U. S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB


(Mark One)

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

     For  the quarterly period ended September 30, 1998


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

        For the transition period ended ______________ to ______________

                        Commission file number 333-35063

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

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

                    7826 Cooper Road, Cincinnati, Ohio 45242
                    (Address of principal executive offices)

                                 (513) 984-5001
                           (Issuer's telephone number)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. 
Yes [X] No [ ]



<PAGE>



                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements

                               BARON CAPITAL TRUST
                             CONDENSED BALANCE SHEET
                               September 30, 1998
                                   (UNAUDITED)


                                     ASSETS

Investment in Baron Capital Properties, L.P.                        $ 2,293,432
Cash                                                                    291,387
Cash held in escrow                                                      16,300
Other Receivables                                                           400
                                                                    -----------

          Total assets                                              $ 2,601,519
                                                                    ===========



                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
          Accounts payable and accrued liabilities:
                 Managing shareholder                                      --
                 Commissions                                               --
                                                                    -----------
                                                                           --
                                                                    -----------

Shareholders' Equity:
          Common shares, no par value; 25,000,000 shares              3,476,228
          authorized; 379,496 shares issued and outstanding,
          a change of 186,373 shares 
          Deficit                                                      (874,709)
                                                                    -----------
                                                                      2,601,519
                                                                    -----------

          Total liabilities and shareholders' equity                $ 2,601,519
                                                                    ===========



                        See notes to financial statements

                                       1
<PAGE>

                               BARON CAPITAL TRUST
                        CONDENSED STATEMENT OF OPERATIONS
    THREE MONTHS ENDED SEPTEMBER 30, 1998 AND FROM COMMENCEMENT OF OPERATIONS
                    (FEBRUARY 3, 1998) TO SEPTEMBER 30, 1998
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                   From Commencement
                                                                                                     of Operations
                                                                       Three Months Ended        (February 3, 1998) To
                                                                       September 30, 1998         September 30, 1998
                                                                       ------------------         ------------------
<S>                                                                         <C>                        <C>      
Revenue:
        Interest Income                                                     $     657                  $   1,064


Costs and Expenses:
        Advisory and investment fees - managing shareholder                    84,102                    182,110
        General and administrative expenses                                    13,695                     13,855
                                                                            ---------                  ---------
               Total costs and expenses                                        97,797                    195,965
                                                                            ---------                  ---------


Net Loss from Investment in Baron Capital Properties, LP                     (679,808)                  (679,808)
                                                                            ---------                  ---------

Net Loss                                                                    $(776,948)                 $(874,709)
                                                                            =========                  =========

Net Loss per Common Share                                                   $   (4.17)                 $   (2.25)
                                                                            =========                  =========
</TABLE>



                        See notes to financial statements

                                       2
<PAGE>

                               BARON CAPITAL TRUST
                   CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
    FROM COMMENCEMENT OF OPERATIONS (FEBRUARY 3, 1998) TO SEPTEMBER 30, 1998
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                      Common Stock
                               -------------------------
                                  Shares        Amount        Deficit         Total
                               -----------   -----------    -----------    -----------
<S>                                <C>       <C>            <C>            <C>        
Initial Capital Contribution          --     $       100    $      --      $       100

Issuance of Common Shares          379,496     3,491,362           --        3,491,362

Return of Capital                     --         (15,234)          --          (15,234)

Net Loss                              --            --         (874,709)   $  (874,709)
                               -----------   -----------    -----------    -----------

Balance, September 30, 1998        379,496   $ 3,476,228    $  (874,709)   $ 2,601,519
                               ===========   ===========    ===========    ===========
</TABLE>



                        See notes to financial statements

                                       3
<PAGE>

                               BARON CAPITAL TRUST
                        CONDENSED STATEMENT OF CASH FLOWS
    FROM COMMENCEMENT OF OPERATIONS (FEBRUARY 3, 1998) TO SEPTEMBER 30, 1998
                                   (UNAUDITED)


Cash Flows from Operating Activities:
    Net loss                                                        $  (874,709)
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
            Increase in accounts payable and accrued liabilities,          --
                managing shareholder
    Increase in accounts receivable                                        (400)
                                                                    -----------
                   Net cash used in operating activities               (875,109)
                                                                    -----------

Cash Flows from Investing Activities:
    Investment in Baron Capital Properties, L.P.                     (2,293,432)
                                                                    -----------

Cash Flows from Financing Activities:
    Proceeds from issuance of common shares                           3,476,228
    Accrued comm in connection with issuance of common shares              --
    Cash held in escrow                                                 (16,300)
                                                                    -----------
                   Net cash provided by financing activities          3,459,928
                                                                    -----------

Net Increase in Cash                                                    291,387

Cash, Beginning                                                            --
                                                                    -----------

Cash, Ending                                                        $   291,387
                                                                    ===========





                        See notes to financial statements

                                       4
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                             CONDENSED BALANCE SHEET
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)



                                     ASSETS

Investment in real estate limited partnerships                        $2,260,150
Investment in limited partnership interests                              341,280
Cash                                                                     183,459
Prepaid expenses and other assets                                         52,500
Other receivables                                                        126,948
Property and equipment                                                   106,358
                                                                      ----------
          Total assets                                                $3,070,695
                                                                      ==========



                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
          Note payable                                                   575,000
          Other accrued liabilities                                      102,263
                                                                      ----------
                                                                         677,263
                                                                      ----------

Partners' Capital
          General partner                                             $     --
          Limited partners, 25,000,000 units authorized:
                 472,309 units issued and outstanding                  2,393,432
                                                                      ----------
                                                                       2,393,432
                                                                      ----------

          Total liabilities and shareholders' equity                  $3,070,695
                                                                      ==========




                        See notes to financial statements

                                       5
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                        CONDENSED STATEMENT OF OPERATIONS
    FROM COMMENCEMENT OF OPERATIONS (FEBRUARY 3, 1998) TO SEPTEMBER 30, 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  From Commencement
                                                                                    of Operations
                                                          Three Months Ended    (February 3, 1998) To
                                                          September 30, 1998      September 30, 1998
                                                          ------------------      ------------------
<S>                                                            <C>                      <C>      
Revenue:
          Interest Income                                      $     383                $     712
          Income from real estate                                 21,644                   21,644
                                                               ---------                ---------
                                                                  22,027                   22,356
                                                               ---------                ---------
                                                                                   
                                                                                   
Costs and Expenses:                                                                
          Personnel                                            $ 111,177                $ 237,815
          Professional services                                   80,930                  119,900
          Managed properties expenses                            224,157                  259,042
          Other general and administrative expenses                  199                   85,407
                                                               ---------                ---------
                   Total costs and expenses                      416,463                  702,164
                                                               ---------                ---------
                                                                                   
Net Loss                                                       $(394,436)               $(679,808)
                                                               =========                =========
</TABLE>






                        See notes to financial statements

                                       6
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                    CONDENSED STATEMENT OF PARTNERS' CAPITAL
    FROM COMMENCEMENT OF OPERATIONS (FEBRUARY 3, 1998) TO SEPTEMBER 30, 1998
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                              General        Limited
                                                              Partner       Partners        Total
                                                            -----------   -----------    -----------
<S>                                                         <C>           <C>            <C>        
Initial Capital Contribution  (89,018 units)                $      --     $   100,000    $   100,000

Issuance of limited partnership interests (379,496 units)          --       2,973,240      2,973,240

Net Loss                                                           --        (679,808)      (679,808)
                                                            -----------   -----------    -----------
Balance, September 30, 1998                                 $      --     $ 2,393,432    $ 2,393,432
                                                            ===========   ===========    ===========
</TABLE>






                        See notes to financial statements

                                       7
<PAGE>

                         BARON CAPITAL PROPERTIES, L.P.
                        CONDENSED STATEMENT OF CASH FLOWS
    FROM COMMENCEMENT OF OPERATIONS (FEBRUARY 3, 1998) TO SEPTEMBER 30, 1998
                                   (UNAUDITED)


Cash Flows from Operating Activities:
        Net loss                                                    $  (679,808)
        Adjustments to reconcile net loss to net cash
           used in operating activities:
               Changes in operating assets and liabilities:
                Increase in prepaid expenses and other assets           (52,500)
                Increase in other receivables                          (126,948)
                Increase in accrued liabilities                         102,263
                                                                    -----------
                        Net cash used in operating activities          (756,993)
                                                                    -----------

Cash Flows from Investing Activities:
        Investment in real estate limited partnerships               (2,260,150)
        Investment in limited partnership interests                    (341,280)
        Purchase of property and equipment                             (106,358)
        Due on purchase of limited partnership interests                   --
                                                                    -----------
                        Net cash used in investing activities        (2,707,788)
                                                                    -----------

Cash Flows from Financing Activities:
        Issuance of limited partnership interests                     2,973,240
        Initial capital contribution                                    100,000
        Increase in notes payable                                       575,000
        Loan from related party                                            --
                                                                    -----------
                        Net cash provided by financing activities     3,648,240
                                                                    -----------

Net Increase in Cash                                                    183,459

Cash, Beginning                                                            --
                                                                    -----------

Cash, Ending                                                        $   183,459
                                                                    ===========




                        See notes to financial statements

                                       8
<PAGE>

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


NOTE 1. BASIS OF PRESENTATION

     The accompanying  unaudited condensed financial statements at September 30,
     1998 have been prepared in accordance  with generally  accepted  accounting
     principles for interim  financial  information and with the instructions to
     Form 10-QSB  promulgated by the Securities and Exchange  Commission.  These
     condensed  financial  statements  reflect  all  adjustments  which,  in the
     opinion of management,  are necessary for a fair  presentation of financial
     position as of September 30, 1998 and results of  operations  for the three
     months and the nine months ended  September 30, 1998 and cash flows for the
     nine months ended September 30, 1998. All such  adjustments are of a normal
     recurring  nature.  The results of operations  for interim  periods are not
     necessarily indicative of the results to be expected for a full year.

NOTE 2. Material Subsequent Events and Contingencies

     In October 1998, the Operating  Partnership acquired an approximately 12.3%
     limited  partnership   interest  in  Alexandria   Development,   L.P.  (the
     "Alexandria  Partnership"),  a Delaware  limited  partnership  which is the
     owner and  developer of a 168-unit  residential  apartment  property  under
     construction in Alexandria,  Kentucky.  Thirty eight of the 168 residential
     units  (approximately  22.6%)  have been  completed  and are in the rent-up
     stage. The Operating Partnership paid $400,000 for the acquired partnership
     interest and retains an option to acquire the remaining limited partnership
     interests at the same price per  percentage  interest (for a total price of
     approximately  $3,250,000 for the entire limited partnership interest). The
     option is exercisable as additional  apartment  buildings are completed and
     rented.  An  affiliate  of Mr.  McGrath,  the founder  and Chief  Executive
     Officer  of  the  Registrant  and  the  Operating  Partnership,   sold  the
     partnership  interest  in  the  Alexandria  Partnership  to  the  Operating
     Partnership  and  also  serves  as  the  managing  general  partner  of the
     Alexandria  Partnership.  During the  construction  stage of the  apartment
     property,  the Operating  Partnership's limited partnership interest in the
     Alexandria  Partnership  is entitled to an annual 12%  preferential  return
     which is senior to the other limited partnership  interests and the general
     partner's nominal 1% interest.

     In September  1998, the Registrant  entered in an agreement with three real
     estate development  companies to acquire two luxury  residential  apartment
     properties in the  development  stage upon the completion of  construction.
     The  development  companies are controlled by Mr.  McGrath.  The properties
     will have a total of 652 units, comprised of one, two and three bedroom/one
     or two bathroom apartments.  Construction on one of the properties, located
     in Louisville,  Kentucky,  is expected to be completed  prior to the end of
     2000,  and  construction  of the other  property,  located  in  Burlington,
     Kentucky  (part of the  Cincinnati  metropolitan  area),  is expected to be
     completed  by the end of 2001.  The  aggregate  purchase  price for the two
     properties is in the range of approximately $41,000,000 to $43,000,000.

     In connection with the transaction,  the Registrant  agreed to co-guarantee
     (along  with Mr.  McGrath),  for a period of 60 days  (plus any  extensions
     which may be  granted),  up to  $3,000,000  of the  development  portion of
     long-term bank construction loans with an aggregate  principal amount of up
     to $36,000,000 to be made to the  development  companies in connection with
     the  development and  construction  of the two apartment  properties and an
     111,000 square foot shopping center in Burlington, Kentucky. The Registrant
     also agreed that,  if the loans are not repaid prior to the  expiration  of
     the  guarantee,  it will  either buy out the bank's  position on the entire
     amount of the construction loans or arrange for a third party to do so. The
     construction  loans are  expected  to be  replaced  by a  long-term  credit
     facility within 180 days.


                                        9
<PAGE>



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

     Baron Capital Trust,  the Registrant,  and Baron Capital  Properties,  L.P.
     (the "Operating  Partnership")  (which will conduct all of the Registrant's
     real estate  operations and hold title to all of its real estate assets and
     of which the Registrant is the sole general partner and a limited  partner)
     commenced  operations  in  February  1998.  In  June  1998,  the  Operating
     Partnership   acquired  beneficial   ownership  of  a  67-unit  residential
     apartment  property  located  in  Kissimmee,  Florida.  In July  1998,  the
     Operating   Partnership   acquired  beneficial   ownership  of  an  80-unit
     residential apartment property located in Lakewood,  Florida. In July 1998,
     the Operating  Partnership  acquired a limited  partnership  interest in 20
     real  estate  limited  partnerships  managed  by  affiliates  of Gregory K.
     McGrath (a founder and Chief  Executive  Officer of the  Registrant and the
     Operating  Partnership) in consideration of a capital  contribution ranging
     from  $2,000  to  $59,000  in  each  such  partnership   (aggregate  amount
     approximately $341,000).

     In September 1998, the Operating  Partnership acquired beneficial ownership
     of a 50-unit  residential  apartment  property located in New Smyrna Beach,
     Florida.  In September  1998, the  Registrant  entered into an agreement to
     acquire two luxury  residential  apartment  properties (total 652 units) in
     Louisville and Burlington, Kentucky upon the completion of construction for
     an aggregate  purchase price in the range of  approximately  $41,000,000 to
     $43,000,000. In connection therewith, the Registrant agreed to co-guarantee
     (along  with Mr.  McGrath),  for a period of 60 days  (plus any  extensions
     which may be  granted),  up to  $3,000,000  of the  development  portion of
     long-term construction loans to be made by an institutional lender to three
     development  companies  controlled by Mr.  McGrath in  connection  with the
     development and  construction of the two residential  apartment  properties
     and a shopping center in Burlington, Kentucky.

     The Registrant  intends to continue to acquire similar  property  interests
     using  proceeds from its  registered  public  offering of 2,500,000  Common
     Shares at $10.00 per share.

     The  Registrant  has the ability to satisfy its cash  requirements  for the
     foreseeable  future.  However,  it will be  necessary  to raise  additional
     capital  during  the  next  12  months  to  make  acquisitions  and to meet
     management's revenue and cash flow goals. The Operating Partnership intends
     to conduct an  exchange  offering  under which it will offer to issue units
     ("Units") of limited partnership interest to be registered, with an initial
     assigned  value  of  $25,000,000,   in  exchange  for  limited  partnership
     interests in real estate limited  partnerships which directly or indirectly
     own interests in residential apartment  properties.  The Registrant and the
     Operating  Partnership intend to investigate making an additional public or
     private offering of Common Shares and/or Units within the next 12 months.

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

                                       10
<PAGE>


                           PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

          The  Registrant is a claimant in the Georgia  Pacific class action law
          suit.

Item 2.   Changes in Securities and Use of Proceeds

          The Registrant's Form SB-2 Registration  Statement (the  "Registration
          Statement")  (Commission file number 333-35063) was declared effective
          by the  Commission  on May 15, 1998. On May 18, 1998,  the  Registrant
          commenced  its public  offering (the  "Offering")  of common shares of
          beneficial interest in the Registrant ("Common Shares"),  the class of
          securities registered, and the Offering is currently ongoing. The name
          of  the  managing  underwriter  of the  Offering  is  Sigma  Financial
          Corporation.  The  amount of Common  Shares  registered  is  2,500,000
          shares.  The  offering  price  per  Common  Share is  $10.00,  and the
          aggregate price of the offering amount  registered is $25,000,000.  As
          of the date of this report,  429,099  Common  Shares have been sold in
          the Offering, for an aggregate offering price of $4,290,991.

          From  the  effective  date  of  the  Registration   Statement  through
          September 30, 1998, the following  expenses have been incurred for the
          Registrant's  account in connection with the issuance and distribution
          of the registered Common Shares:

          Underwriting discounts and commissions:  $ 303,597 (plus five-year 
                                                   warrants to acquire 33,107 
                                                   Common Shares at an exercise
                                                   price of $13.00 per share)


          Finder's Fees:                           $0


          Expenses Paid to or for Underwriter:     $0


          Other Expenses (reimbursement for 
          advisory and investment expenses):       $194,901

                               Total Expenses:     $498,498


                                       11
<PAGE>

          Of such  expense  payments,  $182,110  were  made  directly  to  Baron
          Advisors,  Inc.,  the  Managing  Shareholder  of the  Registrant.  The
          remaining  payments of $316,388  were made  directly or  indirectly to
          others.  The net offering  proceeds to the Registrant  after deducting
          the foregoing total expenses were $3,281,327.

          From  the  effective  date  of  the  Registration   Statement  through
          September 30, 1998, the net offering  proceeds to the Registrant  were
          used for the following purposes:

          Improvements to buildings and facilities:       $0

          Purchase and installation of equipment:         $0

          Repayment of indebtedness:                      $0

          Working capital:                                $308,087

          Temporary investments:                          $0

          Investment in Baron Capital Properties, 
          L.P. (the Operating Partnership) - 9/30/98
          value                                           $2,293,432

          Other purposes for which 5% or more of net
          offering proceeds or $100,000 (whichever 
          is less)  have been used:                       $0

          Of such net  proceeds,  $2,973,240  was  directly  contributed  to the
          Operating  Partnership  in exchange  for Units of limited  partnership
          interest therein. The $679,808  year-to-date net loss of the Operating
          Partnership has reduced the value of the investment to $2,293,432. The
          Operating  Partnership will conduct all of the real estate  operations
          of the  Registrant  and  hold  all of its  real  property  assets.  In
          September   1998,  the   Registrant   made  a  return  of  capital  to
          Shareholders in the amount of $15,234.

Item 3. Defaults upon Senior Securities

     None

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

     None

Item 5. Other Information

     As reported on a Form 8-K Current  Report dated July 15, 1998,  on June 30,
     1998, the Operating  Partnership acquired beneficial ownership of a 67-unit
     residential apartment property located in Kissimmee, Florida referred to as
     the Heatherwood Apartments - Phase I (the "Heatherwood Property").



                                       12
<PAGE>


     As reported on a Form 10-QSB Quarterly Report dated August 14, 1998 for the
     quarter  ended June 30, 1998, on July 31, 1998,  the Operating  Partnership
     acquired beneficial ownership of a second property,  an 80-unit residential
     apartment  property  located in  Lakewood,  Florida  referred to as Crystal
     Court Apartments - Phase II (the "Crystal Court Property").

     The  Registrant  filed with the  Commission a Form 8-K Current Report dated
     September 14, 1998 which included the financial  statements  required under
     item 7 of Form 8-K  (statements  of revenue  and certain  expenses  for the
     years ended  December 31, 1996 and December 31, 1997  (audited) and for the
     five-month  period ended May 31, 1998  (unaudited))  in connection with the
     acquisition  of beneficial  ownership of the  Heatherwood  Property and the
     Crystal Court Property.

Item 6. Exhibits and Reports on Form 8-K

     (a)  No exhibits attached.

     (b)  The  Registrant  filed with the  Commission a Form 8-K Current  Report
          dated  September  14, 1998 which  included  the  financial  statements
          required  under item 7 of Form 8-K  (statements of revenue and certain
          expenses  for the years ended  December 31, 1996 and December 31, 1997
          (audited)   and  for  the   five-month   period  ended  May  31,  1998
          (unaudited))   in  connection   with  the  acquisition  of  beneficial
          ownership of the Heatherwood Property and the Crystal Court Property.

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

November 23, 1998

                                             BARON CAPITAL TRUST

                                             By: /s/  Gregory K. McGrath
                                                 -------------------------------
                                                 Gregory K. McGrath
                                                 Chief Executive Officer

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



                                       13