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

                                   FORM 10-KSB

     (MARK ONE)

     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       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 333-35063

                            ------------------------

                               BARON CAPITAL TRUST
           (Name of Small Business Issuer as Specified in its Charter)

                  Delaware                                     31-1574856
(State or Other Jurisdiction of Incorporation or            (I.R.S. Employer
                Organization)                              Identification No.)


                                7826 COOPER ROAD
                             CINCINNATI, OHIO 45242
           (Address of Principal Executive Offices including Zip Code)

                                 (513) 984-5001
                (Issuer's Telephone Number, including Area Code)

                            ------------------------

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:  NONE

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:  NONE

Check whether the Issuer (1) has 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 [_]

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 registrant'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]

The issuer's revenues for its most recent fiscal year were $5,374,412.

As of March 31, 2001 the aggregate market value of voting and non-voting equity
common stock held by non-affiliates (based on total shares outstanding reduced
by the number of shares held by trustees, officers, and other affiliates) of the
registrant was $9,408,910 based on the purchase price paid for shares issued to
437 investors in the registrant's Cash Offering which ended in May 2000.

<PAGE>

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Yes [_]   No [_]

                  -------------------------------------------
                  -------------------------------------------



                                       2
<PAGE>

                               BARON CAPITAL TRUST

                            FORM 10-KSB ANNUAL REPORT

                       FISCAL YEAR ENDED DECEMBER 31, 2000

                                                                            PAGE

PART I:
Item 1   Description of Business............................................  4
Item 2   Description of Properties..........................................  8
Item 3   Legal Proceedings.................................................. 50
Item 4   Submission of Matters to a Vote of Security Holders................ 50

PART II:
Item 5   Market for Common Equity and Related Stockholder Matters........... 50
Item 6   Management's Discussion and Analysis or Plan of Operation.......... 50
Item 7   Financial Statements............................................... 56
Item 8   Changes In and Disagreements with Accountants on
         Accounting and Financial Disclosure................................ 57

PART III:
Item 9   Trustees, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.................. 57
Item 10  Executive Compensation............................................. 60
Item 11  Security Ownership of Certain Beneficial Owners and Management..... 60
Item 12  Certain Relationships and Related Transactions..................... 62
Item 13  Exhibits and Reports on Form 8-K................................... 63



                                       3
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

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

     In May 1998, pursuant to a registration statement on Form SB-2, the Trust
commenced a public offering of 2,500,000 common shares of beneficial interest
("Trust Common Shares" or "Common Shares") at an offering price of $10.00 per
share ("Cash Offering"). The Cash Offering terminated on May 31, 2000. The Trust
has contributed to the Operating Partnership the net cash proceeds ($5,467,858)
from the issuance of Common Shares in exchange for an equivalent number of units
of limited partnership in the Operating Partnership ("Operating Partnership
Units" or "Units"). As of March 31, 2001, the Trust had sold and/or issued to
the public 940,891 Common Shares.

     The Trust, together with the Operating Partnership, was formed to acquire,
own, operate, manage and improve residential apartment property interests for
long-term ownership, and thereby to seek to maximize current and long-term
income and the value of its assets. To this end, in April 2000, pursuant to a
registration statement on Form S-4, the Operating Partnership completed an
exchange offering (the "Exchange Offering") to acquire equity interests in 23
real estate partnerships, which directly or indirectly own equity and/or debt
interests in 26 residential apartment properties located in the southeast and
mid-west United States. (See "Brief Description of Properties - Exchange
Offering" and ITEM 2 - DESCRIPTION OF PROPERTIES below). The Trust is the sole
general partner of the Operating Partnership and, as of April 15, 2001, owned
702,076 Operating Partnership Units, representing approximately 18% of the then
outstanding Units. The Managing Shareholder of the Trust is Baron Advisors, Inc.
(the "Managing Shareholder").

     The Trust intends to make regular quarterly pro rata distributions to its
Shareholders of net income, if any, generated from investments in property
interests. The Trust has elected to operate as a real estate investment trust
("REIT") for federal income tax purposes, provided, however, that if its
Managing Shareholder determines, with the affirmative vote of a majority in
interest of Shareholders entitled to vote on such matter approving the Managing
Shareholder's determination, that it is no longer in the best interests of the
Trust to continue to qualify as a REIT, the Managing Shareholder may revoke or
otherwise terminate the Trust's REIT election pursuant to applicable federal tax
law.

     The Operating Partnership conducts all of the Trust's real estate
operations and holds all direct or indirect property interests acquired. The
Operating Partnership owns record title to properties or limited partnership
interests or other equity interests in limited partnerships and other entities
that own direct or indirect interests in properties. The Trust is the sole
general partner of the Operating Partnership, and, in such capacity, the Trust
controls the activities of the Operating Partnership. The operations of the
Trust will be carried on through the Operating Partnership (and any other
subsidiaries the Trust may have in the future), among other reasons, in order to
(i) enhance the ability of the Trust to qualify and maintain its status as a
REIT for federal income tax purposes, and (ii) enable the Trust to indirectly
acquire interests in residential apartment properties in exchange transactions,
such as the Exchange Offering, that involve the exchange of Operating
Partnership Units for limited partnership interests in limited partnerships
which directly or indirectly own such property interests, and thereby provide
the opportunity for deferral until a later date of any tax liabilities that
sellers of partnership interests otherwise would incur if they received cash or
Trust Common Shares in connection therewith. The Operating Partnership will be
responsible for, and pay when due, its share of all administrative and operating
expenses of properties in which it acquires an interest.

     The Managing Shareholder has discretion in day to day management and
control of the affairs of the Trust and the Operating Partnership, subject to
(i) general supervision and review by the Independent Trustees and the Managing
Shareholder acting together as the Board of Trustees of the Trust and (ii) prior
approval authority of a majority of the Board and/or of a majority of the
Independent Trustees in respect of certain actions of the Trust and the
Operating Partnership. The Declaration of the Trust requires that a majority of
the Board of the Trust be comprised of Independent Trustees not affiliated with
the Managing Shareholder or its affiliates.

     The Trust's executive offices are located in Cincinnati, Ohio at 7826
Cooper Road, Cincinnati, Ohio 45242. The Trust's main telephone number is (513)
984-5001.


                                       4
<PAGE>

Brief Description of Properties

   Acquired Properties

     Through the Operating Partnership, the Trust invests in direct or indirect
equity or debt interests in residential apartment communities. As of December
31, 2000, the Trust had an indirect equity interest in four apartment
communities (consisting of an aggregate of 309 apartment units). The Trust
acquired beneficial ownership interests in the four properties (individually an
"Acquired Property" and collectively, the "Acquired Properties") with the net
proceeds of the Cash Offering. The Operating Partnership acquired other property
interests in connection with the Exchange Offering described below under " -
Exchange Offering." Three of the Acquired Properties were constructed during the
1980s and are comprised of one-story garden style apartment buildings of modular
construction. One of the Acquired Properties is still under construction. As of
March 31, 2001, 112 units of that property had been completed, 109 of such units
have been rented and three units are in the rent-up stage. An additional 56
units are planned for completion by the end of 2001. The Acquired Properties are
located in urban and suburban and secondary markets in Florida and Kentucky.
During 2000, the average economic occupancy of the Acquired Properties was
approximately 94.1% and the average monthly rent collected per occupied unit was
approximately $550.

     The table below indicates the geographic locations of the Acquired
Properties in which the Trust had an ownership interest at December 31, 2000:

          State             Sites      Properties      Units
          ------            -----      ----------      -----
          Florida             3             3           197
          Kentucky            1             1           112
                            -----         -----        -----
          Total               4             4           309
                            =====         =====        =====

   Exchange Offering

     In April 2000, pursuant to a registration statement on Form S-4, the
Operating Partnership completed an exchange offering (the "Exchange Offering")
under which it acquired additional interests in residential apartment
properties. In the Exchange Offering, the Operating Partnership issued 2,449,492
registered Operating Partnership Units (with an initial assigned value of
$24,494,920) in exchange for substantially all outstanding units of limited
partnership interest owned by individual limited partners ("Exchange Limited
Partners") in 23 limited partnerships (the "Exchange Partnerships"), which
directly or indirectly own equity and/or debt interests in one or more of 26
residential apartment properties located in the southeast and mid-west United
States. Prior to the completion of the Exchange Offering, the Exchange
Partnerships were managed by corporate general partners (the "Corporate General
Partners") which were controlled by Gregory K. McGrath, who is the Chief
Executive Officer of the Trust, a principal unitholder of the Operating
Partnership, and the Chief Executive Officer and sole stockholder and director
of the Managing Shareholder of the Trust.

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

     The Exchange Offering expired on April 7, 2000. Under the terms of the
Exchange Offering, Exchange Limited Partners in a particular Exchange
Partnership were entitled to participate in the offering only if limited
partners holding at least 90% of the units of limited partnership interest in
that partnership affirmatively elected to accept the offering. Exchange Limited
Partners holding approximately 97.4% of the outstanding units of limited
partnership interest in such partnerships accepted the offering, and each of the
Exchange Partnerships exceeded the 90% requirement. As a result, following the
completion of the Exchange Offering, the limited partnership interests of nine
Exchange Partnerships are owned entirely by


                                       5
<PAGE>

the Operating Partnership (in the case of nine Exchange Partnerships in which
all Exchange Limited Partners accepted the offering) and substantially all of
the limited partnership interests in the other 14 Exchange Partnerships are
owned by the Operating Partnership, with the remaining limited partnership
interests being retained by Exchange Limited Partners who elected not to accept
the offering or failed to respond to the offering.

     Listed below is the name of each of the Exchange Partnerships and a
breakdown of the results of the Exchange Offering for each of them. Exchange
Limited Partners that elected not to accept the Exchange Offering or failed to
respond to the offering retained their respective original limited partnership
interests in their particular Exchange Partnerships on substantially the same
terms and conditions as their original investments. The percentages shown in the
third column indicate the percentage partnership interest acquired by the
Operating Partnership in each of the Exchange Partnerships in connection with
the Exchange Offering.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Percentage
                                                        No. of Units                           No. of Units            of
                                                       Accepting the        Percentage of      Declining the      Outstanding
Name of Exchange Partnership                         Exchange Offering    Outstanding Units  Exchange Offering       Units
------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                  <C>                 <C>                <C>
Baron Strategic Investment Fund, Ltd.                      2,250.00             93.75%              30.00             1.25%
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund II, Ltd.                   1,600.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund IV, Ltd.                   2,000.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund V, Ltd.                    2,340.00             97.50%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund VI, Ltd.                   2,310.00             96.65%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund VIII, Ltd.                 2,400.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund IX, Ltd.                   2,364.00             98.50%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Investment Fund X, Ltd.                    2,350.00             97.62%              50.00             2.08%
------------------------------------------------------------------------------------------------------------------------------
Baron Strategic Vulture Fund I, Ltd.                       1,800.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Brevard Mortgage Program, Ltd.                               575.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Central Florida Income Appreciation Fund, Ltd.             2,069.99             98.57%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund, Ltd.                          1,534.00             95.04%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund II, Ltd.                       1,890.00             94.50%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund III, Ltd.                      1,484.00             92.75%             116.00             7.25%
------------------------------------------------------------------------------------------------------------------------------
Florida Capital Income Fund IV, Ltd.                       3,520.00             96.70%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Income Advantage Fund I, Ltd.                        925.00             98.40%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Income Appreciation Fund I, Ltd.                     190.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Florida Income Growth Fund V, Ltd.                         2,210.00             96.09%              90.00             3.91%
------------------------------------------------------------------------------------------------------------------------------
Florida Opportunity Income Partners, Ltd.                    800.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
GSU Stadium Student Apartments, Ltd.                       1,862.10            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Lamplight Court of Bellefontaine Apartments, Ltd.            700.00            100.00%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Midwest Income Growth Fund VI, Ltd.                          560.00             93.33%                 --                --
------------------------------------------------------------------------------------------------------------------------------
Realty Opportunity Income Fund VIII, Ltd.                    904.00             95.76%               5.00              .53%
------------------------------------------------------------------------------------------------------------------------------

           Total                                          38,638.09             97.40%             291.00             0.73%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     In the Exchange Offering, the Operating Partnership acquired equity and/or
subordinated mortgage and other debt interests in 26 properties (the "Exchange
Properties") directly or indirectly owned by the 23 Exchange Partnerships.
Certain of the Exchange Partnerships directly or indirectly own equity interests
in 16 Exchange Properties which consist of an aggregate of 1,012 residential
units (comprised of studio, one, two, three and four-bedroom units). Certain of
the Exchange Partnerships directly or indirectly own subordinated mortgage and
other debt interests in 10 Exchange Properties, which consist of an aggregate of
813 existing residential units (studio and one and two bedroom units) and 168
units (two and three bedroom units) under development. Of the Exchange
Properties, 21 properties are located in Florida, three properties in Ohio and
one property each in Georgia and Indiana. The Exchange Properties are described
in further detail under ITEM 2 - DESCRIPTION OF PROPERTIES below.

     The number of Operating Partnership Units offered in exchange for the
limited partnership interests in the Exchange Partnerships was based on
appraisals prepared by qualified and licensed independent appraisal firms for
each underlying residential apartment property. For purposes of the Exchange
Offering, each Operating Partnership Unit was arbitrarily


                                       6
<PAGE>

assigned an initial value of $10.00, which corresponds to the offering price of
each Trust Common Share offered to the public pursuant to the Cash Offering. The
value of each Unit and Common Share outstanding is substantially identical since
Unit holders, including recipients of Units in the Exchange Offering, will be
entitled to exchange all or a portion of their Units at any time and from time
to time for an equivalent number of Common Shares, so long as the exchange would
not cause the exchanging party to own (taking into account certain ownership
attribution rules) in excess of 5% of the then outstanding Common Shares,
subject to the Trust's right to cash out any holder of Units who requests an
exchange and subject to certain other exceptions. To facilitate such exchanges
of Units into Common Shares, 2,500,000 Common Shares (in addition to the
2,500,000 Common Shares being offered by the Trust in the Cash Offering) have
been registered under the Act. As of March 31, 2001, holders of 113,912 Units
have elected to exchange their Units for an equivalent number of Common Shares.

Competition

     The apartment industry is highly competitive and fragmented with numerous
owners and developers competing with the Trust on a national, regional and local
basis. Competition for residents of apartment communities is subject to the
conditions and pricing of individual units, local market conditions, the
location of the apartment community and other factors. In addition, other forms
of housing, including manufactured housing communities and single-family homes
provide alternatives to potential residents.

     The Trust's current portfolio is generally diversified across metropolitan
areas throughout Florida, Georgia, Indiana, Kentucky and Ohio. The Trust's
properties tend to be located in urban, suburban and secondary markets, where
the Trust competes locally with other apartment communities.

Americans with Disabilities Act

     Properties in which the Trust invests must comply with Title III of the
Americans with Disabilities Act (the "ADA") to the extent that such properties
are public accommodations and/or commercial facilities as defined by the ADA.
Compliance with the ADA requirements could require removal of structural
barriers to handicapped access in certain public areas of the properties where
such removal is readily achievable. The ADA does not, however, consider
residential properties, such as residential apartment properties, to be public
accommodations or commercial facilities, except to the extent portions of such
facilities, such as the leasing office, are open to the public. The Trust
believes that its properties comply with all present requirements under the ADA
and applicable state laws. Noncompliance could result in imposition of fines or
an award of damages to private litigants. If required to make material
additional changes, the Trust's results of operations could be adversely
affected.

Environmental

     The Trust is subject to Federal, state, and local environmental laws and
regulations that apply to the development of real property, including
construction activities, the ownership of real property, and the operation of
multifamily apartment communities. Such laws and regulations could affect the
property interests acquired by the Trust and to be acquired by the Trust in the
future and/or operate to reduce the number and attractiveness of investment
opportunities available to the Trust.

     The Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601, et seq. ("CERCLA"), and applicable state Superfund laws subject
the owner of real property to claims or liability for the costs of removal or
remediation of hazardous substances that are disposed of on real property in
amounts that require removal or remediation. Liability under CERCLA and
applicable state Superfund laws can be imposed on the owner of real property or
the operator of a facility without regard to fault or even knowledge of the
disposal of hazardous substances on the property or at the facility. The
presence of hazardous substances in amounts requiring response action or the
failure to undertake remediation where it is necessary may adversely affect an
owner's ability to sell real estate or borrow money using such real estate as
collateral. In addition to claims for cleanup costs, the presence of hazardous
substances on a property could result in a claim by a private party for personal
injury or a claim by an adjacent property owner for property damage.

     The Trust, where required, intends to retain a qualified environmental
consultant to conduct an environmental investigation of each property that it
considers for investment. If there is any indication of contamination, sampling
of the property will be performed by the environmental consultant. The
environmental investigation report will be reviewed by the Trust and counsel
prior to purchase of an interest in any property.


                                       7
<PAGE>

     The effect upon the Trust of the application of the foregoing laws and
regulations cannot be predicted. Such laws and regulations have not had a
material effect on the Trust's financial condition and results of operations to
date. The Trust is not aware of any environmental condition on any of its
properties which is likely to have a material adverse effect on its financial
condition and results of operations.

Employees

     The Trust and the Operating Partnership currently employ a total of 48
full-time employees.

ITEM 2.   DESCRIPTION OF PROPERTIES

   Description of Properties

     The Trust has executive and administrative offices, financial operations
and a portion of property operations located in approximately 2,500 square feet
at 7826 Cooper Road, Cincinnati, Ohio 45242. The space is subleased on a
month-to-month basis from an affiliated entity. The Trust has approximately
5,000 square feet of leased space at 7809 Cooper Road, Cincinnati, OH 45242
which is sub-leased on a month-to-month basis to an affiliated company. The 7809
Cooper Road space was leased in July 1998 from Grammas Development, an
unaffiliated entity, for a term of five years. The amount per square foot paid
by and to the affiliated entities is the same, and is also the same amount as
paid to the underlying lease holders. Management believes that the lease terms
are competitive with commercial lease rates in the Cincinnati market.

   The Acquired Properties

     Set forth below is a description of the Operating Partnership's acquisition
between June 1998 and June 1999 of beneficial interests in 67-unit, 80-unit,
50-unit and a 40% limited partnership interest in a 168-unit residential
apartment properties located in Orlando, Lakeland and New Smyrna Beach, Florida,
and Alexandria, Kentucky, respectively, and a limited partnership interest in 13
real estate partnerships managed by affiliates of the Managing Shareholder,
including certain of the Exchange Partnerships, which own direct or indirect
equity or debt interests in residential apartment properties (less than 4% in
each case). By acquiring general and limited partnership interests in entities
that own record title rather than direct record title when acquiring property
interests, the Operating Partnership avoids certain costs, such as first
mortgage assumption fees and recordation of title costs. The investments were
made using net proceeds of the Trust's Cash Offering. Also described is a
purchase agreement entered into by the Trust under which the Trust, subject to
certain conditions, agreed to acquire two residential apartment properties
(totaling 652 units) under development in Burlington and Louisville, Kentucky
upon completion of construction. One of the properties has been sold by its
owner, with the consent of the Trust.

     Heatherwood Apartments

     In June 1998, the Operating Partnership acquired the entire limited
partnership interest in Heatherwood Kissimmee, Ltd., a Florida limited
partnership (the "Heatherwood Partnership") which owns fee simple title to a
67-unit residential apartment property referred to as the Heatherwood Apartments
- Phase I (the "Heatherwood Property" located at 1005 Airport Road in Kissimmee,
Florida 32741. In November 1997 an affiliate of the Operating Partnership, Baron
Capital XLV, Inc., acquired the general partnership interest in the Heatherwood
Partnership. Set forth below is certain information describing the property,
first mortgage financing to which the property is subject and the acquisition by
the Operating Partnership of beneficial ownership of the property.

     The Heatherwood Property, completed in 1981, consists of 17 studio/one
bathroom units, 45 one bedroom/one bathroom units, and five two bedroom/one
bathroom units. The property is situated on approximately 2.26 acres and has
approximately 35,136 square feet of rentable area. The average unit size of the
studio, one bedroom and two bedroom units is approximately 288, 576 and 864
square feet, respectively. The average monthly rental rate as of March 31, 2001
for each type of unit was approximately $445, $560 and $690, respectively, or
$1.54, $.97 and $.79 per square foot, respectively. The average monthly
occupancy rates for 1996, 1997, 1998, 1999, and 2000 were approximately 93%,
97%, 94%, 96%, and 98%, respectively. The average annual rental rate per unit
for each of the last five years has been $5,628 (1996), $5,820 (1997), $6,060
(1998), $5,555 (1999), and $6,377 (2000).

     The Operating Partnership acquired the entire limited partnership interest
in the Heatherwood Partnership from an unaffiliated third party, Rylex Capital,
L.L.C., a Florida limited liability company, for a purchase price of $830,000.
The purchase price was based on an independent appraisal of the market value of
the property plus the value of any additional assets, less all liabilities, and
was approved by the Board of the Trust. The Heatherwood Property is subject to
first mortgage


                                       8
<PAGE>

financing with a current principal balance of approximately $1,900,000 (as of
March 31, 2001). The mortgage is held by GMAC Commercial Mortgage Corp. The
first mortgage loan matures in February 2011. Assuming no prepayments of
principal, the balance that will be due at maturity is approximately $1,083,553.
The monthly debt service payments are $8,847, or an annual amount of $106,164.
The loan bears a fixed interest rate of 7.625% and amortizes on a 30-year basis.
The loan is prepayable with a prepayment fee equal to 1% of the then outstanding
principal balance.

     There is no lease, option, or contract to purchase or sell the Heatherwood
Property. A renovation program has been in place since the date of acquisition.
This program includes both interior and exterior improvements at a cost of
approximately $2,500 per unit. The costs have been paid from maintenance
reserves established and maintained by the property on a monthly basis. The
property is in Florida and, as such, subject to the competitive nature of the
state. The demand for units is high between October and April and much lower for
the other months. This situation overrides any other competitive factor. The
Heatherwood Property is not located in an overbuilt area and demand is adequate.
The Heatherwood Property is adequately covered by insurance.

     The Heatherwood Property is a residential community; there is no tenant who
occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Heatherwood Property. The property
leases units for periods of no longer than one year. The federal tax
depreciation basis as of June 30, 2000 is $1,506,169. Depreciation is taken on a
straight-line basis over 30 years. The Heatherwood Property is taxed at 200
mills per $10,000 valuation, and the 2000 taxes due March 31, 2001 were $23,300.
Estimated taxes on proposed improvements are not material.

     Crystal Court Apartments

     In July 1998, the Operating Partnership acquired the entire limited
partnership interest in Crystal Court Apartments II, Ltd., a Florida limited
partnership (the "Crystal Court Partnership") which owns fee simple title to an
80-unit residential apartment property referred to as Crystal Court Apartments -
Phase II (the "Crystal Court Property") located in Lakeland, Florida. On January
15, 1986 an affiliate of the Operating Partnership, Baron Capital LIX, Inc.,
acquired the general partnership interest in the Crystal Court Partnership. Set
forth below is certain information describing the property, first mortgage
financing to which the property is subject and the acquisition by the Operating
Partnership of beneficial ownership of the property.

     The Crystal Court Property, completed in 1986, consists of 20 studio/one
bathroom units, 54 one bedroom/one bathroom units, and six two bedroom/one
bathroom units. The property is situated on approximately 6.8 acres and has
approximately 42,048 square feet of rentable area. The average unit size of the
studio, one bedroom and two bedroom units is approximately 288, 576 and 864
square feet, respectively. The average monthly rental rate as of March 31, 2001
for each type of unit is approximately $329, $399 and $540, respectively, or
$1.14, $.69 and $.62 per square foot, respectively. The average monthly
occupancy rates for 1996, 1997, 1998, 1999 and 2000 were approximately 90%, 95%,
91%, 95%, and 95%, respectively. The average annual rental rate per unit for the
Crystal Court Property for each of the last five years has been $4,356 (1996),
$4,632 (1997), $4,812 (1998), $4,433 (1999), and $4,686 (2000).

     The Operating Partnership acquired the entire limited partnership interest
in the Crystal Court Partnership from an unaffiliated third party, Rylex
Capital, L.L.C., a Florida limited liability company, for a purchase price of
approximately $704,000. The purchase price was based on an independent appraisal
of the market value of the property plus the value of any additional assets,
less all liabilities, and was approved by the Board of the Trust. The Crystal
Court Property is subject to first mortgage financing with a current principal
balance of approximately $1,433,790 (as of March 31, 2001). The mortgage is held
by GMAC Commercial Mortgage Corp. The first mortgage loan matures in October
2004. Assuming no prepayments of principal, the balance that will be due at
maturity is approximately $1,366,490. The monthly debt service payments are
$10,446, or an annual amount of $125,355. The loan bears a fixed interest rate
of 7.5% and amortizes on a 30-year basis. The loan is prepayable with a
prepayment fee equal to 1% of the then outstanding principal balance.

     There is no lease, option, or contract to purchase or to sell the Crystal
Court Property. A renovation program has been in place since the original
acquisition. This program includes both interior and exterior improvements at a
cost of approximately $2,000 per unit. The costs have been paid from maintenance
reserves established and maintained by the property on a monthly basis. The
property is in Florida and, as such, subject to the competitive nature of the
state. The demand for units is high between October and April and much lower for
the other months. This situation overrides any other competitive factor. The
Crystal Court Property is not located in an overbuilt area and demand is
adequate. The Crystal Court Property is adequately covered by insurance.


                                       9
<PAGE>

     The Crystal Court Property is a residential community; there is no tenant
who occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Crystal Court Property. The
property leases units for periods of no longer than one year. The federal tax
depreciation basis as of June 30, 2000 is $1,600,696. Depreciation is taken on a
straight-line basis over 30 years. The Crystal Court Property is taxed at 21.4
mills per $1,000 valuation, and the 2000 taxes due March 31, 2001 were $25,393.
Estimated taxes on proposed improvements are not material.

     Riverwalk Apartments

     In September 1998, the Operating Partnership acquired the entire limited
partnership interest in Riverwalk Enterprises, Ltd., a Florida limited
partnership ("Riverwalk"), which owns fee simple title to a 50-unit residential
apartment property located at 47 Jacaranda Cay Court, New Smyrna Beach, Florida
32169 (the "Riverwalk Property"). Simultaneously, an affiliate of the Operating
Partnership, Riverwalk, LC, a Florida limited liability company, acquired the
general partnership interest in Riverwalk. Gregory K. McGrath, the Chief
Executive Officer of the Trust, is the manager of Riverwalk, LC. The Operating
Partnership owns 99% of the membership interests in Riverwalk, LC. The remaining
1% membership interest is nominally held by the Managing Shareholder of the
Trust, as agent for the Operating Partnership.

     The Riverwalk Property, completed in 1986, consists of 50 two bedroom
units. Forty-five units have two bathrooms and five have one bathroom. The
property is located directly on the intracoastal waterway and was originally
built for condominium sale. The Operating Partnership will operate the property
as a rental community for the indefinite future. Occupancy data for the years
1996 and 1997 for the Riverwalk Property is unavailable. The occupancy rates in
1998, 1999 and 2000 were 98%, 96% and 99%, respectively. As of March 31, 2001,
the property was 92% occupied. The average monthly rental rate as of March 31,
2001 was approximately $570 for a one bath unit and $610 for a two bath unit.
The property has 51,024 square feet of rentable space, or approximately 1,020
square feet on average per unit. The current rent per square foot is
approximately $.59. The average annual rental rates for 1999 and 2000 were
approximately $7,123 and $7,272 per unit, respectively.

     The Operating Partnership acquired the Riverwalk limited partnership
interests from 12 unaffiliated individuals, and Riverwalk, LC acquired the
Riverwalk general partnership interest from Riverwalk Enterprises, Inc. for a
total purchase price of approximately $700,000. None of the principals of
Riverwalk Enterprises is affiliated with the Trust or the Operating Partnership.
The purchase price was based on an independent appraisal of the property less
all liabilities, and was approved by the Board of the Trust. The sale was
subject to a first mortgage of approximately $1,330,000, held by TMG Life
Insurance Company. The current principal balance of the mortgage is
approximately $1,547,967 (as of March 31, 2001). The mortgage matures in
November 2004 and has a current interest rate of 8.77%. Assuming no prepayments
of principal, the balance that will be due at maturity is approximately
$1,411,716. The monthly debt service payments are $14,072, or an annual amount
of $168,860. Prepayment is permitted at any time, subject however to a yield
maintenance termination fee calculated in accordance with the terms of the loan.

     There is no lease, option, or contract to purchase or to sell the Riverwalk
Property. A renovation program has been in place since the original acquisition.
This program includes both interior and exterior improvements at a cost of
approximately $500 per unit to date. The cost will increase per unit as more
renovations are completed. The costs have been paid from maintenance reserves
established and maintained by the property on a monthly basis. The property is
in Florida and, as such, subject to the competitive nature of the state. The
demand for units is high between October and April and much lower for the other
months. This situation overrides any other competitive factor. The Riverwalk
Property is not located in an overbuilt area and demand is adequate. The
Riverwalk Property is adequately covered by insurance.

     The Riverwalk Property is a residential community; there is no tenant who
occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Riverwalk Property. The property
leases units for periods of no longer than one year. The federal tax
depreciation basis as of June 30, 2000 is $1,460,476. Depreciation is taken on a
straight-line basis over 30 years. Riverwalk is taxed at 24.95 mills per $1,000
valuation and the 2000 taxes due March 31, 2001 were $35,323. Estimated taxes on
proposed improvements are not material.

     The total cost of the acquisition to the Operating Partnership was
approximately $655,000, which includes costs of the transaction, including a
$200,000 commission paid to Prime One Realty Inc. An affiliate of Mr. McGrath
received one- half of the commission from Prime One Realty Inc. The Operating
Partnership borrowed $575,000 from I. Stanley Levine, Trustee, of Miami,
Florida, in order to complete the acquisition. The Levine loan has been repaid
in full.


                                       10
<PAGE>

     Alexandria Property

     During 1998 and 1999, the Operating Partnership acquired a total of 40% of
the limited partnership interests in Alexandria Development, L.P. (the
"Alexandria Partnership"), a Delaware limited partnership which owns Alexandria
Apartments, a 168-unit residential apartment property (the "Alexandria
Property") under construction in Alexandria, Kentucky. The aggregate purchase
price was $1,285,000, and the Operating Partnership owned an option to acquire
the remaining limited partnership interests at the same price per percentage
interest (for an additional price of approximately $1,950,000). The purchase
price was based on an independent appraisal of the property less all
liabilities, and was approved by the Board of the Trust. During 2000, the
Operating Partnership purchased no additional units and the option expired in
October 2000. An affiliate of Mr. McGrath sold the partnership interest in the
Alexandria Partnership to the Operating Partnership and also serves as its
managing general partner. 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.

     As of March 31, 2001, 112 of the 168 residential units (approximately 67%)
had been completed and were in the rent-up stage. Of the completed units, 109
units have been rented at an average annual rental rate of $7,453. The average
monthly occupancy rates for 1998, 1999 and 2000 were 14%, 26% and 61%,
respectively, based on all 168 units scheduled to be developed.

     The Alexandria Property is a new development, and there is no renovation
program in place. The property has substantial technological advantages over its
competition in the area and is looking to maximize these advantages in the
future. Alexandria is not in an over-developed location. The Alexandria Property
is adequately covered by insurance. The Alexandria Property is a residential
community; there is no tenant who occupies 10% or more of the rentable square
footage. There is no business, occupation or profession taking place on the
Alexandria Property. The property leases units for periods of no longer than one
year. The property is still in construction and as such there are no assets to
depreciate on the partnership books. The construction company is paying only
land taxes on the Alexandria Property.

     Acquisition of Limited Partnership Interests

     In July 1998, the Operating Partnership also was admitted as a limited
partner in 13 real estate limited partnerships managed by affiliates of the
Managing Partnership, including certain of the Exchange Partnerships. The
Operating Partnership acquired the interests in consideration of a capital
contribution ranging from approximately $2,900 to $83,300 in each such
partnership. The aggregate contribution made by the Operating Partnership was
approximately $341,000. The percentage interest acquired by the Operating
Partnership (less than 4% in each case) was calculated at fair market value. In
each instance, the Operating Partnership agreed that its right to receive
distributions from cash flow or from a capital event would be subordinate to the
right of the existing limited partners to receive any preferred return described
in the partnership agreement of the respective partnership. In addition, the
Operating Partnership agreed with the Exchange Partnerships that the acquisition
would not affect the valuation of the limited partnership interests for purposes
of the Exchange Offering. These various partnerships have been accounted for on
the cost method since their respective ownership interests represent less than
20% of the equity ownership therein. In addition, the partnerships will
periodically assess the realizable value of these investments in order to
ascertain that there has been no impairment in their recorded value.

     Contract to Acquire Two Additional Properties

     In September 1998, the Trust entered into an agreement with three real
estate development companies (Brentwood at Southgate, Ltd., Burlington
Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire two luxury
residential apartment properties in the development stage upon the completion of
construction. The three development companies are controlled by Mr. McGrath. One
of the residential apartment properties has been sold to a third party with the
Trust's consent. The remaining property is scheduled to have a total of 396
units, comprised of one, two and three bedroom/one or two bathroom apartments.
Construction of the property (the "Burgundy Hills Property"), located in
Florence, Kentucky (part of the Cincinnati metropolitan area), is expected to be
completed by the end of the first quarter of 2004. The Trust has a right of
first negotiation to purchase the property from the development company upon
completion and a right of first refusal to purchase the property on the same
terms offered by a third party. The purchase price is expected to be
approximately $30,000,000. It is contemplated that a significant portion of that
amount would be covered by first mortgage financing. At the current time the
Trust does not have adequate resources to close on the transaction and it is
uncertain whether the Trust will have adequate resources to complete the
transaction upon completion of construction.


                                       11
<PAGE>

     In connection with the transaction, the Trust (along with Mr. McGrath, its
Chief Executive Officer) agreed to co-guarantee long-term first mortgage
construction financing provided by KeyBank National Association ("KeyBank"). As
of March 31, 2001, approximately $6,477,000 of the construction loan had been
drawn down. The interest rate on the construction loan is KeyBank's prime rate
(currently 8.5%) or the LIBOR rate plus 2%. The Trust also agreed that, if the
Borrower failed to comply with the repayment and other obligations under the
loan documents, KeyBank could elect to require the Trust to buy out the bank's
position on the entire outstanding amount of the construction loan.

     In September 2000, the Trust received notice from counsel to KeyBank that
Burlington Residential, Ltd. ("Borrower"), the owner of the Burgundy Hills
Property, had defaulted on its loan for failure to pay current interest due and
meet certain equity requirements and covenants under the loan agreement, adverse
changes in the financial conditions of the Borrower and the Trust, and the
Trust's failure to meet certain tangible net worth tests set forth in the loan
agreements. KeyBank indicated that it was exercising its right to accelerate the
loan. According to Mr. McGrath, KeyBank agreed to forego further action for at
least 60 days while the parties attempted to reach an arrangement. The extension
expired in November 2000 and, according to Mr. McGrath, is currently being
extended on a month-to-month basis. The Borrower paid down the outstanding
accrued interest and a portion of the principal and is currently pursuing a new
long-term construction facility with another institutional lender to replace the
KeyBank loan (and the Bank One loan described below).

     Bank One has provided additional institutional financing in the principal
amount of $1,576,000 to the Borrower. The loan is secured by a security interest
in partnership interests in the Borrower. Due to a default in payment of
interest due, Bank One has been assigned rental payments and has taken over
day-to-day management of the property. This loan is expected to be paid off with
the proposed new first mortgage financing referenced above. There can be no
assurance that refinancing will be available or will be available on
commercially reasonable terms, that KeyBank will not seek to enforce its right
to accelerate the loan and begin foreclosure proceedings against the Burgundy
Hills Property or elect to require the Trust to buy out its position on the
entire outstanding amount of the construction loan, or that BankOne will not
seek to enforce its right to take over control of the Borrower.

   The Exchange Properties

     In the Exchange Offering, the Operating Partnership issued registered Units
in exchange for substantially all limited partnership interests owned by
individual limited partners (collectively, the "Exchange Limited Partners" and
individually an "Exchange Limited Partner") in 23 limited partnerships
(collectively referred to herein as the "Exchange Partnerships" and individually
as an "Exchange Partnership") which directly or indirectly own equity and/or
subordinated mortgage or other debt interests in 26 residential apartment
properties (collectively, the "Exchange Properties" and individually an
"Exchange Property"). The actual partnership interest percentage owned by the
Operating Partnership in each of the Exchange Partnerships is set forth in the
table above under ITEM 1. DESCRIPTION OF PROPERTIES - Brief Description of
Properties - Exchange Offering.

     Certain of the Exchange Partnerships own direct or indirect equity
interests in 16 Exchange Properties which consist of an aggregate of 1,012
residential units (comprised of studio and one, two, three and four-bedroom
units). Certain of the Exchange Partnerships own direct or indirect mortgage
interests in 10 Exchange Properties, which consist of an aggregate of 813
existing residential units (studio and one and two bedroom) and 168 units (two
and three bedroom) under development. Of the Exchange Properties, 21 properties
are located in Florida, three properties in Ohio and one property each in
Georgia and Indiana.

     The sole asset of each of 13 of the Exchange Partnerships (individually, an
"Exchange Equity Partnership" and collectively, the "Exchange Equity
Partnerships") is record title to a residential apartment property or the entire
limited partnership or other equity interest in a limited partnership or other
entity which owns record title to a property. The sole asset of each of six of
the Exchange Partnerships (individually, an "Exchange Mortgage Partnership" and
collectively, the "Exchange Mortgage Partnerships") are the entire or an
undivided subordinated mortgage interest in one or more properties (and in one
case, unsecured debt interests). Each of the remaining four Exchange
Partnerships (individually, an "Exchange Hybrid Partnership" and collectively,
the "Exchange Hybrid Partnerships") own a combination of (i) all or a portion of
the direct or indirect equity interest in one or more properties and (ii) an
undivided subordinated mortgage interest in one or more properties (and in one
case, unsecured debt interests).

     Certain information relating to the 26 Exchange Properties and mortgage
indebtedness secured thereby is summarized in the tables set forth below.


                                       12
<PAGE>


                              Property Information
                            Equity Property Interests

The table set forth below summarizes certain information relating to each of the
16 properties in which Exchange Equity Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering directly or indirectly own an
equity interest, including (i) the name of the respective partnership, (ii) the
name and location of each property, (iii) the year each property was completed,
(iv) the number of units, acreage, rentable area, average unit size and average
rental rate per unit and per square feet of rentable area as of December 31,
2000, and (v) physical occupancy of each property as of December 31, 2000.

<TABLE>
<CAPTION>

                           Name of
                         Residential
                          Apartment                                                                Approx.
                        Property (and                                                              Rentable
                            type                         Year                            Approx      Area
Partnership             of interest)     Location      Completed       No. of Units       Acres    (Sq. Ft.)*
-----------             ------------     --------      ---------       ------------       -----    ---------
<S>                   <C>                <C>              <C>        <C>            <C>    <C>       <C>
Exchange Equity
Partnerships:

Baron Strategic       Steeplechase       Anderson,        1977       Total           72    3.20      47,280
Investment Fund II,   Apartments(1)      Indiana                      1 BR           12
Ltd.                                                                  2 BR           60

Central Florida       Laurel Oaks        Deland,          1986       Total           56    6.21      45,216
Income Appreciation   Apartments(1)      Florida                      1 BR           11
Fund, Ltd.                                                            2 BR           45

Florida Capital       Eagle Lake         Port             1987       Total           77    4.68      45,504
Income Fund, Ltd.     Apartments(1)      Orange,                      1 BR           73
                                         Florida                      2 BR            4

Florida Capital       Forest Glen        Daytona          1985       Total           52    6.85      62,692
Income Fund II, Ltd.  Apartments         Beach,                       2 BR           28
                      (Phase I)(2)       Florida                      3 BR           24

Florida Capital       Bridge Point       Jacksonville,    1986       Total           48    3.39      27,360
Income Fund III,      Apartments         Florida                     Studio           6
Ltd.                  (Phase II)(1)                                   1 BR           37
                                                                      2 BR            5

Florida Capital       Glen Lake          St.              1986       Total          144    7.16      79,200
Income Fund IV, Ltd.  Apartments(1)      Petersburg,                  1 BR          144
                                         Florida

Florida Income        Forest Glen        Daytona          1985       Total           26    6.85      29,931
Advantage Fund I,     Apartments         Beach,                       2 BR           19
Ltd.                  (Phase III)(2)     Florida                      3 BR            7

Florida Income        Forest Glen        Daytona          1985       Total            8    6.85       9,166
Appreciation Fund     Apartments         Beach,                       2 BR            6
I, Ltd.               (Phase IV)(2)      Florida                      3 BR            2


<CAPTION>


                                                 12/31/2000          Physical
                                               Average Rental        Occupancy
                       Avg. Unit Size           Rates/Month           as of
Partnership               (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)   12/31/2000
-----------               ---------       ------------------------   ----------
<S>                      <C>       <C>        <C>          <C>         <C>
Exchange Equity
Partnerships:

Baron Strategic          Avg.        657      $429         $.65        80.6%
Investment Fund II,      1 BR        550
Ltd.                     2 BR        678

Central Florida          Avg.        807      $569         $.71        91.1%
Income Appreciation      1 BR        576
Fund, Ltd.               2 BR        864

Florida Capital          Avg.        591      $486         $.82        97.4%
Income Fund, Ltd.        1 BR        576
                         2 BR        864

Florida Capital          Avg.      1,205      $693         $.58        90.4%
Income Fund II, Ltd.     2 BR      1,075
                         3 BR      1,358

Florida Capital          Avg.        570      $467         $.82        95.8%
Income Fund III,        Studio       288
Ltd.                     1 BR        576
                         2 BR        864

Florida Capital          Avg.        550      $670         $1.21       69.4%
Income Fund IV, Ltd.     1 BR        550


Florida Income           Avg.      1,151      $678         $.59        92.3%
Advantage Fund I,        2 BR      1,075
Ltd.                     3 BR      1,358

Florida Income           Avg.      1,146      $675         $.59        87.5%
Appreciation Fund        2 BR      1,075
I, Ltd.                  3 BR      1,358
</TABLE>


                                       13
<PAGE>


<TABLE>
<CAPTION>

                           Name of
                         Residential
                          Apartment                                                                Approx.
                        Property (and                                                              Rentable
                            type                         Year                            Approx      Area
Partnership             of interest)     Location      Completed       No. of Units       Acres    (Sq. Ft.)*
-----------             ------------     --------      ---------       ------------       -----    ---------
<S>                   <C>                <C>              <C>        <C>            <C>    <C>       <C>

Florida Income        Blossom Corners    Orlando,         1980       Total           70    3.67      39,300
Growth Fund V, Ltd.   Apartments         Florida                     Studio          15
                      (Phase I)(1)                                    1 BR           49
                                                                      2 BR            6
Florida Opportunity   Camellia Court     Daytona          1982       Total           60    5.15      34,848
Income Partners,      Apartments(1)      Beach,                       1 BR           59
Ltd.                                     Florida                      2 BR            1

GSU Stadium Student   Stadium Club       Statesboro,      1987       Total           60    3.50      50,736
Apartments, Ltd.      Apartments(1)      Georgia                     Studio           2
                                                                      3 BR            3
                                                                      4 BR           55

Midwest Income        Brookwood Way      Mansfield,       1974       Total           66    3.92      38,016
Growth Fund VI, Ltd.  Apartments(1)      Ohio                        Studio           3
                                                                      1 BR           60
                                                                      2 BR            3

Realty Opportunity    Forest Glen        Daytona          1985       Total           30    6.85      34,231
Income Fund VIII,     Apartments         Beach,                       2 BR           23
Ltd.                  (Phase II)(2)      Florida                      3 BR            7

Exchange Hybrid
Partnerships:

Baron Strategic       Pineview           Orlando,         1988       Total           91    4.38      46,656
Investment Fund VI,   Apartments(3)      Florida                     Studio          26
Ltd.                                                                  1 BR           59
                                                                      2 BR            6

Baron Strategic       Crystal Court      Lakeland,        1982       Total           72    4.5       43,776
Investment Fund IX,   Phase I(4)         Florida                      1 BR           64
Ltd.                                                                  2 BR            8

Baron Strategic       Crystal Court      Lakeland,        1982       Total           72    4.5       43,776
Investment Fund X,    Phase I(5)         Florida                      1 BR           64
Ltd.                                                                  2 BR            8

                      Pineview           Orlando,         1988       Total           91    4.38      46,656
                      Apartments(6)      Florida                     Studio          26
                                                                      1 BR           59
                                                                      2 BR            6

<CAPTION>


                                                 12/31/2000          Physical
                                               Average Rental        Occupancy
                       Avg. Unit Size           Rates/Month           as of
Partnership               (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)   12/31/2000
-----------               ---------       ------------------------   ----------
<S>                      <C>         <C>      <C>          <C>         <C>


Florida Income           Avg.        561      $520         $.93        94.3%
Growth Fund V, Ltd.     Studio       300
                         1 BR        600
                         2 BR        900
Florida Opportunity      Avg.        581      $445         $.77        93.3%
Income Partners,         1 BR        576
Ltd.                     2 BR        864

GSU Stadium Student      Avg.        860      $263         $.31        46.2%
Apartments, Ltd.        Studio       288
                         3 BR        880
                         4 BR        880

Midwest Income           Avg.        576      $378         $.66         97%
Growth Fund VI, Ltd.    Studio       288
                         1 BR        576
                         2 BR        864

Realty Opportunity       Avg.      1,141      $673         $.59        86.7%
Income Fund VIII,        2 BR      1,075
Ltd.                     3 BR      1,358

Exchange Hybrid
Partnerships:

Baron Strategic          Avg.        513      $596         $1.16       95.6%
Investment Fund VI,     Studio       288
Ltd.                     1 BR        576
                         2 BR        864

Baron Strategic          Avg.        608      $431         $.71        88.9%
Investment Fund IX,      1 BR        576
Ltd.                     2 BR        864

Baron Strategic          Avg.        608      $431         $.71        88.9%
Investment Fund X,       1 BR        576
Ltd.                     2 BR        864

                         Avg.        513      $596         $1.16       95.6%
                        Studio       288
                         1 BR        576
                         2 BR        864
</TABLE>



                                       14
<PAGE>


<TABLE>
<CAPTION>

                           Name of
                         Residential
                          Apartment                                                                Approx.
                        Property (and                                                              Rentable
                            type                         Year                            Approx      Area
Partnership             of interest)     Location      Completed       No. of Units       Acres    (Sq. Ft.)*
-----------             ------------     --------      ---------       ------------       -----    ---------
<S>                   <C>                <C>              <C>        <C>             <C>   <C>       <C>
Lamplight Court of    Lamplight          Bellefontaine,   1973       Total           80    6.00      46,944
Bellefontaine         Apartments(7)      Ohio                        Studio          12
Apartments, Ltd.                                                      1BR            53
                                                                      2 BR           15
                                                                                --------  --------  -------
                      TOTAL

                      PROPERTIES:                                               1,012**   83.16     680,856
                                                                                ========  ========  =======


<CAPTION>


                                                 12/31/2000          Physical
                                               Average Rental        Occupancy
                       Avg. Unit Size           Rates/Month           as of
Partnership               (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)   12/31/2000
-----------               ---------       ------------------------   ----------
<S>                      <C>         <C>      <C>          <C>         <C>

Lamplight Court of       Avg.        587      $387         $.66        87.5%
Bellefontaine           Studio       288
Apartments, Ltd.         1 BR        576
                         2 BR        864
                                     -------  ----------   --------    --------
                                     673      $512         $.80        85.8%
                                     =======  ==========   =========   ========
</TABLE>

----------
*    Includes only residential apartment units and excludes common areas.

**   Properties in which more than one partnership has an interest are counted
     only once.

(1)  Partnership owns the entire limited partnership interest in a limited
     partnership which holds fee simple title to the property.

(2)  Partnership owns beneficial interest in an unrecorded land trust which
     holds fee simple title to the property.

(3)  Partnership owns (i) a 57.29% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(4)  Partnership owns (i) a 44.96% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(5)  Partnership owns (i) a 47.59% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (i) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(6)  Partnership owns (i) a 41.71% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) debt
     interests in other property described below in "Mortgage Information -
     Mortgage Properties" table.

(7)  Partnership owns (i) a 31.7% limited partnership interest in a limited
     partnership which holds fee simple title to the property and (ii) a debt
     interest in the property described below in "Mortgage Information -
     Mortgage Properties" table.


                                       15
<PAGE>


                              Property Information
                             Debt Property Interests

The table set forth below summarizes certain information relating to each of the
11 properties in which Exchange Mortgage Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering own a mortgage interest,
including (i) the name of the respective partnership, (ii) the name and location
of each property, (iii) the year each property was completed, (iv) the number of
units, acreage, rentable area, average unit size and average rental rate per
unit and per square feet of rentable area as of December 31, 2000, and (v)
physical occupancy of each property as of December 31, 2000.

<TABLE>
<CAPTION>
                           Name of
                         Residential
                          Apartment                                                                Approx.
                        Property (and                                                              Rentable
                            type                         Year                            Approx      Area
Partnership             of interest)     Location      Completed       No. of Units       Acres    (Sq. Ft.)*
-----------             ------------     --------      ---------       ------------       -----    ---------
<S>                   <C>                <C>            <C>        <C>         <C>       <C>       <C>
Exchange Mortgage
Partnerships:

Baron Strategic       Blossom Corners    Orlando,         1981       Total       68      3.51        38,100
Investment Fund,      Apartments         Florida                    Studio       16
Ltd.                  (Phase II)(1)                                  1 BR        45
                                                                     2 BR         7

                      Villas at Lake     Cincinnati,   Est. 4th      Total      164      20.2       217,300
                      Sycamore(1 )       Ohio          quarter       2 BR
                                                          2003       3 BR

Baron Strategic       Country Square     Tampa,           1981       Total       73      4.56        40,032
Investment Fund IV,   Apartments         Florida                    Studio       14
Ltd.                  (Phase I)(1)                                   1 BR        52
                                                                     2 BR         7

Baron Strategic       Candlewood         Tampa,           1984       Total       33      2.75        17,568
Investment Fund V,    Apartments         Florida                    Studio        6
Ltd.                  (Phase II)(1)                                  1 BR        26
                                                                     2 BR         1

                      Curiosity Creek    Tampa,           1982       Total       81      4.51        43,776
                      Apartments(1)      Florida                    Studio       16
                                                                     1 BR        59
                                                                     2 BR         6

Baron Strategic       Heatherwood        Kissimmee,       1982       Total       41      2.26        22,176
Investment Fund       Apartments         Florida                    Studio       10
VIII, Ltd.            (Phase II)(2)                                 1 BR/1B      26
                                                                    2 BR/1B       4
                                                                    2 BR/2B       1
<CAPTION>



                                                 12/31/2000          Physical
                                               Average Rental        Occupancy
                       Avg. Unit Size           Rates/Month           as of
Partnership               (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)   12/31/2000
-----------               ---------       ------------------------   ----------
<S>                     <C>         <C>       <C>          <C>          <C>
Exchange Mortgage
Partnerships:

Baron Strategic          Avg.         557      $534         $.96        88.1%
Investment Fund,        Studio        300
Ltd.                     1 BR         600
                         2 BR         864

                         Avg.       1,325        --           --          --
                         2 BR
                         3 BR

Baron Strategic          Avg.         548      $482         $.88        98.6%
Investment Fund IV,     Studio        288
Ltd.                     1 BR         576
                         2 BR         864

Baron Strategic          Avg.         532      $478         $.90        100.0%
Investment Fund V,      Studio        288
Ltd.                     1 BR         576
                         2 BR         864

                         Avg.         540      $468         $.87        97.5%
                        Studio        288
                         1 BR         576
                         2 BR         864

Baron Strategic          Avg.         541      $538         $.99        90.2%
Investment Fund         Studio        288
VIII, Ltd.              1 BR/1B       576
                        2 BR/1B       864
                        2 BR/2B       864


</TABLE>


                                       16
<PAGE>

<TABLE>
<CAPTION>

                           Name of
                         Residential
                          Apartment                                                                Approx.
                        Property (and                                                              Rentable
                            type                         Year                            Approx      Area
Partnership             of interest)     Location      Completed       No. of Units       Acres    (Sq. Ft.)*
-----------             ------------     --------      ---------       ------------       -----    ---------
<S>                   <C>                <C>           <C>          <C>         <C>     <C>         <C>
                      Longwood           Cocoa,           1981       Total       59      4.00        36,288
                      Apartments         Florida                     1 BR        51
                      (Phase I)(1)                                   2 BR         8

                      Villas at Lake     Cincinnati,   Est. 4th      Total      164      20.2       217,300
                      Sycamore(1)        Ohio          quarter       2 BR
                                                          2003       3 BR

Baron Strategic       Curiosity Creek    Tampa,           1982       Total       81      4.51        43,776
Vulture Fund I, Ltd.  Apartments(1)      Florida                    Studio       16
                                                                     1 BR        59
                                                                     2 BR         6
Brevard Mortgage      Meadowdale         Melbourne,       1984       Total       64      4.81        39,168
Program, Ltd.         Apartments(1)      Florida                     1 BR        56
                                                                     2 BR         8

Exchange Hybrid
Partnerships

Baron Strategic       Candlewood         Tampa,           1988       Total       33      2.75        17,568
Investment Fund VI,   Apartments         Florida                    Studio        6
Ltd.                  (Phase II)(3)                                  1 BR        26
                                                                     2 BR         1

                      Country Square                      1981       Total       73      4.56        40,032
                      Apartments         Tampa,                     Studio       14
                      (Phase I)(3)       Florida                     1 BR        52
                                                                     2 BR         7

                      Garden Terrace     Tampa,           1983       Total       91      6.00        54,720
                      Apartments         Florida                    Studio        8
                      (Phase III)(3)                                 1 BR        67
                                                                     2 BR        16


Baron Strategic       Candlewood         Tampa,           1984       Total       33      2.75        17,568
Investment Fund IX,   Apartments         Florida                    Studio        6
Ltd.                  (Phase II)(3)                                  1 BR        26
                                                                     2 BR         1


<CAPTION>


                                                 12/31/2000          Physical
                                               Average Rental        Occupancy
                       Avg. Unit Size           Rates/Month           as of
Partnership               (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)   12/31/2000
-----------               ---------       ------------------------   ----------
<S>                      <C>         <C>        <C>          <C>         <C>
                          Avg.         615      $454         $.74        91.5%
                          1 BR         576
                          2 BR         864

                          Avg.       1,325        --           --          --
                          2 BR
                          3 BR

Baron Strategic           Avg.         540      $468         $.87        97.5%
Vulture Fund I, Ltd.     Studio        288
                          1 BR         576
                          2 BR         864
Brevard Mortgage          Avg.         612      $411         $.67        84.4%
Program, Ltd.             1 BR         576
                          2 BR         864

Exchange Hybrid
Partnerships

Baron Strategic           Avg.         532      $478         $.90         100%
Investment Fund VI,      Studio        288
Ltd.                      1 BR         576
                          2 BR         864

                          Avg.         548      $482         $.88        98.6%
                         Studio        288
                          1 BR         576
                          2 BR         864

                          Avg.         601      $481         $.80        92.4%
                         Studio        288
                          1 BR         576
                          2 BR         864


Baron Strategic           Avg.         532      $478         $.90         100%
Investment Fund IX,      Studio        288
Ltd.                      1 BR         576
                          2 BR         864
</TABLE>


                                       17
<PAGE>


<TABLE>
<CAPTION>

                           Name of
                         Residential
                          Apartment                                                                Approx.
                        Property (and                                                              Rentable
                            type                         Year                            Approx      Area
Partnership             of interest)     Location      Completed       No. of Units       Acres    (Sq. Ft.)*
-----------             ------------     --------      ---------       ------------       -----    ---------
<S>                   <C>                <C>              <C>       <C>         <C>      <C>        <C>
                      Garden Terrace     Tampa,           1983       Total       91      6.00        54,720
                      Apartments         Florida                    Studio        8
                      (Phase III)(3)                                 1 BR        67
                                                                     2 BR        16

                      Villas at Lake     Cincinnati,   Est. 4th      Total      164      20.2       217,300
                      Sycamore(3)        Ohio          quarter
                                                          2003

Baron Strategic       Garden Terrace     Tampa,           1983       Total       91      6.00        54,720
Investment Fund X,    Apartments         Florida                    Studio        8
Ltd.                  (Phase III)(3)                                 1 BR        67
                                                                     2 BR        16

                      Heatherwood        Kissimmee,       1982       Total       41      2.26        22,176
                      Apartments         Florida                    Studio       10
                      (Phase II)(2)                                  1 BR        26
                                                                    2 BR/1B       4
                                                                    2 BR/2B       1

Lamplight Court of    Lamplight          Bellefontaine,   1973       Total       80      6.00        46,944
Bellefontaine         Apartments(4)      Ohio                       Studio       12
Apartments, Ltd.                                                     1 BR        53
                                                                     2 BR        15

                                                                              ------ ------------- -----------
                      TOTAL
                      PROPERTIES(5)                                             590     42.48       338,772
                                                                              ====== ============= ===========

<CAPTION>



                                                 12/31/2000          Physical
                                               Average Rental        Occupancy
                       Avg. Unit Size           Rates/Month           as of
Partnership               (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)   12/31/2000
-----------               ---------       ------------------------   ----------
<S>                    <C>         <C>        <C>          <C>         <C>

                        Avg.         601      $481         $.80        92.4%
                       Studio        288
                        1 BR         576
                        2 BR         864

                        Avg.       1,325        --           --          --



Baron Strategic         Avg.         601      $481         $.80        92.4%
Investment Fund X,     Studio        288
Ltd.                    1 BR         576
                        2 BR         864

                        Avg.         541      $538         $.99        90.2%
                       Studio        288
                        1 BR         576
                       2 BR/1B       864
                       2 BR/2B       864

Lamplight Court of      Avg.         587      $387         $.66        87.5%
Bellefontaine          Studio        288
Apartments, Ltd.        1 BR         576
                        2 BR         864

                                 -------- ------------- ------------ -----------

      TOTAL
      PROPERTIES(5)                  569      $466         $.82        92.0%
                                 ======== ============= ============ ===========

</TABLE>

----------
*    Includes only residential apartment units and excludes common areas.

(1)  The Partnership's sole real estate assets consist of an undivided second
     mortgage interest in the property or properties described in this table.
     The second mortgage interests are described below at "Mortgage
     Information-Mortgage Properties."

(2)  The Partnership owns an undivided second mortgage interest in the property
     and unsecured indebtedness associated therewith. The indebtedness is
     described below at "Mortgage Information-Mortgage Properties."

(3)  The Partnership owns (i) an undivided second mortgage interest in the
     property or properties described in this table and (ii) a direct or
     indirect equity interest in one or more properties. The second mortgage
     interests are described below at "Mortgage Information-Mortgage Properties"
     and the equity interest is described above at "Property Information-Equity
     Property Interests."

(4)  The Partnership owns (i) an undivided second mortgage interest in the
     property described in this table and (ii) an undivided limited partnership
     interest in the limited partnership which owns fee simple title to the
     property. The second mortgage interest is described below at "Mortgage
     Information-Mortgage Properties," and the equity interest is described
     above at "Property Information-Equity Property Interests."

(5)  Does not include information for Lake Sycamore, which is under development.


                                       18
<PAGE>

                              Mortgage Information
                            Equity Property Interests

The table below sets forth certain information relating to the first mortgage
(and in one case, second mortgage) indebtedness secured by or associated with
the 16 properties in which Exchange Equity Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering directly or indirectly own an
equity interest, including (i) name of partnership, (ii) name and location of
the properties, (iii) principal balances as of December 31, 2000, (iv) interest
rates, (v) annual debt service, (vi) amortization term, (vii) maturity dates,
(viii) balances due on maturity, (ix) monthly payments, and (x) name of lending
institution.


<TABLE>
<CAPTION>
                                                 12/31/2000                Annual
                                                  Principal   Interest      Debt
 Partnership       Property        Location        Balance        Rate     Payment
 -----------       --------        --------        -------        ----     -------
<S>                <C>             <C>            <C>          <C>         <C>
Exchange Equity
Partnerships:

Baron Strategic    Steeplechase    Anderson,      $1,350,438   Yrs. 1-2:    $107,832
Investment Fund    Apartments      Indiana                        7.25%
II, Ltd.                                                       Yrs  3-4:
                                                                  7.75%

                                                               Yrs. 5-10:
                                                                   8.25%

Central Florida    Laurel Oaks     Deland,         1,563,307       6.54%     121,863
Income             Apartments      Florida
Appreciation
Fund, Ltd.

Florida Capital    Eagle Lake      Port            1,390,496       8.56%     145,669
Income Fund, Ltd.  Apartments      Orange,
                                   Florida

Florida Capital    Forest Glen     Daytona         1,741,653       7.01%     125,696
Income Fund II,    Apartments      Beach,
Ltd.               (Phase I)       Florida

Florida Capital    Bridge Point    Jacksonville,     695,635       9.52%      77,183
Income Fund III,   Apartments      Florida
Ltd.               (Phase II)

Florida Capital    Glen Lake       St.             2,617,088       9.55%     296,046
Income Fund IV,    Apartments      Petersburg,       349,468       8.00%      34,728
Ltd.                               Florida           (second
                                                   mortgage)
Florida Income     Forest Glen     Daytona           870,827       7.01%      71,649
Advantage          III             Beach, FL
Fund I

<CAPTION>
                                                           Balance
                     Monthly     Amortization  Maturity     Due On
 Partnership         Payment        Term        Date       Maturity    Lender
 -----------         -------        ----        ----       --------    ------
<S>                   <C>          <C>           <C>      <C>         <C>
Exchange Equity
Partnerships:

Baron Strategic       $8,986       30 years      10/06    $1,170,075  Crown Bank
Investment Fund
II, Ltd.





Central Florida       10,155       30 years      12/28            --  Prudential Mortgage
Income                                                                Capital
Appreciation
Fund, Ltd.

Florida Capital       12,139       25 years      11/05     1,268,636  Column Financial, Inc.
Income Fund, Ltd.


Florida Capital       10,475       30 years      3/05      1,641,716  Prudential Mortgage
Income Fund II,                                                       Capital
Ltd.

Florida Capital        6,431       25 years      7/06        625,327  Huntington Mortgage Co.
Income Fund III,
Ltd.

Florida Capital       24,670       25 years      5/00      2,587,230  Republic Bank
Income Fund IV,        2,894       25 years      5/05        302,862  Glen Lake Arms
Ltd.                                                                  Joint Venture

Florida Income         5,971       30 years      3/05        817,310  Prudential Mortgage
Advantage                                                             Capital
Fund I
</TABLE>


                                       19
<PAGE>


<TABLE>
<CAPTION>
                                                 12/31/2000                Annual
                                                  Principal   Interest      Debt
 Partnership       Property        Location        Balance        Rate     Payment
 -----------       --------        --------        -------        ----     -------
<S>                <C>             <C>            <C>           <C>       <C>
 Exchange Equity
 Partnerships:

Florida Income     Forest Glen     Daytona          $267,947     7.01%      $19,337
Appreciation       Apartments      Beach,
Fund I, Ltd.       (Phase IV)      Florida

Florida Income     Blossom         Orlando,          995,108     9.04%      106,084
Growth Fund V,     Corners         Florida
Ltd.               Apartments
                   (Phase I)

Florida            Camellia        Daytona         1,042,494      9.04%     111,132
Opportunity        Court           Beach,
Income Partners,   Apartments      Florida
Ltd.

GSU Stadium        Stadium Club    Statesboro,     1,671,649      7.87%     160,346
Student            Apartments      Georgia
Apartments, Ltd.

Midwest Income     Brookwood Way   Mansfield,      1,020,167      9.04%     108,612
Growth Fund VI,    Apartments      Ohio
Ltd.

Realty             Forest Glen     Daytona         1,004,800      7.01%      72,517
Opportunity        Apartments      Beach,
Income Fund        (Phase II)      Florida
VIII, Ltd.

Exchange Hybrid
Partnerships:

Baron Strategic    Pineview        Orlando,        1,572,385      7.75%     139,271
Investment Fund    Apartments      Florida
VI, Ltd.

Baron Strategic    Crystal Court   Lakeland,       1,184,379      7.50%     102,533
Investment Fund    Apartments      Florida
IX, Ltd.           (Phase I)


<CAPTION>
                                                           Balance
                     Monthly     Amortization  Maturity     Due On
 Partnership         Payment        Term        Date       Maturity    Lender
 -----------         -------        ----        ----       --------    ------
<S>                   <C>          <C>           <C>      <C>         <C>
Exchange Equity
Partnerships:

Florida Income        $1,611       30 years      3/05     $251,112    Prudential Mortgage
Appreciation                                                          Capital
Fund I, Ltd.

Florida Income         8,840       25 years      11/06    $882,430    Column Financial, Inc.
Growth Fund V,
Ltd.


Florida                9,261       30 years      11/06     913,346    Column Financial, Inc.
Opportunity
Income Partners,
Ltd.

GSU Stadium           13,362       30 years      10/05     1,520,599  GMAC
Student
Apartments, Ltd.

Midwest Income         9,051       25 years      12/06       890,263  Mellon Bank
Growth Fund VI,
Ltd.

Realty                 6,043       30 years      3/05        943,051  Prudential Mortgage
Opportunity                                                           Capital
Income Fund
VIII, Ltd.

Exchange Hybrid
Partnerships:

Baron Strategic       11,606       30 years      11/04     1,493,008  GMAC
Investment Fund
VI, Ltd.

Baron Strategic        8,544        30 years      11/04    1,126,207  GMAC
Investment Fund
IX, Ltd.
</TABLE>


                                       20
<PAGE>


<TABLE>
<CAPTION>

                                                 12/31/2000                Annual
                                                  Principal   Interest      Debt
 Partnership       Property        Location        Balance        Rate     Payment
 -----------       --------        --------        -------        ----     -------
<S>                <C>             <C>            <C>          <C>      <C>
Exchange Hybrid
Partnerships:

Baron Strategic    Crystal Court   Lakeland,      $1,184,379      7.50%    $102,533
Investment Fund    Apartments      Florida
X, Ltd.            (Phase I)

                   Pineview        Orlando,        1,572,385      7.75%     139,271
                   Apartments      Florida

Lamplight Court    Lamplight       Bellefontaine   1,326,811      9.04%     135,660
of Bellefontaine   Court           Ohio
Apts., Ltd.

                                                 ------------           -----------
                   TOTAL
                   PROPERTIES:                   $20,664,652            $ 1,936,158
                                                 ============           ===========


<CAPTION>
                                                           Balance
                     Monthly     Amortization  Maturity     Due On
 Partnership         Payment        Term        Date       Maturity    Lender
 -----------         -------        ----        ----       --------    ------
<S>                   <C>          <C>           <C>      <C>         <C>
Exchange Hybrid
Partnerships:

Baron Strategic       $8,544       30 years      11/04    $1,126,207  GMAC
Investment Fund
X, Ltd.

                      11,606       30 years      11/04     1,493,008  GMAC


Lamplight Court       11,305       25 years      11/06     1,158,349  Column Financial
of Bellefontaine
Apts., Ltd.

  TOTAL          ------------                          -------------
  PROPERTIES:       $161,344                             $17,883,983
                 ============                          =============
</TABLE>


                                       21
<PAGE>


                              Mortgage Information
                               Mortgage Properties

     The table below sets forth certain information relating to the second
mortgage loans (and in one case other debt interests) owned by each of the six
Exchange Mortgage Partnerships and the four Exchange Hybrid Partnerships
substantially all of whose limited partnership interests the Operating
Partnership acquired in the Exchange Offering, including (i) the name of the
lending Exchange Partnership, (ii) the name, location and number of units of the
underlying residential apartment property securing the first and second
mortgages, (iii) the name of the debtor, (iv) the original principal amount of
the second mortgage loan(s) held by the Exchange Partnership and the principal
balance as of December 31, 2000 and due at maturity, (v) the undivided interests
of other Exchange Partnerships in the second mortgage loans or the principal
balance as of December 31, 2000 of other second mortgage loans secured by the
property and owned by other Exchange Partnerships, (vi) the second mortgage loan
interest rate, maturity date, annual and monthly interest payable and
participation features, if any, and (vii) the principal balance of the
institutional first mortgage loan secured by the property as of December 30,
2000 and the terms thereof.

     Additional information relating to the underlying residential apartment
property securing each second mortgage loan described and the first mortgage
loan with a senior position ahead of the second mortgage loan is set forth above
at "Property Information - Debt Property Interests." The debtors of
substantially all of the second mortgage loans and other loans provided or
acquired by the Exchange Mortgage Partnerships and the Exchange Hybrid
Partnerships are limited partnerships which own fee simple title to the property
which secures such mortgage loans. Affiliates of Mr. McGrath are the corporate
general partners of the debtor partnerships and in such capacity own a minority
economic interest (2%-20%) in such partnerships which is subordinate to the
preferred returns of the limited partners in such partnerships. Mr. McGrath or
an affiliate own substantially all of the general partnership interest in each
of the debtor partnerships. Each second mortgage note described is non-recourse
beyond the property and/or other assets owned by the debtors.


                                       22
<PAGE>


                         EXCHANGE MORTGAGE PARTNERSHIPS
                      Baron Strategic Investment Fund, Ltd.

This Exchange Partnership owns (i) three unrecorded second mortgage loans
secured by the Blossom Corners Property-Phase II and (ii) an unrecorded second
mortgage loan secured by the Lake Sycamore Property. The interest of the
Exchange Partnership in the second mortgage loans, terms of the first mortgage
loan secured by the property, and other information are described below.

--------------------------------------------------------------------------------
1.   Blossom Corners Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Blossom Corners Apartments - Phase II (68
                                       units) Orlando, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Blossom Corners Apartments II, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $977,645
-------------------------------------- -----------------------------------------
12/31/2000 principal balance

(accrued unpaid interest):             $720,696 ($0)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $720,696
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $622,103 of principal (plus non-
                                       cumulative participation interest at the
                                       rate of 3% on the unpaid principal
                                       balance to the extent of any available
                                       cash flow during the year and additional
                                       non-cumulative participation interest
                                       equal to 30% of any remaining available
                                       cash flow during the year), (ii)
                                       adjustable interest rate of 1% over the
                                       prime rate (current adjustable rate of
                                       8.75%) as to $68,861 of principal, and
                                       (iii) fixed interest rate of 12% as to
                                       $160,002 of principal. The loans require
                                       payments of interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         4/02
-------------------------------------- -----------------------------------------
Annual interest payable:               $62,552 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $4,962
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,069,989; the loan matures in 3/02,
first mortgage loan secured by         has a balance due at maturity of
property and other terms:              $1,050,024, bears interest at a fixed
                                       annual rate of 8.24%, has annual and
                                       monthly debt service requirements  of
                                       $106,824 and $8,902, respectively,
                                       amortizes on a 25-year basis, and is
                                       prepayable subject to a prepayment
                                       penalty equal to 1% of amount prepaid
                                       prior to third anniversary of loan.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans consisted of an unrecorded second
                                       mortgage note with a principal balance of
                                       $622,103, an unsecured promissory note
                                       with a principal balance of $68,861, an
                                       unsecured demand note with a principal
                                       balance of $130,270 and advances of
                                       $29,732. On 12/15/98, the debtor restated
                                       and amended the $622,103 second mortgage
                                       note and the $68,861 unsecured promissory
                                       note and made a new promissory note in
                                       favor of the Exchange Partnership in the
                                       original principal amount of $160,002 (to
                                       consolidate the $130,270 demand note and
                                       advances of $29,732). The debtor and the
                                       Exchange Partnership also entered into a
                                       mortgage modification agreement. Pursuant
                                       to the arrangement, the Exchange
                                       Partnership agreed to set the maturity
                                       date on the unsecured notes at the same
                                       maturity date as the second mortgage
                                       note, in exchange for the debtor's
                                       agreement to secure its repayment
                                       obligations on the unsecured notes with a
                                       second mortgage on the property.
-------------------------------------- ----------------------------------------


                                       23
<PAGE>



                 Baron Strategic Investment Fund, Ltd. (cont'd)

--------------------------------------------------------------------------------
2.   Lake Sycamore Second Mortgage Loan:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of
Units and location):                   Villas at Lake Sycamore (164 townhomes
                                       under development) Cincinnati, Ohio
-------------------------------------- -----------------------------------------
Debtor:                                Sycamore Real Estate Development, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loan:                      $230,000
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
Exchange Partnership's 100%
interest in loan (accrued unpaid
interest):                             $230,000  ($68,733)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $230,000
-------------------------------------- -----------------------------------------
12/31/2000 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest):             $341,500  ($67,893)
-------------------------------------- -----------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only until
                                       maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         12/03
-------------------------------------- -----------------------------------------
Annual interest payable:               $27,600
-------------------------------------- -----------------------------------------
Monthly interest payable:              $2,300
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,021,362; approved maximum $2,000,000;
first mortgage loan secured by         the loan matures in 11/01, bears interest
property and other terms:              at an annual adjustable rate equal to
                                       lender's prime rate plus 1% (currently
                                       8.75%), has current annual and monthly
                                       debt service requirements of $89,369 and
                                       $7,447, respectively, requires
                                       payments of interest only until maturity
                                       and is prepayable without penalty.
-------------------------------------- -----------------------------------------
Other matters:                         Two other Exchange Partnerships, Baron
                                       Strategic Investment Fund VIII, Ltd. and
                                       Baron Strategic Investment Fund IX, Ltd.,
                                       own separate second mortgage notes
                                       secured by the property with the same
                                       terms except that they are in the
                                       principal amounts of $98,000 and $243,500
                                       (with accrued unpaid interest in the
                                       amounts of $18,885 and $50,940),
                                       respectively. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgage on a pari passu basis.
-------------------------------------- -----------------------------------------


                                       24
<PAGE>


                    Baron Strategic Investment Fund IV, Ltd.

This Exchange Partnership owns two unrecorded second mortgage loans secured by
the Country Square Property-Phase I described below. The Exchange Partnership's
interest in the second mortgage loans, terms of the first mortgage loan secured
by the property, and other information are described below.

--------------------------------------------------------------------------------
Country Square Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Country Square Apartments - Phase I (73
                                       units) Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Country Square Apartments, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100% interest
in loans:                              $1,372,237
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $1,364,549  ($410,623)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $1,364,549
-------------------------------------- -----------------------------------------
Second mortgage loan interests of      In 3/97, the Exchange Partnership
another Exchange Partnership:          received a loan with a current principal
                                       balance of $259,639 (with accrued unpaid
                                       interest of $115,250) from Baron
                                       Strategic Investment Fund VI, Ltd.
                                       ("Baron Fund VI"). The Exchange
                                       Partnership, in turn, lent the loan
                                       proceeds to the debtor as part of the
                                       Country Square Second Mortgage Loans. The
                                       loan from Baron Fund VI bears interest at
                                       the rate of 15%, payable monthly, matures
                                       in 9/02 and is secured by the Exchange
                                       Partnership's interest in two second
                                       mortgage notes and a second mortgage.
-------------------------------------- -----------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         4/08
-------------------------------------- -----------------------------------------
Annual interest payable:               $163,746
-------------------------------------- -----------------------------------------
Monthly interest payable:              $13,645
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,557,370; the loan matures in 3/08, has
first mortgage loan secured by         a balance due at maturity of $1,385,953,
property and other terms:              bears interest at a fixed annual rate of
                                       7.41%, has annual and monthly debt
                                       service requirements of $133,068 and
                                       $11,089, respectively, amortizes on a
                                       30-year basis and is prepayable after
                                       the fourth anniversary of the loan,
                                       subject to yield maintenance until the
                                       sixth month prior to maturity, when it
                                       can be prepaid at par.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans consisted of a second mortgage note
                                       with a principal balance of $1,192,987
                                       and an unsecured demand note with a
                                       principal balance of $179,250. On
                                       12/15/98, the debtor restated and amended
                                       the notes and the debtor and the Exchange
                                       Partnership entered into a mortgage
                                       modification agreement. Pursuant to the
                                       arrangement, the Exchange Partnership
                                       agreed to set the maturity date on the
                                       demand note at the same maturity date as
                                       the second mortgage note, in exchange for
                                       the debtor's agreement to secure its
                                       repayment obligation on the demand note
                                       with a second mortgage on the Country
                                       Square Property.
-------------------------------------- -----------------------------------------


                                       25
<PAGE>


                     Baron Strategic Investment Fund V, Ltd.

The Exchange Partnership owns (i) an unrecorded second mortgage loan secured by
the Candlewood Property-Phase II, (ii) an undivided interest in three unrecorded
second mortgage loans and a 100% interest in an unrecorded second mortgage loan
secured by the Curiosity Creek Property and (iii) four unrecorded second
mortgage loans secured by the Sunrise Property-Phase I. The interest of the
Exchange Partnership and other Exchange Partnerships in the second mortgage
loans, terms of the first mortgage loans secured by the properties, and other
information are described below.

--------------------------------------------------------------------------------
1.   Candlewood Second Mortgage Loan:
-------------------------------------- -----------------------------------------

Residential apartment property
securing mortgages (number of units
and location):                         Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $21,000
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $21,000  ($6,490)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $21,000
-------------------------------------- -----------------------------------------
12/31/2000 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest):             $143,500  ($41,902)
-------------------------------------- -----------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund VI, Ltd.
Exchange Partnerships in Property:     ("Baron Fund VI") and Baron Strategic
                                       Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2000 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       VI's and Baron Fund IX's second mortgage
                                       loans are $68,000 (accrued unpaid
                                       interest of $20,009) and $75,500 (accrued
                                       unpaid interest of $21,893),
                                       respectively; the annual (and monthly)
                                       payments due them are $8,160 ($680) and
                                       $9,060 ($755), respectively. The other
                                       terms relating to Baron Fund VI's and
                                       Baron Fund IX's second mortgage loans are
                                       the same as stated herein in respect of
                                       the Exchange Partnership's loan.
-------------------------------------- -----------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         3/03
-------------------------------------- -----------------------------------------
Annual interest payable:               $2,520
-------------------------------------- -----------------------------------------
Monthly interest payable:              $210
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $563,233  ($72,094); the loan matures in
first mortgage loan secured by         2/03, has a balance due at maturity of
property (12.8% of amount)             $533,678, bears interest at a fixed
and other terms:                       annual rate of 7.79%, payable quarterly,
                                       has annual and monthly debt service
                                       requirements of $56,153 and $4,679,
                                       respectively, amortizes on a 25-year
                                       basis and is prepayable without penalty.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $21,000. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund
                                       VI and Baron Fund IX with separate second
                                       mortgages on the property. The lending
                                       parties have agreed to share the benefits
                                       of the second mortgages on a pari passu
                                       basis.
-------------------------------------- -----------------------------------------


                                       26
<PAGE>


                Baron Strategic Investment Fund V, Ltd. (cont'd)

--------------------------------------------------------------------------------
2.   Curiosity Creek Second Mortgage Loans:
-------------------------------------- -----------------------------------------

Residential apartment property
securing mortgages (number of units
and location):                         Curiosity Creek Apartments (81 units)
                                       Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Curiosity Creek Apartments, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of Exchange
Partnership's undivided 26.3% interest
in three loans and a 100% interest in
one loan:                              $474,703
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $474,703  ($53,403)

-------------------------------------- -----------------------------------------
Balance due at maturity:               $474,703
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnership's
undivided 73.7% in three loans and a
100% interest in one loan (accrued
unpaid interest):                      $1,243,847  ($167,783)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Vulture Fund I, Ltd.
Partnerships in second mortgage        ("Baron Vulture Fund") owns the remaining
loans:                                 undivided 73.7% interest in three second
                                       mortgage loans and a 100% interest in one
                                       second mortgage loan secured by the
                                       Curiosity Creek Property ("Curiosity
                                       Creek Second Mortgage Loans").The
                                       aggregate original principal balance,
                                       aggregate 12/31/2000 principal balance,
                                       and aggregate balance due at maturity in
                                       respect of Baron Vulture Fund's interest
                                       in the loans is $1,229,575 (accrued
                                       unpaid interest of $167,783); the
                                       aggregate annual and monthly payments due
                                       it are $105,149 and $8,762, respectively.
                                       The other terms relating to Baron Vulture
                                       Fund's interest in the loans are the same
                                       as stated herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $212,227 of principal(plus non-
                                       cumulative participation interest at the
                                       rate of 3% on the unpaid principal to the
                                       extent of available cash flow, plus
                                       additional non-cumulative participation
                                       interest equal to 30% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of prime plus 1% (currently
                                       8.75%) as to $108,899 of principal, (iii)
                                       fixed interest rate of 12.5% as to
                                       $109,325 of principal and (iv) fixed
                                       interest rate of 12% as to $44,253 of
                                       principal. The loans require payments of
                                       interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         4/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $41,238 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $3,437
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,258,030 ($330,862); the loan matures
first mortgage loan secured by         in 4/08, has a balance due at maturity of
property (26.3% of amount)             $1,122,800, bears interest at the fixed
and other terms:                       annual rate of 7.28%, has annual and
                                       monthly debt service requirements of
                                       $106,737 and $8,895, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it may be prepaid at par.
-------------------------------------- -----------------------------------------


                                       27
<PAGE>


                Baron Strategic Investment Fund V, Ltd. (cont'd)


-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the Curiosity Creek
                                       Second Mortgage Loans consisted of a
                                       second mortgage note with a principal
                                       balance of $807,560, two unsecured demand
                                       notes with a an aggregate principal
                                       balance of $830,360 and advances in the
                                       amount of $66,171. On 12/15/98, the
                                       debtor, the Exchange Partnership and
                                       Baron Vulture Fund entered into a
                                       mortgage modification agreement pursuant
                                       to which the Exchange Partnership and
                                       Baron Vulture Fund agreed to set the
                                       maturity date on the demand notes and the
                                       advances at the same maturity date as the
                                       second mortgage note, in exchange for the
                                       debtor's agreement to secure its
                                       repayment obligations on the unsecured
                                       notes and advances with a second mortgage
                                       on the Curiosity Creek Property.
-------------------------------------- -----------------------------------------
3.   Sunrise Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Sunrise Apartments - Phase I (60 units)
                                       Titusville, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Sunrise Apartments I, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $1,036,450
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $1,031,801 ($54,406)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $1,031,801
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $335,000 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal to
                                       the extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 20% of any remaining
                                       available cash flow), (ii) fixed interest
                                       rate of 4% as to $621,515 of principal,
                                       and (iii) fixed interest rate of 12% as
                                       to $16,000 of principal. The loans
                                       require payments of interest only until
                                       maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         10/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $53,995 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $4,500
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,006,107; the loan matures in 1/05, has
first mortgage loan secured by         a balance due at maturity of $932,217,
property and other terms:              bears interest at a fixed annual rate of
                                       7.5%, has annual and monthly debt service
                                       requirements of $174,020 and $14,502,
                                       respectively, amortizes on a 30-year
                                       basis, and is payable after the fourth
                                       anniversary of the loan, subject to yield
                                       maintenance until the sixth month prior
                                       to maturity, when it can be prepaid at
                                       par.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans secured by the Sunrise Property
                                       (the "Sunrise Second Mortgage Loans")
                                       consisted of a second mortgage note with
                                       a principal balance of $335,000, two
                                       unsecured demand notes with an aggregate
                                       principal balance of $622,982 and
                                       advances in the amount of $73,819. On
                                       12/15/98, the debtor restated and amended
                                       the second mortgage note and the demand
                                       notes and created a new promissory note
                                       in favor of the Exchange Partnership in
                                       the original principal amount of $16,000
                                       (to cover prior advances). The debtor and
                                       the Partnership also entered into a
                                       mortgage modification agreement. Pursuant
                                       to the arrangement, the Exchange
                                       Partnership agreed to set the maturity
                                       date on the demand notes and the advances
                                       at the same maturity date as the second
                                       mortgage note, in exchange for the
                                       debtor's agreement to secure its
                                       repayment obligations on the unsecured
                                       notes and advances with a second mortgage
                                       on the Sunrise Property.
-------------------------------------- -----------------------------------------


                                       28
<PAGE>



                   Baron Strategic Investment Fund VIII, Ltd.

The Exchange Partnership owns (i) an undivided interest in an unrecorded second
mortgage loan secured by the Heatherwood Property-Phase II, and three unsecured
loans associated with such property, (ii) three unrecorded second mortgage loans
secured by the Longwood Property-Phase I and (iii) an unrecorded second mortgage
loan secured by the Lake Sycamore Property (under development). The interest of
the Exchange Partnership and other Exchange Partnerships in the second mortgage
loans, terms of the first mortgage loans secured by each property, and other
information are described below.

--------------------------------------------------------------------------------
1.  Heatherwood Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Heatherwood Apartments - Phase II (41
                                       units) Kissimmee, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Heatherwood Apartments II, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's undivided
58% interest in loans:                 $206,260
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $149,180  ($0)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $149,180
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnership's
undivided 42% in loans (accrued
unpaid interest):                      $155,787  ($25,545)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund X, Ltd.
Partnership in second mortgage         ("Baron Fund X") owns the remaining
loans:                                 undivided 42% interest in the second
                                       mortgage loans secured by the Heatherwood
                                       Property and in the unsecured loans
                                       associated with the property
                                       ("Heatherwood Loans"). The aggregate
                                       original principal balance, aggregate
                                       12/31/2000 principal balance, and
                                       aggregate balance due at maturity in
                                       respect of Baron Fund X's interest in the
                                       Heatherwood Loans is $155,787 (accrued
                                       unpaid interest of $25,544); the
                                       aggregate annual (and monthly) payments
                                       due it are $9,710 ($809). The other terms
                                       relating to Baron Fund X's interest in
                                       the Heatherwood Loans are the same as
                                       stated herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $188,500 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal to
                                       the extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 30% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of 1% over prime rate
                                       (currently 8.75%) as to $1,010 of
                                       principal, and (iii) fixed interest rate
                                       of 12% as to $16,749 of principal. The
                                       loans require payments of interest only
                                       until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         10/04
-------------------------------------- -----------------------------------------
Annual interest payable:               $13,408 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $1,117
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $668,543 ($387,757); the loan matures in
first mortgage loan secured by         11/04, has a balance due at maturity of
property (58% of amount) and other     $655,856, bears interest at a fixed
terms:                                 annual rate of 7.75%, has annual and
                                       monthly debt service requirements of
                                       $61,038 and $5,087, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
-------------------------------------- -----------------------------------------


                                       29
<PAGE>


               Baron Strategic Investment Fund VIII, Ltd. (cont'd)

--------------------------------------------------------------------------------
2.   Longwood Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Longwood Apartments - Phase I (59 units)
                                       Cocoa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Longwood Apartments I, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $969,268
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest ):            $969,268  ($152,137)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $969,268
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $368,558 of principal (plus
                                       non-cumulative participation
                                       interest at the rate of 3% on the unpaid
                                       principal to the extent of available cash
                                       flow plus additional non-cumulative
                                       participation interest equal to 30% of
                                       any remaining available cash flow), (ii)
                                       adjustable interest rate of 1% over prime
                                       rate (currently 8.75%) as to $526,465 of
                                       principal, and (iii) fixed interest rate
                                       of 12% as to $74,245 of principal. The
                                       loans require payments of interest only
                                       until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         10/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $77,088 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $6,424
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,005,661; the loan matures in 11/04,
first mortgage loan secured by         has a balance due at maturity of
property and other terms:              $1,204,545, bears interest at a fixed
                                       annual rate of 7.75%, has annual and
                                       monthly debt service requirements of
                                       $89,150 and $7,429, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the Longwood Second
                                       Mortgage Loans consisted of a second
                                       mortgage note with a principal balance of
                                       $368,558, an unsecured demand note with a
                                       principal balance of $526,465, and
                                       advances of $74,245. On 12/15/98, the
                                       debtor restated and amended the second
                                       mortgage note and the demand note and
                                       created a new promissory note in the
                                       original principal amount of $74,245 (to
                                       cover prior advances). The debtor and the
                                       Exchange Partnership also entered into a
                                       mortgage modification agreement. Pursuant
                                       to the arrangement, the Exchange
                                       Partnership agreed to set the maturity
                                       date on the demand note and the advances
                                       at the same maturity date as the second
                                       mortgage note, in exchange for the
                                       debtor's agreement to secure its
                                       repayment obligations on the demand note
                                       and advances with a second mortgage on
                                       the Longwood Property.
-------------------------------------- -----------------------------------------


                                       30
<PAGE>


               Baron Strategic Investment Fund VIII, Ltd. (cont'd)

--------------------------------------------------------------------------------
3.   Lake Sycamore Second Mortgage Loan:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Villas at Lake Sycamore (164 townhomes
                                       under development) Cincinnati, Ohio
-------------------------------------- -----------------------------------------
Debtor:                                Sycamore Real Estate Development, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $98,000
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $98,000  ($18,885)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $98,000
-------------------------------------- -----------------------------------------
12/31/2000 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest):             $473,500  ($119,673)
-------------------------------------- -----------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only until
                                       maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         12/03
-------------------------------------- -----------------------------------------
Annual interest payable:               $11,760
-------------------------------------- -----------------------------------------
Monthly interest payable:              $980
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,021,362; approved maximum $2,000,000;
first mortgage loan secured by         the loan matures in 11/01, bears interest
property and other terms:              at an annual adjustable rate equal to
                                       lender's prime rate plus 1% (currently
                                       8.75%), has current annual and monthly
                                       debt service requirements of $89,369 and
                                       $7,447, respectively, requires
                                       payments of interest only until maturity
                                       and is prepayable without penalty.
-------------------------------------- -----------------------------------------
Other matters:                         Two other Exchange Partnerships,
                                       Baron Strategic Investment Fund, Ltd. and
                                       Baron Strategic Investment Fund IX, Ltd.,
                                       own separate second mortgage notes
                                       secured by the property with the same
                                       terms except that they have principal
                                       amounts of $230,000 and $243,500 (and
                                       accrued unpaid interest of $68,733 and
                                       $50,940), respectively. The lending
                                       parties have agreed to share the benefits
                                       of the second mortgage on a pari passu
                                       basis.
-------------------------------------- -----------------------------------------


                                       31
<PAGE>


                      Baron Strategic Vulture Fund I, Ltd.

The Exchange Partnership owns an undivided interest in three unrecorded second
mortgage loans and a 100% interest in one second mortgage loan secured by the
Curiosity Creek Property described below. The interest of the Exchange
Partnership and a separate Exchange Partnership in the second mortgage loans,
terms of the first mortgage loan secured by the property, and other information
are described below.

--------------------------------------------------------------------------------
Curiosity Creek Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Curiosity Creek Apartments (81 units)
                                       Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Curiosity Creek Apartments, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of Exchange
Partnership's undivided 73.7% interest
in three loans and 100% interest in
one loan:                              $1,243,847
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $1,243,847  ($167,783)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $1,243,847
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnership's
undivided 26.3% in three loans and
100% interest in one loan (accrued
unpaid interest):                      $438,097  ($53,403)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund V, Ltd.
Partnership in second mortgage         ("Baron Fund V") owns the remaining
loans:                                 undivided 26.3% interest in three second
                                       mortgage loans and a 100% interest in one
                                       second mortgage loan secured by the
                                       Curiosity Creek Property ("Curiosity
                                       Creek Second Mortgage Loans"). The
                                       aggregate original principal balance,
                                       aggregate 12/31/2000 principal balance,
                                       and aggregate balance due at maturity in
                                       respect of Baron Fund V's interest in the
                                       Curiosity Creek Second Mortgage Loans is
                                       $438,097 (accrued unpaid interest of
                                       $53,403); the aggregate annual and
                                       monthly payments due it are $41,238 and
                                       $3,437, respectively. The other terms
                                       relating to Baron Fund V's interest in
                                       the Curiosity Creek Second Mortgage Loans
                                       are the same as stated herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $595,333 of principal (plus non-
                                       cumulative participation interest at the
                                       rate of 3% on the unpaid principal to the
                                       extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 30% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of prime plus 1% (currently
                                       8.75%) as to $305,407 of principal, (iv)
                                       fixed interest rate of 12.5% as to
                                       $306,675 of principal, and (iii) fixed
                                       interest rate of 12% as to $36,431 of
                                       principal. The loans require payments of
                                       interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         4/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $105,149 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $8,762
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,258,030 ($927,168); the loan matures
first mortgage loan secured by         in 4/08, has a balance due at maturity of
property (73.7% of amount)             $1,122,800, bears interest at the fixed
and other terms:                       annual rate of 7.28%, has annual and
                                       monthly debt service requirements of
                                       $106,737 and $8,895, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it may be prepaid at par.
-------------------------------------- -----------------------------------------


                                       32
<PAGE>


                  Baron Strategic Vulture Fund I, Ltd. (cont'd)

-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the Curiosity Creek
                                       Second Mortgage Loans consisted of a
                                       second mortgage note with a principal
                                       balance of $807,560, two unsecured demand
                                       notes with an aggregate principal balance
                                       of $830,360 and advances in the amount of
                                       $66,171. On 12/15/98, the debtor, the
                                       Exchange Partnership and Baron Fund V
                                       entered into a mortgage modification
                                       agreement pursuant to which the Exchange
                                       Partnership and Baron Fund V agreed to
                                       set the maturity date on the demand notes
                                       and the advances at the same maturity
                                       date as the second mortgage note, in
                                       exchange for the debtor's agreement to
                                       secure its repayment obligations on the
                                       unsecured notes and advances with a
                                       second mortgage on the Curiosity Creek
                                       Property.
-------------------------------------- -----------------------------------------


                                       33
<PAGE>


                         Brevard Mortgage Program, Ltd.

The Exchange Partnership owns three unrecorded second mortgage loans secured by
the Meadowdale Property described below. The Exchange Partnership's interest in
the Second Mortgage Loans, terms of the first mortgage loan secured by the
property, and other information are described below.

--------------------------------------------------------------------------------
Meadowdale Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Meadowdale Apartments (64 units)
                                       Melbourne, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Florida Opportunity Income Fund
                                       III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $1,048,861
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $1,048,861  ($203,796)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $1,048,861
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $752,747 of principal (plus non-
                                       cumulative participation interest at the
                                       rate of 3% on the unpaid principal to the
                                       extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 20% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of 1% over prime rate
                                       (currently 8.75%) as to $271,923 of
                                       principal and (iii) fixed rate of 12% as
                                       to $24,191 of principal.
-------------------------------------- -----------------------------------------
Maturity date:                         10/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $71,861 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $ 5,988
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $914,071; the loan matures in 7/01, has a
first mortgage loan secured by         balance due at maturity of $905,918,
property and other terms:              bears interest at a fixed annual rate of
                                       8.75%, has annual and monthly debt
                                       service requirements of $93,935 and
                                       $7,828, respectively, amortizes on a
                                       22-year basis, and is prepayable
                                       without penalty.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the second mortgage
                                       loans consisted of a second mortgage note
                                       with a principal balance of $752,747, an
                                       unsecured demand note with a principal
                                       balance of $271,923 and advances of
                                       $24,191. On 12/15/98, the debtor restated
                                       and amended the second mortgage note and
                                       the demand note and created a new
                                       promissory note in favor of the Exchange
                                       Partnership in the original principal
                                       amount of $24,191 (to cover the prior
                                       advances). The debtor and the Exchange
                                       Partnership also entered into a mortgage
                                       modification agreement. Pursuant to the
                                       arrangement, the Exchange Partnership
                                       agreed to set the maturity date on the
                                       demand note and the advances at the same
                                       maturity date as the second mortgage
                                       note, in exchange for the debtor's
                                       agreement to secure its repayment
                                       obligations on the demand note and the
                                       advances with a second mortgage on the
                                       Meadowdale Property.
-------------------------------------- -----------------------------------------


                                       34
<PAGE>

                          EXCHANGE HYBRID PARTNERSHIPS

                    Baron Strategic Investment Fund VI, Ltd.

The Exchange Partnership owns (1) a 57.29% limited partnership interest in a
limited partnership which holds fee simple title to the Pineview Property, (2)
an unrecorded second mortgage loan secured by the Candlewood Property-Phase II,
(3) an undivided interest in two recorded second mortgage loans secured by the
Garden Terrace Property-Phase III, and (4) a note receivable from another
Exchange Partnership which is secured by two unrecorded second mortgage notes
and a second mortgage on the Country Square Property-Phase I. Information
concerning the Pineview Property and the first mortgage indebtedness secured by
it is included above in the tables entitled "Property Information - Equity
Property Interests" and "Mortgage Information - Equity Property Interests." The
interest of the Exchange Partnership and other Exchange Partnerships in the
second mortgage loans, the note payable to the Exchange Partnership from another
Exchange Partnership, terms of the respective first mortgage loan and the
Exchange Partnership's second mortgage loans secured by the three properties
described below, and other information are described below.

--------------------------------------------------------------------------------
1.   Candlewood Second Mortgage Loan:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Baron Strategic Investment Fund
                                       III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's interest in
loan:                                  $68,000
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $68,000  ($20,010)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $68,000
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of other
second mortgage loans secured by the
property and owned by other Exchange
Partnerships (accrued unpaid
interest):                             $96,500  ($21,893)
-------------------------------------- -----------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund V, Ltd.
Exchange Partnerships in the           ("Baron Fund V") and Baron Strategic
Property:                              Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2000 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       V's and Baron Fund IX's loans are $21,000
                                       (accrued unpaid interest of $6,490) and
                                       $75,500 (accrued unpaid interest of
                                       $21,893), respectively; the annual (and
                                       monthly) payments due them are $2,520
                                       ($210) and $9,060 ($755), respectively.
                                       The other terms relating to Baron Fund
                                       V's and Baron Fund IX's loans are the
                                       same as stated herein in respect of the
                                       Exchange Partnership's loan.
-------------------------------------- -----------------------------------------
Mortgage interest and
Amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         3/03
-------------------------------------- -----------------------------------------
Annual interest payable:               $8,160
-------------------------------------- -----------------------------------------
Monthly interest payable:              $680
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $563,233 ($232,615); the loan matures in
first mortgage loan secured by         2/03, has a balance due at maturity of
property (41.3% of amount) and other   $533,678, bears interest at a fixed
terms:                                 annual rate of 7.79%, payable quarterly,
                                       has annual and monthly debt service
                                       requirements of $56,153 and $4,679,
                                       respectively, amortizes on a 25-year
                                       basis and is prepayable without penalty.
-------------------------------------- -----------------------------------------


                                       35
<PAGE>


                Baron Strategic Investment Fund VI, Ltd. (cont'd)

--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $68,000. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund V
                                       and Baron Fund IX with separate mortgages
                                       on the property. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgages on a pari passu basis.
-------------------------------------- -----------------------------------------
2.  Garden Terrace Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
Securing mortgages (number of
units and location):                   Garden Terrace Apartments - Phase III (91
                                       units) Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's undivided 20%
interest in loan:                      $248,353
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $248,353  ($14,316)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $248,353
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnerships'
undivided 80% in loan (accrued
unpaid interest):                      $993,414  ($58,217)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund IX, Ltd.
Partnerships in second mortgage        ("Baron Fund IX") and Baron Strategic
loans:                                 Investment Fund X, Ltd. ("Baron Fund X")
                                       own the remaining undivided 80% interest
                                       in the second mortgage loans secured by
                                       the Garden Terrace Property ("Garden
                                       Terrace Second Mortgage Loans"). The
                                       original principal balance, 12/31/2000
                                       principal balance, and balance due at
                                       maturity in respect of Baron Fund IX's
                                       and Baron Fund X's interest in the Garden
                                       Terrace Second Mortgage Loans are
                                       $310,442 (accrued unpaid interest of
                                       $18,133) and $682,972 (accrued unpaid
                                       interest of $40,084), respectively; the
                                       annual (and monthly) payments due them
                                       are $27,940 ($2,328) and $61,467
                                       ($5,122), respectively. The other terms
                                       relating to Baron Fund IX's and Baron
                                       Fund X's interest in the Garden Terrace
                                       Second Mortgage Loans are the same as
                                       stated herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $147,000 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the
                                       extent of available cash flow, plus
                                       additional participation interest equal
                                       to 30% of any remaining cash flow
                                       (payable only to holders of note referred
                                       to in (ii) below) and (ii) fixed interest
                                       rate of 9% as to $101,353 of principal,
                                       payable only from excess cash flow after
                                       payment of 2% minimum interest and 7%
                                       participation interest due on the note
                                       referred to in (i) above. The loans
                                       require payments of interest only until
                                       maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         1/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $22,353 (plus any additional
                                       participation interest)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $1,863
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $967,012 ($193,402); the loan matures in
first mortgage loan secured by         5/05, has a balance due at maturity of
property (20% of amount) and           $822,063, bears interest at the fixed
other terms:                           annual rate of 8.31%, has annual and
                                       monthly debt service requirements of
                                       $96,047 and $8,004, respectively,
                                       amortizes on a 25-year basis and may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
-------------------------------------- -----------------------------------------


                                       36
<PAGE>


                Baron Strategic Investment Fund VI, Ltd. (cont'd)

--------------------------------------------------------------------------------
3.   Note Payable by Baron Strategic Investment Fund IV, Ltd. ("Baron Fund IV"):
-------------------------------------- -----------------------------------------
12/31/2000 principal balance owed to
Exchange Partnership collateralized
by security interest in Baron Fund
IV's second mortgage on Country
Square Property - Phase I- see above
under table for "Baron Strategic
Investment Fund IV, Ltd.")(accrued
unpaid interest payable to Exchange
Partnership):                          $259,639  ($115,250)
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
Baron Fund IV's second mortgage
loans secured by property (accrued
unpaid interest ):                     $1,364,549  ($410,623)
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,557,370; the loan matures in 3/08, has
first mortgage loan                    a balance due at maturity of $1,385,953,
secured by property:                   bears interest at a fixed annual rate of
                                       7.41%, has annual and monthly debt
                                       service requirements of $133,068 and
                                       $11,089, respectively, amortizes on a
                                       30-year basis, and is prepayable
                                       after the fourth anniversary of the loan,
                                       subject to yield maintenance until the
                                       sixth month prior to maturity, when it
                                       can be prepaid at par.
-------------------------------------- -----------------------------------------
Other matters:                         In 3/97, the Exchange Partnership
                                       provided a loan with a current principal
                                       balance of $259,639 to another Exchange
                                       Partnership, Baron Strategic Investment
                                       Fund IV, Ltd. ("Baron Fund IV"). Baron
                                       Fund IV, in turn, lent the loan proceeds
                                       to the borrower as part of the Country
                                       Square Second Mortgage Loans. The loan
                                       from Baron Fund VI to Baron Fund IV bears
                                       interest at the annual rate of 15%,
                                       payable monthly, matures in 9/02 and is
                                       secured by Baron Fund IV's interest in
                                       the second mortgage note and second
                                       mortgage.
-------------------------------------- -----------------------------------------


                                       37
<PAGE>


                    Baron Strategic Investment Fund IX, Ltd.

The Partnership owns (i) a 44.96% limited partnership interest in a limited
partnership which holds fee simple title to the Crystal Court Property-Phase I,
(ii) an undivided interest in an unrecorded second mortgage loan secured by the
Candlewood Property, (iii) an undivided interest in two recorded second mortgage
loans secured by the Garden Terrace Property-Phase III, and (iv) an unrecorded
second mortgage loan secured by the Lake Sycamore Property (under development).
Information concerning the Crystal Court Property and the first mortgage
indebtedness secured by it is included above in the tables entitled "Property
Information - Equity Property Interests" and "Mortgage Information - Equity
Property Interests." The interest of the Exchange Partnership and other Exchange
Partnerships in the respective second mortgage loans, terms of the respective
first mortgage loan secured by the Candlewood Property, the Garden Terrace
Property and the Lake Sycamore Property, and other information are described
below.

--------------------------------------------------------------------------------
1.   Candlewood Second Mortgage Loan:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Baron Strategic Investment Fund
                                       III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loan:                      $75,500
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $75,500  ($21,893)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $75,500
-------------------------------------- -----------------------------------------
12/31/2000 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest):             $89,000  ($20,009)
-------------------------------------- -----------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund V, Ltd.
Exchange Partnerships in               ("Baron Fund V") and Baron Strategic
Property:                              Investment Fund VI, Ltd. ("Baron Fund
                                       VI") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2000 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       V's and Baron Fund VI's loans are $21,000
                                       (accrued unpaid interest of $6,490) and
                                       $68,000 (accrued unpaid interest of
                                       $20,009), respectively; the annual (and
                                       monthly) payments due them are $2,520
                                       ($210) and $8,160 ($680), respectively.
                                       The other terms relating to Baron Fund
                                       V's and Baron Fund VI's loans are the
                                       same as stated herein in respect of the
                                       Exchange Partnership's loan.
-------------------------------------- -----------------------------------------
Mortgage interest and
Amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         3/03
-------------------------------------- -----------------------------------------
Annual interest payable:               $9,060
-------------------------------------- -----------------------------------------
Monthly interest payable:              $755
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $563,233 ($232,615); the loan matures in
first mortgage loan secured by         2/03, has a balance due at maturity of
property (45.9% of amount)             $533,678, bears interest at a fixed
and other items:                       annual rate of 7.79%, payable quarterly,
                                       has annual and monthly debt service
                                       requirements of $56,153 and $4,679,
                                       respectively, amortizes on a 25-year
                                       basis and is prepayable without penalty.
-------------------------------------- -----------------------------------------


                                       38
<PAGE>


                Baron Strategic Investment Fund IX, Ltd. (cont'd)

-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $75,500. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund V
                                       and Baron Fund VI with separate second
                                       mortgages on the property. The lending
                                       parties have agreed to share the benefits
                                       of the second mortgages on a pari passu
                                       basis.
-------------------------------------- -----------------------------------------
2.   Garden Terrace Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Garden Terrace Apartments - Phase III (91
                                       units) Tampa, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's undivided 25%
interest in loans:                     $310,442
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $310,442  ($18,133)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $310,442
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnerships'
undivided 75% interest in loans
(accrued unpaid interest):             $931,325  ($54,400)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VI, Ltd.
Partnerships in second mortgage        ("Baron Fund VI") and Baron Strategic
loans:                                 Investment Fund X, Ltd. ("Baron Fund X")
                                       own the remaining undivided 75% interest
                                       in the second mortgage loans secured by
                                       the Garden Terrace Property ("Garden
                                       Terrace Second Mortgage Loans"). The
                                       original principal balance, 12/31/2000
                                       principal balance, and balance due at
                                       maturity in respect of Baron Fund VI's
                                       and Baron Fund X's interest in the Garden
                                       Terrace Second Mortgage Loans is $248,353
                                       (accrued unpaid interest of $14,316) and
                                       $682,972 (accrued unpaid interest of
                                       $40,084), respectively, the annual (and
                                       monthly) payments due them are $22,352
                                       ($1,863) and $61,467 ($5,122),
                                       respectively. The other terms relating to
                                       Baron Fund VI's and Baron Fund X's
                                       interest in the Garden Terrace Second
                                       Mortgage Loan are the same as stated
                                       herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $183,750 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable only to
                                       holders of note referred to in (ii)
                                       below) and (ii) fixed interest rate of 9%
                                       as to $126,692 of principal, payable only
                                       from excess cash flow after payment of 2%
                                       minimum interest and 7% participation
                                       interest due on the note referred to in
                                       (i) above. The loan requires payments of
                                       interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         1/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $27,940 (plus any additional
                                       participation interest)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $2,328
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $967,012 ($241,753); the loan matures in
first mortgage loan secured by         5/05, has a balance due at maturity of
property (25% of amount) and           $822,063, bears interest at the fixed
other terms:                           annual rate of 8.31%, has annual and
                                       monthly debt service requirements of
                                       $96,047 and $8,004, respectively,
                                       amortizes on a 25-year basis and may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
-------------------------------------- -----------------------------------------


                                       39
<PAGE>


                Baron Strategic Investment Fund IX, Ltd. (cont'd)

--------------------------------------------------------------------------------
3.   Lake Sycamore Second Mortgage Loan:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Villas at Lake Sycamore (164 townhomes
                                       under development) Cincinnati, Ohio
-------------------------------------- -----------------------------------------
Debtor:                                Sycamore Real Estate Development,
                                       Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $243,500
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $243,500  ($50,940)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $243,500
-------------------------------------- -----------------------------------------
12/31/2000 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest):             $328,000  ($87,618)
-------------------------------------- -----------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only until
                                       maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         12/03
-------------------------------------- -----------------------------------------
Annual interest payable:               $29,220
-------------------------------------- -----------------------------------------
Monthly interest payable:              $2,435
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $1,021,362; approved maximum $2,000,000;
first mortgage loan secured by         the loan matures in 11/01, bears interest
property and other items:              at the annual adjustable rate equal to
                                       lender's prime rate plus 1% (currently
                                       8.75%), has current annual and monthly
                                       debt service requirements of $89,369 and
                                       $7,447, respectively, requires payments
                                       of interest only until maturity and is
                                       prepayable without penalty.
-------------------------------------- -----------------------------------------
Other matters:                         Two other Exchange Partnerships, Baron
                                       Strategic Investment Fund, Ltd. and Baron
                                       Strategic Investment Fund VIII, Ltd., own
                                       separate second mortgage notes secured by
                                       the property with the same terms except
                                       that they have principal amounts of
                                       $230,000 and $98,000 (accrued unpaid
                                       interest of $68,733 and $18,885),
                                       respectively. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgage on a pari passu basis.
-------------------------------------- -----------------------------------------


                                       40
<PAGE>


                     Baron Strategic Investment Fund X, Ltd.

The Partnership owns (1) a 47.59% limited partnership interest in a limited
partnership which holds fee simple title to the Crystal Court Property-Phase I,
(2) a 41.71% limited partnership interest in a limited partnership which holds
fee simple title to the Pineview Property, (3) an undivided interest in two
recorded second mortgage loans secured by the Garden Terrace Property-Phase III,
and (4) an undivided interest in an unrecorded second mortgage loan secured by
the Heatherwood Property-Phase II and in three unsecured loans associated with
such property. Information concerning the Crystal Court Property and the
Pineview Property and the first mortgage indebtedness secured respectively by
them is included above in the tables entitled "Property Information - Equity
Property Interests" and "Mortgage Information - Equity Property Interests." The
interest of the Exchange Partnership and other Exchange Partnerships in the
respective second mortgage loans, terms of the respective first mortgage loans
secured by the Garden Terrace Property and the Heatherwood Property, and other
information are described below.

--------------------------------------------------------------------------------
1.   Heatherwood Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment
property securing mortgages (number
of units and location):                Heatherwood Apartments - Phase II (41
                                       units) Kissimmee, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Heatherwood Apartments II, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's undivided
42% interest in loans:                 $155,787
-------------------------------------- -----------------------------------------
12/31/2000  principal balance
(accrued unpaid interest):             $155,787  ($25,544)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $155,787
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnership's
undivided 58% in loans (accrued
unpaid interest):                      $149,180  ($0)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VIII,
Partnership in second mortgage         Ltd.("Baron Fund VIII") owns the
loans:                                 remaining undivided 58% interest in the
                                       second mortgage loans secured by the
                                       Heatherwood Property and in the unsecured
                                       loans associated with the property
                                       ("Heatherwood Loans"). The aggregate
                                       original principal balance, aggregate
                                       12/31/2000 principal balance, and
                                       aggregate balance due at maturity in
                                       respect of Baron Fund VIII's interest in
                                       the Heatherwood Loans is $149,180
                                       (accrued unpaid interest of $0); the
                                       aggregate annual (and monthly) payments
                                       due it are $8,950 ($746). The other terms
                                       relating to Baron Fund VIII's interest in
                                       the Heatherwood Loans are the same as
                                       stated herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $136,500 of principal (plus
                                       non-cumulative participation
                                       interest at the rate of 3% on the unpaid
                                       principal to the extent of available cash
                                       flow plus additional non-cumulative
                                       participation interest equal to 30% of
                                       any remaining available cash flow), (ii)
                                       adjustable interest rate of 1% over prime
                                       rate (currently 8.75%) as to $732 of
                                       principal, and (iii) fixed interest rate
                                       of 12% as to $12,130 of principal. The
                                       loans require payments of interest only
                                       until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         10/04
-------------------------------------- -----------------------------------------
Annual interest payable:               $9,710 (plus any participation interest
                                       payable)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $809
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------


                                       41
<PAGE>


                Baron Strategic Investment Fund X, Ltd. (cont'd)

--------------------------------------------------------------------------------
12/31/2000 principal balance of        $668,543 ($280,786); the loan matures in
first mortgage loan secured by         11/04, has a balance due at maturity of
property (42% of amount) and           $655,856, bears interest at a fixed
other terms:                           annual rate of 7.75%, has annual and
                                       monthly debt service requirements of
                                       $61,038 and $5,087, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
-------------------------------------- -----------------------------------------
Other matters:                         The Heatherwood Loans consist of a second
                                       mortgage note secured by the Heatherwood
                                       Property with a principal balance
                                       $285,680 and unsecured loans in the
                                       aggregate principal amount of $6,361.
-------------------------------------- -----------------------------------------
2.   Garden Terrace Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Garden Terrace Apartments - Phase III (91
                                       units) Orlando, Florida
-------------------------------------- -----------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's undivided
55% interest in loan:                  $682,972
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $682,972  ($40,084)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $682,972
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of
other Exchange Partnerships'
undivided 45% in loan (accrued
unpaid interest):                      $558,795  ($32,449)
-------------------------------------- -----------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VI, Ltd.
Partnerships in second mortgage        ("Baron Fund VI") and Baron Strategic
loans:                                 Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own the remaining undivided 45%
                                       interest in the second mortgage loans
                                       secured by the Garden Terrace Property
                                       ("Garden Terrace Second Mortgage Loans").
                                       The original principal balance,
                                       12/31/2000 principal balance, and balance
                                       due at maturity in respect of Baron Fund
                                       VI's and Baron Fund IX's interest in the
                                       Garden Terrace Second Mortgage Loans is
                                       $248,353 (accrued unpaid interest of
                                       $14,316) and $310,442, (accrued unpaid
                                       interest of $18,133), respectively; the
                                       annual (and monthly) payments due them
                                       are $22,352 ($1,863) and $27,940
                                       ($2,328), respectively. The other terms
                                       relating to Baron Fund VI's and Baron
                                       Fund IX's interest in the Garden Terrace
                                       Second Mortgage Loans are the same as
                                       stated herein.
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $404,250 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable only to
                                       holders of note referred to in (ii)
                                       below) and (ii) fixed interest rate of 9%
                                       as to $278,222 of principal, payable only
                                       from excess cash flow after payment of 2%
                                       minimum interest and 7% participation
                                       interest due on the note referred to in
                                       (i) above. The loans require payments of
                                       interest only until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         1/07
-------------------------------------- -----------------------------------------
Annual interest payable:               $61,467 (plus any additional
                                       participation interest)
-------------------------------------- -----------------------------------------
Monthly interest payable:              $5,122
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------


                                       42
<PAGE>


                Baron Strategic Investment Fund X, Ltd. (cont'd)

-------------------------------------- -----------------------------------------
12/31/2000 principal balance of        $967,012 ($531,857); the loan matures in
first mortgage loan secured by         5/05, has a balance due at maturity of
property (55% of amount) and           $822,063, bears interest at the fixed
other items:                           annual rate of 8.31%, has annual and
                                       monthly debt service requirements of
                                       $96,047 and $8,004, respectively,
                                       amortizes on a 25-year basis and may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
-------------------------------------- -----------------------------------------
Other matters:                         The Exchange Partnership paid a note (the
                                       "Note") with a current principal balance
                                       of $400,000 to the seller in connection
                                       with its acquisition of an undivided 75%
                                       interest in the Garden Terrace Second
                                       Mortgage Loans. The partnership in turn
                                       sold an undivided 20% interest (and
                                       retained a 55% interest) in the loans.
                                       The Note bears an annual interest rate of
                                       10%, has a maturity date of 1/1/07 and is
                                       secured by a collateral assignment of the
                                       partnership's interest in the loans and a
                                       second mortgage on the property.
-------------------------------------- -----------------------------------------


                                       43
<PAGE>


                Lamplight Court of Bellefontaine Apartments, Ltd.

The Exchange Partnership owns (1) a 31.7% limited partnership interest in a
limited partnership which holds fee simple title to the Lamplight Property and
(2) two unrecorded second mortgage loans secured by the Lamplight Property.
Additional information concerning the Lamplight Property and the first mortgage
indebtedness secured by it is included above in the tables entitled "Property
Information - Equity Property Interests" and "Mortgage Information - Equity
Property Interests." The interest of the Exchange Partnership in the second
mortgage loans and other information are described below.

--------------------------------------------------------------------------------
Lamplight Court Second Mortgage Loans:
-------------------------------------- -----------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Lamplight Court Apartments (80 units)
                                       Bellefontaine, Ohio

-------------------------------------- -----------------------------------------
Debtor:                                Independence Village, Ltd.
-------------------------------------- -----------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $678,302
-------------------------------------- -----------------------------------------
12/31/2000 principal balance
(accrued unpaid interest):             $678,302  ($223,161)
-------------------------------------- -----------------------------------------
Balance due at maturity:               $678,302
-------------------------------------- -----------------------------------------
Mortgage interest and                  (i) Adjustable interest rate of 1% over
                                       prime rate (currently 8.75%) as to
                                       $585,000 of amortization provisions:
                                       principal, and (ii) fixed interest rate
                                       of 12% as to $93,302 of principal. The
                                       loans require payments of interest only
                                       until maturity.
-------------------------------------- -----------------------------------------
Maturity date:                         12/06
-------------------------------------- -----------------------------------------
Annual interest payable:               $60,634
-------------------------------------- -----------------------------------------
Monthly interest payable:              $5,053
-------------------------------------- -----------------------------------------
Prepayment provisions:                 Prepayable without penalty.
-------------------------------------- -----------------------------------------
12/31/2000 principal balance of first
mortgage loan secured by
property and other terms:              $1,326,811; the loan matures in 11/06,
                                       has a balance due at maturity of
                                       $1,158,349, bears interest at a fixed
                                       annual rate of 9.04%, has annual and
                                       monthly debt service requirements of
                                       $141,445 and $11,787, respectively,
                                       amortizes on a 25-year basis, and is
                                       prepayable after the fifth anniversary of
                                       the loan, provided that in the sixth and
                                       seventh years prepayment requires a fee
                                       equal to the greater of 1% of the prepaid
                                       amount or yield maintenance.
-------------------------------------- -----------------------------------------
Other matters:                         Prior to 12/15/98, the Lamplight Court
                                       Second Mortgage Loans consisted of a
                                       second mortgage note with a principal
                                       balance of $585,000 and an unsecured
                                       demand note with a principal balance of
                                       $93,302. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       mortgage modification agreement under
                                       which the Exchange Partnership agreed to
                                       set the maturity date on the demand note
                                       at 12/06, the same maturity date as the
                                       second mortgage note, in exchange for the
                                       agreement of the debtor to secure its
                                       repayment obligations on the demand note
                                       with a second mortgage on the Lamplight
                                       Court Property.
-------------------------------------- -----------------------------------------


                                       44
<PAGE>

Investment Objectives and Policies

   General

     The Trust and the Operating Partnership have been organized to acquire
equity interests in residential apartment properties located in the United
States and/or to provide or acquire mortgage loans secured by such types of
property. Such investments are expected to consist primarily of: (i) the direct
and indirect acquisition, ownership, operation, management, improvement and
disposition of equity interests in such types of properties and/or (ii) mortgage
loans which the Trust and the Operating Partnership provide or acquire which are
secured by mortgages on such types of properties. The Managing Shareholder
expects that investments will (1) generate current cash flow for distribution to
Shareholders and Unitholders from rental payments from the rental of residential
apartment units which the Trust and the Operating Partnership may acquire and/or
principal and interest payments in respect of mortgage loans which the Trust and
the Operating Partnership may provide or acquire and (2), where applicable,
provide the opportunity for capital appreciation of residential apartment
properties. The Trust and the Operating Partnership intend to pay regular
quarterly distributions to the Shareholders and the Unitholders. Properties in
which the Trust and the Operating Partnership acquire an interest are expected
to use the straight-line method of depreciation over 30 years.

     The Trust and the Operating Partnership intend to acquire, own, operate,
manage, and improve residential apartment property interests for long-term
ownership, and thereby to seek to maximize current and long-term income and the
value of its assets. The strategy of the Trust and the Operating Partnership is
to pursue acquisitions of interests in properties that (i) are available at
prices below estimated replacement cost; (ii) may provide attractive returns
with significant potential growth in cash flow from property operations; (iii)
are strategically located, of high quality and competitive in their respective
markets; (iv) have been under-managed or are otherwise capable of improved
performance through intensive management and leasing that will result in
increased occupancy and rental revenues, and (v) provide anticipated total
returns that will increase distributions by the Trust and the Operating
Partnership and their overall market value. The Trust will make investments in
properties indirectly through the Operating Partnership in which it will hold
all of its real estate assets and conduct all real estate operations. Unless the
context otherwise requires, the term "Trust" as used below in this item
collectively refers to Baron Capital Trust and the Operating Partnership.

     The primary business objective of the Trust is to increase distributions to
Shareholders and Unitholders and to increase the value of the Trust's portfolio
of properties in which it acquires an interest. The Trust intends to achieve
these objectives by:

     (i) Acquiring interests in residential apartment properties located in the
United States that are available at prices below estimated replacement cost and
capable of enhanced performance, both in terms of cash flow and investment
value, through application of the Trust's management ability and strategic
capital improvements;

     (ii) Acquiring mortgage loans, including subordinated mortgage loans
secured by mortgages on existing residential apartment properties located in the
United States;

     (iii) Increasing cash flow of the Trust's property interests through active
leasing, rent increases, improvement in tenant retention, expense controls,
effective property management, and regular maintenance and periodic renovations,
including additions to amenities;

     (iv) Managing operating expenses through the use of affiliated leasing,
marketing, financing, accounting, legal, and data processing functions; and

     (v) Emphasizing capital improvements to enhance the Trust's competitive
advantages in its markets.

     The Trust and the Operating Partnership intend to provide or acquire
subordinated mortgage loans which provide for the payment of a fixed or
adjustable rate of interest plus, in certain cases, participation interest that
is payable out of available cash flow remaining after the payment of operating
expenses and debt service requirements and/or out of net proceeds from the sale
or refinancing of such property remaining after the payment of transaction
expenses and indebtedness secured by such property. The repayment of such loans
would be secured by a subordinated mortgage on the underlying property. The
Trust will not provide or acquire mortgage loans in respect of any property
where the amount invested by the Trust or the Operating Partnership plus the
amount of any existing indebtedness in respect of such property exceeds 80% of
the property's estimated replacement cost new unless substantial justification
exists.


                                       45
<PAGE>

     The Exchange Partnerships, substantially all of whose equity interest the
Operating Partnership acquired in the Exchange Offering, collectively manage the
properties in which they have an interest and share property management
expenses. Other properties in which the Trust acquires an interest will be
similarly managed.

     The Trust intends to utilize one or more sources of capital for future
acquisitions and capital improvements, which may include undistributed cash
flow, borrowings, issuance of debt or equity securities and other bank and/or
institutional borrowings. The Trust intends to investigate making an additional
public or private offering of Common Shares and/or Units within the next
12-month period if the Board of the Trust determines that suitable property
acquisition opportunities which meet its investment criteria are available to
the Trust at attractive prices and such an offering would fulfill its cost of
funds requirements. There can be no assurance, however, that the Trust will be
able to obtain capital for any such acquisitions or improvements on terms
favorable to the Trust.

     The Trust qualified as a REIT for federal income tax purposes beginning
with its taxable year ending December 31, 1998.

   Trust Policies with Respect to Certain Activities

     The following is a discussion of the Trust's policies with respect to
investments, dispositions, financings, and conflicts of interest. These policies
have been determined by the Trust's Managing Shareholder and under the
Declaration of Trust may be amended or revised from time to time at the
discretion of the Board with approval of a majority in interest of the
Shareholders entitled to vote on such matters. Section 1.9 of the Declaration of
Trust for the Trust contains certain additional limitations on the Trust's
activities.

     At all times, the Trust intends to make investments and conduct its
operations in such a manner as to be consistent with the requirements of the
Code for the Trust to qualify as a REIT unless, because of changing
circumstances or changes in the Internal Revenue Code of 1986, as amended (the
"Code") (or in Treasury Regulations), the Managing Shareholder, with the consent
of a majority of the Shareholders entitled to vote on such matter approving the
Managing Shareholder's determination, determines that it is no longer in the
best interests of the Trust to qualify as a REIT. No assurance can be given that
the Trust's objectives will be attained.

     Investment Policies

     The Trust's investment objective is to provide quarterly cash distributions
and achieve long-term appreciation through increases in cash flows and the value
of its property interests. The Trust intends to pursue these objectives by
directly or indirectly acquiring equity interests in residential apartment
properties located in the United States and/or providing or acquiring mortgage
loans and other real estate interests related to such types of properties
consistent with its qualification as a REIT. The Trust may invest in first
mortgage loans or subordinated mortgage loans and participating or convertible
mortgages if it concludes that it may benefit from the cash flow or any
appreciation in the value of the subject property. Such mortgages are similar to
equity participation. The Trust may also retain a purchase money mortgage for a
portion of the sale price in connection with the disposition of properties from
time to time.

     Subject to the percentage of ownership limitations and gross income tests
necessary for REIT qualification, the Trust also may invest in securities of
entities engaged in real estate activities or securities of other issuers,
including for the purpose of exercising control over such entities. The Trust
may acquire all or substantially all of the securities or assets of other REITs
or similar entities where such investments would be consistent with the Trust's
investment policies.

     The Trust will not make an equity investment in respect of any property
where the amount invested by it plus the amount of any existing indebtedness or
refinancing indebtedness in respect of such property exceeds the appraised value
of the property. In addition, the Trust will not provide or acquire debt
financing in respect of any property where the amount invested by the Trust plus
the amount of any existing indebtedness in respect of such property exceeds 80%
of the property's estimated replacement cost new as determined by the Managing
Shareholder unless substantial justification exists. Repayment of any mortgage
loans provided or acquired by the Trust would typically be secured by a mortgage
on the land, apartment units, and other improvements financed by the Trust and
be non-recourse to the borrower beyond the underlying property and/or other
assets of the borrower. It is expected that in most cases where it will provide
or acquire a loan, the Trust will provide or acquire a subordinated mortgage
loan that is subordinate to a large-scale first mortgage loan provided by a
lending institution. In certain cases, mortgage loans provided or acquired by
the Trust may be in the form of first mortgage loans.


                                       46
<PAGE>

     Subordinated mortgages securing subordinated mortgage loans to be provided
or acquired by the Trust may or may not be recorded. None of the subordinated
mortgage interests acquired as of the date of this Report have been recorded due
to restrictions contained in first mortgage loan documents. If any subordinated
mortgage in favor of the Trust is not recorded, the Trust's security interest in
the mortgage would be unperfected and, until the subordinated mortgage is
recorded, the Trust would be pari passu (i.e., on an equal basis) with all other
unsecured creditors of the borrower, provided, however, the security instruments
that will be entered into in connection with mortgage loans to be provided or
acquired by the Trust will typically restrict the borrower's ability to enter
into a subsequent loan arrangement with third parties which would be senior to
or pari passu with (i.e., equal to) the mortgage held by the Trust. Non-payment
of any subordinated mortgage loan that may be provided or acquired by the Trust
may constitute an event of default by the borrower under the underlying senior
mortgage loan, and such senior mortgage loan may have to be repaid by the
borrower before Shareholders in the Trust will receive any return on their
investment.

     The Board of the Trust has adopted a policy, described below at " -
Conflict of Interest Policies," designed to eliminate or minimize potential
conflicts of interest which may arise in respect of any residential apartment
property investment opportunity which an Independent Trustee, any other member
of the Board, Gregory K. McGrath, Robert S. Geiger or any of their respective
affiliates may wish to pursue for his own account and which might be suitable
for the Trust and the Operating Partnership.

     The Trust will obtain and maintain insurance coverage on property in which
it acquires an equity interest (and, prior to providing or acquiring any
mortgage loan in respect of a property, will be listed as an additional insured
or loss payee in respect of such property), protecting against casualty loss up
to replacement cost (with a deductible per loss ranging between $1,000 and
$5,000 except in the case of flood and hurricane damage where the deductible
ranges between 1% to 2% per loss), and against public liability in an amount
that is reasonable taking into account the market value of the property at the
time insurance is obtained. There can be no assurance, however, that the Trust's
property interest would not sustain losses in excess of its applicable insurance
coverage, and it could sustain losses as a result of risks which are
uninsurable. There are certain types of losses (generally of a catastrophic
nature, such as earthquakes, floods and wars) which may be either uninsurable or
not economically insurable.

     Pending the commitment of Trust and Operating Partnership funds for
business purposes, for distributions to Shareholders and Unitholders or for
application of reserve funds to their purposes, the Managing Shareholder has
full authority and discretion to make short-term investments in: (i) obligations
of banks or savings and loan associations that either have assets in excess of
$5 billion or are insured in their entirety by the United States government or
its agencies and (ii) obligations of or guaranteed by the United States
government or its agencies. Such short-term investments would be expected to
earn rates of return which are lower than those earned in respect of properties
in which the Trust may invest.

     The Trust intends to make investments in such a manner that it will not be
treated as an investment company under the Investment Company Act of 1940.

     Disposition Policies

     The Managing Shareholder will periodically review the portfolio of assets
which the Trust acquires. Disposition decisions relating to a particular
property will be made based on (but not limited to) the following factors: (i)
potential to continue to increase cash flow and value; (ii) the sale price;
(iii) strategic fit of the property with the rest of the Trust's portfolio; (iv)
potential for, or the existence of, any environmental or regulatory problems;
(v) alternative uses of capital; and (vi) maintaining qualification as a REIT.
Any decision to dispose of a property will be made by the Managing Shareholder.
The prohibitions in the Code and related regulations on a REIT holding property
for sale may affect the Trust's ability to sell properties without adversely
affecting distributions to Shareholders and Unitholders.

     In April 2001, the Trust completed the sale of one property (Glen Lakes
Apartments) whose performance has had a materially adverse effect on the
operating results of the Company. The Trust is currently investigating the
disposition of two additional under-performing properties. There can be no
assurance that the Company will be able to dispose of the properties on terms
and conditions that are attractive to the Company or that the Company will be
able to dispose of the properties at all.

     Financing Policies

     The Trust will have the right to borrow funds, and use the Trust's
available assets as security for any such loan, if the Trust's cash requirements
exceed its available cash. Under the Declaration of the Trust, the aggregate
borrowings of the Trust in relation to its net assets may not exceed 300%,
except where the Trust determines that a higher level of borrowing is
appropriate. It is expected that


                                       47
<PAGE>

each property in which the Trust invests will secure a first mortgage loan. The
principal balance of any such first mortgage loan typically would represent a
substantial percentage of the Trust's basis in any property in which the Trust
owns an equity interest.

     To the extent that the Managing Shareholder desires that the Trust obtain
additional capital, the Trust may raise such capital through additional public
and private equity offerings, debt financing, retention of cash flow (subject to
satisfying the Trust's distribution requirements under the REIT rules) or a
combination of these methods. The Trust may determine to issue securities senior
to the Common Shares, including Preferred Shares and debt securities (either of
which may be convertible into Common Shares or be accompanied by warrants to
purchase Common Shares). The Trust may also finance acquisitions of properties
or interests in properties through the exchange of properties, the issuance of
Shares, or the issuance of Units of limited partnership interest in the
Operating Partnership and any other partnerships the Trust may form or acquire
an equity interest in to conduct all or a portion of its real estate operations.

     The proceeds from any borrowings by the Trust may be used to pay
distributions, to provide working capital, to purchase additional interests in
the Operating Partnership, to refinance existing indebtedness or to finance
acquisitions or capital improvements of new properties.

     Conflict of Interest Policies

     The Trust has adopted certain policies designed to eliminate or minimize
potential conflicts of interest, as described below. However, there can be no
assurance that these policies always will be successful in eliminating the
influences of such conflicts, and if they are not successful, decisions could be
made that might fail to reflect the interests of all Shareholders and
Unitholders.

     The Managing Shareholder has discretion in day to day management and
control of the affairs of the Trust and the Operating Partnership, subject to
(i) general supervision and review by the Independent Trustees and the Managing
Shareholder acting together as the Board of Trustees of the Trust and (ii) prior
approval authority of a majority of the Board and/or of a majority of the
Independent Trustees in respect of certain actions of the Trust and the
Operating Partnership. The Declaration of the Trust requires that a majority of
the Board of the Trust be comprised of Independent Trustees not affiliated with
the Managing Shareholder or its affiliates.

     Actions of the Trust and the Operating Partnership requiring approval of
the Board and/or the Independent Trustees include, without limitation, the
payment of compensation to the Managing Shareholder, a Trustee, any other member
of the Board of the Trust or any of their respective affiliates in amounts in
excess of certain specified limits for services performed for the Trust, and the
acquisition of properties from, or the sale of properties to, any such parties.
For example, the Trust may not purchase property from the Managing Shareholder,
a Trustee, any other member of the Board or any of their respective affiliates
unless a majority of the members of the Board and, in addition, a majority of
the Independent Trustees who have no other interest in the particular proposed
transaction (beyond their role on the Board or as Independent Trustees) review
the proposed transaction and determine that it is fair and reasonable to the
Trust and that the purchase price to the Trust for such property is no greater
than the cost of the property to such proposed seller, or if the purchase price
to the Trust is in excess of such cost, that substantial justification for such
excess exists and such excess is reasonable, provided, however, in no event may
the purchase price for the property exceed its then current appraised value.

     The Board of the Trust has adopted a policy designed to eliminate or
minimize potential conflicts of interests which may arise in respect of
investment opportunities suitable for the Trust and the Operating Partnership
which may be presented to the Managing Shareholder, an Independent Trustee, any
other member of the Board, Gregory K. McGrath, Robert S. Geiger, or any of their
respective affiliates. Under the policy, such parties may pursue for their own
account a residential apartment property investment opportunity which may be
suitable for the Trust and the Operating Partnership (i.e., in accordance with
the purposes for which they were organized) only upon fulfillment of the
following conditions. First, the requesting party or parties must deliver to the
Board of the Trust, at least 60 days prior to the consummation of any such
transaction, a written investment proposal identifying the parties to be
involved in such transaction, specifying in reasonable detail the proposed terms
and conditions of the particular investment opportunity intended to be pursued
and granting the Trust and the Operating Partnership a right of first refusal,
exercisable within 30 days following the delivery of such proposal, to
participate in the proposed transaction in the place of the requesting party or
parties, on the terms and conditions specified in the written proposal.

     In addition, the requesting party or parties either (i) must receive
written notice from a majority of the disinterested members of the Board (i.e.,
those persons who have no other interest in any such transaction beyond their
role on the Board), or an authorized


                                       48
<PAGE>

representative acting on their behalf, which specifies that the Trust and the
Operating Partnership have determined not to participate in the proposed
transaction or (ii) must have not received from the disinterested members of the
Board, or an authorized representative acting on their behalf, written notice,
within 30 days following the receipt of such written proposal, which notifies
the requesting party or parties that the Trust or the Operating Partnership
elect to exercise their right of first refusal to participate in the proposed
transaction on the terms and conditions specified in the written proposal. The
Board of the Trust and the Independent Trustees are responsible for overseeing
the conflicts policy under the circumstances described above to insure that it
is applied fairly to the Trust. However, there can be no assurance that the
policies of the Trust and the Operating Partnership will always be successful in
eliminating or minimizing the influence of such conflicts, and, if they are not
successful, decisions could be made that might fail to reflect fully the
interests of all Shareholders and Unitholders.

Property Description

     The Acquired Properties and the Exchange Properties in which the Trust
currently owns an interest are primarily garden style, one and two-story
residential apartment dwellings which range in size from eight units to 164
units. The Trust believes that the Acquired Properties and the Exchange
Properties generally occupy strategic locations in growing sub-markets. The
average unit size for properties is 569 square feet, with 21.2% of the units
having two or more bedrooms. A majority of the units have washer/dryer
connections and walk-in closets. Certain of the properties have improved their
attractiveness by investing in extensive landscaping and rehabilitating certain
units. Other features included in certain properties are swimming pools,
playgrounds, volleyball courts, fitness centers and community rooms.

     Each of the Acquired Properties and Exchange Properties is a residential
apartment community; there is no tenant who occupies 10% or more of the rentable
square footage. There is no business, occupation or profession taking place on
the properties. Other information concerning the Acquired Properties and the
Exchange Properties is set forth above in this item.

     The Operating Partnership does not intend to acquire an interest in any
property which requires major maintenance unless (i) sufficient amounts have
been reserved to complete such maintenance and, in connection with the
acquisition, the Operating Partnership will receive the benefit of such reserves
or (ii) the acquisition price for the property interest reflects the cost of
required major maintenance items and the Operating Partnership has the ability
to fund such maintenance from its resources. The Operating Partnership intends
to review each of the properties in which it acquires an interest to determine
the costs and benefits of undertaking any capital improvements which may
increase the property's profitability. The Operating Partnership does not intend
to undertake any capital improvement in respect of a property unless the
investment is projected to result in a rate of return of 20% or more on the
investment.

Lease Agreements

     The Operating Partnership and the Exchange Partnerships use a variety of
lease forms to comply with applicable state and local laws and customs. At some
properties, leases provided or recommended by state or local apartment
associations are used. At other properties, a standard company lease is used and
modified if necessary to comply with local law or custom. The term of a lease
varies with local market conditions; however, one-year leases are most common.
Generally, the leases provide that unless the parties agree in writing to a
renewal, the tenancy will convert at the end of a lease term to a month-to-month
tenancy, subject to the terms and conditions of the lease, unless either party
gives the other party at least 30 days' prior notice of termination. All leases
are terminable by the Operating Partnership or the respective Exchange
Partnership for nonpayment of rent, violation of property rules and regulations,
or other specified defaults.

Competition

     In general, there are numerous other residential apartment properties
located in close proximity to each of the Acquired Properties and the Exchange
Properties. The number of units available in any target metropolitan market
could have a material effect on a property's capacity to rent units and on the
rents charged. In addition, in many of the Trust's proposed sub-markets,
institutional investors and owners and developers of residential apartment
properties compete for the acquisition and leasing of properties. Many of these
persons have substantial resources and experience.

Insurance

     The Managing Shareholder believes that all of the Acquired Properties and
the Exchange Properties are adequately insured; however, an uninsured loss could
result in loss of capital investment and anticipated profits.


                                       49
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

     The Trust was named as defendant in two separate actions alleging
discriminatory firing at Blossom Corners Apartments. The Trust believes the
charges to be without merit and has engaged counsel for defense. Any exposure
over $150,000 is covered by employment practices insurance.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

     There is no established public trading market for the Common Shares of the
Trust.

Shareholders

     As of March 31, 2001, there are approximately 437 Shareholders of record of
Common Shares of the Trust, its only class of common equity.

Distributions

     In 1998 and 1999, the Trust declared and paid $72,159 and $270,348,
respectively, of distributions on its outstanding Common Shares. The Trust has
not made a distribution since September 1999. The Trust's ability to make future
distributions will be determined by the net cash flow it has available to make
distributions. Due to significant open accounts payable, management does not
anticipate that the Trust will make distributions to its Shareholders for the
next several quarters. See "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION."

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following discussion should be read in conjunction with the Trust's
Consolidated Financial Statements and Notes thereto. (See ITEM 7 - FINANCIAL
STATEMENTS).

Forward-looking Statements

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


                                       50
<PAGE>

Results of Operations

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

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

     As described elsewhere in this Report, in May 1998, the Trust commenced an
offering (the "Cash Offering") of up to 2,500,000 common shares of beneficial
interest ("Common Shares") in the Trust at a purchase price of $10.00 per share
(maximum proceeds of $25,000,000). In the Cash Offering, which expired on May
31, 2000, the Trust sold 702,076 Common Shares for an aggregate purchase price
of $7,020,763.

     The Trust contributed the net cash proceeds from the issuance of Common
Shares in the Cash Offering ($5,467,858) to the Operating Partnership in
exchange for an equivalent number of units ("Units" or "Operating Partnership
Units") of limited partnership interest in the Operating Partnership. As of
April 15, 2001, the Trust owned 702,076 Operating Partnership Units,
representing approximately 18% of the then outstanding Units. Since the Units
comprise substantially all of the assets of the Trust, the operating results of
the Trust are primarily dependent upon the operating results of the Operating
Partnership.

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

     During 1998 and 1999, the Operating Partnership acquired a total of 40% of
the limited partnership interests in Alexandria Development, L.P. (the
"Alexandria Partnership"), which owns Alexandria Apartments, a 168-unit
residential apartment property (the "Alexandria Property") under construction in
Alexandria, Kentucky. As of March 31, 2001, 112 of the 168 residential units
(approximately 67%) had been completed and were in the rent-up stage. Of the
completed units, 109 units have been rented.

     In September 1998, the Trust entered into an agreement with three real
estate development companies (Brentwood at Southgate, Ltd., Burlington
Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire two luxury
residential apartment properties in the development stage upon the completion of
construction. The three development companies are controlled by Mr. McGrath. One
of the residential apartment properties has been sold to a third party with the
Trust's consent. The remaining property is scheduled to have a total of 396
units, comprised of one, two and three bedroom/one or two bathroom apartments.
Construction of the property (the "Burgundy Hills Property"), located in
Florence, Kentucky (part of the Cincinnati metropolitan area), is expected to be
completed by the end of the first quarter of 2004. The Trust has a right of
first negotiation to purchase the property from the development company upon
completion and a right of first refusal to purchase the property on the same
terms offered by a third party. The purchase price is expected to be
approximately $30,000,000. It is contemplated that a significant portion of that
amount would be covered by first mortgage financing. At the current time the
Trust does not have adequate resources to close on the transaction and it is
uncertain whether the Trust will have adequate resources to complete the
transaction upon completion of construction.

     In connection with the transaction, the Trust (along with Mr. McGrath, its
Chief Executive Officer) agreed to co-guarantee long-term first mortgage
construction financing provided by KeyBank National Association ("KeyBank"). As
of March 31, 2001, approximately $6,477,000 of the construction loan had been
drawn down. The interest rate on the construction loan is KeyBank's prime rate
(currently 8.5%) or the LIBOR rate plus 2%. The Trust also agreed that, if the
Borrower failed to comply with the


                                       51
<PAGE>

repayment and other obligations under the loan documents, KeyBank could elect to
require the Trust to buy out the bank's position on the entire amount of the
construction loan.

     In September 2000, the Trust received notice from counsel to KeyBank that
Burlington Residential, Ltd. ("Borrower"), the owner of the Burgundy Hills
Property, had defaulted on its loan for failure to pay current interest due and
meet certain equity requirements and covenants under the loan agreement, adverse
changes in the financial conditions of the Borrower and the Trust, and the
Trust's failure to meet certain tangible net worth tests set forth in the loan
agreements. KeyBank indicated that it was exercising its right to accelerate the
loan. According to Mr. McGrath, KeyBank agreed to forego further action for at
least 60 days while the parties attempted to reach an arrangement. The extension
expired in November 2000 and, according to Mr. McGrath, is currently being
extended on a month-to-month basis. The Borrower paid down the outstanding
accrued interest and a portion of the principal and is currently negotiating a
new long-term construction facility with another institutional lender to replace
the KeyBank loan (and the Bank One loan described below).

     Bank One has provided additional institutional financing in the principal
amount of $1,576,000 to the Borrower. The loan is secured by a security interest
in partnership interests in the Borrower. Due to a default in payment of
interest due, Bank One has been assigned rental payments and has taken over
day-to-day management of the property. This loan is expected to be paid off with
the proposed new first mortgage financing referenced above. There can be no
assurance that refinancing will be available or will be available on
commercially reasonable terms, that KeyBank will not seek to enforce its right
to accelerate the loan and begin foreclosure proceedings against the Burgundy
Hills Property or elect to require the Trust to buy out its position on the
entire outstanding amount of the construction loan, or that BankOne will not
seek to enforce its right to take over control of the Borrower.

     In April 2000, pursuant to a registration statement on Form S-4, the
Operating Partnership completed an exchange offering (the "Exchange Offering")
under which it acquired additional interests in residential apartment
properties. In the Exchange Offering, the Operating Partnership issued 2,449,492
registered units of limited partnership interest in the Operating Partnership
(the "Operating Partnership Units" or "Units") (with an initial assigned value
of $24,494,920) in exchange for substantially all outstanding units of limited
partnership interest owned by individual limited partners ("Exchange Limited
Partners") in 23 limited partnerships (the "Exchange Partnerships"). The
Exchange Partnerships directly or indirectly own equity and/or debt interests in
one or more of 26 residential apartment properties (the "Exchange Properties")
located in the southeast and mid-west United States.

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

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

     Certain of the Exchange Partnerships own direct or indirect equity
interests in 16 Exchange Properties which consist of an aggregate of 1,012
residential units (comprised of studio and one, two, three and four-bedroom
units). Certain of the Exchange Partnerships own direct or indirect mortgage
interests in 10 Exchange Properties, which consist of an aggregate of 813
existing residential units (studio and one and two bedroom) and 168 units (two
and three bedroom) under development. Of the Exchange Properties, 21 properties
are located in Florida, three properties in Ohio and one property each in
Georgia and Indiana.

     The property interest acquired by the Trust are described in further detail
at ITEM 2 - DESCRIPTION OF PROPERTIES.


                                       52
<PAGE>

     The table below summarizes the results of operations of the Trust for the
year ended December 31, 2000.

                                               Year Ended
                                               December 31, 2000
                                               -----------------

     Property Revenues                         $ 5,374,412
     Property Income (Loss)                    $  (255,540)
     Administrative Expenses/Other Expenses    $ 3,088,810
     Net Loss                                  $(3,344,350)
     Total Assets                              $41,042,882
     Shareholders' Equity                      $10,444,429

Consolidated Balance Sheet as of December 31, 2000 Compared to December 31, 1999

     Due to the completion of the Exchange Offering, the balance sheet for the
Trust reflects large increases in assets, liabilities and shareholders' equity.
Total Assets for the Trust increased by $33,706,684 from $7,336,198 at December
31, 1999 to $41,042,882 at December 31, 2000. Total Liabilities for the Trust
increased $24,792,567 from $5,805,886 at December 31, 1999 to $30,598,453 at
December 31, 2000. The Trust has entered into agreements with certain
professionals involved in the Exchange Offering which are owed accounts payable,
and continues to negotiate with other such professionals, to receive extended
payment terms and reductions of the amounts due, where possible. Shareholders'
Equity increased $8,914,117 from $1,530,312 at December 31, 1999 to $10,444,429
at December 31, 2000.

Operations for the Fiscal Year Ended December 31, 2000 Compared to the Fiscal
Year Ended December 30, 1999

     Revenues increased by $4,789,010 from $585,402 for the year ended December
31, 1999 to $5,374,412 for the year ended December 31, 2000. Real Estate
Expenses for the properties owned by the Trust increased from $1,024,209 for the
year ended December 31, 1999 to $5,629,952 for the year ended December 31, 2000.
The increases in Revenues and Real Estate Expenses were principally due to the
completion of the Exchange Offering. Administrative Expenses decreased
$1,043,924 from $2,728,120 for the year ended December 31, 1999 to $1,684,196
for the year ended December 31, 2000. The decrease in Administrative Expenses
was principally due to a reduction in the cost of professionals associated with
the Exchange Offering. Other non-recurring expenses for the year ended December
31, 2000 were $1,404,614. These expenses were primarily the result of an
adjustment to reduce the carrying value of a rental apartment property held for
sale to its realizable amount of $814,471 and an impairment charge of $354,544
relating to the Trust's investment in the Alexandria Property. The Trust's Net
Loss for the year ended December 31, 2000 was $3,344,350 compared to $3,166,927
for the year ended December 31, 1999.

Liquidity and Capital Resources

     Net Cash Provided by Operating Activities increased by $1,191,141 from
$1,036,202 cash used in the year ended December 31, 1999 to $154,939 cash
provided in the year ended December 31, 2000. The increase in Net Cash Provided
by Operating Activities was principally due to the results of the impending sale
of one asset and the impairment on investments relating to the Exchange
Offering. Net Cash Used in Investing Activities decreased $620,557 from
($801,890) for the year ended December 31, 1999 to ($181,333) for the year ended
December 31, 2000. The decrease was principally due to a reduction in cash
purchases of investments. Cash Flow Provided by Financing Activities decreased
$1,681,039 from $1,694,567 in the year ended December 31, 1999 to $13,528 in the
year ended December 31, 2000. The decrease was principally due to the expiration
of the Cash Offering, resulting in reduced proceeds from the sale of Common
Shares of beneficial interest.

     During the years ended December 31, 2000 and 1999, the Trust experienced
certain cash flow problems and has, from time to time, experienced difficulties
meeting obligations as they became due. In addition, as reflected in the
accompanying consolidated financial statements, the Trust incurred net losses of
$3,344,350 and $3,166,927 in 2000 and 1999, respectively.

     Management's plans regarding these matters, with the objective of improving
liquidity and becoming profitable, encompass the following four strategies:

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


                                       53
<PAGE>

     o    refinance selected well performing assets;

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

     o    reduce corporate overhead.

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

     o    In many locations, the market for apartments has started to include
          re-billing of property water costs to tenants. The Trust has initiated
          billing of tenants for their water used at several locations and
          intends to continue implementation of the strategy at other properties
          as the markets permit. The Trust has also started a program of
          enhancing the aesthetics of the properties which is allowing the Trust
          to increase rents while still improving occupancy.

     o    The Trust has identified certain of its properties which are
          performing well, and have loans which are small relative to the value
          of the property, given their excellent performance. Three properties
          were refinanced in the first quarter of 2001, generating sufficient
          cash for the Trust to enter into negotiations with all of its Exchange
          Offering professionals, and still have a small amount in reserve. All
          three of these properties were refinanced at interest rates lower than
          the interest rate on their old loan. The Trust has identified four
          additional properties which it believes can support higher debt levels
          and provide cash for general corporate purposes. As a result, the
          Trust has refinancing proposals on these four properties that, if
          accepted by the Trust, would result in cash proceeds of approximately
          $1,500,000.

     o    The Trust has entered into a contract for sale of one of its
          properties that, in the past, has required substantial and frequent
          cash infusions, and expects the sale to close during the second
          quarter of 2001. Additional properties are being evaluated for
          potential disposition.

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

     o    For the three months ending March 31, 2001, the Operating Partnership
          anticipates generating positive cash flow from operations in an amount
          in excess of budget. As a result, on March 31, 2001, the Trust had
          approximately $430,000 in available cash.

     Management believes that the actions presently being taken by the Trust,
including the cash to be realized upon refinancing the four properties
previously mentioned and its cash on hand, provide the opportunity for the Trust
to improve liquidity and profitability. The completion of the Exchange Offering
on April 7, 2000 has, in the opinion of management, provided the critical mass
necessary for profitable operations. As described above, the Trust has entered
into agreements with certain professionals involved in the Exchange Offering
which are owed for their services, and continues to negotiate with other such
professionals, to receive extended payment terms and reductions of the amounts
due, where possible. Distributions will be made by the Trust as cash flow
allows, but will be negatively impacted as the open accounts payable are
reduced. Management does not anticipate that the Trust will make distributions
to its Shareholders for the next several quarters.

     In the future the Trust intends to use net cash proceeds from the sale of
additional securities of the Trust and the Operating Partnership, unissued
Common Shares of the Trust and Units of limited partnership interest in the
Operating Partnership, available cash flow, and financing from other sources to
acquire interests in residential apartment properties or interests in other
partnerships substantially all of whose assets consist of residential apartment
property interests.

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


                                       54
<PAGE>

     The target metropolitan markets and sub-markets have benefited in recent
periods from demographic trends (including population and job growth) which
increase the demand for residential apartment units, while financing constraints
(specifically, reduced availability of development capital) have limited new
construction to levels significantly below construction activity in prior years.
Consequently, rental rates for residential apartment units have increased at or
above the inflation rate for the last two years and are expected to continue to
experience such increases for the next 18 months based on market statistics made
available to management of the Trust in terms of occupancy rates, supply,
demographic factors, job growth rates and recent rental trends. Expense levels
also influence operating results, and rental expenses (other than real estate
taxes) for residential apartment properties have generally increased at
approximately the rate of inflation for the past three years and are expected to
increase at the rate of inflation for the next 18 months.

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

     Generally, there are no seasonal aspects of the operations of the Trust or
the Operating Partnership which might have a material effect on their financial
conditions or results of operation. However, for the last 36 months, one 60-unit
student housing property owned by one of the Exchange Partnerships involved in
the Exchange Offering has had an average occupancy rate of 55% for nine months
of the year and 30% for the remaining three months of the year.

     Subject to the foregoing discussion, management believes that the Trust and
the Operating Partnership have the ability to satisfy their cash requirements
for the foreseeable future. However, it will be necessary for the Trust to raise
additional capital during the next 12 months to make acquisitions and to meet
management's revenue and cash flow goals. The Trust 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 Trust and the Operating Partnership expect no material change in the
number of employees over the next 12 months.

     In an effort to increase profitability, the Trust has also entered into
agreements with WaKuL, Inc. (formerly Rapid Transmit Technology, Inc.), a
provider of integrated communications services to owners, property managers and
residents of residential apartment properties, including discounted local and
long distance phone service, digital cable TV, high speed Internet access,
monitored security systems, utility sub-metering and various property management
services. WaKuL will provide these services at no capital cost to the Trust, and
has entered into revenue sharing relationships with the Trust. (WaKuL is an
affiliate of the Trust by virtue of the overlapping management and ownership
capacities in the Trust, the Operating Partnership and WaKuL of Gregory K.
McGrath, a founder of the Trust, the Operating Partnership, and WaKul.) The
WaKuL services are expected to provide the Trust's properties with a significant
marketing advantage over its competitors, and to provide significant rental and
other revenues that the properties otherwise would not have generated.

Year 2000 Problems

     The computer systems of the Trust and the Operating Partnership have been
tested for year 2000 problems and the Trust and the Operating Partnership
believe that such systems are year 2000 compatible. The Trust and the Operating
Partnership have not experienced any material year 2000 problems so far. It is
possible, however, that the computer systems of the Trust and the Operating
Partnership and certain computer systems or software products of their suppliers
could experience year 2000 problems and that such problems could adversely
affect them. With respect to their own computer systems, the Trust and the
Operating Partnership have upgraded their principal operating computer software
to the most recent available revision sold by their software supplier, which the
supplier has represented to be year 2000 compliant. The Trust and the Operating
Partnership believe that such upgrade will solve any year 2000 problems that
could affect their operating software. The failure to identify and solve all
year 2000 problems affecting their business could have an adverse effect on the
business, financial condition and results of operations of the Trust and the
Operating Partnership.


                                       55
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

         See Index to Financial Statements.



                                       56
<PAGE>


                               BARON CAPITAL TRUST



                          INDEX TO FINANCIAL STATEMENTS



                                                                 PAGE
                                                                 ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS               F-1


CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheet                                                 F-2

   Statements of Operations                                      F-3

   Statements of Shareholders' Equity                            F-4

   Statements of Cash Flows                                      F-5

   Notes to Financial Statements                              F-6 - F-25

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Trustees and Shareholders
Baron Capital Trust
Cincinnati, Ohio

We have audited the accompanying consolidated balance sheet of Baron Capital
Trust (the "Trust") as of December 31, 2000 and the related consolidated
statements of operations, shareholders' equity and cash flows for the years
ended December 31, 2000 and 1999. These consolidated financial statements are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Baron
Capital Trust as of December 31, 2000, and the consolidated results of their
operations and their cash flows for the years ended December 31, 2000 and 1999,
in conformity with generally accepted accounting principles.

As more fully discussed in Note 2, the Trust is subject to certain liquidity and
profitability considerations. The Trust's plans with respect to these matters
are also described in Note 2.


                            RACHLIN COHEN & HOLTZ LLP

Miami, Florida
April 13, 2001


                                      F-1
<PAGE>

                               BARON CAPITAL TRUST

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2000


<TABLE>
<S>                                                                               <C>
                                     ASSETS
Rental Apartments:
   Land                                                                           $  5,643,600
   Rental property held for sale                                                     3,635,000
   Depreciable property                                                             26,091,407
                                                                                  ------------
                                                                                    35,370,007
   Less accumulated depreciation                                                     2,304,148
                                                                                  ------------
                                                                                    33,065,859

Cash                                                                                    20,908
Restricted Cash                                                                        359,894
Receivables from Affiliates:
   Mortgage notes, net                                                               3,057,078
   Accrued interest                                                                  1,745,367
   Other                                                                             1,777,654
Other Property and Equipment                                                           105,960
Other Assets                                                                           910,162
                                                                                  ------------
                                                                                  $ 41,042,882
                                                                                  ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Mortgages payable                                                              $ 23,540,172
   Accounts payable and accrued liabilities                                          2,129,615
   Notes payable                                                                     2,482,498
   Payables to affiliates                                                            2,110,086
   Accrued interest payable, affiliates                                                127,676
   Security deposits                                                                   208,406
                                                                                  ------------
         Total liabilities                                                          30,598,453
                                                                                  ------------

Commitments, Contingencies, Subsequent Events and Other Matters                             --

Shareholders' Equity:
   Common shares of beneficial interest, no par value; 2,500,000
      shares authorized; 940,891 shares issued and outstanding                      18,875,273
   Deficit                                                                          (8,088,337)
   Distributions                                                                      (342,507)
                                                                                  ------------
         Total shareholders' equity                                                 10,444,429
                                                                                  ------------
                                                                                  $ 41,042,882
                                                                                  ============
</TABLE>

                See notes to consolidated financial statements.


                                      F-2
<PAGE>

                               BARON CAPITAL TRUST

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
Revenues:                                                                              2000            1999
                                                                                       ----            ----
<S>                                                                                <C>             <C>
   Property:
      Rental                                                                       $ 4,707,842     $ 1,056,995
      Equity in net loss of unconsolidated partnership                                (229,064)       (595,000)
   Interest and other income                                                           895,634         123,407
                                                                                   -----------     -----------
                                                                                     5,374,412         585,402
                                                                                   -----------     -----------
Real Estate Expenses:
   Depreciation                                                                        953,754         206,549
   Amortization of loan costs                                                          162,220          33,800
   Interest                                                                          1,901,100         316,095
   Repairs and maintenance                                                             632,283         143,923
   Personnel                                                                           680,146         126,070
   Property taxes                                                                      456,781          83,495
   Property insurance                                                                  101,707          29,144
   Utilities                                                                           421,681          68,827
   Other                                                                               320,280          16,306
                                                                                   -----------     -----------
                                                                                     5,629,952       1,024,209
                                                                                   -----------     -----------
Administrative Expenses:
   Personnel, including officer's compensation                                         721,626         680,774
   Management, investment and administrative fees, Managing Shareholder                332,151         148,012
   Professional services                                                               311,451       1,438,461
   Other                                                                               318,968         460,873
                                                                                   -----------     -----------
                                                                                     1,684,196       2,728,120
                                                                                   -----------     -----------
Other Expenses:
   Impairment of investments                                                           354,544              --
   Provision for loan losses                                                           235,599              --
   Loss on sale of investments                                                         814,471              --
                                                                                   -----------     -----------
                                                                                     1,404,614              --
                                                                                   -----------     -----------

      Total expenses                                                                 8,718,762       3,752,329
                                                                                   -----------     -----------

Net Loss                                                                           $(3,344,350)    $(3,166,927)
                                                                                   ===========     ===========

Net Loss Per Share - Basic and Diluted                                             $     (4.10)    $     (5.12)
                                                                                   ===========     ===========
</TABLE>

                See notes to consolidated financial statements.


                                      F-3
<PAGE>

                               BARON CAPITAL TRUST

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                              Common Shares of
                                                             Beneficial Interest
                                                             -------------------
                                                            Shares         Amount         Deficit     Distributions        Total
                                                            ------         ------         -------     -------------        -----
<S>                                                         <C>         <C>            <C>             <C>             <C>
Balance, December 31, 1998                                    463,650   $  4,454,101   $ (1,577,060)   $    (72,159)   $  2,804,882

Year Ended December 31, 1999:
   Proceeds from sale of common shares of
      beneficial interest, net of offering costs              211,436      1,945,705             --              --       1,945,705
   Distributions paid                                              --             --             --        (270,348)       (270,348)
   Credit for estimated fair value of
      services performed by officer                                --        217,000             --              --         217,000
   Net loss                                                        --             --     (3,166,927)             --      (3,166,927)
                                                         ------------   ------------   ------------    ------------    ------------

Balance, December 31, 1999                                    675,086      6,616,806     (4,743,987)       (342,507)      1,530,312
                                                         ------------   ------------   ------------    ------------    ------------

Year Ended December 31, 2000:
   Proceeds from sale of common shares of
      beneficial interest, net of offering costs               26,990        248,308             --              --         248,308
   Common shares issued in connection with
      Exchange Offering                                     2,449,492     11,793,159             --              --      11,793,159
   Conversion of Operating Partnership units
      for shares of beneficial interest                       113,912             --             --              --              --
   Shares issued as commissions to broker-dealers
      in connection with Exchange Offering                    124,903             --             --              --              --
   Credit for estimated fair value of
      services performed by officer                                --        217,000             --              --         217,000
   Net loss                                                        --             --     (3,344,350)             --      (3,344,350)
                                                         ------------   ------------   ------------    ------------    ------------

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

                See notes to consolidated financial statements.


                                      F-4
<PAGE>

                               BARON CAPITAL TRUST

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                                           2000            1999
                                                                                           ----            ----
<S>                                                                                   <C>              <C>
Cash Flows from Operating Activities:
   Net loss                                                                           $(3,344,350)     $(3,166,927)
   Adjustments to reconcile net loss to
      net cash provided (used) by operating activities:
         Impairment of investments                                                        354,544               --
         Provision for loan losses                                                        235,599               --
         Loss on sale of investments                                                      814,471               --
         Credit for estimated fair value of services performed by officer                 217,000          217,000
         Depreciation                                                                     987,754          206,549
         Amortization of loan costs                                                       162,220           33,800
         Equity in net loss of unconsolidated partnership                                 229,064          595,000
         (Increase) decrease in operating assets:
            Other receivables                                                                  --           76,388
            Reimbursed administrative expenses receivable                                  36,997          118,074
            Due from Managing Shareholder                                                  14,783          (14,783)
            Other assets                                                                    8,917            3,633
         Increase (decrease) in operating liabilities:
            Accounts payable and accrued liabilities                                      147,888          893,092
            Security deposits                                                                 464            1,972
            Accrued interest payable, affiliates                                          289,588               --
                                                                                      -----------      -----------
               Net cash provided (used) in operating activities                           154,939       (1,036,202)
                                                                                      -----------      -----------

Cash Flows from Investing Activities:
   Additions to rental apartments                                                        (196,277)              --
   Investment in partnerships                                                                  --         (885,000)
   Cash distributions from partnerships                                                     6,082           69,000
   Purchases of other property and equipment                                               (4,979)              --
   Decrease in restricted cash                                                             13,841           14,110
                                                                                      -----------      -----------
               Net cash provided (used) by investing activities                          (181,333)        (801,890)
                                                                                      -----------      -----------

Cash Flows from Financing Activities:
   Proceeds from sale of common shares of beneficial interest                             248,308        1,945,705
   Distributions paid                                                                          --         (270,348)
   Proceeds from mortgage financing                                                            --          290,000
   Proceeds from notes payable, affiliates                                                     --           50,000
   Payments on notes payable                                                             (100,000)        (275,000)
   Payments on mortgages payable                                                         (503,960)         (51,399)
   Increase in loans payable to affiliates, net                                           369,180            5,609
                                                                                      -----------      -----------
      Net cash provided (used) by financing activities                                     13,528        1,694,567
                                                                                      -----------      -----------

Net Decrease in Cash                                                                      (12,866)        (143,525)

Cash, Beginning                                                                            33,774          177,299
                                                                                      -----------      -----------

Cash, Ending                                                                          $    20,908      $    33,774
                                                                                      ===========      ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                          $ 1,738,426      $   316,095
                                                                                      ===========      ===========
</TABLE>

                See notes to consolidated financial statements.


                                      F-5
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2000 AND 1999


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization and Capitalization

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

            The Managing Shareholder of the Trust is Baron Advisors, Inc., a
            Delaware corporation which manages the operations of the Trust and
            the Operating Partnership subject to the supervisory authority of
            the Board of the Trust over the activities of the Trust and the
            Operating Partnership and the Board's prior approval authority in
            respect of certain actions of the Trust and the Operating
            Partnership specified in the Declaration of Trust of the Trust.

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

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

         Basis of Presentation

            The accompanying consolidated financial statements include the
            consolidated accounts of the Trust and the Operating Partnership.
            The Trust is the general partner of the Operating Partnership and
            owns approximately 18% of the limited partner units of the Operating
            Partnership. The consolidated accounts of the Operating Partnership
            include the accounts of 28 controlled limited partnerships that at
            December 31, 2000 had an indirect equity and/or debt interest in 29
            apartment communities. Interest in 25 of the 28 limited partnerships
            was acquired as a result of the Exchange Offering that was
            consummated April 7, 2000 (see Note 3).

            All significant intercompany transactions and balances have been
            eliminated in consolidation.

            The minority interest of unitholders in the Operating Partnership
            represents the 757,746 limited partnership units owned by the
            Original Investors of the Operating Partnership (see Note 14), and
            is stated at the amount of the capital contribution by them to the
            Operating Partnership ($100,000), reduced by their proportionate
            share of the net loss of the Operating Partnership limited to the
            $100,000 contribution. For 2000 and 1999, the entire balance of the
            proportionate share of the net loss of the Operating Partnership of
            $577,000 and $502,000, respectively, was charged to the majority
            unitholders. As of December 31, 2000, 757,746 Operating Partnership
            limited partnership units issued to the Original Investors are
            subject to escrow restrictions and 757,746 units are convertible
            into common shares of the Trust, respectively (see Note 14).


                                      F-6
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Concentrations of Credit Risk

            Financial instruments that potentially subject the Trust to
            concentrations of credit risk are comprised of cash and receivables
            from affiliates.

         Cash

            At various times during the year the Trust had deposits in financial
            institutions in excess of the federally insured limits. The Trust
            maintains its cash with high quality financial institutions, which
            the Trust believes limits these risks.

         Receivables from Affiliates

            Mortgage notes receivable are comprised mainly of second mortgages
            whose ultimate repayment is subject to the performance of the
            underlying property and timing of repayments. Other receivables are
            comprised of notes, lines of credit and advances receivable (see
            Note 8). The Trust establishes an allowance for loan losses when it
            believes the principal balance and accrued interest will not be
            recovered.

         Real Estate Rental Properties and Depreciation

            Real estate rental properties are stated at cost less accumulated
            depreciation. Ordinary repairs and maintenance are expensed as
            incurred; replacements having an estimated useful life of at least
            one year and improvements are capitalized and depreciated over their
            estimated useful lives.

            Depreciation is computed on a straight-line basis over the estimated
            useful lives of the properties as follows:

                                                  Estimated Useful Lives (Years)

              Building                                          30
              Leasehold improvements                            10
              Furniture and fixtures                             7
              Computer equipment and software                   3-5

            Declines in carrying values of investment assets are provided by
            management when the losses become apparent and the investment asset
            is considered impaired in accordance with Statement of Financial
            Accounting Standards No. 121, "Accounting for the Impairment of
            Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
            Management evaluates its investment properties annually to assess
            whether any impairment indications are present. If any investment
            asset is considered impaired, a loss is provided to reduce the
            carrying value of the property to its estimated fair value.

         Revenue Recognition

            Apartment units are leased under operating leases with terms of
            generally one year or less. Rental income is recognized when due
            from tenants.


                                      F-7
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Cash and Cash Equivalents

            For purposes of the statement of cash flows, the Trust considers all
            investments purchased with an original maturity of three months or
            less to be cash equivalents.

         Restricted Cash

            Restricted cash includes capital replacement reserves, and tax and
            insurance impound accounts held by lenders.

         Investments in Partnerships

            The Trust, through the Operating Partnership, accounts for its
            investments in limited partnerships in which it is deemed not to
            have the controlling interest, but has more than a minor limited
            partnership interest, utilizing the equity method of accounting. The
            Operating Partnership's investments in Alexandria Development, L.P.
            and Lamplight Court of Bellefontaine Apartments, Ltd., which
            represent a 40% and 31.7% interest, respectively, at December 31,
            2000, are accounted for using the equity method (see Note 6).

         Mortgage Notes Receivable - Affiliates

            The Trust has investments in various mortgage notes receivable
            acquired as a result of the interest obtained in limited
            partnerships through the Exchange Offering completed April 7, 2000.
            Mortgage notes receivable are recorded at cost, less the related
            allowance for impairment, if any, of such mortgage notes receivable.
            The Trust accounts for such notes under the provisions of Statement
            of Financial Accounting Standard No. 114, Accounting by Creditors
            for Impairment of a Loan, as amended by Statement of Financial
            Accounting Standard No. 118, Accounting by Creditors for Impairment
            of a Loan - Income Recognition and Disclosure. Management,
            considering current information and events regarding the borrowers'
            ability to repay their obligations, considers a note to be impaired
            when it is probable that the Trust will be unable to collect all
            amounts due according to the contractual terms of the note. When a
            loan is considered to be impaired, the amount of impairment is
            measured based upon (a) the present value of expected future cash
            flows discounted at the note's effective interest rate; and (b) the
            liquidation value of the note's collateral reduced by expected
            selling costs and other notes secured by the same collateral. Cash
            receipts on impaired notes receivable are applied to reduce the
            principal amount of such receivables until the principal has been
            recovered, and are recognized as interest income thereafter.

         Loan Costs

            The Trust has capitalized those costs incurred with obtaining
            financing on the investment properties. Such costs (included with
            other assets) are being amortized over the remaining term of the
            financing.


                                      F-8
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         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 and the reported amounts of
            revenues and expenses during the reporting period. Actual results
            could differ from those estimates.

         Reclassifications

            Certain items included in the 1999 consolidated financial statements
            have been reclassified to conform with the 2000 presentation.

         Income Taxes

            The Trust has not provided for federal income taxes because the
            Trust believes it qualifies as a real estate investment trust (REIT)
            under the applicable Sections of the Internal Revenue Code. A REIT
            will generally not be subject to Federal income taxation on that
            portion of its income that qualifies as REIT taxable income to the
            extent that it distributes substantially all of its taxable income
            to its shareholders and complies with certain other requirements.

         Fair Value of Financial Instruments

            The respective carrying value of certain on-balance-sheet financial
            instruments approximated their fair value. These instruments include
            cash, receivables, accounts payable and accrued liabilities. Fair
            values were assumed to approximate carrying values for these
            financial instruments since they are short-term in nature and their
            carrying amounts approximate fair values or they are receivable or
            payable on demand.

            The fair value of debt instruments has been estimated by using
            discounted cash flow models incorporating discount rates based on
            current market interest rates for similar types of instruments. At
            December 31, 2000, the differences between estimated fair value and
            the carrying value of debt instruments were not material.

         Recent Accounting Pronouncements

            In September 2000, Statement of Financial Accounting Standards No.
            140, Accounting for Transfers and Servicing of Financial Assets and
            Extinguishments of Liabilities (SFAS 140) was issued. SFAS 140
            provides accounting and reporting standards for transfers and
            servicing of financial assets and extinguishments of liabilities.
            SFAS 140 is effective for recognition and reclassification of
            collateral and for disclosures relating to securitization
            transactions and collateral for fiscal years ending after December
            15, 2000 and is effective for transfers and servicing of financial
            assets and extinguishments of liabilities occurring after March 31,
            2001. The Trust anticipates that the adoption of SFAS 140 will not
            have a material effect on its financial position or results of
            operations.


                                      F-9
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recent Accounting Pronouncements (Continued)

            In December 1999, the Securities and Exchange Commission (SEC)
            issued Staff Accounting Bulletin No. 101, Revenue Recognition in
            Financial Statements (SAB 101). SAB 101 summarizes certain of the
            SEC's views in applying generally accepted accounting principles to
            revenue recognition in financial statements. SAB 101 is effective
            for the fourth quarter of fiscal years beginning after December
            1999. The Trust believes that it is in compliance with the
            guidelines set forth in SAB 101.

            In June 1999, the Financial Accounting Standards Board issued SFAS
            No. 137, "Accounting for Derivative Instruments and Hedging
            Activities - Deferral of the Effective Date of SFAS No. 133 an
            Amendment of SFAS No. 133", which deferred the effective date to all
            fiscal quarters of all fiscal years beginning after June 15, 2000.
            Historically, the Trust has not entered into derivatives contracts
            to hedge existing risks or for speculative purposes. Accordingly,
            the Trust does not expect adoption of the new standard on January 1,
            2001 to affect its financial statements.

NOTE 2.  LIQUIDITY AND PROFITABILITY CONSIDERATIONS

         During the years ended December 31, 2000 and 1999, the Trust
         experienced certain cash flow problems and has, from time to time,
         experienced difficulties meeting obligations as they became due. In
         addition, as reflected in the accompanying consolidated financial
         statements, the Trust incurred net losses of $3,344,350 and $3,166,927
         in 2000 and 1999, respectively.

         Management's plans regarding these matters, with the objective of
         improving liquidity and becoming profitable, encompass the following
         four strategies:

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

            o     refinance selected well performing assets;

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

            o     reduce corporate overhead.

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

            o     In many locations, the market for apartments has started to
                  include re-billing of property water costs to tenants. The
                  Trust has initiated billing of tenants for their water used at
                  several locations and intends to continue implementation of
                  the strategy at other properties as the markets permit. The
                  Trust has also started a program of enhancing the aesthetics
                  of the properties which is allowing the Trust to increase
                  rents while still improving occupancy.


                                      F-10
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2.  LIQUIDITY AND PROFITABILITY CONSIDERATIONS (Continued)

            o     The Trust has identified certain of its properties which are
                  performing well, and have loans which are small relative to
                  the value of the property, given their excellent performance.
                  Three properties were refinanced in the first quarter of 2001
                  (see Note 17), generating sufficient cash for the Trust to
                  enter into negotiations with all of its Exchange Offering
                  professionals, and still have a small amount in reserve. All
                  three of these properties were refinanced at interest rates
                  lower than the interest rate on their old loan. The Trust has
                  identified four additional properties which it believes can
                  support higher debt levels and provide cash for general
                  corporate purposes. As a result, the Trust has proposals on
                  these four properties that, if accepted by the Trust, would
                  result in cash proceeds of approximately $1,500,000.

            o     The Trust has entered into a contract for sale of one of its
                  properties that, in the past, has required substantial and
                  frequent cash infusions, and expects the sale to close during
                  the second quarter of 2001. Additional properties are being
                  evaluated for potential disposition.

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

            o     For the three months ending March 31, 2001, the Operating
                  Partnership anticipates generating positive cash flow from
                  operations in an amount in excess of budget. As a result, on
                  or about March 31, 2001, the Trust expects to have
                  approximately $430,000 in available cash.

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

NOTE 3.  EXCHANGE OFFERING

         On April 7, 2000, pursuant to a registration statement on Form S-4, the
         Operating Partnership completed the Exchange Offering under which it
         acquired additional interests in residential apartment properties. In
         the Exchange Offering, the Operating Partnership issued 2,449,492
         registered Operating Partnership Units (with an initial assigned value
         of $24,494,920) in exchange for substantially all outstanding units of
         limited partnership interest owned by individual limited partners
         ("Exchange Limited Partners") in 23 limited partnerships (the "Exchange
         Partnerships"), which directly or indirectly own equity and/or debt
         interests in one or more of 26 residential apartment properties located
         in the southeast and mid-west United States. Prior to the completion of
         the Exchange Offering, the Exchange Partnerships were managed by
         corporate general partners (the "Corporate General Partners"), which
         were controlled by Gregory K. McGrath, who is a founder and Chief
         Executive Officer of the Trust, a founder and principal unit holder of
         the Operating Partnership, and the Chief Executive, sole stockholder
         and director of the Managing Shareholder of the Trust.


                                      F-11
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3.  EXCHANGE OFFERING (Continued)

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

         The Exchange Offering expired on April 7, 2000. Under the terms of the
         Exchange Offering, Exchange Limited Partners in a particular Exchange
         Partnership were entitled to participate in the offering only if
         limited partners holding at least 90% of the units of limited
         partnership interest in that partnership affirmatively elected to
         accept the offering. Exchange Limited Partners holding approximately
         97.4% of the outstanding units of limited partnership in such
         partnerships accepted the offering, and each of the Exchange
         Partnerships exceeded the 90% requirement. As a result, following the
         completion of the Exchange Offering, the limited partnership interests
         of nine Exchange Partnerships are owned entirely by the Operating
         Partnership (in the case of nine Exchange Partnership in which all
         Exchange Limited Partners accepted the offering) and substantially all
         of the limited partnership interests in the other 14 Exchange
         Partnerships are owned by the Operating Partnership, with the remaining
         limited partnership interests being retained by Exchange Limited
         Partners who elected not to accept the offering or failed to respond to
         the offering.

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

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

         The following unaudited pro forma summary presents consolidated
         financial information as if the Exchange Partnerships had been acquired
         effective January 1, 1999. The pro forma amounts include adjustments
         for depreciation as a result of the adjustment to fair value of the
         residential


                                      F-12
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3.  EXCHANGE OFFERING (Continued)

         apartment properties and interest associated with the related
         mortgages. The pro forma information does not necessary reflect the
         actual results that would have occurred nor is it necessarily
         indicative of future results of operations of the combined
         partnerships.

                                                        2000            1999
                                                        ----            ----

          Total revenues                            $ 6,780,000     $ 5,842,000
          Cost and expenses                          10,234,000       9,047,000
                                                    -----------     -----------
          Net loss                                  $(3,454,000)    $(3,205,000)
                                                    ===========     ===========

          Weighted average number of shares             816,316         618,772
                                                        =======         =======

          Net loss per share                             $(4.23)         $(5.18)
                                                         ======          ======

NOTE 4.  RENTAL APARTMENTS

         In 1998, the Trust, in three separate transactions, acquired the entire
         limited partnership interest in three Florida partnerships each owning
         a residential apartment property in Florida representing an aggregate
         of 197 units. The aggregate consideration paid by the Trust was
         approximately $2,234,000.

         In April 2000, pursuant to a registration statement on Form S-4, the
         Operating Partnership completed an exchange offering (the Exchange
         Offering) under which it acquired additional interests in residential
         apartment properties (see Note 3). In the Exchange Offering, the
         Operating Partnership issued 2,449,492 registered Operating Partnership
         Units in exchange for substantially all outstanding units of limited
         partnership interest owned by individual limited partners in 23 limited
         partnerships which directly or indirectly own equity and/or debt
         interests in one or more of 26 residential apartment properties
         (containing an aggregate of 1,602 units) located in the southeast and
         mid-west United States.


NOTE 5.  RENTAL APARTMENT HELD FOR SALE

         On December 7, 2000, the Independent Trustees of the Trust accepted an
         offer to sell Glen Lake Arms Apartments (Glen Lake), a 144 unit
         apartment building located in St. Petersburg, Florida for $3,900,000.
         The decision to sell Glen Lake was based on the property's lack of
         performance and its continuing need for cash to operate. The Trust
         expects the sale to be consummated by April 30, 2000. The property was
         adjusted to its carrying amount of $3,635,000 at December 31, 2000,
         resulting in a charge to operations of $814,471.

         The results of operations of Glen Lake from the date of acquisition
         (April 7, 2000) through December 31, 2000 were as follows:

          Rental and other income                               $ 467,620
          Expenses                                                951,805
                                                                ---------
             Net Loss                                           $(484,185)
                                                                =========


                                      F-13
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 6.  INVESTMENTS IN PARTNERSHIPS

         Alexandria Development, L.P.

            On October 14, 1998, the Operating Partnership acquired an
            approximate 12% limited partnership interest in Alexandria
            Development, L.P. (the "Alexandria Property"), a Delaware limited
            partnership, which is the owner and developer of a 168-unit
            residential apartment property under construction in Alexandria,
            Kentucky. An affiliate of the Trust sold the partnership interest in
            the Alexandria Property to the Operating Partnership and also serves
            as the managing general partner of the Alexandria Property. As of
            December 31, 1999, the Operating Partnership owned twenty-six (26)
            units out of a total of sixty-five (65) units of limited partnership
            interest for which it paid $1,285,000. The Operating Partnership had
            the option to acquire the remaining thirty-nine (39) units of
            limited partnership interests for $50,000 per unit or approximately
            $1,950,000. During 2000, the Operating Partnership purchased no
            units and the option expired on October 15, 2000.

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

            The equity in net loss in Alexandria was approximately $229,000 and
            $595,000 for 2000 and 1999, respectively.

         Lamplight Court of Bellefontaine Apartments, Ltd.

            In connection with the Exchange Offering, the Trust indirectly
            acquired a 31.7% limited partnership interest in Lamplight Court of
            Bellefontaine Apartments, Ltd. (Bellefontaine) an 80 unit
            residential apartment community known as the Lamplight Court
            Apartments located in Bellefontaine, Ohio. As of December 31, 2000,
            the equity in the net loss in Bellefontaine exceeded the Trust's
            investment and therefore is carried at zero value in the
            consolidated balance sheet.

NOTE 7.  MORTGAGE NOTES RECEIVABLE - AFFILIATES

         As of December 31, 2000, the Trust held discounted mortgage notes,
         including accrued interest, which were acquired as a result of the
         interest obtained in limited partnerships through the Exchange Offering
         completed April 7, 2000. The carrying value of the notes at December
         31, 2000 amounted to $3,057,078, net of allowance for loan losses of
         approximately $2,585,000. The total face value plus accrued interest of
         these notes amounted to $8,376,349 at December 31, 2000. The notes
         accrue interest at interest rates ranging from 6% to 12% and are
         generally paid currently to the extent of available cash flows. As of
         December 31, 2000, accrued interest relating to these mortgage notes
         receivables amounted to $1,251,482. The notes mature at various dates
         through April 20, 2008. The notes are secured by liens upon certain
         real and personal property and are subordinated to first mortgages,
         which in the aggregate amounted to approximately $11,500,000 at
         December 31, 2000.


                                      F-14
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7.  MORTGAGE NOTES RECEIVABLE - AFFILIATES (Continued)

         At December 31, 2000, the allowance for loan losses amounted to
         approximately $2,585,000. The allowance was established at the date the
         Exchange Offering was completed, as a result of accounting for the
         acquisition of interest in certain partnerships. Included in the
         consolidated statement of operations for 2000 is a charge to operations
         for a provision for loan losses of $235,599.

NOTE 8.  TRANSACTIONS WITH AFFILIATES

         Notes Receivable - Affiliates

            The Trust has four notes receivable due from an affiliate totaling
            $795,000 as of December 31, 2000. The notes call for monthly
            accruals of interest only at 10% per annum with principal and
            accrued interest due as a lump sum payment on April 8, 2003.
            Included in accrued interest due from affiliates is approximately
            $139,000 relating to these notes receivable as of December 31, 2000.

         Notes Payable - Affiliates

            The Trust has two non-interest bearing notes payable owed to its
            Chief Executive Officer totaling $140,000. The notes call for two
            lump-sum payments of $100,000 and $40,000 due on June 22, 2006 and
            April 25, 2007, respectively. The Trust also has a note payable to
            an affiliate totaling $552,256 with 12% interest per annum. Interest
            accrues and is due monthly. The unpaid principal balance and accrued
            interest is due as a lump-sum payment on December 31, 2002. Total
            notes payable to affiliates amounted to $692,256, with accrued
            interest of $49,919, as of December 31, 2000.

         Lines of Credit - Affiliates

            The Trust extends lines of credits to affiliates and is liable under
            lines of credit extended to the Exchange Properties from affiliates.
            All amounts accrue interest at 10% per annum and are due on demand.
            The balance due from affiliates under lines of credit was $805,667,
            with accrued interest of $354,762, as of December 31, 2000. Amounts
            due to affiliates under the lines of credit were $765,647, with
            accrued interest of $78,757, as of December 31, 2000.

         Advances To/From - Affiliates

            From time to time, the Trust advances funds to and receives advances
            from affiliates. These transactions are generally less than $20,000,
            non-interest bearing and are due on demand. Advances due from
            affiliates totaled $176,987 as of December 31, 2000. Advances due to
            affiliates totaled $652,183 as of December 31, 2000.

         Summary of Receivables/Payables - Affiliates:

                                                   Receivables       Payables
                                                   -----------       --------

          Notes receivable/payable                 $   795,000    $   692,256
          Lines of credit                              805,667        765,647
          Advances                                     176,987        652,183
                                                    ----------     ----------
             Total                                  $1,777,654     $2,110,086
                                                    ==========     ==========


                                      F-15
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9.  OTHER PROPERTY AND EQUIPMENT

         Furniture and equipment                                        $114,154
         Computer equipment and software                                  47,552
         Leasehold improvements                                           20,813
                                                                        --------
                                                                         182,519
         Less accumulated depreciation                                    76,559
                                                                        --------
                                                                        $105,960
                                                                        ========

         Depreciation expense for other property and equipment for the years
         ended December 31, 2000 and 1999 was $34,001 and $34,001, respectively,
         and is included in other administration expenses in the consolidated
         statement of operations.

NOTE 10. MORTGAGES PAYABLE

         In 1998, the Partnership acquired interest in three limited
         partnerships each owning a residential apartment property. In
         connection with the Exchange Offering completed April 7, 2000, the
         Partnership acquired 16 partnerships that directly owned interests in
         15 residential properties. Each property had a mortgage that is secured
         by such property. Total mortgage loans on these 18 properties amount to
         $23,540,172 at December 31, 2000. The mortgage loans bear interest at
         rates ranging from 6.5% to 9.5% and mature on various dates through
         December 2006.

         The aggregate maturities of mortgages payable for each of the five
         years subsequent to December 31, 2000 are as follows:

                                           Principal     Interest        Total
                                           ---------     --------        -----
         Year ending December 31:
            2001                          $ 2,906,262   $1,737,305   $ 4,643,566
            2002                              318,947    1,611,718     1,930,665
            2003                              342,599    1,588,067     1,930,666
            2004                            6,925,005    1,436,246     8,361,251
            2005                            6,943,373      766,232     7,709,605
            2006 and thereafter             6,103,987    1,672,240     7,776,227
                                          -----------   ----------   -----------
               Total                      $23,540,172   $8,811,807   $32,351,979
                                          ===========   ==========   ===========

NOTE 11. NOTES PAYABLE

         The Trust has unsecured notes payable to three entities with annual
         interest rates ranging from 10% to 10.4%. Principal and interest
         totaling $517,436 owed to one of the entities is due on demand. The
         remaining balances are due in 2001. As of December 31, 2000, the
         principal balance outstanding on these notes was $1,433,172, with
         accrued interest of $1,049,326, totaling $2,482,498.


                                      F-16
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 12. COMMITMENTS AND CONTINGENCIES

         Contract to Purchase Additional Properties

            In September 1998, the Trust entered into 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 three development companies are controlled by one
            of the Trust's founders and Chief Executive Officer. One of the
            residential apartment properties has been sold to a third party with
            the Trust's consent. The remaining property is scheduled to have a
            total of 396 units, comprised of one, two and three bedroom/one or
            two bathroom apartments. Construction of the property (the "Burgundy
            Hills Property"), located in Florence, Kentucky (part of the
            Cincinnati metropolitan area), is expected to be completed by the
            end of the first quarter of 2004. The Trust has a right of first
            negotiation to purchase the property from the development company
            upon completion and a right of first refusal to purchase the
            property on the same terms offered by a third party. The purchase
            price is expected to be approximately $30,000,000. It is
            contemplated that a significant portion of that amount would be
            covered by first mortgage financing. Currently, the Trust does not
            have adequate resources to close on the transaction and it is
            uncertain whether the Trust will have adequate resources to complete
            the transaction upon completion of construction.

            In connection with the transaction, the Trust (along with its Chief
            Executive Officer) agreed to co-guarantee long-term first mortgage
            construction financing provided by a bank. As of March 31, 2001,
            approximately $6,477,000 of the construction loan had been drawn
            down. The interest rate on the construction loan is the bank's prime
            rate (currently 8.5%) or the LIBOR rate plus 2%. The Trust also
            agreed that, if the Borrower failed to comply with the repayment and
            other obligations under the loan documents, the bank could elect to
            require the Trust to buy out the bank's position on the entire
            outstanding amount of the construction loan.

            In September 2000, the Trust received notice from counsel to the
            bank that Burlington Residential, Ltd. ("Borrower"), the owner of
            the Burgundy Hills Property, had defaulted on its loan for failure
            to pay current interest due and meet certain equity requirements and
            covenants under the loan agreement, adverse changes in the financial
            condition of the Borrower and the Trust, and the Trust's failure to
            meet certain tangible net worth tests set forth in the loan
            agreements. The bank indicated that it was exercising its right to
            accelerate the loan. According to the Chief Executive Officer, the
            bank agreed to forego further action for at least 60 days while the
            parties attempted to reach an arrangement. The extension expired in
            November 2000 and, according to the Chief Executive Officer, is
            currently being extended on a month-to-month basis. The Borrower
            paid down the outstanding accrued interest and a portion of the
            principal and is currently pursuing a new long-term construction
            facility with another institutional lender to replace the bank loan
            (and the loan from another bank described below).

            Another bank has provided additional institutional financing in the
            principal amount of $1,576,000 to the Borrower. The loan is secured
            by a security interest in partnership interests in the Borrower. Due
            to a default in payment of interest due, this bank has been assigned
            rental payments and has taken over day-to-day management of the
            property. This loan is expected to be paid off with the proposed new
            first mortgage financing referred to above.


                                      F-17
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 12. COMMITMENTS AND CONTINGENCIES (Continued)

         Contract to Purchase Additional Properties (Continued)

            There can be no assurance that refinancing will be available or will
            be available on commercially reasonable terms, that the bank
            (described in the preceding paragraph) will not seek to enforce its
            right to accelerate the loan and begin foreclosure proceedings
            against the Burgundy Hills Property or elect to require the Trust to
            buy out its position on the entire outstanding amount of the
            construction loan, or that the other bank will not seek to enforce
            its right to take over control of the Borrower.

         Officers' Compensation

            A founder of the Trust and the Operating Partnership serves as Chief
            Executive Officer of the Trust and the Managing Shareholder. He has
            agreed to serve as Chief Executive Officer in exchange for
            compensation in the form of common shares of the Trust or units of
            the Operating Partnership in an amount not to exceed 25,000 shares
            or units, as applicable, to be determined by the Executive
            Compensation Committee based upon his performance, in addition to
            benefits and eligibility for participation in any option plan and
            bonus incentive compensation plan which may be implemented by the
            Trust. As of December 31, 2000, no common shares of the Trust or
            units of the Operating Partnership have been issued to the Chief
            Executive Officer as compensation. However, in order to reflect all
            appropriate administrative expenses of the Operating Partnership,
            provision of $217,000 has been made in the accompanying financial
            statements for the estimated fair value of the services rendered by
            the Chief Executive Officer for 2000 and 1999. This amount has been
            charged to compensation expense for 2000 and 1999, with
            corresponding credits to partners' capital. These estimates of the
            fair value of such services were determined by management based upon
            an analysis of compensation paid to chief executive officers of a
            number of comparable real estate investment trusts. Compensation and
            benefits for the Chief Executive Officer are determined annually by
            the Executive Compensation Committee of the Board of the Trust.

            On August 28, 2000, the Trust entered into employment agreements
            with the President and Chief Operating Officer (COO) and with the
            Chief Financial Officer (CFO) through December 31, 2001. Under the
            terms of the agreement, the Trust through the Operating Partnership
            will pay the COO and the CFO $175,000 and $110,000 per annum,
            respectively. In addition, the COO and the CFO will receive $94,000
            and $60,000, respectively, if they are involuntarily terminated for
            any reason other than gross misconduct.

         Underwriting Agreement

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


                                      F-18
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 12. COMMITMENTS AND CONTINGENCIES (Continued)

         Operating Leases

            During 1998, the Operating Partnership executed an operating lease
            for office facilities. The lease, which expires on June 15, 2003,
            requires monthly payments of $5,000. The Operating Partnership has
            three options of five years each to extend its lease for a total of
            fifteen additional years. During 2000, the Operating Partnership
            subleased this office facility to an affiliated entity for the same
            amount ($5,000) on a month-to-month basis. The Operating Partnership
            moved into a new office facility which it subleases from an
            affiliated entity on a month-to-month basis for $2,500 per month.

            The Operating Partnership remains liable under the terms of the
            original lease which expires June 15, 2003.

            Minimum future lease payments on this lease are as follows:

              Year ending December 31:
                 2001                                                $ 60,000
                 2002                                                  60,000
                 2003                                                  30,000
                                                                     --------
                    Total                                            $150,000
                                                                     ========

            Rent expense was approximately $42,500 and $62,000 for 2000 and
            1999, respectively.

         Pending Litigation

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

NOTE 13. RELATED PARTY TRANSACTIONS

         Trust Management Agreement

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


                                      F-19
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 13. RELATED PARTY TRANSACTIONS (Continued)

         Trust Management Agreement (Continued)

            Management Agreement had an initial term of one year and was subject
            to extension on a year-to-year basis on approval of the Board or a
            majority of the stockholders entitled to vote on such matter or a
            majority of the Independent Trustees.

            Under the Agreement, the Trust is obligated to reimburse the
            Managing Shareholder for all Trust expenses related to the Cash
            Offering in an amount not to exceed 2% of gross proceeds from the
            sale by the Trust of common shares in the Trust's initial offering.
            The Trust is also obligated to reimburse the Managing Shareholder,
            on a monthly basis during the term of the agreement, for its
            operating expenses relating to the business of the Trust and the
            Operating Partnership in an amount up to the sum of 1% of the gross
            proceeds from the sale by the Trust of common shares in the Trust's
            initial offering, and 1% of the initial stock price for each unit of
            limited partnership interest ("Unit") in the Operating Partnership
            issued in connection with its Exchange Offering. The Managing
            Shareholder in its sole discretion may elect to receive payment for
            its service in the form of common shares with an equivalent value.
            The Trust is also obligated to reimburse the Managing Shareholder
            for expenses incurred prior to and during the Cash Offering in
            investigating and evaluating investment opportunities and assisting
            the Trust in consummating its investments in an amount not to exceed
            4% of the gross proceeds from the sale by the Trust of common shares
            in its Cash Offering for the Managing Shareholder's services.

            On February 7, 2001, the Independent Trustees of the Trust and the
            Managing Shareholder agreed to terminate the agreement effective
            December 31, 2000. At December 31, 2000, the Trust had accrued
            approximately $303,000 which represented all unpaid fees earned by
            the Managing Shareholder through December 31, 2000.

            During 2000 and 1999, respectively, the Trust paid the Managing
            Shareholder $23,649 and $42,289 for reimbursable expenses incurred
            during the Cash Offering, $10,796 and $84,578 for reimbursable
            investment expenses and $297,706 and $21,145 for reimbursable
            management expenses.

         Reimbursed Administrative Expenses

            The Operating Partnership shares certain administrative expenses
            with a number of other partnerships that are related to the
            Operating Partnership by means of a common person who is the sole
            stockholder and officer of the general partner of these partnerships
            and an officer of the Trust and of the general partner of the
            Operating Partnership. These administrative expenses are allocated
            as described below, and the allocated expenses are reimbursed to the
            Operating Partnership by these other partnerships. The allocation of
            the costs was determined based upon an analysis of those
            administrative costs directly associated with or reasonably
            allocated to the activities of each entity. Personnel costs were
            allocated based upon estimates of the time devoted by individual
            employees to each entity's activities on a monthly basis. Other
            administrative costs were allocated on a direct basis to the extent
            practicable, and the balance on a pro rata basis. In the opinion of
            management, the method used to allocate costs to all of the entities
            was considered to be reasonable under the circumstances.


                                      F-20
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 13. RELATED PARTY TRANSACTIONS (Continued)

         Reimbursed Administrative Expenses (Continued)

            During 2000 and 1999, the Operating Partnership was reimbursed
            approximately $370,000 and $857,000, respectively, for
            administrative expenses, which have been presented as a reduction of
            the specific related category of administrative expenses in the
            accompanying financial statements.

NOTE 14. SHAREHOLDERS' EQUITY

         Cash Offering

            On May 15, 1998, pursuant to a registration statement on Form SB-2,
            the Trust commenced an initial public offering of a maximum of
            2,500,000 common shares of beneficial interest in the Trust at $10
            per common share (the "Cash Offering"). The Cash Offering, as
            amended, was terminated May 31, 2000. The Trust sold a total of
            702,076 common shares in the offering for an aggregate offering
            price of $7,020,763. All of the common shares issued by the Trust in
            the offering are tradable without restriction under the Securities
            Act of 1933, as amended (the "Act"), but are subject to certain
            restrictions designed to permit the Trust to qualify and maintain
            its status as a real estate investment trust under the Internal
            Revenue Code. The common shares are not listed for trading on any
            stock exchange, and no market currently exists for the common
            shares.

         Exchange Offering

            The Operating Partnership filed a registration statement on Form S-4
            with the Securities and Exchange Commission (the "Commission")
            covering up to 2,500,000 units of limited partnership interest
            ("Units") to be registered under the Act ("Exchange Offering").

            These units were exchanged for units of limited partnership interest
            in 23 limited partnerships (the "Exchange Partnerships"), which
            directly or indirectly own equity and/or mortgage interests in one
            or more residential apartment properties. The Exchange Partnerships
            were managed by corporate general partners who are affiliated with
            one of the founders of the Trust and the Operating Partnership, who
            is also the sole stockholder and director of the Managing
            Shareholder of the Trust. The registration statement was declared
            effective on November 9, 1999, and the Exchange Offering commenced
            shortly thereafter.

            The number of Units offered in exchange for the limited partnership
            interests in the Exchange Partnerships was based on appraisals
            prepared by qualified and licensed independent appraisal firms for
            each underlying residential apartment property. For purposes of the
            Exchange Offering, each Unit was arbitrarily assigned an initial
            value of $10, which corresponds to the offering price of each Trust
            Common Share that was being offered to the public pursuant to the
            Cash Offering. The value of each Unit and Common Share outstanding
            was substantially identical since Unit holders, including recipients
            of Units in the Exchange Offering, are entitled to exchange all or a
            portion of their Units at any time and from time to time for an
            equivalent number of Trust Common Shares, so long as the exchange
            would


                                      F-21
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 14. SHAREHOLDERS' EQUITY (Continued)

         Exchange Offering (Continued)

            not cause the exchanging party to own (taking into account certain
            ownership attribution rules) in excess of 5% of the then outstanding
            shares in the Trust, subject to the Trust's right to cash out any
            holder of Units who requests an exchange and subject to certain
            other exceptions. To facilitate such exchanges of Units into Common
            Shares, 2,500,000 Common Shares (in addition to the 2,500,000 Common
            Shares offered by the Trust in the Cash Offering) have been
            registered with the Commission.

            By virtue of the completion of the Exchange Offering, the Operating
            Partnership acquired equity and/or subordinated mortgage interests
            in 26 properties (the "Exchange Properties") directly or indirectly
            owned by the 23 Exchange Partnerships. The Operating Partnership
            acquired interests in a particular property and/or mortgages by
            acquiring from limited partners their units of limited partnership
            interest in the respective Exchange Partnership. Each of the
            Exchange Partnerships directly or indirectly owns equity and/or
            mortgage interests in one or more properties. Certain of the
            Exchange Partnerships directly or indirectly own equity interests in
            16 properties, which consist of an aggregate of 1,012 residential
            units (comprised of studio, one, two, three and four bedroom units).
            Certain of the Exchange Partnerships directly or indirectly own
            mortgage interests in 10 properties, which consist of an aggregate
            of 813 existing residential units (studio and one and two bedroom
            units) and 168 units (two and three bedroom units) under
            development. Of the Exchange Properties, 21 properties are located
            in Florida, three properties in Ohio and one property each in
            Georgia and Indiana. See Note 3 regarding the completion of the
            Exchange Offering on April 7, 2000.

            In connection with the Exchange Offering, 124,903 Trust common
            shares were issued as a commission to broker-dealers who assisted
            the Operating Partnership in consummating the Exchange Offering. The
            shares were issued at a value of $10 per share and are reflected at
            a net zero value in the accompanying Statement of Shareholders'
            Equity.

         Operating Partnership Limited Partnership Units

            In connection with the formation of the Trust and the Operating
            Partnership, the Original Investors, Gregory K. McGrath and Robert
            S. Geiger, each subscribed for 601,080 limited partnership units of
            the Operating Partnership (a total of 1,202,160 units). In
            consideration for the units subscribed for by them, the Original
            Investors made a $100,000 capital contribution to the Operating
            Partnership. The number of units subscribed for represented 19% of
            the maximum Common Shares that would have been outstanding after
            completion of the Cash Offering and the Exchange Offering assuming
            that the Trust had sold all Common Shares offered in the Cash
            Offering and that the Operating Partnership had issued the maximum
            number of Units (2,500,000) offered in the Exchange Offering,
            calculated on a fully diluted basis assuming all then outstanding
            units (other than those acquired by the Trust) had been exchanged
            into an equivalent number of Common Shares. The subscription
            agreement entered into by the Original Investors provided that if,
            as of May 31, 2000, the number of units subscribed for by the
            Original Investors represented a percentage greater than 19% of the
            then outstanding Common Shares calculated on a fully diluted basis,
            each Original Investor would be required to return any excess Units
            to the Operating Partnership for cancellation.


                                      F-22
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 14. SHAREHOLDERS' EQUITY (Continued)

         Operating Partnership Limited Partnership Units (Continued)

            Therefore, as of May 31, 2000, an adjustment, reducing the number of
            Units held in escrow by 444,414, was made to accurately reflect the
            number of Units held by the Original Investors. The Original
            Investors have deposited Units subscribed for by them into a
            security escrow account for six to nine years, subject to earlier
            release under certain conditions.

            The fair value of the units issued to the Original Investors
            amounted to $100,000, based upon a determination made by the
            Independent Trustees of the Trust as of the date of subscription for
            these units (February 3, 1998). The determination of the fair value
            took into consideration that at the time of the subscription for the
            units, the Trust and the Operating Partnership were development
            stage companies, with no cash or other significant tangible assets,
            operating history or revenue and no certainty of successful
            offerings or future operations; the founders had at risk their
            initial capital contributions plus certain additional unreimbursed
            advances to cover certain offering and operating expenses; the
            founders have significant experience and developed know-how critical
            to the success of the Trust and the Operating Partnership; and the
            founders' units are subject to significant transfer restrictions.
            The Operating Partnership has accounted for the units as being
            issued and outstanding, but subject to escrow restrictions, in the
            accompanying consolidated financial statements, and has included the
            units as outstanding in determining the weighted average partnership
            units outstanding for purposes of calculating net loss per
            partnership unit in the accompanying consolidated financial
            statements. Because the release of the units from escrow is not
            dependent upon the achievement of any specified level of profits,
            the release of the units from escrow is not considered to be
            compensatory and, accordingly, no accounting measurement will be
            given to the release of the units from escrow.

            Under the subscription agreement, the Original Investors agreed to
            waive future administrative fees for managing Exchange Partnerships
            which participated in the Exchange Offering, agreed to assign to the
            Operating Partnership the right to receive all residual economic
            rights attributable to the general partner interests in Exchange
            Partnerships; and, in order to permit management of the Exchange
            Properties by the Operating Partnership, caused the Exchange
            Partnerships to cancel the partnerships' prior property management
            agreements and agreed to forego the right to have a property
            management firm controlled by the Original Investors assume the
            property management role in respect of properties in which the Trust
            or the Operating Partnership invest.

            Following the Exchange Offering, the Operating Partnership controls
            the Exchange Partnerships by virtue of its ownership of
            substantially all of the limited partnership interests therein,
            which provides the Operating Partnership the ability to remove the
            general partner under the provisions of the limited partnership
            agreements pertaining to each Exchange Partnership that authorize
            limited partners holding over 50% of total partnership interest to
            remove the general partner.


                                      F-23
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 14. SHAREHOLDERS' EQUITY (Continued)

         Distributions

            In 1999, the Board of Trustees authorized the payment of three
            distributions aggregating $270,348 ($.16 per common share of
            beneficial interest) from the surplus of the Trust. This amount is
            presented in the accompanying consolidated financial statements as a
            deduction from shareholders' equity under the caption
            "Distributions". There were no distributions paid in 2000.

NOTE 15. NET LOSS PER SHARE

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

         Basic net loss per share equals net loss divided by the weighted
         average shares outstanding during the year. The computation of diluted
         net loss per share that includes dilutive common share equivalents in
         the weighted average shares outstanding has not been presented, as it
         is anti-dilutive in 2000 and 1999.

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

                                                            Weighted      Net
                                                            Average       Loss
                                              Net Loss       Shares    Per Share
                                              --------       ------    ---------

          2000                              $(3,344,350)    816,316     $(4.10)
                                            ===========     =======     ======
          1999                              $(3,166,927)    618,772     $(5.12)
                                            ===========     =======     ======

         Assuming that the Original Investors had exchanged their limited
         partnership units for an equivalent net amount of 757,746 and 158,353
         Common Shares in 2000 and 1999, respectively, the net loss per share on
         an as-converted basis would have been $(2.12) and $(4.07) per share for
         2000 and 1999, respectively.

NOTE 16. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
         ACTIVITIES

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


                                      F-24
<PAGE>

                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 16. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
         ACTIVITIES (Continued)

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

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

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

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

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

NOTE 17. SUBSEQUENT EVENTS

         On February 5, 2001, the Trust refinanced the first mortgages on three
         properties (see Note 2). The new information of the mortgages is as
         follows:

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


                                      F-25



<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
        ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.


                                    PART III

ITEM 9. TRUSTEES, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
        PERSONS' COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     The names of the persons that serve as Trustees and executive officers of
the Trust and the Operating Partnership and their respective ages and positions
are set forth below. Each of the trustees has served since 1998. The term of
each independent trustee is one year.

Name                      Age    Position
----                      ---    --------

James H. Bownas           53     Trustee
Peter M. Dickson          51     Trustee
Gregory K. McGrath  1/    40     Chief Executive Officer - Trust
Robert S. Geiger  2/      50     Chief Operating Officer - Operating Partnership
Robert L. Astorino        54     President and Chief Operating Officer - Trust
                                 and Chief Executive Officer - Operating
                                 Partnership
Mark L. Wilson            54     Chief Financial Officer - Trust and Operating
                                 Partnership

     Baron Advisors, Inc. ("Baron Advisors" or the "Managing Shareholder"), the
Managing Shareholder and a Trustee of the Trust, was incorporated in July 1997
as a Delaware corporation. The Managing Shareholder has discretion in day to day
management and control of the affairs of the Trust and the Operating
Partnership, subject to (i) general supervision and review by the Independent
Trustees and the Managing Shareholder acting together as the Board of Trustees
of the Trust and (ii) prior approval authority of a majority of the Board and/or
of a majority of the Independent Trustees in respect of certain actions of the
Trust and the Operating Partnership. The Declaration of the Trust requires that
a majority of the Board of the Trust be comprised of Independent Trustees not
affiliated with the Managing Shareholder or its affiliates. Baron Advisor's term
as Trustee expires in May 2001, and it has been nominated by the Trust for
re-election at the annual meeting of Shareholders scheduled on May 31, 2001.

     The management of Baron Advisors has substantial prior experience in and
knowledge of the residential apartment property and single-family housing market
and its financing and experience in the management of investment programs and in
directing their operations. The Chief Executive Officer, sole director and sole
shareholder of Baron Advisors are Gregory K. McGrath and its Chief Operating
Officer is Robert S. Geiger.

     Prior to December 31, 2000, the Managing Shareholder was compensated for
its services pursuant to a Trust Management Agreement. The Trust Management
Agreement was terminated effective December 31, 2000, and since that time the
Managing Shareholder has not been compensated for its services performed on
behalf of the Trust. Officers and employees of the Managing Shareholder who
perform services on behalf of the Trust are not paid any additional compensation
by the Trust. Such officers and employees generally will serve in the same
capacity for the Trust and will be compensated by the Trust in amounts
determined by the Managing Shareholder, in the case of employees, and by the
Executive Compensation Committee of the Trust.

----------

          1/Mr. McGrath is Chief Executive Officer, sole shareholder and sole
     director of the Managing Shareholder. He is also the Chief Executive
     Officer, sole shareholder and director of Baron Capital Properties, Inc., a
     Delaware corporation, which is the Corporate Trustee of the Trust.

          2/Mr. Geiger serves as the Chief Operating Officer of the Managing
     Shareholder.


                                       57
<PAGE>

     Gregory K. McGrath is the Chief Executive Officer, sole director and sole
shareholder of Baron Advisors, co-founder and Chief Executive Officer of the
Trust, and a co-founder and principal unitholder of the Operating Partnership.
Mr. McGrath has over 10 years experience in all aspects of the real estate
industry, including site selection and acquisition, arrangement and closing of
mortgage financing, and property acquisition and management. Between January
1993 and June 1994, Mr. McGrath served as Senior Vice President of Realty
Capital, Inc., a Florida corporation which sponsored real estate limited
partnerships. Mr. McGrath is also the President, sole director and sole
shareholder of Baron Real Estate Services, Inc. ("Baron"), an Ohio corporation
headquartered in Cincinnati, Ohio, which he co-founded in 1989. Mr. McGrath is
also the President, sole director and sole shareholder of Brentwood Management,
LLP, an Ohio limited liability company which provides property management
services. Mr. McGrath is also a principal of The Baron Organization, Inc., a
Delaware corporation which manages an approximately $100 million real estate
portfolio. In addition to the affiliations described above, Mr. McGrath is also
a principal in a number of other related business entities which are involved in
various aspects of the real estate business. In addition, he founded and is the
President and principal shareholder of WaKul, Inc., a provider of integrated
communications services to owners, property managers and residents of
residential apartment properties. See also "Item 12 - Certain Relations and
Related Transactions" below.

     Robert S. Geiger is a co-founder of the Trust and Operating Partnership and
the Chief Operating Officer of the Operating Partnership. Mr. Geiger is also a
practicing attorney. From 1994 to August 1998, he was managing director of the
law firm of Geiger Kasdin Heller Kuperstein Chames & Weil, P.A., a Miami,
Florida law firm with a general practice. From 1986 to 1994, he was managing
director of Levine & Geiger, a Miami, Florida law firm. Mr. Geiger's practice is
concentrated in complex commercial and real property transactions and business
reorganizations. He serves as general counsel for national, regional and local
corporations engaged in a wide range of business activities, including regulated
industry matters. See also "Item 12 - Certain Relations and Related
Transactions" below.

     James H. Bownas, an Independent Trustee of the Trust, has been a principal
in Gamble Hartshorn Johnson Co. LPA, a Columbus, Ohio law firm with a general
practice since November 1996. Mr. Bownas's practice is concentrated in
securities, real estate, taxation, corporate and estate planning. Between
January 1996 and November 1996, Mr. Bownas managed his own legal practice.
Between 1989 and January 1996, Mr. Bownas served as General Counsel, Vice
President and Secretary of Lexford, Inc. ("Lexford") (formerly Cardinal Realty
Services, Inc. and before that Cardinal Industries, Inc.), a publicly traded
company headquartered in Reynoldsburg, Ohio which has sponsored numerous real
estate investment limited partnerships. At Lexford, Mr. Bownas developed
significant experience in the syndication of real estate investment limited
partnerships, negotiated the resolution of over $2 billion of creditors' claims
in connection with the bankruptcy reorganization of Cardinal Industries, Inc.,
and coordinated the transition of Cardinal Industries, Inc. from a bankruptcy
creditor to a successful publicly traded company. Since 1995, Lexford has
engaged in several arms-length transactions (none of which represented a
material portion of Lexford's assets, liabilities, revenues or expenditures)
with affiliates of the Managing Shareholder pursuant to which multi-family real
estate was sold to, purchased from and managed by and for such entities. Mr.
Bownas's term as Independent Trustee expires in May 2001, and he has been
nominated by the Trust for re-election at the annual meeting of Shareholders
scheduled on May 31, 2001.

     Peter M. Dickson, an Independent Trustee of the Trust, has been managing
director of the Guardian Management Company Limited, a global financial services
corporation based in Bermuda since 1990. In addition, since 1994 Mr. Dickson has
served as a director to Grosvenor Trust Company Limited, another Bermuda-based
financial services corporation. Between 1985 and 1990, Mr. Dickson served as the
Executive Vice President of Finance for The Wraxall Group, Bermuda. Between 1979
and 1985, Mr. Dickson held several positions with Peat, Marwick. Mr. Dickson's
term as Independent Trustee expires in May 2001, and he has been nominated by
the Trust for re-election at the annual meeting of Shareholders scheduled on May
31, 2001.

     Robert L. Astorino has served as served as President and Chief Operating
Officer of the Trust since August 2000 and as Chief Executive Officer of the
Operating Partnership since May 25, 1998. From February 1998 through May 25,
1998, he served as President - Property of Strategic Management Inc., a real
estate management company affiliated with the Mr. McGrath. From 1992 through
January 1998, he served as President of The Housing Partnership, Inc., a
Louisville, Kentucky-based real estate investment and consulting company.
Between 1991 and 1992, Mr. Astorino served as Assistant Vice President, Real
Estate Operations at Great Western Bank in Beverly Hills, California, where his
responsibilities included the operation and sale of residential and commercial
real estate obtained in foreclosure.

     Mark L. Wilson was elected Chief Financial Officer of the Trust and the
Operating Partnership in November 1998. Since June 1998 Mr. Wilson has also
served as Chief Financial Officer of WaKul, Inc., a provider of integrated
communications services to owners, property managers and residents of
residential apartment properties. WaKul, Inc. is controlled by Mr. McGrath.
Between 1989 and 1997, Mr. Wilson served as Vice President of Baron Real Estate
Services, Inc., an affiliate of Mr. McGrath. Mr. Wilson was


                                       58
<PAGE>

responsible for financial control, accounting and tax functions for that company
in addition to financial control and accounting for all of the properties which
it managed. In addition, Mr. Wilson served as President of The Baron Companies,
a registered securities broker-dealer which served as the dealer manager of
numerous private offerings of limited partnerships affiliated with Mr. McGrath.

     Joseph M. Jayson, age 62, has been nominated by the Trust for election as
an Independent Trustee on its Board of Trustees. Mr. Jayson is the Chairman,
Director and sole stockholder of J.M. Jayson & Company, Inc. and certain of its
affiliated companies: U.S. Apartments LLC, Westmoreland Capital Corporation,
Oilmark Corporation and U.S. Energy Development Corporation. In addition, Mr.
Jayson is Chairman of Realmark Corporation, a wholly-owned subsidiary of J.M.
Jayson & Company, Inc., and President and Director of Realmark Properties, Inc.,
also a wholly owned subsidiary of J.M. Jayson & Company, Inc. and co-general
partner of Realmark Properties Investors Limited Partnership, Realmark
Properties Investors Limited Partnership-II, Realmark Properties Investors
Limited Partnership-III, Realmark Properties Investors Limited Partnership-IV,
Realmark Properties Investors Limited Partnership-V, Realmark Properties
Investors Limited Partnership-VI A, and Realmark Properties Investors Limited
Partnership-VI B. Mr. Jayson is a member of the Investment Advisory Board of the
corporate general partner of the foregoing partnerships.

     For the past 38 years, Mr. Jayson has been engaged in various aspects of
real estate brokerage and investment. He is a Certified Property Manager as
designated by the Institute of Real Estate Management. He brokered residential
properties from 1962 to 1964 and commercial and investment properties from 1964
to 1967, and in 1967, left commercial real estate to form his own investment
firm. Since that time, Mr. Jayson and J.M. Jayson & Company, Inc. have formed,
or participated in the formation of, over 30 real estate-related limited
partnerships. For the past 19 years, Mr. Jayson , J.M. Jayson & Company, Inc.
and an affiliate have also engaged in developmental drilling for gas and oil.
Mr. Jayson received a B.S. Degree in Education in 1961 from Indiana University
and a Masters Degree from the University of Buffalo in 1963, and has served on
the Educational Faculty of the Institute of Real Estate Management.

     Jerome S. Rydell, age 55, has been nominated by the Trust for election as
an Independent Trustee on its Board of Trustees. Mr. Rydell is President, sole
director and sole beneficial owner of the following companies: (i) Sigma
Financial Corporation ("Sigma"), a NASD registered broker-dealer that acted as
the underwriter of Baron Capital Trust's (the "Trust") public Cash Offering that
ended in May 2000 and participated in the Exchange Offering of Baron Capital
Properties, L.P., an affiliate of the Trust, pursuant to which limited partners
of certain limited partnerships managed by affiliates of Mr. McGrath were
offered the right to exchange their limited partnership interests in such
partnerships in exchange for units of limited partnership interest in Baron
Capital Properties, L.P.; and (ii) Sigma Planning Corporation, a registered
investment advisor and a subsidiary of Sigma. Sigma was formed in 1983 and
currently is licensed in 48 states. Its main office is located in Ann Arbor,
Michigan and its 48-member staff supports more than 500 registered
representatives. Both Sigma and Sigma Planning Corporation are registered with
the Securities and Exchange Commission.

     Mr. Rydell and other affiliates have also sponsored a number of securities
offerings in both real estate and radio stations. In addition, other affiliated
companies currently manage real estate assets comprised of 1,500 residential
sites and $22,000,000 of land contracts and mortgages in the metropolitan
Detroit area. See also "Item 12 - Certain Relations and Related Transactions"
below.

     The Corporate Trustee of the Trust is Baron Capital Properties, Inc.
("Baron Properties"), a Delaware corporation formed in July 1997 and an
Affiliate of the Managing Shareholder. The primary duty of the Corporate Trustee
is to operate an office in the State of Delaware as Delaware law requires that
at least one of the trustees of a Delaware business trust (such as the Trust)
have an office in Delaware. Baron Properties, as Corporate Trustee of the Trust,
will act only at the direction of the Managing Shareholder, and will not take
independent discretionary action on behalf of the Trust. The Corporate Trustee
will not be compensated for its services, but will be reimbursed only for its
reasonable out-of-pocket expenses in serving in such capacity which are approved
in advance by the Managing Shareholder. Such expenses are expected to be limited
to those incurred in connection with the operation of its Delaware office. Baron
Properties may be a trustee of other similar entities that may organized by the
Managing Shareholder, Baron Advisors, and any of their respective Affiliates.
The Chief Executive Officer, sole director and sole stockholder of Baron
Properties is Gregory K. McGrath. The principal office of Baron Properties is at
1105 North Market Street, Suite 1300, Wilmington, Delaware 19899.


Section 16(a) of the Exchange Act Beneficial Ownership Reporting Compliance

     No reports were required to be filed in the most recent fiscal year
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
since the Trust's Common Shares are not registered under the act.


                                       59
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>
                                                 Annual Compensation

                                                                                         Long Term              All Other
  Name and Principal Position             Year        Salary           Bonus           Compensation           Compensation
  ---------------------------             ----        ------           -----           ------------           ------------
<S>                                       <C>      <C>                   <C>                <C>               <C>
Gregory K. McGrath, Chief Executive       2000     $ 217,000  1/         --                 --                    --
Officer - Trust


Robert S. Geiger, Chief Operating         2000     $  55,769  2/         --                 --                    --
Officer - Operating Partnership

                                          2000     $ 149,899             --                 --                $ 9,600 3/
Robert L. Astorino, President and
Chief Operating Officer - Trust and
Chief Executive Officer - Operating
Partnership

Mark L. Wilson, Chief Financial           2000     $  72,729             --                 --                $ 9,791 3/
Officer - Trust and Operating
Partnership
</TABLE>

     1/ The Board of the Trust awarded Mr. McGrath compensation in the amount of
$217,000 for his services in 2000. Mr. McGrath elected not to be paid in cash.
Instead, such amount was recorded as a compensation expense of the Trust and
treated as a capital contribution. In addition, Mr. McGrath, is the Chief
Executive Officer and sole shareholder and director of Baron Advisors, Inc.,
which is the Managing Shareholder of the Trust. Prior to its termination in
December 2000, a Trust Management Agreement, dated as of May 15, 1998, provided
that Baron Advisors, Inc. was entitled to be reimbursed for its operating
expenses relating to the business of the Trust and the Operating Partnership in
an amount equal to 1% of the gross proceeds of the Cash Offering plus 1% of the
initial value of Units issued in connection with the Exchange Offering, up to a
maximum of $500,000 per year. In addition, the Managing Shareholder was entitled
to reimbursement for (i) distribution, due diligence and organizational expenses
incurred in connection with the formation of the Trust and the Operating
Partnership and with the Cash Offering in an amount not to exceed 1% of gross
proceeds from the Cash Offering; (ii) legal, accounting and consulting fees and
filing, recording, printing, postage and other miscellaneous expenses incurred
in connection with the Cash Offering in an amount not to exceed 1% of the gross
proceeds from the Cash Offering; and (iii) expenses incurred prior to and during
the Cash Offering for investigating and evaluating investment opportunities for
the Trust and the Operating Partnership (other than in connection with the
Exchange Offering) and for assisting them in consummating their investments, in
an amount not to exceed 4% of the gross proceeds from the Cash Offering. In
2000, the Trust incurred expenses due Baron Advisors, Inc. totaling $12,095,
comprised of reimbursable organizational and offering expenses ($8,396), and
reimbursable investment advisory expenses ($3,699). Since December 31, 2000, the
Managing Shareholder has not been entitled to receive any reimbursement for
expenses incurred on behalf of the Trust and the Operating Partnership.

     2/ Prior to August 1, 2000, Mr. Geiger's annual salary was set at $100,000,
in addition to benefits, and eligibility for participation in any Common Share
option plan and bonus incentive compensation plan implemented by the Trust.
Since August 1, 2000, Mr. Geiger has not been entitled to any compensation for
his services on behalf of the Trust and the Operating Partnership.

     3/ Company Allowance

     Each Independent Trustee is entitled to be paid an annual fee of $6,000 for
serving in such capacity. In August 2000, the Trust entered into employment
agreements with Mr. Astorino, to serve as President and Chief Operating Officer
of the Trust, and Mr. Wilson, to serve as its Chief Financial Officer, through
December 31, 2001. Under the terms of the agreements, the Trust, through the
Operating Partnership, will pay Mr. Astorino $175,000 and Mr. Wilson $110,000
per annum to serve in such capacities. In addition, Mr. Astorino and Mr. Wilson
will be entitled to receive $60,000 and $40,000, respectively, as an incentive
payment to remain in the employment of the Trust through the term of the
agreements. They will also be entitled to receive $90,000 and $60,000,
respectively, if they are involuntarily terminated prior to the end of the term
for any reason other than their respective gross misconduct.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership of Common Shares of the Trust by (i) each Trustee and Trustee
nominees, (ii) the Trust's Chief Executive Officer and each executive officer of
the Trust, (iii) all executive


                                       60
<PAGE>

officers of the Trust and the Operating Partnership as a group, and (iv) to the
Trust's knowledge, by any person owning beneficially more than 5% of the
outstanding shares of such class, in each case at December 31, 2000. Except as
otherwise noted, each person named in the table has sole voting and investment
power with respect to all Common Shares shown as beneficially owned by such
person.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
       Name, Position and Address of                 Amount and Nature
              Beneficial Owner                    of Beneficial Ownership             Percentage of Class
----------------------------------------------------------------------------------------------------------
<S>                                                      <C>                                <C>
James H. Bownas                                              --                                --
Independent Trustee
1 East Livingston Avenue
Columbus, Ohio  43215
----------------------------------------------------------------------------------------------------------
Peter M. Dickson                                             --                                --
Independent Trustee
33 Church Street
Hamilton, Bermuda  HM 12
----------------------------------------------------------------------------------------------------------
Baron Advisors, Inc.                                         10                                --
Managing Shareholder and
Trustee-Trust
----------------------------------------------------------------------------------------------------------
Gregory K. McGrath                                       378,873 2/                          28.7%
Chief Executive Officer-Trust  1/
----------------------------------------------------------------------------------------------------------
Robert S. Geiger                                         378,873 2/                          28.7%
Chief Operating Officer-
Operating Partnership  1/
----------------------------------------------------------------------------------------------------------
Robert L. Astorino                                       100,000 2/                           9.6%
President and Chief Operating Officer-Trust
and Chief Operating Officer- Operating
Partnership   1/
----------------------------------------------------------------------------------------------------------
Mark L. Wilson                                               --                                --
Chief Operating Officer-Trust and Operating
Partnership   1/
----------------------------------------------------------------------------------------------------------
Joseph M. Jayson                                             --                                --
Trustee Nominee
c/o J.M. Jayson & Co., Inc.
2350 North Forest Road
Getzville, NY 14068
----------------------------------------------------------------------------------------------------------
Jerome S. Rydell                                         97,450 3/                          10.4% 3/
Trustee Nominee
c/o Sigma Financial Corporation
4261 Park Road
Ann Arbor, MI 48103
----------------------------------------------------------------------------------------------------------
All executive officers, Trustees, Trustee                855,206 2/                          50.3%
nominees of the Trust and Operating
Partnership, as a group (9)
----------------------------------------------------------------------------------------------------------
</TABLE>

     1/ The address of Baron Advisors, Inc. and Messrs. McGrath, Geiger,
Astorino and Wilson is 7826 Cooper Road, Cincinnati, Ohio 45242.


                                       61
<PAGE>

     2/ Mr. McGrath and Mr. Geiger, the co-founders of the Trust and the
Operating Partnership, each own 378,873 Operating Partnership Units which are
exchangeable into an equivalent number of Common Shares of the Trust. Their
Units have been deposited into an institutional escrow account. The escrowed
Units (and/or Common Shares to the extent they exchange Units for Common Shares)
are to be released in equal amounts on the sixth, seventh, eighth and ninth
anniversary dates of the effectiveness of the Cash Offering, or earlier if
certain financial goals are achieved by the Trust. Under the Declaration of
Trust, no other Shareholder or Unitholder may hold more than 5% of the
beneficial interest in the Trust. Mr. Astorino holds a 10-year warrant (which
expires in February 2009) to acquire up to 100,000 Operating Partnership Units
from Mr. McGrath at an exercise price of $.001 per unit.

     3/ Mr. Rydell is shown as the beneficial owner of such Common Shares by
virtue of his ownership of Sigma Financial Corporation ("Sigma"), which earned
such shares as commissions in connection with the Exchange Offering. See ITEM 12
- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS below. Sigma has allocated a
portion of the Common Shares to its registered representatives who earned such
shares for assisting the Operating Partnership in the Exchange Offering. As a
result of such allocation, Sigma actually beneficially owns less than 5% of the
outstanding Common Shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the years ended December 31, 1998, 1999 and 2000, the Trust directly
or indirectly entered into several transactions in which the amount exceeded
$60,000 and in which an executive officer of the Trust or the Operating
Partnership had an interest. From 1998 through 2000, the following related
transactions occurred.

     1. The Trust contributed $3,858,240 (1998), $1,379,500 (1999), and $230,118
(2000) of the net proceeds from the Cash Offering to the Operating Partnership
in exchange for 702,076 Operating Partnership Units. The Trust and the Operating
Partnership were co-founded by Gregory K. McGrath and Robert S. Geiger, who are
the Chief Executive Officer of the Trust and Chief Operating Officer of the
Operating Partnership, respectively, and who each own individually Operating
Partnership Units as described below.

     2. The Operating Partnership acquired limited partnership interests in
Alexandria Development, L.P. from an affiliate of Mr. McGrath. See "ITEM 2 -
DESCRIPTION OF PROPERTIES - Description of Properties - Acquired Properties -
Alexandria Property."

     3. In connection with the formation of the Trust and the Operating
Partnership, Mr. McGrath and Mr. Geiger, the founders of the Trust and the
Operating Partnership, subscribed for 1,202,160 Units in the Operating
Partnership in exchange for a cash payment of $100,000. On May 31, 2000 (the
termination date of the Cash Offering), pursuant to an agreement among Mr.
McGrath, Mr. Geiger, the Trust and the Operating Partnership, Mr. McGrath and
Mr. Geiger returned to the Operating Partnership all but 757,746 Units,
representing 9.5% of the then outstanding Common Shares, calculated on a fully
diluted basis assuming that all then outstanding Units (other than those
acquired by the Trust) had been exchanged into an equivalent number of Common
Shares. All outstanding Units, including those owned by Mr. McGrath and Mr.
Geiger, are exchangeable into an equivalent number of Common Shares. See "ITEM
11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."

     4. As described in "ITEM 1 - DESCRIPTION OF BUSINESS - Brief Description of
Properties - Exchange Offering," effective April 7, 2000, the Operating
Partnership acquired equity and debt interests in residential apartment
properties in connection with the completion of an Exchange Offering made to
individual limited partners of 23 limited partnerships in which Mr. McGrath
either directly or indirectly held a beneficial interest.

     5. Described above under "ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION - Results of Operations" are certain transactions involving
Gregory K. McGrath, a co-founder of the Trust and the Operating Partnership and
the Chief Executive Officer of the Trust, certain of his affiliates, and the
Trust relating to the Burgundy Hills Property.

     Described below are certain transactions involving Jerome S. Rydell, a
nominee for Trustee, and the Trust, the Operating Partnership, and affiliates of
Mr. McGrath. Mr. Rydell is the President, sole director and sole beneficial
owner of Sigma Financial Corporation ("Sigma"), a registered securities
broker-dealer. Sigma served as the underwriter in the sale of the Trust's Common
Shares in its best-efforts public Cash Offering that ended in May 2000. Sigma
earned approximately $560,000 in commissions for sales it completed in the
offering. In addition, Sigma also earned five-year warrants (which expire in May
2003) to acquire 59,676 Common Shares at an exercise price of $13.00 per share.
Sigma allocated a portion of the cash commissions and warrants to its registered
representatives.


                                       62
<PAGE>

     Sigma also participated in the Exchange Offering completed in April 2000 by
the Operating Partnership. In exchange for its services during the offering,
Sigma earned 97,450 Common Shares, a portion of which it allocated to its
registered representatives. Sigma has also participated as a broker-dealer in
numerous private offerings by investment programs (including the Exchange
Partnerships acquired by the Operating Partnership in the Exchange Offering and
WaKul, Inc.) sponsored and managed by Gregory K. McGrath or affiliates of Mr.
McGrath, a co-founder and Chief Executive Officer of the Trust and a co-founder
and principal holder of Units in the Operating Partnership. Sigma, Mr. Rydell
and certain of Sigma's registered representatives are owed more than $100,000 by
those programs for outstanding commissions, offering fees, reimbursable
expenses, and advances.

     Sigma is also participating in the private offering sale of units of
limited partnership interest in Baron Lakeside Construction Fund, L.P. ("Baron
Lakeside") and Baron SABH Construction Fund, L.P. ("Baron SABH"). The two
partnerships, sponsored and managed by affiliates of Mr. McGrath, are attempting
to raise a total of $4,150,000. The net proceeds of these offerings will be used
to make loans to owner/developers of residential condominium and apartment
development properties to enable them to pay down first mortgage indebtedness
secured by such properties and to cover outstanding payables owed to general
contractors and other vendors of the projects, construction completion expenses,
interest payments prior to repayment of the loans, working capital, and/or
certain administrative expenses. The owner/developers of the properties to be
developed are controlled and managed by affiliates of Mr. McGrath.

     Following their completion, the development properties beneficially owned
by Mr. McGrath will be listed for sale, and the new development loans and prior
development loans made by other investment limited partnerships sponsored and
managed by affiliates of Mr. McGrath to owner/developers controlled by McGrath
will be repaid out of the net proceeds from any such sales and sales of certain
interests beneficially owned by Mr. McGrath in other properties.

     Mr. Rydell is also a principal of Sigma Renaissance Corporation ("Sigma
Renaissance"), which will have significant authority in respect of the funding
of construction completion requests from owner/developers; the sale of
properties to be developed; the management of entities controlled by Mr. McGrath
which will be involved in the transactions contemplated in the two offerings;
and distributions to limited partners of Baron Lakeside and Baron SABH. In
exchange for a construction fee, Sigma Renaissance will also supervise
construction and serve as the onsite construction managers for the completion of
development and construction on the unfinished development properties to be
completed with the proceeds of the new development loans. Mr. Rydell and Robert
L. Astorino, the President and Chief Operating Officer of the Trust and the
Chief Executive Officer of the Operating Partnership, serve as managers of Sigma
Renaissance.

     The roles of Mr. Rydell, Sigma and Sigma Renaissance in the Baron Lakeside
and Baron SABH transactions are designed (i) to mitigate conflicts of interest
which affect Mr. McGrath due to his role as an affiliate of Baron Lakeside,
Baron SABH, owner/developers which borrow development funds and prior borrower
and lender partnerships affiliated with Mr. McGrath and (ii) to provide for
repayment of the new and prior development loans prior to the distribution of
any net profits or any other payments to Mr. McGrath or any affiliates
beneficially owned entirely by him attributable to their respective interest in
any of the development properties.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     Documents filed as part of this report:

     (a)  Exhibits are either attached as part of this Report or incorporated by
          reference herein.

--------------------------------------------------------------------------------
  Exhibit Number    Description
--------------------------------------------------------------------------------
          3.1*      Certificate of Business Trust Registration of the Registrant
                    (incorporated herein by reference to Exhibit 3.1 to the Form
                    SB-2 Registration Statement of Baron Capital Trust filed
                    with the Securities and Exchange Commission on September 5,
                    1997).
--------------------------------------------------------------------------------
          3.2*      Amended and Restated Declaration of Trust for the Registrant
                    made as of August 11, 1998 (incorporated herein by reference
                    to Exhibit 10.2 to Amendment No. 1 to the Form S-4
                    Registration Statement of Baron Capital Properties, L.P.
                    filed with the Securities and Exchange Commission on
                    September 22, 1998 (Registration No. 333-55753)).
--------------------------------------------------------------------------------


                                       63
<PAGE>

--------------------------------------------------------------------------------
          3.3*      Form of by-laws of the Registrant (incorporated herein by
                    reference to Exhibit 3.3 to Amendment No. 3 to the Form SB-2
                    Registration Statement of Baron Capital Trust filed with the
                    Securities and Exchange Commission on May 15, 1998).
--------------------------------------------------------------------------------
          4.1*      Form of Common Share Certificate (incorporated herein by
                    reference to Exhibit 4.1 to Amendment No. 2 to the Form SB-2
                    Registration Statement of Baron Capital Trust filed with the
                    Securities and Exchange Commission on April 24, 1998).
--------------------------------------------------------------------------------
          10.1*     Trust Management Agreement, dated as of May 15, 1998 between
                    the Registrant and Baron Advisors, Inc. (incorporated herein
                    by reference to Exhibit 10.1 to Amendment No. 3 to the Form
                    SB-2 Registration Statement of Baron Capital Trust filed
                    with the Securities and Exchange Commission on May 15,
                    1998).
--------------------------------------------------------------------------------
          10.2*     Form of Indemnification Agreement among the Registrant,
                    Baron Advisors, Inc., and the Registrant's Independent
                    Trustees and officers (included in Sections 3.6 and 3.7 of
                    the Amended and Restated Declaration of Trust referenced
                    above in Exhibit 3.2)
--------------------------------------------------------------------------------
          10.3*     Warrant Purchase Agreement, dated as of May 15, 1998,
                    between the Registrant and Sigma Financial Corporation
                    (incorporated herein by reference to Exhibit 10.4 to
                    Amendment No. 2 to the Form SB-2 Registration Statement of
                    Baron Capital Trust filed with the Securities and Exchange
                    Commission on April 24, 1998).
--------------------------------------------------------------------------------
          10.5*     Form of Subscription Documents (incorporated herein by
                    reference to Exhibit 3.1 to the Form SB-2 Registration
                    Statement of Baron Capital Trust filed with the Securities
                    and Exchange Commission on September 5, 1997).
--------------------------------------------------------------------------------
          10.6*     Agreement of Limited Partnership of Baron Capital
                    Properties, L.P. dated as of May 15, 1998 (incorporated
                    herein by reference to Exhibit 10.6 to Amendment No. 3 to
                    the Form SB-2 Registration Statement of Baron Capital Trust
                    filed with the Securities and Exchange Commission on May 15,
                    1998).
--------------------------------------------------------------------------------
          10.7*     Amended and Restated Security Escrow Agreement dated as of
                    May 15, 1998 among Gregory K. McGrath, Robert S. Geiger,
                    Baron Capital Trust and American Stock and Transfer Company
                    (incorporated herein by reference to Exhibit 10.4 to
                    Amendment No. 2 to the Form S-4 Registration Statement of
                    Baron Capital Properties, L.P. filed with the Securities and
                    Exchange Commission on January 29, 1999 (Registration No.
                    333-55753)).
--------------------------------------------------------------------------------
          10.8*     Founders' Subscription Agreement (incorporated herein by
                    reference to Exhibit 10.5 to Amendment No. 2 to the Form S-4
                    Registration Statement of Registrant filed with the
                    Securities and Exchange Commission on January 29, 1999).
--------------------------------------------------------------------------------
          10.9*     First Amendment to Amended and Restated Security Escrow
                    Agreement, dated April 30, 1999 (incorporated herein by
                    reference to Exhibit 10.6 to Amendment No. 4 to the Form S-4
                    Registration Statement of Registrant filed with the
                    Securities and Exchange Commission on June 2, 1999).
--------------------------------------------------------------------------------
          10.10*    Amendment to Founders' Subscription Agreement dated April
                    30, 1999 (incorporated herein by reference to Exhibit 10.7
                    to Amendment No. 4 to the Form S-4 Registration Statement of
                    Registrant filed with the Securities and Exchange Commission
                    on June 2, 1999).
--------------------------------------------------------------------------------
          10.11**   Employment Agreement dated as of August 28, 2000 between the
                    Trust and Robert L. Astorino
--------------------------------------------------------------------------------
          10.12**   Employment Agreement dated as of August 28, 2000 between the
                    Trust and Mark L. Wilson
--------------------------------------------------------------------------------
          21**      Subsidiaries of the Registrant
--------------------------------------------------------------------------------


                                       64
<PAGE>
--------------------------------------------------------------------------------
          23**      Consent of Rachlin Cohen & Holtz, Independent Certified
                    Public Accountants
--------------------------------------------------------------------------------

*   Previously filed.
**  Filed herewith.

          (b)  Reports on Form 8-K:

               No reports on Form 8-K were filed during the quarter ended
               December 31, 2000.


                                       65
<PAGE>

                                   SIGNATURES

     In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                                   BARON CAPITAL TRUST

May 8, 2001                                        By: /s/ Robert L. Astorino
                                                       ------------------------
                                                           Robert L. Astorino
                                                           President

     In accordance with the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signatures                          Title                            Date
----------                          -----                            ----

/s/ Robert L. Astorino     President                                 May 8, 2001
-----------------------    (Principal Executive Officer)
    Robert L. Astorino

/s/ Mark L. Wilson         Chief Financial Officer                   May 8, 2001
-----------------------    (Principal Financial and Accounting
    Mark L. Wilson         Officer)

/s/ James H. Bownas        Trustee                                   May 8, 2001
-----------------------
    James H. Bownas

/s/ Peter M. Dickson       Trustee                                   May 8, 2001
-----------------------
    Peter M. Dickson

/s/ Gregory K. McGrath     Trustee and Corporate Trustee,            May 8, 2001
-----------------------    respectively
    Gregory K. McGrath,
    Chief Executive
    Officer of Baron
    Advisors, Inc. and
    Baron Capital
    Properties, Inc.


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