -----------

Net Increase in Cash and Cash Equivalents                                                     1,541,739           159,691

Cash and Cash Equivalents, Beginning                                                             20,908            33,774
                                                                                            -----------       -----------

Cash and Cash Equivalents, Ending                                                           $ 1,562,647           193,465
                                                                                            ===========       ===========

Supplemental Disclosure of Cash Flow Information:

     Cash paid for mortgage and other interest                                              $ 1,344,748       $ 1,045,039
                                                                                            ===========       ===========
</TABLE>


           See notes to consolidated condensed financial statements.



                                      F-4

<PAGE>
                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Basis of Presentation

          The unaudited consolidated condensed balance sheet as of September 30,
          2001, and the related unaudited consolidated condensed statements of
          operations and cash flows for the nine months ended September 30, 2001
          and 2000 (as restated), and the unaudited consolidated condensed
          statements of shareholders' equity for the nine months ended September
          30, 2001 have been prepared by the Trust. In the opinion of
          management, all adjustments (which include reclassifications and
          normal recurring adjustments) necessary to present fairly the
          financial position, results of operations and cash flows at September
          30, 2001 and for the periods presented, have been made. The results of
          operations for the nine months ended September 30, 2001 are not
          necessarily indicative of the operating results for the full year.

          As a result of certain adjustments in connection with the Trust's
          consolidated financial statements for the year ended December 31,
          2000, management determined to restate its Forms 10-QSB and 10-QSB/A
          for the quarter ended September 30, 2000 as previously filed on March
          1, 2001 and August 27, 2001, respectively. The Trust included in its
          original September 30, 2000 financial statements a provision for
          property impairment of $8,356,638, which was a result of writing off
          the excess of the recorded value of the Exchange Partnerships acquired
          in the Exchange Offering over the estimated current value of the
          Exchange Partnerships. The provision for property impairment was a
          result of calculating the recorded value at the date of the exchange
          (April 1, 2000) with incomplete information. As a result, adjustments
          were made to the recorded value based on information not previously
          available to the Trust. Had the Trust been aware of this information
          at the time of filing the September 30, 2000 Forms 10-QSB and
          10-QSB/A, the provision for property impairment of $8,356,638 would
          not have been recorded. Instead an adjustment of $11,005,924 would
          have been recorded to the consolidated balance sheet as an adjustment
          to the recorded amounts of land, depreciable property, advances to
          affiliates and partners' capital to reflect the estimated fair value
          of such assets. The amounts contained herein reflect those changes.

          Certain information and footnote disclosures normally included in the
          financial statements prepared in accordance with generally accepted
          accounting principles have been condensed or omitted. It is suggested
          that these consolidated financial statements be read in conjunction
          with the Trust's financial statements and notes thereto included in
          the Trust's December 31, 2000 Annual Report on Form 10-KSB.

          Organization and Capitalization

          Baron Capital Trust (the "Trust") was organized as a business trust in
          Delaware on July 31, 1997. The Trust and its affiliate, Baron Capital
          Properties, L.P. (the "Operating Partnership" or the "Partnership"), a
          Delaware limited partnership, have been organized to acquire equity
          interests in residential apartment properties located in the United
          States and to provide or acquire debt mortgage loans secured by such
          types of property.



                                      F-5

<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Organization and Capitalization (continued)

          The Trust's Declaration authorizes it to issue up to 25,000,000 shares
          of beneficial interest, no par value per share, consisting of common
          shares and of preferred shares of such classes with such preferences,
          conversion or other rights, voting powers, restrictions, limitations
          as to dividends, qualifications, or terms or conditions of redemption
          as the Board of Trustees of the Trust may create and authorize from
          time to time in accordance with Delaware law and the Declaration.

          The Trust commenced operations on February 3, 1998, at which time it
          received its initial capital contribution.

NOTE 2.   LIQUIDITY AND PROFITABILITY CONSIDERATIONS

          During the year ended December 31, 2000, the Trust experienced certain
          cash flow problems and has, from time to time, experienced
          difficulties meeting obligations as they became due. However, as
          reflected in the accompanying consolidated condensed financial
          statements, during the first nine months ended September 30, 2001, the
          Trust generated Funds From Operations (Funds from Operations is a
          measure of profitability in the REIT industry, which is measured as
          net income less depreciation, amortization, and other non-operating
          expenses and/or income) of approximately $321,000 versus negative
          Funds From Operations of approximately $498,000 for the nine months
          ended September 30, 2000.

          During the first three quarters of 2001, management refinanced four of
          its properties, which generated $1,875,000 of cash to the Trust. This
          cash was used to reduce accounts payable owed by the Trust and
          establish an escrow for expected major repairs to its Riverwalk
          property.

          Management's plans to continue improving liquidity and profitability
          encompass the following four strategies:

          o    increase property cash collections through implementation of
               utility billings, rent increases and property enhancements;

          o    refinance selected well performing assets;

          o    dispose of assets which do not generate cash sufficient to cover
               operating costs or whose geographic location creates excessive
               burden; and

          o    reduce corporate overhead.

          In implementing these strategies, management has adopted the following
          action plans:

          o    In many locations, the market for apartments has started to
               include re-billing of property water costs to tenants. The Trust
               has initiated billing of tenants for their water used at several
               locations and intends to continue implementation of the strategy
               at other properties as the markets permit.



                                      F-6

<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 2.     LIQUIDITY AND PROFITABILITY CONSIDERATIONS (Continued)

          o    The Trust has identified certain of its properties, which are
               performing well and have loans which are small relative to the
               value of the properties, given their excellent performance. Four
               properties were refinanced in the first three quarters of 2001
               generating sufficient cash for the Trust to enter into
               negotiations with all of the Exchange Offering professionals
               which were owed payment for services performed in connection with
               the offering, and still have a small amount in reserve. All four
               of these properties were refinanced at interest rates lower than
               the prior interest rates on the loans. The Trust received cash
               proceeds of approximately $1,875,000 as a result of refinancing
               these four properties. (see Note 6).

          o    The Trust sold one of its properties that, in the past, had
               required substantial and frequent cash infusions. The sale closed
               on April 30, 2001. Additional properties are being evaluated for
               potential disposition (see Note 5).

          o    During 2000, the Trust terminated the services of one of its
               executive officers and entered into an arrangement with two
               outside businesses to allow officers of the Trust to work for
               those businesses. The salaries of those officers funded by the
               Trust were reduced because of the income they received from the
               outside businesses.

          o    As a result of the refinancing of the four properties discussed
               above and the refinancing of two underlying assets on certain
               Exchange Partnerships in the first three quarters of 2001, the
               Partnership had approximately $1,563,000 in available cash at
               September 30, 2001.

          Management believes that the actions presently being taken by the
          Trust, including the cash realized upon refinancing the four
          properties as described above and its cash on hand, provide the
          opportunity for the Trust to improve liquidity and profitability.

NOTE 3.   EXCHANGE OFFERING

          On April 7, 2000, pursuant to a registration statement on Form S-4,
          the Operating Partnership completed the Exchange Offering under which
          it acquired additional interests in residential apartment properties.
          In the Exchange Offering, the Operating Partnership issued 2,449,492
          registered Operating Partnership Units in exchange for substantially
          all outstanding units of limited partnership interest owned by
          individual limited partners ("Exchange Limited Partners") in 23
          limited partnerships (the "Exchange Partnerships"), which directly or
          indirectly owned equity and/or debt interests in one or more of 26
          residential apartment properties located in the southeast and mid-west
          United States.

          The acquisition of the Exchange Partnerships was accounted for under
          the purchase method of accounting, effective as of April 1, 2000 for
          accounting purposes. The cost of acquisition approximated the fair
          value of the net assets acquired (principally the appraised value
          determined by management based on actual 1998 appraisals of the
          underlying residential apartment properties less related liabilities),
          which amounted to $11,793,159. Therefore, no goodwill was recorded in
          this transaction.



                                      F-7

<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 3.   EXCHANGE OFFERING (Continued)

          For financial statement presentation purposes, it is assumed that the
          Units of limited partnership interest in the Operating Partnership
          issued to Exchange Limited Partners in the Exchange Offering have been
          issued as Common Shares of the Trust, since the unit holders (other
          than the Trust) are entitled to exchange all or a portion of their
          Units at any time and from time to time for an equivalent number of
          Common Shares, so long as the exchange would not cause the exchanging
          party to own in excess of 5% of the then outstanding Common Shares,
          subject to the Trust's right to cash out any unit holder who requests
          an exchange and subject to certain other exceptions.

          The following unaudited pro forma summary presents consolidated
          financial information as if the Exchange Partnerships had been
          acquired effective January 1, 2000. The pro forma amounts include
          adjustments for depreciation as a result of the adjustment to fair
          value of the residential apartment properties and interest associated
          with the related mortgages. The pro forma information does not
          necessarily reflect the actual results that would have occurred nor is
          it necessarily indicative of future results of operations of the
          combined partnerships.

<TABLE>
<CAPTION>
                                                                    Nine Months Ended
                                                                      September 30,
                                                               --------------------------
                                                                  2001            2000
                                                                  ----            ----

          <S>                                                  <C>            <C>
          Total Revenues                                       $ 5,300,000    $ 5,300,000
          Cost and Expenses                                      5,900,000      6,400,000
                                                               -----------    -----------
          Loss before Other Expenses and Extraordinary Item       (600,000)    (1,100,000)
          Other Expenses                                          (300,000)            --
                                                               -----------    -----------
          Loss Before Extraordinary Item                          (900,000)    (1,100,000)
          Extraordinary Item- Extinguishment of Debt             1,400,000             --
                                                               -----------    -----------
          Net Income (Loss)                                    $   500,000    $(1,100,000)
                                                               ===========    ===========

          Income (Loss) Per Share:
          Before Extraordinary Items                           $     (1.00)   $     (1.56)
          Extraordinary Item                                          1.56           0.00
                                                               -----------    -----------
          Net Income (Loss)                                    $      0.56    $     (1.56)
                                                               ===========    ===========

          Weighted Average Number of Shares                        949,599        706,793
                                                               ===========    ===========
</TABLE>

NOTE 4.   RECENT ACCOUNTING PRONOUNCEMENTS

          In August 2001, the FASB issued Statement No. 144, Accounting for the
          Impairment or Disposal of Long-Lived Assets (SFAS 144), which
          addresses financial accounting and reporting for the impairment or
          disposal of long-lived assets. SFAS 144 supersedes Statement No. 121,
          Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets to Be Disposed Of , and the accounting and reporting provisions
          of APB Opinion No. 30, Reporting the Results of Operations - Reporting
          the Effects of Disposal of a Segment of a Business, and Extraordinary,
          Unusual and Infrequently Occurring Events and Transactions, for the
          disposal of a segment of a business. SFAS 144 retains the requirement
          in Opinion No. 30 to report separately discontinued operations and
          extends that reporting to a component of an entity that either has
          been disposed of or is classified as held for sale. The Company is
          required and plans to adopt the provisions of



                                      F-8
<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 4.   RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

          SFAS 144 for the quarter ending March 31, 2002. The Company has not
          determined the impact that SFAS 144 will have on its financial
          statements

          In June 2001, the Financial Accounting Standards Board (FASB) issued
          Statement of Financial Accounting Standards (SFAS) No. 143,
          "Accounting for Asset Retirement Obligations". SFAS 143 requires
          entities to record the fair value of a liability for an asset
          retirement obligation in the period in which it is incurred. The
          statement requires that the amount recorded as a liability be
          capitalized by increasing the carrying amount of the related
          long-lived asset. Subsequent to initial measurement, the liability is
          accreted to the ultimate amount anticipated to be paid, and is also
          adjusted for revisions to the timing or amount of estimated cash
          flows. The capitalized cost is depreciated over the useful life of the
          related asset. Upon settlement of the liability, an entity either
          settles the obligation for its recorded amount or incurs a gain or
          loss upon settlement. SFAS 143 will be effective for the Trust's
          financial statements beginning January 1, 2002, with earlier
          application encouraged. The Trust believes that the adoption of this
          statement will not have a significant impact on the results of
          operations or financial position of the Trust.

          In July 2001, the FASB issued SFAS No. 141, "Business Combinations",
          and SFAS No. 142, "Goodwill and Other Intangible Assets" which replace
          Accounting Principles Board Opinion Nos. 16, "Business Combinations"
          and 17, "Intangible Assets", respectively. SFAS No. 141 requires that
          the purchase method of accounting be used for all business
          combinations initiated after June 30, 2001, and that the use of the
          pooling-of-interests method be prohibited. SFAS No. 142 changes the
          accounting for goodwill from an amortization method to an
          impairment-only method. Amortization of goodwill, including goodwill
          recorded in past business combinations, will cease upon adoption of
          SFAS No. 142, which the Trust will be required to adopt on January 1,
          2002. After December 31, 2001, goodwill can only be written down upon
          impairment discovered during annual tests for fair value, or
          discovered during tests taken when certain triggering events occur.
          The Trust believes that the adoption of this statement will not have a
          significant impact on the results of operations or financial position
          of the Trust.

          In July 2001, the Securities and Exchange Commission (SEC) issued
          Staff Accounting Bulletin No. 102, "Selected Loan Loss Allowance
          Methodology and Documentation Issues" (SAB 102). SAB 102 summarizes
          certain of the SEC's views on the development, documentation, and
          application of a systematic methodology as required by Financial
          Reporting Release No. 28 for determining allowances for loan and lease
          losses in accordance with generally accepted accounting principles.
          SAB 102 is effective as of the issuance date. The Trust believes that
          it is in compliance with the guidelines set forth in SAB 102.

NOTE 5.   SALE OF PROPERTY

          On December 7, 2000, the Independent Trustees of the Trust accepted an
          offer to sell Glen Lake Arms Apartments (Glen Lake), a 144-unit
          apartment building located in St. Petersburg, Florida for
          approximately $3,900,000. The decision to sell Glen Lake was based on
          the property's lack of performance and its continuing need for cash to
          operate. On April 30, 2001, the Trust consummated the sale of Glen
          Lake resulting in a loss on the sale of $210,854.



                                      F-9
<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 5.   SALE OF PROPERTY (Continued)

          The results of operations of Glen Lake for the four months ended April
          30, 2001 were as follows:

          Rental and other income                                       $328,816
          Expenses                                                       294,300
                                                                         -------
            Excess of income over expenses                               $34,516
                                                                         =======

NOTE 6.   MORTGAGE REFINANCING

          On February 5, and July 31, 2001 the Trust refinanced the first
          mortgages on four rental properties. The new information pertaining to
          the mortgages is as follows:

<TABLE>
<CAPTION>
                                                    Interest      Term            Maturity           Monthly
          Property                   Mortgage         Rate       (Years)            Date            Payments
          -------                    --------         ----       -------           -----            --------
<S>                                 <C>               <C>          <C>                 <C>           <C>
          Pineview                  $2,700,000        7.51%        25         February 5, 2011      $19,970
          Heatherwood               $1,900,000        7.51%        30         February 5, 2011      $13,298
          Eagle Lake                $1,900,000        7.51%        25         February 5, 2011      $14,053
          Crystal Court I           $1,595,000        7.26%        30           July 30,2011        $10,892
</TABLE>

          The Trust received approximately $1,875,000 in proceeds from the
          refinancing of the first mortgages. In connection with the
          refinancings, the Trust paid one-time prepayment penalties of
          approximately $827,000, which is included in other expenses in the
          accompanying statement of operations.

NOTE 7.   COMMITMENTS AND CONTINGENCIES

          Contract to Purchase Additional Properties


          The following description of the Trust's involvement in the Burgundy
          Hills Property represents an update of information previously
          disclosed in periodic reports (Form 10-QSB quarterly reports and Form
          10-KSB annual reports) of the Trust and the Operating Partnership
          previously filed with the Securities and Exchange Commission.

          In September 1998, the Trust entered into an agreement with three real
          estate development companies (Brentwood at Southgate, Ltd., Burlington
          Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire two
          luxury residential apartment properties in the development stage upon
          the completion of construction. The three development companies were
          previously controlled by Gregory K. McGrath, a founder and the former
          Chief Executive Officer of the Trust. (In September 2001, Mr. McGrath
          assigned all of the outstanding partnership interests in the three
          partnerships to Sigma Renaissance Corporation, a Michigan corporation
          controlled by Jerome S. Rydell, a member of the Board of Trustees of
          the Trust.) One of the residential apartment properties has been sold
          to a third party with the Trust's consent. The remaining residential
          property is scheduled to have a total of 396 units, comprised of one,
          two and three bedroom/one or two bathroom apartments. Construction of
          the property (the "Burgundy Hills Property"), located in Florence,
          Kentucky (part of the Cincinnati metropolitan area), is expected to be
          completed by the end of the first quarter of 2004.



                                      F-10
<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 7.   COMMITMENTS AND CONTINGENCIES (Continued)

          Contract to Purchase Additional Properties (Continued)

          In connection with the transaction, the Trust obtained a right of
          first negotiation to purchase the property from the Borrower upon
          completion and a right of first refusal to purchase the property on
          the same terms offered by a third party. The purchase price is
          expected to be approximately $30,000,000. It is contemplated that a
          significant portion of that amount would be covered by first mortgage
          financing. At the current time the Trust does not have adequate
          resources to close on the transaction even if it were interested in
          doing so and it is uncertain whether the Trust will have adequate
          resources to complete the transaction upon completion of construction.
          In addition, as described below, because the owner of the first
          mortgage on the property has assumed control of the management of the
          Borrower and the development of the property, the exercisability of
          the Trust's rights is currently uncertain.

          In connection with the transaction, the Trust (along with Mr. McGrath,
          its former Chief Executive Officer) agreed to co-guarantee long-term
          first mortgage construction financing provided by KeyBank National
          Association ("KeyBank") to Burlington Residential, Ltd. ("Borrower"),
          the owner of the Burgundy Hills Property. As of October 1, 2001,
          approximately $6,478,000 of the first mortgage loan had been drawn
          down. The interest rate on the first mortgage loan is KeyBank's prime
          rate (currently 6.75%) or the LIBOR rate plus 2%. The Trust also
          agreed that, if the Borrower failed to comply with the repayment and
          other obligations under the loan documents, KeyBank could require the
          Trust to buy out the bank's position on the entire amount of the loan.

          In September 2000, the Trust received notice from counsel to KeyBank
          that the Borrower had defaulted on its loan for failure to pay current
          interest due and meet certain equity requirements and covenants under
          the loan agreement, adverse changes in the financial conditions of the
          Borrower and the Trust, and the Trust's failure to meet certain
          tangible net worth tests set forth in the loan agreements. KeyBank
          indicated that it was exercising its right to accelerate the loan.
          According to Mr. McGrath, KeyBank agreed to forego further action for
          at least 60 days while the parties attempted to reach an arrangement.
          The extension expired in November 2000 and, according to Mr. McGrath,
          has been extended on a month-to-month basis. The Borrower paid down
          the outstanding accrued interest and a portion of the principal and
          intends to seek a new long-term construction facility with another
          institutional lender to replace the first mortgage loan (and the
          BankOne affiliate loan described below). There can be no assurance
          that such financing will be available on satisfactory terms.

          In December, 2000, an affiliate of BankOne acquired KeyBank's position
          in the Burgundy Hills first mortgage loan. The loan is subject to the
          same terms and conditions as that of the original KeyBank loan.
          Earlier, the BankOne affiliate had provided additional institutional
          financing in the principal amount of $1,576,000 to the Borrower. That
          loan is secured by a security interest in partnership interests in the
          Borrower. Due to a default in payment of interest due, the BankOne
          affiliate was assigned rental payments from the Burgundy Hills
          Property and took over day-to-day management of the property.

          The BankOne affiliate recently sold the two loans to Burgundy-Boone,
          LLC, an Illinois limited liability company, according to the latter's
          counsel. As a result, Burgundy-Boone, LLC has assumed control of
          management of the Borrower and of the development of the Burgundy
          Hills Property.

          The Trust, as guarantor of the first mortgage loan, currently has a
          contingent liability for its full outstanding amount. According to
          counsel for Burgundy-Boone, LLC, principal and interest payments on
          the first mortgage loan are current. However, there can be no
          assurance that the first mortgage loan will not again go into default,
          in which event Burgundy-Boone, LLC could begin foreclosure proceedings
          against the Burgundy Hills Property in respect of the first mortgage
          loan.

          Century Construction Inc., the general contractor which performed
          construction services on the Burgundy Hills Property, recently filed
          an action against the Borrower and Mr. McGrath to enforce a mechanic's
          lien on the property in the amount of approximately $1,300,000. The
          contractor also named KeyBank and the BankOne affiliate in the action,
          seeking damages against them on allegations of lender's liability.



                                      F-11
<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 7.   COMMITMENTS AND CONTINGENCIES (Continued)

          Officers' Compensation

          Prior to January 1, 2001, a founder of the Trust and the Operating
          Partnership had agreed to serve as Chief Executive Officer in exchange
          for compensation in the form of Trust common shares or Operating
          Partnership units in an amount not to exceed 25,000 shares or units,
          as applicable, to be determined by the Executive Compensation
          Committee based upon his performance. As of December 31, 2000, no
          Trust common shares or Operating Partnership units of the Partnership
          had been issued to the former Chief Executive Officer as compensation.

          However, in order to reflect all appropriate administrative expenses
          of the Trust, a provision of $217,000 was made in the financial
          statements for the estimated fair value of the services rendered by
          the former Chief Executive Officer for 2000. Effective December 31,
          2000, no compensation expense will be charged for the services
          provided by the former Chief Executive Officer, as these services are
          minimal to the Trust's operations.

          On August 28, 2000, the Trust entered into employment agreements with
          the President and Chief Operating Officer (COO) and with the Chief
          Financial Officer (CFO) through December 31, 2001. Under the terms of
          the agreement, the Trust through the Operating Partnership will pay
          the COO and the CFO $175,000 and $110,000 per annum, respectively. In
          addition, the COO and the CFO will receive $90,000 and $60,000,
          respectively, if they are involuntarily terminated for any reason
          other than gross misconduct.

          Underwriting Agreement

          In connection with the Cash Offering, which terminated on May 31,
          2000, the Trust issued to Sigma Financial Corporation (the
          "Underwriter"), warrants to purchase common shares in an amount equal
          to 8.5% of the number of common shares sold in the offering on a best
          effort basis, by the Underwriter and participating broker-dealers
          selected by the Underwriter and the Trust. The warrants may be
          exercised at any time and from time to time through May 15, 2003 at an
          exercise price of $13.00 per warrant share. The Trust has reserved
          59,676 common shares under the Underwriting Agreement, which is
          equivalent to 8.5% of the 702,076 common shares sold in the Cash
          Offering.

          Pending Litigation

          The Trust is a party to various legal actions resulting from its
          operating activities. These actions are routine litigation and
          administrative proceedings arising in the ordinary course of business,
          some of which are covered by liability insurance, and none of which
          are expected to have a material adverse effect on the consolidated
          financial condition or results of operations of the Trust taken as a
          whole.



                                      F-12
<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 8.   RELATED PARTY TRANSACTIONS

          Trust Management Agreement

          In 1998, the Trust entered into a Trust Management Agreement with the
          Managing Shareholder under which the Managing Shareholder was
          obligated to provide management, administrative and investment
          advisory services to the Trust. The services to be rendered included,
          among other things, communicating with and reporting to investors,
          administering accounts, providing to the Trust of office space,
          equipment, and facilities and other services necessary for the Trust's
          operation, and representing the Trust in its relations with
          custodians, depositories, accountants, attorneys, brokers and dealers,
          corporate fiduciaries, insurers, banks and others, as required. The
          Managing Shareholder was also responsible for determining which real
          estate investments and non-real estate investments (including the
          temporary investment of the Trust's available funds prior to their
          commitment to particular real estate investments) the Trust would make
          and for making divestment decisions, subject to the provisions of the
          Declaration. The Trust Management Agreement had an initial term of one
          year and was subject to extension on a year-to-year basis on approval
          of the Board or a majority of the stockholders entitled to vote on
          such matter or a majority of the Independent Trustees.

          On February 7, 2001, the Independent Trustees of the Trust and the
          Managing Shareholder agreed to terminate the agreement effective
          December 31, 2000. At December 31, 2000, the Trust had accrued
          approximately $303,000, which represented all unpaid fees earned by
          the Managing Shareholder through December 31, 2000. The $303,000 in
          unpaid fees as of December 31, 2000 were paid during the nine months
          ended September 30, 2001.

NOTE 9.   EXTINGUISHMENT OF INDEBTEDNESS TO FORMER CHIEF EXECUTIVE
          OFFICER AND AFFILIATES

          In connection with the sale of Glen Lake property described in Note 5,
          the Trust extinguished approximately $1,268,000 of payables due to
          affiliates and $111,500 due to the Trust's former Chief Executive
          Officer. These liabilities were owed by Florida Capital Income Fund
          IV, Ltd. (former owner of the Glen Lake Property) (one of the Exchange
          Partnerships) to certain affiliates, which were owned or controlled by
          Gregory K. McGrath, the Trust's former Chief Executive Officer. These
          amounts are reported as an extraordinary item in the accompanying
          consolidated condensed statement of operations.

          The Trust also wrote off accrued interest payable of approximately
          $113,000 relating to the extinguished payables due to related parties
          and approximately $23,000 of accounts payable. These amounts were
          recorded as reductions to interest expense and other administrative
          expenses in the accompanying consolidated condensed statement of
          operations.

          During the three months ended September 30, 2001, the Trust entered
          into a settlement with parties who provided legal counsel during the
          Exchange Offering. This settlement resulted in the extinguishment of
          approximately $105,000 in obligations that were previously included in
          accounts payable. This amount is recorded as a reduction of
          professional services in the accompanying consolidated condensed
          statement of operations.



                                      F-13
<PAGE>

                               BARON CAPITAL TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 10.  NET INCOME (LOSS) PER SHARE

          The Trust computes per share data in accordance with Statement of
          Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per
          Share". SFAS 128 requires dual presentation of basic and diluted
          earnings per share on the face of the income statement.

          Basic net income (loss) per share equals net income (loss) divided by
          the weighted average shares outstanding during the year. The
          computation of diluted net income (loss) per share that includes
          dilutive common share equivalents in the weighted average shares
          outstanding has not been presented, as it is anti-dilutive for the
          nine and three months ended September 30, 2001 and 2000.

          The components used in calculating basic net income (loss) per share
          are as follows:

<TABLE>
<CAPTION>
                                                                                          Weighted           Net
                                                                       Net Income         Average       Income (Loss)
                                                                         ( Loss)           Shares         Per Share
                                                                       ----------         --------      -------------
          <S>                                                         <C>                 <C>             <C>
          For the nine months ended September 30:
           2001                                                       $   533,383         949,599         $   0.56
                                                                      ===========         =======         ========
           2000                                                       $(1,255,355)        706,793         $( 1.78 )
                                                                      ===========         =======         ========
          For the three months ended September 30:
           2001                                                       $   313,211         959,830         $   0.33
                                                                      ===========         =======         ========
           2000                                                       $  (370,098)        739,406         $  (0.50)
                                                                      ===========         =======         ========
</TABLE>

NOTE 11.  SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
          ACTIVITIES

          In April 2000, in connection with the completion of the Exchange
          Offering, the Operating Partnership acquired indirect equity interests
          in 16 rental properties and subordinated mortgage interests in 10
          additional properties through the acquisition of substantially all
          partnership interests in the Exchange Partnerships which own land and
          depreciable property, accrued interest, advances, other assets,
          mortgages and notes payable, as follows:

          Land and Depreciable Property                              $28,723,196
          Mortgage Notes Receivable, Affiliates                        3,292,677
          Receivables and Accrued Interest, Affiliates                 3,262,522
          Other Assets                                                   848,813
                                                                     -----------

          Total Assets                                                36,127,208
                                                                      ----------

          Mortgage Payable                                            19,766,015
          Notes Payable and Accrued Interest                           2,320,586
          Payables and Accrued Interest, Affiliates                    1,435,548
          Accounts Payable                                               644,266
          Security Deposits                                              167,634
                                                                     -----------

          Total Liabilities                                           24,334,049
                                                                      ----------

          Equity                                                     $11,793,159
                                                                      ==========



                                      F-14

<PAGE>

Item 2.   Management's Discussion and Analysis or Plan of Operation

          The following discussion should be read in conjunction with the
          Condensed Consolidated Financial Statements of Baron Capital Trust
          (the "Registrant" or the "Trust") and the Notes thereto. (See ITEM 1 -
          FINANCIAL STATEMENTS.)

          Forward-looking Statements

          This Management's Discussion and Analysis or Plan of Operation and
          other sections of this Report contain certain forward-looking
          statements within the meaning of the Private Securities Litigation
          Reform Act of 1995 that are based on current expectations, estimates
          and projections about the Trust's business, management's beliefs and
          assumptions made by management. Words such as "expects",
          "anticipates", "intends", "plans", "believes", "seeks", "estimates",
          and variations of such words and similar expressions are intended to
          identify such forward-looking statements. These statements are not
          guarantees of future performance and involve certain risks,
          uncertainties and assumptions that are difficult to predict.
          Therefore, actual outcomes and results may differ materially from what
          is expressed or forecasted in such forward-looking statements due to
          numerous factors, including, but not limited to those discussed in
          this Management's Discussion and Analysis or Plan of Operation section
          of this Report, as well as those discussed elsewhere in this Report
          and from time to time in the Trust's other Securities and Exchange
          Commission filings and reports. In addition, such statements could be
          affected by general domestic and international economic conditions.
          The forward-looking statements contained in this Report speak only as
          of the date on which they are made, and the Trust does not undertake
          any obligation to update any forward-looking statement to reflect
          events or circumstances after the date of this Report.

          Results of Operations

          The Trust commenced operations in the first half of 1998. The Trust
          and its affiliate, Baron Capital Properties, L.P. (the "Operating
          Partnership"), a Delaware limited partnership, constitute an
          affiliated real estate company which has been organized to acquire
          equity interests in residential apartment properties located in the
          United States and to provide or acquire mortgage loans secured by such
          types of property. The Operating Partnership conducts all of the
          Trust's real estate operations and holds all direct or indirect
          property interests acquired.

          The Trust is the sole general partner of the Operating Partnership,
          and, in such capacity, the Trust controls the activities of the
          Operating Partnership. The Trust has elected to be taxed as a real
          estate investment trust for federal income tax purposes.

          As described below in this Report, in May 1998, the Trust commenced an
          offering (the "Cash Offering") of up to 2,500,000 common shares of
          beneficial interest ("Common Shares") in the Trust at a purchase price
          of $10.00 per share (maximum proceeds of $25,000,000). In the Cash
          Offering, which expired on May 31, 2000, the



                                        3
<PAGE>

          Trust sold 702,076 Common Shares for an aggregate purchase price of
          $7,020,763. The Trust contributed the net cash proceeds from the
          issuance of Common Shares in the Cash Offering ($5,467,858) to the
          Operating Partnership in exchange for an equivalent number of units
          ("Units" or "Operating Partnership Units") of limited partnership
          interest in the Operating Partnership.

          As of October 1, 2001, the Trust owned 961,006 Operating Partnership
          Units, representing approximately 23.8% of the then outstanding Units.
          Such Units are comprised of the Units acquired by the Trust with the
          net proceeds of the Cash Offering and the Units that holders of Units
          have elected to exchange into Common Shares in the manner described
          below in this section. Since the Units owned by the Trust comprise
          substantially all of its assets, the operating results of the Trust
          are primarily dependent upon the operating results of the Operating
          Partnership.

          Through the Operating Partnership, the Trust has acquired
          substantially all the beneficial interests in 16 residential apartment
          properties, including the Heatherwood I Apartments (67 studio, one
          bedroom and two bedroom units located in Kissimmee, Florida) in June
          1998; Crystal Court II Apartments (80 studio, one bedroom and two
          bedroom units located in Lakeland, Florida) in July 1998; Riverwalk
          Apartments (50 two bedroom units located in New Smyrna, Florida) in
          September 1998; and 13 properties acquired as part of the Exchange
          Offering in April 2000 (discussed below). In July 1998 the Operating
          Partnership also acquired a minority limited partnership interest in
          13 real estate limited partnerships then managed by affiliates of
          Gregory K. McGrath (a founder and former Chief Executive Officer of
          the Trust, a founder and principal unitholder of the Operating
          Partnership, and the President, sole shareholder and sole director of
          Baron Advisors, Inc., a Delaware corporation that formerly served as
          the Managing Shareholder and as a trustee of the Board of the Trust),
          including certain of the Exchange Partnerships which participated in
          the Exchange Offering and which are now managed by the Trust.

          During 1998 and 1999, the Operating Partnership acquired a total of
          40% of the limited partnership interests in Alexandria Development,
          L.P. (the "Alexandria Partnership"), a Delaware limited partnership
          previously controlled by Mr. McGrath. (In September 2001, Mr. McGrath
          assigned all of the outstanding partnership interest in the Alexandria
          Partnership to Sigma Renaissance Corporation, a Michigan corporation
          controlled by Jerome S. Rydell, a member of the Board of Trustees of
          the Trust.) The Alexandria Partnership owns Alexandria Apartments, a
          168-unit residential apartment property (the "Alexandria Property")
          under construction in Alexandria, Kentucky. As of October 1, 2001, 112
          of the 168 residential units (approximately 67%) had been completed
          and were in the rent-up stage. Of the completed units, 92 units have
          been rented as of October 1, 2001.

          In early May 2001, MarCap Corporation filed an action in the United
          States District Court for the Northern District of Illinois against
          WaKul, Inc. (a telecommunications company controlled by Gregory K.
          McGrath, the former Chief Executive Officer of the Trust), Mr.
          McGrath, and the Alexandria Partnership, among other parties, seeking
          repayment of approximately $407,000 of indebtedness (plus unspecified



                                       4
<PAGE>

          interest, attorney's fees and collection costs) under a
          telecommunication equipment leasing agreement. Certain of the
          equipment was installed at the Alexandria Property. The Alexandria
          Partnership guaranteed WaKul, Inc.'s lease payments under the leasing
          agreement.

          Due to recurring losses incurred by the Alexandria Property, a
          partners' deficiency and a recent appraisal that valued the Alexandria
          Property at an amount less than the liabilities owed, management of
          the Trust determined to write off the Trust's investment in the
          Alexandria Property, resulting in a charge to operations in 2000 of
          approximately $355,000.

          The following description of the Trust's involvement in the Burgundy
          Hills Property represents an update of information previously
          disclosed in periodic reports (Form 10-QSB quarterly reports and Form
          10-KSB annual reports) of the Trust and the Operating Partnership
          previously filed with the Securities and Exchange Commission.

          In September 1998, the Trust entered into an agreement with three real
          estate development companies (Brentwood at Southgate, Ltd., Burlington
          Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire two
          luxury residential apartment properties in the development stage upon
          the completion of construction. The three development companies were
          previously controlled by Gregory K. McGrath, a founder and the former
          Chief Executive Officer of the Trust. (In September 2001, Mr. McGrath
          assigned all of the outstanding partnership interests in the three
          partnerships to Sigma Renaissance Corporation, a Michigan corporation
          controlled by Jerome S. Rydell, a member of the Board of Trustees of
          the Trust.) One of the residential apartment properties has been sold
          to a third party with the Trust's consent. The remaining residential
          property is scheduled to have a total of 396 units, comprised of one,
          two and three bedroom/one or two bathroom apartments. Construction of
          the property (the "Burgundy Hills Property"), located in Florence,
          Kentucky (part of the Cincinnati metropolitan area), is expected to be
          completed by the end of the first quarter of 2004.

          In connection with the transaction, the Trust obtained a right of
          first negotiation to purchase the property from the Borrower upon
          completion and a right of first refusal to purchase the property on
          the same terms offered by a third party. The purchase price is
          expected to be approximately $30,000,000. It is contemplated that a
          significant portion of that amount would be covered by first mortgage
          financing. At the current time the Trust does not have adequate
          resources to close on the transaction even if it were interested in
          doing so and it is uncertain whether the Trust will have adequate
          resources to complete the transaction upon completion of construction.
          In addition, as described below, because the owner of the first
          mortgage on the property has assumed control of the management of the
          Borrower and the development of the property, the exercisability of
          the Trust's rights is currently uncertain.



                                       5
<PAGE>


          In connection with the transaction, the Trust (along with Mr. McGrath,
          its former Chief Executive Officer) agreed to co-guarantee long-term
          first mortgage construction financing provided by KeyBank National
          Association ("KeyBank") to Burlington Residential, Ltd. ("Borrower"),
          the owner of the Burgundy Hills Property. As of October 1, 2001,
          approximately $6,478,000 of the first mortgage loan had been drawn
          down. The interest rate on the first mortgage loan is KeyBank's prime
          rate (currently 6.75%) or the LIBOR rate plus 2%. The Trust also
          agreed that, if the Borrower failed to comply with the repayment and
          other obligations under the loan documents, KeyBank could require the
          Trust to buy out the bank's position on the entire amount of the loan.

          In September 2000, the Trust received notice from counsel to KeyBank
          that the Borrower had defaulted on its loan for failure to pay current
          interest due and meet certain equity requirements and covenants under
          the loan agreement, adverse changes in the financial conditions of the
          Borrower and the Trust, and the Trust's failure to meet certain
          tangible net worth tests set forth in the loan agreements. KeyBank
          indicated that it was exercising its right to accelerate the loan.
          According to Mr. McGrath, KeyBank agreed to forego further action for
          at least 60 days while the parties attempted to reach an arrangement.
          The extension expired in November 2000 and, according to Mr. McGrath,
          has been extended on a month-to-month basis. The Borrower paid down
          the outstanding accrued interest and a portion of the principal and
          intends to seek a new long-term construction facility with another
          institutional lender to replace the first mortgage loan (and the
          BankOne affiliate loan described below). There can be no assurance
          that such financing will be available on satisfactory terms.

          In December, 2000, an affiliate of BankOne acquired KeyBank's position
          in the Burgundy Hills first mortgage loan. The loan is subject to the
          same terms and conditions as that of the original KeyBank loan.
          Earlier, the BankOne affiliate had provided additional institutional
          financing in the principal amount of $1,576,000 to the Borrower. That
          loan is secured by a security interest in partnership interests in the
          Borrower. Due to a default in payment of interest due, the BankOne
          affiliate was assigned rental payments from the Burgundy Hills
          Property and took over day-to-day management of the property.

          The BankOne affiliate recently sold the two loans to Burgundy-Boone,
          LLC, an Illinois limited liability company, according to the latter's
          counsel. As a result, Burgundy-Boone, LLC has assumed control of
          management of the Borrower and of the development of the Burgundy
          Hills Property.

          The Trust, as guarantor of the first mortgage loan, currently has a
          contingent liability for its full outstanding amount. According to
          counsel for Burgundy-Boone, LLC, principal and interest payments on
          the first mortgage loan are current. However, there can be no
          assurance that the first mortgage loan will not again go into default,
          in which event Burgundy-Boone, LLC could begin foreclosure proceedings
          against the Burgundy Hills Property in respect of the first mortgage
          loan.

          Century Construction Inc., the general contractor which performed
          construction services on the Burgundy Hills Property, recently filed
          an action against the Borrower and Mr. McGrath to enforce a mechanic's
          lien on the property in the amount of approximately $1,300,000. The
          contractor also named KeyBank and the BankOne affiliate in the action,
          seeking damages against them on allegations of lender's liability.

          In April 2000, pursuant to a registration statement on Form S-4, the
          Operating Partnership completed an exchange offering (the "Exchange
          Offering") under which it acquired additional interests in residential
          apartment properties. In the Exchange Offering, the Operating
          Partnership issued 2,449,492 registered Operating Partnership Units in
          exchange for substantially all outstanding units of limited
          partnership interest owned by individual limited partners ("Exchange
          Limited Partners") in 23 limited partnerships (the "Exchange
          Partnerships"). The Exchange Partnerships directly or indirectly owned
          equity and/or debt interests in one or more of 26 residential
          apartment properties (the "Exchange Properties") located in the
          southeast and mid-west United States. (See NOTE 3 "Exchange Offering"
          in the accompanying notes to the consolidated condensed financial
          statements.)



                                       6
<PAGE>

          Holders of Operating Partnership Units (other than the Trust) are
          entitled to exchange all or a portion of their Units at any time and
          from time to time for an equivalent number of Common Shares of the
          Trust, so long as the exchange would not cause the exchanging party to
          own (taking into account certain ownership attribution rules) in
          excess of 5% of the then outstanding Common Shares, subject to the
          Trust's right to cash out any holder of Units who requests an exchange
          and subject to certain other exceptions.

          Following the completion of the Exchange Offering, the Exchange
          Partnerships continued to own the same property interests they owned
          prior to the offering; substantially all of the limited partnership
          interests in the 23 Exchange Partnerships were owned by the Operating
          Partnership; Mr. McGrath, for nominal consideration, assigned to an
          affiliate of the Trust all of the equity stock in 18 of the corporate
          general partners of the Exchange Partnerships ("Corporate General
          Partners") and granted to the Board of the Trust a management proxy
          coupled with an interest to vote the shares of the remaining five
          Corporate General Partners; the Corporate General Partner of each of
          the Exchange Partnerships assigned to the Operating Partnership all of
          its economic interest in the partnership; and Mr. McGrath caused each
          Corporate General Partner to waive its right to receive from its
          Exchange Partnership any ongoing fees, effective upon completion of
          the exchange. As a result of the foregoing, the Operating Partnership
          (and indirectly the Trust) owned substantially all of the economic
          interest represented by the equity and debt interests owned by the
          Exchange Partnerships and controlled management of such partnerships.

          In April 2001, the Operating Partnership sold its equity interest in
          one of the Exchange Properties, Glen Lakes Apartments, a 144-unit
          residential apartment property located in St. Petersburg, Florida.
          Management of the Trust determined to sell the property based on its
          lack of performance and its need for substantial and frequent cash
          infusions. (See Note 5 "Sale of Property" in the accompanying notes to
          the consolidated condensed financial statements.)

          Certain of the Exchange Partnerships currently controlled by the
          Operating Partnership own direct or indirect equity interests in 15
          Exchange Properties which consist of an aggregate of 868 residential
          units (comprised of studio and one, two, three and four-bedroom
          units). Certain of the Exchange Partnerships controlled by the
          Operating Partnership own direct or indirect mortgage interests in 10
          Exchange Properties, which consist of an aggregate of 813 existing
          residential units (studio and one and two bedroom) and 168 units (two
          and three bedroom) under development. Of the Exchange Properties in
          which the Operating Partnership continues to own an interest, 20
          properties are located in Florida, three properties in Ohio and one
          property each in Georgia and Indiana.



                                       7
<PAGE>

          Consolidated Balance Sheet as of September 30, 2001 Compared to
          December 31, 2000

          During the nine months ended September 30, 2001, total assets
          decreased approximately $2.5 million to $38.5 million while
          liabilities decreased approximately $3.0 million to $27.5 million. The
          decrease in assets was mainly due to the sale of the Glen Lake
          property as described in Note 5 of the consolidated condensed
          financial statements. The decrease in liabilities was primarily due to
          the payoff of the first mortgage on the sale of Glen Lake and debt
          extinguishment of approximately $1.5 million as described in Note 9 of
          the consolidated condensed financial statements.

          Shareholders' equity increased to $11.0 million with a net income for
          the nine months ended September 30, 2001 of approximately $533,000.

          Operations for the Nine and Three Months Ended September 30, 2001
          Compared to Nine and Three Months Ended September 30, 2000

          Revenues:

          Revenues increased by approximately $1.6 million for the nine months
          ended September 30, 2001 to approximately $5.3 million compared to
          $3.7 million for the nine months ended September 30, 2000. This
          increase is attributable to a full nine months of operations of the
          Exchange Properties acquired in the Exchange Offering for the nine
          months ended September 30, 2001 compared to only six months of
          operations of such properties for the nine months ended September 30,
          2000 as the Exchange Offering was completed in April 1, 2000. Rental
          revenues decreased approximately $100,000 for the three months ended
          September 30, 2001 compared to the three months ended September 30,
          2000 due to the sale of the Glen Lakes apartments on April 30, 2001.

          Real Estate Expenses:

          Real estate expenses increased by approximately $1.3 million for the
          nine months ended September 30, 2001 compared to the nine months ended
          September 30, 2000. This increase is attributable to a full nine
          months of operations of the Exchange Properties acquired in the
          Exchange Offering for the nine months ended September 30, 2001
          compared to only six months of operations of such properties for the
          nine months ended September 30, 2000 as the Exchange Offering was
          completed in April 1, 2000. Total real estate expenses for the three
          months ended September 30, 2001 compared to the three months ended
          September 30, 2000 increased by $150,000 due to increases in repairs
          and maintenance for repairs to the Exchange Properties.

          Administrative Expenses:

          Administrative expenses decreased by approximately $470,000 for the
          nine months ended September 30, 2001 compared to the nine months ended
          September 30, 2000



                                       8
<PAGE>

          due to the fact that effective December 31, 2000 no compensation
          expense has been charged for the services provided by the former Chief
          Executive Officer as these services are minimal to the Trust's
          operations. Also, during 2000, the Trust entered into an arrangement
          with two outside businesses to allow officers of the Trust to work for
          those businesses. The salaries of those officers funded by the Trust
          were reduced because of the income they received from the outside
          businesses. Administrative expenses for the three months ended
          September 30, 2001 remained consistent with those incurred in the
          three months ended September 30, 2000.

          During the three months ended September 30, 2001 the Trust entered
          into a settlement with parties who provided legal counsel during the
          Exchange Offering. This settlement resulted in the extinguishment of
          approximately $105,000 in obligations that was previously included in
          accounts payable. This amount is recorded as a reduction of
          professional services in the accompanying consolidated condensed
          statement of operations.

          Other Income/( Expenses):

          Other Income/(Expenses) for the nine and three months ended September
          30, 2001 of ($348,241) and $544,918, respectively, related to the
          refinancing of four properties completed in the first and third
          quarters of 2001 and the loss on the sale of the Glen Lake Property
          recorded in the second quarter. There were no other income/(expenses)
          for the nine and three months ended September 30, 2000. During the
          third quarter there was a recognition of approximately $400,000 of
          loan discounts on repayments of loans held by certain Exchange
          Partnerships which was partially offset by prepayment penalties of
          approximately $293,000 and a credit for the provision of loan losses
          recognized at December 31, 2000 totaling $465,514.

          Extraordinary Item- Extinguishment of Debt:

          In connection with the sale of the Glen Lake property, the Trust
          extinguished approximately $1,268,000 of payables due to affiliates
          and $111,500 due to the Trust's former Chief Executive Officer. These
          liabilities were owed by Florida Capital Income Fund IV, Ltd. (former
          owner of the Glen Lake Property) (one of the Exchange Partnerships) to
          certain affiliates, which were owned or controlled by Gregory K.
          McGrath, the Trust's former Chief Executive Officer.

          Liquidity and Capital Resources

          Net cash used in operating activities for the nine months ended
          September 30, 2001 was $1,039,771 compared to $453,391 for the nine
          months ended September 30, 2000. The increase in cash used by
          operating activities was primarily due to the extinguishment of debt,
          a credit for the provision for loan losses, and payoff of accounts
          payables offset by charges on the loss of the Glen Lake property, the
          write off of loan costs on refinanced loans, and depreciation.



                                       9
<PAGE>

          Net cash provided by investing activities for the nine months ended
          September 30, 2001 was $3,057,029 compared to cash used of $302,043
          for the nine months ended September 30, 2000. The increase in cash
          provided for the nine months ended September 30, 2001 was due
          primarily to proceeds from the sale of the Glen Lake property.

          Net cash used in financing activities for the nine months ended
          September 30, 2001 was $475,519 compared to cash provided of $915,125
          for the nine months ended September 30, 2000. Cash used in financing
          activities increased mainly due to the payoff of the Glen Lake first
          mortgage as well as notes payable paid off with the proceeds of the
          Glen Lake sale.

          During the year ended December 31, 2000, the Trust experienced certain
          cash flow problems and has, from time to time, experienced
          difficulties meeting obligations as they became due. However, as
          reflected in the accompanying consolidated condensed financial
          statements, during the nine months ended September 30, 2001, the Trust
          generated Funds From Operations (Funds from Operations is a measure of
          profitability in the REIT industry, which is measured as, net income
          less depreciation, amortization, and other non-operating expenses
          and/or income) of approximately $321,000 versus negative Funds From
          Operations of approximately $498,000 for the nine months ended
          September 30, 2000.

          During the first three quarters of 2001, the Operating Partnership
          refinanced four of its properties, which generated $1,875,000 of cash
          to the Operating Partnership. This cash was used to reduce accounts
          payable owed by the Operating Partnership, advance funds for a second
          round of refinancing, and establish an escrow for expected major
          repairs to its Riverwalk property. Additionally, two underlying assets
          of certain Exchange Partnerships were refinanced in the third quarter
          generating $1,165,000 in cash. This cash was used to pay down mortgage
          notes receivables of the Exchange Partnerships.

          Management's plans to continue improving liquidity and profitability
          encompass the following four strategies:

          o    increase property cash collections through implementation of
               utility billings, rent increases and property enhancements;

          o    refinance selected well performing assets;

          o    dispose of assets which do not generate cash sufficient to cover
               operating costs or whose geographic location creates excessive
               burden; and

          o    reduce corporate overhead.

          In implementing these strategies, management has adopted the following
          action plans:

          o    In many locations, the market for apartments has started to
               include re-billing of property water costs to tenants. The Trust
               has initiated billing of tenants for their water used at several
               locations and intends to continue implementation of the strategy
               at other properties as the markets permit.



                                       10
<PAGE>

          o    The Trust has identified certain of its properties, which are
               performing well and have loans which are small relative to the
               value of the properties, given their excellent performance. Four
               properties were refinanced in the first three quarters of 2001
               generating sufficient cash for the Trust to enter into
               negotiations with all of the Exchange Offering professionals
               which were owed payment for services performed in connection with
               the offering, and still have an amount in reserve. All four of
               these properties were refinanced at interest rates lower than the
               prior interest rate on the loans. The Trust received cash
               proceeds of approximately $1,875,000 as a result of refinancing
               these four properties.

          o    The Trust sold one of its properties that, in the past, had
               required substantial and frequent cash infusions. The sale closed
               on April 30, 2001. Additional properties are being evaluated for
               potential disposition.

          o    During 2000, the Trust terminated the services of one of its
               executive officers and entered into an arrangement with two
               outside businesses to allow officers of the Trust to work for
               those businesses. The salaries of those officers funded by the
               Trust were reduced because of the income they received from the
               outside businesses.

          As a result of the re-financing of the four properties discussed above
          and the refinancing of two underlying assets on certain Exchange
          Partnerships in the first three quarters of 2001, the Trust had
          approximately $1,563,000 in available cash at September 30, 2001.

          Management believes that the actions presently being taken by the
          Trust, including the cash realized upon refinancing the three
          additional properties as described above and its cash on hand, provide
          the opportunity for the Trust to improve liquidity and profitability.

          The completion in April 2000 of the Exchange Offering described above
          has completed the first effort, in the opinion of management, to
          provide the critical mass necessary for profitable operations. As
          described above, the Trust has entered into agreements with certain
          professional firms involved in the Exchange Offering which were owed
          for their services to receive extended payment terms and reductions of
          the amounts due, where possible. Distributions will be made by the
          Trust as cash flow allows, but will be negatively impacted as the open
          accounts payable are reduced. Management does not anticipate that the
          Trust will make distributions to its shareholders for the next several
          quarters.

          The Trust and the Operating Partnership intend to use securities of
          the Trust and the Operating Partnership (including Common Shares and
          Units), proceeds from future sales of such securities, and available
          operating cash flow and financing from other sources to acquire
          interests in additional residential apartment properties or interests
          in other partnerships substantially all of whose assets consist of
          residential apartment property interests, and payment of applicable
          fees and expenses.



                                       11
<PAGE>

          The operating results of the Trust and the Operating Partnership will
          depend primarily upon income from the residential apartment properties
          in which they directly or indirectly own or acquire an equity or debt
          interest. Operating results in respect of equity interests will be
          substantially influenced by the demand for and supply of residential
          apartment units in their primary market and sub-markets, and operating
          expense levels. Operating results in respect of mortgage and other
          debt interests will depend upon interest income, including, in certain
          cases, participation interest, whose payment will depend upon the
          operating performance, sale or refinancing of the underlying
          properties. The operating results of the Trust and the Operating
          Partnership will also depend upon the pace and price at which they can
          acquire and improve additional property interests.

          The target metropolitan markets and sub-markets have benefited in
          recent periods from demographic trends (including population and job
          growth) which increase the demand for residential apartment units,
          while financing constraints (specifically, reduced availability of
          development capital) have limited new construction to levels
          significantly below construction activity in prior years.
          Consequently, rental rates for residential apartment units have
          increased at or above the inflation rate for the last two years.
          Expense levels also influence operating results, and rental expenses
          (other than real estate taxes) for residential apartment properties
          have generally increased at approximately the rate of inflation for
          the past three years. Changes in interest rates are not expected to
          materially impact operations, because the majority of the real estate
          mortgages have fixed interest rates, as do all of the inter-company
          loans.

          The Trust believes that known trends, events or uncertainties which
          will or are reasonably likely to affect the short-term and long-term
          liquidity and current and future prospects of the Trust and the
          Operating Partnership include the performance of the economy and the
          building of new apartment communities. Although the Trust cannot
          reliably predict the effects of these trends, events and uncertainties
          on the property investments of the Trust and the Operating Partnership
          as a whole, some of the reasonably anticipated effects might include
          downward pressure on rental rates and occupancy levels.

          Two recent developments could have a material impact on the
          performance of the Trust. First is the general downturn in the U.S.
          economy due in large part to the collapse of the technological sector.
          This has translated into a significantly softer summer apartment
          rental market, particularly in Florida. Occupancies and collections
          have been negatively impacted for the last five months, and management
          does not anticipate any improvement in the near term. The second
          development arises out of the horrible events of September 11, 2001.
          While management believes it is still too early to understand how
          deeply this event will impact the confidence of Americans and their
          way of life, it is likely to result in a more cash conscientious
          consumer, which could result in downward pressure on rental rates.

          Generally, there are no seasonal aspects of the operations of the
          Trust or the Operating Partnership that might have a material effect
          on their financial conditions or results of operation. However, for
          the last 36 months, one 60-unit student housing



                                       12
<PAGE>

          property owned by one of the Exchange Partnerships involved in the
          Exchange Offering has had an average occupancy rate of 55% for nine
          months of the year and 30% for the remaining three months of the year.

          Subject to the foregoing discussion, management believes that the
          Trust and the Operating Partnership have the ability to satisfy their
          cash requirements for the foreseeable future. However, management of
          the Trust believes that it will be necessary to raise additional
          capital during the next 12 months to make acquisitions and to meet
          management's revenue and cash flow goals.

          As part of the Trust's ongoing operations, management is reviewing the
          entire portfolio of properties to determine the potential for
          restructuring or refinancing various first mortgage loans.
          Additionally, properties whose recent performance has materially
          negatively impacted the Trust's operating results are being evaluated
          for possible sale. Certain of these properties have been listed for
          sale. The Trust is also in discussions with other apartment owners,
          and is exploring business combinations that will bring it economies of
          scale and the size it needs for listing its Common Shares on a
          recognized securities exchange. Additional size would also give the
          Company the operating margin necessary to support its valuable
          management team that is believed necessary for its long-term growth.

          The Trust and the Operating Partnership expect no material change in
          the number of employees over the next 12 months.



                                       13
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

          The Trust is a claimant in the Georgia Pacific class action lawsuit.
          It is also a party to various legal actions resulting from its
          operating activities. These actions are routine litigation and
          administrative proceedings arising in the ordinary course of business,
          some of which are covered by liability insurance, and none of which
          are expected to have a material adverse effect on the consolidated
          financial condition or results of operations of the Trust taken as a
          whole.

Item 2.   Changes in Securities and Use of Proceeds


          Not Applicable.

Item 3.   Defaults upon Senior Securities

          There were no defaults upon senior securities of the Trust in the
          third quarter of 2001.

          In connection with a transaction described above at "Part I - Item 2.
          Management's Discussion and Analysis or Plan of Operations - Results
          of Operations," the Trust (along with its former Chief Executive
          Officer) agreed to co-guarantee long-term first mortgage construction
          financing provided by KeyBank National Association ("KeyBank") to
          Burlington Residential, Ltd. ("Borrower"), the owner of a residential
          apartment property (the "Burgundy Hills Property") under development
          in Boone County, Kentucky. As of October 1, 2001, approximately
          $6,478,000 of the construction loan had been drawn down. The Borrower
          was previously controlled by Gregory K. McGrath, a founder and the
          former Chief Executive Officer of the Trust. (In September 2001, Mr.
          McGrath assigned all of the outstanding partnership interest in the
          Borrower to Sigma Renaissance Corporation, a Michigan corporation
          controlled by Jerome S. Rydell, a member of the Board of Trustees of
          the Trust.) The interest rate on the construction loan is KeyBank's
          prime rate (currently 6.75%) or the LIBOR rate plus 2%. The Trust also
          agreed that, if the Borrower failed to comply with the repayment and
          other obligations under the loan documents, KeyBank would require the
          Trust to buy out the bank's position on the entire amount of the
          construction loan.

          In September 2000, the Trust received notice from counsel to KeyBank
          that the Borrower had defaulted on its loan for failure to pay current
          interest due and meet certain equity requirements and covenants under
          the loan agreement, adverse changes in the financial conditions of the
          Borrower and the Trust, and the Trust's failure to meet certain
          tangible net worth tests set forth in the loan agreements. KeyBank
          indicated that since the default had not been cured within applicable
          grace periods under the loan agreement, it was exercising its right to
          accelerate the loan and demanded payment of the outstanding principal
          balance of the loan, together with all interest due thereon and
          amounts owed to KeyBank for charges, fees and expenses, in the
          aggregate amount of $5,633,135, and that it was relieved of any
          commitment to loan any additional funds to the Borrower for the
          existing phase and additional phases of the construction project.



                                       14
<PAGE>


          According to Mr. McGrath, KeyBank agreed to forego further action for
          at least 60 days while the parties attempted to reach an arrangement.
          The extension expired in November 2000 and, according to Mr. McGrath,
          has been extended on a month-to-month basis. The Borrower paid down
          the outstanding accrued interest and a portion of the principal and
          intends to seek a new long-term construction facility with another
          institutional lender to replace the KeyBank loan (and the BankOne
          affiliate loan described below). There can be no assurance that such
          financing will be available on satisfactory terms.

          In December 2000, an affiliate of BankOne acquired KeyBank's position
          in the Burgundy Hills first mortgage loan. The loan is subject to the
          same terms and conditions as that of the original KeyBank loan.
          Earlier, the BankOne affiliate had provided additional institutional
          financing in the principal amount of $1,576,000 to the Borrower. That
          loan is secured by a security interest in partnership interests in the
          Borrower. Due to a default in payment of interest due, the BankOne
          affiliate was assigned rental payments from the Burgundy Hills
          Property and took over day-to-day management of the property.

          The BankOne affiliate recently sold the two loans to Burgundy-Boone,
          LLC, an Illinois limited liability company, according to the latter's
          counsel. As a result, Burgundy-Boone, LLC has assumed control of
          management of the Borrower and of the development of the Burgundy
          Hills Property.

          The Trust, as guarantor of the first mortgage loan, currently has a
          contingent liability for its full outstanding amount. According to
          counsel for Burgundy-Boone, LLC, principal and interest payments on
          the first mortgage loan are current. However, there can be no
          assurance that the first mortgage loan will not again go into default,
          in which event Burgundy-Boone, LLC could begin foreclosure proceedings
          against the Burgundy Hills Property in respect of the first mortgage
          loan.

          Century Construction Inc., the general contractor which performed
          construction services on the Burgundy Hills Property, recently filed
          an action against the Borrower and Mr. McGrath to enforce a mechanic's
          lien on the property in the amount of approximately $1,300,000. The
          contractor also named KeyBank and the BankOne affiliate in the action,
          seeking damages against them on allegations of lender's liability.

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

          None.



                                       15
<PAGE>

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a)


          Exhibit
          Number               Description

            3.1     Certificate of Business Trust Registration of the Registrant
                    (incorporated herein by reference to Exhibit 3.1 to the Form
                    SB-2 Registration Statement of Baron Capital Trust filed
                    with the Securities and Exchange Commission on September 5,
                    1997).

            3.2     Amended and Restated Declaration of Trust for the Registrant
                    made as of August 11, 1998 (incorporated herein by reference
                    to Exhibit 10.2 to Amendment No. 1 to the Form S-4
                    Registration Statement of Baron Capital Properties, L.P.
                    filed with the Securities and Exchange Commission on
                    September 22, 1998 (Registration No. 333-55753)).

            3.3     Form of by-laws of the Registrant (incorporated herein by
                    reference to Exhibit 3.3 to Amendment No. 3 to the Form SB-2
                    Registration Statement of Baron Capital Trust filed with the
                    Securities and Exchange Commission on May 15, 1998).


          (b)  The Registrant did not file any Current Reports on Form 8-K
               during the quarter for which this Report is filed.



                                       16
<PAGE>

     In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.


November 14, 2001

                                            BARON CAPITAL TRUST

                                            By:      /s/  Robert L. Astorino
                                                     -----------------------
                                                     Robert L. Astorino
                                                     Chief Executive Officer

                                            By:      /s/  Mark L. Wilson
                                                     -------------------
                                                     Mark L. Wilson
                                                     Chief Financial Officer



                                       17