UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, DC  20549

                         FORM 10-KSB

  X	 	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
    		For the fiscal year ended December 31, 1997
		                    OR
	 	   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
		    For the transition period from 		 to

Commission File Number  0-9380

                    CAPITAL PROPERTIES, INC.
       (Name of small business issuer in its charter)

         Rhode Island	 	        	05-0386287
(State or other jurisdiction of  IRS Employer Identification
incorporation or organization)   No.

100 Dexter Road, East Providence, Rhode Island     02914
(Address of principal executive offices)	    (Zip Code)

Issuer's telephone number (401) 435-7171

Securities registered under Section 12(b) of the Exchange Act:

                                       Name of each exchange
	Title of each class	                  on which registered
	Common Stock-$1.00 par value          American Stock Exchange

Securities registered under Section 12(g) of the Exchange Act:
                              None
                         (Title of Class)

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 and (2) has been subject to such filing requirements
for the past 90 days.  Yes    X      No

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form and no
disclosure will be contained, to the best of issuer's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.	[X]

For the year ended December 31, 1997, the issuer's revenues
totalled $2,731,000.

As of March 2, 1998, the aggregate market value of the voting
stock held by non-affiliates of the issuer was $11,464,000.  (For
this purpose, all directors of the issuer are considered
affiliates.)

<PAGE>

As of March 2, 1998, the issuer had 3,000,000 shares of Common
Stock outstanding.

Documents Incorporated by Reference  -  Portions of the proxy
statement for the 1998 annual meeting of shareholders are
incorporated by reference into Part III.  Portions of the annual
report to shareholders of Capital Properties, Inc. for the year
ended December 31, 1997 are incorporated by reference into Parts
I, II, and III.

Exhibit Index  -  Page III-2.

Transitional Small Business Disclosure Format. Yes    No  X

<PAGE>
                          PART I

Item 1.  -  Description of the Business

Business Development

The Issuer was organized as a business corporation under the laws
of  Rhode Island in 1983 as Providence and Worcester Company and
is the successor by merger in 1983 to a corporation also named
Providence and Worcester Company which was organized under the
laws of Delaware in 1979.  The Issuer's corporate name was
changed to Capital Properties, Inc. in 1984.


Business of Issuer

The Issuer  owns certain properties in downtown Providence,
Rhode Island (see "Land Under Long-Term Leases" and
"Land Under Short-Term Leases," in Item 2 below) and operated a
public parking garage and other downtown Providence properties
as public parking facilities (see "Parking Garage" in Item 2 below).

The Issuer owns all of the outstanding capital stock of Tri-State
Displays, Inc., (through which the Issuer leases land for boards
along interstate and primary highways for outdoor advertising
purposes) and all of the outstanding capital stock of Capital
Terminal Company which was incorporated in 1996 (through which
the Issuer operates its petroleum storage facilities).  (See
"Petroleum Storage Facilities" in Item 2 below.)

References hereinafter to the "Issuer" are, unless the context
indicates otherwise, collectively to the Issuer and its wholly-
owned subsidiaries and its predecessors.


Miscellaneous

For information relating to the Issuer's dependence on one or a
few major customers, see Note 6 of Notes to Consolidated
Financial Statements in the Issuer's 1997 Annual Report to
shareholders attached hereto as Exhibit 13 (hereinafter referred
as the "1997 Annual Report"), which note is incorporated herein
by reference.

During the last two years, no monies were expended by the Issuer
and its subsidiary on material research and development
activities.

Compliance with federal, state and local provisions which have
been enacted or adopted regulating the discharge of materials
into the environment, or otherwise relating to the protection of
the environment, has not had a material effect upon the capital
expenditures, earnings or competitive position of the Issuer.

                            I-1

<PAGE>

On December 31, 1997, the Issuer employed a total of 7 persons.


Item 2.  -  Description of Property

Principal Facilities

The Issuer's principal executive offices occupied 2,300 square
feet in premises located in Providence, Rhode Island and held
under a lease expiring in March 1998.  The Issuer's principal
executive offices were located thereafter to its petroleum
storage facilities in East Providence, Rhode Island.


Investment Policies

The Issuer has no established policy for the purchase of
additional developed or undeveloped property.  However, should
suitable parcels become available in the general area of the
Issuer's current land holdings, the Issuer would consider such an
acquisition depending on current levels of cash and the
availability of financing.  Any properties acquired would most
likely be leased primarily to developers under long-term leases.
The Issuer periodically invests its excess cash in United States
government and governmental agency obligations maturing in not
more than one year.


Description of Real Estate and Operating Data

All of the properties described below (except the petroleum
terminal property) are shown on a map on page 5 of the Issuer's
1997 Annual Report, which map is incorporated herein by
reference.

All the properties described below are owned in fee by the
Issuer.  There are no mortgages, liens or other encumbrances on
such properties except for Parcel 22.

In the opinion of management, all of the properties described
below are adequately covered by insurance.  Insurance is also
required of all tenants, with the Issuer being named as an
additional insured.


Petroleum Storage Facilities -  The Issuer holds title to
approximately 8 acres of land fronting on the Seekonk
River in East Providence, Rhode Island.  The property is used and
operated primarily as a petroleum storage facility (the
Facilities) with aggregate storage capacity of 342,000 barrels.
Although the Issuer has no present plan therefor, the property
can be further developed to contain several additional storage
tanks.


                           I-2

<PAGE>

In January 1998, the Issuer purchased the Wilkesbarre Pier in the
Port of Providence and its deep-water berth for receiving
petroleum products by tanker. In January 1998, the Issuer also
purchased the perpetual right to transport petroleum products
from the Pier to its terminal property through pipelines owned by
a third party.  The Issuer also has the right to use a barge dock
in the Seekonk River owned by a third party for the off-loading
of petroleum products.

This property is the only independent petroleum storage facility
with deep-water access in the market area.  All of the petroleum
storage tanks and buildings are owned by the Issuer.

On October 1, 1996, the Issuer took possession of the Facilities
and is currently in negotiations with several companies to lease
all or a part of the Facilities.

The following schedule sets forth certain information on the
federal tax basis of that portion of the petroleum terminal
property which is depreciated:

<TABLE>
     <C>                        <S>            <S>
                                Buildings         Tanks

     Federal Tax Basis (cost)   $191,021       $2,246,787
     Rate per year              2.5% to 5%     3.33% to 20%
     Method                       S/L            S/L
     Life (Years)               20 to 40          5 to 33

</TABLE>

The 1997 real estate taxes are $41,496 at a $22.27 per Thousand
Dollars of assessed valuation tax rate.


Parking Garage  -  The Issuer owns at 360-car parking garage
adjacent to a rail passenger station in downtown Providence,
Rhode Island, together with the underlying land (the Parking
Garage).  Through December 31, 1997, the Parking Garage was
operated by the Issuer under a management agreement with a firm
experienced in parking operations.  Since January 1, 1998, the
Parking Garage is leased under a short-term cancellable lease to
the same firm that formerly operated the Parking Garage.

The federal tax cost basis of the Parking Garage (exclusive of the
underlying land) is $2,500,000, which is being depreciated on the
straight-line method at the rate of 2.5% per year over a 40-year life.

The 1997 real estate taxes are $99,038 on the Parking Garage and
$60,925 on the underlying land using a $31.99 per Thousand
Dollars of assessed valuation  tax rate.


Land Under Long-Term Leases  -  The Issuer owns approximately
20.5 acres of land within the Capital Center Project area of
downtown Providence, including 1.9 acres of air rights over

                           I-3

<PAGE>

Amtrak's Northeast Corridor railroad tracks which run through
downtown Providence.  (The land underlying the Parking Garage
described above is also included in this acreage.)  See the map
on page 5 of the Issuer's 1997 Annual Report, which map is
incorporated herein by reference.

At December 31, 1997, land leases for three separate land parcels
within this area have commenced with remaining terms of up to 146
years.  These leases have scheduled rent increases over their
terms.  For further information on the development of these
parcels by the tenants, reference is made to the Chairman's
Report at pages 2 and 3 in the Issuer's 1997 Annual Report, which
report is incorporated herein by reference.

In March 1998, the Issuer entered into a land lease terminating
in 2142 with one of its current tenants for the proposed
construction on Parcel 6 of an apartment complex containing
approximately 250 units with underground parking.  Among other
things, the lease provides a period of time within which the
tenant may perform its due diligence, seek the approval of the
plans for this complex from the Capital Center Commission and
enter into a tax agreement with the City of Providence.  The term
of this lease will not begin until the commencement of
construction which is anticipated before year-end.  This lease
permits the Company to remove the western portion of this parcel
from under the lease.

Land Under Short-Term Leases  -  Parcels 3E, 3W, 4E and 4W in the
Capital Center Project area and Parcels 21 and 22 immediately
adjacent to this area are leased to the same firm that operates
the Parking Garage described above for surface parking purposes.
However, the Issuer continues to seek developers for these
parcels, and these leases can be terminated on short notice
should suitable development opportunities arise.

In connection with Parcel 4E, in 1989 the Issuer entered into a
non-binding letter of intent with a developer who proposes to
construct an office building.  The developer has delayed the project
until such time as he has located a major tenant to occupy the
building.

The Issuer is the largest single landowner in the Capital Center
Project area but is nevertheless subject to some measure of
competition from other landowners.






                            I-4
<PAGE>

Item 3.  Legal Proceedings

Petition for Assessment of Damages  -  For a discussion of the
litigation currently pending with the State of Rhode Island,
reference is made to Note 11 of Notes to Consolidated Financial
Statements in the Issuer's 1997 Annual Report, which note is
incorporated herein by reference.

Arbitration Proceedings  -  For a discussion of the arbitration
proceedings currently pending between the Issuer and its former
tenant of the Facilities, reference is made to Note 8 of Notes to
Consolidated Financial Statements in the Issuer's 1997 Annual
Report, which note is incorporated herein by reference.

Property Tax Dispute  -   For a discussion of the property tax
dispute and litigation currently pending with the City of
Providence, Rhode Island, reference is made to Note 2 of Notes to
Consolidated Financial Statements in the Issuer's 1997 Annual
Report, which note is incorporated herein by reference.

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

Not applicable.




























                              I-5
<PAGE>

                         PART II

Item 5. Market for Common Equity and Related Stockholder Matters

See page 30 of the Issuer's 1997 Annual Report, which page is
incorporated herein by reference.


Item 6. Management's Discussion and Analysis or Plan of Operation

See pages 6 through 12 of the Issuer's 1997 Annual Report, which
pages are incorporated herein by reference.


Item 7. Financial Statements

The following consolidated financial statements of the Issuer and
its subsidiaries, set forth at pages 13 through 27 of the
Issuer's 1997 Annual Report, are incorporated hereby reference:

     Consolidated balance sheet-December 31, 1997

     Consolidated statements of income and retained earnings-years
     ended December 31, 1997 and 1996

     Consolidated statements of cash flows-years ended December 31,
     1997 and 1996

     Notes to consolidated financial statements-years ended December
     31, 1997 and 1996


Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure

Not applicable.













                            II-1

<PAGE>
                          PART III


Item 9. Directors, Executive Officers, Promoters and Control
Persons of the Issuer.

For information with respect to the directors and control persons
of the Issuer, see Pages  2, 3 and 4 of the Issuer's definitive
proxy statement for the 1998 annual meeting of its shareholders,
which pages are incorporated herein by reference.

The following are the executive officers of the Issuer:

<TABLE>

                                                  Date of First
Name	                  Age      Office Held    Election to Office

<C>                     <S>      <S>                  <S>
Robert H. Eder          65       Chairman             1995
Ronald P. Chrzanowski   55       President            1997
Barbara J. Dreyer	      59	      Treasurer            1997
Edwin G. Torrance       65	      Secretary            1995

</TABLE>

All officers hold their respective offices until their successors
are duly elected and qualified.  Mr. Chrzanowski served as Vice
President of the Issuer from November 12, 1997 to December 31,
1997, and as President since that date.  Ms. Dreyer served as
Secretary-Treasurer of the Issuer from 1987 to 1995; as President
and Treasurer from 1995 to December 31, 1997 and as Treasurer
since that date.


Item 10. Executive Compensation.

See page 3 of the Issuer's definitive proxy statement for the
1998 annual meeting of its shareholders, which page is
incorporated herein by reference.


Item 11. Security Ownership of Certain Beneficial Owners and
Management

See pages 3 and 4 of the Issuer's definitive proxy statement for
the 1998 annual meeting of its shareholders, which pages are
incorporated herein by reference.


Item 12. Certain Relationships and Related Transactions

See pages 3, 4 and 5 of the Issuer's definitive proxy statement
for the 1998 annual meeting of its shareholders, which pages are
incorporated herein by reference.


                              III-1

<PAGE>

Item 13. Exhibits and Reports on Form 8-K

(a)  Index of Exhibits:

    	(3)	(a)	Restated articles of incorporation (incorporated
		       by reference to Exhibit 3 to the Issuer's report on
	       	Form 8A dated June 6, 1997).

       		(b) 	By-laws, as amended (incorporated by reference to
			      Exhibit 3(b) to the Issuer's quarterly report on
      			Form 10-QSB for the quarter ended June 30, 1995).

    (10)	Material contracts:
	        (a)	Note from Providence and Worcester Railroad
       		Company to Issuer dated January 1, 1988
		       (incorporated by reference to Exhibit 10(a) to the
		       Issuer's annual report on Form 10-KSB for the year
       		ended December 31, 1992) as modified by Agreement
		       dated August 16, 1995 (incorporated by reference
		       to Exhibit 10(a) to the Issuer's annual report on
       		Form 10-KSB for the year ended December 31, 1995).

        	(b) 	Leases between Metropark, Ltd., and Issuer:
            		(i) Dated as of December 1, 1997; see page III-3.

           		(ii) Dated as of December 1, 1997; see Page III-4.

          		(iii) Dated November 6, 1996 (incorporated by
                 	reference to Exhibit 10(c) (i) to the Issuer's
                 	annual report on Form 10-KSB for the year ended
	                 December 31, 1996).

  	(13) 	Annual report to shareholders for the year ended
         December 31, 1997; see page III-5.

	  (21)  Subsidiaries of the Issuer; see page III-6.

	  (22)  Plan of the Issuer's parcels in Downtown Providence
        	(incorporated by reference to page 5 of the Issuer's
        	annual report to shareholders for the year ended
	        December 31, 1997), filed as Exhibit 13 hereto.

(b)  For the quarter ended December 31, 1997, no reports on
     Form 8-K were filed.







                               III-2
<PAGE>

                    Exhibit (l0)(b)(i)

                          L E A S E

     	THIS INDENTURE OF LEASE made as of the 1st day of December,
1997, by and between CAPITAL PROPERTIES, INC., a Rhode Island
corporation (hereinafter referred to as "Landlord"), and
METROPARK, LTD., a Rhode Island corporation (hereinafter referred
to as "Tenant").

               W I T N E S S E T H   T H A T:

     	In consideration of the rents, covenants and agreements to
be paid, kept and performed by Tenant, as hereinafter  provided,
Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord the real property known as Parcels
3W and 4W in the Capital Center, in Providence, Rhode Island, as
shown on a plan attached to this Lease as Exhibit A (hereinafter
called the "Premises").

     	TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term (hereinafter called the "Term")
commencing as of December 1, 1997, and ending on November 30,
1999.

     	This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.

1.    Rental.
      During the period from December 1, 1997 to November 30,
1998, Tenant shall pay to Landlord an annual rental of One
Hundred Thirty-eight Thousand ($138,000) Dollars payable in
monthly installments of Eleven Thousand Five Hundred ($11,500)
Dollars on the first day of each month.  During the period from
Decewmber 1, 1998 to November 30, 1999, Tenant shall pay to
Landlord an annual rental of One Hundred Forty-four Thousand
($144,000) Dollars payable in monthly installments of Twelve
Thousand ($12,000) Dollars on the first day of each month.

2.    Utilities and Other Charges.
      Tenant will pay directly before the same become delinquent
all charges, duties, rates, license and permit fees and other
amounts of every description to which the Premises or any part
thereof or any improvement thereon erected or used by Tenant may,
during the term hereof, be assessed or become liable for
electricity, refuse collection, telephone or any other utillities
or services or any connection or meters therefor, whether

                            III-3
<PAGE>

assessed to or payable by Landlord or Tenant.  Tenant will,
within ten (10) days after receipt of written demand by Landlord,
furnish Landlord with receipts or other evidence indicating that
all such amounts have been paid.  Provided, however, that Tenant
shall only be responsible for those charges and assessments which
are for the period of its occupancy of the Premises.

3.    Taxes and Assessments.
      Landlord will pay and keep current the real estate taxes
assessed against the premises.

4.    Compliance with Laws and Regulations.
      Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant.  Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.

5.   Inspection.
     Tenant will permit Landlord and its agents at all reasonable
times during the term hereof to enter the Premises and examine
the state of repair and condition thereof, and the use being made
of the same.  Landlord may also enter upon the Premises to
perform any repairs or maintenance which Tenant has failed to
perform hereunder, and to show the premises to prospective
purchasers, tenants and mortgagees.  Further, Landlord shall have
the right to have test borings done on the premises, and will use
reasonable, good faith effort to avoid unreasonable interference
with the Tenant's business thereon.

6.   Repair and Maintenance.
     Tenant will, at its own expense, from time to time and at
all times during the term hereof, well and substantially repair,
maintain, amend and keep the Premises, together with all fixtures
and items of personal property used or useful in connection
therewith, with all necessary reparations and amendments
whatsoever in as good order and condition as they now are or may
be put in, reasonable wear and tear and damage by the elements
and such unavoidable casualty against which insurance is not
required hereunder excepted.  Tenant will maintain the signs on
the Premises and fix all potholes that may develop.  Tenant will
have the benefit of all warranties pertaining thereto.  Tenant
will remove snow from the Premises and keep the sidewalks clean
and free from ice and snow.  Landlord will be responsible for any
capital improvements.

7.    Use.
      Tenant shall use the Premises only for the operation of a
parking lot and other accessories related to a parking lot which
are approved by Landlord.

8.    Notices re Premises.
	     Landlord will forthwith furnish Tenant copies of any notices
it receives regarding the Premises from any third parties which
notices relate to the Tenant's use and occupancy of the Premises.

9.    Cancellation of Lease.
     	Either Landlord or Tenant may cancel this Lease upon thirty
(30) days' written notice to the other.

10.  	Insurance.
  	   Tenant agrees to maintain at all times public liability
insurance on an occurrence basis against all claims and demands
for personal injury liability (including, without limitation,
bodily injury, sickness, disease, and death) and damage to
property which may be claimed to have occurred on the Land or in
the Building in the event of injury to any number of persons or
damage to property, arising out of any one occurrence, which
shall, at the beginning of the Term, be at least equal to
$1,000,000, and to name Landlord and any mortgagees and ground
lessors designated by landlord as additional insured and furnish
landlord with the certificates thereof; such insurance shall
contain a provision that the Landlord, and each such mortgagee
and ground lessor although named as an insured, shall
nevertheless be entitled to recovery under said policy for any
loss occasioned to it, its servants, agents and employees by
reason of the negligence of the Tenant; all insurance required
under the terms of this Lease shall be effected with insurers
having a general policyholders rating of not less than A in
Best's latest rating guide and shall not be canceled or modified
without at least 30 days' prior written notice to each insured
named therein.  Tenant shall provide landlord with certificates
of all insurance required to be carried by Tenant under the Lease
at or prior to the Commencement Date and prior to the expiration
of each such policy.

11.   Landlord's Costs and Expenses.
      If Tenant shall fail to comply with any of its obligations
hereunder, landlord may, upon ten (10) days' prior written notice
to Tenant (or without notice in case of emergency), take any such
action as may be reasonably required to cure any such default by
Tenant.  Tenant will pay to Landlord, on demand, all costs and
expenses, including reasonable attorneys' fees, incurred by
Landlord in collecting any delinquent rents, or other charges
payable by Tenant hereunder, or in connection with any litigation
commenced by or against Tenant (other than condemnation
proceedings) to which Landlord, without any fault on its part,
shall be made a party.  All such amounts owing to Landlord shall
constitute additional rent hereunder.

12.   Indemnification of Landlord.
 	   	12.1.  Tenant shall indemnify and save harmless
Landlord (regardless of Tenant's covenant to insure) against and
from any and all claims by or on behalf of any person or persons,
firm or firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
      12.2.  Tenant shall pay and indemnify Landlord against
all legal costs and charges incurred in obtaining possession of
the Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.

13.  	Liens.
      13.1.  Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
      13.2.  If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
lien by deposit or by bonding proceedings, and all amounts so
paid by landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
      13.3.Nothing in this lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof.  Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.

14.  Default.
      14.1.  In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default");
        			  (a) 	Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-day period Tenant may cure the
default;
 		         	(b) 	Tenant or any permitted assignee of Tenant
shall (i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
 			         (c)	An order, judgment or decree shall be
entered, without the application, approval or consent of Tenant
or any permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
 			         (d)	Any other default by Tenant in performing any
of its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law.  Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting.  Any and all such
amounts shall be payable to Landlord upon demand.
Notwithstanding anything contained herein to the contrary, no
termination of this Lease prior to the last day of the term
hereof, except as provided in Section 15 hereof, shall relieve
Tenant of its liability and obligations under this Lease, and
such liability and obligations shall survive any such
termination.
      14.2. In the event of any breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or
threatened breach and shall have the right to invoke any right
and remedy allowed at law or in equity, or by statute or
otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
      14.3.  Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or
hereafter existing, at law or in equity, or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in
equity, or by statute or otherwise, shall not preclude the
simulatneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or
otherwise.

15.	  Eminent Domain.
      If the whole or any part of the demised premises shall be
condemned or acquired by eminent domain for any public or quasi-
public use or purpose, then the term of this Lease shall cease
and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.

In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.

16.	 Condition of Premises.
     Tenant represents that the Premises, the sidewalks and
structures adjoining the same, and any subsurface conditions
thereof, and the present uses and non-uses thereof, have been
examined by Tenant, and Tenant agrees that it will accept the
same in the condition or state in which they, or any of them, now
are, without representation or warranty, express or implied in
fact or by law, by Landlord, and without recourse to Landlord as
to the nature, condition or usability thereof, or the use or uses
to which the Premises, or any part thereof, may be put.

17.  Independent Covenants-No Waiver.
   		17.1.  Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
 	  	17.2.  If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
     17.3.  The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant.  A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord.  All remedies to
which landlord may resort under the terms of this Lease or by law
provided shall be cumulative.

18. 	 Subordination.
     	This Lease and the rights of Tenant hereunder are subject
and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
thereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and all substitutions.

19.	  Quiet Enjoyment.
      Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by landlord and any person claiming by, through
or under it.

20.  	Return of Premises.
	     At the expiration or other temination of the term hereof,
Tenant will remove from the Premises its property and that of all
claiming under it and will peaceably yield up to Landlord the
Premises in as good condition in all respects as the same were at
the commencement of this Lease, except for ordinary wear and
tear, damage by the elements, by any exercise of the right of
eminent domain or by public or other authority, or damage which
Landlord is required herein to replace, restore or rebuild or
damage for which no insurance is required hereunder.

21.   Holdover.
    	 Tenant agrees to pay to landlord twice the total of all rent
then applicable for each month or portion thereof Tenant shall
retain possession of the Premises or any part thereof after the
termination of this Lease (unless and to the extent such holding
over shall be pursuant to a written agreement between Landlord
and Tenant), whether by lapse of time or otherwise, and also to
pay all damages sustained by landlord on account thereof; the
provisions of this subsection shall not operate as a waiver by
Landlord of any right of re-entry provided in this Lease or under
law.  Tenant shall also pay all reasonable legal fees and damages
incurred by Landlord as a result of such holdover.

22.   Limitation of Liability.
	     Tenant shall neither assert nor seek to enforce any claim
for breach of this Lease against any of Landlord's assets other
than Landlord's interest in the Premises, and Tenant agrees to
look solely to such interest for the satisfaction of any
liability of Landlord under this Lease, it being specifically
agreed that in no event shall landlord (which term shall include,
without limitation, any of the officers, employees, agents,
attorneys, trustees, directors, partners, beneficiaries, joint
venturers, members, stockholders or other principals or
representatives, disclosed or undisclosed, thereof) ever be
personally liable for any such liability.

23.   No Recording of Lease.
      Tenant hereby acknowledges and agrees that it shall not
record this Lease or any notice or memorandum of this Lease in
any land evidence records or any other publics without the
express prior written consent of Landlord.  In the event of any
such recording, Tenant shall be in default of this Agreement and
Landlord shall have all rights and remedies available under law
or in equity as a result of such recordation including, without
limitation, the right to terminate this Lease.

24.   Assignment and Subletting.
	     Tenant will not assign this Lease, in whole or in part, nor
sublet all or any part of the Premises, nor license, nor pledge
or encumber by mortgage or other instruments its interest in this
Lease without landlord's prior written consent, which consent may
be withheld by landlord in its sole and absolute discretion.
This prohibition includes any subletting or assignment which
would otherwise occur by operation of law, merger, consolidation,
reorganization, transfer or other change of Tenant's corporate or
trustee in any federal or state bankruptcy, insolvency, or other
proceedings.  Consent by landlord to any assignment or subletting
shall not constitute a waiver of the foregoing prohibition with
respect to any subsequent assignment or subletting.

25.   Use of Hazardous Material.
	     Tenant shall not cause or permit any Hazardous Material to
be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees without the prior
written consent of Landlord.  If Tenant breaches the obligations
stated in the preceding sentence, or if contamination of the
Premises by Hazardous Material otherwise occurs, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any
and all claims, judgments, damages, penalties, fines, costs,
liabilities or losses (including, without limitation, diminution
in value of the Premises, damages for the loss or restriction on
use of rentable Premises or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of
Premises space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or
after the Term as a result of such contamination.  This
indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation
of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local
government agency or political subdivision because of Hazardous
Material present in the sole, surface water or groundwater on,
near or under the Premises.

As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including, but
not limited to, those substances, materials, and wastes listed in
the United States Department of Transportation Hazardous
materials Table (49 CFR 172.101) or by the Environmental
Protection Agency as hazardous substances (40CFR part 302) and
amendments thereto, or such substances, materials and wastes that
are or become regulated under any applicable local, state or
federal law.

Landlord and its agents shall have the right, but not the
duty, to inspect the Premises at any time to determine whether
Tenant is complying with the terms of this Lease.

26.	  Construction.
	     The mention of the parties hereto by name or otherwise shall
be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.

27.  	Permits.
	     Tenant, at its cost, shall obtain any necessary permits for
the Premises from the City of Providence.

28.	  Notices.
	     Whenever notice shall be given under this Lease, the same
shall be in writing and shall be sent by certified or registered
mail, return receipt requested as follows:

     	To the Landlord: 	100 Dexter Road
					                   East Providence, Rhode Island  02914

     	To the Tenant:   	c/o Charles Meyers
                   					56 Pine Street
					                   Providence, Rhode Island  02903

	     To the Tenant's	  Charles Koutsogiane
    	  Attorney:	      	1250 Turks Head Building
                    				Providence, Rhode Island  02903

or to such other address or addresses as each party may from time
to time designate by like notice to the other.  Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.

IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.

CAPITAL PROPERTIES, INC.		        	METROPARK, LTD.



By 	/s/ Ronald P. Chraznowski	     By/s/ Charles Meyers
    Ronald P. Chrzanowski	         Charles Meyers, President
    President


STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE

	In Providence, in said County on the 6th day of January,
1998, before me personally appeared Ronald P. Chrzanowski,
President of Capital Properties, Inc., to me known and known by
me to be the person executing the foregoing instrument on behalf
of said corporation, and he acknowledged said instrument by him
executed to be his free act and deed and the free act and deed of
said corporation.

                             					/s/ Gloria P. Hopkins
                            						Notary Public


STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE

In Providence, in said County on the 6th day of January,
1998, before me personally appeared Charles Meyers, President of
Metropark, Ltd., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.


                           						/s/ Gloria P. Hopkins
                          							Notary Public



                                GUARANTEE


In consideration of the execution of the foregoing lease by
the Landlord, the undersigned (jointly and severally, if more
than one) guarantees that the Tenant will pay all rent thereunder
and will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned.  The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default.  This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any.  The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned.  In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.

Executed this 6th day of January, 1998.

                       							/s/ Charles Meyers
                           							Charles Meyers

<PAGE>

                      Exhibit (l0)(b)(ii)

                          L E A S E

     	THIS INDENTURE OF LEASE made as of the 1st day of December,
1997, by and between CAPITAL PROPERTIES, INC., a Rhode Island
corporation (hereinafter referred to as "Landlord"), and
METROPARK, LTD., a Rhode Island corporation (hereinafter referred
to as "Tenant").

               W I T N E S S E T H   T H A T:

     	In consideration of the rents, covenants and agreements to
be paid, kept and performed by Tenant, as hereinafter  provided,
Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord the real property known as Parcels
21 and 22 in the Capital Center, in Providence, Rhode Island, as
shown on a plan attached to this Lease as Exhibit A (hereinafter
called the "Premises").

     	TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term (hereinafter called the "Term")
commencing as of December 1, 1997, and ending on November 30,
1998.

     	This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.

1.    Rental.
      During the term hereof, Tenant shall pay to Landlord an
annual rental of Ninety Thousand ($90,000) Dollars payable in
monthly installments of Seven Thousand Five Hundred ($7,500)
Dollars on the first day of each month.

2.    Utilities and Other Charges.
	     Tenant will pay directly before the same become delinquent
all charges, duties, rates, license and permit fees and other
amounts of every description to which the Premises or any part
thereof or any improvement thereon erected or used by Tenant may,
during the term hereof, be assessed or become liable for
electricity, refuse collection, telephone or any other utillities
or services or any connection or meters therefor, whether
assessed to or payable by Landlord or Tenant.  Tenant will,
within ten (10) days after receipt of written demand by Landlord,
furnish Landlord with receipts or other evidence indicating that
all such amounts have been paid.  Provided, however, that Tenant

                               III-4
<PAGE>

shall only be responsible for those charges and assessments which
are for the period of its occupancy of the Premises.

3.    Taxes and Assessments.
	     Landlord will pay and keep current the real estate taxes
assessed against the premises.

4.    Compliance with Laws and Regulations.
      Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant.  Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.

5.    Inspection.
	     Tenant will permit Landlord and its agents at all reasonable
times during the term hereof to enter the Premises and examine
the state of repair and condition thereof, and the use being made
of the same.  Landlord may also enter upon the Premises to
perform any repairs or maintenance which Tenant has failed to
perform hereunder, and to show the premises to prospective
purchasers, tenants and mortgagees.  Further, Landlord shall have
the right to have test borings done on the premises, and will use
reasonable, good faith effort to avoid unreasonable interference
with the Tenant's business thereon.

6.    Repair and Maintenance.
	     Tenant will, at its own expense, from time to time and at
all times during the term hereof, well and substantially repair,
maintain, amend and keep the Premises, together with all fixtures
and items of personal property used or useful in connection
therewith, with all necessary reparations and amendments
whatsoever in as good order and condition as they now are or may
be put in, reasonable wear and tear and damage by the elements
and such unavoidable casualty against which insurance is not
required hereunder excepted.  Tenant will maintain the signs on
the Premises and fix all potholes that may develop.  Tenant will
have the benefit of all warranties pertaining thereto.  Tenant
will remove snow from the Premises and keep the sidewalks clean
and free from ice and snow.  Landlord will be responsible for any
capital improvements.

7.    Use.
	     Tenant shall use the Premises only for the operation of a
parking lot and other accessories related to a parking lot which
are approved by Landlord.

8.     Notices re Premises.
	     Landlord will forthwith furnish Tenant copies of any notices
it receives regarding the Premises from any third parties which
notices relate to the Tenant's use and occupancy of the Premises.

9.	   Cancellation of Lease.
	     Either Landlord or Tenant may cancel this Lease upon thirty
(30) days' written notice to the other.

10.	  Insurance.
	     Tenant agrees to maintain at all times public liability
insurance on an occurrence basis against all claims and demands
for personal injury liability (including, without limitation,
bodily injury, sickness, disease, and death) and damage to
property which may be claimed to have occurred on the Land or in
the Building in the event of injury to any number of persons or
damage to property, arising out of any one occurrence, which
shall, at the beginning of the Term, be at least equal to
$1,000,000, and to name Landlord and any mortgagees and ground
lessors designated by landlord as additional insured and furnish
landlord with the certificates thereof; such insurance shall
contain a provision that the Landlord, and each such mortgagee
and ground lessor although named as an insured, shall
nevertheless be entitled to recovery under said policy for any
loss occasioned to it, its servants, agents and employees by
reason of the negligence of the Tenant; all insurance required
under the terms of this Lease shall be effected with insurers
having a general policyholders rating of not less than A in
Best's latest rating guide and shall not be canceled or modified
without at least 30 days' prior written notice to each insured
named therein.  Tenant shall provide landlord with certificates
of all insurance required to be carried by Tenant under the Lease
at or prior to the Commencement Date and prior to the expiration
of each such policy.

11.   Landlord's Costs and Expenses.
     	If Tenant shall fail to comply with any of its obligations
hereunder, landlord may, upon ten (10) days' prior written notice
to Tenant (or without notice in case of emergency), take any such
action as may be reasonably required to cure any such default by
Tenant.  Tenant will pay to Landlord, on demand, all costs and
expenses, including reasonable attorneys' fees, incurred by
Landlord in collecting any delinquent rents, or other charges
payable by Tenant hereunder, or in connection with any litigation
commenced by or against Tenant (other than condemnation
proceedings) to which Landlord, without any fault on its part,
shall be made a party.  All such amounts owing to Landlord shall
constitute additional rent hereunder.

12.   Indemnification of Landlord.
 		   12.1.  Tenant shall indemnify and save harmless
Landlord (regardless of Tenant's covenant to insure) against and
from any and all claims by or on behalf of any person or persons,
firm or firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
      12.2.  Tenant shall pay and indemnify Landlord against
all legal costs and charges incurred in obtaining possession of
the Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.

13.	  Liens.
      13.1.  Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
      13.2.  If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
lien by deposit or by bonding proceedings, and all amounts so
paid by landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
      13.3.Nothing in this lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof.  Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.

14.  	Default.
      14.1.  In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default");
 			         (a)	Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-day period Tenant may cure the
default;
 			         (b)	Tenant or any permitted assignee of Tenant
shall (i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
 		         	(c)	An order, judgment or decree shall be
entered, without the application, approval or consent of Tenant
or any permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
          			(d)	Any other default by Tenant in performing any
of its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law.  Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting.  Any and all such
amounts shall be payable to Landlord upon demand.
Notwithstanding anything contained herein to the contrary, no
termination of this Lease prior to the last day of the term
hereof, except as provided in Section 15 hereof, shall relieve
Tenant of its liability and obligations under this Lease, and
such liability and obligations shall survive any such
termination.
    		14.2. In the event of any breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or
threatened breach and shall have the right to invoke any right
and remedy allowed at law or in equity, or by statute or
otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
      14.3.  Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or
hereafter existing, at law or in equity, or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in
equity, or by statute or otherwise, shall not preclude the
simulatneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or
otherwise.

15.	  Eminent Domain.
	     If the whole or any part of the demised premises shall be
condemned or acquired by eminent domain for any public or quasi-
public use or purpose, then the term of this Lease shall cease
and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.

In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.

16.	  Condition of Premises.
	     Tenant represents that the Premises, the sidewalks and
structures adjoining the same, and any subsurface conditions
thereof, and the present uses and non-uses thereof, have been
examined by Tenant, and Tenant agrees that it will accept the
same in the condition or state in which they, or any of them, now
are, without representation or warranty, express or implied in
fact or by law, by Landlord, and without recourse to Landlord as
to the nature, condition or usability thereof, or the use or uses
to which the Premises, or any part thereof, may be put.

17.   Independent Covenants-No Waiver.
     	17.1.  Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
 		   17.2.  If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
      17.3.  The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant.  A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord.  All remedies to
which landlord may resort under the terms of this Lease or by law
provided shall be cumulative.

18.	  Subordination.
	     This Lease and the rights of Tenant hereunder are subject
and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
hereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and all substitutions.

19.	  Quiet Enjoyment.
      Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by landlord and any person claiming by, through
or under it.

20.  	Return of Premises.
	     At the expiration or other temination of the term hereof,
Tenant will remove from the Premises its property and that of all
claiming under it and will peaceably yield up to Landlord the
Premises in as good condition in all respects as the same were at
the commencement of this Lease, except for ordinary wear and
tear, damage by the elements, by any exercise of the right of
eminent domain or by public or other authority, or damage which
Landlord is required herein to replace, restore or rebuild or
damage for which no insurance is required hereunder.

21.   Holdover.
	     Tenant agrees to pay to landlord twice the total of all rent
then applicable for each month or portion thereof Tenant shall
retain possession of the Premises or any part thereof after the
termination of this Lease (unless and to the extent such holding
over shall be pursuant to a written agreement between Landlord
and Tenant), whether by lapse of time or otherwise, and also to
pay all damages sustained by landlord on account thereof; the
provisions of this subsection shall not operate as a waiver by
Landlord of any right of re-entry provided in this Lease or under
law.  Tenant shall also pay all reasonable legal fees and damages
incurred by Landlord as a result of such holdover.

22.   Limitation of Liability.
	     Tenant shall neither assert nor seek to enforce any claim
for breach of this Lease against any of Landlord's assets other
than Landlord"s interest in the Premises, and Tenant agrees to
look solely to such interest for the satisfaction of any
liability of Landlord under this Lease, it being specifically
agreed that in no event shall landlord (which term shall include,
without limitation, any of the officers, employees, agents,
attorneys, trustees, directors, partners, beneficiaries, joint
venturers, members, stockholders or other principals or
representatives, disclosed or undisclosed, thereof) ever be
personally liable for any such liability.

23.   No Recording of Lease.
		    Tenant hereby acknowledges and agrees that it shall not
record this Lease or any notice or memorandum of this Lease in
any land evidence records or any other publics without the
express prior written consent of Landlord.  In the event of any
such recording, Tenant shall be in default of this Agreement and
Landlord shall have all rights and remedies available under law
or in equity as a result of such recordation including, without
limitation, the right to terminate this Lease.

24.   Assignment and Subletting.
	     Tenant will not assign this Lease, in whole or in part, nor
sublet all or any part of the Premises, nor license, nor pledge
or encumber by mortgage or other instruments its interest in this
Lease without landlord's prior written consent, which consent may
be withheld by landlord in its sole and absolute discretion.
This prohibition includes any subletting or assignment which
would otherwise occur by operation of law, merger, consolidation,
reorganization, transfer or other change of Tenant's corporate or
trustee in any federal or state bankruptcy, insolvency, or other
proceedings.  Consent by landlord to any assignment or subletting
shall not constitute a waiver of the foregoing prohibition with
respect to any subsequent assignment or subletting.

25.   Use of Hazardous Material.
	     Tenant shall not cause or permit any Hazardous Material to
be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees without the prior
written consent of Landlord.  If Tenant breaches the obligations
stated in the preceding sentence, or if contamination of the
Premises by Hazardous Material otherwise occurs, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any
and all claims, judgments, damages, penalties, fines, costs,
liabilities or losses (including, without limitation, diminution
in value of the Premises, damages for the loss or restriction on
use of rentable Premises or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of
Premises space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or
after the Term as a result of such contamination.  This
indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation
of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local
government agency or political subdivision because of Hazardous
Material present in the sole, surface water or groundwater on,
near or under the Premises.

As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including, but
not limited to, those substances, materials, and wastes listed in
the United States Department of Transportation Hazardous
materials Table (49 CFR 172.101) or by the Environmental
Protection Agency as hazardous substances (40CFR part 302) and
amendments thereto, or such substances, materials and wastes that
are or become regulated under any applicable local, state or
federal law.

Landlord and its agents shall have the right, but not the
duty, to inspect the Premises at any time to determine whether
Tenant is complying with the terms of this Lease.

26.	  Construction.
	     The mention of the parties hereto by name or otherwise shall
be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.

27.	  Permits.
	     Tenant, at its cost, shall obtain any necessary permits for
the Premises from the City of Providence.

28.	  Notices.
	     Whenever notice shall be given under this Lease, the same
shall be in writing and shall be sent by certified or registered
mail, return receipt requested as follows:

     	To the Landlord:     	100 Dexter Road
                       					East Providence, Rhode Island  02914

     	To the Tenant:	      	c/o Charles Meyers
                        				56 Pine Street
                       					Providence, Rhode Island  02903

     	To the Tenant's      	Charles Koutsogiane
      	  Attorney:        		1250 Turks Head Building
                       					Providence, Rhode Island  02903

or to such other address or addresses as each party may from time
to time designate by like notice to the other.  Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.

IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.

CAPITAL PROPERTIES, INC.	      		METROPARK, LTD.

By /s/Ronald P. Chraznowski     	By/s/ Charles Meyers
    Ronald P. Chrzanowski	       Charles Meyers, President
    President

STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE

     	In Providence, in said County on the 6th day of January,
1998, before me personally appeared Ronald P. Chrzanowski,
President of Capital Properties, Inc., to me known and known by
me to be the person executing the foregoing instrument on behalf
of said corporation, and he acknowledged said instrument by him
executed to be his free act and deed and the free act and deed of
said corporation.

					                         		/s/ Gloria P. Hopkins
                              						Notary Public

STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE

     	In Providence, in said County on the 6th day of January,
1998, before me personally appeared Charles Meyers, President of
Metropark, Ltd., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.


                         							/s/ Gloria P. Hopkins
                              						Notary Public



                                GUARANTEE


     	In consideration of the execution of the foregoing lease by
the Landlord, the undersigned (jointly and severally, if more
than one) guarantees that the Tenant will pay all rent thereunder
and will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned.  The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default.  This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any.  The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned.  In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.

     	Executed this 6th day of January, 1998.


                                 	/s/ Charles Meyers
	                               						Charles Meyers
<PAGE>

                             EXHIBIT 13









                        ANNUAL REPORT 1997





                      CAPITAL PROPERTIES, INC.





























                               III-5

<PAGE>

BRIEF DESCRIPTION OF
THE COMPANY'S BUSINESS


The Company's business consists of the leasing of certain of its
real estate interests in downtown Providence, Rhode Island.
Through its wholly-owned subsidiary, Tri-State Displays, Inc.,
the Company leases locations along interstate and primary
highways in Rhode Island and Massachusetts for outdoor
advertising purposes.  Through its wholly-owned subsidiary,
Capital Terminal Company, the Company operates its petroleum
storage facilities in East Providence, Rhode Island.


<PAGE>

CHAIRMAN'S REPORT

In the accompanying financial statements for the calendar year
1997, the Company is reporting income before taxes of  $121,000.

In May 1997, the Board of Directors declared a three-for-one
split of the Company's common stock (effected in the form of a
200% stock dividend).  To permit the split, the Company's
articles of incorporation were restated to increase the number of
authorized common shares, $1 par value from 1,000,000 to
3,000,000 shares.   In June 1997, the Company's common stock was
listed on the American Stock Exchange and continues to trade
under the symbol "CPI."

During 1997, the Company paid a dividend of $.10 per share on the
Company's outstanding stock on a post-split basis.  The Company
has been classified as a personal holding company (PHC) for
federal income tax purposes due to the present composition of its
stock ownership and revenues.  A PHC is subject to an additional
tax on amounts classified as undistributed PHC income.  This
classification did not affect the Company's federal income tax
liability for 1997 because the Company made sufficient dividend
distributions to shareholders.

In March 1998, the Company relocated its offices to a building on
the site of its petroleum storage facilities (the Facilities) in
East Providence, Rhode Island, which facilities were previously
leased to a tenant.

DOWNTOWN PROVIDENCE REAL ESTATE

The Company owns approximately 20.5 acres of land within the
Capital Center Project area (Capital Center) of downtown
Providence, including 1.9 acres of air rights over Amtrak's
Northeast Corridor (Boston to New York City) railroad tracks.
These properties, shown on the plan which appears on page 5 of
this Report, are Parcels 2, 3S, 3W, 3E, 4W, 4E, 5, 6, 7A, 8 and
9.  The Company also owns a 15,000 square foot parcel (Parcel 22)
and a 3,000 square foot parcel (Parcel 21) which are located
outside of, but immediately adjacent to, Capital Center.

In 1987 and 1988, the Company entered into long-term land leases
on three of its parcels with private developers.  On Parcel 3S,
CFG Associates, L.P. (CFG) completed the construction of an
office building in 1990.  The general partner in CFG is a
subsidiary of Citizens Financial Group, Inc. whose commercial
banking affiliate is the building's principal tenant.  Citizens
Financial Group, Inc. is, in turn, an affiliate of Royal Bank of
Scotland.  This lease terminates in 2087.

On Parcel 8, Gateway Eight Limited Partnership (Gateway Eight)
completed the construction of an office building which is fully
occupied by First Data Corporation.  Gateway Eight is an
affiliate of Congress Group Ventures, Inc. of Cambridge,
Massachusetts.  This lease terminates in 2090.

On Parcel 5, Parcel Five Limited Partnership (Parcel Five L.P.)
completed the construction of an apartment building containing
approximately 225 units. In May 1997, the apartment building was
purchased and the lease assigned to Avalon Properties, Inc., a
real estate investment trust listed on the New York Stock
Exchange which owns approximately 20,000 apartment units in
twelve states.  This lease terminates in 2142.

The Company, in 1989, entered into a non-binding letter of intent
with One Park Row East Corporation (One Park Row), an affiliate
of First Quebec Corporation of Montreal, Canada, for the
proposed  construction  of  an  office building  containing
approximately 95,000 gross square feet on Parcel 4E.  The plans
for this development have already been approved by the Capital
Center Commission, and all permits necessary to commence
construction have been obtained.  However, construction will not
commence until such time as One Park Row has identified tenants
to occupy a significant portion of the building.  When such
tenants have been identified, the letter of intent will be
supplanted by a formal land lease yet to be fully negotiated.

During the late l980's and into the l990's, there was a general
recession in the real estate market during which time there was
no further development on the remaining parcels.  In 1997, there
was a resurgence of interest as a result of the improvement in
the economy and the increased activity in the downtown Providence
area.

In March 1998, the Company entered into a land lease terminating
in 2142 with Avalon Properties, Inc. for the proposed
construction of an apartment complex located on Parcel 6
containing approximately 250 units with underground parking.
Among other things, the lease provides a period of time within
which Avalon may perform its due diligence, seek the approval of
the plans for this complex from the Capital Center Commission and
enter into a tax agreement with the City of Providence.  The term
of this lease will not begin until the commencement of
construction which is anticipated before year-end.  This lease
permits the Company to remove the western portion of Parcel 6
from under the lease.

The Company owns a below-grade parking garage located on Parcel
7A, which garage is adjacent to the Amtrak rail passenger
station.  This garage is leased for public parking purposes to a
firm experienced in parking operations.

Parcels 3E, 4E, 3W, 4W, 6, 21 and 22 have been leased to the same
firm for surface parking purposes under leases which can be
terminated on short notice as suitable development opportunities
arise.

Providence Place Mall, a regional shopping mall containing 1.2
million square feet of retail space and a 4,000 car garage, is
under construction on a 13.2 acre site to the west of the
Company's properties in Capital Center (marked "PPM" on the
plan).  It is anticipated that the Mall will be open in late
1999.  According to the developer, anchor stores include
Nordstrom, Filene's and Lord & Taylor.  The Mall will be
connected to the remainder of the Capital Center area via the
riverwalks along the Woonasquatucket River.

OTHER SIGNIFICANT EVENTS

Several significant events occurred which are discussed more
fully in the accompanying consolidated financial statements and
include:

    The entering of the judgment by the Rhode Island Superior
    Court awarding condemnation proceeds of $6,101,000 in favor of
    the Company.  The State of Rhode Island has appealed this
    judgment.

    The awarding of $184,000 in favor of the Company in the
    arbitration proceedings against the former tenant of the
    Facilities.

    The retroactive increase in the assessed valuation of nine
    parcels of the Company's properties in downtown Providence and
    the subsequent lawsuit filed by the Company against the City
    of Providence.

    The purchase of the Wilkesbarre Pier in East Providence and
    the purchase of the rights to use two pipelines for the
    transportation of petroleum products from the Pier to the
    Company's Facilities.


CAPITAL TERMINAL COMPANY

In 1991, the Company's Facilities were leased to Coastal Oil New
England, Inc. (Coastal), an affiliate of Coastal Corporation,
under a five-year lease which terminated September 30, 1996.  The
Company, through a newly-formed wholly-owned subsidiary, Capital
Terminal Company, took over the operation of the Facilities.  In
March 1997, the Company commenced purchasing product which is
sold at the Facilities.  In August 1997, the Company entered into
a short-term agreement with a company for the warehousing of
product in the Company's tanks for three months.  The Company
continues to seek tenants for the leasing of the entire
Facilities or the short-term leasing of the storage tanks.


TRI-STATE DISPLAYS, INC.

Tri-State Displays, Inc., another wholly-owned subsidiary, owns
or controls various locations along interstate and primary
highways in Rhode Island and Massachusetts which are leased to
Whiteco Metrocom (a division of Whiteco Industries, Inc., of
Merrillville, Indiana) for commercial advertising purposes.
These locations contain a total of 41 billboard faces, all of
which are the large painted bulletins normally seen along
interstate and primary highways.  The Company has secured permits
for two additional locations in Massachusetts which will be under
lease to Whiteco this spring, bringing the total number of
billboard faces to 45.  The Company has also received a permit to
replace one face on one of its boards in Massachusetts with tri-
vision panels which will allow three separate advertising
messages which will be operational in the summer of 1998.  The
Company has additional locations along interstate and primary
highways in Rhode Island, Massachusetts and Connecticut, and, in
cooperation with outdoor advertising companies, is attempting to
obtain public permits to use some of these additional locations
for outdoor advertising purposes.

                      *   *   *   *   *

Finally, a personal note.  As outlined in my letter of November
13, 1997, Barbara J. Dreyer relinquished her role as President of
the Company.  She moved into that position in June 1995 while
retaining the positions of both Treasurer and Chief Financial
Officer.  This multi-role was too much for one person to
undertake; yet we did not want to lose Barbara's services to the
Company.  Barbara has been an essential cog to the Company (and
its predecessor) since 1974.  We are all most fortunate that she
is remaining with us.  Ronald P. Chrzanowski, who was with
Providence and Worcester Railroad Company since 1973, replaced
Barbara as President.  His last position with Railroad was as
Vice President-Engineering and Real Estate, in which capacity he
oversaw Railroad's real estate operations.

                          							Sincerely,

                         							/s/ Robert H. Eder
                             							Robert H. Eder
							                             Chairman

March 18, 1998

<PAGE>

                       MAP IN ANNUAL REPORT

    	The map in the Annual Report to Shareholders is a plan of a
portion of downtown Providence, Rhode Island, which indicates
those parcels owned by the Issuer in that area known as "Capital
Center" and immediately adjacent thereto.  A legend contains the
Parcel Number, the Parcel Size and the Development on the Parcels
as follows:

<TABLE>
     <C>         <S>            <S>
     Parcel No.  Square Feet
     CAPITAL	    PARCEL SIZE    DEVELOPMENT ON PARCELS
     CENTER
       	2	         92,000
       	3S	        48,000       13 Story Office Building -
                                235,000 gross square feet
       	3W         35,000
	       3E         24,000
        4W         46,000
 	      4E         22,000
       	5          54,000       8 Story Luxury Apartment Building-
                                454,000 gross square feet
       	6         385,000       (Land, 303,000; Air Rights, 82,000)
       	7A         76,000       360 Car Public Parking Garage
       	8          36,000	      4 Story Office Building-114,000 gross
                                square feet
       	9          72,000


     OUTSIDE
     CAPITAL
     CENTER
       	21          3,000
	       22         15,000

</TABLE>

(See President's Report, pages 2 and 3, for discussion of the
development on the parcels.)


<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Financial condition:

In 1988, in accordance with a plan of distribution, the Company
transferred the ownership of Providence and Worcester Railroad
Company (Railroad) to the Company's shareholders.  The Company
and Railroad have a common controlling shareholder.  As part of
the plan, the Company received a promissory note in the amount of
$9,377,000 payable over a period of twenty years with interest at
12% per year, prepayable at any time without penalty.
Prepayments reduced the required monthly payments without
changing the term of the note.

During 1995, Railroad informed the Company that it had secured a
commitment from a bank which would enable it to borrow funds in
an amount sufficient to prepay the entire balance of its note at
an interest rate below 10%.  The Company and Railroad negotiated
an agreement reducing the interest rate to 10% upon Railroad's
prepayment of  $1,800,000 on its note, the proceeds of which were
used by the Company to prepay in full its note payable to a bank
in the amount of $1,755,000.

The agreement further provided that the first $200,000 of any
future prepayments would reduce the required monthly payments
over the remaining term of the note.  Thereafter, 50% of any
additional prepayments will reduce the required monthly payments,
and the balance will be applied to reduce the note in inverse
order of maturity of the remaining principal payments.  During
1996, Railroad made a voluntary prepayment of $200,000, which
prepayment (together with the interest rate adjustment) resulted
in a current monthly payment of principal and interest over the
remaining eleven-year term in the amount of $53,000.

During 1995, the Company also entered into an agreement with
Railroad releasing a portion of the collateral securing the note
in exchange for the right to acquire Wilkesbarre Pier (the Pier)
in East Providence, Rhode Island for the sum of $1, subject to
Railroad's retaining the right to use the Pier for certain
purposes. The Pier is used by the Company for the berthing of
vessels that off-load petroleum products which are transported by
pipeline to its petroleum storage facilities (the Facilities).

In January 1998, the Company exercised its right and acquired the
Pier.

On February 17, 1998, Railroad filed a Form S-1 Registration
Statement with the Securities and Exchange Commission to sell an
additional 1,000,000 shares of common stock.  The Registration
Statement sets forth that a portion of the funds to be raised
will be used to prepay in full its note to the Company.  The
Company expects to resolve this issue and receive payment in the
second quarter of 1998.  Accordingly, it is anticipated that this
payment will be made on or before March 31, 1998.  The Company
will invest the proceeds while management is evaluating ways to
use the proceeds to maximize shareholder value.

In addition to the note from Railroad, the Company's principal
assets consist of land, a public parking garage, the Facilities
and outdoor advertising sites.  A significant portion of the land
consists of approximately 20.5 acres, including 1.9 acres of air
rights, in downtown Providence, Rhode Island, held for
development.  At December 31, 1997, the Company had entered into
long-term land leases for three separate land parcels.  One lease
was amended in May 1997, extending the term thereof from 2092 to
2142, with no change in the rents due under the original term of
the lease, and rents for the extended period to be calculated in
accordance with the formulas set forth for the original term.
The tenants of each parcel have constructed buildings which are
substantially occupied.

In March 1998, the Company entered into a land lease terminating
in 2142 with one of its current tenants for the proposed
construction of an apartment complex containing approximately 250
units with underground parking on another of its parcels.  Among
other things, the lease provides a period of time within which
the tenant may perform its due diligence, seek the approval of
the plans for this complex from the Capital Center Commission and
enter into a tax agreement with the City of Providence.  The term
of this lease will not begin until the commencement of
construction which is anticipated before year-end.  This lease
permits the Company to remove the western portion of this parcel
from under the lease.

The Company is engaged in discussions concerning the possible
development of other parcels but is unable to predict when leases
on additional parcels will commence.  However, the Company will
continue to lease the available parcels suitable for public
surface parking under short-term cancellable leases.  The Company
anticipates that future development of the remaining properties
will consist primarily of long-term ground leases under which the
significant portion of future rental income will not be earned
until the buildings are completed by the tenants and occupied.

Certain of the Company's long-term land leases provide for
scheduled rent increases over their terms which extend to the
year 2142.  In accordance with the provisions of Statement of
Financial Accounting Standards (FAS) No. 13 (Accounting for
Leases) and certain of its interpretations, the Company
recognizes the rental income on the straight-line basis over the
term of each lease; however, the Company does not report as
income that portion of such straight-line rentals which
management is unable to conclude is realizable (collectible) due
to the length of the lease terms and other related uncertainties.
At December 31, 1997, the cumulative amount not reported as
income is $10,287,000.

The Company's Facilities were leased to an operator (the
Operator) from October 1, 1991 through September 30, 1996 at an
annual rental of $183,000 plus reimbursement of property taxes
(approximately $90,000 annually).

In 1994, a leak was discovered in a 25,000 barrel storage tank at
the Facilities which allowed the escape of a small amount of fuel
oil.  The tank was emptied and all required notices were made to
the appropriate environmental agency (the Agency).  To date,
monitoring wells have shown no ground water contamination, and
the leak has been contained in the soil under the tank.  The
Company's engineering consultants (the Consultants) are working
with the Agency to determine the extent of remediation.  The
Consultants proposed several acceptable options and determined a
range of estimated costs (including professional fees) to be
$27,000 (for the capping of the contaminated area) to $383,000
(for the complete removal of the contaminated soil and its off-
site disposal).  The Agency has advised the Company that it will
accept the capping of the contaminated area as an appropriate
remediation measure, subject to the placement of a notice on the
Company's deed describing the location of the contaminated area.

During 1995, the Operator informed the Company of the erosion of
a slope and damage to a retaining wall which caused the washing
away of several tons of soil.  The Consultants proposed several
options and determined a range of estimated costs (including
professional fees) to be $15,000 (to repair the eroded channel)
to $136,000 (to include the replacement of the retaining wall).

In 1995, the Company provided for the estimated costs to
remediate the contaminated soil and repair the eroded channel by
reporting a liability and a corresponding receivable from the
Operator for $42,000.  In 1996, the Company paid $15,000 to
repair the eroded channel, which amount reduced the reported
liability to $27,000.

Management is of the opinion that the terms of the lease not only
made the Operator solely responsible for the payment of all costs
to remediate the contaminated soil and to repair the erosion of
the slope and retaining wall, but also required the Operator to
return the Facilities at the termination of the lease in a
condition substantially the same as when the Operator took
possession.  After the Operator vacated the Facilities and
emptied the tanks, the Company inspected the Facilities and
determined that one of the tanks had a structural failure.  The
Company repaired the tank at a cost of $65,000, which amount was
included in expenses applicable to rental income on the
accompanying consolidated statement of income and retained
earnings for 1996.

Since 1985, the Company had been a party to an agreement (the
Pier Operating Agreement) covering the operation and maintenance
of the Pier which was owned by Railroad.  The Pier, which is
connected by two petroleum pipelines to the Company's Facilities,
is integral to the operation of the Facilities.  In 1991, the
Pier Operating Agreement was amended by the parties then subject
to it, which were the Company, Railroad and two oil companies.
The Pier Operating Agreement provided that the parties would
share the annual cost of operating and maintaining the Pier based
on their relative usage of the Pier as measured by vessel
berthing hours.

Commencing in 1991, Railroad had notified the parties on a
periodic basis of the need for several significant repair,
maintenance and dredging projects to the Pier and attempted to
obtain agreement among the parties to proceed with such repairs.
In 1996, Railroad notified the parties that the estimated cost of
the projects totalled approximately $1,100,000 and requested the
parties to consent to its undertaking such projects.  All of the
Company's responsibilities and obligations under the Pier
Operating Agreement were assumed by the Operator in accordance
with the terms of its lease.  Although the Operator paid for
certain on-going operating costs, it did not agree that it was
responsible for any portion of the costs of the projects
identified by Railroad.

Because the Operator did not accept responsibility for any of the
aforementioned costs, the Company initiated arbitration
proceedings in accordance with the lease.  In the arbitration
proceedings, the Operator again denied responsibility and set
forth counterclaims asserting that it was entitled to recover
$96,000 plus interest from the Company for operating expenses.
The Company denied any liability in connection with the
counterclaims.

In August 1997, the arbitrator awarded the Company $184,000 with
respect to all claims.  The Operator paid the Company $74,000 but
challenged the disposition of the remaining portion of the award
relating to the soil remediation by appealing the award to the
Rhode Island Superior Court.  In its appeal the Operator demanded
that the Agency be joined as a party and the unpaid funds be
expended only in connection with a remediation plan approved by
the Agency.  The Company contends that there was no restriction
on its use of the funds.  The Company expects to resolve this
issue and receive payment in the second quarter of 1998.

In October 1997, Railroad was notified by one of the two oil
companies party to the Pier Operating Agreement (the Withdrawing
Company) that the Withdrawing Company was withdrawing from the
Pier Operating Agreement on April 1, 1998 and that it would no
longer be using the Pier after December 31, 1997.  The other oil
company had previously discontinued utilizing the Pier but never
withdrew from the Pier Operating Agreement.

In December 1997, Railroad and the Withdrawing Company entered
into a new agreement (New Agreement) whereby the Withdrawing
Company agrees to pay annual minimum fees for  five years
commencing January 1, 1998, which range from $185,000 to
$235,000. Under the terms of the New Agreement, the owner of the
Pier is not required to make any repairs to the Pier.  The New
Agreement may be terminated by the Withdrawing Company upon
ninety days' notice only in the event of a failure of a component
of the Pier that the owner does not repair.

Of the maintenance, repair and dredging projects estimated by
Railroad in 1996 to cost approximately $1,100,000, one of the
projects was completed in 1997 at a cost of $130,000, of which
the Company's share was $15,000.

In January 1998, the Company exercised its right to acquire the
Pier from Railroad for $1, and Railroad assigned its rights under
the New Agreement to the Company.

The Company believes that the remaining projects proposed by
Railroad are no longer necessary in light of the Company's
planned operation of the Pier.

A trust for the benefit of the Company's controlling shareholder
(the Trust) was party to an agreement (the Pipeline Agreement)
with respect to the use of the two petroleum pipelines which
connect the Pier to the Facilities.  Since February 1983, the
Company and any operator of its Facilities have had the right to
use the pipelines for the transportation of petroleum products in
consideration for which the Company assumed all of the Trust's
obligations for repair and maintenance under the Pipeline
Agreement and agreed to pay to the Trust a fee based upon the
number of barrels of product transported through the pipelines.
The fee was subject to adjustment as of October 1 of each year to
reflect changes in the Consumer Price Index (1967=100).  For the
twelve-month period ending September 30, 1997, the Company paid
$20,000 to the Trust and was not required to make any payment
with respect to maintenance and other expenses.

In December 1997, the Trust entered into an agreement with the
Withdrawing Company, which owns the two petroleum pipelines,
whereby the Withdrawing Company released the Trust from liability
in connection with the pipelines for any costs incurred to date
by the Withdrawing Company, and the Trust would only be
responsible in the future for its proportionate share of a repair
or replacement to the pipelines in excess of $25,000.

The Company had the option to purchase the rights of the Trust
under the Pipeline Agreement and exercised its option in January
1998, acquiring all rights of the Trust for $50,000.

On October 1, 1996, the Company took possession of the Facilities
and is currently in negotiations with several companies to lease
all or part of the Facilities. In the absence of such
arrangements, the annual cash outlay to maintain the Facilities
is approximately $150,000.  Pending the completion of such
arrangements, the Company has been purchasing petroleum products
which it stores at the Facilities and resells and has leased
storage tanks under short-term arrangements.

The Company manages its exposure to future contamination, cleanup
or similar costs associated with the Facilities through its
adherence to established procedures for operations and equipment
maintenance.  In addition, the Company maintains what it believes
to be adequate levels of insurance.

In connection with the River Relocation Project, in 1987 the
State of Rhode Island condemned a portion of the Company's
property and paid an award of $2,600,000.  As part of an
agreement to purchase another parcel of land from the State, the
Company was required to return to the State a portion of the
condemnation award ($1,600,000).

In April 1988, the Company filed a petition in the Rhode Island
Superior Court for an increased condemnation award alleging that
the award paid in 1987 was inadequate.  In January 1992, the
Superior Court awarded the Company an additional condemnation
award of $401,000 plus interest from the date of the
condemnation. The Company had asserted in the Superior Court that
it was entitled to an additional condemnation award in excess of
$6,000,000 plus interest, and accordingly, in February 1992, the
Company appealed the decision of the Superior Court to the Rhode
Island Supreme Court. In January 1994, the Supreme Court
overturned the Superior Court decision and returned the matter to
the  Superior Court for a retrial of the case.  The case was
retried in 1995.

In May 1997, the Superior Court entered final judgment awarding
condemnation proceeds of $6,101,000 in favor of the Company and
interest on the judgment through that date of $4,552,000.  The
State has filed an appeal with the Rhode Island Supreme Court.
Interest is accruing on the judgment.  The Company expects the
matter to be heard by the Supreme Court in April 1998.  The
Company cannot now determine what amount, if any, will be finally
awarded beyond that already paid at the time of condemnation.
Under the aforementioned agreement, the Company may be required
to return to the State a portion of any award.

During 1995, the Company received notice of an increase in the
assessed valuation of several of its parcels in Providence, Rhode
Island.  The increase in the assessment was not the result of a
city-wide revaluation, pertained to 1995 and subsequent years and
resulted in an annual increase in property taxes of $265,000.
The Company filed appeals for 1995 and 1996 but elected to make
property tax payments as due pending the outcome of the appeals.
During the fourth quarter of 1996, the City of Providence (the
City) reduced the assessed valuation on one of the parcels,
resulting in an abatement of property taxes of $107,000 for 1995
and a reduction in the tax of $115,000 for 1996 and subsequent
years.  The Company is unable to determine if the remaining
appeals will result in an abatement of the property taxes for
1995 and subsequent years.

On August 18, 1997, the Company received from the City real
property tax bills for taxes assessed as of December 31, 1996
reflecting an unexpected 200% increase in the assessed valuation
of a majority of the Company's parcels in the Capital Center
area, resulting in an annual increase in property tax expense of
approximately $1,370,000.  This increase was not part of a city-
wide revaluation.

On August 21, 1997, the Company received from the City real
property tax bills purporting to assess taxes for assessment
years ending December 31, 1990 through December 31, 1995, based
upon a $42,000,000 retroactive increase in the assessed valuation
of these same properties.  These increases were not part of a
city-wide revaluation.  The aggregate amount of such taxes as
billed is approximately $7,100,000, which amount did not include
any interest.  The Company believes that the change of
assessments is related to the March 1997 Rhode Island Superior
Court decision that determined a 1987 value for certain
properties condemned by the State of Rhode Island in 1987.

On October 14, 1997, the Company received from the City real
property tax bills for the second quarter of 1997 indicating
interest due on the 1996 assessment of $76,000 and interest due
on the purported assessed taxes for the years 1990 through 1995
of $3,300,000.  The City asserts that the parcels subject to the
retroactive assessment were under-assessed in the prior
assessment periods.

On February 19, 1998, the Company received notices from the City
of tax sales of nine parcels scheduled to occur June 11, 1998.

The Company believes that the increased assessments for 1997 and
prior periods are illegal and on August 27, 1997 filed a lawsuit
against the City in the Rhode Island Superior Court, which is in
the early stages of litigation.

The Company, upon consultation with counsel, believes that its
position with respect to these assessments will be sustained;
however, such proceedings can be protracted and costly, and there
can be no assurance that the Company will be successful in having
the 1997 increase or the retroactive assessments overturned.  The
failure of the Company to prevail in the proceedings contesting
the retroactive assessments or to avoid the tax sales would have
a material adverse effect on the Company's results of operations
and financial condition and, while the Company believes, upon
consultation with counsel, that the likelihood of such failure is
remote, if a court were to require the Company to pay the
retroactive assessments and related interest, the Company could
be forced to seek the protection of the bankruptcy courts.

In management's opinion, the Company will continue to be able to
generate adequate amounts of cash to meet substantially all of
its expenditures.

In May 1997, the Company's Board of Directors declared a three-
for-one split of the Company's common stock (effected in the form
of a 200% stock dividend) which was paid on June 16, 1997.  To
permit the split, the Company's articles of incorporation were
restated to increase the number of authorized common shares, $1
par value, from 1,000,000 to 3,000,000 shares.  In June 1997, the
Company's common stock was listed on the American Stock Exchange.

In 1996 and 1997, the Company paid dividends of $.18 and $.10 per
share, respectively, (restated to reflect the split) on the
Company's outstanding common stock.  The Company expects to be in
a position to continue dividend payments on a semi-annual basis;
however, the declaration of any dividend and the amount thereof
will depend on the Company's future earnings, financial condition
and other relevant factors.

Through December 31, 1997, the Company has been classified as a
personal holding company (PHC) for federal income tax purposes
due to the present composition of its stock ownership and income.
A PHC is subject to an additional tax of 39.6% on amounts
classified as undistributed PHC income.  This classification did
not affect the Company's federal income tax liability in 1996 or
1997 because the Company made sufficient dividend distributions
to shareholders.

Future cash outlays for income taxes will be a more significant
portion of total tax expense and presently exceeds total tax
expense for financial reporting purposes.  This results
principally from the recognition of rental income on a
contractual basis for tax reporting purposes and additional
depreciation claimed for financial reporting purposes.

Since the Company's computer applications are not date-dependent,
the "Year 2000" compliance is not a factor.

During 1997, FAS No. 130 (Reporting Comprehensive Income) and FAS
No. 131 (Disclosures about Segments of an Enterprise and Related
Information) were issued and are effective commencing January 1,
1998.  FAS No. 130 establishes standards for reporting and
display of comprehensive income and its components (income,
expenses, gains and losses) in a full set of general purpose
financial statements.  FAS No. 131 establishes standards for the
way public companies report information about operating segments
in annual financial statements and requires that those companies
report selected information about operating segments in interim
financial reports and establishes standards for related
disclosures about products and services, geographic areas and
major customers.  The Company believes that the adoption of FAS
Nos. 130 and 131 will not have a material effect on its financial
statements for 1998 and subsequent years.

Certain portions of this Annual Report to Shareholders, and
particularly the Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Notes to
Consolidated Financial Statements, contain forward-looking
statements which represent the Company's expectations or beliefs
concerning future events.  The Company cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward-looking statements, including, without limitation, the
following:  the ability of the Company to generate adequate
amounts of cash; Railroad's prepaying its note in full in 1998;
the collectibility of the accrued rental income when due over the
terms of the long-term land leases; the ability of the Company to
enter into leasing arrangements in connection with the
Facilities; changes in economic conditions that may affect either
the current or future development on the Company's parcels; the
final outcome of the condemnation litigation; the resolution of
the property tax litigation with the City; and exposure to future
contamination, cleanup or similar costs associated with the
operation of the Facilities.

Results of operations:

The Company's total income for 1997 decreased 2% from the 1996
level.

The decrease in rental income and expenses applicable to rental
income resulted from the termination of the lease of the
Facilities on September 30, 1996.  The increase in income and
expense for the petroleum storage facilities results from a full
year's operation in 1997.

For 1997, both income and expenses applicable to garage and
surface parking remained approximately at the 1996 levels.

The decrease in interest income in 1997 from 1996 results from
lower levels of temporary cash investments and the scheduled
amortization of the principal balance due on the note from
Railroad.  Interest income for 1998 may be lower should Railroad
prepay its note in full, which note provides for a 10% rate.  The
Company anticipates that it will not be able to invest the
proceeds at comparable rates.

The arbitration award recorded in 1997 and the property tax
abatement recorded in 1996 were comparable in amount.

General and administrative expenses for 1997 increased
approximately 49% from the 1996 level due principally to
professional fees in connection with the arbitration proceedings,
the condemnation case and the listing of the Company's common
stock on the American Stock Exchange.

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997


ASSETS

<TABLE>
<C>                                                 <S>
Properties and equipment (net of accumulated
  depreciation) . . . . . . . . . . . . . . . .     $ 8,664,000
Cash and cash equivalents . . . . . . . . . . .         793,000
Note receivable, Providence and Worcester
  Railroad Company. . . . . . . . . . . . . . .       3,993,000
Other receivables . . . . . . . . . . . . . . .         522,000
Accrued rental income . . . . . . . . . . . . .         452,000
Prepaid and other . . . . . . . . . . . . . . .         432,000
                                                    $14,856,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Accounts payable and accrued expenses:
   Property taxes . . . . . . . . . . . . . . .     $   545,000
   Other	. . . . . . . . . . . . . . . . . . .          141,000
  Deferred income taxes . . . . . . . . . . . .       1,286,000
                                                      1,972,000

Commitments and contingencies (Notes 2 and 9)

Shareholders' equity:
  Common stock, $1 par; authorized, issued and
   and outstanding 3,000,000 shares . . . . . .       3,000,000
  Capital in excess of par. . . . . . . . . . .       8,828,000
  Retained earnings	. . . . . . . . . . . . . .       1,056,000
                                                     12,884,000
                                                    $14,856,000

</TABLE>

See notes to consolidated financial statements.

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<C>                                      <S>           <S>
                                            1997          1996
Income:
  Rentals	. . . . . . . . . . . . . . .  $1,565,000	   $1,703,000
  Garage and surface parking. . . . . .     516,000       493,000
  Petroleum storage facilities, net of
   cost of goods sold of $586,000 in
   1997 . . . . . . . . . . . . . . . .      86,000         4,000
  Interest:
   Providence and Worcester Railroad
    Company . . . . . . . . . . . . . .     409,000       437,000
   Other. . . . . . . . . . . . . . . .      35,000        49,000
  Arbitration award . . . . . . . . . .     120,000
  Property tax abatement. . . . . . . .                   107,000
                                          2,731,000     2,793,000

Expenses:
  Expenses applicable to:
   Rental income. . . . . . . . . . . .     410,000       742,000
   Garage and surface parking	. . . . .     753,000       740,000
   Petroleum storage facilities . . . .     533,000       140,000
  General and administrative. . . . . .     914,000       614,000
                                          2,610,000     2,236,000

Income before income taxes. . . . . . .     121,000       557,000

Income tax expense (benefit):
  Current . . . . . . . . . . . . . . .     138,000       295,000
  Deferred. . . . . . . . . . . . . . .     (74,000)      (70,000)
                                             64,000       225,000

Net income. . . . . . . . . . . . . . .      57,000       332,000

Retained earnings, beginning. . . . . .   1,299,000     1,517,000

Dividends on common stock
  (1997, $.10; 1996, $.18) (Note 10). .    (300,000)     550,000)

Retained earnings, ending . . . . . . .  $1,056,000    $1,299,000

Basic earnings per share(Note 10) . . .     $.02          $.11

</TABLE>

See notes to consolidated financial statements.

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<C>                                        <S>           <S>
                                               1997          1996
Cash flows from operating activities:
  Net income . . . . . . . . . . . . . .    $  57,000     $ 332,000
  Adjustments to reconcile net income to
   net cash provided by (used in)
   operating activities:
    Depreciation . . . . . . . . . . . .      363,000       362,000
    Accrued rental income. . . . . . . .      (82,000)      (91,000)
    Deferred income taxes. . . . . . . .      (74,000)      (70,000)
    Changes in assets and liabilities:
     Increase in:
      Other receivables. . . . . . . . .     (205,000)     (103,000)
      Prepaid and other. . . . . . . . .     (301,000)
      Accounts payable and accrued
       expenses. . . . . . . . . . . . .       93,000
      Income taxes payable . . . . . . .                    128,000
     Decrease in:
      Prepaid and other. . . . . . . . .                     63,000
      Accounts payable and accrued
       expenses. . . . . . . . . . . . .                    (76,000)
      Income taxes payable . . . . . . .     (128,000)
  Net cash provided by (used in)
   operating activities. . . . . . . . .     (277,000)      545,000


Cash flows from investing activities:
  Purchase of:
   Properties and equipment. . . . . . .                    (13,000)
   Temporary cash investments. . . . . .                   (403,000)
  Proceeds from:
   Collection of note receivable,
    Providence and Worcester Railroad
    Company. . . . . . . . . . . . . . .      219,000       402,000
   Maturities of temporary cash
    investments. . . . . . . . . . . . .      203,000       200,000
  Net cash provided by investing
   activities. . . . . . . . . . . . . .      422,000       186,000


Cash used in financing activities,
  payment of dividends . . . . . . . . .     (300,000)     (550,000)


Increse (decrease) in cash and cash
  equivalents  . . . . . . . . . . . . .     (155,000)      181,000
Cash and cash equivalents, beginning . .      948,000       767,000
Cash and cash equivalents, ending  . . .    $ 793,000     $ 948,000


Supplemental disclosures, cash paid
  for income taxes . . . . . . . . . . .    $ 285,000     $ 130,000
</TABLE>


See notes to consolidated financial statements.

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996


1. Basis of presentation and summary of significant
accounting policies:

Basis of presentation and principles of consolidation:

The accompanying consolidated financial statements include
the accounts of Capital Properties, Inc. (the Company) and
its wholly-owned subsidiaries, Tri-State Displays, Inc. and
Capital Terminal Company, which was incorporated in June
1996.  All significant intercompany accounts and transactions
between the Company and its subsidiaries have been eliminated
in consolidation.

Description of business:

The Company operates in one business segment as a lessor of
properties, an operator of adjacent public parking facilities
principally in the Providence, Rhode Island area, and, since
October 1996, a lessor of storage tanks and distributor of
petroleum product at its petroleum storage facilities (the
Facilities) in East Providence, Rhode Island.  Effective
January 1, 1998, the Company leased the public parking
facilities which it previously operated.

Use of estimates:

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

Cash and cash equivalents:

The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.  Cash equivalents, which consist of short-term
uninsured repurchase agreements which the Company routinely
purchases, totalled $568,000 at December 31, 1997.

Temporary cash investments:

The Company periodically invests its excess cash in United
States government and governmental agency obligations
maturing in not more than one year.

Properties and equipment:

Properties and equipment are stated at cost.  Depreciation is
being provided by the straight-line method over the estimated
useful lives of the respective assets.

The Company follows the provisions of Statement of Financial
Accounting Standards (FAS) No. 121 (Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of) which requires that property and equipment
held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the
net book value of the asset may not be recoverable.  An
impairment loss will be recognized if the sum of the expected
future cash flows (undiscounted and before interest) from the
use of the asset is less than the net book value of the
asset.  Generally, the amount of the impairment loss is
measured as the difference between the net book value and the
estimated fair value of the asset.

Income taxes:

The Company and its subsidiaries file a consolidated Federal
income tax return.

Income taxes are provided based on income reported for
financial statement purposes.  The provision for income taxes
differs from the amounts currently payable because of
temporary differences in the recognition of certain income
and expense items for financial reporting and tax reporting
purposes.

Rental income:

The Company's properties leased to others are under operating
leases.  The Company reports rental income when earned under
the operating method.

Certain of the Company's long-term land leases provide for
scheduled rent increases over their remaining terms (26 to
146 years).  In  accordance with the provisions of FAS No. 13
(Accounting for Leases) and certain of its interpretations,
the Company is recognizing rental income on the straight-line
basis over the terms of the leases; however, the Company does
not report as income that portion of such straight-line
rentals which management is unable to conclude is realizable
(collectible) due to the length of the lease terms and other
related uncertainties.

New accounting pronouncements:

During 1997, FAS No. 128 (Earnings Per Share) was issued and
has been implemented in the accompanying consolidated
financial statements.  The provisions of FAS No. 128 did not
change the earnings per share amounts reported for previous
interim or annual periods.

During 1997, FAS No. 130 (Reporting Comprehensive Income) and
FAS No. 131 (Disclosures about Segments of an Enterprise and
Related Information) were issued and are effective commencing
January 1, 1998.  FAS No. 130 establishes standards for
reporting and display of comprehensive income and its
components (income, expenses, gains and losses) in a full set
of general purpose financial statements.  FAS No. 131
establishes standards for the way public companies report
information about operating segments in annual financial
statements and requires that those companies report selected
information about operating segments in interim financial
reports and establishes standards for related disclosures
about products and services, geographic areas and major
customers.  The Company believes that the adoption of FAS
Nos. 130 and 131 will not have a material effect on its
financial statements.

2. Property tax dispute with the City of Providence:

During 1995, the Company received notice of an increase in
the assessed valuation of several of its parcels in
Providence, Rhode Island.  The increase in the assessment was
not the result of a city-wide revaluation, pertained to 1995
and subsequent years and resulted in an annual increase in
property taxes of $265,000.  The Company filed appeals for
1995 and 1996 but elected to make property tax payments as
due pending the outcome of the appeals.  During the fourth
quarter of 1996, the City of Providence (the City) reduced
the assessed valuation on one of the parcels, resulting in an
abatement of property taxes of $107,000 for 1995 and a
reduction in the tax of $115,000 for 1996 and subsequent
years.  The Company is unable to determine if the remaining
appeals will result in an abatement of the property taxes for
1995 and subsequent years.

On August 18, 1997, the Company received from the City real
property tax bills for taxes assessed as of December 31, 1996
reflecting an unexpected 200% increase in the assessed
valuation of a majority of the Company's parcels in the
Capital Center area, resulting in an annual increase in
property tax expense of approximately $1,370,000.  This
increase was not part of a city-wide revaluation.

On August 21, 1997, the Company received from the City real
property tax bills purporting to assess taxes for assessment
years ending December 31, 1990 through December 31, 1995,
based upon a $42,000,000 retroactive increase in the assessed
valuation of these same properties.  These increases were not
part of a city-wide revaluation.  The aggregate amount of
such taxes as billed is approximately $7,100,000, which
amount did not include any interest.  The Company believes
that the change of assessments is related to the March 1997
Rhode Island Superior Court decision that determined a 1987
value for certain  properties condemned by the State of Rhode
Island in 1987 (see Note 11).

On October 14, 1997, the Company received from the City real
property tax bills for the second quarter of 1997 indicating
interest due on the 1996 assessment of $76,000 and interest
due on the purported assessed taxes for the years 1990
through 1995 of $3,300,000.  The City asserts that the
parcels subject to the retroactive assessment were under-
assessed in the prior assessment periods.

On February 19, 1998, the Company received notices from the
City of tax sales of nine parcels scheduled to occur June 11,
1998.

The Company believes that the increased assessments for 1997
and prior periods are illegal and on August 27, 1997 filed a
lawsuit against the City in the Rhode Island Superior Court,
which is in the early stages of litigation.

The Company, upon consultation with counsel, believes that
its position with respect to these assessments will be
sustained; however, such proceedings can be protracted and
costly, and there can be no assurance that the Company will
be successful in having the 1997 increase or the retroactive
assessments overturned.  The failure of the Company to
prevail in the proceedings  contesting  the  retroactive
assessments or to avoid the tax sales would have a material
adverse effect on the Company's results of operations and
financial condition and,while the Company believes, upon
consultation with counsel, that the likelihood of such
failure is remote, if a court were to require the Company to
pay the retroactive assessments and related interest, the
Company could be forced to seek the protection of the
bankruptcy courts.

The Company is accruing for financial reporting purposes (and
paying) property taxes based on the 1994 and 1995 assessed
valuations while it pursues its lawsuit contesting the 1996
and 1997 increases and the retroactive assessments and its
administrative appeals of the 1994 and 1995 assessments.
Property tax expense reported on the accompanying
consolidated statements of income and retained earnings
totalled $782,000 and $744,000 for 1997 and 1996,
respectively.


3. Properties and equipment:
<TABLE>
      <C>                                      <S>
      Properties on lease or held for lease,
      land and land improvements. . . . . .    $ 4,014,000

      Petroleum storage facilities:
        Land. . . . . . . . . . . . . . . .      2,125,000
        Buildings and structures. . . . . .        325,000
        Tanks and equipment . . . . . . . .      4,163,000
                                                 6,613,000
    	Parking garage:
       Land and land improvements . . . . .        162,000
       Building . . . . . . . . . . . . . .      2,500,000
                                                 2,662,000
    	Other:
       Land and land improvements . . . . .         30,000
       Equipment. . . . . . . . . . . . . .         96,000
                                                 	 126,000
                                                13,415,000
    	Less accumulated depreciation:
       Petroleum storage facilities . . . .      4,066,000
       Parking garage . . . . . . . . . . .        606,000
       Other. . . . . . . . . . . . . . . .         79,000
                                                 4,751,000
                                               $ 8,664,000
</TABLE>


Effective January 1, 1998, the Company leased the parking
garage under an operating lease.


4. Note receivable, Providence and Worcester Railroad Company:

In 1988, in accordance with a plan of distribution, the
Company transferred the ownership of Providence and
Worcester Railroad Company (Railroad) to the Company's
shareholders.  The Company and Railroad have a common
controlling shareholder. As part of the plan, the Company
received a promissory note in the amount of $9,377,000
payable over a period of twenty years with interest at 12%
per year, prepayable at any time without penalty.
Prepayments reduced the required monthly payments without
changing the term of the note.

During 1995, Railroad informed the Company that it had
secured a commitment from a bank which would enable it to
borrow funds in an amount sufficient to prepay the entire
balance of its note at an interest rate below 10%.  The
Company and Railroad negotiated an agreement reducing the
interest rate to 10% upon Railroad's prepayment of
$1,800,000 on its note, the proceeds of which were used by
the Company to prepay in full its note payable to a bank in
the amount of $1,755,000.

The agreement further provided that the first $200,000 of any
future prepayments would reduce the required monthly payments
over the remaining term of the note.  Thereafter, 50% of any
additional prepayments will reduce the required monthly
payments, and the balance will be applied to reduce the note
in inverse order of maturity of the remaining principal
payments.  During 1996, Railroad made a voluntary prepayment
of $200,000, which prepayment (together with the interest
rate adjustment) results in a current monthly payment of
principal and interest over the remaining eleven-year term in
the amount of $53,000.

During 1995, the Company also entered into an agreement with
Railroad releasing a portion of the collateral securing the
note in exchange for the right to acquire Wilkesbarre Pier
(the Pier) in East Providence, Rhode Island for the sum of
$1, subject to Railroad's retaining the right to use the Pier
for certain purposes. The Pier is used by the Company for the
berthing of vessels that off-load petroleum products which
are transported by pipeline to the Facilities.

In January 1998, the Company exercised its right and acquired
the Pier (see Note 8).

The note is secured by a first mortgage on a significant
portion of Railroad's operating right-of-way in
Massachusetts, exclusive of the track structure (which
includes rails, ties, fasteners and ballast).  Due to the
active railroad use of the collateral, the Company may not
have immediate access thereto in the event of non-payment by
Railroad.  Based upon an independent appraisal, it is the
opinion of management that the collateral is of sufficient
value to satisfy the obligation of Railroad in the event of a
default.

On February 17, 1998, Railroad filed a Form S-1 Registration
Statement with the Securities and Exchange Commission to sell
an additional 1,000,000 shares of common stock.  The
Registration Statement sets forth that a portion of the funds
to be raised will be used to prepay in full its note to the
Company.  It is anticipated that this payment will be made on
or before March 31, 1998.


5. Other receivables:
<TABLE>
       <C>                                          <S>
       Rentals, principally tenant property
         tax reimbursements (see Note 6). . . . .   $183,000
       Arbitration award (see Note 8) . . . . . .    110,000
       Income taxes	. . . . . . . . . . . . . . .    152,000
       Interest, Providence and Worcester
         Railroad Company . . . . . . . . . . . .     33,000
    	  Property tax abatement (see Note 2). . . .     32,000
    	  Other. . . . . . . . . . . . . . . . . . .     12,000
                                                    $522,000
</TABLE>

6. Description of leasing arrangements:

At December 31, 1997, the Company had entered into long-term
land leases for three separate land parcels.  One lease was
amended in May 1997, extending the term thereof from 2092 to
2142, with no change in the rents due under the original term
of the lease, and rents for the extended period to be
calculated in accordance with the formulas set forth for the
original term. The Company also leases various parcels of
land principally for outdoor advertising for remaining terms
of up to 26 years and surface parking for terms of 2 years.

For those leases with scheduled rent increases, the
cumulative excess of straight-line over contractual rentals
(considering scheduled rent increases over the 30 to 149-year
terms of the leases) amounted to $10,739,000 through December
31, 1997.  Management has concluded that a portion of the
excess of straight-line over contractual rentals ($452,000 at
December 31, 1997) is realizable when payable over the terms
of the leases.

Several leases provide that the tenants reimburse the Company
for property taxes, which amounts are excluded from rental
income and expenses applicable to rental income on the
accompanying consolidated statements of income and retained
earnings.  These reimbursements were as follows:

<TABLE>

     <C>                               <S>        <S>
                                         1997       1996

   		Petroleum storage facilities . .  $  -0-     $ 90,000
 		  Other. . . . . . . . . . . . . .   348,000    260,000
                                       $348,000   $350,000

</TABLE>

Minimum future contractual rental payments to be received
from noncancellable leases as of December 31, 1997 are:

<TABLE>
        <C>                              <S>
	      	Year ending December 31,
               	1998. . . . . . .	      	$  1,218,000
               	1999. . . . . . .		         1,273,000
               	2000. . . . . . .           1,360,000
               	2001. . . . . . .           1,380,000
               	2002. . . . . . .           1,480,000
               	2003 to 2142. . .  	     	   	814,000
                                        	$191,525,000
</TABLE>

Rental income from tenants as a percentage of the Company's
total rental income was as follows:

<TABLE>
              <C>         <S>        <S>
             	Tenant   		  1997     	  1996
 	               A	        31.1%    	  28.4%
                 B		       21.1	       18.5
                 C		       19.2        17.8
                 D		       18.3	       16.8
                 E		       10.3         9.5
                 Other                  9.0
                          100.0%	     100.0%

</TABLE>

In the event of tenant default, the Company has the right to
reclaim its leased assets together with any improvements
thereon.


7. Income taxes:

A reconciliation of the income tax provision as computed by
applying the United States income tax rate (34%) to income
before income taxes is as follows:

<TABLE>
   <C>                                 <S>        <S>
                                          1997      1996
  	Computed "expected" tax expense. .  $ 41,000	  $189,000
    Increase (decrease) in taxes
     resulting from:
	    State income tax, net of
       Federal income tax benefit . .    11,000     37,000
	    Other. . . . . . . . . . . . . .    12,000     (1,000)
                                       $ 64,000   $225,000

</TABLE>

Deferred income taxes are recorded based upon differences
between financial statement and tax carrying amounts of
assets and liabilities.  The tax effects of temporary
differences which give rise to deferred tax assets and
liabilities at December 31, 1997 were as follows:

<TABLE>
     <C>                                          <S>
   		Gross deferred tax liabilities:
       Property having a financial statement
        basis in excess of its tax basis. . .     $1,302,000
       Accrued rental income. . . . . . . . .        181,000
                                                   1,483,000
 	  	Gross deferred tax assets, principally
       professional fees in connection with
       condemnation case (see Note 11).	. . .       (197,000)
                                                 	$1,286,000
</TABLE>

8. Petroleum storage facilities:

Termination of lease and arbitration:

The Company's Facilities were leased to an operator (the
Operator) from October 1, 1991 through September 30, 1996 at
an annual rental of $183,000 plus reimbursement of property
taxes (approximately $90,000 annually).

In 1994, a leak was discovered in a 25,000 barrel storage tank
at the Facilities which allowed the escape of a small amount
of fuel oil.  The tank was emptied and all required notices
were made to the appropriate environmental agency (the
Agency).  To date, monitoring wells have shown no ground water
contamination, and the leak has been contained in the soil
under the tank.  The Company's engineering consultants (the
Consultants) are working with the Agency to determine the
extent of remediation.  The Consultants proposed several
acceptable options and determined a range of estimated costs
(including professional fees) to be $27,000 (for the capping
of the contaminated area) to $383,000 (for the complete
removal of the contaminated soil and its off-site disposal).
The Agency has advised the Company that it will accept the
capping of the contaminated area as an appropriate remediation
measure, subject to the placement of a notice on the Company's
deed describing the location of the contaminated area.

During 1995, the Operator informed the Company of the erosion
of a slope and damage to a retaining wall which caused the
washing away of several tons of soil.  The Consultants
proposed several options and determined a range of estimated
costs (including professional fees) to be $15,000 (to repair
the eroded channel) to $136,000 (to include the replacement of
the retaining wall).

In 1995, the Company provided for the estimated costs to
remediate the contaminated soil and repair the eroded channel
by reporting a liability and a corresponding receivable from
the Operator for $42,000.  In 1996, the Company paid $15,000
to repair the eroded channel, which amount reduced the
reported liability to $27,000.

Management is of the opinion that the terms of the lease not
only made the Operator solely responsible for the payment of
all costs to remediate the contaminated soil and to repair the
erosion of the slope and retaining wall, but also required the
Operator to return the Facilities at the termination of the
lease in a condition substantially the same as when the
Operator took possession.  After the Operator vacated the
Facilities and emptied the tanks, the Company inspected the
Facilities and determined that one of the tanks had a
structural failure.  The Company repaired the tank at a cost
of $65,000, which amount was included in expenses applicable
to rental income on the accompanying consolidated statement of
income and retained earnings for 1996.

Since 1985, the Company had been a party to an agreement (the
Pier Operating Agreement) covering the operation and
maintenance of the Pier which was owned by Railroad.  The
Pier, which is connected by two petroleum pipelines to the
Company's Facilities, is integral to the operation of the
Facilities.   In 1991, the Pier Operating Agreement was
amended by the parties then subject to it, which were the
Company, Railroad and two oil companies.  The Pier Operating
Agreement provided that the parties would share the annual
cost of operating and maintaining the Pier based on their
relative usage of the Pier as measured by vessel berthing
hours.

Commencing in 1991, Railroad had notified the parties on a
periodic basis of the need for several significant repair,
maintenance and dredging projects to the Pier and attempted to
obtain agreement among the parties to proceed with such
repairs.  In 1996, Railroad notified the parties that the
estimated cost of the projects totalled approximately
$1,100,000 and requested the parties to consent to its
undertaking such projects.  All of the Company's
responsibilities and obligations under the Pier Operating
Agreement were assumed by the Operator in accordance with the
terms of its lease.  Although the Operator paid for certain
on-going operating costs, it did not agree that it was
responsible for any portion of the costs of the projects
identified by Railroad.

Because the Operator did not accept responsibility for any of
the aforementioned costs, the Company initiated arbitration
proceedings in accordance with the lease.  In the arbitration
proceedings, the Operator again denied responsibility and set
forth counterclaims asserting that it was entitled to recover
$96,000 plus interest from the Company for operating expenses.
The Company denied any liability in connection with the
counterclaims.

In August 1997, the arbitrator awarded the Company $184,000
with respect to all claims.  The Operator paid the Company
$74,000 but challenged the disposition of the remaining
portion of the award relating to the soil remediation by
appealing the award to the Rhode Island Superior Court.  In
its appeal the Operator demands that the Agency be joined as a
party and the unpaid funds be expended only in connection with
a remediation plan approved by the Agency.  The Company
contends that there was no restriction on its use of the
funds.  The Company expects to resolve this issue and receive
payment in the second quarter of 1998.

The Company has recorded the arbitration award in the
accompanying consolidated statement of income and retained
earnings for 1997 as follows:

<TABLE>
         <C>                                   <S>
         Award	. . . . . .  . . . . . . . . 	  $184,000
         Application against receivable	. .     (42,000)
         Amount payable to Operator for
          refund of 1996 property tax paid
          in advance. . . . . . . . . . . .     (22,000)
                                               $120,000
</TABLE>

Wilkesbarre Pier:

In October 1997, Railroad was notified by one of the two oil
companies party to the Pier Operating Agreement (the
Withdrawing Company) that the Withdrawing Company was
withdrawing from the Pier Operating Agreement on April 1, 1998
and that it would no longer be using the Pier after December
31, 1997.  The other oil company had previously discontinued
utilizing the Pier but never withdrew from the Pier Operating
Agreement.

In December 1997, Railroad and the Withdrawing Company entered
into a new agreement (New Agreement) whereby the Withdrawing
Company agrees to pay annual minimum fees for  five years
commencing January 1, 1998, which range from $185,000 to
$235,000. Under the terms of the New Agreement, the owner of
the Pier is not required to make any repairs to the Pier.  The
New Agreement may be terminated by the Withdrawing Company
upon ninety days' notice only in the event of a failure of a
component of the Pier that the owner does not repair.

Of the maintenance, repair and dredging projects estimated by
Railroad in 1996 to cost approximately $1,100,000, one of the
projects was completed in 1997 at a cost of $130,000, of which
the Company's share was $15,000.

In January 1998, the Company exercised its right to acquire
the Pier from Railroad for $1 (see Note 4), and Railroad
assigned its rights under the New Agreement to the Company.

The Company believes that the remaining projects proposed by
Railroad are no longer necessary in light of the Company's
planned operation of the Pier.

Pipeline rights:

A trust for the benefit of the Company's controlling
shareholder (the Trust) was party to an agreement (the
Pipeline Agreement) with respect to the use of the two
petroleum pipelines which connect the Pier to the Facilities.
Since February 1983, the Company and any operator of its
Facilities have had the right to use the pipelines for the
transportation of petroleum products in consideration for
which the Company assumed all of the Trust's obligations for
repair and maintenance under the Pipeline Agreement and agreed
to pay to the Trust a fee based upon the number of barrels of
product transported through the pipelines.  The fee was
subject to adjustment as of October 1 of each year to reflect
changes in the Consumer Price Index (1967=100).  For the
twelve month period ending September 30, 1997, the Company
paid $20,000 to the Trust and was not required to make any
payment with respect to maintenance and other expenses.

In December 1997, the Trust entered into an agreement with the
Withdrawing Company which owns the two petroleum pipelines,
whereby the Withdrawing Company released the Trust from
liability in connection with the pipelines for any costs
incurred to date by the Withdrawing Company, and the Trust
would only be responsible in the future for its proportionate
share of a repair or replacement to the pipelines in excess of
$25,000.

The Company had the option to purchase the rights of the Trust
under the Pipeline Agreement and exercised its option in
January 1998, acquiring all rights of the Trust for $50,000.


9. Commitments and contingencies:

The Company leases certain properties under noncancellable
leases which expire at various dates to 2005.  In most cases,
management expects that in the normal course of business,
leases that expire will be renewed or replaced by other
leases.  Rent expense amounted to $96,000 and $93,000 in 1997
and 1996, respectively.  Future minimum lease payments under
noncancellable leases at December 31, 1996 are as follows:
1998, $49,000; 1999, $40,000; 2000, $26,000; 2001, $17,000,
2002, $12,000 and thereafter, $43,000.

Under an agreement with the State of Rhode Island entered into
in 1990, the Company will owe the State $158,000 sixty days
after the completion by the State of a construction contract
for certain public improvements affecting one of the Company's
parcels.  The Company anticipates that such payment will be
reimbursable by the developer of such parcel.  Accordingly,
the Company has not provided for such obligation on the
accompanying consolidated financial statements.  The agreement
is secured by a mortgage on one of the Company's parcels.  The
agreement further provides that, should the amount not be paid
when it is due, interest will accrue from the due date at the
prime rate plus 1%.


10.Stock split:

In May 1997, the Company's Board of Directors declared a
three-for-one split of the Company's common stock (effected in
the form of a 200% stock dividend) which was paid on June 16,
1997.  To permit the split, the Company's articles of
incorporation were restated to increase the number of
authorized common shares, $1 par value, from 1,000,000 to
3,000,000 shares.  To account for the split, the Company
transferred $2,000,000 from capital in excess of par to common
stock on the accompanying consolidated balance sheet.


11.Pending litigation:

In connection with the River Relocation Project, in 1987 the
State of Rhode Island condemned a portion of the Company's
property and paid an award of $2,600,000.  As part of an
agreement to purchase another parcel of land from the State,
the Company was required to return to the State a portion of
the condemnation award ($1,600,000).

In April 1988, the Company filed a petition in the Rhode
Island Superior Court for an increased condemnation award
alleging that the award paid in 1987 was inadequate.  In
January 1992, the Superior Court awarded the Company an
additional condemnation award of $401,000 plus interest from
the date of the condemnation. The Company had asserted in the
Superior Court that it was entitled to an additional
condemnation award in excess of $6,000,000 plus interest, and
accordingly, in February 1992, the Company appealed the
decision of the Superior Court to the Rhode Island Supreme
Court. In January 1994, the Supreme Court overturned the
Superior Court decision and returned the matter to the
Superior Court for a retrial of the case.  The case was
retried in 1995.

In May 1997, the Superior Court entered final judgment
awarding condemnation proceeds of $6,101,000 in favor of the
Company and interest on the judgment through that date of
$4,552,000.  The State has filed an appeal with the Rhode
Island Supreme Court.  Interest is accruing on the judgment.
The Company expects the matter to be heard by the Supreme
Court in April 1998.  The Company cannot now determine what
amount, if any, will be finally awarded beyond that already
paid at the time of condemnation.  Under the aforementioned
agreement, the Company may be required to return to the State
a portion of any award.


12.Fair value of financial instruments:

The carrying amounts of the Company's financial instruments
approximate their fair values at December 31, 1997, due to the
short maturities of cash and cash equivalents, note
receivable, Providence and Worcester Railroad Company, other
receivables and accounts payable and accrued expenses.

<PAGE>


Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Certified Public Accounts/Business Consultants



INDEPENDENT AUDITORS'S REPORT



Board of Directors
Capital Properties, Inc.
Providence, Rhode Island

We have audited the accompanying consolidated balance sheet of
Capital Properties, Inc. and subsidiaries as of December 31,
1997, and the related consolidated statements of income and
retained earnings and cash flows for the years ended December 31,
1997 and 1996.  These financial statements are the responsibility
of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Capital Properties, Inc. and subsidiaries as of December 31,
1997, and the results of their operations and their cash flows
for the years ended December 31, 1997 and 1996, in conformity
with generally accepted accounting principles.


              /s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.

March 18, 1998



10 Weybosset Street * Providence, Rhode Island 02093 *
Tel (401) 421-4800 * 1-800-927-LGCD * Fax (401) 421-0643


<PAGE>

                      DIRECTORS AND OFFICERS

                    OF CAPITAL PROPERTIES, INC.

<TABLE>
<C>                               <S>
Robert H. Eder, Director          Chairman of Capital Properties,
    Chairman                      Inc.

Ronald P. Chrzanowski, Director   President of Capital
   	President                     Properties, Inc.

Barbara J. Dreyer, Treasurer	     Treasurer of Capital
                                  Properties, Inc.

Edwin G. Torrance, Secretary      Retired Attorney
                                  Hinckley, Allen & Snyder

Stephen J. Carlotti, Assistant    Attorney, Hinckley, Allen &
   Secretary                      Snyder
                                  Providence, Rhode Island

James H. Dodge, Director	         Chairman of Providence Energy
       		                         Corporation
                                  Providence, Rhode Island

Harold J. Harris, Director	       President of Wm. H. Harris,
                                  Inc.(Retailer)
                                  Providence, Rhode Island

Henry S. Woodbridge, Jr.,         Consultant
     Director                     Pomfret, Connecticut


TRANSFER AGENT	                   INDEPENDENT AUDITORS

American Stock Transfer &         Lefkowitz, Garfinkel, Champi &
& Trust Company                   DeRienzo P.C.
40 Wall Street                    10 Weybosset Street
New York, New York  10005         Providence, Rhode Island  02903


<PAGE>

               MARKET FOR THE COMPANY'S COMMON STOCK


                               AND


                 RELATED SECURITY HOLDER MATTERS


Since June 1997, the Company's common stock has been traded on
the American Stock Exchange, symbol "CPI."  Prior to that date,
the Company's common stock was traded on the Boston Stock
Exchange.  The following table shows the high and low trading
prices for the Company's common stock during the quarterly
periods indicated, as obtained from the American Stock Exchange
and the Boston Stock Exchange, together with dividends paid per
share during such periods.  The prices have been restated to
reflect the 3-for-1 stock split in June 1997.


</TABLE>
<TABLE>
<CAPTION>
                          Trading Prices      Dividends
                         High          Low       Paid
     <C>                 <S>       <S>           <S>

     1997
     1st Quarter         4  1/4    2  7/8        .00
     2nd Quarter         6  1/4    3 15/16       .05
     3rd Quarter         6  5/8    5  1/2        .00
     4th Quarter         6  7/8    6             .05


     1996
     1st Quarter         3         2 11/16       .00
     2nd Quarter         2 15/16   2  3/4        .05
     3rd Quarter         2 13/16   2 11/16       .00
     4th Quarter         3         2  3/4        .13

</TABLE>


At March 2, 1998 there were 478 holders of record of the
Company's common stock.

<PAGE>
                        EXHIBIT 21

             CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

                     SUBSIDIARIES OF THE ISSUER

                        (AS OF MARCH 2, 1998)

     Subsidiary                         State of Incorporation

     Tri-State Displays, Inc.           Rhode Island

     Capital Terminal Company           Rhode Island






































                            III-6

<PAGE>
                         SIGNATURES

     In accordance with Section 13 or15(d) of the Exchange Act,
the Issuer caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                   CAPITAL PROPERTIES, INC.


                                   By /s/Ronald P. Chrzanowski
                                     Ronald P. Chrzanowski
                                     President and Principal
                                     Executive Officer
Dated:  March 26, 1998




     In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Issuer and
in the capacities and on the dates indicated.

Signature

<TABLE>

<C>                                         <S>

/s/Robert H. Eder								                   March 25, 1998
Robert H. Eder
Chairman and Director


/s/Ronald P. Chrzanowski  						            March 26, 1998
Ronald P. Chrzanowski
President and Director
(Principal Executive Officer)


/s/ Barbara J. Dreyer     						            March 26, 1998
Barbara J. Dreyer
Treasurer, Principal Financial
 Officer and Principal
 Accounting Officer


/s/Harold J. Harris       						            March 26, 1998
Harold J. Harris, Director

</TABLE>