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, 1999

                                       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                        (I.R.S. Employer
Incorporation or Organization)                        Identification No.)


                                7809 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 $585,402.

As of March 31, 2000 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 $6,941,463 based on the actual cash paid for shares issued to 462
investors.


<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_______

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








<PAGE>



                               BARON CAPITAL TRUST

                            FORM 10-KSB ANNUAL REPORT

                       FISCAL YEAR ENDED DECEMBER 31, 1999

                                                                            PAGE
                                                                            ----
PART I:
Item 1   Description of Business............................................  4
Item 2   Description of Properties..........................................  8
Item 3   Legal Proceedings.................................................. 53
Item 4   Submission of Matters to a Vote of Security Holders................ 53

PART II:
Item 5   Market for Common Equity and Related Stockholder Matters........... 53
Item 6   Management's Discussion and Analysis or Plan of Operation.......... 54
Item 7   Financial Statements............................................... 57
Item 8   Changes In and Disagreements with Accountants on
         Accounting and Financial Disclosure................................ 58

PART III:
Item 9   Trustees, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.................. 58
Item 10  Executive Compensation............................................. 60
Item 11  Security Ownership of Certain Beneficial Owners and Management..... 61
Item 12  Certain Relationships and Related Transactions..................... 61
Item 13  Exhibits and Reports on Form 8-K................................... 62




                                       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 is scheduled to terminate on May 31,
2000. The Trust has contributed and will continue to contribute to the Operating
Partnership the net cash proceeds 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, 2000,
the Trust had sold and/or issued to the public 694,146 Common Shares, and the
Trust intends to continue to sell Common Shares through the termination of the
Cash Offering.

     The Trust, indirectly through the Operating Partnership, intends 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 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" below). The
Trust is the sole general partner of the Operating Partnership and , as of March
31, 2000, owned 694,156 Operating Partnership Units, representing approximately
36.6% of the then outstanding Units. The exchange offering was completed on
April 7, 2000, and following its completion, the Trust owned 694,456 Units,
representing approximately 16.0% of the then outstandindg Units.

     The Trust intends to make regular quarterly pro rata distributions to its
Shareholders of net income 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
which 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
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 Trust's executive offices are located in Cincinnati, Ohio at 7809
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, 1999, the Trust had an indirect equity interest in four apartment
communities (consisting of an aggregate of 365 apartment units) (individually an
"Acquired Property" and collectively, the "Acquired Properties"). The Trust
acquired such property interests with the net proceeds of the Cash 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,
2000, 96 units of that property had been completed, 82 of such units have been
rented and 14 units are in the rent-up stage. An additional 72 units are planned
for completion by the end of 2000. The Acquired Properties are located in urban
and suburban and secondary markets in Florida and Kentucky. During 1999, the
average economic occupancy of the Acquired Properties was approximately 95.1%
and the average monthly rent collected per occupied unit was approximately $477.

     The table below indicates the geographic locations of the Acquired
Properties in which the Trust had an ownership interest at December 31, 1999:

     State                 Sites      Properties       Units
     ------                -----      ----------       ------

     Florida                 3               3           197
     Kentucky                1               1           168
                           ---             ---           ---
     Total                   4               4           365
                           ===             ===           ===

     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 2,434,274
registered Operating Partnership Units (with an initial assigned value of
$24,342,740) 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, 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, (ii) 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; (ii) 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 (iii) 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>

--------------------------------------------------------------------------------------------------------------------------------
                                                                                               No. of Units       Percentage
                                                        No. of Units       Percentage of      Declining the            of
                                                       Accepting the        Outstanding          Exchange         Outstanding
Name of Exchange Partnership                         Exchange Offering         Units             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.



                                       6
<PAGE>




     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 assigned an initial
value of $10.00, which corresponds to the offering price of each Trust Common
Share currently being offered to the public pursuant to the Cash Offering. The
value of each Unit and Common Share outstanding will be 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.

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



                                       7
<PAGE>



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.

     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 20
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 5,000 square feet
of space at 7809 Cooper Road, Cincinnati, Ohio 45242. The space was leased in
May 1998 from Grammas Development Company, an unaffiliated entity, for a term of
five years and one month. 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, 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,
will acquire two residential apartment properties (totaling 652 units) under
development in Burlington and Louisville, Kentucky upon completion of
construction.

     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, 2000
for each type of unit was approximately $435, $530 and $650, respectively, or
$1.51, $.92 and $.75 per square foot, respectively. The average monthly
occupancy rates for 1995, 1996, 1997, 1998, and 1999 were approximately 88%,
93%, 97%, 94%, and 96%, respectively. The average annual rental rate per unit
for each of the last five years has been $5,424 (1995), $5,628 (1996), $5,820
(1997), $6,060 (1998), and $5,555 (1999).

     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 independent appraisal of the market value of the
property plus the value of any additional assets,



                                       8
<PAGE>



less all liabilities, and was approved by the Board of the Trust. The
Heatherwood Property is subject to first mortgage financing with a current
principal balance of approximately $1,239,000. The mortgage is held by GMAC
Commercial Mortgage Corp. The maturity date of the first mortgage loan is
December 2004. 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, 1999 is $1,571,341. 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 1998 taxes due March 31, 1999 were
$22,787.05. 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, 2000
for each type of unit is approximately $329, $419 and $520, respectively, or
$1.14, $.73 and $.60 per square foot, respectively. The average monthly
occupancy rates for 1995, 1996, 1997, 1998 and 1999 were approximately 91%, 90%,
95%, 91% and 95%, respectively. The average annual rental rate per unit for the
Crystal Court Property for each of the last five years has been $4,188 (1995),
$4,356 (1996), $4,632 (1997), $4,812 (1998), and $4,433 (1999).

     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 $1,471,705. The mortgage is held by GMAC Commercial
Mortgage Corp. The maturity date of the first mortgage loan is 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



                                       9
<PAGE>



Property is adequately covered by insurance.

     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, 1999 is $1,657,232. 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 1998 taxes due March 31, 1999 were
$24,897.65. 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 Operating Partnership and 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
1995 through 1997 for the Riverwalk Property is unavailable. The occupancy rates
in 1998 and 1999 were 98% and 96%, respectively. As of March 31, 2000, the
property was 98% occupied. The average monthly rental rate as of March 31, 2000
was approximately $565 for a one bath unit and $605 for a two bath unit. The
property has 51,024 square feet of rentable space, or approximately 1,020 square
feet per unit. The current rent per square foot is approximately $.55. The
average annual rental rates for 1998 and 1999 were approximately $6,780 and
$7,123 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 $1,585,589. The mortgage matures in November 2004 and has a
current interest rate of 8.75%. The holder of the first mortgage has a right to
adjust the rate in October 1999 for the remaining five years of the loan, to a
rate equal to 200 basis points above the then current rate for five-year
treasury notes. Assuming no prepayments of principal, the balance that will be
due at maturity is approximately $1,411,716. The monthly debt service payments
are $14,071, or an annual amount of $168,859. 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, 1999 is $1,518,035. Depreciation is taken on a
straight-line basis over 30 years. Riverwalk is taxed at 24.95 mills per $1,000
valuation and the 1998 taxes due March 31, 1999 were $34,985.58. 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



                                       10
<PAGE>



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 matured in December 1998. The principal amount of $475,000 was paid and
payment of the remaining principal balance of $100,000 was extended until
October 15, 2000. This loan requires current interest payments only at the
annual rate of 18%, and is secured by a pledge of the general and limited
partnership interests acquired in the transaction. The Operating Partnership
funded the acquisition and expects to satisfy the Levine loan from the net
proceeds of the Trust's sale of Common Shares in the ongoing Cash Offering or
operating cash flow. The purchase price was determined by the parties in an
arms-length negotiation.

     Alexandria Property

     In October 1998, the Operating Partnership acquired an approximately 12.3%
limited partnership interest in Alexandria Development, L.P. (the "Alexandria
Partnership"), a Delaware limited partnership which is the owner and developer
of a 168-unit residential apartment property under construction in Alexandria,
Kentucky (the "Alexandria Property"). Ninety-six of the 168 residential units
(approximately 57%) have been completed as of March 31, 2000 and are in the
rent-up stage. As of March 31, 2000, 82 of the 96 completed units have been
rented at an average annual rental rate of $8,367. The average monthly occupancy
rates for 1998 and 1999 were 14% and 26%, respectively, based on all 168 units
scheduled to be developed. The Operating Partnership paid $400,000 for the
acquired partnership interest and retains an option to acquire the remaining
limited partnership interests at the same price per percentage interest (for a
total price of approximately $3,250,000 for the entire limited partnership
interest). Subsequently, the Operating Partnership acquired additional limited
partnership units for $885,000 and as of April 12, 2000 it owns an approximately
40% limited partnership interest. The acquisition agreement called for an
installment sale with the Operating Partnership to acquire limited partnership
interests as buildings are completed. 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 option is exercisable as additional apartment
buildings are completed and rented. 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.

     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 will be 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 Purchase Two Additional Properties

     In September 1998, the Trust entered in an agreement with three real estate
development companies to acquire two luxury residential apartment properties in
the development stage upon the completion of construction. The development
companies (Brentwood at Southgate, Ltd., Burlington Residential, Ltd. and The
Shoppes at Burlington, Ltd.) are controlled



                                       11
<PAGE>



by Gregory K. McGrath. The properties are scheduled to have a total of 652
units, comprised of studios and one, two and three bedroom/one or two bathroom
apartments. Construction of one of the properties, located in Louisville,
Kentucky, is expected to be completed prior to the end of 2000, and construction
of the other property, located in Burlington, Kentucky (part of the Cincinnati
metropolitan area), is expected to be completed by the end of 2001. The
aggregate purchase price for the two properties is in the range of approximately
$41,000,000 to $43,000,000. The closing of each acquisition, which is expected
to occur shortly following the completion of construction, is conditioned on,
among other things, the completion of the respective apartment property, the
availability of first mortgage financing and the Trust's raising the balance of
the funds necessary for the acquisition in its ongoing Cash Offering or
otherwise having funds available to make the acquisition.

     In connection with the transaction and in exchange for certain benefits
described below, the Trust agreed to co-guarantee (along with Mr. McGrath), up
to 35% (or approximately $12,500,000) of the development portion of long-term
construction loans with an aggregate principal amount of up to $36,000,000 to be
provided by a bank to the development companies. As of December 31, 1999,
approximately $6,150,000 of such loans had been drawn down, resulting in
outstanding guarantees of approximately $2,152,500. Subject to the fulfillment
of certain closing and funding conditions, the construction loans will be made
to the development companies in connection with the development and construction
of the two apartment properties and of an 111,000 square foot shopping center
being developed in Burlington, Kentucky. The interest rates on the construction
loans range from 7.36% to 7.52%. The Trust also agreed that, if the loans are
not repaid prior to the expiration of the guarantee, it will either buy out the
bank's position on the entire amount of the construction loans or arrange for a
third party to do so. The construction loans are expected to be replaced by a
long-term credit facility.

     The Trust expects to receive significant benefits from the transaction in
addition to the acquisition of two large luxury apartment properties located in
attractive communities. First, in exchange for the guarantee of the development
portion of the construction loans, the Trust will receive a discount of
approximately $212,500 (representing a one-half of one percent reduction) on the
purchase price of the properties. The Trust and the development companies are
negotiating a further price reduction which would apply if the development
portion of the loans is not repaid prior to the expiration of the guarantee
period and the Trust is required to buy out or arrange for the buyout of the
lender's position on the loans.

     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 assets 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 June 30, 1999,
and (v) physical occupancy of each property as of June 30, 1999.


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

Baron Strategic       Steeplechase       Anderson,        1977       Total           72    3.20      47,280      Avg.         657
Investment Fund II,   Apartments  (1)    Indiana                     1 BR            12                          1 BR         550
Ltd.                                                                 2 BR            60                          2 BR         678

Central Florida       Laurel Oaks        Deland,          1986       Total           56    6.21      45,216      Avg.         807
Income Appreciation   Apartments  (1)    Florida                     1 BR            11                          1 BR         576
Fund, Ltd.                                                           2 BR            45                          2 BR         864

Florida Capital       Eagle Lake         Port             1987       Total           77    4.68      45,504      Avg.         591
Income Fund, Ltd.     Apartments  (1)    Orange,                     1 BR            73                          1 BR         576
                                         Florida                     2 BR             4                          2 BR         864

Florida Capital       Forest Glen        Daytona          1985       Total           52    6.85      62,692      Avg.       1,205
Income Fund II, Ltd.  Apartments         Beach,                      2 BR            28                          2 BR       1,075
                      (Phase I)  (2)     Florida                     3 BR            24                          3 BR       1,358

Florida Capital       Bridge Point       Jacksonville,    1986       Total           48    3.39      27,360      Avg.         570
Income Fund III,      Apartments         Florida                    Studio            6                         Studio        288
Ltd.                  (Phase II)  (1)                                1 BR            37                          1 BR         576
                                                                     2 BR             5                          2 BR         864

Florida Capital       Glen Lake          St.              1986       Total          144    7.16      79,200      Avg.         550
Income Fund IV, Ltd.  Apartments  (1)    Petersburg,                 1 BR           144                          1 BR         550
                                         Florida

Florida Income        Forest Glen        Daytona          1985       Total           26    6.85      29,931      Avg.       1,151
Advantage Fund I,     Apartments         Beach,                      2 BR            19                          2 BR       1,075
Ltd.                  (Phase III)  (2)   Florida                     3 BR             7                          3 BR       1,358

Florida Income        Forest Glen        Daytona          1985       Total            8    6.85       9,166      Avg.       1,146
Appreciation Fund     Apartments         Beach,                      2 BR             6                          2 BR       1,075
I, Ltd.               (Phase IV)  (2)    Florida                     3 BR             2                          3 BR       1,358
</TABLE>



<TABLE>
<CAPTION>


                          Name of
                        Residential                                  Physical
                         Apartment               6/30/99             Occupancy
                     Property (and type  Average Rental Rates/Month     As Of
Partnership            Of interest)      (Per Unit) (Per Sq. Ft.)     6/30/99
-----------          ----------------    --------------------------  ---------
<S>                   <C>                 <C>          <C>         <C>
Exchange Equity
Partnerships:

Baron Strategic       Steeplechase        $433         $.66         92%
Investment Fund II,   Apartments  (1)
Ltd.

Central Florida       Laurel Oaks         $531         $.66         98%
Income Appreciation   Apartments  (1)
Fund, Ltd.

Florida Capital       Eagle Lake          $465         $.78         96%
Income Fund, Ltd.     Apartments  (1)


Florida Capital       Forest Glen         $673         $.56         94%
Income Fund II, Ltd.  Apartments
                      (Phase I)  (2)

Florida Capital       Bridge Point        $465         $.82         94%
Income Fund III,      Apartments
Ltd.                  (Phase II)  (1)


Florida Capital       Glen Lake           $674        $1.23         76%
Income Fund IV, Ltd.  Apartments  (1)


Florida Income        Forest Glen         $656         $.57         88%
Advantage Fund I,     Apartments
Ltd.                  (Phase III)  (2)

Florida Income        Forest Glen         $655         $.57        100%
Appreciation Fund     Apartments
I, Ltd.               (Phase IV)  (2)
</TABLE>


13


<PAGE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                                                Approx.
                         Apartment                                                                 Rentable
                     Property (and type                  Year                            Approx.     Area       Avg. Unit Size
Partnership            Of interest)      Location      Completed       No. of Units       Acres    (Sq. Ft.)*      (Sq. Ft.)
-----------          ----------------    --------      ---------       ------------      -------   ----------   --------------
<S>                   <C>                <C>              <C>       <C>             <C>    <C>      <C>         <C>         <C>
Florida Income        Blossom Corners    Orlando,         1980       Total           70    3.67      39,300      Avg.         561
Growth Fund V, Ltd.   Apartments         Florida                    Studio           15                         Studio        300
                      (Phase I)  (1)                                 1 BR            49                          1 BR         600
                                                                     2 BR             6                          2 BR         900
Florida Opportunity   Camellia Court     Daytona          1982       Total           60    5.15      34,848      Avg.         581
Income Partners,      Apartments  (1)    Beach,                      1 BR            59                          1 BR         576
Ltd.                                     Florida                     2 BR             1                          2 BR         864

GSU Stadium Student   Stadium Club       Statesboro,      1987       Total           60    3.50      50,736      Avg.         860
Apartments, Ltd.      Apartments  (1)    Georgia                    Studio            2                         Studio        288
                                                                     3 BR             3                          3 BR         880
                                                                     4 BR            55                          4 BR         880

Midwest Income        Brookwood Way      Mansfield,       1974       Total           66    3.92      38,016      Avg.         576
Growth Fund VI, Ltd.  Apartments  (1)    Ohio                       Studio            3                         Studio        288
                                                                     1 BR            60                          1 BR         576
                                                                     2 BR             3                          2 BR         864

Realty Opportunity    Forest Glen        Daytona          1985       Total           30    6.85      34,231      Avg.       1,141
Income Fund VIII,     Apartments         Beach,                      2 BR            23                          2 BR       1,075
Ltd.                  (Phase II)  (2)    Florida                     3 BR             7                          3 BR       1,358

Exchange Hybrid
Partnerships:

Baron Strategic       Pineview           Orlando,         1988       Total           91    4.38      46,656      Avg.         513
Investment Fund VI,   Apartments (3)     Florida                    Studio           26                         Studio        288
Ltd.                                                                 1 BR            59                          1 BR         576
                                                                     2 BR             6                          2 BR         864

Baron Strategic       Crystal Court      Lakeland,        1982       Total           72    4.5       43,776      Avg.         608
Investment Fund IX,   Phase I (4)        Florida                     1 BR            64                          1 BR         576
Ltd.                                                                 2 BR             8                          2 BR         864

Baron Strategic       Crystal Court      Lakeland,        1982       Total           72    4.5       43,776      Avg.         608
Investment Fund X,    Phase I (5)        Florida                     1 BR            64                          1 BR         576
Ltd.                                                                 2 BR             8                          2 BR         864

                      Pineview           Orlando,         1988       Total           91    4.38      46,656      Avg.         513
                      Apartments (6)     Florida                    Studio           26                          1 BR         288
                                                                     1 BR            59                          2 BR         576
                                                                     2 BR             6                                       864
</TABLE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                  Physical
                         Apartment               6/30/99             Occupancy
                     Property (and type  Average Rental Rates/Month     As Of
Partnership            Of interest)      (Per Unit) (Per Sq. Ft.)     6/30/99
-----------          ----------------    --------------------------  ---------
<S>                   <C>                 <C>          <C>          <C>
Florida Income        Blossom Corners           $495         $.88         95%
Growth Fund V, Ltd.   Apartments
                      (Phase I)  (1)

Florida Opportunity   Camellia Court            $436         $.75         93%
Income Partners,      Apartments  (1)
Ltd.

GSU Stadium Student   Stadium Club              $963         $1.13        70%
Apartments, Ltd.      Apartments  (1)



Midwest Income        Brookwood Way             $376         $.65         94%
Growth Fund VI, Ltd.  Apartments  (1)



Realty Opportunity    Forest Glen               $653         $.57         90%
Income Fund VIII,     Apartments
Ltd.                  (Phase II)  (2)

Exchange Hybrid
Partnerships:

Baron Strategic       Pineview                  $461         $.90         92%
Investment Fund VI,   Apartments (3)
Ltd.

Baron Strategic       Crystal Court             $410         $.68         96%
Investment Fund IX,   Phase I (4)
Ltd.

Baron Strategic       Crystal Court             $410         $.68         96%
Investment Fund X,    Phase I (5)
Ltd.

                      Pineview                  $461         $.90         92%
                      Apartments (6)

</TABLE>



14

<PAGE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                                                Approx.
                         Apartment                                                                 Rentable
                     Property (and type                  Year                            Approx.     Area       Avg. Unit Size
Partnership            Of interest)      Location      Completed       No. of Units       Acres    (Sq. Ft.)*      (Sq. Ft.)
-----------          ----------------    --------      ---------       ------------      -------   ----------   --------------
<S>                   <C>                <C>              <C>       <C>         <C>       <C>       <C>       <C>            <C>
Lamplight Court of    Lamplight          Bellefontaine,   1973       Total         80      6.00      46,944    Avg.          587
Bellefontaine         Apartments (7)     Ohio                       Studio         12                         Studio         288
Apartments, Ltd.                                                      1BR          53                          1 BR          576
                                                                     2 BR          15                          2 BR          864
                                                                              ---------- --------- -----------            --------
                      TOTAL
                      PROPERTIES:                                               1,012**   83.16     680,856                   673
---------------------                                                         ========== ========= ===========            ========
</TABLE>



<TABLE>
<CAPTION>
                          Name of
                        Residential                                 Physical
                         Apartment              6/30/99             Occupancy
                    Property (and type  Average Rental Rates/Month     As Of
Partnership            Of interest)     (Per Unit) (Per Sq. Ft.)     6/30/99
-----------          ----------------   --------------------------  ---------
<S>                   <C>                 <C>          <C>          <C>
Lamplight Court of    Lamplight            $397         $.68         88%
Bellefontaine         Apartments (7)
Apartments, Ltd.

                                        ------------ ------------ -----------
                      TOTAL
                      PROPERTIES:          $533         $.80        89.5%
---------------------                   ============ ============ ===========
</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 52.44% 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 39.56% 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 39.56% 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 June 30, 1999, and (v) physical occupancy of each property as of June
     30, 1999.



<TABLE>
<CAPTION>

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

Baron Strategic       Blossom Corners    Orlando,         1981       Total       68      3.51        38,100      Avg.         557
Investment Fund,      Apartments         Florida                    Studio       16                             Studio        300
Ltd.                  (Phase II)  (1)                                1 BR        45                              1 BR         600
                                                                     2 BR         7                              2 BR         864

                      Villas at Lake     Cincinnati,   Est. 4th      Total      164      20.2       217,300      Avg.       1,325
                      Sycamore (1)       Ohio          quarter       2 BR                                        2 BR
                                                          2003       3 BR                                        3 BR

Baron Strategic       Country Square     Tampa,           1981       Total       73      4.56        40,032      Avg.         548
Investment Fund IV,   Apartments         Florida                    Studio       14                             Studio        288
Ltd.                  (Phase I) (1)                                  1 BR        52                              1 BR         576
                                                                     2 BR         7                              2 BR         864

Baron Strategic       Candlewood         Tampa,           1984       Total       33      2.75        17,568      Avg.         532
Investment Fund V,    Apartments         Florida                    Studio        6                             Studio        288
Ltd.                  (Phase II) (1)                                 1 BR        26                              1 BR         576
                                                                     2 BR         1                              2 BR         864

                      Curiosity Creek    Tampa,           1982       Total       81      4.51        43,776      Avg.         540
                      Apartments  (1)    Florida                    Studio       16                             Studio        288
                                                                     1 BR        59                              1 BR         576
                                                                     2 BR         6                              2 BR         864

Baron Strategic       Heatherwood        Kissimmee,       1982       Total       41      2.26        22,176      Avg.         541
Investment Fund       Apartments         Florida                    Studio       10                             Studio        288
VIII, Ltd.            (Phase II)  (2)                               1 BR/1B      26                             1 BR/1B       576
                                                                    2 BR/1B       4                             2 BR/1B       864
                                                                    2 BR/2B       1                             2 BR/2B       864
</TABLE>



<TABLE>
<CAPTION>
                          Name of
                        Residential                                 Physical
                         Apartment              6/30/99             Occupancy
                    Property (and type  Average Rental Rates/Month     As Of
Partnership            Of interest)     (Per Unit) (Per Sq. Ft.)     6/30/99
-----------          ----------------   --------------------------  ---------
<S>                   <C>                 <C>          <C>          <C>
Exchange Mortgage
Partnerships:

Baron Strategic       Blossom Corners      $513         $.92         90%
Investment Fund,      Apartments
Ltd.                  (Phase II)  (1)


                      Villas at Lake        -             -           -
                      Sycamore (1)


Baron Strategic       Country Square       $469         $.86         96%
Investment Fund IV,   Apartments
Ltd.                  (Phase I) (1)


Baron Strategic       Candlewood           $463         $.87         89%
Investment Fund V,    Apartments
Ltd.                  (Phase II) (1)


                      Curiosity Creek      $443         $.82         98%
                      Apartments  (1)



Baron Strategic       Heatherwood          $527         $.98         93%
Investment Fund       Apartments
VIII, Ltd.            (Phase II)  (2)
</TABLE>




16

<PAGE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                                                Approx.
                         Apartment                                                                 Rentable
                     Property (and type                  Year                            Approx.     Area       Avg. Unit Size
Partnership            Of interest)      Location      Completed       No. of Units       Acres    (Sq. Ft.)*      (Sq. Ft.)
-----------          ----------------    --------      ---------       ------------      -------   ----------   --------------
<S>                   <C>                <C>           <C>          <C>         <C>      <C>        <C>         <C>         <C>
                      Longwood           Cocoa,           1981       Total       59      4.00        36,288      Avg.         615
                      Apartments         Florida                     1 BR        51                              1 BR         576
                      (Phase I)  (1)                                 2 BR         8                              2 BR         864

                      Villas at Lake     Cincinnati,   Est. 4th      Total      164      20.2       217,300      Avg.       1,325
                      Sycamore (1)       Ohio          quarter       2 BR                                        2 BR
                                                          2003       3 BR                                        3 BR

Baron Strategic       Curiosity Creek    Tampa,           1982       Total       81      4.51        43,776      Avg.         540
Vulture Fund I, Ltd.  Apartments  (1)    Florida                    Studio       16                             Studio        288
                                                                     1 BR        59                              1 BR         576
                                                                     2 BR         6                              2 BR         864

Brevard Mortgage      Meadowdale         Melbourne,       1984       Total       64      4.81        39,168      Avg.         612
Program, Ltd.         Apartments  (1)    Florida                     1 BR        56                              1 BR         576
                                                                     2 BR         8                              2 BR         864

Exchange Hybrid
Partnerships
Baron Strategic       Candlewood         Tampa,           1988       Total       33      2.75        17,568      Avg.         532
Investment Fund VI,   Apartments         Florida                    Studio        6                             Studio        288
Ltd.                  (Phase II) (3)                                 1 BR        26                              1 BR         576
                                                                     2 BR         1                              2 BR         864

                      Country Square                      1981       Total       73      4.56        40,032      Avg.         548
                      Apartments         Tampa,                     Studio       14                             Studio        288
                      (Phase I)  (3)     Florida                     1 BR        52                              1 BR         576
                                                                     2 BR         7                              2 BR         864

                      Garden Terrace     Tampa,           1983       Total       91      6.00        54,720      Avg.         601
                      Apartments         Florida                    Studio        8                             Studio        288
                      (Phase III)  (3)                               1 BR        67                              1 BR         576
                                                                     2 BR        16                              2 BR         864


Baron Strategic       Candlewood         Tampa,           1984       Total       33      2.75        17,568      Avg.         532
Investment Fund IX,   Apartments         Florida                    Studio        6                             Studio        288
Ltd.                  (Phase II) (3)                                 1 BR        26                              1 BR         576
                                                                     2 BR         1                              2 BR         864
</TABLE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                 Physical
                         Apartment              6/30/99             Occupancy
                    Property (and type  Average Rental Rates/Month     As Of
Partnership            Of interest)     (Per Unit) (Per Sq. Ft.)     6/30/99
-----------          ----------------   --------------------------  ---------
<S>                   <C>                 <C>          <C>          <C>
                      Longwood             $433         $.70         92%
                      Apartments
                      (Phase I)  (1)

                      Villas at Lake        -             -           -
                      Sycamore (1)


Baron Strategic       Curiosity Creek      $443         $.82         98%
Vulture Fund I, Ltd.  Apartments  (1)


Brevard Mortgage      Meadowdale           $412         $.67         83%
Program, Ltd.         Apartments  (1)


Exchange Hybrid
Partnerships
Baron Strategic       Candlewood           $463         $.87         89%
Investment Fund VI,   Apartments
Ltd.                  (Phase II) (3)

                      Country Square       $469         $.86         96%
                      Apartments
                      (Phase I)  (3)


                      Garden Terrace       $417         $.69         90%
                      Apartments
                      (Phase III)  (3)



Baron Strategic       Candlewood           $463         $.87         89%
Investment Fund IX,   Apartments
Ltd.                  (Phase II) (3)
</TABLE>



17

<PAGE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                                                Approx.
                         Apartment                                                                 Rentable
                     Property (and type                  Year                            Approx.     Area       Avg. Unit Size
Partnership            Of interest)      Location      Completed       No. of Units       Acres    (Sq. Ft.)*      (Sq. Ft.)
-----------          ----------------    --------      ---------       ------------      -------   ----------   --------------
<S>                   <C>                <C>           <C>          <C>         <C>      <C>       <C>          <C>         <C>
                      Garden Terrace     Tampa,           1983       Total       91      6.00        54,720      Avg.         601
                      Apartments         Florida                    Studio        8                             Studio        288
                      (Phase III)  (3)                               1 BR        67                              1 BR         576
                                                                     2 BR        16                              2 BR         864

                      Villas at Lake     Cincinnati,   Est. 4th      Total      164      20.2       217,300      Avg.       1,325
                      Sycamore  (3)      Ohio          quarter
                                                          2003

Baron Strategic       Garden Terrace     Tampa,           1983       Total       91      6.00        54,720      Avg.         601
Investment Fund X,    Apartments         Florida                    Studio        8                             Studio        288
Ltd.                  (Phase III)  (3)                               1 BR        67                              1 BR         576
                                                                     2 BR        16                              2 BR         864

                      Heatherwood        Kissimmee,       1982       Total       41      2.26        22,176      Avg.         541
                      Apartments         Florida                    Studio       10                             Studio        288
                      (Phase II)  (2)                                1 BR        26                              1 BR         576
                                                                    2 BR/1B       4                             2 BR/1B       864
                                                                    2 BR/2B       1                             2 BR/2B       864

Lamplight Court of    Lamplight          Bellefontaine,   1973       Total       80      6.00        46,944      Avg.         587
Bellefontaine         Apartments (4)     Ohio                       Studio       12                             Studio        288
Apartments, Ltd.                                                     1 BR        53                              1 BR         576
                                                                     2 BR        15                              2 BR         864

                                                                              ------ ------------- -----------            -------- -
                      TOTAL
                      PROPERTIES5:                                              590     42.48       338,772                   569
---------------------                                                         ====== ============= ===========            ======== =
</TABLE>



<TABLE>
<CAPTION>

                          Name of
                        Residential                                  Physical
                         Apartment               6/30/99             Occupancy
                     Property (and type  Average Rental Rates/Month     As Of
Partnership            Of interest)      (Per Unit) (Per Sq. Ft.)     6/30/99
-----------          ----------------    --------------------------  ---------
<S>                   <C>                 <C>          <C>          <C>
                      Garden Terrace       $417         $.69         90%
                      Apartments
                      (Phase III)  (3)


                      Villas at Lake        -             -           -
                      Sycamore  (3)


Baron Strategic       Garden Terrace       $417         $.69         90%
Investment Fund X,    Apartments
Ltd.                  (Phase III)  (3)


                      Heatherwood          $527         $.98         93%
                      Apartments
                      (Phase II)  (2)



Lamplight Court of    Lamplight            $397         $.68         88%
Bellefontaine         Apartments (4)
Apartments, Ltd.


                                        ------------ ------------ -----------
                      TOTAL
                      PROPERTIES(5):       $447         $.78         91%
---------------------                   ============ ============ ===========
</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 June
     30, 1999, (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>

                                                   6/30/99                   Annual
                                                  Principal    Interest       Debt
 Partnership       Property        Location        Balance       Rate       Payment
 -----------       --------        --------        -------       ----       -------
<S>                <C>             <C>            <C>         <C>           <C>
Exchange Equity
Partnerships

Baron Strategic    Steeplechase    Anderson,      $1,260,000  Yrs. 1-2:      $97,644
Investment Fund    Apartments      Indiana                        7.25%
II, Ltd.                                                      Yrs. 3-4:
                                                                  7.75%
                                                              Yrs. 5-10:
                                                                  8.25%

Central Florida    Laurel Oaks     Deland,         1,588,191      6.54%      121,863
Income             Apartments      Florida
Appreciation
Fund, Ltd.

Florida Capital    Eagle Lake      Port            1,427,797      8.56%      145,669
Income Fund, Ltd.  Apartments      Orange,
                                   Florida
Florida Capital    Forest Glen     Daytona         1,771,768      7.01%      125,696
Income Fund II,    Apartments      Beach,
Ltd.               (Phase I)       Florida

Florida Capital    Bridge Point    Jacksonville,     710,868      9.52%       77,183
Income Fund III,   Apartments      Florida
Ltd.               (Phase II)

Florida Capital    Glen Lake       St.             2,684,155      9.55%      296,046
Income Fund IV,    Apartments      Petersburg,                    8.00%       34,728
Ltd.                               Florida           352,238
                                                     (second
</TABLE>                                           mortgage)


<TABLE>
<CAPTION>

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

Baron Strategic    Steeplechase    $8,138       30 years     10/1/06   $1,099,557  Crown Bank
Investment Fund    Apartments
II, Ltd.

Central Florida    Laurel Oaks     10,155       30 years     12/1/28          -0-  Prudential Mortgage
Income             Apartments                                                      Capital
Appreciation
Fund, Ltd.

Florida Capital    Eagle Lake      12,139       25 years     11/1/05    1,244,562  Column Financial, Inc.
Income Fund, Ltd.  Apartments

Florida Capital    Forest Glen     10,475       30 years      3/05      1,681,926  Prudential Mortgage
Income Fund II,    Apartments                                                      Capital
Ltd.               (Phase I)

Florida Capital    Bridge Point    6,431        25 years     7/1/06       625,327  Huntington Mortgage Co.
Income Fund III,   Apartments
Ltd.               (Phase II)

Florida Capital    Glen Lake      24,670        25 years     5/18/00    2,652,341  Republic Bank
Income Fund IV,    Apartments      2,894        25 years     5/1/05       343,772  Glen Lake Arms
Ltd.                                                                               Joint Venture
</TABLE>




19

<PAGE>



<TABLE>
<CAPTION>

                                                   6/30/99                   Annual
                                                  Principal    Interest       Debt
 Partnership       Property        Location        Balance       Rate       Payment
 -----------       --------        --------        -------       ----       -------
<S>                <C>             <C>            <C>         <C>            <C>
Exchange Equity
Partnerships

Florida Income     Forest Glen     Daytona           885,884      7.01%       71,649
Advantage          III             Beach, FL
 Fund I


Florida Income     Forest Glen     Daytona           272,580      7.01%       19,337
Appreciation       Apartments      Beach,
Fund I, Ltd.       (Phase IV)      Florida

Florida Income     Blossom         Orlando,        1,017,388      9.04%      106,084
Growth Fund V,     Corners         Florida
Ltd.               Apartments
                   (Phase I)

Florida            Camellia        Daytona         1,065,887      9.04%      111,132
Opportunity        Court           Beach,
Income Partners,   Apartments      Florida
Ltd.

GSU Stadium        Stadium Club    Statesboro,     1,712,134      7.87%      160,346
Student            Apartments      Georgia
Apartments, Ltd.

Midwest Income     Brookwood Way   Mansfield,      1,043,073      9.04%      108,612
Growth Fund VI,    Apartments      Ohio
Ltd.

Realty             Forest Glen     Daytona         1,022,174      7.01%       72,517
Opportunity        Apartments      Beach,
Income Fund        (Phase II)      Florida
VIII, Ltd.

Exchange Hybrid
Partnerships

Baron Strategic    Pineview        Orlando,        1,596,966      7.75%      139,271
Investment Fund    Apartments      Florida
VI, Ltd.

Baron Strategic    Crystal Court   Lakeland,       1,203,764      7.50%      102,533
Investment Fund    Apartments      Florida
IX, Ltd.           (Phase I)
</TABLE>


<TABLE>
<CAPTION>

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

Florida Income     Forest Glen     5,971       30 years      3/05        817,310  Prudential Mortgage
Advantage          III                                                            Capital
 Fund I


Florida Income     Forest Glen     1,611       30 years      3/05        216,712  Prudential Mortgage
Appreciation       Apartments                                                     Capital
Fund I, Ltd.       (Phase IV)

Florida Income     Blossom         8,840       25 years     11/1/06     $882,430  Column Financial, Inc.
Growth Fund V,     Corners
Ltd.               Apartments
                   (Phase I)

Florida            Camellia        9,261       30 years     11/1/06      984,430  Column Financial, Inc.
Opportunity        Court
Income Partners,   Apartments
Ltd.

GSU Stadium        Stadium Club   13,362       30 years     10/1/05    1,615,458  GMAC
Student            Apartments
Apartments, Ltd.

Midwest Income     Brookwood Way   9,051       25 years     12/1/06      890,263  Mellon Bank
Growth Fund VI,    Apartments
Ltd.

Realty             Forest Glen     6,043       30 years      3/05        981,813  Prudential Mortgage
Opportunity        Apartments                                                     Capital
Income Fund        (Phase II)
VIII, Ltd.

Exchange Hybrid
Partnerships

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

Baron Strategic    Crystal Court   8,544       30 years      11/04     1,126,207  GMAC
Investment Fund    Apartments
IX, Ltd.           (Phase I)
</TABLE>





20

<PAGE>




<TABLE>
<CAPTION>

                                                   6/30/99                   Annual
                                                  Principal    Interest       Debt
 Partnership       Property        Location        Balance       Rate       Payment
 -----------       --------        --------        -------       ----       -------
<S>                <C>             <C>           <C>             <C>     <C>
Exchange Equity
Partnerships

Baron Strategic    Crystal Court   Lakeland,       1,203,764      7.50%      102,533
Investment Fund    Apartments      Florida
X, Ltd.            (Phase I)

                   Pineview        Orlando,        1,596,966      7.75%      139,271
                   Apartments      Florida

Lamplight Court    Lamplight       Bellefontaine   1,356,867      9.04%      135,660
of Bellefontaine   Court           Ohio
Apts., Ltd.

                                                ------------            ------------
                   TOTAL
                   PROPERTIES:                   $20,971,734             $ 1,925,970
                                                ============            ============
</TABLE>


<TABLE>
<CAPTION>

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

Baron Strategic    Crystal Court      8,544       30 years      11/04     1,126,207  GMAC
Investment Fund    Apartments
X, Ltd.            (Phase I)

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

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

                                ------------                          -------------
                   TOTAL
                   PROPERTIES:     $160,496                             $17,813,465
                                ============                          =============
</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 June 30, 1999 and due at maturity, (v) the undivided interests of
other Exchange Partnerships in the second mortgage loans or the principal
balance as of June 30, 1999 of other second mortgage loans secured by the
property and owned by other Exchange Partnerships, (vi) the appraised
replacement cost new and the appraised value of the property determined under
the income method, (vii) the second mortgage loan interest rate, maturity date,
annual and monthly interest payable and participation features, if any, and
(viii) the principal balance of the institutional first mortgage loan secured by
the property as of June 30, 1999 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. 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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $850,966  ($46,752)
--------------------------------------------------------------------------------
Balance due at maturity:               $850,966
--------------------------------------------------------------------------------
Appraised replacement cost new of
property:                              $3,390,187
--------------------------------------------------------------------------------
Appraised value of property -
income approach:                       $2,322,000
--------------------------------------------------------------------------------
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:              $5,213
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,096,229; the loan matures in 3/02, has
mortgage loan secured by property      a balance due at maturity of $1,050,024,
and other terms:                       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
--------------------------------------------------------------------------------
6/30/99  principal balance of
Exchange Partnership's 100%
interest in loan (accrued unpaid
interest):                             $230,000  ($27,315)
--------------------------------------------------------------------------------
Balance due at maturity:               $230,000
--------------------------------------------------------------------------------
6/30/99 aggregate principal balance
of other second mortgage loans
secured by property and owned by
other Exchange Partnerships
(accrued unpaid interest ):            $341,500  ($20,132)
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (under development):          $9,376,039
--------------------------------------------------------------------------------
Appraised value of property -          $1,080,000
"As is" value:                         $14,312,000 (assuming completion of
Prospective market value:              project as planned, full rent up and
                                       satisfactory environmental-quality test)
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,021,362; approved maximum $2,000,000;
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 $5,623 and $14,509),
                                       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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $1,364,549  ($199,576)
--------------------------------------------------------------------------------
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 $46,934) 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.
--------------------------------------------------------------------------------
Appraised replacement cost new of
property:                              $3,554,776
--------------------------------------------------------------------------------
Appraised value of property -
income approach:                       $2,281,000
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,582,377; the loan matures in 3/08, has
mortgage loan secured by property      a balance due at maturity of $1,385,953,
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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $21,000  ($3,102)
--------------------------------------------------------------------------------
Balance due at maturity:               $21,000
--------------------------------------------------------------------------------
6/30/99 aggregate principal balance
of other second mortgage loans
secured by property and owned by
other Exchange Partnerships
(accrued unpaid interest):             $143,500  ($20,089)
--------------------------------------------------------------------------------
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
                                       6/30/99 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 $9,967) and $75,500 (accrued
                                       unpaid interest of $10,122),
                                       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.
--------------------------------------------------------------------------------



                                      26
<PAGE>



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

--------------------------------------------------------------------------------
Appraised replacement cost new of
property (12.8% of amount,
representing the percentage of the
current principal balance of the
Exchange Partnership's second
Mortgage loan in relation to the
Aggregate current principal Balance
of all second mortgage Loans
secured by the property):              $1,590,447  ($203,577)
--------------------------------------------------------------------------------
Appraised value of property -
 Income approach (12.8% of
 Amount):                              $ 922,000  ($118,016)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $587,146 ($75,155); the loan matures in
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.
--------------------------------------------------------------------------------

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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $474,703  ($33,148)
--------------------------------------------------------------------------------
Balance due at maturity:               $474,703
--------------------------------------------------------------------------------



                                       27
<PAGE>



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

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

6/30/99 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  ($112,259)
--------------------------------------------------------------------------------
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 6/30/99 principal balance, and
                                       aggregate balance due at maturity in
                                       respect of Baron Vulture Fund's interest
                                       in the loans is $1,243,847 (accrued
                                       unpaid interest of $134,759); 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.
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (26.3% of amount):            $3,941,164  ($1,036,526)
--------------------------------------------------------------------------------
Appraised value of property -
Income approach (26.3% of
Amount):                               $2,552,000  ($ 671,176)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,286,406 ($338,325); the loan matures
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.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------



                                       28
<PAGE>



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

--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $1,031,801  (-0-)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,031,801
--------------------------------------------------------------------------------
Appraised replacement cost new
of property:                           $2,700,611
--------------------------------------------------------------------------------
Appraised value of property -
income approach:                       $1,424,000
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of           $1,022,417; 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.
--------------------------------------------------------------------------------



                                       29
<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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $206,260  ($2,406)
--------------------------------------------------------------------------------
Balance due at maturity:               $206,260
--------------------------------------------------------------------------------
6/30/99 principal balance of other
Exchange Partnership's undivided
42% in loans (accrued unpaid
interest):                             $155,787  ($5,972)
--------------------------------------------------------------------------------
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
                                       6/30/99 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 $5,972); 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.
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (58% of amount):              $1,862,475  ($1,080,236)
--------------------------------------------------------------------------------
Appraised value of property -
income approach (58% of
amount):                               $1,259,000  ($730,220)
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------



                                       30
<PAGE>



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

--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $699,359 ($405,628); the loan matures in
mortgage loan secured by               11/04, has a balance due at maturity of
property (58% of amount)               $655,856, bears interest at a fixed
and 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.
--------------------------------------------------------------------------------

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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $969,268  ($60,704)
--------------------------------------------------------------------------------
Balance due at maturity:               $969,268
--------------------------------------------------------------------------------
Appraised replacement cost new of
property:                              $2,666,862
--------------------------------------------------------------------------------
Appraised value of property -
Income approach:                       $1,788,000
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,022,255; the loan matures in 11/04,
mortgage loan secured by property      has a balance due at maturity of
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.
--------------------------------------------------------------------------------



                                       31
<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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $98,000  ($5,623)
--------------------------------------------------------------------------------
Balance due at maturity:               $98,000
--------------------------------------------------------------------------------
6/30/99 aggregate principal balance
of other second mortgage loans
secured by property and owned by
other Exchange Partnerships
(accrued unpaid interest):             $473,500  ($41,824)
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (under development):          $9,376,039
--------------------------------------------------------------------------------
Appraised value of property - "As
is" value:                             $1,080,000

Prospective market value:              $14,312,000 (assuming completion of
                                       project as planned, full rent up and
                                       satisfactory environmental-quality test)
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 12%; requires
amortization provisions:               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
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,021,362; approved maximum $2,000,000;
mortgage loan secured by property      the loan matures in 11/01, bears interest
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 $27,315 and $14,509),
                                       respectively. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgage on a pari passu basis.
--------------------------------------------------------------------------------



                                       32
<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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $1,243,847  ($112,259)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,243,847
--------------------------------------------------------------------------------
6/30/99 principal balance of other
Exchange Partnership's undivided
26.3% in three loans and 100%
interest in one loan (accrued
unpaid interest):                      $474,703  ($33,148)
--------------------------------------------------------------------------------
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 6/30/99 principal balance, and
                                       aggregate balance due at maturity in
                                       respect of Baron Fund V's interest in the
                                       Curiosity Creek Second Mortgage Loans is
                                       $474,703 (accrued unpaid interest of
                                       $33,148); 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.
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (73.7% of amount):            $3,941,164  ($2,904,638)
--------------------------------------------------------------------------------
Appraised value of property -
income approach (73.7% of amount):     $2,552,000  ($1,880,824)
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------



                                       33
<PAGE>





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

--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------

6/30/99 principal balance of first     $1,286,406 ($948,081); the loan matures
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.


--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------



                                       34
<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    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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $1,048,861  ($112,115)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,048,861
--------------------------------------------------------------------------------
Appraised replacement cost new of
property:                              $3,084,043
--------------------------------------------------------------------------------
Appraised value of property -
income approach:                       $1,629,000
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $944,722; the loan matures in 7/01, has a
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.
--------------------------------------------------------------------------------



                                       35
<PAGE>



                          EXCHANGE HYBRID PARTNERSHIPS

                    Baron Strategic Investment Fund VI, Ltd.

The Exchange Partnership owns (1) a 52.44% 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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $68,000  ($9,767)
--------------------------------------------------------------------------------
Balance due at maturity:               $68,000
--------------------------------------------------------------------------------
6/30/99 principal balance of other
second mortgage loans secured by
the property and owned by other
Exchange Partnerships (accrued
unpaid interest):                      $96,500  ($13,224)
--------------------------------------------------------------------------------
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
                                       6/30/99 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 $3,102) and
                                       $75,500 (accrued unpaid interest of
                                       $10,122), 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.
--------------------------------------------------------------------------------



                                       36
<PAGE>



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

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

Appraised replacement cost new of
property (41.3% of amount,
representing the percentage of the
current principal balance of the
Exchange Partnership's second
Mortgage loan in relation to the
aggregate current principal balance
of all second mortgage loans
secured by the property):              $1,590,447  ($656,855)
--------------------------------------------------------------------------------
Appraised value of property -
Income approach (41.3% of
Amount):                               $   922,000  ($380,786)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $587,146 ($242,491); the loan matures in
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.
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $248,353  ($11,196)
--------------------------------------------------------------------------------
Balance due at maturity:               $248,353
--------------------------------------------------------------------------------
6/30/99 principal balance of other
Exchange Partnerships' undivided
80% in loan (accrued unpaid
interest):                             $993,414  ($45,728)
--------------------------------------------------------------------------------



                                       37
<PAGE>



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

--------------------------------------------------------------------------------
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, 6/30/99
                                       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 is $310,442
                                       (accrued unpaid interest of $14,230) and
                                       $682,972 (accrued unpaid interest of
                                       $31,498), 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.
--------------------------------------------------------------------------------

Appraised replacement cost new of
property (20% of amount):              $4,297,897  ($859,579)
--------------------------------------------------------------------------------
Appraised value of property -
Income approach (20% of
Amount):                               $1,782,000  ($356,400)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $967,012 ($193,402); the loan matures in
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.
--------------------------------------------------------------------------------

3.    Note Payable by Baron Strategic Investment
      Fund IV, Ltd. ("Baron Fund IV"):
--------------------------------------------------------------------------------
6/30/99 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  ($56,670)
--------------------------------------------------------------------------------



                                       38
<PAGE>



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

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

6/30/99 principal balance of
Baron Fund IV's second mortgage
loans secured by property
(accrued unpaid interest ):            $1,364,549  ($199,576)
--------------------------------------------------------------------------------
Appraised replacement cost new of
property:                              $3,554,776
--------------------------------------------------------------------------------
Appraised value of property - income
approach:                              $2,281,000
--------------------------------------------------------------------------------
6/30/99 principal balance of           $1,582,377; the loan matures in 3/08, has
first mortgage loan                    a balance due at maturity of $1,385,953,
secured 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.
--------------------------------------------------------------------------------



                                       39
<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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $75,500  ($10,122)
--------------------------------------------------------------------------------
Balance due at maturity:               $75,500
--------------------------------------------------------------------------------

6/30/99 aggregate principal balance
of other second mortgage loans
secured by property and owned by
other Exchange Partnerships
(accrued unpaid interest):             $89,000  ($13,069)
--------------------------------------------------------------------------------
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
                                       6/30/99 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 $3,102) and
                                       $68,000 (accrued unpaid interest of
                                       $9,967), 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.
--------------------------------------------------------------------------------



                                       40
<PAGE>



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

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

Appraised replacement cost new of
property (45.9% of amount,
representing the percentage of the
current principal balance of the
Exchange Partnership's second
Mortgage loan in relation to the
Aggregate current principal Balance
of all second mortgage Loans
secured by the property):              $1,590,447  ($730,015)
--------------------------------------------------------------------------------
Appraised value of property -
Income approach (45.9% of
  Amount):                             $   922,000  ($423,198)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $587,146 ($269,500); the loan matures in
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.
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $310,442  ($14,230)
--------------------------------------------------------------------------------
Balance due at maturity:               $310,442
--------------------------------------------------------------------------------



                                       41
<PAGE>



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

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

6/30/99 principal balance of other
Exchange Partnerships' undivided 75%
interest in loans (accrued unpaid
interest):                             $931,325  ($42,694)
--------------------------------------------------------------------------------
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, 6/30/99
                                       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 $11,196) and
                                       $682,972 (accrued unpaid interest of
                                       $31,498), 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.
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (25% of amount):              $4,297,897  ($1,074,474)
--------------------------------------------------------------------------------
Appraised value of property -
income approach (25% of
amount):                               $1,782,000  ($445,500)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $967,012 ($241,753); the loan matures in
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.
--------------------------------------------------------------------------------

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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $243,500  ($14,509))
--------------------------------------------------------------------------------
Balance due at maturity:               $243,500
--------------------------------------------------------------------------------



                                       42
<PAGE>



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

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

6/30/99 aggregate principal balance
of other second mortgage loans
secured by property and owned by
other Exchange Partnerships
(accrued unpaid interest):             $328,000  ($32,938)
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (under development):          $9,376,039
--------------------------------------------------------------------------------
Appraised value of property -
"As is" value:                         $1,080,000

Prospective market value:              $14,312,000 (assuming completion of
                                       project as planned, full rent up and
                                       satisfactory environmental-quality test)
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 12%; requires
amortization provisions:               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
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,021,362; approved maximum $2,000,000;
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 $27,315 and $5,623),
                                       respectively. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgage on a pari passu basis.
--------------------------------------------------------------------------------



                                       43
<PAGE>



                     Baron Strategic Investment Fund X, Ltd.

The Partnership owns (i) a 47.59% limited partnership interest in a limited
partnership which holds fee simple title to the Crystal Court Property-Phase I,
(2) a 39.56% 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:                 $149,361
--------------------------------------------------------------------------------

6/30/99  principal balance
(accrued unpaid interest):             $149,361  ($5,972)
--------------------------------------------------------------------------------
Balance due at maturity:               $149,361
--------------------------------------------------------------------------------
6/30/99 principal balance of other
Exchange Partnership's undivided
58% in loans (accrued unpaid
interest):                             $206,260  ($5,306)
--------------------------------------------------------------------------------
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
                                       6/30/99 principal balance, and aggregate
                                       balance due at maturity in respect of
                                       Baron Fund VIII's interest in the
                                       Heatherwood Loans is $206,260 (accrued
                                       unpaid interest of $2,406); the aggregate
                                       annual (and monthly) payments due it are
                                       $13,408 ($1,117). The other terms
                                       relating to Baron Fund VIII's interest in
                                       the Heatherwood Loans are the same as
                                       stated herein.
--------------------------------------------------------------------------------
Appraised replacement cost new of
property (42% of amount):              $1,862,475  ($782,240)
--------------------------------------------------------------------------------
Appraised value of property -
income approach (42% of
amount):                               $1,259,000  ($528,780)
--------------------------------------------------------------------------------



                                       44
<PAGE>



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

--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of           $699,359 ($293,731); 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
                                       $325,000 and unsecured loans in the
                                       aggregate principal amount of $24,121.
--------------------------------------------------------------------------------

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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $682,972  ($31,498)
--------------------------------------------------------------------------------
Balance due at maturity:               $682,972
--------------------------------------------------------------------------------
6/30/99 principal balance of other
Exchange Partnerships' undivided
45% in loan (accrued unpaid
interest):                             $558,795  ($25,426)
--------------------------------------------------------------------------------
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, 6/30/99
                                       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
                                       $11,196$5,607) and $310,442, (accrued
                                       unpaid interest of $14,230),
                                       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.
--------------------------------------------------------------------------------



                                       45
<PAGE>



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

--------------------------------------------------------------------------------
Appraised replacement cost new
of property (55% of amount):           $4,297,897  ($2,363,843)
--------------------------------------------------------------------------------
Appraised value of property -
income approach (55% of
Amount):                               $1,782,000  ($980,100)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $967,012 ($531,857); the loan matures in
mortgage loan secured by               5/05, has a balance due at maturity of
property (55% of amount)               $822,063, bears interest at the fixed
and 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.
--------------------------------------------------------------------------------



                                       46
<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
--------------------------------------------------------------------------------
6/30/99 principal balance
(accrued unpaid interest):             $678,302  ($135,713)
--------------------------------------------------------------------------------
Balance due at maturity:               $678,302
--------------------------------------------------------------------------------
Appraised replacement cost new
of property:                           $3,727,599
--------------------------------------------------------------------------------
Appraised value of property -
Income approach:                       $2,214,000
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Adjustable interest rate of 1% over
amortization provisions:               prime rate (currently 8.75%) as to
                                       $585,000 of 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.
--------------------------------------------------------------------------------
6/30/99 principal balance of first     $1,358,436; the loan matures in 11/06,
mortgage loan secured by               has a balance due at maturity of
property and other terms:              $1,158,349, bears  interestat 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.
--------------------------------------------------------------------------------




                                       47
<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.


                                       48

<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.

     After the Trust has completed the Cash Offering and invested the net
proceeds thereof, it 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
12-month period following the completion of the Cash Offering 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 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


                                       49

<PAGE>


Trust may be in the form of first mortgage loans.

     Subordinated mortgages securing subordinated mortgage loans to be provided
or acquired by the Trust may or may not be recorded. 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 " -
Conflicts 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. The Trust has no current intention to dispose of any
property interests it may acquire, although it reserves the right to do so.
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.

         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 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.



                                       50
<PAGE>


     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 will have 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 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 representative acting on their behalf,
which specifies that the Trust and the Operating Partnership have determined not
to participate in



                                       51
<PAGE>



the proposed transaction or (y) 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 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, volley ball 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 Partnership 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.



                                       52
<PAGE>


ITEM 3. LEGAL PROCEEDINGS

        The Trust is not a party to any legal proceedings.


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

        None.


                                     PART II

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, 2000, there are approximately 462 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's
ability to make future distributions will be determined by the net cash flow it
has available to make distributions.

Use of Proceeds from Registered Securities

     The Trust's Form SB-2 Registration Statement (the "Registration Statement")
(Commission file number 333-35063) was declared effective by the Securities and
Exchange Commission (the "Commission") on May 15, 1998. On May 18, 1998, the
Trust commenced its public offering (the "Cash Offering") of Common Shares of
beneficial interest, the class of securities registered. On June 2, 1999, the
Trust filed Post-Effective Amendment No. 1 (the "Amendment") to the Registration
Statement, which the Commission declared effective on June 11, 1999. The Cash
Offering is currently ongoing and is scheduled to terminate on May 31, 2000.

     The name of the managing underwriter of the Cash Offering is Sigma
Financial Corporation. The amount of Common Shares registered is 2,500,000
shares. The offering price per Common Share is $10.00, and the maximum aggregate
price of the offering amount registered is $25,000,000. As of December 31, 1999,
675,086 Common Shares have been sold in the Cash Offering, for an aggregate
offering price of $6,750,860. From the effective date of the Registration
Statement through December 31, 1999, the following expenses have been incurred
for the Trust's account in connection with the issuance and distribution of the
registered Common Shares:

<TABLE>
<S>                                              <C>
     Underwriting discounts and commissions:     $540,068 (plus five-year warrants to acquire 57,613 Common
                                                 Shares at an exercise price of $13.00 per share)

     Finder's Fees:                              $0

     Expenses Paid to or for Underwriter:        $0

     Other Expenses (reimbursement for
     advisory  and investment expenses):         $404,716

                Total Expenses:                  $944,784
</TABLE>



                                       53
<PAGE>


     Of such expense payments, $404,716 were made directly to Baron Advisors,
Inc., the Managing Shareholder of the Trust. The remaining payments of $540,068
were made directly or indirectly to others. The net offering proceeds to the
Trust after deducting the foregoing total expenses were $5,806,076.

     From the effective date of the Registration Statement through December 31,
1999, the net offering proceeds to the Trust were used for the following
purposes:

     Improvements to buildings and facilities:                    $0

     Purchase and installation of equipment:                      $0

     Repayment of indebtedness:                                   $0

     Working capital:                                             $568,336

     Temporary investments:                                       $0

     Investment in Baron Capital Properties,
     L.P. (the Operating Partnership)                             $5,237,740

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

     Of such net proceeds, $5,237,740 was directly contributed to the Operating
Partnership in exchange for Units of limited partnership interest therein. The
Operating Partnership conducts all of the real estate operations of the Trust
and holds all of its real property assets. In 1999, the Trust distributed
$270,348 to its Shareholders.

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.

Results of Operations

     The Trust commenced operations in the first half of 1998. Through the
Operating Partnership, it started acquiring interests in properties including
the entire limited partnership interests in Heatherwood I Apartments in June
1998; Crystal Court II Apartments in



                                       54
<PAGE>


July 1998; and Riverwalk Apartments in September 1998. In July 1998 it acquired
a limited partnership interest in 13 real estate limited partnerships managed by
affiliates of Gregory K. McGrath (a founder and Chief Executive Officer of the
Trust and the Operating Partnership). During 1998 and 1999, the Trust acquired
limited partnership interests in Alexandria Apartments which totaled 40% as of
December 31, 1999 and remained unchanged as of March 31, 2000. See ITEM 2 -
DESCRIPTION OF PROPERTIES.

     Total Assets for the Trust declined by $395,317 from $7,731,515 at December
31, 1998 to $7,336,198 at December 31, 1999. The decline was principally due to
depreciation of $240,349. Total Liabilities for the Trust increased $908,463,
from $4,897,423 at December 31, 1998 to $5,805,886 at December 31, 1999. This
increase resulted principally from accounts payable for professional services
related to the Exchange Offering. The Trust is negotiating with the
professionals involved and expects to receive extended payment terms and
possible reductions of the amounts due. Shareholders' Equity decreased
$1,274,570 from $2,804,882 at December 31, 1998 to $1,530,312 at December 31,
1999. The decrease was principally due to the Net Loss in 1999 of $3,166,927,
offset by the $1,945,705 proceeds from sale of Common Shares of beneficial
interest.

     Net Cash Used by Operating Activities decreased by $386,128 from $1,408,715
cash used in the year ended December 31, 1998 to $1,022,587 cash used in the
year ended December 31, 1999. The decrease in Net Cash Used by Operating
Activities was principally due to the increase in accounts payable. Net Cash
Used in Investing Activities decreased $1,687,931 from $2,484,212 for the year
ended December 31, 1998 to $796,281 for the year ended December 31, 1999. The
decrease was principally due to the acquisition of rental apartments in 1998 for
$1,559,162 compared with no such acquisitions in 1999. Cash Flow from Financing
Activities decreased $2,394,883 from $4,070,226 in the year ended December 31,
1998 to $1,675,343 in the year ended December 31, 1999. The decrease was
principally due to the reduction in proceeds from sale of Common Shares of
beneficial interest in the Trust by $2,319,384 from $4,265,089 in the year ended
December 31, 1998 to $1,945,705 in the year ended December 31, 1999.

     Revenues increased by $208,878 from $376,524 for the partial year ended
December 31, 1998 to $585,402 for the complete year ended December 31, 1999.
Real Estate Expenses for the properties owned by the Trust increased from
$606,015 for the partial year ended December 31, 1998 to $1,024,209 for the
complete year ended December 31, 1999. The increases in Revenues and Real Estate
Expenses were principally due to a full year of operations in 1999 compared to a
partial year of operations in 1998. Administrative Expenses increased $1,280,551
from $1,447,569 for the year ended December 31, 1998 to $2,728,120 for the year
ended December 31, 1999. The increase in Administrative Expenses was principally
due to an increase in Professional Services of $1,309,450 from $129,011 for the
year ended December 31, 1998 to $1,438,461 for the year ended December 31, 1999.
The increase in Professional Services was principally related to the Exchange
Offering and is not expected to recur.

     The Trust plans to continue raising equity in its Cash Offering under its
current prospectus dated June 11, 1999, as it may be amended or supplemented.
The current offering is for $25,000,000, and is effective through May 31, 2000.
Through December 31, 1999 the Trust has raised $6,750,863. The net cash proceeds
from the issuance of Common Shares in connection with this offering and the net
cash proceeds of any subsequent issuance of Common Shares will be contributed by
the Trust to the Operating Partnership in exchange for an equivalent number of
Units in the Operating Partnership. The Operating Partnership will use the net
cash proceeds of the offering, unissued units of limited partnership interest in
the Operating Partnership or a combination of net cash proceeds and unissued
units to acquire interests in residential apartment properties or interests in
other partnerships substantially all of whose assets consist of residential
apartment property interests, and payment of fees and expenses as described in
the prospectus.

     Because of the net losses of $3,166,927 and $1,577,060 in 1999 and 1998,
respectively; the $975,305 in accounts payable owed to professionals in
connection with the Exchange Offering as of December 31, 1999, and the limited
liquid resources as of December 31, 1999, the Company's independent auditors
included an explanatory paragraph in their auditors' report regarding certain
going concern considerations to reflect these conditions (see the Report of
Independent Certified Public Accountants and Note 2 of the Notes to Consolidated
Financial Statements included herewith in Item 7). The completion of the
Exchange Offering on April 7, 2000 has, in the opinion of management, provided
the critical mass necessary for profitable operations. The Company is
negotiating with the firms who are owed accounts payable, and expects to receive
extended payment terms and possible reductions of the amounts due. Distributions
will be made by the Trust as cash flow allows, but will be negatively impacted
as the open accounts payable are reduced.

     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 2,434,274
registered Operating Partnership Units (with an initial assigned value of
$24,342,740) in exchange for substantially all outstanding units of limited
partnership interest owned by individual limited partners ("Exchange



                                       55
<PAGE>


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.

     The property interests acquired by the Operating Partnership to date are
described in further detail at ITEM 2 - DESCRIPTION OF PROPERTIES.

     The Trust and the Operating Partnership intend to continue to acquire
similar property interests using proceeds from the Trust's Cash Offering,
securities of the Trust and the Operating Partnership, including Common Shares
and Units, and available operating cash flow and financing from other sources.

     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.

     The table below summarizes the results of operations of the Trust for the
year ended December 31, 1999.

                                                     Year Ended
                                                     December 31, 1999
                                                     -----------------

         Property Revenues                           $    585,402
         Property Income (Loss)                      $   (438,807)
         Administrative Expenses                     $  2,728,120
         Net Loss                                    $ (3,166,927)
         Total Assets                                $  7,336,198
         Shareholders' Equity                        $  1,530,312


     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 88% for nine months
of the year and 61% 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, the Trust will continue the Cash Offering
through May 31, 2000,



                                       56
<PAGE>


subject to extension, and it will also be necessary to raise additional capital
during the 12-month period following the completion of the Cash Offering 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 12-month period
following the completion of the Cash Offering.

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

Year 2000

     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 in 2000.
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.


ITEM 7. FINANCIAL STATEMENTS

See Index to Financial Statements.





                                       57


<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-F-6

   Notes to Financial Statements                                       F-7-F-28



<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,  1999 and the  related  consolidated
statements of operations, shareholders' equity and cash flows for the year ended
December  31,  1999 and for the  period  from  inception  (February  3, 1998) to
December  31,   1998.   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, 1999,  and the  consolidated  results of their
operations and their cash flows for the year ended December 31, 1999 and for the
period from  inception  (February 3, 1998) to December 31, 1998,  in  conformity
with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Trust will continue as a going  concern.  As discussed in Note 2 to the
consolidated financial statements, the Trust incurred significant net losses and
negative  cash flows from  operations  for 1999 and 1998 and, as of December 31,
1999,  reflects limited liquid  resources.  These  conditions raise  substantial
doubt about the Trust's  ability to  continue as a going  concern.  Management's
plans  with  regard  to  these  matters  are  also  described  in  Note  2.  The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


                            RACHLIN COHEN & HOLTZ LLP

Miami, Florida
February 25, 2000 except for Note 12,
   as to which the date is April 7, 2000


                                      F-1
<PAGE>


                               BARON CAPITAL TRUST

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 1999



                        ASSETS
Rental Apartments:
   Land                                                             $ 1,178,693
   Depreciable property                                               6,189,095
                                                                    -----------
                                                                      7,367,788
   Less accumulated depreciation                                      1,453,177
                                                                    -----------
                                                                      5,914,611

Investments in Partnerships                                             930,970

Cash and Cash Equivalents                                                33,774
Restricted Cash                                                          52,089
Reimbursed Administrative Expenses Receivable, Affiliates                36,997
Due from Managing Shareholder                                            14,783
Other Receivables                                                         3,724
Advances to Affiliates                                                    5,141
Other Property and Equipment                                            134,981
Other Assets                                                            209,128
                                                                    -----------
                                                                    $ 7,336,198
                                                                    ===========

               LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Mortgages payable                                                $ 4,278,117
   Accounts payable and accrued liabilities                           1,295,092
   Note payable                                                         100,000
   Notes payable, affiliates                                             50,000
   Capital lease obligation                                              42,369
   Security deposits                                                     40,308
                                                                    -----------
         Total liabilities                                            5,805,886
                                                                    -----------

Commitments, Contingencies, Subsequent Events and Other Matters            --

Shareholders' Equity:
   Common shares of beneficial interest, no par value; 2,500,000
      shares authorized; 675,086 shares issued and outstanding        6,616,806
   Deficit                                                           (4,743,987)
   Distributions                                                       (342,507)
                                                                    -----------
         Total shareholders' equity                                   1,530,312
                                                                    -----------
                                                                    $ 7,336,198
                                                                    ===========


                  See notes consolidated financial statements.
                                      F-2


<PAGE>


                               BARON CAPITAL TRUST

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                         From
                                                                                                       Inception
                                                                                       Year          (February 3,
                                                                                       Ended            1998) to
                                                                                    December 31,      December 31,
                                                                                       1999              1998
                                                                                    ----------        -----------
<S>                                                                                 <C>               <C>
Revenues:
   Property:
      Rental                                                                        $ 1,056,995       $   358,949
      Equity in net loss of unconsolidated partnership                                 (595,000)          (20,360)
   Interest and other income                                                            123,407            37,935
                                                                                    -----------       -----------
                                                                                        585,402           376,524
                                                                                    -----------       -----------

Real Estate Expenses:
   Depreciation                                                                         240,349            80,296
   Interest                                                                             316,095           164,333
   Repairs and maintenance                                                              143,923            86,349
   Personnel                                                                            126,070            53,860
   Property taxes                                                                        83,495            34,496
   Property insurance                                                                    29,144            20,477
   Utilities                                                                             68,827            27,299
   Other                                                                                 16,306           138,905
                                                                                    -----------       -----------
                                                                                      1,024,209           606,015
                                                                                    -----------       -----------

Administrative Expenses:
   Personnel, including officer's compensation                                          680,774           718,715
   Management, investment and administrative fees, Managing Shareholder                 148,012           324,213
   Professional services                                                              1,438,461           129,011
   Other                                                                                460,873           275,630
                                                                                    -----------       -----------
                                                                                      2,728,120         1,447,569
                                                                                    -----------       -----------


      Total expenses                                                                  3,752,329         2,053,584
                                                                                    -----------       -----------

Loss Before Minority Interest                                                        (3,166,927)       (1,677,060)

Minority Interest of Unitholders in Net Loss of Operating Partnership                        --           100,000
                                                                                    -----------       -----------

Net Loss                                                                            $(3,166,927)      $(1,577,060)
                                                                                    ===========       ===========

Net Loss Per Common Share                                                           $     (5.12)      $     (7.41)
                                                                                    ===========       ===========
</TABLE>


                  See notes 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>
From Inception (February 3, 1998) to December 31, 1998:
      Initial capital contributions:
         Managing shareholder                                          10   $       100   $        --    $        --    $       100
      Proceeds from sale of common shares of
         beneficial interest, net of offering costs               463,640     4,257,001            --             --      4,257,001
      Distributions paid                                               --            --            --        (72,159)       (72,159)
      Credit for estimated fair value of
         services performed by officer                                 --       197,000            --             --        197,000
      Net loss                                                         --            --    (1,577,060)            --     (1,577,060)
                                                                  -------   -----------   -----------    -----------    -----------

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
                                                                 ========   ===========  ============     ==========     ==========
</TABLE>


                  See notes consolidated financial statements.
                                      F-4
<PAGE>


                               BARON CAPITAL TRUST

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                From
                                                                                                               Inception
                                                                                             Year             (February 3,
                                                                                             Ended              1998) to
                                                                                          December 31,        December 31,
                                                                                             1999                1998
                                                                                          ------------        -----------
<S>                                                                                       <C>                 <C>
Cash Flows from Operating Activities:
   Net loss                                                                               $(3,166,927)        $(1,577,060)
   Adjustments to reconcile net loss to
      net cash used by operating activities:
         Credit for estimated fair value of services performed by officer                     217,000             197,000
         Minority interest of unitholders in net loss of Operating Partnership                     --            (100,000)
         Depreciation                                                                         240,349              80,296
         Equity in net loss of unconsolidated partnership                                     595,000              20,360
         Increase in operating assets and liabilities:
            Other receivables                                                                  76,388             (80,112)
            Reimbursed administrative expenses receivable                                     118,074            (155,071)
            Due from Managing Shareholder                                                     (14,783)                 --
            Other assets                                                                        3,633            (221,611)
            Accounts payable and accrued liabilities                                          906,707             388,385
            Security deposits                                                                   1,972              38,336
         Other                                                                                     --                 762
                                                                                          -----------         -----------
               Net cash used by operating activities                                       (1,022,587)         (1,408,715)
                                                                                          -----------         -----------

Cash Flows from Investing Activities:
   Acquisitions of rental apartments                                                               --          (1,559,162)
   Investment in partnerships                                                                (885,000)           (741,280)
   Cash distributions from partnerships                                                        69,000              10,950
   Purchases of other property and equipment                                                       --            (117,771)
   (Increase) decrease in restricted cash                                                      14,110             (66,199)
   (Advances) repayments to affiliates                                                          5,609             (10,750)
                                                                                          -----------         -----------
               Net cash used in investing activities                                         (796,281)         (2,484,212)
                                                                                          -----------         -----------
</TABLE>


                  See notes consolidated financial statements.
                                      F-5

<PAGE>


                               BARON CAPITAL TRUST

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                                          From
                                                                                                      Inception
                                                                                 Year                (February 3,
                                                                                 Ended                 1998) to
                                                                              December 31,            December 31,
                                                                                 1999                    1998
                                                                              -----------            -----------
<S>                                                                            <C>                    <C>
Cash Flows from Financing Activities:
   Proceeds from sale of common shares of beneficial interest                   1,945,705              4,265,089
   Distributions paid                                                            (270,348)               (72,159)
   Initial capital contributions                                                       --                100,100
   Proceeds from mortgage financing                                               290,000                     --
   Proceeds from notes payable, affiliates                                         50,000                     --
   Payments on note payable                                                      (275,000)              (200,000)
   Payments on mortgages payable                                                  (51,399)               (19,019)
   Payments on capital lease obligation                                           (13,615)                (3,785)
                                                                              -----------            -----------
               Net cash provided by financing activities                        1,675,343              4,070,226
                                                                              -----------            -----------

Net Increase (Decrease) in Cash and Cash Equivalents                             (143,525)               177,299

Cash and Cash Equivalents, Beginning                                              177,299                     --
                                                                              -----------            -----------

Cash and Cash Equivalents, Ending                                             $    33,774            $   177,299
                                                                              ===========            ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                  $   316,095            $   164,333
                                                                              ===========            ===========
</TABLE>


                  See notes consolidated financial statements.
                                      F-6

<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998



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 will manage 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  81% of  the  limited  partner  units  of the  Operating
          Partnership.  The consolidated  accounts of the Operating  Partnership
          include  the  accounts  of three  limited  partnerships  in which  the
          Operating Partnership is the controlling limited partner, by virtue of
          its right to remove the general partner due to its majority  ownership
          percentage in those limited partnerships.

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

          The minority  interest of  unitholders  in the  Operating  Partnership
          represents  the  1,202,160  limited  partnership  units  owned  by the
          Original Investors of the Operating  Partnership (see Note 10), 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.  During 1998, the proportionate share of the net loss of
          the Operating  Partnership  allocated to the minority  unitholders was
          $100,000 with


                                      F-7
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Basis of Presentation (Continued

          the excess of  approximately  $71,000  being  charged to the  majority
          unitholders.  For 1999, the entire balance of the proportionate  share
          of the net loss of the Operating  Partnership  of $502,000 was charged
          to the majority  unitholders.  As of December  31, 1999 and 1998,  the
          1,202,160  Operating  Partnership  limited partnership units issued to
          the Original Investors are subject to escrow  restrictions and 158,353
          and 108,757  units are  convertible  into common  shares of the Trust,
          respectively (see Note 10).

     Concentrations of Credit Risk

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

          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.

          Reimbursed Administrative Expenses and Other Receivables

          Receivables  are  comprised  mainly  of  (a)  administrative   expense
          reimbursements  due  from a  number  of  other  partnerships  that are
          related  to the  Operating  Partnership  (see Note 9) and (b)  monthly
          rents due.  The  Operating  Partnership  monitors  exposure  to credit
          losses and does not maintain an allowance for these receivables, as it
          believes that these receivables are fully collectible.

     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


                                      F-8
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Real Estate Rental Properties and Depreciation (Continued)

          Losses 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.  No such
          losses have been required or provided in the accompanying consolidated
          financial statements.

     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.

     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.

     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  investment in Alexandria  Development,  L.P.,
          which represents a 40% interest at December 31, 1999, is accounted for
          using the equity method (see Note 4).

          Investments  in  partnerships  in which  the  Operating  Partnership's
          interest is so minor that the  Partnership  has virtually no influence
          over  partnership  operating and financial  policies are accounted for
          utilizing the cost method. These investments  generally represent less
          than  5%  of  the  partnership   interest  (see  Note  4).  The  Trust
          periodically   assesses  the  estimated   realizable  value  of  these
          investments in order to ascertain that there has been no impairment in
          their recorded value.

     Capital Reserve

          In connection  with the acquisition of the investment  properties,  as
          required  by the lending  institutions,  the Trust has  established  a
          capital  reserve  account,   which  is  to  be  used  for  significant
          improvements to the property.


                                       F-9
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     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 six years,  the remaining term
          of the financing.

     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.

     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
          Section 856 to 860 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
          stockholders 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, 1999, the  differences  between  estimated fair value and
          the carrying value of debt instruments were not material.

     Recent Accounting Pronouncements

          In June 1997, the Financial Accounting Standards Board issued SFAS No.
          130, "Reporting  Comprehensive Income" and No. 131, "Disclosures about
          Segments  of an  Enterprise  and  Related  Information."  SFAS No. 130
          establishes  standards  for  reporting  and  displaying  comprehensive
          income,  its  components,  and  accumulated  balances.  SFAS  No.  131
          establishes  standards  for  the  way  that  public  companies  report
          information  about operating  segments in annual financial  statements
          and  requires  reporting  of  selected   information  about  operating
          segments in interim financial  statements  issued to the public.  Both
          SFAS No. 130


                                      F-10
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Recent Accounting Pronouncements (Continued)

          and SFAS No. 131 are effective for periods  beginning  after  December
          15, 1997.  The Trust adopted these new  accounting  standards in 1998,
          and their adoption had no effect on the Trust's  financial  statements
          and disclosures.

          In June 1998, the Financial Accounting Standards Board issued SFAS No.
          133,  "Accounting for Derivative  Instruments and Hedging Activities."
          SFAS No. 133 requires companies to recognize all derivatives contracts
          as either  assets or  liabilities  in the balance sheet and to measure
          them at fair value. If certain conditions are met, a derivative may be
          specifically designated as a hedge, the objective of which is to match
          the timing of the gain or loss  recognition of the hedging  derivative
          with the  recognition  of (i) the  changes  in the  fair  value of the
          hedged asset or liability that are  attributable to the hedged risk or
          (ii) the earnings effect of the hedged forecasted  transaction.  For a
          derivative not designated as a hedging instrument, the gain or loss is
          recognized  in  income  in the  period  of  change.  SFAS  No.  133 is
          effective for all fiscal quarters of fiscal years beginning after June
          15, 1999.

          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. BASIS OF PRESENTATION

     The accompanying  consolidated  financial  statements have been prepared in
     conformity with generally accepted accounting  principles which assume that
     the Trust will continue on a going concern basis, including the realization
     of  assets  and  liquidation  of  liabilities  in the  ordinary  course  of
     business.  However,  for 1999 and 1998,  the Trust  incurred  net losses of
     $3,166,937  and  $1,577,060  and  negative  cash flows from  operations  of
     $1,022,587 and $1,408,715,  respectively,  and has limited liquid resources
     as of December 31, 1999. These conditions raise substantial doubt about the
     Trust's ability to continue as a going concern.

     Management's  plans  to  continue  its  operations  and  become  profitable
     encompass the following:

     o    The  Trust  plans  to  continue  to  raise  capital  through  its Cash
          Offering,  which has been extended to May 31, 2000 and also intends to
          make  additional  public or private  offerings of common shares and/or
          Operating  Partnership  units within the 12 month period following the
          commencement of the proposed Exchange Offering, which became effective
          on November 9, 1999.


                                      F-11
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2. BASIS OF PRESENTATION (Continued)

     o    The Trust, through its Operating  Partnership,  intends to continue to
          acquire  rental  properties  using  proceeds  from  the  Trust's  Cash
          Offering and the Exchange Offering described in Note 10. 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  subordinate
          mortgage  interest.  Operating  results in respect of equity interests
          will  be  substantially   influenced  by  the  demand  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  Operating
          Partnership will also depend upon the pace and price at which they can
          acquire and improve additional property interests.

     o    See Note 12 regarding the completion of the Exchange Offering on April
          7, 2000 under  which the Trust,  through  the  Operating  Partnership,
          acquired additional interests in residential apartment properties.

     In view of these  matters,  realization of a major portion of the assets in
     the accompanying consolidated balance sheet is dependent upon the continued
     operations  of the  Trust,  which in turn is  dependent  upon  the  Trust's
     ability to meet its capital and financing requirements,  and the success of
     its future operations. Management believes that the actions presently being
     taken by the Trust provide the  opportunity  for the Trust to continue as a
     going concern.  However,  there can be no assurance that management will be
     successful in the  implementation of its plans to raise adequate amounts of
     capital or that future operations will become profitable.  The accompanying
     consolidated financial statements do not include any adjustments that might
     result from the outcome of this uncertainty.

NOTE 3. RENTAL APARTMENTS

     Heatherwood Apartments

          On June 30,  1998,  the  Operating  Partnership  acquired  the  entire
          limited partnership interest, representing a 99% partnership interest,
          in Heatherwood Kissimmee, Ltd., (the "Heatherwood Property") a Florida
          limited   partnership  which  owns  fee  simple  title  to  a  67-unit
          residential  property  located at  Kissimmee,  Florida  for a purchase
          price of approximately  $830,000.  The Heatherwood Property is subject
          to first mortgage  financing with an original balance of approximately
          $1,250,000  collateralized  by the  property.  The mortgage  calls for
          monthly payments of principal and interest of $8,847 and bears a fixed
          interest  rate  of  7.625%.  The  entire  balance,  including  accrued
          interest, is due on December 2004 and may be prepaid with a prepayment
          fee  equal  to 1% of  the  then  outstanding  principal  balance.  The
          principal balance outstanding as of December 31, 1999 was $1,226,624.


                                      F-12
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3. RENTAL APARTMENTS (Continued)

     Crystal Court Apartments

          On July 31,  1998,  the  Operating  Partnership  acquired  the  entire
          limited partnership interest, representing a 91% partnership interest,
          in Crystal Court Apartments II, Ltd., (the "Crystal Court Property") a
          Florida limited  Partnership which owns fee simple title to an 80-unit
          residential  apartment  property  located in  Lakeland,  Florida for a
          purchase price of approximately  $704,000.  The Crystal Court Property
          is subject to first  mortgage  financing  with an original  balance of
          $1,494,000  collateralized  by the  property.  The mortgage  calls for
          monthly  payments  of  principal  and  interest of $10,446 and bears a
          fixed interest rate of 7.5%.  The entire  balance,  including  accrued
          interest,  is due on October 2004 and may be prepaid with a prepayment
          fee  equal  to 1% of  the  then  outstanding  principal  balance.  The
          principal balance outstanding as of December 31, 1999 was $1,464,099.

     Riverwalk Apartments

          On September 1, 1998,  the Operating  Partnership  acquired the entire
          limited partnership interest, representing a 99% partnership interest,
          in Riverwalk  Enterprises,  Ltd., (the "Riverwalk Property") a Florida
          limited  partnership,  which  owns  fee  simple  title  to  a  50-unit
          residential  property  located  at New  Smyrna  Beach,  Florida  for a
          purchase price of approximately  $700,000.  The Riverwalk  Property is
          subject  to first  mortgage  financing  with an  original  balance  of
          approximately $1,400,000  collateralized by the property. The mortgage
          calls for monthly  payments of  principal  and interest of $14,072 and
          bears a fixed  interest  rate of 8.75%  amortized  over 25 years.  The
          entire balance, including accrued interest, is due on October 2004 and
          may be prepaid  with a prescribed  prepayment  fee.  During  1999,  an
          additional  $290,000 was borrowed on the first mortgage under the same
          terms as the original mortgage. The entire $290,000 was distributed to
          the Operating  Partnership.  The principal  balance  outstanding as of
          December 31, 1999 was $1,587,394.

          In connection with the purchase of the Riverwalk  Property,  the Trust
          executed a  promissory  note  payable to the sellers of the  Riverwalk
          Property with an original  balance of $575,000.  The note called for a
          lump-sum  payment of principal  and accrued  interest at a rate of 18%
          per annum on  December  1,  1998.  In  December  1998,  the  Operating
          Partnership  paid $226,163 of principal and interest  towards the note
          and  exercised  its  option  to  extend  the  maturity  of the note to
          February  1,  1999 for an  extension  fee of 1% of the  original  loan
          amount or $5,750.

          During  1999,  with the  distributions  received  from  the  Riverwalk
          Property,  the  Operating  Partnership  paid $275,000 of principal and
          $42,500 of interest towards the note and exercised  several options to
          extend the  maturity of the note to October 15, 2000 for an  extension
          fee of 1% of the outstanding  loan amount at the time the options were
          exercised.  The principal balance  outstanding as of December 31, 1999
          was $100,000.


                                      F-13
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4. INVESTMENTS IN PARTNERSHIPS

        Alexandria Property                                            $589,690
        Other Limited Partnership Interests                             341,280
                                                                       --------
                                                                       $930,970
                                                                       --------

     Alexandria Apartments

          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.  The Operating Partnership paid
          $400,000 for eight (8) units of limited partnership  interest out of a
          total of  sixty-five  (65) units and  retains an option to acquire the
          remaining  fifty-seven (57) units of limited partnership interests for
          $50,000  per  unit  or   approximately   $2,850,000.   The  option  is
          exercisable  as  additional  apartments  are  completed and rented and
          expires  on  October  15,  2000.  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.  During the construction  stage of the apartment
          property, the Operating  Partnership's limited partnership interest in
          the  Alexandria  Property 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.

          During  1999,  the  Operating  Partnership  exercised  its  option  to
          purchase  an  additional  eighteen  (18) units of limited  partnership
          interest for $885,000,  thereby  increasing its ownership  interest to
          approximately 40%. As of December 31, 1999, the Operating  Partnership
          owned 26 units  of  limited  partnership  interest  for  which it paid
          $1,285,000.

          The  following  is a  summary  of the  investment  in  the  Alexandria
          Property:

                                                      1999            1998
                                                    ---------       ---------

          Balance, beginning                        $ 368,690       $      --
          Investments                                 885,000         400,000
          Distributions                               (69,000)        (10,950)
          Equity in net loss                         (595,000)        (20,360)
                                                    ---------       ---------
          Balance, ending                           $ 589,690       $ 368,690
                                                    =========       =========


                                      F-14
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4. INVESTMENTS IN PARTNERSHIPS (Continued)

     Alexandria Apartments (Continued)

          The following is a condensed  summary of the financial  position as of
          December 31, 1999 and results of operations of the Alexandria Property
          for 1999 and 1998:

          Financial Position:
             Rental apartments                     $  7,048,559
             Construction in progress                 3,650,679
             Other assets                               762,836
                                                   ------------
                Total assets                       $ 11,462,074
                                                   ============

             Mortgage payable                      $  8,525,000
             Other liabilities                        3,323,378
                                                   ------------
                Total liabilities                    11,848,378
             Partners' Capital (Deficiency)            (386,304)
                                                   ------------
                                                   $ 11,462,074
                                                   ============


                                                        1999           1998
                                                    -----------    -----------
          Results of Operations:
             Rental income                         $    405,798    $    85,971
             Other income                                91,542        266,685
             Costs and expenses                      (2,062,615)      (518,186)
                                                   ------------    -----------
                Net loss                           $ (1,565,275)   $  (165,530)
                                                   ============    ===========

             As of December 31, 1999, there was approximately  $560,000 in notes
             receivable   from   affiliates   included   in  other   assets  and
             approximately $2,300,000 in notes payable to affiliates included in
             other liabilities,  respectively. Included in cost and expenses for
             1999 is a prepayment  penalty of approximately  $750,000 charged in
             November 1999 by the former  mortgage  holder on the refinancing of
             the mortgage  payable.  The  Alexandria  Property's  management  is
             currently  contesting  the  penalty.  However,  the  outcome is not
             determinable as of the date of this report.

         Other 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  Shareholder.  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.


                                      F-15
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 5. OTHER PROPERTY AND EQUIPMENT

          Furniture and equipment                                       $112,273
          Computer equipment and software                                 44,455
          Leasehold improvements                                          20,313
                                                                        --------
                                                                         177,540
             Less accumulated depreciation                                42,559
                                                                        --------
                                                                        $134,981
                                                                        ========

          Depreciation  expense for other  property and  equipment  for the year
          ended  December  31, 1999 and the period  ended  December 31, 1998 was
          $34,001 and $8,558, respectively.


NOTE 6. MORTGAGES PAYABLE
<TABLE>
<CAPTION>
                                      Original     Maturity     Interest     December 31,
                 Property              Amount        Date         Rate          1999
                 --------             --------     --------     --------     ------------

<S>                                  <C>          <C>            <C>         <C>
          Heatherwood Apartments     $1,250,000   12/31/2004     7.625%      $1,226,624
          Crystal Court Apartments    1,494,000   10/31/2004     7.5          1,464,099
          Riverwalk Apartments        1,400,000   10/31/2004     8.75         1,587,394
                                     ----------                              ----------
             Total                   $4,139,000                              $4,278,117
                                     ==========                              ==========
</TABLE>


          All  mortgage  notes  payable  are  collateralized  by the  underlying
          properties described in Note 3 above.

          The  aggregate  maturities  of mortgages  payable for each of the five
          years subsequent to December 31, 1999 are as follows:

          Year ending December 31:

          2000                                                       $   60,479
          2001                                                           62,885
          2002                                                           71,180
          2003                                                           77,228
          2004                                                        4,006,345
                                                                     ----------
            Total                                                    $4,278,117
                                                                     ==========


                                      F-16
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7. CAPITAL LEASE OBLIGATION

     During 1998,  the Operating  Partnership  purchased  office  furniture
     financed through a capital lease obligation. The lease calls for sixty
     (60) monthly  payments of $1,245  including  interest at 19.95% and is
     secured by the office  furniture  purchased.  Future  minimum  capital
     lease  payments and the net present value of the future  minimum lease
     payments at December 31, 1999 are as follows:

     Year Ending December 31:
        2000                                                       $ 14,940
        2001                                                         14,940
        2002                                                         14,940
        2003                                                          8,715
                                                                   --------
        Total minimum lease payments                                 53,535
        Less amount representing interest                           (11,166)
                                                                   --------
        Present value of minimum lease payment                     $ 42,369
                                                                   ========

NOTE 8. COMMITMENTS AND CONTINGENCIES

     Contract to Purchase Additional Properties

          In September  1998,  the Trust entered in an agreement with three real
          estate  development   companies  to  acquire  two  luxury  residential
          apartment  properties in the development  stage upon the completion of
          construction. The development companies (Brentwood at Southgate, Ltd.,
          Burlington Residential,  Ltd. and The Shoppes at Burlington, Ltd.) are
          controlled by one of the Trust's founders and chief executive officer.
          The properties  are scheduled to have a total of 652 units,  comprised
          of  one,  two  and  three  bedroom/one  or  two  bathroom  apartments.
          Construction  of  one  of  the  properties,   located  in  Louisville,
          Kentucky,  is expected to be completed  prior to the end of 2000,  and
          construction  of the other property,  located in Burlington,  Kentucky
          (part  of  the  Cincinnati  metropolitan  area),  is  expected  to  be
          completed by the end of 2001. The aggregate purchase price for the two
          properties   is  in  the  range  of   approximately   $41,000,000   to
          $43,000,000.  The  closing of each  acquisition,  which is expected to
          occur shortly following the completion of construction, is conditioned
          on, among other things,  the  completion of the  respective  apartment
          property, the availability of first mortgage financing and the Trust's
          raising the balance of the funds  necessary for the acquisition in its
          ongoing Cash  Offering or otherwise  have funds  available to make the
          acquisition.

          In  connection  with  the  transaction  and in  exchange  for  certain
          benefits described below, the Trust agreed to co-guarantee (along with
          the chief executive officer), up to 35% (or approximately $12,500,000)
          of the  development  portion of long-term  construction  loans with an
          aggregate  principal  amount of up to  $36,000,000 to be provided by a
          bank  to  the  development   companies.   As  of  December  31,  1999,
          approximately $6,150,000 of such loans


                                      F-17
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 8. COMMITMENTS AND CONTINGENCIES (Continued)

     Contract to Purchase Additional Properties (Continued)

          had  been  drawn  down,   resulting  in   outstanding   guarantees  of
          approximately  $2,150,000.  Subject  to  the  fulfillment  of  certain
          closing and funding conditions, the construction loans will be made to
          the  development  companies in  connection  with the  development  and
          construction of the two apartment  properties and of an 111,000 square
          foot shopping  center being  developed in  Burlington,  Kentucky.  The
          interest  rates on the  construction  loans range from 7.36% to 7.52%.
          The Trust also agreed that,  if the loans were not repaid prior to the
          expiration  of the  guarantee,  it  would  either  buy out the  bank's
          position on the entire amount of the construction loans or arrange for
          a third  party to do so. The  construction  loans are  expected  to be
          replaced by a long-term credit facility.

          The Trust expects to receive significant benefits from the transaction
          in  addition  to  the  acquisition  of  two  large  luxury   apartment
          properties  located in  attractive  communities.  In exchange  for the
          guarantee of the development  portion of the  construction  loans, the
          Trust will receive a discount of approximately  $212,500 (representing
          a one-half  of one percent  reduction)  on the  purchase  price of the
          properties.  The Trust and the development companies are negotiating a
          further price reduction,  which would apply if the development portion
          of the loans is not repaid prior to the  expiration  of the  guarantee
          period and the Trust is  required to buy out or arrange for the buyout
          of the lender's position on the loans.

     Officers' Compensation

          A founder of the Trust and the Operating  Partnership  serves as Chief
          Executive  Officer of the Trust,  the  Operating  Partnership  and the
          Managing Shareholder. He has agreed to serve a Chief Executive Officer
          for the first year in exchange for  compensation in the form of common
          shares  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.  During  1999 and 1998,  no common  shares of the Trust or
          units of the Operating  Partnership were issued to the Chief Executive
          Officer as compensation.  However, in order to reflect all appropriate
          administrative expenses of the Partnership, provisions of $217,000 and
          $197,000 have been made in the accompanying  financial  statements for
          the  estimated  fair  value  of the  services  rendered  by the  Chief
          Executive  Officer for 1999 and 1998.  This amount has been charged to
          compensation expense for 1999 and 1998, 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.


                                      F-18
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 8. COMMITMENTS AND CONTINGENCIES (Continued)

     Officers' Compensation

          The other founder of the Trust and Operating Partnership serves as the
          Chief Operating  Officer of the Trust,  the Operating  Partnership and
          the Managing  Shareholder.  His initial  annual salary has been set at
          $100,000,  in addition to benefits,  and eligibility for participation
          in any common share option plan and bonus incentive  compensation plan
          which may be implemented by the Trust.

     Underwriting Agreement

          In  connection  with the Cash  Offering,  the  Trust  issued  to Sigma
          Financial  Corporation  (the  Underwriter),  warrants  to  purchase an
          amount  equal to 8.5% of the  number of Common  Shares  sold on a best
          effort  basis  by the  Underwriter  and  participating  broker-dealers
          selected  by the  Underwriter  and  the  Trust.  The  warrants  may be
          purchased at any time and from time to time through May 15, 2003 at an
          exercise  price of $13 per  warrant  share.  The  Trust  has  reserved
          212,500 shares under the Underwriting agreement, which represents 8.5%
          of the 2,500,000  shares offered in the Cash Offering.  As of December
          31,  1999,  the  Underwriter  has the option to  purchase up to 57,613
          shares at $13 per share.

     Operating Leases

          During 1998, the Operating Partnership executed an operating lease for
          its office  facilities.  The lease,  which  expires in 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.

          Minimum future lease payments on this lease are as follows:

              Year ending December 31:
                 2000                                        $  60,000
                 2001                                           60,000
                 2002                                           60,000
                 2003                                           30,000
                                                             ---------
                    Total                                    $ 210,000
                                                             =========

          Rent expense was approximately  $62,000 and $24,000 for 1999 and 1998,
          respectively.


                                      F-19
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9. RELATED PARTY TRANSACTIONS

     Trust Management Agreement

          The Trust  has  entered  into a Trust  Management  Agreement  with the
          Managing Shareholder under which the Managing Shareholder is obligated
          to provide management, administrative and investment advisory services
          to the Trust. The services to be rendered include, 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 is 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 will make and for making divestment  decisions,
          subject to the  provisions of the  Declaration.  The Trust  Management
          Agreement  has an initial  term of one year and may be  extended  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.

          The  Trust  will  reimburse  the  Managing  Shareholder  for all Trust
          expenses 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.  Under
          the Trust Management Agreement,  the Trust will 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 a Proposed  Exchange  Offering of Units as
          contemplated in the Trust's  Prospectus.  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 will
          also reimburse the Managing  Shareholders 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 the Trust's initial offering
          for the Managing Shareholder's services.

          During 1999 and 1998, the Trust paid the Managing  Shareholder $42,289
          and  $92,393  for  reimbursable  expenses  incurred  during  the  Cash
          Offering,  $84,578 and $185,456 for reimbursable  investment  expenses
          and $21,145 and $46,364 for reimbursable management expenses.


                                      F-20
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9. RELATED PARTY TRANSACTIONS (Continued)

     Trust Management Agreement (Continued)

          During 1999, the Trust  overpaid  $14,783 of  reimbursable  management
          fees to the Managing Shareholder,  which is recorded as a due from the
          Managing  Shareholder in the accompanying balance sheet as of December
          31, 1999.

     Transactions with Affiliated Entities

          During 1999 and 1998,  the Operating  Partnership  paid  approximately
          $37,000 and $12,000,  respectively  to an affiliated  corporation  for
          computers being used by the Operating Partnership.

     Reimbursed Administrative Expenses

          The 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
          general  partner of the Operating  Partnership.  These  administrative
          expenses are allocated as described below, and the allocated  expenses
          are  reimbursed to the  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.

          During 1999 and 1998, the  Partnership  was  reimbursed  approximately
          $857,000 and  $496,000,  respectively,  for  administrative  expenses,
          which have been  presented  as a  reduction  of the  specific  related
          category  of  administrative  expenses in the  accompanying  financial
          statements.

     Advances

          From  time to  time,  the  Operating  Partnership  advances  funds  to
          affiliates.  These  advances  do not  accrue  interest  and are due on
          demand.  As of  December  31,  1999,  the  Operating  Partnership  had
          advanced $5,141 to two affiliates.

     Notes Payable, Affiliates

          On December 23, 1999,  the Riverwalk  Property  executive a promissory
          note payable to an affiliate for $20,000. The note payable calls for a
          lump sum principal  payment plus accrued interest at 10% per annum due
          on December 23, 2004.


                                      F-21
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9. RELATED PARTY TRANSACTIONS (Continued)

     Notes Payable, Affiliates (Continued)

          On April 2, 1999,  the Crystal  Court  Property  executed a promissory
          note payable to an affiliate for $20,000. The note payable calls for a
          lump sum principal  payment plus accrued interest at 10% per annum due
          on April 2, 2004.

          On December 10, 1999, the Heatherwood  Property  executed a promissory
          note payable to an affiliate for $10,000. The note payable calls for a
          lump sum principal  payment plus accrued interest at 10% per annum due
          on December 10, 2004.

NOTE 10. 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, which is payable in full upon subscription, for proposed
          total gross proceeds of $25,000,000  (the Cash  Offering).  All of the
          common  shares to be issued or sold by the Trust in the offering  will
          be tradable without  restriction under the Securities Act, but will be
          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 Cash Offering,  as amended,  will
          terminate no later than May 31, 2000.

     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  Securities  Act of 1933,  as
          amended (the "Act") ("Exchange Offering").

          It is  proposed  that  these  units  would be  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  are managed by corporate  general partners
          who  are  affiliated  with  one  of  the  founders  of  the  Operating
          Partnership,  who is the sole stockholder and director of the Managing
          Shareholder  of the Trust.  This  registration  statement was declared
          effective  on November 9, 1999,  and the Exchange  Offering  commenced
          shortly thereafter.


                                      F-22
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 10. SHAREHOLDERS' EQUITY (Continued)

     Exchange Offering (Continued)

          The  number  of  Units  being  offered  in  exchange  for the  limited
          partnership  interests in the Exchange  Partnerships  will be 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 has been arbitrarily  assigned an
          initial value of $10, which  corresponds to the offering price of each
          Trust Common Share  currently  being offered to the public pursuant to
          the Cash Offering. The value of each Unit and Common Share outstanding
          will  be  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 Trust 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 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 being offered by the Trust in the Cash  Offering)  have
          been registered with the Commission.

          As its  initial  investment  targets  in the  Exchange  Offering,  the
          Operating   Partnership   is   offering  to  acquire   equity   and/or
          subordinated  mortgage  interests  in  26  properties  (the  "Exchange
          Properties")   directly  or  indirectly   owned  by  the  23  Exchange
          Partnerships.  The Operating  Partnership will acquire  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 12 regarding the completion of the Exchange Offering on April
          7, 2000 under  which the Trust,  through  the  Operating  Partnership,
          acquired additional interests in residential apartment properties.

     Operating Partnership Limited Partnership Units

          In  connection  with the  formation  of the  Trust  and the  Operating
          Partnership,  the  Original  Investors  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.  If the Cash  Offering  and the  Exchange
          Offering are fully subscribed, those Units would represent


                                      F-23
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 10. SHAREHOLDERS' EQUITY (Continued)

     Operating Partnership Limited Partnership Units (Continued)

          19% of the total Common  Shares  outstanding  after  completion of the
          Cash Offering and exchange by the Operating  Partnership  of 2,500,000
          of its Units for units of limited partnership  interest in real estate
          limited partnerships  (including any exchange pursuant to the Exchange
          Offering),  calculated  on a fully  diluted  basis  assuming  all then
          outstanding  Units (other than those  acquired by the Trust) have been
          exchanged into an equivalent number of Common Shares. If, however,  as
          of May 31, 2000,  the Cash Offering  and/or the Exchange  Offering has
          been completed and the number of Units subscribed for by each Original
          Investment  represents  a  percentage  greater  than  19% 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) have been  exchanged  into an  equivalent  number of Common
          Shares,  each Original  Investor has agreed to return any excess Units
          to the Operating Partnership for cancellation.  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 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
          Partnership;  and the  founders'  units  are  subject  to  significant
          transfer restrictions.  The 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 shares
          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  Participating  Exchange
          Partnerships;  agreed to assign to the Operating Partnership the right
          to receive all residual  economic  rights  attributable to the general
          partner  interests in  Participating  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.


                                      F-24
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 10. SHAREHOLDERS' EQUITY (Continued)

     Operating Partnership Limited Partnership Units (Continued)

          After  the  exchange  with the  limited  partners  and  assignment  of
          economic rights of the general partner, the Operating Partnership will
          control  the  Participating  Exchange  Partnerships  by  virtue of its
          ownership of at least 90% of the limited partnership interests,  which
          will  provide  the  Operating  Partnership  the  ability to remove the
          general  partner  under  the  provisions  of the  limited  partnership
          agreements that limited partners holding over 50% of total partnership
          interest have the right to remove the general partner.

     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.  During 1998, two
          quarterly distributions aggregating $72,159 ($.225 per common share of
          beneficial  interest) were  authorized for payment from surplus of the
          Trust.  These amounts are presented in the  accompanying  consolidated
          financial  statements as a deduction from  shareholders'  equity under
          the caption "Distributions".


NOTE 11. 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 stock equivalents in
     the weighted average shares outstanding has not been presented,  as it
     is anti-dilutive in 1999 and 1998.

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

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

              1999      $(3,166,927)          618,772      $(5.12)
                        ===========           =======      ======

              1998      $(1,577,060)          212,731      $(7.41)
                        ===========           =======      ======

     Assuming  that the Original  Investors  had  exchanged  their  limited
     partnership  units for an  equivalent  net  amount  of  49,900  Common
     Shares,  the net loss per share on an  as-converted  basis  would have
     been $4.74 and $6.00 per share for 1999 and 1998, respectively.


                                  F-25
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 12. COMPLETION OF 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 2,434,274  registered
     Operating Partnership Units (with an initial assigned value of $24,342,740)
     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,  sole stockholder and director of the Managing
     Shareholder of the Trust.

     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 has assigned to the Operating
     Partnership  all of its  economic  interest  in the  partnership;  and  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  (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.


                                      F-26
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

     The  unaudited  pro forma  condensed  consolidated  balance  sheets at
     December  31,  1999 and  statements  of  operation  for the year ended
     December  31,  1999,  have been  prepared  assuming  that the Exchange
     Offering  (see  Notes 10 and 12) had  been  fully  subscribed  and had
     occurred on January 1, 1999.

     The pro forma  information is not  necessarily  indicative of what the
     Trust's results of operations  would have been assuming the completion
     of the described transaction at the beginning of the period indicated,
     nor does it purport to project the Trust's  results of operations  for
     any future period.


<TABLE>
<CAPTION>
            Unaudited Pro Forma Condensed Consolidated Balance Sheets
                                December 31, 1999


                                                          The Trust         Exchange          Pro Forma
                                                         (Historical)     Partnerships       Adjustments       Pro Forma
                                                         -----------       -----------       -----------       -----------

<S>                                                      <C>               <C>               <C>               <C>
          Rental properties                              $ 5,915,000       $22,567,000       $ 8,697,000       $37,179,000
          Other assets                                     1,421,000        12,899,000         3,271,000        17,591,000
                                                         -----------       -----------       -----------       -----------
             Total assets                                $ 7,336,000       $35,466,000       $11,968,000       $54,770,000
                                                         ===========       ===========       ===========       ===========

          Mortgage payable                               $ 4,278,000       $17,802,000       $        --       $22,080,000
          Other liabilities                                1,528,000         4,697,000                --         6,225,000
                                                         -----------       -----------       -----------       -----------
             Total liabilities                             5,806,000        22,499,000                --        28,305,000
                                                         -----------       -----------       -----------       -----------


          Shareholders' equity                             1,530,000        12,967,000        11,968,000        26,465,000
                                                         -----------       -----------       -----------       -----------
             Total liabilities and
                shareholders' equity                     $ 7,336,000       $35,466,000       $11,968,000       $54,770,000
                                                         ===========       ===========       ===========       ===========
</TABLE>


       Unaudited Pro Forma Condensed Consolidated Statements of Operation
                          Year Ended December 31, 1999

<TABLE>
<CAPTION>
                                                The Trust           Exchange        Pro Forma
                                              (Historical)        Partnerships      Adjustments         Pro Forma
                                              ------------        ------------      -----------        -----------

<S>                                            <C>                <C>               <C>                <C>
          Total revenues                       $   585,000        $ 5,257,000       $        --        $ 5,842,000
          Costs and expenses                     3,752,000          5,058,000           237,000          9,047,000
                                               -----------        -----------       -----------        -----------
          Net income (loss)                    $(3,167,000)       $   199,000       $  (237,000)       $(3,205,000)
                                               ===========        ===========       ===========        ===========

          Weighted average number of
             common shares                         618,772                            2,497,800          3,116,572
                                               ===========                          ===========        ===========

          Net loss per share                   $     (5.12)                                            $     (1.03)
                                               ===========                                             ===========
</TABLE>


                                      F-27
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (Continued)

     Pro Forma Adjustments

          The unaudited pro forma condensed  consolidated  financial  statements
          represent the acquisition of the exchange partnerships,  which will be
          accounted for under the purchase  method of accounting.  The Trust has
          estimated the adjustments  required to allocate the aggregate purchase
          price  over  the  recorded  book  value of  these  partnerships.  Such
          allocations are subject to final  determination  based upon valuations
          provided  by the Trust and other  valuations  of fair  value as if the
          acquisitions  were  effective  on  January  1,  1999.  Therefore,  the
          allocations   reflected   in  the   unaudited   pro  forma   condensed
          consolidated   financial   statements  may  differ  from  the  amounts
          ultimately determined. Differences between the amounts included herein
          and the final  allocations  are not expected to have a material effect
          on the unaudited pro forma financial statements.

          Pro form depreciation  adjustment for the year ended December 31, 1999
          is based upon assets at fair value at January 1, 1999; primarily based
          upon 30 year asset lives.

          Summary pro forma  adjustments to present  comparative  per share data
          assume that the exchange  transaction had been  consummated at January
          1, 1999 (assumes shares  outstanding for entire period).  The escrowed
          performance  shares are not included in the pro forma computation with
          basic loss per share  because  there is no  assurance  that the shares
          will  be   released   from  escrow  and  their   inclusion   would  be
          antidilutive.


NOTE 14.  SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

     During 1998, the Operating Partnership acquired three rental apartment
     properties  through the  assumption  of mortgage  payables  and a note
     payable, as follows:

       Mortgages payable                                        $4,058,737
       Note payable                                                575,000
                                                                ----------
                                                                $4,633,737
                                                                ==========

     Also, the Operating  Partnership  acquired  furniture and equipment in
     1998 by means of capital lease financing in the amount of $59,769.


                                      F-28


<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 (1)
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.

<TABLE>
<CAPTION>
Name                        Age         Position
----                        ---         --------
<S>                         <C>         <C>
James H. Bownas             52          Trustee
Peter M. Dickson            50          Trustee
Gregory K. McGrath(2)       39          Chief Executive Officer - Trust and Operating
                                        Partnership
Robert S. Geiger(3)         49          Chief Operating Officer - Trust and Operating
                                        Partnership
Robert L. Astorino          53          President - Operating Partnership
Mark L. Wilson              53          Chief Financial Officer - Trust and Operating
                                        Partnership
</TABLE>


     Baron Advisors, Inc. ("Baron Advisers"), the Managing Shareholder of the
Trust, was incorporated in July 1997 as a Delaware corporation. 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 is Gregory K. McGrath and its Chief Operating
Officer is Robert S. Geiger. The Managing Shareholder will be compensated for
its services pursuant to a Trust Management Agreement. Officers and employees of
the Managing Shareholder who perform services on behalf of the Trust will not be
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.

     Gregory K. McGrath is the Chief Executive Officer, sole director and sole
shareholder of Baron Advisors, Inc. and Chief Executive Officer of the Trust and
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


----------
(1)  The Trust has entered into a Trust Management Agreement with Baron
     Advisers, Inc., the Managing Shareholder of the Trust(the "Managing
     Shareholder") under which the Managing Shareholder is obligated to provide
     management, administrative and investment advisory services to the Trust
     from the commencement of the Cash Offering. The services to be rendered
     include, among other things, communicating with and reporting to Investors,
     administering accounts, providing to the Trust 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 is 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 will make and for making divestment decisions,
     subject to the provisions of the Declaration of Trust.

(2)  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.

(3)  Mr. Geiger serves as the Chief Operating Officer of the Managing
     Shareholder.


                                       58
<PAGE>


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.

     Robert S. Geiger is 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.

     James H. Bownas is a principal in Gamble Hartshorn Johnson Co. LPA, a
Columbus, Ohio law firm with a general practice. Mr. Bownas's practice is
concentrated in securities, real estate, taxation, corporate and estate
planning. 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.

     Peter M. Dickson has been managing director of the Guardian Management
Company Limited, a global financial services corporation based in Bermuda since
1991. 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.

     Robert L. Astorino has served as President 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. Between 1989 and 1997, Mr. Wilson served
as Vice President of Baron Real Estate Services, Inc., an affiliate of Mr.
McGrath. Mr. Wilson was 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.

     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
will be 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,



                                       59
<PAGE>


Baron Advisors, Inc., and any of their 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.


ITEM 10.  EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                             ANNUAL COMPENSATION
-----------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>             <C>            <C>                <C>
Name and Principal Position        Year      Salary          Bonus          Long Term          All Other
                                                                            Compensation       Compensation
-----------------------------------------------------------------------------------------------------------------
Gregory K. McGrath, Chief          1999      $217,000 (1)         --               --                   --
Executive Officer - Trust and
Operating Partnership
-----------------------------------------------------------------------------------------------------------------
Robert S. Geiger, Chief            1999      $100,000             --               --                   --
Operating Officer - Trust and
Operating Partnership
-----------------------------------------------------------------------------------------------------------------
Robert L. Astorino, President      1999      $166,475        $820                  --          $1,200 2/
Operating Partnership
-----------------------------------------------------------------------------------------------------------------
Mark L. Wilson, Chief Financial    1999      $101,535             --               --          $8,159 2/
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 1999. 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. Pursuant to
     a Trust Management Agreement, dated as of May 15, 1998, which is renewable
     annually, Baron Advisors, Inc. is entitled to be reimbursed for its
     operating expenses relating to the business of the Trust and the Operating
     Partnership in an amount up 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 is entitled to reimbursement (i) for 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) for 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) for 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 1999, the Trust incurred expenses due
     Baron Advisors, Inc. totaling $126,862, comprised of reimbursable
     management expenses ($21,144), reimbursable organizational and offering
     expenses ($21,144), and reimbursable investment advisory expenses
     ($84,574).

(2)  Car Allowance


                                       60
<PAGE>


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, (ii) the Trust's
Chief Executive Officer and each executive officer of the Trust, (iii) all
executive 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, 1999. 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 and Address of                           Amount and Nature
             Beneficial Owner                          of Beneficial Ownership                       Percentage of Class
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                                        <C>
James H. Bownas                                                   --                                          --
1 East Livingston Avenue
Columbus, Ohio  43215
------------------------------------------------------------------------------------------------------------------------------------
Peter M. Dickson                                                  --                                          --
33 Church Street
Hamilton, Bermuda  HM 12
------------------------------------------------------------------------------------------------------------------------------------
Gregory K. McGrath  (1)                                           (2)                                         9.5%
------------------------------------------------------------------------------------------------------------------------------------
Robert S. Geiger (1)                                              (2)                                         9.5%
------------------------------------------------------------------------------------------------------------------------------------
Robert L. Astorino  (1)                                            --                                          --
------------------------------------------------------------------------------------------------------------------------------------
Mark L. Wilson  (1)                                                --                                          --
------------------------------------------------------------------------------------------------------------------------------------
All executive officers of the Trust and                            (2)                                         19%
Operating Partnership, as a group
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

----------
(1)  The address of Messrs. McGrath, Geiger, Astorino and Wilson is 7826 Cooper
     Road, Cincinnati, Ohio 45242.

(2)  Mr. McGrath and Mr. Geiger, the original investors in the Operating
     Partnership, each own 601,080 Operating Partnership Units which are
     exchangeable into an equivalent number of Common Shares of the Trust.
     Pursuant to an agreement among Messrs. McGrath, Geiger, the Trust and the
     Operating Partnership, if, as of May 31, 2000, the Units held by each of
     them represent a percentage greater than 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) have been
     exchanged into an equivalent number of Common Shares, Mr. McGrath and Mr.
     Geiger have agreed to return any excess Units to the Operating Partnership
     for cancellation. Their Units have been deposited in escrow. The escrowed
     Units and/or 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.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the years ended December 31, 1998 and 1999, 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 had an interest. The
Trust expects to enter into additional such transactions in 2000 (See ITEM 1 -
DESCRIPTION OF BUSINESS - Brief Description of Properties - Exchange Offering).
In 1998 and 1999, the following related transactions occurred.


                                       61
<PAGE>


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

     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. Such Units are
exchangeable into an equivalent number of Common Shares. Pursuant to an
agreement among Mr. McGrath, Mr. Geiger, the Trust and the Operating
Partnership, if, as of May 31, 2000 (the scheduled termination date of the Cash
Offering), the Units held by each of them represent a percentage greater than
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) have been exchanged into an equivalent number of Common Shares, Mr.
McGrath and Mr. Geiger have agreed to return any excess Units to the Operating
Partnership for cancellation. See also footnote 2 above under ITEM 11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     As discussed 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.


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.


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Exhibit Number                 Description
------------------------------------------------------------------------------------------------------------------------------------
<S>         <C>                <C>
            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, 1999 (Registration Statement No. 333-55753)).
------------------------------------------------------------------------------------------------------------------------------------
            3.3*               Form of by-laws of the Registrant (incorporated herein by reference to Exhibit 3.3 to Amendment No.
                               3  to the Form SB-2 Registration Statement of Baron Capital Trust filed with the Securities and
                               Exchange Commission on May 15, 1998).
------------------------------------------------------------------------------------------------------------------------------------
            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).
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>




                                                                 62
<PAGE>


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Exhibit Number                 Description
------------------------------------------------------------------------------------------------------------------------------------
<S>         <C>                <C>
            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)).

------------------------------------------------------------------------------------------------------------------------------------
            21**               Subsidiaries of the Registrant

------------------------------------------------------------------------------------------------------------------------------------
            23**               Consent of Rachlin Cohen & Holtz, Independent Certified Public Accountants

------------------------------------------------------------------------------------------------------------------------------------
            27**               Financial Data Schedule
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


----------
*    Previously filed.

**   Filed herewith.


          (b)  Reports on Form 8-K:

               No reports on Form 8-K were filed during the quarter ended
               December 31, 1999.



                                       63
<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



April 14, 2000                                   By:  /s/ Gregory K. McGrath
                                                      ----------------------
                                                      Gregory K. McGrath
                                                      Chief Executive Officer


     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/ Gregory K. McGrath     Chief Executive Officer               April 14, 2000
----------------------     (Principal Executive Officer)
Gregory K. McGrath

/s/ Mark L. Wilson         Chief Financial Officer               April 14, 2000
----------------------     (Principal Financial and Accounting
Mark L. Wilson             Officer)


/s/ James H. Bownas        Trustee                               April 14, 2000
----------------------
James H. Bownas


/s/ Peter M. Dickson       Trustee                               April 14, 2000
----------------------
Peter M. Dickson

/s/ Gregory K. McGrath     Corporate Trustee                     April 14, 2000
----------------------
Gregory K. McGrath,
Chief Executive
Officer of Baron Capital
Properties, Inc.

/s/ Gregory K. McGrath     Managing Shareholder                  April 14, 2000
----------------------
Gregory K. McGrath,
Chief Executive
Officer of Baron
Advisors, Inc.



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