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, 1996
		    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 No.)
incorporation or organization)

One Hospital Trust Plaza, Suite  920, Providence, Rhode Island 02903	
(Address of principal executive offices)                 	(Zip Code)

Issuer's telephone number 		(401) 33l-0l00				

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	               Boston 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 ments 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]

<PAGE>

For the year ended December 31, 1996, the issuer's revenues totalled 
$2,793,000.

As of March 3, 1997, the aggregate market value of the voting stock held by
non-affiliates of the issuer was $4,526,000.  (For this purpose, all 
directors of the issuer are considered affiliates.)  

As of March 3, 1997, the issuer had 1,000,000 shares of Common Stock 
outstanding.

Documents Incorporated by Reference  -  Portions of the proxy statement for the 
1997 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, 1996 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 conducts thru-put petroleum operations (see "Petroleum Storage 
Facilities" in Item 2 below), owns certain properties in downtown Providence,
Rhode Island (see "Land Under Long-Term Leases," "Land Under Short-Term 
Leases," and "Land Available for Leasing" in Item 2 below) and operates 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). 	

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 5 of Notes to Consolidated Financial Statements in the 
Issuer's 1996 Annual Report to shareholders attached hereto as Exhibit 13 
(hereinafter referred as the "1996 Annual Report"), which note is 
incorporated herein by reference.

                                  I-1

<PAGE>

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.

On December 31, 1996, the Issuer employed a total of 5 persons.

Item 2.  -  Description of Property

Principal Facilities

The Issuer's principal executive offices occupy 2,300 square feet in premises 
located in Providence, Rhode Island and held under a lease expiring in March 
1998.

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 1996 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.

                                 I-2

<PAGE>

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 facilitiy 
(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.

Additionally, the Issuer has the perpetual right to use the Wilkesbarre Pier 
in the Port of Providence and its deep-water berth for receiving petroleum 
products by tanker, and the perpetual right to transport such 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 oil companies to enter into thru-put 
arrangements under which the Issuer would receive, store and disburse product
(thru-put) for such companies.  

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

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

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

The 1996 real estate taxes, which were paid by the tenant, are $89,314 at a 
$35.75 per Thousand Dollars of assessed  valuation tax rate.

Parking Garage - The Issuer owns at 360-car parking garage adjacent to a rail.
 
                              I-3
<PAGE>

passenger station in downtown Providence, Rhode Island, together with the 
underlying land (the Parking Garage).  The Parking Garage is operated by the
Issuer under a management agreement with a firm experienced in parking 
operations, which agreement is cancellable by either party on short notice.  
The Issuer has no present plan for the future improvement of this property.  
The Parking Garage is surrounded by parcels owned by the Issuer on which 
there is surface parking.  (See "Land Under Short-Term Leases" below for a 
discussion of future development.)  Several of these parcels are leased to 
the firm mentioned above.  Also, there is a parking garage under an apartment
building adjacent to the Parking Garage which, at this time, is available for
public parking.  However, since the apartment building is fully occupied, its
garage is not a competitive factor.  A 1,680-car parking garage, constructed in
connection with the Convention Center Project in downtown Providence, opened in 
1992 but has not affected the operations of the Issuer's Parking Garage and 
adjacent parking facilities.

The federal tax 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% over a 40-year life.

The 1996 real estate taxes are $94,177 on the Parking Garage and $57,935 on 
the underlying land using a $30.42 per Thousand Dollars of assessed valuation 
tax rate.  The real estate taxes on the underlying land were originally 
$173,805; however, as a result of an appeal by the Issuer, the assessed 
valuation was reduced, resulting in a $115,870 reduction in the 1996 taxes.

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 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 1996 Annual Report,which map is incorporated herein by reference.

At December 31, 1996, land leases for three separate land parcels within this
area have commenced with remaining terms of up to 96 years.  These leases 
have scheduled 

                                   I-4

<PAGE>

rent increases over their terms.  For further information on the development 
of these parcels by the tenants, reference is made to the President's Report 
at pages 2 and 3 in the Issuer's 1996 Annual Report, which report is 
incorporated herein by reference.

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.  However, due to the current economic conditions in New England 
and the difficulty in obtaining credit for commercial real estate development,
the developer has delayed the project.

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.

Land Available for Lease  -  Parcel 6 in the Capital Center Project area, 
which is available for lease, is operated by the Issuer for surface parking 
under the same management agreement described above in "Parking Garage."

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 the 
President's Report at page 3 in the 1996 Annual Report, which report 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 7 of Notes to Consolidated Financial Statements in 
the Issuer's 1996 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 24 of the Issuer's 1996 Annual Report, which page is incorporated 
herein by reference.

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

See pages 6 through 10 of the Issuer's 1996 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 11 through 21 of the Issuer's 1996 Annual 
Report, are incorporated hereby reference:

Consolidated balance sheet-December 31, 1996

Consolidated statements of income and retained earnings	-years ended December 
 	31, 1996 and 1995
	
Consolidated statements of cash flows-years ended	December 31, 1996 and 1995

Notes to consolidated financial statements-years ended December 31, 1996 and 
	 1995

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 1997 annual meeting of its shareholders, which pages are incorporated 
herein by reference.

The following are the executive officers of the Issuer:

<TABLE>

<S>                   <C>    <C>                        <C>
                                                      				Date of First
Name	                 Age	   Office Held               	Election to Office

Barbara J. Dreyer    	58	    President and Treasurer          	1995
Edwin G. Torrance    	65	    Secretary	                        1995

</TABLE>

All officers hold their respective offices until their successors are duly 
elected and qualified.  Ms. Dreyer served as Secretary-Treasurer of the 
Issuer from 1987 until her election to the office of President and Treasurer 
in 1995.

Item 10. Executive Compensation.

See page 3 of the Issuer's definitive proxy statement for the 1997 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 1997 
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 1997 
annual meeting of its shareholders, which pages are incorporated herein by 
reference.

Item 13. Exhibits And Reports on Form 8-K
	
         (a)	Index of Exhibits:
 
	           	(3)	(a) Articles of Incorporation (incorporated by reference 
                 to Exhibit 3 to the Issuer's annual report on Form 10-K for 
                 the year ended 	December 31, 1988).

                                 III-1

<PAGE>

                 (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) Lease between Whiteco Metrocom, Inc. and Issuer dated 
                 June 25,	1985 (incorporated by reference to Exhibit 10(b) 
                 to the Issuer's	annual report on Form 10-KSB for the year 
                 ended December 31,1992) as amended by agreement dated March 
                 12, 1995 (incorporated by reference to Exhibit 10(c) to the 
                 Issuer's quarterly report on Form	10-QSB for the quarter 
                 ended June 30, 1995).

              			(c) Leases between Metropark, Ltd., and Issuer:
      
                 				(i)  Dated November 6, 1996; see page III-4.

                				(ii)  Dated November 30, 1995 (incorporated by reference 
                          to Exhibit 10(c) (i) to the Issuer's annual report 
                          on Form 10-KSB for the year ended December 31, 1995).

    		            	(iii)  Dated November 10, 1994 (incorporated by reference 
                          to	Exhibit 10(c) (iii) to the Issuer's annual 
                          report on Form 10-KSB for	the year ended December 
                         31, 1994).

         		(13)	Annual report to shareholders for the year ended December 31, 	
             			1996; see page III-5. 

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

                               					III-2

<PAGE>

           (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, 
                  1996), filed as Exhibit 13 hereto. 

     (b)  For the quarter ended December 31, 1996, no reports on Form 8-K 
          were filed.

                                     III-3

<PAGE>

                                EXHIBIT (10) (c) (i)
                    
                                    L E A S E

THIS INDENTURE OF LEASE made as of the sixth day of 
November, 1996, 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 3E and 4E 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 of two years (hereinafter called the "Term") 
commencing as of November 1, 1996, and ending on October 31, 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 period from November 1, 1996 to October 31, 1997, 
Tenant shall pay to Landlord an annual rental of One Hundred Eight 
Thousand ($108,000) Dollars payable in monthly installments of Nine 
Thousand ($9,000) Dollars on the first day of each month.  During the 

<PAGE>

period from November 1, 1997 to October 31, 1998, Tenant shall pay to 
Landlord an annual rental of One Hundred Eleven Thousand Six Hundred 
($111,600) Dollars payable in monthly installments of Nine Thousand 
Three Hundred ($9,300) 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 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 

                                  2

<PAGE>

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, on weekends, but 
done in such a manner as not to unreasonably interfere 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 

                                 3

<PAGE>

benefit of all warranties pertaining thereto.  Tenant will remove snow from 
the Premises and keep the sidewalks clean and free from ice and snow.

7.  USE.

Tenant shall use the Premises only for the operation of a 
parking lot and other accessory uses relating to motor vehicles.

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.

Landlord and Tenant may cancel this Lease upon thirty (30) 
days' notice to the other.

10.  INSURANCE.

Tenant will, at its own cost and expense, effect and maintain
during the term hereof, a policy or policies of comprehensive general
liability insurance, or its equivalent, with minimum limits of not les than
$500,000 for injury to one or more persons in any one occurrence, and also
insurance in the sum of not less than $1,000,000 against claims for property
damage in any one accident, such policy or policies to name Landlord as
additional insured, to require the insurer to give landlord at least 10 days'
written notice of its intention to cancel, terminate or amend the insurance 
policy or policies in any material respect, and to cover the entire Premises.  
Tenant may insure premises as part of a blanket 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 

                                4

<PAGE>

(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.

                                 5

<PAGE>

 			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.

                                  6

<PAGE>

13.3  Nothing in this lease contained shall be deemed or 
construed in any 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;

                               7

<PAGE>

(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 

                                  8

<PAGE>

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.

                                 9

<PAGE>

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 

                                 10

<PAGE>

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 therefor; 
provided, however, that before such subordination shall be effective, 
Landlord shall cause the mortgagee, or other party in interest, as the case 
may be, to deliver to Tenant an assent to this Lease, in proper form for 
recording whereby such mortgagee or other party agrees that no foreclosure 
of such mortgage or any action taken with respect thereto, by such 
mortgagee or any other person claiming by or through or under such 
mortgage (or other interest) shall disturb the possession of Tenant under this 
Lease so long as Tenant is not in default hereunder, and that the validity and 
continuance of this Lease will be so recognized.  Simultaneously with the 
delivery of such an agreement, Tenant agrees to execute and deliver an 
instrument in proper form for recording, wherein Tenant agrees to and does 
subordinate this Lease to the liens of the mortgagees and others as above-

                                     11

<PAGE>

mentioned, and to all renewals, modifications, consolidations and 
replacements and extensions of such mortgages thereunder, and to any 
persons claiming by, through or under such mortgages or other such 
interest.

19.  QUEST 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.  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 

                                12

<PAGE>

contained shall inure to the benefit of and be binding upon the successors 
and assigns of such parties, unless otherwise provided.


22.   PERMITS.

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

23.  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: 	One Hospital Trust Plaza
                					Suite 920
                					Providence, Rhode Island  02903

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

			To the Tenant's		Alan T. Dworkin, Esq.
			  Attorney:	    	164 Airport Road
               					Warwick, Rhode Island  02889

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/ Barbara J. Dreyer                 By: /s/ Charles Meyers
Barbara J. Dreyer, Treasurer	             Charles Meyers, President 

                                    13

<PAGE>

STATE OF RHODE ISLAND

COUNTY OF PROVIDENCE


In Providence, in said County on the 6th day of November, 1996, 
before me personally appeared BARBARA J. DREYER, 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 she acknowledged said instrument by her executed to be her 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 November, 1996, 
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

                                 14

<PAGE>

                           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 November, 1996.

                                      /s/ Charles Meyers												
                                 									Charles Meyers
								

                                   15

<PAGE>
						
                          EXHIBIT (13)

                    1996 ANNUAL REPORT TO SHAREHOLDERS


BRIEF DESCRIPTION OT
THE COMPANY'S BUSINESS

The Company's business consists of the leasing of certain of its real
estate interests in downtown Providence, Rhode Island and the operation
of other downtown Providence properties as public parking facilities.
Through its wholly-owned subsidiary, Tri-State Displays, Inc., the
Company leases outdoor advertising 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>

PRESIDENT'S REPORT                

In the accompanying financial statements for the calendar year 1996, the 
Company is reporting income before taxes of $557,000.

The Company's common stock is listed on the Boston Stock Exchange under the 
symbol "CPI" and is also traded over-the-counter.

During 1996, the Company paid a dividend of $.55 per share on the Company's 
outstanding stock.  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 1996 because the 
Company made sufficient dividend distributions to shareholders.

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.

The Company has entered into long-term land leases (approximately 100 years) 
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.

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.

On Parcel 5, Parcel Five Limited Partnership (Parcel Five L.P.) completed the 
construction of an apartment building containing approximately 225 units.  
Parcel Five L.P. is affiliated with a Harvard University endowment fund.

The Company owns a below-grade parking garage located on Parcel 7A, which 
garage is adjacent to the Amtrak rail passenger station.  This garage and 
Parcel 6 are being operated by the Company for public parking purposes under 
a management agreement with a firm experienced in parking operations.  
Parcels 3E, 4E, 3W, 4W, 21 and 22 have been leased to the same firm for 
surface parking purposes under leases which can be terminated on short 
notice should suitable development opportunities arise.

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.

                                    2

<PAGE>

Providence Place Mall, a regional shopping mall containing 1.2 million square 
feet of retail space and a 4,000 car garage, is proposed to be built on a 
13.2 acre site to the west of the Company's properties in Capital Center 
(marked "H" on the plan).  The developer, Providence Place Group, has 
announced that the groundbreaking will take place on March 24, 1997.  
According to the developer, anchor stores include Nordstrom, Filene's and 
Lord & Taylor.  The proposed Mall will be connected to the remainder of the 
Capital Center area via the riverwalks along the Woonasquatucket River.

RIVER RELOCATION AND RELATED CONDEMNATION

When a River Relocation Project in the Capital Center area was first proposed, 
the Company, concerned primarily that the relocation plan would delay the 
availability of its properties for development purposes, opposed the 
relocation and, in 1985, brought suit for damages against the State and the 
City.  In January 1987, the Company entered into a Settlement Agreement 
with the State which resulted in a dismissal of that lawsuit.

In order to accommodate the relocation of the rivers, the State condemned a 
portion of the Company's property in November 1987.  The State and City had 
previously agreed to share all land condemnation costs.  As part of the 
Settlement Agreement, in 1989 the State deeded to the Company a 72,000 square
foot parcel of land in Capital Center (Parcel 9).  As payment for Parcel 9, 
the Company was required to return to the State an amount equal to the 
State's share of the condemnation award, but the Company was entitled to 
retain the balance of such award.  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 ($2,600,000) was inadequate.  In 
January 1992, the Superior Court awarded the Company an additional 
condemnation award of $401,000 plus interest from the date of 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 and on March 5, 1997, the Superior Court issued a decision awarding the 
Company an additional $6,100,000 plus interest.   The Company expects the 
judgment to be entered in mid-March 1997, and the State will have twenty 
days thereafter to file an appeal to the Supreme Court.  Should an appeal be 
filed, management is unable to predict when the matter will be heard.  Under 
the Settlement Agreement, the Company may be required to return to the State 
a portion of any additional award as and when finally determined.

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.  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. 
Such 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.

                                   3

<PAGE>   

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 twelve-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 require Railroad  to convey the Wilkesbarre Pier (the Pier) in East 
Providence, Rhode Island for the sum of $1 to a purchaser of the Company's 
petroleum storage facilities (the Facilities), should the Company sell the 
Facilities.  The Pier is used by the Company or its tenant for the berthing 
of vessels which off-load petroleum products which are transported by 
pipeline to the Facilities.


OTHER OPERATIONS

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, commenced the operation of the 
Facilities.  The Company anticipates moving product through the Facilities in 
March 1997.

Tri-State Displays, Inc., another wholly-owned subsidiary, owns or controls 
22 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 the 
which are the large painted bulletins normally seen along interstate and 
primary highways.  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.  

                             *    *    *  

Because of relocating, Gayl W. Doster is not standing for reelection as a 
director of the Company in April of this year.  Although Mr. Doster only 
served as a director of the Company one year, his broad business experience 
and incisive thinking greatly assisted management in its decision-making.  We
thank him for his valued contributions.

                               							Sincerely,

                                      /s/ Barbara J. Dreyer
                               							Barbara J. Dreyer
                               							President	 

March 7, 1997

                                    4

<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>

<S>          <C>              <C>

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            	386,000 (Land, 303,000; Air Rights, 83,000)
	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.)
                          
                                   5

<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.  Such 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 twelve-
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 require Railroad to convey the Wilkesbarre Pier (the Pier) in East 
Providence, Rhode Island for the sum of $1 to a purchaser of the Company's 
petroleum storage facilities (the Facilities), should the Company sell the 
Facilities.  The Pier is used by the Company or its tenant for the berthing 
of vessels which off-load petroleum products which are transported by pipeline 
to the Facilities.

The note is now 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.

The Company intends to hold the note to maturity.

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.  As of December 31, 1996, the
Company had entered into three long-term land leases covering approximately 
3.2 acres of land.  The tenants of each parcel have constructed buildings 
which are substantially occupied.  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 use the available parcels for 

                                       6

<PAGE>

public surface parking.  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 land leases provide for scheduled rent increases 
over their terms which extend to the year 2091.  In accordance with the 
provisions of Statement of Financial Accounting Standards 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, 1996, the cumulative amount not reported as income is $9,422,000.

The Company's Facilities had been leased under a 5-year agreement which 
terminated September 30, 1996, under which the tenant paid 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 have proposed several acceptable options and have 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 former tenant 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 have proposed several options and have 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 erosion situation by reporting a liability 
and a corresponding receivable from the former tenant for $42,000.  In 1996, 
the Company paid $15,000 to repair a portion of the erosion situation, which 
amount reduced the reported liability to $27,000.  At December 31, 1996, the 
Company is reporting on the accompanying consolidated balance sheet the 
aforementioned liability of $27,000 in accrued expenses, other, and a $42,000
receivable from the former tenant which is included in other receivables.

Management is of the opinion that the terms of the lease not only make the 
former tenant 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 former tenant to return the Facilities at the 
termination of the lease in a condition substantially the same as when the 
former tenant took possession.  After the former tenant 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 is included in expenses applicable 
to rental income on the accompanying consolidated statement of income and
retained earnings for 1996.

Since 1985, the Company has been a party to an agreement covering the 
operation and maintenance of the Pier, which Pier is owned by Railroad.  In 
1991, the agreement was amended by the parties then subject to the agreement 
who were the Company, Railroad and two major oil companies. 	The agreement 
provides that the parties will share the cost 

                                  7

<PAGE>

of operating and maintaining the Pier, which costs are allocated annually 
among the parties based on their relative usage of the Pier as measured by 
vessel berthing hours.  Since 1991, Railroad has notified the parties of the 
need for several significant repair and maintenance projects to the Pier and 
has attempted to obtain agreement among the parties to proceed with such 
repairs.  In 1996, Railroad notified the parties that the estimated cost of 
the repair and maintenance projects totalled approximately $1,100,000 and 
requested the parties to consent to its undertaking such projects.  All of 
the parties except one have consented. All of the Companys responsibilities 
and obligations under this agreement were assumed by the former tenant in 
accordance with the terms of its lease.  Although the former tenant has paid 
for certain on-going operating costs, it does not agree that it is 
responsible for any portion of the costs of the repair and maintenance 
projects. The Company is unable to determine what its share of the costs will
be as well as when reimbursement will be due Railroad.

Because the former tenant does not agree that it is responsible for any of 
the aforementioned costs, the Company has initiated arbitration proceedings 
before the American Arbitration Association in accordance with the lease 
provisions.  In connection with the arbitration proceedings, the former 
tenant has again denied responsibility and has set forth counterclaims 
asserting that it is entitled to recover $96,000 plus interest from the 
Company for operating expenses.  The Company denies any liability in 
connection with the counterclaims.  	The  arbitration proceedings will 
decide the responsibilities of the parties, which decision is final.  The 
Company expects that the proceedings will commence in the second quarter of 
1997 and that a decision will be rendered shortly thereafter.  The 
arbitration could find that the Company is financially responsible for some 
or all of the disputed costs.  

On October 1, 1996, the Company took possession of the Facilities and is 
currently in negotiations with several oil companies to enter into thru-put 
arrangements under which the Company would receive, store and disburse 
product (thru-put) for such companies.   However, there is no assurance when 
and if such arrangements can be completed.  In the absence of such 
arrangements, the annual cash outlay to maintain the Facilities is 
approximately $240,000.  Pending the completion of thru-put arrangements, the 
Company anticipates purchasing petroleum products which it will store at the 
Facilities and resell.

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

In 1995 and 1996, the Company paid dividends of $.30 and $.55 per share, 
respectively, 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.

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 interest is calculated by using a published Treasury 
bill rate which compounds annually and, 

                                     8

<PAGE>


through December 31, 1996, totals approximately 66% of any additional award.  
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, and on March 5, 1997, the Superior Court issued a decision awarding 
the Company an additional $6,100,000 plus interest.  The Company expects 
the judgment to be entered in mid-March 1997, and the State will have twenty 
days thereafter to file an appeal to the Supreme Court.  Should an appeal be 
filed, management is unable to predict when the matter will be heard.  Under 
the aforementioned agreement, the Company may be required to return to the 
State a portion of any additional award as and when finally determined.

The Company has incurred professional fees in connection with the case which 
totalled $32,000 and $154,000 in 1996 and 1995, respectively, which are 
included in general and administrative expenses on the accompanying 
consolidated statements of income and retained earnings.

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 has filed appeals for 1995 and 1996
but was required to make property tax payments as due pending the outcome of 
the appeals.  During 1996, 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.  The Company is unable to 
determine if the remaining appeals will result in an abatement of the 
property taxes for 1995 and 1996 and the lowering of  property taxes for 1997 
and thereafter.

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%.  

For the two years ended December 31, 1996, 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 of 39.6% on amounts classified as undistributed 
PHC income.  This classification did not affect the Company's federal income 
tax liability in 1995 or 1996 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.

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 

                                     9

<PAGE>

generate adequate amounts of cash;  the ability of the Company to enter into 
thru-put 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 resolution of the arbitration proceeding; the final 
outcome of the condemnation litigation; 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 1996 decreased 8% over the 1995 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.

For 1996, income applicable to garage and surface parking remained 
approximately at the 1995 level.  Expenses applicable to garage and surface 
parking decreased 7% over the 1995 level principally due to a decrease in 
property taxes resulting from a reduction in the assessed valuation of the 
land under the parking garage.  This reduction in the assessed valuation also
resulted in the Company's reporting income of $107,000 from the abatement of 
a portion of its 1995 taxes on said parcel.

Also included in total income for 1995 is $75,000 resulting from the sale of 
properties and equipment, principally the Company's only billboard which was 
sold to its tenant.  

The decrease in interest income on the note receivable from Railroad results 
from prepayments in 1996 and 1995 totalling $200,000 and $1,855,000, 
respectively, and the reduction in 1995 of the interest rate on the note from
12% to 10%.

General and administrative expenses decreased 46% from the 1995 level 
principally due to a decrease in payroll and related costs resulting from a 
reduced number of employees and a decrease in professional fees in connection
with the condemnation case.

The Company had a note payable outstanding to a bank, which was fully prepaid
in August 1995.

                                	 10

<PAGE>
		

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996

<TABLE>

<S>                                                        <C>
ASSETS

Properties and equipment (net of accumulated
	depreciation)                                           		$	9,027,000
Cash and cash equivalents                                   			948,000
Temporary cash investments	                                  		203,000
Note receivable, Providence and Worcester  Railroad
	Company                                                  			4,212,000
Other receivables		                                           	317,000
Accrued rental income of $9,792,000 less amount for which
	realization is not assured of $9,422,000		                   	370,000
Prepaid and other		                                           	131,000
                                                        	 $	15,208,000


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
	Accounts payable and accrued expenses: 
		Property taxes                                      		 $     489,000
	  	Other		                                                   	104,000
	Income taxes payable	                                       		128,000	
	Deferred income taxes	                                   	 	1,360,000
                                                          	 	2,081,000

Commitments and contingencies (Notes  5, 7 and 8)

Shareholders' equity: 
	Common stock, $1 par; authorized, issued and
		and outstanding 1,000,000 shares	                        		1,000,000
	Capital in excess of par		                                	10,828,000
	Retained earnings		                                        	1,299,000
			                                                        	13,127,000
                                                        	 $	15,208,000
</TABLE>

See notes to consolidated financial statements.


                                  	11	

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
                                                 
<S>                                              <C>         <C>
                                                				1996		     	1995	

Income:
	Rentals                                       		$1,703,000		$1,759,000
	Garage and surface parking			                     	493,000	   	483,000
	Petroleum storage facilities		            		         4,000	
	Interest:
		Providence and  Worcester Railroad Company	    			437,000   		668,000
		Other		                                          		49,000	    	35,000
	Property tax abatement		                          	107,000		
	Gain on sale of properties and equipment					                   75,000
                                               			2,793,000		 3,020,000

Expenses:
	Expenses applicable to:
		Rental income	                                  		742,000	   	805,000
		Garage and surface parking		                     	740,000	   	797,000
		Petroleum storage facilities		                   	140,000
	General and administrative		                      	614,000	 	1,133,000	
	Interest				                                                  	124,000	
	                                               		2,236,000	 	2,859,000	

Income before income taxes                       			557,000	   	161,000

Income tax expense (benefit):
	Current                                         			295,000   		188,000
	Deferred		                                        	(70,000)	 	(105,000)
                                                  		225,000	    	83,000

Net income                                       			332,000	    	78,000

Retained earnings, beginning		                   	1,517,000	 	1,739,000

Dividends on common stock
	(1996, $.55; 1995, $.30)	                       		(550,000) 		(300,000)

Retained earnings, ending                     		$	1,299,000	$	1,517,000

Earnings per common share	                          		$.33	    		$.08

</TABLE>

See notes to consolidated financial statements.


                                      13

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
							
<TABLE>
<S>                                            <C>          <C>

                                                   		1996		      	1995	
Cash flows from operating activities:
	Net income	                                    	$	332,000    	$	78,000
	Adjustments to reconcile net income to net
		cash provided by operating activities:
			Depreciation		                                 	362,000    		364,000
			Gain on sale of properties and equipment			                		(75,000)
			Accrued rental income		                        	(91,000)	  	(128,000)
			Deferred income taxes		                        	(70,000)  		(105,000)
			Changes in assets and liabilities:
				Increase in:
					Other receivables	                         		(103,000)		
					Prepaid and other		                                     			(26,000)
					Accounts payable and accrued expenses			                  		99,000
					Income taxes payable                       			128,000
				Decrease in:
					Other receivables		                                      			38,000
					Prepaid and other		                           	63,000		
					Accounts payable and accrued expenses		      	(76,000)		
					Income taxes payable			                                  		(78,000)
	Net cash provided by operating activities		      	545,000	    	167,000

Cash flows from investing activities:
	Purchase of:   
		Properties and equipment	                      		(13,000)   		(10,000)
		Temporary cash investments		                   	(403,000)
	Proceeds from:
		Collection of note receivable, Providence and
			Worcester Railroad Company                   			402,000	  	2,068,000
		Sale of properties and equipment		                         			138,000	
		Maturities of temporary cash investments		      	200,000			
	Net cash provided by investing activities		      	186,000  		2,196,000

Cash flows from financing activities, payment of:
	Note payable, bank	                                     				(2,053,000)
	Dividends		                                     	(550,000)  		(300,000)
	Cash used in financing activities		             	(550,000)		(2,353,000)	
		
Increase in cash and cash equivalents	           		181,000	     	10,000
Cash and cash equivalents, beginning		            	767,000    		757,000
Cash and cash equivalents, ending	              	$	948,000 	$  	767,000

Supplemental disclosures, cash paid for:
	Interest	                                      	$     -0-		$  	119,000
	Income taxes	                                  	$	130,000   	$	345,000

</TABLE>

See notes to consolidated financial statements.

                                  13

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995


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
   the Company and its wholly-owned subsidiaries, Tri-State Displays, Inc.
   (TSD) and Capital Terminal Company (CTC), which was incorporated in June
   1996 to hold the assets and operate the Company's petroleum storage 
   facilities (the Facilities) commencing October 1, 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, effective October 1, 1996, an operator
   of a thru-put petroleum storage facility in East Providence, Rhode Island. 

  	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 
   revenue 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 $841,000 at December 31, 
   1996.

  	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.

  	Effective January 1, 1997, the Company has adopted Statement of Financial 
   Accounting Standards 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 of the asset
   and the estimated fair value of the related assets.  

                                    14

<PAGE>

   The adoption of FAS No. 121 had no effect on the accompanying consolidated 
   financial statements for 1996.

  	Income taxes:

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

   Income taxes are provided based on earnings 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 land leases provide for scheduled rent increases 
   over their remaining terms (27 to 96  years).  In accordance with the 
   provisions of Statement of Financial Accounting Standards No. 13 
   (Accounting for Leases) and certain of its interpretations, the Company is 
   recognizing the 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.

2.	Properties and equipment:

<TABLE>

        <S>                                               <C>
      		Properties on lease or held for lease, land
      			and land improvements	                          	$	4,014,000
				
		      Petroleum storage facilities:
			      Land		                                             1,825,000
      			Buildings and structures		                           325,000
      			Tanks and equipment		                              4,163,000
			                                                         6,313,000
		      Other:
		      	Land and land improvements	                        		492,000
      			Buildings, principally parking garage	           		2,537,000
      			Equipment	                                          		96,000
                                                    					   3,125,000
                                                     						13,452,000
      		Less accumulated depreciation:
			      Petroleum storage facilities	                     	3,775,000
      			Other                                        		      650,000
                                                            4,425,000
                                                     					$	9,027,000			
</TABLE>
			
3. 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

                               15

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995	


3. Note receivable, Providence and Worcester Railroad Company (continued):

  	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.  
   Such 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 
   twelve-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 require Railroad to convey the Wilkesbarre Pier (the Pier) 
   in East Providence, Rhode Island for the sum of $1 to a purchaser of the 
   Facilities, should the Company sell the Facilities.  The Pier is used  
   by the Company or its tenant for the berthing of vessels which off-load 
   petroleum products which are transported by pipeline to the Facilities.

  	The note is now 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.

  	The Company intends to hold the note to maturity.


4.	Other receivables:

<TABLE>

        <S>                                          <C>
      		Rentals, principally tenant property
			       tax reimbursements (see Note 5)	          	$	134,000
      		Property tax abatement (see Note 9)	          		93,000
      		Former tenant of petroleum storage
		        facilities (see Note 7)                    			55,000
      		Interest, Providence and Worcester
		       	Railroad Company	                           		35,000		
			                                                  	$317,000
</TABLE>

                                 16

<PAGE>


5.	Description of leasing arrangements:

  	At December 31, 1996, the Company had entered into land leases for 
   three separate land parcels with remaining terms of up to 96 years.  The 
   Company also leases various parcels of land principally for outdoor 
   advertising and surface parking for remaining terms of up to 27 years.

   For those leases with scheduled rent increases, the cumulative excess of 
   straight-line over contractual rentals (considering scheduled rent 
   increases over the initial 30 to 102-year terms of the leases) amounted to
   $9,792,000 through December 31, 1996.  Management has been able to 
   conclude that a portion of the excess of straight-line over contractual 
   rentals ($370,000 at December 31, 1996) 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>

          <S>                                    <C>       <C>
                                                		 1996    		 1995  

          Petroleum storage facilities	         	$	90,000 	$ 90,000
          Other		                                	260,000	 	236,000
                                               		$350,000		$326,000		

</TABLE>
	
  	Minimum future contractual rental payments to be received from 
   noncancellable leases as of December 31, 1996 are:

<TABLE>
          <S>                                      <C>
  
        		Year ending December 31,
	                	1997		                          	$ 	1,139,000
               			1998	                            			1,218,000
               			1999                            				1,273,000
               			2000	                            			1,360,000
               			2001                             			1,380,000
               			2002 to 2092                   			168,992,000
                                              					$175,362,000			
</TABLE>
	
	  Rental income from major tenants as a percentage of the Company's total 
   rental income is as follows:

<TABLE>
        
                 <S>                         <C>     <C>
	               	Tenant                      1996	   1995
                  		A	                      	28.4%	  27.2%	
                 			B	                      	18.5	   18.1	
                 			C	                     		17.8   	17.3	
                 			D		                     	16.8   	16.3	
</TABLE>
		

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

                                     17

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995


6.	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>
 
       <S>                                  <C>         <C>
                                          				1996		      	1995	  
     		Computed "expected" tax expense    		$189,000   	$	55,000	
     		Increase (decrease) in taxes
			      resulting from:
			       State income tax, net of
			        Federal income tax benefit      			37,000	    	22,000		
        		Other	                            		(1,000)    		6,000	
                                        	 		$225,000	   $ 83,000
</TABLE>

  	Deferred income taxes are recorded based upon differences between 
   financial statement and tax bases of assets and liabilities.  The tax 
   effects of temporary differences which give rise to deferred tax assets 
   and liabilities at December 31, 1996 were as follows:

<TABLE>

        <S>                                          <C>
      		Gross deferred tax liabilities:
			       Property having a financial statement
			       	basis in excess of its tax basis        		$1,380,000	
       			Excess of straight-line over
				       contractual rental income	                 		148,000
       			Other		                                         6,000
                                                     	1,534,000
      		Gross deferred tax assets, principally 
          professional fees in connection with 
          condemnation case	                         		(174,000)
                                                					$1,360,000
</TABLE>

7. Petroleum storage facilities:
   
	  Since October 1, 1991, the Company's Facilities had been leased under a 
   5-year agreement under which the tenant paid an annual rental of $183,000 
   plus reimbursement of property taxes (approximately $90,000 annually), 
   which lease terminated September 30, 1996.

  	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 have proposed several acceptable options and have 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 former tenant 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 
	
                                    18

<PAGE>


   consultants have proposed several options and have 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 erosion situation by reporting a 
   liability  and a corresponding receivable from the former tenant for 
   $42,000.  In 1996, the Company paid $15,000 to repair a portion of the 
   erosion situation, which amount reduced the reported liability to $27,000.  
   At December 31, 1996, the Company is reporting on the accompanying 
   consolidated balance sheet the aforementioned liability of $27,000 in 
   accrued expenses, other, and a $42,000 receivable from the former tenant 
   which is included in other receivables.

  	Management is of the opinion that the terms of the lease not only make the 
   former tenant 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 former tenant to return the Facilities at the 
   termination of the lease in a condition substantially the same as when the
   former tenant took possession.  After the former tenant 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 is included in 
   expenses applicable to rental income on the accompanying consolidated 
   statement of income and retained earnings for 1996.

  	Since 1985, the Company has been a party to an agreement covering the 
   operation and maintenance of the Pier, which Pier is owned by Railroad.  
   In 1991, the agreement was amended by the parties then subject to the 
   agreement who were the Company, Railroad and two major oil companies. 	The
   agreement provides that the parties will share the cost of operating and 
   maintaining the Pier, which costs are allocated annually among the parties
   based on their relative usage of the Pier as measured by vessel berthing 
   hours.  Since 1991, Railroad has notified the parties of the need for 
   several significant repair and maintenance projects to the Pier and has 
   attempted to obtain agreement among the parties to proceed with such 
   repairs.  In 1996, Railroad notified the parties that the estimated cost 
   of the repair and maintenance projects totalled approximately $1,100,000 
   and requested the parties to consent to its undertaking such projects.  
   All of the parties except one have consented.  All of the Company's 
   responsibilities and obligations under this agreement were assumed by the 
   former tenant in accordance with the terms of its lease.  Although the 
   former tenant has paid for certain on-going operating costs, it does not 
   agree that it is responsible for any portion of the costs of the repair 
   and maintenance projects.  The Company is unable to determine what its 
   share of the costs will be as well as when reimbursement will be due 
   Railroad.

  	Because the former tenant does not agree that it is responsible for any of 
   the aforementioned costs, the Company has initiated arbitration 
   proceedings before the American Arbitration Association in accordance with
   the lease provisions.  In connection with the arbitration proceedings, the 
   former tenant has again denied responsibility and has set forth 
   counterclaims asserting that it is entitled to recover $96,000 plus 
   interest from the Company for operating expenses.  The Company denies any 
   liability in connection with the counterclaims.  	The  arbitration 
   proceedings will decide the responsibilities of the parties, which 
   decision is final.  The Company expects that the proceedings will commence
   in the second quarter of 1997 and that a decision will be rendered shortly 
   thereafter.  The arbitration could find that the Company is financially 
   responsible for some or all of the disputed costs.  

                                     19

<PAGE>

CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
	

7. Petroleum storage facilities (continued):

  	On October 1, 1996, the Company took possession of the Facilities and is 
   currently in negotiations with several oil companies to enter into 
   thru-put arrangements under which the Company would receive, store and 
   disburse product (thru-put) for such companies. 

8.	Commitments and contingencies:

  	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%.

  	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 $93,000 and $99,000 in
   1996 and 1995, respectively.  Future 	minimum lease payments under 
   noncancellable leases at December 31, 1996 are as follows: 1997, $96,000; 
   1998, $49,000; 1999, $40,000; 2000, $26,000; 2001, $17,000; and thereafter,
   $55,000.
	
	
9. Property tax abatement:
 	
   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 has filed appeals for 1995 and
   1996 but was required to make property tax payments as due pending the 
   outcome of the appeals.  During 1996, 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.
   The Company is unable to determine if the remaining appeals will result in
   an abatement of the property taxes for 1995 and 1996 and the lowering of 
   property taxes for 1997 and thereafter.


10.Transactions with related parties:

  	A trust for the benefit of the controlling shareholder is the holder of 
   rights with respect to the use of the Pier and two petroleum pipelines 
   located in East Providence, Rhode Island.  Since February 1983, the 
   Company and the tenant of its Facilities have had the right to utilize the
   pipelines for the transportation of petroleum products, in consideration 
   for which the Company and its tenant are obligated to pay the trust a fee 
   based upon the number of barrels of product transported through the 
   pipelines.  The fee is subject to adjustment as of October 1 of each year 
   to reflect changes in the Consumer Price Index.

                                         20

<PAGE>

  	Under the terms of the 1991 lease of the Facilities (see Note 7), the former
   tenant paid a significant portion of the amount due to the trust for the 
   usage of the pipelines.  The Company's share of the pipeline usage fee 
   amounted to $30,000 for both 1996 and 1995, which amounts are included in 
   expenses applicable to rental income on the accompanying consolidated 
   statements of income and retained earnings.
	
	  The Company has the option to purchase the rights of the trust at any time
   during the twelve-month period following September 30, 1997, at a price 
   equal to twice the payments due for the twelve-month period ending 
   September 30, 1997, but not less than $50,000.   Based upon usage to date,
   the price would be $50,000.  The Company can assign its rights to purchase
   to a third party.  Should the Company not purchase the rights of the trust,
   the Company's responsibility will continue indefinitely under the present 
   arrangement. 


11.Pending litigation and subsequent event:
	
	  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 interest is calculated by using a 
   published Treasury bill rate which compounds annually and, through 
   December 31, 1996, totals approximately 66% of any additional award.  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, and on March 5, 1997, the Superior Court issued a decision 
   awarding the Company an additional $6,100,000 plus interest.  The Company 
   expects the judgment to be entered in mid-March 1997, and the State will 
   have twenty days thereafter to file an appeal to the Supreme Court.  
   Should an appeal be filed, management is unable to predict when the matter
   will be heard.   Under the aforementioned agreement, the Company may be 
   required to return to the State a portion of any additional award as and 
   when finally determined.

  	The Company has incurred professional fees in connection with the case 
   which totalled $32,000 and $154,000 in 1996 and 1995, respectively, which 
   are included in general and administrative expenses on the accompanying 
   consolidated statements of income and retained earnings.

12.Fair value of financial instruments:

  	The carrying amounts of the Company's financial instruments approximate 
   their fair values due to the short maturities of cash and cash equivalents, 
   temporary cash investments, other receivables and accounts payable and 
   accrued expenses and the recently revised terms of the note receivable, 
   Providence and Worcester Railroad Company.
 
                                         21

<PAGE>


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





INDEPENDENT AUDITORS' 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, 1996, and the related 
consolidated statements of income and retained earnings and cash flows for 
the years ended December 31, 1996 and 1995.  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, 1996, and the results of their operations
and their cash flows for the years ended December 31, 1996 and 1995, in 
conformity with generally accepted accounting principles.


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

March 7, 1997



10 Weybosset Street-Providence, Rhode Island 02903-Tel (401)421-4800-
1-800-927-LGCD - Fax (401) 421-0643

                                     22   

<PAGE>						          	

                        	DIRECTORS AND OFFICERS

                       OF CAPITAL PROPERTIES, INC.     

<TABLE>

<S>                                     <C>    
Robert H. Eder, Director		             	Chairman of Providence and 		
   	Chairman			                       		Worcester Railroad Company

Barbara J. Dreyer, Director,	        			President and Treasurer of Capital 	
   	President and Treasurer	          		Properties, Inc.

Edwin G. Torrance, Secretary			        	Attorney, Hinckley, Allen & Snyder
                                 							Providence, Rhode Island

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

Gayl W. Doster, Director	            			President of Sigma Corporation
                                 							Indianapolis, Indiana

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

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


TRANSFER AGENT			                      	INDEPENDENT AUDITORS

Fleet National Bank		                			Lefkowitz, Garfinkel, Champi &   
Stock Transfer Department			              DeRienzo P. C.
Post Office Box 1440				               	10 Weybosset Street
Hartford, Connecticut  06101			        	Providence, Rhode Island  02903

</TABLE>

                                   23

<PAGE>


                MARKET FOR THE COMPANY'S COMMON STOCK

                                AND

                   RELATED SECURITY HOLDER MATTERS


The Company's common stock is traded on the Boston Stock Exchange, symbol 
"CPI."  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 Boston Stock Exchange, together with dividends paid per share during 
such periods.

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

          	1996
	          1st Quarter         		9	           8 1/8		    -0-
          	2nd Quarter         		8 3/4	       8 1/4	    	.15
          	3rd Quarter	         	8 3/8       	8 1/8	    	-0-
          	4th Quarter		         9	           8 1/4    		.40 

          	1995
          	1st Quarter         		7 1/2	       6 3/4	    	-0-
          	2nd Quarter         		9 1/4	       8		        .10
          	3rd Quarter         		9 1/4	       8 1/8    		-0-
          	4th Quarter         		9           	8 1/8	    	.20

</TABLE>

   At March 3, 1997 there were 491 holders of record of the Company's common 
   stock.

                                   24


                              EXHIBIT 21

             CAPITAL PROPERTIES, INC. AND SUBSIDIARIES

                    SUBSIDIARIES OF THE ISSUER

                       (AS OF MARCH 3, 1997)
<TABLE>

             <S>                           <C>
            	Subsidiary			              			State of Incorporation

            	Tri-State Displays, Inc.   			Rhode Island

            	Capital Terminal Company	  	  	Rhode Island

</TABLE>


                                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/ Barbara J. Dreyer
                             		      Barbara J. Dreyer        	                
                             		      President and Treasurer

Dated:  March 24, 1997




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.

<TABLE>

<S>                   <C>                            <C>

Signature		
		  
/s/ Barbara J. Dreyer
Barbara J. Dreyer	   	President, Treasurer	         	March 21, 1997
                    			and Director (Principal
                    			Executive Officer,
                    			Principal Financial
                    			Officer and Principal
                    			Accounting Officer


/s/ Robert H. Eder
Robert H. Eder     		 Director                     		March 24, 1997

	
/s/ Harold J. Harris
Harold J. Harris      Director  	                    March 21, 1997





</TABLE>